Q2 2024 Palantir Technologies Inc Earnings Call

August 5, 2024

Right.

<unk> market close and posted on our Investor Relations website.

Speaker Change: During the call we will make statements regarding our business that may be considered forward looking within applicable securities laws, including statements regarding our third quarter and fiscal 2024 results management's expectations for our future financial and operational performance and other statements regarding our plans prospects and expectations.

Speaker Change: These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results information concerning those risks is available in our earnings press release distributed after the market closed today and in our SEC filings.

Speaker Change: We undertake no obligation to update forward looking statements, except as required by law.

Speaker Change: Further during the course of today's call, we will refer to certain adjusted financial measures. These non-GAAP financial measures should be considered in addition to not as a substitute for or in isolation from GAAP measures.

Speaker Change: Additional information about these non-GAAP measures, including reconciliation of non-GAAP to comparable GAAP measures is included in our press release and Investor presentation provided today.

Speaker Change: Our press release Investor presentation, and other earnings materials are available on our Investor Relations website at investors <unk> com.

Speaker Change: Over the course of the call we will refer to various growth rates when discussing our business. These rates reflect year over year comparisons unless otherwise stated.

Speaker Change: Joining me on today's call are Alex Karp, Chief Executive Officer, Sean <unk>, Our Chief Technology Officer, Dave Glaser, Chief Financial Officer, and Ryan Taylor, Chief revenue Officer, and Chief Legal Officer.

Hey, what is up everybody? Welcome to the Guilty as Charged podcast. My name is Steven and I'm the host as always. Back with my guy Tyler after a weekend down an Elstern window. Tyler, what's up man? How you doing today?

Speaker Change: Joining me on today's call are Alex Karp, Chief Executive Officer, Sean Thank our Chief Technology Officer, Dave Glaser, Chief Financial Officer, and Ryan Taylor, Chief revenue Officer, and Chief Legal Officer.

Ryan Taylor: I'll now turn it over to Ryan to start the call.

Tyler: Doing well, man. I've just been jamming out to the Deadpool and Wolverine soundtrack and just Enjoying my last two weeks of summer before school starts up again

Ryan Taylor: We are thrilled to report tremendous results for our business driven foremost by strong execution in our U S commercial business and continued U S government business acceleration.

Ryan Taylor: I'll now turn it over to Ryan to start the call.

Ryan Taylor: We are thrilled to report tremendous results for our business driven foremost by strong execution in our U S commercial business and continued U S government business acceleration overall revenue growth, excluding strategic commercial contracts accelerated to 30% year over year and 10% sequential in Q2.

Tyler: Yeah, obviously no spoilers, but the song that they use at the end has been stuck in my head since we saw the movie. And I'm not even a huge fan of the artist who sings that song. Yeah. But I woke up on

Speaker Change: Overall revenue growth, excluding strategic commercial contracts accelerated to 30% year over year and 10% sequential in Q2.

Speaker Change: I woke up yesterday morning and I was like singing and I'm like, wait, what is going on? Like it's a very very end or like the one shot or the one shot like the The song that they play leading up to the final battle scene. Okay. Yes. I get you Pretty good. Yeah, pretty pretty good. Yeah

Ryan Taylor: Our exceptional results are a reflection of a market that has quickly awakening to the reality that our customers have already known we stand alone in our ability to deliver enterprise AI production impact at scale.

Speaker Change: Our exceptional results are a reflection of a market that has quickly awakening to a reality that our customers have already known we.

Speaker Change: We stand alone in our ability to deliver enterprise AI production impact at scale.

Ryan Taylor: We are delivering these results in the face of an unprecedented enterprise AI opportunity as noted by Sequoia the revenue expectations from the AI ecosystems infrastructure Buildout have grown from $200 billion to $600 billion per year in just nine months. The world is struggling with this huge problem.

Speaker Change: So it was a super fun weekend. If you guys missed it, obviously the three of us got to get, we got together over the weekend, went down to Huntington Beach, we watched House of Dragons together. Alex had not watched House of Dragons, so we had to explain to him everything that had happened.

Speaker Change: We are delivering these results in the face of an unprecedented enterprise AI opportunity as noted by Sequoia the revenue expectations from the AI ecosystems infrastructure Buildout have grown from $200 billion to $600 billion per year in just nine months. The world is struggling with this huge problem.

Speaker Change: Tyler's mom made these amazing amazing teriyaki flavored ribs that were fantastic and these

Speaker Change: Theres, a great bottleneck between prototype and production.

Speaker Change: The World has also come to understand what we've been saying all along the standard playbook does not and will not work it cannot solve this problem.

Speaker Change: these garlic knots. I got to get the recipe for that by the way because those garlic knots were like fantastic. And then we went and saw Deadpool in Wolverine, so...

Speaker Change: The World has also come to understand what we've been saying all along the standard playbook does not and will not work it cannot solve this problem.

Speaker Change: It was a great night then, we got to go to practice together, get up close and personal to the action, I got to participate in the media sessions, it was just overall an awesome awesome weekend. I can't thank anybody from...

Speaker Change: While many companies can build prototypes the leap from prototype to production is substantial.

Talented: Talented has made that leap.

Talented: Our focus is on deploying enterprise AI and production solving meaningful problems for our customers.

Volunteers made that leap our focus is on deploying enterprise AI and production solving meaningful problems for our customers.

Speaker Change: Practices that said hi to me, to Alex, Tyler, Alex and I went to the Die Hard Bullet Club event on Saturday night and that was amazing.

We have the right products at the right time at our history means that we understand the $600 billion opportunity. Unlike anyone else in the space.

Speaker Change: We have the right products at the right time at our history means that we understand the $600 billion opportunity. Unlike anyone else in this space.

Speaker Change: I found out that Tyler and Karen, shout out Karen, share birthdays so that was fun. So just overall a fabulous fantastic weekend for the Guilty as Charged podcast.

We are uniquely situated and you see that in our results now.

We are uniquely situated and you see that in our results now laugh.

Speaker Change: Yeah, it really was. I've been working with Alex since 2017, and we finally just met a few days ago. It's 2024. I know that Jason, our original co-host,

Talented: Last quarter, we signed 27 deals worth $10 million or more and closed nearly a $1 billion of TCP.

Speaker Change: Last quarter, we signed 27 deals worth $10 million or more and closed nearly a $1 billion of TCP.

Talented: One of the most notable indicators of our delivery is the volume of existing customers, who are signing expansion deals many of which are a direct result of AIP.

Speaker Change: is moving to California.

One of the most notable indicators of our delivery is the volume of existing customers, who are signing expansion deals many of which are a direct result of AIP.

Speaker Change: Pretty soon. So I actually might be able to meet him one day as well. Yeah. Yeah. Shout out Jason I hope everything's going well with the army and all that stuff okay, so today we wanted to kind of do a Check-in with where some of the Chargers players are at. We've you know separately kind of talked about

We continue to see the greatest transformation in our U S commercial business evident in the many AIP driven deals closed last quarter, our U S commercial revenue, excluding strategic commercial contracts climbed 70% year over year.

Speaker Change: We continue to see the greatest transformation in our U S commercial business evident in the many AIP driven deals closed last quarter, our U S commercial revenue, excluding strategic commercial contracts climbed 70% year over year.

Speaker Change: Some of the position battles and some of our major takeaways from training camp, but so we're going to do a stock watch today of players that

Speaker Change: Our U S. Commercial HCV closed was up 44% year over year and up 19% sequentially, while our deal count in U S. Commercial was nearly twice what it was just a year ago.

Speaker Change: Our U S. Commercial ACB closed was up 44% year over year and up 19% sequentially.

Speaker Change: Maybe we necessarily haven't spent a ton of time talking about players that are obviously super important to the season with their roles and things like that. But before we do, obviously the Chargers did have a practice just now.

Speaker Change: Our deal count in U S. Commercial was nearly twice what it was just a year ago.

Speaker Change: We maintain conviction in our ability to land new customers and subsequently expand those engagements as we sharpen our focus to taking our customers across the chasm from prototype to production.

Speaker Change: We're not there, but we've watched some of the clips, read some of the articles, and Dara Popper's article, hopefully, will be coming out in a minute here. So we'll have some reaction there, but.

Speaker Change: Tampa General signed a seven year expansion deploying AIP to deliver a care coordination operating system, where we've helped them reduce patient length of stay by 30%.

Speaker Change: First and foremost I have to talk about the offensive line and kind of the injury status right now. So Jamari Sawyer got injured yesterday in practice. He did not practice today and in his place

Speaker Change: Tampa General signed a seven year expansion deploying AIP to deliver a care coordination operating system, where we've helped them reduce patient length of stay by 30%.

Speaker Change: Panasonic energy of North America signed a three year expansion using AIP across finance quality control and manufacturing operations.

Speaker Change: AARP shared their utilizing AIP to provide targeted personalized experiences for their 29 million unique visitors on a monthly basis.

Speaker Change: Eaton deepened our relationship leveraging AIP to modernize ERP deployments. In addition to finance sales and supply chain use cases.

Eaton deepened our relationship leveraging AIP to modernize ERP deployments. In addition to finance sales and supply chain use cases.

Speaker Change: Kinder Morgan signed a five year foundry and AIP enterprise expansion with production use cases, including storage optimization pipeline integrity monitoring and power optimization.

These are just a handful of the significant expansions last quarter into production with AIP and.

Speaker Change: These are just a handful of the significant expansions last quarter into production with AIP and.

And the magnitude of expansion is notable.

Speaker Change: A major North American Industrial company started working with US in late 2022 expanded to a 5 million dollar run rate in 2023, and further deepened engagement to a 20 million dollar run rate this year.

Speaker Change: And the magnitude of expansion is notable.

Speaker Change: One of America's leading hospitals began working with us in 2021 generated approximately $1 $5 million of revenue in 2020 to over $4 million of revenue in 2023 and is on track to generate nearly $15 million of revenue this year.

Speaker Change: With regard to landing new customers U S commercial customer count grew 83% year over year last quarter.

Speaker Change: Boot camps remain a key go to market motion, particularly for prototyping, what is possible with AI, but the real opportunity and our unique capability lies in moving from prototyping to production with these customers that is where we're focused.

Speaker Change: We closed a seven figure deal with a large wholesale insurance brokerage firm for an initial production automated policy review use case, just 16 days after the boot camp.

Speaker Change: A leading convenient store chain went from prototype at a bootcamp to paid pilot in 25 days, then converted the inventory management and pricing optimization use case into initial production immediately following the pilot.

Speaker Change: A leading convenient store chain went from prototype at our bootcamp to paid pilot in 25 days, then converted the inventory management and pricing optimization use case into initial production immediately following the pilot.

Speaker Change: Our product charisma remains unparalleled.

Speaker Change: We plan to leverage this combination of boot camps in pilots with a focus on moving towards high value production use cases to continue landing new customers at the same time, we are heightening our concentration towards building deep production level relationships with every single customer.

Speaker Change: The phenomenal strength of our U S government business shows the power and scale of our enterprise software delivery.

Speaker Change: Our U S government business continued accelerating growing more than 8% sequentially for two consecutive quarters.

Speaker Change: We proudly received several notable awards last quarter, including a production contract from the Department of Defense, Chief Digital and artificial intelligence office C. D. A L to deploy and scale and AI enabled operating system across the D. O D. Starting with an initial order of $153 million to support certain combatant.

Speaker Change: We proudly received several notable awards last quarter, including a production contract from the Department of Defense, Chief Digital and artificial intelligence office C. D E O to deploy and scale and AI enabled operating system across the D. O D. Starting with an initial order of $153 million to support certain combatant.

Speaker Change: <unk> and the joint staff, while additional awards can be made up to $480 million over a five year period.

Speaker Change: Amanda in the joint staff, while additional awards can be made up to $480 million over a five year period.

Speaker Change: This award reflects the criticality of our software and our nation's defense capabilities.

Speaker Change: Shortly after <unk> announced a new initiative.

Shortly after <unk> announced a new initiative open dagger to enabled defense tech companies traditional contractors and government developers to develop applications and integrations on top of maven powered by pound here in a contract worth $33 million.

Speaker Change: <unk> to enable defense tech companies traditional contractors and government developers to develop applications and integrations on top of Maven powered by pond here in a contract worth $33 million.

We maintained pride in the mission critical impact of our products and celebrate the long term strength of our U S government business evident in last quarter's results.

Speaker Change: We maintained pride in the mission critical impact of our products and celebrate the long term strength of our U S government business evident in last quarter's results.

Speaker Change: Looking ahead I have never felt more bullish about our business than I do today.

Speaker Change: We're charging full steam ahead, leading our customers across the bridge from prototype to production with our ever expanding product capabilities laying the path for that journey I'll now turn it over to Sean to share more details.

Sean: Thanks Ryan.

Sean: Our customers had been ahead of investors in markets customers choose us not because we're delivering proof of concepts, but because we deliver proof years are foundational investments in our infrastructure and in particular, an ontology I'll note a widely ignored and discounted innovation have put us in the pole position.

Sean Thank: Thanks Ryan.

Sean Thank: Our customers had been ahead of investors in markets customers choose us not because we're delivering proof of concepts, but because we deliver proof years are foundational investments in our infrastructure and in particular, an ontology I'll note a widely ignored and discounted innovation have put us in the pole position.

Speaker Change: <unk> has made prototyping incredibly easy and charismatic but with the same utility of our Powerpoint slides the journey to production as the market is now discovering is fraught and requires a foundational set of technologies that we have uniquely invested in creating the product pipeline that's needed to harvest economic value from AI.

Speaker Change: <unk> has made prototyping incredibly easy and charismatic but with the same utility of a powerpoint slide the journey to production as the market is now discovering is fraught and requires a foundational set of technologies that we have uniquely invested in creating the product pipeline that's needed to harvest economic value from AI.

Speaker Change: And that's a journey that we were pathfinders on with the U S Department of defense, starting in 2018, and one we continue to be the leaders in across both segments government and commercial today.

The bottleneck in the transition from prototyping to production is a very hard set of technical problems. We didn't build those technologies eating berries in San Francisco, we had to be on the factory floor in the box or eating pain with our customers.

Speaker Change: The bottleneck in the transition from prototype to production is a very hard set of technical problems. We didn't build those technologies eating berries in San Francisco, we had to be on the factory floor in the box or eating pain with our customers.

Speaker Change: Seeing the secret truth of what does and doesn't work in metabolizing. It into product. This has always been the secret apology or it is the anti playbook.

Speaker Change: Today's AIP developers will be the enterprise's next generation of builders Apollo delivers eye watering agility and responsiveness AIP deprecates backend development. The same way that Hyperscale is deprecated infrastructure, providing the mechanism to bring AI into production in the enterprise quickly.

Speaker Change: Today's AIP developers will be the enterprise's next generation of builders Apollo delivers eye watering agility and responsiveness AIP deprecates backend development. The same way that hyperscale or has deprecated infrastructure, providing the mechanism to bring AI into production in the enterprise quickly.

Speaker Change: Our builder investments are feeding our product pipeline with their customers developers in the wild compute modules have enabled the integration of our customers' own containerized applications into operational workflows. Today. This technology is powering exquisite missile warning systems in the U S government and sophisticated production plant optimization across commercial and <unk>.

Speaker Change: <unk> SDK has enabled customers to build their own pro code applications backed by ontology. The critical ingredient for harnessing <unk> in the enterprise and we pulled all of these investments together and code Workspaces, where we have enabled an end to end development environment that lets customers treat their business as code. These.

Speaker Change: Apologies SDK has enabled customers to build their own pro code applications backed by ontology. The critical ingredient for harnessing L. O EMS in the enterprise and we pulled all of these investments together and code workspace, where we have enabled an end to end development environment that lets customers treat their business as code. These investments have made us.

Speaker Change: These investments have made us the emerging choice not only for application developers, but also data scientists are platforms have become the fastest place for our customers to develop refine and manage not only their models, but integrated offerings that deliver business impact. Once again history is repeating itself with data scientists as they abandon the thin playbook products over.

Speaker Change: The emerging choice not only for application developers, but also data scientists are platforms have become the fastest place for our customers to develop refine and manage not only their models, but integrated offerings that deliver business impact. Once again history is repeating itself with data scientists as they abandon the thin playbook products of the past.

Past.

Speaker Change: We recently hosted two champions road events, one in Denver, and one in Munich that pull together, the most experience and prolific customer developers to share the latest on our roadmap, but more importantly to surface new opportunities to go deeper at build at Pandora Dot com developers in the U S U K, Canada, and India amongst a growing list of countries can now access a free develop.

Speaker Change: We recently hosted two champions road events, one in Denver, and one in Munich that pull together, the most experience and prolific customer developers to share the latest on our roadmap, but more importantly to service new opportunities to go deeper at build at Pandora Dot com developers in the U S U K, Canada, and India amongst a growing list of countries can now access a free <unk>.

Speaker Change: <unk> and our library of quick starts tutorials and reference implementations for themselves.

Speaker Change: Developer tier and a library of quick starts tutorials and reference implementations for themselves.

Speaker Change: This developer movement is matched on the government side, whether it's with developers and armed forces, Ukraine or the U S Army.

Speaker Change: The past.

In government <unk> recent contract award on Maven will enable us to scale those exquisite capabilities to the Dod enterprise and to bring integrated <unk> capabilities across space cyber electronic warfare and logistics.

Speaker Change: We recently hosted two champions road events, one in Denver, and one in Munich that pull together, the most experienced and prolific customer developers to share the latest on our roadmap, but more importantly to surface new opportunities to go deeper at build at <unk> Dot com developers in the U S U K, Canada, and India amongst a growing list of countries can now access a free develop.

Speaker Change: In government <unk> recent contract award on Maven will enable us to scale those exquisite capabilities to the Dod enterprise and to bring integrated <unk> capabilities across space, cyber and electronic warfare and logistics.

Speaker Change: The C D O open dagger contract also enabled defense tech companies traditional contractors and government developers to leverage Apollo and the ontology software development kit or SDK to develop applications and integrations on top of Maven all powered by Powershares mission manager.

Speaker Change: <unk> and our library of quick starts tutorials and reference implementations for themselves.

Speaker Change: This developer movement is matched on the government side, whether it's with developers and armed forces, Ukraine or the U S Army.

Speaker Change: And finally.

Speaker Change: Fresh out of the AAP product pipeline, we are launching a new offering warp speed.

Speaker Change: And government <unk> recent contract award on Maven will enable us to scale those exquisite capabilities to the Dod enterprise and to bring integrated <unk> capabilities across space cyber electronic warfare and logistics.

Speaker Change: And finally.

Fresh out of the AAP product pipeline, we are launching a new offering warp speed to power American Reindustrialization.

Speaker Change: Power American Reindustrialization.

Speaker Change: The software Playbooks have also failed in manufacturing and all the founders driving Reindustrialization no. It. This is why Spacex built their own ERP, we created warp speed from our years of experience on the factory floors, helping customers build planes trains automobiles and even ships today, we power production of jet engine satellites and weapon system.

Speaker Change: The C D O open dagger contract also enabled defense tech companies traditional contractors and government developers to leverage Apollo and the ontology software development kit OSD K to develop applications and integrations on top of Maidment all powered by Powershares mission manager.

Speaker Change: In the industrial base.

Speaker Change: Warp speed built on AIP on our industrial AI and with ontology is the modern American manufacturing operating system that re imagines how to bend Adams better with beds at.

Speaker Change: In the industrial base.

Speaker Change: And finally.

Speaker Change: <unk> built on AIP on our industrial AI and with ontology is the modern American manufacturing operating system that re imagines how to bend Adams better with bits.

