>> we are 30 minutes into the u.s. trading day on this monday, may 13. here are the top stories we are following. gamestop shares soar. keith gill returned to socially meet it with a cryptic post. in an exclusive conversation with janet yellen on the nation's economy, the nation's outflow, and the u.s. china relationship with president biden set to quadruple tariffs on chinese electric vehicles. and as it done with goldman ceo at the choose france summit hosted by emmanuel macron. david solomon joins bloomberg tv for an exclusive interview at 10:30 a.m. new york time. ♪

katie: i'm katie greifeld in new york. welcome to bloomberg markets. markets this morning are pretty green but it is pretty quiet. s&p 500 currently higher by .1% payment same thing if you look at the nasdaq 100, also .2% higher. a little bit more action if you look at the bond market. that really continuing with 10-year yield's lower by two or three basis points. back below 4.50. greenblatt quiet. looking for some action, let's go to bailey lipschultz. it feels like we woke up in 2021 feeling like what is going on with gamestop right now. bailey: we are so back, as is marine kitty, call it a meme of

a player. that triggered a rally in gamestop shares, up more than 90%, now 104%, halting four times in the first few minutes for voluntarily. it appears those animal spirits are around. still cautious on the company, cautious on the outlook. they had earnings next month but it feels like in this moment in time, very much shades of 2021. even seeing shares like amc, all rounding double digits this morning. it seems like investors are more than happy to play that meme stock now. katie: i thought stuff like this wasn't supposed to happen anymore after all of those rate hikes. gamestop going to limit up this morning. let's talk about what is going on with apple. a lot of speculation around that name as well. bailey: on the number of reports and reaction from wall street into the potential for a partnership with openai.

that would bring some of the openai technology to their devices. back in the green but trading up a few percentage points higher this morning. reports they are closing in on a partnership with openai. microsoft rallying, google under pressure this morning, potential read across from a partnership. apple has largely set out the ai media. -- mania. if this doesn't end up getting announced, that will be a big win for those apple bulls and analysts and investors plotting this update, potential for implementation of some of the openai technology into the iphone, imac, ipads. katie: that is what investors wanted to hear, what is apple's ai strategy? maybe we will get some clarity on that. let's bring it home with squarespace. another rally in that name. bailey: merger monday playing out. permira agreeing to acquire

squarespace in an all cash deal. the stock is up more than 70% this morning -- 17% this morning. private equity, the concerns around the ftc, nowhere near the level we saw when strategic's are buying these companies. squarespace has the ability to build websites, so the deal comes in a natural discount. when i talked to investors and analysts this morning, it is a win. that is how they are viewing the industry, ups and downs in the space. squarespace absolutely rallying alongside gamestop. katie: happy monday. i your reporting as always. let's get a broader look at the markets. joining us now is katrina dudley, an investment strategist at franklin templeton investment. sorry to say but we have to start with gamestop. talking to bailey, i thought things like this are not supposed to happen with fed

funds above 5% a minute when you look at gamestop, amc, etc. up double digits as well. what do you make of it? katrina: we have over 300 investment professionals that just participated in our survey. one of the interesting things, for the first time in a long time, our views on the entirety of the market particularly from the regional perspective have converged. stock stories like gamestop are exciting to people, they drive that single stock mentality. in a world where things are much more coalescing around a good theme, people are looking for the stories. gamestop is a representation of that. katie: this is not a broad brush strokes market. you can take a look at company stories and the stocks will actually respond to those specific stories. katrina: i am an active managers so i love hearing things like that. the fact that the market will

pay attention to earnings. if we look at what happened this past earnings season, you see that in the stock reaction. disproportionate moves down when companies are not meeting expectations, slightly better moves up when they are. katie: pretty amazing to see how punishing the market has been to those earning mrs.. god forbid you miss and guide lower. you have just seen an absolute, really the enthusiasm coming out of those names very quickly. does that make sense at this point in the cycle? is this a blueprint we are familiar with? katrina: you made a point about the fact that the interest rate cycle is coming into play. in terms of companies that miss earnings expectations, people are saying what does the rest of the p&l look like, what are the implications of lower earnings than i expected? number two, as the discount rate gets higher and the cost of money becomes higher, missing in

the near term becomes much more expensive in terms of the future stock price. i like when markets are acting rationally and you can explain it and understand it in a holistic sense. i think that is really good for individual investors who have interest in those single name stocks. katie: glad you brought up the cost of money. there was a great story on the bloomberg terminal that pound if you look at the russell 2000, about 800 billion north of that in debt, 75% needs to be refinanced through 2029. those small companies facing the maturity wall, close to $620 million. when you think about the cost of capital, how painful could that process be? katrina: there is a balance. if you know you have a long-term financing need, you may look at looking to go into the market early and staggering that early. 2029 is still some time into the future.

