Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul Swinge. You,
Speaker 1: along with my co host Lisa Brahma wits each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money. Whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. Well, President Donald Trump threatened to
Speaker 1: regulate or shutter social media companies, a warning apparently aimed
Speaker 1: at Twitter after it began fact checking his tweets. Lots
Speaker 1: of questions in the marketplace. That's knocking in part, knocking
Speaker 1: down the nast back off about one point eight percent today.
Speaker 1: The question is can the president do that? Jim Anderson,
Speaker 1: CEO of Social Flow, based in New York City, has
Speaker 1: some answers for social Flow and full disclosure. Social Flow
Speaker 1: is a platform used by Bloomberg for social media purposes. Jim,
Speaker 1: thanks so much for joining us here. So an interesting
Speaker 1: response by the President to the fact checking that was
Speaker 1: instituted by Twitter. I guess the basic question is what
Speaker 1: can there does it really do well? It's a great,
Speaker 1: great question, Paul, I mean there's so much to unpack
Speaker 1: in this story. I guess the first thing I'll say
Speaker 1: is that Twitter's labeled of President Trump's tweets were around
Speaker 1: the tweets about baloting by mail, not the conspiracy about
Speaker 1: that Joe Scarborough having had something to do with the
Speaker 1: death of a former staffer. And and that's an interesting distinction,
Speaker 1: because so much of the energy yesterday was around, oh goodness,
Speaker 1: this is a terrible tweet. How could President Trump do this?
Speaker 1: What's Twitter gonna do? And and notably, they did not
Speaker 1: do anything. They didn't play for that tweets, they didn't
Speaker 1: remove it, they didn't do anything. They instead focused on
Speaker 1: an area around mail and balancing, which is its own
Speaker 1: set of controversy. So that's the first thing I would notice.
Speaker 1: I think they felt like they were on more solid
Speaker 1: ground with the mail in balloting than they were about
Speaker 1: the Joe Scarborough, which I'm struggling to understand. What Twitter is.
Speaker 1: Is it a media platform? Well, it is a platform,
Speaker 1: I think, you know, you sort of wrapped up in
Speaker 1: that question is what is a media platform? What is
Speaker 1: the company? And certainly you've seen Facebook and Twitter both
Speaker 1: say they are not media companies, and they certainly don't
Speaker 1: fit the traditional definition. You know, they don't. The FCC
Speaker 1: doesn't define them as a media company. They don't print
Speaker 1: a newspaper. But that being said, those are both amazingly
Speaker 1: successful advertising sales platforms. That's not how we normally as
Speaker 1: consumers think about them. We think about the Twitter or
Speaker 1: the Facebook experience. But you know, they derive almost acent
Speaker 1: of their revenue from advertising. So if you define media
Speaker 1: platform as one that sells advertising, well then they certainly
Speaker 1: fit that definition. I think part of what we're all
Speaker 1: wrestling with is that they're not They're not like anything
Speaker 1: we've historically had when it comes to radio and television
Speaker 1: and newspapers. There's there's something really different. So I guess
Speaker 1: it kind of makes a question, what, ultimately do you
Speaker 1: think the responsibility is of the facebooks of the world
Speaker 1: and the Twitters of the world and the other social
Speaker 1: media companies who in large part just you know, it's
Speaker 1: user generated content. Do they have a responsibility to fact check? Well,
Speaker 1: they have a responsibility to society, I'll say responsibility to
Speaker 1: fact check. You know that the challenge with fact checking is,
Speaker 1: you know, we would all love to think that facts
Speaker 1: are wonderfully objective things, and in some cases they are right.
Speaker 1: It's it's Wednesday today in New York City, at least
Speaker 1: it may be a different day, and if you go
Speaker 1: across the date line, etcetera. But we're not talking about
Speaker 1: those kinds of objective facts. We're talking about conspiracy theories
Speaker 1: and in you into and all you really need to
Speaker 1: do is turn on any of the other more traditional media,
Speaker 1: turn on television, and depending on the channel in which
Speaker 1: you consume your news, you're gonna get very very different answers.
