00:00:02 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news, Bloomberg Money. 00:00:12 Speaker 2: This is the Bloomberg Money Podcast. I'm Tom Keen with Scarlet Foo. Join us each week for a smart look if the force is 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 is always on the Bloomberg Terminal and the Bloomberg Business app. Got a great set of Bloomberg people to be with us, David Girls just won't go away Bloomberg this weekend on Friday. 00:00:49 Speaker 3: Ramping up to the show. 00:00:50 Speaker 4: You have a key guest this week, Yes, maybe one from Michigan. 00:00:53 Speaker 3: I'm going to tease that. 00:00:54 Speaker 2: Okay, a moment Jess a song with us. Thank you so much for joining and nice to have you here. Got lots to talk about at the start of the show right now, But how did you affect mister Hassett here you were talking about socialism and the New Democratic Party broll. 00:01:11 Speaker 5: We're talking about some inconsistencies maybe in the Republicans language. They have talked about the communist socialist Democrats and asked him what a socialist was, and he said, the government owns the means of production. And then I pointed out that the Trump administration has been taking stakes in a lot of American companies. 00:01:29 Speaker 3: John Edwards years ago was. 00:01:30 Speaker 2: Old school and what I saw today was a too America's job atcon. I mean, have you ever seen it, Mike McKee, this split apart as we all struggle to retirement. 00:01:40 Speaker 5: I don't think it was too split apart this time. It was a lot of stuff under the hood that you have to kind of thread together to make a story out of it. Now, we did lose twenty three thousand jobs, but fifty thousand of those were local education teachers and education workers, and a lot of that maybe just a seasonal difference of when people were taking off payrolls, because they usually come off May in June, and so that'll go away in the next month. And then the question is where's the rest of the job. We lost nineteen thousand retail jobs, but the rest of it was all just kind of lower hiring. Social services and education and health has been the big job creator, and we've been usually getting thirty forty fifty thousand a month in that category only got twenty two thousand, So hiring slowed down, but we had a four point one percent unemployment rate because a lot of people left the labor force. Labor force was a lot smaller again the second month. And what that's telling you is that the President's deportation plans are working. The baby boomers, except for Tom, are still are retiring now. 00:02:49 Speaker 1: And I think, what's behind his shoulder? 00:02:53 Speaker 3: Last time on the show for him? Save the show right now, young one. 00:02:58 Speaker 6: So the job's report took off the front page at least for this warning. But when it comes to inflation, still not oil prices, David and consumers have the Iron War fatigue. Every headline on military strikes or talks causes huge swings and oil prices and gas prices. This is really difficult to know where things stand. I think even the President has Iron War fatigue. 00:03:17 Speaker 3: I think that's true. 00:03:18 Speaker 4: I mean, he's been talking about the prospects of a deal, but it's one that's been negotiated between the Iranians and Theomani's and a very circumscribed one that doesn't involve, certainly the nuclear program or anything like that interesting to see the way in which the President, if not talking about the Iron War, isn't pivoting to talking about the economy, although we do know from recent reporting from Bloomberg and other outlets he's calling up Kevin Warresh, calling up the FED chair more frequently now to talk about the economy. Spit all his ideas and where things are here about mister Warsh's impressions of the data. 00:03:45 Speaker 7: So clearly cognizant of where things. 00:03:47 Speaker 4: Are, but that's not manifesting the way that he's talking about on the campaign is. 00:03:49 Speaker 2: An odd David that we're ignoring affordability, standard of living, paycheck to paycheck right now, it seems like nobody's talking about it. 00:03:58 Speaker 4: I wouldn't paint that with the broad brush, but I'd go back to the White House. And it is something that I think President Trump's advisors desperately wanted to talk about more of the advances that he's made, and you saw him go to Las Vegas this week to talk once again about no taxes on tips, which was such a rally and cride during the campaign. But it is not something that he is either fond of talking about or able to talk about or able to stay focused on when he's on the campaign trail. So I think that is laid bare for so many people. You mentioned oil prices. Gas price is incredibly expensive. I think there's an awareness of the fact that is the case here across this country. But it is certainly to your point, certainly not in the Republican zeitgeist, the president zeitgeist. You look at the election that we had in Michigan this week, it really was an animating issue. 00:04:36 Speaker 3: And even when you see kind of. 00:04:37 Speaker 4: Invective put on the candidate who won on abdulahs a Ed, he pivots very quickly to talk about affordability in healthcare and other matters. 00:04:45 Speaker 6: So it's because of this that investors kind of take matters into their own hands. And Sajah, you've written a story about how artificial intelligence is helping retail investors become kind of DIY hedge fund managers. They're using this technology to build programs huge returns in the stock market because this is what they see as their path forward. 00:05:03 Speaker 3: Exactly. 00:05:04 Speaker 8: If you think about kind of the progression of retail trading, this is almost like zero commission two point zero, So five ten years ago when Robinhood kind of spearheaded this zero commission period, and then during the pandemic we saw like game stop and mean stock trading, and now it's almost the next chapter for retail trading, especially with artificial intelligence. These folks that we talked to, they don't just ask AI like what stocks to buy, They're asking them to help build code, build a model, very sophisticate a model to help them identify strategies and even generate trading calls. 