American Dream Squeezed in K-Shaped Economy — Bloomberg Money 8/14/2026

[00:00:00] Speaker 1: Bloomberg Money? [00:00:30] Speaker 2: Good noon, everyone. Bloomberg Money, personal finance, retirement, some say wealth management. It's a Friday in the summer at the doldrums of August. But Scott and I, we pieced it together today. I think it's going to be an interesting one hour here. And we bounce off a negative statistic on American consumption. Retail sales fell unexpectedly. I thought we're all spending happily this summer. I think some are, but too many aren't. That'll be one of our real themes today, to say the least. It's been an odd week, don't you think? Yeah, it's absolutely been an odd week. And we should thank, by the way, our radio listeners for joining us as well. This is a new Bloomberg Money in which our radio listeners join for the first time. We're doing it. We'll get to Joe Matthew in a moment. We welcome all of you. It's a simulcast for you worldwide, of course, on television, on radio. Good morning, specifically 92.9 FM in Boston. But serious in all the other ways you discover us every day across television and radio. We welcome all of you. an important conversation. Mike Wilson will be with us at Morgan Stanley, their chief equity strategist. Away from, like, the mathiness here. But Mike Wilson on, where are we going on a rate of return out within our retirement planet? Scarlett? Also joining us is Kristen Bitterly. She is head of [00:01:43] Speaker 3: Citi Global Wealth at Work. We're going to talk about the research she has done into people living longer and maintaining their financial health. [00:01:51] Speaker 2: They're all thinking about it. But she's full time. She's like full time. This is the theme that goes into everything she says and does. I mean, it's about longevity and it's about planning for that. Especially on the back side after Field of Dreams last night, where you will address baseball, as you can do in August. Right now, we address the stock market moving the wrong way. Futures earlier, a bit green. But right now, some red on the screen. But the VIX, I'm sorry, Scarlett. The VIX is really, really important. [00:02:16] Speaker 3: It's a bull market VIX, even with all the indeterminate news into the weekend. Very tame. The S&P 500 still set to close up for a third straight week, albeit just modestly. And that's thanks for a rebound in tech this week. We look at yields. They're higher across the curve. Of course, data this week showed inflation cooling. Look at that. I miss this. They're higher. It's a cross asset data check. And yeah, the 10-year yield up four basis points. The dollar not doing that much off by four tenths of 1%. And crude oil holding in the low 80s range. [00:02:46] Speaker 2: WTI at $81.60 a barrel. That's why I'm with Scarlett, folks. I completely miss this 30-year bond of 5.27. How about that 7% 30-year mortgage rate? Yeah, well, that's not going to -- that's not going to come back anytime soon. Yeah. But there it is. I mean, yields up here today. And we'll have to see on that. We start strong. This has become hugely successful for us. Different voices from Bloomberg News with us this morning. Isabel Lee is with us. We're thrilled that she could join. And Lily's with us as well here. Thank you so much for joining. But Joe Matthew is with us here as he looks to radio and television following on here with balance of power as well. To me, the arch theme and lessons learned of this week, but for everyone riveted in the nation by affordability, is going to be the turnout on the elections, plural, to come. Do you have any visibility on the turnout of the midterms in November? [00:03:46] Speaker 4: Well, we have conventional wisdom, which is that the energy is with the Democrats. The question is, are they running for something or are they simply running against Donald Trump? And that's going to help to animate that turnout as to what in the world it is that he says at the last minute here. Because even look at Texas, where you saw Democrats turning out ahead of Republicans in primary elections. We're going to be in Florida on Tuesday. That's a little bit less significant in this particular conversation. But where's the price of gas on election day? We're above $4 a gallon right now. We're at $4.14 here in New York. And I checked that today because the president's going to Garden City. You know Garden City. It's only 18 miles from here. And it bears no resemblance to this city. He'll be surrounded by first responders. And he's not going to be talking about affordability. He's talking about crime. [00:04:35] Speaker 2: In Garden City, he's resounded by people that own a BMW and a Mercedes in the garage. The Republicans can't win without audience, can they? [00:04:42] Speaker 4: Well, so why is he going there is a big question today. Because the affordability argument has not been landing. He calls it a Democratic hoax. You're looking at the data, Tom. You know better? [00:04:51] Speaker 3: Well, we're looking at the data and the data show that retail sales for the month of July fell unexpectedly. Lily Meyer, you cover specialty retailers for Bloomberg News and you cover a lot of the big aspirational brands. [00:05:03] Speaker 5: Does what you see in this retail sales report mesh with what you've been reporting on when it comes to these specific companies? Yes. We reported just a few weeks ago that Under Armour saw softness and trends. And we've been seeing, you know, kind of a mixed consumer picture over the last few months. Many of the retailers still are yet to report. So it'll be really interesting to hear if they say a similar thing and are seeing softness. But yes, Under Armour said they were seeing softer demand. [00:05:30] Speaker 3: So I'm curious to see what other retailers will say and if they echo that. Absolutely. And I'm wondering as well, as we see this K-shaped economy, you know, the divide growing ever wider. You've also been reporting on how even when it comes to people's hobbies, those that can afford it are splurging big time. The running culture, for instance, has gone way upscale. [00:05:48] Speaker 5: Yeah, we wrote a story about, you know, high end running spending. So, you know, instead of shopping at places that are a little bit more affordable, like your Nike's, your Adidas, shoppers are buying $350 running shorts. [00:06:01] Speaker 2: Okay, the world's different. When you were at Bates College, it was a road trip of 25 miles to go to Freeport, Maine, to