however, the other offset to that, a lot of money sitting on the sidelines in private equity funds. that could drive some consolidation of the small-cap names. when we think about the environment, m&a, we've been talking, it's been easier for the private equity shops to get these deals done because they don't have the same pressures as it relates to the ftc. they also have time frames on their capital. they are up against that need to deploy some of this capital. finally, some of these are really good, strong statements for an american company. a lot of our smaller companies have manufacturing on shore. there is a good support for that manufacturing. having them also being capital based is a good thing for our country. katie: especially on the smaller end, we have seen a pickup, to crystallize your point. that maturity wall we are seeing in the russell 2000, that can be

the catalyst for more consolidation, when you are saying? -- what you are saying? katrina: you want to have a name that nobody recognizes. that makes it so much easier. we have seen it happen in the modular office space, a market that people didn't know existed, with a couple of companies that no one knows their name. that is the type of set up, which is a really low risk m&a strategy. if you combine that with the fact that you are doing it all cash deal, so it is not dependent on needing to go to the finance markets, it's an easy transaction to get through the hurdles. we will see over time, the kesey transactions get done first -- easy transaction to get done first and then we will see the harder ones get done as we go further. it is a balance. you point out these maturity walls are coming up. that is what makes for an exciting market. katie: it does sound exciting

when you describe it that way. i read some version of that stat for small caps, maturity wall. investors seize on that as a reason to be bearish on small caps. m&a aside, how are you feeling about the small-cap space right now? katrina: if you look at with a large cap represented, where the risk is, we have the magnificent seven delivering earnings growth but fairly rich valuations. the small-cap universe is some of the cheapest valuations on a relative basis we have seen in like 20 years. you get the advantage of buying these earnings at inexpensive multiples. the second thing is, these are domestically oriented companies. they are benefiting from things like inflation reduction act, the chips act. that is the second element of it. thirdly, i would say growth is actually one of the things we are not concerned about. we think the global growth outlook and the u.s. growth outlook is fairly secure, also

good for small caps. katie: sounds like there is still opportunity there, bargains to be found. let's talk about the large cap universe. we have not talked about tech yet. how are you feeling about big tech at the moment, especially what we learned over the past few weeks when it comes to the earnings power? katrina: earnings power is strong and that is what evaluations reflect. you can actually have these high multiples and the countries -- companies grow into those earnings numbers. i'm not as worried about them. in terms of the incremental capital and i look at investor portfolios, they heavily overweight into these growth names. as an investor, you need to have some balance in your portfolio. i've talked about the fact that we think there's a lot less divergence in the world. within portfolios there needs to be less divergence. if you are significantly invested in those names, i would pause and maybe think about taking profits and allocating it

into the other parts of the market that will balance your portfolio and give you that security going forward. katie: let's wrap it up on a down note. where would you absolutely avoid right now? katrina: if i was to completely avoid the market, it is very difficult. for so much of my career, i was always able to pick out a country and say don't invest here. last year was easy, europe, because of the rising energy costs. but they have gotten over it better. for the first time in my life, the entire market is investable, which means you want balance, you want a portfolio that doesn't have country risk and it. katie: you can find a silver lining in everything at this point. growth is not a concern. our big thanks to katrina dudley of franklin templeton investments. the s&p trying to hold onto gains of .1%. coming up, our exclusive

conversation with treasury secretary janet yellen is next. this is bloomberg. ♪ wealth-changing question -- are you keeping as much of your investment gains as possible? high taxes can erode returns quickly, so you need a tax-optimized portfolio.

