Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: So let's talk a bit about Tesla at its highest today,
Speaker 2: shares up about one point six percent, stuck pretty much
Speaker 2: unchanged on the day, but there was a flurry of
Speaker 2: news on the company decliners. Sorry, it's up point zero
Speaker 2: four percent. You can always hope we still have one
Speaker 2: about half an hour ago. Never Tesla, all right. So
Speaker 2: among the stories on Tesla and Elon, Tesla deliveries sliding.
Speaker 2: Bill Ackman telling CNBC today he would be interested in
Speaker 2: a deal to take Elon Musk's ex Corp public, but
Speaker 2: he said he hasn't talked to Elon yet. And then
Speaker 2: there's you know, maybe he wasn't watching the Jet Chiefs
Speaker 2: game and looking at for Taylor shift. Maybe he was
Speaker 2: doing something else last night.
Speaker 3: Tim, Yeah, he livestream himself playing through Diablo Dungeon late
Speaker 3: last night. It's a test of his social network's ability
Speaker 3: to handle game streaming. Did it go better than his
Speaker 3: visit to the border last week.
Speaker 2: Good question, good question, All right, So what does it
Speaker 2: all mean for the company and the priorities of its
Speaker 2: ever evolving and news generating leader. With that, returned to
Speaker 2: Bloomberg News EV reporter Sean o'caine on the phone out
Speaker 2: there in Austin, Texas, and then right here in our
Speaker 2: interactive broker studio, Bloomberg Business Wee columnist Max Chapkin. Let's
Speaker 2: get to the kind of news news, and that is
Speaker 2: the Tesla deliveries. Sean, what can you tell us about
Speaker 2: the news? And I thought Tesla had telegraphed.
Speaker 4: A lot of this, and I think the question was
Speaker 4: really just, you know, how big of a slowdown were
Speaker 4: they going to encounter? And I think, you know, we
Speaker 4: just we really saw that impact today. They did a
Speaker 4: pretty big changeover in China by getting that facility ready
Speaker 4: to produce what is not a dramatically new version of
Speaker 4: the Model three, but certainly something that required some downtime
Speaker 4: to get new tooling in. And they've also had some
Speaker 4: downtime here in Austin as they have been getting things
Speaker 4: ready to start production of the cyber truck. So you know,
Speaker 4: I think you're right they telegraphed it. I think it
Speaker 4: was just a little bit of surprise to Wall Street,
Speaker 4: maybe not to Tesla. How much of a miss it
Speaker 4: was sewn?
Speaker 3: You said cyber truck. So I got to ask you
Speaker 3: about the cyber truck. Sure, this thing was unveiled years ago.
Speaker 3: Is it actually going to start production in the fourth
Speaker 3: quarter this year?
Speaker 4: We well, I mean, you never know what Tesla, right,
Speaker 4: but yeah, I think we're probably going to see some
Speaker 4: limited production. I mean, even Elon Musk has said that
Speaker 4: they're not going to start They're not going to be
Speaker 4: in volume production for this thing until next year at
Speaker 4: some point. But we're seeing a lot of signs that
Speaker 4: they're actually getting close to that. There are some, you know,
Speaker 4: people who follow the company really closely, investors or fans
Speaker 4: who have been flying drones over the factory here in
Speaker 4: Austin who have seen some crash tested cyber trucks. We've
Speaker 4: seen some sort of you know, what they call release candidates,
Speaker 4: which is pretty close to production quality driving out in
Speaker 4: the wild. So that they're doing crash tests is a
Speaker 4: pretty good sign that they feel comfortable with the level
Speaker 4: that they're at and they're ready to start maybe shipping
Speaker 4: some of them soon, even if they are missing the
Speaker 4: third quarter target that they the most recent headline they've
Speaker 4: given themselves.
Speaker 2: All right, not to shame on toddlers, but sometimes it
Speaker 2: feels like watching Elon is like watching a toddler. He's
Speaker 2: the kind of all over the place. So Max Chafkin,
Speaker 2: come on in on here. We've got you know, the
Speaker 2: delivery news. We've got Bill Ackman out there on CNBC.
Speaker 2: Maybe I don't know regarding X. And then you've got
Speaker 2: Elon Musk late last night streaming. How do you think
Speaker 2: about him?
Speaker 5: Well, so I am not a Diablo expert. All I
Speaker 5: can say is that you know, for months Twitter now,
Speaker 5: the company now known as X, has been you know,
Speaker 5: trying to find ways to justify itself, trying to find
Speaker 5: ways to essentially turn the company around, turn perceptions about
Speaker 5: the company around, both among advertisers and users. And I
Speaker 5: think that is the most important asset that the company
Speaker 5: has is Elon muh skin, Elon Musk's own feed and
Speaker 5: so logging on to X to live stream a video
Speaker 5: game as he did the other night, or going to
Speaker 5: the border in Texas as he did on for I
Speaker 5: believe he's on Friday and sort of trying to, you know,
Speaker 5: do kind of like a weird political magazine things. It's
Speaker 5: all about just finding ways to again, to change the
Speaker 5: narrative here. I don't think it's totally clear that it's working,
Speaker 5: although the company definitely wants to. We have Linda Yakarino
Speaker 5: set to meet with bankers later in the week, and
Speaker 5: of course this kind of long running question about how
Speaker 5: long it's going to take for advertisers to to sort
Speaker 5: of come back in big numbers.
Speaker 3: But Max, is there any indication that he's built a
Speaker 3: viable business now that he's let so many people go
Speaker 3: and change the product so much since he took it private.
Speaker 5: Well, I think it's possible. You know, the other day,
Speaker 5: like are.
Speaker 3: We putting the cart before the horse here with talking
Speaker 3: about taking this company public.
Speaker 5: The most important asset that, as I said, you know,
Speaker 5: the most important asset this company has is Elon Musk's following.
Speaker 5: As we know, you know, Elon Musk is amazing at
Speaker 5: getting public market investors to put money into speculative investments.
Speaker 5: Here we are talking about the cyber truck, this thing that,
Speaker 5: as you said, is years years delayed, and investors are
Speaker 5: still sort of you know okay with it. So from
Speaker 5: from Bill Ackman's point of view. From Acman, of course,
Speaker 5: is basically has this investment vehicle that's a lot like
Speaker 5: an IPO. He needs a candidate company. If he were
Speaker 5: somehow able to persuade Elon Musk to you know, work
Speaker 5: with him on a on a spark deal, it's called
Speaker 5: a spark. It's basically a lot like an IPO or
Speaker 5: somewhere between an IPO and a spack. And if you
Speaker 5: were able to persuade Elon Musk to stay as CEO,
Speaker 5: that would probably you know, go over well with with
Speaker 5: public market shareholders. There still are a lot of right.
Speaker 2: Yes, yeah, Hey, Sean, I do wonder too in terms
Speaker 2: of there's always I feel like when we talk about
Speaker 2: Elon that he's got his hands into many pots. Although
Speaker 2: he's seems to do well with it, but there is
Speaker 2: always that point when there's maybe some concerns it's like, well,
Speaker 2: wait a minute, maybe he's just doing too much. What
Speaker 2: are investors, you know, thinking about how Tesla kind of
Speaker 2: longer term in terms of where it's going is it's
Speaker 2: still on track.
