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Speaker 3: We just want to get a check on kind of
Speaker 3: how we ended up today and as we get ready
Speaker 3: for some more big megacap tech earnings. We're talking about
Speaker 3: Alphabet and Amazon coming our way over the next couple
Speaker 3: of days. Eric Wiener is in the house back with
Speaker 3: us senior editor Equities America's at Bloomberg News. Here in
Speaker 3: our Bloomberg Interactive Brokers studio a lot coming at investors.
Speaker 3: Certainly we watch for headlines that impact the trade here.
Speaker 3: Is it still really though largely about earnings for the
Speaker 3: most part, although some policies like we saw with the
Speaker 3: homebuilders today, certainly impacted by some things that could come
Speaker 3: from the White House.
Speaker 4: Well, right now, as far as today is concerned, Anthropic
Speaker 4: really freaked out the market and software has been selling
Speaker 4: off software stocks in particular within tech have really done poorly.
Speaker 4: I mean, if you look at like the Magnificent seven,
Speaker 4: you can see Microsoft has really come down more than
Speaker 4: the others, and that's spending on AI and that's also software.
Speaker 4: So today you got a lot of movement around what
Speaker 4: is at risk, who is going to survive AI, who
Speaker 4: isn't going to survive AI? And as these tools come
Speaker 4: out and they take the place of other you know,
Speaker 4: data providers. You saw like the London Stock Exchange down,
Speaker 4: you saw SMP Global downtild. Yeah, really weird, really weird reactions,
Speaker 4: and it's because there people are afraid that they're going
Speaker 4: to be replaced. That's different than the big megacap earnings
Speaker 4: where you got Google coming in Google, well, Alphabet they're
Speaker 4: up like ten percent, they were the best performer last year.
Speaker 4: The question is that they're within spitting distance of Nvidia,
Speaker 4: you know, of passing them as the biggest as the
Speaker 4: biggest stock in the world market keep yeah, yeah, So
Speaker 4: I mean it's will they will they justify that rally?
Speaker 3: Well, you know, speaking of this and we're watching earning
Speaker 3: so closely, just want to mention Eric super micro computer
Speaker 3: crossing the Bloomberg terminal we are seeing the stock pop
Speaker 3: initially here in the after market, let's go to the outlook.
Speaker 3: The company talking about seeing third quarter net sales of
Speaker 3: at least twelve point three billion. That is way above
Speaker 3: the street estimate of ten point two five billion. Ce's
Speaker 3: third quarter just at EPs at least sixty cents this year.
Speaker 3: That's eight cents better than what the street is forecasting.
Speaker 3: And what's always key is what we're seeing in terms
Speaker 3: of margins. And right now we're looking back at the
Speaker 3: second quarter a just to gross margin tim six point
Speaker 3: four percent, that was a little light point fifty two percent.
Speaker 3: But nonetheless check in super Micro up about nine percent
Speaker 3: here in the after mark.
Speaker 5: Yeah, the company seeing third quarter net sales at least
Speaker 5: twelve point three billion, beating estimates of ten point twenty
Speaker 5: five billion dollars. Eric, before we let you go, does
Speaker 5: this this report from super Micro a sigh of relief
Speaker 5: after voluntility like today?
Speaker 4: Sure? I mean, and we're seeing examples of this that
Speaker 4: today may have been overdone. I mean, that is a
Speaker 4: lot of what we've heard from analysts, what we've heard
Speaker 4: from traders. It's just you know, it could have been
Speaker 4: kind of a deep seek moment where you know, people
Speaker 4: initially react and then sort of come back to the
Speaker 4: table and think, well, maybe that was overdone and we.
Speaker 3: Should say Aman deep seeing a Bloomberg intelligence said you know,
Speaker 3: software is not all going away, and he said some
Speaker 3: of it could have been a valuation.
Speaker 4: Exactly, well exactly, so, I mean, and you saw like
Speaker 4: Palenteer did really well. They haven't done great this year,
Speaker 4: but they got a bounce today because of their earnings.