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our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly. katie: this is bloomberg markets. i'm katie greifeld. we now take you to virginia where our own annmarie hordern is standing by with an exclusive interview. we will bring you that as soon as we have the feet. let's check on the markets on this monday morning coming off of two straight weeks of gains. the s&p 500 hanging in onto gains. let's go now to virginia where

anne-marie is standing by. annmarie: thank you. we welcome our tv audience and radio listeners here in virginia. i'm sitting down with treasury secretary janet yellen. thank you so much, madam secretary, for joining bloomberg. secretary yellen: thank you for the invitation. annmarie: we are in stafford county, which bind and one in 2020. you are here to talk about the fiscal agenda that we see from this administration, highlighting these millions of dollars coming to broadband in rural areas like virginia, but when you look at consumer sentiment, the michigan survey, recent polls, inflation remains top of mind for american voters. how do you get them to potentially look at the way that you look at how the economy is working? secretary yellen: the cost of living in many areas is very high. it is a concern to americans and it is president biden's top priority to do all that he can

to bring down the cost of living. why i am here in stamford county, though, -- stafford county, though, it illustrates in one which way that will occur. i am looking at any area that has been deprived, has had really no access to the internet and all -- at all, sufficiently remote part of virginia. president biden has made a commitment that every american household and business should have access to the internet. funds that were included in the american rescue plan that was passed in 2021, later the bipartisan infrastructure bill, provided substantial funding to make sure that the internet is available everywhere and that it

is also affordable. what we saw during the pandemic, access to the internet is critical to education, to jobs, to health care. it is really a critical tool that everybody, family needs access to. making that available, making sure it's affordable, which is what we are going to see today, a project that has succeeded in reaching about 700 households in this area. this is one way in which president biden is working to lower the cost of living. but there are many other areas, as well. prescription drugs. brought down the cost of insulin to $35 a month. working very hard to bring down

the cost of energy. at the same time, protecting the environment. bolstering the finances of households by extending the child tax credit, earned income tax credit. annmarie: if inflation is still top of mind for americans today, why then tomorrow, where it is expected the biden administration will lift the balls higher with respect to chinese goods, why then raise tariffs? sec. yellen: the president believes it is critically important for the united states to have a role and presence in strategic industries like semiconductors, clean energy, that are going to be the foundation of good jobs and national security in the decades ahead. he believes it, unacceptable as

i do, to be completely dependent on china is in these areas -- china in these areas. given that china is not really playing by the rules, and the sense that they have enormous subsidies and critical areas, manufacturing, has resulted in overcapacity. he wants to make sure that the stimulus that is being provided through the inflation reduction act, to support these industries -- and these are industries that are creating good manufacturing jobs in parts of the country that have been overlooked or have suffered from de- industrialization in the past. the president wants to make sure he protects these investments. i don't want to get ahead of the 301 review on tariffs but this

is a commitment that president biden has made. i agree with it. i was just in china a couple weeks ago and made it clear that we would not allow chinese overcapacity to harm our emerging industries. annmarie: does the u.s. want a trade war with china? sec. yellen: we believe that we should have a deep and productive, and we do in most areas, trade in investment relationship. we are working to stabilize our economic relationship. we do not wish to disengage with china economically, but we do think the playing field should be fair. china engages in unfair practices like massive subsidies of industries and they have decided are critical. those are cases where we will act to protect ourselves. annmarie: we have seen beijing

in the past respond, tit for tat. are you expecting a response, could they go after tesla, american farm products? sec. yellen: president biden believes anything we should do should be targeted to our concerns and not broad-based. hopefully we will not see a significant chinese response. but that is always a possibility. annmarie: china is a big focus going into the election, the former president talking about how he wants to put a 60% potential tariff on all chinese goods. also talking about the trump-era tax cuts that are set to expire next year. he said over the weekend, but will give you a tax hike. if you were up to trump, it would be a tax cut on the upper, middle, and business-class. are you envisioning these tax cuts to be extended? sec. yellen: what president biden has said, and i certainly agree with it, we want to make

sure that working families earning under $400,000 are not faced with a tax hike. but all of wealthy individuals and corporations that benefited from the tax cut and jobs act, provisions that are going to expire, the president, for the sake of working families and tax fairness, believes the rich and corporations should pay their fair share. i would say that cbo, the congressional budget office, recently estimated that extending all of the provisions of tcja would cost $5 trillion over the next decade. we really do need to be on a fiscally sustainable path. the president has already signed and put into effect a trillion

