Powell Says No Plans to Leave Fed Until Investigation Over

Summary

Bloomberg Businessweek Podcast Summary

Episode Title: Powell Says No Plans to Leave Fed Until Investigation Over
Date: March 18, 2026
Hosts: Carol Massar and Tim Stenovec
Featured Guests: Greg Peters (PJM Fixed Income), Tarek Mansour (Kalshi), Hendy Susanto (Gabelli Funds), Denise Sokova (Bloomberg News), Jennifer Welch (Bloomberg Economics)

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Main Theme & Purpose

This episode centers on three major stories shaping global markets:

1. Federal Reserve Chair Jay Powell’s statement that he will remain at the Fed until an ongoing investigation concludes, and the market’s reaction following the latest FOMC meeting.
2. Exclusive insights into regulatory pressures on prediction market startup Kalshi, featuring a candid interview with CEO Tarek Mansour about new legal threats.
3. Analysis of Micron’s earnings, implications for semiconductor markets, and the persistent volatility in the global energy sector linked to Middle East conflicts.

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Key Discussion Points & Insights

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1. Federal Reserve & Market Reaction

(02:09 – 10:24)

Powell’s Statement on Staying at the Fed

• Jay Powell (Clip): “I have no intention of leaving the board until the investigation is well and truly over with transparency and finality. I would refer you to the statement … I won't have anything more for you on that.” (02:56)
• Powell’s unexpected firmness brought clarity to markets unsure of his tenure amidst the DOJ investigation.

Market Response & Analysis

• Greg Peters (PJM Fixed Income):
  • “Instead of lower for longer, it’s ‘Powell for longer’…that’s what the market’s trading on.” (04:03)
  • The announcement led to a perception of sustained higher rates, with immediate effects seen in Treasury yields.
• Carol Massar: S&P dropped significantly post-meeting; yields on 10-year Treasuries shot up to 4.25%.
• Greg Peters: Market is pricing in higher rates because Powell is unconcerned about labor market tightness and sees inflation risks from energy prices.

Inflation and Tariffs

• Ongoing effects of tariffs are no longer seen as a “one-time hit”—goods inflation is still working through the system.
  • Greg Peters: “Goods inflation is still coming through the system…[companies] haven't moved prices up yet…but we will do so in the first quarter, first half of 2026.” (07:02)

Labor Market and Corporate Responses

• The labor market is stagnating, but not shedding jobs.
  • Companies are defending margins by raising prices and keeping labor costs flat.

AI & Productivity

• Tim Stenovec: Asks about AI’s long-term impact on inflation/productivity.
• Greg Peters: AI is inflationary in the near term due to high investment costs, but could be disinflationary over the longer term.

Notable Quotes & Moments

• Greg Peters: “This was supposed to be a complete non-event…now it’s a topic of conversation.” (09:47)
• Carol Massar & Tim Stenovec: Lighthearted speculation on “Powell for longer” hats and shirts.

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2. Kalshi & the Future of Prediction Markets

(13:00 – 24:39)

Arizona’s Criminal Charges Against Kalshi

• Arizona files criminal charges against Kalshi, accusing them of illegal gambling.
• Tarek Mansour (Kalshi CEO):
  • “These charges have nothing to do with gambling or the merits…this is a total overstep and we look forward to fighting it in court.” (13:39)
  • “This is not about our business model…this is a broader attack…” (16:21)
  • Kalshi is regulated by the CFTC but faces state-level challenges, arguing this is about federal preemption.

Legal & Business Implications

• Tim Stenovec: Raises the possibility of having to restrict Kalshi’s business state by state.
• Tarek Mansour:
  • “We will always abide by court decisions…But when government oversteps the law, we’re going to fight that in court, which we look forward to.” (17:38)
  • Kalshi willing to fight legal battles for as long as necessary, sees prediction markets as important financial infrastructure.

Gambling vs. Financial Market Debate

• Survey: 61% of adults view prediction markets as gambling, 8% as investing.
• Mansour: Points to historical Supreme Court rulings distinguishing between speculation and gambling.
  • “If speculation is gambling, then the stock market…is gambling.” (19:34)
• Denise Sokova (Bloomberg):
  • Sports bets make up 60–90% of volume on many platforms, complicating claims that these are purely ‘truth machines’ or economic hedges. (21:24)
  • States want regulatory control—and tax revenues—from these activities.

Viability Without Sports Betting

• Tim Stenovec: Could Kalshi survive if limited to economic/crypto contracts?
• Denise Sokova: Removing sports betting would drastically shrink activity and limit business viability.

