00:00:00 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news, Bloomberg Money. 00:00:12 Speaker 2: This is the Bloomberg Money Podcast. I'm Tom Keene with Scarlet Foo. Join us each week for a smart look at the forces shaping your financial life. On personal finance, on retirement, and wealth management. We will explore how people are earning, investing, and building wealth. We are live Fridays at noon Eastern on Bloomberg Television. Subscribe to the podcast wherever you listen, and it's always on the Bloomberg Terminal and the Bloomberg Business app. And we get it out of the park today. Girls here for Bloomberg this week and it's wonderful to see David Girl Bloomberg this weekend. Alison Schreger here with an important story and this is a real pleasure. Hannah Elliott. What you do is you go to Baylor and if you do Baylor, you do autos? Hannah Elliott? Or is this working with Matt Miller on an esteamed auto podcast. Let's get it started. I walked by Elucid. Elucid two hundred thousand dollars or something. Are they selling? Are we going to buy fancy overpriced evs with our wealth management? 00:01:16 Speaker 3: Apparently not the sales say no, the sales day Americans don't want EV's. Unfortunately, for companies like Lucid and Tesla and Ribbon that are struggling, and also for our domestic automakers that are actually pulling back on a lot of EV's, they had money. 00:01:32 Speaker 2: Question. Yeah, I'm Scarlett probably as this, I'm going to steal it from her. Should the Chinese be let into America to sell as cheap evs? 00:01:40 Speaker 3: You know what, I'm not an economist. Jim Farley at Ford thinks that EV's from China will be. 00:01:46 Speaker 4: Here in the next five years or so. A lot of people. 00:01:49 Speaker 3: Keith Manton are esteemed automotive reporter came on the podcast yesterday, agrees it's only a matter of time. 00:01:56 Speaker 5: It's only a matter of time. But I mean under this president, unlikely, right, David, because he is all about trade wars and tariffs and making sure that he seeks vengeance on those who have wronged him in the past. And you see this across the policy spectrum. 00:02:10 Speaker 6: That's absolutely correct. I mean, he's somebody who loves tariffs, as he says time and time again. I would have a hard time imagining him welcoming Chinese autos into the United States as he invites American automakers to the lawn of the White House over and over again. We saw him put these new tariffs in place just a few days ago, so that that's very much the direction of travel. 00:02:27 Speaker 2: There kids at camp. We also have a president of the United States at camp. He's at Camp David right now, sixty miles north of the White House. In the history of this cabinet room is extraordinary. I guess of everything. I remember monocolm began and and we're sad out with Carter in seventy nine. Why is the president there? And it's a place where they talk about war, isn't It's a great question. 00:02:49 Speaker 6: And were I the president, I wouldn't go for the day and leave as he's going to do. He's headed to Bedminster after this, but gets in the Toctin Mountains in Maryland, as you say, sixty miles outside of Washington, d C. We saw FDR go there during his presidency, which called Shangri La back then, and Dwight Eisenhoward didn't like the name. He thought that was a little too a feat so he changed it to Camp David in honor of his grandson. He went there for many weeks after he had a heart attack in Denver. There is some talk of this being the first cabinet meeting at Camp David. No, this one is not Eisen Howard can being the While he was there. 00:03:17 Speaker 2: There's a photoscoll and I saw President Obama playing pool and you could I could see President Trump bowling President bowling Alley. There is a bowling Alley image. 00:03:28 Speaker 4: I don't get that on truth Social. 00:03:30 Speaker 6: But this is really just a venue change. It's the same kind of cabinet meeting we've seen. He's invited the press, and then I'll say, lastly on your point about the significance of this venue, and presidents have liked this place in the past because the press hasn't been. 00:03:40 Speaker 2: Able to go. 00:03:40 Speaker 6: And we see President from kind of turning that on its sad guys, he's got a live filmed cabinet meeting taking place again. 00:03:47 Speaker 4: Well, he's being true to his spirit. 00:03:49 Speaker 5: Alix, I want to bring you into the conversation because you recently had a column on how Americans are richer than ever before, but they're also. 00:03:55 Speaker 4: Angrier than ever before as well. 00:03:57 Speaker 5: The top one percent is richer or is everyone getting richer because you wonder how much of this is you know, kind of relative gains. 00:04:04 Speaker 1: Well, everyone is getting richer. The top one percent has gotten way way richer. Even if you look at the intercome distribution. It's true the middle class is smaller, but because more people have entered the upper middle class. But even lower income people are by most metrics bet are often they used to be. But it's sort of extraordinary because all we hear is people feel like the economy is not working for them. So, you know, there's a lot of reasons why that could be. It could be some like necessary services are still expensive, could be relative gains or what matters. 00:04:34 Speaker 5: You know, I wonder whether how much of this is tied to fundamental misunderstandings about how investing or financial markets work. You think about gen Z and they really adopted this financial nihilism where they bet the house on crypto prediction markets all these other things. And you know, because why noting everything doesn't look good for them anyway, they feel like everything's rigged regardless. 