00:05:39 Speaker 6: Okay, so on the one hand, this empowers individual investors, but on the other hand, everyone is using these AI models which kind of look through the same data, and they use similar models, and I would imagine spit out similar outcomes. Doesn't this create you know, concentration risk where people piloted the same positions for sure. 00:05:57 Speaker 8: If they're using the same AI models and generating similar calls, that could really amplify the market swings. 00:06:04 Speaker 3: Those are calls. Does AI tell you when to get out? 00:06:09 Speaker 7: It does too. 00:06:10 Speaker 8: Some people have set up, for instance, ten percent stop losses so that you can do that. 00:06:16 Speaker 3: We didn't need AI. 00:06:18 Speaker 8: But if you're treating at a high frequency during the day, when you're at your day job or when you're having lunch with friends or even when you're sleeping. These AIS can actually execute or automate your strategies for you. 00:06:29 Speaker 6: I want to bring back to jobs for a moment here, Mike McKee, do we see any evidence of AI the kind of stuff that Sidja was talking about taking away jobs so farward? Is it still too early to look for that? 00:06:39 Speaker 7: Too early to look for that. 00:06:40 Speaker 5: But we did see evidence at AI as adding jobs because there were twenty two thousand construction jobs added, and about nineteen thousand of those were in areas adjacent to building AI, data centers, non residential construction, specialty contractors and things like that. And then you had another four to six thousand jobs in com and semiconductor manufacturing. So those were some of the positive areas in this job's report and they're definitely linked to AI. But too early to say, well, I didn't look at the actually jobs for stockbrokers, but too early to say that AI is having a big effect on them. 00:07:18 Speaker 3: Rest secs just keep it going this weekend. 00:07:21 Speaker 7: Every day. I say they can't keep this up and up, but they do. 00:07:24 Speaker 3: They do. 00:07:24 Speaker 5: It reminds me of Butch Cassidy and the Sundance kid when they're looking back at the Pinkerton Detectives saying, who are these guys? 00:07:31 Speaker 2: We do it's amazing to see. It's gonna just has been a joy, joy, joy of the summer. Bloomberg on a well, Bloomberg Money on a Friday, And I'll tell you it's hot out there? 00:07:43 Speaker 3: Is it ninety today? It feels like yesterday was Boomer? 00:07:46 Speaker 6: I know it's I mean, this is these are the dog days and August. 00:07:48 Speaker 3: It's truly the dog days of August. 00:07:51 Speaker 2: And we're going to try to do Is there some good conversation here about personal finance, about retirement and about you know, everything out there in Wells Man. 00:08:00 Speaker 3: Here's what you need to know. 00:08:02 Speaker 2: Meredith Whitney knows it's about baseball. In baseball, you go up to the plate and two thirds of the time you go back to the dugout. She has enjoyed over the years a few times of putting the ball in play definitive and finance in banking. She still Meredith Whitney's advisory group today. 00:08:20 Speaker 3: What was it like the acclaim you had I'm going to call it fifteen or twenty years ago. 00:08:26 Speaker 2: How did you handle just the day to day the boom of Meredith Whitney, municipal finance and banking. 00:08:33 Speaker 3: How do you handle it day to day? 00:08:35 Speaker 9: It was really awkward because you know, my world had been really small, covering banks and financials, and I loved it. So people within the industry knew who I was and I had great relationships, and then all of a sudden, there was so much more attention focused on me, and it's very it's uncomfortable. I wasn't used to it. I can't imagine how you guys are get used to it. 00:08:58 Speaker 2: You know it was but you comfortly decided what you and Sally Crawchuk were path breaking on, which is actually doing securities analysis. And then it got so much bigger than that. Let's show one of the huge Meredith Whitney's successes. You got to play, You got to put the ball in play, and then you have to have the courage to hold on. 00:09:17 Speaker 3: I was in a meeting with Meredith ages ago. 00:09:19 Speaker 2: I could barely shave at the time, and you know, there we were and she says, this company, Visa, it'll work out. When did you sell Visa? When did you get out? How did you not sell Visa? 00:09:31 Speaker 9: I mean, it's just been you know, back then it was just you know, cash to credit. There was this huge tailwind to it. And also it was like I call it a da mutualization from the from the bank, so it was it was a straight arrow. 00:09:45 Speaker 10: It was one of the easier ones. 00:09:46 Speaker 9: And I call it the og of fintech because it was really one of the first FinTechs. Now, after the Financial crisis, the FinTechs became a real thing and dissarn intermediate a lot of the things that the banks weren't only to do because they had PTSD from the financial crisis. 00:10:03 Speaker 6: You say, Visa, I think about credit cards, and I know, Meredith, you track consumer credit as a way to gauge the health of consumer spending and therefore the broader economy. Your view is that it's become increasingly more valuable because of the way that people use credit cards. They're visas now as opposed to five or ten years ago. 00:10:21 Speaker 1: What does that look like. 00:10:22 Speaker 9: Well, what's happened is post financial crisis, the banks pulled back dramatically from near prime and subprime, so they had all sorts of exposure. Wells was a big subprime lender, and so all of that has moved into the shadow banking s. It's maybe companies like that, we're famously subprime, like Capital One has pulled way back and has focused on prime. So instead of revolving balances, people are spending and paying back monthly. Now the balances don't reflect that they grow, but they're growing at the place of inflation. And so what I look at is being a very good guide for where inflation is. Gas prices peaked in like mid early early May. Credit card spending had already peaked in early April, so and you've seen credit card spending deccelerate from that time. And so these are just people spending, absorbing the higher prices and then just spending accordingly. So I think I think the FED should look at their own data. This is data that comes out weekly, so you can see credit card balances and it's really helpful. So I think I think inflation is in a real mirror. 