Speaker Change: Fresh out of the AAP product pipeline, we are launching a new offering warped speed to power American Reindustrialization.

At the Dawn of World War, two we didn't have a defense industrial base, we had an American industrial base Chrysler made missiles and general Mills wasn't just a cereal company. This is also what our future must look like it is clear that the nation must reindustrialize and mobilize at warp speed to win.

Speaker Change: The software Playbooks have also failed in manufacturing and all the founders driving Reindustrialization no. It. This is why Spacex built their own ERP, we created warp speed from our years of experience on the factory floor is helping customers build planes trains automobiles and even ships today, we power production of jet engine satellites and weapon systems.

Speaker Change: At the Dawn of World War, two we didn't have a defense industrial base, we had an American industrial base Chrysler made missiles and general Mills wasn't just a cereal company. This is also what our future must look like it is clear that the nation must reindustrialize and mobilize at warp speed to win.

Speaker Change: This platform will transform production in the value chains that power, our kill chains I'll turn it over to Dave to talk us through the financials.

Speaker Change: This platform will transform production in the value chain that power, our kill chains I'll turn it over to Dave to talk us through the financials.

Speaker Change: In the industrial base.

Speaker Change: Warp speed built on AIP on our industrial AI and with ontology is the modern American manufacturing operating system that re imagines how to bend Adams better with pits at.

Dave Glaser: Thanks, Sean.

Dave Glaser: Two was an exceptional quarter revenue growth accelerated to 27% year over year exceeding the high end of our prior guidance by 5% driven by the strength in our U S commercial and government businesses.

Sean Thank: Thanks, Sean.

Speaker Change: Two was an exceptional quarter revenue growth accelerated to 27% year over year exceeding the high end of our prior guidance by 5% driven by the strength in our U S commercial and government businesses.

Dave Glaser: On the back of this strength, we are increasing our full year revenue guidance mid point to 274, 6 billion, representing a 23% year over year growth rate.

Dave Glaser: On the back of this strength, we are increasing our full year revenue guidance mid point to 2.746 billion, representing a 23% year over year growth rate.

Dave Glaser: We delivered these tremendous topline results, while expanding adjusted operating margin to 37%, having a strong unit economics of our business we.

Speaker Change: This platform will transform production and the value chains that power, our kill change I'll turn it over to Dave to talk us through the financials.

Speaker Change: We delivered these tremendous topline results, while expanding adjusted operating margin to 37%, having a strong unit economics of our business well.

Dave Glaser: We also delivered our seventh consecutive quarter of GAAP profitability generating a record $134 million of GAAP net income and our sixth consecutive quarter of GAAP operating profit generating a record $105 million of GAAP operating income.

Dave: Thanks, Sean.

Dave: Two was an exceptional quarter revenue growth accelerated to 27% year over year exceeding the high end of our prior guidance by 5% driven by the strength in our U S commercial and government businesses.

Speaker Change: We also delivered our seventh consecutive quarter of GAAP profitability generating a record $134 million of GAAP net income and our sixth consecutive quarter of GAAP operating profit generating a record $105 million of GAAP operating income.

Dave Glaser: Our revenue and profitability drove a seven point sequential increase to our rule of 40 score from 57 in the first quarter to 64 in the second quarter.

Dave: On the back of this strength, we are increasing our full year revenue guidance mid point to 274, 6 billion, representing a 23% year over year growth rate.

Speaker Change: Our revenue and profitability drove a seven point sequential increase to our rule of 40 score from 57 in the first quarter to 64 in the second quarter.

Turning to our global top line results.

Dave: We delivered these tremendous topline results, while expanding adjusted operating margin to 37%, having a strong unit economics of our business.

Dave Glaser: Revenue continues to accelerate we generated $678 million in revenue up 27% year over year, and 7% sequentially. Excluding the impact of revenue from strategic commercial contracts second quarter revenue grew 30% year over year and 10% sequentially.

Speaker Change: Turning to our global top line results.

Speaker Change: Revenue continues to accelerate regenerated at $678 million in revenue up 27% year over year, and 7% sequentially. Excluding the impact of revenue from strategic commercial contracts second quarter revenue grew 30% year over year and 10% sequentially.

Dave: We also delivered our seventh consecutive quarter of GAAP profitability generating a record $134 million of GAAP net income and our sixth consecutive quarter of GAAP operating profit generating a record $105 million of GAAP operating income.

Dave Glaser: Customer count grew 41% year over year, and 7% sequentially to 593 customers.

Speaker Change: Customer count grew 41% year over year, and 7% sequentially to 593 customers.

Dave: Our revenue and profitability drove a seven point sequential increase to our rule of 40 score from 57 in the first quarter to 64 in the second quarter.

Dave Glaser: Revenue from our largest customers continues to expand second quarter trailing 12 month revenue from our top 20 customers increased 9% year over year to $57 million per customer.

Speaker Change: Revenue from our largest customers continues to expand second quarter trailing 12 month revenue from our top 20 customers increased 9% year over year to $57 million per customer.

Dave: Turning to our global top line results.

Revenue continues to accelerate we generated $678 million in revenue up 27% year over year, and 7% sequentially. Excluding the impact of revenue from strategic commercial contracts second quarter revenue grew 30% year over year and 10% sequentially.

Dave Glaser: Now moving to our commercial segment second quarter commercial revenue grew 33% year over year, and 3% sequentially to $307 million.

Speaker Change: Now moving to our commercial segment second quarter commercial revenue grew 33% year over year, and 3% sequentially to $307 million.

Dave Glaser: Excluding the impact from strategic commercial contracts commercial revenue grew 40% year over year and 8% sequentially.

Speaker Change: Excluding the impact from strategic commercial contracts commercial revenue grew 40% year over year and 8% sequentially.

Dave: Customer count grew 41% year over year, and 7% sequentially to 593 customers.

Dave Glaser: Second quarter commercial <unk> booked was $377 million, representing 31% growth year over year.

Speaker Change: Second quarter commercial <unk> book was $377 million, representing 31% growth year over year.

Dave: Revenue from our largest customers continues to expand second quarter trailing 12 months revenue from our top 20 customers increased 9% year over year to $57 million per customer.

Dave Glaser: Our U S. Commercial business continues to see unprecedented demand with AIP driving both new customer conversions and existing customer expansions in the U S.

Our U S. Commercial business continues to see unprecedented demand with AIP driving both new customer conversions and existing customer expansions in the U S.

Dave Glaser: Second quarter U S. Commercial revenue grew 55% year over year, and 6% sequentially to 159 million.

Dave: Now moving to our commercial segment second quarter commercial revenue grew 33% year over year, and 3% sequentially to $307 million.

Speaker Change: Second quarter U S. Commercial revenue grew 55% year over year, and 6% sequentially to $159 million <unk>.

Dave Glaser: Revenue from strategic commercial contracts U S. Commercial revenue grew 70% year over year and 8% sequentially.

Dave: Excluding the impact from strategic commercial contracts commercial revenue grew 40% year over year and 8% sequentially.

Speaker Change: Excluding revenue from strategic commercial contracts U S. Commercial revenue grew 70% year over year and 8% sequentially.

Dave Glaser: In the second quarter, we booked $262 million of U S commercial T CV, representing a 152% growth year over year.

Dave: Second quarter commercial <unk> book was $377 million, representing 31% growth year over year.

Speaker Change: In the second quarter, we booked $262 million of U S commercial <unk>, representing a 152% growth year over year.

Dave Glaser: Total remaining deal value in our U S commercial business grew 103% year over year and 11% sequentially.

Dave: Our U S. Commercial business continues to see unprecedented demand with AIP driving both new customer conversions and existing customer expansions in the U S.

Speaker Change: Total remaining deal value in our U S commercial business grew 103% year over year and 11% sequentially.

Dave Glaser: Our U S commercial customer count grew to 295 customers, reflecting 83% growth year over year and 13% growth sequentially.

Dave: Second quarter U S commercial revenue grew 55% year over year, and 6% sequentially to $159 million.

Speaker Change: Our U S commercial customer count grew to 295 customers, reflecting 83% growth year over year and 13% growth sequentially.

Dave Glaser: We generated $148 million in international commercial revenue in the second quarter, representing 15% growth year over year, and 1% sequential decline as a result of continued headwinds in Europe.

Dave: Revenue from strategic commercial contracts U S. Commercial revenue grew 70% year over year and 8% sequentially.

Speaker Change: We generated $148 million in international commercial revenue in the second quarter, representing 15% growth year over year, and 1% sequential decline as a result of continued headwinds in Europe.

Dave: In the second quarter, we booked $262 million of U S commercial <unk>, representing a 152% growth year over year.

Dave Glaser: We continue to capitalize on targeted growth opportunities in Asia, the middle East and beyond.

Speaker Change: We continue to capitalize on targeted growth opportunities in Asia, the middle East and beyond.

Dave Glaser: Revenue from strategic commercial contracts declined to $9 million for the quarter, We anticipate third quarter 2020 for revenue from these customers to continue to decline to between $6 million to $8 million compared to $50 million in the third quarter of 2023.

Dave: Total remaining deal value in our U S commercial business grew 103% year over year and 11% sequentially.

Speaker Change: Revenue from strategic commercial contracts declined to $9 million for the quarter, We anticipate third quarter 2020 for revenue from these customers to continue to decline to between $6 million to $8 million compared to $50 million in the third quarter of 2023.

Dave: Our U S commercial customer count grew to 295 customers, reflecting 83% growth year over year and 13% growth sequentially.

Dave Glaser: We continue to anticipate 2020 for revenue from these customers to be less than 2% of full year revenue.

Speaker Change: We continue to anticipate 2020 for revenue from these customers to be less than 2% of full year revenue.

Dave: We generated $148 million in international commercial revenue in the second quarter, representing 15% growth year over year, and 1% sequential decline as a result of continued headwinds in Europe.

Dave Glaser: Shifting to our government segment second quarter government revenue grew 23% year over year, and 11% sequentially to $371 million.

Speaker Change: Shifting to our government segment second quarter government revenue grew 23% year over year, and 11% sequentially to $371 million.

Dave: We continue to capitalize on targeted growth opportunities in Asia, the middle East and beyond.

Dave Glaser: Second quarter U S government revenue grew 24% year over year, and 8% sequentially to $278 million.

Speaker Change: Second quarter U S government revenue grew 24% year over year, and 8% sequentially to $278 million.

Dave: Revenue from strategic commercial contracts declined to $9 million for the quarter.

Dave Glaser: As Ryan mentioned, we were selected for several notable awards in Q2, which led to the strongest U S government bookings quarter since 2022, reflecting the growing demand for our government software offerings.

Dave: We anticipate third quarter 2020 for revenue from these customers to continue to decline to between $6 million to $8 million compared to $50 million in the third quarter of 2023, we.

Speaker Change: As Ryan mentioned, we were selected for several notable awards in Q2, which led to the strongest U S government bookings quarter since 2022, reflecting the growing demand for our government software offerings.

Dave: We continue to anticipate 2020 for revenue from these customers to be less than 2% of full year revenue.

Dave Glaser: Second quarter International government revenue grew 21% year over year, and 18% sequentially to $93 million, primarily driven by additional funding from our partner nation related to our ongoing efforts in eastern Europe.

Speaker Change: Second quarter International government revenue grew 21% year over year, and 18% sequentially to $93 million, primarily driven by additional funding from our partner nation related to our ongoing efforts in eastern Europe.

Dave: Shifting to our government segment second quarter government revenue grew 23% year over year, and 11% sequentially to $371 million.

Speaker Change: Second quarter, <unk> booked was $946 million up 47% year over year.

Dave: Second quarter U S government revenue grew 24% year over year, and 8% sequentially to $278 million.

Speaker Change: Second quarter, <unk> booked was 946 million% to 47% year over year.

Speaker Change: Net dollar retention was 114% an increase of 300 basis points from last quarter. The increase was driven both by expansions at existing customers and new customers acquired in Q2 of last year as net dollar retention does not include revenue from new customers that were acquired in the past 12 months. It is not yet fully captured the acceleration and velocity in our U S.

Dave: As Ryan mentioned, we were selected for several notable awards in Q2, which led to the strongest U S government bookings quarter since 2022, reflecting the growing demand for our government software offerings.

Dave: Second quarter International government revenue grew 21% year over year, and 18% sequentially to $93 million, primarily driven by additional funding from our partner nation related to our ongoing efforts in eastern Europe.

Speaker Change: Business over the past year.

Speaker Change: We ended the second quarter with $4 3 billion in total remaining deal value an increase of 26% year over year, and 5% sequentially and $1 4 billion in remaining performance obligations and increase of 41% year over year and 5% sequentially.

Speaker Change: Commercial business over the past year.

Speaker Change: Second quarter, <unk> booked was $946 million or 47% year over year.

Speaker Change: As a reminder, our apio is primarily comprised of our commercial business as it does not take into account contracts with an initial term of less than 12 months and contractual obligations that fall beyond termination for convenience causes both of which are common in most of our government business.

Speaker Change: As a reminder, our apio is primarily comprised of our commercial business as it does not take into account contracts with initial term of less than 12 months and contractual obligations that fall beyond termination for convenience causes both of which are common in most of our government business.

Speaker Change: Turning to margin and expense adjusted gross margin, which excludes stock based compensation expense was 83% for the quarter.

Speaker Change: Commercial business over the past year.

Speaker Change: Turning to margin and expense adjusted gross margin, which excludes stock based compensation expense was 83% for the quarter.

Speaker Change: Adjusted income from operations, which excludes stock based compensation expense and related employer payroll taxes was $254 million, representing adjusted operating margin of 37% and marking the seventh consecutive quarter of expanding adjusted operating margins.

<unk> income from operations, which excludes stock based compensation expense and related employer payroll taxes was $254 million, representing adjusted operating margin of 37% and marking the seventh consecutive quarter of expanding adjusted operating margins.

Speaker Change: Q2, adjusted expense was $425 million up 4% sequentially and 7% year over year.

Speaker Change: Turning to margin and expense adjusted gross margin, which excludes stock based compensation expense was 83% for the quarter.

Speaker Change: We continue to expect expenses to ramp through the back half of the year as we invest in the product pipeline and hard technical problems and Debottlenecking. The journey from prototype to production that Sean just outlined we remain focused however on calibrating expense growth below revenue growth for the full year in order to continue delivering on our goals of sustained GAAP profitability and operating.

Speaker Change: We remain focused however on calibrating expense growth below revenue growth for the full year in order to continue delivering on our goals of sustained GAAP profitability and operating income.

Speaker Change: Income.

In the second quarter, we generated GAAP operating income of $105 million, representing a 16% margin our sixth consecutive quarter of GAAP operating income and fifth consecutive quarter of expanding GAAP operating margins, we generated second quarter GAAP net income of $134 million, representing a 20% margin our seventh consecutive quarter of GAAP profitability.

Speaker Change: Q2, adjusted expense was $425 million up 4% sequentially and 7% year over year.

Speaker Change: We generated second quarter GAAP net income of $134 million, representing a 20% margin our seventh consecutive quarter of GAAP profitability.

Speaker Change: Second quarter adjusted earnings per share was <unk> <unk> and GAAP earnings per share was <unk> <unk>.

Speaker Change: Yeah.

Speaker Change: Second quarter adjusted earnings per share was <unk> <unk> and GAAP earnings per share was <unk> <unk>.

Additionally, our combined revenue growth and adjusted operating margin accelerated to 64% in the first quarter, a seven point increase to our rule of 40 score from the prior quarter.

Speaker Change: Additionally, our combined revenue growth and adjusted operating margin accelerated to 64% in the first quarter, a seven point increase to our rule of 40 score from the prior quarter.

Income.

Speaker Change: In the second quarter, we generated GAAP operating income of $105 million, representing a 16% margin our sixth consecutive quarter of GAAP operating income and fifth consecutive quarter of expanding GAAP operating margins, we generated second quarter GAAP net income of $134 million, representing a 20% margin our seventh consecutive quarter of GAAP profitability.

Speaker Change: Turning to our cash flow in the second quarter, we generated $144 million in cash from operations and $149 million and adjusted free cash flow representing margin of 21% and 22% respectively.

Speaker Change: Turning to our cash flow in the second quarter, we generated $144 million in cash from operations and $149 million and adjusted free cash flow, representing a margin of 21% and 22% respectively.

Speaker Change: That cash flow to ramp through the back half of the year in line with the expected timing of government and commercial year end collections.

Speaker Change: We expect cash flow to ramp through the back half of the year in line with the expected timing of government and commercial year end collections.

Speaker Change: Second quarter adjusted earnings per share was <unk> <unk> and GAAP earnings per share was <unk>.

Speaker Change: Through the end of the second quarter, we repurchased approximately one 2 million shares as part of our share repurchase program.

Through the end of the second quarter, we repurchased approximately one 2 million shares as part of our share repurchase program.

Speaker Change: As of the end of the quarter, we have 973 million remaining of the original authorization.

Speaker Change: We ended the quarter with 4 billion in cash cash equivalents and short term U S Treasury Securities.

Speaker Change: We ended the quarter with $4 billion in cash cash equivalents and short term U S Treasury Securities now.

Speaker Change: Now turning to our outlook for Q3 2024, we expect revenue of between 697 and $701 million and.

Speaker Change: Now turning to our outlook for Q3 2024, we expect revenue of between 697 and $701 million.

Speaker Change: And adjusted income from operations of between 233 and $237 million.

Speaker Change: The cash flow to ramp through the back half of the year in line with expected timing of government and commercial year end collections.

Speaker Change: And adjusted income from operations of between 233 and $237 million.

Speaker Change: For full year 2024, we are raising our revenue guidance to between two seven and four two and 275 zero billion.

Speaker Change: Through the end of the second quarter, we repurchased approximately one 2 million shares as part of our share repurchase program.

Speaker Change: For full year 2024, we are raising our revenue guidance to between $2 seven <unk> and $2 75 zero billion.

Speaker Change: As of the end of the quarter, we have $973 million remaining of the original authorization.

Speaker Change: We are raising our U S commercial revenue guidance to in excess of $672 million, representing a growth rate of at least 47%.

Speaker Change: We ended the quarter with $4 billion in cash cash equivalents and short term U S Treasury Securities.

Speaker Change: We are raising our adjusted income from operations guidance to between 966 and $974 million.

Speaker Change: Now turning to our outlook for Q3 2024, we expect revenue of between 697 and $701 million.

Speaker Change: We are raising our adjusted income from operations guidance to between 966 and $974 million.

We continue to expect adjusted free cash flow of between $800 million and $1 billion and we continue to expect GAAP operating income and net income in each quarter of this year.

Speaker Change: We continue to expect adjusted free cash flow of between $800 million and $1 billion and we continue to expect GAAP operating income and net income in each quarter of this year.

Speaker Change: And adjusted income from operations of between 233 and $237 million.

Speaker Change: With that I'll turn it over to Alex for a few remarks, and then Arnaud will kick off the Q&A.

Speaker Change: For full year 2024, we are raising our revenue guidance to between $2 $7, <unk> and $2 75 zero billion.

Speaker Change: With that I'll turn it over to Alex for a few remarks, and then Arnaud will kick off the Q&A.

Speaker Change: Yeah.

Speaker Change: Thank you for participating in our earnings.

Speaker Change: Yeah.

We are raising our U S commercial revenue guidance to in excess of $672 million, representing a growth rate of at least 47%.

Speaker Change: Thank you for participating in our earnings.