go to L.L. Bean drunk at 2 a.m. in the morning. [00:06:14] Speaker 5: You know, over you go, shopping, power shopping, 2 a.m. in the morning. That retail day is gone, isn't it? Everybody wants to go fancy now. Yeah, it's a totally different retail scene. And I think running is a really good example. You know, people are spending wild amounts of money to sweat in these items. And, you know, a $450 running vest or $150 T-shirt that has holes in it. So people want items. [00:06:39] Speaker 4: I don't know. Joe and I knew it was a $14 sweatshirt. That's right. From LSU from Filene's basement. And a Burton Eye record from L.L.B. Exactly. [00:06:48] Speaker 3: Isabel, let me bring you into this conversation, because what you've been writing about is as folks are spending $350 on Nike mesh shorts or perhaps higher brands, you have a lot of wealth advisors and influencers using social media to really talk up how the wealthy, the rich, are saving a lot of money on taxes. And that's something that ordinary people are basically eating up. [00:07:10] Speaker 6: Ordinary people, maybe because they want to buy $100 Lululemon pants when they go to their yoga classes, they want more money in their pockets. So tax alpha, that's a strategy used for usually reserved for the ultra high net worth and hedge funds. Basically, think of tax alpha as maximizing your after-tax returns, not your pre-taxes. [00:07:28] Speaker 2: If someone tells me they're making $500,000 a year, I'm like, but how much of that? Am I singeing you with the steam coming out of my ears? We're managing money to make losses? [00:07:38] Speaker 6: That's what some people do. So now these strategies are being marketed to retail investors and TikTok and YouTube and on Instagram. And retail investors are eating this up. Some firms are lowering as much as $1,000, as little as $1,000. But you have some people saying that it's not worth it. [00:07:53] Speaker 2: Save me here. Put the Bloomberg money cork in my mouth. Save me. [00:07:57] Speaker 6: Save me here. Because you do manufacture losses so that you will have more take-home pay. [00:08:02] Speaker 3: But, you know, this whole strategy ties people ever closer to their wealth advisors because these are not easy strategies. These are complicated strategies. [00:08:11] Speaker 6: They're very complex strategies. Some include shorting stocks. Some include borrowing money because you have to, again, manufacture the losses. And this is a story done by my great colleagues, Charlie Wells and Denita Tekova. And we talked to some people and some of them are really into it, but some are like, no, it's not worth it if you don't have a million dollars at the very least. [00:08:26] Speaker 3: You know, I come back to the idea that it really is about inflation for, you know, whether you're at the top of the income spectrum or the bottom of the income spectrum. And, Joe, we had data this week that showed inflation slowed, but it's still above 3%. We know cost of living is top of mind for voters. I'm not sure where it ranks for the president, who is obviously trying to end the war in Iran and wants a perpetrator for what's going on with the reflecting pool. Is it a priority for the rest of the Republican Party? [00:08:50] Speaker 4: A huge priority. Yeah, we're going to talk to Mike Flood later on. Main Street Caucus, Nebraska. It's the only thing he's worried about. He's hoping I'll ask him about the housing bill that they got passed. The president refused to sign. There's a massive disconnect here as the president suggests that affordability is a democratic hoax and has previously said that they won on affordability. The part I don't get is after that tape this week, we didn't hear anything from the president. There was no victory lap. There wasn't even a statement from a boring statement from the communications office. So you almost get the sense the White House has stopped caring about. [00:09:24] Speaker 2: I've got to ask because it's such news front and center, and that is the war in the eastern Mediterranean. Joe, you and Kayla are just hardwired into this. Should we expect news this weekend? [00:09:35] Speaker 4: No. Look, I am getting a little bored of the let's wake up Monday and see if we're back at war routine. There's a reluctance to go long into the weekend because you're asking me about this. Tom, but the president says we're easing back. We're low-keying it. And this looks like it's going to be a long-term economic strangle as opposed to a kinetic military action. [00:09:55] Speaker 2: Can we rip up the script? We get lucky here. Yeah, please. Okay, Joe Matthew, of course, foundational with David Brodnoy. In Boston, the Fenway Sports Group of Boston announces they're unloading Liverpool in some form. [00:10:06] Speaker 4: Mm-hmm. Will that money go directly to save the middle relief of the Boston Red Sox? Well, I'm sure that you would like to see that. I would like to see that. I'm not sure David Brodnoy would have done that with the money, though. [00:10:16] Speaker 2: Yeah. Can't you do something better in Massachusetts with the bottom of the K? We'll have to see it. It's a sale. Bezos picks up a hunk of British soccer. Yep. Bezos adds another brand. Where's John Farrow to make me smarter? I have no idea what I'm talking about here. You know what a hot dog costs at Fenway Park right now? I don't know. $6.50. What's a hot dog costs at Costco, Lily? That's a good question. It's like $1.50. They've never changed it. That's true. Yeah. There we go. This has been wonderful. Thank you. Joe Matthew, of course, Lily Meyer, as well. And Isabelle Lee also writing up an important article on TikTok. Coming up, an important conversation. Mike Wilson, you know him for his acuity at Morgan Stanley. Much more. Mike Wilson here on the path to the proper retirement. It's not just TikTok. It's also Instagram. It's also YouTube. Did you ever go from Bates to Freeport, Maine? You did. Bloomberg Money from New York City. Scarlett Fu and Tomke, thank you so much for being with us today. I mean, this is what it's about, folks. We get somebody in really, really quite good scarlet and they write a seven page really, really detailed paper. But what's it mean about my non-retirement? What does it mean for the stocks that you have in your portfolio? Forget the fixed income. The Bitcoin in my portfolio. There's none in my portfolio. I'm in triple leverage to all cash. That's a different story. We are honored to bring you Mike Wilson, pride of