Welcome to the first day of October, the first of the quarter. 30 minutes until the start of trading. I am Dani Burger.
And I am Michael McKee. Bloomberg: Open Interest starts right now.
Coming up, investors usher in a new quarter as stocks wrestle with a relentless rise in yields. Macron's bullish forecast fuels the AI trade, but the chipmaker warns of rising costs. And Netflix wants more growth. The streaming giant's next act.
Liz Ann Sonders with this idea that what the sell side has to say is different than the buy side expectations. Micron delivered record margin, AI driving demand with a huge jump of sales in its memory chips. The company gave a much larger than expected outlook as demand continues to outstrip supply as data centers race to secure high-bandwidth memory for AI.
Maybe that was all priced in. Elsewhere, the 10-year yield hit its highest level since 2002 as global bonds grappled with stubborn inflation and warnings rates may stay higher for longer. Neel Kashkari spoke with Michael McKee and the rest of the team on Surveillance.
I look at capital markets activity. If deals are getting done, they are oversubscribed, and oversubscribed, that makes me question: is policy as tight as I previously thought it was? I'm not celebrating anybody's IPO being shelved, but to the extent there is some tentativeness creeping into broad financial markets, that indicates the rate environment may be having some effect.
Neel Kashkari having a conversation with you. It is notable you can, off the back of a quarter that is the worst for 10-year Treasuries since 1994, and still say rates are not restrictive. Plenty of companies are still borrowing.
It is one of the conundrums people are still trying to understand, along with the fact that consumer confidence is really low. Companies are borrowing like crazy. Interest rates keep going up. Sometimes I think back to the Chuck Prince days. You have to keep dancing.
Keep dancing while the music is playing. Risk markets are doing really well. Troubling for the bond market is there does not seem much to curb higher. 10-year yields are higher by two basis points, but it is not cracking equity markets. Part of the issue is the reason yields are going so much higher is for a multitude of reasons. It is not just inflation. It is good growth. The jobs numbers have been robust.
It does seem like the economy may be accelerating. There is a combination of good growth, which suggests good earnings for stocks, but also the hope that the hyperscalers can deliver profits. That is kind of going to be the pivot point if somebody decides they cannot.
So far we are seeing another boost to the tech trade. It is not playing out how you would expect if you get a monster beat, and that is Micron. It delivered an upbeat forecast, but it warned an increase in pay could lower profit margins. Joining us is Jake Silverman. Is it because they are paying their people more, or was the good news already priced in?
Part of it is balance between upside and downside. With memory, investors are never going to fully remove the risk of downside because the industry has been so cyclical. When investors are looking at creating their forecasts and their models, they are thinking about the downside risk to this, as opposed to that point where even the CFO said himself, we are expecting decreasing pricing growth through the fiscal 2027 and likely going forward. Investors are looking at this and think we have an idea of what pricing can go to. Even with these agreements, what is the risk that at some point the AI capex investment cycle does not decline but slows to a degree when supply and demand goes out of balance?
There is a story that, given the history of chipmakers, your chip becomes obsolete fairly quickly. Somebody like Micron should be able to anticipate a revolving growth story, even if they cannot raise prices as much.
DRAM generally, they are commodity-like products. The argument that companies are trying to make is it is not really the case anymore. These are strategic products, and that is why they call them strategic customer agreements, these long-term contracts they are signing with customers. Now they have 26 from 16 last quarter. Where that is true is with high-bandwidth memory. This is part of the design cycle for customers like NVIDIA, who have their AI servers, and now hyperscalers as well. Even OpenAI with their recent Jalapeno chip. It is important to keep in mind technology progress. At the same time, the same rules that have governed memory in the past still apply to some extent. There is still a supply and demand element that will underpin the ability for the company to maintain pricing and increase at long term.
87% margins, which is wild. Is that the peak?
They were clear this was some temporary hit, that these are floor margins for Q1, and then it will increase through fiscal 2027. We think that will be the case, especially when you're seeing these price increases that are likely to occur in 2027 or are going to occur in 2027. That will increase pricing and increase margins as well. Overall, the margin profile for the entire business will continue to improve. With pricing increasing at a decelerating rate, margins will improve at a much slower rate than they have been.
Slower than 87%. You can probably live with that.
A lot of investors are trying to juggle that. Is that now acceptable?