Speaker Change: We founded this company to be a ray of light to America, and our western allies and in doing so we built software for the institutions as they ought to exist not as they do exist and of course, the whole playbook around building software building institutional.

Speaker Change: <unk>.

Speaker Change: We are raising our adjusted income from operations guidance to between 966 and $974 million.

Speaker Change: We continue to expect adjusted free cash flow of between $800 million and $1 billion and we continue to expect GAAP operating income and net income in each quarter of this year.

Speaker Change: Software building.

Speaker Change: With that I'll turn it over to Alex for a few remarks, and then onno will kick off the Q&A.

Speaker Change: Software that would be transformative and especially in the current context around AI and large language models flew in the face of everything that people have been taught to know about enterprises, what makes them work how they can transform themselves what software products would be valuable what software products people.

Speaker Change: <unk>.

Speaker Change: Our software that would be transformative and especially in the current context around AI and large language models flew in the face of everything that people have been taught to know about enterprises, what makes them work how they can transform themselves what software products would be valuable.

Speaker Change: Yeah.

Alex: Thank you for participating in our earnings.

Speaker Change: Would adopt how would they adopt them how would you get value from analysts users in the software context, how would you transform manufacturing how would you use in the current context large language models not as an act of self flagellation or something that just makes a small group of people richer, but in a way that <unk>.

What software products people would adopt how would they adopt them how would you get value from analysts users in the software contacts how would you transform manufacturing how would you use in the current context large language models not as an act of self flagellation or something that just makes a small group of people.

Speaker Change: Software building.

Speaker Change: You can extract value in extra essential life-and-death Congress context, like the battlefield or in institutional or commercial context like the transformation that is happening all across America and in some other countries and in the face of this we made bold claims that looked ridiculous to many people one bold claim was.

Speaker Change: Richard but in a way that you can extract value in existential life-and-death, comverse context, like the battlefield or in institutional or commercial context like the transformation that is happening all across America and in some other countries and in the face of this we made bold claims that look ridiculous to many people.

Speaker Change: What software products people would adopt how would they adopt them how would you get value from analysts users in the software contacts how would you transform manufacturing how would you use in the current context large language models not as an act of self flagellation or something that just makes a small group of people.

Speaker Change: These large language models will not work without foundational software they will not work without a means to process them. They will stay something like self pleasuring or powerpoints, which is you know.

Speaker Change: <unk> one bold claim was these large language models will not work without foundational software they will not work without a means to process them. They will stay something like self pleasuring or powerpoints, which is the.

Speaker Change: The purveyor.

Speaker Change: Richard but in a way that you can extract value in extra essential life-and-death Congress context, like the battlefield or in institutional or commercial context like the transformation that is happening.

Speaker Change: Which are which are sold to institutions as a way of.

Speaker Change: The purveyor.

Which are which are sold to institutions as a way of.

Speaker Change: Deceiving institutions from transferring their high value revenue.

Speaker Change: Two other enterprises without actually transforming themselves, which were addictive and thin and led to dysfunction in enterprise and enterprise is much like theyre allegory in the political world of woke Ism became slower dumber.

Speaker Change: Two other enterprises without actually transforming themselves, which were addictive and thin and led to dysfunction in enterprise and enterprise is much like their allegory in the political world of woke Ism became slower dumber.

Speaker Change: All across America and in some other countries and in the face of this we made bold claims that looked ridiculous to many people. One bold claim was these large languished models will not work without foundational software. They will not work without a means to process them. They will stay something like self pleasuring or powerpoints, which is.

Speaker Change: It is not able to actually produce results.

Speaker Change: And we built the infrastructure you need to move from self fly.

Speaker Change: And we built the infrastructure you need to move from self flash.

Speaker Change: The purveyor.

Speaker Change: <unk> powerpoints.

Speaker Change: Which are sold to institutions as a way of.

Speaker Change: And prototypes flawlessly into production production, meaning your enterprise gets faster it runs better the margins are better the people inside the enterprise become more valuable your tribal knowledge in your enterprise knowledge, which differentiates you from all other enterprises becomes truly valuable it becomes a.

Speaker Change: <unk> powerpoints.

Speaker Change: Deceiving institutions from transferring their high value revenue too.

Speaker Change: A weapon in your hand, whether that weapon is in the commercial context to make what you know how to do better than anyone else work better than anyone else by making engineers better by making the workers more able to do things engineers would be able to do by by treating your company as a portfolio as opposed to dots on a powerpoint.

Speaker Change: They are not able to actually produce results.

Speaker Change: And we built the infrastructure you need to move from self <unk>.

Speaker Change: Flagellation powerpoints.

Speaker Change: And prototypes flawlessly into production production, meaning your enterprise gets faster it runs better the margins are better the people inside the enterprise to become more valuable your tribal knowledge in your enterprise knowledge, which differentiates you from all other enterprises becomes truly valuable it becomes out.

Speaker Change: We believed in the numbers now show that we were right that by doing this we could give america and its allies a structural advantage in the commercial area, which we have seen in our numbers prove and arguably even more importantly on the battlefield, which we can't talk as much about but is the absolute most important area, where America and its allies.

Speaker Change: Weapon in your hand, whether that weapon is in the commercial context to make what you know how to do better than anyone else work better than anyone else by making engineers better by making the workers more able to do things engineers would be able to do by by treating your company as a portfolio as opposed to dots on a powerpoint.

Speaker Change: Have to have dominance and leadership that we had a structural advantage and what is gratifying about or this quarter.

Have to have dominance and leadership that we had a structural advantage and what is gratifying about or this quarter.

Speaker Change: And in general about about what we've done is not the banality that we were right in the playbook purveyors are obviously somewhat laughable. It is that you can build a great business be aligned with America in the west that that alignment will make us stronger and better that you priced software products will actually be.

Speaker Change: And in general about about what we've done is not the banality that we were right in the playbook purveyors are obviously somewhat laughable. It is that you can build a great business be aligned with America in the west that that alignment will make you stronger and better that you priced software products will actually be.

Speaker Change: Products and now powerpoints and that you can actually build something with the best people in the world. The best investors in the world that will lead to structural advantages.

Speaker Change: Have to have dominance and leadership that we had a structural advantage and what is gratifying about or this quarter.

Speaker Change: Of course, all along the way we had many many doubters we had people that thought we would never be profitable. We have now we are over seven quarters and profitability without people that we would never be able to grow the revenue, we'd never be able to reaccelerate. Our U S. The U S government because of its often.

Speaker Change: And in general about about what we've done is not the banality that we were right in the playbook purveyors are obviously somewhat laughable. It is that you can build a great business be aligned with America in the west that that alignment will make you stronger and better that you priced software products will actually be.

Speaker Change: Often opaque, but we asserted that product superiority would overcome many of the vicissitudes in difficulties of working with yogurt, which government witness reacceleration, we asserted that our that our products were the precursor to making L. EMS valuable that they would that we would product ties how you create this value.

Speaker Change: Often opaque, but we asserted that product superiority would overcome many of the vicissitudes in difficulties of working with yogurt, which government witness reacceleration, we asserted that a that our products were the precursor to making L. EMS valuable that they would that we would product ties how you create this value.

Speaker Change: Products and now powerpoints and that you can actually build something with the best people in the world. The best investors in the world that will lead to structural advantages.

Speaker Change: Much the way Hyperscale ours, as Sean had mentioned that prioritize other technical issues and that that we would give those that product position to our customers witness our 70% after smacks corridor at the third quarter in a row, where we're growing at what amounts to a ridiculous rate and theirs.

Speaker Change: <unk> the way Hyperscale ours, as Sean had mentioned that prioritize other technical issues and that we would give those that practice Asian to our customers' witness our 70% after snack quarter over the third quarter in a row, where we're growing at what amounts to a ridiculous rate and theirs.

Speaker Change: Often opaque, but we asserted that product superiority would overcome many of the vicissitudes in difficulties of working with yogurt, which government witness reacceleration, we asserted that our that our products were the precursor to making L. Ams valuable that they would that we would product ties how you create this value.

Speaker Change: Witness the Reacceleration of our global business ex back to 30% witness our backlog look at any part of our business than it is like well how are we doing this as a really long interesting question that people will dedicate their academic careers on but but we do not have time to address and it may not be learned for everyone, but we do do it.

Speaker Change: And the single most important part however of this is that we are going to play if I.

And the single most important part however of this is that we are going to play if I.

Speaker Change: A determinant enroll and making America and its western allies. The dominant force again on this world in this world and because of that the best times for this company are not in the past I would say the single most interesting thing about this quarter, if you had to reduce it to one.

Speaker Change: A determinant enroll in making America and its western allies. The dominant force again on this world in this world and because of that the best times for this company are not in the past I would say the single most interesting thing about this quarter. If you had to reduce it to one simple fact after.

Speaker Change: Witness the Reacceleration of our global business expect to 30% witness our backlog look at any part of our business.

Speaker Change: Then it is like well how are we doing this as a really long interesting question that people will dedicate their academic careers on but but we do not have time to address and it may not be learned for everyone, but we do do it and the single most important part. However of this is that we are going to play if I.

Speaker Change: Simple fact, after 20 years after after changing the way people do Intel after changing the way the battlefield works after changing the way people procure software after exporting our art's product platforms to our to our allies. After a punishing our adversaries after building a commercial business after a GPO and after seeing it all reaccelerate.

Speaker Change: 20 years after after changing the way people do Intel after changing the way the battlefield works after changing the way people procure software after exporting our arts.

Speaker Change: Platforms to our to our allies after a punishing our adversaries after building a commercial business after GP owing after seeing it all reaccelerate the best times for US Arctic are yet to come and we are planning to just take our energy and run this business as a business at which we are which is our owners. We are owners with a very long term focus.

Speaker Change: The best times for US are that are yet to come and we are planning to just take our energy and run this business as a business at which we are which is our owners. We are owners with a very long term focus for the best interest of our country, our allies and our panel interiors and our investors and so I'm very thrilled to have you participate in.

Speaker Change: For the best interest of our country, our allies, and our <unk> and our investors and so I'm very thrilled to have you participate in this.

Speaker Change: What for Us means historic.

Speaker Change: Earnings and last not least the world is on the precipice of what could be a very severe Ah Ah set of violent interactions in the middle East and it goes without saying that pound at parents here, we know where we stand and we are very much supporting America and its allies in the middle East, including Israel.

Speaker Change: What for Us means historic.

Speaker Change: Earnings and last not least the world is on the precipice of what could be a very severe Ah Ah set of violent.

Speaker Change: The best times for US are that are yet to come and we are planning to just take our energy and run this business as a business of which we are which is our owners. We are owners with a very long term focus for the best interest of our country, our allies and our <unk> and our investors and so I'm very thrilled to have you participate in.

Speaker Change: Interactions in the Middle East and it goes without saying that talent at parents here, we know where we stand and we are very much supporting America and its allies in the middle East, including Israel.

Speaker Change: Thank you.

Speaker Change: Thanks, Alex I will now turn to a few questions from our shareholders before opening up the call axle asks what is <unk> doing to be different from its competitors and what is the company's plan to stay competitive.

Speaker Change: <unk>.

Speaker Change: Thanks, Alex we'll now turn to a few questions from our shareholders before opening up the call.

Speaker Change: <unk> asks what is <unk> doing to be different from its competitors what is the company's plan to stay competitive.

Speaker Change: What for Us means historic.

Thanks Axel.

Speaker Change: All of the value and where the market is completely bottleneck is on that transition from prototyping to production and that happens to be the place that we are most differentiated that differentiation is built on more than a decade of deep technical investments technologies.

Speaker Change: Earnings and last not least the world is on the precipice of what could be a very severe Ah Ah set of violent interactions in the middle East and it goes without saying that talent at parents here, we know where we stand and we are very much supporting America and its allies in the middle East, including Israel.

Thanks, Axel well all of the value and where the market is completely bottleneck is on that transition from prototyping to production and that happens to be the place that we are most differentiated that differentiation is built on more than a decade of deep technical investments.

Speaker Change: Technologies like the ontology OSD K the primitives that we have that permeate the platform security functions on objects actions right back machinery automation and a deep product pipeline that really is focused on addressing this very problem on this transition from prototyping to production and I think when you. When you think about the chat GPT moment itself.

Speaker Change: Technologies like the ontology.

Speaker Change: Thank you.

D. K.: As D. K the primitives that we have that permeate the platform security functions on objects actions right back machinery automation and a deep product pipeline that really is focused on addressing this very problem on this transition from prototyping to production and I think when you. When you think about the chat GPT moment, so very clearly invalidated the thin product.

Speaker Change: Thanks Axel.

Speaker Change: Very clearly invalidated the thin product playbooks at the past I think this bottleneck is doing that same thing to AI software. It is so easy to create an AI prototype.

D. K.: Playbooks at the past I think this bottleneck is doing that same thing to AI software. It is so easy to create an AI prototype.

Speaker Change: That's the equivalent of effort of making a powerpoint slide, but it's actually very very hard to get that in production, probably 10 to 100 times harder than traditional software transitioning to production and therein lies our entire opportunity in the market. That's what you see with the expansions that have happened with Panasonic energy and Tampa General and that's what you Frank.

Speaker Change: Technologies like the ontology.

Speaker Change: Dk the primitives that we have that permeate the platform security functions on objects actions right back machinery automation and a deep product pipeline that really is focused on addressing this very problem on this transition from prototyping to production and I think when you. When you think about the chat GPT moment, so very clearly invalidated the thin product.

Speaker Change: We see in the numbers of this quarter.

Frank: Thanks, Sean our next question is from Jacob who asks we understand why foundry has become the operating system for the modern enterprise how does this change with L O N.

Speaker Change: We see in the numbers of this quarter.

Speaker Change: Playbooks at the past I think this bottleneck is doing that same thing to AI software. It is so easy to create an AI prototype.

Speaker Change: Thanks, Sean our next question is from Jacob who asks we understand why foundry has become the operating system for the modern enterprise how does this change with L O N.

Speaker Change: Well the market doesn't need point solutions, even if it's slightly addicted to them and our customers can't solve their business problems with hyperscale or infrastructure alone they need.

Speaker Change: That's the equivalent of effort I'm, making a powerpoint slide, but it's actually very very hard to get that in production, probably 10 to 100 times harder than traditional software transitioning to production and therein lies our entire opportunity in the market. That's what you see with the expansions that have happened with Panasonic energy and Tampa General and Thats, what you Frank.

Well you know the market doesn't need point solutions, even if it's slightly addicted to them and our customers can't solve their business problems with hyperscale or infrastructure alone they need.

Speaker Change: System that organizes and orchestrates the interaction of their physical business with their technology with AI and <unk> in the same way that Youre operating system orchestrates and organizes your hardware with your applications and in the same way that your operating system gives you application development frameworks like App kit for Mac or.

Speaker Change: System that organizes and orchestrates the interaction of their physical business with their technology with AI and <unk> in the same way that your operating system orchestrates and organizes your hardware with your applications and in the same way that your operating system gives you application development frameworks like App kit for Mac or.

Speaker Change: We see in the numbers of this quarter.

Frank: Thanks, Sean our next question is from Jacob who asks we understand why foundry has become the operating system for the modern enterprise how does this change with <unk>.

Speaker Change: When you lie for Windows talented Oh, SDK and ontology is that application development framework for the entirety of your business that allows you to treat your business like code leveraging the parameters that we built that extend llm's throughout your enterprise and just as a point that we've already mentioned, but.

Speaker Change: Well you know the market doesn't need point solutions, even if it's slightly addicted to them and our customers can't solve their business problems with hyperscale or infrastructure alone they need.

Speaker Change: Or when you lie for Windows talented Oh, SDK and ontology is that application development framework for the entirety of your business that allows you to treat your business like code leveraging the parameters that we built that extend llm's throughout your enterprise and just as a point that we've already mentioned, but.

Speaker Change: System that organizes and orchestrates the interaction of their physical business with their technology with AI and LMS in the same way that Youre operating system orchestrates and organizes your hardware with your applications and the same way that your operating system gives you application development frameworks like App kit for Mac or.

Speaker Change: A lot of what we're doing sounds complex on the outside but what is not complex as the customers already understand they need it. So it's like a lot of our actual advantages the customers way ahead of investors way ahead of people investing this and we also and we're way ahead of our customers and we have distribution. So typically in a revolution in the red.

Speaker Change: When you lie for Windows talented Oh, SDK and ontology is that application development framework for the entirety of your business that allows you to treat your business like leveraging the parameters that we built that extend llm's throughout your enterprise and just as a point that we've already mentioned, but.

Speaker Change: Pollution comes from like small company somewhere but this revolution is coming from being ahead of where the customers are and the customers are years ahead of what what analysts and others think and we are actually monetizing simply the fact that we're ahead of our customers in the years ahead of everyone else and all of these things that Sean was talking about but how does an ontology work with an S. K how does the <unk>.

Speaker Change: Evolution comes from like small company somewhere but this revolution is coming from being ahead of where the customers are and the customers are years ahead of what what analysts and others think and we are actually monetizing simply the fact that we're ahead of our customers in the years ahead of everyone else and all these things that John was talking about but how does an ontology work with an S. K how does the.

Speaker Change: Does that work with an enterprise how would you actually use a large language model in a way where it's a differentiated meaning you use the right large language model at the right time under the right conditions in the logic, meaning in the way the business understands itself under the <unk> within the context of the security and security logic of the business those things are largely not understood.

Speaker Change: How does that work with an enterprise how would you actually use a large language model in a way where it's a differentiated meaning you used the right large language model at the right time under the right conditions in the logic, meaning in the way the business understands itself under the within the context of the security and security logic of the business those things are largely not.

Evolution comes from like small company somewhere but this revolution is coming from being ahead of where the customers are and the customers are years ahead of what what analysts and other sync and we are actually monetizing simply the fact that we're ahead of our customers in the years ahead of everyone else and all of these things that Sean was talking about but how does an ontology work with an S. K how does the <unk>.

Speaker Change: On the outside but every single person in government, who is trying to use them or who is using them every single customer who is buying this witness the numbers they either understand this overtly or they understand that nothing else works and it may in many cases, they simply understand that nothing else is giving them any value and they are increasingly getting tired of pain.

Stuart on the outside but every single person in government, who is trying to use them or who is using them every single customer who is buying this witness the numbers they either understand this overtly or they understand that nothing else works and it may in many cases, they simply understand that nothing else is giving them any value and they are increasingly getting tired of pay.

Speaker Change: Does that work with an enterprise how would you actually use a large language model in a way where it's differentiated meaning you use the right large language model at the right time under the right conditions in the logic, meaning in the way the business understands itself under the <unk> within the context.

Speaker Change: For things they either don't use or are they shouldn't use.

Speaker Change: For things that either don't use or are they shouldn't use.

Speaker Change: Thank you Barry.

Speaker Change: Our next question is from Dan with Wedbush, Dan. Please turn on your camera and then you'll receive a tiny airline.

Speaker Change: Thank you Barry.

Speaker Change: Our next question is from Dan with Wedbush, Dan. Please turn on your camera and then you'll receive a tiny airline.

Speaker Change: The security and security logic of the business those things are largely not understood on the outside but every single person in government, who is trying to use them or who is using them every single customer who is buying this witness the numbers they either understand this overtly or they understand that nothing else works and it may in many cases, they simply understand.

Dan: I think a historic quarter for pound here so congrats there.

Speaker Change: I think a historic quarter for pounds here so congrats there.

Dan: Does it feel out.

Dan: <unk>.

Speaker Change: Does it feel.

