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Speaker 2: Hey listen, folks. We did get a key inflation gauge.
Speaker 2: It came out earlier this morning. It grew at a
Speaker 2: slower pace last month. We also got some data on
Speaker 2: a resilient US consumer. We also saw incomes growing, and
Speaker 2: yet US consumer sentiment fell in the month of September
Speaker 2: to a four month low on growing concerns about the
Speaker 2: impact of high prices and personal finances. Richmond Fed President
Speaker 2: Thomas Barkin spoke with Bloomberg TV and Radio international economics
Speaker 2: correspondent and policy correspondent Michael McKee before this morning's of
Speaker 2: US economic reports, and you talked about the Fed's dual
Speaker 2: mandate and keeping an eye on all the data as
Speaker 2: it continues to come in.
Speaker 3: It's a low hiring environment, but the labor supply is
Speaker 3: also short and you have to be very attentive to
Speaker 3: that balance because it could get out of balance right.
Speaker 3: Similar on the inflation side, you do have these cost
Speaker 3: pressures and four and a half years of inflation over target.
Speaker 3: On the other hand, you're not seeing that show up
Speaker 3: and spikes and inflation in the real time numbers.
Speaker 4: We are seeing what.
Speaker 3: Seems to be a productivity boom, and so I think
Speaker 3: you have to be very attentive to how little we
Speaker 3: know about how each of our mandate variables is going
Speaker 3: to play out. And so, you know, I feel like
Speaker 3: very adaptive is the way to think about it as
Speaker 3: and that's part of why I'm not being prescriptive into well,
Speaker 3: it's this many cuts over this period of time, because
Speaker 3: I think we're going to see and learn a lot as.
Speaker 5: We go here.
Speaker 2: Adaptive and attentive sounds like data dependent. That is Richmond
Speaker 2: FED President Thomas Barkin. Earlier this morning on Bloomberg with
Speaker 2: Bloomberg TV and Radio International Economics and Policy course Mike
Speaker 2: joining us from DC along with Elizabeth rent Or, senior
Speaker 2: economist at the personal finance company nerd Wallet. We'll get
Speaker 2: to her in just a moment, but Mike, I do
Speaker 2: want to start with you this morning's data drop of
Speaker 2: US data and what you heard from Fed President Barkin.
Speaker 2: Does it all kind of mesh with what we got
Speaker 2: in the latest FED decision and commentary.
Speaker 6: Maybe not.
Speaker 7: And that's the situation that Tom was describing, is we
Speaker 7: came out of the FED meeting thinking that they were
Speaker 7: going to do a rate cut in October and there
Speaker 7: was a good chance of another one in December. And
Speaker 7: then over the last four or five days, we've gotten
Speaker 7: a number of data points that suggest that the economy
Speaker 7: may be rebounding from a summer low, maybe stronger than
Speaker 7: we thought. Second Quarter growth was revised up, and today
Speaker 7: we got better than expected spending numbers from consumers. So
Speaker 7: at this point it's really hard to say what's going
Speaker 7: to happen. The one thing we know from today PCEE
Speaker 7: report is that inflation is not going down. It didn't
Speaker 7: get any worse, but it is still a closer to
Speaker 7: three percent than the Fed's two percent target. So it
Speaker 7: just kind of beans that those who are in the
Speaker 7: middle for the Fed, they're probably going to be waiting
Speaker 7: till much closer to October twenty ninth to make any
Speaker 7: kind of decision.
Speaker 8: Mike, is there a shoe to drop when it comes
Speaker 8: to inflation as a result of tariffs, because we did
Speaker 8: have so many companies pull forward goods purchases before tariffs hit,
Speaker 8: and we just haven't seen it show up. We're going
Speaker 8: to start hearing from companies in the middle of next
Speaker 8: month for their latest earnings report, but we're not seeing
Speaker 8: the spikes in inflation like he was talking about to you.
Speaker 7: Well, we have seen some We've seen prices go up
Speaker 7: for some goods, and there are expectations that will continue
Speaker 7: to see that. It depends, as you mentioned, on inventories
Speaker 7: and how fast those are worked down and then supply
Speaker 7: chain adjustments. It's very hard to say exactly when things
Speaker 7: are going to hit, but economists do expect and the
Speaker 7: Fed does expect to see inflation rise over the next
Speaker 7: couple of months. Then the question is does it go
Speaker 7: down again or does it keep going up because maybe
Speaker 7: the President is continuing to put on additional tariffs. The
Speaker 7: one thing that we can probably into it is that
Speaker 7: Americans are not happy. The consumer sentiment numbers went down
Speaker 7: because of inflation, and even though it doesn't have a
Speaker 7: lot to do with the President's tariffs, Gasoline prices have
Speaker 7: gone up. Meat prices have gone up. Turkey prices have
Speaker 7: gone up there for different reasons. But when you go
Speaker 7: to the grocery store, it's all just inflation to you.