University of Michigan, chief U.S. equity strategist and investment officer of a small shop, Morgan Stanley. [00:11:57] Speaker 7: This morning. How are you doing? How's your year been? Doing great. It's a bull market. You know, summer's been pretty good to me. And do you feel like you do you feel like the market you've gotten the market right? Have you underestimated its durability? No. I think we probably were the first ones to talk about this earnings recovery. And even we underestimated the strength of it. So, yes, we did underestimate the power of it. But directionally, I think we were right on that. I think what we've been surprised is probably the durability of the AI CapEx. It's just [00:12:27] Speaker 2: just how much that has accelerated and how much, quite frankly, how much the market has been willing to absorb on the issuance of both credit and equity. Well, the reason you've been good at that is Jim Caron. It's got nothing to do with the equity side of the shop. Bring up the chart right now. This is the emotion. Many of you have forgotten this. Stocks. You can go down in stocks. It's a shock. Now, this chart ends in 2022. But there's XPS. It's wonderful. Great. Wonderful. COVID and all that. And then there's a big rollover in 2021-22 where are you brave enough to catch the falling knife? When the market rolls over like that and my personal finance is troubled, how do I get back into the market? How at the margin do you buy when you see the sweat of that chart? [00:13:11] Speaker 7: Well, the really challenging thing of 2022, as you know, for retirees was that stocks and bonds went down for the first time in really our lifetime. And that so there was no hedge. So even though the decline in equities wasn't as severe as it was in 08 or in 01 or 02, your 6040 portfolio was down the same. So that was a change. And that I think that was one of the things that made investors apprehensive to step in. It was like, holy smokes. I'm getting hit on both my defensive stuff and my offensive part of my portfolio. So I think people froze up. Now, our job is to remind people that there's value at some point. And I would say we navigated the 2021 top extremely well and the 22 downturn. We probably overstayed our welcome a bit in 23 and got back on board in 24 under the other on the story that we're telling now. But like, I mean, as an as a as a person who has their money in the market for retirement or a long term investor, you really should avoid being shaken out on both the top and the bottom. So in other words, chasing stocks is as damaging as selling stocks at the bottom, in my view. So that's why we like dollar cost averaging. So we do like still like diversified portfolios. 22 is a challenge on that. It ended up working out for folks who stayed fully [00:14:24] Speaker 3: invested. And for those who stay fully invested, they their faith in equities has been restored, maybe for bonds, not as much given that the performance has not been as great. Is there a way to get all your defense of your bond like exposure within equities? I've heard some people talk about the idea of swearing off fixed income completely and perhaps owning insurance companies as proxies for bonds. You get the price appreciation. You get the dividend. It's kind of like a win win. Yeah. Well, what I would say [00:14:49] Speaker 7: is that these asset classes are now more closely correlated. So they're just not going to offer that natural diversification benefit that they have historically. So that means you need to do other things. So there are other types of investments. You were mentioning earlier like gold or or maybe even Bitcoin or some of these things that can defend against inflation. So we we've been a very big advocate of gold, not so much as a yielding instrument, but as a defensive asset. That doesn't mean you abandon fixed income, but it does mean you reduce your duration. So there are things you can do within your fixed income portfolio to make it more valuable. It still provides some diversification benefit without taking too much risk on the duration [00:15:23] Speaker 3: side. So when you talk about gold, gold was acting like a meme stock at the beginning of this year. I mean, was that just kind of a unique one off period or can we return to things like that? Well, I would say that gold has been in a bull market for 25 years. I mean, [00:15:35] Speaker 7: people kind of woke up to this idea more recently at the beginning of the year. And this probably is a good place to kind of, you know, kind of gravitate to for the rest of the discussion. For this year, I would say we've had basically one big commodity rotation. So coming into this year, you have to remember at the end of last year, the Fed started printing money again with this reserve management management program. And that led directly to gold and silver stocks taking off. Then we went into rare earths and metal stocks, then energy stocks and then semiconductors. Now, what do all those have in common? They're all commodities. OK, so it's kind of interesting to me that that's what's been going on. And that may be exactly what people are doing. They're looking for things that are not stocks, but commodity like to offset, you know, the risk to have in their portfolio with equity like risk. [00:16:17] Speaker 2: At Michigan, there is Stephen Ross. And there is this idea of arbitrage pricing theory. I want you to bring it over to somebody's retirement where we talk about factor based investing. Discuss momentum and the other factors there that lead to successful personal finance. [00:16:35] Speaker 7: You know, first of all, we have to understand that people, you know, the retail investor gets a bad rap. The retail investor, I think, has navigated the last 15 years extremely well. Now, this is a good lead into your question, which is in the in the GFC, when the Fed started printing money the first time, all the smart people were like, oh, this is a disaster. It's going to be inflationary. And what did the retail person do? They bought bonds because, like, we don't see inflation. And by the way, this is just filling in holes. It's a different type of QE. Then when COVID happened, they sold their bonds and they bought stocks because they realized this actually this kind of QE where you actually print money and send checks out to people is extremely inflationary. So I would say the average retail person has essentially diverse has done a really good job of diversifying their portfolio away