sonali: welcome to bloomberg markets. i'm sonali basak. let's check the markets. a choppy trade this week. the s&p 500 up about point 6%. you would need a little more to get out of the slump of the week. could have the first down week in seven weeks. this would be the street breaking six weeks in a row of gains. the nasdaq 100 on the seventh

straight week of gains, one .4% higher. two year yield 407. new york crude at 70 one. a rise of about 2%. mid-day movers on the equity side in the middle of earnings season with mna news. boeing. the shares rising. it is reportedly in early talks to share its space business. it would be an end of an era including starliner and space station operations according to the wall street journal. it would be part of the company's efforts to shore up financing amid supply chain snarls, union strikes and regulatory scrutiny. you are seeing boeing up around .7% now. decker up 11%. the company behind hokah and uggs surging after boosting forecast. net sales jumped 12% in the previous quarter compared to a year ago. and it to be die follow, financials, new york community

bank shares fallen, the worst day since early september. the regional vendor is providing guidance for net interest income and earnings per share for 2024 and 2025 put a wall street estimates. new york community bank now down more than 7%. we will dig into it with bloomberg senior intelligence bank at a sterman chan. you are seeing the kbw bank index and regional bank index. most stocks in the red actually in the bank index. the only one in the green today is capital one. >> what kind of overhang do you see from new york community bank? >> for new york community it is a very much more idiosyncratic with their turnaround in their business deemphasizing the commercial real estate aspect of what they do and really pivoting to a commercial and business lending focus. this will take more time. they are seeing weaker credit quality specifically with commercial real estate exposure. this is taking a big hatchet to

their estimates for eps the next couple years. sonali: something incredible to me. before today you saw new york community bank down more than 60% this year and now you see a down another 7% today. why wasn't a lot of this already baked in? herman: the reporting today really demonstrated the turnaround will take more time than previously considered. they are talking about positive earnings, not next year, but in 2026, potentially. it will be a tough slog for them to really change their business, becoming more commercial focused and is still dealing with the credit quality for their legacy commercial real estate exposures. sonali: i can understand that new york community bank had certain idiosyncratic exposures given the rules of new york and not -- whatnot. how can you be convinced more

regional banks won't fall play -- pray to a greater degree to commercial real estate? herman: a couple things come to mind. at the exposure to problematic commercial real estate lending. office cre for example. it is much lower for other regional banks i cover it versus the new york community. second, the credit quality for commercial lending is still fairly strong. the other parts of the businesses are still holding up really well. and liquidity is very strong. there is much -- not much in terms of red flags that are cautionary in our view. sonali: with their earnings to see some comedy like what you see when it comes to regional banking? herman: net income grew 2% on average. it lending has not been materializing for regionals. but there is expectation for that to come back as interest

rates decline and the fed cuts interest rates. there are positives. at the end of the day, it is about managing great risk and with rates coming down, whom -- how do they manage the loans repricing and deposit repricing? sonali: hermann chan from a bloomberg intelligence thank you so much. we will branch out to public and private markets. the inverse of the regional bank story is private credit. we are joined by the monroe capital chairman and ceo . n you are in the center of one of the highest trends in the market now, not just private credit, but the consolidation among private credit managers. can you take us back for a minute and talk about the deal process and what got you through -- to the tied up with another investment firm? ted: sure to thank you for

having me today. you are right. this has been one of the hottest areas of alternative investments . we have grown our firm at 25% since the financial crisis. a lot of the reasons for the growth was a lot of the lending has been pushed out of their regulated financial markets into the nonregulated markets to firms like monroe. we went on a search to find what we thought would be the ideal partner. we wanted somebody that we thought was very limited partner focused, investor focused, somebody that had a significant balance sheet that could help us grow the business, yet, somebody that would allow us to have investments and operational independence. we found a 320-year-old firm, french investment firm in wendel. they have been around since 1720. they survived two revolutions. they have about 1300 family

members and they agreed to make a valuable -- available about $13 million of seed capital so we can grow our business and attract institutional and high net worth investors into what has become a very, very stable, consistent, and investor friendly asset class. sonali: we were talking about pressures in the regional banking system. since 2008 a lot of activity has moved into private credit. i am curious how that extension works now. when i had gone around and talked to a lot of folks in the market they said the introduction of basel three endgame could even accelerate the push more. you see it that way? ted: what happened was in the financial crisis, one of the challenge was, regulated banks were stuck. they were holding a tremendous amount of loans that they would normally sell. when the financial crisis happened, the loans became essentially not salable. the banks needed to be bailed

