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Bloomberg Money: The Opportunity Cost of Cautious Investing · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, radio News, Bloomberg Money.
• 0:12
  Speaker 2: This is the Bloomberg Money Podcast. I'm Tom Keene with
• 0:15
  Speaker 2: Scarlet Foo. Join us each week for a smart look
• 0:19
  Speaker 2: at the forces shaping your financial life. On personal finance,
• 0:23
  Speaker 2: on retirement and wealth management. We will explore how people
• 0:27
  Speaker 2: are earning, investing, and building wealth. We are live Fridays
• 0:32
  Speaker 2: at noon Eastern on Bloomberg Television. Subscribe to the podcast
• 0:36
  Speaker 2: wherever you listen, and is always on the Bloomberg Terminal
• 0:40
  Speaker 2: and the Bloomberg Business app. What I want to talk
• 0:43
  Speaker 2: about is unspoken. Everything is down in a market. Apple
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  Speaker 2: like a rock on the edge of a five trillion
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  Speaker 2: dollar company. Is personal Finance by Apple twenty years ago and.
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  Speaker 1: Just hold it well for some people.
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  Speaker 3: But increasingly Americans are having a hard time saving for
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  Speaker 3: retirement because of rising living They're not putting money into
• 1:01
  Speaker 3: their retirement accounts because they have to pay for the
• 1:03
  Speaker 3: kiddie litter.
• 1:03
  Speaker 2: They got to pay for the kidy litter, they got
• 1:05
  Speaker 2: to pay for school. And that will talk about some
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  Speaker 2: of those themes today. I think what's fascinating here is
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  Speaker 2: Mark German with that story a few days ago on
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  Speaker 2: rebuilding the iPad and it's these buy and hold companies
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  Speaker 2: that's what makes.
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  Speaker 4: A winning retirement.
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  Speaker 1: That's what makes a real winning retirement.
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  Speaker 3: We're going to get into all of that and whether
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  Speaker 3: there's a room for bonds in that portfolio.
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  Speaker 4: Well, bonds is a big thing. We're going to do
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  Speaker 4: that here. We're going to do that in a bit. Here.
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  Speaker 2: We have a wonderful guest for you today, Noural Raubini.
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  Speaker 2: Not the normal Rabini you think you know, yes, senior
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  Speaker 2: economic strategist Hudson Bay Capital, but Nora Rabini when he
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  Speaker 2: was with Clinton, when he was trying to figure out
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  Speaker 2: the future of social security. We'll talk to Professor Rubini
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  Speaker 2: about his crisis that he's seen.
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  Speaker 3: Right the softer side of Norael Raubini. We've also got
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  Speaker 3: Amanda Line. I'm Chief Credit Strategies at Goldman Sacks. Fancy title,
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  Speaker 3: but we're going to keep our topic of conversation very basic.
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  Speaker 3: The failure of bonds to produce much in the way
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  Speaker 3: of total returns in the last five years.
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  Speaker 4: Back to be fair, it was like a five.
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  Speaker 3: But twenty twenty two, you know, is scarred in our brains.
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  Speaker 4: Let's scarred everyone.
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  Speaker 2: They had a great moderation for years and then up
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  Speaker 2: we went.
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  Speaker 4: Let's do this.
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  Speaker 2: Let's do a data check right now, and it's on
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  Speaker 2: the stock market and it's not so pretty apple as
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  Speaker 2: I said, like a rock is really holding on well,
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  Speaker 2: you wouldn't know it anywhere else.
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  Speaker 4: But it is better from when Scar.
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  Speaker 2: Came in the door today at nine fifty five am,
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  Speaker 2: nastack down one percent.
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  Speaker 4: It was down two percent or more in futures.
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  Speaker 2: We ought to a VICX of nineteen and we do
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  Speaker 2: better now to take much better in the last two hours.
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  Speaker 1: It certainly is all right.
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  Speaker 3: Let's take a look at what's going on in a
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  Speaker 3: cross asset. You have the tenure yield not doing much
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  Speaker 3: of anything, basically at four and a half percent. After
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  Speaker 3: this week's inflation prints showed that price pressures are easing.
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  Speaker 3: The dollar also not doing a whole lot. But the
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  Speaker 3: story for this year is a stronger dollar because the
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  Speaker 3: US economy remains resilient.
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  Speaker 1: But the big story is in oil. The bottom of.
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  Speaker 3: Oil prices coincided with the end of the first half,
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  Speaker 3: and since it started the second half, Brent, which you
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  Speaker 3: see there, has gone from the low seventies, was highs
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  Speaker 3: the mid eighties, a little bit.
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  Speaker 4: Of news flow as well, and what will be the.
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  Speaker 1: News was open. It's kind of an unanswerable question.
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  Speaker 2: It's a unanswerable question right now, I would say because
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  Speaker 2: insight Vanessa there, Okay, here's.
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  Speaker 4: The reality fault.
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  Speaker 2: Michael Ball, Eric Beltunas, the Foo and me. We're only
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  Speaker 2: here because Vanessa Perdomo has World Cup tickets to give us, right,
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  Speaker 2: I don't think so.
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  Speaker 5: I think that would be quite a price time for everyone.
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  Speaker 2: It's up to seven thousand dollars I saw in my life,
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  Speaker 2: and that was a few days ago. We've got a
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  Speaker 2: great set of people where there's Eric Beltunas holds a
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  Speaker 2: high ground on exchange traded funds for Vanessa Perdomo drives
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  Speaker 2: so much of our sports coverage as well. And Michael
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  Speaker 2: Ball is with us as well. He's always like nerdo
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  Speaker 2: fed stuff and we're going to talk to him some
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  Speaker 2: of the basic responsibilities maybe the new chairman has. Eric,
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  Speaker 2: thank you so much for joining today. You stopped traffic
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  Speaker 2: this week by saying our retirement system is now the
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  Speaker 2: stock market discuss.
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  Speaker 1: Yeah.
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  Speaker 6: Look, it was the Trump account innouncement which I had
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  Speaker 6: been following. But when you really dig into the numbers,
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  Speaker 6: you know, fifty eight percent of Americans own stocks.
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  Speaker 7: That is by far the most in the world.
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  Speaker 6: So we're kind of an experiment here most countries is
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  Speaker 6: only the rich people that own stocks. Trump accounts are
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  Speaker 6: going to bring in like another twenty percent, maybe even
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  Speaker 6: more depending on how many philanthropists get involved, And that
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  Speaker 6: would be a lot of people who don't even care
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  Speaker 6: or know about the stock market are now going to
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  Speaker 6: have a kind of a vested interest in how it does.
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  Speaker 6: So now you've got almost the entire voting public who
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  Speaker 6: is going to care what the stock market does. So
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  Speaker 6: if the Fed and the government have stepped in multiple
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  Speaker 6: times since two thousand and eight, with more people interested
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  Speaker 6: in it, you really can't let it go. You can't
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  Speaker 6: let it fail. It's kind of like a public utility,
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  Speaker 6: like the electro grid.
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  Speaker 2: Right, I'm in the triple leverage Netflix account. That's really
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  Speaker 2: working out today. Well, are we learning in the double
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  Speaker 2: leverage triple leverage comedy that it's speculation and that investment?
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  Speaker 4: Yeah?
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  Speaker 6: Absolutely, I think there's two a lot of games being
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  Speaker 6: played at the same time in the stock market. You know,
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  Speaker 6: there's plenty of money going into VU and Vanguard. I
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  Speaker 6: call them the vanguardians. Then there's the digens, you know,
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  Speaker 6: and they both buy the dip for different reasons, but
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  Speaker 6: they're both playing different games. What some are trading, some
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  Speaker 6: are going long term and ets. We see both both kinds.
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  Speaker 6: But I'll say that the big blob of money is
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  Speaker 6: generally pretty conservative. They're buying cheap beta both stocks, bonds,
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  Speaker 6: and maybe some commodities, and they're holding for the long term.
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  Speaker 7: And that's the It's just boring, you know.
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  Speaker 6: They don't get much media because it's like, Okay, I'm
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  Speaker 6: going to buy Voo today.
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  Speaker 7: What else can I say? It's the S and P
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  Speaker 7: five hundred.
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  Speaker 6: We're going to talk about these shiny objects over here,
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  Speaker 6: but most of the money is pretty vanilla.
