Bloomberg Money 7/17/2026

[00:00:00] Speaker 1: Bloomberg Money? [00:00:30] Speaker 2: Good noon, everyone. Bloomberg Money. It's on personal finance. It's on retirement. Maybe it's on wealth management. Welcome, all of you, to a show. Really interesting show coming up. We'll talk about it in a minute. What I want to talk about is the unspoken. Everything is down in the market. Apple, like a rock on the edge of a $5 trillion company. It's personal finance by Apple 20 years ago and just hold it. Well, for some people, but increasingly, Americans are having a hard time saving for retirement because of rising living costs. They're not putting money into their retirement accounts because they have to pay for the kitty litter. They've got to pay for the kitty litter. They've got to pay for school and all that. We'll talk about some of those themes today. I think what's fascinating here is Mark Gurman with that story a few days ago on rebuilding the iPad and it's these buy and hold companies. That's what makes a winning retirement. That's what makes a winning retirement. We're going to get into all of that and whether there's room for bonds in that portfolio as well. Bonds is a big thing. We're going to do that here. We're going to do that in a bit here. We have a wonderful guest for you today. Nora Rubini. Not the Nora Rubini you think you know. Yes, senior economic strategist, Hudson Bay Capital, but Nora Rubini when he was with Clinton, when he was trying to figure out the future of Social Security. We'll talk to Professor Rubini about his crisis that he sees. [00:01:45] Speaker 3: All right. The softer side of Nora Rubini. We've also got Amanda Lynam, chief credit strategist at Goldman Sachs. Fancy title, but we're going to keep our topic of conversation very basic. The failure of bonds to produce much in the way of total returns in the last five years. [00:01:58] Speaker 2: They bounced back to be fair. It was like a five. Twenty twenty two. You know, it's scarred in our brains. It's scarred everyone. They had a great moderation for years. And then up we went. Let's do this. Let's do a data check right now. And it's on the stock market and it's not so pretty. Apple, as I said, like a rock is really holding on. Well, you wouldn't know it anywhere else. But it is better from when scar came in the door today at 9:55 a.m. Nasdaq down one percent. It was down two percent or more in futures. We are to evict some 19 and we do better now to take much better in the last two hours. It certainly is. All right. Let's take a look at what's going on in [00:02:34] Speaker 3: cross asset. You have the 10 year yield not doing much of anything basically at four and a half percent after this week's inflation prints show that price pressures are easing. The dollar also not doing a whole lot. But the story for this year is a stronger dollar because the U.S. economy remains resilient. But the big story is in oil. The bottom of oil prices coincided with the end of the first half. And since the start of the second half, Brent, which you see there has gone from the low 70s to as high as the mid 80s. A little bit of [00:02:59] Speaker 2: news flow as well. And what will be the news is the street reform was open. Well, it's kind of an unanswerable question. It's an answerable question right now. I would say good insight. Vanessa, you OK over there. OK, here's the reality, folks, Michael Ball, Eric Malchunas, the fool and me. We're only here because Vanessa Perdomo has World Cup tickets to give us. Right. I don't think so. I think that would be quite a price tag for everyone. It would. It's up to $7,000. I saw it in that life. And that was a few days ago. We've got a great set of people with us. Eric Malchunas holds a high ground on exchange traded funds. Vanessa Perdomo drives so much of our sports coverage as well. And Michael Ball is with us as well. He's always like nerdo Fed stuff. And we're going to talk to him some of the basic responsibilities maybe the new chairman has. Eric, thank you so much for joining today. You stopped traffic this week by saying our retirement system is now the stock market. Discuss. Yeah. Look, it was the Trump account [00:03:58] Speaker 1: announcement which I had been following. But when you really dig into the numbers, you know, 58 percent of Americans own stocks. That is by far the most in the world. So we're kind of an experiment here. Most countries is only the rich people that own stocks. Trump accounts are going to bring in like another 20 percent, maybe even more, depending on how many philanthropists get involved. And that would be a lot of people who don't even