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Musk’s X in Talks to Raise Money at a $44 Billion Valuation · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 2: All right, Matt mill is sitting in for Alex Steel
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  Speaker 2: on Paul Sweeney Live here in our Bloomberg Interactive Brokers Studio,
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  Speaker 2: streaming live on YouTube, as well as at Hedeverdy YouTube
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  Speaker 2: dot com search Bloomberg podcast Live. What are the interesting
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  Speaker 2: stories coming out of Elon Muk's And there are many
• 0:35
  Speaker 2: stories every single day coming from Elon Musk, so much
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  Speaker 2: and so that Bloomberg has a podcast dedicated to Elon Musk. Anyway,
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  Speaker 2: the latest is he's looking to, you know, do some
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  Speaker 2: more race and more money at X an evaluation of
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  Speaker 2: forty four billion dollars.
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  Speaker 3: It seems like I've heard that number of bit.
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  Speaker 4: That's how much he paid for the first place. He
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  Speaker 4: really hopes to get it back there. But our story
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  Speaker 4: notes that Fidelity Mare worked down its investment in X
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  Speaker 4: by seventy percent in December.
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  Speaker 3: Yep, exactly right, So what's changed since then? I don't know.
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  Speaker 4: Let's ask President of the United States of America exactly right.
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  Speaker 2: Max Chapkin joins us Bloomberg Business Week senior reporter and
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  Speaker 2: co host of the Elon Inc.
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  Speaker 3: Podcast. So, forty four billion dollars? What are people saying
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  Speaker 3: about that number?
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  Speaker 5: So, I mean, we've what we've seen is that all
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  Speaker 5: of Elon Musk's companies are essentially worth more today than
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  Speaker 5: they were before the election. And the reason, I mean,
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  Speaker 5: you're hinting at it jokingly, but Elon Musk happens to
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  Speaker 5: have a pretty good relationship with the most powerful or
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  Speaker 5: one of the most powerful politicians in the world, Donald Trump,
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  Speaker 5: you know, serving as a you know, senior aide to
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  Speaker 5: the Trump administration in the White House, also effectively running
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  Speaker 5: this effort known as the Department of Government Efficiency. You know,
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  Speaker 5: right after the election, we saw the Tesla's share price
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  Speaker 5: go way up. SpaceX is said to be raising money
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  Speaker 5: at a big valuation increase, and XAI also raising money.
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  Speaker 5: So it's sort of figure, you sort of figure that
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  Speaker 5: x would at least try to explore this as a
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  Speaker 5: possibility just because again they raise a lot of outside money.
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  Speaker 5: We don't know, I don't believe anyway that what this
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  Speaker 5: money would be for, whether it would be to buy
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  Speaker 5: out some existing shareholders you know he took he did
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  Speaker 5: not pay for this the entire forty four billion himself,
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  Speaker 5: or perhaps you know, they're trying to raise capital, although
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  Speaker 5: my intuition would be at least some of this would
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  Speaker 5: probably go to some existing shareholders.
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  Speaker 4: I mean, it makes sense to me that he gets
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  Speaker 4: a higher evaluation now I understand that because well, I mean,
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  Speaker 4: Tesla is worth what half a trillion dollars or something,
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  Speaker 4: and that's obviously not on the fundamentals of the car business. Sorry,
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  Speaker 4: it's worth one point one trillion dollars right now.
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  Speaker 3: So investors are going to want this to get a
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  Speaker 3: piece of x Ai.
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  Speaker 4: For example, right Twitter owns I think a big stay
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  Speaker 4: in Xai, or maybe some kind of robotics that he's
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  Speaker 4: going to make, or I don't know.
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  Speaker 3: So some other business that he's in.
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  Speaker 5: So we so we know that some Twitter shareholders have
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  Speaker 5: or that there is some ownership stake in Xai that
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  Speaker 5: at least earlier shareholders are able to take advantage of.
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  Speaker 3: I'm not sure that these investors.
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  Speaker 5: I don't know if what, I don't know exactly what
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  Speaker 5: they're buying here or whether or how much of how
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  Speaker 5: much of Xai they would be getting. But you're right
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  Speaker 5: that Xai, which is Elon Musk's AI thing, is this
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  Speaker 5: fast growing chatbot competitor to chat gbt.
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  Speaker 3: Uh.