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  Speaker 3: All right, let's talk about shiny objects, because two weeks
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  Speaker 3: ago SpaceX was a shiny object, but it's now trading
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  Speaker 3: below it's IPO price. Yeah, it's at about one twenty
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  Speaker 3: four and change. What does that signal, Michael Ball about
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  Speaker 3: speculative appetite right now? Because we know that there's gonna
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  Speaker 3: be a lot of volatility. How can you tell when
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  Speaker 3: we're just going through normal swings versus there's really a change,
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  Speaker 3: an inflection point in whether people chase rallies.
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  Speaker 4: Yeah. Two things.
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  Speaker 8: It came in very expensive valuation wise, and it also
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  Speaker 8: was sort of marketed as a neo cloud in the
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  Speaker 8: sky literally floating around the planet versus a rocket ship company.
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  Speaker 4: So it changed kind of flavor.
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  Speaker 8: And it's now fallen into this momentum Unwine and almost
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  Speaker 8: all things AI.
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  Speaker 3: There are some other big IPOs to look forward to,
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  Speaker 3: not just space X. We've got Anthropic Open AI at
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  Speaker 3: some point, and Alphabet and other big tech companies are
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  Speaker 3: busy selling stock. The setup seems to be there's going
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  Speaker 3: to be a lot of supply coming to market. Do
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  Speaker 3: you think, given the increased role that individual investors play
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  Speaker 3: in the market, that there's going to be enough demand
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  Speaker 3: to absorb all of this supply.
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  Speaker 8: Yeah, And that's been the real macro dynamic changes here
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  Speaker 8: that finally we're going to have more supply than demand.
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  Speaker 8: The buyback story is actually worsened as well. We know
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  Speaker 8: free cash flows come off from the hyperscollers and some
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  Speaker 8: of the mega techs, so that's even more questionable next year.
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  Speaker 8: But to your point, we keep getting new bytes of
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  Speaker 8: additional paper coming to fund not only capex in AI
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  Speaker 8: but even elsewhere with other IPOs coming more than expected
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  Speaker 8: as people are sort of rushing in, and with credit
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  Speaker 8: markets now looking a little more wildly, and some of
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  Speaker 8: the rejection there from the paper that we've reached only
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  Speaker 8: gotten it means ai paper may even come more for stocks.
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  Speaker 2: I mean, I mean Michael helped me or dovetail this
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  Speaker 2: in with that, Eric said, because Carol's got to get
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  Speaker 2: to Vanessa. She's more important than we are in this conversation.
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  Speaker 2: If German warsh levels or raises interest rates.
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  Speaker 4: What does it do to my four oh one k?
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  Speaker 8: Yeah, Look, equity financing is actually coming up into conversation
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  Speaker 8: again because this is a lot of balance sheet constraints
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  Speaker 8: on the banks who helped not only help the paper
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  Speaker 8: come to market through IPOs, but then actually lend to
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  Speaker 8: the you know, not only buyside but other areas of
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  Speaker 8: the market to borrow and basically buy stocks, and that
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  Speaker 8: is coming under more pressure.
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  Speaker 2: Are we asleep about any instabilities to come up here?
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  Speaker 2: I mean in personal finance, retirement, wealth management?
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  Speaker 4: Are we all in sleep right now?
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  Speaker 8: So right now, as the macro picture stands, with growth
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  Speaker 8: and inflation where it is, I think we can expect
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  Speaker 8: maybe a reversal of the palle cuts and maybe a
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  Speaker 8: subsequent maybe seventy five basis points of hikes just to
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  Speaker 8: reset the levels and basically get markets. You know, even
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  Speaker 8: but you know, I don't see a large hiking cycle
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  Speaker 8: coming in. Worsh is certainly not signaling that, So I
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  Speaker 8: don't you need to be surprised by any sort of
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  Speaker 8: tail risk. What you should expect is that financial conditions
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  Speaker 8: will be not easy.
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  Speaker 4: Further, do you have a clue what he just said?
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  Speaker 1: There a part of it, some of it. Well, let's
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  Speaker 1: bring that back.
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  Speaker 3: To the World Cup and how we spend our money
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  Speaker 3: on a daily basis, because the buoyant stock market of
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  Speaker 3: the last couple of years is one big reason why
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  Speaker 3: you're seeing so much froth built into the World Cup.
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  Speaker 3: I mean, Vanessa, you've been going to the matches, not
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  Speaker 3: just necessarily in New York, New Jersey, but around the country,
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  Speaker 3: and there's all these luxury suites built in. There's these
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  Speaker 3: like fast ways for the uber wealthy to get to
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  Speaker 3: these games where they don't have to wait in line
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  Speaker 3: and put up with all the inconveniences that people who
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  Speaker 3: pony up thousands of dollars do.
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  Speaker 5: It's interesting because no matter who you are right now,
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  Speaker 5: if you're going to the World Cup Final, you are
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  Speaker 5: probably in an upper echelon level of having money. I mean,
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  Speaker 5: getting into the World Cup Final is seven thousand dollars
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  Speaker 5: just to get in. The average price and depending on
• 8:51
  Speaker 5: what you know secondary ticket marketing you look at it's
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  Speaker 5: eleven to twelve thousand dollars.
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  Speaker 1: So but these ultra rich who are going to the
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  Speaker 1: game and.
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  Speaker 5: They're spending tens of thousands of dollars on helicopter rides,
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  Speaker 5: they still have to find their way around the stadium.
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  Speaker 5: They still have to deal with a little bit of
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  Speaker 5: traffic as well.
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  Speaker 3: Okay, so a little bit of friction there for even
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  Speaker 3: the uber wealthy. The other thing about the World Cup
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  Speaker 3: is kind of the cultural impact.
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  Speaker 1: It's having all.
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  Speaker 3: These footballers that people, you know, three months ago didn't
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  Speaker 3: know who they were. Jude Bellingham, Earling Holland. Everyone knows
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  Speaker 3: who they are now, including how they dress off the pitch.
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  Speaker 3: Earling Holland has a fifty thousand dollars man bag. It's
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  Speaker 3: ludicrously capacious. As someone from Succession once said, it's very large.
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  Speaker 3: And I know you have a man bag.
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  Speaker 4: Too, right, I do have a man bag. Yes, I do.
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  Speaker 1: Okay, so we have man bag experts here.
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  Speaker 5: Fifty thousand dollars burken bag as well.
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  Speaker 2: No it's not a burkin, but I did look at
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  Speaker 2: the mini Kelly.
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  Speaker 4: Continue.
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  Speaker 3: My point is here is that what we see on
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  Speaker 3: the world at the World Cup, and you know the
• 9:46
  Speaker 3: players involved, has a huge influence on the rest of
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  Speaker 3: the economy, for instance, like the luxury sector. And there's
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  Speaker 3: why the way Holland's man bag see ludicrously capacious, along
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  Speaker 3: with some other players too.
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  Speaker 4: I'll just get through at it. Are you kidding me?
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  Speaker 4: Where's the raccoon? Where's the raccoon? I have a question.
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  Speaker 2: You're legit d one serious soccer. Nobody's falling down at
• 10:10
  Speaker 2: Ducaine and withering on the ground, and then when the
• 10:13
  Speaker 2: ball goes on the field they moranculous to get up.
• 10:16
  Speaker 2: What do you think about this madness where I'm screaming
• 10:19
  Speaker 2: at the screen, get up, get up?
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  Speaker 4: Get up? Am I wrong?
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  Speaker 9: No?
• 10:22
  Speaker 1: You're not wrong.
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  Speaker 5: And I would also like to just wint out that
• 10:24
  Speaker 5: I did play women's soccer and this is not something
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  Speaker 5: we definitely see as much in the women's game.
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  Speaker 1: This is a very male How.
• 10:30
  Speaker 2: Do you respond to the stupid fall down, the ball
• 10:33
  Speaker 2: goes by.
• 10:33
  Speaker 4: Oh, I'm miraculously cured.
• 10:36
  Speaker 5: It's a part of the game in a way that
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  Speaker 5: I think is one of the reasons why it's not
• 10:40
  Speaker 5: as big in the US.
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  Speaker 4: I agree.
• 10:42
  Speaker 5: I think, you know, you have American football here in
• 10:45
  Speaker 5: hockey and all these other sports that are very American,
• 10:48
  Speaker 5: and we love it here, and they're very strong and.
• 10:52
  Speaker 4: Free time fix it.
• 10:53
  Speaker 3: That's in hockey. They're actually fighting.