Dan: Does it feel like you're starting to now in terms of the conversions from the boot camps to deals starting to accelerate it seemed like that based on that based on the actual quarter, but can you just give me some granularity there.

Speaker Change: <unk>.

Speaker Change: Does it feel like you're starting to now in terms of the conversions from the boot camps to deals at starting to accelerate it seemed like that based on that.

Speaker Change: But nothing else is giving them any value and they are increasingly getting tired of paying for things. They either don't use or are they shouldn't use.

And the actual quarter, but can you just give me some granularity there.

Speaker Change: Yes, I can give first of all I think the numbers the numbers speak for themselves. We closed 2007 deals worth more than $10 million or more a $1 billion of T. C V in quarter, and so I'll start with the numbers because they speak for themselves.

Speaker Change: Thank you bet.

Speaker Change: Our next question is from Dan with Wedbush, Dan. Please turn on your camera and then you'll receive a tiny airline.

Speaker Change: I think a historic quarter for pound care. So congrats there.

Speaker Change: <unk> are an important part of that motion, we're seeing them expose customers to new opportunities and and new potential customers opportunities that'd be incentives as Sean was highlighting what everyone underestimated the immense challenge of deploying enterprise production AI software at scale and so we're very much focusing our energy and going deep in production with those customer.

Dan: Does it feel out.

Speaker Change: <unk> are an important part of that motion, we're seeing them expose customers to new opportunities and and new potential customers to opportunities that be incentives as Sean was highlighting what everyone underestimated the immense challenge of deploying enterprise production AI software at scale and so we're very much focusing our energy and going deep in production with those customer.

Dan: <unk>.

Dan: Does it feel like you're starting to now in terms of the conversions from the boot camps to deals at starting to accelerate it seemed like that based on that based on the actual quarter, but can you just give me some granularity there.

Speaker Change: And that's the massive opportunity before us and Thats what were running at full speed you see that in the numbers you see that in the customers' reaction who are blown away by the impact, we're having for them and demanding more and more in that direction from us and <unk>.

Speaker Change: Yes, I can give first of all I think the numbers the numbers speak for themselves. We closed 2007 deals worth more than $10 million or more a $1 billion of <unk> in quarter, and so I'll start with the numbers because they speak for themselves.

Speaker Change: And that's the massive opportunity before us and Thats what were running at full speed.

That in the numbers you see that in the customers' reaction who are blown away by the impact, we're having for them and demanding more and more in that direction from us and.

Speaker Change: Really where we're focusing maybe a slightly orthogonal indirect way of answering your question is.

Speaker Change: <unk> are an important part of that motion, we're seeing them expose customers to new opportunities and and new potential customers opportunities that being said is as Sean was highlighting what everyone. Underestimate. This the immense challenge of deploying enterprise production AI software at scale and so we're very much focusing our energy and going deep in production with those customer.

Speaker Change: Really where we're focusing maybe a slightly orthogonal indirect way of answering your question is.

Speaker Change: If you take the battlefield, where these things the few places. These things are <unk> used for the battlefield, where other forms of AI are in use and you take U S. Commercial what Youre really seeing is a very tight learning circle what works what doesn't why.

Speaker Change: If you take the battlefield, where these things for few places. These things are <unk> used for the battlefield, where other forms of AI are in use and you take U S. Commercial what Youre really seeing is a very tight learning circle what works what doesn't why.

Speaker Change: And that's the massive opportunity before us and Thats what were running at full speed.

Speaker Change: And Thats very different in places that aren't working in America has many businesses that are very strong and theyre very very agile. So they're learning very very quickly and then much like people watching this call they're like Oh, Okay. This is working.

Speaker Change: And that's very different in places that aren't working in America has many businesses that are very strong and they are very very agile. So they're learning very very quickly and then much like people watching this call. They're like Okay. This is working.

Speaker Change: That in the numbers you see that in the customers' reaction who are blown away by the impact, we're having for them and demanding more and more in that direction from us and.

Really where we're focusing maybe a slightly orthogonal indirect way of answering your question is if you take the battlefield, where these things. The few places. These things are <unk> used for the battlefield, where other forms of AI are in use and you take U S. Commercial what Youre really seeing is a very tight learning circle what works what doesn't work.

Uh huh.

Speaker Change: There were leaders like you who predicted this would work, but most people actually our customers want to see it in production and then say okay. Well why is it's working and that is a separate and what's very special about what's happening now is you have more and more people who are like okay. I know this works I want to understand exactly why and how would I expand.

Speaker Change: Uh huh.

Speaker Change: Why.

Speaker Change: And Thats very different in places that aren't working in America has many businesses that are very strong and they are very very agile. So theyre learning very very quickly and then much like people watching this call they're like Oh, Okay. This is working.

Speaker Change: And why is nothing else working and so that's leading to a very different motion I think it's going to lead to a very different way of looking at our company in all areas, including financial areas, because it's like when you're making assertions you need.

Speaker Change: You know there were leaders like you who predicted this would work, but most people actually our customers want to see it in production and then say okay. Well why is it's working and that is a separate and what's very special about what's happening now is you have more and more people who are like okay. I know this works.

Speaker Change: Vanguard innovators to look at it and say okay. Well. This is something that is not quite there, but I think it could work and we're very much moving into the phase of yes. This is working or our adversaries note. This works our U S. Military Gnosis works people on the ground and it's a very similar in U S commercial and that's that's what you're generating.

Vanguard innovators to look at it and say okay. Well. This is something that is not quite there, but I think it could work and we're very much moving into the phase of yes. This is working or our adversaries note. This works our U S. Military Gnosis works people on the ground and it's a very similar in U S commercial and that's that's what's generating this.

Speaker Change: Want to understand exactly why and how would I expand it and why is nothing else working and so that's leading to a very different motion I think it's going to lead to a very different way of looking at our company in all areas, including financial areas, because it's like when you're making assertions you need.

Speaker Change: 70% number that is kind of you know.

Speaker Change: Joel dropping like the geology shopping numbers are being generated by okay. This works, how do I expand and explain to me how it is working and can we expand these things and by the way. Our innovation is also because we're like okay. We see this works, but this could work five times better if we had different kinds of innovation that no one else has.

Speaker Change: Joel dropping like the geology shopping numbers are being generated by okay. This works, how do I expand and explain to me how its working can we expand these things and by the way. Our innovation is also because we were like okay. We see this works, but this could work five times better if we had different kinds of innovation that no one else has.

Vanguard innovators to look at it and say okay. Well. This is something that is not quite there, but I think it could work and we're very much moving into the phase of yes. This is working or our adversaries note. This works our U S. Military Gnosis works people on the ground those short and it's a very similar in U S commercial and that's that's what's generating this.

Speaker Change: Thank you.

Speaker Change: Our next question is from Mariano with Bank of America Marianna. Please turn on your camera and then you'll receive a prompt tiny airline.

Speaker Change: Thank you.

Our next question is from Mariano with Bank of America Marianna. Please turn on your camera and then Youll see the prompt on mute your line.

Thank you and good afternoon, everyone I'm going to try to squeeze two questions.

70% number that is kind of.

Speaker Change: Thank you and good afternoon, everyone I'm going to try to squeeze two questions Yeah sure.

Speaker Change: Joel dropping like the jaw dropping numbers are being generated by okay. This works, how do I expand and explain to me how it is working and can we expand these things and by the way. Our innovation is also because we're like okay. We see this works, but this could work five times better if we had different kinds of innovation that no one else has.

Mariano: So the first one I'm curious about.

So the first one I'm curious about.

Mariano: What is that is that like a new system that allows companies to build their own European system is something that runs on top of your existing old school legacy ERP system oil Pan tier, creating like a solution that is ERP like little bit details about that the second one is not just words fit but also all the time.

Speaker Change #100: What is that is that like a new system that allows companies to build their own ERP system is something that runs on top of your existing all school legacy ERP system, or ponti or creating like a solution that is ERP like little bit details about that the second one is not just words fit but also all the time.

Marianna: Thank you. Our next question is from Mariano with Bank of America Marianna. Please Chinese camera and then Youll see the tiny airline.

Speaker Change: In the Sally station Gail.

Speaker Change: A report recently, where they've said so far and implementation are the two biggest barriers for the U S to be able to produce that weapons that they need.

Speaker Change #100: Industrialisation Gail.

Mariano: Thank you and good afternoon, everyone I'm going to try to squeeze two questions yeah sure. So.

Speaker Change #100: A report recently, where they've said so far and implementation are the two biggest barriers for the U S to be able to produce that weapons that they need.

Mariano: The first one I'm curious about the <unk>.

Speaker Change: What is that is that like a new system that allows companies to build their own European system is something that runs on top of your existing old school legacy ERP system oil Pan tier, creating like a solution that is ERP like a little bit he talked about that the second one as not just words fit but also all the time Eric.

Speaker Change: What is the biggest barrier or hurdle for the U S primes are especially they all start to.

Speaker Change #101: What is the biggest barrier or like hard all for the U S primes are.

Speaker Change: To come to you and let you help them Reindustrialize produced and get back on track on besides multibillion dollar contracts they have thank.

Speaker Change #101: They all start to.

Speaker Change #102: To come to you and let you help them reindustrialize produce and get back on track on besides multibillion dollar contracts they have thank.

Speaker Change: Thank you.

Speaker Change: Thank you Mariana.

Speaker Change: In the Sally station Gail list posted a report recently, where they've said.

Speaker Change: Warped speed it really is.

Speaker Change #101: Thank you.

Speaker Change #103: Yes, Thank you Mariano.

Speaker Change: We conceive of it as an operating system for the modern American manufacturer. It touches not just ERP, but also any S. P. A L. M plc. This is interacting with the factory floor, and we think theres an opportunity to re imagine this I think the kind of congenital defect from most of the software. It was designed historically in the <unk> for the CFO.

Speaker Change #103: Warped speed it really is.

Speaker Change #105: We can see limited operating system for the modern American manufacturer it touches not just ERP, but also mes.

Far and implementation are the two biggest barriers for the U S to be able to produce that weapons that they need.

Speaker Change #106: Lamb. It's plc. This is interacting with the factory floor, and we think Theres an opportunity to re imagine this I think the kind of congenital defect from most of the software. It was designed historically in the <unk> for the CFO why would you do that if you were starting over today you would build software that was designed for the head of production that was focused principally on production and then and then how you integrate both.

Speaker Change: What is the biggest barrier or hurdle for the U S Prime.

Speaker Change: Especially they all start.

Speaker Change: To come to you and let you help them reindustrialize produce I can get back on track on these like multibillion dollar contracts they have.

Speaker Change: Why would you do that if you were starting over today you would build software that was designed for the head of production that was focused principally on production and then and then how you integrate both your extent legacy systems and use warped speed in place of the investments that you haven't made I think the big opportunity. So if you go to the big legacy manufacturers and you say that it sounds crazy they've.

Speaker Change: Thank you.

Mariana: Thank you Mariana.

Speaker Change #107: The extent legacy systems and use warped speed in place of the investments that you haven't made I think the big opportunity. So if you go to the big legacy manufacturers and you say that it sounds crazy they've made a bunch of historical investments they are not yet convinced or even aware of the fact that the legacy software playbook doesn't work, but if you go to new.

Mariana: Warped speed it really is a.

Speaker Change: We can see limited operating system for the modern American manufacturer. It touches not just ERP, but also mes P. L. M. It's a plc is interacting with the factory floor, we think theres an opportunity to re imagine I think the kind of congenital defect from most of the software. It was designed historically in the <unk> for the CFO.

Speaker Change: A bunch of historical investments they are not yet convinced or even aware of the fact that the legacy software playbook doesn't work, but if you go to new manufacturers. The one that are powering the reindustrialization of the country. They all know this they're all alumni of the Tesla and Spacex World, where they built their own systems from scratch, principally because the other stuff.

Speaker Change #108: Manufacturers. The one that are powering the reindustrialization of the country. They all know this they're all alumni of the Tesla Spacex World, where they built their own systems from scratch, principally because the other stuff doesn't work at all and they also know they can't afford to 300 engineers. It would take to build this completely from scratch or the time it would take to do that.

Speaker Change: Doesn't work at all and they also know they can't afford the 300 engineers it would take to build this completely from scratch or the time it would take to do that so there's this very powerful role of taking AIP building the applications on top of it using the OSD Kay and delivering the integrated suite of applications that are also valuable to the business because I think one of the other key insight.

So there's this very powerful role of taking AIP building the applications on top of it using the OSD Kay and delivering the integrated suite of applications that are also valuable to the business because I think one of the other key insights here is it's not actually believable that the same ERP manufacturing system that you used to build rockets is what you would use to build rack.

Speaker Change: A bunch of historical investments they are not yet convinced or even aware of the fact that the legacy software playbook doesn't work, but if you go to new manufacturers. The one that are powering the reindustrialization of the country. They all know this they're all alumni of the Tesla Spacex World, where they built their own systems from scratch principally because the other.

Speaker Change: It's here is it's not actually believable that the same ERP manufacturing system that you used to build rockets is what you would use to build rackets and how do you what is the right way to think about grafting. The software around the manufacturer in a way that gives them alpha not just creates a huge amount of services for the system integrators, you know we live in a world.

Speaker Change #109: And how do you what is the right way to think about grafting the software around the manufacturer in a way that gives them alpha not just creates a huge amount of services for the system integrators. You know we live in a world today, where it's one dollar of license for $9 of implementation that never seems to quite work, who is really happy with the implementation of these systems, which ones are even.

Speaker Change: It doesn't work at all and they also know they can't afford to 300 engineers. It would take to build this completely from scratch or the time it would take to do that so this is very powerful role of taking AIP building the applications on top of it using the OSD Kay and delivering the integrated suite of applications that are also valuable to the business, but I think one of the other key.

Speaker Change: Today, where it's one dollar of license for $9 of implementation that never seems to quite work, who is really happy with the implementation of these systems, which ones you even happening on time, who can say that those systems. They didn't fall apart in 10 seconds when COVID-19 supply chain disruptions happened right. There is an entire opportunity to reinvent this now and I think the bolus of energy around.

Speaker Change #110: Happening on time, who can say that those systems didn't fall apart in 10 seconds, when COVID-19 supply chain disruptions happening right. There is an entire opportunity to reinvent. This now and I think the bolus of energy around National Defense and Reindustrialization is catalyzing.

Speaker Change: It's here is it's not actually believable at the same ERP manufacturing system that you used to build rockets is what you would use to build rackets and how do you what is the right way to think about grafting. The software around the manufacturer in a way that gives them alpha not just creates a huge amount of services or the system integrators, you know we live in a <unk>.

Speaker Change: And National Defense and Reindustrialization is catalyzing.

Speaker Change: This opportunity.

Speaker Change: Shops, leading the charge, but the reason that I think is likely to work is because.

Speaker Change #110: This opportunity.

Speaker Change #110: Shops, leading the charge, but the reason that I think is likely to work is because.

Speaker Change: And not just America, but every allied nation is has the problem that they cannot get their military production to work too.

Today, where it's one dollar of license for $9 of implementation that never seems to quite work, who is really happy with the implementation of these systems, which ones are you even happening on time, who can say that those systems didn't fall apart in 10 seconds, when COVID-19 supply chain disruption tablet right theres, an entire opportunity to reinvent this now and I think the bolus of energy around.

Speaker Change #111: Not just America, but every allied nation is has the problem that they cannot get their military production to work too.

Speaker Change: Your question is not really two questions. It's it's what are you building and from my perspective, and why is it likely to work and they're very linked it's likely to work because every single every single western country. When you talk to these leaders in private.

Speaker Change #112: Your question is not really two questions. It's it's what are you building from my perspective, and why is it likely to work and they're very linked it's likely to work because every single every single western country. When you talk to these leaders in private.

Speaker Change: National Defense and Reindustrialization is catalyzing.

Speaker Change: With the conversation I often have with them is what could we possibly do to make manufacturing work. So we were actually be competitive on the battlefield and the answer to that.

Speaker Change: This opportunity.

Speaker Change #113: With the conversation I often have with them is what could we possibly do to make manufacturing work. So we were actually be competitive on the battlefield and the answer to that.

Speaker Change: Shops, leading the charge, but the reason that I think is likely to work is because.

Speaker Change: For these countries really is re imagine how you produce and the people who do it are going to be people, who are are alumni of the companies that are actually built companies correctly call. It the pound share alumni and people from the Spacex network are the really the only people who have done these things and the.

Speaker Change: Not just America, but every allied nation is has the problem that they cannot get their military production to work too.

Speaker Change #114: For these countries really is re imagine how you produce and the people who do it are going to be people, who are are alumni of the companies that are actually built companies correctly call. It the pound share alumni and people from the Spacex network are the really the only people who have done these things and the.

Speaker Change: First thing they want is a software program that will allow them, including with large language models and AI to build the way you ought to build.

Speaker Change #114: The first thing they want is a software program that will allow them, including with large language models and AI to build the way you ought to build.

Speaker Change: With the conversation I often have with them is what could we possibly do to make manufacturing work. So we were actually be competitive on the battlefield and the answer to that.

Speaker Change: <unk> does not mean build near term in the interest of your CFO. So you can IPO quickly and build something it's fake.

Speaker Change #115: Does not mean build near term in the interest of your CFO. So you can IPO quickly and build something it's fake.

Speaker Change: It means build something that is real build something a sustainable build something and where the production is actually production of our product and that aligns very squarely with how powered ear wins and how we build things and that's why this is a super important thing we're working on.

Speaker Change #116: It means build something that is real build something a sustainable built something and where the production is actually production of our product and that aligns very squarely with how parents here wins and how we build things and that's why this is a super important thing we're working on.

Speaker Change: The first thing they want is a software program that will allow them, including with large language models and AI to build the way you ought to build.

Speaker Change: Thank you.

Speaker Change: Alex as always we have a lot of individual investors on the line is there anything you'd like to say before we end today's call.

Speaker Change #116: Thank you.

Speaker Change #117: Alex as always we have a lot of individual investors on the line is there anything you'd like to say before we end todays call well again. Thank you for your support that we've had good and bad times. This is a <unk>.

Alex Karp: Again, thank you for your support that we've had good and bad times. This is a.

Speaker Change: Does not mean build near term in the interest of your CFO. So you can IPO quickly and build something it's fake.

Speaker Change: A super important time for pound here, because we have proven to the world that what we do is quantifiable and real.

Speaker Change #118: A super important time for pound here, because we have proven to the world that what we do is quantifiable and real Ah. We we are focused.

Speaker Change: It means build something that is real build something a sustainable build something and where the production is actually production of a product and that aligns very squarely with how pound share wins and how we build things and that's why this is a super important thing we're working on.

Speaker Change: We are we are.

Speaker Change: <unk> on growing this company to be much more impactful much larger and much more valuable.

Speaker Change #119: <unk> on growing this company to be much more impactful much larger and much more valuable.

Speaker Change: And we appreciate your support and we know that many of you also support us because you realize that we are a value aligned with your values, which means fighting to make the west a stronger and better place, including on the battlefield and that battlefield as may be upon us now and we appreciate your support and.

Speaker Change #120: And we appreciate your support and we know that many of you also support us because you realize that we are a value aligned with your values, which means fighting to make the west a stronger and better place including on the battlefield.

Thank you.

Speaker Change: Alex as always we have a lot of individual investors on the line is there anything you'd like to say before we end todays call well again. Thank you for your support that we've had good and bad times. This is.

Alex: A super important time for pound here, because we have proven to the world that what we do is quantifiable and real.

Speaker Change #121: And that battlefield as may be upon us now and we appreciate your support and do what you can do help America and help our allies.