Legal Outlook

• Denise Sokova: “Momentum seems to be building…pretty much headed [to the Supreme Court]. Bloomberg Intelligence gives Kalshi a 60% chance of winning.” (24:28)

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3. Micron Earnings & Semiconductor Outlook

(25:15 – 33:21)

Upbeat Results, Market Skepticism

• Micron posts record performance, surpassing forecasts for earnings and revenue.
• Hendy Susanto (Gabelli Funds):
  • “Fiscal third quarter guidance is very strong, way surpassing analysts’ expectation and my own…gross margin is the strongest in the history of Micron.” (26:16)

Market Reaction

• Despite the beat, stock only modestly higher; investors possibly wary of high expectations and cyclical risks.
• Tim Stenovec: “How much runway does Micron have to continue to raise prices and maintain these margins?” (26:56)
• Hendy Susanto: Industry has limited DRAM manufacturers; pricing is strong, at least through June quarter.

Supply-Demand Dynamics

• Ongoing supply constraints: “There won’t be any new capacity expansion this year…expect new capacity in 2027.” (28:54)
• Pricing should remain favorable until then.

Cyclical Industry Outlook

• “We are still in early innings…major customers’ priority is to secure supply and pricing is secondary.” (30:54)
• Demand tied closely to growth of AI/data center infrastructure, especially with Nvidia as a major client.

Investment Recommendation

• “Micron is definitely a strong buy here…earnings could grow meaningfully.” (32:40)
• Watching for updates on pricing negotiations and capacity expansion in upcoming calls.

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4. Energy Markets & Middle East Geopolitics

(36:30 – 41:33)

Iran, China, and Gulf Tensions

• Jennifer Welch (Bloomberg Economics):
  • China continues to import oil via Iranian-linked tankers, negotiating discreetly to secure supplies. (37:01)
• Gulf states such as Qatar and UAE finding themselves at risk of Iranian missile strikes, despite not being direct participants in the conflict.

Risks to Global Energy Infrastructure

• “Even though we’re three weeks into this war, it doesn’t show any signs of deescalating…risk to energy infrastructure is here to stay, and Iran has a powerful toolkit.” (38:08)

Regional Involvement

• “Other countries…might enter the conflict, or be dragged in due to defending infrastructure or U.S. pressure. Most do not want to get involved but are feeling the heat.” (39:34)

China’s Strategic Lessons

• China is closely studying U.S. engagement and munitions usage, watching for alliance friction as U.S. assets are shifted Middle East-ward.
  • “China watches every conflict closely…looking for lessons on how to defeat U.S. military and how conflict strains U.S. alliances in Asia.” (40:34)
• Strategic Advantage: “I think strategically, yes, this is an advantage to China.” (41:30)

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Notable Quotes & Memorable Moments

• Greg Peters on Powell: “Instead of lower for longer, it’s ‘Powell for longer.’” (04:03)
• Tim Stenovec/Carol Massar (on Powell news): “Powell for longer, Carol.” “I love shirts and hats being made.” (04:32)
• Tarek Mansour (Kalshi): “Whether something feels and looks like gambling doesn’t necessarily make it gambling. Speculation exists in all financial markets…if speculation is gambling, then the stock market with retail participation is gambling.” (19:34)
• Denise Sokova (On Kalshi volumes): “It's often 60, 80%, in certain cases 90% is sports bets.” (21:24)
• Jennifer Welch (Geopolitics): “Other countries…might be dragged into the war…they are receiving pressure from the United States to enter in some way…” (39:34)
• Jennifer Welch (On strategic implications): “China watches every conflict very closely … looking for lessons on how to defeat the U.S. Military.” (40:34)

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Timestamps for Key Segments

• Fed Statement & Market Reaction: 02:09 – 10:24
• Prediction Markets/Kalshi Interview: 13:00 – 24:39
• Micron Earnings/Chips Outlook: 25:15 – 33:21
• Energy Markets & Geopolitics: 36:30 – 41:33

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Tone & Style

• Conversational, analytical, and slightly playful where appropriate (especially surrounding Powell).
• Direct citations of guests and hosts preserve original voice and intent.

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Summary for Non-Listeners

This episode delivers timely analysis directly from market movers and newsmakers: it breaks down why the Fed’s leadership saga matters, reveals the uphill battle for prediction markets as regulators scramble to catch up, explains the bullish case for semiconductors despite cyclical worries, and deciphers how conflict in the Middle East is being exploited and studied by other global powers. If you care about markets, policy, and the way geopolitics and innovation collide, each segment provides insight straight from the front lines.

Transcript

[Carol Massar]

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[Bloomberg Businessweek Daily Announcer]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg businessweek Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.

[Carol Massar]

Carol Massar, Jim Stanwick live here at Bloomberg headquarters in New York City, just minutes away from that closing bell. We've got stocks lower. U.S. yields are higher. As Fed Chair Jay Powell said, higher energy prices will push up overall inflation and as expected, the Fed leaving interest rates unchanged once again here.

[Tim Stannwick]

Yeah, continue to expect one rate cut this year due to increased uncertainty from the war in the Middle East. I think the big takeaway that I had was just how muddled of a view. Yeah, everybody on the FOMC has moving forward, it's just like us, truly. There's a lot of us and everybody we talk to.