care or know about the stock market are now going to have a kind of a vested interest in how it does. So now you've got almost the entire voting public who is going to care what the stock market does. So if the Fed and the government have stepped in multiple times since 2008 with more people interested in it, you really can't let it go. You can't let it fail. It's kind of like a public utility like the [00:04:42] Speaker 2: electric grid. Right. I'm in the triple leverage Netflix account. That's really working out today. Well, are we learning in the double leverage, triple leverage comedy that it's speculation and not investment? [00:04:54] Speaker 1: Yeah, absolutely. I think there's two a lot of games being played at the same time in the stock market. You know, there's plenty of money going into VU and Vanguard. I call them the Vanguardians. Then there's the Degens, you know, and they both buy the dip for different reasons. But they're both playing different games. Some are trading. Some are going long term in ETFs. We see both both kinds. But I'll say that the big blob of money is generally pretty conservative. They're buying cheap beta, both stocks, bonds and maybe some commodities. And they're holding for the long term. And that's the it's just boring. You know, they don't get much media because it's like, OK, I'm going to buy VU today. What else can I say? It's the S&P 500. We're going to talk about these shiny objects over here. But most of the money is pretty vanilla. All right. Let's talk about shiny objects, because two weeks [00:05:37] Speaker 3: ago, SpaceX was a shiny object. But it's now trading below its IPO price. Yeah, it's at about 124 and change. What does that signal, Michael Ball, about speculative appetite right now? Because we know that there's going to be a lot of volatility. How can you tell when we're just going through normal swings versus there's really a change, an inflection [00:05:55] Speaker 4: point in whether people chase rallies. Yeah, two things. One, it came in very expensive valuation-wise. And then also it was sort of marketed as a neocloud in the sky, literally floating around the planet versus a rocket ship company. So it changed kind of flavor. And it's now fallen into this momentum unwind in almost all things AI. There are some other big IPOs to look forward to, not just [00:06:16] Speaker 3: SpaceX. We've got Anthropic, OpenAI at some point. And Alphabet and other big tech companies are busy selling stock. The setup seems to be there's going to be a lot of supply coming to market. Do you think, given the increased role that individual investors play in the market, that there's going to be enough demand to absorb all of this supply? Yeah, and that's been the real macro dynamic [00:06:34] Speaker 4: change this year, that finally we're going to have more supply than demand. The buyback story has actually worsened as well. We know free cash flows come off from the hyperscalers and some of the mega techs, so that's even more questionable next year. But to your point, we keep getting new bites of additional paper coming to fund not only CapEx in AI, but even elsewhere with other IPOs is coming more than expected as people are sort of rushing in. And with credit markets now looking a little more wobbly and some of the rejection there from the paper that we've recently gotten, it means AI paper may even come more for stocks. [00:07:02] Speaker 2: I mean, Michael, help me here. Dovetail this in with what Eric said, because Scarlett's got to get to Vanessa. She's more important than we are. In this conversation, if Chairman Walsh levels or raises interest rates, what does it do to my 401k? [00:07:15] Speaker 4: Yeah. Look, equity financing is actually coming up into conversation again, because this is a lot of balance sheet constraints on the banks who helped not only help the paper come to market through IPOs, but then actually lend to the, you know, not only buy side, but other areas of the market to borrow and basically buy stocks. [00:07:30] Speaker 2: And that is coming under more pressure. Are we asleep about any instabilities to come up here? I mean, in personal finance, retirement, wealth management, are we all asleep right now? [00:07:38] Speaker 4: So right now, as the macro picture stands with growth and inflation where it is, I think we can expect maybe a reversal of the Powell cuts and maybe a subsequent maybe 75 basis points of hikes just to reset the levels and basically get markets, you know, even. But, you know, I don't see a large hiking cycle coming and Walsh is certainly not signaling that. So I don't think you need to be