Speaker Change: Do what you can to help America and help our allies.

Speaker Change: Thank you. Thank you that concludes Q&A for today's call.

Speaker Change: We we are focused on growing this company to be much more impactful much larger and much more valuable.

Speaker Change #121: Thank you. Thank you that concludes the Q&A for today's call.

Speaker Change: And that battlefield as may be upon us now and we appreciate your support and do what you can to help America and help our allies.

Speaker Change: Wix gives you the power of AI to build the website you need.

Speaker Change: Thank you. Thank you that concludes the Q&A for today's call.

Speaker Change: With full business functionality and a design tailored.

Just for you.

Speaker Change: <unk> every element of your website and.

Speaker Change: And what's your vision come to life in minutes.

Speaker Change: Control everything from the biggest task to the finest details.

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Speaker Change: Thank you.

Speaker Change: But come down is on everything you need to get the edge at the end of the market today.

Speaker Change: This is good.

Speaker Change: [music].

Yes.

Karla: Library 30 onto at Bloomberg headquarters in New York I'm Karla.

Speaker Change: Alex.

Speaker Change: Well that was an eight hours in the market and we still have an hour to go and we don't know where to go and we are moving to the downside here looks like a check in on where we are so this is an S&P futures chart, because I felt like it was worth illustrating the last 12 hours that we've seen the rate here is when you had Asian markets open. So you obviously saw a little bit of a gap down from where he worked on Friday and you.

Speaker Change: Picked up steam to the downside than around two o'clock Europeans that opened around four o'clock you on again, the UK sites opening than cash theaters opened here they hit the low by around 930, when we opened it anyhow the ISR services that wasn't terrible as maybe it could have been if you compare it to the ice in manufacturing and then a slow climb upwards from there.

Speaker Change: Now we are rolling over a little bit here. The question is where do we go from here there was clearly a signal here and a by the death, but there are a lot of systemic funds right now in the market as well as solid and a call for them as they continue to sell into this pressure. So we're going to get into all of that in today's show, but the takeaway from today's price action is less bad.

Speaker Change: The VIX spiked to as high as 65, just an hour before the U S market itself and then easing to the low thirties, although still elevated from last weeks 16 unchanged. This of course is equity index as per their initial losses and a rally in U S treasuries.

Speaker Change: <unk> at your journey of your journey research cause the initial sell off over and done when he spoke this morning bounce.

Speaker Change: Bounce conceivable that this carry trade unwind becomes some sort of financial crisis that intern leads to recession, but that's not where my my thinking is that.

Speaker Change: Now you mentioned it Alex but the latest data showed there is no recession, yet today's read on the services sector points to an expansion in the biggest part of the U S economy with even orders rebounding. It did provide a bit of relief after five days a week payrolls number and the increase in the jobless rate. So.

Tech remains the weak link in video onto a two and a half months, though on a report that is upcoming AI chip will be delayed due to design flaws, while apple dipped below $200 a share at Warren Buffett's, Berkshire Hathaway reduce its taken the company a sign that he sees are stretched valuations I would love to kick it off right there with Barry Bannister of Stifel Chief <unk>.

Barry Bannister: Equity analysts know Barry has been calling for a 10% correction on the estimate of a 100 by October Berry is that this correction.

Speaker Change: It's begun I would not.

Speaker Change: I would say this rally this intraday rally that we've tried to have.

Speaker Change: Too many technical levels of broken the fed really is sort of trapped they tip.

Speaker Change: Typically from last hike to first cut at seven months by September it will be up to 14, so it's probably too late for them and our specific forecast as you look at second half GDP and even core PC on a year over year basis would point too disappointing data that with our color.

<unk> with a peak or a crescendo in October I would say this rally you mentioned too many technical levels broken which ones are you looking at and which ones pretend more damage to come.

Speaker Change: Well I was particularly interested in how financial conditions have rotated up to tightness and how high yield and investment grade spreads on a percentage change basis or.

Speaker Change: More today and recently than the S&P or mdx or any other index is down so we're seeing a tightening of financial conditions, which really brings into question. The price earnings ratio of the stock market at large it got too frothy for too long.

Weighted was much better value with cap weighted with the AI boom just got overdone.

Speaker Change: If you want to pay the rally here when would you buy the sorry, yeah. The rally when would you then by the sell off and where would you buy that fell off.

We're going to have to digest. The fact that our GDP models are saying that we're going to come close to a zero GDP by third quarter and.

Speaker Change: It may only last a quarter and it may be that we pick up again, but we look at specific sub components of GDP and it doesn't look great. The other thing that we're looking at is that year to year, our core PCE will probably break three just barely 331 in the fourth quarter and when that happens I think.

Speaker Change: It's going to really make it hard for the fed to justify a dramatic cuts as they look out to 'twenty five in futures.

Speaker Change: So nothing really looks great right now I would just.

Speaker Change: Take the summer short.

Speaker Change: Nothing was great right now, but when it comes time to start picking up on some pieces, where would you do that would it be by size for instance, small cats of our large cap would it be in certain sectors.

Speaker Change: Fantastic weather at the utility is our consumer staples or when you look at different geographies Barry.

Speaker Change: Well for a few months, we've been urging investors because we saw this correction coming we've been saying by the defensive value, which was utilities health care and staples and quality.

Speaker Change: And with my colleague Thomas Carol and miles Matico, we came out with a lot of work on that so we have been in the right kind of defensive posture for a <unk>.

Speaker Change: Second Colton defensive trade, but if we have a rally lets say after we make our low around October and Thats typical of investors just to go back to the old winners now it won't last very long and it could fade very badly, but typically you don't want to fight the.

Speaker Change: Consensus psychology, if theres any sort of power rally, even if it doesn't last very long, but let's focus on getting to the bottom first before we try to come up for air the window sort of a healthy correction that some are calling for me come in on how big correction, how do you judge that.

Speaker Change: A typical correction thats, a mid cycle slowdown might be in that 12%, 13% range, which would put us at 5000 off the July high for the S&P 500, So 5000 there.

Speaker Change: Teens for the Mdx because of beta if it goes beyond that and it's more like discounting a recession, where the drops are much higher much larger and that would be obviously bad.

Speaker Change: So we're thinking it'll it'll bottom out there around 5000 and I certainly wouldn't.

Speaker Change: Jumping in front of it here because things are going to deteriorate from both the economy and the feds ability to argue that theyre going to rapidly get back to 2%.

Speaker Change: More bullish than most people are super core housing because of all tenants and certain sub components that lead us to think unit labor cost are going to go up as productivity activities cyclically fades in the back half. So it's a very specific model, but it's enough to cause us to be have Pos.

Speaker Change: How would you explain the turnaround in treasuries, we now have our prices at the short end of the curve down.

Speaker Change #100: We're no longer seeing big big declines across the curve, what do you make of that.

Speaker Change #101: We did have a bowl steepen or there that probably just overshot a little bit it is unlikely that the fed is going to give us 50 basis points from the sudden move in September.

Speaker Change #101: Unless we just fall apart on the payrolls data a few a couple of weeks before so if we looked at that it just got overdone, perhaps and we are still in a period, where the fed needs to cut and the question is how long the market and the economy more weight I.

Speaker Change #102: I mean, if we were worried about growth, though why isn't it in the backend selling off.

Speaker Change #103: Well longer term I think that theres going to be a higher equilibrium yield on the 10 year tips yield the real yielded really prices off 36 month rate futures adjusted for the 10 year breakeven inflation.

Speaker Change #103: The oil price, perhaps its just looking through some of the geopolitics, but oil hasnt collapsed, a collapse would be somewhere below or at $60 a barrel.

Speaker Change #103: It has not collapsed so thats, usually a sign that you can maintain a breakeven level of about two so when you look at it there's not a lot of downside in the tenure yield just because of the fed's normalization longer term inflation and where.

Speaker Change #104: You would price the instrument last comment would be if you look at the long term expectation of short term rates it tends to be a little bit below or close to on a normal level nominal GDP in United States can grow of three or four nominal.

Speaker Change #104: And we're not going to see the old days of 2% unless we're in a recession, which is not bullish anyway.

Muhammad Larry: Okay, Great perspective, Barry I really appreciate your joining us a Barry Bannister of Stifel, Chief equity strategist and he had been calling for a 10% correction now coming up on to close over the next two hours Muhammad Larry and Bloomberg opinion columnist Ann President of Queens College, Cambridge joins us with his perspective on this risk sell off but a big bright spot there.

Speaker Change #106: On news of the potential buyout from Mars, we're going to speak to an analyst that well could be one of the biggest deals out of the year and the best performing stock in the S&P in calendar <unk>.

Speaker Change #107: And the earnings season Rolls on we got listed hands and talents here among the companies set to report after the closing Bell, we're gonna breakdown, what investors should be on watch more from all of those results all that and more coming up.

Speaker Change #107: Close on Bloomberg.

Speaker Change #107: [music].

Speaker Change #107: Okay.

Okay.

Speaker Change #107: Let me now.

Speaker Change #107: It has been increasingly focused on the employment side of their mandate.

Isolation comes down in Plano.

Speaker Change #107: Driving.

Speaker Change #107: Do you think there'll be pretty reacted to that and maybe even see a little bit behind the curve by the time, we get to that September meeting.

Brian Clark: That was very as Brian Clark on Friday, that's after the affirm adjusted their outlet, saying they expect to 50 point basis point cut this year, along with a quarter point cut in December and said he is not alone I guess theres been the calls I've gotten louder and today the conversation seems to be about an inter meeting cut because that's how bad things were the curb this inverted and everything changed.

Michael Mckee: Over an hour joining us now as chief correspondent lending, our core, making Bloomberg International Economics and policy correspondent Michael Mckee.

Michael Mckee: We really went from maybe we're not going to get a soft landing to lots of cut to enter meeting cut to a curved this inversion to now the steady as she goes now we see a higher to you what happened.

Speaker Change #110: Yeah Wow right.

Speaker Change #111: I mean first of all when panic start you know we've all been through this before it just escalates right. So that's why we came in what happened in Asia overnight into Europe, but then Mike and I were talking about the ISN services and has that been bad we might be saying, we're still in a free fall curve of majorly inverted disinvited sale.

Speaker Change #112: Those numbers were a little bit better. So I think it gave people a little bit of a reprieve to regroup and think is the fed going to do this that inter meeting cut pricing way came down. So I think it was a chance to regroup and think and it kind of calm things not for equity Israeli are they're still down but the bond market now we're still a inverted in the curve after being a positive.

Mike Mckee: By a little over one basis point and articles me the Chicago Fed President, Mike Mckee has been making the rounds.

Speaker Change #114: You were one that people, who spoke with him on Friday and he cautioned for everyone to stay calm he spoke again today and its message hasn't changed that much. So from the perspective of fed officials, they're not anywhere where the market seems to be when it comes to interpreting this data.

Speaker Change #114: The Fed's view is if you can trade.

Speaker Change #115: And then we don't care if that trade loses you money.

Speaker Change #116: Our job is to make sure that the markets work and if they are working then we don't really have a problem.

Speaker Change #117: When you consider goolsbee as one of the dogs.

Speaker Change #117: The fact that he isn't.

Screaming for any kind of emergency action tells you that the majority of the open market Committee is not going to be looking at this.

Speaker Change #118: And intervening cut unless we had some sort of interruption in market trading isn't going to happen and I think it's way too early.

Speaker Change #118: To say, a 50 basis point cut is going to happen in September because we have a lot of data between now and then.

Speaker Change #118: Just one small example.

Jobs report a lot of people think that while there were a lot of people who didn't go to work because of weather now it may not have been in a hurricane it may be in a lot of different reasons, but that could easily reverse and then you get a big number in August.

Speaker Change #119: You, just don't know well, but to that point, where infill markets Theres no pricing in like 115 basis points.

Speaker Change #119: So far this year, we started the year with like six basis points of kind of it's kind of crazy.

Speaker Change #120: And if that has to like give credence to the data, but at the same time wanting to walk that back because there have been one as seen on slide five cut price and are they well no they're not going to believe in <unk>.

Or six cuts unless the economy is falling off a cliff unless were really in need of that sort of thing.

Speaker Change #120: If you spread it out you could see that happening if we go into 2025, if they want to get down to the 3% to 4% range to get to neutral, but it's not going to happen all at once unless there is a real shift in the paradigm of the news and the fact that the stock market fell today convinced some equity investors.

Speaker Change #120: There's a shift in the paradigm when you look at the reaction in the bond market. For example, you don't see that so I think this is going to be just a waiting game for equity market investors.

Speaker Change #121: That isn't going to be anxious to come out and reassure people because we don't want to give a lot of credence to this Jay Powell is not till the 23rd so.

Speaker Change #121: We probably won't see a whole lot this month until.

Speaker Change #121: Separately, the things like retail sales numbers that might give us some clues, but beyond that it's going to be a waiting game during August.

Speaker Change #122: It feels like most of the panic blistering overseas trading hours in Japan in Europe, you had the unwind of the yen carry trade based on the bank of Japan action last week and when U S. Trading hours began a little bit of con seem to have return is that the way to think about it here.

Speaker Change #122: I think the comden really return until the ISR data came out.

Speaker Change #123: Holding pattern until that yes, I mean kind of in a holding pattern, but I think you're right to carry unwind has escalated everything but and even I was thinking about a fed ghouls based comments like I think I'll not today, but the other day he spoke and he said to your point of their pricing. So many cuts before he said he will remember the market was pricing in like seven concept. The start of the year like we were com and <unk>.

Speaker Change #124: That didn't pan out so I think they have to look through that but I think the bond market took a little reprieve. We also have a bunch of supply coming this way.

Speaker Change #124: Refunding supply, which is a lot of paper three's tens and <unk> coming so with the data kind of giving them a little bit of a chance to stop now you have to figure out we have to take down the supply and the only real key data I mean, not to minimize any of the other ones, but nothing major besides the unemployment claims on Thursdays Sundays Monday, we have a lot of isn't going to be a lot of waiting and I would say that we have a lot of.

Speaker Change #125: Time until September, but if the data turns deferred crank tourism DC always says the fed will do whatever they need to do so if I then they need to go more they will but for now they're not going to panic and we haven't gotten to that point, yes. In other words, Liz really appreciate youre, joining us onsite here, along with Michael Mckee, Liz Mccormick and Michael Me Mickey on the fed and what it is.

Speaker Change #126: <unk> now coming up shares of Kelly Novo rising to enter to a high has not seen in more than 35 years as a snack company that was spun off from Kellogg's.

Speaker Change #126: Is now potentially in play more analysis to come and top class next this is the close.

Speaker Change #126: Okay.

Speaker Change #126: Yes.

Speaker Change #126: Sure.

Okay.

Speaker Change #126: Okay.

Okay.

Speaker Change #127: Alright, now for cap cause and looked at some of the big movers on the back of analysts recommendations now, let's start with the homebuilder Kb home toll brothers and others getting hit today with celebrating some important global the analysts as a risk and return our outlook for the builders is now to the downside.

Speaker Change #128: Technical risks from interest rates and margin risk from new and existing inventory in the housing market as a whole ballast for example offer over 5% next up we've got mobile I downgraded at DIY security into Newfield from by mobile I would make software for autonomous driving glasses annual forecast last week now to move at the analysts wasn't particularly a fan out you also raise can.

Nik Modi: Third about production and lower cost competitors over in China, unless some things on talent over different story here. The company responsible for brands like pop Tarts, and Pringles may be added to the roster of snack for Mars and tops is seen the two companies get underway analyzing Nik Modi at RBC capital markets, telling investors there is something here.

Speaker Change #130: Calendar <unk> you look at his recommendation to outperform melanoma up by 15% one of the few stocks in the Green today is Scarlett.

Nik Modi: One of our top Com, alright, and let's continue our conversation on <unk> the shares as mentioned, having its best day in 36 years on the heels of that M&A speculation with Mars both companies by the way declined to comment let's get some sell side analysis from Erin Lash director of consumer equity research over at Morningstar, Erin does this tie up potentially.

Speaker Change #130: If it makes sense here.

Erin Lash: Yes, there is merit to the potential tie up obviously, we're dealing with a market where growth is slowing, particularly given the fact that we're up against weakening consumer spending.

Speaker Change #133: We faced multiple quarter of substantial inflation induced price hikes.

Erin Lash: And so growth has been much harder to come by across the packaged food realm, and so adding a comment.

Erin Lash: Our portfolio of brands that are anchored in snacking and have significant exposure to emerging and developing markets.

Erin Lash: Boost the growth prospect for the likes of Mars.

Think that there'll be other bidders Aaron that can come in and going to have a good tie up here.

Speaker Change #134: That's a very tough question there have been significant concerns around antitrust.

Aaron: For quite some time within the space.

Speaker Change #136: Think about when hostess was on the block about a year ago. There were a number of players that were out of contention just because of the significant overlap in their portfolio.

Speaker Change #136: So it's unlikely that there are mature a substantial amount of bidders that could emerge for these assets.

Eric: Given given those potential hurdles Eric.

Speaker Change #138: Eric do you think the market turmoil, we're seeing is going to affect negotiations or discussions right now between Mars and Keller Nova.

Eric: I think that that's very hard to say, we have long viewed kellen overstock is undervalued and we didn't think that the market fully appreciated the strength of the the focus.

Speaker Change #139: Like I said emerging markets snacking that Kelly, Nova had really honed over the last several years with the pop in the share price today, we do think the shares look more fairly valued.

Erinn: But weather outside forces impact any discussions going forward I think it's tough to call. So erinn what strikes me if I think of snacks like pop tarts, and Pringles is DLP, one drugs Angelina snack like that coming under pressure as DLP, one really take the stage, how do you view that and potential tie up I guess that often.

Speaker Change #139: Defensive.

Erinn: I think it's a combination you think about these packaged food companies. They have faced a rash of headwinds over the last several decades from varying.

Erinn: Diet trends and fads change.

Erinn: Changes in preference is from a consumer perspective, particularly along the long ends of health and wellness.

And through that all they've been able to invest significant resources between research and development and subsequently marketing ensure that their portfolio of false and and aligns with the evolving trends and so we see this as moving down the same path.

Erinn: We think that these firms are.

Speaker Change #141: Maintaining and prudence and objectivity in terms of what Theyre seeing from consumers and what consumers are after them. We expect that the portfolio of offerings will evolve in that regard as well.

Speaker Change #142: If these discussions don't get anywhere if they're not productive or are they stall out Erin and Martin is still in the market for a snack company where else can it go to I mean, if pepsico or our Campbell's soup looking to sell some theyre snack businesses, our snack assets.

Speaker Change #143: Not that we're aware of Pepsi.

Speaker Change #144: Pepsi has long talked about the strength of combining the beverage business with our snacking operation.

Speaker Change #144: Campbell soup has has again been focusing over the last call it six years or so.

Speaker Change #144: On streamlining their portfolio.

In terms of meals and beverages and in snacking and leveraging to grow that that mix.

Speaker Change #144: As well, particularly within the U S market.

Speaker Change #145: Hershey has the outside.

Speaker Change #145: Interest of the Milton Hershey Trust.

Speaker Change #145: And so that SM.

Speaker Change #146: Essentially it takes that off the table. So there aren't a ton of major players that look to be options and we appreciate it. Thank you so much Erin lash over at Morningstar, joining us and don't know if it isn't the only thought because that today's garlic and couple of others in the Green you got on semi Tyson foods and here you go crowd strike that's a change.