Our thanks to Jake Silverman of Bloomberg Intelligence. The Netflix co-CEO says the streaming giant is not growing as quickly as he would like. He spoke at the Bloomberg Springtime Conference.
We are not growing as fast as I want us to, and we are making the move to make that faster. We are also doing things that create a lot of headwind. When we do live programming on Netflix, which is a relatively new thing, we spend about 5% of our content budget on live events. They generate about 1% of our watching.
He also defended Netflix's pursuit of Warner Bros., saying he does not regret going after the company, even though Netflix ultimately lost to Paramount. Joining us is a Bloomberg Intelligence media analyst. What are we looking at here in terms of Netflix going on from this to maybe wanting to buy somebody else?
Bloomberg Intelligence Media Analyst
7:36 ↗
Absolutely. I think that is the biggest question on everybody's mind. We always knew Netflix had been very shy in terms of M&A, but with that Warner deal, it did show they have some appetite and they could go after big properties. Now at Paramount finally closing the Warner Bros. transaction, all eyes are on what happens next. Can NBC, which will be spun off from Comcast, be a potential target? It has a lot of attractive assets, plus it offers Netflix theme park exposure, which could be pretty interesting.
When it comes to the Paramount deal, this thing needed to close yesterday, and we certainly got moved there. We have a new CEO, the former CEO of Mattel, who has joined the show before. It seems like an odd pairing, a toy company moving to become the CEO of this much larger Paramount Skydance, now with Warner Bros. What do you make of that?
Bloomberg Intelligence Media Analyst
8:40 ↗
I think it is pretty good news for Paramount because in David Allison you have a young individual who is hungry and has a lot of technology experience, but not necessarily a lot of experience running a media company. Now you have somebody who has been responsible for an operational turnaround at Mattel and someone who has taken Mattel from being a toy company into more of an IP-driven platform. You saw what he did with the Barbie movie. That will be one of the biggest proof points, whether he can get that Barbie's equal going once it gets to Paramount and Warner Bros.
Outside of Netflix and talking about what they might do, I am wondering who else might be in the market, given we'll have maybe a change in control in Washington over the next two years, if not next year, and that could raise antitrust questions. What is the play out there now?
Bloomberg Intelligence Media Analyst
9:36 ↗
A lot of questions still hanging in the balance out there in terms of antitrust. We know one of the biggest deals in the television broadcasting space, which is Nexstar-Tegna, is in limbo right now. Fox and Roku facing some hurdles. Everything could work out by mid-2027. Uncertainty as we are trying to understand the landscape and what happens with a lot of the regulatory scrutiny. A lot of deals waiting to happen once that regulatory uncertainty clears.
Thank you so much for joining us. Let's get a check on your markets. 20 minutes until the trading day starts. We move higher this morning. Though yields are charting higher, that will keep a lid on what equities do. 10-year yields at 5.30, still near their highest since 2002. Brent crude $99, back below $100. Let's get a look at individual movers with Norah Mulinda.
Let's look at big movers. Shares of Accenture jumping. The results easing some of the concerns that AI could disrupt the consulting business. Accenture gave a solid outlook for the year ahead. You will see shares of the company higher by 18%. McCormick down, but did post better-than-expected sales. The spice maker maintaining its outlook. It is also saying because controls are helping to support margins. Over to energy. Exxon following after Wells Fargo downgraded the stock to equal weight from overweight and said the stock's premium could start to shrink. The firm also sees shares of Exxon down about 0.6%.
We will catch up with you later. Microsoft just had a $1 trillion quarter as cloud growth drives the stock higher. More on the AI trade next. This is Open Interest.
Let's get you some high-interest stories, look at what is making headlines around the world. Blackstone is committing $1 billion to build a new defense tech company as the U.S. faces growing threats from inexpensive drones and missiles. It will focus on lower-cost navigation and guidance technologies for weapon interceptors. Blackstone says it plans additional acquisitions as it expands its defense portfolio. Actor and filmmaker Ben Affleck says he is less worried about AI replacing Hollywood than what it could mean for kids. He says AI should enhance filmmaking, something his own AI company was doing before Netflix bought it. He spoke at Bloomberg Springtime Conference in L.A.
When I worry about AI, I worry about my kids in school. I worry about the 30% rise in the number of A's given out in colleges. I worry about responsible use. I do not worry about Skynet, and I do not think it will take over this business in any meaningful way. I think it will be additive.