00:04:54 Speaker 1: Yeah, it's there is more of this feeling that success is sort of randomly rather than you know, or I'm also seeing the sort of disconnect and understanding risk. That risk comes from taking, you know, from risking more like you've got higher rewards for more taking more risk, And I don't think this of that relationship has been well understood. Also, I feel like there's a dearth of risk taking in a lot of their lives in other ways. So I feel like it's expressing themselves through taking sort of outside risks in other ways, like maybe they won't invest in this in p. Five hundred, but they'll invest in you know, the you know, Calshier or whatever. So it might be so also a lack of financial literacy or a lask of good risk training. 00:05:33 Speaker 2: Well, you mentioned the financial literacy. You own the high ground on this with your book and with your academics as well. We're going to have the former vice chairman of the FEDHAN and with your heritage to Manhattan Institute and all that. What did you think of the press conference? 00:05:49 Speaker 1: You know, there's two things I've changed my mind about in the last five years. One is drug legalization and the other is monetary policy transparency, which I was like a big thing of. You know, Actually Rich was chair of the department when I was at Columbia, so I learned all this stuff from him, and it's just I feel like the FED sort of started to box itself in a little bit too much a forward guidance. Okay, so to some degree, I think, you know, well, maybe it wors just not communicating so. 00:06:17 Speaker 2: Well right now? 00:06:18 Speaker 7: Okay, you know, maybe a little mystery and a little like, hey, we think why I. 00:06:23 Speaker 2: Use that word the other day? The mystery or how does he pull away from too much mystery? 00:06:28 Speaker 7: Well, you want a clear reaction function, you want clear rules, but you also don't want to say, hey, we're going to probably increase rates in five years or for the years, so you kind of want to strike that fout. 00:06:41 Speaker 2: The blumber of money angle on this is the yield. I'm sorry, we're mortgage rates in two weeks. 00:06:46 Speaker 5: The mortgage is now at six point six six percent. That's a one year high. We're not at seven percent yet, but it does make home ownership a lot more expensive. And David, there's a lot of talk about the affordability crisis. Has DC come up with any solutions that will I don't know, resonate with voters before the midterm elections? 00:07:04 Speaker 2: No, not really. 00:07:05 Speaker 6: I mean, there was this housing build that the president liked until he didn't like, and so I think that there's been some lip service to it. But we're at a point now as we approach the midterm, so I think the prospects there being any kind of real landmark legislation coming together seems pretty unlikely. But I think that, you know, you, going back to the meeting that's taking place right now, the president has this difficulties overseas and in the US, and this is certainly something I think. 00:07:26 Speaker 2: That's what thirty seconds and I gave you the last word. Is everybody leaving California? 00:07:31 Speaker 4: Oh gosh, if you're rich, maybe yes. 00:07:34 Speaker 2: Yeah, you talk about personal funding. 00:07:36 Speaker 3: Really, it's really tricky. Everybody's watching the mayoral race. This is a really in LA specifically. 00:07:42 Speaker 4: You're going to Texas, You're going to Florida. Exactly. 00:07:44 Speaker 2: Do you have Red Sox Dodgers tickets this weekend? 00:07:46 Speaker 8: I do not. 00:07:46 Speaker 9: I'm a mixed fan. 00:07:47 Speaker 4: Tom Okay, nice exactly. I want to thank our panelist. 00:07:54 Speaker 5: Thank you so much everyone, David Garral, co host of Blueberg this weekend, and of course be sure to tune in up because they will will be hosting their next episode at seven am Eastern Time tomorrow and on Sunday. Alison Schrager, Bloomberg Opinion columnist. You can check out her latest work on Bloomberg dot Com, Slash Opinion and Hannah Elliott. 00:08:10 Speaker 4: Her Hot Pursuit. 00:08:11 Speaker 5: Podcast with one Matt Miller comes out every Friday at noon. Just tune in after the show. 00:08:17 Speaker 2: Coming up the conversation and after that press conference an important conversation for global economics. Richard Clarita, the former vice chairman of the Federal Reserve. His academics is directly involved in the uproar that chairman wars started here on Wednesday. Richie clarda next from New York City. It's Bloomberg Money. You studied under clarity. 00:08:41 Speaker 4: Can Ebie's ever become collectibles? 00:08:45 Speaker 2: Did you pass the math? Welcome back at Bloomberg Money thrilled you with us, Tom Keenan Scarlett Food. It was going to be an important interview, but well maybe a a little more important than it was. Wednesday at one pm. Richard Clarida is with us with PIMCO of Columbia University, always and always the vice chairman, former Vice chairman. I should say the Federal Reserve system, and I think you know we're going to straddle here between Bloomberg money and everything else. 00:09:16 Speaker 5: Yeah, and we got to start with what we saw in the bond market this week, because we had to sell off in the thirty year yield this week reached a nineteen year high five point twenty six percent, Rich Clarida. Does this sell off in the long line tell us anything about the US economy and therefore how people's prospects might change. 00:09:33 Speaker 10: Well, there are a lot of reasons bond eeals can go up and down, not just the Fed. The FED is an important part of it. What I would point to is that so far Kevin Warsh has been shared really only six seven. 00:09:45 Speaker 9: Weeks, but an important measure in the. 00:09:47 Speaker 10: Bond market, which is break even inflation, so sort of traders expectation of inflation is out or below where it was at least out to ten years when he became chairman. But certainly the reaction during the press conference was probably not one that was welcome. 00:10:01 Speaker 5: Right, we know the first Trump administration cared a lot about the stock market, and the second one seems to have added the bond market to its list of things that is watching. Which part of the bond market does this administration care most about? The thirty year yield the ten year yield. 