Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Business Week, Insight from the reporters and
Speaker 2: editors that bring you America's most trusted business magazine, plus
Speaker 2: global business, finance and tech news. The Bloomberg Business Week
Speaker 2: Podcast with Carol Masser and Tim Stenoveek on Bloomberg Radio.
Speaker 3: Let's get two it. As we keep saying, Stock's initially
Speaker 3: getting a bit hammered, bond yields jumping with traders slashing
Speaker 3: their bets for FED rate cuts this year after data
Speaker 3: showed a solid jobs market and an increase in consumer
Speaker 3: inflation expectations. So let's dig into all of it a
Speaker 3: round table Bloomberg News International Economics and Policy correspondent Michael
Speaker 3: McKee to my left and to our right is Bloomberg
Speaker 3: News Rates reporter Michael McKenzie. Michael McKay, Let's start with
Speaker 3: you first. I want to ask you about today's jobs
Speaker 3: and you mish sentiment numbers laid out for us and
Speaker 3: what it says about the US economy.
Speaker 4: I always love Jobs Day because Carol bakes cookies and
Speaker 4: you know, didn't get Tim decorates the tree.
Speaker 5: It's once a month.
Speaker 3: Now you must be thinking of a different holiday.
Speaker 4: Payrolls were obviously very strong. We have to take it
Speaker 4: with a little bit of a grain of salt because
Speaker 4: there's probably some still some hurricane and strike catchup in that.
Speaker 4: And also we had the very late Black Friday, which
Speaker 4: appears to have delayed the hiring of retail employees because
Speaker 4: we saw twenty seven thousand decline in retail in November,
Speaker 4: when normally you'd expect all those people to come on,
Speaker 4: and we saw forty three thousand additional people hired for
Speaker 4: retailers in December, and also forty seven thousand hired in
Speaker 4: the category that includes basically the delivery drivers, the ups
Speaker 4: and FedEx people who are bringing you all those packages.
Speaker 3: Dudes to deliver it before the porch bandit stealer from
Speaker 3: my pirates.
Speaker 4: There was there, There was good news in there, but
Speaker 4: it maybe there may be some payback next week or
Speaker 4: next month orrather. But the good news for the FED
Speaker 4: is that the unemployment rate went down, massive increase in
Speaker 4: the household survey in terms of people hired after a
Speaker 4: big decrease the month before, and everybody said, oh, labor
Speaker 4: market is falling apart, and it's not. That's the bottom
Speaker 4: line here. Which can keep the Fed on the sidelines,
Speaker 4: which will bring Mike mackenzie in to explain all the
Speaker 4: joy that was found in the market.
Speaker 3: I listened to I think you know, we're all listening
Speaker 3: to surveillance this morning when the numbers passed, and it
Speaker 3: was like, I mean, man, the market reaction was pretty swift, Michael.
Speaker 5: Indeed it was. This has been a really tough week
Speaker 5: for the bond markets, right. Fact, what was interesting about
Speaker 5: today was longer day to bondes have been signing off
Speaker 5: the most. So much of this week today is all
Speaker 5: about the front end because the market saying, oh, the Fed,
Speaker 5: he's really going to go on extended pause. Now we've
Speaker 5: pushed out the first rate cut for this year from
Speaker 5: around June. Now we're flirting with a September October timeframe.
Speaker 5: Bank of America come out today and say no, we
Speaker 5: don't see any more rate cuts now for the cycle.
Speaker 5: Goldman City pushing it back. So the real problem now
Speaker 5: is that you've got a series of forces all combining
Speaker 5: to really hurt bonds because there's no really place here
Speaker 5: nowhere here to hide really, because a Frinda yd is
Speaker 5: going to get whacked because if the economy keeps trundling
Speaker 5: along at this kind of pace, and you've also got
Speaker 5: that uncertainty coming from the Trump administration coming in who
Speaker 5: they want to keep the economy going. The FED is
Speaker 5: also going to have to look at inflation a lot
Speaker 5: more closely now, and we've got a really important inflation
Speaker 5: report coming out next Wednesday. So everything's pushing us towards
Speaker 5: the world where the FED is basically done. The December
Speaker 5: expectations for rates where the FED rate will be is
Speaker 5: now above four percent, So four percent is now your flaw,
Speaker 5: and that means the longer end is still going to
Speaker 5: sell off. It hasn't sold off as much today, but
Speaker 5: it's sold off a lot this week. And we did
Speaker 5: test five percent on the thirty year. The twenty year
Speaker 5: bond is already above five percent. Tens when above four
Speaker 5: seventy five where everyone has been saying, oh, that's going
Speaker 5: to be where the buyers turn up, we're not really
Speaker 5: seeing it.
Speaker 3: Ten years right now.
Speaker 6: Yeah, So does that mean we get to five for
Speaker 6: our folks talk that you talked to Michael McKenzie saying
Speaker 6: we could see five percent on.
Speaker 5: Yes, I think you've got a pretty good chance of that.
Speaker 5: We'll see. I mean, inflation next week is expected to
Speaker 5: show the third consecutive monthly rise and the headline rate,
Speaker 5: so we're not trending in the right way. And then
Speaker 5: Scott Besson's going to sit down for the Senate confirmation
Speaker 5: hearing on Thursday, and everyone in the bond market wants
Speaker 5: to hear what he's going to say about what's happening
Speaker 5: in terms of fiscal policy. How do you square this
Speaker 5: incoming administration's efforts to keep on spending bring in tax
Speaker 5: cuts with being fiscally disciplined. And that's what's got people
Speaker 5: worried as well.
Speaker 3: But you guys keep reminding both of you do that. Listen,
Speaker 3: there's a lot that happens, you know, from FED meeting
Speaker 3: to FED meeting, whether it's more reads on inflation, more
Speaker 3: reads on jobs. And then we'll see, Mike, in reality,
Speaker 3: what we get out of this administration that ultimately might
Speaker 3: impact things.
Speaker 4: Yeah, what Michael was talking, I was like, we're all dated.
Speaker 4: I was thinking, you want to pat the bond traders
Speaker 4: on the head and go, you guys are so cute,
Speaker 4: I mean, changing their views like this, and we all
Speaker 4: know in a couple of weeks it'll all change again,
Speaker 4: because yes, CPI is very important next week, but after that,
Speaker 4: the big one is Inauguration Day and the hundred executive
Speaker 4: orders he's going to put out, and then whatever plans
Speaker 4: they go through. I think the only safe bet is
Speaker 4: that we don't know what the FED is going to
Speaker 4: be doing this year, and the FED doesn't know either,
Speaker 4: and they're very happy to go sit in the shade
Speaker 4: and wait this out for a little bit because they
Speaker 4: don't want to be on the wrong side, you know,
Speaker 4: slow the economy or goose it too much, given what
Speaker 4: we don't know about what's going to happen.