Speaker 1: So I think it's a very slippery slope for the
Speaker 1: platforms to start getting into fact checking. And I think,
Speaker 1: you know, it's it's tough to understand how yesterday's decisions
Speaker 1: by Twitter to label two of Donald Trump's tweets is
Speaker 1: going to turn out well for them. I mean, you
Speaker 1: already saw the blowback from him and from his campaign,
Speaker 1: and I suspect they're going to get a tremendous amount
Speaker 1: of criticism. Um And so it's a it's almost a
Speaker 1: no win situation for the platforms to say, hey, I'm
Speaker 1: I'm going to be the one who does the fact
Speaker 1: check and I'm going to label or or remove content
Speaker 1: doesn't meet my standards. Well, and I guess the other
Speaker 1: side of this story is Facebook, And there was a
Speaker 1: report in the Wall Street Journal yesterday about how even
Speaker 1: Facebook's own experts found that, yes, the platform has actually
Speaker 1: enhanced divisions in the country and across the world and
Speaker 1: sort of created an increased partisanship, and that the platform
Speaker 1: could do something about it, but chose not to because
Speaker 1: ultimately it drove traffic. That was a business decision, and
Speaker 1: it seems in contrast to what Twitter is doing. Should
Speaker 1: Facebook be rewarded for that, at least with respect to
Speaker 1: shares and with respect to the way that it's perceived,
Speaker 1: given the fact that it does have some social responsibility,
Speaker 1: but it also has a responsibility twits shareholders. Yeah, it's interesting.
Speaker 1: I read that same article and I've I've seen commentary
Speaker 1: about that, and you know, I think anybody objectively, you
Speaker 1: don't have to be inside of Facebook to note that
Speaker 1: it can be used for divisive topics and tends to,
Speaker 1: at least in some cases and ease polarization. Um, you know,
Speaker 1: saying that they did it curry for their business interests. Yes,
Speaker 1: they do have an obligation to their their shareholders, but
Speaker 1: I think there's a missing piece of that, which is
Speaker 1: once they start doing that, especially if they talk about
Speaker 1: how they're going to start policing speech or fact checking
Speaker 1: or uh, you know, removing contents. I mean, they's a
Speaker 1: remarkably splicy, slippery slope. And again I'm going to go
Speaker 1: back to the no win scenario. The minute they start
Speaker 1: talking about doing that, they get highlighted for being inconsistent,
Speaker 1: being unfair, manipulating elections, you know, all kinds of things
Speaker 1: like that that, yes, will hurt their business, but also
Speaker 1: I think they're just a very untenable position for them,
Speaker 1: and I think that's one of the reasons why you
Speaker 1: saw Facebook go down the route of creating effectively what
Speaker 1: they like to call their Supreme Court um, which is
Speaker 1: some a non Facebook controlled body that will help them
Speaker 1: be the sort of the arbitr of these types of decitions.
Speaker 1: But like any supreme court, like our U S. Supreme Court,
Speaker 1: these this arbitration and these decisions happen well well after
Speaker 1: the fact. I mean these we're talking years down the road,
Speaker 1: I would imagine, before these kinds of things get hashed out. So, uh, Jim,
Speaker 1: I mean TV extent, there is some movement to regulate
Speaker 1: some of the social media platforms. Is it something that
Speaker 1: would come from the Federal Communications Commission or the courts?
