Bloomberg Markets : BLOOMBERG : June 5, 2024 12:00pm-1:00pm EDT : Free Borrow & Streaming : Internet Archive (2024)

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sonali: welcome to bloomberg markets. tech is driving record highs for the s&p 500. the nasdaq and traders are weighing the latest economic data for clues about fed rate policy and that is driving yields lower. let's get a check on the markets. the s&p hitting record highs. the nasdaq 100. you're seeing 7/10 of 1% gain on the s&p 500 shaking off the worries started the week. we started the week lower.

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the nasdaq 100 up more than 1.3%. almost 1.4%. you're seeing a two-year bond did. three basis points lower on two-year yields on the day to 470 three. incredible when you think about how we started the week at 480. the 10 year yield below for 30 at the moment. within three basis points lower on the day. midday movers on the equity side paired and video the biggest gainer on the s&p as it continues to hit all-time highs of the 10 for one stock split. many are betting the rally and other world's most valuable chipmaker has room to run. on monday bank of america analysts lifted their price target to a street wide high of $1500 per share. crowd strike delivered first quarter earnings that beat wall street expectations despite a pullback in spending has challenged its cybersecurity rivals. company shares had doubled over

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the past year handing a valuation that makes it more expensive then nearly all of its rivals. adp data from may showed a slowdown in private payroll growth but the services sector posted its strongest growth in nine months. let's discuss this with bloomberg intelligence rates strategist ira jersey. you see all of this conflicting data crossing the tape yet yields barreling lower. you think the bid we have seen this week alone either the bond market makes sense to you? i were: might have gone too far but keep in mind a big part of what is going on with treasuries is a global rate story. we had this morning the bank of canada cut interest rates for the first time. the first g7 country to do so. the ecb is likely to follow. part of the treasury move is being dragged down by the global rate environment. to your point, the ism data, particularly the services data was very robust. have this disconnect between the

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good sector and the manufacturing sectors being a little bit weak. services has grown like gangbusters. that is where all of the inflation is coming from. there is this idea any of the rights market that eventually the federal reserve is going to cut interest rates and are going to have a slowdown. the services boom cannot last forever. you did not see that in the most recent ism survey. sonali: where is the tail wagging the dog if? we think about the central bank divergence, it is a big story. you and many other guests have talked about this idea that we are looking too far too soon in the bid we have had in the bond market so far. how do you read the data when the rest of the world is changing course? ira: i think that is one of the challenges we have because u.s. is a little bit stronger and you are seeing higher inflation then europe and canada.

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i don't think it is a tail wagging the dog. it is what ranges and where his fair value for longer-term rates. you look at the short end of the curve so you look at treasury bills and what is going on in the six-month space, don't have the same type of rally and lower yields than you have in the longer end. the longer end is going to reflect not only what is going on in the economy today but what the market anticipates is going to happen next year and in 2026. the market thinks there is going to be lower interest rates. it is not going to be as severe and the terminal rate the fed is going to cut to is not going to be at the same level we wear at six month ago when we thought the fed was going to cut to 3%. now the market is thinking like 150 basis points of cuts instead of 250. that is the big seachange. around that 15, 20 basis points on 10 year yield, that is going to be noise and positioning.

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all of those things are can shaving to some of the recent rally we have had and some are technicals. 430 was an important level on the 10 year. if we close below that level, that is a signal there are going to be people who are sure to are going to be nervous and unwind those shorts and we could see more of a rally. i think it would be hard to break 4% in treasuries before the fed starts to cut rates. sonali: in the near term, the 430 level fascinating. it is not just the absolute points in the curve for a lot of people have been trading on. the people who have bought steepeners, it is kind of like wall street got delivered on those steepeners and you would the in the red if you got in at the beginning of this year. the 210 curve is more negative now and it was at the beginning of this year. how do you feel about the reversal of this trade? >> being in the steepeners was always going to be difficult because the market had been pricing on a forward basis for the curve to steepen.