Speaker 6: So January twenty ninth is the consensus on the twenty
Speaker 6: ninth than the idea is the consensus says maybe the
Speaker 6: next move comes all the way in the fall summer.
Speaker 4: Well, the consensus for January. You look at the WRP
Speaker 4: page and I think it's written down there.
Speaker 7: We'd be gobsmacked.
Speaker 6: If the let's see WRP moved greats oh it does
Speaker 6: say that, yeah, twenty nine.
Speaker 7: But after that, who knows.
Speaker 4: I mean by March, first of all, we've got the
Speaker 4: dead ceiling hanging over everybody's head. We're going to have
Speaker 4: a government has to be funded in.
Speaker 7: March by March, right, And so you have that little thing.
Speaker 4: Just those two little things alone, let alone any new
Speaker 4: policies to throw people out of the country or imposed
Speaker 4: tariffs or things like that.
Speaker 3: I want to throw two things into it. First of all,
Speaker 3: isn't it great that the job market's doing well and
Speaker 3: this growth is happening, So where's that aspect of it?
Speaker 3: The other thing is, and I heard this on surveillance
Speaker 3: this morning, like what is really behind the growth and rates?
Speaker 3: Is it inflation? Is it that the economies growing?
Speaker 2: Like?
Speaker 3: Do we really know what is truly behind the move
Speaker 3: up in rates.
Speaker 5: It's a combination of factors. But clearly, if you look
Speaker 5: at term premium measures from the New York Fed model,
Speaker 5: it's risen a lot. I mean, it was barely above
Speaker 5: zero a month ago. It's now above sixty basis points.
Speaker 5: So it's moved a lot. And that tells you that
Speaker 5: investors are going to demand a higher premium to own
Speaker 5: longer day to debt rate. You've then got the front
Speaker 5: end of the curve where everybody was really telling me
Speaker 5: for the last month of just stay in the two year.
Speaker 5: That's going to be fine because the Fed's still going
Speaker 5: to cut this year. Well, now that's now kind of
Speaker 5: in question, and in fact, we now have a situation
Speaker 5: is quite rare. The two year yield is now above
Speaker 5: the Fed Fund's effective rate of four thirty three. Now,
Speaker 5: before everyone saying, oh that's got the Fed effective is
Speaker 5: a really tough level to break for the two year,
Speaker 5: well that's just been broken. So you're in an environment
Speaker 5: right now where there's a lot of uncertainty.
Speaker 3: So is it uncertainty that's just moving rates up? Like
Speaker 3: that's what I'm trying to get to do, Like we
Speaker 3: do we really understand why we've seen it?
Speaker 5: Well, I think there's another element to this is and
Speaker 5: if you talk to a lot of us, talking to
Speaker 5: on Greg Peter's at PGA Meda this week, he says,
Speaker 5: we're is going back to where we were before the
Speaker 5: financial crisis, that's when real us were above two percent.
Speaker 5: Inflation is running in a sort of two and a
Speaker 5: half three percent zip code, which means bond yields are going.
Speaker 3: To be at five percent. So back to normal.
Speaker 5: That's kind of back to normal, back.
Speaker 7: To the old normal, the old normal of the new normal.
Speaker 4: But what's funny is you look at the actual cost
Speaker 4: of borrowing, not the FED funds rate, because you're not
Speaker 4: a bank. But if you look at mortgage rates, and
Speaker 4: if you look at credit card rates, and you look
Speaker 4: even look at the prime rate for the best business borrowers,
Speaker 4: none of them have come down since the FED cut
Speaker 4: rates one hundred basis points. And yet the economy is,
Speaker 4: like I said, is just still roaring along, which tells
Speaker 4: you a that the Fed's probably not restrictive enough and
Speaker 4: b that the neutral rate has clearly moved up at
Speaker 4: this point. Now the feds concern is how long does
Speaker 4: it stay up? Do we revert or are we back
Speaker 4: at the old normal? And it stays that.
Speaker 6: Way, Mike, When it comes to the estimate, economists, apart
Speaker 6: from our own Ana Wong here at Bloomberg Economics, they
Speaker 6: got this wrong in terms of the figure that we
Speaker 6: got this morning. Why is that so hard to get.
Speaker 4: Well, there's a lot of moving parts in all of this,
Speaker 4: and then there's some group thing too, and so people
Speaker 4: are looking at what's happened in the past and extrapolating that.
Speaker 4: Some people may have missed the change in the holiday
Speaker 4: and the seasonal effect of that, and it's been for
Speaker 4: months and months, really hard to get a handle on
Speaker 4: what's happening with the labor market. Remember, it was only
Speaker 4: a couple of months ago that the labor market was
Speaker 4: so bad that we had to start cutting interest rates
Speaker 4: to save it. And now you've got this reversal, And
Speaker 4: does that last or is this just a quickie.
Speaker 3: Thing too, like just to kind of wrap up here though, So, Michael,
Speaker 3: is that like we just have to think about folks.
Speaker 3: We're just going back to the way it maybe used
Speaker 3: to be it should be.
Speaker 5: I think you have to because let's face it, so
Speaker 5: many people in this country have locked in very low
Speaker 5: mortgage costs. So even though the thirtieth fixed today is
Speaker 5: going to be above seven percent when we get the
Speaker 5: new numbers next week, it doesn't really affect the majority
Speaker 5: of people. And as long as the job market stays
Speaker 5: tight and potentially could give you tight if you start
Speaker 5: to see people being deported this year, if you don't
Speaker 5: lose your job and you've locked in really low borrowing rates,
Speaker 5: and look, a lot of companies did the same as well.
Speaker 5: And we still have all the fiscal stimulus from the
Speaker 5: Biden administration still flowing through the economy. So again, it's
Speaker 5: very hard to see what's going to knock this economy
Speaker 5: off course. The only silver lining for the bomb market
Speaker 5: right now, The only reason you'd be buying ten year
Speaker 5: yields at these levels and thirties at five percent, is
Speaker 5: that if you think there's going to be enough. We're
Speaker 5: moving into a sort of in a sort of an
Speaker 5: environment where good economic news becomes bad news for the
Speaker 5: equity market. You get a tumble in stock folk and
Speaker 5: you get a back up and credit, then treasuries will
Speaker 5: probably show some haven support. Right But again, it's going
Speaker 5: to be interesting to see how that works, given again
Speaker 5: at the US fiscal position.
Speaker 3: Mike, twenty seconds left here, though, I mean, is there
Speaker 3: enough growth out there in the US economy to keep
Speaker 3: things going?