Speaker 4: So you know, it's it's sort of a moving target
Speaker 4: when you're talking about AI with winners and losers, and
Speaker 4: we're just still in the.
Speaker 5: Very early innings. Eric Wiener, Senior Editor Equities America's at
Speaker 5: Bloomberg News. We wanted to talk to you for longer,
Speaker 5: but a bit of a busy show, so please come
Speaker 5: back again.
Speaker 6: We'll do it.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 5: Well our Market's live blog today, pointing out that Neil
Speaker 5: Utta of Renaissance Macro notes that something typically goes wrong
Speaker 5: in the stock market when a new FED chair takes over.
Speaker 5: Years that saw a FED leadership change also saw big
Speaker 5: s and P five hundred drawdowns, an average of seventeen
Speaker 5: percent to the downside for the past four chairs alone.
Speaker 5: Dot A writing in a note today that quote, if
Speaker 5: past is prologue, I would not be surprised to see
Speaker 5: the new FED chair test it, especially given the circumstances
Speaker 5: of his ascension to the job, a newfound policy dove
Speaker 5: tasked with convincing those around the FOMC likely suspicious of
Speaker 5: the motivations to his position. Neil joins us now he's
Speaker 5: partner and head of economic research at Renaissance of Macro Research.
Speaker 5: He joins us from New Jersey. Neil, good to see
Speaker 5: you. You also write in the note that you've been tracking
Speaker 5: how Warsha's sentiment has changed since his time as a
Speaker 5: FED governor during the Great Financial Crisis two thousand and
Speaker 5: six to twenty eleven. I believe what did you find?
Speaker 7: Well, good to be with you. I found what you'd expect,
Speaker 7: which is he's been hawkish throughout his entire public career
Speaker 7: up until about the six months during which he's been
Speaker 7: here for interviewing for the FED job. For a president
Speaker 7: who calls himself a low interest rate person.
Speaker 5: Shocking, I know, isn't it like kind of baffling?
Speaker 3: I think when I when the name was announced Neil,
Speaker 3: I was kind of like, wait, did I miss something?
Speaker 8: Like?
Speaker 3: So, what do you think is going on here? Are you?
Speaker 4: Do?
Speaker 7: You feel like?
Speaker 4: You know?
Speaker 3: It's interesting? Was a Gavin Newsom who was who did
Speaker 3: a big interview with our Bradstone and just said, you know,
Speaker 3: kind of the rule of law is in a part
Speaker 3: his view in terms of this presidency, but he said,
Speaker 3: one of the things the president does pay attention to
Speaker 3: is financial markets and do you think that was kind
Speaker 3: of in his thinking when he said I got to
Speaker 3: get I gotta put a FED chair in the market's respect.
Speaker 7: Yeah, I don't. I mean, I don't know, I don't.
Speaker 7: I don't know how to think about that. I mean,
Speaker 7: I think the upshot to all this is that the
Speaker 7: FED is bigger than any one person, right. It's it's
Speaker 7: it's an institution with lots of people, it's a it's
Speaker 7: an institution that's driven by consensus building, and there are
Speaker 7: a lot of people on the FYMC that rotated and
Speaker 7: out from the regional FED banks and there are no slouches,
Speaker 7: you know, like someone like Lori Logan or Beth Hammock.
Speaker 7: You know, their expertise I think is considerably stronger and
Speaker 7: in lots of places than Kevin Warsh. So I don't
Speaker 7: think they're going to be intimidated by by Kevin warfh
Speaker 7: sitting around that table. So I think the upshot here
Speaker 7: is that the the FED is bigger than any one person,
Speaker 7: and that probably limits a lot of the sort of
Speaker 7: anxiety that you might get to markets. I mean, the
Speaker 7: real test of all of these positions, in my opinion,
Speaker 7: is really in times of crisis, you know, not so
Speaker 7: much when things are normal.
Speaker 5: So we're going to get to crisis in just a second.
Speaker 5: But first I'm wondering if we're putting the cart before
Speaker 5: the horse at this point because of what we've heard
Speaker 5: from Senator Tom Tillis and the fact that he will
Speaker 5: not back a nominee until the probes into J. Powell
Speaker 5: are settled. What does that mean for the outlook?