Speaker 2: Yep.
Speaker 6: I don't do a lot of the shopping in my house.
Speaker 6: My husband tends to do.
Speaker 8: My daughter do.
Speaker 9: No.
Speaker 2: My people are my husband and my daughter. But man,
Speaker 2: they brought some steaks and I was like, how much
Speaker 2: did they cost? When they told me, I was like, whoa, Elizabeth,
Speaker 2: come on in on this. Because we are continuing to
Speaker 2: get data points, how does that cross with what we
Speaker 2: did get from the and your view on where the
Speaker 2: economy is and what needs to be done in terms
Speaker 2: of monetary policy.
Speaker 10: Well, I think largely what Spin said is accurate. You know,
Speaker 10: the FED is trying to keep their eye on the ball.
Speaker 10: We're all trying to keep our eye on the ball.
Speaker 10: But there's a lot of balls in the air right now,
Speaker 10: and some of them are flying in completely different direction.
Speaker 10: So it's really hard to suss out where things are headed.
Speaker 10: When it comes to inflation, Yes, it ticked up just slightly,
Speaker 10: but it's not showing real acceleration right now. To your point,
Speaker 10: consumers are feeling a bit of a burn more than
Speaker 10: that headline number would have you believe. You know, food
Speaker 10: inflation rose last month according to today's data, and that's
Speaker 10: something we all interact with on a weekly, if not
Speaker 10: daily basis.
Speaker 4: We see that number.
Speaker 10: And so that's definitely playing into consumer sentiment. Also, we're
Speaker 10: more exposed to all of this talk about the economy, right,
Speaker 10: We're all talking a lot about when inflation is going
Speaker 10: to pick back up, the impact of tariffs, and so
Speaker 10: that's in the back of consumers heads as well, So
Speaker 10: they anticipate a lot of potentially bad stuff happening as
Speaker 10: of yet, wen't haven't seen it translate into reduce spending
Speaker 10: from a big picture overall, I'd say this week we
Speaker 10: got some more of those mixed messages though. Right consumer
Speaker 10: spending is strong despite weak sentiment. The economy continues to
Speaker 10: grow according to the GDP figures. I say, if there's
Speaker 10: some good news out of this week in addition to
Speaker 10: the consumer spending, is that the initial claims came down
Speaker 10: the unemployment claims, So that's a bright spot I suppose
Speaker 10: on the recent past labor market.
Speaker 2: You know, I'm thinking of a conversation that Tim and
Speaker 2: I had yesterday with the CFO of a firm, right,
Speaker 2: and we talked to the CEO just a couple of
Speaker 2: weeks ago and they're saying they're pretty busy. There's a
Speaker 2: lot of activity on their platform. We were thinking, well,
Speaker 2: wait a minute, how does this mesh with maybe a
Speaker 2: slowdown in consumer you know, concerns about the consumer and
Speaker 2: they our own Stuart Paul kind of weighing in that, well,
Speaker 2: what's happening is people are buying, but they're buying and
Speaker 2: taking longer to pay for things, and that's why they're
Speaker 2: making use of that place.
Speaker 8: Like essentially, if he sees a service such as though
Speaker 8: that being used, then it could be a sign about
Speaker 8: the way the consumer's feeling. Elizabeth, I want to go
Speaker 8: to you on next week and the non farm payer
Speaker 8: print that we're expecting a week from now, we'll be
Speaker 8: sitting here talking about that number. Fifty thousand is the
Speaker 8: number of jobs that economy is surveyed by Bloomberg expect
Speaker 8: to be added to the economy. How is the labor
Speaker 8: market in your view?
Speaker 10: The labor market is hanging in there, you know. I
Speaker 10: think the big question next week is not only what
Speaker 10: we're going to see in the jobs data, but if
Speaker 10: we're going to see the jobs data.
Speaker 2: You know, if the I saw that story right, if
Speaker 2: there's a shutdown, the BLS would delay the next US
Speaker 2: jobs report.