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  Speaker 5: You know, obviously a lot of people think there's upside there,
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  Speaker 5: and it's using Twitter's data, and Twitter one way or
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  Speaker 5: another is going to and Twitter shareholders, one way or
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  Speaker 5: another are going to get compensated for that, whether that's
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  Speaker 5: coming in revenue or ownership stake one way or another. Xai,
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  Speaker 5: this other venture is going to pay for that, and
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  Speaker 5: that's helping to drive the value. The other thing that's
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  Speaker 5: helping to drive the value is just the fact that
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  Speaker 5: Twitter x feels more.
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  Speaker 3: Vital than it did, say a year ago.
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  Speaker 5: And that I think, like some of what investors, if
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  Speaker 5: they're buying at forty four billion or higher, are reacting to,
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  Speaker 5: is the prospect that Trump could perhaps make policies that
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  Speaker 5: would somehow be helpful to x the company. But they're
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  Speaker 5: also just reacting to the fact that, like this is
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  Speaker 5: basically the center of conservative media right now. This is
• 4:23
  Speaker 5: kind of where anyone on the right, especially anyone on
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  Speaker 5: the kind of Trump aligned right, is making news, is
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  Speaker 5: releasing stuff. It's where a lot of the big media
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  Speaker 5: figures are spending a lot of their time. It's basically
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  Speaker 5: like what Twitter was for everyone, you know, maybe maybe
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  Speaker 5: like ten years ago, and in certain ways Twitter had
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  Speaker 5: kind of lost that and Elon Musk has brought that back,
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  Speaker 5: at least in this one corner of the political world,
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  Speaker 5: which happens to be the corner affiliated with the president.
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  Speaker 4: By the way, say a side question on that note,
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  Speaker 4: do all journalists, even the bleeding heart liberals, which is
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  Speaker 4: to say all journalists still use Twitter?
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  Speaker 5: You know, Twitter has i'd say, proven very sticky, even
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  Speaker 5: for people on on the left. You see people a
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  Speaker 5: lot of people have gone over to Blue Sky, a
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  Speaker 5: lot of liberals have gone over to Blue Sky, or
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  Speaker 5: threads are still posting on Twitter that said they. Twitter
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  Speaker 5: has definitely lost a bunch of celebrities. I think you're
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  Speaker 5: seeing media outlets, even companies maybe not participating quite as
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  Speaker 5: much on Twitter now. I don't think that has everything
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  Speaker 5: to do with politics. A lot of that was happening
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  Speaker 5: like before the acquisition. Basically, social media in general is
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  Speaker 5: no law, is not proving to be as big a
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  Speaker 5: traffic driver companies are just not wanting to invest in
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  Speaker 5: it as much, and that was one of the reasons.
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  Speaker 5: Remember back two years ago when Elon Musk bought the company,
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  Speaker 5: he agreed to this price forty four billion, and then
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  Speaker 5: he tried to get out of it. The price kind
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  Speaker 5: of fell, and there was this broader sense that all
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  Speaker 5: of these social media companies were just not as valuable
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  Speaker 5: as as they had been, say in the kind of
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  Speaker 5: immediate aftermath of pandemic, when all of us just you know,
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  Speaker 5: had a lot more.
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  Speaker 3: Time on our hands, perhaps to scroll so like.
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  Speaker 5: So some of those trends have nothing to do with politics,
• 6:05
  Speaker 5: but of course politics has everything to do with.
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  Speaker 2: This interesting all right, we'll keep on top of that.
• 6:10
  Speaker 2: Max Chafkin Bloomberg BusinessWeek's senior reporter and he's co host
• 6:13
  Speaker 2: of the Elon Inc.
• 6:15
  Speaker 3: Podcast.
• 6:17
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
• 6:25
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• 6:28
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 6:31
  Speaker 2: The news out of our friends from Cooper Tino. Apple
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  Speaker 2: says that it will have a more affordable iPhone sixteen
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  Speaker 2: E available February twenty eighth.
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  Speaker 6: This could be.
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  Speaker 2: Important for us in the s E the SSE sixteen
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  Speaker 2: s E sixteen SC, thank you sixteen SC. I'm thinking
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  Speaker 2: of markets like you know, some developing markets because they
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  Speaker 2: needed a lower price iPhone well.
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  Speaker 4: Or even here for people who don't need to do
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  Speaker 4: much more than.
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  Speaker 3: Text and call.
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  Speaker 4: Who's that I mean looking at me? Well, I mean
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  Speaker 4: you and me? Right, what are we doing besides scrolling?
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  Speaker 4: You know, you've got your doom scrolling on your TikTok
• 7:06
  Speaker 4: or whatever you're doing over there, and then you're texting
• 7:09
  Speaker 4: and making calls. I'm not doing graphic design with my phone.
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  Speaker 3: All right, I'll tell anaag Rana.