Speaker 7: Well, typically when you have you know, the sort of
Speaker 7: changing of the guard, if you will, it takes about
Speaker 7: ninety days from the time the person is nominated by
Speaker 7: the President to when they're confirmed by the Senate. We'll
Speaker 7: see how long this one goes. You know, typically the
Speaker 7: hearing is scheduled before the committee is scheduled about a
Speaker 7: month after the person is nominated. Now, if Senator Tillis
Speaker 7: decides to kind of stick to a guns, I mean,
Speaker 7: he's got nothing to lose. He's not up for a
Speaker 7: re election. You know, we'll see. I mean, you know,
Speaker 7: I think, as is the case with any nominee, the
Speaker 7: longer they it's like a fish out of water, right,
Speaker 7: I mean, what happens If a fish is out of
Speaker 7: water long enough, it starts to smell. And so I
Speaker 7: think that's that's the risk. I think you run if
Speaker 7: both sides kind of hunker down. I mean, the President
Speaker 7: has basically said, let it go on for as long
Speaker 7: as it needs to, you know, but to get Tillis
Speaker 7: to back down, the President will need to back down
Speaker 7: from the investigation.
Speaker 3: Hey, you know, I do wonder what a wash FED
Speaker 3: will be like, Neil, having seen, like you, lots of
Speaker 3: different FED chairs, and I remember a time where I
Speaker 3: feel like you didn't really hear from a lot of
Speaker 3: FED speakers, and now it's just such the norm. Is
Speaker 3: he going to be a quieter FED chairman, so that
Speaker 3: we're not going to be able to pick up cues
Speaker 3: and speeches that he's going to be giving potentially if
Speaker 3: again he is indeed FED chair, the next FED chair.
Speaker 7: Yeah, I mean, I think that's been one of his
Speaker 7: sort of critiques of the FED, is that they talk
Speaker 7: too much?
Speaker 3: Do you agree?
Speaker 7: And I, you know, sometimes yes I do. I mean
Speaker 7: I think that there's something to be said for that.
Speaker 7: But there's also, you know, like with everything, there's a
Speaker 7: lot of incongruencies in what he's talking about, right, So
Speaker 7: you know, during his time as a governor, you know,
Speaker 7: I don't really recall any meaningful speeches that Warsh gave
Speaker 7: on the economic and policy outlook, and he probably looked
Speaker 7: at that as a sort of form of forward guidance
Speaker 7: that he didn't really believe in. But you know, he
Speaker 7: kind of is all about like, use less discretion in
Speaker 7: terms of policy, right, we should have more of a
Speaker 7: rules based framework. But I think what's interesting about that
Speaker 7: now is a lot of what he's talking about in
Speaker 7: terms of you know, trying to get rates down at
Speaker 7: least up front, is an appeal to discretion. Like, how
Speaker 7: else would you describe the sort of golden age, right
Speaker 7: these is that they have to kind of bring rates down, right,
Speaker 7: like we're in an economic golden age. It's a productivity boom.
Speaker 7: Nehru's low. We can cut rates without stoking inflation. Obviously,
Speaker 7: that's an appeal to discretion at some level. So you're
Speaker 7: actually going to need a lot of data to convince
Speaker 7: the people around the table to kind of buy into
Speaker 7: that theory. You can't just will it into the Fed's policy.
Speaker 7: The other thing I would say, he's also a big
Speaker 7: critic of forward guidance.
Speaker 4: Now.
Speaker 7: One of the things we know about forward guidance right
Speaker 7: this is, you know, basically guidance on interest rates is
Speaker 7: that helps move you know, so that basically allows like
Speaker 7: movements in the front end of the Yeld curve to
Speaker 7: translate more into the back end of the Yeal curve, right,
Speaker 7: because then markets anticipate what will come as a result
Speaker 7: of what the Fed's doing. Now, if you get away
Speaker 7: from forward guidance, that kind of goes away and it
Speaker 7: pushes up term premiums, which all else sql makes longer
Speaker 7: term interest for its higher, which is something they've said
Speaker 7: they want to get down. You know, of one of
Speaker 7: Worsh's big criticism back in twenty twenty four was that
Speaker 7: the FED wasn't able to get the entire curve down
Speaker 7: in twenty twenty four, even though they cut interest rates.
