About this transcript: This is a full AI-generated transcript of Bloomberg Businessweek Talks Investment Landscape, Integrating AI at Schwab IMPACT from Bloomberg Television, published October 30, 2026. The transcript contains 18,971 words with timestamps and was generated using Whisper AI.
"This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. Bloomberg Business Week Daily with Carol Masser..."
[00:00:00] Speaker 1: This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. Bloomberg Business Week Daily with Carol Masser and Tim Stenevek. Live on Bloomberg Radio, television, and Bloomberg Originals.
[00:00:30] Speaker 2: And a very good afternoon, everybody. Day two from Schwab Impact in Boston. Carol Masser, Tim Stenevek, live here on Bloomberg Television, Radio, YouTube, and Bloomberg Originals. Schwab Impact, we've had some great conversations already. We've got a lot more coming up. But really, about the independent advisor space, what's coming at them. I've got to say, the theme of AI is here as well. It's not just in those earnings that we keep talking about.
[00:00:54] Speaker 3: Okay, you said earnings, so I'm going to Alphabet. Shares just cratering today. At one point, I'm the worst ever. I think it's fair to say a historic day for Alphabet. You and I were all over this yesterday, the existential threat to Alphabet's business. Because, wait a second, is search being cannibalized by the new way that people are interacting with AI?
[00:01:10] Speaker 2: That's right. And all that spend, when it comes to AI, are they getting any more juice out of the search business or out of kind of their lean into AI in a big way? And this is where we are in this narrative. But I have to say, here among the independent advisory space, here among Schwab, we've heard a lot of conversations that they are definitely all in, making commitments, actions, deals, if you will, agreements, to make sure that all of those advisors have the AI that they need. But we're also kind of trying to tread carefully.
[00:01:39] Speaker 3: Yeah, 6,000 people here. This is the biggest Schwab impact ever. You've got RIAs from all over the country here. Grateful to everybody, too, coming and saying hi to us. Yeah, it's really sweet. On the floor here at Schwab Impact 2026 in Boston.
[00:01:52] Speaker 2: They actually, there are people out there listening and watching, in case we were wondering.
[00:01:56] Speaker 3: You sound so surprised. I don't know why.
[00:01:58] Speaker 2: I know. Let's talk about what's coming up, certainly this hour. We've got the president and CEO of Charles Schwab. Rick Worcester is going to be back with us. I'm curious about kind of leaning the way in an AR, increasingly AI world, especially when it comes to the financial sector. So looking forward to see what he has to say.
[00:02:13] Speaker 3: And as far as RIAs go, Schwab kind of plays with everybody on the spectrum. So we spend a lot of time talking about retail and understanding Schwab's role there. We're talking the other side, too, though, today. Sam Kang is joining us. Head of Family Office and Premier Wealth Group over at Schwab Advisor Services. The trillions of dollars that are changing hands in the coming years. And about family offices and being the first call for everything from complex estate planning to a medical emergency overseas to maybe a prenup. I don't know.
[00:02:39] Speaker 2: Everything.
[00:02:39] Speaker 3: That's how family offices go. I need a new yacht captain. Okay? I've heard a family office guy talk about that. I had to get a new yacht captain in two days. We got it.
[00:02:48] Speaker 2: All right. DJ Tierney is going to be along as well. Senior investment portfolio strategist at Schwab Asset Management. We're going to talk about concentrated market risk. It is a theme that we've been talking about this year over the last few years. We're also going to check in with the president of Daft Giving on why donor advised funds make sense in this environment, what's going on. And then we're going to also talk about AI being, AI investment in particular, being an economic engine for growth. We got a read on the U.S. economy. Pretty upbeat today. So lots to get to.
[00:03:14] Speaker 3: Yeah, Michael Vogelzang stopping by on that. Join the conversation. Bloomberg.com slash ask radio. That's Bloomberg.com slash ask radio. If you've got any questions for us or any of our guests over the next two hours here on Bloomberg TV, four hours, special programming on Bloomberg Business Week Daily.
[00:03:28] Speaker 2: All right. We've got to get to go in there with a check on the trade. We are definitely seeing some movement when it comes to stocks. Let's send it back to New York City. Bloomberg headquarters in New York City and to the one and only Charlie Pell.
[00:03:38] Speaker 4: I thank you very much, Carol and Tim. Here's what's going on. The Dow, the S&P, NASDAQ, all moving lower right now. Apple certainly, our alphabet, certainly having a big impact on markets. Right now, we've got the S&P at 7719, down 25, dropped there of three tenths of one percent. Dow Industrials also down by three tenths of one percent. But let's take a look at the NASDAQ 100 index, down 1.3 percent right now. Tech hit hard. We've got the NASDAQ composite index. It is down now by 1.3 percent. And interestingly, though, on a down day for much of the market, the Russell 2000 index of small cap shares, it is advancing now by 1.1 percent. The two-year, day after the Fed, 4.66 percent. The 10-year, 4.99 percent. The 30-year, 5.33 percent. Spot gold, down $49 the ounce to 4,017, drop there of 1.2 percent. West Texas, intermediate crude, 101.30 at a barrel, down 1.4 percent. Brent crude right now, 1.14.15, barrel of Brent down by 1 percent. Bottom line here, tech stocks being dragged lower by a record drop in Alphabet. Right now, Alphabet down 12.4 percent. This after last night's earnings report, disappointing results, renewing investor concerns about the threat that AI poses to its core businesses. Again, Alphabet bears repeating down 12.4 percent. Microsoft, after earnings, down 1.2 percent. Amazon, after the closing bell today, that stock now lower by 3.4 percent. Back we go to the Schwab Impact 2026 conference in Boston. Once again, your hosts, Tim Stenevec and Carol Nasser.
[00:05:17] Speaker 2: All right, gotcha, Charlie. Thank you so much. Well, over the summer, Bloomberg News reminding us that the number of family offices has boomed over the past two days, amid surging fortunes across tech, finance, and healthcare, they've pushed into markets for buyouts, secondhand private equity in real estate, and even taken activist positions at listed companies. We know there's a lot going on in this space.
[00:05:36] Speaker 3: Just a reminder, they usually serve a single or small group of clients. They can generally be nimbler than other institutional investors. And today, Carol, at least a fifth of the world's 500 richest people now have an investment firm overseeing their wealth. It helps manage fortunes totaling more than $5 trillion. That's according to Bloomberg's wealth index.
[00:05:51] Speaker 2: Yeah, it's all this wealth part of that generational transfer as well that we talk about. This is really the world of our next guest. Sam Kang is back with us, head of family office and premier wealth group at Schwab Advisor Services, joining us at Schwab Impact 2026. How are you?
[00:06:04] Speaker 5: Good. Good to see you again.
[00:06:05] Speaker 2: It's great to see you, and it's really great to check in with you and the team here. And, you know, we have these year increments, and we talk to a bunch of Schwab people throughout the year, but some of you not so much. And it's great to, like, kind of just start with what's changed in the past 12 months.
[00:06:19] Speaker 5: Well, what we really see is just the amount of growth. So just from our experience, we've added 30% more relationships within our offer. Assets have grown by over 50%.
[00:06:31] Speaker 2: Wow. Where's the wealth coming from?
[00:06:35] Speaker 5: From everywhere.
[00:06:36] Speaker 2: What does that mean, though? Is it, like, people, older people transfer or, like, tech wealth? What is it?
[00:06:42] Speaker 5: Yeah, it's tech wealth, but just overall, the number of ultra-high network families has just continued to grow. So based on a Cerulean report, the number of ultra-high network families now are over 440,000 individual families. That's a growth of over 700% since 2011.
[00:06:59] Speaker 2: That's amazing.
[00:07:00] Speaker 3: So we got Anthropics S1 this week. And part of, you know, that was one of the most read entities on the Bloomberg Terminal on Monday, the entire S1. Also among the most read stories was just how wealthy each of the individual founders, there are seven of them, at Anthropic are going to get. I mean, we're talking fortunes for each of them, over $10 billion. Those are just the founders. We have SpaceX this year. We're likely going to see an IPO from Anthropics. We perhaps, in the next few months, maybe, we'll see an IPO from OpenAI. How many more family offices will be created as a result of the wealth being created when it comes to AI?
[00:07:36] Speaker 5: There's estimates saying that there will be about 10,000 single-family offices by the end of the decade.
[00:07:41] Speaker 3: By the end of the decade. And the new formation, how much of that is AI related?
[00:07:46] Speaker 5: Oh, tough to tell exactly what that number is. But we do see growth, not just from AI, but all across the industry.
[00:07:53] Speaker 3: But fair to say AI is a higher concentration of growth and will be? Are you preparing for that?
[00:07:58] Speaker 5: Absolutely. So we do see, just based on region, there's a lot of growth in Northern California, obviously, and even in the Boston area.
[00:08:04] Speaker 2: I want to know how much of that is saying, all right, I'm in this company, it's a hot shot, it's growing, we're hiring, but we're a little worried about what the fallout will be on the other side. How many are thinking, when it comes to that new wealth, are saying, where do I put it? Where do I park somewhere safe? Where do I get that diversification? Because I'm so exposed to my company.
[00:08:22] Speaker 5: Yeah, so this is exactly where many of these families are looking for that type of support. So it could be through single-family offices or multifamily offices. We see growth in both areas. So just within our world, we now have 80 single-family offices that we're supporting and 80 multifamily offices. On the multifamily office side, again, these are ultra-high network families that may just start off with 20 million in investable assets, but up to several billion. Wow, okay. So just on our platform, we have now 80 billionaires.
[00:08:56] Speaker 2: But how many are thinking, like, I am too concentrated in one area, or are they not when they come to you?
[00:09:02] Speaker 5: There are families that want to hold on to a lot of those assets. Many are diversifying. And they're diversifying in multiple ways. They're investing in other companies. They're also donating a lot of those assets also philanthropically. Right. So we see just various ways of structuring those deals.
[00:09:20] Speaker 2: You know, we tease that when you guys work with a family office, that there's lots of things you do. And there's the expected stuff in terms of their portfolio management and probably tax planning. Where else do you go? And I am curious about the type of staff you need to kind of deal with these types of individuals.
[00:09:37] Speaker 5: Yeah, so the staffing of a single-family office can start with just two or three professionals. Okay. But there's also families that may have 50 to even 100 sometimes, depending on the type of family. It is not just about the financial side. It's across the entire balance sheet, for one. So it's not, they maybe have an operating business. They may have collectibles, yachts and jets and so forth. But even beyond that, what's most critical is actually the goals of the family itself. It could be philanthropy. There's the family dynamics and family governance. The biggest question that we actually hear is...
[00:10:14] Speaker 2: So the therapist and psychologist that you have to...
[00:10:16] Speaker 5: No, seriously. Seriously. And the largest question that we hear is actually, how am I going to transfer this generational wealth to my children? So that is really the biggest question that these families have.
[00:10:30] Speaker 3: And it's a complicated question, especially when so much of it is tied up in a single asset. There's the challenge in California, too, with the potential billionaire's tax. We'll see what happens next week. You know, I talked to some folks who work in family offices, and it sounds like there's a misunderstanding among the general public about how these folks invest. If there's a large concentration in, let's say, a single publicly traded company, maybe they were a founder and they have billions of dollars as a result, oftentimes they're not selling a single share of this equity ever. And instead, they're investing based on leverage and margin.
[00:11:03] Speaker 5: Yes, we definitely see that. This is where some of the long-short strategies come in, where they have concentrated positions. So they're thinking about the tax consequences. Also, many of these holders believe in the long-term runway of these companies. So they're not selling a single share, and they're looking to diversify in different ways.
[00:11:22] Speaker 2: Well, it certainly mirrors what we keep reporting out of Bloomberg about wealth creation in a big way. Certainly, when we talk about the K-shaped economy, the upper rung doing super well. I still don't have my family office, just so you know. You still get some years. Sam Kang, thank you so much.
[00:11:36] Speaker 5: Really appreciate it. Thank you for having me again.