• 7:15
  Speaker 2: He covers all that technology space for Bloomberg Intelligence, He
• 7:18
  Speaker 2: joins us.
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  Speaker 3: Here our talk just about Apple here? What is this
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  Speaker 3: new product? What are they trying to target here?
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  Speaker 6: Yeah, it's actually given a bigger screen size for a
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  Speaker 6: smaller price. So they've taken the S out of the
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  Speaker 6: SE and call it the iPhone sixteen EH, which is
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  Speaker 6: essentially the big Zoom, big screen, Foster chip, Apple Intelligence,
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  Speaker 6: much bigger battery life for two hundred dollars less. I
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  Speaker 6: think that's really The punchline from my side is that
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  Speaker 6: it's two hundred dollars lower than the base model of
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  Speaker 6: iPhone sixteen, which actually should help them compete better in
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  Speaker 6: China where they're struggling.
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  Speaker 4: So what won't this phone be able to do? I mean,
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  Speaker 4: all gets it. Is he going to feel like he's
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  Speaker 4: not able to achieve as much in his daily life
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  Speaker 4: as he would if he got the pro model or
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  Speaker 4: will he just not notice.
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  Speaker 6: A pro model will have a much more phenomenal camera.
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  Speaker 6: So if you're really into photography, you're not going to
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  Speaker 6: go for this model. You're going to go for the
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  Speaker 6: pro model. But if you really want to get into
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  Speaker 6: the Apple ecosystem and be part of the Apple family,
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  Speaker 6: which I think a lot of people in emerging markets
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  Speaker 6: want to be, but the higher price point stops them
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  Speaker 6: from getting there, this is a nice way to get there.
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  Speaker 6: The other thing is the upgrades from eleven to twelve.
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  Speaker 6: They actually put down a little tab on their release
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  Speaker 6: which shows the battery life of this phone substantially better
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  Speaker 6: than the eleven and the twelve and the se So
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  Speaker 6: for all of those people who actually been hanging around
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  Speaker 6: with their twelve and elevens, and this is a good
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  Speaker 6: way to upgrade without paying a lot more.
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  Speaker 2: I got the sixteen Pro, I upgraded from the eleven
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  Speaker 2: and it is the battery life is awesome, so much less.
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  Speaker 3: Stress in your life.
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  Speaker 2: You don't have to worry about the battery and carrying around.
• 9:02
  Speaker 3: A charger and those pictures that you're taking, Paul all phenomenal.
• 9:05
  Speaker 2: Yeah, here's my picture taking rule. If there isn't a
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  Speaker 2: person in the picture, I'm not taking it. Yeah, you know,
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  Speaker 2: like I was skiing, not one picture of me of
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  Speaker 2: the like the mount Dude.
• 9:14
  Speaker 4: I just went uh scuba diving for two weeks in Indonesia,
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  Speaker 4: and for the first time I said, you know what,
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  Speaker 4: screw it.
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  Speaker 3: I'm not taking any pictures at the moment. I'm not
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  Speaker 3: bringing a go pro.
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  Speaker 4: I'm just gonna look yes stuff and see it with
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  Speaker 4: my eyes on rag.
• 9:27
  Speaker 2: It's just going to be enough for Apple because I
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  Speaker 2: think about with some of the challenges in China, boy,
• 9:31
  Speaker 2: they have to really look even maybe more intently at India.
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  Speaker 2: And if you're gonna be a player in India, I
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  Speaker 2: kind of feel like you need even a lower.
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  Speaker 3: Price price phone. What is their India strategy now?
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  Speaker 6: Oh, I think you know one of the things that
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  Speaker 6: has happened over the last seventy eight years is inflation
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  Speaker 6: is really kicked in and these phones that started with
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  Speaker 6: five hundred and six hundred and now priced at eleven
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  Speaker 6: hundred eleven hundred. So I mean there is a bunch
• 9:55
  Speaker 6: of you could say, esp going up for these phones.
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  Speaker 6: This is Apples way of saying, Okay, I cannot dent
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  Speaker 6: these markets which just features alone, let me bring a
• 10:02
  Speaker 6: little bit of you know, price flavor in it. The
• 10:05
  Speaker 6: thing that's impressive in this case is they've actually increased
• 10:07
  Speaker 6: the size of the screen along with high battery life.
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  Speaker 6: For some people, that's enough. Frankly, I think when you
• 10:13
  Speaker 6: are targeting the Indian market and the Chinese market, you're right,
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  Speaker 6: it's probably you know, one hundred dollars less would have
• 10:19
  Speaker 6: been better. But remember a lot of those people start
• 10:22
  Speaker 6: with a refurbished phone from Apple and then they want
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  Speaker 6: to move up. This is I think a nice bridge
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  Speaker 6: between those things and the pro models, and I think
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  Speaker 6: it'll work both in India and China.