Speaker 1: How would it even be affected? Do you think, Yeah,
Speaker 1: it's a great question. I mean you're talking significant jurisdictional issues,
Speaker 1: but I don't immediately jump to the jurisdictional issues. I've
Speaker 1: gone to the politics of it. Right, So it's politically, uh,
Speaker 1: sort of advantageous for President Trump right now to talk
Speaker 1: about regulating the platforms. But you know, historically Republicans and
Speaker 1: Conservatives have not been heavy on regulations. So you sort
Speaker 1: of getting what the headlines are, which is, you know,
Speaker 1: somebody saying we should regulate these platforms, and then the
Speaker 1: devil is truly of the details. You know, do you
Speaker 1: really expect a Republican president of Republican control Senate, got
Speaker 1: a Democratic House. Do we expect you know, sort of
Speaker 1: bipartisan consensus to come uh, in terms of how those
Speaker 1: platforms are regulated, I will say, I mean it is
Speaker 1: interesting they get criticized from both fines. Right, You've got
Speaker 1: Democrats criticizing these platforms for sort of one set of issues,
Speaker 1: Republicans can criticizing for a related set of issues, coming
Speaker 1: at it from very different signs. So there is bipartisan
Speaker 1: um agitation, for lack of a better word, whether that
Speaker 1: emerges in consensus, in which agencies, or how that regulation
Speaker 1: will play out. I think that, you know, it's going
Speaker 1: to be years in the making, and probably antitrust is
Speaker 1: the most likely issue to really come to the four
Speaker 1: at least for facebooks, not so much for Twitter. Jim Anderson,
Speaker 1: thank you so much for weighing in. Jim Manderson, chief
Speaker 1: executive officer of Social Flow in New York and just
Speaker 1: for full disclosure of Social Flow is a platform used
Speaker 1: by Bloomberg for social media purposes. Interesting to see the
Speaker 1: reaction in shares on Twitter, the response to President Trump's request,
Speaker 1: or basically his his criticism of Twitter. Some people were saying,
Speaker 1: we'll sell Twitter shares, and then other people were saying
Speaker 1: quickly that they would buy them. It became a partisan
Speaker 1: issue whether you bought or sold Twitter shares, and I
Speaker 1: guess that the conclusion today, Paul has been self for now.
Speaker 1: I guess that's right. Yeah, interesting, it would be I
Speaker 1: think just really a can of worms here, so, uh,
Speaker 1: you know, I think it's a really difficult thing to
Speaker 1: manage and too for these social media companies free speech.
Speaker 1: We are approaching the summer and then the fall when
Speaker 1: students return to college campuses around the country, except that
Speaker 1: this year there's a high likelihood that they will not
Speaker 1: be doing so, which raises a question of whether parents
Speaker 1: really want to be paying and students themselves want to
Speaker 1: be taking out loans to pay colleges when they cannot
Speaker 1: get the full college experience. Joining us now to discuss
Speaker 1: this and what the future is for higher education in
Speaker 1: general is Robert kelch In, Associate professor of the Department
Speaker 1: of Education, Leadership, Management, and Policy at Seton Hall University,
Speaker 1: as well as Janet Lauren, Endowment's reporter for Bloomberg News. Robert,
Speaker 1: I want to start with you, how big of an
Speaker 1: existential threat is COVID nineteen and the likelihood that many
Speaker 1: campuses will not open in the fall to higher education.
Speaker 1: It's a serious risk to many college campuses because students
Speaker 1: may not pay as much intuition, and colleges that have
Speaker 1: students living on campus won't get that incredibly important revenue
Speaker 1: from room and board. So, Jennet, let's put this into
Speaker 1: maybe financial perspective a little bit. Here. A lot of
Speaker 1: this big universities with multibillion dollar downmands, they're likely to
Speaker 1: be able to weather this pandemic risk better than others.
Speaker 1: But I'm thinking about the secondary and even smaller colleges
Speaker 1: and universities. How at risk do you think they are
Speaker 1: from an economic perspective. Well, before we get to the
Speaker 1: second tier colleges, just don't forget that. Harvard also said
Speaker 1: that they all they have a one point two billion
Speaker 1: dollar budget deficit over to some two um academic years,
Speaker 1: and Northwestern also talked about its budget deficits. So it's
Speaker 1: the biggest colleges with the biggest endowments are not necessarily immune. Uh.