[00:11:38] Speaker 2: Thanks for having us. Head of Family Office and Premier Wealth Group at Schwab Advisor Services, joining us right here at Schwab Impact. In just a few minutes, we're going to check in with the CEO of Schwab, Rick Worcester. He's going to be stopping by in about 10 minutes. Next up there, we're going to talk about donor-advised funds. We're going to do that with Julie Sun Wu, so she's going to join us in just a moment. On a day where, yes, we are seeing markets overall, the major indices, they are down about 1.5% on the NASDAQ 100. A lot of that has to do with what we got from Alphabet last night. Again, that AI trade in question. Down about 0.4% on the S&P 500. Well off our lows of this session. You go inside the S&P 500, Tim, most names, almost 400, are higher in today's session. So a little bit of a perspective, even in the NASDAQ 100, more names, almost 60, are higher and about 40 are lower today. So just remember, you've got the index number, and it can be very skewed by a couple of big names, and Alphabet's a big one.
[00:12:33] Speaker 3: It is. And, you know, we're seeing more reporting, too, from our Bloomberg News team. Davey Alba and Julia Love out with a story about Alphabet's AI risk extending beyond $1 trillion, the filing shows. So the reporting continues, the filings continue.
[00:12:47] Speaker 2: Yeah, and the debt raises continue, right, in a big way. All right, let's get to our next guest. We do talk about donor-advised funds. They've become widely used charitable giving vehicle, particularly for taxpayers seeking to accelerate and maximize their charitable contributions within a single year, while retaining influence over the timing and amounts of the grants to operating charities. We've talked about them a lot at Bloomberg. We want to go to our next guest, Julie Sun Wu. She is president of Daft Giving 360. It's all about donor-advised funds. They are an independent 501c3 public charity, formerly known as Schwab Charitable. And you guys, you've supported so many charities. Like, in any given year, you are supporting a lot of charities. So tell us, what's your world like right now? I feel like there is a lot of wealth creation, families, individuals trying to think about it. But you also have a market and kind of macro environment that has created a fair amount of uncertainty and volatility on any given day, any given month. So I am curious. The day-to-day gyrations, does it impact you at all in terms of what you do?
[00:13:57] Speaker 6: Well, I think this is a unique moment in time. We have a really strong equity market that we've had for quite some time. We have instant wealth creation, right? Where people that are not used to having the amounts of money that they have are inheriting or through the wealth transfer or making that money through some of the tech companies that we're seeing in the space. So I think that donor-advised funds are greatly made for this moment. So what we are seeing is that these instant wealth creation opportunities in this concentrated market creates market appreciation. And donor-advised funds allow people to make contributions into vehicles like ourselves and get that instant tax benefit, the write-off, and delay that decision around when they can donate to charities, when they can make the decision about what causes they are most passionate about.
[00:14:52] Speaker 3: And then ultimately, the money comes out of that fund tax-free and goes to charity? Or how does that work?
[00:14:59] Speaker 6: Yes. So the way donor-advised funds work is that you can make the contribution. And in 73% of the cases for ourselves, people are doing that in the form of non-cash assets.
[00:15:08] Speaker 3: So they're donating equity of some sort.
[00:15:09] Speaker 6: Donating equity. We have concentrated equity positions. We have market appreciation happening. And when that contribution is made, donors are able to take the tax deduction of the fair market value of that contribution at the moment of a contribution to the donor-advised fund. And then what they do is they invest the proceeds of the liquidation of those contributions into other investments, and that grows over time. So this past year, because we've had a strong market, we've had people generate over $9 billion in addition to their original contribution. That is all ultimately destined to go to charities. And so think about the power, the compounding power of those investments and all the good that that extra money will be able to do in people's local communities.
[00:15:49] Speaker 2: You are taking, obviously, equity, cash, hard assets, crypto.
[00:15:55] Speaker 6: We are. Tell us about everything that you're willing to take in. I mean, our view is that every dollar that we can take in and liquidate and redistribute to charity is a good thing. And so, essentially, if anything has a market and we're able to help liquidate it, then we can take it in and make that happen. And, again, redeploy that in the community according to people's passions.
[00:16:16] Speaker 2: Hard assets, too. Like, if they've got a hard asset, you're going to work with them and to figure this out? We're going to work.
[00:16:19] Speaker 6: We see all kinds of things that we do. Like what? Like what?
[00:16:22] Speaker 2: So, collectibles are always an interesting story. Are you looking to get rid of your boat? That's all I want to know. No, but a lot of other stuff. No, I'm just kidding. But, no, I'm curious. Like, what stuff comes to you?
[00:16:32] Speaker 6: Yes, it could be properties. I mean, crypto is certainly a hot topic. You know, it could be collectibles. I mean, obviously, right now, what we're seeing is the market that we're given is... Tim has a lot of bikes, a bike collection. Bikes, I'm sure there's a market for that, depending on the bikes we're looking at. Yes. But, you know, I think, you know, AI is a topic in this space, right? You know, so I think we are seeing more interest in pre-IPO securities, contributions of that. You are. Yes, private business interests. How do you value that, though? You know, as companies stay more private. Yeah, good question.
[00:17:00] Speaker 3: It's not marked to market the same way equities or bonds are.
[00:17:02] Speaker 6: Yes, we obviously have a team of experts that specializes in that, and that's how we do it. Yes.
[00:17:07] Speaker 2: Well, we want to talk to them, because we have trouble doing the valuation. I mean, it's really tricky. It is, yes. I mean, there's a lot of information increasingly out there, the longer that they stay private. Yeah, it is...
[00:17:17] Speaker 3: Is this next generation going to be as philanthropic as the generation that's giving them the money?
[00:17:23] Speaker 6: All indications are yes. You know, that people are, especially when you see some of these, I think, pre-IPO stocks, you know, et cetera. I think social good is clearly a topic among the next generation. They will look different. You know, I think that they are more interested in understanding where their dollar goes, you know, what impact that they're having. And those are things that we're keeping an eye on to make sure that we can deliver on what this next generation wants differently. So AI, how does it help you in what you do? Oh, yes. We're all learning, aren't we? Yes. That's why we have a conference here with so many AI topics, you know? So I think, you know, it will definitely make us more efficient. So we're looking at ways to redeploy that and get rid of some of the manual processes that we're doing. And that just means that the dollar that comes in goes out to charities much faster. That's our ultimate goal, right?
[00:18:03] Speaker 2: And you're doing that already? And it's working.
[00:18:05] Speaker 6: We're already doing. It's already helping. We're excited about prospects in the future.
[00:18:09] Speaker 2: All right. Interesting stuff. Julie, thank you so much. Thank you. An important part. They've been around for a long time, right? But it's just such an important part. Yes. Certainly as people think about, you know, giving away and giving charity. Julie Sun Wu, she is with us, of course, president of Daft Giving 360, joining us here at Schwab Impact 2026.
[00:18:26] Speaker 3: Hey, we're up here in Boston. Our eyes, though, to still on Wall Street, the S&P 500 down about half a percentage point. The Nasdaq and Bozit down 1.5%. The Dow down about four-tenths of 1%. In terms of what's moving, well, it's Alphabet, wiping off hundreds of billions of dollars in value today. It's down 12.6% as we speak.
[00:18:45] Speaker 2: I think it's like a half a trillion dollars. That's real money, folks. All right. When we come back, a real treat. Great to have back with us the president and CEO of Charles Schwab. Rick Worcester, he's stopping by. Lots to talk about with him. We're coming back in a moment.
[00:19:02] Speaker 4: It's 1.21 on Wall Street. We do check markets all day long here at Bloomberg. I'm Charlie Pella. We've got tech stocks being dragged lower by a record drop in Alphabet after earnings. Right now, Alphabet is down by 12.5%. Disappointing numbers from Alphabet, renewing investor concern about the threat that AI poses to its core business. Again, Alphabet down now by 12.5%. S&P down 5 tenths. We've got the Dow down 4 tenths. NASDAQ down 1.5%. The 10-year, 4.99%. Gold down 1.1%. 4,021 the ounce. And West Texas Intermediate Crude, 101.38 apparel, down now by 1.3%. Back we go to the Schwab Impact 2026 conference in Boston. And once again, your hosts, Carol and Tim.
[00:19:51] Speaker 2: Did you really? All right, everybody. We are back here at Schwab Impact 2026.
[00:19:56] Speaker 3: We're having too much fun. They're not going to let us go on the road anymore because it's like too much fun.
[00:20:00] Speaker 2: Oh, I know. It's like going home a little bit. I've got to say, Rick Worcester is back with us. He's president and CEO of the Charles Schwab Corporation. Good to be back with you.
[00:20:08] Speaker 7: It's so fun to be here. Thanks for having me on.
[00:20:10] Speaker 2: It's great to have you here. I feel like, go back a couple years, AI was not necessarily the focal point. It is now.
[00:20:16] Speaker 7: Is anyone talking about it here at the conference? Yes.
[00:20:20] Speaker 2: You guys in particular. What's happened? What's the conversations, Rick, that you guys have internally?
[00:20:26] Speaker 7: Well, it's been a huge accelerant to our business and I think to all the advisors here. And I think it's primarily helping us in a couple of different ways and helping the advisors in a couple of different ways. Number one, it's helping us be more efficient and effective with clients. It's streamlining operations. It's helping advisors be more prepared for meetings to recall what the last discussion they had with a client was or what's important to that client. And at the same time, I think it's creating new pathways to engage clients. And for all of us here at this conference, it will allow us to reach new clients that we couldn't have before with a personal relationship.
[00:20:57] Speaker 3: Well, one way you're doing that is by investing in Nevis. The booth is just right over there. We talked about this quite a bit yesterday with some members of your team. A year ago, you were sitting with us. You had just acquired Forge Global. Is this investment in Nevis part of something bigger?
[00:21:09] Speaker 7: Well, it's part of us trying to nail the basics for our advisors. Our biggest advisors have pretty sophisticated technology stacks. And what Nevis, I think, can do for them is provide an operating layer that makes it easy for them to work across their tech stack and integrate into us. And so what we're trying to do with our investment in Nevis is create ease for the advisor and make it even easier for them to work with us, which hopefully gives us a preferred position in being their custodian of choice.
[00:21:37] Speaker 2: How do you think about AI and being cautious? Because I think we're in this narrative around the AI spend. Look at Alphabet today, erasing about half a trillion dollars in market cap. You know, and I think there's increasingly the conversation about return on investment and will it all pay off. So how do you think about your moves, whether it's partnerships or doing deals, and what makes the most sense versus kind of watching how this ultimately plays out? And what will be the ROI for everybody?
[00:22:02] Speaker 7: Well, for us, we start with what's the end game? What are we trying to accomplish? And at Schwab, it's all about delighting the client, whether it's an advisor or a direct retail client. And so we've been placing our emphasis on how do we bring AI to our clients in a way that helps their financial journey and their investment life. And I think there's a plethora of ways that that can happen, from stitching together more of their investment life in one place, to having insights that they wouldn't have before, to making all these advisors more productive with their clients. So we'd like to start with the end goal. And I think AI has a really big role to play in all of that.
[00:22:35] Speaker 2: I'd love to know what you think about all of the bubble conversation that's been out, whether it's Ken Griffin of Citadel, you know, some concerns. And then there are others who are pushing back over at Blackstone saying, no, no, no, you know, we've got to keep going. You've seen a few market cycles. What do you think?
[00:22:52] Speaker 7: Well, it certainly feels like a boom. And we've had several years of great returns, which is terrific. In terms of a bubble, you know, one thing that gives me some confidence that maybe we're not in a bubble is there is a tremendous number of stocks that I think are either fairly valued or undervalued. And you certainly see stocks that are highly valued. Their fundamentals are incredible. And they're creating an entire new market, new way of working. It's not surprising that they have high valuations attached to them. And at the same time, there's so many companies that I look at. I'm like, wow, this company is cheap.
[00:23:25] Speaker 3: So to that end, I mean, we spent a lot of time over the last two days talking about AI in terms of advisor services and what it can do for RIAs and ultimately the end client. But what is AI doing for you at Charles Schwab right now on your back end that's making you more efficient?