Speaker 4: Appears to be back right now, and it looks like
Speaker 4: maybe only something that would come from the administration at
Speaker 4: this point, or some exogenous event, some war we didn't anticipate,
Speaker 4: or something would knock it off its pins at the moment.
Speaker 3: All right, Cookies and Christmas tree next time around. All right, guys,
Speaker 3: thank you so much. Bloomberg News International Economics and Policy
Speaker 3: correspondent Michael McKee, along with Bloomberg News Rates reporter Michael McKenzie. Guys, thanks,
Speaker 3: have a great weekend.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 3: Our next guest has spent a decade and a half
Speaker 3: of public service, serving three US administrations, including former Presidents
Speaker 3: Jimmy Carter and Bill Clinton. Joining US right now is
Speaker 3: Stuart Eisenstadt. He's former Deputy Secretary of the Treasury, Undersecretary
Speaker 3: of State for Economic Affairs, former Undersecretary of Commerce for
Speaker 3: International Trade, and former US Ambassador to the European Union.
Speaker 3: He understands a lot of how the world works, certainly
Speaker 3: from a US perspective when it comes to policy and
Speaker 3: geopolitics and more. He was President Jimmy Carter's Chief White
Speaker 3: House Domestic policy advisor and wrote a biography of him
Speaker 3: entitled President Carter The White House Years, and gave a
Speaker 3: eulogy at the state funeral yesterday for former President Carter. Today,
Speaker 3: Ambassador Eisenstadt a senior council member at Covington and Burling,
Speaker 3: and he joins US from Washington. D c Ambassador Eisenstadt,
Speaker 3: thank you so much for being with us, and we
Speaker 3: are very sorry for your loss.
Speaker 8: Thank you very much. As you've known Jimmy Carter for
Speaker 8: fifty five years. I was his policy director when he
Speaker 8: ran for governor of Georgia, then when he ran for president,
Speaker 8: and then four years in the White House as his
Speaker 8: chief domestic advisor. So it was a personal loss. But
Speaker 8: he lived a long life and he in many ways
Speaker 8: taught us how to live a life of purpose, a
Speaker 8: life of faith, a life of determination, of honesty. And
Speaker 8: one of the things that I really tried to stress
Speaker 8: in my eulogy was that we shouldn't only look at
Speaker 8: him as the greatest former president, which he was forty
Speaker 8: three years, curing two African diseases, monitoring over one hundred elections,
Speaker 8: building houses for habitat. Rather, we should later rest the
Speaker 8: myth that his greatest achievements came only as former president.
Speaker 8: And I believe that as we look back at what
Speaker 8: was actually accomplished, that we will see that he was
Speaker 8: one of the most consequential one term presidents in American history.
Speaker 8: And I say that I wasn't nominating him for Mount Rushmore,
Speaker 8: but he belonged in the foothills other presidents who have
Speaker 8: really made the country stronger and the world safer. And
Speaker 8: he did. And I tried to lay out in my
Speaker 8: eulogy what major things he had accomplished.
Speaker 3: You know, maybe not Mount Rushmore, but you did call
Speaker 3: him a renaissance man for all these different things that
Speaker 3: he had done. You mentioned that in your eulogy. I
Speaker 3: want to say that I'm glad you went there in
Speaker 3: terms of his first term or his only term, in
Speaker 3: terms of what he accomplished, because I do feel like
Speaker 3: so much of the narrative and conversation since his passing
Speaker 3: about is all that he achieved once he left. But
Speaker 3: it's remarkable. And in listening to the eulogies yesterday, yours
Speaker 3: and others about the issues that he worked on in
Speaker 3: the White House, whether it was the Middle East, whether
Speaker 3: it was inequalities, whether it was the environment, these are
Speaker 3: things that are with us today and pressing and challenging issues.
Speaker 3: And I think about the environment, and here we are
Speaker 3: watching the fires out on the West Coast. I want
Speaker 3: to kind of go there because obviously this was something
Speaker 3: that President Carter thought about. What is wrong and why
Speaker 3: hasn't our US policy maybe on the environment and climate
Speaker 3: change specifically, why aren't we maybe better?
Speaker 8: And he was I think the greatest environmental president since
Speaker 8: Theodore Roosevelt. He literally double the size of our national
Speaker 8: park system with the Alaska Lands built. He had strong
Speaker 8: amendments to the Clean Air and Clean Water ract But
Speaker 8: interestingly he did the super fun to clean up chemical
Speaker 8: waste and all of these our major accomplishments, and in fact,
Speaker 8: we put out a report in nineteen eighty called the
Speaker 8: Global two thousand Report, which forecast climate change on energy.
Speaker 8: Really did everything together. He deregulated oil and gas, that is,
Speaker 8: ended the price controls, which led to a huge upsurge
Speaker 8: in production, so we're now the number one producer in
Speaker 8: the world of both. But he also had the first
Speaker 8: incentives for conservation like installation, and the first incentives for
Speaker 8: renewable energy like solar and even put symbolically solar panels
Speaker 8: on the White House. I mean this was done like
Speaker 8: in the nineteen seventy eight seventy nine period, so he
Speaker 8: already envisioned that is being a really critical thing for
Speaker 8: the United States. He really inaugurated the whole clean.
Speaker 6: Energy euro Ambassador you talk about all these accomplishments, and look,
Speaker 6: I think it's important for us to look at historical
Speaker 6: context here. Why then do you think voters this didn't
Speaker 6: resonate with voters, and he lost in the election of
Speaker 6: nineteen eighty so badly to Ronald Berry.
Speaker 8: That's that's a good a good question. And all the
Speaker 8: op eds that I've written on his life in the
Speaker 8: Wall Street Journal and elsewhere, I mentioned that I hope
Speaker 8: we don't end by the way before going to deregulation,
Speaker 8: which even Senator Graham or Republican Senator said transformed the
Speaker 8: whole US economy. Let me answer your direct question. I
Speaker 8: call it the three eyes that were against them. First,
Speaker 8: inter party warfare with the liberal wing of the Democratic Party,
Speaker 8: hitted by Ted Kennedy. It divided the convention in nineteen eighty.
Speaker 8: Kennedy never really reconciled and worked for him, and that
Speaker 8: was a huge disability. Second, the second eye is inflation.
Speaker 8: We had inherited high inflation. It was part of the
Speaker 8: nineteen seventies with Nixon who had double digit inflation and
Speaker 8: Ford and we had double digit inflation, but that was
Speaker 8: largely powered as was Nixon's by the way, by the
Speaker 8: oil shock. It was the Opeic embargo against the US
Speaker 8: in nineteen seventy three. It was the Iranian Revolution and
Speaker 8: shock in nineteen seventy nine nineteen eighty that just hugely
Speaker 8: increased the pressures. But here is one of the most
Speaker 8: courageous things he did, and it makes the point that
Speaker 8: much of what he accomplished only blossomed after he left.
