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What The Bond Selloff Means For Your Wallet & Simplifying Finance For Your Family · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios. Podcasts.
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  Speaker 2: Radio.
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  Speaker 3: News.
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  Speaker 4: Bloomberg Money.
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  Speaker 2: This is the Bloomberg Money Podcast. I'm Tom Keen with
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  Speaker 2: Scarlett Fu. Join us each week for a smart look
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  Speaker 2: at the forces shaping your financial life on personal finance,
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  Speaker 1: Good noon, everyone.
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  Speaker 2: Bloomberg Money here. Scarlett Fuentonke, thank you for being with us.
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  Speaker 2: What an odd, what an exhausting week we have had
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  Speaker 2: here with the traffic. You went crosstown. Did it take
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  Speaker 2: 20 minutes or an hour to get here? I had
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  Speaker 2: to get out.
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  Speaker 1: I had to walk. I mean, I had to wait
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  Speaker 1: behind barricades.
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  Speaker 3: It's just.
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  Speaker 2: Junior's pro at that, Miles Miller. Record five different taxi cabs.
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  Speaker 5: Oh, my gosh.
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  Speaker 2: To get over to the Deutsche Bank Center.
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  Speaker 1: How much did that whole thing cost?
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  Speaker 2: It was, I don't know, Reto Gregori's Keeper of the
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  Speaker 2: Amex is the only one who knows that information. It's
• 1:25
  Speaker 2: a really twisted and special Bloomberg Money today, but we
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  Speaker 2: have to go to it. The back end of the show,
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  Speaker 2: Taylor Swift will join us.
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  Speaker 1: Oh, that's a good piece.
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  Speaker 2: Out with her new single. That's a good piece. That's
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  Speaker 2: a zeitgeist right now.
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  Speaker 1: That's how people are spending their money.
• 1:39
  Speaker 2: We've got a great, great show for you. Jeffrey Rosenberg
• 1:41
  Speaker 2: holds on to Florida BlackRock. Really good out of Carnegie
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  Speaker 2: Mellon and Tepper Institute. Jeff Rosenberg, the high yields. Forget
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  Speaker 2: about the math. What does it mean for your personal finance,
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  Speaker 2: your retirement, your wealth management?
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  Speaker 1: And we've got Barry Ritholtz. He's founder and chairman of
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  Speaker 1: Ritholtz Wealth Management. He's host of Masters in Business on
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  Speaker 1: Bloomberg Radio. He's going to talk about how wealth is
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  Speaker 1: actually created in America. And hint, it involves taking risks.
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  Speaker 2: Stop the show. His book is phenomenal. Because it's got
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  Speaker 2: the word not. How not. How not to screw up.
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  Speaker 2: That's the name of the book. It's done really well.
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  Speaker 2: It deserves to be. We're thrilled to have Barry with us,
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  Speaker 2: given the tumult that we've seen this week. Data check.
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  Speaker 2: Scarlett's going to go across. I've got the stock data
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  Speaker 2: check for you here. And, you know, Friday, it was
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  Speaker 2: a nice uptick. I think more than a normal August Friday.
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  Speaker 2: We're into the market now with the Dow up 356%.
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  Speaker 2: To me, the story is a VIX, which goes against
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  Speaker 2: surging dollar, surging interest rates, surging into the weekend. What
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  Speaker 2: do you do with your 401k? I have no idea.
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  Speaker 1: Big question mark. All right. Speaking of surging interest rates,
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  Speaker 1: yields on the 10-year are at the highest since 2007.
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  Speaker 1: You can see they're 5.16%. The five-year yield is trading
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  Speaker 1: above 5%. We're going to get into bonds a little
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  Speaker 1: bit later on. Stocks are set to close out the
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  Speaker 1: week with a modest gain. The dollar is down. somewhat weaker.
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  Speaker 1: And look at that. Oil prices down 2% for the week,
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  Speaker 1: but it doesn't feel like it.
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  Speaker 2: Audible loftus. We're going to do an Audible here with
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  Speaker 2: a remote camera here. Get over here. I got to
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  Speaker 2: fix my bow tie. That's the first thing. There we go.
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  Speaker 2: Nikki Waller with us today, running all of our personal finance,
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  Speaker 2: just doing a superb job of timely stories.
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  Speaker 6: There.
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  Speaker 2: Miles Miller is with us. To say he's a senior
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  Speaker 2: reporter doesn't even describe.
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  Speaker 1: He covers all sorts of things, yes.
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  Speaker 2: His handle on this great metropolitan five-borough New York City
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  Speaker 2: and also down in Washington. as well. Can you bring
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  Speaker 2: the camera over here? I mean, could you look at
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  Speaker 2: Carol Master's notes? What do you think this is like?
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  Speaker 2: We don't have any notes.
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  Speaker 7: This is my world.
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  Speaker 3: I know.
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  Speaker 1: I'm a note and a paper girl.
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  Speaker 2: What are you and Tim doing this afternoon?
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  Speaker 1: What are we doing?
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  Speaker 8: We're going to do a little bit of China. We're
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  Speaker 8: going to be talking a little bit about Cuba. Still
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  Speaker 8: staying with the U.N. I feel like it's been such a.
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  Speaker 2: Yeah, and I agree. And Eric Martin's Marco Rubio story,
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  Speaker 2: Bloomberg Businessweek, world class on the secretary.
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  Speaker 1: Yeah, he's been covering national politics, national security.
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  Speaker 2: Let's jump into it right now. Nikki Waller with us
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  Speaker 2: on personal finance here. I have no idea how you
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  Speaker 2: start your Monday morning meeting given the present chaos. Is
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  Speaker 2: your world turned upside down?
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  Speaker 9: No, our world is very curious about what's going on.
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  Speaker 9: And our week actually started over the weekend because when
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  Speaker 9: we saw those mortgage rates last week, we sent reporters
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  Speaker 9: out to open houses around the country.
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  Speaker 3: Thank you.
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  Speaker 9: And we talked to sellers and we talked, we couldn't
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  Speaker 9: find any buyers, but we talked to sellers and we
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  Speaker 9: talked to realtors.
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  Speaker 1: About exactly how stalled things feel.
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  Speaker 2: Is price moving?
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  Speaker 7: Prices are moving down.
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  Speaker 9: People are having, sellers are having to cut their prices
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  Speaker 9: a lot. We talked to one guy who had to
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  Speaker 9: cut his price twice, more than six figures in 10 days.
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  Speaker 1: The first was when he.
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  Speaker 9: Had an open house and only two people came. The
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  Speaker 9: second was after the Fed raised rates last week.
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  Speaker 1: And it goes back to the volatility that we've seen
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  Speaker 1: in bond markets, Carol, and people talking about how we're
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  Speaker 1: in this new era. The days of zero interest rates
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  Speaker 1: are long gone. It is a new era.
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  Speaker 8: Bring up the bond boards here at Bloomberg, and all
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  Speaker 8: of a sudden you're seeing 5% all along the curve.
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  Speaker 8: And what's interesting, you think about U.S. Treasuries, really the
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  Speaker 8: global bellwether, right? So whether it's the impact on consumers,
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  Speaker 8: on corporations, on governments. This is a game changer. We
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  Speaker 8: keep saying, though, it's not like the late 70s, early
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  Speaker 8: 80s when you were seeing rates up in the teens.
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  Speaker 8: But nonetheless, it has an impact. And for a generation
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  Speaker 8: who's never seen something like this, it's a big deal.
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  Speaker 1: Absolutely. Let's bring in Miles Miller to all of this,
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  Speaker 1: because here we are in New York City and we
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  Speaker 1: had the U.N. General Assembly week. There are a lot
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  Speaker 1: of people walking around. There's a lot of wealth. Wait,
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  Speaker 1: the U.N. was happening this week?
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  Speaker 6: I know.
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  Speaker 1: In case you didn't notice, I know that you covered
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  Speaker 1: the city and the security and all that. This week
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  Speaker 1: started off with a lot of flight chaos, right? We
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  Speaker 1: had the flights halted at all of New York City airports.
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  Speaker 1: It's going to probably end with a nor'easter storm. So
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  Speaker 1: people are having a hard time getting in and out
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  Speaker 1: of the city to attend to all of New York
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  Speaker 1: City's offerings, including diplomacy.
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  Speaker 10: Yeah, this was quite a crazy week in New York, right?
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  Speaker 10: It wasn't just the U.N. General Assembly. Of course, the
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  Speaker 10: Metropolitan Opera came back. The New York City Ballet came,
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  Speaker 10: and I went to opening night for the ballet. It
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  Speaker 10: was quite a crazy week to get around town. But yes,
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  Speaker 10: it began with all those travel troubles. Of course, New
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  Speaker 10: Jersey Transit involved a line cut that went to TRACON,
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  Speaker 10: which operates all of air traffic control. And because of that,
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  Speaker 10: world leaders were delayed getting in. They fixed that. And
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  Speaker 10: then we've got all the traffic tie ups. And then
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  Speaker 10: we've got Benjamin Netanyahu in town giving his big speech,
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  Speaker 10: fighting with Mayor Mamdani. It was quite a week for
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  Speaker 10: diplomacy and also getting around.