Speaker Change #147: Among the best in farmers, but Tyson seemed really interesting because that was fundamental they raised the guidance in chicken and that has helped support the company, yes, beef and pork might have their own issues with taking doing well under the company is doing well overall better chicken and pork results beef like you said definitely a weak link here. What's interesting of course is also with crowd strike. This is a company that has lost a lot of gas.

Speaker Change #148: Lately because of all the news with the outage of Microsoft So, it's a little bit of a rebound play a bit of relief rally there alright coming up more analysis for the market our conversation with Scott Brunner USG at U S equities strategist over at Citi and FIS is a close on Lindbergh.

Speaker Change #147: Okay.

Speaker Change #147: No.

Speaker Change #147: Okay.

Speaker Change #149: We're about half half an hour away from the close of trading we that can be down over 3% some of the worst movers in the S&P, you're looking at them got Amazon Este Lauder Allstate Cigna is kind of a hodgepodge, but its a continuation of what we've seen since Friday I mean, this is the worst day for Amazon.

Speaker Change #150: Friday, yes, that's on the heels of its results, which.

Speaker Change #151: Were not that great from where investor stand in terms of their investments in the payoff, but what's interesting among all of those things as they are all consumer facing and there are a lot of question marks about the consumer and how strong the consumer is heading into the end of the year and then you have the flu data out at two o'clock and that was okay. Maybe I did not point to any kind of a hard landing the data today has been okay, well that's true.

Speaker Change #152: So that's a good perspective right because if you look at the overall for the S&P, it's still up almost 9% on the year that doesn't spell a catastrophe, but it does shift the ear and price are against for example for the S&P Arthur relatively bullish we haven't seen any sort of downgrades on that they wanted to get the pulse on the market with Scott kroner, Our U S equities strategist and global head of ETF Ray.

Speaker Change #153: Over at Citi, Hey, Scott, how would you understanding categorize the last 48 hours of trading.

Scott Kroner: Well I think it's probably what I focus on is an unwinding of positioning that going into Q3 was pretty strong and confident and is now coming into question. So specifically if you look at the way we characterize the three forces at work in the market over the past couple of months first has been the AI growth.

Scott Kroner: Tailwind, which is manifested in the Mega cap growth part of the market doing quite well. The second has been an ongoing view that soft landing is becoming increasingly the base case, which has allowed for a goldilocks setup for many investors in the third obviously is how one thinks about election outcomes and impacts in there I think.

The early read on the Trump lead in the polls setup for a positive equity response around deregulation and so forth. All told those three drivers of positioning our coming into question right now they are coming into your question right now in the jobs report on Friday is a big reason why that kind of got people thinking again that the labor market.

Speaker Change #155: It is deteriorating a lot quicker than the fed may have appreciate it.

Speaker Change #156: My question is on saying that this week's data is really limited to the items services, we got today and jobless claims on Thursday and on the earnings front. It feels like we don't get anything significant until in video at the end of the month. So until then what's going to be the catalyst that you're paying attention to.

Speaker Change #157: Well, we're watching that positioning and were saying Hey look at we have to let this unfold and play out for a while right. So to the degree that investors were appointed down a fairly constructive path and a lot of the premise for that is now coming into question. We have to allow some time. So the way we have framed it going into Q3 actually.

Speaker Change #157: We have looked at our target to 5600 for the end of the year, which gave US a couple of percentage points of upside, but we were really saying hey look at.

Speaker Change #157: Theres a lot thats extended here, we have to allow for a 5% to 10% pullback, we're getting that 5% to 10% pullback or right at about 5% now.

Speaker Change #157: And I think what we have to just assuming here is that the the questioning continues the uncertainty continues and with that some unwinding risk, but under the surface.

Speaker Change #158: <unk> still quite constructive on the U S equity fundamental setup. So we think the S&P is still building to a slightly different drummer in terms of a wall Street approach versus main street and the broader economy.

No.

Speaker Change #159: Just to be clear that is 600 is your target.

Speaker Change #159: I'll stick by that number and that's how we get there is different.

Speaker Change #159: No I mean look at so we had gone to 5600 <unk>.

Speaker Change #159: As we hit the midpoint of the year and our call was very clear.

Speaker Change #160: The risk reward isn't super fantastic from that starting point allow for some of the excesses to work their way off we thought the Q2 reporting period will be a trigger for that we've seen some evidence of that mark will pull us back you begin to set up a better risk reward set up into the end of the year.

Speaker Change #160: Somewhere in there we're presuming in increase in volatility around the elections and then as you get through the election, usually there is an alleviation of that uncertainty coming out the other side. All told we think this pullback ultimately becomes a buying opportunity, but we do need to let the dust settle in terms of this repositioning angle that I keep coming back to.

Speaker Change #160: We talk a lot about the election and of course, there's a lot of about positioning as well, but I know that you and I were talking earlier about how Alex there's a lot of people trying to get ahead of thinking there might be a change in administration or certainly there is going to change in the leader at top end.

Scott: They want position for a potential tax changes as well that's right and so we had changes in capital capital game pack like you need to kind of get ahead of that which brings me to kind of buffer and what happened with Apple Hey, Scott can you walk us through what the election might be playing out right now mark itself out.

Scott: So the way we've been thinking about election, a little bit different for many we've been saying that both candidates or parties. If you will our equity negative we focused in on tariffs and taxes as the two main decision points.

Speaker Change #162: While we all care about social issues are a little bit less impactful on fundamentals, so where is the biggest fundamental issue.

Speaker Change #162: With with Trump, it's how you incorporate tariffs and narrow our concern has been that that would be fundamentally disruptive journeys.

Harris: As Vice President and Harris moves up in the policy you have the Democratic profile now kicking in.

Speaker Change #164: In our view, increasing burden on pushing tax rates higher to offset a lot of other spending initiatives and in that scenario, that's potentially a negative for U S equities as well as we've been living in sort of a lower tax rate regime over the past several years. So in both cases, we have issues with the candidates.

Speaker Change #164: We get there are some flip sides with Trump you get deregulation and his potential push down lower taxes, but we will take the deregulation as an offset to tariff concerns with vice President Harris, we're still looking at that spending inertia, which kind of keeps the physical a combination part going but if you pay through paid for.

Speaker Change #165: Higher taxes, which you do that then begin to do is cloud the S&P 500 fundamental picture as long as as well as with other parts of the U S equity market got it. Thank you for explaining that and interesting that both candidates are equity negative having said that I know theres a lot of discussion I'm sure. Our clients are asking a lot of questions about the elections.

Speaker Change #166: And the potential impacts, but to what extent are they already positioning for it I feel like it's more discussion and thought operations right now than active positioning.

Speaker Change #167: I think theres a lot of discussion and there's probably some positioning or hedging put on around Trump trades.

Speaker Change #168: <unk> trades now harriss trades got that but in terms of an aggregate portfolio positioning around the election I don't know that we have seen that in aggregate just yes, it's quite interesting again among the backdrop issues that we think we need to contend with next year is the growing deficit situation any concern we've had.

Has been that you would see a backup in interest rates, let's call. It the bond vigilantes returning into the into the spectrum here as investors are dealing with an ongoing new supply in U S. Treasuries, you turnaround and look at what's happening with 10 year yields right now and it's like that issue seems to be off the table relative to more recession type concerns. So we're back in.

Speaker Change #168: Fourth I think right now the election is probably taking a little bit of a backseat to what's happening in terms of the underlying economic circumstance and the fed but I think as we go from now until the end of the year, we have to remain centered around a view that hey look at this is going to be an evolving changing landscape that we're going to have to keep adjusting to.

Speaker Change #168: Our approach with our ongoing focus is on S&P 500 fundamentals in particular and there are we think we're still in very good shape.

Alex Karp: Great Scott really appreciate your joining us and giving US your perspective, Scott as U S equity strategies and global head of ETF research over at Citi and you think about this in context, Alex the changes over the last couple of days, we've gone from no landing to soft landing to hard landing and I think today, we've pulled back into soft landing given the ICM.

Speaker Change #169: Services and the flows report, but you have to wonder to what does it actually mean for the equity market may sell down by about 3%, but theres still a lot of a systematic funds out there like Cta is evolved vol funds that the signal is still going to be sell for them no. Even if you get a rally tomorrow or a dead cat bonds like is it just that in the selling of this going to prevail.

Speaker Change #170: And when you layer in liquidity and you layer in seasonality yeah, sorry, the robot taking over is that what you're saying.

Speaker Change #170: Funds I don't know.

Speaker Change #170: Hi, everybody.

Maybe I don't know we've got much more coming up on this market selloff medic Mondays and that's what we've been saying all day and looking at the Vic spiking to a record earlier right now at about 37 and change we're going to breakdown. The VIX is moves next this is the close.

Speaker Change #170: [music].

Speaker Change #170: Okay.

Speaker Change #170: Perfect.

Speaker Change #172: Wall Street famous Theyre engaged surging as much as 42 points and the biggest one day spike going all the way back to 1990, Abigail do little has more and look at that price action. There on the VIX right, it's come back down to Abe.

Speaker Change #172: Seemingly reasonable authority.

Speaker Change #172: Yeah.

Speaker Change #174: At a high 65.7 pretty amazing rally and it's just a sign of the uncertainty in the system that the stress in the system investors getting nervous we just two or three weeks ago had this VIX that they all complacent 12 level and then on the attempted assassination of Donald Trump It ticked a little higher and then on the speculation that Joe Biden may not be running then it went up.

Speaker Change #175: So in 18 or 19 to before these gyrations that we're seeing now there were actually signed that folks are starting to get nervous and I connect that back to the yen I know everybody is talking about the unwind of the yen carrying train, but the yen did start to strengthen around July 9th that is also at a point, where you're starting to see the nikkei come down the NASDAQ100 come down for.

Speaker Change #175: For some reason these options traders were a little bit slower capture what was going on.

Speaker Change #176: And so it wasn't that can placement level, but that really went away today, we're now in backwardation, which means that the VIX spot much higher than the curve. Although the whole thing is elevated and lumpy you brought that up I was harping about this on the meeting is this if you look at how backward in that curve, yes in such a short period of time and you look back from a week ago I got the Cc RV function you can say.

Speaker Change #177: The difference it's unreal Unreal, we actually have a terminal chart that we can show, we're just showing spot going right up through the curve and the curve had been elevated all year because of the election that uncertainty, but now going Super high now it's interesting 50, our friends at <unk>, who are of course, not the trade area.

Speaker Change #178: It is it fair to say a question that the thing that <unk> has a big trade in the market right now and you've had it for months and these are call options I think it was a 40 for the October level.

Speaker Change #179: Actually this is not exactly that chart, we were talking about but maybe we do have it I think it's BTB 'twenty, which will show that curve.

Speaker Change #179: But he apparently option volume right now is relatively light. So I think that this is a prelude of more to come the VIX may come back in it's clear that the system is under stress I'm sharing that Japanese banks that was a big part of the selloff and that Theyre spheres that the plumbing is stressed over there. If that's the case if this turns out to be systemic it could really get kind of ugly, but.

Speaker Change #180: It may take time, but the fact that we're seeing it in stock bond commodities currencies and FX, yes, problematic and then sort of what the contagion for that is our Abigail. Thanks, a lot we really appreciate that Abigail and deliver joining us there because if you're a small fund and then all of a sudden models up a lot. What do you have to do them to readjust varshock that the value at risk shock and then you have to adjust your.

Speaker Change #181: I can't imagine that were done in just 48 hours. It just goes to show that one thing happens and the ripple effects continue even if that first inc. Kind of calms down and everyone feels like okay, we've repossession adequately, but theres a lot of.

Speaker Change #182: Follow on that we haven't completely anticipate again also a correlation rises that's an increase as the mix also wasn't increases correlation rather than sort of a at the speeds itself a little we didnt get any visibility either no and that's a whole lot of bonkers, alright, well coming up we were at 15 minutes away from the closing Bell ran accounting you're down days and pride sheath of investment strategy and research.

Speaker Change #181: Glen.

Lindbergh: Will be joining us youre looking at S&P fill up by about 3% in this historic Monday is Lindbergh.

Okay.

Lindbergh: Yes.

Lindbergh: Okay.

Speaker Change #184: Our core PCE will probably break three just barely 331.

Speaker Change #184: In the fourth quarter and when that happens I think it's going to really make it hard for the fed to justify a dramatic cuts as they look out to 'twenty five in futures.

Speaker Change #185: So nothing really looks great right now I would just.

Speaker Change #185: Take the summer short.

Speaker Change #186: That was very bad as our chief equity strategist at Stifel kicking off the show and talking about how nothing really looks great right. Now. It is true you look at the S&P 500, and it's 11 sector groups everything is in the Red we came in this morning, knowing that it would be ugly given the price action overnight yep could have been worse. So I guess, if you take a look at where we were at like 830. This morning.

Speaker Change #187: Now down by 3%, but it is not worse than that but it's still a brutal kind of 42 hours, if youre, along equities and recently announced the cyclical stuff.

Speaker Change #187: Sectors in the S&P or the least bad like <unk> energy consumer Staples are real estate kind of smack in the middle there and the Russell is down but it's not massively underperforming it's relatively in line with the S&P downgrade percent I think it's all in context right. Because if you just looked at this without knowing what we had earlier today down 3% look pretty bad. Yes. This is this is a mess.

Speaker Change #187: Monday meltdown, but given where we were at four in the morning, six in the morning or even at eight in the morning, but there's kind of been a lot worse, 100% and like Oh, It's only a 50, but it wasn't 60, but again from where we were a week ago.

Speaker Change #187: And Jonathan you can relate to we think how you manage our portfolio of the paradigm shift really in you guys wrote it well said alright, so let's get some more market analysis, and bring and Jason <unk> Chief oven message strategy and research over at Glen Me, Jason What do you see in terms of this paradigm shift theres, an unwind of taking place in several ways what stands out to you.

Jason: Well first of all Sterling. Thanks for having me on this is this is very much a what we think of as a much needed market correction in the markets have gotten a bit overvalued. The optimism, we're sitting a little bit high to have a reset like this 5% to 10% of magnitude I think we'd be a little bit hesitant to call. This a pair.

Sterling: Or a dime shift okay.

Speaker Change #190: <unk> on average, we see 5% to 10% market corrections occur about one or two times every given year and the majority of those instances, we actually see markets go on to new highs during those shares but it doesn't happen all the time some of those times of markets end up down and the other thing to think about is this came about after we had a 15.

Sterling: Percent run in the S&P 500 for the first two quarters of the year through the mid year point were up 15% so to give back 5% plus actually still means that the market is up mid single to upper single digits. At this point in time. So does that okay. If it's on a paradigm Sip do you have to buy the dip.

Speaker Change #190: Look I think you have to be careful in buying the dip it depends on how you are positioned coming into this we are in the late cycle of an economic expansion, we don't think last.

Speaker Change #190: Weeks reports, indicating an impending recession. We think this is an economic slowdown at this point in time recession risks are there, but they haven't still haven't gotten pronounced in nature at some point here. This will be buying opportunity, we would recommend that investors kind of sit back and look at this and say, okay, there's going to be rebalancing opera.

Speaker Change #190: And here in the portfolio, probably before I came into this my my portfolio is probably overweight equities at this point in time with this move my portfolio might actually be more in line with targets, if im a little bit light I'd, probably start nibbling, but I'd take that nibbling slow because I don't think we've had this dust settle as of yet at this point in time, there is a lot of technical.

Speaker Change #190: <unk> involved including what's going on with the UN carrier trade a lot of unusual things in the market and it just may take a little bit of time for the dust to settle alright.

Speaker Change #190: And of course, it won't take more data points as well I'm thinking about the fact that we're still only midway through the earnings season, Yes, we've gone through the big banks and through the biggest of the big Tech companies, except for Nvidia, but we still have consumer companies to go we still have a lot of the industrials like caterpillar, which is due to report tomorrow. So theres a lot more data points that we're going to get how much.

Speaker Change #192: Two earnings matter in the coming days as we shifted sift through all these shifting position.

Speaker Change #193: I think there's a handful of things that matter one of the thing is earnings. This quarter next couple of quarters are probably going to be a little bit better earnings growth for the S&P 500 analysts is baked in higher numbers, they will probably come in a little bit lower than one ml as expected, but generally better growth than what we saw the prior quarters. Prior say three or four quarters are getting better as well.

Speaker Change #193: We pass through the year. In addition to that we need to keep our eyes on consumer spending and employment data as it continues to evolve we get weekly jobless claims trends as well as manufacturing sentiment indexes, which we think are pretty key right now those numbers look there on the margin that economic data is a little bit soft is not it.

Speaker Change #194: Appointed recessionary in nature, but it is on the software side, indicating growth will probably be on from an economic standpoint, a little bit lighter in the back half of this year, even though the earnings numbers might be a little bit better. So this is how would you categorize what we've seen so far in the earnings season like it clearly hasn't sounded like anything falling off a cliff, but there aren't clear and weak points, what do we noted.

Speaker Change #195: Look it's been stronger growth than what we've seen in prior quarters.

Speaker Change #196: But in terms of the actual reporting season relative to expectations I would say, it's been mixed right, we've had upside and downside surprises with such rewarded differently on different sides. There probably one of the interesting things that's happening.

Hearing more and more about is a little bit of skepticism surrounding AI and how quickly those investments will pay off in profitability start to ship to the narrative, we actually think Thats again, a healthy thing for the market to go through the optimism surrounding AI was a little bit pronounced historically technology cycles, we've seen waves of hype.

Speaker Change #196: By a wave of disappointment followed by a wave eventually down the road a few years later that ends up being ultimate realization of the initial hype just pace just perhaps not on the pace that was originally expected by investors. When they are very excited and it's a lot of waves you just described.

Jason final question to you Warren Buffett, we learned that Berkshire Hathaway. This weekend cut its taken Apple by half. We also learned that in prior weeks. It had been steadily reducing our stake in bank of America and it was the biggest shareholder in bank of America. What did you say when you got the world's most famous value investor Paring his position in <unk>.

Speaker Change #197: Long term investments like Bank of America like Apple what does it say about valuations overall.

Speaker Change #198: But Berkshire Hathaway as a value investor he is going to look at the market from prospective through evaluation lens. When he does that he's going to look around and he's going to see a lot of large cap stocks actually sitting at the upper end of the valuations I wouldn't say all of them, but certain ones are definitely going to stand out some of the tech companies are going to be the ones that stand out and he is probably going to be are or.

Speaker Change #199: His operation is going to be more willing to shave those sort of positions. When we look at the marketplace, we see actually a pretty broad spectrum of opportunities or higher end of the capitalization spectrum has been rich for quite some time as you dip further down and that capitalization spectrum into the rest of the S&P 500, or even those down into the small cap indices or even.

Jason: Indices abroad, we find more reasonable valuations alright, good stuff, Jason <unk> chief of investment strategy and research.

At La Mede, and he says one of the things you want to pay attention to of course is earnings Alex we're not anywhere close to being done with earning season. After the bell today, we are going to be hearing from CSS from lucid HIMSS and volunteer puncher, it's going to have to make good on its AI narrative and <unk> I mean, I love that company in terms of its macro read right, it's still going to be more of the manufacturing and not necessarily the server.

But felt quite good alright, we're moving closer to the closing balance loan market coverage right here on Lindbergh.

Speaker Change #200: The closing Bell Bloomberg's comprehensive cross platform coverage of the U S market closed charge right now.

Sure.

Scarlett: We're about two minutes away from the end of the trading day on this Monday, Scarlett <unk> and Alex El here to take you through the closing Bell, we've got a global simulcast let's welcome Carol Master added Matt Miller.