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it was going to be hard to outperform the forwards. at the beginning of the year. those like you have said have unwound significantly with a two year yield docking up again and approaching 5%. even the two year yield has rallied a lot the last couple of weeks where we were close to 5%. no we are down almost 30 basis points from there. i do think that eventually the steepener will pay off. do your point, the timing of when to get into the trade is important. it is not clear and i don't think it will be clear should be in that trade until it moves dramatically pit that is going to think -- moves dramatically. that is going to take surprisingly low cpi and pc deflator prints for that rally to be more sustained and the market to price in for deeper rate cuts than is being priced. the two year yield is pricing a very slow cuts by the federal

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reserve over the next 18 months. that has to change to wind up seeing a massive steepening of the curve. our view is the 210 curve is going to remain inverted for all year. it might be less inverted but we think we are going to wind up in a situation where we don't on invert over the next six to eight months. sonali: bloomberg intelligence right strategist ira jersey. we thank you for your time. as he has been saying here, it is the central bank diversion driving the bond market now and outside the federal reserve, the bank of canada is the first group of seven central banks to cut interest rates. here is governor to make macklin earlier today. talk to our judgment today is the economy does not dean -- does not need monetary policy asked restrictive as it has been and so we cut the policy rate by 25 basis points. there are limits to how far we can diverge from the united states but we are not close to

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those limits. sonali: jon erlichman joins me from toronto to talk about what has been a dramatic move for the bond markets from treasuries and elsewhere. what happened today? jon: you are right. we did see the market reaction. canada's currency weakening against the u.s. dollar. we should point out there was a growing expectation the bank of canada might be the first g7 nation to make a pivot and there were expectations among the economists surveyed by bloomberg. don't be surprised if come the june meeting today they ultimately do this. there are a few different shooting factors for the canadian economy would have to highlight. let's talk about household debt. we hear about the big home price increases over the last decade in canada. people have to pay more to get into the housing market. if i do take on more household debt. as we got to this straight

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hiking cycle, that started to put a bigger squeeze on consumers. we have seen record population growth in this country yet the growth we are seeing in the overall economy is not keeping pace with that. that was one of the early clues that may be consumers were feeling a little bit stretched. katie canada is a little further ahead of the united states but we likely would not be at this point to talk about a pivot if we were not seeing underlying inflation trends in proving that ira was talking about. several months of improvements on the inflation front. at that we are back at the inflation targets the bank of canada would ideally see but they are increasingly confident we are going to get there. if you can go today and pivot and ultimately get the soft landing scenario instead of waiting too long, that seems to be the thinking right now if inflation trends are there. there expectations they are not done and they will keep cutting rates over the year. sonali: is a question for the

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bank of canada but it is a question for the central banks around the world. how comfortable is a central bank on diverging from the fed's policy? jon: we heard those comments from tif macklin about that. that was one of the obvious questions especially when coming into this pivot point the overnight rate in canada was already divergent from of the united states. and how comfortable is a country like canada in having a growing divergence? the bank of canada governor looked at it through the lens of inflation. he said at the end of the day canada is its own economy. we have are in central bank which sets auditory policy. we have her own currency. trying to address the inflation reality. we are going to do that through interest rate policy. at the end of the day, how much can canada ignore what happens in the u.s. if we continue to delay this conversation on a u.s. fed pivot? there are economic implications. a lot of the economy, i've been

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asking questions about if you have a weaker canadian dollar as a result, are you by nature importing more inflation? canada buys a lot of stuff from the united states. canada has been challenging growing its economy over the long-term. tings like productivity has not helped through a weaker currency. that is going to be one of the big stories going forward. sonali: we thank you so much for your time. jon erlichman from toronto. we want to bring you breaking news outside of new york city. new york governor kathy hochul plans to indefinitely delay new york city congestion pricing plan citing inflation and financial pressures. she said the state is exporting under -- exploring other funding options for the mta. this was a plan set to begin june 30. it would be the first of its kind in the united states and it was expected to bring in a billion dollars a year in a plan to modernize the more than 100-year-old transit system. and now is of course getting a

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significant roadblock when it comes to the state. coming up next, we are going to talk about commercial real estate with commercial real estate developer marion gilmartin on the risks and opportunities ahead if interest rates start to cool further. this is bloomberg. ♪