Speaker 10: Right, And this is crucial data for monetary policy, as
Speaker 10: you all know. I mean, ideally, if there is a shutdown,
Speaker 10: it will be brief, as recent ones have been, and
Speaker 10: the FED will still have that data in hand before
Speaker 10: their next meeting.
Speaker 4: Regardless of when we get it.
Speaker 10: I anticipate that data is going to show, you know,
Speaker 10: weaker job growth as we've seen over the past several months.
Speaker 10: But I do believe the unemployment rate is going to
Speaker 10: remain relatively steady. The break even rate, or the number
Speaker 10: of jobs we have to add each month in order
Speaker 10: for the unemployment rate to remain steady, is decreasing. And
Speaker 10: that's because the labor force is decreasing.
Speaker 7: Right.
Speaker 10: We know we're not getting as many immigrants right now,
Speaker 10: and some immigrants that we're already here, already working, maybe
Speaker 10: leaving the workforce. The magnitude of that a little uncertain,
Speaker 10: but I do believe that's going to help hold that
Speaker 10: unemployment rate where it is.
Speaker 2: Mike, saving thirty seconds for you, because I think we
Speaker 2: have to bring up Fed Governor Lisa Cook this case
Speaker 2: before the Supreme Court. President Trump wants the Supreme Court to,
Speaker 2: I guess give him the okay to fire her.
Speaker 6: She's fighting it as well.
Speaker 2: Just quickly, what do we know, what might we get
Speaker 2: in terms of news, either today or potentially over the weekend.
Speaker 7: Well, a decision could come any time by the Court,
Speaker 7: and they have tended to move quickly in these Trump
Speaker 7: firing officials cases, except that in this case there are
Speaker 7: a lot of miquey filings, friends of the court, filings
Speaker 7: that the justices may want to wade through. And also
Speaker 7: we've seen in a couple of controversial cases that some
Speaker 7: justices want to dissent, and so that takes some time
Speaker 7: to write. So we don't exactly know when we are
Speaker 7: going to get this decision. If the Court allows her
Speaker 7: to stay in the job, then we kind of lose
Speaker 7: the headlines for a year or so while it goes
Speaker 7: through lower courts. And if they fire her, then of
Speaker 7: course we'll be back here immediately talking with you about
Speaker 7: what happens next to the FED.
Speaker 2: Right, and we talk about whether or not we have
Speaker 2: an independent FED anymore.
Speaker 6: All right, Mike McKee, thank you so much. There in DC.
Speaker 2: Bloomergs Mike McKee along with Elizabeth Renter, senior economist at
Speaker 2: Nerd Wallet.
Speaker 8: Stay with us more from Bloomberg Business Week Daily coming
Speaker 8: up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
Speaker 1: us live weekday afternoons from two to five eastering. Listen
Speaker 1: on Apple Karplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 2: Well, former FBI director James Comey has been charged with
Speaker 2: lying to Congress an obstruction related to testimony he gave
Speaker 2: in twenty twenty, accelerating President Trump's push for legal action
Speaker 2: against his perceived political enemies. Now after the indictment, Comy
Speaker 2: said in a video on Instagram that he is not afraid.
Speaker 2: His lawyer to Tim has come out with a statement.
Speaker 8: Yeah, as lawyer said, Jim Comy denies the charges filed
Speaker 8: in their entirety. We look forward to vindicating him in
Speaker 8: the courtroom. I want to bring in Bloomberg News Justice
Speaker 8: Department reporter Chris Strome. He joins us from Washington, DC. Chris,
Speaker 8: a relatively short indictment. What exactly is James Comy alleged
Speaker 8: to have done?
Speaker 5: Well?
Speaker 4: The process? Here?
Speaker 11: Is highly unusual. The charges are highly unusual. There's two
Speaker 11: charges against Comy. It's for lying and obstructing a congressional
Speaker 11: proceeding related to testimony he gave in September of twenty twenty,
Speaker 11: which was just about five years ago, which was right
Speaker 11: up against the statute limitations for DOJ to go get
Speaker 11: these charges.
Speaker 2: So I got to say, all of us are I
Speaker 2: think doing a deep dive to try and remember if
Speaker 2: I can't even remember what happened on my so to
Speaker 2: think about what happened in five years ago. Although when
Speaker 2: you start doing it, you were like, oh, yeah, we
Speaker 2: day Monday was the Tailanell press conference.
Speaker 8: It was it was that's all I remember.
Speaker 6: Well done, well done.