Speaker 8: So let's put ourselves in July of nineteen seventy nine.
Speaker 8: Inflation is roaring, gas prices are going up, gas lines
Speaker 8: are occurring, and he decides over the objection, and I'm
Speaker 8: not exaggerating of all of his advisers to appoint Paul
Speaker 8: Voker to head the Federal Reserve, knowing in advance because
Speaker 8: Paul told him in the Oval office that if I'm
Speaker 8: appointed the head of the BED, I'm going to have
Speaker 8: to take drastic actions on interest rates that are going
Speaker 8: to make it very difficult for you in an election.
Speaker 8: You're in nineteen eighty in terms of a potential recession,
Speaker 8: our unemployment, And he said, Paul, I cannot make mon
Speaker 8: legacy leaving this kind of inflation. You take care of
Speaker 8: the economy, I'll take care of the politics. Well, the
Speaker 8: fact is inflation dropped like a rock right for Paul's
Speaker 8: but only in Reagan's first two years, after Carter had
Speaker 8: already left. And third is Iran. The Iran hostage crisis
Speaker 8: four hundred and forty four days was so unbelievably debilitating
Speaker 8: and humiliating. Carter made a choice early on that he
Speaker 8: was going to save the lives of the hostages rather
Speaker 8: than take dramatic military action which would risk their lives.
Speaker 8: All of them did come back, all of them came
Speaker 8: back safe, but he paid a huge political price.
Speaker 3: Well, you know, Ambassador Eisenstadt, you know one of the
Speaker 3: things I think someone said during one of the eulogesus
Speaker 3: that he was far sighted. In other words, he thought
Speaker 3: about longer term impact, not on only the current generation, but
Speaker 3: generations to come. We only have about unfortunately, about three
Speaker 3: and a half minutes or so left here. I do
Speaker 3: think about policies today that he seemed to have some insights,
Speaker 3: some foresight, some foresightedness, whether it was the Middle East,
Speaker 3: whether it was China, whether it was equality in the environment.
Speaker 3: When you look at the divisiveness today and the political
Speaker 3: swings that we are saying and extremes, Americans are looking
Speaker 3: for something else, and maybe they don't feel represented. How
Speaker 3: do you think about the environment today. President Carter tried
Speaker 3: to represent everybody.
Speaker 8: Yeah, let me give you three answers to that. First
Speaker 8: of all, we had much more backpartisanship then much of
Speaker 8: our legislation. We had almost seventy percent of our legislation passed.
Speaker 8: We had regular meetings with Republican leadership, regular breakfasts as
Speaker 8: well as Democratic. Second, he had a major role in
Speaker 8: ending the Cold War. Reagan gets the credit for it,
Speaker 8: and he deserves credit. But all the weapons systems which
Speaker 8: Reagan implemented, the MX mobile missile, the cruise missile, the
Speaker 8: stealth bomber, and intermediate nuclear forces in Europe, every single
Speaker 8: one of them he started. And Brennan, the longtime Soviet
Speaker 8: ambassador and his memoirs, said that Jimmy Carter's human rights
Speaker 8: policy played a major role in undermining Soviet Union. And last,
Speaker 8: he said, I'm going to do the right thing, regardless
Speaker 8: of politics. And let's take deregulation, which would be an
Speaker 8: important subject for Bloomberg. When we came into office, there
Speaker 8: was tight regulation on roots and prices for all of
Speaker 8: our surface and air transportation, no new entrance, rigid prices,
Speaker 8: administered by government agencies. Jimmy Carter deregulated every single one
Speaker 8: of those deregulated air lands, which made it possible for
Speaker 8: competitors to come in. Right today, ninety percent of the
Speaker 8: public flas only less than fifty percent did. Then, trucks
Speaker 8: and rail deregulation made a more efficient supply chain. Deregulation
Speaker 8: of telecommunications allowed the cable era to occur, and even
Speaker 8: deregulated beer industry, which led to the growth of.
Speaker 3: He're here on a Friday beer industry. I'm in on that. Hey, listen,
Speaker 3: we only do have about thirty five to forty seconds,
Speaker 3: So forgive me for asking you to be brief if
Speaker 3: you could, But I do think about those major initiatives
Speaker 3: that you were laying out as you talk about the
Speaker 3: former president's legacy thirty seconds. Do you think the country
Speaker 3: is moving in the right direction when it comes to
Speaker 3: laying out those long term plans? And again, I just
Speaker 3: asked that you'd be very brief.
Speaker 5: I do not.
Speaker 8: I think we're very short term focused. I don't think
Speaker 8: we're looking around the corner at the real challenges of
Speaker 8: climate change, the real challenges that will come from China
Speaker 8: and how to combat it. So I really think we're
Speaker 8: looking at a very shortsighted, narrow political way of attacking
Speaker 8: these problems, and we're doing it without the back parisanship
Speaker 8: that Jimmy Carter was able to foster.
Speaker 3: I so appreciate that, and I so appreciate you reminding
Speaker 3: us of all the things that happened during the Carter administration.
Speaker 3: I think history always teaches us right, the things that
Speaker 3: go right, the things that go wrong. But it's an
Speaker 3: important way in terms of our way forward. Ambassador Eisenstadt,
Speaker 3: thank you so much. Stewart Eisenstadt, former US ambassador, and
Speaker 3: so much more in terms of his public service currently
Speaker 3: at Covington and Berlin.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
Speaker 2: weekday starting at two pm Eastern on Apple car Play
Speaker 2: and the Android Auto with the Bloomberg Business app. You
Speaker 2: can also listen live on Amazon Alexa from our flagship
Speaker 2: New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 3: Gave you an update on the wildfires out there in
Speaker 3: the Los Angeles area, looking at it from a couple
Speaker 3: of different perspectives on the ground and what we are seeing,
Speaker 3: but also you know, we do think about the business
Speaker 3: and financial impact. In the meantime, you continue to see
Speaker 3: a lot of organizations that are rolling to help out
Speaker 3: those affected by the LA wildfires, including some to help
Speaker 3: find shelter. So let's get into what airbnb dot org
Speaker 3: is doing. Their executive director, Christoph Gorder, is with us.
Speaker 3: He joins us from Salt Lake City. Christoph, nice to
Speaker 3: have you here with us. First of all, what can
Speaker 3: you tell us about what you are hearing about operations there,
Speaker 3: your teams in the area when it comes to the fires.