• 10:33
  Speaker 4: Also, you know, I've been having long, drawn out deep
• 10:39
  Speaker 4: conversations with chat GPT in my car. No, you're all in, yeah, well,
• 10:44
  Speaker 4: it has a voice you know function now, So you've
• 10:47
  Speaker 4: got a friend now exactly. I asked questions, you know,
• 10:51
  Speaker 4: usually about cars, and we go through a lot of
• 10:54
  Speaker 4: stuff together, and it's fascinating and helpful to me. But
• 10:59
  Speaker 4: one thing it can't do is work in my iOS.
• 11:04
  Speaker 4: It can't make appointments for me, send an email, send
• 11:07
  Speaker 4: a message, that sort of thing. Obviously Siri can do
• 11:10
  Speaker 4: some of that stuff, but isn't nearly as capable or intelligent.
• 11:15
  Speaker 3: I guess if that's word I can use as chat GPT.
• 11:18
  Speaker 4: When are they going to step up their game in
• 11:20
  Speaker 4: terms of Siri.
• 11:22
  Speaker 6: One of the things you have to remember, Mark, when
• 11:25
  Speaker 6: you come to Apple, they are extremely worried about privacy
• 11:27
  Speaker 6: and the data leaking. So I am fairly certain over
• 11:30
  Speaker 6: the next twelve months you will see them using more
• 11:33
  Speaker 6: large language models to do a lot of those things.
• 11:35
  Speaker 6: But they just have to go with their own pace
• 11:37
  Speaker 6: because one of the things they cannot do is dialute
• 11:40
  Speaker 6: their brand because of some error by some other third
• 11:43
  Speaker 6: party provider. And I mean it's just a matter of
• 11:46
  Speaker 6: something coming a little bit later, you know, I'm to
• 11:50
  Speaker 6: be honest, not that concerned. My biggest thing is whether
• 11:53
  Speaker 6: this thing can push towards that unit shipment problems that
• 11:56
  Speaker 6: Apple's been facing for the past three years.
• 11:59
  Speaker 2: An Rock, thanks so much for running us on Rogron
• 12:00
  Speaker 2: of technology channels for Bloomberg Intelligence, joining us from that
• 12:03
  Speaker 2: burgeoning tech cub that is known as Chicago, Illinois.
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  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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• 12:22
  Speaker 2: Alex Steel is out today, Paul Sweeney with you live
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  Speaker 3: Where did they go?
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• 12:36
  Speaker 3: All works, all right.
• 12:37
  Speaker 2: We're hearing a lot of news coming out of Washington, DC,
• 12:39
  Speaker 2: out of the Doge Group, Elon Musk Group. They're looking
• 12:43
  Speaker 2: for efficiencies. One of the areas that they are finding
• 12:45
  Speaker 2: is I think there's too many people in the US government.
• 12:48
  Speaker 2: We've heard that for a long time, but they're making
• 12:49
  Speaker 2: some big moves laying people off, firing people.
• 12:53
  Speaker 3: Across the board.
• 12:53
  Speaker 2: We want to get a sense of kind of what
• 12:55
  Speaker 2: that means for the government workforce. Jessica Krugel, chief strategy
• 13:01
  Speaker 2: officer for Culture Partners, Jessica, I, I've seen the numbers.
• 13:05
  Speaker 3: We've all seen the numbers in the reporting, but I
• 13:07
  Speaker 3: haven't seen.
• 13:08
  Speaker 2: The stories of the people how it's affecting them, what's
• 13:11
  Speaker 2: happening to them. Because it's odd because it used to
• 13:14
  Speaker 2: be if you've worked for the government, maybe it'll make
• 13:16
  Speaker 2: a lot of money, but you certainly have job security.
• 13:18
  Speaker 3: That's not the case anymore.
• 13:19
  Speaker 7: No job security is gone. I mean that was the
• 13:21
  Speaker 7: choice that we made as young people. Do we want
• 13:23
  Speaker 7: to go into private industry and we'll make more money
• 13:25
  Speaker 7: but be more at risk, or do we want to
• 13:27
  Speaker 7: work for the government and have that job security. Because
• 13:30
  Speaker 7: that's gone now. The only option left for the American
• 13:33
  Speaker 7: people if they want job security is to upskill. They
• 13:36
  Speaker 7: have to be better, they have to become top performers
• 13:38
  Speaker 7: in order to claim that job security for themselves. So
• 13:42
  Speaker 7: it's really about taking accountability.