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the new york times building to barclays center. abigail doolittle joins us as well. the first question is about interest rates and how this might start to impact the sectors that have been the hardest hit here. i'm much relief are you seeing under the surface as we see at least traders bidding the bond market into lower interest rate territory? maryanne: rather than focus on where interest rates are going, whether we are entering a recession or stagflation, i prefer to were focused what we know. what we know is in a crisis there is a great opportunity. we are seeing movements in interest rates but in my business, it is about long-term value creation and you really focus on the future and interest rates are going to move. we are confident over the term come interest rates will settle down to when you are building a massive skyscraper, you're not thinking about what interest rates are today. you're trying to get hold of land and opportunity and think about the next cycle. abigail: does last week you had

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a topping out ceremony for two with dental ceremonies in new york city. i've heard so many stories through these conversations about how the development situation in new york city around multifamily and residential has ground to a halt because of the tax abatement coming to an end where the expiration of that plus rates, not knowing where they are. how did you manage to get that done? maryanne: i'm fond of saying building two ground up as initial buildings would be another day at the office before all the disruption in the credit markets. it was harder to put these buildings into the ground than it was to build barclays center which was a 10 year crawl, 35 lawsuits and a decade of litigation and delay. at once i thought it was the hardest thing i would do in my career and that multifamily, a sector that has been strong and delivers as the gift that keeps on giving would be so difficult to start two new buildings is extraordinary. it is about the credit markets and the crisis and the fact that being able to land construction

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loans and capital partners in the last 18 months -- abigail: how did you do that? you were with forced city, those a public company. a huge part of your job is to raise capital. how did you get those loans done in such a tough environment? maryanne: world-class capital once to be with folks that deliver value and world-class markets. it is earning our stripes. i did that at forrest city but the last 18 months has proven yet again. it's about the quality of the sponsorship, the quality of the dirt. have amazing kitchens, one in the upper east side one in west chelsea. we talk about what is happening out of multifamily market. vacancy rates are 1.8%. this is a 50 year low. there is something not enough housing. this week there was a lottery for affordable housing. 100 50,000 applications in 12 hours. there is simply -- it is not possible to overbuild in this market and because of that high-quality sponsorship a repeat performance with lenders and capital that wants to be in

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new york and realizes there is no better asset class and multi family. sonali: curious about the capital story. you mentioned it ek regional lending. regional lending system has been clogged up the last 18 months. how do you encourage more capital into the system? does it require more government assistance? does it require more tax breaks how do? you encourage the money to flow in? maryanne: i would start by saying we are seeing so many more nontraditional lenders. debt funds. ways to access capital that previously were not typical for construction loans. when we built a front 80 unit multifamily building in west chelsea which in the course of a single year we leased up to 90% at five dollars over the pro forma, we built that in the pandemic when everyone ran away from new york and conventional lenders had no interest in going to an investment community meeting and putting forward a construction loan for a building in new york city. and yet madison stepped up.

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josh seger looked at it and said this is a bit on the future of new york. i have seen the obituary written for new york many times over my career. but on the fact the pandemic would be a moment in time. a long time but people would come back to the city. you're looking at capital that is patient should and focuses on long-term value creation which is what development is. very little patience for this in the public markets. debt funds and nontraditional lenders have been an extremely effective source of capital for us. abigail: josh segan is a friend of ours. he joined as a month ago and had great commentaries. let's switch cities. baltimore, you're parted with kevin plank. what is it exactly? maryanne: it started as a courtesy call where i was asked to go visit kevin who had amassed 235 acres of land south of 95 in baltimore. i knew about the aquarium. i do not know and out of -- i did not know a lot about baltimore.

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it was a come -- i was completely taken by his commitment and there is noted that flies baltimore's flag better than kevin who started his business in 1996 by his own election. he did not have to open a business. the thing about great civic leaders like dan gilbert, this is what it takes to lift a city up. i was intrigued by the partnership. goldman sachs, the urban investment fund back to kevin plank. at the real estate, 14 million square feet. it is a master plan where you build what you want, where you want, when you want. that is not common in a great american city. i'm betting big on baltimore because it has unbelievable diverse and educated workforce. beds and meds is a big part of that. the land is high-quality. it is proximate to d.c. shared with hybrid working it is easy to get to new york. it has its challenges. all cities have challenges. new york is able to draft in behind its history of being the greatest place to live in this country for many of us what i think baltimore is going to see