[Carol Massar]

There's a lot of unknowns we should point out. Officials raised both their growth and inflation forecast for the year Fed governor and Trump ally. I think it's safe to say Fed Governor Stephen Myron only to center at this meeting. And I feel like we kind of buried the lead. Here's Fed Chair Jay Powell at the press conference.

[Tim Stannwick]

I have no intention of leaving the board until the investigation is well and truly over with transparency and finality. And I would refer you to the statement that was in the Fed's brief that you will all have seen. And I won't have anything more for you on that. On the question of whether I will then continue to serve as a governor after my term ends and after the

[Greg Peters]

investigation is over, I have not made that decision yet.

[Tim Stannwick]

And I will make that decision based on what I think is best for the institution and for the people we serve. Well, there you have it. Fed Chair Jay Powell earlier today at the FOMC press conference. That next FOMC decision, By the way, April 29, 2026. With more on today's Fed decision and market reaction, let's bring in Greg Peters, PJM Fixed Income Co Chief Investment Officer. PJM as a whole is approximately $1.5 trillion in assets under management, about a trillion in fixed income alone. Greg joins us here in our Bloomberg Interactive Brokers studio. Okay, so we'll talk about the decision. We'll talk about the market reaction. But but first, on the sound that we just played from Jay Powell, just the idea that he will stay at the central bank until after the Justice Department's investigation is complete, that was some of the biggest news that we heard today.

[Carol Massar]

Or was it in your view?

[Greg Peters]

No, I think it was the clarity. It was something that was hanging over the market. I think the insider view was that he would stay on because he cares about the institution. But the pointedness and the clarity in which he made that statement was somewhat surprising. So I do think that was a big market mover today. And, you know, instead of lower for longer, it's Powell for longer. And it's that's what the market's trading on.

[Tim Stannwick]

I like that. Powell for longer, Carol.

[Carol Massar]

I love shirts and hats being made.

[Tim Stannwick]

I love when he was like, I know you guys are going to ask about this.

[Carol Massar]

Yeah.

[Tim Stannwick]

Here's what I have to say. And that's all I'm going to say on the matter.

[Carol Massar]

But what's interesting is he actually did say something. A lot of times he's like, folks, we're here to talk, you know, basic stuff like we're here to talk about the economy and rates. And he went for it.

[Greg Peters]

It's great. Right? Clear Speaking out of a Fed chair, I think is, is maybe a trend.

[Carol Massar]

Greg, why are we though? I'm looking at what's happened in terms of the trade. We're pretty much hovering near our lows. We've seen stocks certainly sell off rather dramatically. S and P was off about 40 right after the decision. We're now off about 87 points down 1.3%. Let's talk to your world. In terms of what we see in the fixed income and treasury trade, I'm looking at a 10 year with a yield of 425. It was about 421 right after the decision. Shorter end 376. We're at about 370. So we've definitely seen a change in the yields. Why is it, is it because specifically what Fed said about maybe the potential for energy prices and the push on inflation or what I think was a twofold.

[Greg Peters]

The, the Powell announcement definitely had an impact. So that is, you know, power for longer is higher rates. Right. That is the perception rightly or wrongly, you know, from the marketplace. And the second was on less. He what he basically said he's not overly worried about the labor market which is, you know, means that he can keep rates higher and watching inflation which is basically once again code for keeping rates higher. So I think the interpretation from the market or was just exactly that rates are higher and it's being priced in the front end as you see and the curve is actually modest, modestly flattening, steepening, otherwise it'd be a big steeper.

[Tim Stannwick]

As Carolyn I huddled after, after his press conference and before the program we both pointed out the tariffs making sort of a big, a big presence in the speech today given or and then press conference today too. And in his answers today, were you surprised about his commentary regarding tariffs that

[Carol Massar]

you know, goods inflation. Right. Should we be worried about still?

[Tim Stannwick]

I thought, I thought the impact had hit and I think a lot of economists thought the impact had hit and it was, I'm not going to say transitory, but it's like it wasn't as big as people thought it would be.

[Greg Peters]

Well, you know, if you look back in 2025, the biggest mistake that market players and economists made was thinking it would be a one time hit.

[Tim Stannwick]

Yeah.

[Greg Peters]

And what we learned is that it's a, it's a kind of a continuous kind of hit. Right. It's not a one time shock. It just leaks out over time. And I still think that's in the system. So the way we think about it, the way I think about it Is that that goods inflation is still coming through the system. For example, at the end of last year or just in course of talking to over a thousand companies last year, they basically all told us the same thing, which is, you know, they haven't moved prices up yet. Yet, but we will do so in the first quarter, first half of 2026. So I think he's reflecting that reality, honestly.