• 13:44
  Speaker 4: And it's sad.
• 13:44
  Speaker 7: It's sad for the people who are losing their jobs
• 13:47
  Speaker 7: because if those jobs were never needed and if they
• 13:49
  Speaker 7: are wasteful, as the right are saying, well, it wasn't
• 13:53
  Speaker 7: their fault that they had those jobs, obviously, but now
• 13:56
  Speaker 7: they have to pay the price.
• 13:57
  Speaker 2: So I mean, again, I don't think a lot of
• 14:00
  Speaker 2: people would argue that our government is not loaded, to
• 14:03
  Speaker 2: use a term, and whether that's just overall costs overhead,
• 14:06
  Speaker 2: whether it's people that there can't be a lot more
• 14:10
  Speaker 2: efficiencies probably coming out of government, both federal government local,
• 14:14
  Speaker 2: But the reality is a lot of times that means
• 14:16
  Speaker 2: people in jobs. So again, the message for these folks,
• 14:21
  Speaker 2: if they're to the extent they're being impacted out of
• 14:23
  Speaker 2: a job, is they need to up their gain, don't
• 14:25
  Speaker 2: they They.
• 14:26
  Speaker 7: Do need to up there that same well we've heard we've.
• 14:28
  Speaker 2: Heard that before when manufacturing jobs we're leaving this country
• 14:31
  Speaker 2: over the last thirty forty fifty years, that those workers
• 14:34
  Speaker 2: will need to find new skills for this new economy.
• 14:36
  Speaker 3: It's kind of a similar story.
• 14:37
  Speaker 7: It's a story as old as time. We have to
• 14:39
  Speaker 7: evolve as industry evolves. The issue here is I don't
• 14:44
  Speaker 7: think actually that a lot of Democrats are necessarily angry
• 14:47
  Speaker 7: with some of the decisions that are being made because
• 14:50
  Speaker 7: there probably is a lot of bloat. There probably is
• 14:52
  Speaker 7: an efficiency no one wants incompetence, No one wants that waste.
• 14:55
  Speaker 7: The issue is the haste with which this is happening.
• 14:59
  Speaker 7: I think there could be more thoughtfulness perhaps and how
• 15:02
  Speaker 7: quickly we move because these people are getting affected and
• 15:05
  Speaker 7: we're going to see that it's going to be a
• 15:07
  Speaker 7: big story with unemployment numbers as we see in the
• 15:10
  Speaker 7: next few job reports.
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  Speaker 3: I'm sure, yeah, exactly.
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  Speaker 2: Do we know what kind of severance plans they're getting
• 15:15
  Speaker 2: or anything like that. I haven't heard much about that either.
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  Speaker 7: No. Well, we saw that there was the fork option
• 15:21
  Speaker 7: that seventy five thousand workers took. That was about four
• 15:23
  Speaker 7: percent of the US government. Some of the people who
• 15:25
  Speaker 7: took that severance option then also got fired, and so
• 15:29
  Speaker 7: there's been some administrative issues with how all of this
• 15:32
  Speaker 7: is rolling out. Back to the haste issue, it's been
• 15:34
  Speaker 7: a little bit messy. You see people being laid off
• 15:36
  Speaker 7: and then being called back later that weekend when they realize,
• 15:39
  Speaker 7: for example, the laid off people who were working on
• 15:41
  Speaker 7: the bird flu they said no, wait, come back, the
• 15:44
  Speaker 7: nuclear story, for example. So there's lots of chaos and
• 15:47
  Speaker 7: this needs to be ironed out.
• 15:49
  Speaker 2: Are you surprised that it's that it's I guess, DOGE
• 15:54
  Speaker 2: being led by Elon Musk seems to be at the
• 15:56
  Speaker 2: forefront of making these decisions.
• 15:58
  Speaker 3: Is that is that working? Well? Do we know?
• 16:01
  Speaker 7: Seems to be right, But then I also saw that
• 16:03
  Speaker 7: now they're claiming that Elon Musk is not making these decisions,
• 16:07
  Speaker 7: and so really a lot of the confusion is in
• 16:10
  Speaker 7: the massive amount of communications and headlines that are happening
• 16:13
  Speaker 7: all at once. Everyone is trying.
• 16:14
  Speaker 1: To keep up.
• 16:15
  Speaker 2: I mean, I guess again, when you think about it,
• 16:17
  Speaker 2: whether it's in the government or in the corporate world,
• 16:20
  Speaker 2: everybody's got to kind of adapt to this changing environment.