00:10:16 Speaker 10: Oh my goodness, I'm not sure I would defer probably a secretary bust and I do think at one point he may have said that he's focused more on the ten year yield than he is on the FED funds rate. Well, so much of the economy people borrow along for car loans or mortgages or corporate loans, and so that's probably what he had in mind. 00:10:33 Speaker 2: Okay, So what we're going to do here, it's Bloomberg money. We do personal finance, we do wealth management, we do retirement. But we also have Richard Clarita where this is in the heart of this debate over the chairman of the Fed. So it's going to be a little bit sort of like Scarfoon and Time doing Bloomberg surveillance like more you can. 00:10:51 Speaker 4: Protect the children at that minder blurry, protect the. 00:10:53 Speaker 9: Children at home valance. 00:10:54 Speaker 2: Fine, okay, so former Vice chairman, with great respect, I don't want to turn this into a street lesson. But you have Wosh nominally of Stanford talking about the Lucas critique and then going over and what people don't know is you're directly involved with this. Let's first listen to Chairman Warsh on Wednesday. 00:11:15 Speaker 11: Some version of the Lucas critique should remind us that when we talk about measures of inflation or something else, and we describe those measures as being consistent with our objectives, we might make them such that they're not very good measures or very good objectives. 00:11:37 Speaker 2: The chairman before we had the questions from Michael McKee of Bloomberg, the world lit up, an along with legit cred Out of Lucas's Chicago was fiery. The news conference was rich in philosophy, process and institutional aspirations, but poor in operational guidance. The absence of claritai like analytical specificity appears to have spoken louder than Worsh's words. So Lucas did what he did. CGG, Clarita, Galli, and Gertner reinvented modern economics with something called dynamic stochastic general equilibrium theory. We come out now, and as Claudia Sam says, we have a chairman who's not sure what he's looking at an inflation. How does he get the buryls Macon. Does he need to reaffirm PCE is the inflation series? Well? 00:12:29 Speaker 10: I think what he said at the press conference is for now until next January at least that's going to be correct. So the FED adopted that again in January. He left open the possibility that the task forces could recommend other measures. They could go to an average instead of picking one INDUX, they could look at CPIPPI. 00:12:46 Speaker 9: There are a lot of things they could do. 00:12:48 Speaker 10: But I think Anna as usual raised is an important point is that an inflation targeting central bank needs to be clear about what it is it's targeting. It can, it may evolve, and so I think that will be important very importantly. 00:13:02 Speaker 2: Then here, if we need to get the system back with a confidence about the FED, how does he do that at Jackson Hole? Does he have to reaffirm as Somem says, that inflation is the appropriate measurement and not a policy. 00:13:19 Speaker 10: Well, I think Jackson Hole may serve a couple purposes. Historically, as we've seen, chairs have used Jackson Hole as sort of a sneak preview of coming attractions. At the September, November, and December meetings, Chairman war Shennedy may do that. 00:13:33 Speaker 9: He's also interested. 00:13:34 Speaker 10: In what he called some big question, big picture questions that he sort of previewed at this meeting, and he's also talking to the task forces. 00:13:43 Speaker 9: I think it's too early to tell what he'll do at. 00:13:45 Speaker 10: Jackson Hole, but he may do that as well. 00:13:48 Speaker 5: I find it really interesting that he doesn't want to tell the bond market a whole lot of things, and he's kind of waiting to take his cue from the bond market. 00:13:55 Speaker 4: From a layperson's point of view, it feels very circular. 00:13:57 Speaker 3: Right. 00:13:57 Speaker 5: The Central Bank sets a benchwork industry, the bond market takes its que from that. What's the rationale for the FED to take its queue from the bond market that's relying on the FED to set policy. 00:14:07 Speaker 4: Help me understand that. 00:14:08 Speaker 10: So here's the way I would express it. The FED is a very important part of ten year treasury yields. 00:14:16 Speaker 9: It's not the only thing that drives yields. 00:14:18 Speaker 10: So I think the Chairman was important to emphasize that the FED does want to step back and interp movements in bond yields. It could be inflation, it could be global growth, Middle East hostilities, but certainly the Chairman and the FED understands that an important part of tenier yields is the expected path of the funds rate and to Scarlett's point, and I actually Ben bernanke gave a speech on this, as did I as vice chair. It's called sometimes called the hall of mirrors problem in central banking, which is the central bank looks at the market, the market looks at the central bank. 00:14:47 Speaker 2: It gets circular. Let's go back to your page. Gallian Gertler didn't know this. Richard claar to channeling Alan Blinder. Having looked at monetary policy from Joni Mitchell's both sides, now I can testify that central banking in practice is as much in art as a science. How does worsh get back to science to Clarita silence versus some mom and pop philosophy he learned at Stanford? 