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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Inflation is getting just becoming a very stubborn situation for

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Speaker 2: the Fed.

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Speaker 3: This is too much for the Fed.

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Speaker 4: Inflation is not doing what they wanted on average, and

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Speaker 4: this is a problem for them.

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Speaker 3: The sound that you heard there was the door slamming

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Speaker 3: on the June rate cuts. That's gone.

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Speaker 4: I do think it's just a door on a rate cut.

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Speaker 1: The Fed is not, in our opinion, is not going

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Speaker 1: to be making any moves anytime soon.

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Speaker 4: They're more likely to hold status quo, and.

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Speaker 2: Pretty good reason for them to remain on hold.

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Speaker 1: Here see how things go.

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Speaker 4: A rate cut in June, it seems to me would

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Speaker 4: be a dangerous and egregious.

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Speaker 3: Error at the moment.

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Speaker 1: I think they probably set up for September and December

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Speaker 1: to rate cuts this year.

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Speaker 3: As a real risk of no rate cuts. You know,

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Speaker 3: that's starting to come into the narrative and I think

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Speaker 3: that's new.

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Speaker 4: They're you know, creating a problem for themselves in terms

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Speaker 4: of the promises of rate cuts the inability to actually

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Speaker 4: secute on them.

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Speaker 5: Those were some Bloomberg TV guests reacting to today's CPI

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Speaker 5: print and whether or not delays the Federal reserves path

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Speaker 5: to cutting rates. Well, here on set to give her

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Speaker 5: many sens is Penny Pennington, CEO and managing partner at

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Speaker 5: Edward Jones. Penny, wonderful, wonderful and chat with you.

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Speaker 3: Thanks for being here. It's a pleasure. It's a great

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Speaker 3: day because.

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Speaker 5: I feel like you're really finally recalibrating a higher for

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Speaker 5: longer environment. I think we're looking at one and a

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Speaker 5: half cuts now, just based on expectations now in the market.

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Speaker 5: How does that make an investor rethink portfolio allocation?

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Speaker 1: Well, you're right to ask me, because I represent eight

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Speaker 1: million clients across North America, nineteen thousand financial advisors, two

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Speaker 1: trillion dollars of their assets that we are privileged to

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Speaker 1: care for. Five hundred thousand times a week, our financial

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Speaker 1: advisors are meeting with their clients. And I asked a

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Speaker 1: couple of our financial advisors this morning when we got

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Speaker 1: the CPI print, what are your clients going to say

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Speaker 1: when they come in?

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Speaker 3: What are you saying to them?

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Speaker 1: One of my financial advisors said, they're not asking about CPI,

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Speaker 1: but we've been talking for a couple of years about

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Speaker 1: they're purchasing power.

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Speaker 3: They're purchasing power. Day to day. They're purchasing power for

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Speaker 3: the long term. Day to day.

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Speaker 1: Julia was just talking about car insurance rates have stayed high,

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Speaker 1: gasoline food.

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Speaker 3: It's just it's a truism.

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Speaker 1: That what you bought at the grocery store three years

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Speaker 1: ago now for one hundred dollars now costs one hundred

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Speaker 1: and thirty dollars. We are scenario planning with our clients

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Speaker 1: for what higher interest rates and higher prices will mean

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Speaker 1: for them for all of their goals for the retirement

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Speaker 1: planning for the shorter term spending that they want to do.

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Speaker 1: We are seeing clients continue to spend retirement dollars for experiences,

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Speaker 1: and this is one of the things I think that

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Speaker 1: maybe keeping service inflation where it is. An earlier report

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Speaker 1: talked about summer travel is going to be very high.

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Speaker 1: People are still spending money, and our retired investors are

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Speaker 1: doing that.

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Speaker 5: I wonder if also part of the reason is that

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Speaker 5: they can park their money in a two year bond

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Speaker 5: now and then they get on a spiper yield or

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Speaker 5: just put in a money market fund and get five

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Speaker 5: or six percent.

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Speaker 3: Are people actually doing that.

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Speaker 5: They're parking their money and there's taking the yield and

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Speaker 5: going and do something with it.

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Speaker 1: Sure, you're getting rewarded for shorter term money today where

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Speaker 1: you weren't five years ago, so that feels good. The

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Speaker 1: risk in that is parking money at four to five

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Speaker 1: percent when inflation is at three and a half percent

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Speaker 1: doesn't give you the long term return that's going to

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Speaker 1: help you meet your goals. So we always stress with

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Speaker 1: our clients the proper allocation of their assets cash, fixed

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Speaker 1: income equities, allocated appropriately for your risk tolerance, your time horizon,

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Speaker 1: and the kind of goals short, medium, and long term

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Speaker 1: that you're trying to achieve.

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Speaker 2: How does the higher interest rate and environment and the

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Speaker 2: idea that most people believe higher interest rates at least

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Speaker 2: relatively speaking, are kind of here to stay, how does

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Speaker 2: that change the long term planning?

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Speaker 1: Well, there's some puts and takes to that, right, So

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Speaker 1: we're getting rewarded for the shorter term money. But if

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Speaker 1: you're a parent or a grandparent who's thinking about or

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Speaker 1: a thirty something thinking about buying a house, that's a

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Speaker 1: different thing, right, So it depends on your goals, It

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Speaker 1: depends on what stage of life you're in as to

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Speaker 1: how you're going to see that higher for longer interest

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Speaker 1: rate environment.