Speaker 2: So but Chris take us back there and what it
Speaker 2: is that he is charged with lying about.
Speaker 4: Yeah.
Speaker 11: So, during the hearing, it was before the Senate Judiciary Committee,
Speaker 11: he was asked about a situation in which his deputy,
Speaker 11: Andrew McCabe had leaked information to the Wall Street Journal
Speaker 11: about Hillary Clinton, and Komy.
Speaker 4: Was asked if he stood by previous.
Speaker 11: Testimony he had given that he didn't authorize the leak,
Speaker 11: and he said he did. Now the Justice Department is
Speaker 11: trying to say that Komy wasn't telling the truth because
Speaker 11: he was involved in authorizing the leak. And it goes
Speaker 11: back actually to twenty sixteen when there was a dispute
Speaker 11: between Komy and his deputy Andrew McCabe regarding the leak.
Speaker 11: McCabe had said that Comy approved of the leak after
Speaker 11: the Wall Street Journal reported on it, and Kmy said
Speaker 11: he had no memory of that. The Justice Department Inspector
Speaker 11: General looked into this and issued a report that found
Speaker 11: that Komy was telling the truth and McCabe was lying
Speaker 11: about it. And so essentially Comy was reiterating that he
Speaker 11: had no knowledge of the leak, but the Justice Department
Speaker 11: is trying to say, well, Andrew McCabe said, you did
Speaker 11: have knowledge of the leak, and so therefore.
Speaker 4: We are going to charge you with lying.
Speaker 11: Now, the Justice Department might have some additional information, but
Speaker 11: this has been well investigated and to our knowledge, there's
Speaker 11: no new information that would that would prove Kmy was lying.
Speaker 8: So it raises the question and back to what Patrick Fitzgerald,
Speaker 8: the lawyer for James Comy, said, he denies the charges
Speaker 8: filed and we look forward to vindicating him in the courtroom.
Speaker 8: Does it make it too a courtroom.
Speaker 4: It's hard to know. At this point.
Speaker 11: Comy is going to have an initial appearance on October ninth.
Speaker 11: I'm sure that his lawyers are going to move to
Speaker 11: just dismiss the charges before they ever go to trial.
Speaker 11: Getting charges dismissed is very difficult, so it's you know,
Speaker 11: probably more likely that they will end up going to trial.
Speaker 11: I would expect Comy and his lawyers to call for
Speaker 11: a quick trial because they believe the facts are on
Speaker 11: their side and that Komy can get equitted.
Speaker 2: What about a history lesson for everybody, a civic lesson
Speaker 2: for everybody.
Speaker 6: I mean, do presidential.
Speaker 2: Powers extend to something like this and using the Justice
Speaker 2: Department to maybe go after presidential foes?
Speaker 11: Well, this has been one of the raging debates under
Speaker 11: the Trump administration, both the first Trump administration but definitely
Speaker 11: under this second administration. How far do Trump's powers go
Speaker 11: as president? Now, Trump will say that he controls the
Speaker 11: Justice Department, that he can order prosecutions, that he is
Speaker 11: the chief law enforcement officer. Historically, the Justice Department has
Speaker 11: maintained independence from the White House and from the president,
Speaker 11: but that's largely.
Speaker 4: Based on norms and traditional practices.
Speaker 11: There's no law or regulation that says the president can't
Speaker 11: interfere in prosecutions.
Speaker 2: Yeah, I guess I would say some presidential historians would
Speaker 2: also suggest that maybe a google the Watergate like at
Speaker 2: this point right.
Speaker 8: Well, that time we had a lot of pushback from
Speaker 8: Republican senators who made their way to the White House,
Speaker 8: And we haven't heard that this time.
Speaker 2: Around, right, So, like, we'll see, We'll just have to,
Speaker 2: I guess, kind of wait and see how this plays out.
Speaker 2: Interesting story, another one certainly on our mind. Chris, Thank
Speaker 2: you so much for running through it for us. Chris Strom,
Speaker 2: He's Justice Department. Justice Department reporter joining us from Washington, DC.
Speaker 8: Stay with us more from Bloomberg Business Week Daily coming
Speaker 8: up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 8: In the meantime, we continue to piece together the life
Speaker 8: of Jeffrey Epstein. Bloomberg News has gone through more than
Speaker 8: eighteen thousand emails from Epstein's personal Yahoo account that was
Speaker 8: obtained by Bloomberg News that cash revealing Carol a sweeping
Speaker 8: array of details about not just his public life, but
Speaker 8: his private life as well.