out. regulators at the time decided we will never get to that position again. not only u.s. regulators but regulators around the world forced those buyout rolls out of the banking system to the institutional investor market. when i first started the business 90% of lending was in the regulated financial industry. 10% was out. today it's the opposite. 90% of the leveraged buyout loans are held outside of the regulated banking industry and only 10% remain today. that is unchanging. if anything it will continue to move outside the regulated financial institutions. sonali: there was a financial stability report put out a few days ago by the imf. they said when it comes to non-bank financial institutions private credit in particular there is a stabilizing force under the surface and a significant amount of risk and regulations they made include

increasing transparency, expanding data collection, boosting counterparty resilience. what you think about those? how much more transparency does this market need? ted: the reason why the loans were moved out of the regulated financial system is because of depositors. depositors bore the brunt of the risk for the financial crisis. the taxpayers had to build out banks. same thing happened in europe and asia. when you move loans outside the regulated system into the institutional system, we don't deposit more. the interests and entities best able to bear the risks and hold the assets long-term, they are in exactly the right position. the institutional investor market. the pension fund, insurance companies, entities that don't have to mark assets on a quarterly basis and move them out and take losses quickly in the event that the market moves

against them. regulators did exactly what they should have done. and the result is actually perfect today. that is why private credit business has grown so much. the assets are exactly how they should be. sonali: does this also give you firepower to look ahead and it pursue more deals of your own. do you see more consolidation in the space, particularly for yourself? ted: no doubt about it. we are the largest player in the lower middle markets. that's mainstream america. 200,000 companies in the u.s. alone that are $250 million in revenue and below. i have a strong appetite to continue to grow -- to continue to grow the firm and consolidate. smaller firms bring more challenges raising money in doing business as the industry continues to mature and consolidate. sonali: thank you for joining us

on the heels of the announcement. monroe capital chairman and ceo ted koenig. coming up, big tech earnings continue next week. microsoft, meta, apple all reporting. we will break down expectations next. this is bloomberg.

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sonali: this is bloomberg markets. i'm sonali basak. it's time for the stock of the hour, the magnificent seven etf gaining ahead of big tech earnings next week. tesla helping boost to the basket of stocks on its own earnings. now we await amazon, microsoft, apple, and meta earnings next week. i hope you get sleep before that

part of earnings season. we will bring in bloomberg technology cohost ed ludlow. there's a lot to set up for. but what i am wondering is, how high is the bar for these companies? which of the companies are most vulnerable to these skyhigh expectations? ed: the bar is higher. it is so interesting. it sentiment to the magnificent seven has changed since the summer. tesla was a surprise because it beat expectations in a big way and its outlook was one for the both. basically the mag seven group peaked in july. we know they were such a contributor to the s&p 500 the first half of the year. since july they have fallen away. there are questions of valuation. it all comes down to earnings growth. for all of the investment in ai and capex what are they showing in translation to earnings. if you take those announced next week or strip out meta and

cleared nvidia, earnings growth expectations are less than 20%. that is still big relative to the index overall. it is its slowest rate of growth at about sick -- in about six quarters. things are changing and the bar is higher as a result. sonali: if the bar is higher how will investors treat the marginal spend? ed: there is just more evidence companies are spending and investing even more. for example, alphabet. it's capex is tracked so closely because it's cloud business is the number three player in the market behind aws and azure. at the same time it's investing in waymo. we just covered that this morning. is it translating to topline growth and bottom-line growth? prior portents show yes. google cloud platform did provide on data. again relative to expectations will it continue to do so? one example. sonali: i want to talk about companies more heavily weighted

in the philadelphia semiconductor index. we can look at the nasdaq 100 but the sox is up 26% this year and almost every member in the green ahead of next week's earnings and amd is tuesday. what are your expectations? ed: there is the big picture than idiosyncratic. amd is benefiting from all of the ai investment. it offers accelerator that competes with nvidia products. the difference is amd is much smaller. they might do for $.5 billion of ai chip sales this year. if they exceed that, great, the market will love it. but the thing that is specific for them it's the time i did technology. they came out with my 300 generation. what i hear from sources at all kinds of technology companies is at the tip is great, the problem is, if you go with it, by the time you have installed it in a data center somewhere nvidia is out with another, better chip. you have to think about your technology pathway and amd has had a tough time explaining that to investors. they keep saying our tip is so good relative to nvidia's. in that case, where is it really

available in the real world to drive cloud computing? there is much to remain in that conversation for sure. sonali: thank you for your time. everybody, get some sleep. particularly you. a really busy week is ahead. a bloomberg's ed ludlow cohost of bloomberg technology. coming up, there is a new debut fund. they are looking at companies that could may be sort of go public at some point. we talk about that text. this is bloomberg.