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in our missed growth and opportunity. it was elected by the feds as a tech hub and $4 billion of capital has been flowing into that city since i started taking a look at it two years ago. sonali: you are clearly not afraid to get your hands dirty in tougher cities and tougher situations were a lot of investors are left behind or leaving the area in some cases. what other cities are you excited about? maryanne: i have a thought that what we do is so focused on boots on the ground it is hard for me to imagine exporting my human capital because it is not very efficient and takes a lot of tender care and feeding to build a building. to me it has to be a train right away and so the focus for us is the mid atlantic, with east region should at least until we stood up an office somewhere else. we are 30 euros startup. we are a engine that could trying to do the kind of things we did at scale at forrest city when we were with ape cup public company but i believe in the private markets the world of ground of developer is much more doable at the scale encz kind of

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genetic change and positive impact we want to bring. sonali: we thank you for your time today. the founder and ceo of mag partners as well as abigail doolittle. what has been the hot topic of the year. another hot topic coming up. the nba reportedly near a deal with multiple broadcasters to air games for $76 billion over the next decade. you're going to discuss sports and streaming next. stick with us. this is bloomberg. ♪ recipes. recipes that are more than their ingredients. ♪ [smoke alarm] recipes written by hand and lost to time... can now be analyzed and restored using the power of dell ai. preserving memories and helping to write new ones. ♪

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sonali: this is bloomberg markets and i'm sonali basak. a fresh report out today the nba is getting nearer to a deal to sell the rights to amazon, disney and nbc for the next 11 years worth up to $76 billion. disney would retain the rights to air the finals and other games for $2.6 billion per year

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and the deal potentially leaves one her brother is covering behind. let's discuss this with randall williams because these deals don't come along all that often. talk to us about the nuance we are seeing shared rental: espn gets the first package. the wall street journal, they believe nbc is getting the second package and we have amazon as the newcomer. the official details are not yet final but i expect after the nba finals, adam silver is going to get up on a podium and say this is what is new. sonali: how soon is there pressure to announce that right after the finals? randall: i think this negotiating went longer than what people expected it to. in large part that is because one her brother discovers is out. with a new partner in and macy, -- with the new partner in, nbc, it provides a little more -- you want to be careful around things. you're welcoming a new partner

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in the one you had as a little older, you want to be careful to sonali: what does it mean for warner? to the game? randall: they have one final season one last season. unless charles barkley, he has talked about hiring his cohost as teammates and selling that to nbc, i don't know how interested nbc would in that. hiring their own talent. if everything holds as is, this will be the final season of inside nba and nba on tnt. sonali: a lot of money at play. we thank you for keeping an eye on the whole story for us. still ahead, a big win for hedge funds and private equity firms. a court had struck down sec rules requiring certain disclosures. the details on that up next. this is bloomberg. ♪

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so i had to show them. i've run this place for 20 years, but i still need to prove that i'm more than what you see on paper. today i'm the ceo of my own company. it's the way my mind works. i have a very mechanical brain. why are we not rethinking this? i am more... i'm more than who i am on paper.

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sonali: this is bloomberg markets. let's get a check on these markets flying high today. the s&p 500 reaching new highs on the day. now up 7/10 of 1%. the nasdaq 100 resuming that gain up almost 1.5% on the day. the two year yield 474 on the day. my two basis points or more lower on the day. the 10 year yield still below the critical level of 430. we close the day at 429 and perhaps we have direction lower at the longer end of the curve.

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three basis points lower on the day. the day movers on the equity side, hp shares hitting a record high after the company reported that her than expected revenue fueled by sales of servers built for ai. hp's backlog is 3.1 billion dollars shared more on that in just a minute. watching shares of alphabet after it named eli lilly executive as its next cfo for a replacement for ruth porat. steps into a role at a pivotal moment for alphabet as it works to get ahead of peers in the ai race and alphabet up more than 3/10 of 1%. from public markets to the private markets, a federal appeals court struck down the sec's rules requiring a hedge funds and private equity firms to detail quarterly fees and expenses to investors. all the inside baseball and we

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know this is something manage funds association and others had fought heavily. how the day when? >> this is a huge setback for the regulators. they have been pushing hard for this. this will -- would have been cost expensive. it would have been time consuming. these funds are notorious for being private and for not disclosing things. so this would have meant they would have had to disclose things about their fees and expenses they may not want to. sonali: why is this such a closely held secret? why does the fund want to keep them secret? >> hedge funds and private equity firms charge typically 2% of assets, 20% of gains. her other fees passed through to some of these investors in hedge funds passed through things like compensation which has been getting more expensive.

