美债回购计划提振市场，标普微涨0.3%

THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS THE CLOSE.

THE FIGHT OVER ACCESS TO CAPITAL. I'M ROMAINE BOSTICK.

KICKING OFF TO THE CLOSING BELL, MARKETS STAGING THE REBOUND AFTER THE TREASURY ANNOUNCED PLANS TO BUY BACK LOWER DATED BONDS. YIELDS HIT ALL-TIME HIGHS. THE S&P INCHING HIGHER BY 0.3%, CHIPS ARE THE BIGGEST LOSERS DOWN BY 2%. WE HAVE THE DOLLAR HITTING ITS LOWEST IN THREE MONTHS.

SCOTT BESSENT NINE MONTHS AGO FAMOUSLY SAID IT IS HIS JOB TO BE THE NATION'S TOP BOND SALESMAN AND TREASURY YIELDS WOULD BE THE BAROMETER. HE HAS STRUGGLED QUITE A BIT. WHEN HE GAVE THE SPEECH TO A CONFERENCE IN NOVEMBER, 20 AND 30 YEAR YIELDS WERE BELOW 4.7. NOW THEY ARE 5.2 AND WOULD BE HIGHER IF NOT FOR SCOTT BESSENT TRYING TO LIFT THE CAP ON HIS AGENCIES BUYBACKS FOR LONGER DATA AND NOMINAL COUPON SECURITIES.

THE MARKET REACTION SUGGESTS THIS IS AN IMPORTANT TACTICAL MOVE ON THE TREASURY. A LITTLE UNEXPECTED SO YOU ARE PROBABLY GETTING AN OUTSIZED REACTION RIGHT NOW. BUT I DON'T THINK IT CHANGES THE FUNDAMENTALS. BIG FISCAL DEFICIT AND A ON THE SIDELINES, WHICH IS DRIVING LONGER-TERM YIELDS HIGHER. ROMAINE: THE LAST POINT IS KEY BECAUSE MANY TRADERS SEE THIS AS MORE OF A BAND-AID. THE FISCAL DEFICIT, THE TREASURY BORROWING AND LOPSIDED DURATIONS ADDING TO CONCERNS ABOUT INFLATION, PUTTING THE FLOOR UNDER YIELDS THAT WILL TEST SCOTT BESSENT'S ATTEMPT AT A CAP.

LOOKING AT LAST MONTH'S FED MEETING, PAY ATTENTION TO THE TONE OF THE FOMC POLICY MAKERS. GOVERNMENT BONDS OCCUPY A SMALLER PLACE IN PORTFOLIOS THAN A DECADE AGO. PRIVATE ASSETS NOW 40 OF THE 6040 PORTFOLIO. HYPERSCALERS CONTINUING TO FLOOD THE MARKET WITH RECORD ISSUANCE. ISABELLE: A FLOOD OF RECORDS AND I WANT TO BRING YOU TO THIS CHART. THE WHITE LINE IS CORPORATE YIELDS WHICH STAYED ELEVATED. THE BLUE LINE IS LONGER DATED INVESTMENT GRADE BOND ISSUANCE MATURING IN 15 YEARS OR MORE.

WHAT IS THE TAKE AWAY? IS THE AI BOOM CREATING COMPETITION? TECH COMPANIES ARE BORROWING TO CREATE AI BUILDOUT CREATING OPPORTUNITIES IN THE BOND MARKET. TECH ACCOUNTS FOR 40% OF YOU -- U.S. IG ISSUANCE. INVESTORS HAVE A CHOICE, TAKE THE EQUITY RISK OR LOCK IN HIGH YIELDS FOR THE SAME AI BOOM. ROMAINE: LET'S KICK THINGS OFF WITH THE HEAD OF INVESTMENT STRATEGY AT J.P. MORGAN. YOU KNOW A LOT ABOUT THIS. YOU TALKED ABOUT AI INFRASTRUCTURE FINANCING AND HOW MUCH IS COMING FROM PRIVATE MARKET.

BOTH ARE SHARING THE BURDEN. WHEN IT COMES TO HOW IT IS RECEIVED, IS THE ACTIVITY IN THE PRIVATE MARKET MORE REPRESENTATIVE OF DEMAND FOR AI FINANCING AS OPPOSED TO THE PUBLIC SPACE?