sonali: this is bloomberg markets sonali basak. this private equity fund l two point announced its equity fund with capital. that money goes a long way with growth capital seeking new investors. we discuss it with managing

partner kerstin dittmar. she started l2 point in 2018. it's an interesting time for you to do this. it's hybrid capital you are focused on. explain the structure and why it has become more interesting when you think about growth capital. kerstin: it is meant to offer growth companies and alternative to capital solutions that is less deluded or costly than traditional growth equity and does not come with the operational restrictions traditional debt products offer. companies we focus on and work with at l2 point tend to be at an inflection point where they could be profitable or self-sustaining, but they are seeing a very interesting growth opportunity in front of them and want to be able to continue throwing fuel on the fire. they are mindful of the cost of capital. they are mindful of what they

may incur with that. structured equity offers an interesting, as you said, hybrid solution that balances the cost of capital with operation restriction. sonali: very interesting timing to talk about this. the ipo market has been choppy at best. closed in parts of the market. what are the opportunities you have been finding as the ipo market has a shut to so many companies? kerstin: the ipo market even if it were to reopen is facing a huge backlog of technology companies. usually 30 can go public in a given year. we have a backlog of over 200 that are potential ipo candidates. even with the market to reopening a large number of companies need to find private financing solutions to fund continued investments into growth. they are sensitive to dilution. they want to minimize that. the valuation environment has

also reset. we aren't at the multiples we saw in 2020 and 2021. companies over the last two years have hesitated to raise in a lower valuation environment. and today they are coming to the conclusion they want to be able to continue to invest in growth. they want to raise capital. it just mindful of capital efficiency. sonali: how does it work exactly? if the valuation reset has been underway and is still happening in many parts of the market, does taking capital from you help them avoid a down round situation? kerstin: it can. the way structured equity is implemented as we trade some amount of what we receive in exchange for seeking less upside than a traditional growth investor mind. this allows companies to grow into perhaps the out of the money valuation, giving them a chance to take their high growth

rate and get themselves to the point where they need to be in order to raise. sonali: what is the outlook? some of that is buying time to hope for better valuation later. when do we get there? ed: i don't think we will go back to the multiples we saw in 2020 or 2021 anytime soon, if ever, but companies are growing. if you are a company growing at 30%, 40% to 50% and you are 30%, 40%, 50% out of the money over time you can get yourself there and if you are confident in the growth you are willing to take on this effective form of leverage done through an equity instrument that does not come with all of the operational restrictions and without the cash debt service you have with the traditional debt product. sonali: there are a lot of conversations about companies getting bigger and bigger before they go public. huge companies in private markets. with companies trying to raise capital, make it through this period in time are they tending to be bigger? kerstin: they can range.

we focus on companies anywhere from $40 million plus in revenue. some of our countries have $800 million plus in revenue. they are late stage growth companies fundamentally at the point where if they needed to be profitable, they could. it varies by industry. a software company might reach that scale at a lower revenue number. a higher fixed cost company, and e-commerce company might need 100 million dollars plus in revenue to get there. we are seeing companies being very thoughtful about the amount of capital they are raising. you aren't seeing the number of mega rounds you saw in 2020 and 2021 where capital was pretty cheap. capital was in some cases free. and the size of the round, you were going to maximize it because of the craft of capital. today there is a much more tangible cost of the capital. especially with late stage growth companies that don't need that much money they are being more thoughtful about the size of rounds they are raising.

sonali: the private market has been of high interest. that is l2 point's kerstin dittmar with a view under the hood and what is around the corner in the world of capital raising. let's look at the market. we are back up on the s&p 500. it has been a tough week. but we are ending higher. the s&p 500 is up about .5%, off of the session highs, still high nonetheless. if we keep at this level, still a down week. the nasdaq 100 still in a better shape. up 1.3%. today. and up on the week as well. the two year yield at 407, roughly flat, a fascinating move in the bond market. not so much on the shortened. certainly on the long end. part of the trump trade, still having a look around for 21 on the 10 year. bitcoin down about seven -- .7%. gold higher, but not by much.

these have certainly been the safety trades that have underpinned the market where there is a little fear under the surface. a lot to tell next week. a big week of earnings. i'm sonali basak. that does it for bloomberg markets. have a great weekend. this is bloomberg. get your business online in minutes with the power of ai... ...with a perfect name, a great logo, and a beautiful website. just start with a domain, a few clicks, and you're in business. make now the future at godaddy.com/airo it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

>> from the world of politics. to the world of business. . this is "balance of power."

♪ >> live from washington, d.c. joe: 11 days and anything can happen. welcome to the fastest show in politics. with new polling out that underscores a tight presidential race as seen in our own bloomberg news swing state poll. i'm joe mathieu in washington. kailey leinz is at world headquarters in new york. you're early for the donald trump concert at madison square garden. kailey: i think i'm going to get out of here before that happens. i cannot imagine the gridlock it is going to cause in midtown manhattan as he takes his case to new york. but texas, as with kamala harris would be on site into. 11 days to go. across the battleground, 49-49.