Speaker 4: I mean, I think there's always questions from some investors
Speaker 4: about succession planning and sort of the roadmap. You know,
Speaker 4: I think it'll be really interesting to see if those
Speaker 4: questions resurface in any sort of tangible way on this
Speaker 4: call later this month, as they had discussed the third
Speaker 4: quarter results, because this is going to be the first
Speaker 4: one since we find out that the CFO, Zach Kirkhorn,
Speaker 4: is leaving, and that's one of the big sort of
Speaker 4: questions hanging over the company right now and over the
Speaker 4: last couple of weeks, is what are the circumstances of
Speaker 4: that departure. Zach is someone who was making promises that,
Speaker 4: you know, Chris Margins were going to stay at a
Speaker 4: certain level and that you know, all the price cuts
Speaker 4: earlier this year really weren't going to eat into the business,
Speaker 4: and then that wound up actually not being exactly the case,
Speaker 4: and then a couple months later he's out saying he's
Speaker 4: out the door. So I think there are you know,
Speaker 4: maybe more than recently, over the last couple of months
Speaker 4: or a year or so, we're probably going to hear
Speaker 4: more of those questions about it. But you know, broadly,
Speaker 4: I don't think we see too much too much doubt
Speaker 4: in the in the outlook for them, because they the
Speaker 4: stock still sort of holds, and they've been able to
Speaker 4: deliver the vehicles that they have on the road in
Speaker 4: pretty pretty sizable numbers, right especially this year.
Speaker 3: Yeah, hey, Sean, give me like thirty seconds on the
Speaker 3: cyber truck here, because this thing is really important for Tesla,
Speaker 3: and it's entering a market that's dominated by Ford and
Speaker 3: GM that you know, Japanese automakers have tried to enter
Speaker 3: and dominate and they've failed.
Speaker 4: It's it's really a great unknown. I mean, there clearly
Speaker 4: seems to be a lot of interest. How much of
Speaker 4: that is just people liking to joke about how they
Speaker 4: have a pre order in for it or not is
Speaker 4: kind of hard to tell. But there's so much that
Speaker 4: we don't know about it. We don't really know the
Speaker 4: final base price because that's obviously going to be going
Speaker 4: up by the company's owned admission. We don't know, you know,
Speaker 4: how well it's going to perform in these crash tests.
Speaker 4: Deal is pretty heavy and pretty rigid compared to the
Speaker 4: cars that we're used to these days that crumple up
Speaker 4: pretty easily. To be able to displace all that energy,
Speaker 4: I'm sure Elon Musk would say, hey, look, we've got
Speaker 4: autopilot and maybe full self driving down the road, We're
Speaker 4: not going to need that, but I think there's just
Speaker 4: a lot we need to know. And that's one of
Speaker 4: the reasons that this delivery event, whenever it happens, is
Speaker 4: going to be so key to watch. How much more
Speaker 4: information do we get?
Speaker 2: Got about thirty five?
Speaker 5: Yeah, and there's also the question of demand. I mean,
Speaker 5: you know, going back six months or so, we were
Speaker 5: talking a lot about our Tesla buyers getting tired of
Speaker 5: Elon's antics. Is there is there demand for these things?
Speaker 5: Price cuts, these these massive price cuts on the Model
Speaker 5: three and Model Y in particular, have clearly helped address
Speaker 5: that problem, if it even was a problem. But the
Speaker 5: cyber truck presents, you know, a new challenge, right. This
Speaker 5: is a very very different looking car, a very different
Speaker 5: car from what the average truck buyer is into. And
Speaker 5: it's not clear that the combination of video games and
Speaker 5: weighing in on immigration policy is necessarily the best way
Speaker 5: to reach you know, the average.
Speaker 2: Truck buyer, but it's pretty normal for you, you.
Speaker 5: Look, definitely the best way to reach you on FAM
Speaker 5: all right.
Speaker 2: Gotta leave it there. Our thanks to Sean Okay in
Speaker 2: Bloomberg News EV reporter and of course, Bloomberg Business Wee
Speaker 2: columnist Max Shaftin.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: All right, So, Tim, we've been talking a lot about
Speaker 2: this conversation that Jamie Diamond had with Bloomberg originals Emily
Speaker 2: Chang that over the next generation, AI, artificial intelligence is
Speaker 2: going to have a profound impact not just on the
Speaker 2: way we work, but also in a big way on
Speaker 2: our health.
Speaker 3: Yeah, here's what he said. Your children are going to
Speaker 3: live to one hundred and not have cancer because of technology,
Speaker 3: and literally they'll probably be working three and a half
Speaker 3: days a week, lived to one hundred, a world without cancer,
Speaker 3: three and a half day work weeks.
Speaker 2: Sign me up.
Speaker 3: Yeah sounds pretty great, right.
Speaker 2: All right, So let's see what our next guest has
Speaker 2: to say about the role AI will play in our health.
Speaker 2: Michael Dolling back with US president and CEO at Northwell Health,
Speaker 2: you know, the largest healthcare provider in New York. The
Speaker 2: Northwell System, treating over two million New Yorkers each year
Speaker 2: at twenty one hospitals eight hundred and ninety outpatient facilities.
Speaker 2: Michael Dowling joining us on the phone from Long Island
Speaker 2: this afternoon. Michael, it is great to be talking with
Speaker 2: you and not necessarily focused on the pandemic. So nice
Speaker 2: to be back with you once again. AI. You guys
Speaker 2: are hosting your annual Constellations forum that focuses on AI
Speaker 2: and healthcare Constellation Forum, I should say, And you are
Speaker 2: focusing on AI and healthcare. How are you guys and
Speaker 2: putting this together? Thinking about artificial intelligence, which is not
Speaker 2: a new science. You're actually on Zoom, so good to
Speaker 2: see you on camera. Yeah, tell us a little bit
Speaker 2: about well.
Speaker 6: I mean, as you just mentioned, is not new.
Speaker 7: The ability of it, the accelerated capability of it has
Speaker 7: been enhanced dramatically over the last couple of years, and
Speaker 7: that will continue and it's going to be an integral
Speaker 7: part of whatever everything that.
Speaker 6: We do going forward. So we have to decide. The
Speaker 6: big decision point for me is deciding what is it
Speaker 6: good for and what is it not so good for?
Speaker 6: And I think we will be going through that analysis
Speaker 6: for quite a time because it provides extraordinary opportunity to
Speaker 6: improve clinical care, improve diagnosis, analyze data. But it also
Speaker 6: brings with it some potential dangers. You don't want the
Speaker 6: machine brain to outpace the human brain so that the
Speaker 6: human brain can't figure out what the machine brain is
Speaker 6: doing to you. Okay, is something we have to be very,
Speaker 6: very careful.