[Carol Massar]

Well, I keep thinking about, I mean, you know me, I'm kind of obsessed with earnings reports but I do think about, you know, C suite commentary and what we hear from them. Mind you, it'll be, you know, obviously the last quarter, but it'll also be the outlook and whether or not they are saying they're feeling pressures, whether it's on margins and so on and so forth. And so what do they do to compensate for that?

[Greg Peters]

Well, I think you see that in the labor market. Right. So you're not seeing a shedding of jobs in labor, but you have this incredibly stagnant labor market. So you could blame AI, you could blame on protecting margins. I'm not really sure. But you know that is a kind of a reflexive response from corporations. Right. So they'll defend margins, they'll raise prices and they'll kind of keep labor flat. And that's what you see.

[Tarek Mansour]

Yeah.

[Tim Stannwick]

What does I do to the economy? He was asked, he's asked about this every time.

[Carol Massar]

Yeah.

[Tim Stannwick]

And I think, I mean, and I think his, his answer again, it's sort of like it's kind of the question that, that I would ask him if I had a chance to sit down with him and the characters weren't on. He said, you can't really make a call at this point about whether Jenny, I will lead to lower inflation, but over the long term it's possible it expands US output and productivity. What's your view on it?

[Greg Peters]

My view comports with his. A lot of investors think it's just immediate kind of disinflationary effect. The way he described it, in which I agree with, is that the spend and the draw on resource that you're seeing today is actually inflationary. So it's a two step process.

[Tim Stannwick]

Yeah, those things cost a lot of money and the demand is high.

[Greg Peters]

Right, Exactly. Think about trying to get an electrician as an example.

[Tim Stannwick]

Right.

[Carol Massar]

So we just did this past week.

[Greg Peters]

So. So. And I bet you paid more for it.

[Carol Massar]

So it was a joy.

[Greg Peters]

So it's inflationary over the near term. Over time the expectation is that it is disinflationary. But we have to ride ride the wave. And you know, it's hard to make that timing assessment.

[Carol Massar]

Jay Powell did well, I thought he did.

[Greg Peters]

Actually. This was supposed to be a complete non event in a way, right? I mean we were talking at a risk meeting this morning and this is the first time that we can recall in years and years that the Fed meeting wasn't even a topic of conversation. And now it's a topic of conversation. So I actually think it was a pretty good meeting. I liked his directness and you know, the markets less so clearly. But you know, I think the markets are somewhat in kind of fantasy land here as well. So it's, it's kind of a, kind of a eye opening type of environment.

[Tim Stannwick]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Carol Massar]

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[Tim Stannwick]

In an exclusive interview with Bloomberg Call, she co founder Tariq Mansour vowed to fight criminal charges against the Prediction Market Exchange, calling Arizona's recent movie quote total overstep as legal battles with states escalate beyond civil enforcement.

[Carol Massar]

Yeah, it was just Tuesday that Arizona filed criminal charges against Kalshee for operating an illegal gambling business, citing misdemeanors that carry less serious penalties than felonies. Arizona's criminal complaint follows Kalshee's move last week to block the state's gaming department from taking enforcement action against the company.

[Tim Stannwick]

I spoke with Kalshi co founder and CEO Tark Man Suhor on Bloomberg radio and TV about the charges.

[Tarek Mansour]

Look, I mean these charges have nothing to do with gambling or the merits. If it was about gambling or the merits, they would let the judicial process run its course in the federal courts. You know, five days ago on Thursday, Kalshee filed suit against Arizona in federal courts on the merits on whether Kalshee is subject to exclusive jurisdiction of the cftc. And you know, we're confident opposition and wanted to let the court process play out. And instead of letting that happen, the Arizona attorney general decided to subvert the judicial process and weaponize it and go to state court and file these criminal charges, which you know, we view as meritless and baseless. We see this as a total overstep and we look forward to fighting it in court.

[Tim Stannwick]

Well, experts are saying this could be the first of of many charges such as these from from other states too. How does it change your legal strategy?

[Tarek Mansour]

Well, this is the whole point of federal preemption. So this is not about Cameron. The the charges that the attorney general filed are not about gambling. They're not even about sports only. They're about prediction markets writ large. It's just, you know, attacking the entire business model. And nothing prevents from the same attorney general or others from fighting the same criminal charges against derivatives markets writ large. They could file the same exact charges under the same analysis against CME or ICE or NASDAQ and that's the whole point of federal regulation of these financial exchanges is to prevent this sort of chaos and this, these sort of attacks on these businesses that could be political in nature or other. And that's a very important distinction.

[Tim Stannwick]

Well, I read the charging document from the attorney general. It has 20 charges. They're mostly about betting and wagering. When it comes to sports, there's some election stuff in there. Would you ever consider limiting your business in Arizona or other states to, to things that these AGs don't seem to have problems with, like economic data, the price of Bitcoin, what markets are going to do, predictions around those things?