00:11:32 Speaker 6: So it's like a charge card as opposed to a credit card that you pay the ballance off of. 00:11:36 Speaker 10: That's exactly right, the charge plate right yourself. 00:11:40 Speaker 6: But that's also why all these big banks are chasing the higher income consumer. Everyone's coming out with their own premium credit card because the fees are so lucrative. I mean, there's an underserved population here of people who actually need credit cards but can't actually get it. 00:11:52 Speaker 9: Can't get it, and so what they're doing is they're going outside of the banking system, which means it's incredibly expensive. I say that people aren't living paycheck to paycheck, but payday to payday. So the fastest growing industry within fintech and financial services is advanced wage pay. So if you've worked two days, you can access for a fee, your wages for those two days. And what happens is people are using this service multiple times. Now, it was Dave and Chime that reported yesterday that was their fastest growing product. And so while on a two week basis it looks like a six and a half percent interest rate, but annualized that's over one. 00:12:32 Speaker 10: Hundred and sixty percent. 00:12:33 Speaker 9: People aren't using this product one time, they're using multiple It. 00:12:36 Speaker 2: Harkens back to our grandparents. It feels like it's almost, you know, depression kind of. It's not about fancy personal finance and retirement. It's about a tough time out there. We're trying to get to the next paycheck. 00:12:47 Speaker 10: That's exactly right. 00:12:47 Speaker 9: So there was a study done in February that two thirds of people working are living paycheck to paycheck and a quarter of of labor ports participants are struggling to pay their bills. And so what they're doing is they're going to pawn shops, they're doing payday earned wage access borrowing and there, or they're tapping into for the subprime in near prime. They can't even get home equity loans. So this is a fright a feast. 00:13:21 Speaker 2: Well, this is the courage yet over decades, you know, talking about the two Americas out there help me out as a stereotype of James Diamond of a small bank on Park Avenue and buy now and pay later. I mean to me, it's almost a revolution where the kids aren't using the charge cards like they used to in our personal finance. Does affirm in those kind of companies, do they win? 00:13:42 Speaker 9: I think the buy now, pay later replace the credit card. And what I never saw coming was the fact that the merchants are paying the fees right there, you know, they're paying a firm, they're paying and so what happened in twenty ten, and not to get to technical, but the. 00:13:57 Speaker 3: Card at Friday, don't get technical. 00:14:00 Speaker 9: When we were in college, we got solicited by every credit card out there. When we graduated, we had credit card debt. In twenty ten that changed, So unless you've got a co signed by your parent, if you were under twenty one. 00:14:12 Speaker 10: You couldn't get a credit card. 00:14:14 Speaker 9: So this generation of Gen Z and younger millennials aren't used to revolving credit, so they're they're actually buy now, pay later is more appealing to them, even though sometimes it's the same thing. 00:14:26 Speaker 6: How do they set up a credit history? Then if they eventually when they want to start becoming consumers in this economy and be able to apply for loans, they don't have a credit history. 00:14:34 Speaker 9: Though, that's exactly that's exactly right, because you're not even if they're even if it's a high end high earners and they're taking American Express, they're paying down their balance, so you're exactly right, it's going to be harder for them to get a PRESD. 00:14:44 Speaker 2: I think of you and the Klan. I'm going to pick on Mike Mayo. We all love to pick on Mike Mayo. Great analysts out there, you people said they get through the Great Financial Crisis and think we should own the banks as part of our retirement. Give us an update now on where you think in the next ten years those successful investments, where do they go. 00:15:02 Speaker 9: Well, it used to be the case that the banks paid rich dividends. That hasn't been the case. So banks have been buying back shares at really high valuations, which is not a creative for the banks. And they've been reticent to raise dividends because they don't know how long this you know, this great earning, you know bonanza that the banks are in is going to last. So I think they're better vehicles to buy outside of the banks that have rich, rich dividend yields. In retirement, you can have both rich equities that i've rich dividen yields. 00:15:39 Speaker 10: Bonds are less certain. 00:15:40 Speaker 9: The sixty forty portfolio hasn't been, you know, a great performer the last year. 00:15:45 Speaker 10: But I think banks, you know, Jamie. 00:15:48 Speaker 9: Sorry, JP Morgan is an absolute outlier. I mean, they've had since two thousand and ten, they've just been a juggernaut and that's been a great stock. But they bought back the most amount of shares of any of the banks. 00:16:02 Speaker 6: Twenty years ago. Banks were what tech was in terms of concentration in the market. I mean, they were the giants and then now it's all tech firms and banks are kind of like, you know, middle of the road. 00:16:11 Speaker 3: Can you see Meredith and the golf course. It'd be like a terror. 00:16:16 Speaker 6: You've made some big calls on banks on munis in your career on Wall Street. What's your personal approach to investing these days. 00:16:23 Speaker 9: I've always been thematic with my part I didn't own the banks back then, thank goodness, because I was covering them and I just felt. 00:16:31 Speaker 10: There was always a conflict of interest. 