• 16:24
  Speaker 2: Is that similar for the US government?
• 16:26
  Speaker 3: Do you think?
• 16:27
  Speaker 4: Well?
• 16:27
  Speaker 7: I think companies are going to be looking at how
• 16:31
  Speaker 7: these decisions within the federal government will affect them. With
• 16:33
  Speaker 7: the FAHA announcement, for example, mortgage companies will be impacted
• 16:37
  Speaker 7: if they're not able to get mortgage insurance for low
• 16:39
  Speaker 7: income mortgage families that are interested in their first time home,
• 16:42
  Speaker 7: then they're either going to increase their rates or they're
• 16:45
  Speaker 7: going to give out less mortgages. How does that impact
• 16:47
  Speaker 7: people in corporations? It will have a ripple effect this
• 16:51
  Speaker 7: economy is a holistic system, and so one change in
• 16:54
  Speaker 7: the federal government will ripple out.
• 16:57
  Speaker 2: So what's the expectation here going forward? Is it something
• 17:00
  Speaker 2: I mean, one could argue again if you think about
• 17:02
  Speaker 2: the US government, it feels like it's something that is
• 17:05
  Speaker 2: ripe for efficiency or greater efficiency.
• 17:08
  Speaker 3: This could be a long term process.
• 17:10
  Speaker 7: Oh yeah, this is going to take a long time.
• 17:12
  Speaker 7: I don't think we're going to really understand the impact
• 17:15
  Speaker 7: that this will have on our economy for six to
• 17:18
  Speaker 7: nine months. Right now, we are in the hardest part
• 17:22
  Speaker 7: of change management. We say it culture partners. Culture doesn't
• 17:26
  Speaker 7: go down without a fight, and so right now there's
• 17:28
  Speaker 7: massive resistance because it is different. Whether this different is
• 17:32
  Speaker 7: going to be better and more efficient and more economical,
• 17:36
  Speaker 7: we'll have to wait and see.
• 17:37
  Speaker 2: So what are the next steps for people that I
• 17:41
  Speaker 2: mean when you're in a government role, you know, that's
• 17:44
  Speaker 2: a whole different idea and in mindset to being in
• 17:48
  Speaker 2: the corporate world, the for profit world, how difficult do
• 17:52
  Speaker 2: you think it will be for these people to adapt
• 17:55
  Speaker 2: and maybe reskill or upskill or kind of look outside
• 17:58
  Speaker 2: of the government, which again was seen as almost employment
• 18:02
  Speaker 2: for life.
• 18:02
  Speaker 7: Yeah, it's interesting because you've seen a lot of headlines
• 18:04
  Speaker 7: recently about generations Z gravitating towards government work because they
• 18:08
  Speaker 7: want the stability that they felt they couldn't get with corporations.
• 18:13
  Speaker 7: That's now out the window, obviously, and so young people
• 18:15
  Speaker 7: they're gonna have to do what everyone has done in
• 18:18
  Speaker 7: the history of building their careers, which is upskill, upskill, upskill.
• 18:22
  Speaker 7: I want to learn everything about AI right now. I
• 18:24
  Speaker 7: want to understand how I can take control of my
• 18:28
  Speaker 7: career by making the choice to focus on what I
• 18:31
  Speaker 7: can control to drive results in whatever it is that
• 18:34
  Speaker 7: I do. And if I can differentiate myself as a
• 18:36
  Speaker 7: top performer, then I'm going to have job security because
• 18:39
  Speaker 7: I will be in need. Right the people who are
• 18:41
  Speaker 7: probably not the top performers are the people who are
• 18:44
  Speaker 7: getting laid off and then getting called back three days later.
• 18:46
  Speaker 7: If you go back to that environment, you've already created
• 18:49
  Speaker 7: a dynamic in which people know, I mean, you're desperate.
• 18:52
  Speaker 7: So that's not necessarily a good move for you either.
• 18:55
  Speaker 2: Do you think corporate America will take a look what
• 18:57
  Speaker 2: the government's doing and saying, hey, maybe we should can
• 18:59
  Speaker 2: do this too.
• 19:00
  Speaker 7: I think the government is looking at what corporate America
• 19:02
  Speaker 7: has already done. The nature of layoffs has changed significantly
• 19:05
  Speaker 7: in the last ten years. It used to be a
• 19:07
  Speaker 7: last ditch effort to try and save a dying company.
• 19:10
  Speaker 7: Now it's an efficiency tool.
• 19:11
  Speaker 2: Right.