I THINK WHEN WE TAKE A STEP BACK TO THINK ABOUT WHY THERE IS THIS AMOUNT OF ISSUANCE IN PUBLIC OR PRIVATE MARKET, IT IS BECAUSE WE ARE STILL IN A TIME WHEN WE ARE TRYING TO SOLVE FOR THE BOTTLENECKS ON INFRASTRUCTURE, THE POWER OR COMPUTE SIDE. THE WAY TO INVEST IS, PEOPLE ARE TRYING TO RAISE CAPITAL THROUGH DEBT MARKETS. IN TERMS OF THE NEXT FIVE YEARS, WE THINK A LOT OF THAT ISSUANCE WILL COME FROM PRIVATE CAPITAL. 25% OF THE MULTIPLE TRILLIONS OF DOLLARS WE EXPECT OVER THE NEXT FIVE YEARS WILL BE FROM PRIVATE CAPITAL.

THE TENSION TAKING PLACE RIGHT NOW IS NOT THAT THERE IS NOT DEMAND. BIDS ARE CONTINUING BUT IT'S WHETHER I'M COMPENSATED FOR THE RISKS. WHAT DO I MEAN? FOR THE MOST PART THERE IS A LOT OF INFRASTRUCTURE ORIENTED FUNDS INVESTING WITHIN DATA CENTERS TODAY AND GETTING THE BID FOR A LOT OF THOSE LOANS AND THE ISSUANCE ON THE EQUITY OR DEBT SIDE. THE DIFFICULTY WE COME BACK TO FROM AN INVESTMENT PERSPECTIVE, AM I GETTING PAID FOR TECH OBSOLESCENCE RISK?

IS INFRASTRUCTURE ORIENTED RETURNS WITHIN THE DATA CENTER SPACE, HIGH SINGLE DIGITS ARE LOW DOUBLE DIGITS, IS IT ENOUGH TO COMPENSATE FOR THE FACT THAT MAY BE THESE DATA CENTERS DEPENDING ON WHERE THEY ARE BUILT AND WHERE THEY ARE ON THE VALUE CHAIN, IS THAT COMPENSATING FOR THE RISK? THAT IS THE QUESTION. ROMAINE: CAN THE PUBLIC MARKETS YOU SEE THAT PLAY OUT PARTICULARLY WITHIN ISSUANCE FROM COREWEAVE OR SOME TYPE OF ISSUANCE FROM THE NEO-CLOUD OR SOMEBODY THAT DOESN'T HAVE THE CLOUT THAT ALPHABET OR NVIDIA WOULD.

I ASSUME THAT IS PLAYING OUT IN THE PRIVATE SECTOR. SITARA: THE SPREADS ARE THERE. ROMAINE: DO YOU THINK WE WILL SEE THOSE SPREADS WIDE NOW MORE? ARE WE GETTING CLOSE TO EQUILIBRIUM? SITARA: I THINK WE WILL CONTINUE TO SEE THE SPREADS REFLECT THE RISK EMBEDDED IN ANY INVESTMENT RELATED TO AI. WE SEE THAT WITH INFRASTRUCTURE. THE OTHER WAY TO THINK ABOUT IT, THE TENSION MARKETS ARE TRYING TO DIGEST IS TWO DIFFERENT TRADES GETTING PRICED AT THE SAME TIME.

IT IS WHETHER OR NOT THE INFRASTRUCTURE PLAYERS ARE STARTING TO SEE, WHETHER OR NOT THE CASH FLOW BURNED IT TAKES TO BUILD THE INFRASTRUCTURE, COMPUTE AND DATA CENTERS AND CHIPS, WHETHER THE PAYOUT WILL END UP COMING ON THE APPLICATION SIDE. WE ARE BUILDING ALL OF THIS. HYPERSCALERS, PUBLIC AND PRIVATE MARKETS ARE BUILDING AND STRUCTURE IN THE HOPE -- INFRASTRUCTURE IN THE HOPE AI WILL BECOME A PLATFORM THAT MOVES BEYOND THE TECH SECTOR IN TERMS OF ROI IMPACT AND WILL MOVE TO THE SERVICE BUSINESS.