Speaker 7: I think what that misses is the fact that longer
Speaker 7: term rates fell into the cut. Right. Had they not
Speaker 7: had for a guidance, that wouldn't have happened, in which
Speaker 7: case they may have had to cut even more.
Speaker 6: Yeah.
Speaker 7: So look, I mean there's a lot of interesting little
Speaker 7: nuances that we can talk about for hours.
Speaker 3: Frankly, well, one nuance I want to ask you, and
Speaker 3: maybe it isn't just a nuance, but I do wonder
Speaker 3: about the connection with Stanley drunken Miller. We talked about
Speaker 3: this with our Eric Shatsker and the ties that he
Speaker 3: has famed investor, well known on Wall Street, certainly to
Speaker 3: the Bloomberg audience, to you, that he has ties to
Speaker 3: Best and the Treasury Secretary right Scott Besson, as well
Speaker 3: as to Kevin Warsh. I think the ft even talked
Speaker 3: about the Financial Times about the rise of the shadow
Speaker 3: FED chair, meaning Drunken Miller got about thirty seconds. Is
Speaker 3: that maybe something that could be a reality very quickly.
Speaker 7: I mean I don't know. I think a lot of
Speaker 7: this sort of enthusiasm for a tread treasury Fedicorp is
Speaker 7: quite misplaced. Okay, you know, I'm not sure. I'm not
Speaker 7: sure I buy into that. Again, that goes back to
Speaker 7: this issue around QWI, like why did the fed haf QWI.
Speaker 7: Did they do it to bail out the federal government
Speaker 7: or did they do it because the federal government wasn't
Speaker 7: doing anything? I mean that if you go back to
Speaker 7: that time, Carol, we were talking about how the government
Speaker 7: was doing a sequester and austerity, and you know, I
Speaker 7: think that kind of gets the causality around policy backward.
Speaker 3: All right, listen, We always appreciate when you jump up
Speaker 3: on Bloomberg.
Speaker 8: So thank you so much. Neil.
Speaker 3: Have a great week. Neil Data. He's partner head of
Speaker 3: economics at Renaissance Macro Research. Joining us from New Jersey.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 5: Bloomberg News real estate report of Pat Clark joins us
Speaker 5: here in the Bloomberg BusinessWeek studio. What did you find out?
Speaker 5: How would this work?
Speaker 8: Well, there are details still to be negotiated right, but
Speaker 8: it would be what's typically known as a rent to
Speaker 8: owner pathway to home ownership program, where private investors acquire
Speaker 8: homes from homebuilders. These could be homes potentially that are
Speaker 8: sort of built tailored for this program, so maybe built
Speaker 8: on the smaller sides, not built yet, not built yet,
Speaker 8: and they could be built for this program, acquired by
Speaker 8: private investors who would then rent the homes out and
Speaker 8: then with some sort of opportunity for renters to convert
Speaker 8: into owners. Usually the way that's worked is there's some
Speaker 8: sort of help or, at least in more recent iterations
Speaker 8: on the model, there's some sort of program to help
Speaker 8: renters save a down payment. Some of the talk around
Speaker 8: this is that, you know, would there be a role
Speaker 8: for federally back mortgages. You know, does do Fanny and
Speaker 8: Freddie get involved in some way bring down the cost
Speaker 8: of you know, cost of in interest payments when you
Speaker 8: actually go and buy the home that you've been rented.
Speaker 3: So private investors Pat find them, provide the money up
Speaker 3: front for home builders to build, and then who gets
Speaker 3: all the permitting and all that good stuff. That's always
Speaker 3: so much fun.
Speaker 5: Well, the builders have to build the homes.