Speaker 9: Great, thanks for having me on, and you know, our
Speaker 9: hearts go out to the thousands of families that are
Speaker 9: just going through the most traumatic events right now. Airbnb
Speaker 9: dot org we're a nonprofit. We're founded by arenb a
Speaker 9: few years ago, and we provide free housing in times
Speaker 9: of crisis like this. So we've been working in LA
Speaker 9: since the fire started on Tuesday. Housed our first guest yesterday,
Speaker 9: and now I think we're probably the last numbers I have.
Speaker 9: We've housed. We've provided housing support for about six five
Speaker 9: hundred people in the last twenty four hours. But the
Speaker 9: need is just enormous.
Speaker 6: How does that housing support manifest and what's the relationship
Speaker 6: that you have currently with Airbnb. Are you taking airbnbs
Speaker 6: that are available and then essentially fronting the cost covering
Speaker 6: the cost for those affected exactly.
Speaker 5: So.
Speaker 9: The way we work is we partner with a local nonprofit.
Speaker 9: In this case, it's a nonprofit called La two one one,
Speaker 9: which covers all of La City in La County. They
Speaker 9: are very connected into the community. They identify and vet
Speaker 9: the families who are going to stay with us. Once
Speaker 9: they've approved them, we issue them a credit to book
Speaker 9: the airbnb that works best for them and their needs
Speaker 9: where they want to be, if they need wheelchair accessibility
Speaker 9: or it needs to be pet friendly, and so they're
Speaker 9: able to just sort of pick the airbnb that's going
Speaker 9: to be most communient for them, and then we work
Speaker 9: with hosts to get a discount on that and the
Speaker 9: balance is paid for by Arianbe dot org.
Speaker 3: You said about sixty sixty five hundred people you've already
Speaker 3: helped out, but you said the demand is incredible. Can
Speaker 3: you give us an idea of how many people are
Speaker 3: reaching out and looking for your assistance, so.
Speaker 9: It's really fast moving. I mean the number the sixty
Speaker 9: five hundred numbers from last night, and you know, I'm
Speaker 9: just waiting for some updates today, but you know, will
Speaker 9: be thousands more will have gotten help just this morning
Speaker 9: in terms of the need, you know, immediately right after
Speaker 9: we open the program on Wednesday, you know, we had
Speaker 9: thousands and thousands of requests and so we've got a
Speaker 9: backlog right now and you know, working our way through it.
Speaker 9: But the situation is still evolving, and there are more
Speaker 9: areas you know, opening up for evacuation, and so it's
Speaker 9: still you know, I think unfortunately, very early days.
Speaker 7: So it's hard to.
Speaker 9: Get a you know, a number really nailed down because
Speaker 9: it's moving so fast.
Speaker 6: One thing that I'm trying to understand is how long
Speaker 6: some of these folks are going to be displaced. I mean,
Speaker 6: think about it from the perspective of how long it
Speaker 6: takes to rebuild something. Factor in not just the insurance issues,
Speaker 6: but also the fact that getting building materials and folks
Speaker 6: to actually do that work. Those people are going to
Speaker 6: be in a very short supply because of the scale
Speaker 6: of this devastation. How long do you plan to be
Speaker 6: housing people in the wake of this disaster.
Speaker 9: Well, we've committed in this immediate emergency, We've committed and
Speaker 9: aremb is there to support us to provide emergency housing
Speaker 9: to twenty five thousand people, and so we're going to
Speaker 9: do as much as we can. We sort of look
Speaker 9: at this in a couple phases as this evolves. The
Speaker 9: first phase is the evacuation phase, and they're the stays
Speaker 9: that we're providing are very short, so it's about a
Speaker 9: week now. Most of the people we're hoping are going
Speaker 9: to be able to go back to their homes in
Speaker 9: these evacuation areas, but of course they're going to be
Speaker 9: thousands and thousands of people. We're going to need a
Speaker 9: long term stay and so then we will move into
Speaker 9: phase two, will extend to stay out to about a month,
Speaker 9: and we're sort of an emergency stop gap while people
Speaker 9: figure out their other options. So think of us sort
Speaker 9: of like as the ambulance that gets you to the hospital.
Speaker 9: And then there'll be other options FEMA, insurance, etc. That
Speaker 9: people will need to do. But it's a long, long
Speaker 9: road to recovery.
Speaker 3: Yeah, we can only imagine. Christoph. You guys have been
Speaker 3: doing this, you know, in other either natural disasters. Tell
Speaker 3: us about, you know, kind of what you guys have
Speaker 3: learned about this process to where you are today.
Speaker 9: Well, you know, the idea has been around for a while.
Speaker 9: It goes back to actually twenty twelve when Hurricane Sandy
Speaker 9: hit in New York City and there was an EVERYB
Speaker 9: and B host in Brooklyn who called in and said, Hey,
Speaker 9: I see all these people displaced. Can I open up
Speaker 9: my home for free? And that's where the idea started,
Speaker 9: and very quickly they were over a thousand hosts in
Speaker 9: New York City who opened up their homes for Hurricane
Speaker 9: Sandy victims. And you know, that went along for a
Speaker 9: few years. But by twenty twenty we realized it was
Speaker 9: a really big idea and so everybb dot org was formalized.
Speaker 9: It was created as a separate nonprofit and now we
Speaker 9: respond around the world to disasters. So, you know, unfortunately
Speaker 9: in southern California, we were just down in that same
Speaker 9: area in December and Malibu working on a fire there.
Speaker 9: And it's continuous for us around the world and throughout
Speaker 9: the year.
Speaker 3: Before you go, just got about twenty seconds, thirty seconds.
Speaker 3: How can people find out more information about this organization?
Speaker 9: Hop on our website Airbnb dot org. There's two ways
Speaker 9: you can help. If you make a donation every penny
Speaker 9: will go to pay for a family and need for
Speaker 9: a stay because EVERYMB covers all of our operating expenses.
Speaker 9: So if you want to help people in LA, it's
Speaker 9: a great direct way to do that. You'll help us
Speaker 9: help more people. If you're in the LA area and
Speaker 9: you've got a place that you can host a family,
Speaker 9: you can learn about how to sign up to a
Speaker 9: host and we also need your help there.
Speaker 3: And if somebody needs a place to stay, how do
Speaker 3: they do that real quickly?
Speaker 9: So you reach out to two one one LA two
Speaker 9: one one, either on their website or call them. There's
Speaker 9: a very easy intake form and they'll take you through
Speaker 9: the process. There's a little bit of a delay right
Speaker 9: now because we've got so many people in the system,
Speaker 9: but be patient. Will help you.
Speaker 3: Good luck with your efforts, Christoph, Thank you so much.
Speaker 3: Christeph Gorder joining us executive director of at Airbnb dot org.