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  Speaker 2: We've undersold it. You have four Emmy Awards. You've grounded
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  Speaker 2: out in the five boroughs in New York City. Why
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  Speaker 2: are we moving to Philadelphia? I mean, it's just as
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  Speaker 2: simple as that. Wealth management, personal finance, it's not working
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  Speaker 2: in Boston. It's not working in New York City.
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  Speaker 10: Yeah, Philadelphia, whenever you look at, and I worked in Philly.
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  Speaker 10: I worked at WTXF there, which is the Fox station.
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  Speaker 10: Spent a good amount of my career covering South Jersey there.
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  Speaker 10: It makes sense, right? Because it's so much cheaper to
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  Speaker 10: live in Philadelphia. Your money goes so much farther. And
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  Speaker 10: there are people who get on that Amtrak and pay
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  Speaker 10: for that 12-trip ticket or get that multi-trip ticket. It
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  Speaker 10: just makes more sense.
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  Speaker 1: You know, Nikki, this reminds me of a story that
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  Speaker 1: your team wrote about how the marker of financial success
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  Speaker 1: in America has really shifted. Once upon a time, it
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  Speaker 1: was buying a home, but that's no longer the case.
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  Speaker 9: Yeah, you can say the American dream is being redefined
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  Speaker 9: for a lot of people. And it is less about
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  Speaker 9: following those traditional milestones that we're talking about and more
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  Speaker 9: about actually enjoying your life right here and now. Even
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  Speaker 9: if you have a down payment, the carrying costs of
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  Speaker 9: a home are hard or the rates are high, as
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  Speaker 9: we're talking about. And prices, while their individual prices are
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  Speaker 9: coming down, they're not coming down broadly.
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  Speaker 1: And actually, I'm not sure we all want that.
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  Speaker 2: What's your sense within what you and Tim are doing
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  Speaker 2: of how many people have missed this bull market? And
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  Speaker 2: I'm not talking about fancy Jeff Rosenberg math. I'm talking
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  Speaker 2: about just because of caution or gloom or poverty or
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  Speaker 2: they just can't make the bills, they miss this bull market.
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  Speaker 1: We talk about this a lot.
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  Speaker 8: And obviously, you go back to Peter Atwater at William &
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  Speaker 8: Mary and talking about the K-shaped economy. I mean, not
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  Speaker 8: everybody's in the financial market. There are folks that are
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  Speaker 8: still really struggling.
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  Speaker 1: Look at consumer sentiment. Exactly.
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  Speaker 11: Well done.
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  Speaker 8: We see strong retail numbers, but consumer sentiment is down
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  Speaker 8: and gas prices are up. We saw diesel hit a
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  Speaker 8: record high. I mean, these are things where there are
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  Speaker 8: lots of families struggling. I'm amazed at even the amount
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  Speaker 8: of conversations we have in the newsroom where folks that
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  Speaker 8: you would think are doing fairly well and they're saying,
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  Speaker 8: I feel pinched.
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  Speaker 1: I'm making decisions.
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  Speaker 8: So I think there's many stories to tell when it
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  Speaker 8: comes to this economy. And it plays out politically.
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  Speaker 1: Yeah. How much did you pay for gas when you
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  Speaker 1: went to the pump?
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  Speaker 7: Oh, I'm sorry.
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  Speaker 1: You don't do that.
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  Speaker 2: I don't do that. I'm above it all. It's not good.
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  Speaker 2: I mean, miles is in the trenches on this. And
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  Speaker 2: there's a lot of people. I mean, diesel, you go
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  Speaker 2: New York City, diesel doesn't matter. Sit on 59th Street
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  Speaker 2: and count the diesel trucks that go by.
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  Speaker 10: The diesel costs are insane. I mean, I, I gas
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  Speaker 10: up probably twice or three times a week. I have
• 8:57
  Speaker 10: two cars right now trying to get down to one.
• 8:59
  Speaker 10: That's a different story for a different day, but you know, but,
• 9:06
  Speaker 10: but to fill up the Yukon is insane. That is
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  Speaker 10: probably $ 80 to fill up. So I always do half
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  Speaker 10: a tank. It's just easiest to do half a tank
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  Speaker 10: because you know, I, I don't know.
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  Speaker 7: I don't want to pay. And you know, we talk
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  Speaker 7: about this a lot.
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  Speaker 10: Like we were going to a lot of concerts this summer,
• 9:21
  Speaker 10: going to concerts and events. I'm like, Affirm and Klarna
• 9:24
  Speaker 10: look really good for young people because, as you were saying,
• 9:28
  Speaker 10: they want to have good experiences. So how do you
• 9:30
  Speaker 10: make those experiences? That's brilliant. Are those platforms successful?
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  Speaker 1: Yeah, they're really successful.
• 9:36
  Speaker 9: People are using them for exactly what Mike Miles is
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  Speaker 9: talking about. They're using them for Knicks tickets. They're using
• 9:42
  Speaker 9: them for Taylor Swift. They're also, though, more often using
• 9:45
  Speaker 9: them for everyday expenses. This is now becoming a rotating
• 9:50
  Speaker 9: line of credit for a lot of people to get by.
• 9:54
  Speaker 8: Well, I love the story that you guys have about
• 9:56
  Speaker 8: finance maxing strategies, how you have this whole generation who
• 9:58
  Speaker 8: are trying to figure out how to save money. So
• 10:00
  Speaker 8: it's the buy now, pay later. They're moving in with
• 10:02
  Speaker 8: their families again. I mean, all these different things that
• 10:05
  Speaker 8: they are doing, sharing, streaming, subscriptions, like these things that
• 10:08
  Speaker 8: they are doing to kind of save money.
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  Speaker 9: Yeah, and at the same time, they are investing. I mean,
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  Speaker 9: you look at Gen Z, they are more heavily invested
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  Speaker 9: in retirement and their 401ks than their forebears.
• 10:19
  Speaker 2: Can I go political here? Bloomberg Money, why not? We
• 10:21
  Speaker 2: got Miles with us today.
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  Speaker 1: Yeah, go for it.
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  Speaker 2: How's the mayor doing?
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  Speaker 7: Mayor's having a great week.
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  Speaker 2: He really is. Mr. Netanyahu is pounding him at the U.N.
• 10:29
  Speaker 10: But he's masterful at the way that he handles this
• 10:32
  Speaker 10: situation with Trump. He knows he's going to have this
• 10:35
  Speaker 10: negative interaction with Netanyahu being here. It has his biggest ally, Trump,
• 10:41
  Speaker 10: in the backyard of Archibald Gracie's mansion, a mansion that
• 10:44
  Speaker 10: he knows that Trump loves and has been to in
• 10:46
  Speaker 10: the past. Trump is waging war against the media. He
• 10:49
  Speaker 10: brings the world's media to Gracie Manchin. The first three
• 10:53
  Speaker 10: or four questions come from all of the outlets that
• 10:55
  Speaker 10: Trump has banned at the White House.
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  Speaker 2: It was masterful.
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  Speaker 7: I mean, it was truly masterful.
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  Speaker 2: Is this the first Friday Miles has been in the
• 11:02
  Speaker 2: office since when? Since Taylor Swift last held him, right?
• 11:06
  Speaker 1: Yeah, just get on his case.
• 11:07
  Speaker 2: Something like that.
• 11:08
  Speaker 1: Miles, what do you make of that relationship between President Trump?
• 11:10
  Speaker 2: Who's in charge here?
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  Speaker 6: I don't.
• 11:12
  Speaker 2: I am blown away. But have you seen the video?
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  Speaker 11: Well, you're always in charge.
• 11:16
  Speaker 1: We know that.
• 11:18
  Speaker 8: But that relationship between President Trump and Mayor Mamdani from
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  Speaker 8: the get-go.
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  Speaker 10: Yeah, I mean, I think the mayor's team quickly realized
• 11:26
  Speaker 10: that they would get more bees with honey.
• 11:30
  Speaker 2: Is that what they say? Yes, correct.
• 11:32
  Speaker 7: More flies with honey.
• 11:34
  Speaker 10: And so going down there and meeting with him from
• 11:37
  Speaker 10: the beginning, instead of taking this adversarial tone, has played
• 11:41
  Speaker 10: dividends for them. And it's been marvelous to see. And also,
• 11:45
  Speaker 10: two Queens guys being.
• 11:47
  Speaker 1: Able to talk.
• 11:47
  Speaker 10: I mean, Trump really fashions himself as a Queens guy.
• 11:49
  Speaker 10: He's like, I had a building in Sunnyside. It's like,
• 11:52
  Speaker 10: you know, this is the leader of the free world
• 11:54
  Speaker 10: talking to brass tacks about Queens.
• 11:57
  Speaker 2: It's really interesting.
• 11:57
  Speaker 1: Two Queens guys at the end of the day. All right,
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  Speaker 1: Miles Miller, Carol Masser, and Nikki Waller, thank you so
• 12:02
  Speaker 1: much for joining us in our Money Roundtable.