00:15:13 Speaker 10: Oh well, I think Kevin Walsh and the committee understand that. Look, Kevin came in. Chairman Warsh came in with an ambitious agenda, and I think that they're going to both focus on implementing that agenda as well as getting to where they need to be on policy. I guess where I would try to relate Clarita Galley Gertler to the current conversation is perhaps specifically in the domain of forward guidance and so in the CGG model, there's actually not a role for forward guidance because the market understands the FED reaction function and the FED understands the market. If you're not going to do forward guidance, then it's incumbent for the markets to have a broad understanding of how the central bank will react to data. If we had six bad months in a row of inflation data, would they hike and by hand much? 00:16:01 Speaker 9: They're not committing to that, but they're saying, if the data comes out this way. 00:16:05 Speaker 2: For everybody have Bloomberg money and Scott I got goosebumps. This is like the real deal. I mean, this is what the adults in the room are arguing about right now. 00:16:14 Speaker 5: Well, for people who are watching this and don't quite know all the names that you and Rich are throwing out there, I want to bring it back to the real economy and the real people's concerns. Do you agree with those people who say that we have a K shaped economy where the higher income and asset owners are doing well and everyone else is kind of struggling that downward arm, and if so, how do we solve for that? 00:16:33 Speaker 10: Well, yes, broadly, we do and have had a K shape economy for some time, but the K, the branches of the K, have been diverging more widely in the last six or seven years. The way I like to think about it, Scarlett is roughly sixty percent of Americans live in a house that's owner occupied housing, sometimes with their parents, but it's owned about forty percent rent. Most of that sixty percent owned stocks, most of the other forty percent doesn't. So we've been in an economy for some time, but especially in the last six years when stocks have gone up, house prices have gone up. 00:17:07 Speaker 9: So the top of that K is doing pretty well. 00:17:09 Speaker 10: If you're in the other part of the K, you don't own your house, you don't own a lot of stocks, you're living paycheck to paycheck. It's been a tough six years, and so there's no doubt we're in a casehay to. 00:17:19 Speaker 5: Now those services costs just keep getting more expensive as well. 00:17:26 Speaker 2: From New York City on a Friday, Bloomberg Money, Tom keenan Scarlet Food and with Scarlet Food, Richard Claire and you. 00:17:32 Speaker 5: Know, Bloomberg money is about how you invest and make your money, but it's also about how you spend your money. So Rich claud I want to ask you on this Friday, what's your splurge? 00:17:40 Speaker 4: First of all, and how do you save? What do you savell? 00:17:45 Speaker 10: I leave the saving to my wife, she's pretty good at it. My splurge is on My hobby is music, So I buy guitars, I buy recording equipment. 00:17:52 Speaker 9: Really, I even spend money. I'm recording my albums. So yeah, that's my splurge. 00:17:58 Speaker 4: Then you rich record album. 00:18:00 Speaker 10: In twenty sixteen, I did available Spotify, Apple Music stream for free on YouTube. The new album's coming out later this year. Maybe we'll do a rollout party on this show. 00:18:10 Speaker 4: Oh it's a follow up. Yeah, yeah, Well what's it called. 00:18:12 Speaker 9: It's gonna be called take two? 00:18:14 Speaker 4: Take two? Okay? And what folk music? 00:18:16 Speaker 3: Like? 00:18:17 Speaker 4: What's your vibe? 00:18:17 Speaker 9: Olk rock? 00:18:18 Speaker 2: Yeah? 00:18:18 Speaker 10: Folk ross someone who listened to too many Beatles albums. 00:18:21 Speaker 2: And I will editorialize as i've heard it. It is not a vanity album. It is exquisite. I was shocked. Let's thank you really really quite thank you quit? 00:18:31 Speaker 5: And you're the solo star, like I don't hear a band name in there. 00:18:33 Speaker 10: Well, I write the songs and do the vocals, but I work with professional studio musicians in London, LA and Nashville. So all the music you hear is really good playing and then I do some singing on it. 00:18:43 Speaker 4: Richard Clarts a new album coming. 00:18:45 Speaker 10: Out with Day Well by December thirty first. 00:18:48 Speaker 5: By December thirty first, Richard Clater to thank you so much. Pimcoll global economic advisor, the former Feederal Reserve Vice chairman, and of course Columbia University professor as well. Coming up a conversation with Laurie Calvacino of RBC Capital Markets on your retirement fund. 00:19:02 Speaker 4: This is Bloomberg Money. That is. 00:19:14 Speaker 5: Bloomberg Money is your new destination for personal finance. It's a cross platform effort that extends beyond your television, including at our new digital hub at Bloomberg dot com slash money. And this week's story I saw on that site is focused on Boomerang kids. 00:19:27 Speaker 4: It used to be that after. 00:19:28 Speaker 5: The kids graduated from college, they were out on their own, off your payroll, out of your house. In twenty twenty six, that is no longer a safe assumption. Suzanne Woolly joins us now to discuss how to protect your money and maybe your sanity when an adult child requires support. Suzanne Great to see you, and I guess the first question is how much does it cost? What is the cost financial cost of letting a grown child move back. 00:19:50 Speaker 4: Into your home. 00:19:51 Speaker 12: Financial planners talk about an average of fifteen hundred dollars a month, which comes out about eighteen thousand a year. So it's more significant then you might think. And it's not just recent graduates either. I mean your adult children could be separating or divorcing and have kids, have pets on their own and bring them back home. 00:20:11 Speaker 4: How do you plan for this? 00:20:12 Speaker 5: What are the planners saying you can do to kind of get ahead of this? 00:20:15 Speaker 12: Well, I say, I mean an important part is to just set expectations. So when your adult child wants to come look back home, talk about, you know, will they pay some rent? Sure, you'll give them below market rent, of course, you know which, but it may increase over time, you know, so they have sort of an incentive to not make this arrangement last forever. 00:20:32 Speaker 4: Yeah. 00:20:33 Speaker 12: So setting expectations about rent and about privacy and just how things are going to work, it's just really important. 00:20:41 Speaker 4: Can use our question please. 