Speaker 8: But I think you know, the way one person described
Speaker 8: it to me is like builders are in the they're
Speaker 8: in the moving business, not the storage business, if like
Speaker 8: you indulge a cliche. And so the builders are the
Speaker 8: builders know how to get the homes built, built, and
Speaker 8: then they give them to someone else, right who can
Speaker 8: hold them on a balance sheet and figure out how
Speaker 8: to management manage them. I mean, managing these kinds of
Speaker 8: properties is not not necessarily.
Speaker 3: In the pitfalls before in this rent to own you
Speaker 3: report it in your story.
Speaker 8: It's one pitfall. It's you know, it's complicated, right, who's
Speaker 8: supposed to take care of the home during a period
Speaker 8: of time and its own you know, when when ownership
Speaker 8: is sort of transitory. So that's that's certainly one thing.
Speaker 8: It should be easier with newly built homes, right if
Speaker 8: you're doing this the way this has been done in
Speaker 8: the past, usually as you buy and exist in home
Speaker 8: and you know which comes with which could come with
Speaker 8: all sorts of like deferred maintenance in it, whereas these homes,
Speaker 8: you know, you would imagine could even have a builder
Speaker 8: warranty on them, and so that should be easier. The
Speaker 8: hard part really is coming up with a scheme that
Speaker 8: lets people convert.
Speaker 5: And bind the homes another challenge, I think, and I'm
Speaker 5: no real estate expert, but I'm told the three most
Speaker 5: important things when it comes to real estate are location, location, location.
Speaker 5: I've heard that before. Where are these homes going to
Speaker 5: be built? Because it kind of doesn't matter if you
Speaker 5: create a million homes and places where people don't want
Speaker 5: to live. Sure, you know that's I think.
Speaker 8: That that seems like the less hard problem, so really
Speaker 8: to me personally.
Speaker 5: Well, because that's where, to Carroll's point, the permitting comes in.
Speaker 5: Because a lot of a lot of the challenges with
Speaker 5: the affordability crisis is zoning and the fact that a
Speaker 5: lot of these places that are highly desirable with expensive
Speaker 5: home prices you can't build because of density issues.
Speaker 8: Yeah, I guess that could be an issue. I mean
Speaker 8: there's also, like we're talking about lots and lots of
Speaker 8: newly built single family homes. These have to go in
Speaker 8: the suburbs, they have to go where there's land to
Speaker 8: build them on and you.
Speaker 3: Know, as but is that where people want to live? Like?
Speaker 3: That goes I guess the argument pod because we've been
Speaker 3: talking about affordability you know this better than we do,
Speaker 3: like for decades, and so you have so many people
Speaker 3: working in these major cities, be it New York, be
Speaker 3: it La like and the ability to live close so
Speaker 3: you're not commuting an hour or two hours or three
Speaker 3: hours or whatever the heck it is. You know, it's
Speaker 3: it's difficult so to find that affordable housing that is
Speaker 3: close to where the jobs are. Is that where this
Speaker 3: I mean if you're buying, if you're building single family homes,
Speaker 3: that might not be the case.
Speaker 8: Sure, that's that's fair, right, is like, can you actually
Speaker 8: find a market for these kinds of properties? I mean
Speaker 8: there's there's It's not as though there are not homes.
Speaker 8: You know, homes are being built in the suburbs, right,
Speaker 8: some of them are built. You know a lot of
Speaker 8: capitals formed around this idea of built to rent, which
Speaker 8: is homes that are built for the purpose of renting
Speaker 8: out very often in communities, you know, in whole communities.
Speaker 8: Sometimes people call them horizontal apartment buildings. I think those
Speaker 8: are renting. I mean it's possible that, you know, not
Speaker 8: every project has rented as well as the developer thought
Speaker 8: it would when they started, because that happens too. And
Speaker 8: I think anytime you think about building at scale, there's
Speaker 8: a real estate cycle to contend with.
Speaker 3: But I.
Speaker 8: You know, I think that there are plenty of markets
Speaker 8: where you could find demand for this kind of product.