Speaker 1: Listen litening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from two to five these during Listen
Speaker 1: on Applecarplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 6: Carol the fire affecting so many case in point We
Speaker 6: were actually set to interview Corey Clipston, the CEO at
Speaker 6: swan Bitcoin, about crypto, but he let us know a
Speaker 6: little earlier today that he now has to evacuate due
Speaker 6: to fires in southern California, so he's unable to make
Speaker 6: the interview.
Speaker 4: Right.
Speaker 3: Joining us instead is John Harai, swan Bitcoin's managing director.
Speaker 3: Swan Bitcoin, in case you don't remember, it's a platform
Speaker 3: that offers a host of services, including allowing people to
Speaker 3: buy bitcoin in personal, business and retirement accounts. John joining
Speaker 3: us from New York City. John, first of all, thank
Speaker 3: you for jumping in and talking with us. First up, Corey. Okay,
Speaker 3: what do we know about any of your team that
Speaker 3: maybe had exposure to the LA wildfires.
Speaker 10: Yeah, great to be here with you guys and standing
Speaker 10: in for Corey. So far, Corey and his family and
Speaker 10: his house appear to be okay, but he is quite
Speaker 10: close to the danger zone and I believe he is
Speaker 10: helping some people who may have lost their home or
Speaker 10: at least had to evacuate. So it's pretty hectic over
Speaker 10: there right now, and it's one of those things where
Speaker 10: every day brings new updates. So yeah, definitely thinking about
Speaker 10: Corey and all of my other colleagues and everyone who
Speaker 10: is in that area right now.
Speaker 6: It's hard to transition to talking about something like crypto
Speaker 6: when we spent so much time talking about the wildfires
Speaker 6: and the devastation out in LA affecting so many people.
Speaker 6: But nonetheless we are going to do that because it
Speaker 6: is one area of green today in a market where
Speaker 6: we're seeing a lot of selling. Bitcoin up by three
Speaker 6: percent right now, though it's down about eleven percent from
Speaker 6: that all time high last month, down this week by
Speaker 6: a little more than four percent. John, what's the outlook
Speaker 6: as we head into the new year, especially as we
Speaker 6: get the new administration in office. What's priced in right now?
Speaker 7: Yeah, and today is an interesting day. I agree with you.
Speaker 10: To see bitcoin be up a few percent while stocks
Speaker 10: are down, while bond yields are up. That's interesting. I
Speaker 10: don't want to read too much into one day, but
Speaker 10: it is noteworthy. Looking forward outlook wise, I typically highlight
Speaker 10: three things that I think will support Bitcoin's price going forward.
Speaker 10: One is continued relatively easy fiscal policy. Number two is
Speaker 10: continued relatively easy monetary policy, and then third is continued adoption.
Speaker 10: And if we double click on that adoption, I would
Speaker 10: say it's going to come from many places, but there's
Speaker 10: two big ones. One is potential nation state adoption. And here,
Speaker 10: of course, i'm talking about a new administration, Trump administration
Speaker 10: coming in. They're talking about what's being known as the
Speaker 10: SBR Strategic Bitcoin Reserve. Some are calling it a stockpile,
Speaker 10: but either way, it would be the US government proactively
Speaker 10: and consciously adding and holding bitcoin, which would be a
Speaker 10: a big deal. And then the other leg of that
Speaker 10: adoption story is basically what micro Strategy is doing, and
Speaker 10: it's corporate adoption. And they have bought just a ton
Speaker 10: of bitcoin in the past several months here, and the
Speaker 10: pace of their accumulation is really increasing. I don't believe
Speaker 10: we're going to see micro strategy, you know, they're in
Speaker 10: a class of their own, but I think it is
Speaker 10: going to be a big story for twenty twenty five
Speaker 10: what nation states do, primarily driven by the US in
Speaker 10: terms of bitcoin accumulation, and what corporations do you know,
Speaker 10: call it copycats of the micro Strategy playbook. We're actually
Speaker 10: calling it lbe at SWAN or leveraged Bitcoin Equity. It's
Speaker 10: a little bit of a nod to the old LBO
Speaker 10: leveraged buyout. But that's what we're calling the micro strategy playbook,
Speaker 10: the LBE playbook, and I think there's going to be
Speaker 10: more companies that do that.
Speaker 3: Can I just say, John, I'm listening to you, and
Speaker 3: so might say and I'm waiting for the emails to
Speaker 3: come in that both of those, forgive me, are maybe
Speaker 3: a little flimsy. First of all, well, I think the
Speaker 3: strategic reserves, I don't know, it's a long ways to
Speaker 3: get that. I think there are a lot of folks
Speaker 3: that say that that makes absolutely no sense.
Speaker 6: Including some prominent bitcoin investors like Nick Carter of Castle Island,
Speaker 6: who came on our show and got a lot of
Speaker 6: flak for saying he doesn't think the US should.
Speaker 3: Do that right, And I mean as taxpayers, I think
Speaker 3: a lot of us would be like, wait, what is
Speaker 3: our money being used for? And the other hand is
Speaker 3: the micro strategy. I get that supply demand equation and
Speaker 3: why that is supportive of bitcoin, but again it doesn't
Speaker 3: go to what is bitcoin, what is it really being
Speaker 3: used for? What is that long term usage that to
Speaker 3: me really then would help put in a floor that
Speaker 3: lasts around for a long time.
Speaker 10: Yeah, it's great points you guys bring up and I
Speaker 10: am familiar with Nick Carter's views.
Speaker 7: I think his views were nuanced.
Speaker 10: He was particularly against bitcoin being accumulated by a state government,
Speaker 10: particularly the US, using the word reserve and the language
Speaker 10: that some people were using, that it would be a
Speaker 10: monetary asset, that it would somehow back the dollar provide
Speaker 10: stability to the dollar. That is specifically what Nick was
Speaker 10: against my and he in his article he said that
Speaker 10: he's okay with a bitcoin stockpile, so he made that distinction.
Speaker 10: My summary view is that regardless of what they call it,
Speaker 10: it's going to act like a stockpile, even if they
Speaker 10: call it a reserve. I don't think we are anywhere
Speaker 10: close to a world where bitcoin held by the US
Speaker 10: government is actually backing the dollar or providing stability to
Speaker 10: the dollar. So I guess you could say I kind
Speaker 10: of understand Nick's argument, but I think there is a
Speaker 10: world where the US owns bitcoin as a stockpiled asset,
Speaker 10: and I think there is a relatively easy way for
Speaker 10: them to do that, and that's just them saying, Hey,
Speaker 10: the roughly two hundred thousand bitcoin that we hold, we're
Speaker 10: just going to hold onto it. And personally, I think
Speaker 10: that would be massive if the wealthiest, most powerful country
Speaker 10: in the world says, hey, we are accumulating a big
Speaker 10: we're just holding a bit bitcoin as a strategic asset.