• 19:12
  Speaker 7: We're in the post COVID profit grabbing era, and so
• 19:16
  Speaker 7: a company will put their best quarter in history and
• 19:18
  Speaker 7: then have layoffs right afterwards, and the stock market reacts
• 19:20
  Speaker 7: very positively. So the government is taking note from Corporate
• 19:23
  Speaker 7: America and saying we can do that too.
• 19:25
  Speaker 3: Thirty seconds left. I learned of a new term during
• 19:27
  Speaker 3: the pandemic labor hoarding. Is that a thing courting?
• 19:30
  Speaker 7: Is it trying to attract labor?
• 19:32
  Speaker 3: Just people companies are holding on the employees. I'm not coarding.
• 19:35
  Speaker 7: Yeah, Oh I don't think that's the thing right now,
• 19:40
  Speaker 7: not anymore. Yeah.
• 19:41
  Speaker 2: Interesting, So see how the times change here. Jessica Krigle,
• 19:44
  Speaker 2: thank you so much for joining us. Jessica Kriggle is
• 19:46
  Speaker 2: the chief strategy officer for Culture Partners, based out there
• 19:51
  Speaker 2: in a Sacramento area.
• 19:54
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 19:58
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• 20:01
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• 20:04
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• 20:08
  Speaker 2: All right, twenty twenty three the smp I don't know,
• 20:11
  Speaker 2: twenty two to twenty three percent return heck of a year.
• 20:14
  Speaker 2: Did it again in twenty twenty four with north of
• 20:17
  Speaker 2: twenty percent returns for the S and P five hundred
• 20:19
  Speaker 2: and neck.
• 20:19
  Speaker 3: What do you do this year? Already up about three
• 20:21
  Speaker 3: and a half four percent? But can we do it again?
• 20:24
  Speaker 2: Marion Bartel's joins as a chief investment strategist at Sanctuary Wealth,
• 20:28
  Speaker 2: joining us from New York via zoom. So, Marian, when
• 20:31
  Speaker 2: you talk to your clients, you know, kind of when
• 20:33
  Speaker 2: you're doing your year a head letter for twenty twenty five,
• 20:36
  Speaker 2: how did you kind of set expectations? What are the
• 20:38
  Speaker 2: conversations you're having with your clients?
• 20:41
  Speaker 8: Well are your head report said? All that's new is old?
• 20:45
  Speaker 8: In other words, innovation has been around for centuries, and
• 20:50
  Speaker 8: we're just in another major phase of innovation with artificial intelligence,
• 20:57
  Speaker 8: with blockchain, with the crypto space also known as web three,
• 21:02
  Speaker 8: virtual reality. But you know, AI is really going to
• 21:07
  Speaker 8: increase productivity. We're already seeing enhancements in productivity, and we
• 21:10
  Speaker 8: think that's going to continue, So what does that mean
• 21:13
  Speaker 8: for earnings? That means earnings can continue to grow. And
• 21:17
  Speaker 8: you know, we're just getting to the end of fourth
• 21:19
  Speaker 8: quarter earnings for last year coming in significantly higher than expectations,
• 21:25
  Speaker 8: and we're seeing margins expand. And what we tell clients,
• 21:28
  Speaker 8: markets go up and down based on earnings, and we
• 21:31
  Speaker 8: have earnings.
• 21:33
  Speaker 2: So we it seems like Marian that that's going to
• 21:36
  Speaker 2: be key for this market because I'm not sure what
• 21:38
  Speaker 2: the Fed's going to do for us this year. Maybe
• 21:40
  Speaker 2: one cut, maybe two, but it seems like this market,
• 21:43
  Speaker 2: if it's going to move higher, really needs earnings. So
• 21:47
  Speaker 2: how confident are you in that earnings growth story for
• 21:49
  Speaker 2: this market?
• 21:50
  Speaker 8: Well, given the innovation that we have, I'm extremely confident,
• 21:54
  Speaker 8: so confident that I set our target range this year
• 21:58
  Speaker 8: to seventy two hundred to seventy four one hundred on
• 22:01
  Speaker 8: the S and P five hundred, which is another twenty
• 22:03
  Speaker 8: percent return, which is very rare.
• 22:07
  Speaker 2: So it's so is that going to have some margins,
• 22:09
  Speaker 2: have some multiple expansion Because I know a lot of
• 22:11
  Speaker 2: people are concerned about the valuation of this market.
• 22:15
  Speaker 3: How do you think about that?