Speaker 1: These are the schools that quickly paid out room and
Speaker 1: board refunds. Uh. And we've also seen that colleges have
Speaker 1: had to cancel somewhat lucrative summer programs which helped fill
Speaker 1: their campuses. So that's one step. You know, most colleges
Speaker 1: are not going to be immune to anything. And certainly
Speaker 1: the second tier colleges UM, you know, they're they're having
Speaker 1: to think about who's going to be coming to fill
Speaker 1: their classes. As the top tier colleges, you know, take
Speaker 1: other kids off the waitlist, the second tier colleges may
Speaker 1: find that the kids that they thought were coming in
Speaker 1: in the fall may not be there. And certainly, tuition
Speaker 1: revenue is a huge part of most college budgets. Certainly
Speaker 1: the wealthiest colleges like a Princeton Amherst College, more than
Speaker 1: half of their budgets come from endowment um investment income. However,
Speaker 1: most schools are very reliant on tuition to make their budgets. Robert,
Speaker 1: there's a question here, how much is this going to
Speaker 1: be a temporary shock for universe these particularly the ones
Speaker 1: that have more robust endowments and are better weathered or
Speaker 1: sort of hunker down to weather this storm. And how
Speaker 1: much does this shift the whole conversation around higher education
Speaker 1: where we've seen incredible inflation of the tuition bills over time,
Speaker 1: and you mean, this is a lot of people saying
Speaker 1: maybe we need to rethink this and some of these
Speaker 1: colleges don't need to exist in the short term. This
Speaker 1: put some incredible pressure on colleges to hold a line
Speaker 1: on tuition even as they're spending more money to get
Speaker 1: college campuses ready for students in the full world. Will
Speaker 1: many colleges go out of business from this? The answer
Speaker 1: is probably not that many it'll be small private colleges
Speaker 1: serving a few hundred students, but most public colleges will
Speaker 1: go on even if they're hit hard by losses and
Speaker 1: state funding, and most midsized private colleges will find a
Speaker 1: way through, even though it would be a difficult few
Speaker 1: years to come. Jennet, we've seen some big, big universities, UM,
Speaker 1: you know, Harvard, Brown, m I, t H coming to
Speaker 1: the bond market. How how has higher education generally been
Speaker 1: received in the credit markets and kind of how's the
Speaker 1: outlook today for some of these institutions. Well, these schools
Speaker 1: are still very highly rated, they have very high demand,
Speaker 1: and they're taking advantage of low interest rates UM, and
Speaker 1: there chances are the the institutions you just named are
Speaker 1: going to continue to be around for a very long time. So,
Speaker 1: you know, I think there's still been demand for that
Speaker 1: debt um, you know, considering where their market position is. Robert,
Speaker 1: do you think that online education should cost the same
Speaker 1: amount as the in person type? Online education will end
Speaker 1: up costing about the same amount unless a college can
Speaker 1: get up to massive scale because you're still interacting with faculty.
Speaker 1: Good technology is expensive. You don't have some of the
Speaker 1: in person facilities, but the tuition price ends up typically
Speaker 1: being about the same for good online versus good in
Speaker 1: person education. That's kind of shocking to me because I
Speaker 1: would think that the classroom, the the amount of people
Speaker 1: that could potentially be a participant in the online course,
Speaker 1: the overhead seems like it would be a lot less.
Speaker 1: Why am I wrong? Most of the overhead here is people,
Speaker 1: And if you want interaction between students and professors, you
Speaker 1: need faculty to do that, and good technology for learning
Speaker 1: management systems and working with students online is also expensive.
Speaker 1: Although there are returns if you can get large class
Speaker 1: or large universities doing this, like an Arizona State, but
Speaker 1: most smaller colleges doing this for one or two semesters
Speaker 1: just won't see that economy of scale. Jenet. Can any
Speaker 1: of the I'm thinking more about the private colleges and universities.