Speaker 5: I'm wondering about the companies that could benefit here. Lenar
Speaker 5: is up three percent in a day when the broader
Speaker 5: market is lower. We're seeing home builders in general higher
Speaker 5: apart from just a handful who are potential winners here?
Speaker 8: Yeah, I think anyone in the new home space right
Speaker 8: like builders building supply. You know, I don't. It's it's
Speaker 8: I wasn't able to unearth a lot of details regarding investor.
Speaker 8: You know, who is forming the capital to do this
Speaker 8: right and and and who gets to invest in this
Speaker 8: and on what kinds of terms? But you know, there's
Speaker 8: you could certainly see opportunities.
Speaker 3: So is it a fund is created and then home
Speaker 3: builders tap into that fund? Is that kind of how
Speaker 3: it works? Or we don't. We don't know yet. And
Speaker 3: I'm the other thing that, like I was thinking is
Speaker 3: that Okay. Now you have investors in Boved, you have
Speaker 3: home builders involved. These are all layers that have to
Speaker 3: make some money on this project, and I'm curious about
Speaker 3: how expensive these might be. I know the whole idea
Speaker 3: is about affordable homes, but I do think about people
Speaker 3: taking a piece of the action and how that drives
Speaker 3: up prices.
Speaker 8: Essentially, I think it's complicated.
Speaker 5: I think there's there's I always you know, I think we.
Speaker 8: Tried to get this across in the story.
Speaker 5: This is a this is a complex.
Speaker 8: Idea, and it may prove too complex to actually, you know, operationalize,
Speaker 8: but the you know, it's you know, at the same time,
Speaker 8: I think you could think about it as it may
Speaker 8: turn out that this is an idea that the housing
Speaker 8: industry broadly is trying to put in front of the
Speaker 8: Trump administration, because you know, both sides recognize that there
Speaker 8: is a housing affordability crisis and it needs to be
Speaker 8: addressed in some way. Everyone has an interest in doing something,
Speaker 8: and so, you know, if it turned out this was
Speaker 8: a conversation starter, I wouldn't be shocked. At the same time,
Speaker 8: you know, we have Trump accounts, right, we have Trump
Speaker 8: we have these this does seem to be a template
Speaker 8: that you know, some people have at least pushed from
Speaker 8: just idea to something that exists in the real world.
Speaker 8: And so it wouldn't shock me at that time.
Speaker 3: Were actually going to talk about TRUP account a little
Speaker 3: bit later on, No, it's interesting. Would they be called
Speaker 3: Trump homes?
Speaker 8: That's the way people are talking about them now? Yeah,
Speaker 8: all right, and so one way to get it in
Speaker 8: front of the president.
Speaker 3: Right, yeah, knew your audience, as some might say, Pat
Speaker 3: great story and it is a Bloomberg exclusive, so highly
Speaker 3: I'm everybody check it out on the Bloomberg at Bloomberg
Speaker 3: dot com pac clock. Thank you. He is Bloomberg News
Speaker 3: real estate reporter joining us right here in studio.
Speaker 2: If you are listening to the Bloomberg Business Weekdaily podcast,
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Speaker 3: It is time now for our weekly discussion focused on women,
Speaker 3: money and power. We speak to some of the most
Speaker 3: influential women that are out there from across the world
Speaker 3: of finance, really across the business world. Great to have
Speaker 3: back with US Jamie Madera. She is managing director, head
Speaker 3: of US Wealth Advisory and head of Retirement at the
Speaker 3: world's largest asset manager. We're talking about Blackrock and she's
Speaker 3: here in studio.
Speaker 5: How are you, How are you?
Speaker 6: I'm good.
Speaker 5: It's great to be here.
Speaker 3: It's great to have you here. And I do want
Speaker 3: to kind of start with that because I think about
Speaker 3: these funds what it might mean for more Americans. We
Speaker 3: talk about the ability to create wealth and that's whether
Speaker 3: it's to buy a house, to just think about your retirement.
Speaker 3: What do you think this means in terms of retirement
Speaker 3: planning for more America.