• 12:04
  Speaker 2: Should we have Masser back?
• 12:05
  Speaker 4: It's 50-50.
• 12:06
  Speaker 1: Oh, for sure. But I did wear the Hermes sky.
• 12:09
  Speaker 11: I thought we were going to talk about Williamsburg.
• 12:10
  Speaker 2: We didn't get there.
• 12:11
  Speaker 1: We didn't get there. Next time, next time. Mine's too.
• 12:14
  Speaker 3: I know.
• 12:15
  Speaker 1: For you. Coming up, we've got a conversation with BlackRock's
• 12:18
  Speaker 1: Jeffrey Rosenberg with a focus on personal finance, retirement, and
• 12:21
  Speaker 1: wealth management, looking at the craziness in the bond market.
• 12:24
  Speaker 1: This is Bloomberg Money.
• 12:27
  Speaker 2: We'll do Mez Williamsburg.
• 12:29
  Speaker 12: I know.
• 12:30
  Speaker 1: You know what? It was hard to make that transition.
• 12:32
  Speaker 11: I know.
• 12:32
  Speaker 8: Some consumers are doing very well.
• 12:36
  Speaker 1: Some consumers are feeling very.
• 12:40
  Speaker 2: You're listening to Bloomberg Money. Stay with us with more
• 12:43
  Speaker 2: to come after this. Bloomberg Money On a Friday, Bloomberg Money.
• 12:53
  Speaker 2: Thank you so much for joining us. Our videos are
• 12:55
  Speaker 2: out there as well. Do a great job of that
• 12:57
  Speaker 2: on YouTube. Look for that Saturday morning. It takes a
• 13:01
  Speaker 2: while to put them all together. Again, we always lead
• 13:03
  Speaker 2: with Scarlett Fu in our videos as well. I look
• 13:06
  Speaker 2: at the number of countries to go to, like top
• 13:09
  Speaker 2: 10 countries to retire to, top 20. Don't go to
• 13:12
  Speaker 2: these five. And always in the top of the list
• 13:15
  Speaker 2: is a country, I think it's a surprise to people, Norway.
• 13:18
  Speaker 1: Norway, Scandinavian country. Well, the Scandinavian countries are known for
• 13:21
  Speaker 1: their happiness ratings, right? They tend to do pretty well there.
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  Speaker 2: That's why I never would go there, but that's a
• 13:26
  Speaker 2: separate issue.
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  Speaker 1: It doesn't fit in naturally with you. Yeah, if you
• 13:30
  Speaker 1: look at Bloomberg.com slash money, which is our homepage, your
• 13:34
  Speaker 1: destination for personal finance, this is a cross-platform app. effort
• 13:37
  Speaker 1: that extends beyond your television screen. This is a story
• 13:40
  Speaker 1: that definitely got our attention. Norway tops the global retirement
• 13:43
  Speaker 1: index for a second straight year. And a lot of
• 13:47
  Speaker 1: it has to do with the fact that retirement systems
• 13:50
  Speaker 1: are under pressure and people are worried that their country
• 13:53
  Speaker 1: is going to run out of money. But Norway is
• 13:54
  Speaker 1: a oil powerhouse. And it has a massive sovereign wealth fund.
• 13:58
  Speaker 1: There's a lot of wealth in that country.
• 13:59
  Speaker 2: And there's more than Oslo. The stereotype is Helsinki over
• 14:03
  Speaker 2: west to Stockholm and then over to Oslo. And they're
• 14:06
  Speaker 2: all different. I get that. And it's actually fairly expensive.
• 14:10
  Speaker 2: It is not the cheapest place.
• 14:11
  Speaker 3: No, it isn't.
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  Speaker 1: But there's a strong social safety net.
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  Speaker 2: The social safety net is world class because of all
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  Speaker 2: that oil in there.
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  Speaker 1: But also key is that it's not a big country.
• 14:20
  Speaker 1: It's a small country. So you can do all those
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  Speaker 1: things and not go bankrupt. I mean, you think about
• 14:25
  Speaker 1: Singapore and what they're able to do. It's really hard
• 14:27
  Speaker 1: to replicate that model in a China or in the U.S.
• 14:30
  Speaker 2: I sat at the Raffles Outdoor Bar in Singapore three
• 14:33
  Speaker 2: lifetimes ago and said it's too hot and muggy. You
• 14:36
  Speaker 2: never feel that.
• 14:37
  Speaker 1: You can never retire in Singapore.
• 14:37
  Speaker 2: You never feel that in Norway.
• 14:39
  Speaker 1: No, no, no.
• 14:39
  Speaker 2: Not at all. But, you know, I would say this
• 14:41
  Speaker 2: is front and center. I've said for years, Scarlett, that
• 14:44
  Speaker 2: The American retirement system has failed. The percentage with zero retirement.
• 14:49
  Speaker 1: I mean, I kind of always assumed that there would
• 14:51
  Speaker 1: be no Social Security by the time I would need it.
• 14:53
  Speaker 1: I just kind of operate on that assumption.
• 14:55
  Speaker 2: And we had Jack Lew with us, folks, the former
• 14:58
  Speaker 2: Treasury secretary a month ago or so, who made clear
• 15:02
  Speaker 2: after the election of 2028, there's no other issues. the
• 15:06
  Speaker 2: amendment of Social Security as well. But I think the
• 15:09
  Speaker 2: 10 countries, it's all a different story. Susan, we've got
• 15:12
  Speaker 2: five of them here. Ireland is boom if you can
• 15:15
  Speaker 2: afford the real estate. Renting your owner is extraordinary.
• 15:18
  Speaker 1: So Western Europe, highly represented there. And again, social safety net.
• 15:22
  Speaker 2: These are where the fancy people are retiring, I would say.
• 15:25
  Speaker 2: These are all more expensive than what you see in
• 15:27
  Speaker 2: Southeast Asia with Vietnam.
• 15:30
  Speaker 6: Malaysia.
• 15:30
  Speaker 2: And with Bangkok, Malaysia, and with the Philippines as well. Oh,
• 15:34
  Speaker 2: look at that.
• 15:34
  Speaker 1: Czech Republic is on there as well.
• 15:36
  Speaker 6: Yeah.
• 15:36
  Speaker 1: As the 10th one.
• 15:38
  Speaker 2: You know, we'll have to see. We'll have to see
• 15:40
  Speaker 2: on it. But I would say this is front and center.
• 15:42
  Speaker 2: It's something Scarlett and I want to do much more
• 15:44
  Speaker 2: of as we go into 2027.
• 15:47
  Speaker 1: I mentioned how oil prices are lower today, but it
• 15:49
  Speaker 1: doesn't feel like it. They just took another leg lower.
• 15:52
  Speaker 1: And in fact, that has given stocks a boost in
• 15:55
  Speaker 1: intraday trading right now. You have the major indexes in
• 15:57
  Speaker 1: the green now. The Dow, the S & P and
• 16:00
  Speaker 1: the Nasdaq taking the leg up because there's hopes that
• 16:03
  Speaker 1: there's going to be some kind of diplomatic way to
• 16:04
  Speaker 1: end the war in Iran. Oil prices again down.
• 16:07
  Speaker 2: We look at equities, bonds, currencies, commodities. Scarlet food demands it,
• 16:11
  Speaker 2: I say. And you see it with oil there at
• 16:13
  Speaker 2: 101 a barrel. Yields have been remarkable, particularly the 30-year.
• 16:17
  Speaker 2: We're going to go to Jeff Rosenberg in a bit
• 16:19
  Speaker 2: on that. But right now, an important interview. It is
• 16:23
  Speaker 2: not O Canada, it is O Mexico. And we know
• 16:25
  Speaker 2: at Bloomberg that so many within the Schoenbaum administration listen.
• 16:30
  Speaker 2: to our Bloomberg work from Scarlett and myself and others
• 16:33
  Speaker 2: each and every day. He is the Foreign Affairs Secretary
• 16:38
  Speaker 2: for Mexico, a demanding job of the University of Chicago.
• 16:42
  Speaker 2: David Gurra with Roberto Velasco Alvarez.
• 16:45
  Speaker 6: David.
• 16:46
  Speaker 3: Thank you very much, Mr. Secretary.
• 16:47
  Speaker 13: Thank you very much for being here. You have spent
• 16:49
  Speaker 13: your career focused in part now on the North American
• 16:53
  Speaker 13: relationships between U.S., Mexico and Canada. How do you assess
• 16:56
  Speaker 13: the state of the U.S.-Mexico relationship right now?
• 16:59
  Speaker 4: Well, we have a relation that has a lot of dialogue.
• 17:03
  Speaker 4: We have a relation with deep cooperation on many different areas,
• 17:07
  Speaker 4: including security, based on what we view as core principles
• 17:13
  Speaker 4: like respect to our sovereignty and territorial protection. integrity, but
• 17:17
  Speaker 4: taking all of that, I think it's overall a good relation,
• 17:20
  Speaker 4: a strong relation.