surprised by any sort of tail risk. What you should expect is that financial conditions will be, you know, not easing further. Do you have a clue what he just said there? [00:08:05] Speaker 3: Part of it, some of it. Well, let's bring that back to the World Cup and how we spend our money on a daily basis, because the buoyant stock market of the last couple of years is one big reason why you're seeing so much froth built into the World Cup. I mean, Vanessa, you've been going to the matches, not just necessarily in New York, New Jersey, but around the country. And there's all these luxury suites built in. There's these like fast ways for the uber wealthy to get to these games where they don't have to wait in line and put up with all the inconveniences that people who pony up thousands of dollars do. [00:08:35] Speaker 5: It's interesting because no matter who you are right now, if you're going to the World Cup final, you are probably in an upper echelon level of having money. I mean, getting into the World Cup final is $7,000 just to get in the average price. And depending on what, you know, secondary ticket market you look at, it's $11,000 to $12,000. So but but these ultra rich who are going to the game and they're spending tens of thousands of dollars on helicopter rides, they still have to find their way around the stadium. [00:09:02] Speaker 3: They still have to deal with a little bit of traffic as well. OK, so a little bit of friction there, even the uber wealthy. The other thing about the World Cup is kind of the cultural impact it's having. All these footballers that people, you know, three months ago didn't know who they were. Jude Bellingham, Erling Holland, everyone knows who they are now, including how they dress off the pitch. Erling Holland has a $50,000 man bag. It's ludicrously capacious, as someone from succession once said. It's very large. And I know you have a man bag too, right? [00:09:30] Speaker 2: I do have a man bag. Yes, I do. OK, so we have man bag experts here. Is it a $50,000 Birkin bag as well? No, it's not a Birkin, but I did look at the Minnie Kelly. Continue. [00:09:39] Speaker 3: My point is here is that what we see on the world at the World Cup and, you know, the players involved has a huge influence on the rest of the economy, for instance, like the luxury sector. And there's, by the way, Holland's man bag. See, ludicrously capacious, along with some other players, too. I'll just get through at it. Are you kidding me? [00:09:59] Speaker 2: Where's the raccoon? Where's the raccoon? I have a question. OK, you're legit D1, serious soccer. Nobody's fallen down at Duquesne and withering on the ground. And then when the ball gets on the field, they miraculously get up. What do you think about this madness where I'm screaming at the screen, get up, get up, get up? Am I wrong? [00:10:20] Speaker 5: No, you're not wrong. And I would also like to just point out that I did play women's soccer. And this is not something we definitely see as much in the women's game. This is a very male. [00:10:28] Speaker 2: How do you respond to this stupid fall down? The ball goes by. Oh, I'm miraculously cured. [00:10:34] Speaker 5: It's a part of the game in a way that I think is one of the reasons why it's not as big in the U.S. I agree. I think, you know, you have American football here and hockey and all these other sports that are very American. And we love it here. And they're very strong. And we don't like that. [00:10:51] Speaker 2: Every time fix it. At least in hockey, they're actually fighting. They punch each other. She drops the gloves, they run. I mean, she's in the corner in the third period. She's frightening. You should see her, folks. The terror of northern New York City. Well, this was lovely. This was fun. This was great. Eric Belchunas, thank you. Vanessa Perdoma, thank you. And Michael Ball. Seriously, look for Michael Ball's academics on the Fed all out through the weekend on Bloomberg and other news sources as well. I mean, coming up here, it's going to be interesting. We've got Noriel Roubini. He's senior economic strategist at Hudson Bay Capital. We've known each other for decades. I want to know what he thinks, like with Ted Lieu the other week, the future of Social Security. Yeah, a lot to talk about with Noriel Roubini. It's a different Noriel Roubini. It is. He's sensitive. Can you get us tickets? That's all I care about. No, I don't even know if I'm going to the end yet. I'll sit where I can see Pennsylvania to get us tickets. [00:11:48] Speaker 5: Sit here. [00:11:58] Speaker 2: Welcome back. It's Bloomberg Money. Tom Keen alongside