Speaker 6: Yeah, so, look, I think first of all, taking a
Speaker 6: step back retirement, right, It is such an interesting conversation.
Speaker 6: It is changing so drastically, the ecosystem, everything about it
Speaker 6: is changing. And when you think about anything we can
Speaker 6: do as a society to help people save earlier, invest earlier,
Speaker 6: and fund those longer lives, that is a great thing.
Speaker 6: And when you think about what these accounts will do
Speaker 6: for helping people actually put money away towards their retirement,
Speaker 6: but start at a much younger age, it is about
Speaker 6: time in the market, right, you just need to have
Speaker 6: more time, and the idea of helping people start saving
Speaker 6: earlier is a wonderful thing.
Speaker 5: So you give the seed amount of money and then
Speaker 5: hopefully the people who get that have exposure to the market,
Speaker 5: and then they start to get more as well. I
Speaker 5: think the challenge for a lot of people might be
Speaker 5: they don't necessarily have the money to add to that. So,
Speaker 5: you know, it's a complicated it's a complicated program, I think,
Speaker 5: an one that won't necessarily it's a simple program, but
Speaker 5: a complicated issue that won't necessarily saw if we think
Speaker 5: about from the broader perspective of Americans being prepared for retirement,
Speaker 5: what are you seeing from clients out there right now
Speaker 5: making sure that in an environment like this where we're
Speaker 5: seeing some volatility. Charlie was just talking about double digital
Speaker 5: clients and some software names today because of disruption from AI.
Speaker 5: What are you hearing from them about how to hold
Speaker 5: on to their assets?
Speaker 6: Yeah, So if we take a step back and we
Speaker 6: think about what are we turn to all for when
Speaker 6: we talk about helping more Americans achieve retirement security. So
Speaker 6: retirement security means the freedom to choose what's next, the
Speaker 6: freedom to do what's next, the freedom to support your
Speaker 6: longer life. And when we talk to clients about it,
Speaker 6: it's two things. It's giving appropriate access to the full
Speaker 6: power of the capital markets and it's managing risk across
Speaker 6: these longer lives. And when you think about how you
Speaker 6: pull those two things together, that's what we focus on
Speaker 6: with our clients. In fact, Blackrock, a lot of people
Speaker 6: don't realize we're a retirement company. Right people think of
Speaker 6: Blackrock in many ways we're a retirement company. Over half
Speaker 6: of the assets, half of our fourteen trillion, is in
Speaker 6: service of helping people say for retirement. Right back in
Speaker 6: nineteen ninety three, we created invented this elegant design of
Speaker 6: a solution, which is a target date fund that helps
Speaker 6: people access the capital markets and then manages them through
Speaker 6: in an appropriate way so that when they retire they
Speaker 6: have money to use during their retirement. The challenge is
Speaker 6: the world's changed, right, so people are living longer, The
Speaker 6: responsibility of retirement saving is now so much more on
Speaker 6: the individual than ever before, and the capital markets have
Speaker 6: evolved so much so you need to almost rewire the
Speaker 6: whole thing and understand and figure out what are you
Speaker 6: solving for and the resources and tools you have to
Speaker 6: deliver on that.
Speaker 3: So, Jamie, what are some of the things that you
Speaker 3: think about in that rewindering.
Speaker 6: Yeah, so there's two really big themes. The first is
Speaker 6: we talk about people living longer. People are living longer,
Speaker 6: and they've always been focused on saving to get to
Speaker 6: a certain number, but who knows what that number should
Speaker 6: be and how do you actually then convert that and
Speaker 6: do the math to figure out how much income that
Speaker 6: should get you. So the first one is all about
Speaker 6: turning savings into income. And you think about penn plans
Speaker 6: for years. What's the benefit of a pension? You get
Speaker 6: a defined benefit, a defined income stream, and to date
Speaker 6: four to one K plans haven't provided that. More and
Speaker 6: more people are asking for it. Over fifty percent of
Speaker 6: Americans are more scared of outliving their assets than dying,
Speaker 6: Like that's a really scary thing. And what they're really
Speaker 6: saying is any clarity on figuring out how much income
Speaker 6: can I get and how do you actually give me
Speaker 6: the lifetime income, the guaranteed income to get there. And
Speaker 6: so one of the things that we've been talking with
Speaker 6: our clients about is a target date fund that has
Speaker 6: the option of embedded lifetime income provided by an insurance company.