Speaker 3: Maybe we need to tell our deficit first before we
Speaker 3: start doing that and spending money on it. I guess
Speaker 3: my point is I just am trying to understand, Like,
Speaker 3: if that doesn't happen, you pull the rugout. That doesn't happen.
Speaker 3: If micro strategy starts to back off, you know what
Speaker 3: fundamentally is there to support bitcoin?
Speaker 10: Yeah, so the micro strategy piece, I would say bitcoin
Speaker 10: is the primary use case for Bitcoin is a store
Speaker 10: of value monetary asset that is distinct from bitcoin being
Speaker 10: used as payments or medium of exchange. I think all
Speaker 10: of that will come, but that's many years down the road.
Speaker 10: So I think corporations, individuals, Nation States, financial advisors, family
Speaker 10: offices will continue to use bitcoin as a store of
Speaker 10: value monetary asset in twenty twenty five and beyond. I
Speaker 10: think that is ultimately what provides some sort of stability
Speaker 10: or a floor for bitcoin. But I actually think it
Speaker 10: will be pretty significant appreciation in the coming twelve months.
Speaker 6: Appreciation is certainly helpful when folks are long bitcoin, or
Speaker 6: they're making leverage bets on bitcoin, such as Michael Sailor
Speaker 6: at micro Strategy. But if we see a significant decline,
Speaker 6: then it starts to really hurt and be painful.
Speaker 7: What happens, then, yeah, that's for sure true.
Speaker 10: If you're going to execute this micro Strategy playbook or
Speaker 10: the LBE playbook as we're calling it, it does require
Speaker 10: that Bitcoin goes up on a longer term time horizon.
Speaker 10: I would point people to twenty twenty when Sailor and
Speaker 10: micro Strategy made their first buys. Bitcoin did not go
Speaker 10: upright after that. It actually went down very quickly in
Speaker 10: the weeks after his purchases. But the way you execute
Speaker 10: that strategy is you do it prudently.
Speaker 7: You do it.
Speaker 10: If you're going to do it with debt, you do
Speaker 10: it with debt that doesn't have a maturity for four
Speaker 10: to five years. If you're going to do it with equity,
Speaker 10: you tap the equity markets when your stock is trading
Speaker 10: at a hefty multiple to your bitcoin holdings. Those are
Speaker 10: just some of the ways, And you think about the
Speaker 10: ratio of the outstanding debt you have to your bit
Speaker 10: coin market value. So I think as long as people
Speaker 10: are getting that those companies will be okay.
Speaker 3: Got it run John, Thank you so much for jumping in.
Speaker 3: Really appreciate this. John Harry Swanpitcoin's managing director.
Speaker 1: This is the Bloomberg Business Week Podcast. Listen live each
Speaker 1: weekday starting at two pm Eastern on Applecarplay and Android
Speaker 1: Auto with the Bloomberg Business App. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 3: Mcle I'll bet you let me drive.
Speaker 7: Oh no, no, no no, this is not a toy's.
Speaker 2: Honey.
Speaker 3: Please, how do the gravels? Let's wat I want to
Speaker 3: try it.
Speaker 11: It's a good question. Good try.
Speaker 2: This is the Drive to the Clothes.
Speaker 8: Dot songs for me thic Well driver Ja.
Speaker 2: Don on Bloomberg Radio.
Speaker 3: All right, everybody, just about eighteen nineteen minutes to go
Speaker 3: until we wrap up the trading day. Charlie Bill Maloney
Speaker 3: there breaking down the trade on this Friday, and we
Speaker 3: were definitely off our best levels of the session, but
Speaker 3: we've seen some definite reaction to the day's economic news,
Speaker 3: expectations about the FED and maybe pushing out at least
Speaker 3: based on what we see in the trade. The first
Speaker 3: rate cut out until maybe October, so but a lot
Speaker 3: can happen.
Speaker 6: Hey, what a parlor game we play?
Speaker 3: We do, indeed don't we. I mean it's like day
Speaker 3: to day, week to week, day to day week.
Speaker 6: Everything's different when it comes to what investors think the
Speaker 6: Fed's going to do.
Speaker 3: Yeah, I know, it's kind of like why do we
Speaker 3: even bother because the Fed's going to do what it's
Speaker 3: gonna do, what it means.
Speaker 6: Pretty much laughed at me when I asked if January
Speaker 6: it was in play.
Speaker 3: It's like Tim steadeveek, No, I know, but you know
Speaker 3: you never know, Like I mean, month things happen, right,
Speaker 3: I mean, if anything we found in our look are
Speaker 3: year ahead pieces, I think about talking with Tim O'Brien
Speaker 3: from our opinion team who oversees that Sam Potter on
Speaker 3: the Markets and Stocks team, is that there's just so
Speaker 3: so many things in last year that we just weren't
Speaker 3: kind of expecting and that happened. So things come out
Speaker 3: of anywhere, so that will change the market environment.
Speaker 6: Well, let's see what Dana Duoria has to say about that.
Speaker 6: Dana is the co chief investment officer over at invest Net.
Speaker 6: It's the tech provider to banks and registered investment advisors.
Speaker 6: The investment platform has more than six point eight trillion
Speaker 6: dollars in assets on it, managed by many different folks
Speaker 6: out there. Dana, good to have you with us.
Speaker 7: How are you good to be here?
Speaker 11: I'm great, thank you.
Speaker 6: So, so, what do you make of the way that
Speaker 6: this Job's report changes the outlook for the FED this year?
Speaker 11: Well, certainly predictable. How the reaction to it, I mean,
Speaker 11: really wants a blowout report?
Speaker 12: This was not you know, just a little bit more
Speaker 12: in terms of the non farm payrolls.
Speaker 11: This was pretty much one hundred thousand more than what
Speaker 11: was expected.
Speaker 12: So not surprising that the reaction that the market had interesting.
Speaker 12: I guess from the standpoint that the market had already,
Speaker 12: of course, from the last foe C meeting, been pricing
Speaker 12: you know, lower expectations for rate cuts, and you know,
Speaker 12: those lower expectations, I think, to a certain extent, we're
Speaker 12: all you could argue, we're already sort of taking account
Speaker 12: of the fact that unemployment was still low, you know,
Speaker 12: jobs market was still strong, and that the Fed certainly
Speaker 12: didn't have to move anytime soon.
Speaker 11: So I could argue this is a bit of an overshoot.