[00:23:40] Speaker 7: It's helping us all over the place. I visited a branch in Austin, Texas, last week, and I sat with one of our financial consultants. Their job is to sit with clients and help their financial dreams come true and play an important role. That financial consultant told me that the AI tools we had put on his desktop saved him two to three hours a day. And so what he's able to do with those two or three hours a day is go see another family, go talk to another couple trying to retire, an individual trying to buy their first house. That's two or three hours he's getting back every single day to help more clients.
[00:24:10] Speaker 3: Are you seeing it show up on the bottom line at all in terms of earnings?
[00:24:13] Speaker 7: Absolutely, we are. We for sure have fewer people per client answering phone calls. We're able to serve more clients with each of our financial consultants. Now, we're still net positive from a hiring standpoint, but we're more efficient. We have 1,600 more people than we had two years ago, so we're growing. But if you look at the number of people we have per client, per client account, we continue to scale our business. And AI has been an important part of that.
[00:24:41] Speaker 2: So making you more efficient in certain areas, you are hiring. Where are you hiring?
[00:24:45] Speaker 7: We are hiring a lot of client-facing people. And the interesting thing I'm seeing about AI, and there's so much talk about it, and justifiably so, at the same point, relationships matter either just as much or even more. And when I look at all the statistics in our business, relationships are driving more growth than technology. When we have a financial consultant relationship in a branch like we have here in Boston, and we have a client relationship, that client relationship grows three times faster than when we don't have that person-to-person relationship. Likewise, our RRA business is the fastest-growing segment of our business, and that is entirely fueled by the relationship these wonderful advisors have with their end clients.
[00:25:25] Speaker 2: So kids, go get a liberal arts degree, right? What do you think about? What do we tell the next generation in this environment?
[00:25:33] Speaker 7: Well, I think EQ matters a lot no matter what you choose to do, and I think there's probably lots of ways to learn EQ.
[00:25:38] Speaker 3: So I want to talk a little bit. There's a lot we want to get to with you, but you know at this point that when you sit down with us, I'm going to ask you about prediction markets.
[00:25:45] Speaker 7: There was a market on that.
[00:25:47] Speaker 3: I wake up this morning and I see the news. Cal sheet, a $40 billion valuation, raising another billion dollars today from a large group of investors, including some financial services firms, interestingly enough. Are you missing the boat on prediction markets?
[00:26:00] Speaker 7: Well, my point of view on prediction markets is things related to financial events that could make sense in your portfolio. We think there's a market for that and a justification to have it in your portfolio, and we pursued that. We're working with the CBOE to make financial-related prediction markets available. I do not think, and I strongly feel, that sports gambling is not an asset class, despite some of these firms that offer it say. It's gambling.
[00:26:25] Speaker 2: They say it's not gambling.
[00:26:26] Speaker 7: It's gambling.
[00:26:27] Speaker 2: They push back constantly. What do you say?
[00:26:29] Speaker 7: I believe it's 100% gambling, and I have no problem against gambling. People like to go to Vegas, go to Vegas, have a good time. But you need to realize when you do that that you're very likely to lose some money. That is completely different than being an investor. And I just want to make sure people understand the difference, particularly young people who are being marketed to with sports gambling being an asset class. Listen, go gamble if you want to. Take money you might have gone out to dinner with, gamble. But don't mix that with buying stocks that if you're 22 years old when you're 65 are going to be worth a lot more. Why is that bad?
[00:27:05] Speaker 3: Prediction markets say there's no difference between betting on the outcome of sports or the markets or betting on the outcome of what Fed chair Kevin Warsh will do at the next meeting.
[00:27:14] Speaker 7: I think it's factually incorrect to say that sports gambling is the same as being an investor. Nine cents and a dollar on average people lose when they sports gamble. And again, that's fine. You go out to dinner. You leave with less money. You had a nice time with your wife or your friend. You know, you're happy that you spent the money and people enjoy sports and have a good time with it. If people want to do that, I think it's great. I just want to make sure the young investor in our country doesn't think that sports is an asset class the same way than investing in stocks is because they are fundamentally different. One has a positive expected return that will benefit you in your financial life and make you wealthy. The other is going to take money out of your pocket.
[00:27:53] Speaker 2: Do you ever think that these prediction markets are going to grow substantially when it comes to the financial markets and having a role in the financial system?
[00:28:01] Speaker 7: Yeah, I don't know because there's so many ways to participate in markets today and take different positions. I don't know how much that adds. I think it simplifies things and it might be a unique way for younger investors to engage. Maybe it's easier. But I think the reason you see 90 plus percent of the volume in sports gambling is because it's got around the sports gambling rules and it's opened up nationally and allowed people to do that.
[00:28:23] Speaker 3: So just last question on this, when do you think we'll see the actual prediction products from you?
[00:28:27] Speaker 7: Well, we already are in it in a small way. We're beginning with a relationship with CBOE where we have financial contracts on the S&P that are structured as prediction markets. We will launch more in the next year, but they are going to be financially driven. We're going to stay away from sports. Again, I have no problem with sports gambling. Have at it. Just don't confuse it with investing.
[00:28:46] Speaker 2: I want to go back to AI and agentic AI. And I know you've had some, I think, thoughts about this in terms of that ability that do we want to be able to open up and let agents basically make decisions on your portfolio or your retirement assets? Do you have a view on that as you guys lean more and more into AI?
[00:29:05] Speaker 7: Well, I think at the moment, I think very few people want to do that, number one. And number two, we're not going to allow it on our platform. There's too much risk for the client. Well, I'm not going to say, I'm not going to commit to ever. Things can change. But as we sit here today, I think it's too much risk for the client to bear and too much risk for us to bear. Now, interestingly, we are blocking traffic from agents that are unauthorized. But here's an interesting thing. We track how many times we have to block a client. We've got 49 million client accounts. I get a weekly report with the weekly hits. It's like 30 times that news was blocked, 40 times that Claude was blocked. Clients are not yet willing to give their passwords to these agents to go take activity on their behalf. I'm not ready.
[00:29:45] Speaker 3: I'm not ready. I don't think I ever will be ready. I mean, it's sort of the most sacred thing that somebody can do is part with their money and to make that decision themselves. But maybe I'm just old-fashioned. I don't know.
[00:29:55] Speaker 7: Well, you look at examples like Hugging Face, and there's been others where agents maybe do things that they weren't intended to do. And by the way, I'm very pro-AI. I think AI is terrific, and it's going to help us in lots of ways. But the idea that you might expose all your money or give your password and credentials to an AI agent, that makes me very nervous and certainly makes us nervous that our clients would do that, which is why we don't allow it. But we will create safe ways in, because we know clients want to use large language models. And so we've got two ways for clients to engage with us and use their large language models, but in a very safe and secure way.
[00:30:29] Speaker 2: So, Rick, I've got to say, every morning, I think I feel like Tim and I get up separately. But we are a little stressed. Sorry, a little joke, a little levity. No, but we talk about – sorry. That was funny. Large family, you know, crazy stuff. The wars – sorry, now I'm going to do a hard turn. Midterms, there's just AI. There's just so much coming at investors right now. And I know you and John Beattie, right, did a keynote earlier, and you guys were kind of looking – talking about the outlook. How do you see the outlook right now?
[00:30:59] Speaker 7: Well, the markets are strong. The economy is strong. And that's a good place to be. Employment –
[00:31:04] Speaker 2: Why does it always feel so bad, though?
[00:31:06] Speaker 7: Well, there's always things to be concerned about. And the market doesn't love uncertainty. And the midterms create uncertainty. But we'll get past that soon. And if you look at the past midterms, 19 of the last 19 midterms, after we've got through them, the market's gone up. So maybe we'll make it 20 in a row. But, yes, there's been uncertainty. But I think what's kept the markets continuing to go is that the economy's strong. You're seeing incredible productivity growth. This birth of AI that's driving a lot of incredible level of investment, certainly level of investments I've never seen in my career. Yeah. So fundamentally, there's a lot of great things happening.
[00:31:40] Speaker 2: Is there – what's one risk that you keep on your – I don't know, on your mind?
[00:31:45] Speaker 7: I think, to me, the biggest risk is inflation. Because the way inflation could hurt the markets is if bond yields continue to go up, there's a lot of debt in the world. And so that debt becomes more expensive. The discount rate on equities becomes higher. And so I think inflation is something to watch.
[00:32:04] Speaker 2: Yeah, and it seems to be a little bit persistent, right? Thank you so much.
[00:32:08] Speaker 7: Thanks for having me on. And I always love coming on and seeing you, too. I always have a great time. We have fun with you, too. Thanks, Rick. It's always good to see you. Thank you.
[00:32:15] Speaker 2: Rick Worcester, of course, President and CEO of Charles Schwab Corporation. All right, folks, we're going to continue from Impact 2026 here in Boston, keeping an eye, too, on the markets. More conversations to come. Stick around. Tim and I back in just a moment.
[00:32:36] Speaker 4: It's 140 on Wall Street. We do check markets all day long here at Bloomberg. Two hours, 20 minutes to go until we got the closing bell. The Dow, the S&P, NASDAQ, all in the red. Not all stocks lower, though. We have got the Russell 2000 index of small cap shares rallying by nine-tenths of one percent. But a tough day for a lot of the big tech names. Tech stocks being dragged lower by a record drop in alphabet after disappointing results last night. Those numbers renewing investor concerns about the threat that AI poses to its core business. Right now, we've got the S&P down six-tenths of one percent, lower by 38 points. Dow Industrials down five-tenths of one percent. NASDAQ down one and a half percent. All of this with the SOX, the Philadelphia Semiconductor Stock Index. It is down now by one and a half percent. A day after the Fed decision, two-year, 4.66 percent. The 10-year, 4.99 percent. And the 30-year currently yielding 5.33 percent. Gold, meanwhile, down 1.3 percent. 4,015 the ounce. West Texas Intermediate Crude just above 102 a barrel, down six-tenths of one percent. Barrel of Brent at 115, down now by three-tenths of one percent. Deal news. DoorDash makes it official. It is buying rival Instacart in a deal that values the company at about $17 billion. Shares today, right now, we are looking at shares of DoorDash, D-A-S-H on the ticker. We do have DoorDash shares. They're trading higher by $9.90, 179.38 on DoorDash. Again, recapping here, S&P 500 index, trading lower by 40 points, down five-tenths of one percent. And back, we go to the Schwab Impact 2026 conference in Boston. Once again, your hosts, Tim Stenevec and Carol Masser.
[00:34:27] Speaker 2: All right, Charlie, thank you so much. So we talk a lot about market concentration, and I came across some research on Bloomberg. U.S. equity concentration, we know it's risen sharply over the last decade. The 10 largest companies in the Bloomberg U.S. aggregate equity index account for more than one-third of the index, and that's more than double their share a decade ago.
[00:34:45] Speaker 3: Maybe Alphabet's concentration is a little less today than it was yesterday.
[00:34:48] Speaker 2: It is a little bit. But keep in mind, you know, revenues grow, margins expand. Some of this was, you know, rightfully earned, but it is also maybe not a problem on its own, but it does remind you that you've got to know what you know, you know, earn, or what you own, excuse me, and especially when you think about what you want your portfolio position for, and that's kind of where our next guest comes in.
[00:35:07] Speaker 3: DJ Tierney is Senior Investment Portfolio Strategist at Schwab Asset Management. He joins us here at Schwab Impact 2026 in Boston. How are you? Welcome.
[00:35:15] Speaker 8: I am great.
[00:35:16] Speaker 3: Thank you so much for having me. And what an event, right? Oh, yeah. It is pretty amazing. 6,000, more than 6,000 people. I mean, it's just massive. Well, let's talk about concentration risk, because I think there are some folks out there who don't really understand, I think, that the way that some of these largest companies have increased their position in the S&P 500. And if you are just focused, you know, on investing in that, for example, maybe you're overweight.
[00:35:40] Speaker 8: You certainly are. And to put it in context, we've run numbers on this. By the way, I checked the S&P 500 10 minutes ago after the alphabet correction. Top 10 holdings, about 40% of the S&P 500. Wow. Still. So, yeah, the two numbers, the top five has been around 30 for the last quarter or two, and the top 10, 40%.