00:20:43 Speaker 2: Jo, I mean, ask you for a friend, how do you get them out the door once. 00:20:47 Speaker 12: They move back in well, Tom, you must have made it a little too comfortable for them. 00:20:51 Speaker 2: That's the major thing. Make it too comfortable. 00:20:54 Speaker 5: Yeah, I mean you definitely don't want to be rating your retirement account or drawing down on your savings and perhaps not retire because they've come home to exactly. 00:21:02 Speaker 4: I mean, that's the key. 00:21:03 Speaker 12: If it's coming at the expense of your retirement security, you really have to think twice because your kids will have a long runway, you know, for earnings. Your runway if you're closer retiring is nuts. 00:21:14 Speaker 2: I'm going to get upset now. I remember sitting on the bed with my father. I came home from school and all that, and he said, you got four weeks to move out. That was the runway. The runway was for. 00:21:25 Speaker 4: Are you getting your kids four weeks? 00:21:27 Speaker 2: No, they've been very good about it, actually, but I admit, just like you say, we're all writing checks. 00:21:34 Speaker 12: Yeah, you're writing checks, what I mean. And sometimes it's great to have your kid move back, you. 00:21:38 Speaker 4: Know, for a while, at least in it for a while, and. 00:21:40 Speaker 12: If they're fatting, rent and maybe doing chores, empty. 00:21:45 Speaker 2: The dishwasher, walk to dog, all that. 00:21:47 Speaker 5: So Zanne, thank you so much, Suzanne Woolly is a member of our Bloomberg money team. 00:21:51 Speaker 2: Laura Calvausina's over here taking note. She's got young cherubs and she says, is this what this? This is what I had with kel Vassina Morney. We are thrilled the brig you now. Lori Calvisina had a US equity strategy at RBC Capital Markets, scary power points in a view of the equity market that's allowed people to be invested given their fears. Let's do this, let's bring it up right now. Is we can our money musterd here from Calvasena, It's from front of eighty page power points. It's like Mary Meeker on steroids. Lori Calvisina, our main sentiment model points to a gain of ten point eight percent over the next twelve months. You look here at the draw down fifty percent, Great Financial Crisis, World War two forty percent, and then you've got to get out front and still be optimistic. Do you fear the big draw down? 00:22:44 Speaker 13: So our base case has been we're going to be higher over the next twelve months, but it's not going to be in a linear fashion. And we assume that we're going to have at least one, maybe more drawdowns of five to ten percent. We call that tier one on our Tiers of Fear framework. What we do, you know, as sort of things come up in the market, right, we'll look at what we call tier two, tier three, tier four and sort of evaluate is their risk. 00:23:05 Speaker 8: Of falling into one of those. 00:23:06 Speaker 13: Not because we're telling everybody, you know, especially sort of in retail investorland, to sell, but to be prepared for. 00:23:12 Speaker 8: What might be your job. 00:23:13 Speaker 2: Is to go out and talk to people and say to them, let the fear go, Let it go, let it go, let it go. They're frozen because they're worried about that big draw down. What percentage of us are worried about a negative thirty five percent bear market? 00:23:27 Speaker 13: So if you look at the Conference Board survey that just came out, they actually have a question that gets very very little attention, But I like it a lot, and it's on stock market optimism going forward. I forget the exact number, but it's still extremely elevated, and it actually ticked up just a little bit. It hit a new high in late twenty twenty four, and it's been kind of hovering around that. 00:23:45 Speaker 8: Level ever since. 00:23:47 Speaker 13: So when we look at that as a gauge of retail investors, we think that they're not too worried. Now, if I talk about institutional investors, you know, we might look at something say the CFTC futures positioning data, which is easy. You had seen sort of one standard deviation above the long term average. Basically, that's you know, complicated speak for saying people were feeling good and well positioned, but not crazy, not euphoric, and that's easing down. 00:24:10 Speaker 8: It doesn't look under owned. 00:24:11 Speaker 13: And I would say there's some nervousness creeping into the institutional community, but I don't think there's panic there either. 00:24:16 Speaker 5: So use of institutional investors, but I know that one thing that comes up a lot in those conversations is the role of the retail investor and how they influence the market. Overall, retail stock ownership, I think is at a twenty year high. How do you think that's changed a stock market over your time covering it? 00:24:31 Speaker 13: You know, it's interesting because when I started, I started back in two thousand at a different firm, and I remember being taught, you know, by a very seasoned, you know, extremely bright strategist that you would look at the retail fund flow data and do whatever the opposite was right. So if they were all buying, you'd sell, and if they were all selling, you'd buy. And I don't think it quite works that way anymore. I do think retail investors have gotten much more sophisticated in their understanding of financial markets. There's a lot of innovation in the industry that's helping people out, you know. 00:25:00 Speaker 2: And I, you know, we. 00:25:01 Speaker 8: Were talking earlier about how I travel. 00:25:03 Speaker 13: I run into people in airports, I run into, you know, people who are driving me places, and you know, and you know, talk to people on airplanes and people sometimes, you know, will start talking about the stock market and they know a lot. And I think that's very different from early on in my career when sort of the purview of all the intricacies of our industry were really just limited to the institutional community. 