• 17:22
  Speaker 13: No doubt you heard the President of the United States
• 17:23
  Speaker 13: speaking here. He talked about Mexico as the epicenter of
• 17:25
  Speaker 13: cartel violence. He said it was unacceptable that the U.S.
• 17:29
  Speaker 13: could have a 2,000-mile border with a country that is,
• 17:31
  Speaker 13: in his estimation, controlled by cartels. How do you respond
• 17:34
  Speaker 13: to that?
• 17:35
  Speaker 4: Well, what I can tell you is that in the
• 17:36
  Speaker 4: past two years, the homicide rate in Mexico has halved.
• 17:42
  Speaker 4: There's a 51% reduction in homicides in Mexico. Most crimes
• 17:47
  Speaker 4: are also in a downward trajectory.
• 17:50
  Speaker 3: There's a lot of.
• 17:51
  Speaker 4: Progress given the new government security strategy that includes a
• 17:56
  Speaker 4: new focus on intelligence and investigations. There's also, as I said,
• 18:02
  Speaker 4: cooperation with the United States based on these four principles
• 18:06
  Speaker 4: that we also include what we call cooperation without subordination.
• 18:13
  Speaker 2: Is there total alignment with the U.S.
• 18:15
  Speaker 13: When it comes to its approach to violence in the region,
• 18:17
  Speaker 13: or do you differ with the U.S.
• 18:19
  Speaker 1: In some way?
• 18:19
  Speaker 4: No, I think the U.S. has a different approach with
• 18:24
  Speaker 4: other countries. We have our own approach to cooperation. As
• 18:28
  Speaker 4: I said, these principles for us are fundamental. They are
• 18:32
  Speaker 4: in our constitution. We have to respect our legal framework.
• 18:36
  Speaker 4: But with that considered, I think we have good work.
• 18:41
  Speaker 4: We have good progress and we have good achievements. I mean,
• 18:44
  Speaker 4: if you look at, for example, the numbers at the border,
• 18:47
  Speaker 4: there's a 60 percent reduction in the fentanyl that is
• 18:51
  Speaker 4: reaching the border. The White House has recognized that. There's
• 18:55
  Speaker 4: also a historic reduction in the figures of irregular migration
• 19:01
  Speaker 4: that we've seen. in the border in the past couple years,
• 19:04
  Speaker 4: so I think we are in a different situation from
• 19:08
  Speaker 4: where we were before.
• 19:09
  Speaker 13: We've seen other countries enter into joint military operations with
• 19:12
  Speaker 13: the U.S. Seems that's a red line for you. Is
• 19:14
  Speaker 13: that something that you wouldn't consider?
• 19:15
  Speaker 4: Well, for Mexico, as I said, there has to be
• 19:19
  Speaker 4: respect for our territorial integrity, for our sovereignty, and that
• 19:23
  Speaker 4: entails that operations in Mexico only correspond to Mexican authorities.
• 19:29
  Speaker 13: We've seen the deportation of more than 200,000 Mexicans during
• 19:33
  Speaker 13: the start of the president's second term. What's the impact
• 19:35
  Speaker 13: of that been on your country, having that influx of
• 19:38
  Speaker 13: Mexicans returning to Mexico?
• 19:39
  Speaker 4: Well, we have a strategy to receive our citizens when
• 19:42
  Speaker 4: they are returned from the United States.
• 19:45
  Speaker 3: It's called Mexico Te Abraza.
• 19:47
  Speaker 4: And we provide access to social media programs, we provide
• 19:52
  Speaker 4: basic resources so they can reintegrate to Mexico and they
• 19:56
  Speaker 4: can get jobs, they can get access to healthcare, And
• 19:59
  Speaker 4: so far, I think we've been successful in receiving our
• 20:05
  Speaker 4: Mexican fellows, you know, as what they are.
• 20:08
  Speaker 3: Part of our country.
• 20:09
  Speaker 13: There are the Mexican fellows, as you put it. There
• 20:10
  Speaker 13: are also these third country deportations as well, thousands of...
• 20:14
  Speaker 13: people not from Mexico being sent there. And I'm curious,
• 20:16
  Speaker 13: do you welcome that, these third country deportations?
• 20:19
  Speaker 4: Well, there is a number of people that are rejected
• 20:22
  Speaker 4: at the border in the United States and out of
• 20:26
  Speaker 4: humanitarian grounds. We have received some of these individuals and
• 20:32
  Speaker 4: we provide them with an opportunity to return to their
• 20:36
  Speaker 4: countries of origin or in cases where they require protection
• 20:39
  Speaker 4: in Mexico, we offer them pathways as well.
• 20:41
  Speaker 13: Give us an update on trade negotiations. We had Jameson Greer,
• 20:45
  Speaker 13: the U.S. trade representative here at the Council on Foreign Relations,
• 20:47
  Speaker 13: saying the trade deficit is exploding, in his words. How
• 20:51
  Speaker 13: close are those negotiations as you see them?
• 20:53
  Speaker 4: Well, I'm always cautiously optimistic. We continue to have constructive conversations.
• 21:00
  Speaker 4: We continue to have positive engagements. We don't have yet
• 21:04
  Speaker 4: an agreement. Obviously, we're talking about The different 232 tariffs
• 21:09
  Speaker 4: that have been implemented, particularly the car industry and the
• 21:13
  Speaker 4: steel sector, are of worry for Mexico. We continue to
• 21:18
  Speaker 4: talk about what the U.S. describes as non-tariff barriers. I
• 21:22
  Speaker 4: think we've made a lot of progress, and.
• 21:24
  Speaker 3: Hopefully we will get to an agreement in the not-so-distant future.
• 21:30
  Speaker 13: Likely to see reductions on steel and car tariffs, do
• 21:33
  Speaker 13: you think?
• 21:33
  Speaker 3: Well, that's our hope.
• 21:35
  Speaker 13: Optimistic still?
• 21:37
  Speaker 3: Again, cautiously optimistic.
• 21:40
  Speaker 13: You studied at the University of Chicago. Yes, there was
• 21:42
  Speaker 13: political theory with Martha Nussbaum and the like. Also spent
• 21:45
  Speaker 13: a lot of time with David Axelrod. So you understand
• 21:47
  Speaker 13: US politics. Given that, I'm curious how you think about
• 21:51
  Speaker 13: the timeline the US is operating under right now, the
• 21:53
  Speaker 13: administration is operating under with the midterm elections here many
• 21:56
  Speaker 13: weeks away. Do you see that as a forcing mechanism
• 21:59
  Speaker 13: or something that's shaping conversations about trade in particular?
• 22:02
  Speaker 4: Well, you know, we try to be very careful about
• 22:06
  Speaker 4: not getting ourselves entangled with U.S.
• 22:09
  Speaker 3: Politics.
• 22:10
  Speaker 4: What I can tell you is that we're obviously watching
• 22:14
  Speaker 4: the elections like everybody else, and that we will continue
• 22:21
  Speaker 4: to engage with the U.S. before and after, because that
• 22:24
  Speaker 4: is the responsibility of of any government that shares such
• 22:28
  Speaker 4: a big border, that shares so many interests, including the
• 22:31
  Speaker 4: trade that you just mentioned.
• 22:33
  Speaker 13: USMCA not renewed with the rubber stamps. These negotiations are ongoing.
• 22:37
  Speaker 13: What would it mean for North America were there to
• 22:39
  Speaker 13: be a deal, say, between Mexico and the United States,
• 22:41
  Speaker 13: but not one with Canada, not one between the U.S.
• 22:43
  Speaker 5: And Canada?
• 22:44
  Speaker 4: Well, I mean, the framework of the USMCA continues to
• 22:48
  Speaker 4: be trilateral. There are some aspects that will need to
• 22:51
  Speaker 4: be discussed trilaterally. But of course, there are issues that
• 22:54
  Speaker 4: are bilateral. There have always been aspects of the USMCA,
• 22:57
  Speaker 4: previously the NAFTA, that were bilateral in their nature. And
• 23:02
  Speaker 4: it's natural for the countries to have also bilateral engagement
• 23:05
  Speaker 4: and to reach some agreements in that manner.
• 23:08
  Speaker 13: A few questions about Asia, if I could. You've been
• 23:11
  Speaker 13: shuttling around New York, but you also went back to Mexico.
• 23:13
  Speaker 13: There was a state visit by South Korea's leadership. How
• 23:16
  Speaker 13: do you assess the prospects of a Mexico-South Korea trade deal?
• 23:20
  Speaker 4: Well, I don't think we will get to a free
• 23:24
  Speaker 4: trade agreement. We're looking more at different agreements that show
• 23:29
  Speaker 4: the complementarities between the economies. Of course, the conversations will
• 23:34
  Speaker 4: continue to see.
• 23:35
  Speaker 3: Where we end.
• 23:36
  Speaker 4: But in the meantime, what we are deepening is our
• 23:39
  Speaker 4: cooperation in several different areas, including science and technology. artificial intelligence,
• 23:45
  Speaker 4: obviously the different investments of the Korean companies that are
• 23:49
  Speaker 4: in Mexico, including also Korean culture.
• 23:53
  Speaker 3: K-pop, that is of great interest for a lot of
• 23:56
  Speaker 3: people in Mexico.