00:16:32 Speaker 9: But I always take long term thematic approaches to my investing. So I'll give you a couple of examples, you know, the winners and the losers. With the Housing bill, the affordable Housing twenty first century road to Housing. I bought Sky, which is Champion Homes, which is a manufactured home builder, and the idea is that they repealed a chassis law, things would change, that production would increase dramatically, And manufacturer homes are really nice. They're not the manufactured homes of yesteryear. So by that I've done, I do front some some frontier investing in terms of with. 00:17:16 Speaker 10: Uh uh uh uh. 00:17:20 Speaker 1: Certain markets, geographical market. 00:17:21 Speaker 9: To me well, with a lot of the stands which have very rich, rare earth minerals, so that a lot of that is going sees uh private to public companies know that sort of esoteric ic, but those have been good plays and they're emerging will be bigger plays, all. 00:17:41 Speaker 1: Right, So a commodity play there. 00:17:42 Speaker 6: And then from Meredith Whitney, thank you so much for joining us, by the way, you really appreciate. Meredith Whitney, CEO of Meredith Whitney Advisory Group, coming up a conversation with David Kelly with a focus on personal finance, retirement and wealth management, disiness Bloomberg Money. 00:18:00 Speaker 2: On a Bloomberg Money on a Friday, And I'll tell you it's hot out there. 00:18:03 Speaker 3: Is it ninety today? It feels like yesterday was brutal. 00:18:06 Speaker 1: I know it's I mean, this is these are the dog days longest. 00:18:09 Speaker 3: It's truly the dog days of August. 00:18:11 Speaker 2: And we're going to try to do is there some good conversation here about personal finance, about retirement and about you know, everything out there in Wilson Management. 00:18:21 Speaker 3: Here's what you need to know. 00:18:22 Speaker 2: Meredith Whitney knows it's about baseball. In baseball, you go up to the plate and two thirds of the. 00:18:28 Speaker 3: Time you go back to the dugout. 00:18:31 Speaker 2: She has enjoyed over the years a few times of putting the ball in play definitive and finance in banking. She'sill Meredith Whitney's advisory group today. 00:18:40 Speaker 3: What was it like the acclaim you had I'm going to call it fifteen or twenty years ago. 00:18:46 Speaker 2: How did you handle just the day to day the boom of Meredith Whitney, municipal finance and banking. 00:18:54 Speaker 3: How do you handle it day to day? 00:18:55 Speaker 9: It was really awkward because you know, my world had been really small, covering banks and financials, and I loved it. So people within the industry knew who I was and I had great relationships, and then all of a sudden, there was so much more attention focused on me, and it's very it's it's uncomfortable. I wasn't used to it. I can't imagine how you guys get used to it. 00:19:19 Speaker 2: You know, it was it was comfortly decided what you and Sally Crawchuk were path breaking on, which is actually doing securities analysis, and then it got so much bigger than that. Let's show one of the huge Meredith Whitney's successes. You got to play, You got to put the ball in play, and then you have to have the courage to hold on. I was in a meeting with Meredith ages ago. I could barely shave at the time, and you know, there we were and she says, this company, Visa, it'll work out. When did you sell Visa? When did you get out? How did you not sell Visa? 00:19:51 Speaker 9: I mean, it's just been you know, back then it was just you know, cash to credit. There was this huge tailwind to it. And also it was like I call it a DTA mutualization from the bank, so it was a straight arrow. 00:20:06 Speaker 10: It was one of the easier ones. And I call it the OG. 00:20:09 Speaker 9: Of fintech because it was really one of the first FinTechs. Now, after the financial crisis, the FinTechs became a real thing, and dissarn intermediated a lot of the things that banks weren't willing to do because they had PTSD from the financial crisis. 00:20:24 Speaker 6: You say Visa, I think about credit cards, and I know, Meredith, you track consumer credit as a way to gauge the health of consumer spending and therefore the broader economy. Your view is that it's become increasingly more valuable because of the way that people use credit cards. They're visas now as opposed to five or ten years ago. 00:20:42 Speaker 9: What does that look like, Well, what's happened is post financial crisis, the banks pulled back dramatically from near prime and subprime, so they had all sorts of exposure. Wells was a big subprime lender, and so all of that has moved into the shadow banking s. It's maybe companies like that were we're famously subprime, like Capital One, has pulled way back and has focused on prime. So instead of revolving balances, people are spending and paying back monthly. Now the balances don't reflect that they grow, but they're growing at the place of inflation. And so what I look at is being a very good guide for where inflation is. And when gas prices peaked in like mid early early May, credit card spending had already peaked in early April, so and you've seen credit card spending accelerate from that time. And so these are just people spending, absorbing the higher prices and then just spending accordingly. So I think I think the FED should look at their own data. This is data that comes out weekly, so you can see credit card balances and it's really helpful. 00:21:49 Speaker 10: So I think I think inflation is in a real mirror. 00:21:53 Speaker 6: So it's like a charge card as opposed to a credit card that you pay the balance off of. 00:21:57 Speaker 10: That's exactly right, the charge plate yourself. 00:22:00 Speaker 1: But that's also why. 00:22:01 Speaker 6: All these big banks are chasing the higher income consumer. Everyone's coming out with their own premium credit card because the fees are so lucrative. I mean, there's an underserved population here of people who actually need credit cards but can't actually get it. 00:22:13 Speaker 9: Can't get it, and so what they're doing is they're going outside of the banking system, which means it's incredibly expensive. I say that people aren't living paycheck to paycheck, but payday to payday. So the fastest growing industry within fintech and financial services. 00:22:27 Speaker 10: Is advanced wage pay. 00:22:29 Speaker 9: So if you've worked two days, you can access for a fee, your. 00:22:35 Speaker 10: Wages for those two days. 00:22:37 Speaker 9: And what happens is people are using this service multiple times. 