00:25:23 Speaker 5: Okay, so it's changed a lot in your twenty plus years, But is it going to look like Korea? You look at the Korean stock market and it was had a bananas week. Great, it was down ten percent on Tuesdays, sixteen percent overnight. Year to date, it's massively Regail investors are huge presence there. They love the AI trade. They love these leverage single stock ets. Is that what the US stock market is headed towards? 00:25:45 Speaker 13: You know, it's hard to say. I don't see that right now. I feel like we have more guardrails in place. But the reality is that if you look at sort of this theme of democratization of the equity market, I mean, we got a lot of color on that from financial companies in this reporting season, talking about new and struments and why they might be doing one thing or another thing. Did retail want it? Did institutions want it? Was it something you know they should be doing? You know, sports right for example? And prediction markets was something we saw a few companies say we're not going to do, even though there might be appetite for it. 00:26:14 Speaker 8: But I do think. 00:26:15 Speaker 13: This trend of getting typical Americans engaged in the stock market, I don't think that's changing. 00:26:21 Speaker 2: What would you do as a retiree? Now the old rule was take four percent, be happy, move on, maybe buy an annuity, whatever. What's the RBC advice for someone with an equity pot and how to manage it? Given that retirees. 00:26:38 Speaker 13: Never die well, I think the first thing you always do is and this is always my first advice for peoples work with a financial advisor, and I think even in my purview as sort of an equity person, you know, I would want sort of that device that advice on diversification. 00:26:50 Speaker 4: By the distance, I think that I. 00:26:52 Speaker 13: Know a certain corner of the market very well, and there's a certain corner of the market I don't know very well. So I would want some advice frankly to come in and sort of ballence me out. But I do think staying diversified is something that just makes sense and not trying to play the short term, not trying to play every little twist in turn. 00:27:08 Speaker 2: How do you not play the short term? If you're watching Bloomberg, Surveilance or five of Scars media properties religiously, but you're supposed to be long term? How do you do that? In modern media? 00:27:19 Speaker 13: This goes back to our tears of fear right and so typical drawdowns are five to ten percent. Be prepared for those, and there's always a big test once you kind of get to nine percent ten percent, are you going to go lower? And what we tell the institutions, and I tell this to you know, fas I talk to as well, is if you don't think that there's a serious chance of a recession or these days we're all also talking about interest rate shocks, then you're probably going to bottom out at ten percent. But if there is something that's unknown that happens in the market, right if you looked back at twenty eighteen, we had tariffs for the first time, we had some concerns about the FED, we had a twenty percent draw down. We have these growth scares that can go to like the fifteen to twenty percent range, But just kind of know what's coming, be educated ahead of time, be prepared, and don't know react in the moment. If you don't think that there's you know, sort of a serious chance of a recession, and we talked a lot to hedge funds about this last year around tariffs, then you're probably not going to have like a twenty five or thirty three percent type draw down, which is what you see in recessions. Kind of twenty percent might be the worst. 00:28:15 Speaker 8: And so it's really. 00:28:16 Speaker 13: Just being educated and knowing that markets can be volatile and what do these different levels signify, and just again not overreacting in the moment. 00:28:23 Speaker 5: Individual investors seem to have mastered the art of buying the dip. 00:28:26 Speaker 4: They come in. 00:28:27 Speaker 5: They are kind of you know, they don't get rattled by stock market declientes. They come in there like I'm buying, I'm buying. Have institutional investors looked at that and kind of adjusted their behavior as a result. 00:28:36 Speaker 13: One thing we've noticed is that there are certain valuation gauges. You know, we can look at pees and where they typically bottom out at, and on certain charts they make higher and higher lows. And I think that's because of these dip buyers coming in. So you do have to have it in the back of your mind. 00:28:49 Speaker 2: Well, you just said I disagree with not you, but I disagree with the zeitgeist that we've learned something new. We haven't woken up on a Monday being down twenty two percent or being done. 00:29:00 Speaker 4: Thirty four We're going to let that hap. 00:29:03 Speaker 2: Well, that may be, that's an Eric belt Shoots question. But Laurie, I think we don't have a collective memory of a massive drawdown anymore, and our behavior will change if we get that. 00:29:13 Speaker 8: Well, you know, I take your point. 00:29:15 Speaker 13: We have a lot of conversations, you know, I would just say in the financial community about when did you start? So I started in two thousand. I didn't see the tech bubble melt up, but I certainly saw the other side. 00:29:24 Speaker 2: We enjoyed two thousand and eight nine. 00:29:26 Speaker 8: Yeah, I lived through it, right, I remember and enjoyed. 00:29:28 Speaker 4: You lived through it. 00:29:29 Speaker 8: I lived through it. 00:29:30 Speaker 13: I remember being in conference rooms, I want to say, like in two thousand and six, with mice running across the floor, and home building companies talked to packed rooms, you know, and you couldn't you were violating some fire code, right because there were too many people. And so I remember the height of that bubble, you know, very clearly. 00:29:45 Speaker 8: And I do think there's a lot of people. 