[00:35:58] Speaker 3: Is that, is there any historical comparison there?
[00:36:02] Speaker 8: You have to go back to the late 19th century when railroad, the railroad capital built out. Why do we keep talking about railroads, Terrell? Well, sorry, but that is the last time. So, amongst our lives, we truly keep talking about railroads in the 1960s and 70s. Well, so, yeah, of the modern era, a lot of people fall back to the late 19th. The 1990s and the dot-com buildup, which we now look back. We know that was a bubble. The S&P 500 concentration, top five then, was about 17%. Today, it's 30. So, if, sometimes I'll, I, the advisors are interested in this, by the way. We have conference, we have panels on this, and they all come to these to talk about it because they want to talk about what can you do. Right. And the ones that don't come, I say, well, if you're not worried now, is there a level where you will be worried? Because if the forces that got us here today in October of 2026, they're not abating. I mean, the IPO, forward calendar, potential M&A, it could get higher. And so, if you're not concerned now, which we think you should be, because you have sector risk, you've got individual company risk in your, what should be a diversified strategy. So, you know, we're enjoying the opportunity to talk to advisors and engage.
[00:37:11] Speaker 2: DJ, the thing is, I mean, you go, you look over the last five years, this is, the big tech trade has been a great trade. We talk about buying the index, but you're really buying these big tech names. It has been a great trade for investors. So, like, how do you figure out, like, okay, this has been great for my portfolio. When do we know kind of the party's over? Or do we assume these companies are pivoting and thinking about embracing AI at this point? Like, how do you know that that's not kind of our future in terms of that's where the growth is and the value creation?
[00:37:43] Speaker 8: The bottom of the line is we don't know.
[00:37:45] Speaker 2: Yeah.
[00:37:45] Speaker 8: And so nobody does know. This could perpetuate for quite some time. And some of these companies may end up being the largest companies in the world in 10 years. What we can say with history, with some certainty, look at 1970, look at 1980, look at 1990. The regime changes consistently happen. The top 10, eight go away. Seven go away. Eight go away. So, historically speaking, we're very likely to have a shift in leadership. And, you know, the Google move today is an example, a 12.5% drop in a day. These things can happen. And so what we're saying is just start to position yourselves. We're not saying wholesale make changes, but maybe at the margin start to do different index strategies. For you, is this a sign that Alphabet is going to be outside of that top 10? Is this existential?
[00:38:27] Speaker 3: Is this the end?
[00:38:28] Speaker 8: I'm not making any call like that. That's a really big, diverse cash flow, you know, accretive company. They've got lots of lines of business. So I'm not making a call on Google.
[00:38:36] Speaker 2: Search business still, it's there.
[00:38:38] Speaker 8: But it's a reminder that your concentration risk can have an impact.
[00:38:41] Speaker 3: But if you, I mean, but to your point, if you were to go back and look at the biggest companies in the world, you know, 10 years ago, 15 years ago, 20 years ago, I mean, you'd be talking at some points about, you know, oil companies. Correct. You'd be talking about consumer companies. Yeah. You'd be talking about, you know, a generation ago, railroad companies. So it's like the leadership absolutely changes. Correct.
[00:39:01] Speaker 8: Yeah. Whether you're talking about AT&T, IBM, those were the companies in the 70s and 80s. Whether you're talking at the dot com, Cisco, Lucent, that doesn't come up quite as often, right? That was the top 10 in this S&P 500. So there are changes.
[00:39:12] Speaker 2: Where is WorldCom? No, no, I'm just kidding. No, but what's interesting is I think about diversification. What does it mean on a global basis? I am amazed how we don't really talk about global markets as much as we do in terms of your portfolio.
[00:39:25] Speaker 8: Right, right. Well, we do. So there you go. Yeah, one of the ways we like to point out is, by the way, if you leave the U.S., the sector diversification changes dramatically. So if you buy even just developed, diversified, developed large company indices outside the U.S., technology is not in the top four sectors, right? Things like consumer products, industrial, commercial, rise to the top financials. And so one diversifying metric might be let's look at your global versus U.S. mix.
[00:39:50] Speaker 2: Yeah.
[00:39:50] Speaker 8: That's a good step right there.
[00:39:52] Speaker 2: Do emerging markets have the attraction as much as they've gone through their ups and downs, certainly volatility and so on. And so forth. But I'm just curious.
[00:39:58] Speaker 8: Yeah. So I'll tell you, our portfolio approach is to be globally diversified. So is emerging markets of interest? Yes. And it always is. Developed always is. So we go global diversification right out of the gate and then we maintain it and we rebalance. So we take really long-term views on how we assemble our portfolios. And then the key is within asset classes, like the U.S. equity market, we'll diversify away from market capitalization. So whether it's active management or something like a strategic beta, we use fundamental indexing as a mainstay in our portfolio construction. So those are the ways you can find diversification within your asset class.
[00:40:32] Speaker 2: Fundamental indexing is a big part of it, right, that you guys are doing.
[00:40:34] Speaker 8: It is. Yeah. We've had a partnership there for coming up in 20 years. We have ETFs, we have indexed mutual funds.
[00:40:40] Speaker 2: It's funny what you said, though, about market rotation. Like you think about energy, not so interesting. And then all of a sudden it's very interesting again this year. So like you do see different kind of ins and outs when it comes to things that are hot. DJ, this was fun. Thank you. Oh, my pleasure. Thanks so much for having me. Yeah. Thanks. Thanks for having us. This is your home. Or, you know, home of sorts. DJ Tierney, Senior Investment Portfolio Strategist at Schwab Asset Management, joining us at Schwab Impact 2026.
[00:41:05] Speaker 3: It is Bloomberg Business Week Daily. Just taking a look at some of the stocks that are making big moves right now, I do want to talk very briefly about Alphabet. It's right now down 13% today. Looking at different functions on the Bloomberg Terminal that give us an idea historically what this day means, it's the worst day for Alphabet going back to its IPO back in 2004. It's the lowest since March 30th of this year. So giving up certainly a few months of gains at this point. The change today, Carol, you alluded to this earlier. Yeah. Down almost $500 billion in a single day. $494.35.
[00:41:41] Speaker 2: Still a $3.4 trillion market cap company.
[00:41:44] Speaker 3: Yeah.
[00:41:44] Speaker 2: In case you were worried.
[00:41:45] Speaker 3: Yeah.
[00:41:46] Speaker 2: No. I'm not trying to be silly about it, but it is a big, big move. And you've got to kind of wonder, we'll see what happens tomorrow and what happens into the next week trade, where maybe some people say, okay, this is an opportunity to get in. All right, guys. Another day where we are waiting for a couple of big tech mega cap companies. We've got Amazon, Intel. Yesterday, of course, we know it was Microsoft and Alphabet. Our next Schwab team member guides his team when it comes to market outlook and direction. You kind of work with Schwab, don't you? We work with Schwab. Michael, God, it's been a long time. It's been a long time, Carol. How are you? I just realized. Michael Vogel saying this with us.
[00:42:22] Speaker 3: Oh, I love these real-time. Oh, my goodness. You know, I saw your name. That was not rehearsed or planned or anything. That was a legit, authentic reaction.
[00:42:29] Speaker 2: I mean, it's been such a long time. It's been a long time. Well, he's chief investment officer of the independent fiduciary investment advisory cap trust. Roughly $233.7 billion in. Is it outsourced AUM?
[00:42:40] Speaker 9: In managed AUM. In managed AUM. And then we have other AUA.
[00:42:44] Speaker 2: Yeah, a lot more. How are you doing? I'm doing all right. Thank you.
[00:42:48] Speaker 9: Yeah, I feel a little crazy, but yeah.
[00:42:49] Speaker 2: A little crazy. Well, you lead a team of more than 50 across manager and security research, portfolio management, alternative investment strategy. You guide them when it comes to investments and direction. I am curious, what's your guidance in today's environment?
[00:43:04] Speaker 9: Man, it's a tough one. You know, we sort of start from the place of where we are as a market. And obviously, we have the concentration. You're just talking about Google. Yeah. And all of the troubles that that that brings. You know, 80% of the market is effectively forgotten. And so, you know, what the way we've been describing it to folks in either our advisors and also their clients is to say, you know, we believe that the range of outcomes is a little wider than normal. I guess extinction from AI and bull markets are kind of. He went there. He went there. It's kind of the big, the real-time blood pressure. But we laugh.
[00:43:43] Speaker 2: But do you guys talk about it?
[00:43:44] Speaker 9: Like, yeah, I don't, I don't, not that. Okay. Right. Not, not, not sort of the ultimate. But, you know, it's, it's a, another way we, we, we try to educate folks on is, you know, the volatility in names like Google is the price you pay for the future, right? You don't get the future of AI without dealing with down whatever it is today, 10, 15% in a particular name or even in the whole complex. And so we run some money in a, you know, much more speculative AI strategy, 25 names, very small, not the big, the big hyperscalers. And the volatility is breathtaking. Yeah. But the long-term returns are really strong. And, and again, it's that volatility is the price you pay to participate in that long-term future.
[00:44:33] Speaker 2: So in other words, you're betting on, okay, so they're making the investments today. There's going to be some rough spots where it doesn't look like it's paying off. Right. And that's the, that's the story.
[00:44:42] Speaker 9: The key is, right, if investors are left to their own devices, what you end up with is this, you know, sort of, sort of the water in the bathtub analogy. People get carried away. They think it's great. They put all their money on red number six. And, and, you know, our job as advisors and fiduciaries is to say, hey, when things are great, the market's high after three years of double-digit returns, don't get carried away, right? We're going to have some rough spots and so pull some back and put it in places that the market's forgotten a little bit.
[00:45:13] Speaker 3: Do, do people listen to that right now? They do. We have, we, and I mean, we, the collective we as human beings have really selective short memories.
[00:45:20] Speaker 9: 100%. You know, maybe it's self-selective with our client base, right? They're, they're hiring us to advise them. And so.
[00:45:26] Speaker 3: So they're already taking that step to say, we need the feedback. Maybe they're actually open. But do they take it, right?
[00:45:31] Speaker ?: Yeah.
[00:45:31] Speaker 2: Like, it's, it's hard to ignore kind of the trade of the last three, five, 10 years where these tech names have certainly been of interest.
[00:45:38] Speaker 9: It's, you know, we just, we just talked about a chart the other day from, I think it was back in 2006, maybe it was 2004. Energy was maybe, I'm going to get the numbers wrong, but energy was about eight or nine, 10% of the S&P and technology was 13 or 14%. Today, if those same stocks had remained in technology, it'd be 50%. They've removed a bunch of them.
[00:46:00] Speaker 3: Yeah.
[00:46:01] Speaker 9: You know, MasterCard, Visa, a few others were, had been taken out. But if you'd keep those in, that, that 10 or 12, 13%, whatever it was, would now be worth almost 50% of the S&P. So it is true. The technology has just devoured the entire market. And so, yeah, people are short term. They, they see this. Why should I invest in Coca-Cola?
[00:46:22] Speaker 3: But, but, but I mean, people say this is the next industrial revolution. Like this is something so much bigger than anything we've seen in an entire, in an entire generation. Are they right?
[00:46:32] Speaker 9: Without a doubt, right? Without a doubt. And that's, that's this idea of, our advice is stay invested. Don't get so crazy that when you get a big drawdown, you're going to get knocked off the rail and you'll sell it because you don't want, you can't stand it. Play a little defense, but keep enough in the game so that you can, that you can enjoy the future, right? It's not terribly sexy advice, but it really works because we're, we're, we're dealing with emotions and human psychology most of the time.
[00:46:56] Speaker 2: So the negative free cash flow, the constant tapping into the credit market, it's just about 30 seconds here, Michael. I mean, none of that makes you feel like it's getting, it does. It absolutely does.