Scarlett Foo. Both of us were talking about the smoke and the fire from Duluth. I looked at Duluth, Minnesota today. Just unbelievable. Have you been walking around with a mask on? No, I don't do the mask thing, but the dogs aren't healthy. No, the dogs don't like the locks. We'll see on that as we go through today. Stay with Bloomberg, all of our media for the continued coverage of what we're seeing in the smoke. It is not smoke and mirrors with Noriel Roubini. He's senior economic strategist at Hudson Bay Capitol. That barely describes his contribution to the Clinton administration, his years of service to New York University and the books that just keep on coming. One of them no beef with getting older. Okay, that's fine. And we'll look at that. I want to talk about that in a minute. Noriel, welcome to the show. Ted Lieu was on the other day. What's the sweat on Social Security? Do we really have to risk losing a check on Social Security into the 2030s? [00:13:00] Speaker 6: Well, we know that the trust fund is going to start running out of money. And therefore, whoever is going to be president after this administration in 2028, he or she will have to figure out together in a bipartisan way what to do about it. You can, how to say, length, retirement age. You can raise payroll taxes. You can cut benefits. You can do a combination of all those things. But definitely, we have to do something about it. It just popped into my puny head. [00:13:25] Speaker 2: He wasn't picked by a task force for Chairman Walsh. What an oversight that was. Let's go to Norah Roubini from, I believe, it's four years ago. No beef with getting older. In 1960, there were five active workers for every retired and disabled worker in these United States. Well, it's gone to three to one in 2009, headed towards two to one in four years. Instead of moving forward, we have slipped backward out of Fortune magazine in 2022. So the clock is ticking. I mean, we're moving up. Do you get the sense the politicians have any understanding of what's going to happen the first Wednesday of November in [00:14:04] Speaker 6: 2028 when we got to start really fixing this? Well, you know, the politicians always kick the can down the road until something becomes critical. They prefer to avoid it. And as we know, Social Security has been for a long time the third rail of American politics. So we'll have to deal with it like we did a few decades ago by creating commission at that time. We'll have to increase retirement age. We have to increase payroll taxes or have the corporates that a winner has paid for the workers or we'll have to cut some benefits. So any combination of those things is going to have to happen at some point down the line. [00:14:42] Speaker 3: Eric just pointed out to me that Senator Tim Kaine, a Democrat from Virginia, and Senator Bill Cassidy, a Republican from Louisiana, have proposed a plan to save Social Security by borrowing a one and a half trillion dollars to invest in the stock market, which would grow over 75 years to pay future benefits. Does that sound like something that could work or is that kind of craziness? [00:15:01] Speaker 6: Well, there are some ideas in the past about, unquote, privatizing Social Security. And in countries that have sovereign wealth funds because they're running fiscal surpluses and current account surpluses, they can build up net foreign assets like Norway does, like in the Gulf they do, to create something of a buffer for the future. The problem with the U.S. is we run a fiscal deficit and a large current account deficit. So if you borrow more to invest in the stock market, you get that margin, some returns because the returns on the stock market will be higher than what you pay on that borrowing. But there's a gimmick. At the end of the day, you have to do something else. That's not going to solve the problem. It's one step in one direction, but it's not going to be enough. [00:15:39] Speaker 3: Okay, not the solution. In the meantime, inflation is getting in the way of everyone's best laid plans. You look at price increases in elderly health care, for instance, home health care. Because of immigration curbs, it's far outstripping the rise in college tuition. You can see there. Although, of course, the absolute cost of each is comparing apples with oranges. Nouriel, are Gen Xers and millennials all going to work until we're 90 years old because we need to pay for six-figure college tuition as well as 24/7 care for our parents? [00:16:07] Speaker 6: Well, in principle, yes. The problem is going to be that with AI, eventually we're going to have long-term permanent tech