More from that conference throughout the day on Bloomberg. That includes conversations with Disney's Dana Walden and NBCUniversal's Donna Langley. Google is laying out its new flagship AI model called Gemini for Argon, starting with government and cybersecurity partners. Google says it delivers frontier performance in legal work and cyber defense. Some employees say the model struggles with certain coding tasks and its performance remains uneven.
Let's discuss all of that with Bloomberg equities reporter Carmen Reinicke. Google is the latest to roll out a new agent. How do we know whether you should use it or not, or these others, because there is a new one all the time?
That is such a good point and something that is important for Google that they are rolling this out. Investors are excited about it. The stock is up 1.7% in premarket. They have a delay with the Gemini 3.5 model. Having this new model come out has been cheered by investors. It is interesting because it came out on the heels of our reporting from Bloomberg that there was internal skepticism around some of the capabilities. It is a constant race to the next model. OpenAI is coming out with new ones, Anthropic is coming out with new ones. What investors are really looking for is these companies that have these large LLMs, that they are making progress. I think over the coming days we will hear more as users get in there and see what these capabilities are. We will hear more about what works and what does not, and what could be coming out next.
I cannot wait for Anthropic and OpenAI to be publicly traded because I wonder if news like this will come out and the other stocks drop. How much of this will impact the horse race? The other thing you and your team have been tracking that I had completely missed was how good of a quarter Microsoft had, the best since 1998. What was going on at Microsoft that it had such a banger of a third quarter?
It is interesting because coming in June it was the worst month since 2000. The biggest catalyst was the earnings. They had a great earnings report that showed fast revenue growth in their cloud business, and from there the stock has continued to climb. Microsoft gets up in AI themes. It is a software name, so it has been caught up in some of the software issues we have seen, but it is also a hyperscaler. Especially lately with yields higher and more of macro pressure, those names have seen more shine from investors. It had this huge jump in July, and from there has slowly ground higher, and now the best quarter since 1998 is incredible.
So much of the game was attributable to cloud. How much room is there in that segment to post, if not the same kind of earnings, at least stronger?
That is a great question and gets to the high bar we are seeing for these companies. Investors want to see beat and raise, but even that is not enough. You have to blow your results out of the water. For Microsoft, Wall Street sees a lot of upside for this company. They are very bullish and have been bullish. Investors I speak to have said this could become one of the biggest winners in AI because of its capabilities, because of Copilot and all of the internet and our digital lives that it touches. I am going to be very closely watching what happens in earnings season. That will be interesting.
Thank you for joining us and explaining all of that. I guess we will take to AI to watch the earnings.
We are just going to ask our own AI how the earnings results went down.
They will tell us where the companies made a mistake and what they should use of the AI agents.
I like this world because maybe we can just be on the beach while that is happening.
Coming up, Kate Moore of Citi Wealth. This is Bloomberg: Open Interest.
We have lots and lots of challenges. The macro. I almost wonder why a stock guy is on today when we should just be talking about bonds 24/7 at this point. High oil, incredibly high yields. The global competition for capital. The Iran situation. And the midterms. Let's remember the last couple of midterms of the Trump political era have been very volatile.
Julian Emanuel explaining why he expects volatility. Let's bring in Kate Moore. Should we erase the name Open Interest and pretend this is not a stock show and talk about bonds?
Right now there's a lot of that. I agree with Julian in terms of volatility into the fourth quarter. For a couple of things I'm focused on. The Iran war. The impact not just of oil but all refined product of inflation into 2027. That'll be a tough nut for many of the policymakers. The second is around AI use cases. A lot of the stock folks are worried about their concentration in AI given the fact we have not monetized as much as many people had hoped. They hedged on the equity side and the credit side, and that is a massive worry. The other thing I would say is politics. We have a lot of noise that could lead to this volatility that Julian was referring to. Some of it may be around what happens in the U.S. We have a Brazilian election, but we also have big policy decisions everywhere else. There is a lot of risk that could shift the narrative this quarter.
For those of us who are old enough to live through the last couple of times we had a bent risk built up, how do you see this playing out? Should we start to be worried that maybe we are out over our skis, it is time to pull back?
As a former ski racer, I love to be a little over my skis. I think we have to worry about what the longer-term impact of bond yields is going to be on the discount rate and on valuations. Right now we have seen earnings significantly surpass any contraction we have had in multiples in 2026. That is my baseline for 2027 as well. No multiple expansion and all returns coming from earnings. The earnings comps will get harder, and we know there are other pressures that will weigh on the bottom line. This will be something that will be a real debate and something to watch in the markets.