from things that are levered, you know, anti-fragile to inflation. And so that's why we've been doing the same thing in our recommendations, you know, whether it's gold, whether it's alternative investments, things that can provide ballast to the portfolio without having pure equity like risk. I got eight ways to go here when I come [00:17:33] Speaker 3: back. I mean, it's really interesting. Well, we want to get his take to on how he manages his personal finances. We're going to have to do [00:17:39] Speaker 2: that. I mean, Mike Wilson with us with Morgan Stanley and just all sorts of ways here to go from the day-to-day battle of strategy over to how do you not screw up retirement planning. It's that simple. [00:17:50] Speaker 3: Mike Wilson will be staying with us. He's with Morgan Stanley. Also later on on Bloomberg Money, we'll tell you why one city is still living the American dream when it comes to affordable housing. There is stuff available for first-time home buyers, believe it or not. It's not here, though. It's not New York. It's not in California. This is Bloomberg Money, somewhere in the middle of the country. [00:18:09] Speaker 2: It's in there's a lot of that. It's a lot of booming. Bloomberg Money, we say good morning and a good afternoon and on to the weekend for you. Scarlet Fu and Tom King. Major shout out Ellen Beeson-Zetner over at Morgan Stanley. Top 39 economists under 39. Oh, I love that. Some awards she won today. Mike Wilson did win that award. Well, her colleague Mike Wilson is here with us. He's the chief U.S. [00:18:32] Speaker 3: equity strategist and CIO over at Morgan Stanley. And Mike, we want to ask you about how you invest your money. You talked a little bit about how when you look for some defensive qualities, perhaps you go into gold, for instance, or look at other alternatives. Is that how you, you know, diversify your portfolio? Are you going into gold? What do you do to make sure that you [00:18:50] Speaker 7: don't, you're not overly loaded up on equities? Yeah, well, I'm probably not a great example. I'm a, you know, I'm much more tactical than I would recommend most individual investors be. Like I'll trade in and out. I'll even short things as my defensive heads. But that's not practical for most people. Okay. So I would recommend that we recommend for most retail investors or even institutional investors endowments is you have to have a plan. Okay. And then what people don't do a good job of is rebalancing. So what I worry, not worry about so much, but I think what I see out there right now is a lot of unbalanced portfolios, not just in equities, but in certain equities. Okay. And that's tilted towards something. Yeah, there's just you've got too much exposure to single assets because nobody wants to pay taxes. And I hear this all the time. What do you say to [00:19:33] Speaker 2: the people that go, I'm afraid of Mike Wilson's world. I'm loaded to the boat in cash. Should they be looking at two and three [00:19:39] Speaker 7: year Jim Caron like money? Well, look, I mean, everybody should have some cash and you're getting paid for your cash now. The biggest change since since really COVID, quite frankly, is that you're getting a positive real return now on your fixed income. So I'm not as bearish on fixed income nearly as we were 10 years ago. I mean, particularly for things that are three, four years in, you're getting a real return. That's quite respectable. Now, everybody has their own like everybody has their own risk tolerance. Okay. Some people like to hold 30 percent cash. Some people like to hold 5 percent cash, whatever that number is. But you're getting paid for it now. So cash is a good asset. Mid tier, you know, sort of duration. Bonds is a good asset. Infrastructure type bonds is a good defensive asset. Certain equities are a good defensive asset, whether it be utilities or maybe staples and things like that. So there are many things you can do from a stylistic standpoint that you can protect yourself. Once again, what I think people have loaded up on now is, you know, large cap growth stocks. And those have been great. And that's why they want to continue to own those. But just understand it. You're unbalanced. Okay. So you better make sure you're going to be right for the next three or four or five years. And by the way, taking profits and paying yourself and paying Uncle Sam is not is not a cent. You can do that. It allows you to sleep at night. And now is the time to do that, to rebalance. If you're on if you're unbalanced. Now, some people, if you're not unbalanced, then you're fine. But I, I, that's the one thing I see out there right now. And that's what 10 year bull markets do. They get you unbalanced. Mike Wilson of Morgan Stanley. [00:21:01] Speaker 3: Thank you so much. Pleasure speaking with you. Coming up on Bloomberg Money, a conversation with Kristen Bitterly. She's head of Citi Global Wealth at Work. We're going to talk more about retirement. This is Bloomberg Money. [00:21:12] Speaker 2: Good afternoon. I got it right. I said good morning the last time. You said good noon, good noon, good noon, good noon, good noon. We got a little bit of money on personal finance, retirement, wealth management, the doldrums of August. But if not, there's huge news flow and huge visibility to where we're going with a lot of good [00:21:38] Speaker 3: conversations today. Absolutely. And you also had data today that shows that perhaps the consumer is feeling a little bit less. There were negative statistics. Yeah. Unexpected drop in July. It said it was online. Was it the food clan? I don't do anything with Prime Day. I have nothing to do with. I'm the same I can't get myself organized. It's like jump the shark almost like I'm like why. But I guess it works. I can't get into the mood of buying for the holidays in August or July or June [00:22:02] Speaker 2: whenever it actually is. That's where we are. Why don't you do a data check here because let's do that. Yeah. The equity market. You look [00:22:08] Speaker 3: at the major indexes. They're all in the red. The Russell 2000s up. But you know if you look at the big cap measures all down down down for the week however the S&P 500 is still set to close up for a third straight week. So there's some comfort there. The VIX below [00:22:23] Speaker 2: 14 and a half. Well yeah that's a bull market VIX but it doesn't feel that way. When you go across asset you see the tension and the massive tension to me is in the yield