dollars of deficit reduction over the next decade. he has proposed in his 2025 budget an additional $3 trillion worth of deficit reduction. it really is critical that we are in a fiscally sustainable path. tcja, the bulk of the benefits and went to the wealthy and corporations. the blew away the deficit. it caused a huge increase in the deficit. it promised an investment boom it, and we didn't see it. annmarie: should tax revenues be used to lower the deficit? is that the plan for biden or will they go to social programs? sec. yellen: president biden believes it is good to invest in areas of the economy that will help us grow and create good jobs. his budget is one that proposes

helping working families and undertaking investments that are critical to our future, but also raising taxes on wealthy individuals who he believes are not paying their fair share. raising taxes on corporations that are doing extremely well. he went both invest in america, and help working families, and lower the deficit. annmarie: the u.s. at the moment is spending as much every year on paying off our debt as it is funding our military. does the u.s. new lower interest rates in order to balance the budget? sec. yellen: we have to take the interest rate path that prevails in the economy has given -- as given. the president's budget incorporates the assumption that interest rates

will be in line with private sector forecasters, so there has been an increase in the interest rate path. that is assumed. it is necessary to make sure that we are in a fiscally sustainable path. of course, the higher interest rate path makes that more difficult, but the president's budget -- i see the key metric that summarizes the burning of deficits -- it is interest costs. the president's plan would hold interest costs at historical levels, not allow them to rise above that. annmarie: the federal deficit is at a level that we don't see outside of recessions. is anyone in washington seriously concerned about this? real conversations about bringing debt back to a sustainable path? sec. yellen: like i said, the

interest cost of the debt is a way to measure its burden. generally, interest rates have been lower in spite of recent increases, lower than past decades. that means that metrics like the ratio of debt to gdp, we can probably manage and have a fiscally sustainable path with somewhat higher ratio of debt to gdp. but it's important to make sure the real interest burden of the debt, which is a measure of the burden placed on our economy, we have to make sure that that stays in historically normal level. annmarie: this is not just a complaint of fiscal hawks, something i heard at the imf and world bank, country lining up,

concerned about the path the u.s. is on, and also what that means for the u.s. dollar. a lot of people reminiscent of the nixon times saying it is our currency but it is your problem. is it right in that context that other countries should be intervening? sec. yellen: our position is that major countries, like those in the g7 -- and this is agreed in the g7 -- should have market-determined exchange rates. if intervention occurs, it should be rare. we will communicate it, and largely to address fluctuations in currencies. that is the system that we essentially have in place. i think it has worked well. of course, differences in the stands of monetary policy across countries is a factor that

influences the value of exchange rates. annmarie: i'm sure this will come up on your next trip, meeting with your g7 partners in italy. there have been reports that japan has intervened twice. you said it should be communicated, should be rare. but they have not barked, so why should it matter? sec. yellen: i am not going to comment on a situation in a specific country. i just want to leave it as, when there is excessive volatility, it is possible for countries to intervene. it doesn't always work with more fundamental changes in policy. but we believe that should have been very rarely and be communicated to trade partners if it does. annmarie: just on a final point, in this affects world, meeting your g7 partners, do you have a currency pair that you watch the most? sec. yellen: i watch certainly

the value of the dollar vis-a-vis major currencies like the euro, yen, renminbi. currency developments generally. annmarie: excellent payment treasury secretary janet, thank you for your time. that was secretary janet yellen in virginia talking about the millions of dollars that have come out of the fiscal agenda of the biden administration. today, during this infrastructure week, it's about expanding broadband in rural areas. katie: our thanks to u.s. treasury secretary janet yellen and bloomberg's own annmarie hordern. joining me to discuss that interview is mike mckee, write to my left. let's start where yellen ended, and the commentary on currencies. we've all been watching what is going on with the yen. she made the point that g7 nations should have market-determined currencies. a lot of speculation over