Speaker 3: Let's talk about the pluses before we get into the
Speaker 3: potential dark side here, which sounds like, you know, something
Speaker 3: out of a sci fi movie. What do you make
Speaker 3: of what what Jamie Diamond said earlier today? Your children
Speaker 3: are going to lift to one hundred and not have
Speaker 3: care answer because of AI technology. Is that is that true?
Speaker 6: I want I want to live to be one hundred, folks.
Speaker 3: That's what we were.
Speaker 2: Talking about earlier, me too here here, But is that
Speaker 2: where we are?
Speaker 1: Is that?
Speaker 3: Is that an accurate thing to say?
Speaker 2: Do you think we're getting nothing class?
Speaker 6: And I think we just got to be careful not
Speaker 6: to over exaggerate. I think it can have wonderful potential
Speaker 6: to allow us to identify the diseases earlier on, especially
Speaker 6: with the genome sequencing. When you combine them the results
Speaker 6: of the mapping of the human genome. With AI, we
Speaker 6: will be able to predetermine way, way in advance, what
Speaker 6: you potentially could end up having problems with.
Speaker 3: Okay, so then what would you do about it to intervene?
Speaker 3: What would you do about that if you noticed somebody
Speaker 3: was set to get cancer.
Speaker 6: Well, then I think that you've got to determine. The
Speaker 6: clinical leadership has the determine how you intervene, how you
Speaker 6: how you change behavior, saw people act differently, What kind
Speaker 6: of clinical treatment that you have to engage in to
Speaker 6: allow people to live longer a member, In the last
Speaker 6: fifty years or sixty years, we've added about thirty years
Speaker 6: to life as life expectancy back in the nineteen thirties
Speaker 6: was around forty seven to fifty today's were in the
Speaker 6: seventies and eighties, so we've had major progress.
Speaker 3: I do want to push back on this a little
Speaker 3: bit because in recent years we've also seen it come
Speaker 3: down as a result of COVID and drug overdoses.
Speaker 6: Yeah, but that's a temporary thing. I mean that happens.
Speaker 6: You look at the long term trend, not the short terment.
Speaker 6: You know, births in a statistic, it's the long term trend.
Speaker 6: And sure when you have a thing that COVID is
Speaker 6: an increase of mortality, and it does come down a
Speaker 6: little bit, But I don't think that's something that will
Speaker 6: set a prediction for the future.
Speaker 2: What do you believe will be the most significant changes
Speaker 2: in healthcare that helps patients live longer and live a
Speaker 2: better longer life. Watching aging parents, grandparents, it isn't always
Speaker 2: pretty and it's often very difficult. So I would live
Speaker 2: to two hundred as long as I know I'm healthy
Speaker 2: and I can get around.
Speaker 3: Some of your friends were living at two hundred two.
Speaker 2: That would be kind. So how do we how are
Speaker 2: you thinking about that?
Speaker 6: The biggest change in my view, to make those results
Speaker 6: a reality. It goes beyond the delivery of medical care.
Speaker 6: It has to do with lifestyle and behavior, so all
Speaker 6: of the social determinants of health. It has to deal
Speaker 6: with some of the societal issues. I mean, we do
Speaker 6: a great job of taking care of you after you
Speaker 6: get sick, but we have to do a much better
Speaker 6: job of taking care of you before you get sick,
Speaker 6: so you can prolong life. But that involves finding ways
Speaker 6: to get people to improve their own health, but prove
Speaker 6: their own lifestyle. And that's just where AI can also
Speaker 6: be very very helpful to be able to do the
Speaker 6: analytics right, to be able to tell you what people
Speaker 6: should be doing to improve their own cas situations and
Speaker 6: not dependent upon all those old times.
Speaker 2: We'll go back to that idea of genetic mapping, and
Speaker 2: you know, we're born, we get a map and we
Speaker 2: can already see what might be the potential problems. Maybe
Speaker 2: it's hard problems, So then maybe we know from the
Speaker 2: get go that we have an awareness. I think about
Speaker 2: kids who are born, you know, who have you know,
Speaker 2: diabetes from a young age or or different issues if
Speaker 2: you will, you know, from a young age, they that's
Speaker 2: their life and they grow into or grow with that
Speaker 2: problem and just from the get go look at life
Speaker 2: differently in terms of what they eat and what they
Speaker 2: need to do. And I do wonder if we have
Speaker 2: that map from the get go, whether it's removing organs,
Speaker 2: treating things differently, like, I just wonder, can we do
Speaker 2: it better at a much earlier stage.
Speaker 6: Absolutely, I think that you'll be doing genome sequencing of
Speaker 6: all kids within a couple of years in most children's hospitals.
Speaker 6: We are investigating that possibility right now. We have it
Speaker 6: not well as part of our children's hospital, So I
Speaker 6: think that that's where it will start, mostly with children,
Speaker 6: and then I think it will expand to be doing
Speaker 6: genome sequencing with adults. But let's let's be cautious here
Speaker 6: because while it offers wonderful, wonderful potential, we don't fully
Speaker 6: know all of the implications yet, and we don't fully
Speaker 6: understand all of the ethical issues involved. So, you know,
Speaker 6: you find out something about somebody or some family member,
Speaker 6: to what extent do you disclose it, what extent do
Speaker 6: you share it, How should it be shared, and when
Speaker 6: should it be shared? All of these issues have to
Speaker 6: be worked out very very carefully over the next couple
Speaker 6: of years. So the enormous potential is here with the
Speaker 6: combination of genome secuencing and AI, but I think we're
Speaker 6: going to a process over the next couple of years
Speaker 6: to figure out how to make use of it as
Speaker 6: appropriately as we possibly can and not over react, not
Speaker 6: on the react either, but not overreach. A little bit
Speaker 6: of caution is important here here, especially given the situations
Speaker 6: you're seeing with chat chipec, where it produces lots of
Speaker 6: controversial information that's not correct. You cannot be doing that
Speaker 6: in the healthcare sphere. It's just too dangerous.
Speaker 3: But there's something kind of strange happening here where we're
Speaker 3: talking about AI, Carol and what it can do in
Speaker 3: the future, because you know, there's this article in the
Speaker 3: current edition of Bloomberg BusinessWeek about a moxicillin shortage here
Speaker 3: in the US. I mean, we're talking about a drug
Speaker 3: that was discovered more than fifty years ago. And I
Speaker 3: lived this nightmare on Friday when my son was diagnosed
Speaker 3: with an ear infection and the doctor had to spend
Speaker 3: a half hour of her time calling different pharmacies around
Speaker 3: Brooklyn trying to find a ten day supply of antibiotics
Speaker 3: a maxicillan that ended up costing me three dollars and
Speaker 3: sixteen cents when she finally found it. Michael, she wasted
Speaker 3: so much time doing this. How are we talking about
Speaker 3: world where AI helps us live to one hundred but
Speaker 3: we can't get a moxicillin.
Speaker 6: Well, But that's why you've got to be This is
Speaker 6: why you've got to be a little bit cautious. As
Speaker 6: I said, this is why you can automatically assume that
Speaker 6: there's a new technology coming into play that is going
Speaker 6: to just solve everything immediately. There's a lot of other
Speaker 6: issues involved. I mean, one of the biggest changes in
Speaker 6: healthcare is moving more and more health care out into
Speaker 6: the community, expanding ambulatory care, moving stuff out of the hospital,
Speaker 6: be less hospital centric, the whole supply chain issues, the
Speaker 6: whole labor cost issues, all of these things are all
Speaker 6: part of the complete package that you've got to deal with.