• 10:56
  Speaker 7: They do.
• 10:57
  Speaker 2: She drops the gloves, they run. I mean she's in
• 11:00
  Speaker 2: the corner in the third period. She's frightening. You should
• 11:03
  Speaker 2: see her. Folks, the terror of Northern New York City. Well,
• 11:08
  Speaker 2: this is lovely, this is fine, This was great. Eric Belchunis,
• 11:11
  Speaker 2: thank you. Vanessa Predoma, thank you. And Michael Ball seriously
• 11:14
  Speaker 2: looked for Michael Balls academics on the FED all out
• 11:17
  Speaker 2: through the weekend, on Bloomberg and other news sources as well.
• 11:21
  Speaker 4: I mean, coming up here, it's going to be interesting.
• 11:24
  Speaker 2: You got Nora Rabini, a senior economic strategist at Hudson
• 11:28
  Speaker 2: Bay Capital.
• 11:28
  Speaker 4: We've known each other for decades.
• 11:30
  Speaker 2: I want to know what he thinks, Like with Ted
• 11:32
  Speaker 2: lu the other week, the future of social Security.
• 11:36
  Speaker 3: Yeah, a lot to talk about with Noriel Rabini. It's
• 11:38
  Speaker 3: a different Noriel Rabini. I'm good more money.
• 11:40
  Speaker 4: He's sensitive. You get us tickets. That's all I care
• 11:44
  Speaker 4: about it.
• 11:44
  Speaker 2: No, I don't even know if I'll sit where I
• 11:47
  Speaker 2: can see Pennsylvania.
• 11:48
  Speaker 4: Can you get us tickets?
• 11:50
  Speaker 2: You're listening to Bloomberg money. Stay with us with more
• 11:54
  Speaker 2: to come after this welcome back. It's Bloomberg money. Tom
• 12:03
  Speaker 2: Keene alongside scholar. If both of us were talking about
• 12:06
  Speaker 2: the smoke and the fire from I looked at du Luth,
• 12:08
  Speaker 2: Minnesota today, just unbelievable.
• 12:11
  Speaker 1: Have you been walking around with the mascot?
• 12:12
  Speaker 4: No, I don't do the mask thing. But the dogs
• 12:14
  Speaker 4: aren't healthy.
• 12:15
  Speaker 1: I mean no, they dogs don't want.
• 12:16
  Speaker 2: To want it at all. We'll see on that as
• 12:19
  Speaker 2: we go through. They stay with Bloomberg all of our
• 12:21
  Speaker 2: media for the continued coverage of what we're.
• 12:24
  Speaker 4: Seeing in the smoke, it is not smoke and mirrors.
• 12:28
  Speaker 2: With Nora Rabini, his senior economic strategist at Hudson Bay Capital.
• 12:32
  Speaker 2: That barely describes his contribution to the Clinton administration, his
• 12:36
  Speaker 2: years of service to New York University, and the books
• 12:40
  Speaker 2: that just keep on coming.
• 12:43
  Speaker 4: One of them. No beef with getting older.
• 12:44
  Speaker 2: Okay, that's fine, and we'll look at that. I want
• 12:49
  Speaker 2: to talk about that in a minute, Nora, Welcome to
• 12:51
  Speaker 2: the show. Ted Leu was on the other day, what's
• 12:54
  Speaker 2: the sweat on social Security? Do we really have to
• 12:58
  Speaker 2: risk losing a check on social security into the twenty thirties.
• 13:03
  Speaker 10: Well, we know that the trust fund is going to
• 13:05
  Speaker 10: start running out of money, and therefore whatever is going
• 13:09
  Speaker 10: to be president after this administration in twenty twenty eight,
• 13:13
  Speaker 10: he or she will have to figure out together in
• 13:15
  Speaker 10: about a partisan way, what to do about it. You
• 13:17
  Speaker 10: can how to selength the retirement age, you can raise
• 13:21
  Speaker 10: peril taxes, you can cut benefits, you can do a
• 13:23
  Speaker 10: combination of all those things. But definitely we have to
• 13:25
  Speaker 10: do something about it.
• 13:26
  Speaker 2: It just popped into my puny head. He wasn't picked
• 13:29
  Speaker 2: by a task force for chairman works.
• 13:31
  Speaker 4: What oversight that was?
• 13:33
  Speaker 2: Let's go to normal Rabini from I believe it's four
• 13:35
  Speaker 2: years ago.
• 13:36
  Speaker 4: No be for getting older.
• 13:38
  Speaker 2: In nineteen sixty there were five active workers for every
• 13:41
  Speaker 2: retired and disabled worker in these United States. But well
• 13:45
  Speaker 2: it's going to three to one in two thousand and nine,
• 13:48
  Speaker 2: headed towards two to one.
• 13:49
  Speaker 4: In four years.
• 13:50
  Speaker 2: Instead of moving forward, we have slipped backward out of
• 13:54
  Speaker 2: Fortune magazine in two twenty two.
• 13:57
  Speaker 4: So the clock is ticket.
• 13:59
  Speaker 2: I mean, we're moving a Do you get the sense
• 14:01
  Speaker 2: that politicians have any understanding of what's going to happen
• 14:05
  Speaker 2: the first Wednesday of November in twenty twenty eight when
• 14:08
  Speaker 2: we got to start really fixing this.
• 14:10
  Speaker 10: Well, you know, the politicians always kick the canda on
• 14:13
  Speaker 10: the road until something becomes critical. They prefer to avoid it. Then,
• 14:17
  Speaker 10: as we know, social security has been for a long
• 14:18
  Speaker 10: time the third rail of American politics. So we'll have
• 14:22
  Speaker 10: to deal with it like we did a few decades
• 14:24
  Speaker 10: ago by creating commission. At that time was run by
• 14:28
  Speaker 10: Alan Greenspan. This time around somebody else, and they'll come
• 14:30
  Speaker 10: with sensible ideas. We have to increase retirement age, we
• 14:33
  Speaker 10: have to increase peral taxes, or have the corporates that
• 14:38
  Speaker 10: winners pay for the workers, or we'll have to cut
• 14:40
  Speaker 10: some benefits. So any combination of those things is going
• 14:43
  Speaker 10: to have to happen at some point.
• 14:44
  Speaker 4: On the line.
• 14:45
  Speaker 3: Eric Welchin has just pointed out to me that Senator
• 14:47
  Speaker 3: Tim Kaine, a Democrat from Virginia, and Senator Bill Cassidy.
• 14:50
  Speaker 3: A Republican from Louisiana have proposed a plan to save
• 14:53
  Speaker 3: social security by borrowing up one and have trillion dollars
• 14:56
  Speaker 3: to invest in the stock market, which would grow over
• 14:58
  Speaker 3: seventy five years of pay future. And ifits does that
• 15:01
  Speaker 3: sound like something that could work or is that kind
• 15:03
  Speaker 3: of craziness?
• 15:04
  Speaker 10: Well, there are some ideas in the past about unquote
• 15:08
  Speaker 10: privatizing social security and in countries that have solving well
• 15:12
  Speaker 10: funds because they're running physical surpluses and current accounts, soupers
• 15:15
  Speaker 10: that can build up net for an assets, like Norway does,
• 15:19
  Speaker 10: like in the Gulf, they do to create something of
• 15:21
  Speaker 10: a buffer for the future. The problem us that we
• 15:23
  Speaker 10: run a fiscal deficit and a large current account deficits.
• 15:26
  Speaker 10: So if you borrow more to invest in the stock market, yeah,
• 15:29
  Speaker 10: you get that margin some returns because the returns on
• 15:31
  Speaker 10: the stock market be higher than what you pay on
• 15:34
  Speaker 10: that borrowing. But there's a gimmick. At the end of
• 15:36
  Speaker 10: the day, you have to do something else. That's not
• 15:38
  Speaker 10: going to solve the problem. It's one step in one direction,
• 15:41
  Speaker 10: but it's not gonna be enough.
• 15:42
  Speaker 1: Okay, not a solution.
• 15:43
  Speaker 3: In the meantime, Inflation is getting in the way of
• 15:45
  Speaker 3: everyone's best laid plans. You look at pricing increases in
• 15:49
  Speaker 3: elderly healthcare, for instance, home healthcare because of immigration curves,
• 15:52
  Speaker 3: it's outstripping, far outstripping the rise in college tuition. You
• 15:56
  Speaker 3: can see there, although of course the absolute costs of
• 15:59
  Speaker 3: each as comparing apples with oranges. Noel are genetsers and
• 16:02
  Speaker 3: millennials all going to work until we're ninety years old
• 16:04
  Speaker 3: because we need to pay for six figure college tuition
• 16:07
  Speaker 3: as well as twenty four to seven care for our parents.
• 16:09
  Speaker 10: Well, in principle, yes, the problem is going to be
• 16:11
  Speaker 10: the VII. Eventually we're going to have a long term
• 16:15
  Speaker 10: permanent tech Unemployment's going to happen only slowly. That's going
• 16:18
  Speaker 10: to happen the next twenty years. So even if you
• 16:21
  Speaker 10: increase the retirement age, the problem is going to be
• 16:23
  Speaker 10: a large chunk of the population is going to be
• 16:24
  Speaker 10: replaced by AI and robots in the next twenty twenty
• 16:27
  Speaker 10: five years. So increasing retirement age is not going to
• 16:30
  Speaker 10: be a solution. It's true that we higher potential growth,
• 16:33
  Speaker 10: that ratio tend to fall because it's that to GDP,
• 16:36
  Speaker 10: so our physical condition is not as bad as it
• 16:38
  Speaker 10: would be in a situation where growth is lower, But
• 16:41
  Speaker 10: at some point we have to do something. But eventually
• 16:43
  Speaker 10: we need some form of universal basic income for everybody
• 16:46
  Speaker 10: while they work and once they retire.
• 16:49
  Speaker 4: And we're already on the way to that.
• 16:50
  Speaker 2: One evening at Dabos, you and I said a lovely
• 16:53
  Speaker 2: old German bar. There was a public official down three
• 16:56
  Speaker 2: seats down from us who didn't participate.
• 16:58
  Speaker 4: But listened in.
• 17:00
  Speaker 2: When you framed out seven eighth nine, can you use
• 17:04
  Speaker 2: eight oh nine?
• 17:05
  Speaker 4: Or frankly, two.
• 17:06
  Speaker 2: Thousand and two thousand and one is an analogue for
• 17:09
  Speaker 2: this exuberance we have now in the stock market.
• 17:12
  Speaker 10: Well, let's become more optimist. Of course, there is fraudin
• 17:15
  Speaker 10: as there will be excesses. But I think that this
• 17:17
  Speaker 10: AI revolution is the most important in human history in
• 17:20
  Speaker 10: terms of tech innovation.
• 17:21
  Speaker 4: But you just told us we're going to lose all
• 17:23
  Speaker 4: our jobs.
• 17:24
  Speaker 10: Yeah, but I suppose that God goes from two to
• 17:26
  Speaker 10: four by the end of the decade, and that's going
• 17:28
  Speaker 10: to be six percent by two thousand and forty or
• 17:30
  Speaker 10: ten percent by two thousand and fifty, because they're going
• 17:32
  Speaker 10: to get to AGI. Then we've grown doubling every five
• 17:35
  Speaker 10: years a ten percent you can tax the winner, redistribute
• 17:38
  Speaker 10: everybody to everybody else, and make everybody better off.
• 17:40
  Speaker 4: So that's going to be a factor.
• 17:42
  Speaker 10: We'll have either expository distribution that is universal busy income,
• 17:47
  Speaker 10: or we'll have it something means some form of socialism. Essentially,
• 17:51
  Speaker 10: the government's going to take over some fraction of the
• 17:53
  Speaker 10: big tech firms, as they're already willing to do five
• 17:56
  Speaker 10: ten percent of it. We create a solven fund that way,
• 17:58
  Speaker 10: and we create the market, and we're going already in
• 18:01
  Speaker 10: that direction effectively.
• 18:02
  Speaker 3: The fact, Okay, this is a very gloomy picture that
• 18:04
  Speaker 3: you're painting. That brings true with your doctor Jim kind
• 18:07
  Speaker 3: of No, it's not gloomy.
• 18:08
  Speaker 10: It's optimist. With ten percent growth and machines doing all
• 18:10
  Speaker 10: the work, we don't need to work.
• 18:12
  Speaker 1: Do you know what these economic theories inside it?
• 18:14
  Speaker 9: Now?
• 18:14
  Speaker 1: You understand why things happen the way they do.
• 18:16
  Speaker 3: As an individual, do you manage your finances in a
• 18:19
  Speaker 3: way that aligns with them? Or is there some element
• 18:21
  Speaker 3: of irrational behavior in how you look at your own
• 18:23
  Speaker 3: finances recently?
• 18:25
  Speaker 10: Rational I've never traded in my life. I've never bought
• 18:27
  Speaker 10: any individual security of any sort, I invest for the
• 18:31
  Speaker 10: long term. I've a diversified portfolio, mostly if equities, if
• 18:34
  Speaker 10: everything were to go on a severe session, or move
• 18:36
  Speaker 10: some of it into liquid assets and so on. But
• 18:39
  Speaker 10: I think that most people that are not sophisticated investors
• 18:42
  Speaker 10: should just buy an old until they retire, rather than
• 18:45
  Speaker 10: tay trading or mimis talk or crypto or the stuff
• 18:47
  Speaker 10: that makes me lose money.
• 18:49
  Speaker 1: So you're very much a buy and old guy. You
• 18:51
  Speaker 1: don't touch it at all.
• 18:51
  Speaker 2: Absolutely twenty seconds you're in my ear here talk crypto.
• 18:55
  Speaker 4: The young one to know about crypto.
• 18:56
  Speaker 2: You and I love crypto so much. Twenty sixty Is
• 19:00
  Speaker 2: it going to thirty?
• 19:01
  Speaker 10: Most likely? Yes, most likely?
• 19:03
  Speaker 4: Yes.
• 19:03
  Speaker 10: I mean really, listen, crypto is not a cryptocurrency. They're
• 19:08
  Speaker 10: not the means of payment. They're not a unit of account,
• 19:11
  Speaker 10: they're not the stable store of value. They're not a
• 19:13
  Speaker 10: single number. So calling them crypto currencies actually missnomer. Whatever
• 19:17
  Speaker 10: they are, they're not really neither acid or currency. It's
• 19:19
  Speaker 10: mostly bibble. Upon's a game, most of them scathing.
• 19:23
  Speaker 3: Well, he's been skating on a lot of crick was
• 19:25
  Speaker 3: on the edge of Rubini there, all right, doctor Noriel Rubini,
• 19:28
  Speaker 3: Thank you so much for joining us today anything. He is,
• 19:30
  Speaker 3: of course, Hudson Bay Capital senior economic strategist.
• 19:34
  Speaker 2: Joining us now Amanda Linham. She's chief credit strategist at
• 19:37
  Speaker 2: Goldman Sachs. And I just want to bring up the
• 19:40
  Speaker 2: chart here for you, Amanda, because you're expert at this
• 19:42
  Speaker 2: a Bloomberg. We have the total return indices that are
• 19:45
  Speaker 2: just absolutely exquisite off of all the heritage of Lehman
• 19:49
  Speaker 2: and Barclays as well. And the chart of the week
• 19:52
  Speaker 2: is the lineup chart here and it's a great moderation.
• 19:55
  Speaker 2: The bond market price up forever, forever, forever, seven standard
• 20:00
  Speaker 2: deviation move and we've come back, but come on home.
• 20:03
  Speaker 2: We flatlined over the last five or six years. Does
• 20:06
  Speaker 2: that mean bonds are of vailue or does that mean
• 20:09
  Speaker 2: you're still catching up?
• 20:10
  Speaker 11: Well, first of all, thank you for having me. Good afternoon.
• 20:12
  Speaker 12: If you looked at that chart, Tom and you maybe
• 20:15
  Speaker 12: you started it at year in twenty twenty one, which
• 20:17
  Speaker 12: is just before the Fed started hiking rates and just
• 20:19
  Speaker 12: before interest rates really started their trend upward, what you
• 20:22
  Speaker 12: would see is that IG bonds are roughly flat. However,
• 20:25
  Speaker 12: high yield bonds are up over twenty percent leverage loans
• 20:28
  Speaker 12: floating rate are up over thirty percent over that same timeframe.
• 20:31
  Speaker 12: So I think this speaks to the point that we've
• 20:33
  Speaker 12: been emphasizing for a bit, and very relevant for your
• 20:36
  Speaker 12: audience as well, is that there's an opportunity cost to
• 20:38
  Speaker 12: being too defensive in this market.
• 20:40
  Speaker 11: Now.
• 20:41
  Speaker 12: To answer your question on do bonds fit in a portfolio, absolutely,
• 20:44
  Speaker 12: but they just can't be the only part. And that
• 20:47
  Speaker 12: chart you showed telled a great story in terms of
• 20:50
  Speaker 12: what the rise in interest rates has done to pressure
• 20:53
  Speaker 12: bond total returns. But at the same time, equities have
• 20:55
  Speaker 12: enjoyed a pretty meaningful upswing.
• 20:57
  Speaker 11: And so that's the point. On devers, I've never.
• 20:59
  Speaker 2: Asked this question, and how long have they been doing
• 21:01
  Speaker 2: this sex seven or eight years. I've never asked this question.
• 21:04
  Speaker 2: How much of our four to one k's in America
• 21:07
  Speaker 2: are in boring, sleepy, underperforming bonds versus the high yield
• 21:11
  Speaker 2: magic you just talked about.
• 21:13
  Speaker 12: I mean, our investors that are managing a lot of
• 21:16
  Speaker 12: these four to one k's on behalf of retirees and
• 21:19
  Speaker 12: workers typically will employ pretty diversified portfolios. And then, as
• 21:24
  Speaker 12: you know, there are target date funds that become less
• 21:26
  Speaker 12: risky as you get closer to retirement. In general, it's
• 21:29
  Speaker 12: a pretty good way to be invested. I think there's
• 21:32
  Speaker 12: a difference between saving and investing in this market, and
• 21:36
  Speaker 12: I think one of the big lessons is that being
• 21:38
  Speaker 12: invested over the long term is really what is critical.
• 21:41
  Speaker 12: It's hard to time over the arc of a career
• 21:45
  Speaker 12: for anyone rate backdrop or equity market backdrop, So staying
• 21:48
  Speaker 12: invested and in a diversified portfolio is key.
• 21:50
  Speaker 3: Saving and investing. I like that when my son was born,
• 21:53
  Speaker 3: my mother in law gave him a bond. Today, when
• 21:56
  Speaker 3: kids are born, they have access to a Trump account.
• 21:59
  Speaker 3: Their grandparents can contribute to that. These Trump accounts only
• 22:02
  Speaker 3: invest in stock funds or ets. That's a pretty strong
• 22:05
  Speaker 3: signal about the role of bonds and building a portfolio
• 22:09
  Speaker 3: of personal's a person's financial future, doesn't it well.
• 22:12
  Speaker 12: I think it's one part of an overall plan. But
• 22:14
  Speaker 12: from my perspective, when we think about the role of
• 22:17
  Speaker 12: a portfolio and where fixed kicks in, it's really to
• 22:21
  Speaker 12: provide income later in life that's more regular as opposed
• 22:25
  Speaker 12: to waiting for an equity dividend. And then importantly, it's
• 22:28
  Speaker 12: to offset periods of equity market.
• 22:30
  Speaker 11: Weakness like we see today.
• 22:31
  Speaker 12: And so while we've had a pretty meaningful uptrend in
• 22:34
  Speaker 12: equities over the past few years, we've known from cycles
• 22:37
  Speaker 12: that those don't go on in perpetuity, and so ideally
• 22:40
  Speaker 12: what you would want to have is some fixed rate
• 22:42
  Speaker 12: exposure across the curve, some floating rate exposure. Actually, we've
• 22:45
  Speaker 12: been our portfolio strategy colleagues have been emphasizing.
• 22:48
  Speaker 11: The role of real assets.
• 22:49
  Speaker 12: And kind of inflation protection and then typical equities and
• 22:52
  Speaker 12: it all.
• 22:52
  Speaker 4: Fixed together, fixed incomes, recommending goals.
• 22:56
  Speaker 11: Our portfolio strategists.
• 22:57
  Speaker 12: So our portfolio strategists who take a multisector have basically
• 23:01
  Speaker 12: made the point that, as you alluded to, the sixty
• 23:03
  Speaker 12: to forty portfolio isn't as straightforward as it was in
• 23:06
  Speaker 12: the years past, and so given some of the shifts
• 23:09
  Speaker 12: in the market, that we actually do have to incorporate
• 23:11
  Speaker 12: things like.
• 23:12
  Speaker 1: Real essets in the stock market.
• 23:14
  Speaker 3: Individual investors are just as influential now as institutional investors.
• 23:17
  Speaker 1: That's really changed over the last few years.
• 23:18
  Speaker 3: I don't know who the dumb money is anymore versus
• 23:20
  Speaker 3: the smart money.
• 23:21
  Speaker 1: That line is blurred.
• 23:23
  Speaker 3: Does that kind of blurring exist in the fixed income
• 23:25
  Speaker 3: and credit world or will this asset class always be
• 23:28
  Speaker 3: the domain of institutions and professionals.
• 23:31
  Speaker 12: We have a wide range of investors in our market.
• 23:33
  Speaker 12: I think the really interesting bifurcation that I've seen in
• 23:36
  Speaker 12: corporate credit over the past couple of years, but definitely recently,
• 23:40
  Speaker 12: has been this bifurcation between investors who are buying bonds
• 23:43
  Speaker 12: for yield versus investors who are buying bonds for spread.
• 23:46
  Speaker 11: And total return.
• 23:48
  Speaker 12: And that is the key, and what we have emphasized
• 23:50
  Speaker 12: is if you are allocating to credit right now, you
• 23:52
  Speaker 12: should be buying for income and yield, not because there's
• 23:56
  Speaker 12: material scope for a total return boost from tighter spreads
• 23:59
  Speaker 12: because they're already height, or from lower rates because our
• 24:01
  Speaker 12: rate strategists are expecting rates to be worded.
• 24:03
  Speaker 2: Want bond exposure to a data center in Ohio. Here
• 24:06
  Speaker 2: is Amanda Lineum, She's been burning it up. Zero heads
• 24:09
  Speaker 2: you a thirty page article and lead with.
• 24:12
  Speaker 4: Amanda Lineum of Goldman Sachs here it is a mix
• 24:16
  Speaker 4: of markets will be required.
• 24:18
  Speaker 2: Our equity research colleagues expect the five hyper scalers to
• 24:22
  Speaker 2: invest a combined zillion trillion in AI capex to now
• 24:26
  Speaker 2: four years out. It would push hyper scalers rights well
• 24:30
  Speaker 2: above the current market conventions in our wealth management. Are
• 24:35
  Speaker 2: we going to be overwhelmed by this tech capex juggernaut.
• 24:38
  Speaker 12: This is the main debate in the corporate credit market
• 24:40
  Speaker 12: right now. And just for your listeners, that number is
• 24:43
  Speaker 12: five point eight trillion that are equity conser is not
• 24:45
  Speaker 12: a zillion, it's five point eight trillion, And I think
• 24:48
  Speaker 12: what a lot of investors do is they will look
• 24:50
  Speaker 12: at the hyperscaler's balance sheets and expect that that will
• 24:53
  Speaker 12: largely be financed with debt, and that a lot of
• 24:55
  Speaker 12: that will come through the traditional IT corporate credit market.
• 24:58
  Speaker 12: The point that we've made is that the bond market
• 25:00
  Speaker 12: has issue where concentration constraints to a certain degree, and
• 25:03
  Speaker 12: so the key takeaway there is that we expect a
• 25:06
  Speaker 12: portion of that five point eight trillion to be funded
• 25:08
  Speaker 12: with debt, a portion of which will come through the
• 25:10
  Speaker 12: traditional bond markets. But we also see scope for the
• 25:13
  Speaker 12: private infrastructure market to play a role. We see scope
• 25:16
  Speaker 12: for these new project finance jvs to do some of
• 25:18
  Speaker 12: the heavy lifting. Cash flow from operations from the hyperscalers
• 25:21
  Speaker 12: will contribute. We're also expecting equity issue, and some of.
• 25:24
  Speaker 11: The rating agaties have said that afraid.
• 25:26
  Speaker 1: I don't like it, check them.
• 25:28
  Speaker 12: I am not concerned about in access to capital constraint.
• 25:31
  Speaker 12: I just think as we progress through what is a
• 25:33
  Speaker 12: multi year investment cycle, that there will be more nuanced
• 25:37
  Speaker 12: conversations around which market I should be accessing, and at
• 25:40
  Speaker 12: one price that's largely a twenty twenty seven to twenty
• 25:43
  Speaker 12: twenty eight event.
• 25:43
  Speaker 3: We think, I want to take a step back here
• 25:45
  Speaker 3: because you think about the different generations and gen Z
• 25:48
  Speaker 3: right now is graduating from college, they're joining the workforce,
• 25:50
  Speaker 3: they're building up savings. They know about memestocks, they know
• 25:53
  Speaker 3: about crypto, they know about prediction markets. These are all
• 25:55
  Speaker 3: go big or go home kinds of bets. Is there
• 25:58
  Speaker 3: anything within the fixed income space that response to that impulse?
• 26:02
  Speaker 1: Well?
• 26:02
  Speaker 12: More subject to risk sentiment like other markets are in
• 26:06
  Speaker 12: terms of when there's a real risk off tone, we
• 26:08
  Speaker 12: feel it in our market, I would say we tend
• 26:10
  Speaker 12: to be a bit more defensive. We actually put a
• 26:12
  Speaker 12: piece out on this earlier this week, my colleague Spencer did,
• 26:15
  Speaker 12: which really emphasized that the credit equity beta has diverged
• 26:19
  Speaker 12: in twenty twenty six in particular, meaning credit hasn't been
• 26:23
  Speaker 12: participating as much on the upside, but it's also been
• 26:25
  Speaker 12: more defensive on risk off tones on the downside. And
• 26:28
  Speaker 12: I think going back to over the arc of a
• 26:30
  Speaker 12: career and investment cycle, just being invested as the keeper.
• 26:33
  Speaker 2: I love that we're doing credit beta, but you're at
• 26:36
  Speaker 2: this weekend it's a family event or you know, friends
• 26:39
  Speaker 2: in Romans and countrymen, and somebody says, should I buy
• 26:41
  Speaker 2: a five year CD or a three year CD? America
• 26:45
  Speaker 2: is still stuck in that question of personal finance versus
• 26:49
  Speaker 2: a lot of if they.
• 26:50
  Speaker 1: Had any money to put in a CD to begin with.
• 26:52
  Speaker 4: Well, okay, but the arch question is on duration. How
• 26:55
  Speaker 4: short should I be right now?
• 26:57
  Speaker 12: So we like being more towards the front, an intermediate
• 27:00
  Speaker 12: part of the curve. At the longer end of the curve,
• 27:03
  Speaker 12: so thirty year bonds, for example, it tends to be
• 27:05
  Speaker 12: a bit more whippy. If your question is is do
• 27:10
  Speaker 12: we expect the FED to be kind of cutting or
• 27:12
  Speaker 12: hiking or holding? Pat From here, our economists are expecting
• 27:16
  Speaker 12: the FED to essentially be on hold through twenty twenty six.
• 27:19
  Speaker 12: I would say the Middle East conflict has been flagged
• 27:21
  Speaker 12: as an upside risk in terms of inflation, which does
• 27:24
  Speaker 12: provide some risk to that view, but in general we're
• 27:27
  Speaker 12: expecting rates to remain on hold. So staying invested amid
• 27:30
  Speaker 12: in elevated rate environment you are actually earning some coupon
• 27:33
  Speaker 12: from there as well.
• 27:33
  Speaker 3: All right, so staying invested is the message here from
• 27:36
  Speaker 3: Milanda Amandeline of Goldman Sachs Chief Credit Strategy.
• 27:39
  Speaker 1: Thank you so much for joining us, all right.
• 27:41
  Speaker 3: Coming up on Bloomberg Money, adult happy meals they're a
• 27:44
  Speaker 3: thing and they're pulling in customers across tax brackets. More
• 27:47
  Speaker 3: restaurants are trying to lured diners looking for deals. Sometimes
• 27:50
  Speaker 3: the hours are a little bit earlier, you know, verging
• 27:52
  Speaker 3: on early bird special.
• 27:54
  Speaker 1: Plus we're bullish on books. Tom and I share what
• 27:56
  Speaker 1: we're reading. How did you narrow it down classic?
• 27:59
  Speaker 2: I narrowed it down to the classic. Amanda's rerouted three times.
• 28:03
  Speaker 1: That's all. Coming up on Bloomberg Money. Thanks time, We'll
• 28:06
  Speaker 1: hip you've your recommenition.
• 28:09
  Speaker 4: Jesse Livermore.
• 28:19
  Speaker 1: Bloomberg Money.
• 28:20
  Speaker 3: It's your new destination for personal finance. It's a cross
• 28:23
  Speaker 3: platform effort that extends beyond your television, including our new
• 28:26
  Speaker 3: digital hub at bloomberg dot Com, Slash Money and Tom.
• 28:29
  Speaker 3: That reminds me of a story that I saw this week.
• 28:31
  Speaker 3: When was the last time that you enjoyed a happy meal?
• 28:34
  Speaker 4: A happy meal that was a few years ago, to
• 28:36
  Speaker 4: say the least, we just went for the toys.
• 28:38
  Speaker 1: You just went for the toys.
• 28:39
  Speaker 3: Well, there's you know, some adult happy meals now being
• 28:41
  Speaker 3: offered by restaurants which give you an entree aside and
• 28:44
  Speaker 3: adult beverage of your toys for a flat price. And
• 28:46
  Speaker 3: the reason, of course, is inflation. Bloomberg's Sarah Foster writes
• 28:51
  Speaker 3: bundle deals that often include an entree aside and a
• 28:53
  Speaker 3: drink are up fifteen percent from a year earlier across
• 28:56
  Speaker 3: all restaurants segments, and find dining establishments like the ones
• 29:01
  Speaker 3: you attend. They're the fastest growing entrede category on restaurant menus,
• 29:06
  Speaker 3: and Sara joins us. Now, so what's an example of
• 29:07
  Speaker 3: a restaurant that Tom might deign to go do?
• 29:09
  Speaker 1: Not just a McDonald's.
• 29:11
  Speaker 9: Well, I was doing a lot of traveling around the
• 29:13
  Speaker 9: city to kind of hunt down these adult happy words.
• 29:15
  Speaker 11: Sure that I parked at this.
• 29:20
  Speaker 9: I will probably be holding off on the red meat
• 29:22
  Speaker 9: for a while. But and sun Steake Easy in Greenwich Village.
• 29:25
  Speaker 9: That was this place that I parked at. You know,
• 29:27
  Speaker 9: what really stood out to me is that these are
• 29:29
  Speaker 9: not your fine, you know.
• 29:32
  Speaker 11: Value menu eaters.
• 29:34
  Speaker 9: They are going for these fine dining restaurants. A lot
• 29:37
  Speaker 9: of them work in finance, a lot of them work
• 29:39
  Speaker 9: in tech, and they are really drawn to these predictable pricing.
• 29:42
  Speaker 11: You know you mentioned the toy thing, Tom.
• 29:44
  Speaker 9: It's what's interesting I think is the adult version of
• 29:46
  Speaker 9: this happy meal always replaces the toy with a cocktail.
• 29:50
  Speaker 11: I think that's in a way of a different what
• 29:52
  Speaker 11: makes them happy.
• 29:53
  Speaker 9: But a lot of them really do say you know,
• 29:54
  Speaker 9: they would be interested in a toy too, if that
• 29:56
  Speaker 9: adult one would provide it.
• 29:57
  Speaker 1: And these pictures are phenomenal.
• 29:58
  Speaker 3: I think part of this too is when you talk
• 30:00
  Speaker 3: to the restaurant tours is they made sure that they
• 30:02
  Speaker 3: wanted it to be really visually appealing so that people
• 30:05
  Speaker 3: can post it to their social media.
• 30:07
  Speaker 9: What was really fascinating is that a lot of these
• 30:09
  Speaker 9: adult happy meals looked luxurious. I was talking with this
• 30:13
  Speaker 9: one restaurant in DC. They call it the Lobby Meal.
• 30:16
  Speaker 9: Included in that was a glass of champagne and it
• 30:20
  Speaker 9: was branded with that blow clicko, you know, champagne branding
• 30:24
  Speaker 9: that was really attracting the people's facing this.
• 30:26
  Speaker 2: And I'll do a shout out to Michael's, which is
• 30:28
  Speaker 2: just iconic and also vot or right across the street
• 30:32
  Speaker 2: from our effort here is it seems to me everybody
• 30:35
  Speaker 2: simplifying the menus, it just seems to be easier now
• 30:39
  Speaker 2: to order than twelve pages of choices from years ago.
• 30:43
  Speaker 3: Yeah, it makes things easier for the restaurant themselves because
• 30:46
  Speaker 3: they only offer one or two things, right, there's not
• 30:48
  Speaker 3: a whole lot of things you have to worry about
• 30:50
  Speaker 3: with your supply chain and your suppliers.
• 30:51
  Speaker 9: It's true, it's easier to offer these curated menus because
• 30:55
  Speaker 9: a lot of the diners who I spoke with, they
• 30:57
  Speaker 9: say that they face.
• 30:58
  Speaker 11: Decision fatigue when they go out exactly.
• 31:01
  Speaker 9: You know, you see that with line culture, TikTok and
• 31:03
  Speaker 9: social media is just proliferating all of these new restaurants
• 31:06
  Speaker 9: to try and sometimes people, you know, on a busy day,
• 31:09
  Speaker 9: they just want to have the meal.
• 31:10
  Speaker 11: Laid out for them.
• 31:11
  Speaker 3: And some of these deals are hidden too, right, it's
• 31:13
  Speaker 3: not totally advertised. You kind of have to be in
• 31:15
  Speaker 3: the know.
• 31:16
  Speaker 9: It's this layer of prestige and exclusivity. It's like a
• 31:19
  Speaker 9: club that if I spoke with one restaurant that was
• 31:22
  Speaker 9: selling so many adult happy meals that they had to
• 31:24
  Speaker 9: kind of pull it away, and now they still sell
• 31:27
  Speaker 9: it to people who ask for it.
• 31:29
  Speaker 4: Stay with Sarah.
• 31:29
  Speaker 2: This is the acid test. I want to know if
• 31:31
  Speaker 2: you've read my book. We've got two books here on trading.
• 31:33
  Speaker 2: We had a lot of fun with this. We're doing
• 31:35
  Speaker 2: different things we did elon Musk, like bow.
• 31:37
  Speaker 4: Ties a mask. Come on, Scar tell me when the
• 31:39
  Speaker 4: bow ties out of line.
• 31:40
  Speaker 1: It's trying.
• 31:41
  Speaker 2: Now. We got the trading game here. This is Scarfu's book,
• 31:44
  Speaker 2: Scar tell Us about.
• 31:44
  Speaker 4: The trading game.
• 31:45
  Speaker 1: Okay.
• 31:45
  Speaker 3: It's by Gary Stevenson, who is a trader on the
• 31:47
  Speaker 3: FX and rates to us at City in London just
• 31:50
  Speaker 3: before and during the financial crisis. He grew up in
• 31:52
  Speaker 3: the wrong part of London but went to LSE because
• 31:54
  Speaker 3: he was a math whiz. He made a ton of
• 31:56
  Speaker 3: money for City and himself a four hundred thousand pounds
• 31:59
  Speaker 3: bonus in his first year as a trader when he
• 32:01
  Speaker 3: was twenty three and he had a thesis driving all
• 32:04
  Speaker 3: his trades, which is that interest rates would stay low
• 32:06
  Speaker 3: and inequality would worsen. What's interesting to me is that
• 32:10
  Speaker 3: later on in the book gets into this he had
• 32:11
  Speaker 3: to come to Jesus moment where he quit the industry,
• 32:14
  Speaker 3: and now he has a YouTube channel teaching people about
• 32:16
  Speaker 3: real world economics.
• 32:18
  Speaker 4: This is great.
• 32:18
  Speaker 2: The iconic math exam at the London School of Economics.
• 32:21
  Speaker 2: That's what mister Jagger who went on to sing.
• 32:24
  Speaker 1: Oh the one Jager.
• 32:26
  Speaker 2: Mister Jagger went on after he bombed out of the
• 32:28
  Speaker 2: math exam at LS years ago.
• 32:30
  Speaker 4: It's a rigorous test.
• 32:32
  Speaker 3: I mean, I'm making him sound preachy here, but he's
• 32:34
  Speaker 3: really not. Because the book is fun, with a lot
• 32:36
  Speaker 3: of descriptions of the characters on trading floors.
• 32:38
  Speaker 2: My book is definitive. You read it every five years.
• 32:41
  Speaker 2: If you're in the game, this is a book. If Sarah,
• 32:43
  Speaker 2: if you haven't read this book, you're in my time
• 32:44
  Speaker 2: out chair. Reminiscence of a Stock Operator. His book is
• 32:48
  Speaker 2: one hundred and three years old and there is a
• 32:50
  Speaker 2: lesson about every four pages.
• 32:52
  Speaker 4: There's a point in here.
• 32:54
  Speaker 2: With Jesse Livermore, it's so stressful in New York. In Boston,
• 32:58
  Speaker 2: he goes to Florida for vacation, and he learns more
• 33:02
  Speaker 2: about trading in Florida from the cotton traders than he
• 33:06
  Speaker 2: does in New York or Boston. This is a classic,
• 33:10
  Speaker 2: classic book. It's criminal that it's not part of a
• 33:14
  Speaker 2: job assigned.
• 33:14
  Speaker 1: What was the last one we read it?
• 33:15
  Speaker 4: I read it about three or four years ago, and
• 33:17
  Speaker 4: I'm due to read it again about right now.
• 33:19
  Speaker 2: I think i'll do that. The annotated version is worth
• 33:21
  Speaker 2: its weight in gold. It's a bigger almost like coffee table.
• 33:24
  Speaker 1: Yeah, and it's hardcover too, hardcover.
• 33:26
  Speaker 4: Well, yeah, we only do a hardcover. I'm blueberg.
• 33:28
  Speaker 2: Oh well, I'm a terrible snuff Sarah. Have you read
• 33:32
  Speaker 2: Jesse Livermore?
• 33:33
  Speaker 11: I haven't, but I need.
• 33:34
  Speaker 4: There're yours, Simon.
• 33:35
  Speaker 2: I'm going to tell Nikki Waller, Sarah's deep into Jesse Livermore.
• 33:38
  Speaker 3: All Right, it's Friday, so we need to look ahead
• 33:40
  Speaker 3: to the weekend and next week. Just get a sense
• 33:43
  Speaker 3: of how you're going to spend your money. And I'm
• 33:45
  Speaker 3: going to focus in on earnings because it's going to
• 33:47
  Speaker 3: be a pretty light week for data. There's not a
• 33:49
  Speaker 3: whole lot going on on that front. And of course
• 33:52
  Speaker 3: FED officials are in a blackout period before their meeting.
• 33:55
  Speaker 3: So let's focus on earnings because on Tuesday week at
• 33:57
  Speaker 3: General Motors and tom you know that all the big
• 33:59
  Speaker 3: car makes have seemingly given up on hybrids or electric vehicles.
• 34:03
  Speaker 3: They've all put their eggs in the gas guzzling suv basket.
• 34:07
  Speaker 4: Well they have.
• 34:08
  Speaker 2: And you know, I look at alphabet moving on and
• 34:10
  Speaker 2: then the following week into technology, and it's as big
• 34:13
  Speaker 2: a deal as a bank store.
• 34:14
  Speaker 1: Oh for sure.
• 34:14
  Speaker 3: You know, Alphabets the first of the hyperscalers to report earnings,
• 34:17
  Speaker 3: and people aren't even calling it earning season anymore. They're
• 34:19
  Speaker 3: calling it capex season because it's all about what they
• 34:23
  Speaker 3: say when it comes to capital expenditures, and it's really
• 34:25
  Speaker 3: going to be a show me moment to me.
• 34:27
  Speaker 2: The big thing here, folks, to get a little nerd
• 34:29
  Speaker 2: on you, is the nominal GDP. Right now, the animal
• 34:32
  Speaker 2: spirit of the country is basically, you know, like a
• 34:35
  Speaker 2: third world country like China or whatever.
• 34:37
  Speaker 4: Percent five point six percent is.
• 34:40
  Speaker 2: Well and that's really an important What we do on
• 34:43
  Speaker 2: Bloomberg Money as well, is when there's really important breaking news,
• 34:46
  Speaker 2: we're going to stay with that.
• 34:48
  Speaker 4: Scarlett's going to queue it up right now. This on Apple.
• 34:51
  Speaker 1: This is on Apple.
• 34:53
  Speaker 3: Apple is an early settlement talks with the US Department
• 34:55
  Speaker 3: of Justice over an antitrust suit from twenty twenty four
• 34:59
  Speaker 3: that alleges the iPhone maker violated antitrust laws. According to
• 35:03
  Speaker 3: Bloomberg reporting by Mark German and his colleagues, the discussions
• 35:06
  Speaker 3: are active, there are no guarantees that the two size
• 35:09
  Speaker 3: will reach an agreement, and no trial date has been
• 35:11
  Speaker 3: set in the case. Apple has made multiple offers this
• 35:13
  Speaker 3: year to the DOJ to bring the case to a close.
• 35:16
  Speaker 3: This is according to people familiar with the matter, but
• 35:19
  Speaker 3: the discussions are private that discussions can end without an
• 35:22
  Speaker 3: agreement being reached.
• 35:24
  Speaker 2: The initial tick up here is a nice move up
• 35:26
  Speaker 2: back to three thirty two. Again, I said earlier in
• 35:29
  Speaker 2: the show, Devin, I think we've got that headline. Apple
• 35:32
  Speaker 2: at three point forty one ishes a five trillion dollar company.
• 35:37
  Speaker 2: And what's important here and pulls it back into Bloomberg money,
• 35:39
  Speaker 2: is basically who doesn't own Apple? Yes, Because within a
• 35:43
  Speaker 2: four oh one k portfolio, whatever the mix is, it
• 35:46
  Speaker 2: can be something tech dominated where it's four or five, six,
• 35:49
  Speaker 2: eight percent or maybe less, or just individual stack ownership.
• 35:53
  Speaker 4: It's part of America.
• 35:54
  Speaker 1: It's kind of like SpaceX.
• 35:55
  Speaker 3: Even if you didn't want it, you have it because
• 35:57
  Speaker 3: of exposure to, for instance, the now like one hundred.
• 36:01
  Speaker 3: So the DJ's main allegations here are basically about Apple
• 36:04
  Speaker 3: blocking super apps programs that include mini apps within them,
• 36:08
  Speaker 3: like we chat in China.
• 36:09
  Speaker 1: And you know, Apple with.
• 36:10
  Speaker 3: This walled garden business model is something that a lot
• 36:14
  Speaker 3: of people have not necessarily complained about, but brought up
• 36:17
  Speaker 3: as something that works against. It's how it's viewed as
• 36:21
  Speaker 3: a competitive company.
• 36:23
  Speaker 2: It's been a permanent fixture of people going after Apple
• 36:27
  Speaker 2: for as you say, nicely, the world garden. What I
• 36:29
  Speaker 2: would suggest if you talk to the cell side of
• 36:32
  Speaker 2: any persuasion, the suber bowls, I think of Gene Munster
• 36:35
  Speaker 2: and Dan Eyes and others much more cautious. This app
• 36:39
  Speaker 2: section of the business, the service section, just continually grows.
• 36:44
  Speaker 1: Well, they have to have.
• 36:45
  Speaker 3: It has to because the hardware is increasingly a commodity
• 36:49
  Speaker 3: and companies like Apple face increased costs for memory chow.
• 36:52
  Speaker 2: Because everyone in my family is doing Apple movies every night.
• 36:55
  Speaker 2: I look at my visa Apple this, Apple, this, Apple that,
• 36:59
  Speaker 2: and the answer is that subset of Apple is so
• 37:03
  Speaker 2: so important away from the Frenzy over iPhones.
• 37:06
  Speaker 3: No, that's a really good point. By the way, you
• 37:08
  Speaker 3: mentioned movies on Apple.
• 37:10
  Speaker 4: Yeah, it can you a touch here in Odyssey?
• 37:11
  Speaker 3: Is it or the Odyssey was released today so you
• 37:14
  Speaker 3: can go see it. It's the first movie I believe
• 37:17
  Speaker 3: that was completely made and designed to be made on
• 37:20
  Speaker 3: the IMAX with iMX cameras, So this is a big one.
• 37:23
  Speaker 3: Matt Damon plays the main character and Hathaway's part of it.
• 37:27
  Speaker 3: Our producer said. The reviews from the UK were it
• 37:29
  Speaker 3: could have been better, But I'm excited about this.
• 37:31
  Speaker 2: I've heard very mixed reviews. I mean it's not like Milana.
• 37:34
  Speaker 2: I mean, you're the celebrity Loadstone. Milana tanked right.
• 37:38
  Speaker 3: The live action movies like, I don't know that they
• 37:40
  Speaker 3: really catch on. I'm not sure who wants the live
• 37:42
  Speaker 3: action movies aside from the studios because it allows them
• 37:45
  Speaker 3: to renew the asset.
• 37:46
  Speaker 2: But if we can summarize with Warner Brothers, with all
• 37:49
  Speaker 2: the merger, Frenzy had a bang up year. It's a
• 37:51
  Speaker 2: good year. Is it a good summer for Hollywood?
• 37:54
  Speaker 1: And I think it's a good year for Hollywood.
• 37:56
  Speaker 3: Yes, it's no longer resting on the laurels of two
• 37:59
  Speaker 3: movies like Barbie or Oppenheimer.
• 38:01
  Speaker 1: It's a lot more than that.
• 38:02
  Speaker 2: The time we've got here, I think this is really
• 38:04
  Speaker 2: important as we as we've really enjoyed launching the show
• 38:07
  Speaker 2: and giving you.
• 38:07
  Speaker 4: A perspective here.
• 38:08
  Speaker 2: For me, the major major thing here is all the
• 38:12
  Speaker 2: marketing of wealth management, all the concepts and mergers, and
• 38:16
  Speaker 2: we're trying to slice through that, try to figure out, okay,
• 38:19
  Speaker 2: what's really going on, I think with a mandoline, and
• 38:21
  Speaker 2: we did a nice job of that today to say, okay,
• 38:24
  Speaker 2: what do you do with bonds? And our message was
• 38:27
  Speaker 2: all bonds aren't the same.
• 38:28
  Speaker 3: Right, And of course people are scarred from what happened
• 38:30
  Speaker 3: in twenty twenty two when bonds were supposed to be
• 38:32
  Speaker 3: the ballast for your portfolio. The stock market tanked and
• 38:36
  Speaker 3: bonds didn't do it right.
• 38:38
  Speaker 1: Negative returns.
• 38:39
  Speaker 2: Give me an Apple banner here. I just think it's
• 38:41
  Speaker 2: so important. Apple from two hundred and eighty, two hundred
• 38:44
  Speaker 2: and eighty the end of June, and it's been not
• 38:47
  Speaker 2: a moonshot that over says it, but nicely up here
• 38:51
  Speaker 2: it's three thirty one, just below the recent record high.
• 38:54
  Speaker 2: And to get onto three forty one five trillion dollar
• 38:57
  Speaker 2: company is remember I mean you don't remember this, you know,
• 39:01
  Speaker 2: Steve Jobs, John Scully, We're.
• 39:02
  Speaker 4: All going to die lease as a failure. It's a
• 39:04
  Speaker 4: long way from that.
• 39:05
  Speaker 1: It's a long way from that.
• 39:06
  Speaker 3: And of course this is a company that has been
• 39:08
  Speaker 3: kind of behind the curve when it comes to AI
• 39:10
  Speaker 3: adoption too. But maybe that's a little bit of it
• 39:12
  Speaker 3: saving grace right now as we see some pressure on
• 39:14
  Speaker 3: ship makers and the whole question of the AI trade.
• 39:16
  Speaker 2: Of course, all I know is Mark German has the
• 39:19
  Speaker 2: cool orange iPhone.
• 39:21
  Speaker 1: Does he I do? Of course he does. He's ahead
• 39:24
  Speaker 1: of uner one.
• 39:26
  Speaker 4: Thank you so much. It's Bloomberg Money. This is Bloomberg.
• 39:32
  Speaker 2: This is the Bloomberg Money podcast, bringing you a smart
• 39:36
  Speaker 2: look at the forces shaping your financial life.
• 39:39
  Speaker 4: I'm Tom Keen with Scarlet Food.
• 39:42
  Speaker 2: You can watch the show live on Bloomberg TV every
• 39:45
  Speaker 2: Friday at noon Wall Street Time. Subscribe to the podcast
• 39:49
  Speaker 2: on Apple, Spotify or wherever you listen, and as always on.
• 39:54
  Speaker 4: The Bloomberg Terminal and The Bloomberg Business, Apple
• 40:00
  Speaker 7: Damper