unemployment. It's going to happen only slowly. But it's going to happen in the next 20 years. So even if you increase the retirement age, the problem is going to be a large chunk of the population is going to be replaced by AI and robots in the next 20, 25 years. So increasing retirement age is not going to be a solution. It's true that with higher potential growth, debt ratio tend to fall because it's debt to GDP. So our fiscal condition is not as bad as it would be in a situation where growth is lower. But at some point, we have to do something. But eventually, we need some form of universal basic income for everybody. [00:16:43] Speaker 2: Well, they work and once they retire. And we're already on the way to that. One evening at Davos, you and I sat at a bar, lovely old German bar. There was a public official down three seats down from us who didn't participate but listened in. And you framed out 07, 08, 09. Can you use 08, 09 or frankly, 2000, 2001 is an analog for this exuberance we have now in the stock market? [00:17:09] Speaker 6: Well, I've become more optimist. Of course, there is fraughtiness. There will be excesses. But I think that this AI revolution is the most important in human history in terms of tech innovation. You just told us we're going to lose all our jobs. Yeah. But suppose that growth goes from two to four by the end of the decade. Then it's going to be 6% by 2040 or 10% by 2050 because we're going to get to AGI. Then we've grown to doubling every five years at 10%. You can tax the winner, redistribute everybody to everybody else and make everybody better off. So that's going to be a factor. We'll have either exposed to redistribution that is universal basic income or we'll have it ex ante. Ex ante means some form of socialism. Essentially, the government is going to take over some fraction of the big tech firms as they're already willing to do, 5%, 10% of it. We create the sovereign fund that way and we create the Marxian socialism. We're going already in that direction effectively. [00:17:59] Speaker 3: Okay. This is a very gloomy picture that you're painting here that rings true with your Dr. Doom kind of painting. [00:18:04] Speaker 6: No, it's not gloomy. It's optimist. With 10% growth and machines doing all the work, we don't need to work. It's only in the world of scarcity that the life dignity is based on the work. [00:18:14] Speaker 2: We've got to go to break. Stay around. Argentina or Spain? [00:18:18] Speaker 6: I root for Argentina because there are many Italians in Argentina and Italy do not qualify. [00:18:23] Speaker 2: This will be good. We're going to talk about the old world of Noir Albini when we come back. [00:18:28] Speaker 3: We're through this Amanda line and coming up as well. And later on, inflation is reshaping our spending habits, which means that restaurants are using nostalgia to pull in customers with adult happy meals. That's a thing. So that conversation is still ahead. You can find that and more stories like it by subscribing to the Bloomberg Money newsletter. This is Bloomberg Money. Why are they showing that to us? I'm starving. I know, me too. Those are good fries. [00:18:59] Speaker 2: Bloomberg Money, Tom Keen, Scarlet Fu. Thank you so much. Here's the difference. Old world, new world. I think of Nassim Taleb. I think of Noir Albini. It's real simple. They don't think like we do. They don't think like we do. They teach economics. [00:19:11] Speaker 3: They teach generations of grad school students about how to think about the economy. I'm curious, Dr. Rubini, do you practice what you teach? Meaning, do you know all these economic theories inside it now? You understand why things happen the way they do. As an individual, do you manage your finances in a way that aligns with them? Or is there some element of irrational behavior in how you look at your own finances? [00:19:32] Speaker 6: I'm reasonably rational. I've never traded in my life. I've never bought any individual security of any sort. I invest for the long term. I have a diversified portfolio mostly of equities. If everything were to go in a severe recession or move some of it into liquid assets and so on. But I think that most people, they're not sophisticated investors. They should just buy and hold until they retire rather than day trading or MIMI stock or crypto or other stuff that makes them lose money. [00:19:57] Speaker 3: So you're very much a buy and hold guy. You don't touch it at all. Absolutely. 