space price down yield up today. The 10 year yield no love there in a 30 year bond. You know how do you get to a 7% mortgage rate. You do it with a 5.2 7% mortgage rate. We're not there yet. Well the chart you're coming out of the pandemic. I'm sorry. I mean Kristen Biddley's aged over this. It's a it's a higher yield. There's no other way to to put it. Oil is like we're waiting for news. Joe Matthews says he thinks a quiet weekend in the eastern Mediterranean. That's what we all say. And then something else changes [00:22:59] Speaker 3: that. In any case as you know Bloomberg Money is your new destination for personal finance. This is a cross platform effort that extends beyond your television screen including our new digital hub at Bloomberg dot com slash money. And Tom this week one of our stories that we feature is the American dream of owning a home. It is alive at least in Grand Rapids Michigan. Almost half of all new homeowners in Kent County are younger than 35 because the area is a high concentration of affordable homes and plentiful job opportunities. Paulina Cachero has been following the story and she joins us now. So why is Grand Rapids kind of bucking this trend the national trend of first time homeownership being out of reach for so many young people. Yeah. I think what's really unique about Kent County [00:23:41] Speaker 1: Michigan is that there's a relatively favorable ratio between home prices and income. So nearly half of its home owners in 2025 were 35 years or younger. And that's pretty amazing if you consider that the average first time homebuyer today was is 40 years old across the U.S. And that's the oldest in data going back to 1981. So it helps that Grand Rapids you know has a really diversified economy. Its population has been growing. And there's a lot of opportunities for young workers who are earning enough to to buy a home. You know while across the U.S. I would say you know workers under 35 that price of a home is three point six times their income. [00:24:25] Speaker 3: But it's much in Grand Rapids. It's much lower than that. OK. It's much lower than that. But you wonder how it's going to stay that way because affordability is already eroding. You look at the prices at Grand Rapids and it's up a third in five years. So could you make the argument that Grand Rapids is just a few years behind everyone else every other city. Yeah. It's there's definitely a lot of [00:24:44] Speaker 1: pressure on the market. We've seen prices go up about three four percent in five years as you mentioned. And inventory is still roughly 30 percent below pre-pandemic levels. And this is an issue we're dealing with across the U.S. Housing supply shortage. And actually what we're seeing in Grand Rapids is they're building homes at a slower pace at five point three percent [00:25:04] Speaker 2: compared to seven percent. What are people doing in Grand Rapids. I mean what the you know I think of 1963 Fruit Loops. Fruit Loops are pretty much like you know all that. Yeah. In Grand Rapids and Battle Creek and and all that. What are they doing in Grand Rapids in [00:25:22] Speaker 1: this boom. We've seen that the wages have you know kept up. It's like 13 percent higher than the rest of the state. So I think that you know being able to keep home prices relatively low while incomes are growing and there's a relatively young population has helped people be able to afford buying homes. It's not just about having cheap homes. It's having the economic opportunities to afford them as well. All [00:25:45] Speaker 3: right. Paulina Cachero. Thank you so much. She's a member of our Bloomberg money team covering stories that affect your money. Oh [00:25:52] Speaker 2: think is just great right now. This is important. Kristen bitterly holds court full time at the Citigroup shop in wealth management and had a global wealth at work. It really really focused on retirement. I look at the risk of 74 as a failure. There's a huge percentage of America is not getting retirement done. What's the biggest thing they could do to solve that other than just save more money. Well I would say there's two [00:26:17] Speaker 8: things. One we have to realize that we're living longer. So when you look at average life expectancy it is increasing. The population above 80 is expected to triple by 2030. And the population above 65 is expected to double. So people are living longer which means your money has to work for you longer. So the second kind of I would say error that a lot of people make is not investing early on. So saving we do see savings rates that they've increased. Yeah. If you're not investing that money. And I heard Mike Wilson earlier today talk about the fact that yes there is an attractive yield on cash and short duration fixed income. But when you're thinking about what is my life expectancy. How long does that money have to [00:26:55] Speaker 3: work for me. If I don't invest I'm going to be behind. And it's not just investing. It's also taking advantage of tax efficient vehicles and fee efficient vehicles like people think investing means just putting it into an account or putting into your 401k and kind of [00:27:09] Speaker 8: forgetting absolutely absolutely. Absolutely. So I would say the first thing about being too overweight cash. We need to make sure that we're putting that to work. And whether that right amount in cash is 10 percent 15 percent. We've seen those slightly elevated. It shouldn't be 30 percent. But you're absolutely right. Taking advantage of any type of tax advantaged account or tax deferred account. Making sure that your wealth is structured in the right way is also critically important. And then also there's there's more tax efficient investments. So if you're invested in fixed income and you're a U.S. investor look to the muni market. Look to some of these areas where you're after tax and after fee [00:27:42] Speaker 3: returns are going to be more profitable for you. There are some people who take this to the extreme. Right. There's the fire movement of financial independence. Retire early. People who say. I'm on that movement. I'm working. I think you're a little bit. You and I are past our [00:27:57] Speaker 2: prime when it comes to the caskets. Right. Surveillance caskets right over here. Yes. Yes. That's right. I mean the idea is to be able to retire in [00:28:04] Speaker 3: your 30s 40s and 50s and live your best life. But I'm sure there's traps that people fall into when they pursue fire at all