[Tarek Mansour]

Look, I mean, the AG also claimed that we have war markets, which is incorrect. It's either flat out the lie or misinformed take, which is unfortunate for someone, you know, filing criminal charges against the company. What's more important here again is this is not about the merits. If it's about the merits, let's let the judicial process run its course in federal courts. This is about something other than the merits, which is what I'm focused on. I don't know what the AG is focused on, but you know, she is up for reelection. You know, it does, they did some press. It does seem to be making some buzz. But what I'm really focused on is building a great product for our millions of customers, out of which close to 400,000 are in Arizona and fighting any of these baseless cases in courts, which was. Which we're going to continue doing.

[Tim Stannwick]

So you're fighting the cases. As I mentioned, Arizona is not the only state to take issue with your business. What happens ultimately if courts do side with states? What does it mean for the future of your company?

[Tarek Mansour]

We believe in the rule of law. Right. We will always abide by court decisions. The law applies to us, but it also applies to the government, including state governments. And that's a very important thing. Right? This is really not about our business model. Again, if it was about our business model, we would be focused on the federal courts and the lawsuit about the merits. This is a broader attack. And you know, many states have sided with us and have grant us a preliminary injunction agreeing with our legal analysis. We have spent four years getting regulated by the federal government and we have a federal government in the CFTC that is coming strongly in favor of our position. Filing these charges is a total, total overstep and an overreach from an AG that's up for reelection. And we find that unfortunate. But we will stay focused on what we do Best, which is building a great product.

[Tim Stannwick]

So certainly the cftc, we know where the CFTC stands and we know where Michael, Mike Selig stands on this. We don't know where courts stand on this. And I'm wondering if, if, if we see a state like Nevada, for example, block access to your business, what will you do? Will you continue to operate or will you, will you say, okay, we're not going to operate in Nevada?

[Tarek Mansour]

Well, first of all, let's get, let's get to that point and you know, we'll have to make a decision as a company. What we do, what I can reiterate is we will 100% abide by the law. That's what we will do as a company. It's always been our position. That's why we spent four years getting regulated upfront, regulatory first as a company and always abide by the law. But what I always say, the law applies to us as much as it applies to the government. And when government oversteps the law and goes out of bound, we're going to fight that in court, which we look forward to.

[Tim Stannwick]

How long does that process take? Because it seems like there's a regulatory limbo happening. You're, it's almost like your legal team is going to have to play whack a mole with all these states that are, that are filing suit or bringing criminal charges. How long is this going to take?

[Tarek Mansour]

And gladly we have a legal team to handle these types of things and we focused on, and you know, maybe it's a question for them. I mean, look, whatever, whatever long it takes, we're going to fight for prediction markets. I spent eight years building this company, four out of which half of which are getting regulated upfront. I really believe in this marketplace. I'm very excited about the growth that we're seeing. Some of the fast growing company companies in America right now. And so what I'm going to be focused on is keep building a great product. And that's what's sort of most important for me. The more important sort of question is, you know, when, when it comes to this is not really about, you know, whether this is gambling or not. It's not really about state versus federal, which are both coexisting and both growing, both models. This really is turning into sort of some special interest that like the status quo, the status quo is working very well for monopolies, but not for the consumers that are flocking to prediction markets right now, which we're going to keep fighting for.

[Tim Stannwick]

Tarek, there is this perception though, that people think this is gambling. An Ipsos survey from just a few weeks ago, for example, shows 61% of adults say prediction market trading is closer to gambling. 8% say it's closer to investing. So there is this public perception that doesn't necessarily match with what you say the platform is. How do you respond to that and how do you battle that? Like, how is this not gambling?

[Tarek Mansour]

I haven't really looked at these polls. You know, the thing I will say is there's always been a battle of whether financial derivatives are gambling. Grain futures were called gambling in the 1800s and there was a Supreme Court decision that, you know, said even though there is speculation, these products have financial structures, the financial markets and thus are going to fall under financial market jurisdiction. So I always say this, you know, whether something feels and looks like gambling doesn't necessarily make it gambling. Speculation exists in all financial markets. If we're going to take a line that speculation is gambling, then the stock market with retail participation is gambling. Then buying options for retail or zero day to expiry options is gambling. Then retail buying crypto is gambling line. The more important line and the historical line that we've been taking under the law, but also, you know, as we think about it societally is, is the business model a gambling business model, which is a model where the revenue of the business and the profits are equal to the customer's losses, in which case the incentive is to promote more losses and block the winners. Or is it an open, free and fair marketplace where people can enter in and out freely and transparently which is a financial exchange which Casio falls under.

[Tim Stannwick]

That's Kalchi co founder and CEO Tarek Mansour. An exclusive interview on Bloomberg. Let's stay on call. She and Prediction Markets overall. Here with us is a member of our team who keeps track of them. She reports on them. She's Bloomberg News cross asset reporter Denise Sokova. She's here in our Bloomberg Interactive brokers studio. Denitza. The last question about gambling, that, that this. When I got off air after this interview, I had IBS from customers, from colleagues. Some people came up to me. Every single one of them said to me, how is it not gambling? That seems to be the question that will be the biggest uphill battle for this company because that's what the courts are going to decide.