[00:47:07] Speaker 9: So we've been, we've been positioning this as we're at, we're at a bit of a pivot in the AI trade just for the reasons. You mentioned, we've gone from self-supported, self-funded with cash flow to now the debt markets have to have to pick up the load. And bond investors are sketchy, right? They get a little worried. And so that's what we're dealing with right now. And I think it's, it's a fraught time and I think we have to be careful. But I think the long-term picture is fine.
[00:47:33] Speaker 2: So let's not make it 20 years or whatever the heck it is.
[00:47:35] Speaker 9: It hasn't been 20.
[00:47:36] Speaker 2: I want to hear. I am like blown. I'm going to like go search. I need to hear. I've been a bloomer a long time. When we're done. What a treat. Come back.
[00:47:42] Speaker 9: Great. We'll do that. Would you?
[00:47:43] Speaker 2: We would love it. Michael Fugglesing, Chief Investment Officer over at CapTrust joining us here at Impact 2026.
[00:47:49] Speaker 3: Hey, we've got much more coming up live from Schwab in Boston in just a minute. This is Bloomberg.
[00:47:54] Speaker 1: This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. Bloomberg Business Week Daily with Carol Masser and Tim Stenevek live on Bloomberg Radio, television, and Bloomberg Originals.
[00:48:24] Speaker 2: All right, everybody, we are back on Bloomberg Business Week Daily, Carol Masser, Tim Stenevek live here at Impact 2026 in Boston. I feel like it's a homecoming of sorts.
[00:48:33] Speaker 3: It's definitely a homecoming. I love this. If you made it here. If you made it here.
[00:48:36] Speaker 2: There's a story. We'll get to it in just a moment.
[00:48:42] Speaker 3: The great thing about doing this four years in a row is, you know, you get to know the people who you have on over and over again. And it's sort of like a little reunion. And you build relationships here that you get to continue with throughout the year.
[00:48:57] Speaker 2: Which is true of our next guest, who we're going to get to. Kevin Gordon is going to be with us in just a moment. So we're going to talk a lot of things. He's head of macro research and strategy at Charles Schwab. He's going to join us in just a moment. We're surrounded by registered investment advisors, independent advisors. They've been coming up. We've been hearing kind of what's on their mind. A lot of them are upbeat. So it's really fascinating. A lot of them leaning into AI, which has been a major theme this year at the event. So coming up over the next hour or so, we are going to talk with Kevin. But we've got a few other folks.
[00:49:25] Speaker 3: Yeah, Jelena Kerr is back with us. You remember her from last year. She's head of advisory experience over at Charles Schwab. And then Mark Mezzanotte has come in. He's head of private wealth solutions for iCapital. He's going to be joining us in just a few minutes.
[00:49:34] Speaker 2: See what he has to say about the market environment. Hey, we love your questions. Send them to us. Bloomberg.com slash askradio for Bloomberg.com subscribers and for terminal clients. We like to bring you into the conversation. We also like to bring Charlie Pellett into the conversation. So let's get an update on where we are in the training session. Charlie, over to you.
[00:49:50] Speaker 4: Hi, thank you very much. And here's what's going on. Stocks continue to trade lower. Two hours to go ahead of the closing bell. The big story today, what is happening with Alphabet? GOOG, Google, the ticker symbol, down now by 13%. Bottom line here, tech stocks being dragged lower by a record drop in Alphabet after disappointing numbers. Newed investor concern about the threat that AI poses to its core business. Bears repeating Alphabet down now by 13%. S&P 500 index lower by 48 points to 76.96. That is a drop of 6 tenths of 1%. Now, industrials now lower by 295 points down by about 6 tenths of 1%. S&P, by the way, very close to session lows. NASDAQ hard hit down 1.6%. NASDAQ 100 index hit even harder down now by 1.7%. Interestingly, though, on a down day for much of the market, the Russell 2000 index of small cap shares is up now by 7 tenths of 1%. The stocks, the Philadelphia stock exchanges, semiconductor index down by 2%. The two-year, day after the Fed, 4.66%. The 10-year, 4.99%. West Texas intermediate crude down 9 tenths of 1%. 101.88 a barrel. Brent, 114.71 down by 5 tenths of 1%. Again, Alphabet after earnings down now by 13%. Microsoft after earnings down 8 tenths of 1%. Amazon and Intel both report today after the close of trading. They'll be the big tech names. We got Amazon down 3.8%. Intel now lower by 4.5%. Recapping, stocks lower, S&P down 6 tenths of 1%. Your 10-year currently yielding 4.99%. And back we go to the Schwab Impact 2026 conference in Boston. Once again, your hosts, Tim Stenevec and Carol Nasser.
[00:51:44] Speaker 2: All right. We do have markets taking a leg lower, as you just heard from Charlie. So hovering near our lows of this session. What a week. Anthropic S1 on Monday. Big tech earnings. AI reads thanks to quarterly updates from Alphabet. Microsoft. We get Amazon and Intel later on. Not everything is equal, as you know, with the results. That's only through Thursday, too. Yeah. Oh, wait. Fed decision.
[00:52:03] Speaker 3: Yeah.
[00:52:03] Speaker 2: How could I forget? Yeah. We knew we had to check in with Kevin Gordon.
[00:52:07] Speaker 3: He's head of macro research and strategy at the Schwab Center for Financial Research. He joins us here at Impact 2026. A familiar name, a familiar face, not just to our listeners and viewers. Welcome back, guys. Thank you. On Bloomberg this weekend as well. Yes. So we love seeing you there. This economy right now, has your view on it changed this week as a result of the S1, as a result of what we heard from Fed Chair Kevin Warsh, and then what we heard from Alphabet yesterday.
[00:52:33] Speaker 10: No, not much has changed. I think, you know, it's funny. I was thinking back to a year ago, almost around this time, but last impact. And we were talking about the labor market because we were getting data that was actually showing, you know, a weakening in labor. That was the time when payroll growth was averaging basically zero. But I was calling it sort of a hall of mirrors labor market. But I feel it's expanded to become kind of a hall of mirrors economy. Because when you look at even third quarter GDP that got reported this morning, stronger than expected. Right. Really great business investment. Consumer spending was resilient. That's very much at odds with basically every consumer sentiment metric. You know, consumer confidence from the conference board did bounce back in October. But you match that or you sort of mesh that with what we've gotten from you, Mish. And most people, especially in the dozens of client events that I've done in the past couple of weeks, most people still feel sort of this gripping anxiety around the economy. So it's really opened up this gap. And I've called it, you know, sort of this vibration where people sort of persistently feel bad, driven by inflation, driven by fears about AI and the labor market, which I know we'll get to. But it's a fascinating sort of divergence. And it was just really has only been confirmed this week, especially with this morning's GDP data, but also with inflation staying stickier. Now we know September PCE, you know, was hot.
[00:53:46] Speaker 3: Well, on the inflation picture of that, like, you know, if we were thinking about this a year ago and talking about the labor force, think about what, you know, if we're looking at this through the lens of the dual mandate, the Fed now squarely focused on that inflationary picture because we've had such a big macro event this year with the conflict in the Middle East and the rise in oil prices and the stickiness of that. How sticky is that inflation going to be?
[00:54:08] Speaker 10: I think it's pretty sticky. And I think that the hard part is... It's been sticky, right? And the hard part, too, is you've got... And, you know, we've covered this. And I remember, you know, going on the show relatively early on in the conflict and talking about how, you know, it takes time for these kinks to be worked out when there's supply, sight, and nature. And I think that's the tough part about this is that not only are we living with sort of this lingering impact from everything that happened with tariffs last year, because that is still embedded in the system. It's just not as powerful and maybe as, you know, sort of colorful as something like energy prices because we all feel that, you know, instantly, especially people who drive. But I think that the hard part about this is this sort of lingering, sticky supply shock nature of all this inflation, whether it is, you know, tariffs, whether it is everything going on with the war, whether it is, I think, this sort of coming trickle down that you'll see from the spike in diesel prices. I mean, I think we've yet to feel that.
[00:55:00] Speaker 2: I don't know if you have a food court like we have at Bloomberg where, like, everybody...
[00:55:03] Speaker 10: We don't. That's why I like to go to yours.
[00:55:05] Speaker 2: Okay, okay. It has a fun food court. But what's great about it is you have groups from all of Bloomberg running into each other. So, you know, you kind of get these interesting conversations. And I think about the folks that we've talked to here at Schwab talking about family offices and wealth creation just kind of like off the chart. Oh, yes, yes. And then you've got, you know, a stock market that, okay, maybe today not so great, but we, you know, kind of continue to see a lot of records. And yet you still have a lot of problems out there. And you see it in some of those economic indicators.
[00:55:35] Speaker 10: I mean, this is the tough part about the... How do you square that? This is the tough part about it. And it's been almost a feature now of the post-pandemic environment. Because in my assessment of it, we have not had what I think of as sort of a real bear market post-pandemic. We've had these really sharp drawdowns, but I would call them more sort of severe corrections. Like you knew why it happened. Yeah. And they resolve themselves fairly quickly. I mean, to me, a real bear market is, you know, 07 to 09, much more protracted. 2000 to 2002, much more protracted. Even in the early 90s, you know, you had these longer ruptures. And so that, with the sharp rebound that you've seen in conjunction with rates being as high as they are and what people earn in the fixed income world, you have this dual, you know, sort of cushion that has helped the asset owners, which we hope, you know, more and more people every day, you know, become. But those who were already in that, and they were sort of, you know, the haves, they have disproportionately benefited. So that's what drives that kind of K-shaped thinking of this economy and the market in particular. But is it harder right now for the have-nots, if we're going to continue with this metaphor, to become haves? In some ways, yes.
[00:56:36] Speaker 3: Because they're just shredding water.
[00:56:37] Speaker 10: Well, yeah, absolutely. And this is also really difficult when I call it the hall of mirrors economy, because there's so much pressure coming from those higher energy prices, so much pressure coming from just higher staples, you know, whether it's groceries, whether it is gas. But at the same time, in all of this, we've basically remained in a fully employed economy. We have not seen, you know, massive net job loss, and we have not seen initial jobless claims pick up to recessionary-like levels. Even last fall, you know, I mentioned that slowdown in payroll growth. Even though that was happening, we were basically skating towards the zero pound. You did not have the commensurate pickup in claims that you would normally see in a recession. So we had this sort of hiring recession, but you didn't translate it into a firing recession. So I think that I've been sort of saying, you know, that the labor market's resilience is almost the economy's worst enemy, because it's still keeping people employed month to month. That nominal spending engine is going. That's helping drive some inflation. But also, people are struggling at the same time in inflation-adjusted, you know, income terms. So it creates a little bit of a strange kind of effect.
[00:57:36] Speaker 2: What's the worst scenario? Like, we all know markets don't only go up. Economies don't just only grow. So we all know that. But so what's the smart conversation around the risks that could possibly likely happen?
[00:57:51] Speaker 10: I think the smart conversation is we have to be open to possibilities around this oil shock, you know, lasting long, but also maybe not as bad as it has been in history. And the Boston Federal Reserve has actually had really good research on this, looking at prior oil shocks and comparing it to modern day, where it would just take a much more massive increase in the price of Brent crude, if you want to use that as your benchmark, to lead to employment loss, to lead to lingering inflation that is higher. Because our economy is not as dependent on oil. It's different, yes. And I think that that metric, you know, that metric of the share of our spending that goes on gasoline and gasoline-related products, you know, is low single digits. So are we overdoing it when we talk about gas prices so much? No, no, no. We're not overdoing it. I think we're maybe overdoing it and thinking about it in, you know, big blanket recessionary terms. But we're not overdoing it in terms of thinking about how it does hit certain groups of people who are not represented by the S&P 500, as an example. So there is that split. And I've tried to, you know, in the vibration, you know, I don't want it to just be a, you know, a quirky term. I do want it to be, I think, this look within the economy that we should, you know, take to see how people are being affected by this.
[00:59:00] Speaker 2: We have a viewer question, Brendan from Maryland. And this was kind of, thank you, a follow-up to a guest we had earlier. In terms of market concentration, which we talked about, what should investors make of these AI tangential companies and other verticals, like industrial construction utilities companies? And I think that was our conversation with, who did we talk to? Oh, DJ. With DJ, yeah. I love DJ. Yeah, he was great. And we talked about market concentration.