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we can be leases. it can be other travel expenses. these things have been adding up and they have becoming more popular you are seeing more funds use these fees for their clients and you're seeing the costs rise. it is not always super clear what is being passed through. it is not always clear with the amount that is, how much is allocated to certain things. sonali: the point the management association was making is these are sophisticated investors. big boys and girls that can fees and private funds but the sec even though they were fought and defeated on this one, it is not they were defeated in all cases. what has the sec been doing to overhaul this massive private asset industry? hema: they have been making a big push to increase transparency. this industry is known for being opaque. have been pushing to do a variety of different things. have worked out peered some have not. earlier the imposed rules to limit the preferential treatments that some larger investors make it should if a

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fund once to move something out of one fund to another, they have been asking that an independent auditor needed to value those positions. scrapped a fee that would have made it easier for investors to sue managers. you are seeing this massive push to increase transparency. sonali: you win some. you lose some. we thank you for keeping an eye on a complicated story. in complication, new york governor kathy hochul indefinitely suspending new york city's congestion pricing plan. michelle cassidy joins us with the details. not only did she announce this plan from the governor's office in new york. you had new jersey governor also coming out praising kathy hochul's decision to what are the complications -- kathy hochul's decision. what are the complications? michelle: this was a surprise today for everybody in the new york city area. many drivers are relieved by this.

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the issues are that congestion pricing was supposed to ease traffic. the goal was to ease traffic in the central business district which is midtown manhattan. and improve air quality and raise money for new york city's transit system which is more than 100 years old. the question now is how is this going to ease traffic, improve air quality and get the subway system and the buses and the public transportation the money it needs to have a modern upstate system and attract more riders? sonali: it is interesting because this was a plan that was supposed to bring in a billion dollars a year into the transit system in new york city. without this plan, what plan is there? michelle: as of now, there is not one. kathy hochul said she is working on alternative funding but not

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give details of that so we will see what she and other lawmakers come up with. we have been hearing there is consideration of some sort of a tax on new york city businesses. we will see if that is what it is going to be. state lawmakers last year raised a payroll mobility tax on certain new york city businesses. some new york city businesses to help get some money towards mta which is the authority that oversees the transit system. we will see if there is that appetite to raise taxes again on the business community. sonali: we thank you for your time and coverage of a topic. a big surprise coming out of the new york state governor's office . from new york to texas. like rock and citadel are among investors backing an upstart

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stock exchange, a stock market in texas to challenge the new york stock exchange and nasdaq. we are going to discuss this with julie fine in dallas. you have got to love the dallas new york competition. why are these large investors looking to start up a newer exchange that rivals what you see in new york city? julie: a lot of investors talk about the business climate in the state of texas. business is something governor greg abbott really goes after. they find this an easy place to do business. so far there have been $120 million raised for this upstart stock exchange. it is not going to be doing business for a year or two as they gather money but they do have big-name investors like like rock, citadel securities so they feel they have a good seed to get going. sonali: do we know anything about what this means for competition? you think citadel securities,

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none of the biggest market makers, particularly one of the designated market makers people turn to on the new york stock exchange for. blackrock, the largest asset in the world here. how do they think about this? is this idea of texas versus new york or is it a little bit of we need more room to shine among everybody here? julie: you have seen so many businesses move here. you talk about goldman sachs going here. this has become somewhat of a financial center. this will be electronic. have time before this can get going. they feel this is a good opportunity for them to be able to do business. a lot of people feel that texas has fewer regulations which make it easier to do business. this is an idea. it has not been filed with the sec yet. there is a lot of work to do. with the money they have two begin doing business, the investors feel good about this.