00:29:47 Speaker 13: In the institutional community who weren't around for the GFC, right, who weren't around for the tech bubble. So I take Tom's point. But remember, we did have a massive draw down around COVID, which was a typical recession type draw down, and it was it was interesting. I mean, we we've done a lot of work around that, especially, you know, as kind of the Middle East situation has flared back up. And I reminded people, I said, you know, we did a recession's worth of decline in about a month. Good, and you know, and I think people have kind of forgotten about that one. But you can see fair how fast and steep and and you know, difficult frankly, you know those kind of decline. Twenty two wasn't pretty either. No, No, that was a that was a weird one. We've had trouble classifying that one, you know, and sort of our tears. We think what essentially happened was the misery index spiked because of inflation. It felt like a recession. 00:30:36 Speaker 8: It wasn't. 00:30:37 Speaker 13: You got a recessionary type draw down in the market, and you also had a massive interest rate shock, just expectations of FED hikes piled in, and you threw a war on top of that. 00:30:46 Speaker 8: Right, it was. 00:30:47 Speaker 13: It was a little bit worse than a growth scared not quite as bad as a recession, but pretty darn close. 00:30:51 Speaker 2: Lurie, thank you so much. Really appreciate it coming in on a Friday, I really really appreciated. RBC Capital Marcus powerpoints of Squize. Get it from RBC the capital markets. 00:31:05 Speaker 5: All right, we're looking at shares of Apple down as much as eleven percent right now after component shortages, weight on the company's sales forecast. A letter Popina of Bloomberg News joins us now to discuss when we're talking about shortages, it's really the memory chips, and we've seen prices for those things spike up and a company like Apple needs to contend with it. 00:31:25 Speaker 14: Yeah, CEO Team Cook said that memory chip shortage is similar to one hundred y of flots. The demand is so high and the shortage is so widespread that in the common quarter there will be more shortages and some weaight times for some of the key products includeing MacBook Mini, so that may weigh on the revenue outlook. Now we're talking about the outlook for the quarter ending in September. This is the quarter when the key iPhones usually go out. This is the quarter when you know, mom and pop investors buy apples and then your iPhones for their kids they go back to school. So that's supply shortage is going to weigh on sentiment. And this is what is John and shares lower today. 00:32:04 Speaker 4: Okay. 00:32:04 Speaker 5: Apple also came out with this new innovative way of funding your iPhone purchases, or maybe purchase is the wrong word. You're now going to be able to lease your iPhone the way that you can lease a car. 00:32:14 Speaker 14: Yeah, that's pretty much the case, and not just your Apple. You can you lease your iPad. You can lease your MacBook Medium, MacBook Pro for up to three years, and then after that point you can decide if you want to keep it, if you want to return it, if you want to just upgrade to a new cycle. 00:32:29 Speaker 4: So that's pretty. 00:32:30 Speaker 14: Much, you know, Apple's way of saying, listen, just keep staying with us forever and keep upgrading. 00:32:35 Speaker 2: But from a consumption standpoint, somebody had this on Twitter this week where every result of gee, they don't have the chips, so this supply. This the reason they don't have the supply is they have massive demand. Do we see within our reporting, Mark German and you and everybody else, do we see any way on a unit basis that they're stumbling. 00:32:53 Speaker 4: They're not They're not really stumbling. 00:32:55 Speaker 14: I mean, China remains a weak spot, but it's always been a week spot. So we cannot demand any strong numbers out of China. But you know, when you look at the sales of the wearables they missed, they were in line with expectations. 00:33:07 Speaker 2: I mean, the scarlet needs a blush neo, right, I mean that's really what this is. 00:33:13 Speaker 14: If you look at the sales for MacBooks, they smashed expectations by landslide. You know, so the iPhone expectations also wear a bob estimate. So across the board people kept buying. So consumers, your retail traders, they had nothing to do with that week forecast. 00:33:27 Speaker 8: It's more of a supply. 00:33:29 Speaker 14: Can strained issue rather than a demand issue. 00:33:31 Speaker 5: Apple has had to raise prices as well. And you wonder how much these new foldable iPhones that they're going to release are going to end up costing. 00:33:38 Speaker 2: Why do I need a foldable iPhone? 00:33:40 Speaker 4: That's what they can fit it into your pocket, won't fall out. It's an extble. Your pockets are bigger, mind than. 00:33:45 Speaker 2: The Neo came out as a joke and it's the hottest thing going right. Yeah, it's talk about Bloomberg money. Everybody watching this show and personal finance. A kid, I need a Blue I guess I like my Air, but I really need a Neo to go back. 00:33:58 Speaker 4: Well, the parents want to pay for the new not there? 00:34:01 Speaker 5: Well something you is a low cost model, so that's start of it appeal, that's the selling point. Thank you so much, Elena Popina of Bloomberg News. All Right, and you know it's Friday, it's Bloomberg money. So we always talk about books. I know that I've got a huge reading list on my phone that I got to get to. Do you read books or do you like use the Kindle? 00:34:20 Speaker 2: No? No, I tried the Kindle, and I've tried other things, and now I'm very much back to just reading hardcover books only though old well yeah sometimes I can't, but you know, old school books. How about the muster read books that we've got right now? Yours my mind is a foundation read if you care about Elena Poppina's technology. Chip War is my book of the year two years ago. Chris Miller's out of Tufts up in Boston, and this is absolutely, absolutely the seminal read on the history of semiconductors, and he just captures beautifully the turf wars, whether it's obviously Silicon Valley or Charles River in Boston, or even over to the Netherlands at ASML or Timewan. Excuse me, the timeline story is actually the invention of Taiwan semiconductors may be the most emotional story in the book. 00:35:14 Speaker 5: Yeah, I can't wait to get to that point. I'm really excited about it. My book kind of ties into that. It's How to Rule the World and Education and Power at Stanford University by THEO Baker. 