Speaker 1: Can they expect any support in terms of fiscal support
Speaker 1: fiscal stimulus UM the government. Well, we've already seen UM
Speaker 1: universities such as you know, Harvard, Princeton, Stanford saying they
Speaker 1: were declining, you know, to accept their share of federal
Speaker 1: stimulus stimulus money early on. You know, mid a lot
Speaker 1: of criticism. UM. I also did a story about the
Speaker 1: p p P money that some uh, small colleges, we're
Speaker 1: not sure if they were allowed to apply for it
Speaker 1: because of the requirement on workers and their student student
Speaker 1: workers had been counted even though you know they had
Speaker 1: all gone home. UM. So you know, depending on if
Speaker 1: the smaller colleges um do uh you know, meet the
Speaker 1: threshold for employees, they could get some money from the
Speaker 1: p p P, you know, because they really are small businesses.
Speaker 1: Robert Kelchin, thank you so much for joining us. Robert Kelchin,
Speaker 1: Associate pressor, Professor, the Partner of Education Leadership Management Policy
Speaker 1: at Seton Hall University UH in New Jersey and China.
Speaker 1: Lauren a Downance reporter for Bloomberg News on the phone,
Speaker 1: really fascinating discussion there. I would think I kind of
Speaker 1: agree with you, Lisa. I would think just intuitively, there
Speaker 1: would be a discount for online versus being on campus. Yeah,
Speaker 1: I'm going to pray for that. I mean, it sounds
Speaker 1: like that's not going to be the case. And honestly,
Speaker 1: it's good to have people paid for what they offer. Still,
Speaker 1: as a parent, the idea of having a little bit
Speaker 1: of deflation in that intuition payments not the worst thing
Speaker 1: in the world. I do want to bring you this
Speaker 1: headline crossing that the US will not certify Hong Kong's autonomy.
Speaker 1: That's basically throws into question whether that region will continue
Speaker 1: to get special trading status, sort of first step to
Speaker 1: dessertisfying them again. Paul, though this the question in my
Speaker 1: mind is who will that hurt more? The U s
Speaker 1: for Beijing, the people in Hong Kong. Yeah, we're coming
Speaker 1: back to that discussion that that we've had prior to
Speaker 1: the pandemic. It's about the trade wars and who really
Speaker 1: gets hurt the most. Who can weather a disruption in
Speaker 1: the relationship more the US are China. Looks like we're
Speaker 1: about to find out on a bit different front. About
Speaker 1: a month ago, Paul, everyone was talking about the transformation
Speaker 1: in the way that we've viewed society on the heels
Speaker 1: of COVID nineteen, and that particularly applied to the auto industry,
Speaker 1: where sales have plunged and are expected to plunge by
Speaker 1: twenty per cent. Is that really accurate though? How much
Speaker 1: will we see permanent changes to the auto industry as
Speaker 1: a result of the pandemic? Kevin Tynan has been following
Speaker 1: the senior autos analyst for Bloomberg Intelligence, Kevin, what's your
Speaker 1: take here? Are there permanent changes they're going to take
Speaker 1: hold of the auto industry as a result of the pandemic?
Speaker 1: I think so? Um, you know, but I don't think
Speaker 1: it's structural in the way that two thousand and eight
Speaker 1: two tho nine was. I think there will be improvements
Speaker 1: to processes, and whether that's at the manufacturing level or
Speaker 1: at the retail sales level. That that I would say
Speaker 1: this crisis sort of accelerated. But but you know, in
Speaker 1: terms of a tear down and rebuild of the entire
Speaker 1: automotive process from the build to the sale, you know,
Speaker 1: I think that's a little bit overstated, So Kevin, I
Speaker 1: you know, one point before the pandemic, there was a
Speaker 1: reasonable discussion about whether we as a US society had
Speaker 1: reached peak auto, you know, with Uber another ride sharing companies, UH,
Speaker 1: the fact that more and more young people were moving
Speaker 1: to urban centers where they can depend more on mass transportation.
Speaker 1: There was really a debate about peak auto in this country.