[00:59:25] Speaker 10: Yeah, I mean, that's a great point because, you know, there are these, there are tangential risks. It is spreading into areas like industrials or materials, even energy to some extent and utilities, you know, key to this build out and this infrastructure build out. I will say, though, I think where you look for some of the excesses and some of the imbalances, it still almost squarely rests in the tech sector. And just as, maybe to put a statistic on it, you know, the forward EPS growth for, you know, the Bloomberg series, best EPS, estimated next 12 months for the tech sector is up by 90% year over year. Far and away a record. Yeah. Beyond what we saw in the 2000s and early 90s, and then when you translate it over into industrials, you don't have anywhere near that kind of hockey stick-like move. So I still think from just an earnings expectations perspective, if you think you're in sort of bubbly territory for tech, there are ways to diversify outside of that. And we've sort of lived this for the past couple of years.
[01:00:17] Speaker 2: But should you with those kind of expectations? Or have valuations already factored all of that in?
[01:00:22] Speaker 10: No, well, I think, well, this is what makes it different from sort of other periods of boom and maybe bubble is, which we still sort of think we're in this boom phase. You know, it's hard to call it a bubble until you see that it's popped.
[01:00:34] Speaker 8: Yeah.
[01:00:34] Speaker 10: But I think that for even for the earnings component, it's still, given you're seeing most of the excess really still reside in tech. Yes, tech is a big part of the market. So if it does really struggle, very much like today, cap-weighted indexes will struggle. However, if you are exposed and diversified to other parts of the market, much like we're learning today, equal-weighted S&P 500 is up. So you can still have that hedge, lowercase h.
[01:00:56] Speaker 3: So maybe a good transition to talk about productivity and the idea of the impact of this technology on the labor market and also on productivity. We are speaking with Kevin Gordon, head of macro research and strategy at Charles Schwab here at Schwab Impact 2026 in Boston. What is, what have you penciled out?
[01:01:15] Speaker 10: I think that, well, in what we've seen so far in the productivity data.
[01:01:19] Speaker 3: But that's, it's, that's like, I mean, we're just, if I'm, if I'm, if everybody's right here, just scratching the surface with this technology. I mean, look at the anthropic customers, like, there's a lot more opportunity there, people say.
[01:01:31] Speaker 10: Oh, for sure. And I think, you know, the hard data productivity that we get from, you know, the government statistics from the VEA. I mean, that, that hasn't been dramatic. So I think it'll, in some ways, be measured in maybe the non-traditional data ways that we think about it. Because everybody's productivity is kind of personal.
[01:01:46] Speaker 3: Yeah.
[01:01:47] Speaker 10: You know, how much you can fit in a certain day and how many trips you can take or what the technology allows for you, whatever, however you think about it. So we're not seeing it yet. But at the same time, but I think the bigger story and the more important sort of exclamation point around this is that I'm just not a big believer that you're going to see this massive level shift down in the number of payrolls in the world or in the U.S. because of this technology. I'm a big believer that these technological booms do lead to net job creation, but it's not maybe in the same place that you would think it is or maybe the obvious place. But even when I look at, you know, these things called dissimilarity indexes, which really just measures sort of the churn of jobs over time, how many people need to, how many times people need to change jobs, that has not dramatically broken away from other times we've had technological booms, whether it was the computer, whether it was the internet. So if we were seeing that, that shift, then I would be a little bit more concerned. But with payrolls, non-form payrolls are at an all-time high, unemployment rate has not spiked, and yet we're sort of four years into this process already.
[01:02:44] Speaker 2: Doesn't it make you scratch your head occasionally?
[01:02:45] Speaker 10: Yeah, I scratch my head every day. Yeah. I mean, yeah, I think you have to do that if you're a macro person.
[01:02:50] Speaker 2: What about globalization?
[01:02:53] Speaker 10: That's an easy one.
[01:02:54] Speaker 2: No, no, no, no.
[01:02:56] Speaker 10: What about it?
[01:02:56] Speaker 2: Well, no, my point is there was such a pushback, but the reality is...
[01:03:00] Speaker 10: Oh, you can't escape globalization. Right? I mean, look at the trade deficit in the U.S.
[01:03:04] Speaker 2: Yeah.
[01:03:05] Speaker 10: I just point people to that, and this is not...
[01:03:06] Speaker 2: It hasn't changed dramatically, has it?
[01:03:08] Speaker 10: It's, we are, if you exclude the Liberation Day swings and the run-up you had when people were front-running their purchases in anticipation of that tariff wall, we are at all-time record highs on the trade deficit. I mean, and most of that is driven by AI.
[01:03:22] Speaker 3: But it has changed the way companies think about their supply chains. Oh, absolutely. No question.
[01:03:26] Speaker 10: But I think if you're thinking about sort of purchase activity around the world and how countries are still dependent on each other, and even if it's just the parts and the components you're getting, you can diversify it away. But the whole thing about globalization, maybe it's not Chinazation, where we're all sort of dependent on one country. Yeah. But I think that's why we think it's sort of a re and not a D. It's a re-globalization. It's not a deglobalization. I mean, world trade export, you know, volume is at an all-time high. That data comes from the CPB, Netherlands Bureau. I mean, that's at an all-time high. The trade deficit is at an all-time high, excluding the Liberation Day swings. So all of that still suggests, to me at least, that globalization is not dead. It's just shifting. It's just changing shape. It's not dead. It's just sleeping.
[01:04:08] Speaker 2: Well, we hope people aren't sleeping when it comes to voting, because we have midterms.
[01:04:13] Speaker 10: And Mike Townsend is going to be joining us next hour from the Washington Wise podcast. We love, love, love. I love Mike. We do, too. We were on the big stage together on Tuesday night, along with Lizanne and Colin. And, I mean, it's just, you know.
[01:04:24] Speaker 2: And he says it's easy peasy, right?
[01:04:26] Speaker 3: Well, he has his, you know, Mike has his predictions. He's going to give them to us. I want to see if they align with what happens. But the effect on portfolios and the effect on the market. Rick Worcester said.
[01:04:36] Speaker 2: Or businesses and regulatory, too.
[01:04:38] Speaker 3: He said, listen, we, you know, have 19 examples of post-election markets going up. And he thinks we'll add up a 20th example next week.
[01:04:46] Speaker 10: I think I'm fully on board. I agree with Rick. I mean, the data supports it.
[01:04:51] Speaker 2: Well, Kevin, he is your CEO. He is the CEO. I'm just kidding. I know. I fully agree.
[01:04:55] Speaker 10: I mean, the data support it. I mean, I think that it's one of those things that, you know, you always kind of get that angst around it being some kind of risk event. Is it going to be a market-clearing event? I do think maybe a little bit of a shift this time is that you do have the data center component being voted on more. So, you know, maybe in terms of the social pushback.
[01:05:15] Speaker 2: Do you look at prediction markets?
[01:05:16] Speaker 10: I mean, I look at them from time to time in terms of how people are – I look at it from a sentiment angle. You know, are things getting too one-sided for a particular inflation print or a GDP print? You do. Yeah. I just – I mean, I think all data can be useful in certain ways. I mean, it's certainly not my main, you know, source of sentiment. He's on it all the time. But it's a daily feed. Yeah. I mean, it is a – it's a daily feed.
[01:05:40] Speaker 3: But I'm on it all the time as an observer. I've never participated. No, no, no. I wasn't trying to get you in trouble.
[01:05:45] Speaker 2: But it is like kind of another gut check. And you're right. It's like every day. Yeah. Like a fresh set.
[01:05:48] Speaker 10: I think it's good, you know, because sometimes – there was a time when I would use more social media feeds to get a sentiment check. But that's harder to piece together as data points. You know, some of those –
[01:05:56] Speaker 3: It's just right there, and it's numbers, and it's –
[01:05:57] Speaker 10: And it's a line on a chart. And it's not always right. Correct. Yeah. Correct.
[01:06:01] Speaker 2: Can you just stay forever?
[01:06:02] Speaker 10: Oh, I wish. I wish, too. Can you guys stay forever? Yeah, we can. You guys are great.
[01:06:05] Speaker 2: Yeah, we like it. It gets cold in Boston, though, you know.
[01:06:07] Speaker 10: It does, but I like that. I know, I know. You know me. I can't handle the New York summer. I can't believe you're a Pepperdine guy. Like, come on, Malibu. I know, but it was only hot for like two weeks moving into school, and then it got nice. So I was just, you know – I mean, Tom and I talk about this all the time. He's like, why did you leave California? Yeah.
[01:06:24] Speaker 2: Thank you.
[01:06:25] Speaker 3: Thank you. We are glad you did, and we are glad whenever you joined us. It's so good to be with you guys. Thank you for being here.
[01:06:29] Speaker 2: Thank you. And thank you guys for inviting us in. Kevin Gordon, head of macro research and strategy at Schwab Center for Financial Research. No one like him. Amazing. Coming up, we're going to talk with the head of Private Wealth Solutions at iCapital on advisor adoption of alternatives. So we're going to get into that space a little bit more. We are also counting down to the close on this Thursday. Stick around. Tim and I back in just a moment.
[01:06:57] Speaker 4: It's 221 on Wall Street. We do check markets all day long here at Bloomberg. Tough day for tech with the Dow, the S&P, NASDAQ. They're all in the red right now. We have got the S&P 500 index down 0.5% of 1%. Right now, though, the NASDAQ 100 index is down 1.6%. NASDAQ composite down 1.5%. Dow Industrials down by 0.5%. And the Bloomberg Mag 7 index, of which Alphabet is a part, it is down now by 1.7%. Alphabet after earnings, biggest drop ever, now plunging by 13.2%. Microsoft after earnings, down 0.5%. Amazon and Intel coming up after the close of trading today. We've got Amazon right now down 3.9%. Intel ahead of earnings, down now by 4.5%. The two-year yield, a day after the Fed decision, 4.65%, but the 10-year at 4.98%. Spot gold, $4,000.8. Right now, it is down 1.5%. West Texas Intermediate Crude, just below 102, a barrel, down 0.8%. Barrel of Brent, the global benchmark, 114.73. Brent crude right now, down 0.5%. Again, Alphabet bears repeating, down 13.2%. Potential deal news. All sources tell Bloomberg, Marvell technology is in advanced stocks to buy Lumentum Holdings. That is a data center optics maker and a potential all-stock transaction. Marvell down now by 13%. Lumentum, which uses the ticker symbol Lite, L-I-T-E, down 1.9%. Back, we go to the Schwab Impact 2026 conference in Boston. Once again, your hosts, here they are, Tim Stenevek and Carol Masser.
[01:08:45] Speaker 2: All right, Charlie, thank you so much. Yes, indeed, we are here at Schwab Impact 2026 in Boston. There's a recent story that caught my attention. It was Apollo and Mubadala Capital agreeing, Apollo agreeing to acquire a nearly 10% equity stake in Mubadala Capital. It's a $755 billion plus alternative asset arm of Abu Dhabi sovereign wealth fund. And there's some other things. But I guess my point is, there is a lot going on in the alternative investment space. And a lot of it, not just in the U.S., but really globally.
[01:09:17] Speaker 3: Mark Mezzanotti is head of private wealth solutions for iCapital, which, as it says on its website, is working to make alternative investments accessible to wealth advisors and their high net worth investors, enabling fund managers to reach new sources of capital. He joins us here with an update on what he's seeing when it comes to investor interest and flows in the alt investment space. Welcome. How are you?
[01:09:35] Speaker 11: I'm terrific. Thank you for having me.
[01:09:37] Speaker 3: So let's start with the $2 trillion elephant in the room, which is anthropic, maybe $2 trillion. We'll see what happens. We'll see. Alternatives when it comes to private companies, pre-IPO. How would you gauge interest right now?