Speaker Change #202: In doing so welcome to our Bloomberg TV radio and Youtube audiences worldwide Manic Monday, we're going with the elaboration.

Scarlett: Right.

Matt Miller: But it feels like it could have been a lot worse than we've been spared the worse given that <unk> report at 10 am I got to say, Matt and I have been having a lot of conversations like for all of US right who have lived in reported during the great financial crisis during Covid the meltdown.

Matt Miller: Setting of the economy. This even though it felt maybe a little uncomfortable at the get go at the beginning I feel like it's been a lot more orderly and we've even seen that wear off our worst levels of the day, Matt Yes, absolutely I mean overnight when I saw the Nikkei open down more than 10% I started to get really worried in this morning was rough because future.

Matt Miller: Yours were worse than they were on Friday, and then we opened down more than 4% on the S&P down more than 5% on the NASDAQ, but youre right Scarlet when we got that ISS number it kind of equalize things and we felt a little bit better even though the numbers are still bad theyre not nearly as bad as they were yes, but are yet and I think I have to say, yes and.

Speaker Change #204: Other hardware Thats all day, the systemic funds right like if you have if you have a volatility shock in a bar stock eventually they're going to have to keep selling and so I'm really skeptical of the selling is actually done yet and that momentum takes a momentum of its own. So it may just be a pause before something the next wave of selling comes along but for now we can say we can call. It a day here.

Speaker Change #205: For Monday, Yes, we got them out there you have a volume is really high here, where it is settling out with the S&P I must be closing down around 3% the NASDAQ off by about three 4% the Dow Jones industrial average up about two 6% again volume pretty strong on this Monday, Carol Alright, and looking at the S&P, 501st you've talked about it right pretty big.

Scarlet: Based selling 482 names in the S&P 500, low today Scarlet 21 to the upside yeah, let's take a look at the imap, which should be pretty read across the board here because if you slice the S&P 500 until 11 sector groups or 'twenty four sector groups everything is down in fact by 'twenty one yes.

Speaker Change #205: Okay.

Speaker Change #205: And household and personal products down one 4%. So yeah, I'll read only a tomato pie there today I love that alright. So it made it really tough to find some gainers, but I did find a few telenovela up about 16% just off at times of the day top number one gain or any S&P 500 up the most since October of 87 this as Mars.

Speaker Change #207: Considers buying the snack maker of what could be one of the biggest deals. This year still talks are said to be ongoing no final decisions have been made according to those familiar.

Speaker Change #208: Could value kellen over at around $30 billion that is coming from the Wall Street Journal a bit earlier today on semiconductor again, another one an outperformer up almost 6% of its highs today, finishing the day up one five percentages among the top gainers in both the S&P 500, the NASDAQ100, I don't know.

Speaker Change #207: To be quite honest.

Speaker Change #208: There was some news Friday after the close of market settling of insider, selling which would make me think it would be down but it's not we didn't see the sox briefly turned positive in todays session. So it could be that there was just some momentum from buying and pushing some of these names higher and advanced micro also hire another of the semi names up about almost two.

A percent in today's trade Alex Yes, we still have some earnings that are coming out I mentioned the <unk>. The earnings came in right in line, a little bit better actually a 49 cents a share the estimate for 48 revenue Bang in line with estimates three 7 billion I was just kind of throwing through the press release here in terms of that performance is kind of what was growing where the risks were.

Speaker Change #209: It doesn't seem to have that kind of color yet, but we'll definitely keep looking on that in terms of their outlook I know that their operating income to decrease about 1% versus the same period last year.

Speaker Change #209: But nonetheless.

Speaker Change #212: Relatively solid results from CSI. Okay. We also have earnings out of this and of course the car rental company. This is a stock that's really going to kind of lock us youre down about 52% second quarter revenue missing. The average analyst estimate 3.05 billion analysts were looking for $3 one $4 billion International revenue also lighter than anticipated.

Speaker Change #213: <unk> revenue lighter than anticipated, there's a theme here, obviously and adjusted EBITDA down 71% year over year $214 million analysts were looking for $254 7 million Alright, we're caught up on Avis earnings now take a look at some of the losers in today's market a much bigger company Nvidia.

It was at one point down like 15% and had lost almost $400 billion of market cap. So this 6% loss doesn't look as bad as it could have been nonetheless, obviously it is.

Speaker Change #213: At least one of the two worlds biggest companies so a huge drag on the S&P Apple as well the Apple story I think is fascinating Warren Buffett has sold we found out this weekend have entirely half of his Apple shares. He still adds a massive position massive in Apple like 400 million shares.

But.

Speaker Change #214: And Apple had rallied up into the end of the week, but that story hurt Apple shares considerably today again, not as bad as they were this morning, but we're still closing down significantly on what is a very large company and then I had to look at robinhood and bitcoin and coinbase were all down.

Speaker Change #215: Cause of the underlying asset I'm guessing you can trade bitcoin robinhood. It hurt that platform you, obviously trade bitcoin on coinbase and I heard that platform bigger stock as well, but in general Bitcoin has been a risk indicators. So with this huge risk off feeling pervasive in the market Bitcoin at one point was down like 16% I think it's <unk>.

Speaker Change #216: Right now about nine or 10 times, a F and that is hurting anyone who is related to it micro strategy also a big loser in the market today, Alright, I'm, taking a look at the bond market. It looks super boring right. This second but man was that a day for a bond traders going around I mean really at one point you had the two year yield down 20 basis points and now.

Speaker Change #217: It's up by one basis point and one point you had the curb disinvesting in holding around two basis points and then all of a sudden now we keep inverting I mean that is a tremendous move in the bond market. We get supply later on this week for sure, but nonetheless, I mean, I don't know what to make of that price that kind of M. <unk> services coming in better than expected.

Everything is above 15, which signals growth not tremendous growth, but above 50 does signal that things are not contracting and that's the biggest part of the U S economy, which kind of feels like the environment, we're going to be for what the next month or so until we get through Jackson hole until we get to the next fed meeting J, Paul reminded us feel like Theres a lot of data points to get through so you do wonder about how that kind of.

Speaker Change #218: Shapes, the trade and whether or not we continue to see more momentum at least on the yield curve to the downside, let's get some odd numbers here on talent here because that also coming out.

Speaker Change #219: With earnings so just a big headline here on a full year adjusted operating income basis Theyre looking at anywhere between 966 million to 974 million. They were at some point looking for about $882 9 million, so they're raising their full year adjusted operating.

Speaker Change #219: Income remember this company has kind of two businesses really is a governance and government revenue based.

Speaker Change #220: Contracts in wholesale theyre kind of ramp up their commercial business as well with their artificial intelligence platform. So this to me feels like okay, AI I can make money from it well plus if they get J.

Speaker Change #221: J D Vance into the White house, what an amazing two this would be for Peter Teal, I mean, the stocks already at 40%, but imagine the government contracts that could be awarded after that yeah, well. The company was co founded by metered Peter tail in 2003, and this is definitely part of the appeal of a company like this all the recurring revenue that it gets.

Speaker Change #222: In the U S government one thing we should note is that our Pearland here says AI has transformed its business already transformed as a direct quote here and of course, what people want to get is the color here on exactly how much of a contribution AI has made to the business alright, we're looking at lucid earnings as well and if youre sitting at home trading. This company, let me give you the headlines.

Speaker Change #223: The EBITDA loss or the loss before taxes interest and depreciation was $647 $6 million, we were looking for $569 million. So worst than expected. However, the revenue in the second quarter was $206 million and we were looking for revenue of 185.

Speaker Change #223: $8 million. So the revenue was better than expected of course, it is really all about liquidity with this country accompany does it have enough cash to stay in business and so far it looks like they do because the public investment fund is making a new one 5 billion dollar commitment for lucid that has got to be good news.

Speaker Change #224: I would guess for the shared with a lot of money in up about 6%, Yes, I forgot you already put $3 billion into it alright him and her is also add his and hers health out stock is a little bit lower here in the aftermarket and we can go right to the outlook third quarter adjusted EBITDA of $35 million to $40 million estimate on the street is $33 eight so it does look like that's upbeat fiscal year adjusted <unk>.

Speaker Change #225: <unk> of $140 million to $155 million that is an app forecast it had seen $120 million to $135 million at the stock, which has been a real outperform up a 100%. So far this year in 2024 kind of kick it around right now up about eight tenths of a percent alright guys.

Speaker Change #224: Monday, that's where that was a day.

It was a day.

Can't wait to see what Tuesday brings that's a wrap I that's going to do for our cross platform coverage of the market close on radio TV Youtube Bloomberg of Rachel's, We will see you guys again same time same place tomorrow.

Speaker Change #226: Coming up on the close more analysis on the day that was Mohammed El area and he's a Bloomberg opinion columnist Ann President of Queens College, Cambridge will be joining us to give us his perspective, not just today, but what's in store for this week. This month and this year. This is a closed on Bloomberg.

Speaker Change #226: [music].

Okay.

Speaker Change #226: Okay.

Speaker Change #226: [music].

Scarlet: Welcome back to the close I'm Scarlet for an analyst day on what day. It was lets give you some of the highlights here guys, who got the S&P buying the most in September of 2022, but you know what it could've been worse closing just down about 3% we are off the lows as we headed into the close the futures market for tenant it could be a much rougher day Vic yes.

Speaker Change #227: At a 37 handle what we were at a 60 handle however, how.

Speaker Change #228: Quickly we moved in that inversion very severe a week ago, we were at 12 or the 210 spread now down by 11 basis points at one point were relatively flat in the first time, you've seen that in years again historic moments and gone spot down by about one 5% I want to point that out because when you have to sell things either for liquidity or stop losses or to cover your he hadn't carried.

Speaker Change #229: Trade you sell the stuff that's been working Angola has been working and it did what it's supposed to do you sell the stuff that win in order to cover the stuff that doesn't but still nonetheless sitting at $2400 an ounce Scarlet two stocks that have been winning for a long time definitely on the losing side today, Nvidia and Apple were the two most actively traded company stocks by Valley.

Speaker Change #230: And video of course, the poster child for AI excitement or hype, depending on your point of view down on a reported that its latest AI chip is going to be delayed due to design flaws on top of that there was another report that founder cofounder and CEO Jensen Huang has been Offloading some of his stake in the company selling to 323 million.

Speaker Change #231: Of Nvidia shares in the month of July just before the Tech route really got underway. So interesting timing no. One is saying it's connected but it's kind of an aside to what's going on and Apple, losing almost 5% on the day. There is a theme here in terms of a prominent investors unloading some of their stakes because Warren Buffett's, Berkshire Hathaway has reduced its taken.

Speaker Change #231: Apple by half so a big shareholder so holding the stock, but reducing our stake by half probably evaluation play at this point telenovela I want it and I wanted to include because it's up 16% on the day. The snack maker remember was spun off from Kelloggs and jumped on reports that Mars. The privately held Candy company may buy the company.

Speaker Change #232: So we'll keep an eye on that one but our top story. This hour really boils down to did the fed make a mistake by not cutting rates swaps traders seem to think so because on Friday. They priced in a 100 to 125 basis points of easing following that weak jobs report. This morning, they were even more convinced and briefly pricing of 15%.

Speaker Change #232: Probability that policymakers would make an emergency cut before the September fed meeting before the fed September meeting that positioning did face after a better than expected read on the services sector about 30 minutes. After the market's open but nonetheless, it's a very transformative few days for the market. So joining us at his take as Muhammad Ali I am President of a Queen.

Speaker Change #233: College, Cambridge, and Bloomberg opinion columnists and he joins US now you are on Bloomberg television on job day, but now you've had like 48 hours of market access and we'll get to the defendants in a second but what's your bigger takeaway here on what we've seen in the market.

Speaker Change #234: So on Friday, it was all about the growth scare.

Speaker Change #235: And the policy mistake concern growth it turns out has been slowing much faster than people anticipated.

Speaker Change #236: Then there was an understanding that the fed has missed a golden opportunity to cut rates. What we've seen today is the third leg, which is really bad technicals being triggered and a concern that these bad technicals would feed back onto the economy.

Speaker Change #236: So we are in a situation where.

Speaker Change #236: Markets have overshot, especially in the fixed income side, especially on government bond yields and what we need now is for these markets to regain their footing. It doesn't mean, Alex that the fed could do and intermittent cut that would be a big mistake in my opinion.

Speaker Change #236: I'm interested in hearing your thoughts further on the bad technicals feeding back to the real economy does that happen is that how it works the bad technicals can feed back to the economy.

Alex Karp: Yes, they can and that's the nightmare you want to avoid bad technicals basically means certain people have been caught off sites and you have over levered situation, the Japanese carrier trade being one of them and you have over hyped valuations. So what tends to happen and you said it is that as people.

Alex Karp: To get back on side, they sell what they can.

Alex Karp: And when they sell what they can you get what's called <unk> Patriot.

Alex Karp: And that can take and can start entering the credit market can start going into different segments that make borrowing harder that make banks more prudent and next thing you know you've got the technicals, leaving to a credit crunch.

Mohamad: Then on the minds the economy, we're not there, but that's the one thing to keep in Iowa. So are we going there because in some ways Mohamad. It would not surprise me tomorrow, we'd come in and we get a turnaround Tuesday right, but are we headed there for this kind of contagion, though.

Speaker Change #238: I don't think so.

Mohamad: Look.

Mohamad: A lot will depend on.

Speaker Change #239: How modern calls are met today and tomorrow whenever you have these massive movements first thing you've got to figure out where was the pain trade.

Speaker Change #240: And who is.

Speaker Change #240: Is really having trouble raising cash so far we haven't seen evidence of that so.

Speaker Change #241: I am of the view that this will we will look back on this and say it was an overreaction in certain parts of the market.

Speaker Change #242: And the market got carried away by demanding inter median cuts by demanding 75 basis points in September it's not going to happen.

Speaker Change #243: It's not going to happen the fed will look at the economy and say, yes, it's weakening but this is not an emergency situation right such.

Speaker Change #244: Such as the ones you've seen before okay. So things might not have gotten disorderly in U S trading hour, especially given the price action you look at the charts, we've definitely closed off our lowes and things.

Speaker Change #245: Steady after the 10 am ISN services report can we say the same thing about what happened in Europe and overseas trading in Asia, and Europe I. If you look at the Nikkei It fell as much as 13% it closed down 12% the biggest one day drop.

Speaker Change #246: Since the 1987 Black Monday, if there is difficulty for companies to get out of positions or investors to gas positions and they have that forced selling scenario that you were just describing that can spread to the U S markets candidate.

Speaker Change #247: Yes, and we're keeping a very close eye all of us that are interested in this on Japan, There's two dynamics going on in Japan. The one is the equity market remember Japanese equities with the Darling of investors up to July and we saw a massive increase in evaluations and then you've got the.

Speaker Change #247: Higher interest rates, then you start getting the strengthening of the yen and that meant that Japanese stocks have given up all day game now that they have a completely different dynamic which is the Japanese investors for years four years has been going outside Japan to get yield yields.

Speaker Change #247: Were too low in Japan.

Speaker Change #247: Japan. So they went they started buying U S high yield U S investment grade and some of them had been caught offsides and they have to sell that position. So those two dynamics are interacting and we've got to keep an eye on that.

Speaker Change #247: The Japanese authorities I think are quiet.

Speaker Change #247: Aware of what's going on there. So I suspect that you will see them provide a lot more scope for certain Japanese investors not to panic sell.

Speaker Change #247: Well.

Speaker Change #248: We did.

Speaker Change #249: Does the boj does the government I know that they don't want a super weak yen, but did they want that kind of a reversal that we've seen in just the last week, where we've moved from like $1 60 to $1 43 in a very short amount of time.

Speaker Change #249: That velocity is that a good thing.

Speaker Change #250: No I mean, no country wants to see if currency move by this much in such a short amount of period amount.

Speaker Change #251: I'm out of time milk are no country once that business the behavior of a an emerging economy. This is not the behavior of a developed economy with mature institutions. So no I think they are worried about the volatility that's going on in the FX market right now alright, Mohammed El <unk> as president of Queens.

Alex Karp: Cambridge, He is sticking with us there's a lot more to discuss with him whether its overseas whether it's here in the U S, especially when it comes to how the fed proceeds next but Alex there is no more earnings rolling in yes. We are spirit Aero systems are coming in of course. This is a company that Boeing is trying to buy because of this main supplier. The stock is up barely but it wasn't really great.

Speaker Change #252: Looking at revenue hours, a little bit of a mess 149 billion. You also had delivery delays shipped that deliveries for Boeing were down 42% for Airbus.

Speaker Change #253: For the Boeing 787, there were down 64% and our loss per share was $2.73. Yeah. So this is an ongoing story and of course, that's going to be absorbed by Boeing at some point.

Speaker Change #254: We will continue to keep you posted if there is any further developments there this is bloomberg.

Speaker Change #254: [music].

Speaker Change #254: Okay.

Speaker Change #254: Yes.

Speaker Change #254: Okay.

Speaker Change #255: Today's see a red price action in risk assets had traders convinced that the federal reserve will cut interest rates sooner and more than what they had priced in last week Mohammed Atta Muhammad Ali <unk> from Rick opinion Congress and President of Queens College, Cambridge is still with US and he says the fed is not going to make an emergency rate cut.

Speaker Change #256: Well, how long can you elaborate on that because we went from this narrative of no landing for the economy to a soft landing with the weaker batch of data, particularly the jobs report and now I feel like over the last 24 or 48 hours to a hard landing where are we at in terms of the actual economy and how the fed response.

So I don't think we had a hard landing I put their profitability at a hub of a hard landing of 35%. That's why I've been for the last few months.

Speaker Change #257: The market is adjusting towards 35 and in some cases people have gone into above 50, but for me. It is not the dominant scenario, yes, it's a fat tail Scott.

Speaker Change #258: Let's call. It you get emergency cuts when you have a massive external shock of some sort.

Speaker Change #258: You don't get emergency cuts simply because you've had three data releases that were weaker than anticipated and you've had market turmoil I mean, that's what you're saying to me Mohammed because the jobs number wasn't terrible right like we werent negative job, but that's what was very confusing as this is the market testing this and then.

Speaker Change #259: Yes, I think the market is trying to replay the fourth quarter of 2018.

Speaker Change #259: Where you get unsettling volatility.

Speaker Change #260: And that unsettling volatility forces deferred into a U turn on policy, that's not warranted by <unk>.

Speaker Change #260: Economic development now it worked in the fourth quarter, but it didn't result in an emergency cut it just made the fed less hawkish at its next policy meetings and that's what I think youre going to get you're going to get either 25 or 50 basis point cut in September.

Speaker Change #260: But you will not get an intermediate cut.

Speaker Change #261: How much of the market and doing the work for the fed in terms of tightening.

Speaker Change #261: Excuse me.

Speaker Change #263: Let me rephrase that question financial conditions are tightening here, how much does that change how the fed response to what's happening in the markets. I know you said unless theres true turmoil or unless theres, an external shock, but the tightening and the extent of the tightening that we've seen in the just the last three days alone is pretty pretty remarkable.

Speaker Change #264: So you've got two two competing factors.

Speaker Change #265: Interest rate risk factor and the equity stroke credit risk factor. So the interest rate one is loosening tremendously yeah. We had a 50 basis points move in the two year last year lost last week that doesn't happen in a mature economy. We had 50 basis points move yes, so you've had a loosening of financial.

Speaker Change #266: On the interest side, but you're right you are getting a tightening of financial conditions on the credit and equity side. So.