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Speaker 2: I am curious about some of the longer term trends

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Speaker 2: that we've seen in investing with the individual investors, this

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Speaker 2: sort of gravitation to private markets, the idea that at

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Speaker 2: least on a risk reward balance, that there's something maybe

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Speaker 2: they're a little bit more attractive than what you're finding

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Speaker 2: in public markets. And we've already seen a lot of

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Speaker 2: high network individuals really diversify into that private space. Are

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Speaker 2: you seeing that trend sort of move down the line

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Speaker 2: the income spectrum.

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Speaker 1: Well, you're focusing on diversification, which I love, and you're

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Speaker 1: focusing on the fact that a certain kind of democratization

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Speaker 1: of assets and the ways to purchase asset occurs in

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Speaker 1: our capital market system.

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Speaker 3: That can be really healthy.

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Speaker 1: So the traditional asset allocation of cash, fixed income, and

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Speaker 1: public market equities still very sound and strong. But I

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Speaker 1: read a statistic the other day ninety two percent of

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Speaker 1: companies with one hundred million dollars of revenues or more

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Speaker 1: are private, and so it's important that we continue to

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Speaker 1: have a strong and thriving capital market system for capital creation.

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Speaker 1: It is likely also to be important sooner rather than later,

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Speaker 1: that access to private assets become more democratized. What is

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Speaker 1: going to be important though, is clients understanding that that

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Speaker 1: client experience is a little bit different than buying a

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Speaker 1: public equity or an etfor or a bond on the

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Speaker 1: bond market. But I do see that coming probably sooner

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Speaker 1: rather than like.

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Speaker 5: Do we know what percentage we'll be in those private markets?

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Speaker 5: Like part of me is also like, hey, go in

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Speaker 5: the private markets and then just pretend you're not going

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Speaker 5: to get that money back because you don't know what

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Speaker 5: it's going to do.

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Speaker 3: We don't have any test cases.

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Speaker 5: Really on this.

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Speaker 3: How much would you recommend?

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Speaker 1: It depends on one's risk tolerance. When you think about

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Speaker 1: liquidity as well, private markets are less liquid assets when

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Speaker 1: you think about that experience of how quickly do you

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Speaker 1: need to draw your money out and how long term

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Speaker 1: are your goals? The private markets less liquid and longer

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Speaker 1: term in their exit, longer term in nature in the exit.

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Speaker 1: So clients are just going to have to be very

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Speaker 1: thoughtful about that, which means our financial advisors are going

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Speaker 1: to be very thoughtful.

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Speaker 3: About that in advising them. What do you think about

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Speaker 3: bitcoin in crypto? Well, is crypto proven yet? No, it's not.

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Speaker 1: And when we as a company advise clients based on

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Speaker 1: the fundamentals of assets, based on their cash flows, their revenues,

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Speaker 1: their ability to be sustainable. It's really hard to analyze

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Speaker 1: cryptocurrency right now in that light. We are taking a

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Speaker 1: bit of a wait and see approach at this point.

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Speaker 1: Our clients are not purchasing crypto through US, but we

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Speaker 1: are actively monitoring.

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Speaker 2: That's I want to talk about the generational differences, if

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Speaker 2: you will, I mean, are there generational differences? We keep

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Speaker 2: talking about the idea of the boomers sort of aging

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Speaker 2: out and this great wealth transfer, and then you have

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Speaker 2: this younger generation of millennials and Gen xers, which they

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Speaker 2: always forget about us, and of course Gen Z who

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Speaker 2: have different priorities and are going to be coming into

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Speaker 2: this investment landscape from a much different starting point than

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Speaker 2: what the boomers did.

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Speaker 1: You're exactly right when I think about I'm a booby

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Speaker 1: baby boomer on the last year of the Baby Boomers,

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Speaker 1: so I can channel that, but I can also channel

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Speaker 1: my thirty year olds. So the boomers and the silent

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Speaker 1: generation are about to think about their emotion right now,

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Speaker 1: moving their assets to the next two generations. Baby boomers

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Speaker 1: in silent generation thinking about their long lives, remaining healthy

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Speaker 1: in their long lives and having a great quality of life,

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Speaker 1: while at the same time moving their assets to the

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Speaker 1: next two generations. Very interestingly, we just did some research

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Speaker 1: and only about thirty percent of families are planning on

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Speaker 1: having this conversation with the next two generations. That sets

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Speaker 1: those families up for some real anxiety and we found

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Speaker 1: that out in our research and perhaps some disharmony after

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Speaker 1: mom and dad or grandma and granddad are gone. And

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Speaker 1: so we would advise to with your financial advisor, take

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Speaker 1: the emotion out of this family conversation, but begin the

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Speaker 1: process of talking about moving your legacy and your values.

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Speaker 1: You don't have to talk about the dollar signs, this

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Speaker 1: is what makes people uncomfortable sometimes. But talk about the

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Speaker 1: legacy and the values that you want to pass on

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Speaker 1: to the next generation. And then one final thing, we

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Speaker 1: found out sixty eight percent of those who own the

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Speaker 1: assets today would like to move them to the next

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Speaker 1: two generations during their lifetimes.

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Speaker 3: So a financial.

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Speaker 1: Advisor helping a family scenario plan for a long life,

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Speaker 1: making sure they don't run out of money.

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Speaker 3: But the.

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Speaker 1: Beauty of the joy of seeing your children and your

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Speaker 1: grandchildren enjoy some of those assets during your life is

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Speaker 1: pretty special.

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Speaker 2: Yeah, and hopefully do it in a tax advantage way.

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Speaker 1: PRIs Eisley, I'm about to have my first grandchild.

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Speaker 3: My daughter is having her first child, so this is

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Speaker 3: very real for me.

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Speaker 2: Oh, congratulations, Thank you all right, Penny, it's been wonderful

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Speaker 2: to have you. Penny Pennington, CEO or AT Edward Jones