00:35:23 Speaker 4: This book is a lot of things, oh yeah. 00:35:25 Speaker 5: But what I enjoyed the most is the picture that it paints of Stanford for super bright and ambitious kids. Stanford's a place where the coding or hacking clubs they join have access to slush funds provided by tech companies, so they can party on yachts and socialized with billionaires. Vcs hang out there on campus at the cafe I think it's called the Koupa Cafe to scout future talent, which leads to offers of funding their startups later on for billions of dollars with a non doct I. 00:35:51 Speaker 2: I take issue with the romance of this and that mostly what the kids do is work. They're particularly undergraduate. They're working on first principle heavyweight mathematics, their operational research. I mean, so much of this is Michael Spence, the laureates invention, but I think it's underplayed how much the bright kids at these bright schools on the West coast, Harry Mudd, Caltech, Stanford, I'd mentioned Cornell on the East coast. Frankly, the kids work, I mean Scarlett slid through just in. 00:36:21 Speaker 4: Case there is that. 00:36:23 Speaker 5: But the ones that get farther are the ones who are hobnobbing with the bill ups. You know, they're getting the early look deals with those guys. 00:36:31 Speaker 2: I like hobnobbing better than new. 00:36:34 Speaker 4: Sounds a little bit like, you know, friendlier. 00:36:35 Speaker 8: Right all right. 00:36:36 Speaker 5: For the latest reviews and recommendations from Bloomberg, be sure to subscribe to the on Books newsletter. 00:36:46 Speaker 2: Bloomberg Money. From New York City on a Friday, summer Friday, the streets are just it's a summer Friday. It's easier to get to work and get home. 00:36:53 Speaker 4: Yeah, there's no traffic whatsoever. 00:36:55 Speaker 2: There's no question about it. So I guess they're gonna look ahead, he or can we look. 00:37:00 Speaker 15: Yeah, let's do that to this hour, right, Yeah, this hour. Richard claar Go's with the vice chairman. We ripped it up and did a much you know, Federal Reserve conversation. And the excitement of that was Annawon's work of Bloomberg economics. 00:37:13 Speaker 2: She was on fire. Here is Richard Clarida. 00:37:18 Speaker 10: He left open the possibility that the task forces could recommend other measures. They could go to an average instead of picking one inducts, they could look at CPIPPI. 00:37:27 Speaker 9: There are a lot of things they could do. But I think Anna. 00:37:30 Speaker 10: As usual raised is an important point is that an inflation targeting central bank needs to be clear about what it is it's targeting. It can and may evolve, and so I think that will be important. 00:37:41 Speaker 2: And I published this morning as well. Look for that at Bloomberg Economics across the weekend and what our videos will be out as well. 00:37:48 Speaker 5: All right, it was great to have Richard Clarida here with us, but it is Fridays. We need to look ahead to the weekend and next week as well. This Saturday and Sunday, BTS will be holding their first headline performance concert in New York since. 00:38:00 Speaker 2: They got to be sold mental soldo. 00:38:03 Speaker 4: I was checking on stubhop. 00:38:04 Speaker 5: You can still get stage right tickets for eighteen hundred dollars for repair each and then the nosebleed is at one hundred and seventy six, so that's a huge spread. But I thought maybe you would be more interested in Rush. 00:38:16 Speaker 2: Is that right? 00:38:16 Speaker 9: Yeah? 00:38:16 Speaker 5: They have a reunion tour. They're now halfway through their four night residency. At MSG. The og band members Getty Lee and Alexleisen will be their minus drummer Neil Port, who passed away sadly in twenty twenty. 00:38:27 Speaker 2: They did a bang up job on this. They went out and they just really looked for a new drummer, which is incredibly hard for any bands. They will all say that Anakans is from Germany and she's like legit classical rock train. Jeff Percaro was their huge hero from Toto, and the answer is she's the real deal and literally ran an academic department at the university. 00:38:49 Speaker 4: I don't know that it's a woman of many talents. 00:38:52 Speaker 2: I would suggest is a non Rush fanatic. It's been hugely successful. 00:38:56 Speaker 4: All right. 00:38:56 Speaker 5: Well, they are playing at MSG again, this four night concert residency that they're calling it. Also, of course next week we've got the job support for the month of July and the CONSENSU assessment right now is for eighty eight thousand jobs added in the month of July versus fifty seven thousand in July. 00:39:12 Speaker 2: I'm still not used to the new jobs number, with immigration being under one hundred thousand. To me, eighty eight thousands terrible, and yet the one would tell you that's actually pretty well. 00:39:23 Speaker 5: You'll get the unemployment rate, it's going to stay unchanged at four point two percent, and our generally earning is pretty much staying in line. 00:39:29 Speaker 2: And that's brilliant that you do that through August through September. For Bloomberg Money, the inflation adjusted wage got to be front and center as well. 00:39:37 Speaker 4: And don't forget earnings. 00:39:38 Speaker 5: SpaceX reports its first set of results as a listed company that's worked out so far. 00:39:44 Speaker 2: This is the Bloomberg Money podcast, bringing you a smart look at the forces shaping your financial life. I'm Tom Keen with Scarlet Food. You can watch the show live I'm Bloomberg TV every Friday at noon Law Street Time. Subscribe to the podcast on Apple, Spotify or wherever you listen, and is always on the Bloomberg terminal in the Bloomberg Business app