00:22:41 Speaker 10: Now. 00:22:42 Speaker 9: It was Dave and Chime that reported yesterday it was their fastest growing product. And so while on a two week basis, it looks like a six and a half percent interest rate, but annualized that's over one hundred and sixty percent. People aren't using this product one time, they're using it multiple. 00:22:57 Speaker 2: It hard comes back to our grandparents. It feels like it's almost you know, depression kind of. It's not about fancy personal finance and retirement. It's about a tough time out there. We're trying to get to the next paycheck. 00:23:07 Speaker 10: That's exactly right. 00:23:08 Speaker 9: So there was a study done in February that two thirds of people working are living paycheck to paycheck and a quarter of labor porce participants are struggling to pay their bills. And so what they're doing is they're going to pawn shops, they're doing payday earned wage access borrowing, and or they're tapping into for the subprime in near prime. They can't even get home equity loans. So this is a fright, a feast. 00:23:41 Speaker 2: Well, this is the courage yet over decades, you know, talking about the two Americas out there help me out as a stereotype of James Diamond of a small bank on Park Avenue, and by now and pay later, I mean to me, it's almost a revolution where the kids aren't using the charge cards like they used to in our personal finance. Does a firm in those kind of companies. 00:24:02 Speaker 3: Do they win? 00:24:03 Speaker 9: I think the buy now, pay later replace the credit card. And what what I never saw coming was the fact that the merchants are paying the fees right, they're you know, they're paying a firm. 00:24:13 Speaker 10: They're paying. 00:24:14 Speaker 9: And so what happened in twenty ten, and not to get to technical, but the. 00:24:17 Speaker 3: Card out Friday, don't get technical. 00:24:21 Speaker 9: When we were in college, we got solicited by every credit card out there. When we graduated, we had credit card debt. In twenty ten that changed so unless you got a co signed by your parent, if you were under twenty one, you couldn't get a credit card. So this generation of Gen Z and younger millennials aren't used to revolving credit, so they're they're actually buy now, pay later is more appealing to them, even though sometimes it's the same thing. 00:24:46 Speaker 1: How do they set up a credit history? 00:24:47 Speaker 6: Then if they eventually when they want to start becoming consumers in this economy and be able to apply for loans, they don't have a credit history. 00:24:55 Speaker 9: Though that's exactly that's exactly right, because you're not even if they're even if it's a high end, high earners and they're the American Express. They're paying down their balance, so you're exactly right, it's going to be harder for them to get a proud I think of you. 00:25:05 Speaker 3: And the Klan. I'm going to pick on Mike Mayo. We all love to pick on Mike Mayo. 00:25:08 Speaker 2: Great analysts out there, you people said they get through the Great Financial Crisis and think we should own the banks as part of our retirement. Give us an update now on where you think in the next ten years those successful investments, where do they go? 00:25:22 Speaker 9: Well, it used to be the case that the banks paid rich dividends. That hasn't been the case. So banks have been buying back shares at really high valuations, which is not a creative for the for the banks, and they've been reticent to raise dividends because they don't know how long this you know, this great earning, you know bonanza that the banks are in is going to last. So I think they're better vehicles to buy outside of the banks that have rich, rich dividend yields. 00:25:54 Speaker 10: In retirement. 00:25:54 Speaker 9: You can have both rich equities that I've rich dividen in yields. 00:25:59 Speaker 10: Bonds are less. 00:26:00 Speaker 9: Certain the sixty forty portfolio hasn't been, you know, a great performer the last year. But I think Banks, you know Jamie sorry, JP Morgan is an absolute outlier. I mean they've had since two thousand and ten, they've just been a juggernaut and that's been a great stock. But they bought back the most amount of shares of any of the banks. 00:26:22 Speaker 6: Twenty years ago. Banks were what tech was in terms of concentration in the market. I mean, they were the giants, and then now it's all tech firms and banks are kind of like, you know, middle of the road. 00:26:32 Speaker 3: Can you see Meredith and the golf course, it'd be like a terror. 00:26:37 Speaker 6: You made some big calls on banks on unis in your career on Wall Street. What's your personal approach to investing these days. 00:26:43 Speaker 9: I've always been thematic with my part. I didn't own the banks back then, thank goodness, because I was covering them and I just felt there was always a conflict of interest. 00:26:53 Speaker 10: But I always take. 00:26:54 Speaker 9: Long term thematic approaches to my investing. So I'll give you a couple of examples. You know, the winners and the and the losers with the housing bill, the affordable housing twenty first century road to housing. I bought Sky, which is Champion Homes, which is a manufactured uh home builder, and uh the idea is that they repealed a chassis law. Uh, things would change, that production would increase dramatically. And manufactured homes are really nice. They're not the manufactured homes of yesteryear. 00:27:30 Speaker 10: So by that I've done, I. 00:27:33 Speaker 9: Do front some some frontier investing in terms of with uh uh uh uh. 00:27:39 Speaker 1: Uh certain markets. Do your graphical market to me well, with a. 00:27:43 Speaker 9: Lot of the stands which have very rich rare earth minerals, so that a lot of that is going sees uh private to public of companies know that sort of esoteric terek. But those have been good place and they're emerging will be bigger plays, all. 00:28:01 Speaker 1: Right, so a commodity play there. 00:28:03 Speaker 6: And then from Meredith Whitney, thank you so much for joining us, by the way, really appreciate it. Meredith Whitney, CEO of Meredith Whitney Advisory Group, coming up a conversation with David Kelly with a focus on personal finance, retirement and wealth management. 