YOU SEE MARKETS TRY TO PRICE THAT. ISABELLE: WHAT ABOUT PRIVATE MARKETS? YOU SAY THERE IS STRATEGIC NECESSITY. ARE INVESTORS BEING PUSHED TOWARDS IT BECAUSE PUBLIC MARKET VALUATIONS ARE TOO HIGH? SITARA: MY FAVORITE QUESTION. THERE ARE TWO THINGS THAT A LOT OF ACTIVITY SO FAR THIS YEAR, IN TERMS OF THE LONG END OF THE YIELD CURVE IN TODAY'S PRICE ACTION AND MORE BROADLY. THE MARKET IS TRYING TO FIGURE OUT WHAT THE NEXT PHASE OF ARTIFICIAL INTELLIGENCE WILL BE AND THE ULTIMATE IMPACT OF GEOPOLITICAL FRAGMENTATION, WHAT THAT MEANS FOR SUPPLY SHOCKS TO INFLATION AND STOCK BOND CORRELATIONS.

WHEN INFLATION VOLATILITY IS HIGHER, STOCKS AND BONDS MOVE IN THE SAME DIRECTION. WE SAY PRIVATE MARKETS ARE A STRATEGIC NECESSITY, THEY FILL TWO BUCKETS. IT IS TRYING TO ACCESS ALPHA RETURN DRIVERS BEYOND U.S. MEGA CAP TECH. THAT HAS DOMINATED PUBLIC MARKET PERFORMANCE OF THE PAST THREE YEARS. PRIVATE EQUITY AND BUYOUT, THAT IS SECONDARIES AND VC AND GROWTH IN TERMS OF LEGGING INTO THE NEXGEN DISRUPTORS. IT IS ALSO DIVERSIFIED THE DIVERSIFIERS.

THE 40 PART OF YOUR PORTFOLIO USED TO BE I'M TRYING TO FIND YIELD AND CARRY WHEN RATES WERE LOW. RATES ARE NOT LOW. WHERE CAN I GET YIELD THAT WILL SURVIVE AFTER INFLATION VOLATILITY? THAT IS WHERE REAL ESTATE COMES INTO PLAY, INFRASTRUCTURE COMES INTO PLAY. AND WHERE NONDIRECTIONAL HEDGE FUNDS, DESPITE JULY'S PERFORMANCE, IT HAS BEEN A STRONG YEAR FOR HEDGE FUNDS IN TERMS OF PROVIDING LESS CORRELATED RETURNS WHERE YOU CAN GET ALPHA GENERATION WITHOUT SACRIFICING VOLATILITY BENEFITS.

ROMAINE: GREAT STUFF, SITARA. GOT TO LEAVE IT THERE. KICKING US OFF TO THE CLOSE ON WEDNESDAY AFTERNOON. A LOOK AT ONE OF THE BIGGEST MOVERS OF THE DAY, ESTEE LAUDER, A TURNAROUND STARTING TO TAKE ROOT. WE WILL HAVE AN INTERVIEW WITH THE CEO TO FIND OUT WHAT HE SEES AS THE NEXT LEG UP. ISABELLE: FROM BEAUTY TO BONDS. THE TWISTS AND TURNS IN THE TREASURY MARKET WITH THE CO-CIO OF PROPUBLICA AND PRIVATE -- PROPUBLICA AND PRIVATE -- ROMAINE: ROZ BREWER ON HER STORIED CAREER.

ALL OF THAT IS NEXT ON THE CLOSE. . THIS IS BLOOMBERG. ISABELLE: LET'S CHECK THE AI SPENDING BOOM THROUGH THE LENS OF FINANCIAL TECHNOLOGY. OUR NEXT GUEST'S PLATFORM IS BRIGHT -- BUILDING INFRASTRUCTURE TO MANAGE AI SPEND, WORKING WITH AI MODELS. I'M PLEASED TO SAY JOINING US LIVE IS ERIC. THANKS FOR JOINING US. AI SPENDING IS UP. OUR COMPANY'S GETTING A RETURN ON THAT SPENDER DO YOU THINK THEY ARE AFRAID OF FALLING BEHIND?

WHAT YOU SAID BEARS REPEATING. OVER THE LAST 12 MONTHS COMPANIES ARE SPENDING NEARLY 21 TIMES MORE ON -- AND NEVER IN HISTORY HAS SOMETHING GROWN SO QUICKLY. PART OF THE REASON FOR THE GROWTH IN SPEND IS THERE ARE MOMENTS WHEN YOU PLUG-IN AI AND IT IS EXTRAORDINARY RETURNS. THE FEAR BUSINESSES HAVE ARE, ARE THE EMPLOYEES TOKENMAXXING? MAYBE THEY SPEND $15 WHEN THEY COULD HAVE SPENT $.15. WHAT RAMP ROUTER IS AIMED TO DO IS HELP COMPANIES NOT WORRY ABOUT THAT.

COMPANIES ARE