Speaker 2: Exactly we want to get into it. It is today's Bloomberg
Speaker 2: Big Take. Bloomberg News finance reporter Max Ableson part of
Speaker 2: the team who wrote it. He's here in studio, Max,
Speaker 2: so good to have you here. Another incredible read. It
Speaker 2: is among our most read stories on the Bloomberg First
Speaker 2: of all, step back. We've been covering this, right, these
Speaker 2: emails remind everybody, the emails that Bloomberg got access to
Speaker 2: what you guys have been going through.
Speaker 5: Yeah, that's right.
Speaker 9: It's been one of the highlights of my you know,
Speaker 9: twenty years in journalism to be a part of this
Speaker 9: team with Siria Matu and Jason Leopold and if Benny Morrison,
Speaker 9: many others.
Speaker 5: So, you know, Epstein who remains.
Speaker 9: So profoundly central to the public imagination and yet.
Speaker 5: Such a profound enigma.
Speaker 9: Bloomberg News obtained you know, thousands, more than ten thousand,
Speaker 9: more than eighteen thousand emails. And I want to be clear,
Speaker 9: these are these are private emails. These aren't things that have.
Speaker 5: Been recycled through.
Speaker 9: It's not things everyone knows about this new stuff and
Speaker 9: it's from it's from a private email dress actually, for example,
Speaker 9: where there was one email where someone says, listen, I
Speaker 9: need to talk to you about something private. What email
Speaker 9: would be good and he writes back and says this
Speaker 9: one to give.
Speaker 5: You a sense of what we're talking about here.
Speaker 9: And my colleagues, including Harry Wilson and others, did some
Speaker 9: really remarkable reporting on Peter Mendelssohn, who lost his job
Speaker 9: as the UK bassador of the United States.
Speaker 5: Exactly in the week of their story.
Speaker 9: And Avin Benny Benny Morrison and Jason Leopold have done
Speaker 9: and others had done great work on Gillian Maxwell and
Speaker 9: really carefully showing that her relationship to Epstein was just
Speaker 9: just much deeper and that partnership was much closer than
Speaker 9: either either have had admitted. And what this story, which
Speaker 9: which I wrote with this this wonderful team, what this
Speaker 9: story is about is, in some ways, I hope you know,
Speaker 9: not the usual.
Speaker 5: You know, Epstein is of course, in some.
Speaker 9: Ways a story about sex and sex crimes. But I
Speaker 9: think what you'll find is that what this story is
Speaker 9: about is about what I what I cover. It's it's
Speaker 9: really a story about money and a storry about power
Speaker 9: and a story about connections. And that's how we talked
Speaker 9: about it with our editors, including Lauren Eder.
Speaker 2: And it's a but can I just pump in in
Speaker 2: that there's a bunch of people pictures, and I'll be
Speaker 2: honest with you, I.
Speaker 5: Think when we both I didn't recognize most of them.
Speaker 8: Well, that's what I think was so notable about this.
Speaker 8: I mean, there are certainly the names that have been
Speaker 8: associated with Epstein for years, like Alan Derschowitz, for example,
Speaker 8: and there's new information, new emails from there in a
Speaker 8: conversation that your team had with him about that. But
Speaker 8: there's also a name that I'd never seen before, Mary Spaeth,
Speaker 8: somebody who's a crisis strategist. She was director of media
Speaker 8: relations at one time for the White House under Ronald Reagan.
Speaker 8: What did she what role did she serve?
Speaker 5: Well?
Speaker 9: Thanks for that question, because I think what's special about
Speaker 9: the piece and I hope viewers and listeners check it out.
Speaker 9: I think what makes it a valuable piece of journalism,
Speaker 9: especially at this moment when Epstein.
Speaker 5: Is really in the news and is all of a sudden.
Speaker 9: It has gone from being an exclamation point to a
Speaker 9: real question mark. And there are a lot of questions
Speaker 9: about what's going to happen now over the next few
Speaker 9: days and weeks and months with Epstein and his files.