[01:09:56] Speaker 11: So I would frame that in the context of the fact that we know companies are staying private longer. Today we have 13,000 or so companies that are privately held with revenues greater than $100 million. So it's not just the ice cream shop on the corner. These are $100 million revenue companies. In fact, two-thirds of them are between $1 and $500 million, and one-third are greater than $500 million in revenue. So when you think about that in terms of names like Ananthropic or some of the great IPOs we've seen earlier this year, it's driving more and more attention from investors and advisors who are saying, hey, these IPOs are great, but is there a way to get involved with them sooner? So when we think about our platform globally, we've seen about 43% of our flows this year are into private equity. Now, if you want to pack that private equity component, 39% of the flows we're seeing going into venture capital and growth equity. So you see the flows kind of following the desire of investors and financial advisors.
[01:10:57] Speaker 3: Then where do the venture capital investors invest? Where do they bet? What types of names are they buying? Yeah, because, you know, if you invest in a, I don't know, let's say a round somehow that is part of a bigger raise from like a legendary storied venture capital firm, even if that firm has invested in one of these prominent names, the fund that you invest in might not end up in that name. This might be part of a different fund. The fund that might be part of one of the prominent names might have raised money years ago.
[01:11:31] Speaker 11: And they might continue to have series of raises following the initial raise. But I think what you're getting at, Jim, is important. It's make sure you know what you're buying. And there's an element of education amongst financial advisors today as we see more and more product in the market. And we see different levels of product accessibility through suitability requirements coming, not changing, but more private products being available to qualified investors, qualified purchasers, or qualified clients, or accredited investors, or sub-accredited. So there's no shortage of product to get access to investments. The question is, really a good question, is do you know what's in the fund that you're buying? And by the way, it's a great place to have this conversation here at Schwab Impact because that's the value of a financial advisor where the individual investor doesn't have to figure that out on their own. They can talk to a financial advisor, and the floor here is packed with the investors that are managing those private market vehicles.
[01:12:30] Speaker 2: But what's the supply-demand dynamic, Mark, in terms of investors chasing capital in the alt-investment space or the alt-investments chasing investors? In other words, I'm trying to understand whether there's just so much money looking to find a home, and that essentially means you're going to have maybe some investments that shouldn't have been funded because they have so much access to capital out there. And I just wonder, what's the equation out there right now?
[01:13:04] Speaker 11: So I think in portfolio construction, if you are buying a particular asset class or sub-asset class, again, it's going to come down to understanding what's in that fund.
[01:13:16] Speaker 2: And there's the transparency?
[01:13:18] Speaker 11: There's, absolutely. When we talk to the GPs, they are able to talk about what is the strategy, what are their sectors, what are their industries, and they'll give you examples of names that are in their portfolio. They can't name all of them, but they will give you names that are typically known names to increase a comfort level. But I think depending on the space that you're in, if you're down in that venture capital, there is going to be a lot of names that you don't know and a lot of, a lot of...
[01:13:47] Speaker 2: It's the risk-reward, isn't it? I think that's the case. Yeah.
[01:13:49] Speaker 11: But to your earlier point, Carol, to your question, is it kind of supply or demand? Where is this, where is it coming from? And we know that the private wealth market is becoming more and more open to buying alternative investments, which have been very popular in institutions and pensions for decades. And I think it's a function that technology has allowed these managers to take some of those strategies that previously weren't available to individuals and find a way to package them so they can operationally be purchased and tracked and accounted for at an individual's level. But some of the data will also show us that we had 85% of advisors in our most recent survey said that their clients came to them asking about alternatives.
[01:14:33] Speaker 3: Are these available to investors who are not so-called accredited investors yet? Are they only available to accredited investors?
[01:14:39] Speaker 11: Full spectrum. Okay. Certain products are sub-accredited, sub-AI accredited investor. That's a different AI? Yeah, it's a different AI, yes. It's less talked about today, yes.
[01:14:50] Speaker 3: But so how would you sort of, you know, not rank, but chop up, like, what is available to accredited versus non-accredited investors?
[01:14:59] Speaker 11: What's become incredibly exciting for financial advisors is when it comes to portfolio construction and for being able to manage an asset allocation for a family and scale the allocation through multiple generations, you may find that your G1, G2 investors can be very successful and are comfortable building out a program of drawdown vehicles. But as you get down to G2 and 3 and 4, where the dollars might be smaller or the investors might be younger, the net worths might be lower, you're able to get not the same, but similar type investment strategies from those same managers just packaged differently in a QC or AI wrapper.
[01:15:44] Speaker 2: Do, Mark, do investors really, though, get it that if you're going to do, whether it's private equity, that your money is going to be tied up? Like, is that education really happening? Is that education, the understanding really hitting investors who want that exposure?
[01:15:59] Speaker 11: I think about it just like the proliferation of ETFs into the world of mutual funds back in 2007, eight, nine. And it took a while. It was active or index. And then it became both. And it became a portfolio construction story. And today, I see an analog to that story with private and public. And you started to see the last five, six, seven, eight years of the big brand names being the first to be purchased, most trusted, built into portfolios. Now you're seeing portfolio construction at that sub-asset allocation level. But, Carol, the education is important. The liquidity is simply different in private markets than public markets. And we probably did, the industry as a whole, probably did a disservice using this term semi-liquid. Because I think investors only hear... The liquid part? The liquid part.
[01:16:56] Speaker ?: Oh, yeah.
[01:16:56] Speaker 11: And I think, to me, liquidity in these funds, it's contractual liquidity. And it's the same way if you have a fire escape on the back of your Manhattan apartment. That is an exit. But it's not intended to be your primary exit or your regular exit. And a lot of these vehicles have an exit, but its liquidity features have to be understood.
[01:17:16] Speaker 2: I haven't heard private credit. Is there not that much interest anymore?
[01:17:19] Speaker 11: No, private credit has plenty of interest, but it's a gigantic umbrella. So, you know, the thinking of private credit is kind of categorizing with a broad brush of ETFs. You've got direct lending. You have asset-backed lending. You have real estate finance. There's so many sub-sectors of private credit that it's hard to just think of it as one big, you know, consistent...
[01:17:45] Speaker 2: So what pockets are investors still interested in and having exposure?
[01:17:49] Speaker 11: So we're seeing more flows into asset-backed finance. Real estate debt. We've seen an increase, which has been nice. You know, kind of bleeding into the infrastructure space. We're seeing a lot of interest in infrastructure. And, you know, rates go up, rates go down. And financial advisors go back to saying, how do I build the best risk-adjusted portfolio for my client? And they're still buying direct lending. They're just not buying it at the same clip they were buying it at last year. And much of that is based on liquidity, Carol, to your point, not to systemic underlying credit issues.
[01:18:24] Speaker 3: So what can you tell us about iCapital's availability among RIAs right now? What relationships have you as a firm been able to establish so those RIAs can then offer your products to their investors versus the opportunity that you still have?
[01:18:40] Speaker 11: So I'm thinking of answering that in two ways. I've been in this business for 30 years, and I joined iCapital about a year ago. And this is a fintech platform. So iCapital is not an asset manager. We're that connective tissue in the ecosystem that allows wealth managers to access the asset manager or the GPs and private markets managers. We're the technology that facilitates it. And you see a lot. It's a great vantage point because the platform is built around specialized investments of alternatives, structured products, and insurance and annuities. So when you combine our data business with that as well, it's a really great vantage point to kind of see where the business is going. And then if you go back to just the iCapital origin story, if you go back to 2013, this is a firm that started effectively as an OCIO for small independent advisors that didn't have the same level of infrastructure that the bigger firms had. So we were that source of education and asset allocation and portfolio construction and trade and post-trade support. That's where we got. That's where our business began. And today it has obviously grown to the point where we now have $1.2 trillion in platform assets. So it's available in most places. Wow. Yeah. I can't think of many. It's not available. Right. It's an incredible data source. It's a great place.
[01:20:02] Speaker 2: It is.
[01:20:03] Speaker 11: It's a great corporate culture, too, by the way. It's a fun place to work.
[01:20:06] Speaker 2: Yeah, somebody we know is working there. No. Mark, thank you so much.
[01:20:10] Speaker 11: It was really nice to speak with you today. Good to see you, Mark. Thank you.
[01:20:13] Speaker 2: Mark Mezzanotti, he is head of private wealth solutions at iCapital, joining us here at Impact 2026.
[01:20:18] Speaker 3: Hey, Jelena Kerr is next on Bloomberg Business Week Daily as our coverage continues from Schwab Impact.
[01:20:26] Speaker 4: It's 240 on Wall Street. We do check markets all day long here at Bloomberg. We have got the Dow, the S&P, Nasdaq, all in the red right now. Tough day for shares of Alphabet. Google right now down 12.9 percent. We are looking at a loss on the Nasdaq 100 index of 1.8 percent. The Nasdaq composite index down 1.7 percent. S&P lower by 49, drop there of six tenths of one percent. Lows of the day right now on the S&P. Down industrials down almost 300 points. We're down 296 now, lower by about six tenths of one percent. Yes, it is a down day for the S&P 500 index, but you dig a little deeper. That's what we do here at Bloomberg. We've got 377 members of the S&P higher. 125 are lower right now. Two-year yield day after the Fed, 4.65 percent. The 10-year, 4.98 percent, and the 30-year, 5.32 percent. Gold, meanwhile, down $58 a ounce, holding just above $4,000, down 1.4 percent. West Texas, intermediate crude, 102.17 of barrel. WTI, down six tenths of one percent. Brent, now at 115 even, down by about three tenths of one percent. Deal news. DoorDash is buying rival Instacart in a transaction that values the company at about $17 billion. DoorDash shares, they are up 3.6 percent. Shares of Instacart down now by just about 1.9 percent. Recapping, stocks lower S&P down 50 points now. Again, worst level of the day, a drop there of seven tenths of one percent. Back, we go to the Schwab Impact 2026 conference in Boston. And once again, your hosts, Carol Masser and Tim Stenevec.
[01:22:13] Speaker 2: All right, Charlie Pellett there, back at Bloomberg headquarters in New York City. Yes, indeed, we are at Schwab Impact 2026 in Boston. Carol Masser along with Tim Stenevec. And there was a new study, actually, that was released this morning here at Schwab Impact. It was the 2026 Independent Advisor Outlook. It surveyed more than 1,200 independent advisors to look at fiduciary model anchors' growth while firms invest in AI, alternatives, private markets, to meet clients evolving needs. It looked into a lot of things, and there's a lot of data there.
[01:22:44] Speaker 3: Julena Kerr is back with us. She's head of Advisor Experience at Schwab Asset Advisor Services. Tell us about the study, in particular, the wealth part of this, and what you learned and what we can learn from it.
[01:22:55] Speaker 12: Absolutely. We are hearing more and more the complexity that clients are dealing with in their financial lives, whether that's massive appreciation of a stock they happened upon or...
[01:23:07] Speaker 3: A good problem to have. Exactly.
[01:23:08] Speaker 12: A lovely, lovely problem to have. But that complexity continues to grow, as do the implications of needing to mind your taxes, mind your income, all of the things that need to happen. So, advisors are leaning in on that quite dramatically and wanting to take advantage of some different types of investment vehicles to support their clients.
[01:23:29] Speaker 2: It does feel like there's more and more coming at advisors and just getting more and more complicated. And I feel like also the expectations of what their clients want from them has also grown. Is that fair?
[01:23:41] Speaker 12: It's very fair. I think making sense of it all has become more and more challenging for clients. And so advisors are trying to demonstrate to clients an ability to really customize and personalize to the solution that they uniquely need, including picking particular items in their portfolio that they are passionate about or maybe dispassionate about so they can exclude them. So it's a very personal decision now that clients are making.
[01:24:11] Speaker 3: What do people want to exclude right now?
[01:24:14] Speaker 12: You know, certainly different industries. And it's very, again, it's very personal.
[01:24:18] Speaker 3: But is there one in general? Like people say, listen, you know, after a school shooting, for example, they're like, OK, I want nothing related to firearms in this portfolio.
[01:24:26] Speaker 12: That's a great example. Pharmaceuticals, sometimes they might want to exclude that. They might want to exclude tech. They don't want the volatility of some of the tech portfolios. Do people actually say that? Wow.
[01:24:36] Speaker 3: If somebody wants to exclude tech, you said because of volatility. Are there other reasons they might want to do it?