whether intervention has and is taking place in japan right now. mike: she went further than i would've expected for a treasury secretary. you know they will not say anything about intervention except that she laid out the g7 policy that currency intervention should be rare, limited to times of excess fluctuation. maybe that's the case that the japanese could make given they pass their record low in recent weeks for the yen. she didn't excess more is coming on but admitted this is a key topic and is being driven by interest rate differentials which are being driven by the u.s. fed keeping rates higher for longer. it didn't sound to me like she would say this is a time period where we would completely rule it out. katie: speaking of u.s. interest rates, she also made the point, you look at the higher interest rate path we are on, and that

worsened the fiscal challenge the u.s. is facing now. mike: as annmarie pointed out, the u.s. is spending more on interest payments made and is spending on defense. that is going to be a problem going forward. she cannot really criticize the fed as the treasury secretary, but she didn't let it be known that high interest rates are problem for the budget and the deficit overall. i'm sure you can read between the lines that she would like to see them lower. katie: she would definitely like to see them lower than that comes back to the fed, and what the fed is trying to do here. inflation is still sticky. we will get an update on wednesday. you think about the basic facts of where we were, maybe now not in the fed's weber. mike: certainly when the wrong direction in the last few months. people hoping cpi starts to show it is going the other way soon. i thought it was very interesting framing for annmarie to ask about the idea of trade

more with china given the fact that the administration will announce all of these tariff increases. tariff is a tax on consumers and will essentially add to u.s. inflation, and whether or not that is a mistake. yellen suggested it is something that needs to be targeted and watched carefully but admitted china could respond and therefore we could see inflation problems down the road. with a treasury secretary, they are well coached not to move the markets. in this case, she didn't move markets so much as she gay people on wall street openings to think about some of the things that are wearing the administration and could be acted upon. katie: to see what she actually said, china, broad-based retaliation is " always a possibility." you think about what is happening on the u.s. side, she declined to comment on what is being reported now, the biden administration is set to quadruple tariffs on chinese

ev's, but she did say when it comes to china we should be talking about targeted measures, not broad-based measures. it seems the goal is not to be too dependent on china when it comes to those key industries. mike: at the same time, they don't want to destroy the relationship between the two countries, and they don't want any blowback on the u.s. economy. the chinese retaliated on donald trump by putting tariffs on soybeans. that really hurt soybean sales. it is incentivized the resilience to increase their soybean production. that has hurt the overall markets for u.s. soybeans going forward. those in the kinds of things you have to try to avoid that you cannot get around. maybe the administration feels the need to impose some sanctions because the chinese are not playing fairly. but you also have to keep an eye out for the law of unintended consequences. katie: bloomberg's mike mckee,

great breakdown of our exclusive interview. annmarie hordern with the treasury secretary janet yellen. let's take a look at these markets. the s&p 500, again, quite start to the trading week. still higher by .1%. we are coming off of two straight weeks of gains. we are not too far away from those all-time highs. of course, the bulk of earnings behind us, but still some to come. let's go to natalia for a market update. >> it is a relatively quiet day. the s&p 500 is flat today but it is supposed to be a busy week. ppi data, cpi, and traders are watching retail earnings from some of the biggest companies in the u.s. oil is slightly up-to-date. in the news, china can boost their economic activity, which

could be positive for crude prices. the u.s. dollar is moving lower. let's take a look at some of the individual movers. to date, we can see it is a meme stock day. gamestop is up by 75%. trading has been halted today a few times. this came after a man who was behind this meme stock rally during the pandemic, he was on x for the first time in three years. retail traders saw this as a positive signal that meme stocks are coming back. we see other shares, read it and tesla -- reddit and tesla, one of the retail darlings. reddit is also up, driven by the fact that the company appointed a new director for advertising.