Speaker 12: You know that you had what the information you had before,
Speaker 12: we were down to fifty basis points, and now you know,
Speaker 12: the market reacts again, whereas this report blowout as it is,
Speaker 12: I think is you know, kind of confirmation of what
Speaker 12: maybe we knew.
Speaker 11: Was a possibility, which is that the FED really isn't
Speaker 11: going to want to move. I think we all know
Speaker 11: the FED at this point.
Speaker 12: You know, the failure here is letting inflation take hold again, and.
Speaker 11: So they're probably going to air. I think we all
Speaker 11: kind of recognize.
Speaker 12: Right to a certain extent, they're gonna err on the
Speaker 12: side of staying higher for longer.
Speaker 11: This just kind of you know, confirms it.
Speaker 3: Hey, what does it mean though for valuations currently on
Speaker 3: the equity side of things. I mean, if I just
Speaker 3: do I look at the price to earning, so just
Speaker 3: doing really basic on like something like the NASTAQ one hundred,
Speaker 3: it's about thirty two. If I look at the S
Speaker 3: and P five hundred, it's just about twenty four. So
Speaker 3: if we are indeed going to live in this higher
Speaker 3: rate environment, valuations they've got to come down.
Speaker 12: Yeah, look one hundred percent, right, multiples are not multiples.
Speaker 11: Uh, you know, work inversely. So if you have higher rates,
Speaker 11: you would expect multiples to come down.
Speaker 12: And we're already, as you you know, just quoted, we're
Speaker 12: pretty high on multiples, right. I mean, if there's you know,
Speaker 12: a flying the ointment around the expectation that equities do
Speaker 12: well this year, it's where we sit from a multiple's perspective.
Speaker 11: We have a very concentrated market.
Speaker 12: We have, you know, a series of very large stocks
Speaker 12: that are you know, you just read it, rate very high.
Speaker 12: The S and P five hundred is very high, and
Speaker 12: that's driven even more by you know, kind of bigger names.
Speaker 12: So valuations do matter.
Speaker 11: I mean, I'm certainly of the school that you can't
Speaker 11: you can't keep ignoring that forever.
Speaker 12: And you know, higher rates does work against price multiples
Speaker 12: being a continued driver of expansion in the market. So
Speaker 12: that's one hundred percent of fly in the ointment.
Speaker 6: If US stocks are expensive by some measures, many measures,
Speaker 6: I think it's fair to say, is it time to
Speaker 6: look to emerging markets?
Speaker 9: To Europe?
Speaker 12: Yeah, I mean from a tactical perspective, if I was
Speaker 12: going to look right now at you know, what what
Speaker 12: we see in the market in terms of a strong
Speaker 12: dollar expectation you know, a FED that's not going to
Speaker 12: cut rates as fast as maybe overseas economies will will
Speaker 12: more likely cut rates more quickly. That strong dollar is
Speaker 12: a headwind to the emerging market story for sure. So
Speaker 12: if you're thinking about it in terms of, hey, tactically,
Speaker 12: what do I think is the case? I mean, I
Speaker 12: think you have to include that, and you have to,
Speaker 12: you know, think about within emerging markets maybe where you.
Speaker 8: Want to be.
Speaker 12: But if you're looking at it, where I think your
Speaker 12: question is, and it's a very valid one, which is, Hey, look,
Speaker 12: at the end of the day, the market is valuing
Speaker 12: all those things that they've priced in everything that I
Speaker 12: just said, and having some diversification in that portfolio, particularly
Speaker 12: when the US market is so concentrated, probably makes sense,
Speaker 12: particularly for long term investors.
Speaker 3: How do you define diversification then.
Speaker 12: So it's interesting you say that, right, if you look
Speaker 12: at the academic research, theoretically, the most diverse byed portfolio
Speaker 12: is the total market.
Speaker 11: Right, It's the market clearing portfolio. It's everything you can own.
Speaker 11: But in the if you look at.
Speaker 12: The total market, that's pricing everything at the value in
Speaker 12: the market, and you're getting back to that place where okay,
Speaker 12: but I've got some by other measures, I've got some
Speaker 12: concentration risk there because I've got a lot of money
Speaker 12: if I'm sitting in market or anything that's low tracking
Speaker 12: error to market, I've got a lot of money in
Speaker 12: those big stocks. And so I think, you know, if
Speaker 12: you're thinking about it from that perspective, think about diversifying
Speaker 12: into smaller parts of the market. Think about diversifying, as
Speaker 12: you said, into international economies.
Speaker 6: Okay, international economies one where one area we could look
Speaker 6: private markets though, for retail investors, something that's on your radar.
Speaker 6: I know that the I know that the private equity
Speaker 6: folks would like more people to be investing in the
Speaker 6: private markets. But what yeah, you know, more money out there,
Speaker 6: they want to wear more one K two. Is this
Speaker 6: something that you could see moving away from the ultra
Speaker 6: high net worth folks and actually going to regular people.
Speaker 11: Yeah, yeah, for sure. It's it's very much a trend.
Speaker 11: We expect the trend to get a good trend.
Speaker 3: I think it can be.
Speaker 12: You know, yes, I think it absolutely can be, because
Speaker 12: you're seeing a lot of the innovation that maybe was
Speaker 12: available in public markets now take place in private markets.
Speaker 12: And you know, if you're a believer in democratizing those
Speaker 12: types of those.
Speaker 11: Return streams, then yes, the devil in the details of courses.
Speaker 11: What is the vehicle?
Speaker 12: Am I really getting access to these returns and cannot
Speaker 12: live with the ill equis that comes with it? But
Speaker 12: I think the alternatives managers are seeing that, you know,
Speaker 12: they're looking at Hey, dB plans are just not going
Speaker 12: to be the source anymore.
Speaker 11: It's called d C.
Speaker 3: How do we come down.
Speaker 11: Market to more of a retail audience.
Speaker 12: And they're innovating in their structures, interval funds in particular, right,
Speaker 12: so semi liquid structures that are maybe more palatable to
Speaker 12: the audience in that high net worth and even you know,
Speaker 12: getting into the mass.
Speaker 11: Apple one area.
Speaker 3: Hey we get to run. Happy New Year. Good to
Speaker 3: check in with you, Danna Dioria. She's Chief investment Officer
Speaker 3: of Investment. It's the tech provider to banks and rias.
Speaker 3: The platform has more than six point eight trillion dollars
Speaker 3: in assets.
Speaker 2: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
Speaker 2: and anywhere else you get your podcasts. Listen live weekday
Speaker 2: afternoons from two to five pm Eastern on Bloomberg dot Com.
Speaker 2: The iHeartRadio app tune In and the Bloomberg Business app.
Speaker 2: You can also watch us live every weekday on YouTube
Speaker 2: and always on the bloom Very terminal
Speaker 3: M