I was not aware that you are a ski racer. When did you do that? You still get out there and speed down the slopes?
I do, sometimes a bit too dangerously. Conversations about the risks I take on the mountain. Do not tell my bosses.
You can get out the high-octane stuff and be very reasonable in this market. We will get the market open in just a moment, so you will stay with us. Our very own skier Kate Moore staying with us through the market open. We are seeing stocks move higher. It is the first day of October and first day of the quarter. Stocks moving higher even in the face of higher bond yields. Yields are higher nearly three basis points this morning, the highest since 2002. They hit a high yesterday above this level. Brent crude below $100 a barrel, up 2% this morning. Your opening bell after this break.
Let's get your trading day started. You are watching Bloomberg: Open Interest. One of the worst quarters since the 1990s for the Treasury market. Stocks doing OK, up 0.2%. The Nasdaq outperforms. Micron earnings came in line. We have the Ireland Fund ringing the bell at the New York Stock Exchange to promote investing in Ireland, as you would assume given the name and all of the green they are wearing. 50 years of this they are celebrating. We have Power Us down at the Nasdaq. They do AI infrastructure and the backbone to infrastructure for automation. They merged into another company. I know it is crowded there. You might need to sit on the floor, but I am annoyed they made the women sit on the floor. There is one guy down there. More dudes should be down there. There needs to be more gender equality when it comes to sitting on the podium. Micron is down 1%. They delivered quarterly results that were a record. AI demand drove a huge jump in sales of its memory chips. Margins are 87%. The company gave a stronger-than-expected outlook, but there is a question: does the buy side expect more than what the sell side's estimates were? So maybe a beat was not good enough for Micron.
I am saving you a chair so you do not have to sit on the floor. Citi Wealth Chief Kate Moore is joining us in studio. We were talking about skiing in Jackson Hole, and I hope it will be a good year and I will see you out there. In the meantime, you have to sell people something. We were talking about bonds. Bonds have had a terrible couple of quarters. The price keeps going down. What are you telling people, particularly in the wealth management side, some of your older customers about fixed income?
It is a really good question, and I have to give some uncomfortable truths to clients that are very accustomed to thinking about bonds as being a safe-haven asset. We talked a lot about what is driving bond yields, maybe that is a good way to start the conversations. We have been very underweight duration in portfolios, and this has been a very good call for us. We talked about this before, but I started substituting in the middle part of last year some of that substitution for gold. What we basically have said is what has been driving bond yields higher has not just been higher inflation expectations, it has been really yields come expectations around growth, and we have this fiscal story where spending will happen in any regime, and it is happening everywhere around the world, exerting upward pressure on yields. You have all of these forces together, and there are very few things we see that will shake those drivers at moving yields higher. A lot of times clients have been saying we have hit this magical 5% threshold. That is made up. They want to know is this the time to add. The reasons we are moving higher are for real yields and the expectations around growth. We are unlikely to get a significant pullback in yields that improves prices. We are staying super underweight duration. We trimmed the securities in our portfolios over the past couple of days and added more to equity risk. That is where we will feel we will get the best returns.
Given those drivers, it would make sense that equities are holding up. There are pockets of risk that seem to be under pressure. The equal weight just had its seventh consecutive week down. That is the second longest streak in history. The other two times were during bear markets. CCCs were trading for 1,000 basis points over Treasuries, the most since the 2023 blowup of SVB. There are pockets that feel like they are under stress. Is there risk that will be more widespread?
When there are no areas in the market facing any stress, that makes me more worried that there is too much complacency. The fact that there is dispersion in terms of credit quality, in terms of companies producing free cash or companies that have a lot of investment and expense to take on to be competitive, I want to see that differentiation. I hear you entirely on this one. I just want to make a point on credit, which we think is a significant reason for the credit spread widening, has to do with supply. Supply that came in September. I am sure you talked about that. Very importantly, that may not be repeated in October. Spreads were at incredible tights even as equity multiples contracted. There had to be that adjustment to the rate volatility. It is overdue in the credit space and not signaling something that makes me concerned. On the equity side, we will once again be starting earnings season in just a few weeks, and I think it will be very important for people to see the breadth of earnings. This is the most important. This narrative that it is all AI driving earnings and the economy is not quite true. Yet we need proof point after proof point there are spaces in the industrial side doing well. That the consumer, whose data looks quite good, continues to spend and incomes are OK. The next couple of weeks should allow for comfort even as we get the policy decisions and things that could cause volatility.