Speaker 1: Where do you think we are as it relates to that,
Speaker 1: How do you think about long term auto demand in
Speaker 1: this country, Yeah, I think, you know, and looking at
Speaker 1: the numbers in terms of vehicle registrations by state, which
Speaker 1: is something I was just you know, I was just
Speaker 1: compiling that data, and you know, there is a definitive
Speaker 1: trend to less private vehicle ownership and that's over you know,
Speaker 1: a decade or so. Um, you know, in terms of
Speaker 1: the fear of mass transit or the fear of ride hailing.
Speaker 1: I feel like, you know, there's probably some temporary effect
Speaker 1: of that, but at the same time, I don't think
Speaker 1: you're gonna get private vehicle ownership and storage and repair
Speaker 1: and maintenance and insurance for people that live in urban areas.
Speaker 1: It just doesn't make sense, you know. And I just
Speaker 1: looked at it total cost of ownership on a new vehicle,
Speaker 1: which is roughly about thirty eight nine thou dollars over
Speaker 1: five years all in on the cost is about nineties
Speaker 1: thousand dollars. So, uh, you know, it just doesn't make
Speaker 1: sense for for that sort of structural shift to private
Speaker 1: vehicle ownership for a lot of cities, uh and people.
Speaker 1: So so maybe a little bit and maybe for a
Speaker 1: short term, but over the longer stretch, I think that
Speaker 1: move away from vehicle ownership is probably going to continue. Greg,
Speaker 1: Jared has a question for you. He wants to pick
Speaker 1: up a cheap car on the Hurts liquidation that we've
Speaker 1: all been expecting, given the fact that they've filed for bankruptcy.
Speaker 1: Are we going to see that? Yeah, you know, and
Speaker 1: I've looked at this and I don't think and I
Speaker 1: get this question a lot obviously since Friday. Um, Look,
Speaker 1: I don't think it affects the new vehicle market. Right.
Speaker 1: These are off rental vehicles, so maybe there's a little
Speaker 1: bit of an impact and residual value in the pre
Speaker 1: owned market. But I would even argue that the pre
Speaker 1: owned buyer. Uh maybe there's a small subsegment or a
Speaker 1: niche of that market that may be an off rental buyer,
Speaker 1: but pre owned buyers are probably going to gravitate more
Speaker 1: to the off lease a little bit higher quality, a
Speaker 1: little higher technology, better equipped vehicles than you know, sort
Speaker 1: of this rental car uh dump. But I see that,
Speaker 1: as you know, the lowest end of the of the
Speaker 1: pre owned market where buyers would be. So I don't
Speaker 1: see it causing a ripple all the way up to
Speaker 1: the new vehicle market. Kavin just give us a sense
Speaker 1: of the relative health from a bounce seat liquidity perspective
Speaker 1: of the big US automakers right now. Yeah, liquidity seems
Speaker 1: to be okay in terms of how long we think
Speaker 1: the downturn less and again very different than oh eight
Speaker 1: oh nine, which started as really a banking crisis and
Speaker 1: credit markets were frozen. You couldn't bet a mortgage, you
Speaker 1: couldn't get a car loan. This is not that the
Speaker 1: automo makers couldn't take down any you know, any additional liquidity.
Speaker 1: So this isn't really that And I think, you know,
Speaker 1: we're looking at you know, the consensus for May is
Speaker 1: already back to a ten, which is funny almost to say,
Speaker 1: but from you know, in eight six to a ten
Speaker 1: in a month, if that's the beginning of the trend
Speaker 1: of recovery, uh, it would seem to say that the
Speaker 1: worst is behind. So if this is the inflection point
Speaker 1: which was April, you know, then I would say that
Speaker 1: that there should be no issues going forward in terms
Speaker 1: of liquidity on the balance sheet for for the large automakers. Kevin,
Speaker 1: thanks so much for joining us. We appreciate that update
Speaker 1: on the auto industry. Kevin Tynan, He's the senior auto's
Speaker 1: analyst for Bloomberg Intelligence. He's been covering the auto industry
Speaker 1: for decades at least. It's just some anecdotal evidence. I
Speaker 1: was uh meeting with a buddy mine last weekend who
Speaker 1: manages an auto dealership, and he kind of confirmed, uh,
Speaker 1: what Kevin was saying that kind of that March April
Speaker 1: time frame was the trough there because they weren't able
Speaker 1: to even have anybody into their dealership. Now they're booking appointments. Uh,
Speaker 1: and and these said sales are running about of normal,
Speaker 1: which was a big improvement from that March April time frame,
Speaker 1: So hoping that can continue. There is some pent up
Speaker 1: demand out there. He was saying, people were buying cars,
Speaker 1: they are leasing cars, uh, just at obviously reduced rape.