20 seconds. They're in my ear here. [00:20:02] Speaker 2: Talk crypto. The young want to know about crypto. You and I love crypto so much. 120 to 60. Is it going to 30? Most likely, yes. [00:20:11] Speaker 6: Most likely, yes. I mean, really, listen, crypto is not a cryptocurrency. They're not a means of payment. They're not a unit of account. They're not a stable store of value. They're not a single numerator. So calling them crypto currency is actually a misnomer. Whatever they are, they're not really neither asset or a currency. It's mostly bubbles upon the game for most of them. [00:20:30] Speaker 3: Paul Krugman was scathing this week. Oh, he's been scathing on a lot of things. Krugman was on the edge of Rubini there. All right. Dr. Noriel Rubini, thank you so much for joining us today. Thank you. He is, of course, Hudson Bay Capital Senior Economic Strategist. Coming up on Bloomberg Money, Duvaldo bonds mean the 60/40 portfolio is losing appeal. We all adhere to it. Amanda Linham of Goldman Sachs will join us to discuss. You have some pointed questions for her. [00:20:54] Speaker 2: I do. Plus, she knows Jaylen. So it's, you know, Villanova. She and Jaylen go way back. She and Jaylen go way back. This is Bloomberg Money. Keep it right here. [00:21:03] Speaker 3: Forget crypto, forget Bitcoin, forget Ether, right? Thank you. [00:21:10] Speaker 2: It is Bloomberg Money, Tom Kane and Scarlett. I've got to do a massive audible here right now. I hear rave reviews about the Odyssey. I hear people trash and trash and trash and trash in it. What does the celebrity lodestone of Bloomberg Money think? [00:21:36] Speaker 3: I think it's going to be great. It's going to be incredible. It's the first IMAX film, like, through and through. Like, he, Christopher Nolan, envisioned it as an IMAX movie. [00:21:44] Speaker 2: You've got to go see it with IMAX or it's just afterwards the same thing. Yeah. I mean, that's how he intended it for it to be seen. Yeah. I think it's going to be great. So then his event, I guess, Paul Sweeney saying, [00:21:53] Speaker 3: Hollywood's really making a comeback. Well, people want to get out of the house after years of being stuck in it. And maybe they want something different than streaming something and binging something. Let's say the show of the data check. All right. Let's get there. We look at equities and chip stocks are really taking it on the chin. It started in Asia, spilled over into the U.S. The Philadelphia Semiconductor Index pretty much near a bear market, down 20% from a record high. We haven't gotten there yet, but a lot of red on [00:22:17] Speaker 2: that tape. And the VIX inches up to 18. But some better ranks than three, four, five hours ago as well. Cross asset. We do look at equities, bonds, currencies, commodities on Bloomberg money and the yield. I mean, it's real simple. A 454 gets your attention. Amanda Lynam has aged looking at the bond market here in the last number of weeks. I got an $82 on West Texas Intermediate. Brent goes out much further than that. It will be a sporting weekend. Look to Bloomberg for the Asian opening here in the 7:00 p.m. hour roughly on Sunday. Joining us now, Amanda Lynam, she's chief credit strategist at Goldman Sachs. And I just want to bring up the chart here for you, Amanda, because you're expert at this. At Bloomberg, we have the total return indices that are just absolutely exquisite off of all the heritage of Lehman and Barclays as well. And the chart of the week is the line of chart here. And it's a great moderation. The bond market price up forever, forever, forever. Seven standard deviation move. And we've come back. But come on, we've flatlined over the last five or six years. Does that mean bonds are of value? Or does that mean you're still catching up? Well, first of all, thank you for having me. Good afternoon. [00:23:29] Speaker 7: If you looked at that chart, Tom, and maybe you started it at year-end 2021, which is just before the Fed started hiking rates and just before interest rates really started their trend upward, what you would see is that IG bonds are roughly flat. However, high-yield bonds are up over 20%. Leverage loans, floating rate, are up over 30% over that same timeframe. So I think this speaks to the point that we've been emphasizing for a bit and very relevant for your audience as well is that there's an opportunity cost to being too defensive in this market. Now, to answer your question on do bonds fit in a portfolio, absolutely, but they just can't be the only part. And that chart you showed tells a great story in terms of what the rise in interest rates has done to pressure bond total returns. But at the same time, equities have enjoyed a pretty meaningful upswing. And so that's the point on diversity. [00:24:15] Speaker 