00:28:14 Speaker 1: This is Bloomberg Money. 00:28:22 Speaker 6: Bloomberg money is about making and investing your money, but it's also about spending it, and a lot of people like spending it on golf, both watching and playing it. Professional golf only caught the attention of golfers for decades, but over the last five years it's become kind of a soap opera. Bloomberg Senior Business of Sports reporter Randall Williams joins us out and Randall. I go to the idea that for people in the US, professional golf was equal to the PGA Tour. But then you had Live Golf, which was funded by the Saudi Arabians, popping up as a competitor. And then at some point the two decided on a merger. But then I don't think anything happened. What's the latest or what has happened. 00:28:57 Speaker 11: Well, it's been on an indefinite pause, but the PGA Tour has evolved since then. Of course Live Golf entered. It caused a lot of chaos. But then you had the Strategic Sports Group that's backed by Fenway's Sports Group is backed by Steve Cohen, who's the Mets owner, and then you have Arthur Blank who's the Falcon's owner. Them and a lot more people put up to three billion dollars into the PGA Tour, which created a for profit arm called the PGA Tour Enterprises. Since then, the PGA Tour has been slowly trying to i'd say, recalibrate itself, to get on the right track, to evolve, to fill in some of the holes that maybe live golf exposed. 00:29:32 Speaker 6: What were some of the holes that live golf exposed, Because golf had a bit of a renaissance during the pandemic. Up until that point, a lot of people criticize it for being hard, elitist, expensive, but then golf like found itself during the pandemic. 00:29:44 Speaker 7: Well, I'd say that. 00:29:45 Speaker 11: Golf is very traditionalist sport, and so with tradition, there's always tradition versus innovation. And so of course you had some people complaining about player pay, you had people complaining about the tournament schedule. And so now we have a bunch of innovations that are opening in regards to the system of golfer is going to be a championship series and then a challenger series, and that's how the changes of come. 00:30:08 Speaker 3: What do you see TV doing here? 00:30:09 Speaker 2: I mean, the Masters is iconic and all that, but in terms of the entertainment TV streaming battle. Are they going to be a huge bidding war from where you said. 00:30:17 Speaker 3: I think so. 00:30:18 Speaker 11: I think we're a couple of years away from that. But media rights are of course a huge part of the sports business, and if you're not in the media rights business, then your sport probably isn't going to last very long. And the PGA Tour is still the dominant presence in golf. I think live. The threat of Live came from the Saudi's who had seemingly limitless pockets. 00:30:35 Speaker 3: Now that that is not in. 00:30:36 Speaker 11: Existence anymore, the PGA Tours again once again the dominant franchise that I think broadcasters are going to be bidding up. 00:30:42 Speaker 6: Yeah, with Saudi Arabia pulling is funding from that other golf league. Thank you so much, Bloom we'k si your business of sports reporter Randall Williams joining us now, I'm pleased to say, is the CEO the new CEO of the PGA Tour, Brian. Roll up, Brian, Great to see you here. 00:30:56 Speaker 7: Great to see you. 00:30:56 Speaker 6: So we just talked about how golf is for the traditionalists. A lot of people like to say it's the sport most like life because it's hard, but it's also kind of elitist and kind of expensive. 00:31:06 Speaker 1: Coming from the NFL, do you see. 00:31:08 Speaker 6: Those as features to be protected or barriers to growth that should be challenged. 00:31:13 Speaker 12: Well, I think any sport, professional sport that's worth its salt will always sort of challenge where it is. And I think there's one thing I learned at the NFL over two decades is you know, if you're not going forwards, you're going backwards in innovation matter. So when I first took the job, I was very clear that we're going to honor tradition, but we're not going. 00:31:31 Speaker 7: To be overly bound by it. 00:31:32 Speaker 12: And you look at some of the trends of the game of golf, will as you say, maybe it has this reputation as elitist. 00:31:38 Speaker 7: If you look at the growth since COVID, participation in. 00:31:42 Speaker 12: Golf in this country has grown thirty nine percent since COVID. Now you don't have to play a sport to watch it on television, but sure helps. 00:31:49 Speaker 7: Half of that growth is under the age of twenty or thirty five. 00:31:52 Speaker 12: The average age of a professional tour telecast, inclusive of the majors, is sixty six years old, so there is a disconnect between where the sport is going and what professional has been able to do. We are closing that gap in significant ways, and if you just close that gap to a minimum, you've got a bit of a rocket ship. 00:32:07 Speaker 6: You've talked about how Live Golf helped expose some of the weaknesses of the tour, was the biggest lessons about the economics of professional golf were about the product itself. 00:32:16 Speaker 7: I think it's the product. 00:32:18 Speaker 12: I think, listen, there's something about the sports industry I don't understand. If you look at the history. Huge innovation usually doesn't happen without a crisis. It could be a labor dispute with a collectiborrodi and agreement. Back in my old job, the USFL or the AFL NFL, when I looked at this opportunity, I just saw the AFL NFL, which essentially created a lot of systemic changes in professional football that started to accelerate the growth. 00:32:40 Speaker 7: I think we've had that moment here. 00:32:42 Speaker 12: So I think a lot of perhaps shortcomings in professional golf came with a little bit of competition, where all Americans competition is a good thing. So I think we've seen that and we're trying to build something that outlives all of us here, What. 00:32:55 Speaker 3: Did you learn from Pete Rosell? I mean it was before your time. 00:32:58 Speaker 2: If we say, Pete Rosell invented all of this really best practices as well. What is the if you're the Pete Roselle of golf, what do you need to do to really jump start? 