Speaker 6: There is no one magic and pure all just because
Speaker 6: you have a new technology, it's how we used it
Speaker 6: that technology in the context of the whole environment that
Speaker 6: makes If we do it right, we'll improve everything. But again,
Speaker 6: things are complicated. Health Care is not a simple business.
Speaker 6: It's much more complex than other businesses. And you know
Speaker 6: there is these days, there is, especially COVID. There's a
Speaker 6: growing mistrust of science. Got it, Michael, We've got to
Speaker 6: rebuild that trust at Michael, we've got to the discovery's work.
Speaker 2: We've got to run. Michael Dowling, of course, CEO at
Speaker 2: Northwell Health, joining us right here on Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: Just Say Alexa play Bloomberg eleven thirty from the pandemic.
Speaker 2: Pause on student loan payments that lasted for more than
Speaker 2: three years. It has come to an end, so Tim,
Speaker 2: starting this month, forty million people with outstanding student loan
Speaker 2: payments that collectively exceed more than one point six trillion dollars,
Speaker 2: They're going to have to start repaying them.
Speaker 3: There's a reason our market's guests keep talking about this effectingly.
Speaker 3: Zoomer spending well. Melissa Burn is executive director of We
Speaker 3: the forty five Million. It's a nonprofit organization. It says
Speaker 3: it represents student loan borrowers here in the US. The
Speaker 3: group wants to cancel all student alone debt. Melissa joins
Speaker 3: us on zoom from Washington, d C. What's it good
Speaker 3: to have you with us?
Speaker 1: How are you? I've been better.
Speaker 8: It's a sad day knowing that the loans are turned
Speaker 8: back on, but you know, as it.
Speaker 3: Goes, I mean, was this did you expect this? We
Speaker 3: knew this was going to happen.
Speaker 8: I mean, I guess I had faith in you know,
Speaker 8: I probably is a little naive to think that once
Speaker 8: we got the president to do the loan relief back
Speaker 8: in August of twenty twenty two, that we would get
Speaker 8: that done and then we would have an ease and
Speaker 8: to repayment for the remaining twenty million people. The you know,
Speaker 8: the right wing dark money groups going all in to
Speaker 8: kill loan relief was you know, a kick in the gut.
Speaker 8: And then Kevin McCarthy basically saying, we'll crash the global
Speaker 8: economy if we don't do return to repayment. You know,
Speaker 8: it's a lot, and I think in both circumstances, it's
Speaker 8: people with loans who weren't seen as fully human.
Speaker 2: Melissa help me out here, and we took about this
Speaker 2: a lot in the newsroom, and I've had individuals who
Speaker 2: come up to me and say, you took a loan out,
Speaker 2: You've got to repayment and repay it. And one individual
Speaker 2: in particular said, you know, I chose not to go
Speaker 2: to college because I saw, you know, my siblings and
Speaker 2: the debt that they took on. I took a different route,
Speaker 2: but I was concerned about repayment. You know, what do
Speaker 2: you say to that argument?
Speaker 8: I think, what I mean, one thing that I say
Speaker 8: is that it is really terrible that back in the eighties,
Speaker 8: our governments, both at the state level and federal level
Speaker 8: quit funding higher education and they made a choice to
Speaker 8: move funding of it. If you're going to if you're
Speaker 8: poor or working class or for generation college student, you
Speaker 8: have to choose between you know, getting education or going
Speaker 8: into debt. And you know, that's not a fair situation.
Speaker 8: Like if you're eighteen or nineteen, you don't have savings,
Speaker 8: and the idea that in our country that if your
Speaker 8: parents are wealthy, they get to give you tax free,
Speaker 8: you know, hundred thousand dollars to pay for your college.
Speaker 8: And if you don't come from that kind of family,
Speaker 8: your option is debt or no college, or it's you know,
Speaker 8: working through jobs.
Speaker 2: Is the bigger issue. I mean, I took on student debt,
Speaker 2: you know, and my parents kicked in what they could
Speaker 2: and got an award from the school and then took
Speaker 2: on some debt and I paid back that college debt.
Speaker 2: The bigger issue I think many would argue is that
Speaker 2: the cost of higher education has just gotten out of
Speaker 2: control many times over right, the rate of inflation. We've
Speaker 2: all done the stories. Is that the bigger issue yeah.
Speaker 8: I mean that's the part I when I first started
Speaker 8: working on this back in I think it was twenty ten,
Speaker 8: and I come at this from being a borrower, from
Speaker 8: being a first nursion college students. I come at this
Speaker 8: as like an impacted person who's experienced this whole system
Speaker 8: and the shame that came from it. It took me a
Speaker 8: long time to get over my shame of having debt.
Speaker 8: I thought we would win free college first, and then
Speaker 8: it would be a cleanup round to help the folks
Speaker 8: that are struggling. But because of the pandemic in the
Speaker 8: ability to do the pause and then try to do
Speaker 8: a cleanup after the pause via a first round of
Speaker 8: a very mod like we want full cancelation, but we didn't,
Speaker 8: you know, whine and complain that we just got ten
Speaker 8: k or twenty k. We were good, you know, we
Speaker 8: saw that it helps real people, but twenty million people,
Speaker 8: and that you don't say no and you don't complain
Speaker 8: when twenty million people have a chance to have a
Speaker 8: decent life.
Speaker 3: So what's the solution here? Because the part that I
Speaker 3: have a trouble understanding is if we cancel all student
Speaker 3: loan debt, but we don't address the cost of college.
Speaker 3: Then we're going to end up in the next generation
Speaker 3: with the same exact issue, and it could even.
Speaker 8: Be worse, right, which is why we need to have
Speaker 8: free public college. We need to fix the way graduate
Speaker 8: programs work. Right now, a lot of universities will offer
Speaker 8: these master's programs that are basically used to help fund
Speaker 8: the whole university or going into you know, for example,
Speaker 8: see like these like random policy degree programs or what
Speaker 8: you're seeing now on a whole growth of They're called
Speaker 8: online program managers, which are these online master's programs at university.
Speaker 8: So you'll see them in social.
Speaker 9: Work or.
Speaker 8: Other kinds of programs like that. So people are going
Speaker 8: into like two hundred grand of debt to get this
Speaker 8: online degree. USC in California had a big scandal around this,
Speaker 8: and then the money from that goes into just the
Speaker 8: general funds because it doesn't cost that much money to
Speaker 8: you know, educate somebody online. And so I think that
Speaker 8: these are things to look forward to. Look at what
Speaker 8: the administration did. I think it was last week in
Speaker 8: terms of the gainful employment regulations and to have that
Speaker 8: also apply to graduate schools. But I think it really
Speaker 8: it all goes back to a value is like should
Speaker 8: people when they hit eighteen or whatever age they want
Speaker 8: in education, should they have should it be paywalled? Whether
Speaker 8: you want to become a welder or you want to
Speaker 8: care cancer, so you need to get a go go
Speaker 8: from like undergrad to med school, Like, should that be paywalled?