• 23:57
  Speaker 2: Fourth largest market in the.
• 23:58
  Speaker 3: World is Mexico. Fourth largest market for K-pop.
• 24:00
  Speaker 4: So we're exploring the opening of a K-pop or K-culture
• 24:07
  Speaker 4: center in Mexico City and the opening of a Mexican
• 24:10
  Speaker 4: culture center in South Korea.
• 24:11
  Speaker 2: How about that?
• 24:12
  Speaker 3: It's going to be interesting.
• 24:13
  Speaker 13: Our focus here so much this week is on the
• 24:15
  Speaker 13: U.S.-China relationship, and I'm curious how Mexico's tack toward China
• 24:19
  Speaker 13: has changed under this administration.
• 24:21
  Speaker 4: Well, obviously, we have had throughout the decades a friendly
• 24:27
  Speaker 4: political relation with China. We intend to keep it that way.
• 24:30
  Speaker 4: We have an ongoing dialogue with the Chinese government. We
• 24:35
  Speaker 4: also have, obviously, an interest, as the rest of the
• 24:40
  Speaker 4: world does, looking at the relation between the US and
• 24:46
  Speaker 4: China going in a positive direction. So we expected these
• 24:50
  Speaker 4: conversations to go well, to have positive results.
• 24:55
  Speaker 3: And when it comes to trade, I mean, our focus.
• 25:00
  Speaker 4: Right now is Plan Mexico, which is centered in bringing
• 25:06
  Speaker 4: back to Mexico supply chains that have left over the
• 25:09
  Speaker 4: years and to fostering greater added value in the supply
• 25:14
  Speaker 4: chains that we already have in Mexico.
• 25:16
  Speaker 13: We are days away from an election in Brazil. Were
• 25:18
  Speaker 13: President Lula to lose his bid for re-election, how would
• 25:21
  Speaker 13: that change your country's relationship with Brazil?
• 25:24
  Speaker 4: Well, as with the rest of Latin America, we continue
• 25:29
  Speaker 4: to have dialogue with all the governments in the region.
• 25:34
  Speaker 4: We will see what's the result in Brazil. We have
• 25:37
  Speaker 4: an excellent relationship. with the government of President Lula. I
• 25:40
  Speaker 4: was just in Brazil meeting with him and his team.
• 25:44
  Speaker 4: So let's wait and see the result of the election.
• 25:47
  Speaker 13: I'll close with a question just about changes in Latin
• 25:49
  Speaker 13: America broadly. We've seen this shift to the right. And
• 25:52
  Speaker 13: I'm curious how that move has shaped your relationship with
• 25:54
  Speaker 13: other countries in the region, how it continues to shape them.
• 25:58
  Speaker 4: We're trying to find pragmatic areas of cooperation with the
• 26:02
  Speaker 4: different governments of the region. Of course, not all of
• 26:06
  Speaker 4: us think alike, but we can find areas like public health,
• 26:11
  Speaker 4: science and trade where we can find space to continue
• 26:18
  Speaker 4: working together, even though we are not aligned necessarily politically.
• 26:23
  Speaker 3: Very good to speak to you.
• 26:24
  Speaker 2: Thank you very much.
• 26:24
  Speaker 3: Thank you, David.
• 26:25
  Speaker 13: That's the Point of Fair. Secretary of Mexico, Roberto Velasco,
• 26:27
  Speaker 13: joining me here at the United Nations.
• 26:28
  Speaker 2: Back to you. David Gurra, thank you so much. That
• 26:30
  Speaker 2: from the United Nations, Rose Garden, overlooking the East River
• 26:34
  Speaker 2: as well. It is Bloomberg money. And what we're trying
• 26:37
  Speaker 2: to do here within the daily Bloomberg grind of sophisticated
• 26:41
  Speaker 2: equity bond currency commodity analysis is find somebody who at
• 26:45
  Speaker 2: Carnegie Mellon Tepper took stochastic calculus for finance, survived Brownian motion,
• 26:52
  Speaker 2: and Bruno DePere's Edo's Lemma, but can talk about personal finance, retirement.
• 26:58
  Speaker 1: There's only one guy.
• 27:00
  Speaker 2: That can do that. Jeffrey Rosenberg joins us from BlackRock today.
• 27:03
  Speaker 2: How do you simplify this nuts finance world we're in
• 27:08
  Speaker 2: right now? How do you bring it down for mom, dad,
• 27:12
  Speaker 2: your kids?
• 27:13
  Speaker 5: Well, the big question, Scarlett and I were talking about
• 27:15
  Speaker 5: this before, you know, bonds had made it into the
• 27:19
  Speaker 5: regular media and people are wondering and What's going on?
• 27:22
  Speaker 5: And is the bond market freaking out? And a very
• 27:25
  Speaker 5: simple way of kind of understanding what's going on in
• 27:29
  Speaker 5: interest rates is interest rates reflect the marginal cost of capital.
• 27:33
  Speaker 5: There's opportunity costs associated with them. And what we're seeing
• 27:36
  Speaker 5: in the market is a reflection of a lot of
• 27:39
  Speaker 5: demands for capital. We have growth that's accelerating. We have
• 27:44
  Speaker 5: capital expenditures from the AI investment that are accelerating.
• 27:48
  Speaker 7: We have record debt and deficits. So we have treasury indebtedness.
• 27:52
  Speaker 5: All of this on top of our regular amount of
• 27:55
  Speaker 5: corporate bond financing, mortgage-backed security financing, refinancing activity. And so
• 28:00
  Speaker 5: this competition for capital is a big reason why we've
• 28:04
  Speaker 5: seen this step.
• 28:05
  Speaker 2: Is it a permanent shift within our personal finance system?
• 28:08
  Speaker 2: Do we adjust? Carlos is too young to remember this,
• 28:10
  Speaker 2: but Jeff, do we have to adjust back to what
• 28:12
  Speaker 2: we knew, a higher interest rate regime?
• 28:15
  Speaker 7: Yeah, we do.
• 28:16
  Speaker 5: This is a structural change, and I think you really
• 28:19
  Speaker 5: have to sort of associate the structural change with.
• 28:23
  Speaker 7: A longer history, right?
• 28:25
  Speaker 5: It's not the thing we got used to for a
• 28:27
  Speaker 5: long time, which was zero interest rates and QE. The
• 28:31
  Speaker 5: post-GFC era lasted 10, 15 years, and it gave us
• 28:35
  Speaker 5: very low mortgage rates. It gave us incredible housing price gains.
• 28:39
  Speaker 5: It gave us incredible private equity gains, everything that was
• 28:42
  Speaker 5: fueled by debt. did really well in that zero interest
• 28:46
  Speaker 5: rate environment. And we're clearly out of that zero interest
• 28:49
  Speaker 5: rate environment. It's a higher real interest rate environment. That
• 28:51
  Speaker 5: was the argument before. What's the opportunity cost of capital?
• 28:54
  Speaker 5: And a higher inflation rate environment.
• 28:55
  Speaker 2: Let me bring up this morning, my sweet scholar, jump
• 28:57
  Speaker 2: into this with Jeffrey Rosenberg. This is Rick Reeder. He
• 29:00
  Speaker 2: was on a short list to be the chairman. The
• 29:03
  Speaker 2: Federal Reserve System, I believe, still works at BlackRock right now.
• 29:06
  Speaker 2: The next phase markets have benefited from a narrow set
• 29:09
  Speaker 2: of powerful themes. Next phase is likely to require greater
• 29:13
  Speaker 2: precision at how risk is allocated and where opportunities are sourced.
• 29:18
  Speaker 1: I look at the yield curve and the five-year yield
• 29:20
  Speaker 1: now gives you 5%. It's only the two-year and the
• 29:24
  Speaker 1: three-year that's below 5%. So it's a good time to
• 29:26
  Speaker 1: be a saver once again. And if you have a
• 29:28
  Speaker 1: traditional pension plan, it's also good. But with higher yields,
• 29:32
  Speaker 1: do we now say, okay, the 60-40 portfolio, oh, that
• 29:35
  Speaker 1: works again.
• 29:36
  Speaker 7: So you're really spot on to highlight both sides.
• 29:40
  Speaker 3: Of this, right?
• 29:40
  Speaker 5: The liability side, the mortgages, that's a little painful. But
• 29:43
  Speaker 5: the opportunity side on the investment side is better. I
• 29:46
  Speaker 5: don't think you can conclude 60-40 is back because there's
• 29:49
  Speaker 5: another whole issue with bonds, which is how do they
• 29:52
  Speaker 5: perform and with equities?
• 29:54
  Speaker 7: What's the relationship?
• 29:55
  Speaker 5: And that relationship used to be very powerfully diversifying. We
• 29:59
  Speaker 5: had an environment where bonds would reliably go up whenever
• 30:03
  Speaker 5: there was a challenge to equities. That was an environment
• 30:05
  Speaker 5: when we had too little inflation. So that's over. We're
• 30:08
  Speaker 5: five years into too much inflation. When you have too
• 30:11
  Speaker 5: much inflation, bonds aren't really a hedge anymore. They're good
• 30:14
  Speaker 5: for income, as you pointed out, and that's the way
• 30:16
  Speaker 5: to think about them. But for diversification, we're going to
• 30:19
  Speaker 5: have to think about broadening our diversifier set away from
• 30:23
  Speaker 5: just thinking about the traditional 60-40.