costs. Yeah. I [00:28:12] Speaker 8: would also say though the investors that we work with and the clients we work with they are in specialized industries. So we work with lawyers. We work with professional services asset managers pre IPO post IPO companies. A lot of our clients. They like to work like this is part of like they enjoy their profession. They're ambitious. And so what we see is actually something different. They want to work longer. And even in retirement there's a great organization that's called Luster where it's founded by very successful women. And what they do is they say like this is actually like I'm going to live my best life in retirement. I'm not fading into the background. I'm not giving up on my intellect and professional ambitions. I may do something different. Right. My time. But I'm still very active and very busy. What I see [00:28:54] Speaker 2: day after day. This is a beautiful quote from Citigroup and Kristen. Let's bring it up. And it's about the inertial force that's out there in our bad behavior. I'm as guilty of this as anyone. Leaving excess capital idling cash hoarding cash far beyond the threshold seriously penalizes long term growth. Inflation. It silently erodes the purchasing power of uninvested capital. Why do we do the start with you mean you're expert of this. Why do what's the why why we sit with cash up to our eyeballs. First thing is we don't teach people to [00:29:29] Speaker 8: invest. So when you think of our education in the U.S. Yeah. You may be a business major and maybe you have some type of coursework in college. But many people grow. They could go to the best universities in the world and not actually understand financial planning estate planning and how to invest. So part of it is like we are not educated to do that. Loss aversion is also a very very very powerful heuristic bias where people tend to think that it's safe. Cash feels safe. And the last thing that I would say is people are busy. The inertia part is actually very real. So Mike talked about this that you're kind of you could have the inappropriate allocation because you don't understand the outsized kind of positions in your portfolio. You have to have a more [00:30:12] Speaker 2: proactive. But to the chart we showed with Mike which we could also show with Kristen. Is there issue here Scarlett. We're addicted to a bull market or we don't have to think. Right. To me that's a lot of it. Right. I don't. There's the sweat with a VIX of 14. The sweat's not out [00:30:25] Speaker 3: there. So I guess the question is how do you go de-risking your portfolio. Mike talked about you know having too much concentration in the growthy parts of the market. And it's OK to actually take some profit and you know put it aside. And pay uncle Sam sometimes. Yeah. Pay uncle Sam even though everyone's scared to death of doing it. How do you go about de-risking your portfolio day in and day out. Because it's something people don't want to do. They're comfortable with seeing that number grow. Yeah. So this inertia concept [00:30:50] Speaker 8: it's actually on two different two different fronts. It's one on being too overweight cash. So that's then an element of how do I actually put capital to work. And I think that's easier actually. If you're too overweight cash the idea that you can leg in you can use dollar cost averaging. I think that's probably an easier psychological component on the front of OK I need to rebalance. And potentially that does have tax impacts. One of the things that I would say is if tax is a major deterrent that should not be the major deterrent. However there are hedging strategies. There are a number of different strategies that you can employ where you take off some of the downside risk without triggering a taxable event. So I would encourage people who have really large embedded gains to speak to their advisor about [00:31:30] Speaker 2: that. And now we go over a few tread. Kristen bitterly one of the gimmicks is option writing. I bring in an income to get an enhanced income and I give up some of the future capital gain. Is it a sound strategy. Option overwriting. Absolutely. Look I grew up in [00:31:47] Speaker 8: derivative. So I probably have a bias in the options market. I think options are a double edged sword. When you use them for leverage when you don't understand what your max downside max upside is and the risk return profile. Clearly some people can get on the wrong side of that trade. If you are long in equity position and you think it's going to be relatively sideways you don't want to sell out of it because you like the company and you're finding ways of a more tax efficient augmented yield by selling listed options or covered calls against it. That can be a way to enhance your income. Stay in the stock not trigger a taxable gain. You mentioned how people are not [00:32:21] Speaker 3: educated on investing. Are we also not educated on debt and the role that debt plays. Because you pointed out that the way people look at debt is they're either scared to death of it or they have too much in it. [00:32:31] Speaker 8: They're they're they're carrying high interest personal loans and there's never any in between. It's so interesting because I think this is a very cultural component as to how you were raised that what you see is there are many people who were taught growing up like debt is bad that any type of debt is bad. Clearly there are some types of debt that are really high interest bearing debt that are your credit card for example. The idea that you're very disciplined about that because it's a very high interest rate. However we were just talking about mortgages earlier. If you're someone who locked in a 30 year fixed mortgage at maybe a 3 percent 2 percent level that is probably one of the that's kind of the trade of the century if you think about it in terms of very cheap financing that is also there's a tax efficient element to it that is intelligent leverage intelligent debt that helps you actually achieve your goals. Thank you so much for coming in today. Thanks for having me. Again soon like before the year end. Kristen Bitterly thank you so much for city wealth had a global wealth at work. I noticed the 30 year mortgage [00:33:29] Speaker 2: 6.67 percent. You keep rolling it higher to 7 percent. Well I'm wondering. The world stops at 7 percent but there it is. I mean it's a big statistic. What fun last night. Field of Dreams. Netflix hit the ball out of the park over the