Speaker 8: And should we have it where we're subsidizing rich families
Speaker 8: three via five to nine programs to say, for their
Speaker 8: kids college, but not making a path for kids that
Speaker 8: are working class or middle class to be able to
Speaker 8: go on and get that education. So and they become like,
Speaker 8: you know, functional contributing numbers of society, whatever that education is.
Speaker 8: If it's getting the education because you want to work
Speaker 8: at a hospital and draw blood and do that work.
Speaker 2: Melissa years. So we just have about a minute left
Speaker 2: here if I could just pop in because I'm curious.
Speaker 2: Many would argue that the top end of the income
Speaker 2: strata and the lower end they're taken care of. Either
Speaker 2: families can afford it and they can do the college
Speaker 2: savings plans, or at the lower end that's where schools provide,
Speaker 2: you know, often pay for a big bulk of the tuition.
Speaker 2: You're talking about the middle income I'm assuming, like, who
Speaker 2: are the forty five million in.
Speaker 8: The middle and lower? Yeah, it's the middle and the lower.
Speaker 8: I mean, you know, outside of Harvard and Yale and Princeton,
Speaker 8: folks who come from you know, if you're going to
Speaker 8: a state school, because there's been so much the funding,
Speaker 8: you're mostly going to have some debt if you even
Speaker 8: if you're on PAL, because unfortunately PAL isn't pagged to
Speaker 8: the cost of college.
Speaker 2: Yeah, it's a tricky situation, you know, And I'm playing
Speaker 2: Devil's advocate a little bit because there are those who say, listen,
Speaker 2: you know, how do you forgive when other people are
Speaker 2: paying back their loans? And I feel like it to
Speaker 2: many would argue that it gets to that bigger issue
Speaker 2: of just how expensive it's all become.
Speaker 6: State school.
Speaker 3: Not all jobs are created equal when you graduate, absolutely,
Speaker 3: and I think that's a real issue because there's this
Speaker 3: you know, we're taught follow your passion, and oftentimes passions
Speaker 3: don't pay. That's an issue. I mean, I could talk
Speaker 3: about this for five minutes, but.
Speaker 2: Didn't Present Obama get into this, like trying to get
Speaker 2: colleges to say, you come out with this degree. Yeah,
Speaker 2: here's what you're likely to make with that kind of degree,
Speaker 2: like to give people some transparency to say, go ahead
Speaker 2: and study this.
Speaker 3: But a lot of these people graduated before Obama was
Speaker 3: president still still paying back student loan debt. I mean
Speaker 3: people who are graduated in two thousand and two are
Speaker 3: paying bucks.
Speaker 2: I would argue it's just gotten way in terms of
Speaker 2: how expensive it is and making you almost impossible for
Speaker 2: many to pay back those loans in an easy way
Speaker 2: or manageable way. Melissa Burn, executive director of We the
Speaker 2: forty five million. As you can tell, it's a hot topic.
Speaker 10: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 5: Send yours guns and money.
Speaker 10: Dead, Get me out out of this God.
Speaker 2: Certainly on the docket for the new US Supreme Court
Speaker 2: new I mean opening up a new term today ten.
Speaker 3: Yeah, and the lawyers will certainly be involved.
Speaker 2: Also, yeah, all right, Well, the Court, the nation's highest
Speaker 2: court thinking about where its conservative revolution should go next.
Speaker 2: One federal appeals Court already has lots of ideas.
Speaker 3: In the next nine months, an outside share of the
Speaker 3: High Court's biggest cases will come from the ultra conservative
Speaker 3: Fifth US Circuit Court of Appeals. Those far reaching rulings
Speaker 3: are providing impossible, are proving impossible for the Supreme Court
Speaker 3: to ignore. Cases involving federal regulatory power, guns and probably
Speaker 3: abortion in social media regulation are going to test Carrol
Speaker 3: just how far the Supreme Court's conservative majority wants to
Speaker 3: go in remaking the nation's legal landscape.
Speaker 2: We're all watching closely. Greg Stores, Bloomberg News Supreme Court reporter,
Speaker 2: writes for Bloomberg BusinessWeek about the conservative Fifth Circuit and
Speaker 2: the key decisions that could come in the Justice's next terms.
Speaker 2: He joins us from Washington, DC. Also here, the editor
Speaker 2: of Bloomberg Business Week, jol Weber, with us at Bloomberg Headquarters.
Speaker 2: The story, by the way, in the upcoming issue of
Speaker 2: Bloomberg Business Week, out on newstands later this week, but
Speaker 2: find this story also online at Bloomberg dot com, slash BusinessWeek,
Speaker 2: and of course, on the Bloomberg terminal. I feel like
Speaker 2: the fourth quarter is a big one on so many
Speaker 2: different levels, Joel, but definitely for the nation's highest court.
Speaker 10: So this is the beginning of a new term for
Speaker 10: the Supreme Court, and Greg has become indispensable in writing
Speaker 10: sort of these walk ups and helping us make sense
Speaker 10: of these moments. Obviously, the Supreme Court has made a
Speaker 10: number of interesting and controversial and headline making decisions within
Speaker 10: the last couple of years. What he flagged heading into
Speaker 10: this one is that the Fifth Circuit is an area
Speaker 10: of the country that is basically an appellate court that
Speaker 10: has a lot of very conservative judges, and this term
Speaker 10: in particular has a number of cases that originate with
Speaker 10: that appellate court. So, Greg, what does it all mean
Speaker 10: and help us make sense of it all?
Speaker 11: Well, it means a number of things. It starts in
Speaker 11: starts off with some big cases involving the power of
Speaker 11: federal regulatory agencies. There's a case that the Court's going
Speaker 11: to be hearing tomorrow involving the Consumer Financial Protection Bureau.
Speaker 11: That's the entity that regulates things like mortgages and auto
Speaker 11: loans set up after the two thousand and eight financial collapse.
Speaker 11: And then it's got cases involving guns and almost certainly
Speaker 11: abortion and coming up later on in the term, and
Speaker 11: they're really going to shape how far the Supreme Court's
Speaker 11: going to go this term.
Speaker 10: Okay, so the Fifth Circuit talk to us about what
Speaker 10: they oversee and their jurisdiction and also what makes this
Speaker 10: time so different.
Speaker 11: Yeah, So this is a court that has twelve Republican
Speaker 11: appointed judges and just for Democratic appointed just judges, and
Speaker 11: six of the Republican appointed just judges are Trump appointees.