squarespace is up by 13%. this is on the news that the company is going private. let's flip the board. i want to talk about the financial sector here in the u.s. we saw activity from hedge funds last week. goldman sachs prime brokerage data showed hedge funds have been selling financial stocks for the past three weeks. last week, financials saw their largest net something in two months. traders i spoke with said there are possibly two reasons behind the move. on the one hand, we already passed through financial earnings season. now we don't have a big catalyst for the market. we also see signs for the economic slow down here in the u.s. when it comes to gdp or consumer sentiment data, which can be negative for financial stocks. when it comes to technical

analysis, traders are flagging that this sector is reaching an overbought territory, now trading at 65. when it reaches the 70 level, this can be a negative catalyst for this sector. if you look your to date picture, financials are outperforming on the year to date basis. katie: thank you so much. an interesting moment in markets right now when you think about where we are when you take a look at the long-term chart. s&p 500, not too far below those all-time highs. in terms of what the next catalyst could be, that remains to be seen. we think about where we are in the earnings landscape, big tech bradley behind us. we still have some's heavyweights like nvidia next week. then we have the fed to look forward to. before we get there, cpi on wednesday, so take your pick. right now, let's talk about the

choose france summit underway beaming it's an annual event hosted by the french president. we are going there now with goldman sachs chairman and ceo david solomon with jonathan ferro. jonathan: i appreciate it. alongside me, david solomon on goldman sachs. good afternoon. fantastic to see you in paris. we need to talk france for and then we will move our way through the business and talk about the united states as well. typically i can say as a brit, we would look at france as antibusiness, perhaps you would choose london over paris. that seems to have changed. am i right david: a little bit. brexit had a big impact on that evolution. we have 300, 400 people in paris now, triple what we had five or six years ago. so there's been an evolution. i do think it is still a complex place for professional services

person to put an employee. our dialogues, we have talked about that, one of the things i'm encouraged by. the administration is looking to do things here that actually improves -- this is a business environment. one of the things that is interesting, we have chosen france. very important hub for us here on the continent, but also our people like living here. one of the things in a competitive world for talent, we give our people more latitude to work and live out places that they want to live. jonathan: have you chosen france because somewhere else is getting worse or because france is getting better? david: it's a combination. france on the continent has gotten better. the regulatory structure requires that we have certain people here for our business. our clients are here, we want to be near our clients. it's a combination of things that make this an appropriate place for goldman sachs to continue to grow. jonathan: a lot of us going

forward into 2025 feel like we are flying blind a little bit. do you have more visibility on the future of europe or the united states? david: i don't have a lot of visibility on the future of the world, let alone europe or the united states. a lot of people you talk to are very sure about how things will play out as we go forward. i tend to look at how we manage risks, what are the tails we need to be concerned about? when i think about economic outcomes, i think about distribution of those outcomes. there is a perception of the direction of travel we can talk about but i certainly don't know where the direction of travel is. i will say, going back to but we were talking about with france, listening to a number of officials that spoke at lunch today, they are talking about ways they can accelerate more entrepreneurship, more investment, more flexibility, and more strengthening and

interdependency in europe. those are hard to execute on but very important. jonathan: the white house is doing something similar but comes at a cost. the budget, north of 6% last year, when unemployment is south of 4. speaking of risks, is that one? david: certainly one that i'm focused on. the level of debt in the u.s., level of spending is something we need a sharper focus on, more dialogue on then we have seen. we had a pandemic, we made a bunch of decisions, but we are long out of that pandemic and spending levels are continuing at a pace that i think is raising our debt level, creating issues for us down the road. this is something that deserves a lot of attention, not getting as much attention as i would like to see it get right now. we are in an election year, so i don't have my head in the sand. i don't think you'll see that got a lot of attention prior to the election, but it is something that requires focus.

we need to deal with the debt and deficits. hopefully, a lot more discussions as we get through the election and move to the next administration. jonathan: i often say the united states has the privilege of acting recklessly, the way that the europeans do not. any sense of a pushback from the treasury market, investors against this risk we are talking about currently? david: the reserve currency is a great privilege. i will not sit here and say that i see in the near term a threat to that in any way, shape, or form, but is not something you can take for granted. the united states ability to spend without constraint is not unlimited. ultimately the market will challenge that. has not challenged it yet, not saying it is coming soon, but something we should be very protective of. jonathan: did you think the experience of the u.k. could be a case study from what we could face in america? david: that was a disruption to

the gilt market, one of the things you need to be concerned about. the risk issues i highlighted before, at the time, the bank of england had to reverse its course and become very accommodative to deal with that. we have had disruptions in the treasury market before. certainly had a disruption in march 2020. to the degree that we had a significant disruption in the treasury market in the future, we don't have a lot of capacity in the banking market to intermediate that. it would require very accommodative policy. if it came at the time when the central bank could not be accommodated, that would be a risk that needs to be monitored. jonathan: a lot of risks in the past few months. looking had to seven rate cuts for the federal reserve, all the way down to none. some are down to two. big swings in the equity markets. we are seeing 10% swings in trillion dollar names post earnings. is that environment good for