• 30:25
  Speaker 7: We talk about it 50-30-20. And so what's that 20?
• 30:28
  Speaker 5: It's alternatives and different forms of diversification to add into
• 30:32
  Speaker 5: the portfolio mix.
• 30:34
  Speaker 2: All right.
• 30:34
  Speaker 1: So we look also at the bond sell-off that's taking
• 30:37
  Speaker 1: place in the U.S. And we talk about it like
• 30:39
  Speaker 1: it's the end of the world. Is the bond market
• 30:41
  Speaker 1: freaking out? But it's not. I mean, because this is
• 30:43
  Speaker 1: a global phenomenon. You see this in Japan. You see
• 30:45
  Speaker 1: this in Western Europe. How much should we focus on
• 30:49
  Speaker 1: the US's fiscal problems driving bond yields higher when it
• 30:53
  Speaker 1: feels like every developed country has the same problem?
• 30:56
  Speaker 5: Yeah, I would say not overly focus on the fiscal issue.
• 30:59
  Speaker 5: The fiscal issue is real. Interest payments are higher. Debt
• 31:03
  Speaker 5: outstanding is higher. But it's part of a broader story.
• 31:07
  Speaker 5: A simple way to think about that, and I'm glad
• 31:08
  Speaker 5: you brought up the global perspective, Globally, what we've seen
• 31:12
  Speaker 5: is an increase this year in nominal GDP forecasts. My friend, colleague,
• 31:17
  Speaker 5: and mentor Tom Parker points this out, and we'll be
• 31:19
  Speaker 5: writing about this shortly. If you look at global average
• 31:22
  Speaker 5: and GDP, nominal GDP, so what does that mean? It
• 31:25
  Speaker 5: means take the real rate of activity and add the
• 31:28
  Speaker 5: rate of inflation. That's basically like current price level of
• 31:32
  Speaker 5: economic growth. What were the changes this year globally on average?
• 31:35
  Speaker 5: An increase of about 50 basis points, half a percentage
• 31:38
  Speaker 5: point relative to forecasts at the beginning of the year.
• 31:41
  Speaker 5: That matches almost exactly the average global bond increase. So
• 31:46
  Speaker 5: global bond rates, they track nominal activity. So this isn't
• 31:50
  Speaker 5: the bond market freaking out. This is the bond market recognizing.
• 31:53
  Speaker 7: That, hey, growth is higher in nominal terms.
• 31:56
  Speaker 2: But a huge body of people who aren't sophisticated go, OK,
• 31:59
  Speaker 2: it's roaring. It's a boom. nominal GDP is up. Do
• 32:03
  Speaker 2: you just presume, Jeff, that for the average guy out there,
• 32:07
  Speaker 2: with a retirement plan, the punch bowl ends, the party ends,
• 32:11
  Speaker 2: and nominal GDP comes down and we are harmed in
• 32:15
  Speaker 2: our personal finance?
• 32:17
  Speaker 5: Well, OK, so in a shock scenario where nominal GDP
• 32:22
  Speaker 5: comes down, it's coming down because there's disinflation.
• 32:25
  Speaker 7: It's coming down because real growth is going on. That's
• 32:27
  Speaker 7: a recession scenario.
• 32:29
  Speaker 2: OK, but away from that.
• 32:30
  Speaker 5: Away from that, if it comes down to a lower level,
• 32:33
  Speaker 5: depends on whether that's real or inflation. Right now, the
• 32:36
  Speaker 5: hope is.
• 32:36
  Speaker 2: What's your bet on that?
• 32:38
  Speaker 5: It'll start with inflation. That's the expectation. If and when
• 32:42
  Speaker 5: we stop the geopolitical... transference into inflation from oil prices.
• 32:48
  Speaker 5: If we can get through that, we can see inflation
• 32:50
  Speaker 5: come back down. 2.5%, 2.6% from 3.3%, 3.2%. That will
• 32:56
  Speaker 5: bring nominal GDP down, and that will help to take
• 32:59
  Speaker 5: the edge off of what we've.
• 33:00
  Speaker 2: Seen in the industry. You're too young. You're too young.
• 33:02
  Speaker 2: I remember the raging debate over actuarial assumption. My first
• 33:06
  Speaker 2: question of Bloomberg was to Rick Wagoner at Generous Motors
• 33:10
  Speaker 2: about the shift in their pension obligations. Are we so
• 33:14
  Speaker 2: out of whack, Jeffrey Rosenberg, that we're going to have
• 33:16
  Speaker 2: to change our so-called actuarial assumption to a higher regime
• 33:21
  Speaker 2: and that upsets our retirement and upsets our wealth management?
• 33:26
  Speaker 3: No.
• 33:26
  Speaker 5: I mean, those adjustments are happening in real time. They
• 33:30
  Speaker 5: happen as the rates go higher. And it's asset liability matching.
• 33:34
  Speaker 5: So two things are happening. One, the liability actually goes
• 33:36
  Speaker 5: down when that happens because you're discounting those future payments
• 33:39
  Speaker 5: by a higher interest rate. And two, you're more able
• 33:42
  Speaker 5: to defease, that is, kind of immunize that liability at
• 33:46
  Speaker 5: a higher interest rate environment. The problem on the pension
• 33:49
  Speaker 5: side isn't the 5% interest rates. The problem was the 0%
• 33:52
  Speaker 5: interest rate. That was the problem when we were looking
• 33:55
  Speaker 5: at pension deficits because you were blowing out the liability.
• 33:59
  Speaker 7: And you didn't have.
• 34:01
  Speaker 5: Income oriented fixed income instruments that could help you to
• 34:04
  Speaker 5: offset that liability. So it's actually a much better environment
• 34:07
  Speaker 5: from that asset line.
• 34:08
  Speaker 2: This is where Jenny says and others and John writing
• 34:11
  Speaker 2: and bring capitals. It's the same thing We should celebrate
• 34:14
  Speaker 2: that we're back to a normal yield within.
• 34:17
  Speaker 1: Our wealth management Because post-GFC, it was so abnormal for
• 34:19
  Speaker 1: so long. But people think in the short term and
• 34:21
  Speaker 1: people think based on what they know. We know that
• 34:24
  Speaker 1: this White House is not like higher borrowing costs. Scott Besson,
• 34:27
  Speaker 1: the Treasury Secretary, has tried to do a number of things.
• 34:30
  Speaker 1: What's left at his disposal? I mean, if he were
• 34:33
  Speaker 1: to intervene in some way, does government intervention work to
• 34:36
  Speaker 1: lower bond yields?
• 34:37
  Speaker 7: Not without a real change in the fundamentals. You can
• 34:41
  Speaker 7: do some things.
• 34:42
  Speaker 5: There are some bigger things that can be done, but
• 34:44
  Speaker 5: it requires the Federal Reserve's balance sheet.
• 34:46
  Speaker 7: We've seen that, right?
• 34:47
  Speaker 5: We've seen the impact of quantitative easing. And you can
• 34:52
  Speaker 5: implement very powerful policies. We've seen those policies happen in
• 34:56
  Speaker 5: our past. where the government decides it wants a certain
• 35:00
  Speaker 5: kind of interest rate. That was the financial repression era.
• 35:02
  Speaker 5: No one is really expecting that kind of thing. But
• 35:05
  Speaker 5: you ask the question, what could be done? But that
• 35:07
  Speaker 5: doesn't necessarily mean you can solve the ultimate problem of
• 35:11
  Speaker 5: how much debt deficits that you have. How you can
• 35:14
  Speaker 5: do that over the long run is by raising nominal
• 35:16
  Speaker 5: GDP relative to your borrowing rate and relative to your.
• 35:21
  Speaker 7: Change in your rate of borrowing, which is your deficits.
• 35:24
  Speaker 5: Those take real fiscal changes that we haven't really seen
• 35:29
  Speaker 5: the political ability to implement. And so we're going to
• 35:32
  Speaker 5: have to price the anticipation that there's going to be
• 35:35
  Speaker 5: a permanently higher level of debt and deficits that's going
• 35:39
  Speaker 5: to increase the term premium and the cost of financing.
• 35:41
  Speaker 2: My takeaway from this is buy the three-year CD.
• 35:44
  Speaker 6: Yeah.
• 35:45
  Speaker 1: Buy the five-year note. Get your five-year note.
• 35:47
  Speaker 2: That used to be the old answer.
• 35:49
  Speaker 1: Jeff Rosenberg. Thank you so much. Jeff Rosenberg of BlackRock.
• 35:52
  Speaker 1: Coming up on Bloomberg Money, we've got Barry Ritholtz, chairman
• 35:55
  Speaker 1: and CIO of Ritholtz Wealth Management, talking about how Americans
• 35:59
  Speaker 1: are generating their wealth right now. This is Bloomberg Money.