Speaker 6: And so you've elegantly brought together the target date fund solution,
Speaker 6: which is the number one solution for any four to
Speaker 6: one K plan, but you've now embedded it into that,
Speaker 6: or you've embedded lifetime income into that.
Speaker 5: So is that anity that goes in there?
Speaker 3: Then yeah, it's the option.
Speaker 6: So you know, we do think that first of all,
Speaker 6: people need choice and people want options. And the beautiful
Speaker 6: thing about life Path paycheck, which is our target date
Speaker 6: fun with income is not only does it give you
Speaker 6: the option to get that guaranteed income an annuity provided
Speaker 6: by an insurance company, but it also helps you figure
Speaker 6: out what that income could be and how much it
Speaker 6: could be to throughout your life.
Speaker 5: Well, how is this different than people saving assets use
Speaker 5: and then supplementing social Security with selling some of those
Speaker 5: assets every year? Why when they reach retirement is there
Speaker 5: an aversion then to selling the assets? And people want
Speaker 5: income generated from the assets instead of actually disposing of
Speaker 5: the assets.
Speaker 6: Look, I think at the end of the day, we're
Speaker 6: all human, right, and you want some sort of security.
Speaker 6: That's the beautiful thing about social security. It gave me
Speaker 6: some type of security. And so you could do the
Speaker 6: math and figure out what your withdrawal is and how
Speaker 6: you actually sustain those assets that you've saved, and you
Speaker 6: can work with an advisor or various tools to do that.
Speaker 6: That's a perfectly fine approach. Or you could also get
Speaker 6: the security of having that guaranteed income and having that
Speaker 6: income stream for you. And we call it life path
Speaker 6: paycheck because people work and work and work, and then
Speaker 6: suddenly they retire and where is my income coming from?
Speaker 6: And so through life path paycheck, you actually get that
Speaker 6: paycheck after you stop working. Fascinating.
Speaker 3: And one of the things before before we wrap up is,
Speaker 3: you know, we talk a lot about the wealth, the
Speaker 3: great Wealth transfer and whether it's to a younger generation.
Speaker 3: But increasingly again you talk about people living longer. Women
Speaker 3: tend to outlive men. And I am curious here you
Speaker 3: are having more conversations with women, either as part of
Speaker 3: a marriage or a partnership and kind of planning around
Speaker 3: that idea that, Okay, one of us might not be
Speaker 3: around and it's likely to be maybe the woman who
Speaker 3: lives longer.
Speaker 6: Yeah, so average longevity rates have increased by seven years
Speaker 6: over the past two decades. Now when you think about women, women,
Speaker 6: as you say, tend to in general outlive men. The
Speaker 6: other thing that's interesting is in partnerships, more often than not,
Speaker 6: the woman is younger, and so she has that bigger
Speaker 6: gap to fill. You know, when we talk to women
Speaker 6: about return ron savings, this is where security really matters.
Speaker 6: The confidence Let me know I have some type of guarantee,
Speaker 6: and then I will use the rest of my savings
Speaker 6: on discretionary items or doing the things I want to do. Confidence, security,
Speaker 6: and clarity. Clarity is the big word for everyone. Let
Speaker 6: me know how much I need and how I'm going
Speaker 6: to fund it.
Speaker 3: It sounds so simple, right, but it's amazing how it's
Speaker 3: not there, and you're right. I think people get to
Speaker 3: the end and they're like, wait a minute, this isn't
Speaker 3: what I expected.
Speaker 5: Never have time.
Speaker 3: Come back soon. I will love it, love it. Jamie mcjeras.
Speaker 3: She's managing director, head of US Wealth Advisory and head
Speaker 3: of Retirement over at Blacklow, joining us right here in studio.
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