00:33:07 Speaker 7: It's a really good question. 00:33:08 Speaker 12: Pete Roselle, I think one thing he got. 00:33:10 Speaker 7: I mean he was he was thirty four years old. 00:33:12 Speaker 12: When he took a job, and I think I think people realized that, but he he was the first one. 00:33:16 Speaker 7: Who figured out media. 00:33:17 Speaker 12: I think when it came to so the modern media model that I think you see in the NFL that I was a part of. But then I think other sports have adopted, right, is if you get your media model right, you can build a sport. So when he started the NF, when he started working in the NFL, it was probably the third most popular sport in the country, behind professional baseball and college football. But because of a reach model using network television, he built the sport and told the stories. And so I think that's one thing I've learned is how you know we're concentrated? How do you increase the reach of the PGA Tour and how do you tell more stories about the athlete to play it. 00:33:48 Speaker 2: Okay, so you got Ernie from El Tuna, Pennsylvania. You're coming up the course, lightening it up decades decades decades ago. I was at Rochester in nineteen sixty eight when Lee Trevino turned your sport upside down. 00:34:01 Speaker 3: Who's your new Lee Trevino? 00:34:03 Speaker 7: Well, listen, I think we have a lot of stars. 00:34:06 Speaker 12: I think there's a misconception about professional golf that a given competition or given tournament only matters if one or two golfers are in it. When you actually look at professional golf, the difference in winning a tournament and losing tournament is one stroke over four days. That type of competitive parody, it's that tight. The only other place I've seen that as in professional football. So the reality is is we have a collection of some pretty amazing golfers. Whether you take the established guys like Scotti, Shefflin, Rory McIlroy, or you look at the Coyven kid who's just coming out of Auburn and some of these younger guys who are. 00:34:40 Speaker 7: Just really performing well. 00:34:42 Speaker 12: I think we have an amazing roster of veterans and young guys who are really really competitive. It's our job to actually showcase them better. 00:34:50 Speaker 6: Randa was talking to us about the PGA Tour Enterprises, this commercial arm. Of course, FIFA wanted to follow the tour's lead and spin off its own business, seek outside investors that ended up failing. I'm curious to hear more about the PGA Tour Enterprises and the role of it in the PGA Tour overall. Is this something that the players feel and experience? Is this something that the fans feel and experience? 00:35:12 Speaker 7: Yeah, I think the answers both of them will. I think the players experienced it. 00:35:16 Speaker 12: Where what PGA Tour Enterprises has allowed us to do is to evolve the PGA Tour where most professional sports have gotten. We've actually capitalized it and turned it into a commercial business. And the strength of that commercial business funds innovation, It funds player purses and funds everything. I think the PGA Tour was locked in a bit of a legacy governance model. Now that the mission is clear, now that we're capitalized, we can do that. So I think the players will feel it, and that you look at the new competitive model that we've announced there's healthy persons across the board, and they can actually earn equity in the tour. This is the only professional tour of scale that I can think of. Players can actually earn equity, which is a huge opportunity and also aligns investors, management and players like know this for in the world. I think the fans will feel it be because of that commercial change to the tour. We have investment dollars to make the fan experience better, to make the competitive product better, to make the media product better. So I think that is and I think it's one thing that came out of this, this this live competition of crisis, is we got focused, we got capitalized. Now we know what the mission is and I think fans and players are going to win because what. 00:36:23 Speaker 2: Are you personally to do about slow play? There's no other mean, Meredith Whitney was just done with us and she's stand on the golf course lining up a five foot putt for twenty minutes. 00:36:31 Speaker 3: Yeah, and the answer is slow. 00:36:33 Speaker 2: I mean the retires, we do personal finance, retirement, wealth management. Everybody in retirement wants to play your sport four days a week, but they can't because a stupid slow play what do you do well. 00:36:44 Speaker 12: I don't stay up a night worrying about slow play among amateurs at their country club. 00:36:48 Speaker 7: I actually don't care about that. 00:36:49 Speaker 12: I only when I think about the PGA Tour professional golf. I think it depends when we're talking about who you're talking to when you talk about slow play and a third Thursday or Friday round before the cut, when we have one hundred and forty four players and it's early in the year and we're racing against daylight to keep this on television, we need to speak to us. We need to when you're talking about a Sunday round or a playoff and someone's taking extra to line up a shot, because it's the shot of their life. 00:37:17 Speaker 3: That's different. 00:37:17 Speaker 12: So I think context matters here. I also think it's about how we produce the sport. So if you're watching on television and somebody is actually standing over a put a little longer, there's a thousand other shots going on on the golf course. It's our job, and our broadcast partners produce it better. I come from the NFL, where we produce the Red Zone channel. The Red Zone channel moved around. The fact of the matter is, is half the time. When you go in to look at a Cleveland game. 00:37:39 Speaker 7: It's not live. It already happened. 