• 36:05
  Speaker 2: Jeffrey, thank you.
• 36:05
  Speaker 10: Great, guys.
• 36:06
  Speaker 1: Thank you. That was really helpful.
• 36:08
  Speaker 2: Hope so. You're listening to Bloomberg Money. Stay with us
• 36:12
  Speaker 2: with more to come after this. Yes, the fish are alive.
• 36:24
  Speaker 2: Somebody emailed me and said, was it a prop and
• 36:26
  Speaker 2: fake fish?
• 36:27
  Speaker 1: No, no, they're real.
• 36:28
  Speaker 2: They're real.
• 36:29
  Speaker 1: There used to be baby sharks in there, too.
• 36:31
  Speaker 2: Yeah, the famous Aquaria of Michael Bloomberg.
• 36:34
  Speaker 1: Aquaria, because that's plural.
• 36:37
  Speaker 2: This is a joy. I need you to focus. There's
• 36:39
  Speaker 2: a guy named Ed Hyman who basically invented market economics
• 36:43
  Speaker 2: with a guy named Alan Greenspan. Ed Hyman is founder
• 36:46
  Speaker 2: of Evercore ISI, one of my heroes. Good morning, Ed.
• 36:49
  Speaker 2: And this is what he says. This is a unique book,
• 36:52
  Speaker 2: maybe the best I've ever read, and I've read a lot.
• 36:56
  Speaker 2: Nothing else needs to be said about Barry Ritholtz, chairman, CIO, entrepreneur,
• 37:02
  Speaker 2: Ritholtz Wealth Management. He has a number of properties, including
• 37:06
  Speaker 2: master's in business on Bloomberg Radio. But he has a
• 37:09
  Speaker 2: spectacular book. I'm not going to bore you with why
• 37:13
  Speaker 2: it's so good. All you need to know. It tells
• 37:15
  Speaker 2: you what not to do. What's the next step for
• 37:19
  Speaker 2: the book? You came out with a beach reading this summer.
• 37:22
  Speaker 2: This book has an oomph to it right now. What's
• 37:25
  Speaker 2: the next thing?
• 37:26
  Speaker 6: We'll do something fun with video, finding clever ways to
• 37:29
  Speaker 6: illustrate some of the charts and tables and making them.
• 37:34
  Speaker 7: More interesting, more accessible.
• 37:36
  Speaker 2: Let's look at it right now. I want to bring
• 37:37
  Speaker 2: this in. This is Ritholtz, just classic Ritholtz here and
• 37:40
  Speaker 2: how not to invest. Tiny errors, epic fails, and everything
• 37:45
  Speaker 2: in between. How to avoid the avoidable errors investors are
• 37:50
  Speaker 2: making in 2026 in September. What are we doing wrong
• 37:54
  Speaker 2: right now? What do we need to avoid?
• 37:56
  Speaker 6: So I think people, and it really depends on who
• 37:59
  Speaker 6: you are, where you sit, what your portfolio is like,
• 38:01
  Speaker 6: where you are. People are looking at the bond market
• 38:05
  Speaker 6: and drawing all sorts of interesting extrapolations. There's a little
• 38:10
  Speaker 6: bit of panic, not a whole lot. Oh, my God,
• 38:13
  Speaker 6: what does this mean?
• 38:14
  Speaker 3: Is this the war? Is this the tariffs?
• 38:16
  Speaker 7: Is this inflation?
• 38:17
  Speaker 2: What's going on?
• 38:19
  Speaker 6: Some of that certainly is a factor. But when I
• 38:21
  Speaker 6: look at this market and I look at the history
• 38:23
  Speaker 6: of interest rates going back 50, 60 years, this seems
• 38:28
  Speaker 6: to be, after 25 years of ZERP and QE and
• 38:33
  Speaker 6: zero interest rate, seems like we're kind of normalizing.
• 38:36
  Speaker 2: You go back to the 80s and 90s, people.
• 38:40
  Speaker 6: Recognize that a 7% mortgage was fairly typical. Your prior guest,
• 38:46
  Speaker 6: Jeff Rosenberg, implied we really didn't know how good we
• 38:50
  Speaker 6: had it when rates were zero, mortgages were 3%, and
• 38:53
  Speaker 6: it was free to borrow. And so this means that
• 38:57
  Speaker 6: era is coming to an end and we're shifting our
• 39:01
  Speaker 6: from monetary stimulus to fiscal stimulus.
• 39:05
  Speaker 2: Related to the book, don't.
• 39:07
  Speaker 6: Panic about this. Recognize it for what it is and
• 39:11
  Speaker 6: look at your portfolio and consider, do you need to
• 39:14
  Speaker 6: make a long-term shift in your equity exposure? If you're
• 39:18
  Speaker 6: looking for tax-free yield, consider munibonds. My New York State
• 39:24
  Speaker 6: munibond portfolio that I'm an investor in, 4.5% tax.
• 39:30
  Speaker 2: Yield.
• 39:30
  Speaker 6: That's the taxable equivalent of just about 8%. If I
• 39:34
  Speaker 6: would have told someone five years ago, hey, I could
• 39:37
  Speaker 6: get you AA-rated 8% yield.
• 39:43
  Speaker 2: Their heads would have exploded. It's been.
• 39:45
  Speaker 6: so long before bonds paid you to sit and wait.
• 39:50
  Speaker 3: Okay.
• 39:50
  Speaker 1: So maximizing your investments, maximizing your savings, that's certainly something
• 39:53
  Speaker 1: everyone wants to do. But before you can get there,
• 39:56
  Speaker 1: you have to have the money to be able to
• 39:57
  Speaker 1: invest in all of that. And you've been looking into
• 40:00
  Speaker 1: how Americans generate their wealth, how Americans create their wealth.
• 40:04
  Speaker 1: And the answer is not by working at a company
• 40:07
  Speaker 1: and getting a W-2. You can do well, but you
• 40:09
  Speaker 1: can't generate a lot of wealth.
• 40:11
  Speaker 2: Right.
• 40:12
  Speaker 6: The new book, The Everyday Millionaire, The Everywhere Millionaire, talks about,
• 40:18
  Speaker 6: and this is very much all exercise in confirmation bias,
• 40:23
  Speaker 6: talks about how we really misunderstand where wealth comes from
• 40:26
  Speaker 6: in America. We think, and the media focuses obsessively on
• 40:32
  Speaker 6: tech founders and CEOs, but the average wealthy person in America,
• 40:38
  Speaker 6: somewhere around the top 4 or 5%, Most of them
• 40:41
  Speaker 6: don't work for public companies. Most of them aren't tech founders.
• 40:45
  Speaker 6: They tend to be ordinary people running regular businesses that
• 40:51
  Speaker 6: they have ownership of, own, don't earn. And things like
• 40:56
  Speaker 6: dental practices, HVAC, auto dealers, things that you see in
• 41:01
  Speaker 6: your everyday life that you encounter that you probably don't
• 41:05
  Speaker 6: realize are putting these folks in the top 4%, which
• 41:10
  Speaker 6: is about $ 25 million net worth, or somewhere around the
• 41:14
  Speaker 6: top 10%, which is about $ 5 million liquid net worth.
• 41:20
  Speaker 2: I can do a Bloomberg Money Audible with Barry Ritholtz.
• 41:24
  Speaker 2: When the Knicks were in the tank... He was their
• 41:26
  Speaker 2: only loyal fan.
• 41:27
  Speaker 1: I think there's also someone named Spike Lee, too.
• 41:31
  Speaker 2: Spike Lee and Barry Ritholtz as well. I look at
• 41:34
  Speaker 2: a repeat in the NBA, and I'm thinking of Jalen
• 41:37
  Speaker 2: with his small business. Jalen Brunson is building out all
• 41:40
  Speaker 2: of this, you know, the athlete thing and all that.
• 41:44
  Speaker 2: How hard is it to repeat? I mean, they have
• 41:46
  Speaker 2: a target on their back, right?
• 41:49
  Speaker 6: Especially in the modern era where it seems that key
• 41:53
  Speaker 6: players move around a little more frequently than they did
• 41:56
  Speaker 6: back in the day.
• 41:56
  Speaker 7: That's number one.
• 41:58
  Speaker 6: Plus, after you win, everybody says, okay, what do we
• 42:01
  Speaker 6: have to do to get past last year's championship? Look
• 42:06
  Speaker 6: at how all the moves that were made when Golden
• 42:08
  Speaker 6: State Warriors were on their tear.
• 42:12
  Speaker 2: The same with the Lakers.
• 42:13
  Speaker 6: Everybody kind of rejiggers themselves.
• 42:16
  Speaker 2: Are you going to be there opening night? I'm not going.
• 42:17
  Speaker 6: To be there opening night, but I will be there
• 42:20
  Speaker 6: about eight seats away from Mike on the floor.
• 42:23
  Speaker 2: Yeah, but come on. He's on the long side.
• 42:25
  Speaker 6: I'm on the short side.