cornfield last night. We thought we'd do a baseball moment for you. Coming up. Scarlett has a killer book. It's Bloomberg Money. Good afternoon. [00:33:54] Speaker 3: I like how you stressed the word killer because that's going to come back. It was magic. Remember the movie Field of Dreams? No. The book about Field of Dreams? Field of Dreams to list Joe Jackson. Spectacular. It was one of the rarest things where the movie was better than the book. Kevin Costner starring Kevin Costner 1989. Last night there was a Field of Dreams game that it took place in Iowa. I was crying full disclosure tears the whole thing. Twins versus Phillies on Netflix. This was it had been a couple of years since the last one. But both teams wore throwback uniforms which I love. Yeah. [00:34:38] Speaker 2: The corner was not knee high by the fourth of July. It was spectacular. The Phillies and twins delivered. Major league baseball delivered and all that. We thought we'd just take a look at this. Of course the iconic movie. The hall of famers coming out. Mike Schmidt there from the Phillies. You watched until the very end. No I did not watch the whole thing because I have to get up and do a date. You know the early morning gig. But you noticed the one Roger Clemens there. Roger Clemens at the end was playing catch with his son who's on the twins. You know the whole thing was just a huge huge success to say. At least we wanted over to books. Here's the book for those younger who are like Field of Dreams. I don't get it. It's fossil TV. Shoeless Joe. Kinsella did it. And I'm sorry. This was the first of the books. W.P. Kinsella. Shoeless Joe. It's different than the movie. The movie is better than the book. But the book is a rite of passage for anybody that wants to understand the 20th century in America. We have a producer from New Zealand, grew up at a sheep farm, doesn't get it. [00:35:33] Speaker 3: Doesn't understand it. [00:35:34] Speaker 2: Totally doesn't understand Field of Dreams. [00:35:36] Speaker 3: Well, you know, the movie has Kevin Costner, has Ray Liotta as Sleepless Joe. [00:35:40] Speaker 2: Killed it. Ray Liotta just killed it. Shoeless Joe, excuse me. Burt Lancaster, I think his last movie. Yes, it was. Just to watch Burt Lancaster up in Minnesota as A Doctor's Worth It. Tell us about The Bronx is Burning. [00:35:49] Speaker 3: Well, my book is also about baseball, but it's the opposite of gauzy and feel-good. It's gritty and chaotic. It's about the 1977 New York Yankees when Billy Martin was feuding with George Steinbrenner. Reggie Jackson was dominating. And the title refers to what Howard Cosell said on air after a fire broke out in a school near Yankee Stadium. There it is, ladies and gentlemen. The Bronx is burning. Remember in 1977, summer of Son of Sam was on the loose? Yeah. You had the blackout, the looting that happened across New York City. Ed Koch versus Mario Cuomo, fighting for the mayoral. [00:36:24] Speaker 2: It's talked as a malaise. And, of course, in New York City, it was front and center. And you think of Mayor Giuliani and those following that pulled us out of it. But your book is brilliant of attention there from another time away from the magic and nostalgia of Fielding Green. [00:36:39] Speaker 3: It's pretty, it's New York, it's history, it's baseball, it's all that. And it's, I must read. All right, so let's talk about sports because we're going to stay on this theme. It just upsets me. Leave it into personal finance. It is pretty upsetting. [00:36:50] Speaker 2: We don't talk to each other before the show. And my people briefed what they learned from Scarlett's people. This is upsetting. [00:36:56] Speaker 3: It is upsetting. And this is a story that Bloomberg News wrote this week on our money platform. It's centered on how sports betting is entering wealth management plans, financial planning for Gen Zers. Zi Jiao Song joins us now to discuss. So the idea here is that certain members of the Gen Z cohort see sports betting as a legitimate alternative to investing or see it as a form of investing? [00:37:18] Speaker 9: Yes, exactly. So one in four Gen Z investors actually consider sports betting as part of their deliberate ongoing component of their long-term financial plans. And I think this really is related to how fast sports betting industry has grown. And along with it, it's the prediction markets, rapid expansion, where companies kind of brand themselves as investing platforms. And this is changing how Gen Z and younger Americans are thinking about wealth building and financial planning. [00:37:46] Speaker 3: Now, some of the people who do this say that they approach sports betting with kind of the dispassionate eye that they would look at investing, which I find really fascinating. Like, they say they don't let emotion get caught up in any of this. [00:37:59] Speaker 9: Yeah, that's what they say. And we talked to some long-term sports bettors, actually, and they said they've gotten increasingly analytical in their approaches. They would do research on sports teams, and then they would, like, maybe section off a part of their money to just put in sports betting. One person actually won some 2,500 this year and was able to fund their entire vacation to a bachelor party. [00:38:22] Speaker 2: Okay, but I just went to, you know, I went to AI and all that to look at this. How many people make money at Kelsey? How many people make money at FanDuel on the left field wall out at Field of Dreams last night? [00:38:35] Speaker 9: That's a really good question. It's actually, over the long term, consistent profiters off these platforms are the top maybe 1% or 5%. [00:38:44] Speaker 2: Okay, so let's be charitable. It's 5%. You're telling me 95% of people lose money, and we're calling it a financial plan of our personal finance? [00:38:53] Speaker 9: Over the long term, yes, they are not profitable, 95%. But I think it really has to do with, like... [00:38:58] Speaker 2: What are you laughing at? [00:39:00] Speaker 3: For a certain cohort... [00:39:01] Speaker 2: I'm the fossil here. [00:39:02] Speaker 3: For a certain cohort, they're thinking, you know what, I'm going to be the one that beats the odds, and, you know, you've got to go big. Oh, come on. [00:39:09] Speaker 2: Last night, I mean, what did you think? Did you watch Field of Dreams last night, the baseball game? Oh, you're telling me. It's like, the Netflix ratings will be huge. The Hall of Famers are coming out of the cornfield Shoeless Joe came out of, and there's a FanDuel sign in the left field. Sign! I mean, that's what we... It's your fault! [00:39:27] Speaker 3: It's a dose of 2026 on your Field of Dreams, Tom. Can't be helped. We'll have to see. All right. Well, Zijia, thank you so much. I'm too upset to talk. Really, really appreciate it. It's fascinating, this idea, because we talk about the financial nihilism among younger people. Well, this is kind of an offshoot of that. [00:39:44] Speaker 2: I strongly agree. I just think it's... [00:39:48] Speaker 3: Go big or go home, and, like, why not? [00:39:49] Speaker 2: It'd be different if you were making money like it was batting. 