00:37:40 Speaker 3: Roll it back. 00:37:40 Speaker 12: I think we can produce it better and actually tell a better story. So it's a complex issue. But I'm not really focused on your local club. That's the local club's problem. I'm really focused on the PGA Tour. 00:37:50 Speaker 1: Can you do a red zone version of the PGA Tour? 00:37:52 Speaker 12: I think, I think we're talking about a lot of innovation, but if you think about how golf is produced already, it is a little bit of red zone here Scarlett on the eighteenth green, let's take a look. 00:37:59 Speaker 3: Let's go over here. 00:38:00 Speaker 2: At asked do you need a hydration break? I mean, please tell me if the ninth hole a hydration break was a Jenny Kremel. But that's the story here. What are you going to do about a hydration break to bring in a marginal million? 00:38:13 Speaker 7: Well, no comment on that. 00:38:15 Speaker 12: I'll ask the FIFA guys on that. 00:38:17 Speaker 3: I don't have a view on that. 00:38:18 Speaker 6: Well, having said that, I mean, I'm sure you watch the World Cup. Are there any learnings from the World Cup, the spectacle that was a World Cup that you can apply to pro golf. 00:38:26 Speaker 12: I just think in general, I think the World Cup or what we're doing, whether sports are doing, it's a reminder that the value of sports is increasing in a world that is continually fragmented, whether it's by media so much competition for your attention. There's a handful of things that are standing out that can aggregate tens of millions of people at one time doing one thing, and I think it's it's sports and maybe some news. So I think that is encouraging. If you're in the sports business now, you know, it does mean you can rest on your laurels. It means you need to innovate and keep up with the chaming demographics of the sports fan. But I think if the world operating has taught us is that sports is a pretty strong investment class. 00:39:09 Speaker 6: Okay, when you innovate, especially when it comes to media distribution, you guess the point where fans are left confused. We have a Bloomberg News story about how sports fans are looking at two thousand dollars streaming bills in order to follow their favorite team. Has it gone too far to the point where fans will start rebelling and. 00:39:24 Speaker 1: It won't work anymore? And we have to kind of rethink this. 00:39:27 Speaker 12: Well, if fans are rebelling in sports, we haven't seen it yet. But I think the larger question is, while I'm a big believer that in order to build a sport and the value proposition of sports and media is reach, how many people can you reach? 00:39:41 Speaker 7: How can you aggregate audience? That is still true. Pete Rosell got that right, That is still the case. 00:39:46 Speaker 12: The difference is reach is much more complicated because of where the media world is. 00:39:50 Speaker 2: I going to slip this in you a gift us to get Florida State. I think he's fourteen. I don't think you can drive a car, Miles Russell. Okay, what do you do with the property? Like Miles Russell fifteen? I think fifteen to sixteen years old. 00:40:02 Speaker 12: Well, I think what you're going to see is when we announce our new competitive model, which if you study, what we've done is we've opened up the meritocracy of the PGA Tour. We've created a Championship series, which is the top twenty three events or so, where the top hundred twenty golfers are going to compete together weekend and week out. 00:40:20 Speaker 7: They can't play. 00:40:20 Speaker 12: Down into the Challenger Series, which is for everybody else. They will compete for a regular season title that will be the most precious, prestigious thing in golf. There'll also be promotion relegation, so at the end of that you're going to be relegated down. My point is we've opened up the meritocracy, so if he's that good, we have now created a system where he will work his way in to be into the top top. No more sponsor exemptions, no one of the stuff that hid in the meritocracy. Where you play is based on how you earned it in the play, So I think that's. 00:40:50 Speaker 1: Important, Brian. 00:40:51 Speaker 6: At some point Lebron James will have a lot of free time, and we know that he's been playing a lot of golf and he is an investor in pj Tor enterprises. Have you talked to mister James about some kind of role for him in professional golf? I don't know, some kind of ambassadorial role, No, I haven't. 00:41:04 Speaker 7: But I think I think. 00:41:05 Speaker 12: I think Lebron James is an example of the growth of the sport. Like when people get the bug, they get the bug, and and it's a great competitive sport to play but also to watch, and so we love Lebron to be more involved. We love everyone to be more involved, and I think you're going to see more of that over time. 00:41:24 Speaker 1: Brian, thank you so much for your time today. 00:41:25 Speaker 7: Thank you great to have you in with us. 00:41:27 Speaker 1: Brian roll up, the new CEO of the PGA Tour. 00:41:29 Speaker 2: Should you see Lebron on the sand trap and nobody else had seen and he's just looking. 00:41:34 Speaker 12: Right over it and those deep bunkers on the links court and see it's good send advantage. 00:41:41 Speaker 6: It's very cool to say that would make a very interesting red zone version of PJ Tour. 00:41:45 Speaker 1: I find you've put that all together. 00:41:46 Speaker 3: I'm excited about what I heard here. 00:41:48 Speaker 2: I mean, I think you know, they're really with the adversity of the last couple of years, really getting their act together. 00:41:54 Speaker 3: Yeah. 00:41:54 Speaker 1: Absolutely. 00:41:56 Speaker 6: You know it's a big subject in terms of everyone spending all their time playing golf golf and spending money on streaming. 00:42:04 Speaker 2: It was an honor here to interview Lee Trevino a number of years ago, but just seared in my memory. 00:42:10 Speaker 3: I caddied it was like four bags a day. Really, Yeah. 00:42:14 Speaker 2: I caddied Oakhel where you had a wonderful tournament couple years ago. 00:42:18 Speaker 3: It was great it was. It was a real learning experience least. 00:42:23 Speaker 2: This is the Bloomberg Money Podcast, bringing you a smart look at the forces shaping your financial life. 00:42:30 Speaker 3: I'm Tim Keen with Scarlet Food. 00:42:32 Speaker 2: You can watch the show live on Bloomberg TV every Friday at noon Wall Street Time. Subscribe to the podcast on Apple, Spotify or wherever you listen, and as always, on 00:42:44 Speaker 3: The Bloomberg Terminal and the Bloomberg Business app.