• 22:17
  Speaker 8: So they're correct if I've gone back to nineteen hundred
• 22:21
  Speaker 8: on PE ratios for the S and P five hundred,
• 22:25
  Speaker 8: and we're at the top of the range. There's no
• 22:28
  Speaker 8: doubt about that. But when I study secular ball markets,
• 22:34
  Speaker 8: and particularly nineteen eighty two through the peak of two thousand,
• 22:38
  Speaker 8: we expanded PE multiples. So if my thesis is correct
• 22:44
  Speaker 8: that this innovation is going to continue to drive markets
• 22:47
  Speaker 8: actually out into the end of the decade, I actually
• 22:50
  Speaker 8: expect the PE multiples to continue to expand. I don't
• 22:54
  Speaker 8: think we're going to get a significant contraction. I think
• 22:57
  Speaker 8: the next time we see the market at well people
• 23:01
  Speaker 8: may call a reasonable multiple will not be INTI we
• 23:05
  Speaker 8: enter a secular bear market, which I don't think happens
• 23:07
  Speaker 8: until the next decade.
• 23:09
  Speaker 3: How about just maybe are there any risk coming out
• 23:11
  Speaker 3: of Washington d C. I think if you think about
• 23:13
  Speaker 3: this new Trump.
• 23:14
  Speaker 2: Administration, a lot of folks are very positive from an
• 23:16
  Speaker 2: economic perspective, lower taxes, maybe less regulation that could loosen
• 23:21
  Speaker 2: the animal spirits a little bit. But on the other side,
• 23:23
  Speaker 2: you've got all this talk about tariffs and other economic
• 23:28
  Speaker 2: policies that could be present a headwind. How do you
• 23:31
  Speaker 2: think about Washington risk?
• 23:34
  Speaker 8: So the market has really dealt very well with Washington
• 23:38
  Speaker 8: so far, and of course we have comments from Trump
• 23:42
  Speaker 8: again on tariffs, and I think that is not in
• 23:45
  Speaker 8: the markets. Yesterday we actually hit a new record high.
• 23:48
  Speaker 8: I think if we didn't have that comment, we'd be
• 23:50
  Speaker 8: sitting here at another new high in the market. So
• 23:54
  Speaker 8: I think the market needs time to digest what these
• 23:57
  Speaker 8: tariffs really mean. And they're not a done deal, so
• 24:02
  Speaker 8: the market doesn't like on certainty, and what they want
• 24:04
  Speaker 8: to know are the facts, and once they know the facts,
• 24:07
  Speaker 8: they'll price it in and then the market can move
• 24:09
  Speaker 8: beyond it. So what that means is that Washington can
• 24:12
  Speaker 8: create noise, it can create a little bit of volatility
• 24:15
  Speaker 8: for the markets, but I don't believe it's going to
• 24:18
  Speaker 8: ruin the bull trend in the markets.
• 24:20
  Speaker 2: Marion, your clients can now actually get a yield in
• 24:23
  Speaker 2: the bond market, I mean the two year treasuries four
• 24:26
  Speaker 2: point three percent. How do you think about fixed income
• 24:30
  Speaker 2: allocations these days? Are you sticking with treasuries? Do you
• 24:33
  Speaker 2: take some credit risk? How do you think about the
• 24:35
  Speaker 2: fixed income side of the game.
• 24:37
  Speaker 8: So spreads in the fixed income market are very very narrow,
• 24:41
  Speaker 8: but we don't see a risk of a recession so
• 24:45
  Speaker 8: we don't think there's a ton of risk if you
• 24:48
  Speaker 8: can go into you know, corporates. We're not a fan
• 24:53
  Speaker 8: of treasuries. We wouldn't go long duration here either. So
• 24:58
  Speaker 8: we're being very, very sle lactive in where we're allocating
• 25:04
  Speaker 8: our fixed income portfolio with that set though a lot
• 25:09
  Speaker 8: of clients like sitting in that cash that was able
• 25:12
  Speaker 8: to get five percent and they're not moving it. So
• 25:16
  Speaker 8: we have almost seven trillion dollars in the money market fund,
• 25:20
  Speaker 8: and to be honest, I only see that going up.
• 25:22
  Speaker 8: I don't see you going down yet.
• 25:24
  Speaker 3: Marian, Thank you so much. We appreciate that.
• 25:26
  Speaker 2: Marion Bartel's chief investment strategists at Sanctuary Wealth got a
• 25:30
  Speaker 2: bullish call there again on S and P. Five hundred
• 25:32
  Speaker 2: twelve month twelve month out seventy two hundred to seventy
• 25:35
  Speaker 2: four hundred, one of the higher numbers that we've seen
• 25:37
  Speaker 2: out there on the street.
• 25:39
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• 26:04
  Speaker 3: YAHM