30% of the time you make money, okay, it's great. Good luck. [00:39:55] Speaker 3: Yeah. Well, in any case... 5%? It's a Gen Z thing right now. Maybe they'll outgrow. We'll see how it goes. By the way, we did mention our must-read books. Just a reminder, for the latest reviews and recommendations from Bloomberg, be sure to subscribe to the On Books newsletter. Keep it right here. We've got more coming up, including how to plan for your weekend, how to spend your money this weekend and the week ahead. Yes. More baseball? [00:40:19] Speaker 2: I just... Please, really, 5% make money? Oh, Bloomberg, money, Duncan. [00:40:32] Speaker 3: Why are you crying? Why are you crying? [00:40:35] Speaker 2: They're going to college. I'm so sad. It's just terrible. Here's the door. What's your hurry? Joining us, Lisa Matera. Are you going to cry when she goes to college? [00:40:46] Speaker 10: I know. I have, like, two weeks. I'm at my wit then. It's going to be difficult. [00:40:50] Speaker ?: Oh, my word. [00:40:50] Speaker 10: I'm so sad. But one thing I don't have to worry about, and this is what a lot of parents are going to be spending their money on this weekend, is Southern Sorority Rush. Tom, I know you're familiar with Bid Day. It is huge down there. Okay, so this is, for the past week, girls have gone to school early. These are all girls who want to go to these Southern schools, okay? And they've been on Instagram and TikTok and all the things, picking out which organization they want to go to. And so they've been going through the interview process. They've been going to the events. They've been wearing the dresses, the makeup, just to make sure that they get into the sorority of their choice. And this weekend, they're going to find out if they do or not. But the money behind this is because there are parents out there who are paying, get this, sorority rush consultants in order for their kids to get into the sorority of their choice. [00:41:37] Speaker 3: How do they consult with them? They're not, like, they're not outreaches from the organizations themselves. They're kind of independent consultants. [00:41:42] Speaker 10: No, these are, like, some of them are women who did pledge, and so they're giving advice. So they're charging these parents this much to get the inside scoop. Anywhere from $3,000 to $12,000. And what's some of the advice they offer? To go over their resumes, to get their headshots done, to go through their social media feed, to make sure they talk correctly, wear the right thing, say the right thing. Can I interrupt? This is a girl talk. [00:42:02] Speaker 2: Okay. 1025 15th Street, Boulder. The Tridel House. The way it got ready to rush is you got a six-pack of three, two-quarters beer. I don't think so anymore. The rich girls had a quarter keg out front, of course. [00:42:15] Speaker 3: Well, at least the thing is that that's not how it's done anymore. [00:42:18] Speaker 2: That's the way it got anymore. Good morning to Tridel's Nationwide. [00:42:21] Speaker 10: It's a Tridel. But it's a huge thing. And what's making this story bigger is because it's finally becoming big in the northeast, in the Midwest, in the West, where it wasn't popular before. So now you have all these outsiders coming into this little community. [00:42:33] Speaker 2: Does any, I mean, at Cornell, did they do this? [00:42:36] Speaker 3: I mean, I don't know about sorority rush consultants. I don't know about the amount of money that people are spending. But that's, you know, when I went to school, that was ancient history. [00:42:42] Speaker 2: Well, to me, the number one thing here is a dad. Is anybody going to school? [00:42:48] Speaker 3: Is anybody taking Western Sioux? Wait, wait. But this is why this is happening before the semester begins. Lisa made that clear. People are going to school. [00:42:55] Speaker 2: Oh, what, they end the first day of school? [00:42:57] Speaker 10: Yes, yes. And then they have to pay the dues after they pay the consultants. So we haven't even, the dues can be anywhere from 5,000 a semester to 10,000 a semester, depending on if you want the housing and the room and board in the middle. Incredible. This is a story on the Bloomberg Terminal, by the way, right? It was a story on the Bloomberg. Yes, you have to check it out. It was fascinating going through it, I'm telling you. There's a lot on social media about this as well. There is a ton of it. But thankfully, yes, my daughter's not involved in these things. [00:43:20] Speaker 3: Okay, well, let's get back to the calendar events of what's coming up next week because we've been talking about the consumer, the state of the consumer. Retail sales numbers came out today, which were disappointing. We get more of an inside read on retail companies, right? [00:43:31] Speaker 10: Yes, a lot of retail companies. So let's go through it. We'll start with, on Tuesday, you have Home Depot. That's a big one, right? Then you get to Wednesday, Estee Lauder, Target, Lowe's, TJX. And then we end off on Thursday with Walmart and Raw Stores, too. So a big week for retail earnings next week. I'm a huge, huge fan of TJX. You can get a lot of the dorm shopping done there. Yes, we did a lot of the dorm shopping there and at Costco, too. [00:43:53] Speaker 2: Well, a Home Depot with a management change to the illness that CEO's taken a temporary leave. Right, correct. So that will be part of their conference call as well. [00:44:01] Speaker 3: All right, Lisa Mateo, thank you so much. Lisa, of course, hosts Bloomberg this weekend every Saturday and Sunday morning starting at 7 a.m. Eastern time. Tom, upset for Lisa because her daughter's going off to school soon. And that does it for Bloomberg Money this Friday. Keep it right here. This is Bloomberg. It's okay. [00:44:17] Speaker 2: Oh, God. Here's the door. What's your hurry? Bye.