• 42:26
  Speaker 2: Well, OK, that's fine. You know, you didn't you didn't
• 42:29
  Speaker 2: save Mr. Bloomberg when the Nick crashed into him. Where
• 42:32
  Speaker 2: were you? I was watching at home.
• 42:35
  Speaker 6: I'm like, oh, he's going to feel that tomorrow.
• 42:38
  Speaker 2: Can I just I want to pause here, folks. There's
• 42:40
  Speaker 2: been 422 Bloomberg money wealth books over 40 years. There's
• 42:45
  Speaker 2: a thing called a type one construct and a type two.
• 42:48
  Speaker 2: All you need to know on a Friday afternoon is
• 42:51
  Speaker 2: Barry Ritholtz has the single best type two construct wealth
• 42:56
  Speaker 2: management book. that exists. You can't do this unless you
• 43:02
  Speaker 2: think about the word not. What to avoid, what not
• 43:07
  Speaker 2: to do in investment. It's a jewel. Throw it at
• 43:10
  Speaker 2: your bratty kids and say, shut up and read it.
• 43:13
  Speaker 2: Barry Ritholtz, we look for the movies, DiCaprio playing Ritholtz.
• 43:17
  Speaker 2: I don't think so. Barry Riddles, thank you so much.
• 43:20
  Speaker 2: Riddles Wealth Management here today. We've got much more coming up.
• 43:24
  Speaker 2: A really special site. I think, is Taylor going to appear?
• 43:28
  Speaker 3: Is it Tay-Tay?
• 43:29
  Speaker 2: I think it's like a Taylor Day, I think.
• 43:32
  Speaker 1: It may very well be. Well, Christina Ruffini is going
• 43:34
  Speaker 1: to join us next. We're going to talk a little
• 43:36
  Speaker 1: bit about it. We're going to look ahead to this
• 43:38
  Speaker 1: weekend because there is some new music and new music
• 43:42
  Speaker 1: videos from Ms. Swift, her first since getting married. This
• 43:46
  Speaker 1: is Bloomberg Money.
• 43:48
  Speaker 2: You're listening to Bloomberg Money. Stay with us with more
• 43:51
  Speaker 2: to come after this.
• 43:53
  Speaker 1: Bloomberg Money.
• 44:01
  Speaker 2: Bloomberg Money, Tom King and Scarlett Fu, an eventful day.
• 44:04
  Speaker 2: Thank you for being with us as we did some
• 44:06
  Speaker 2: international relations there. Thank you, David Gurra, as well. I mean,
• 44:10
  Speaker 2: it's Friday. We have to look forward to the weekend.
• 44:12
  Speaker 1: Absolutely. And so here to help us look forward to
• 44:15
  Speaker 1: the weekend is Christina Ruffini. She is Bloomberg This Weekend's host.
• 44:18
  Speaker 1: You guys air every Saturday and Sunday, 7 a.m. to
• 44:21
  Speaker 1: 10 a.m.
• 44:22
  Speaker 11: We are here. We're doing everything. We're doing a recap
• 44:24
  Speaker 11: of the U.N.
• 44:24
  Speaker 12: We're going to look forward towards these Middle East negotiations,
• 44:27
  Speaker 12: what's going on. We're going to talk to you about,
• 44:29
  Speaker 12: we have a fun story about how teeny, teeny, tiny
• 44:32
  Speaker 12: hotels are becoming really popular as people don't want to
• 44:34
  Speaker 12: deal with taking out the trash in their Airbnb, but
• 44:36
  Speaker 12: they want like some hotel services.
• 44:38
  Speaker 11: Without being in a behemoth resort. These like micro hotels
• 44:41
  Speaker 11: are peaking in popularity.
• 44:42
  Speaker 1: That was the thing in Japan with the capsule hotels.
• 44:44
  Speaker 11: So this is not small rooms. This is a small
• 44:46
  Speaker 11: number of rooms, like.
• 44:47
  Speaker 12: Three and four rooms at somebody's really fancy villa that
• 44:50
  Speaker 12: they're now letting out and having a super luxury experience.
• 44:53
  Speaker 12: But you also get to be there with some other people.
• 44:56
  Speaker 12: And again, people are moving away from Airbnbs because of
• 44:58
  Speaker 12: all the drama.
• 44:59
  Speaker 2: Everything seems to be managed now. including Taylor Swift's latest.
• 45:04
  Speaker 2: I mean, it's an incredibly managed exercise. You're an hour ago.
• 45:06
  Speaker 1: Well, anything she does has to be managed because whatever
• 45:09
  Speaker 1: she does has such a big impact.
• 45:10
  Speaker 2: I mean, you know, you used to drop a record
• 45:12
  Speaker 2: or drop this or drop that, and that's over.
• 45:15
  Speaker 1: Well, she's revealing a video at the MTV VMAs, the
• 45:19
  Speaker 1: Video Music Awards, but everyone just calls it VMAs. I
• 45:23
  Speaker 1: don't even know how you watch the VMAs these days.
• 45:26
  Speaker 12: I don't know, but I did see the video is
• 45:28
  Speaker 12: going to have Colin Farrell and Dakota Johnson in it. And,
• 45:31
  Speaker 12: you know, I'm kind of Taylor Swift agnostic, but I
• 45:34
  Speaker 12: do like Colin Farrell.
• 45:35
  Speaker 11: I would I would watch him read the phone.
• 45:37
  Speaker 1: That's the trailer, by the way. I will watch this video.
• 45:39
  Speaker 11: I will watch this video.
• 45:39
  Speaker 1: This looks like a movie.
• 45:41
  Speaker 2: Patient Zero is the new song.
• 45:43
  Speaker 1: Patient Zero is the new song. You have you have
• 45:45
  Speaker 1: Taylor Swift fans in your household.
• 45:46
  Speaker 2: I sat up on her food court. I listened to
• 45:48
  Speaker 2: it at full volume on my fancy iPhone.
• 45:50
  Speaker 11: What did you think?
• 45:53
  Speaker 2: I really like it. I think that what she did
• 45:55
  Speaker 2: during COVID was absolutely brilliant. And, you know, she's grounded
• 45:59
  Speaker 2: out and done it. I'm just waiting for wedding photographs.
• 46:01
  Speaker 2: I mean, you're the celebrity lodestone here.
• 46:03
  Speaker 1: You know, what we did get was photographs of people
• 46:06
  Speaker 1: attending the wedding and what they wore. We didn't get
• 46:08
  Speaker 1: any photographs released from her wedding itself. Have you seen any?
• 46:12
  Speaker 12: No, and I don't, again, I don't care about the wedding,
• 46:14
  Speaker 12: but I would like to see the fashion. I would
• 46:15
  Speaker 12: like to see the dress.
• 46:17
  Speaker 11: I admire that they've managed to keep that Locked down.
• 46:21
  Speaker 1: I'm sure many NDAs were signed.
• 46:23
  Speaker 11: When has that ever stopped anyone before?
• 46:24
  Speaker 2: Or you can bring it over into Bloomberg this weekend.
• 46:26
  Speaker 2: I mean, we can make, you know, it's Taylor extravaganza
• 46:28
  Speaker 2: this weekend. That's all there is to it.
• 46:30
  Speaker 7: There it is.
• 46:30
  Speaker 11: I think David Gurra is like a low-key Swifty. I
• 46:33
  Speaker 11: know he has.
• 46:33
  Speaker 2: Swifty's in his house.
• 46:34
  Speaker 7: Gurra's useless.
• 46:35
  Speaker 2: David's useless on Taylor Swift. He's waiting for Taylor Swift bluegrass.
• 46:40
  Speaker 2: I mean, he got folklore.
• 46:42
  Speaker 11: Was that not close enough?
• 46:43
  Speaker 2: No, that was not close enough for David Gurra.
• 46:45
  Speaker 6: Okay.
• 46:46
  Speaker 2: Christina, thank you. Thank you both.
• 46:48
  Speaker 1: Christina Ruffini, of course, be sure to catch Bloomberg this weekend,
• 46:51
  Speaker 1: every Saturday and Sunday morning, starting at 7 a.m. Eastern time.
• 46:55
  Speaker 1: So the VMAs are happening this weekend. Saturday Night Live
• 46:58
  Speaker 1: also begins its new season this weekend. Jalen Brunson is hosting.
• 47:01
  Speaker 2: Jalen's hosting at home. I wear Destination television. I've got
• 47:04
  Speaker 2: to straighten my bow tie after an hour of Bloomberg money.
• 47:08
  Speaker 2: Thank you to our team for all of the effort.
• 47:17
  Speaker 2: This is the Bloomberg Money Podcast, bringing you a smart
• 47:20
  Speaker 2: look at the forces shaping your financial life. I'm Tom
• 47:24
  Speaker 2: Keen with Scarlett Fu. You can watch the show live
• 47:28
  Speaker 2: on Bloomberg TV every Friday at noon Wall Street time.
• 47:32
  Speaker 2: Subscribe to the podcast on Apple, Spotify, or wherever you listen.
• 47:36
  Speaker 2: And as always, on the Bloomberg Terminal and the Bloomberg
• 47:40
  Speaker 2: Business app.