business? david: the market is the market. there are a handful of things that are driving these platforms to grow earnings very significantly and gain a larger importance in the overall market competitive -- capitalization. they have the enormous competitive advantage of the will be operating in. it is not surprising given the changes in technology we have seen. i don't worry about that from a market perspective. markets are relatively efficient. i do where we the equity markets particularly in the united states, but true all over the world, are bringing fewer and fewer public companies, and that is concerning. there is an abundance of capital available in private markets but i think it's important that we have open, accommodative, strong public markets with tremendous disclosure. i think that is good for capital

deployment. i am concerned that the breadth of public market is getting more narrow, something to think about. jonathan: do you see that improving at all? david: it is easy to brew when it was zero. it has opened up, we have seen some successful ipos during the first couple months of the year. i think the level of ibu activity will pick up in the second half of the year into 2025. it will not be as robust as 2021 but we will go back to what i would call a normalized market for ipos. that said, the overall size or number of companies coming public, companies are staying private longer, more access to capital, and there are consequences associated with that. jonathan: let's think about m&a. difficult to think about which deal can or cannot get done based on current regulation.

how much is that holding back m&a activity in the united states? david: i think there is no question the regulatory environment has been a headwind to m&a activity. for example, large cap tech has closed out because of the regulatory environment, from making significant acquisitions. the regulatory environment has made it harder to understand or really expect exactly how it will intervene. i think that has had a chilling effect. that said, the world is a competitive place. scale matters everywhere you turn. people will do what they need to do strategically to advance their position. if they had to litigate it, they will litigate. generally those companies have chosen to litigate, generally made progress. nobody wants to go down that path. at the end of the day, scale matters, confidence matters. confidence has been improving over the last 12 months. certainly in 2022, 2023, you

didn't have high confidence, and that affects m&a. based on the indicators that we can see, dialogue is picking up, and my guess is we will move back to a more normalized level as we finish the year. jonathan: stocks picking up on that, up double digits from the lows of october. oppenheimer said the second quarter was a near perfect print. you must feel vindicated about where this business is going now, how he appreciated that is. david: i've always felt good about goldman sachs, the way the business is positioned for a long time. we have made a bunch of decisions over the last six years to execute on that plan. that has included our 1gs operating eat those, putting more resources toward our client franchises, allowing us to take market share from some of our competitors. we have grown our financing business, financing our clients, which plays to our strengths.

we've also made some strategic decisions over the last five years to bring a variety of business together in our asset wealth management business so we have a scaled platform, supervising a little less than $3 trillion in assets. we are seeing margin improvement in the growth of that business. i think the firm is very well positioned. we are executing on our plan, staying focused on our clients. but we cannot control is the environment. i would say 2022, 2023 was not a great environment for our business. the environment has improved. i wouldn't say we are back to average environment but we are getting there. we will stay focused on our clients and execute on our plan. jonathan: leaning into different parts of the business. would you be open to acquisitions particularly for management? david: we are always looking to grow and extend our franchise. great asset and wealth management businesses, you don't

buy them, they are generally for sale at point in time. at the moment, we are very focused on our execution. the bar to do something significant or transformative -- i say this all the time -- will be very high. if something came along at some point that we thought could accelerate our journey and as it wealth management, bring accretive returns, strengthen our position, we would consider it. at the moment we have a lot to do to drive our organic growth strategy. jonathan:? are those opportunities in europe or elsewhere david: we made an acquisition in europe we are going to look. we have a strategy around our asset wealth management

business. we have been executing on it. we have been clear we have room to grow and we think we can grow this business high single digits and improve the margins. we have room to run so we will continue on the execution path. jonathan: you been acquiring talent. mr. kaplan is making a comeback. what will he be doing? david: rob had a long and very important career and goldman sachs, ran the investment banking business for a significant period of time. rob was looking to come back into the business. we decided he should come home to goldman sachs. we are thrilled he is spending time with our clients, has deep client relationships. he has always been a leader, mentor to people he believes in deeply. another senior leader who can spend time with all of us in the culture of goldman sachs. we have 4000 people in dallas, texas now. it puts another senior leader in dallas, which is important for