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sonali: what are they muscling in on? to your point about this being electronic, that is fascinating. you have seen these exchanges fight off the treatment they have gotten from new york, new jersey when it comes to data information and taxes. are there consents they might get in texas they might not have in new jersey or new york? julie: the paperwork has not been filed so i believe these companies think it will be easier to do business here electronically. i have been told the governor has been involved with this for some time. this is going to be no surprise to the government here. it remains to be seen exactly what they will run into but so far these investors feel good about this decision. sonali: julie fine, we thank you so much for keeping an eye on this and giving us a view from the governor's office. coming up next, we are going to talk about hewlett-packard enterprises surging to a record

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high on strong ai server sales. we are going to get more on the company's block esther quarter next as it helps to fuel records in stocks. this is bloomberg. ♪ every 3 minutes a child is born with a cleft condition. in the u.s., children are healed at birth. but in parts of the world where the right medical care doesn't exist,

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sonali: this is bloomberg markets. it is time for the stock of the hour. we are looking at hewlett-packard. trading at a record high after the company beat revenue expectations thanks to servers built for artificial intelligence. revenue jumped by 3.3% to $7.2

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billion when wall street expected a 2% decline to $6.82 billion. joining us with more is brody ford. what a surprise. computers were the hot thing once upon a time and now servers are the hot thing thanks to ai. brody: who would've thought they would be an interesting growth is this. the storyline we have seen is supermicro jumped 200% this year. dell did some similar order of magnitude and everybody said what about hpe? are they going to get forgotten? last night they disclosed we have a couple hundred million in this ai server revenue. they are starting to be taken seriously in the storyline which is how we see this stock pop today. sonali: when you look at the pop today, as a company that split up when you think about hewlett-packard. how well did hpe do before this? what was the story and how to today change the narrative?

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brody: there was the 2015 ray cubs are always a little said, no different with hp and hpe. hpe took the enterprises networking. he had been a little bit of a sleep your company. they recently purchased juniper networks saying we are going to go all in on networking turn we are going to help be at the edges of cloud infrastructure, provide the hardware. but then there is this new growth business that a lot of folks did not redact a year and a half ago. -- did not predict a year-and-a-half ago. they're a lot more investor eyes on hpe today there and there have been for the last couple years. sonali: when you think about the competition, you had antonio neary's saying he thinks the rocket will start waking up to this. after today's announcement, they will understand even more underlined do think wall street is fully -- even more. you think wall street is fully sold? brody:brody: they made some money here but the back right -- the backlog is not growing at

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the same rate as dell. margins appear to be a little higher. dell lost a lot of their market value a week ago because analysts said wait a sec. the margins on these servers appear to be low because nvidia charges a lot of money on these chips. hpe managed to cut expenses to the extent the margins were decent. i would say they are still probably third in thi. sonali: i want to walk with you through a server farm one day. keeping an eye on what has been a surprising story for many people today. we are going to speak to dealmaker jim langston on the mna outlook and his new role at paul weiss. of the top am and a advisors in the country. we are going to talk about the rebound and the merger broom next. this is -- the merger boom next. this is bloomberg. ♪

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sonali: this is bloomberg markets. it is time for the wall street beach. we are joined by jim langston. he is a partner at paul weiss, rifkin, wharton and garrison. clients include goldman sachs, starbucks and general mills. we are joined by michelle davis, senior correspondent at bloomberg deals. we are joined by both of you at a time when deals are finally coming back. before we get to the limitations because there are some, talk to us about what you are seeing in conversations with your clients. jim: mna, we think the stars are aligning for it to be a busy year the second half of the year and beyond. confidence is returning to boardrooms, to siu suites. -- to see suites. companies are willing to make

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bold bets on mna. the private agree market has not been as active but we feel that is going to be unlocked so we get greater certainty on interest rates and private equity holds additional levers to achieve exits. michelle: there is an election coming up this year as you may have heard and i know you are expecting a pickup in activity. i'm curious what your advice is to clients who are worried about their deal getting caught up in the rhetoric. is there advice around avoiding deals that might be too controversial or high-profile? what is the election impact? jim: you have to separate the noise from the reality. we are in an election year. everything gets politicized. iman day is no accent -- m&a is no exception. there a lot of headlines around antitrust. the bottom line is deals that were getting done in the past can still get done today. if the deal make strategic sense and a deal that could get done,

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you should go for it. what you have to have is a plan, a strategy. you cannot wait for the noise this around the deal. cannot wait for the congressman, senator, white house to take a shot at the deal. have to be prepared and control the narrative and have a way to get the deal done and sell that to the shareholders. sonali: another big blockage has been this concern around foreign buyers. think about what happened with nippon steel. how does the tone around cross-border m&a change as the election cycle progresses? jim: everything gets more politicized. the deal is an example. it is a challenging environment for cross-border m&a. geopolitical by the lines are hardening. nationalistic protection impulses are intensifying turn companies want to invest closer to home rather than abroad. you look at the u.s., the growth in the u.s. relative to