[01:24:41] Speaker 12: I mean, sometimes it'll come down to a personal company selection. There might just be a company they don't believe in.
[01:24:48] Speaker 3: I was laid off from this company a long time ago. I don't want anything involved.
[01:24:51] Speaker 12: Don't include that in my portfolio.
[01:24:53] Speaker 3: But like you said, it is intensely personal. And there's no way to paint the brush of, like, you know, generalizing.
[01:25:00] Speaker 12: That's right. And the great news is there's tooling that's scalable that advisors can employ to do that now a little easier than they used to be able to do.
[01:25:09] Speaker 2: Jelena, there was like a whole wealth section of this survey. What can you tell us about that? Because it does feel like from some of the conversations with your colleagues and others, just wealth creation is off the charts. But tell us about the findings specifically.
[01:25:21] Speaker 12: Yes, clients are more and more interested in leaning into a couple of categories. One is banking. So they are expecting their advisor to help them with banking solutions, in particular, pledged asset lending. So you have securities. You don't want to sell them, but you want to unlock something behind them. Like the billionaires. Exactly. You might want to buy a house or a boat or a plane. Seriously.
[01:25:45] Speaker 2: Yeah, no, right? And there are some incredible systems set up to do that where you can.
[01:25:51] Speaker 12: Yeah. Yeah. So you get to keep the assets. It unlocks cash for you to deploy how you want. And we've seen tremendous growth in that. In fact, half of advisors in the study are using that as a solution for their clients right now.
[01:26:04] Speaker 3: What's the typical ratio of how much money you can have access to by pledging assets?
[01:26:11] Speaker 12: It depends on the security in it. So up to about 70% for standard securities. So about a 70% release rate.
[01:26:19] Speaker 3: So, okay, so what does that mean in real terms? Like if you have $100 million in assets, you could get $70 million in cash?
[01:26:28] Speaker 12: Depending on what it's invested in. If you're invested in an alternative asset class, it's lower.
[01:26:34] Speaker 3: That seems so high.
[01:26:35] Speaker 12: Yeah, for liquid traded things. Think about ETFs and things of that nature, equity securities. Those are the things that we would release at that level. So that's one big thing. What else were it in terms of the findings? The other big one that we saw is an increase in utilization of alternative investments, which is just growing like gangbusters. 45% of advisors in the study are using them now. And that's definitely dramatically up. We've seen 40% year-over-year growth in that asset class within our client base.
[01:27:06] Speaker 3: Who's calling for that? Is it the end client or is it?
[01:27:10] Speaker 12: I think it's partially the end client, but it's also the way for the advisor to differentiate and show that they can deliver value and perhaps alpha and return on the portfolio in a different way. While helping the client understand the illiquidity of some of those. I mean, some of them are semi-liquid. Some of them are illiquid to really make sure they understand how long the duration is on some of those. Is there any more of a breakdown in terms of what they're interested in?
[01:27:34] Speaker 2: We just talked with, gosh. Mark? Yes.
[01:27:40] Speaker 3: Mark Mezzanotti over at iCapital.
[01:27:42] Speaker ?: Thank you.
[01:27:42] Speaker 2: At iCapital and talking about alt investments. And it was interesting to hear private equity like as a big interest again. I didn't hear, I mean, private credit too, but that's what we spent a lot of time talking about. Where within the alt space are folks interested?
[01:27:54] Speaker 12: Private equity is definitely one, so I would double down on that one. Okay. And real estate, you know, more like a traditional real estate investment trust, but underlying hard assets that they're able to attach to.
[01:28:07] Speaker 3: I mean, it's fascinating to see that sort of, you know, we talked earlier, too, to Sam Kang over at the family office part of the business. And that was one of the questions I had is these mega wealthy people are essentially able to have so much liquidity without actually selling any of their concentration of stock that created that wealth in the first place.
[01:28:32] Speaker 12: That's right. The amount of concentrated solutions across the ecosystem continue to grow, whether that's, you know, we just talked a little bit about the pledged asset lending. We are actually able to lend against some of the alternatives. So if you marry those two last concepts together, you want to lend against your REIT or your private equity, we can do that now, too, because that's been something that's been a growing demand from advisors.
[01:28:56] Speaker 2: We want to squeeze in a question. We want to ask you, what is Schwab doing with AI so that it is easy to plan Roth conversions, managing RMD, et cetera, for Schwab clients?
[01:29:07] Speaker 12: This is a big topic for advisors. They spend a lot of time managing. Good question. They have a lot of people who are clients. Good question. Exactly. And they're always having to pay attention. You would never want to inadvertently trigger an RMD if you didn't need to. Conversely, you have to take a certain amount every year. And so advisors want to automate that. It's still probably one of those places where they're having to maybe babysit the workflow, and that needs to not feel like that anymore.
[01:29:32] Speaker 3: A required minimum distribution. The government calls for this when you turn a certain age. That's right. With your retirement portfolio. That's right.
[01:29:38] Speaker 12: So the AI could be used as an overlay to track that, understand how many RMDs they've already taken, or have they taken one at all this year? What have you got to do by when? And tee that up as a next best action for the advisor.
[01:29:50] Speaker 2: And that's where AI can really help in a big way. Absolutely. Really fascinating. And I said, why do we have to take an RMD? Why can't we keep letting it appreciate? I just say, Talena, thank you.
[01:30:03] Speaker 3: The government tells you, Tara.
[01:30:04] Speaker 2: I know. They tell us a lot of things. Fun to have you back. Thank you so much. Be well. Talena Kerr. She's head of Advisor Experience at Schwab Advisor Services here at Schwab Impact 2026.
[01:30:14] Speaker 3: Hey, coming up next, we are just about an hour away from the market close. We've got much more from Schwab Impact in just a minute. It is Bloomberg Business Week Daily.
[01:30:24] Speaker 1: This is Bloomberg Business Week Daily with Carol Masser and Tim Stenevec on Bloomberg Radio and Television.
[01:30:36] Speaker 3: It is Bloomberg Business Week Daily. That is Carol Masser. I'm Tim Stenevec. We are live from Schwab Impact 2026 in Boston. But our hearts are in New York City and on Wall Street, especially with regard to today's trade. Let's take a look at how markets are doing as we do get close to an hour from the close of trading on this Thursday afternoon. The S&P 500 down about six tenths of one percent. The Nasdaq down 1.6 percent. The Dow down about half a percentage point.
[01:31:05] Speaker 2: I'm Carol Masser along with Tim Stenevec. Let's get to some stocks on the move and obviously big tech front and center. And that means we're going to start with Alphabet. This stock down the most ever, ticker, of course, G-O-O-G-L. Alphabet, excuse me, saying demand for its cloud services is increasing at a rapid clip, pointing to growth in its backlog or cloud contracts it hasn't yet fulfilled.
[01:31:29] Speaker 3: Yeah, the company's quarterly filing lists about $98.5 billion in contingent commitments that the company could be on the hook for under certain conditions, including guaranteeing data center lease payments, also backing partners, purchases of power equipment. A lot of sort of stories about this company as our reporters read through the filings. But the knee-jerk reaction, at least in today's trade, over the concerns about the search business being cannibalized by AI, that is really what has investors' reaction today.
[01:32:00] Speaker 2: Yeah, absolutely keeping an eye on it. All right, so that is Alphabet. We're going to move on over to Microsoft, ticker is MSFT. And we just saw that Microsoft drew demand for its $25 billion bond offering with $115 billion of orders at its peak, or 4.6 times the offering size. So if you're wondering if investors are interested in this debt, well, when it comes to Microsoft's debt, yeah, that would be a yes.
[01:32:24] Speaker 3: You've got to listen to Paul Sweeney and Tom Keen in the mornings. I do. Because, oh, I'm not talking to you. I know you do. I know, you know I do. Paul and Tom this morning, Paul said, yeah, seven or eight calls, phone calls, they get this deal done. Yeah. Everybody's saying yes. Right. I mean, think about it from the perspective of the health of Microsoft as a company and the company's balance sheet.
[01:32:50] Speaker 2: Correct.
[01:32:51] Speaker 3: So this is a company that has, let's just say, a credit rating akin or higher than the U.S. government.
[01:32:57] Speaker 2: I mean, as you said, the transaction, one of the most sought-after U.S. corporate bond sales on record with the debt launched in as many as 10 tranches with maturities ranging from 2 to 40 years.
[01:33:08] Speaker 3: Keep in mind, this is top tier AAA rating from Moody's and S&P.
[01:33:12] Speaker 2: And what's fascinating, and I'm just looking at some of the write-through on the Bloomberg, I mean, we have not seen Microsoft do this in some time. Microsoft really standing out among its big tech peers as in having not tapped the market in years. It last sold high-grade debt back in 2017, raising $17 billion. It's also the only publicly traded U.S. firm besides Johnson & Johnson with top-tier AAA ratings from Moody's and S&P Global ratings. And we should point out, it comes after the company reported robust results for its fiscal first quarter. On Wednesday, posted a 48% gain in cloud revenue while keeping its capital expenditures in check. So really soothing investors who have been concerned about lavish spending on AI. So there you have it, Microsoft MSFT.
[01:34:02] Speaker 3: Okay, let's have a burrito.
[01:34:04] Speaker 2: Let's do that.
[01:34:05] Speaker 3: Okay, Chipotle, CMG is the ticker. Shares are up 9.4%. Sales beat as new chicken and chips are bringing diners back. Sales rose faster than expected in the third quarter due to more frequent menu launches and revamped loyalty offers. Same-store sales climbing 2.1%. The company's third quarter revenue rose nearly 10% to $3.3 billion. Chipotle expecting to close out the year with 2% higher prices. The company also anticipates inflation around 3% in the current quarter and elevated levels next year.
[01:34:36] Speaker 2: They said inflation for beef and freight as well as higher protein usage partially offsetting higher prices and tariff relief. Labor expenses also rose due to higher wages, additional staffing in restaurants, and increased insurance costs, cutting into Chipotle's profits. But I think as you said this, maintaining its full-year guidance for comp restaurant sales, comparable restaurant sales growth in the low single-digit range. I mean, they've been going through some stuff.
[01:34:59] Speaker 3: Yeah, choppy. October sales have been choppy, too, according to the company. Mesquite-smoked brisket? What do you think?
[01:35:07] Speaker 2: It's amazing. I'll go for it.
[01:35:09] Speaker 3: You'll go for it? Does that work?
[01:35:10] Speaker 2: I love me some brisket.
[01:35:11] Speaker 3: Does that work in a burrito bowl? I don't know. I don't know. I guess it does.
[01:35:14] Speaker 2: I love me some brisket. Hey, shares of Chipotle, though, they are down 15% year-to-date, but they are getting a pop again, ticker CMG, and the stock up 9.3% in today's session. So quite a move. All right, that is our Stock Movers podcast. Check them out. They are five-minute episodes, big winners and losers in the stock market. You can find it on Apple, Spotify, or anywhere you get your podcasts.
[01:35:36] Speaker 3: Hey, we've got two hours more coverage coming up live from Schwab Impact 2025. We've got a great couple of hours if you are sticking with us on Bloomberg Business Week Daily. Our coverage continues on radio, on YouTube, on Bloomberg Originals, and more. We've got joining us in just a few minutes John Beatty. He and CEO Rick Worcester had the keynote earlier today. John is head of advisor services at Schwab. That is really what this event is about. It's about those thousands of RIAs that are on the platform, the trillions of dollars that Schwab has custodied for them. He's going to give us his view on the challenges and what he's hearing from these advisors about their own clients.
[01:36:11] Speaker 2: We're also going to get the view on the midterms and regulatory and policy initiatives that might come down. Mike Townsend back with us, always a great guest to talk to, managing director of legislative and regulatory affairs. And then, yeah, we're going to talk a little bit about strategy, innovation, stewardship with David Bottson. So it's all to come from the Schwab team. They're coming your way. Do not go anywhere. If you're watching on TV, the close is coming your way in just a moment. Tim and I continuing right here in Boston at Schwab Impact 2026. This is Bloomberg.