Speaker 11: And the individual personalities on the court are also very
Speaker 11: distinctive and very outspoken. So just to name one, there's
Speaker 11: a judge named James ho who, even while on the bench,
Speaker 11: has written and that abortion is a moral tragedy and
Speaker 11: said that if there's too much money in politics, it's
Speaker 11: because there's too much government. And these conservative litigants in
Speaker 11: many cases, like the State of Texas which is part
Speaker 11: of the Circuit, like to get their cases before this
Speaker 11: court because very very often they get good results. And
Speaker 11: with a number of these cases this term, what has
Speaker 11: happened is that this Circuit has struck down an administration
Speaker 11: policy or said that it administrative agency has to change
Speaker 11: the way it's doing something. And the Biden Administration has
Speaker 11: gone to the Supreme Court saying, hey, that this circuit's
Speaker 11: gone too far. So it's kind of testing just how
Speaker 11: conservative the US Supreme Court is.
Speaker 2: Well, it sounds like it's a list that they will
Speaker 2: be dealing with with some very very important issues. It's
Speaker 2: hard to pick out, like what's the most significant? But
Speaker 2: where shall we begin in terms of cases that you,
Speaker 2: as someone who's followed the US Supreme Court like really
Speaker 2: is kind of front and center and you're thinking about
Speaker 2: this one in a big way.
Speaker 11: Well, certainly the gun case that they're going to hear
Speaker 11: arguments on November seventh is one that's going to get
Speaker 11: a lot of attention. This is a case involving whether
Speaker 11: somebody who is subject to a domestic violence restraining order
Speaker 11: still has his or her full Second Amendment rights. The
Speaker 11: Supreme Court back a year and a half ago, in
Speaker 11: a case called Bruin, that the way we test whether
Speaker 11: a gun restriction is constitutional is to look back into
Speaker 11: history and see if we can find a historic analog
Speaker 11: to the current restriction. And in this case, the Fifth
Speaker 11: Circuit said, you know, we look back at seventeen eighty
Speaker 11: nine and we didn't see any laws that restricted gun
Speaker 11: possession by somebody who has a domestic violence restraining order
Speaker 11: and therefore the Second Amendment doesn't allow this sort of restriction.
Speaker 11: So this is going to be a real test whether
Speaker 11: the Supreme Court's history test that had set up a
Speaker 11: couple of years ago means what it seems like it means.
Speaker 11: And if it does, then that means it's going to
Speaker 11: be really hard to argue in favor of all these
Speaker 11: other gun restrictions around the country.
Speaker 3: So what does that mean for the federal ban on
Speaker 3: bump stocks? If we're continuing with the firearms theme, what
Speaker 3: would this court potentially do in that context and explain
Speaker 3: what bump stocks are actually? I think a lot of
Speaker 3: people might remember them, I think in the wake of
Speaker 3: the Las Vegas shooting years ago.
Speaker 11: Right right, there's a Las Vegas shooting. Basically, it's a
Speaker 11: device that turns a semi automatic weapon, which is legal,
Speaker 11: into a machine gun, which is illegal. And the question
Speaker 11: this is actually a very different legal question than the
Speaker 11: case involving the domestic violence restraining orders. This is actually
Speaker 11: a question of administrative law and not a question of
Speaker 11: the Second Amendment. The question is whether the Bureau of
Speaker 11: Alcohol and Tobacco and firearms when it banned those, and
Speaker 11: this actually was under the Trump administration, whether it had
Speaker 11: authority to do that. Essentially, what ATF did was to
Speaker 11: say that a bump stock is akin to a machine gun,
Speaker 11: which is illegal, and therefore we're going to say the
Speaker 11: bump stocks are illegal too. So this one actually goes
Speaker 11: to one of those questions of how much power do
Speaker 11: federal regulatory agencies do. It just happens to be one
Speaker 11: that also coincides with this big fight over gun rights.
Speaker 10: Greg, let's bring it back to core Bloomberg competencies. Two
Speaker 10: other areas that will be of great interest the Consumer
Speaker 10: Financial Protection Bureau, as was the Securities Exchange Commission. What
Speaker 10: might be in the balance here?
Speaker 2: Yeah, it's like barely a decade old, I think the CFPP.
Speaker 11: Yeah, yeah, just slightly more than that. You're right, And
Speaker 11: this is actually the second time we've had a CFPB
Speaker 11: case at the Supreme Court. This is a Fifth Circuit
Speaker 11: ruling in some ways came out of nowhere. This was
Speaker 11: not like an argument people have been raising for years.
Speaker 11: But the Fifth Circuit said, there's a constitutional provision that
Speaker 11: says you can't spend money without a congressional appropriation and
Speaker 11: the way CFPB is set up, it gets its money
Speaker 11: from the Federal Reserve, it doesn't not subject to the
Speaker 11: year to year congressional appropriation process, and the Fifth Circuit said, up,
Speaker 11: that's unconstitutional. The way it's set up, and it struck
Speaker 11: down is paid a lending rule that never actually took effect,
Speaker 11: but it cast a cloud over basically everything the CFPB
Speaker 11: had done. Because if everything it's been doing all this
Speaker 11: time has been using money that it wasn't supposed to have,
Speaker 11: maybe there are questions about whether those past actions can stand.
Speaker 11: So there's a lot of concern, and there's a brief
Speaker 11: buy like the mortgage industry saying, hey, we're really concerned
Speaker 11: that this might unsettle the mortgage industry if the Supreme
Speaker 11: Court adopts in a full threaded way what the Fifth
Speaker 11: Circuit did. So big stakes for this agency. There's an
Speaker 11: agency that has been very active in a lot of fronts,
Speaker 11: both the banking world and the non banking world. So
Speaker 11: the business community is going to be watching this one
Speaker 11: very closely.
Speaker 2: You know, I do wonder too, Greg, I think about
Speaker 2: our audience, right, And obviously Supreme Court justices can Supreme
Speaker 2: Court decisions excuse me, will impact different parts of the
Speaker 2: US population. But I think about the investment world and
Speaker 2: the business world, and I think about certainly the CFPB
Speaker 2: they're going to be following that. But what do you
Speaker 2: think is top of mind for like the Bloomberg audience.
Speaker 11: Certainly, all these cases about regulatory agencies are really really important,
Speaker 11: and the business community kind of has an ambivalent relationship
Speaker 11: with them, So they don't like a lot of the regulation,
Speaker 11: but they do like stability, and the CFPB case sort
Speaker 11: of threatens some of that stability. There's another big case
Speaker 11: involving another big case involving it's a little technical, but
Speaker 11: really really important, how much authority agencies have to interpret
Speaker 11: ambiguous federal statutes. And that's another case where to give
Speaker 11: the agency more power, which is tradition what they've had
Speaker 11: that at least ensures some stability in terms of the regulations.
Speaker 11: So that is a big thing. So far this term,
Speaker 11: we don't have any of the major business fight if
Speaker 11: nothing else like punitive damages or class actions, none of
Speaker 11: the kind of traditional fights that the Chamber of Commerce
Speaker 11: has been pushing. The biggest action is probably going to
Speaker 11: be in these administrative law questions.
Speaker 10: Which also raises the interesting observation I suppose that, I mean,
Speaker 10: of all the courts that you could bring some of
Speaker 10: these conversations to, this Supreme Court is one that has been,
Speaker 10: you know, willing to wag into controversies before that. Prior
Speaker 10: Supreme courts have not. So what's the current kind of
Speaker 10: chatter about why they picked what they picked and and
Speaker 10: the you know, the read of the Supreme Court on
Speaker 10: these particular cases.