[Denise Sokova]

It has been the big question we have been covering for months. If you speak to a lot of those CEOs, they're going to tell you we are a truth machine. We're so important from probability hedge funds, we were able to hedge those super niche markets. But if you look at the volumes, it's often 60, 80% in certain cases, 90% supports bets. And then it becomes really hard to explain to people how this will have economic hedging or any other value. That said, every platform is different. Kalshi is especially strong when it comes to sports betting. Polymarket is seeing slightly different breakdown there. But for example, crypto markets are really big there, political markets are really big there, and of course, sports is big there. But so far they've seen all that pushback. It's not gambling. We're regulated by the cftc. Like in the interview he talked a lot about, oh, if they sue us, they can sue the cme. And I think that's kind of a complicated argument to make considering there aren't really other companies opening anything like that. Obviously they were under a lot of scrutiny for sports, but we got scrutiny for war contracts for a lot of things.

[Tim Stannwick]

There are other companies that offer this. It's. It's like FanDuel and DraftKings.

[Jennifer Welch]

Exactly.

[Tim Stannwick]

And those are regulated by states.

[Denise Sokova]

Exactly. That's. That's where.

[Carol Massar]

What are the states want. I mean, is it that they want to be able to regulate these companies under state gambling rules? What is it?

[Denise Sokova]

I mean, of course those don't have the same protections as sports markets, but you can also imagine that states are losing a lot of revenue that usually they take from those company. Nevertheless, we've seen some of the sports betting activity fall in some states. We've seen a really.

[Carol Massar]

I was about that at the traditional gambling sites. Are they losing some activity?

[Denise Sokova]

Yeah, we've definitely seen that. And when it comes to app downloads is really couchy soaring. It's like, I don't know, 3 million downloads a week, a month. And that has nothing to do with like the numbers we've seen, for example, from DraftKings, which was kind of a leader in that space. So they're definitely taking over, but at the same time, we're seeing kind of states combine forces and file all those loads, you'd say, at the same time. So there is a lot of unity on the state side when it comes to their response.

[Carol Massar]

I thought it was interesting to Tim, your question about, like, if they limit their, what type of activity? So maybe they walk away from the sports gambling. Right. And then it's economic, like, is that still a viable business?

[Tim Stannwick]

I mean, look what Denita said, 60 to 80% in some cases, some cases up to 90% of the activity on these platforms. I'm not going to say call she specifically. And it varies based on what's going on in the news. But that, that is the bulk of the activity on the platform. So if they were to do that Denise, it would really limit what they offered.

[Denise Sokova]

Yeah, for sure. And even you can see a lot of their marketing campaign, ad campaign. There is a whole new campaign house. You can win 1 billion if you get all the brackets in in March Madness. And I don't know how can you explain that this is like all a truth machine. If you're, if you're offering a contract like that and, and you're really emphasizing those super long short bets like it's 1 in 120 billion chance.

[Carol Massar]

30 seconds. Got to ask both of you, is this something that ultimately makes its way to the Supreme Court? Like where does it. Because the momentum seems to be building, certainly the legal momentum.

[Denise Sokova]

Yeah, I think that's pretty much the consensus. We have a pretty good estimate by the Bloomberg, by Bloomberg Intelligence they say pretty much headed there. That said, they give Koshi 60% chance of winning in high court.

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[Carol Massar]

All right everybody, we are watching Micron here in the aftermarket. It's been bouncing around. We saw it kick up a couple of percentage points. Right now it is just up about 4.10of a percentage points. The numbers look certainly pretty strong here but we as we just talked about with remainder, this stock's on a tear up more than 60% year to date and that's after a triple digit percentage gain last year.

[Tim Stannwick]

Expectations were high. Sandisk is following Micron stock lower in the after hours down about 810 of 1%. Worth repeating some of those headlines, Carol. Third quarter adjusted revenue forecast did beat estimates $32.75 billion to $34.25 billion. The estimate was for 23.66 adjusted EPS 1875 to 1955. The estimate was for 1120. When I see numbers like this, I'm like I have to check this again because these are so different than what the estimates said.

[Carol Massar]

But the expectation, like sometimes these numbers are just off the charts. Micron also saying that AI server demand continues to be strong. So we're going to continue to track this here in the aftermarket. Let's get to our guest Hendy Susanto. He's a portfolio manager at Cabelli Funds. They've got about 35 billion in assets under management and they also of course hold Micron shares handy. So glad that you could join Tim and myself. What do you make of this report?