Speaker 9: What our story is about and why Mary Spaith comes
Speaker 9: up is that it's about the depth and the breadth
Speaker 9: of his relationships. And you know, it is not a
Speaker 9: story about Republicans versus a story about democrats. It's a
Speaker 9: story about powerful people, and it's a story about different
Speaker 9: kinds of power. It's a story about academics and researchers,
Speaker 9: people who made it make it into high elite echelons
Speaker 9: of intellectual life. It's about people who offer, like Mary
Speaker 9: Spaith offers a basically strategy for people who are in trouble,
Speaker 9: crisis strategy, public relations. And it's a story about counselors
Speaker 9: and lawyers. And to answer your question about Mary, there
Speaker 9: was a point, believe it or not, where investigators are
Speaker 9: closing in Jeffrey Epstein. This is early two thousand and eight.
Speaker 9: You know, he's about to go to jail for the
Speaker 9: It's like about a year, it's a little bit longer
Speaker 9: than a year. And after that he's a free man
Speaker 9: for a very long time. I think about a decade
Speaker 9: until the twenty nineteen charge sex trafficking, and then he dies.
Speaker 5: He's found dead in prison for jail right after that.
Speaker 9: But back in two thousand and eight, investigators are circling
Speaker 9: Epsea's in trouble and what do we find in these emails?
Speaker 9: But these draft apology options where she sends him three
Speaker 9: different kinds of apology apologies. One is one's very meek,
Speaker 9: talks about his memories of being a kid.
Speaker 5: It's actually found it very deep.
Speaker 9: You know all of us remember being kids and having
Speaker 9: to apologize. Second one is very short, it's really terse.
Speaker 9: But the third one, it's the word we use.
Speaker 5: Is elegaic, and it is. He cites William James.
Speaker 9: I'm hoping it's the first Bloomberg News story that calls
Speaker 9: out William James, nineteenth century American philosopher. Talks about the
Speaker 9: hour of terror and the hour of say shifty, how.
Speaker 5: About that word?
Speaker 9: And he talks about the American dream, talks about the
Speaker 9: American dream and a substantial rewards, and he says, this
Speaker 9: is a public and heartfelt apology.
Speaker 8: I just want to say, Space Firm was hired through
Speaker 8: a lawyer to provide communications options for mister Epstein and
Speaker 8: his legal team, she said. In response to questions for
Speaker 8: the story, she said, quote, I ultimately terminated the engagement
Speaker 8: because of my discomfort with it.
Speaker 9: That's right, that's right, Thanks for saying that. I think
Speaker 9: it's really important, out of fairness that we add things
Speaker 9: like that. And you know, she also said, you know,
Speaker 9: because of confidentiality and privilege, she can't comment further. But
Speaker 9: you know, we don't know, We don't know what was
Speaker 9: going on here. I want to be clear with our viewers.
Speaker 9: You know, for all we know, Epstein was really very
Speaker 9: close to saying sorry, but he did not. He did
Speaker 9: not in the sense of giving a broad apology, certainly
Speaker 9: to his victims.
Speaker 5: And I want to be clear.
Speaker 9: The US Department of Justice says there are more than
Speaker 9: a thousand of them, more than a thousand of them,
Speaker 9: and Epstein did not give a heartfelt William James quoting
Speaker 9: apology as far as we know.
Speaker 5: But our story shows what it could have potentially sounded
Speaker 5: like if he had.
Speaker 2: It's why we say there are so many questions still
Speaker 2: out there. And you guys, by going through these emails,
Speaker 2: maybe This is not direct conclusions, but you start to
Speaker 2: piece together, you know, kind of a little bit more
Speaker 2: of the life around Jeffrey Epstein. Max, thank you as always,
Speaker 2: Max abel Abelson. He's financial reporter at Bloomberg News. This
Speaker 2: is the big take.
Speaker 6: Check it out on the Bloomberg.
Speaker 8: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 8: up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch
Speaker 1: us live weekday afternoons from two to five e's during
Speaker 1: Listen on Applecarplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 2: All right, TikTok, everybody, just about eighteen nineteen minutes to
Speaker 2: go until we wrap up.
Speaker 6: The trade for the day and for the week overall.
Speaker 2: We are expecting a down week on the S and
Speaker 2: P five hundred, this after three consecutive weeks have gained. However,
Speaker 2: there is one name that is definitely on our radar.
Speaker 2: I've had to play around with.
Speaker 6: The game that I'm going to talk about with my TV.
Speaker 2: Colleagues, because as soon as we saw the headline popping
Speaker 2: about Electronic Art said to be near a takeover by
Speaker 2: silver Lake, initially reported by the Wall Street Journal, This
Speaker 2: is about a fifty billion dollars maybe.
Speaker 6: Deal to go private. That's big that according to people familiar,
Speaker 6: that would be massive.