Speaker 1: But in terms of the trough, it seems to have
Speaker 1: been hit in March and April. So you know, if
Speaker 1: that is in fact the case, maybe the auto industry
Speaker 1: had kind of weather the storm here and may do
Speaker 1: a little bit better than say, uh, you know, some
Speaker 1: of the cruise lines or some of the airlines of
Speaker 1: some of the other consumer facing businesses that likely will
Speaker 1: have to deal with a longer rebound than maybe some
Speaker 1: other industries. Well, do you do sports gambling? I do not. Okay,
Speaker 1: that doesn't surprise me. Evidently the people who do a
Speaker 1: sports gambling have migrated over to the stock market, and
Speaker 1: we've heard this reported increasingly. There was actually a great
Speaker 1: story looking at that in the Financial Times with some
Speaker 1: data about brokerage accounts and what we're seeing, which really
Speaker 1: raises a question about the sentiment in the retail sector. Sure,
Speaker 1: the betters, but also mom and pop investors who are
Speaker 1: looking at the wild swings and wondering what to make
Speaker 1: of it. Joining us now, someone with a front row
Speaker 1: seat to that sentiment, Julia carl Carlson, founder and chief
Speaker 1: executive officer of Financial Freedom Wealth Management Group, joining us
Speaker 1: from Newport, Oregon. Julia, we're so glad to have you
Speaker 1: on the show. Really important to get a sense of
Speaker 1: the retail component, especially since a lot of people are
Speaker 1: saying that this aspect of the market is accounting for
Speaker 1: a greater proportion of the sentiment right now than others.
Speaker 1: Can you give us a sense of the retail client
Speaker 1: that you deal with and where their mind is at
Speaker 1: right now. Yeah, thanks for having me, Lisa and Paul.
Speaker 1: You know clients what I am feeling are calmer now.
Speaker 1: And I think this definitely is perspective on where you
Speaker 1: are at in the country. We are in organ it's
Speaker 1: rule and I think given the magnitude of the rally
Speaker 1: that's happened off of the March twenty three lows, clients
Speaker 1: are actually pleasantly surprised looking at their account values. And
Speaker 1: I think some of the some of our clients that
Speaker 1: chose not to look back in March and we're you know,
Speaker 1: either fearful or just saying I'm gonna just not watch.
Speaker 1: When we say encourage them to go in and look,
Speaker 1: it's really not that bad. They do look and they're like, wow,
Speaker 1: I am surprised. So we are seeing Um. I would
Speaker 1: say the best word for it is a sense of
Speaker 1: calmness out there. It's interesting enjoy a sense of calmness
Speaker 1: here in the financial markets with Lee, Lise and I
Speaker 1: often comment that you know a little bit of surprise
Speaker 1: in how the market has rebounded off of the bottom
Speaker 1: um given some of the dire economic news that we
Speaker 1: get in terms of jobless claims and GDP princes and
Speaker 1: so on and so forth. Has your clients and are
Speaker 1: they were they on kind of the risk curve here.