[Hendy Susanto]

I guess this is, I believe this is the strongest record performance of Micron. And then looking at the way the share trade I think going to this earning I did think that the biggest risk is investor high expectation. And then fiscal third quarter guidance is very strong, is way surpassing analysts expectation and then my own expectation as well. And then gross margin is the, is the strongest in the history of Micron. And then we are still in the early innings of HBM as like precious semiconductors, high bandwidth memory, precious metals and then now we have precious semiconductors.

[Carol Massar]

So.

[Tim Stannwick]

So Hendy then why I mean the stock reaction is only up 810 of 1% despite the fact that like you said this is such a record. You know I think many people would say this was an incredible beat. I want to go to the conversation that we were just having with our colleague Romain a few minutes ago which is about how much pricing power and how much sort of Runway does Micron have to continue with to raise prices and to continue to have these margins. Like how long does that last?

[Hendy Susanto]

Yeah. So in terms of pricing power I think we can start based on the fact that there are only like three DRAM manufacturer. Sk, Hynix, Samsung and Micron. So like structurally Micron is in good positions. And then we believe that pricing is now based on quarterly negotiation. So companies like Micron they will try to capitalize on the pricing trend. The pricing trend is still going up at least until this until the June quarter. And then companies like Micron will try to balance between taking the pricing advantage and managing long term customer relationship while also trying to manage customer diversification as well.

[Carol Massar]

Yeah, yeah, right. Because we do know that in terms of who are their big customers, it's definitely skewed. Is it towards Nvidia 17%? It's kind of a lot. Andy, one thing I want to ask you. As the headlines continue to cross, Micron says NAND demand to stay well above our available supply. AI other server demand concerns strained by memory supply and says AI server demand continues to be strong. So this is kind of a mixed blessing. Demand is there but they're having trouble meeting that demand. Is that, is that the right read on this?

[Hendy Susanto]

That's the right, the right read. And I think what, what investors should keep in mind is that this calendar year 2026 all the memory makers will we rely on migration of their process technology. So in other words, there won't be any new capacity expansion and then capacity expansion. We are, we are expecting that to come in 2027. So I think for the 2026 when companies said that they are sold out on capacity, that will be indeed true and then that will come with favorable pricing as well.

[Tim Stannwick]

The company also flicking at this idea that they're going to build out to match expectations and match demand. You did say that we're in the early innings of this and I'm going to get right here it says we are investing in global manufacturing, in our global manufacturing footprint to support their growing demand. Referring to customers, that's the words of Sanjay Mehrotra, the president, chairman and CEO of Micron. How long does it take to build that out?

[Hendy Susanto]

So I think in general the rule of thumb in the industry is if you have the shell or the fab buildings and structure, you can expect new capacity within like 6 to 12 months. And then after that then you will have to work on the yield optimization.

[Tim Stannwick]

Okay.

[Hendy Susanto]

So that, that is the sort of time frame that we are looking.

[Tim Stannwick]

So six months until if the shell is there they can be up and

[Hendy Susanto]

running and they can actually, if you have a, if you have the shell it can be done as short as like six months.

[Tim Stannwick]

Yeah.

[Hendy Susanto]

Yeah.

[Tim Stannwick]

Well I guess there's another way of asking. Look, you said we're in early innings but we always talk to Ian King who covers chips for semiconductors for Bloomberg News and he, he reminds us this is all cyclical but we're just trying to figure out where we are in the cycle. So where do you think we are in the cycle?

[Hendy Susanto]

So I, I still think that we are still in the early innings. Many major customers, their priority is to secure supply and the pricing is secondary. And then if somehow there's a disruption within one customers, companies have said that they can find other major takers easily. And then on the other hand I do think that it is the best of interest of customers to secure long term supply agreement. Let's say when you build a large data centers or when you want to spend on GPUs you want to make sure that you will have supplies of memory, memory chips for you.

[Carol Massar]

Hindi it's been an interesting week, right. And I feel like we've talked about a lot of things when it comes to AI but and chips and semiconductors because Nvidia of course its GTC meeting this week got to read certainly on the AI spend and build and what's going on here. We have Micron and of course Micron As Tim reminded us, 70% of their business goes is from Nvidia. Is there a read through for you when it comes to that spend and

[Hendy Susanto]

build out so the spending built out, I think it will benefit all the major players and then I would also emphasize that all the capital equipment that have major exposure to DRAM, we'll see a strong year in 2027 driven by like new capacity and then capital spending on on the, on the flip side.

[Carol Massar]

Yeah, so, so I'm just curious, are you, would you buy more shares of Micron on this earnings report or are you waiting for the call? I'm just curious, what do you think?

[Hendy Susanto]

Micron is definitely a strong buy here. We can see Micron earning about like $40 on like in this current fiscal year and growing to at least like $50. So if someone wants to apply like 10 to 15 times of price to earnings ratio, there is still like meaningful upside based on that valuation approach.

[Carol Massar]

All right, interesting. 15 seconds. What are you listening for on the call? What do you need to hear really quickly?