Speaker 11: So what's interesting about this term is that a lot
Speaker 11: of these cases, the ones we've been talking about, we're
Speaker 11: kind of ones the Supreme Court didn't have any choice.
Speaker 11: But here traditionally, if a lower court strikes down a
Speaker 11: federal statute, blocks a regulation, and if the Solicitor General,
Speaker 11: who's the top government supreme court lawyer, asks the Supreme
Speaker 11: Court to hear an appeal, the Supreme Court almost always will.
Speaker 11: And that is that there are a number of cases
Speaker 11: both granted already in cases that probably will be granted soon.
Speaker 11: Where that's what's going on. Where so it's less the
Speaker 11: case so far this term that we can say, oh,
Speaker 11: the Supreme Court is really interested in affirmative action, and
Speaker 11: you may want to consider outlawing affirmative action like we
Speaker 11: had less term, or overturning the constitutional right to abortion
Speaker 11: like we had the term before. There are fewer cases
Speaker 11: like that and more cases where a court like the
Speaker 11: Fifth Circuit is saying, hey, Supreme Court, do you want
Speaker 11: to go this far? And the Supreme Court is sort
Speaker 11: of forced to grapple with whether it really does.
Speaker 2: Hey, one thing I wanted to ask you the Fifth
Speaker 2: Circuit and then the Supreme Court picking up these cases,
Speaker 2: not all of them go the way of the conservatives, right.
Speaker 2: We've seen that in the past.
Speaker 11: Yes, that is absolutely the case, Carol. Last term, for example,
Speaker 11: the Fifth Circuit lost at least a significant amount of
Speaker 11: the case. The Supreme Court reverse the Fifth Circuit and
Speaker 11: significant part in seven of the nine cases they have,
Speaker 11: So that court has not been doing all that well lately,
Speaker 11: and it is very much an open question. I'm sure
Speaker 11: the Supreme Court. I think highly likely the Supreme Court
Speaker 11: will uphold the Fifth Circuit in some of these cases,
Speaker 11: but probably not all of them, and which one is
Speaker 11: very hard to say.
Speaker 3: The story that we're discussing Supreme Court has pile of
Speaker 3: cases from conservative Fifth Circuit is in the upcoming issue
Speaker 3: of BusinessWeek magazines. But you can read it now on
Speaker 3: the Bloomberg terminal and at Bloomberg dot com. Hey, we're
Speaker 3: talking with Greg Store, Bloomberg News Supreme Court reporter.
Speaker 1: Greg.
Speaker 3: If we I'd be remiss if I didn't ask you
Speaker 3: right now about the news today from just Clarence Thomas,
Speaker 3: who's issued a rare recusal in January sixth Trump lawyer appeal.
Speaker 3: What's going on here?
Speaker 11: Yeah, So Justice Thomas did not give us any explanation
Speaker 11: for this refusal. So to some degree, you know, all
Speaker 11: we can do is speculate. But I'll tell you what
Speaker 11: the case is about. It is this lawyer, John Eastman,
Speaker 11: a law professor who has been a lawyer for Trump,
Speaker 11: advising him on the election issues. He is one of
Speaker 11: the people who's under indicted named Georgia in that case.
Speaker 11: And this was a case involving the House committee looking
Speaker 11: into the January sixth attack, trying to get access to
Speaker 11: his emails. The Supreme Court turned away John Easton's petition
Speaker 11: today and Clarence Thomas, without any explanation, said I'm recusing myself.
Speaker 11: I'm not taking part in this case. So this is
Speaker 11: the first time in a January sixth related case that
Speaker 11: he has recused. What exactly the reason is? You know
Speaker 11: there there was a report in Politico about a year
Speaker 11: ago that indicated that some of these emails that we're
Speaker 11: talking about reference Justice Thomas and had Johnny's been saying
Speaker 11: he is our best hope for overturning the election results.
Speaker 11: And so that might be what it is, that that
Speaker 11: Justice Thomas is aware of the there's substance he's in
Speaker 11: there substantively. It may be something else. Again, the justices
Speaker 11: are required to although some justices do give an explanation
Speaker 11: as to why they we recused, he did not.
Speaker 2: Interesting times. We are living no doubt about it, guys.
Speaker 2: Thank you so much. Greig Store, Bloomberg News Supreme Court Reporter.
Speaker 2: His story is in the upcoming issue of Bloomberg Business
Speaker 2: Week on newsstands later on this week. Find it online
Speaker 2: at Bloomberg dot com, slash Business Weekend on the Bloomberg
Speaker 2: And if I can just give a little shout out
Speaker 2: his wife, Kimberly Ekins Store on a podcast called Sisters
Speaker 2: in Law. I love it. It's I love it. I'm
Speaker 2: obsessed with it.
Speaker 3: And also we had a connection to.
Speaker 2: I didn't know initially and then I'm like, oh, but
Speaker 2: it's really fun. They just go through all of the
Speaker 2: legal cases and of course our thanks to the editor
Speaker 2: of Bloomberg business Week, Jil Webber, joining us from Bloomberg headquarters. Yeah,
Speaker 2: it's a great podcast. It's four prominent lawyers, all women,
Speaker 2: sisters in law, but they're all involved in the legal
Speaker 2: universe and just whatsever front and center. A lot of
Speaker 2: it has been on Trump cases, as you would imagine,
Speaker 2: as we talked about earlier, but just goes in and
Speaker 2: out of different things. They've talked on things with legal
Speaker 2: issues with Elon Musk and Tesla.
Speaker 3: We should come on the show.
Speaker 2: It's I would love. It's really really fun and kind
Speaker 2: of a must listen, just like we are. This is
Speaker 2: Bloomberg Radio.
Speaker 6: Brother Mark.
Speaker 1: A journal How about you let me drive?
Speaker 10: No no, no, drive, honey please, I'll do the riding gravels.
Speaker 6: I want to try it. It's a good question.
Speaker 1: This is the Drive to the Globe on Bloomberg Radio.
Speaker 2: Believe it's October already.
Speaker 3: I didn't even realize it snuck up on me. I mean,
Speaker 3: we got to buy our plane tickets.
Speaker 6: I haven't done it.
Speaker 3: That's what that's what makes me think of. And I'm
Speaker 3: not talking for Thanksgiving or you know, Christmas holiday. I'm
Speaker 3: talking like we got a trip coming up next week,
Speaker 3: next week tickets yet. So that's how it's snuck up
Speaker 3: on me.
Speaker 2: All right, a lot of things sneaking up on us,
Speaker 2: including earnings just a couple of weeks away. Let's get
Speaker 2: to our next guest. She's senior VPN uh. Lisa Erickson
Speaker 2: is also head of the Public Markets Group over at
Speaker 2: US Bank Wealth Management. She's on Zoom in Minneapolis, Minnesota. Uh,
Speaker 2: it is nice to have you back with us, Lisa.
Speaker 2: This market environment the fourth quarter, what are you thinking
Speaker 2: might ultimately be the major themes or is it hard
Speaker 2: to kind of figure that out right now?