Speaker Change #266: How does it play out I suspect that pretty equal keep an eye on credit spreads credit spreads had been relatively well behaved so far they haven't adjusted the way interest.

Speaker Change #266: Treasury yields have adjusted so just keep an eye on credit spreads because that's going to be really important.

Speaker Change #267: We just have about a minute left but the fed really setup job data is being <unk>.

Speaker Change #267: Factor, what's going to be the X factor for you over the next few weeks.

Speaker Change #267: So I think all of us are going to start paying attention a lot more attention to droplets claims on Thursday.

Speaker Change #267: It's a noisy number its a very noisy high frequency number, but if that number comes at to above 250.

Speaker Change #267: Then the market will get really nervous about a recession risk alright to watch for 250 on jobless claims and right now the consensus estimate for this Thursday report is our 240000, so we're getting closer to that level Mohammed always a pleasure speaking with you.

Speaker Change #270: He has come back and join US again Mohammed El Aerion as President of Queens College, Cambridge, giving us his perspective on what has been a pretty incredible Monday. It feels like we've gone through a war, even though at the end of it.

Speaker Change #271: It wasn't as disorderly in the U S trade as it was as it seemed in Asia trade yeah.

Speaker Change #272: Feel like aside from the fundamental economic data here just the jostling on positions. When you have a mix now at 38, I feel like I feel like a drumbeat here, but all of those funds that have to readjust their risk I can't imagine it's done in just 48 hour time, yeah, well I mean, a big big driver of all the volatility and the declines in the weakness is certainly technology stocks and coming.

Speaker Change #273: We're going to speak with Dan Ives senior equity analyst at Wedbush, He's going to breakdown. The latest AI company to report, which is talented but really talk a little bit about the perspective of these companies and what kind of a long term view you need to hold for some of these AI related play also in video getting hit as well on some production delays now also reorganizing <unk>.

Speaker Change #273: All of that filtering through in the tech market.

Dan Ives: Is lindbergh.

Dan Ives: Okay.

Scarlet Pearl: [music] defense Bloomberg's to close I'm Scarlet Pearl should only dancing joins us now through the rest of the hour and I know you've been doing double duty today you were there for the open when things got really bad and since.

Speaker Change #276: The <unk> report things have calmed down a little bit in that it didn't get worse, but certainly have calmed down a bit and yes. It didn't get worse interestingly the bond market did reverse pretty significantly you have to wonder how that sets up for tomorrow doesn't it absolutely. We also of course had earnings after the closing Bell and Palin tier is one of the companies that did report.

Speaker Change #277: And so far we're looking at a double digit percentage gain for Palin tier it increases profit outlook. It also of course talked up its AI business as well as saying that demand for AI is definitely helping us business as AI has transformed its business in fact with revenue climbing 27%. Thanks to its commercial business and of course.

Speaker Change #278: AI plays a part in <unk> business with the U S government that recurring government contract that it has benefited from certainly a defense named here. It was also the Trump trade my dad as well, but also a stock that before you entered today was just taking a massive hit boy what a day makes alright, so let's bring in Dan Ives senior equity analyst at Wedbush to give.

Dan Ives: It's a little bit more context, not just on palin tier, but on the big Tech stocks overall, which I know that dentists pretty constructive on Dan when it comes to <unk> results, how lower highway expectations heading into this should not only mentioned the fact that the stock has been under pressure, but this is a company that had some very very stable contracts.

Speaker Change #279: I mean this is a gold metal performance you look at where China. The AIP. This is a company in transformation mode.

Speaker Change #280: It comes to AI Revolution, I think actually one of the best barometers around demand Besides Microsoft Nvidia AMD powered tier that's why they're the message of AI and I view. This as really just a game changer quarter not just for them boarded speaks to about overall AI demand for the enterprise.

Speaker Change #280: Dan at the end of the day, you look at a selloff like today and I know that you say hold through the long term, but ultimately how do you feel about investor sentiment around these magnificent seven names and anything AI adjacent at this point do you feel like Theres, a fundamental shift here and that perhaps investors are going to have to hold on.

Speaker Change #281: A little longer here to ride out this volatility.

Speaker Change #282: I think this weekend is about as scary as I've seen probably going back like Covid goes in terms of March 2020 in terms of the handholding over the weekend into today, but it comes down to look at the fundamentals look at earnings look at whats playing out a once in a 40 year type of cycle in terms of AD revenue.

Speaker Change #283: But we are going to have white knuckle murdered whether yen carry trade what we're seeing in nikkei, but that doesn't change our view. This tech bull market continues to have legs and look almost 25 years covering tech from the street, we use terms like this white knuckle moments, we're front and center Handholding you earn the winter you earn the names.

Speaker Change #284: And we are in pounds. He is a perfect example, stock with almost 20.

Speaker Change #284: Probably tomorrow is a three in front of it okay.

Speaker Change #285: I want to get back to some of the Big Tech names, but first of all you mentioned White-knuckle moment, you are joining us from Japan. So that means you are there yesterday during the Nikkei's decline of up to 13% is the biggest one day decline since the 1987 Black Monday crash give us a sense of what you saw and what you felt was their panic selling wasn't disorder.

Speaker Change #284: Lee.

Speaker Change #286: I think maybe a little calmer than you would expect from just the historic so but no doubt I mean this was.

Speaker Change #287: More than a wide knock a moment historical just happens in a year, but it comes down to when things like this happen, we're not going to hide how do you ultimately where does that report.

Speaker Change #288: In fact look like you know not just for Japanese fund, but around the world and I continue to believe this is just more of a global sort of whether it's the yen carrier trade de risking that we will stabilize and will create opportunities, but are definitely not time to be having a cappuccino during meetings.

Dan Ives: Tokyo, Dan, but at what point do you say hold off here on catching the falling knife, because if you don't know how far that carry trade has to unwind and then you layer. The systematic traders on top of that at what point do you worry that we just have more to go here in this white knuckle moment.

Speaker Change #289: We could have more of them to go right, but my view and it's always been earn these panic geopolitical VIX spiking moment for decades, that's been our best opportunity to earn the best Tech winters claim.

Speaker Change #290: Clean the core tech teams and to me what would meet me hesitate if fundamentals change chip our checks here in Asia don't show the demand for AI. If we start to see that then that's different it's <unk>.

Speaker Change #291: It's actually the opposite I think more here that broke from Nvidia in a few weeks and the rest of the book, we saw Microsoft Luca leases due to AMD look at <unk>, where I think we're going to see with Nvidia you don't look at disasters like Intel as a barometer. Okay. You mentioned Nvidia, so I'll bite and video shares declining a lot today.

Speaker Change #292: Of course pairing a lot of their losses, but there was a report that is upcoming AI chip is going to be delayed because of design flaws.

Speaker Change #293: How meaningful is this delay to its revenue line to its bottom line at a time when investors are in a show me kind of mode.

Speaker Change #294: I don't think that really changed the story I mean, if it moves a few months nor in stopping orders because of it it comes down to demand.

Speaker Change #295: Timing things could shift out a little like we've seen with <unk> and youre going to have general regional type of Tech move obviously led by golf either bad Jensen Nvidia This doesn't move the needle, but it <unk> fit perfect narrative of just the perfect storm, we can massage geopolitical the nikkei yen Aric trade Buffett Selwyn.

Speaker Change #296: <unk> does Apple position, yes, I mean, this just kind of add fuel and that's why all of the bed that was getting worried I hadn't seen them in 18 months. They all came out over the weekend.

Speaker Change #297: Just saying if you take a look and you mentioned that you were in Japan, when you see the Japanese indexes and how much they found coming into this morning's train. It was drastic they were historic moves to the point that you're making if you look at the NASDAQ100, It was roughly 3% drop off of two days of more than 2% drops in a row.

Speaker Change #297: When you're talking to clients out there Dan what's the sentiment and what's the worry that that risk off appetite starts to be more pervasive around the world.

Dan Ives: I don't think especially on the institutional perspective, who is going to be wanting to sell Microsoft Apple in midyear.

Speaker Change #297: Sir.

Speaker Change #297: Alphabet.

Speaker Change #298: Because of the yen carry trade falling apart in the summer.

Speaker Change #298: Is that the.

Speaker Change #300: These are situations I'm, not saying that it's pleasant, but it isn't.

Speaker Change #300: Isn't that what just happened.

Speaker Change #300: 24 hours.

Speaker Change #301: Yeah, and that's why it's a tech investor you view that as opportunity not time to hit the elevator and hit the exit. So I think that's I think the best ones over the years <unk> been able to use these opportunities, but it comes down to fundamental yeah look at earning season and look at talent you just as another data point that this AI revolution still.

Speaker Change #300: And the second inning.

Speaker Change #302: You put it in different ways second inning, we're at nine P. M of an all night party, but with the pullback that we've got today in the last couple of days has a time change to now like seven P. M.

Speaker Change #303: Look Theres music, everyone go out the party yeah, but it's still nine 930 in that party and.

Dan Ives: As our checks continue to show. This party is going on to afford we stay firmly bullish and that's why we've used the opportunity as I go through the white knuckle as you own the names in Tech look at fundamentals, that's how we navigate some people feeling hung over today, but then I know you're up bright and early that is Dan Ives senior URL.

Speaker Change #304: Senior equity analyst at Wedbush, we're going to take a look at some of the biggest movers in after hours after quarterly results lucid Hampden her spirit auto a lot of divergence hereafter market arent, we seeing here at lucid up 15% after reporting him and her is down almost 10% spirit aerosystems down more than 2% Scott.

Scott: Yes, Louis and of course, getting some new Saudi support the pis, putting another $1 $5 billion of commitment behind that company I believe Matt Miller was telling us its already given 3 billion. So that financial support certainly being welcomed by investors spirit Aero systems, a modest move but it is being absorbed by its parent its former parent Boeing and him and her.

Scott: <unk> continues to be another story of consumer demand for it.

Speaker Change #305: Different drug options, which of course are center directly to the consumer as opposed to the traditional channels and of the hundreds of companies that have reported earnings so far more than 80% have top consensus estimates that much like the market sell off the good earnings news has been eclipsed by guidance from consumer and Tech companies in particular, 20th now for more analysis is gene.

Gene Martin: Martin atoms of Bloomberg intelligence, what do you make of all that you have the earning season tailing off at a time when sentiment seems to start to change and the macro along with it what does the forward look mean in terms of kind of changing attitudes around the street.

Speaker Change #307: So the only area of change to the negative has really been with respect to attack and some of the select tech adjacent names in the consumer and communications space and with respect to that it's not about a downgrade to the outlook, it's really about a downgrade of the excessive expectations embedded in price. So I think that that's an important nuance because we're actually not seeing company guide.

Speaker Change #307: To the downside, we're not seeing analysts estimates revised slow or what we are seeing is tech companies, saying hey.

Hey hold the phone your expectations are far too high market right and I think that that's important an important nuance we need to watch, though as the earnings season progressed as to see if some of the weaker macro data that we've had in the last couple of weeks impacts the ex tech space and Thats yet to come we really haven't dug into the meat of the consumer earnings.

Speaker Change #307: And then or some of the industrials earnings seasons financials were off the charts fantastic at the start of the season, So let's see what happens in consumer industrial yet certainly the ISN returning back to 2023 Loews is not a welcome surprise with the services and next today with relatively solid so it's been kind of mixed macro.

Speaker Change #308: Even though last week was painful and we characterize it as this horrible kind of macro week its been realistically a little bit more mixed.

Speaker Change #309: And a lot of it had to do with guidance I am just simply not living up to investors very very high expectations and I am glad you bring up the fact that we still have a lot of earnings to go whether it's consumer companies are industrial companies and they make up a big big chunk of the U S economy, even as the Big Tech names make up a bigger chunk of the S&P 500, when it comes to the industrials and the consumer names.

Speaker Change #310: What kind of comps are we looking at here are these companies how higher lowest the bar, yes. The bar is actually really low the virus very low for all of the index, except for attack and I think that that's also important is a year ago. The rest of the index or the 493 of the S&P 500 that are not the magnificent seven we're posting year over year declines in earnings.

Speaker Change #310: That makes for a very very easy comps for this segment to potentially do quite a bit better very contrasted to the Max seven or the biggest of the big Cat Tech stocks, where earnings growth with peaking over the course of the last several quarters. These are groups that are just starting to take their way out I think though we have a confidence issue in this space and it's not just about what the company is saying.

Speaker Change #310: But how they say it and how they guide going forward and the Investor confidence is very very limited with respect to the script all of our confidence was really piled on the shoulders of <unk>, where we did see persistent and accelerating earnings growth prospects. This group is just starting to show some signs of improvement and investors need to gain confidence.

Speaker Change #311: That improvement is terrible.

Speaker Change #312: Adam It's a great reminder, that there are 493 of their company.

The big cap space and even more in the small cap space. Thank you so much and again just to recap where we are on this Monday you have the big Big declines here across the board for the equity indexes, whether it's the tech heavy NASDAQ the S&P 500, or the Russell 2000, which had been a beneficiary of the rotation trade out of big tech into smaller.

Speaker Change #312: Companies on hopes that the fed but soon cut rates.

Speaker Change #313: VIX look at that.

Ali: Ali because at one point that got to somewhere in the Sixty's, it's come back down to 38, which feels relatively low, but certainly a long way off from where we were just a few weeks ago and if you looked at the NASDAQ100 over three days you're off by almost 8%. So really that three day basis is even more painful than the day alone, but more to come this week Scarlet. This is the close.

Lindbergh: On Lindbergh.

Lindbergh: [music].

Lindbergh: Okay.

Lindbergh: [music].

Speaker Change #315: It's time now for the top three were renamed dropped that people are driving some of the days, let's talk about stories and today's scene is kamala Harris as potential running mate, who she is considering as her pick for VP first Mark Kelly former astronaut and U S. Navy Captain he has been serving as a junior Senator from Arizona Since 2020, and next that Josh Sapiro.

Speaker Change #316: Popular Governor of Pennsylvania, which is of course, a key battleground state and finally, Tim was the Minnesota Governor since 2019. He is credited with being the first Democrat to call. The Trump campaigns activities Weird. It's a label that seem to have gained some traction because you've been hearing a lot of people use that word to describe what's going on with the Trump.

Speaker Change #317: And Vance and everything else there alright, Kamala Harris is expected to announce her choice by tomorrow, but Reuters is now reporting that she has narrowed the search down even further so of course, we needed to bring in balance of power at Cobo is Kelly lines to give us little more context here. So Kelly she is narrowed it down from three to two.

Speaker Change #318: What's your money on who is their money on.

Kelly Lines: Well at this stage it really is just a binary choice. According to Reuters its two governor Governor Walz of Minnesota Governor Shapiro of Pennsylvania, now if Youre just going via electoral college considerations, you could understand why governor Josh Shapiro, our Pennsylvania would be the more attractive choice considering that he is very popular in that savings that governor with north of 50.

Kelly Lines: Percent approval ratings and of course, if you win Pennsylvania that really helps you on the path to 270 electoral college votes remember Theres 19 electoral vote, a college votes in the state of Pennsylvania, and this is a key pillar of the so called Blue Wall, which includes Pennsylvania, Michigan and Wisconsin that said that is in the same neighborhood as Minnesota, which is why Tim Walz, perhaps is.

Speaker Change #320: There. He is also one of these kind of darlings of the media. If you will you mentioned that he coined that term weird he has been making the rounds on various television shows. He is someone who is well known in the house of Representatives, having served there for 12 years before becoming governor. So really we expect that we'll understand what are the two it is within the next 24 hours because Kamala Harris is set to kick off.

This ticket in style in Philadelphia Tomorrow evening with a rally we've been told not to read too much into the fact that that rally is happening in Philadelphia, which is Josh Shapiro hometown. So I'll, let you read into that what you will but of course that is going to kick off a seven states swing state Blitz with this ticket over the course of the next five days given the locations in some ways, it's part of it.

Speaker Change #320: Not hand that Kelly you know when.

Speaker Change #321: <unk> was picked to be Trump's running made there were very obvious market implications in the sense that he has been very vocal on a certain number of topics here. If you had Josh the <unk> 10 malls in particular, what could you expect out of them will it be as significant for Kamala Harris as it would have been for Trump to choose a running mate.

Speaker Change #320: He did.

Well one of the threads here that actually runs through both the Republican and Democratic side is the idea of appealing to labor. This is something the working man, we heard JD Vance talking a lot about after he was selected as the Republican Vice presidential nominee and it is worth pointing out we have heard from labor about governor Josh Shapiro, including from the UAW President, Sean Finn, who was not in favor of him as a choice.

Speaker Change #320: He actually preferred someone more like governor walz, or even governor Andy Beshear, and Kentucky debuted as pro Labor Labor also had a problem with Senator Mark Kelley of Arizona, which could potentially play a role in the fact that we no longer understand he is on the shortlist of short list of Labour policy is going to be something very interesting to watch, especially considering Harris is planning to be industry.

Speaker Change #320: On Wednesday to rally.

Speaker Change #320: With the UAW, but something else to consider here on on policy is Josh Shapiro when it comes to Israel in Gaza. We know that this is a problem that is very much divided Democrats between progressive and more moderate Democrats, Josh Shapiro is a Jewish man, who would be actually only the second person in history to be on a major presidential ticket who is Jewish if he is indeed tapped and he was much.

Speaker Change #322: Harsher in handling some of the college protest we saw earlier this year that has caused some problems among progressive so that's another area to watch very carefully if he is ultimately selected by Harris. Okay. So the moment as tomorrow evening in Philadelphia. When she holds her a campaign rally, but theres a possible possible additional announce it before then or.

Speaker Change #323: Yeah. It is worth considering that when biden rollout Kamala Harris as his vice presidential pick in 2020. It was a video on social media that went first granted it was during the pandemic during that time, but we have heard rumors that it could be a kind of video rollout that begins the proceedings. If you will tomorrow and ultimately of course culminated in that in person rally.

Speaker Change #324: Thank you so much bloomberg's Kelly lines cohorts of balance of power.

Speaker Change #325: A lot of news coming out of the other Kamala Harris campaign soon still had what investors need to watch for tomorrow, starting with more earnings this is lindbergh.

Speaker Change #325: [music].

Speaker Change #326: We can take a look at what else we're watching for it tomorrow. Because in addition to Uber reporting earnings should Ali Caterpillar, which I'll kind of kick things off for the industrial company and I am very excited at another bellwether to look forward to before the market opens tomorrow as well as Hyatt remember watching how Hyatt Airbnb I always mobility companies and companies.

Speaker Change #327: Focusing on travel are really interesting in this market without weakening consumer absolutely read it as well is going to be reporting earnings Theres also some economic data, although having said that the most important economic data points really came out today with the ICM services. There is trade balance doesn't tend to move the market as much listen we're all waiting for Thursday at the end of the day out of the jobless claims but yes.

We are keeping an eye on every economic data point these days with the bond market moving as it is alright, and let's not forget that tomorrow evening Kamala Harris is holding a rally in Philadelphia and everyone says not to read too much into the location count given that Kamala Harris still hasnt selected our named publicly her running mate.

Speaker Change #328: There's a lot of anticipation that her running mate may just be the current governor of Pennsylvania, and Mike Kelly was saying really this announcement could come anytime tomorrow in any form social media stole the show when it comes to this election, let's see if we'll hear sooner but of course. This is really the political news of the week and of course with her rally, Pennsylvania. She is going to kick off a seven.

Campaign rally overall, social sent me on the road a lot here that does it for US we've got balance of power coming up next with Kelly lines at Joe Matthew have a great evening, everyone. This is lindbergh.