[Hendy Susanto]

I think like pricing negotiation and then what the latest thought on the capacity expansion. Like how soon new capacity can come to like Micron fabs.

[Carol Massar]

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[Carol Massar]

Hey, let's get more on the energy markets and really the economic and geopolitical implications. Back with us is Bloomberg Economics Chief Geo Economics Analyst. She's Jennifer Welch and she's live from The Bloomberg Washington D.C. bureau. Jenny, good to keep checking in with you because I do feel like there's so much to keep track of and it does kind of shift a little bit. First and foremost Iran's hold on the energy markets right now and how it impacts the world differently. Which brings us kind of to China. They continue to get oil from Iran. That's true.

[Jennifer Welch]

Yeah. It does seem like some of the tankers that have been able to make their way out of the Strait of Hormuz once the war started have been linked to Iran, but also potentially linked to China and delivering oil there. We suspect Beijing is probably negotiating behind closed door threat to Tehran to keep that oil flowing. And for its part, Iran seems willing to work with China, but also other countries. India and Pakistan have also potentially been beneficiaries here to essentially allow their vessels to come through in order to pick up oil and other resources and transport it back to those economies that are facing a real need for that supply.

[Tim Stannwick]

Right now, it seems like Iran and Israel are trading strikes on key energy facilities in the Middle East. It's. And I wonder, Jenny, to what extent this makes it more complicated or challenging or difficult for markets to sort of go back to where they were when, or if I should say when this conflict ends. Qatar's Ross Laugh and industrial city suffered extensive damage after an Iranian attack. And facilities in Qatar, Saudi Arabia and the UAE run a list of sites at risk of Iranian airstrikes. How do you watch that from a geoeconomics perspective?

[Jennifer Welch]

Yeah, so this seems to be Tehran making good on its threat following an Israeli strike on its gas fields earlier today to hit other facilities in the Gulf. So it's more that the Israelis are hitting Iran and Iran is hitting Gulf, rather than Israelis and Iran directly trading straits. The Gulfs are kind of taking some incoming, even though they're not directly party to this conflict yet. I think that what this highlights is that even though we're three weeks into this war, it doesn't show any signs of de escalating anytime soon. And we predict that this higher level of intensity of conflict could continue for at least another week or two and this potentially subside, although we don't anticipate a ceasefire as anywhere close. Rather, what we anticipate is that maybe, for example, the United States will pull out. President Trump does seem to be looking for an exit ramp, and that could take some of the intensity out of the conflict, but by no means necessarily put it to an end. And indeed, we're likely to see risk continue to not just traffic in the Strait of Hormuz, but also to the Gulf and energy infrastructure there. Iran realizes now it has a rather powerful toolkit that it can play, and it's likely to continue leveraging that whenever it feels that it's being threatened.

[Tim Stannwick]

Jenny, you mentioned something that really raised my eyebrows just now, and it was the idea that some of these geographical neighbors aren't part of the war. Yet you use the word yet. Are you implying that you think that other countries will enter this war?

[Jennifer Welch]

I think that other countries, well, they might define it differently. Some of them might say that they've been dragged into it because they've been having to shoot down projectiles coming out of Tehran. I think they are receiving pressure from the United States States to enter in some way, shape or form. We've seen President Trump talk about not just trying to enlist U.S. allies and other countries like China and reopening the Strait of Hormuz, but having rather positive things to say about the prospect for Gulf countries to assist with that. Now, our assessment is that the vast majority do not want to be parties to this conflict. They don't certainly want to get directly involved. Maybe some of them are allowing US Forces to, for example, use their airspace, but they're very wary of giving Tehran any additional reason to target them.

[Carol Massar]

Hey, one thing I want to get to before we wrap up here, China watching very closely. As Bloomberg has reported, China's military has been studying President Trump's war in Iran for lessons that could prove helpful in any future conflict of its own. That's according to Western officials familiar with the matter. Gosh, what do we need to know about this?

[Jennifer Welch]

I think the main thing to know is that China watches every conflict very closely, as do many US Observers as well. But what China is watching for is lessons on how to defeat the US Military. And here I think that they probably taken away that this was obviously, especially at its initial stages, a very impressive display of firepower from the US Military. But now what they're probably noticing is that the US Is using, especially at the higher end, a lot of munitions that would theoretically be useful in any fight with China. And I think that's what they're tracking closely. I think also at a strategic level, what they're watching is, especially with all this debate over reopening the Strait of Hormuz, that this is creating friction points between the US and its allies and that the US Is, especially when it comes to Asian partners, having to withdraw some assets from that theater in order to back up what it's trying to do in the Middle East. So those are some of the dynamics that Beijing is going to be watching very closely in the weeks ahead.

[Carol Massar]

So, Jenny, five seconds. Advantage to China, perhaps just quickly.

[Jennifer Welch]

I think strategically, yes, this is the

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[Carol Massar]

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