us. and he certainly has a view on the macro. having rob coordinate with our research team, available to talk to our clients about what we see going on in the macro, is in an area we can contribute. we are thrilled to have rob back as a senior statesman in the firm. jonathan: when i dial goldman for the fed call, do i dial jan hatsius or rob? david: i would be happy to give you opinions on that also, as with 40 others. the range of opinions, we have a range of opinions, but it is one of debate. i feel so lucky, there are so many smart partners at goldman sachs out in the world talking to people. as you do that, you learn. you bring perspective to the table. all those perspectives come into

the mindset factor. jan is really good at taking data and information and digesting it. he sits inside a very powerful place inside goldman sachs, and all of us contribute into that information flow. we have a great ability to kind of listen and learn, talk to very smart people, and that gets incorporated into our views. jonathan: a ton of information this week, cpi, ppi, more fed speak. can we finish on what the business is telling you about the state of the economy? are we slowing down, falling off a cliff, booming? david: definitely not falling off a cliff. the u.s. economy is chugging along pretty well. i think the market is pretty much set up for what you see is what you get for the rest of 24. there have been a bunch of data points that indicate a slowing and what i would call the 30% of the consumer economy, where people are making different choices, tightening up on their spending choices.

you have seen earnings reports that indicate that. but broadly speaking, the service sector is still strong, the economy is still in pretty good shape. where it will be in six months, how much of that slow down we see in the bottom quartile, we have to watch the data carefully. jonathan: we alluded to it earlier. do you feel personally vindicated on where the business it is now versus the coverage of the last six months? david: goldman is a visible organization. the team that i have come of the partners that help us serve our clients, run the firm, we have had a high degree of confidence in our strategy over the last 5, 6 years. we continue to execute on that strategy. when times are good, things feel good. when times are tougher, things don't feel as good. we take a longer view, execute against that strategy. we just know that if we have smart people working together,

collaboratively, driving for excellence to serve our clients, we will do just fine. that is our true north. serving our clients with excellence. jonathan: david solomon, thank you for your time. appreciate it. catch you in new york next time. that was david solomon of goldman sachs. back to you in new york. katie: our thanks to goldman sachs ceo david solomon and our own jonathan ferro. more coverage from the choose france summit this afternoon. brian moynihan will join us for an exclusive interview at 12:30 p.m. eastern time. you can take a look at what we heard from david solomon, to go through some of the headlines. concerned that fewer companies are going public. there are consequences to staying private for longer. also when it comes to goldman's own business, it would consider an asset management purchase but it is a high bar. let's look at some social

climbers, stocks making waves on social media. delta taking flight after hsbc named it a top pick within airlines, highlighting it strong competitive positioning, increasing demand for international travel. intel saying it's in advanced talks with apollo for $11 billion to build a plant in ireland. they have been working to diversify the company's manufacturing outside of asia, which dominates chip production today. you can follow all the latest company buzz on your bloomberg terminal. quick check on the markets right now. it is a pretty quiet monday, if you look at what is going on outside of gamestop. i will call the s&p unchanged. take a look at the nasdaq 100, a little bit better but still quite overall, up .2%. the bond market pretty quiet,

still down about three basis points on that yield. coming up, we have bloomberg technology with caroline hyde and ed ludlow. that does it for bloomberg markets. i'm katie greifeld. this is bloomberg. ♪ do you want to close out? should i? normally i'd hold. but... taking the gains is smart here, right? feel more confident with stock ratings from j.p. morgan analysts in the chase app. when you've got a decision to make... the answer is j.p. morgan wealth management. sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh and they're all coming? those who are still with us, yes.hhhhh

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>> from the heart of where innovation, money, and power collide in silicon valley and beyond, this is bloomberg technology with caroline hyde and ed ludlow. ♪ caroline: i'm caroline hyde. ed: i'm ed ludlow. this is bloomberg technology. caroline: full chip coverage ahead. the latest headlines from nvidia, arm, intel, and more. ed: apple nears a deal with openai. caroline: