Latest / Bloomberg Intelligence / Supply Shocks Hit Your Wallet, Investor & Consumer Sentiments Diverge, Expensive Suburbs

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Supply Shocks Hit Your Wallet, Investor & Consumer Sentiments Diverge, Expensive Suburbs · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios. Podcasts.
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  Speaker 5: This is the Bloomberg Money Podcast. I'm Tom Keen with
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  Speaker 4: Good noon, everyone.
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  Speaker 5: Bloomberg Money, personal finance, retirement, wealth management, touch of politics,
• 1:00
  Speaker 5: 25 days.
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  Speaker 4: To the midterm elections. I'm Tom Keene. Of course, Scarlett
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  Speaker 4: Foon leading the challenge here.
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  Speaker 5: And the thing, everything is overwhelmed on personal finance, retirement
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  Speaker 5: and wealth management by consumer sentiment. That 44 statistic this
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  Speaker 5: morning speaks volumes about the tension in America.
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  Speaker 1: People feel very lousy because no one likes high oil prices.
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  Speaker 1: No one likes high mortgage rates. And now people can
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  Speaker 1: do something about it when they go to the polls.
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  Speaker 5: And would you agree that when we're doing this every
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  Speaker 5: day and we're doing this every Friday at 12 noon,
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  Speaker 5: we're trying to move away from the elite discussion that
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  Speaker 5: we do every.
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  Speaker 4: Day on Bloomberg?
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  Speaker 5: Because half more than half of America with that statistic
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  Speaker 5: of 44 is flat.
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  Speaker 4: On their back.
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  Speaker 1: Yes, but then you look at GDP numbers, which is
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  Speaker 1: an aggregate number, and it looks like everything's just fine.
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  Speaker 1: Corporate earnings, which are going to begin in earnest next week,
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  Speaker 1: also just fine, actually more than fine.
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  Speaker 5: Well, the mix here in October, and a beautiful October
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  Speaker 5: it is in New York City. Again, we welcome all
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  Speaker 5: of you with important conversation. Peter Orszag will join us today,
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  Speaker 5: of Lazard, of course, but his definitive work on American
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  Speaker 5: retirement over the arc.
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  Speaker 4: Of his career. Thrilled to have Dr. Orszag with us.
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  Speaker 1: And later on in the hour, Anastasia Amoroso, Chief Investment
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  Speaker 1: Strategist for Partner Group's Private Wealth and Retirement Business Unit,
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  Speaker 1: will be sitting down with us. We'll get her view
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  Speaker 1: on how the great bond sell-off resets the table for
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  Speaker 1: valuations and stocks.
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  Speaker 5: And she has been wonderful about the courage to stay
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  Speaker 5: in the market as well. Right now, I've got to
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  Speaker 5: stay in the market. I went to, wait, I was
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  Speaker 5: in all cash too low. I haven't bought a first
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  Speaker 5: share yet. Triple leverage, all cash runs doing well this week.
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  Speaker 5: I don't care about stocks. Some do. What's important here
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  Speaker 5: is the bull market statistic for Anastasia. 14.92 on a
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  Speaker 5: VIX is a wow statistic.
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  Speaker 1: Yeah, and we're looking at a fourth straight year of
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  Speaker 1: double-digit gains right now, and also gains for the week
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  Speaker 1: in equities. Let's flip it up and show you what's
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  Speaker 1: happening with yields. The 10-year yield moving up, that's been
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  Speaker 1: a familiar sight. It touched a new multi-decade high of 5.36%
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  Speaker 1: on Wednesday.
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  Speaker 3: Dollar and.
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  Speaker 1: Up slightly and oil prices for WTI just below $ 92
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  Speaker 1: a barrel.
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  Speaker 4: A roundtable this morning to get us started with good conversation.
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  Speaker 4: The zeitgeist of a Friday.
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  Speaker 5: It's already been scarred because Gura inflicted upon us children
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  Speaker 5: photographs of flag football.
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  Speaker 4: We'll survive.
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  Speaker 5: David Gura is with us from Bloomberg this weekend and
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  Speaker 5: really on top of the midterm.
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  Speaker 4: Debate as well.
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  Speaker 5: With us, Jessica Carl, author of Bloomberg Opinion today. It's
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  Speaker 5: a huge summation of all that we're doing with Tim
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  Speaker 5: O'Brien's shop at Bloomberg Opinion. And Max Chavkin's with us
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  Speaker 5: with Everybody's Business podcast. And I know, Scarlett, you really
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  Speaker 5: wound up about a Max story here.
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  Speaker 1: Yeah, absolutely. He's written about what's something called AI surveillance pricing,
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  Speaker 1: which is like dynamic pricing, but personalized based on who
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  Speaker 1: you are and what you've done before.
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  Speaker 4: Is that right?
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  Speaker 6: Yeah, this is the idea that as pricing algorithms get
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  Speaker 6: more and more sophisticated, we already have this to some
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  Speaker 6: extent with social media advertising, where you have a pair
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  Speaker 6: of shoes that follows you.
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  Speaker 1: Around the internet. There are groups, many of them left-leaning,
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  Speaker 1: many of.
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  Speaker 6: Them trying to kind of get populist rage going, warning
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  Speaker 6: about the potential risk. for these same kinds of technologies
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  Speaker 6: to apply to things like at grocery stores. So the idea,
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  Speaker 6: and this again is mostly theoretical at this point, but
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  Speaker 6: that you're walking through a grocery store and the price
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  Speaker 6: of a good will change based on other stuff you
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  Speaker 6: have in your shopping cart. So, for instance, and this
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  Speaker 6: came up in the story I just wrote, Walmart has
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  Speaker 6: a patent that suggests that they would change the price
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  Speaker 6: of mayonnaise if you already had tuna fish in their cart. Now,
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  Speaker 6: I should say, Walmart responded to this by saying, we
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  Speaker 6: are not changing the price of mayonnaise yet.
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  Speaker 1: This is just a patent. We're not doing this.
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  Speaker 6: They're committed to the slogan, which is everyday low prices.
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  Speaker 6: But it does sort of show you that there are
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  Speaker 6: at least some people within these companies that are thinking
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  Speaker 6: about this stuff. And we are seeing this in maybe
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  Speaker 6: less high-profile examples.
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  Speaker 1: So the technology is there, but it may not be
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  Speaker 1: implemented at the moment. It feels like this is something
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  Speaker 1: that politicians would jump on, especially those who are running
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  Speaker 1: for election in November.
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  Speaker 7: Well, I can imagine that they would, yeah.
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  Speaker 4: Even Republicans got to look at this. I mean, is
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  Speaker 4: it in place now?
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  Speaker 5: If Jessica Carl books an airplane ticket and she comes
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  Speaker 5: back six hours later, do they jack up the price
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  Speaker 5: because they know she was there six hours ago?
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  Speaker 6: The airplane one is one where it is not. It's
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  Speaker 6: pretty muddy. So the airlines say, no, we don't do that.
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  Speaker 6: Anyone who's bought an airline ticket, though, will see that
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  Speaker 6: the prices change very often. There are these kind of
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  Speaker 6: like one-off cases. In fact, one came up during a
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  Speaker 6: hearing in Congress. You brought up Republicans. Josh Hawley has
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  Speaker 6: been kind of ringing the bell on this. I think
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  Speaker 6: the issue is that they have so many different fare classes,
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  Speaker 6: you know, potentially dozens, even hundreds, where it starts to
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  Speaker 6: get very close to personal.
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  Speaker 4: My summer is I'm getting taken to the cleaners.
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  Speaker 5: The reason Jessica Carroll's here, she actually is good at
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  Speaker 5: social media, unlike the rest of it. Give us an update,
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  Speaker 5: as we talk to Max about this, about the new
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  Speaker 5: digital impact on Americans that aren't hipsters and into social.
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  Speaker 5: I mean, it permeates our society, doesn't it?
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  Speaker 2: I think you hear a story like that, and that
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  Speaker 2: story about tuna fish in the cart with the mayonnaise,
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  Speaker 2: that would go viral, and that's kind of what's feeding
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  Speaker 2: into the negative consumer sentiment that you're seeing.
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  Speaker 8: Even if it's not actually happening.
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  Speaker 2: I think people on social media, there's these rage bait
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  Speaker 2: stories that really are pushing politicians to sort of address
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  Speaker 2: these issues in a different way on social media, I think.
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  Speaker 1: Speaking of politicians trying to address this in a different way,
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  Speaker 1: President Trump has renamed artificial intelligence AI AI. into super intelligence,
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  Speaker 1: and this focus on semantics is super interesting. I know
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  Speaker 1: you've been writing about it in your newsletter. Yes, yesterday.
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  Speaker 2: He wanted to label everyone who still says AI as
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  Speaker 2: the enemy, and I was joking.
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  Speaker 8: My name is not Jessica.
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  Speaker 1: It's the enemy now.
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  Speaker 8: But yeah, I think.
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  Speaker 2: When consumers see, like, oh, he's focusing on the name
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  Speaker 2: of AI, when there's so much anger and pessimism directed
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  Speaker 2: at this technology, people are worried it's price gouging them,
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  Speaker 2: it's going to eliminate their jobs.
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  Speaker 1: So there's a lot of.
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  Speaker 2: Fear around this, and that label sort of just seems
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  Speaker 2: silly in the grand scheme of things.
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  Speaker 5: I don't buy for a minute AI matters in the election.
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  Speaker 5: David Gerro, Bloomberg this weekend, you're on top of this.
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  Speaker 5: You're talking to Republicans and Democrats. Let's assume AI doesn't matter.
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  Speaker 5: What then does matter the first Tuesday of November?
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  Speaker 4: Well, I think that it does matter.
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  Speaker 7: And so you're seeing in a lot of states and
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  Speaker 7: local levels referendums surrounding AI and the construction of data centers.
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  Speaker 7: You look at the debate that took place in Michigan
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  Speaker 7: last night. Both of the candidates, Republican and Democrat, came
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  Speaker 7: out against building more data centers at this moment.
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  Speaker 8: So it's a very tangible debate.
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  Speaker 7: Totem of what I think the electorate is seeing as
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  Speaker 7: representative of data centers right now. But it's affordability, as
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  Speaker 7: we've talked about week after week after week. Democrats have
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  Speaker 7: wisely ceased on that as an issue that they want
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  Speaker 7: to keep talking about. Republicans are quite fearful of the
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  Speaker 7: fact that they really don't have a good answer to it.
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  Speaker 4: I make it up as I go.
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  Speaker 5: You actually read the literature, Cook Political Report out today
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  Speaker 5: with a redo on the House in a lot of seats.
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  Speaker 4: I get it.
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  Speaker 7: No, they've moved their forecast, 18 Democratic seats now in
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  Speaker 7: their list of what they think is going to happen
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  Speaker 7: with the House. Look, Democrats have to get to 218.
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  Speaker 7: They had to gain three seats to do that. What
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  Speaker 7: the Cook Political Report nonpartisan outfit is predicting now is
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  Speaker 7: something more like 224 or above. So really a kind
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  Speaker 7: of sea change here in the House. And if you
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  Speaker 7: look at them and Eurasia Group and Morgan Stanley, I
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  Speaker 7: think that there's this expectation the Senate is still going
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  Speaker 7: to be difficult for Democrats, but Democrats are making inroads
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  Speaker 7: on that.
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  Speaker 4: Side as well.
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  Speaker 1: When you talked about the surveillance pricing, this is something
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  Speaker 1: that certain people have jumped on. And these are people
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  Speaker 1: who worked with Elizabeth Warren, the senator. Is this now
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  Speaker 1: a Democratic issue?
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  Speaker 6: I mean, there are Republicans, as David is kind of
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  Speaker 6: hinting at, there are Republicans who are trying to claim
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  Speaker 6: the mantle on AI and on affordability. I think the
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  Speaker 6: reason why the Democratic groups that I talk to see
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  Speaker 6: this as a good issue is because it hits two buckets.
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  Speaker 4: It hits AI.
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  Speaker 6: I'm upset about AI. There's a lot of money going in.
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  Speaker 6: There's a sense that maybe regular people are not benefiting
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  Speaker 6: from this, whatever you call it. And then there's affordability
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  Speaker 6: and the kind of... The thing for them that's appealing
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  Speaker 6: about this is this combines both. This is AI skepticism
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  Speaker 6: and affordability. AI is not just this thing that might
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  Speaker 6: take away your job at some point in theory. It's
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  Speaker 6: also maybe driving your prices up, which whether or not
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  Speaker 6: it's happening in grocery stores, it's certainly happening from an
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  Speaker 6: inflation perspective. AI is driving inflation.
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  Speaker 8: It speaks to this notion that you don't really know
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  Speaker 8: what's happening.
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  Speaker 7: I think you feel like AI is developing and going somewhere,
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  Speaker 7: but you don't have a grasp on what it can
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  Speaker 7: do and what it is doing, what it will do.
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  Speaker 7: And I think this is just another example to kind
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  Speaker 7: of confuses or renders apparent to the electorate, I don't
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  Speaker 7: have a handle on where this technology, which is so
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  Speaker 7: radically changing our lives, is headed.
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  Speaker 1: And this is a common theme in all the opinion
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  Speaker 1: pieces that our Bloomberg opinion contributors write about, and you
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  Speaker 1: have to kind of synthesize.
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  Speaker 2: Yes, yeah, there's so much uncertainty just in general with
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  Speaker 2: the economy and the AI skepticism feeds into that, and
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  Speaker 2: I think you see it in spending on, I mean,
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  Speaker 2: discretionary spending is staying in line, but I think you
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  Speaker 2: see people kind of becoming hesitant to spend on bigger things.
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  Speaker 4: Can you get rid of all the AI garbage on Twitter?
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  Speaker 8: I would love to. I think if I did, I
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  Speaker 8: wouldn't be working here anymore.
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  Speaker 5: It would like another wave of unusability on Twitter, on
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  Speaker 5: X or whatever, because they.
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  Speaker 1: Got all this fiction stuff.
• 10:14
  Speaker 7: Is the triple leveraged all cash fund now available as
• 10:16
  Speaker 7: an ETF?
• 10:17
  Speaker 5: Yeah.
• 10:17
  Speaker 4: It is. We've talked about it. It's in registration. Belchunas
• 10:21
  Speaker 4: is on the board. Eric Belchunas, our ETF guru. But
• 10:24
  Speaker 4: the roadshow, the merch, it's going to be bow ties.
• 10:28
  Speaker 5: Yeah.
• 10:29
  Speaker 8: I'm going to wait for the merch.
• 10:30
  Speaker 5: The merch is going to be unbelievable. It's going to
• 10:33
  Speaker 5: be four-pull leverage. We'll see how that goes.
• 10:35
  Speaker 3: Yeah.
• 10:35
  Speaker 1: Well, you can't do triple leverage right now, according to
• 10:37
  Speaker 1: the SEC, unless it's something.
• 10:38
  Speaker 3: I know.
• 10:38
  Speaker 4: That's a problem. I said to the counselor, why'd you leave?
• 10:40
  Speaker 4: He wouldn't let me do it.
• 10:42
  Speaker 1: Yeah, Gensler would have let you do it. All right,
• 10:43
  Speaker 1: thank you to all of our panelists here. David Gurra,
• 10:46
  Speaker 1: he is co-anchor of Bloomberg this weekend. Jessica Carl, author
• 10:49
  Speaker 1: of the Bloomberg Opinion Today newsletter. And Max Chafkin, Bloomberg
• 10:51
  Speaker 1: Businessweek columnist and co-host of everybody's podcast. I know, we're excited.
• 10:57
  Speaker 1: Coming up on Bloomberg Money, Peter Orszag, Lazard's CEO and chairman.
• 11:02
  Speaker 1: And of course, he's behind some of the ideas that
• 11:04
  Speaker 1: are critical to the 401k. This is Bloomberg Money.
• 11:09
  Speaker 5: You're listening to Bloomberg Money. Stay with us with more
• 11:12
  Speaker 5: to come after this. On a perfect Friday from New
• 11:21
  Speaker 5: York City, Bloomberg Money, Tom Keen and Scarlett.
• 11:24
  Speaker 4: I thought that was a spirited conversation.
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  Speaker 5: The heart of the matter is 25 days to the midterm.
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  Speaker 5: It will be seismic, to say the least.
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  Speaker 1: Yeah, AI dominating everyone's thoughts and also rising prices. Can't
• 11:35
  Speaker 1: get away from rising gas prices, rising mortgage rates. rising
• 11:39
  Speaker 1: food prices.
• 11:40
  Speaker 5: And the food prices to me is the emotion. In fact,
• 11:42
  Speaker 5: it's one of the brilliances of our guests. Peter Orszag
• 11:45
  Speaker 5: is with us, chairman and chief executive officer of Lazard
• 11:48
  Speaker 5: that barely describes his contribution to modern retirement in America.
• 11:54
  Speaker 5: Coming out of LSE a number of years ago, he
• 11:56
  Speaker 5: wandered in and got.
• 11:57
  Speaker 4: A job and he said, you know what?
• 11:59
  Speaker 5: When we take a new job, we should automatically be
• 12:03
  Speaker 5: in the 401k of the company. You say, well, that's
• 12:06
  Speaker 5: no big deal. At the time, it was absolutely seismic.
• 12:11
  Speaker 5: He also looks at his economics as well as running
• 12:13
  Speaker 5: the shop at Lazard. Here is a seismic essay from
• 12:17
  Speaker 5: January this year. The risk of higher U.S. inflation in 2026.
• 12:22
  Speaker 5: Research demonstrates a consumer perception of inflation is is based on,
• 12:26
  Speaker 5: here's the grocery part, the frequency of purchase of, say, eggs.
• 12:31
  Speaker 5: Inflation rising above 4% by the end of 2026 is
• 12:35
  Speaker 5: plausible and a most likely scenario.
• 12:38
  Speaker 4: You and Adam Posen nailed it. Where do we go
• 12:42
  Speaker 4: from here? Well, I think the.
• 12:44
  Speaker 9: Important thing about that is not necessarily the kind of
• 12:47
  Speaker 9: victory lap, but instead, why did we say that? And
• 12:50
  Speaker 9: the reason we said that is we are living in
• 12:51
  Speaker 9: a new supply side era where if you want to
• 12:54
  Speaker 9: understand inflation today, you need to look at the supply
• 12:57
  Speaker 9: shocks that happened a year or two ago. And the thought,
• 13:01
  Speaker 9: in fact, I just read a piece of research suggesting,
• 13:04
  Speaker 9: don't worry, the next few months you'll see a tailing
• 13:07
  Speaker 9: off of inflation because these one-time effects will erode. Okay,
• 13:11
  Speaker 9: but our other point is there are going to be
• 13:13
  Speaker 9: continual new supply shocks. So we're living in this era,
• 13:17
  Speaker 9: supply-side era 2.0. in which you're going to be hit
• 13:20
  Speaker 9: by these things on an ongoing basis. And so treating
• 13:22
  Speaker 9: them each as a one-off thing is a mistake.
• 13:25
  Speaker 5: Our Bloomberg Money audience is hit by it each and
• 13:27
  Speaker 5: every moment and wrapped around personal finance and retirement and
• 13:32
  Speaker 5: wealth management.
• 13:32
  Speaker 4: Without getting into.
• 13:33
  Speaker 5: The mathiness, does there need to be a new set
• 13:37
  Speaker 5: of a higher interest rate, what the fancy people call
• 13:40
  Speaker 5: a higher actuarial assumption? Are we shifting in our interest
• 13:44
  Speaker 5: rate now?
• 13:45
  Speaker 9: I definitely think that the interest rate environment is different
• 13:48
  Speaker 9: today than it was three or four years ago. It's unfortunate,
• 13:51
  Speaker 9: by the way, that we didn't take advantage of that
• 13:53
  Speaker 9: moment when we had extended moment when we had low
• 13:56
  Speaker 9: rates to extend the maturity of treasuries, which is something
• 13:59
  Speaker 9: that Bob Rubin and Joe Stiglitz and I had called for. Instead,
• 14:03
  Speaker 9: we have been shortening maturity. That's too bad. But I
• 14:06
  Speaker 9: think we are in a new era in which, frankly,
• 14:08
  Speaker 9: the bond vigilantes are coming back.
• 14:10
  Speaker 4: Oh, we could digress.
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  Speaker 1: I know. If we start talking about the bond market,
• 14:14
  Speaker 1: we can go in a different direction. Getting back to
• 14:16
  Speaker 1: that inflation story that you were just talking about, is
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  Speaker 1: AI inflationary? I mean, there's the build-out, then there's the implementation,
• 14:22
  Speaker 1: and then there's the application. And we haven't totally gotten
• 14:25
  Speaker 1: to the mass application yet.
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  Speaker 9: Yeah, I think on AI, the build-out is massive, maybe three,
• 14:31
  Speaker 9: three and a half percent of GDP investment, which is
• 14:34
  Speaker 9: larger than railroads, highways, electrification by a significant margin. That's
• 14:40
  Speaker 9: also putting upward pressure on interest rates. My own view
• 14:43
  Speaker 9: is I think that I'm a, I think we need
• 14:45
  Speaker 9: to separate the technology and the business model here. I'm
• 14:48
  Speaker 9: a huge believer in the technology.
• 14:49
  Speaker 10: I use it.
• 14:49
  Speaker 9: I probably have 70 or 80 agents running as we speak.
• 14:53
  Speaker 9: I'm astonished by how rapidly things are progressing. But because
• 14:57
  Speaker 9: so much of the investment is debt financed, I do
• 15:00
  Speaker 9: think the risk of financial distress in this ecosystem is
• 15:05
  Speaker 9: higher than people appreciate. Because when it's debt financed, if
• 15:08
  Speaker 9: the token spend, instead of doing this, just does.
• 15:10
  Speaker 1: That, you've got a problem.
• 15:12
  Speaker 9: If it were equity financed, it's a different thing. But
• 15:14
  Speaker 9: because so much of it is debt financed, and that
• 15:17
  Speaker 9: token spend, going from this to that, could come from
• 15:20
  Speaker 9: open weight, which we've already talked a lot about, but
• 15:22
  Speaker 9: also from local compute. I think that's the part that
• 15:24
  Speaker 9: people are not appreciating, is the ability to run the
• 15:29
  Speaker 9: models on an air-gapped computer based on local compute.
• 15:32
  Speaker 4: You're not drawing in the cloud. Can I do a
• 15:33
  Speaker 4: family shout-out?
• 15:34
  Speaker 3: Please.
• 15:34
  Speaker 4: My brother's dead on in this local weight. He says
• 15:37
  Speaker 4: you're 100% right. On local compute, yeah. On local computing.
• 15:39
  Speaker 1: So there's so much we don't know yet about how
• 15:41
  Speaker 1: AI is going to work and how it's going to
• 15:43
  Speaker 1: affect the economy. One thing we do know is what
• 15:45
  Speaker 1: Tom referenced, which was your work on the research that
• 15:48
  Speaker 1: led to automatic enrollment in 401ks. Your view on the
• 15:52
  Speaker 1: Trump accounts, which have now made clear that those kids
• 15:56
  Speaker 1: under 18 will now be automatically enrolled in these Trump accounts.
• 15:59
  Speaker 1: Is it a good thing?
• 16:00
  Speaker 4: I think that part is a good thing.
• 16:01
  Speaker 9: And the power of inertia and the power of defaults
• 16:05
  Speaker 9: is very, we all know it from our own lives,
• 16:07
  Speaker 9: if something's even a little difficult, often you don't do it.
• 16:10
  Speaker 9: And that was the point about auto-enrollment into retirement savings plans.
• 16:15
  Speaker 9: And also, if you're going to set up something for kids,
• 16:18
  Speaker 9: it's better to auto-enroll them.
• 16:19
  Speaker 4: I've got to get this in. I think a lot
• 16:20
  Speaker 4: of people don't know Lazard.
• 16:22
  Speaker 5: Your stewardship of Lazard here, the way you're out on social,
• 16:24
  Speaker 5: everywhere he goes, you have to run five miles with
• 16:27
  Speaker 5: Peter Orzek.
• 16:27
  Speaker 4: Yeah. I mean, every city, it's ridiculous.
• 16:29
  Speaker 1: That's one way to weed people out.
• 16:31
  Speaker 4: Jack Lew is on.
• 16:32
  Speaker 5: And, you know, Social Security is going to fall apart here.
• 16:35
  Speaker 5: If I had to pick, you know, Republican, Democrat, whatever,
• 16:38
  Speaker 5: to be on Jack Lew, you'd be on the short,
• 16:39
  Speaker 5: short list for that. How close are we to Social
• 16:43
  Speaker 5: Security failing after the presidential election of 28?
• 16:48
  Speaker 9: Both Social Security and Medicare have looming problems associated with
• 16:53
  Speaker 9: their financing. They will have to be addressed. This is
• 16:55
  Speaker 9: part of an overall fiscal imbalance of 6% to 7%
• 16:58
  Speaker 9: of GDP. And history shows we don't deal with these
• 17:02
  Speaker 9: problems until they're crises. The last Social Security reform... did
• 17:07
  Speaker 9: not occur until checks were literally not about to go
• 17:09
  Speaker 9: out the door. That's the part of the Greenspan Commission
• 17:12
  Speaker 9: that people missed from 1983. You need that forcing event
• 17:16
  Speaker 9: to really focus people's attention. We don't have that forcing
• 17:19
  Speaker 9: event yet.
• 17:19
  Speaker 1: Peter, I wanted to talk to you about junior bankers
• 17:21
  Speaker 1: because I know this is something you think about a lot.
• 17:23
  Speaker 1: For years, private equity was aggressively poaching junior bankers from
• 17:26
  Speaker 1: the investment bank. Citigroup recently cut its investment banking program,
• 17:30
  Speaker 1: analyst program, to two years from three years so that
• 17:33
  Speaker 1: these junior bankers can advance faster. What does the environment
• 17:36
  Speaker 1: look like at Lazard now? Are you responding in a
• 17:39
  Speaker 1: similar way?
• 17:40
  Speaker 9: We really, I'm thrilled by the talent we're able to
• 17:43
  Speaker 9: attract to Lazard. I think the most exciting thing for
• 17:45
  Speaker 9: junior bankers today is the opportunity to change the way
• 17:49
  Speaker 9: that we work.
• 17:50
  Speaker 3: Mm-hmm.
• 17:50
  Speaker 9: So that you have leaner deal teams. We're hiring more
• 17:54
  Speaker 9: managing directors, so there will be more deal teams, but
• 17:56
  Speaker 9: on each deal team, a leaner deal team. I remember
• 18:00
  Speaker 9: early in my career, the most exciting thing was to
• 18:02
  Speaker 9: be able to assume more responsibility as rapidly as you can,
• 18:05
  Speaker 9: and when you have larger deal teams, it's just a
• 18:08
  Speaker 9: little bit stultifying. The technology will enable us to make
• 18:13
  Speaker 9: the deal teams leaner, and to have that upward trajectory,
• 18:16
  Speaker 9: and also cultivate and train the characteristics that we think
• 18:20
  Speaker 9: are gonna be particularly valuable in our business in the future,
• 18:24
  Speaker 9: the ability to engender trust, the in-person client.
• 18:27
  Speaker 4: The soft skills.
• 18:28
  Speaker 9: The softer skills. There's a great book out called Messy Jobs,
• 18:32
  Speaker 9: which goes through the things that are going to be
• 18:35
  Speaker 9: valued versus less valued as AI develops. A senior banker's
• 18:40
  Speaker 9: role is definitely a messy job, and we want to
• 18:42
  Speaker 9: be training people and cultivating the skills for that. And
• 18:45
  Speaker 9: it's really an exciting moment.
• 18:46
  Speaker 5: I will suggest Peter Orszag dodged the bullet of silly
• 18:50
  Speaker 5: exhaustion in investment banking today. How do you deal with
• 18:53
  Speaker 5: the stereotype of the young kids exhausted?
• 18:57
  Speaker 9: This is, I think, a crucial moment for us to
• 19:01
  Speaker 9: weed out all of that inefficiency sitting around at 2 a.m.
• 19:05
  Speaker 9: for no reason.
• 19:06
  Speaker 4: Thank you.
• 19:06
  Speaker 9: I have always believed in working really hard, but when
• 19:08
  Speaker 9: you're working really hard on things that are meaningful and that...
• 19:12
  Speaker 9: You're not just kind of wasting time. It's a much
• 19:15
  Speaker 9: different experience than, you know, literally something that seems totally inefficient.
• 19:20
  Speaker 9: There's a lot of opportunity to improve the process.
• 19:24
  Speaker 1: There's a lot of opportunity to improve the process, but
• 19:25
  Speaker 1: sometimes you have to go through the process to be
• 19:27
  Speaker 1: able to know what to do. And are we depriving
• 19:29
  Speaker 1: young people of that?
• 19:30
  Speaker 4: Well, that comes back to the training.
• 19:32
  Speaker 9: I think there are lots of ways of trying to
• 19:33
  Speaker 9: train people, give them the at-bats. But honestly, the 176th
• 19:38
  Speaker 9: time that you're moving... the boxes around on a PowerPoint slide,
• 19:43
  Speaker 9: you're not learning that much. And so the question becomes,
• 19:46
  Speaker 9: how can we train people? I'll give you an analogy,
• 19:49
  Speaker 9: which is we have gotten very good at training airplane pilots,
• 19:52
  Speaker 9: including through simulators and not just real life experiences. I
• 19:58
  Speaker 9: think the new technology is opening up all sorts of
• 20:00
  Speaker 9: opportunities for us to be able to, again, cultivate the
• 20:03
  Speaker 9: skill sets that we think are valuable and then make
• 20:05
  Speaker 9: sure there are enough at-bats to give you the experience
• 20:09
  Speaker 9: that you need to spot that seems off. We've got
• 20:11
  Speaker 9: to push back on the AI on that output.
• 20:14
  Speaker 4: All right.
• 20:14
  Speaker 1: Good stuff, Peter. Thank you so much for joining us today.
• 20:16
  Speaker 4: Great to be with you.
• 20:17
  Speaker 1: Peter Orszag, chairman and CEO of Lazard.
• 20:20
  Speaker 4: And I didn't have to jog with Peter Orszag.
• 20:22
  Speaker 1: No five miles for you.
• 20:23
  Speaker 4: A success.
• 20:25
  Speaker 10: All right.
• 20:25
  Speaker 1: Coming up, high earners are bucking the trend and not
• 20:29
  Speaker 1: necessarily maxing out their 401ks. We're going to learn why
• 20:31
  Speaker 1: they're rejecting this classic money advice. Plus, Anastasia Amoroso joins
• 20:36
  Speaker 1: us as well. This is Bloomberg Money.
• 20:41
  Speaker 5: You're listening to Bloomberg Money. Stay with us with more
• 20:44
  Speaker 5: to come after this.
• 20:57
  Speaker 1: Bloomberg Money is our destination for personal finance, and one
• 21:00
  Speaker 1: of the stories that caught our audience's attention this week
• 21:03
  Speaker 1: is whether to maximize your contributions to 401ks because some
• 21:07
  Speaker 1: high earners are now questioning that strategy. Bloomberg's Sarah Foster
• 21:11
  Speaker 1: has been reporting on this story, and she joins us
• 21:13
  Speaker 1: now to discuss. And you talked to a 40-year-old who
• 21:15
  Speaker 1: decided to cut her contribution down to 5% from 20%.
• 21:20
  Speaker 1: So she can still capture her full employer match, but
• 21:23
  Speaker 1: she no longer wants to put that other amount into
• 21:26
  Speaker 1: her 401k. She's redirecting it elsewhere.
• 21:29
  Speaker 3: It's been months, I think, of writing stories about maxers.
• 21:32
  Speaker 3: I guess it's time that we write a story about anti-maxers.
• 21:35
  Speaker 3: I spoke with one of these savers who told me
• 21:37
  Speaker 3: that she's still saving and investing for her future. She's
• 21:40
  Speaker 3: just not putting it in the 401k.
• 21:41
  Speaker 8: She's looking at the Roth IRA, brokerages.
• 21:44
  Speaker 3: She wants access to the funds earlier, and she wants
• 21:46
  Speaker 3: more control over her investments.
• 21:48
  Speaker 1: And if she were to put it in her 401k,
• 21:50
  Speaker 1: she would be penalized if she took her money out early.
• 21:52
  Speaker 1: So this is for people who want to work hard,
• 21:54
  Speaker 1: save hard, and retire early.
• 21:56
  Speaker 3: It's one of those stories where I think finance has
• 21:59
  Speaker 3: to kind of fit around your personal goals. And so
• 22:02
  Speaker 3: if you're someone who maybe wants to take on a
• 22:05
  Speaker 3: little more risk or maybe retire early before those typical
• 22:08
  Speaker 3: rules with the traditional 401k, that's when it probably makes
• 22:12
  Speaker 3: sense to max out, or to not max out, excuse me.
• 22:15
  Speaker 3: But I think the big question now is, A lot
• 22:19
  Speaker 3: of retirement planners are a little bit worried about it.
• 22:21
  Speaker 4: I'm worried about it.
• 22:22
  Speaker 5: The thing that's changed from Peter Orszag and his landmark
• 22:25
  Speaker 5: work at Brookings years ago is I believe we're all
• 22:27
  Speaker 5: living longer. Is that part of this equation that some
• 22:32
  Speaker 5: 39-year-old actually understands that if there's a couple, say? the
• 22:36
  Speaker 5: actuarial ability to get to 90 is pretty tangible.
• 22:39
  Speaker 3: That's actually a big concern for a lot of the
• 22:42
  Speaker 3: retirement experts I spoke with. You know, it's not just
• 22:45
  Speaker 3: the fact that the 401k was so successful as a
• 22:47
  Speaker 3: wealth building tool because it was a set it and
• 22:49
  Speaker 3: forget it method, but it was also successful for saving
• 22:52
  Speaker 3: for retirement because people were unable to access the money.
• 22:56
  Speaker 3: You know, even if you were tempted to spend it,
• 22:58
  Speaker 3: you couldn't. And now this is a concern here if
• 23:01
  Speaker 3: it is something that you have more access to sooner.
• 23:03
  Speaker 1: So this 39-year-old, she's redirecting her money to where? To
• 23:07
  Speaker 1: a health savings account? To a brokerage account?
• 23:11
  Speaker 3: A brokerage account and a Roth IRA. And actually, she
• 23:13
  Speaker 3: maxed out the Roth IRA this year, but now she
• 23:16
  Speaker 3: plans to not max out that next year and instead
• 23:19
  Speaker 3: fund most of the investments to the brokerage account because
• 23:21
  Speaker 3: she is one of those people who wants to retire.
• 23:23
  Speaker 5: Is there an assumption within retirement that you go to
• 23:26
  Speaker 5: a lower tax bracket? So many people I've talked to
• 23:28
  Speaker 5: say it's a fiction. You know, you retire and it's like, yay,
• 23:31
  Speaker 5: lower tax bracket.
• 23:32
  Speaker 4: No, oops.
• 23:33
  Speaker 8: The tax consideration is part of it, too.
• 23:35
  Speaker 3: I think, you know, even with the advent of Roth 401ks,
• 23:38
  Speaker 3: it's not really kind of helping people think about it,
• 23:41
  Speaker 3: especially if you were.
• 23:42
  Speaker 8: The original incentive of the 401k was.
• 23:44
  Speaker 3: To take the tax break, lower your taxable income, you know,
• 23:47
  Speaker 3: pay it in retirement when hopefully you're in a lower
• 23:49
  Speaker 3: tax bracket then.
• 23:50
  Speaker 8: But I think.
• 23:51
  Speaker 3: As we've seen that tax rates are historically low, there
• 23:55
  Speaker 3: is a lot more room to go up than down.
• 23:57
  Speaker 1: That's a really good point. All right, Sarah, thank you
• 23:59
  Speaker 1: so much. Sarah Foster, she writes for our Bloomberg Money.
• 24:02
  Speaker 4: Is she on every week?
• 24:03
  Speaker 1: I think we do have a contract.
• 24:05
  Speaker 3: I like it.
• 24:05
  Speaker 8: It's good.
• 24:06
  Speaker 5: That's because the reporting is so damn good. Sarah, thank
• 24:09
  Speaker 5: you so much. Joining us now, and this is really
• 24:11
  Speaker 5: important for all of you who've missed the bull market,
• 24:14
  Speaker 5: Anastasia Amoroso. Chief Investment Strategist, Partners Group. Her ability along
• 24:20
  Speaker 5: the way to say find courage and stay in the
• 24:23
  Speaker 5: market has been a landmark as well.
• 24:25
  Speaker 4: Are you still a bull?
• 24:26
  Speaker 8: I'm still a bull. I'm still a bull, Tom.
• 24:28
  Speaker 11: I do allow for the possibility that the market will.
• 24:30
  Speaker 8: Go down at some point. I do allow for that,
• 24:33
  Speaker 8: of course.
• 24:33
  Speaker 11: But look, it's been a phenomenal ride to be in
• 24:35
  Speaker 11: the equity markets.
• 24:36
  Speaker 3: Right.
• 24:36
  Speaker 11: I just sort of refresh the longer-term data set and look.
• 24:39
  Speaker 11: Over the last 15 years, the S & P averaged
• 24:41
  Speaker 11: something like 11%, 12%. So it's been a phenomenal time
• 24:45
  Speaker 11: to accumulate that personal wealth.
• 24:47
  Speaker 4: Let's look at the money market, the money MMR right now.
• 24:51
  Speaker 4: Excuse me.
• 24:52
  Speaker 5: This is Anastasia Amarosa. This should continue. Standard and poor
• 24:56
  Speaker 5: is expected. ginormous quarter look for that next week starting
• 25:00
  Speaker 5: with jp morgan standard and poor's 493 the rest of
• 25:03
  Speaker 5: them still expected to deliver 18 growth edgar denny this
• 25:07
  Speaker 5: afternoon's at 12 percent growth earnings revisions consistently positive and
• 25:12
  Speaker 5: here's the money anastasia line this should continue that's the
• 25:17
  Speaker 5: hope and prayer come on at some point.
• 25:19
  Speaker 11: It ends Well, it ends if the Fed ties the
• 25:24
  Speaker 11: policy so much that it does slow the economy. It
• 25:27
  Speaker 11: ends if the technology hope that we now all have,
• 25:31
  Speaker 11: for some reason, that bubble bursts. But I don't see
• 25:33
  Speaker 11: either one of those things on the horizon, Tom. And
• 25:35
  Speaker 11: I think the reason why I certainly continue to be
• 25:37
  Speaker 11: a bull into your end is I do think a
• 25:39
  Speaker 11: lot of the fears that we had for the market
• 25:41
  Speaker 11: are in the process of being resolved. We're in the
• 25:43
  Speaker 11: process of being absorbed, digested, and that we can move
• 25:46
  Speaker 11: on to the next thing. And what I'm talking about is,
• 25:47
  Speaker 11: let's say, the price of oil. And yes, we're still
• 25:50
  Speaker 11: hovering around.
• 25:51
  Speaker 3: $ 100 a barrel.
• 25:51
  Speaker 11: But the fact of the matter is a big chunk
• 25:53
  Speaker 11: of the Middle East production is actually making its way
• 25:56
  Speaker 11: out of the Middle East because of the rerouting and
• 25:59
  Speaker 11: just reshaping of that region.
• 26:00
  Speaker 8: So that's the first point.
• 26:01
  Speaker 11: The second point is, yes, yields have risen quite significantly.
• 26:05
  Speaker 11: but it's against the backdrop of really solid economic growth.
• 26:08
  Speaker 11: And also, they have risen to the point where it's
• 26:10
  Speaker 11: attractive for investors. You know, it's attractive for investors. You
• 26:13
  Speaker 11: don't see end-user demand step back at the U.S.
• 26:16
  Speaker 8: Treasury auctions. You actually see it strengthen.
• 26:18
  Speaker 11: So, I think 5.25 on a 10-year will generate investor appetite,
• 26:23
  Speaker 11: which in and by itself can cap the level of
• 26:25
  Speaker 11: yields from here on out.
• 26:26
  Speaker 5: Okay.
• 26:27
  Speaker 1: So, this great bond sell-off has revived the case for bonds.
• 26:29
  Speaker 1: What does it mean for the valuations of equities?
• 26:32
  Speaker 11: Well, Look, of course, on the margin is going to
• 26:35
  Speaker 11: dent the valuations of equities. And I would say we've
• 26:37
  Speaker 11: actually seen that to some extent. So first of all,
• 26:40
  Speaker 11: if you looked at the S & P beginning of
• 26:42
  Speaker 11: this year, you were looking at a 23 times multiple.
• 26:44
  Speaker 8: Today, it's a 19 times multiple.
• 26:46
  Speaker 11: And I think part of the reason is we had
• 26:48
  Speaker 11: to absorb the geopolitical uncertainty and also the rates uncertainty.
• 26:51
  Speaker 8: So that has reset. We've also seen that reset play
• 26:53
  Speaker 8: out in private markets as well.
• 26:56
  Speaker 11: But if that is happening against the backdrop of strong
• 27:00
  Speaker 11: economic growth, that earnings growth, Tom, that I.
• 27:03
  Speaker 8: that I discussed, that is accelerating.
• 27:05
  Speaker 11: So that allows companies the freedom, the room to absorb
• 27:09
  Speaker 11: those higher.
• 27:09
  Speaker 5: This is a great conversation for the has. On Bloomberg Money,
• 27:12
  Speaker 5: I want you to talk about the personal finance. I
• 27:15
  Speaker 5: look at you, Anastasia. You come to America from Eastern Europe.
• 27:20
  Speaker 5: You come over here. You're in New Mexico. You're not
• 27:22
  Speaker 5: in some fancy school in New York City or name
• 27:24
  Speaker 5: the city. You're in New Mexico. There's a huge body
• 27:27
  Speaker 5: of America that's not participating in the conversation we're having here.
• 27:32
  Speaker 5: about earnings and future earnings, PEs and fancy ratios. Consumer
• 27:36
  Speaker 5: sentiment out hours ago.
• 27:38
  Speaker 4: It's terrible.
• 27:39
  Speaker 5: How do we dovetail our investor prosperity into an America
• 27:44
  Speaker 5: that feels flat on their back? I don't understand how
• 27:47
  Speaker 5: those two meet.
• 27:48
  Speaker 11: I mean, it's such a huge disconnect right now. And look,
• 27:51
  Speaker 11: everywhere you look, consumers do feel depressed about their personal finances.
• 27:55
  Speaker 8: And I can understand why.
• 27:56
  Speaker 11: Because everywhere you go, the average selling prices are moving higher.
• 28:01
  Speaker 8: And what I've sort of realized just.
• 28:02
  Speaker 11: Traveling this week and just this year is that we're
• 28:05
  Speaker 11: in an environment where consumer demand is actually quite strong.
• 28:09
  Speaker 11: We feel like we're breaking even as consumers, but we're
• 28:12
  Speaker 11: still doing okay. So the demand side of the equation
• 28:14
  Speaker 11: is fine. But what's happened also is that we are
• 28:16
  Speaker 11: capacity constrained, whether it's the travel industry, whether it's the
• 28:19
  Speaker 11: leisure hospitality, whether it's the industrials industry.
• 28:22
  Speaker 8: So as a result... corporations have pricing power.
• 28:26
  Speaker 11: They're using that pricing power, which is why we're seeing
• 28:28
  Speaker 11: those record earnings. So the bottom line, Tom, it is
• 28:31
  Speaker 11: not a phenomenal time.
• 28:32
  Speaker 8: To be a consumer.
• 28:33
  Speaker 11: It's sort of an okay or maybe a bad time
• 28:35
  Speaker 11: to be a consumer, but it's actually a phenomenal time,
• 28:37
  Speaker 11: a very solid time to be an investor. Because if
• 28:40
  Speaker 11: you can invest in the companies that are solving those
• 28:43
  Speaker 11: capacity bottlenecks and they're delivering record earnings in the meantime,
• 28:47
  Speaker 11: that's the way to, I think, even out the playing
• 28:49
  Speaker 11: field and to have those consumers become investors.
• 28:53
  Speaker 1: Anastasia, on Bloomberg Money, we like to ask our guests
• 28:56
  Speaker 1: how you are investing, how you've changed your approach to
• 28:58
  Speaker 1: investing given everything that's happening right now. What would surprise
• 29:01
  Speaker 1: people about the way that you think about investing personally?
• 29:06
  Speaker 11: Well, I don't know if that's surprising necessarily, but I
• 29:09
  Speaker 11: do invest across all the various asset classes.
• 29:11
  Speaker 8: Of course, the core pillar of the portfolio still has to.
• 29:14
  Speaker 11: Be that S & P exposure, the NASDAQ exposure, the
• 29:17
  Speaker 11: AI trade that absolutely has to be a part of it.
• 29:19
  Speaker 1: So you're in private assets too?
• 29:20
  Speaker 8: Of course, yeah, private assets.
• 29:22
  Speaker 11: But I don't think that would be surprising given that
• 29:24
  Speaker 11: I do work for a private markets company. But I
• 29:26
  Speaker 11: do extend the universe from public to private. And I
• 29:29
  Speaker 11: think of it as a continuum. So if you're going
• 29:31
  Speaker 11: to invest in equities, make it public equities, but also
• 29:34
  Speaker 11: make it private. If you're going to invest in fixed income, look,
• 29:37
  Speaker 11: bonds are great, high grade is great, Treasuries are becoming greater.
• 29:42
  Speaker 11: But at the same time, I'm quite attracted to private credit.
• 29:46
  Speaker 11: And the fact is that you have that substantial yield
• 29:49
  Speaker 11: that you can earn there.
• 29:49
  Speaker 5: I want to bring up this chart. It is my
• 29:51
  Speaker 5: Bill Gross chart. I used it first with William Gross many,
• 29:54
  Speaker 5: many years ago. It is a 10-year yield back before
• 29:57
  Speaker 5: anybody in this room besides me was born. It's the
• 30:00
  Speaker 5: great moderation from the Volcker years down, and you see
• 30:03
  Speaker 5: the surge up here in inflation and in yield that's
• 30:06
  Speaker 5: been extraordinary. What do you say to the crew addicted
• 30:10
  Speaker 5: to price up and the low yields that we had
• 30:13
  Speaker 5: for five, six, seven years?
• 30:15
  Speaker 8: Well, that's not the future. That's what I would say
• 30:17
  Speaker 8: to that.
• 30:18
  Speaker 11: And look, bygone is the era of those lower yields
• 30:21
  Speaker 11: and the term premium that has been suppressed. You know,
• 30:24
  Speaker 11: if you dissect the move higher in the 10-year Treasury yield,
• 30:27
  Speaker 11: some of it has to do with sick inflation.
• 30:29
  Speaker 8: Some of it has to do with robust growth, which
• 30:31
  Speaker 8: is great.
• 30:31
  Speaker 11: And some of it has to do with the fact
• 30:33
  Speaker 11: that the bond market has more uncertainty about the trajectory
• 30:36
  Speaker 11: of the budget deficit and just growth patterns.
• 30:39
  Speaker 10: Globally.
• 30:40
  Speaker 11: So I think we have to get used to the fact, Tom,
• 30:42
  Speaker 11: that the term premium is going to revert to the
• 30:44
  Speaker 11: historical norms. And that means that the 10-year treasury is
• 30:47
  Speaker 11: not going to be at 2%.
• 30:49
  Speaker 8: It is likely to hover around 5%. This has been wonderful.
• 30:53
  Speaker 4: Anastasia Amoroso, thank you.
• 30:54
  Speaker 5: And congratulations on The quality of her bull market calls along.
• 30:59
  Speaker 1: The way, I got to go to cash.
• 31:01
  Speaker 4: I'm afraid. I'm afraid.
• 31:02
  Speaker 3: No.
• 31:03
  Speaker 1: Hold tight.
• 31:04
  Speaker 4: Hold tight. Next earnings, revenues will be there. Earnings will
• 31:07
  Speaker 4: be there. Thank you so much.
• 31:08
  Speaker 8: Thanks so much.
• 31:09
  Speaker 5: For coming in today. This is going to be fascinating.
• 31:12
  Speaker 5: I love what you're going to talk about here, Scott. Right.
• 31:14
  Speaker 1: Because coming up, this discount of leaving New York City
• 31:17
  Speaker 1: for the suburbs like New Jersey, Connecticut. Well, it's not
• 31:20
  Speaker 1: what it used to be. We've got the details on
• 31:22
  Speaker 1: that because you might be surprised if you decamped for
• 31:25
  Speaker 1: New Jersey what you're paying for now, especially when you're
• 31:28
  Speaker 1: sending kids to sports and summer camps and all that.
• 31:31
  Speaker 1: This is Bloomberg Money.
• 31:35
  Speaker 4: You're listening to Bloomberg Money.
• 31:37
  Speaker 5: Stay with us with more to come after this.
• 31:43
  Speaker 1: Bloomberg Money is your new destination for personal finance. It's
• 31:46
  Speaker 1: a cross-platform effort that extends beyond your television screen, including
• 31:49
  Speaker 1: our new digital hub at Bloomberg.com slash money. And Tom,
• 31:53
  Speaker 1: this week we saw the story about how the New
• 31:56
  Speaker 1: Jersey discount to New York and Philadelphia, it's gone with
• 31:59
  Speaker 1: the cost of living in the suburbs now starting to
• 32:02
  Speaker 1: outpace the.
• 32:02
  Speaker 4: I wouldn't even say nationwide.
• 32:04
  Speaker 1: Yeah, absolutely. Paulina Cacero reported on the story and she
• 32:07
  Speaker 1: joins us now. And Paulina, what's happening in New Jersey
• 32:10
  Speaker 1: where costs are rising so much faster than even New
• 32:13
  Speaker 1: York City?
• 32:14
  Speaker 12: Yeah, so I think like from 2020 to since 2021
• 32:17
  Speaker 12: during the pandemic, we saw housing costs increase, right? People
• 32:21
  Speaker 12: could suddenly work from anywhere. They wanted to move to
• 32:23
  Speaker 12: the suburbs, have a little bit more space under COVID-19 lockdowns.
• 32:26
  Speaker 1: And we saw housing prices drop.
• 32:28
  Speaker 12: Just expand then obviously everyone came back bosses were calling
• 32:33
  Speaker 12: workers back to the office and everyone started moving you
• 32:36
  Speaker 12: know closer along the Hudson River so they could commute
• 32:39
  Speaker 12: back into the city and you know since then overall
• 32:43
  Speaker 12: inflation has risen New York City has gotten a lot
• 32:45
  Speaker 12: more expensive and people that might not have moved to
• 32:48
  Speaker 12: the suburbs started to in large part and now child
• 32:52
  Speaker 12: care costs are what's driving up the cost of raising
• 32:54
  Speaker 12: a family in New Jersey.
• 32:56
  Speaker 1: And It used to be housing was cheaper in the
• 32:59
  Speaker 1: suburbs and you got more bang for your buck there.
• 33:01
  Speaker 1: But now that's starting to equalize a little bit too.
• 33:04
  Speaker 12: Yeah, especially with interest rates where they're at. If you
• 33:07
  Speaker 12: could probably find a rental that's comparable to the cost
• 33:10
  Speaker 12: of your mortgage in New Jersey. And you might be
• 33:12
  Speaker 12: getting more space, but the cost you might be saving,
• 33:16
  Speaker 12: you're spending on commuting back into the city and in
• 33:18
  Speaker 12: the higher... cost of child care as well.
• 33:21
  Speaker 1: This chart, which looks complicated, but all you need to
• 33:23
  Speaker 1: know is that the New Jersey suburbs are seeing much
• 33:27
  Speaker 1: faster growth in prices than other places. I mean, most
• 33:30
  Speaker 1: of that is New Jersey. Monmouth County, Hudson County, Passaic County,
• 33:34
  Speaker 1: you don't go there.
• 33:34
  Speaker 4: I can't see it. You can't see it?
• 33:37
  Speaker 1: But you've been a Manhattan diehard this whole time.
• 33:39
  Speaker 5: I've been a Manhattan diehard the whole time, but I
• 33:41
  Speaker 5: have the luxury. I think this is hugely emotional nationwide.
• 33:46
  Speaker 5: I'm going to go to your time at the University
• 33:47
  Speaker 5: of Southern California. And the basic idea of, is LA
• 33:51
  Speaker 5: any different? I don't think so. I think this is nationwide.
• 33:55
  Speaker 12: Yeah, I think we're definitely seeing it on a national level.
• 33:57
  Speaker 12: I think families always kind of move to the exurbs
• 34:00
  Speaker 12: or the suburbs to get more space and save a
• 34:02
  Speaker 12: little bit. But because there's so many people doing that,
• 34:05
  Speaker 12: it's not cheaper anymore.
• 34:05
  Speaker 4: The bargain was public schools.
• 34:07
  Speaker 5: Are you saying that you're reporting that the public school
• 34:10
  Speaker 5: bargain is broken?
• 34:12
  Speaker 12: I don't know if it's the public school bargain, but
• 34:14
  Speaker 12: in major cities like New York City, we are expanding
• 34:16
  Speaker 12: our universal child care program. That really helps with those
• 34:20
  Speaker 12: early costs of child care. And actually, child care in
• 34:22
  Speaker 12: New York City is about $ 5, 000 cheaper than it is
• 34:25
  Speaker 12: in New Jersey.
• 34:26
  Speaker 5: This is something I'm blind on. I am blind to
• 34:29
  Speaker 5: the immense challenge today in personal finance of childcare.
• 34:35
  Speaker 4: I had a gift. It was way cheaper when I
• 34:39
  Speaker 4: was doing it.
• 34:39
  Speaker 1: Well, it's been a long, long time. And not to mention,
• 34:42
  Speaker 1: the immigration crackdown means that the options for childcare have
• 34:47
  Speaker 1: gone down, have slimmed down considerably, too.
• 34:49
  Speaker 5: Yeah, it's a huge thing. What else are you working
• 34:51
  Speaker 5: on besides? I mean, this is a huge theme you've
• 34:53
  Speaker 5: got going here. What's the next story? Get out in
• 34:55
  Speaker 5: front of it.
• 34:56
  Speaker 8: The next story?
• 34:57
  Speaker 12: I mean, I think it's just thinking about where do
• 34:59
  Speaker 12: people go if they want to raise a family? It
• 35:01
  Speaker 12: seems like there's not really anywhere to hide.
• 35:04
  Speaker 8: There's no safe house.
• 35:05
  Speaker 5: And I don't mean to interrupt because we've got to
• 35:06
  Speaker 5: move on, but this is critical because I've seen two, three,
• 35:09
  Speaker 5: four articles this week on the staggering decline In birth rate,
• 35:14
  Speaker 5: in children.
• 35:15
  Speaker 4: I mean, we're becoming like Italy.
• 35:17
  Speaker 1: People have pets rather than kids. Yeah. Pets are cheaper.
• 35:20
  Speaker 4: We make light of that. It's a joke, but come on,
• 35:22
  Speaker 4: from a societal standpoint?
• 35:24
  Speaker 3: Yeah.
• 35:24
  Speaker 12: It's interesting because from the parents that I talk to,
• 35:27
  Speaker 12: a lot of people wanted to have like one or
• 35:29
  Speaker 12: two kids, but because they're not able to afford having
• 35:31
  Speaker 12: kids until later in their life, and then they're just
• 35:34
  Speaker 12: trying to get their kids to two kids.
• 35:35
  Speaker 1: It gets all pushed out.
• 35:36
  Speaker 8: It gets pushed out. What are you, talking the story
• 35:38
  Speaker 8: of my life?
• 35:38
  Speaker 3: No.
• 35:40
  Speaker 4: Let's move on.
• 35:41
  Speaker 1: All right, let's move on. We talked about living in
• 35:43
  Speaker 1: the suburbs. To live in the suburbs is to be
• 35:46
  Speaker 1: a sports parent. And among sports parents, hockey parents are
• 35:49
  Speaker 1: legendarily a unique breed. You can chalk it up to
• 35:52
  Speaker 1: 6 a.m. games every Saturday, hauling the equipment. back and
• 35:55
  Speaker 1: forth from the rink, driving to weekend tournaments in Massachusetts,
• 35:58
  Speaker 1: only to realize that you left the gloves at home.
• 36:00
  Speaker 1: So my book of the week that I'm reading is
• 36:02
  Speaker 1: Pee Wee's Confessions of a Hockey Parent by Rich Cohen.
• 36:06
  Speaker 1: It's his memoir that follows the interminable season of competitive
• 36:10
  Speaker 1: youth hockey in Connecticut, which starts in September, goes through March,
• 36:13
  Speaker 1: then you've got tryouts, which you have to pay separately for,
• 36:16
  Speaker 1: in April. Rich Cohen recounts how he lived vicariously through
• 36:20
  Speaker 1: his kids' on-ice performance. He rode the high of every breakaway,
• 36:24
  Speaker 1: suffered the indignity of every penalty.
• 36:26
  Speaker 4: I want to do this right now.
• 36:28
  Speaker 5: Just in the last hour, Bloomberg News has reported, Rich Cohen,
• 36:32
  Speaker 5: we are fortunate because he wrote one of the definitive
• 36:34
  Speaker 5: books on the Chicago Bears.
• 36:35
  Speaker 3: Yes, he did.
• 36:36
  Speaker 4: And we've lost a giant here.
• 36:38
  Speaker 5: Mike Ditka, I believe at 86 years old, I don't
• 36:41
  Speaker 5: have that in front of me, but he formed what
• 36:43
  Speaker 5: tough was for an entire generation.
• 36:45
  Speaker 1: Someone was just remarking that he always looked angry, but
• 36:48
  Speaker 1: I think that's just kind of his persona. He would,
• 36:51
  Speaker 1: you know, I'm serious about what I do.
• 36:52
  Speaker 4: Right. You know, we should do this as an aside
• 36:55
  Speaker 4: on Bloomberg Money.
• 36:56
  Speaker 5: So many people affected by Mike Ditka in a good
• 36:59
  Speaker 5: and wonderful way.
• 37:00
  Speaker 1: And, of course, you know, memorialized in SNL as Da Bears.
• 37:04
  Speaker 4: Yeah, absolutely.
• 37:06
  Speaker 5: You know, my book here today, if we can jump
• 37:08
  Speaker 5: onto this, on the suburbs as well, is a suburb
• 37:11
  Speaker 5: that is long and gone. It was about a glass
• 37:14
  Speaker 5: of vermouth at 10 a.m., and no one wrote about
• 37:17
  Speaker 5: it like John Cheever. For those younger, this is 1954.
• 37:22
  Speaker 5: Two lifetimes ago, and no one wrote about the angst.
• 37:27
  Speaker 5: If you loved Mad Men, the ethos of Mad Men
• 37:31
  Speaker 5: came 100% from the magnificent work of John Chee.
• 37:35
  Speaker 1: Depressed people, beautiful depressed people living in their homes in
• 37:38
  Speaker 1: the suburbs.
• 37:38
  Speaker 4: Well, you're describing me. Be careful here.
• 37:41
  Speaker 5: The answer is there was an element of that tension,
• 37:44
  Speaker 5: and maybe it was depression, but it was mostly depression.
• 37:46
  Speaker 5: the post-World War II struggle in the IGY 1957.
• 37:50
  Speaker 1: I was looking this up, and John Cheever lived in
• 37:52
  Speaker 1: Scarborough on Hudson, which is between Briarcliff Manor and Austin,
• 37:55
  Speaker 1: and Austin was the home of the fictional Betty and
• 37:58
  Speaker 1: Don Draper in Mad Men. And at one point, he
• 38:00
  Speaker 1: rented a house that was previously occupied by Richard Yates, who,
• 38:04
  Speaker 1: of course, wrote Revolutionary Road, which itself was a big
• 38:08
  Speaker 1: thing about soul-sucking suburbs that.
• 38:09
  Speaker 3: Got turned into.
• 38:10
  Speaker 5: And what's magical about this is it folds right back
• 38:12
  Speaker 5: to Bloomberg Money and personal finance issues. We perceive now,
• 38:16
  Speaker 5: and I would go with this, it just was easier
• 38:19
  Speaker 5: then to be average or be above average.
• 38:22
  Speaker 4: And now with the budgets and the bills.
• 38:25
  Speaker 1: Yeah, it's crazy hard.
• 38:26
  Speaker 4: It's way different than the time of John Cheever.
• 38:29
  Speaker 1: The competitiveness has gone out the window. All right, Paulina,
• 38:32
  Speaker 1: thank you so much for joining us. Paulina Cacero, Bloomberg
• 38:35
  Speaker 1: Money Reporter. And for the latest reviews and recommendations from Bloomberg,
• 38:38
  Speaker 1: subscribe to the On Books newsletter.
• 38:45
  Speaker 4: Bloomberg Money. I mean, it's as simple as this. I
• 38:47
  Speaker 4: have a new iPhone. It's boring.
• 38:49
  Speaker 5: It's got a boring case. Randall is rocking. That's like
• 38:54
  Speaker 5: a Jalen Brunson look.
• 38:55
  Speaker 2: I love it.
• 38:55
  Speaker 4: I mean, it's just rocking.
• 38:57
  Speaker 10: This is the phone from last year, but I appreciate
• 38:59
  Speaker 10: the compliment on my case.
• 39:01
  Speaker 1: Randall always comes in and surprises us. We want to
• 39:03
  Speaker 1: talk to you about Jalen Brunson and the Knicks. But
• 39:05
  Speaker 1: before we get to that, flag football, because David Gurra
• 39:08
  Speaker 1: was saying his 13-year-old daughter plays flag football. And that
• 39:11
  Speaker 1: is something that we've seen a lot of, this growth
• 39:13
  Speaker 1: in flag football, that the NFL is very much behind.
• 39:16
  Speaker 10: Yeah, the NFL has invested $ 192 million alongside a multitude
• 39:20
  Speaker 10: of partners with the goal of creating a pro men
• 39:25
  Speaker 10: and women's.
• 39:25
  Speaker 4: Flag football league.
• 39:26
  Speaker 10: And a lot of that has gone to the grassroots
• 39:28
  Speaker 10: level as well. And so it's no surprise that I
• 39:30
  Speaker 10: think some younger women are choosing flag football over a
• 39:33
  Speaker 10: sport like soccer or softball, even volleyball, because the gateway
• 39:37
  Speaker 10: to entry is a lot lower.
• 39:38
  Speaker 4: It's cheaper. It's cheaper too. I mean, think about it.
• 39:41
  Speaker 10: In regular football, you need the pads, you need the helmet,
• 39:43
  Speaker 10: you need everything. In flag football, you need flags, you
• 39:45
  Speaker 10: need Maybe gloves and cleats.
• 39:47
  Speaker 4: Excuse me, you need a glass, of course, 3-2 beer
• 39:50
  Speaker 4: in your left hand while you're playing. At least that's
• 39:52
  Speaker 4: what it was when we were doing it.
• 39:54
  Speaker 10: I mean, it's interesting the perception of flag football has changed.
• 39:58
  Speaker 10: When I was playing, I'd be like, oh, we're not
• 39:59
  Speaker 10: playing flag. It's for lesser men, I'd say. But now
• 40:03
  Speaker 10: I think the NFL is leaning into it because if
• 40:06
  Speaker 10: you think about the other leagues that exist, the NWSL,
• 40:08
  Speaker 10: the WNBA, those sports are booming.
• 40:10
  Speaker 4: The valuations are growing. And so.
• 40:12
  Speaker 10: What we're going to find out is can the NFL
• 40:14
  Speaker 10: build an infrastructure, not necessarily with their own league, but
• 40:17
  Speaker 10: at the grassroots level, high school, and eventually college, for
• 40:21
  Speaker 10: this to be a booming business.
• 40:22
  Speaker 1: Okay, let's talk about the NBA and Jalen Brunson.
• 40:25
  Speaker 3: Mrs.
• 40:25
  Speaker 1: Keene calls him my Jalen. People are getting excited about
• 40:28
  Speaker 1: the first game of the season where the Knicks will
• 40:31
  Speaker 1: play the 76ers. And Tom's been scanning the prices.
• 40:34
  Speaker 5: $ 32, 000 down close.
• 40:36
  Speaker 3: What?
• 40:36
  Speaker 4: Two tickets. So you said $ 32, 000? $ 33, 000 down close.
• 40:38
  Speaker 5: $ 33, 000.
• 40:38
  Speaker 4: That doesn't surprise me. $ 76, 000. It doesn't surprise me.
• 40:42
  Speaker 5: This is nirvana. This opening, Nick, $ 76, 000. I mean, it's
• 40:45
  Speaker 5: this experience thing in sports.
• 40:47
  Speaker 1: Now, isn't it? Jalen Brunson versus LeBron James.
• 40:49
  Speaker 4: And everyone else. But it doesn't surprise me.
• 40:52
  Speaker 10: Look, there was some drama behind the tickets a couple
• 40:55
  Speaker 10: weeks ago with season ticket holders. And a lot of
• 40:57
  Speaker 10: people were saying, like, these prices are too high. The
• 41:00
  Speaker 10: Knicks redid the process. They are, I mean, $ 32, 000 is
• 41:03
  Speaker 10: a lot of money, so you might need to go
• 41:04
  Speaker 10: a little higher. But generally speaking, this is Madison Square
• 41:07
  Speaker 10: Garden we're talking about, and this is a world champion Knicks.
• 41:09
  Speaker 10: James Dolan is not going to give you, myself, or
• 41:12
  Speaker 10: Scar any sort of discount in that experience.
• 41:14
  Speaker 4: I got eight other questions. We could go with him
• 41:16
  Speaker 4: for a whole other hour.
• 41:17
  Speaker 1: I'm just grateful that I went to see the Knicks
• 41:19
  Speaker 1: last year before they won, and I could actually buy
• 41:21
  Speaker 1: the tickets back then.
• 41:22
  Speaker 5: Are they distracted with their success? If you're doing SNL
• 41:26
  Speaker 5: and all the rest of this stuff.
• 41:28
  Speaker 10: No, I actually don't think the players are, but I
• 41:30
  Speaker 10: do think that James Dolan not paying some of these
• 41:33
  Speaker 10: players is going to inevitably self-destruct the team if he's
• 41:37
  Speaker 10: trying to make everyone take the Jalen Brunson pay cut.
• 41:40
  Speaker 3: Ooh.
• 41:40
  Speaker 4: I think that could happen.
• 41:41
  Speaker 1: There's the tension for this year.
• 41:43
  Speaker 4: Yeah, absolutely.
• 41:43
  Speaker 10: I mean, the Knicks just put out a statement today
• 41:45
  Speaker 10: that said they're calling off contract negotiations.
• 41:48
  Speaker 4: Ten seconds. Cleveland or White Sox? Ooh, I'll go White
• 41:51
  Speaker 4: Sox because I can go outside of Chicago.
• 41:53
  Speaker 1: I stopped watching because the Yankees are out. Randall Williams,
• 41:55
  Speaker 1: thank you so much. Your senior business and sports reporter.
• 41:58
  Speaker 1: That does it for Bloomberg Money this week. From Tom
• 42:01
  Speaker 1: and me, have a great weekend.
• 42:09
  Speaker 5: This is the Bloomberg Money Podcast, bringing you a smart
• 42:13
  Speaker 5: look at the forces shaping your financial life. I'm Tom
• 42:17
  Speaker 5: Keen with Scarlett Fu. You can watch the show live
• 42:21
  Speaker 5: on Bloomberg TV every Friday at noon Wall Street time.
• 42:25
  Speaker 5: Subscribe to the podcast on Apple, Spotify, or wherever you listen.
• 42:29
  Speaker 5: And as always, on the Bloomberg Terminal and the Bloomberg
• 42:33
  Speaker 5: Business app.
• 42:35
  Speaker 12: Thank you.