One of my favorite questions I ever heard in the Oval Office of the President. Yesterday one of the reporters asked Donald Trump whether the Treasury should increase the size of 30-year options. I am not sure that is something the President focuses on. Probably not his wheelhouse. When he talks about equities and bonds, everybody has been buying seven stocks, now you want breadth. How are the rest of the stocks in the S&P 500 besides the Magnificent Seven going to be able to handle higher interest rates? The seven will buy whatever you offer them. What about everybody else?
We have to be conscious of the fact that there are areas of the market that are interest-rate sensitive. At the beginning of this year we felt contrarians were outside of consensus when we were saying the policy moves was likely to be tightening instead of cutting rates. This is important because we are also looking at the rate-sensitive parts of the market and some people rushing into that. We saw that happen with the past money community, they would find themselves disappointed. It took a little longer for small caps, who are much more rate-sensitive and will be much more challenged as we continue to tighten policy, for this price reactions to happen. Some areas of the market that are really reliant on funding we will have to watch. That dispersion is healthy. Interest rates should move higher as a result of the growth and the inflation picture. I think you will have to be on your toes a little bit and active managers should be repositioning and being tactical.
There is a lot of narratives in this market that keep getting challenged. Micron has been the star in this market and maybe today we are reconsidering. I was looking at Accenture, the tech consulting firm. While Micron is up, Accenture is down 16% because there is a question of what does tech consultancy look like. They are up for their best day ever today because they had good earnings. I wonder how many of these narratives you expect to get challenged in earnings and what kind of chop that means for the market?
A really good question, especially with professional services around timing. In the near term, consulting services will be needed to help engineer and architect the transition into a new world using new technologies. Over the medium term, we have to ask ourselves, do we need those people, do we need humans doing that work? When you look at the areas of the market, the areas of our economy that are the most likely to be disrupted, companies and sectors that have high labor intensity to sales and things that are repeatable tasks like professional services is in the top right quadrant of places to be disrupted. I would just suggest people will continue to test all of these companies and will test all of the investors and spenders in AI for realizing the benefits in the near term, even though I am highly convicted that over the medium term this will be transformational for everyone.
Thank you so much for joining us. That is Citi Wealth's Kate Moore. We are up by one third of 1% despite yields moving higher. Less stocks moving to the upside than down. Microsoft, we were talking about this with our reporter Carmen Reinicke, its best quarter since 1998. The gains continue. Here is Accenture up 22%. IT services were being widely used. Even though this is a company that is down for this year. This question around services when it is labor-intensive, can you replace things with people? Let's look at some of the sectors. Materials down significantly this morning, down about 5%. Information technology, Microsoft doing well. Coming up, billionaire investor Bill Ackman calls Anthropic one of the greatest business stories he has ever seen. More from my exclusive interview coming up next. This is Open Interest.
Wells Fargo placing Microsoft on its tactical ideas list for the fourth quarter, keeping its overweight rating on the stock. The analyst says Microsoft is in a strong position to make money from the AI boom. From tech to real estate, Morgan Stanley initiating coverage of several homebuilders but slapping an underweight rating on NVR. The company says it is not immune to housing affordability and margin pressure. Goldman Sachs upgrading Occidental Petroleum to buy from neutral, saying it looks cheap. Goldman also says higher oil prices could mean bigger dividends. Those are your top calls.
Billionaire Bill Ackman is looking to transform Pershing Square into more of a Berkshire Hathaway-style investment firm. As he is looking for opportunities, he says he is not buying Anthropic if it IPOs, but it is one of the greatest business stories he has ever seen.
The market is narrowly focused on SpaceX and Anthropic and the picks and shovels that support SpaceX and Anthropic.
Is that a problem? On the 22nd you put out something saying will we see in Anthropic as one? There is a 10% chance we kill humanity. There was a large part of that prospectus that basically said here's all the harm we might cause. What do you make of an IPO with that sort of thing in it, and is that a company you would buy?
Anthropic is perhaps the greatest business story I have ever seen in terms of from zero to $2 trillion. In terms of the revenue of the company, on the quality of the product, it is clearly an amazing company. Query whether the frontier model companies will be able to maintain their market presence in light of the power of open source and open-weight models.