Speaker 9: Well, we're going into this fourth quarter a little bit cautious,
Speaker 9: and the reason why is when you look at the
Speaker 9: balance of risk and reward, what you really see is
Speaker 9: pretty even stack on both sides. Certainly on the positive side,
Speaker 9: we've had corporate earnings remain relatively resilient and beating expectations
Speaker 9: for most of the year. In addition, the consumer really
Speaker 9: has held in there with their spending despite multiple headwinds,
Speaker 9: and certainly when we look at monetary policy, we're certainly
Speaker 9: closer to the end of a hiking cycle, although the
Speaker 9: exacting is yet to be unknown. But on the other hand,
Speaker 9: when we just look at overall economic activity, it certainly
Speaker 9: is slowing and not just tier in the US. And again,
Speaker 9: as we talk about monetary policy, it's unclear how long higher,
Speaker 9: for longer it's going to last. So that really leads
Speaker 9: us more at a neutral position, just recommending that clients
Speaker 9: would stay at their strategic weight, whatever that typically would be.
Speaker 3: So does that mean a recession is coming, a recession
Speaker 3: is imminent? What does that mean?
Speaker 9: Well, right now, our US Bank economics team really is
Speaker 9: on the soft landing side of it, although again the
Speaker 9: chances are pretty near fifty to fifty. And the reason
Speaker 9: why again is if you look at the underlying driver
Speaker 9: of the US economy, the consumer, they have really hung
Speaker 9: in there in terms of being able to continue to
Speaker 9: spend both on experiences and goods. But again we've got
Speaker 9: that continued challenge where inflation hasn't come all the way
Speaker 9: down and as well, as a result, the Federal Reserve
Speaker 9: is still keeping that tighter monetary policy.
Speaker 2: How much risk or how much risk are investors at
Speaker 2: at this point, especially if ultimately we are going to
Speaker 2: continue to take out key levels. When it comes to
Speaker 2: the treasury trade and yield in particular, you know ten
Speaker 2: year yields, we talk five percent, that's the easy part.
Speaker 2: Six percent, seven percent that people have floated around, that's
Speaker 2: that's a different environment.
Speaker 9: Do your point care? That really is what's keeping us
Speaker 9: again on the more cautious side of neutral, And it's
Speaker 9: really the fact that you've had this relentless rise and
Speaker 9: treasury yields, both on the back of what's going on
Speaker 9: with federal reserve policy, but also simply because investors are concerned.
Speaker 9: It's kind of a good news is bad news scenario.
Speaker 9: As we continue to get some nice economic readings, they're
Speaker 9: just concerned again what that means for rates staying higher,
Speaker 9: and eventually that does have to impact the consumer.
Speaker 3: When do you think it starts to actually impact the consumer,
Speaker 3: because you did say that, you know, the consumer has
Speaker 3: hung in there. The consumer has hung in there for
Speaker 3: quite a while. But you know, gas prices are going up,
Speaker 3: We got oil prices.
Speaker 2: Talking about hustle balance sheets for.
Speaker 3: Hustle balance sheets are done with that excess cash except
Speaker 3: for the wealthiest of people. And then of course you
Speaker 3: have the autoworker strike as well, and then student loan
Speaker 3: repayments starting up again for forty five million Americans.
Speaker 9: Well, really, that that's our big question, Tim, is really
Speaker 9: how long can that consumer continue to spend at the
Speaker 9: levels they have been And all the signs are pointing
Speaker 9: to those headwinds that you've talked about continuing on through
Speaker 9: the fourth quarter, and so really it's that rate of
Speaker 9: change game between again, how quickly can some of those
Speaker 9: inflation pressures come down Hopefully we get some eventual of
Speaker 9: relief on the rate front, besides the fact that you know,
Speaker 9: they are being able to consumer wise continue to hang
Speaker 9: in there with some of the excess savings that they
Speaker 9: still had from the pandemic spending, as well as the
Speaker 9: fact that the labor market is still relatively strong. And
Speaker 9: so that really is some of the key data that
Speaker 9: we're going to be looking at as we continue to
Speaker 9: move in through this fourth quarter.
Speaker 2: All right, so big macro talk, we've got your macro perspective.
Speaker 2: What does it mean in terms of what investors should
Speaker 2: do either on the equity side of things or on
Speaker 2: the fixed income side of things. On a day where
Speaker 2: we see the rustle, which is a great indicator of
Speaker 2: kind of our local and US domestic economy goes negative
Speaker 2: for the year.
Speaker 9: We are really recommending that clients right now stay neutral
Speaker 9: on the big asset classes. So again, whatever with their
Speaker 9: it does.
Speaker 2: New typical long term you still have yeah, go ahead.
Speaker 9: Correct, So whatever their typical long term weight would be
Speaker 9: on an asset allocation basis to equities, fixed income, and
Speaker 9: real assets, that they just stay at that weight as
Speaker 9: opposed to overweighting or underweighting while we continue to monitor
Speaker 9: the data. Now, certainly within those markets there may be
Speaker 9: some areas where you can skewed to and four, But
Speaker 9: within the US equity market, we really just believe having
Speaker 9: that broader exposure at this point certainly just makes sense. Again,
Speaker 9: at whatever your long term weight would.
Speaker 2: Be, Okay, so does that mean more interest in the
Speaker 2: market weighted performers or how do you see that?
Speaker 9: Well, right now, we just recommend broader exposure to market,
Speaker 9: but certainly for clients who have a shorter term time
Speaker 9: horizon in terms of any liquidity or current investment objectives.
Speaker 9: Our favoritism within the US equity market actually would be
Speaker 9: to some of those sectors that offer above average dividend
Speaker 9: growth and yields, And really the reason why is again,
Speaker 9: with some of this uncertainty in the economy right now
Speaker 9: and the potential volatility that we've seen, having that income cushion,
Speaker 9: we think really makes a difference.
Speaker 2: You're the second person, since I did a show earlier
Speaker 2: on Bloomberg Radio and on our YouTube channel with Bailly
Speaker 2: Lipshealtz second person, Tim, who talked about dividends and looking
Speaker 2: at dividend paying stocks in this stay.
Speaker 3: So is that where we are in the cycle?
Speaker 9: Lisa, Well, certainly, we think again, with the lack of clarity,
Speaker 9: having that cash in hand certainly is attractive now for
Speaker 9: clients with longer term horizon. We do see some opportunity
Speaker 9: again in those secular growth sectors. There's a lot of
Speaker 9: ongoing trends towards AI, machine learning, just use of the cloud, anytime, anywhere,
Speaker 9: spending that should benefit those companies. But again, given the
Speaker 9: run up that they've had really over the last few months,
Speaker 9: and as well as the fact that their valuations are
Speaker 9: relatively more rich, we would advise looking for those on
Speaker 9: a longer term basis.
Speaker 2: All right, we're gonna run, Hey, listen, Thanks so much,
Speaker 2: Lisa ericson Senior VP and Head of the Public Markets
Speaker 2: Group over at US Bank Wealth Management on zoom in Minneapolis.
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