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the rest of the western world. the deepness of the capital markets has been a beacon to m&a in the u.s. and europeans that are trying to enhance their growth profile. when you put all that together, it is harder to get a global cross-border deal done today than in the past. michelle: i was at any event this morning on m&a and the head of banking at jp morgan, the head of mna said she has noticed there was a pickup in unsolicited m and a last year reached a 10 year high. is that something you are noticing on your end? jim: absolutely. the number of letters landing in boardrooms on an unsolicited basis is up. it goes back to this competence theme we talked about. companies are more confident. they are willing to reach for their mna hopes and dreams and they are realizing you cannot just wait for a company to go on the auction block. if you have a deal, you want to pursue it, art of your broader

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strategy, sometimes you have to take matters into your own hands. we think there is going to be more of that for the rest of the year. sonali: it is fascinating to see people with the green light on everywhere you go slowly starting to come back to the surface. it sounds like the confidence has come back despite some of the headwinds you have been talking about. if you think about the confidence moving into the rest of the year, do you think it can be firmly planted within the world of private equity given what you were saying about the muted nature? jim: i think we are about to turn a corner and get into the early stage of the private m&a super cycle. those investors have in on the sidelines for 18 plus months. sonali: cannot happen fast enough. jim: their lps are clamoring for them to return capital. the dry powder remains at a high watermark. they need to invest. debt markets are more constructive now.

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there is creative structures available. structured equity overs. we are going to see more rollover equity. that mna activity we think is going to beget more activity on the private equity side. michelle: can you talk to us about antitrust? there has been a narrative antitrust scrutiny has been chilling deals but recently we have been hearing about bigger and bigger deals. even seeing your deals attempted like bhp going after anglo. what are you seeing? our companies emboldened or are they still worried? jim: bigger deals have a bigger target on their back. have to be prepared to fight fire with fire. we talked about earlier, have a strategy to actually get the deal cleared to companies have gotten used to this heightened antitrust environment. there is noise and reality. the truth of the matter is lots of deals are still getting done. if you have a deal that would

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have gotten done in the past, despite all the noise, it can still get done today. there are going to be more twists and turns in the process. you have to be prepared to be in the process for a lot longer than you had in the past but the results should still be the same. sonali: it is almost halfway through the year. the largest deal we have seen is $37 billion. do you see something even larger than that? do you think there are companies out there willing to fight antitrust storm and say we are willing to go mega? jim: mega m and a deals has been a big trend this year. you look at how the year started off with the synopsis. a lot of -- a large tech transaction should look at the tech -- tech transaction. look at the mega deals in that will patch in farm. with ink that is going to continue for the rest of the year particularly around the

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election outcome and people realize standing still is not a viable business strategy. there is a first mover advantage. there is going to bm and a and consolidation in your sector, it is better to be the first mover than the last mover. sonali: what are you hearing as well? michelle: it sounds like a lot of the same things are being discussed among other dealmakers. people are expecting a big pickup. the mood everyone describes as cautiously optimistic. definitely way better than last year when folks were depressed because their deals were falling apart at the finish line. how would you -- in couple words how would you describe the mood? jim: i would say it has gone from cautious optimism to more optimism. sonali: it is halftime. anything can happen. we thank you both for your time. that does it for bloomberg markets. we are at all-time highs today. we are shaking off the fear at the beginning of the week. we are rolling into fresh highs

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for the s&p and nasdaq 100. stick with us through the close. it is an interesting day. this is bloomberg. ♪ her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

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>> from the world of politics to the world of business. this is "balance of power." ♪ live from washington, d.c.

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♪ joe: it's the summer of scare tactics. at least since one republican. with a boost to their own particular contraception, one of a series of messaging bills that have been following here on the first assurance politics. welcome. i am joe mathieu of the kailey leinz in washington. seems like you're getting one of these a day although this is specific to reproductive rights, one of the biggest issues on the campaign trail. kailey: yeah, the right to contraception is what the senate will try to foster their and you need 60 books to do so. unclear if any republicans will get on board the 60 votes to do so. to get republicans on the record button issue that pertains to the productive outs. it'

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