Does that mean you would not buy it because you are scared of that competition?
We would look to buy businesses to predict what they will look like. Boring things like Microsoft or S&P Global or Visa and Mastercard. Things that are in our portfolio. We are less likely to be an investor in a fast-growing business that is consuming a huge amount of capital and you are betting on the lines crossing at some point.
Has the prospectus actually been filed?
It is just a report, so we have to wait to see what the actual language has said.
I think Jensen Huang has made this point well. If you're a $2 trillion company and your product or service can cause enormous harm, you will be careful about releasing the product to the market. I feel like you do not need, at least for the Anthropics of the world, you do not need legislation or the government to protect them from doing something stupid. It is a bit like a pharma company. You do not release a drug to the world. Maybe in the case of a drug you have government oversight. There is a huge disincentive to put out a product that will destroy the world.
Does that mean you're less concerned about the AI worst-case scenario? You think they will self-regulate OK?
I am less concerned about Anthropic or OpenAI. I am more concerned about a rogue actor who does not have the same considerations, who uses the resources of an open-source model to cause enormous harm. That is a very significant risk. I would rather the best frontier labs are incredibly powerful so they can protect us apart from the rogue operator, less powerful AI.
More from my exclusive interview in the next hour. We also got into his surprise that the Aurora IPO was delayed, and that fits into our next story. Dealmaking has lost steam. The value of deals fell 10% from a year ago. Companies are just $1.2 trillion away from a record M&A set in 2021. Joining us is Bloomberg senior deals reporter Michelle Davis. I feel like when there was this bonanza of deals in the first and second quarter, there was a narrative like maybe we will not have a summer, it will be a really busy summer. Not that it was not busy, but it did feel like slightly a lull.
Some of the momentum definitely slowed. The irony and something bankers have told me is because everyone feels like now is the time to try your dream deal, from everyone is shooting for the stars. That means they are working on big deals, and big deals are hard to get done and they have a low success rate. I think people were busy running around, but a lot of them never saw the light of day. We cannot say that they were busy. They all claim they are the busiest they have ever been. Some things did change since the second quarter. The war in Iran. Midterm elections are coming up. Not as great of an environment as it was starting the year.
Ordinarily you get to a certain level of interest rates and it turns off the deal faucet. How much higher is that redline than it used to be?
What sources tell us is for a lot of the big companies thinking about mega M&A, an increase by a couple interest rates will not be that meaningful. Either they are funding a stock where they are investment-grade companies and it is not that cost-prohibitive. I think at the margins it does start to impact sentiment of banks are feeling like it is riskier to extend large amounts of debt, private equity. It is not great for them. We have been waiting for five years for them to get off the sidelines. Interest rates going up is the wrong direction for that to happen.
On this idea that people can dream their ideal deals, I wonder how much that is hitting a roadblock when it comes to state regulators. We were talking about this. A company that wants to spin out an agricultural unit adding a challenge from California. Shares are down considerably because they are able to finally complete that spinoff. Is there this tension that the federal regulatory environment looks good, but maybe the deal is harder to get through than we thought because states have something to say?
That is exactly what we are starting to see. Even though no matter what happens in November, the FTC and DOJ are still going to have the same regulators and still be a good federal regulatory environment, we have seen state AGs getting political and deals getting extremely politicized. If you know you will be announcing a deal that is politically sensitive, you do not want to announce something in the month before the midterms where politicians will hold you up as a poster child for why M&A should not happen. That is spooking companies and making them less emboldened to make a splash. It is not a guarantee that if you know Trump will greenlight it, someone could come in at the last minute and try to block it.
You talk about everyone looking for the big deal. If you want to make up that $1.2 trillion, I love the way we frame it as it is not that far away, it is a lot of money. Where else besides tech at the big companies absorbing the smaller players, where else could you look?
A lot of what is missing from this big M&A boom has been the smaller deals that the smaller companies pursue because everyone is spending their time on the M&A. There is a lot of appetite to transact across all sectors. Consumer retail is the exception to that because so much of the money in public markets is leaving consumer and going into tech and industrials. Everything else, everyone says will continue to be busy. Biopharma has been one where we see more deals over $1 billion than in any other year. No deals over 10 or 15. It is not like we have seen big deals in that space. We will see more there. Financial services. It seems like people are taking advantage of overall regulatory environment there.