Speaker 8: It's not just silver Lake but also sadier Abia's public
Speaker 8: investment fund. This, according to people with knowledge of the matter.
Speaker 8: The video game maker is known for madd An NFL,
Speaker 8: the SIMS and then Carrol's favorite battlefield.
Speaker 6: I walk by every.
Speaker 8: Playing that all the time.
Speaker 5: Love it.
Speaker 8: Couldningnounce a deal as soon as next week, said the
Speaker 8: person who has not to be identified discussing confidential information.
Speaker 2: Stock up about fourteen percent as we speak, So we
Speaker 2: said it could be a fifty billion dollar take private.
Speaker 2: Right now, the market cap at forty eight point two billion.
Speaker 2: All right, let's talk about not necessarily that unless she
Speaker 2: wants to, but let's talk about the stocks overall for
Speaker 2: the day, for the week. Carolschlife is back with us
Speaker 2: chief market strategist at BMO Private Wealth, joining us from
Speaker 2: Minneapolis Private Wealth. By the way, three hundred and fifteen
Speaker 2: billion dollars in assets under management. And I got to say,
Speaker 2: if you're lucky enough to have a four oh one
Speaker 2: K and you've looked at it recently and you're buying
Speaker 2: the market Carol, you're pretty happy.
Speaker 12: It combs up.
Speaker 13: Yeah, yeah, you're pretty happy. And it almost doesn't matter
Speaker 13: what segment you're in. And it's actually better to have
Speaker 13: spread it around this year because in particular, diversification, which
Speaker 13: we preach all the time, is work.
Speaker 12: It definitely worked this year.
Speaker 8: So let's let's talk a little bit about valuations, because
Speaker 8: earlier this week we heard from fed JJ Powell. He
Speaker 8: was asked about stock valuation. There was not a rational
Speaker 8: exuberance moment, No, there was not. He did say it's
Speaker 8: not a time of elevated its financial stability risks. But
Speaker 8: he also said, Carol, Carol, s some asset prices elevated
Speaker 8: versus historical levels, and by many measures, equity prices are
Speaker 8: fairly highly valued.
Speaker 14: Is he right?
Speaker 13: Yeah, they're rich. But it's also important to put the
Speaker 13: caveat in there. And actually the piece I wrote this
Speaker 13: week for our field was called beer Hunting, and we
Speaker 13: talked about valuations in there. And one of the things
Speaker 13: it's important to recall is that valuations are not what
Speaker 13: kills a bear market, nor do they kills a bull market,
Speaker 13: or do they revive a bear market. Things can stay
Speaker 13: over or undervalued for a great length of time, and
Speaker 13: it's usually something structural that breaks that brings markets down.
Speaker 13: And so yes, the valuations are high, but earnings estimates
Speaker 13: and GDP estimates have been brought down low because no
Speaker 13: one knows exactly how to filter through all the impacts
Speaker 13: of everything thrown us this year. And the one theme
Speaker 13: that's been very consistent is the resiliency of businesses, the economy,
Speaker 13: and consumers.
Speaker 2: You know, it's kind of wacky, right, like we just
Speaker 2: in terms of the moods of this market, Like you
Speaker 2: go back to January and I think we weren't you know,
Speaker 2: we were still in the Biden economy and people were
Speaker 2: still talking about us exceptionalism. And then we got the
Speaker 2: inauguration and the White House started, you know, implementing executive
Speaker 2: orders and different initiatives. And then of course the tariffs
Speaker 2: and we saw a stock sell off and then we've
Speaker 2: seen the bounce back as things kind of eased when
Speaker 2: it comes to tariffs. It's just been kind of all
Speaker 2: over the place. Is there a dynamic though to this market?
Speaker 6: You know that you kind of can cling to.
Speaker 13: I think the dynamic we've been claimed to and the
Speaker 13: thing we've urged investors to cling to all years to
Speaker 13: follow the fundamentals and to look at companies and to
Speaker 13: listen to what companies are doing and watch what they're doing.
Speaker 13: And it's interesting because we also had in addition to
Speaker 13: all of that, we also had the big disconnect between
Speaker 13: the hard data and the soft data for a long time,
Speaker 13: or the sentiment, and you still see inklings of that,
Speaker 13: particularly among consumers.
Speaker 12: But we've also encouraged.
Speaker 13: Clients to step back and think through this is really
Speaker 13: the mirror image of what you had in Trump one
Speaker 13: point zero or when he came in there. You had
Speaker 13: a lot of really optimistic things going on with the economy,
Speaker 13: and then we had tariffs hit in the back half
Speaker 13: of that, and then we had COVID, and everybody.