Speaker 1: As you talk to them, I will are they willing
Speaker 1: to take take on a little bit more risk, maybe
Speaker 1: shift from bonds into equities, or maybe get a little
Speaker 1: bit more further out on the risk curve for some
Speaker 1: of their investments. Well, I don't know if we I
Speaker 1: would say adding risk at this point, but we definitely
Speaker 1: when the market was um low, we were rebalancing, and
Speaker 1: so they were they and putting into positions where they
Speaker 1: were putting them the position to capture more of the
Speaker 1: upside as it recovered. And so I would say, no,
Speaker 1: we're not adding risk because most of our clients are
Speaker 1: in retirement. They want they've built their wells, they want
Speaker 1: that more moderate portfolio that aren't going to be, you know,
Speaker 1: subject to these wild swings. And although we do feel
Speaker 1: very confident in the long term opportunity and equities that
Speaker 1: that those remain attractive, especially compared to the alternative like
Speaker 1: cash or fixed income, we're not we're not necessarily willing
Speaker 1: to say let's add risk at this point because most
Speaker 1: likely there may be a pullback here in the shorter term.
Speaker 1: I wonder if sixty forty still works given how low
Speaker 1: bond fields are Are you still recommending that kind of
Speaker 1: allocation to bonds as a hedge. Well, I would say yes,
Speaker 1: we are in line in alignment with a sixty forty,
Speaker 1: although we don't expect a lot from that forty moving forward.
Speaker 1: It's more for that stability and peace of mind part
Speaker 1: of the portfolio. So joy we saw bank Rate came
Speaker 1: out with a study recently that about of working or
Speaker 1: recently unemployed adults with retirement savings have either tapped into
Speaker 1: or planned to tap into the retirement funds as an
Speaker 1: immediate source of income because of the pandemic. Have you
Speaker 1: seen that from your client base? You know, we haven't.
Speaker 1: When I read that statistic, I was wondering, what was
Speaker 1: the statistic before all this happened, and but it sounds
Speaker 1: like it's it's in regards to you know, the people
Speaker 1: that have lost their jobs or have been um on unemployment.
Speaker 1: I mean, for the most part, even our clients that
Speaker 1: are still working, they're spending less. And our clients that
Speaker 1: are in retirement are actually stopping their r m d
Speaker 1: s because they can, and they are reducing that monthly
Speaker 1: income just because they're not traveling. They're not out, uh,
Speaker 1: spending the money that they were, you know, three or
Speaker 1: four short months ago. Just looking forward, What are you
Speaker 1: looking for in order to advise your clients perhaps to
Speaker 1: take a little risk off the table and temper their
Speaker 1: expectations for the year. Well, I think that the amount
Speaker 1: of stimulus that's come into not only now in the US,
Speaker 1: but worldwide. You know, I think that that is what
Speaker 1: we're seeing in the in the stock market rallies and
Speaker 1: I but we're also I think pricing in that we
Speaker 1: are going back to work, that we will get a vaccine.
Speaker 1: We're pricing in all of these perfect scenarios that um,
Speaker 1: you know, there's going to be something that rocks about
Speaker 1: and and comes in and and has a pullback. So
Speaker 1: I we always recommend that you stay invested per your
Speaker 1: risk profile, per your or um financial objective, and wouldn't
Speaker 1: necessarily say let's add risk um because there is still
Speaker 1: uncertainty and how this will all play out. Julia, thanks
Speaker 1: so much for joining us. We appreciate your perspective. Julia Carlson,
Speaker 1: founder and CEO Financial Freedom Wealth Management, located in a
Speaker 1: beautiful Newport, Oregon, right on the coast. They're beautiful part
Speaker 1: of the country. Kind of saying, stay the course here. Um,
Speaker 1: you know, the rebound has been pronounced coming off of
Speaker 1: that initial sell off, but the joy was suggesting, you know,
Speaker 1: stay the course. There's certainly could be some more volatility,
Speaker 1: but certainly stay invested. Thanks for listening to the Bloomberg
Speaker 1: P and L podcast. You can subscribe and listen to
Speaker 1: interviews at Apple Podcasts or whatever podcast platform you prefer.
Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa
Speaker 1: abram Woyds. I'm on Twitter at Lisa A. Bramwoits one
Speaker 1: before the podcast, you can always catch us worldwide. I'm
Speaker 1: Bloomberg Radio