Speaker 12: Had a collective lack of recall of.
Speaker 13: What came before COVID in a lot of cases this
Speaker 13: time around, if you recall after the election and into
Speaker 13: early January, we came in with a lot of optimism.
Speaker 13: Wall Street staffed up thinking we were going to have
Speaker 13: all the M and A and IPOs and all of
Speaker 13: that go on, and then we got hit all of
Speaker 13: a sudden with tariffs and trade policy and geopolitical issues
Speaker 13: and markets took a step back and looked at that,
Speaker 13: and now we're back to where a lot of that
Speaker 13: stuff's pushed aside. Markets are desperately trying to get to
Speaker 13: the other side of tariffs and focus on something else.
Speaker 12: But business is through it all.
Speaker 13: And that's one of the advantages we have is that
Speaker 13: we bank multi generational businesses and we also manage the
Speaker 13: money for those businesses when we'll liquidity events happen, and
Speaker 13: so we're plugged into a lot of that. And when
Speaker 13: we talk to the business owners and the commercial teams
Speaker 13: we have that serve those those business owners, they've told
Speaker 13: us throughout their adapting and adopting as best they can,
Speaker 13: and they're nervous, but they still have to grow and
Speaker 13: they have to continue to do business because they have
Speaker 13: shareholders and bankers and employees.
Speaker 8: What are they nervous about.
Speaker 13: I think they're just nervous like anybody else, trying to
Speaker 13: figure out, you know, where does the next policy changer
Speaker 13: shift come from?
Speaker 8: Where there's I think the answer is social that's where
Speaker 8: it comes from.
Speaker 14: Maybe it's social media, but you know, the hard part
Speaker 14: is is it amplifies moves too, and even you know,
Speaker 14: even when you go do a search on social media,
Speaker 14: your search is going to feed your your.
Speaker 12: Personal personal preferences.
Speaker 13: If you will, you have to be active about searching
Speaker 13: a variety of sources or active about searching out something
Speaker 13: that's going to be neutral and down the middle. And
Speaker 13: so yeah, it's definitely been a challenging year, but it's
Speaker 13: a big process of having to write every week really
Speaker 13: helps because we're trying to sort through the okay of
Speaker 13: all of this stuff going on, right, what is impact
Speaker 13: for portfolios moving forward?
Speaker 2: Carol, But I thought it was interesting that you said
Speaker 2: that the work that you guys are doing for businesses
Speaker 2: that even though there's some concerns and uncertainty and fears
Speaker 2: out there, that they're making decisions right because they have
Speaker 2: to run a business and if it's a competitive world
Speaker 2: as we all know, and if they kind of delay
Speaker 2: miss something, there's potential that they're going to lose share,
Speaker 2: right and they're going to fall behind it, so that
Speaker 2: they're pulling you know, that they're actually moving ahead with things, even.
Speaker 6: Like we see the IPO market. That's a good sign.
Speaker 13: Yeah, it's a great sign. And we've been talking about
Speaker 13: for some time. When you look at the stats of
Speaker 13: what's out there because we've had such a locked up
Speaker 13: IPO market for such a long time. I've seen some
Speaker 13: estimates recently of as many as thirty thousand companies that
Speaker 13: are revenue and earnings generated mature companies in venture capital
Speaker 13: and private capital portfolios.
Speaker 12: If even one percent of those go public, you know.
Speaker 13: The other thing that's really interesting is when you were
Speaker 13: tracking the earnings as they came in in the second quarter,
Speaker 13: they're technically according to Bloomberg, there were only four hundred
Speaker 13: and ninety seven names in the S and P five hundred.
Speaker 13: So we've had this net reduction of public companies out
Speaker 13: there and so having some IBOs because we peaked in
Speaker 13: terms of public companies back in nineteen ninety six I
Speaker 13: think it was, and currently there are more ETFs than
Speaker 13: there are publicly held companies in the US.
Speaker 2: Interesting, wait, all right, wait, we got to go, but
Speaker 2: we got to come back on that point in the future,
Speaker 2: because I think it's an interesting dynamic to this market
Speaker 2: and what it says Caryl.
Speaker 6: Thanks glad we could reconnect Carrol's life.
Speaker 2: She's cheap market strategic at Female Private Wealth joining us
Speaker 2: from Minneapolis.
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