2: I've never asked this question. How long have I been doing this? It's like seven or eight years. I've never asked this question. How much of our 401ks in America are in boring, sleepy, underperforming bonds versus the high-yield magic you just talked about? [00:24:29] Speaker 7: I mean, our investors that are managing a lot of these 401ks on behalf of retirees and workers typically will employ pretty diversified portfolios. And then, as you know, there are target date funds that become less risky as you get closer to retirement. In general, that's a pretty good way to be invested. I think there's a difference between saving and investing in this market. And I think one of the big lessons is that being invested over the long term is really what is critical. It's hard to time over the arc of a career for any one rate backdrop or equity market backdrop. So staying invested and in a diversified portfolio is key. [00:25:07] Speaker 3: Saving and investing. I like that. When my son was born, my mother-in-law gave him a bond. Today, when kids are born, they have access to a Trump account. Their grandparents can contribute to that. These Trump accounts only invest in stock funds or ETFs. That sends a pretty strong signal about the role of bonds and building a portfolio, a person's financial future, doesn't it? [00:25:28] Speaker 7: Well, I think it's one part of an overall plan. But from my perspective, when we think about the role of a portfolio and where fixed them kicks in, it's really to provide income later in life that's more regular as opposed to waiting for an equity dividend. And then importantly, it's to offset periods of equity market weakness like we see today. And so while we've had a pretty meaningful uptrend in equities over the past few years, we've known from cycles that those don't go on in perpetuity. And so ideally, what you would want to have is some fixed rate exposure across the curve, some floating rate exposure. Actually, we've been our portfolio strategy. Colleagues have been emphasizing the role of real assets and kind of inflation protection and then typical equities. And it all fits together. So sorry, Goldman Sachs fixed incomes recommending gold. Our portfolio strategists. So our portfolio strategists who take a multi-sector view have basically made the point that, as you alluded to, the 60/40 portfolio isn't as straightforward as it was in the years past. And so given some of the shifts in the market that we actually do have to incorporate things like real assets. In the stock market, individual investors are just as [00:26:31] Speaker 3: influential now as institutional investors. That's really changed over the last few years. I don't know who the dumb money is anymore versus the smart money. That line is blurred. Does that kind of blurring exist in the fixed income and credit world? Or will this asset class always be the domain of institutions and [00:26:46] Speaker 7: professionals? We have we have a wide range of investors in our market. I think the really interesting bifurcation that I've seen in corporate credit over the past couple of years, but definitely recently has been this bifurcation between investors who are buying bonds for yield versus investors who are buying bonds for spread and total return. And that is the key. And what we have emphasized is if you are allocating to credit right now, you should be buying for income and yield, not because there's material scope for a total return boost from tighter spreads because they're already tight or from lower rates because our rate strategists are expecting rates to be on bond exposure to a data center in Ohio. Here is Amanda line. [00:27:22] Speaker 2: She's been burning it up. Zero had a 30 page article and led with Amanda line of Goldman Sachs. Here it is. A mix of markets will be required. Our equity research colleagues expect the five hyperscalers to invest a combined zillion trillion in AI over the past couple of years. This is the main debate in the corporate credit market right now. And just for your listeners, that [00:27:58] Speaker 7: number is 5.8 trillion that our equity. It's not a zillion. It's 5.8 trillion. And I think what what a lot of investors do is they will look at the hyperscalers balance sheets and expect that that will largely be financed with debt and that a lot of that will come through the traditional corporate credit market. The point that we've made is that the bond market has issuer concentration constraints to a certain degree. And so the key takeaway there is that we expect a portion of that 5.8 trillion to be funded with debt, a portion of which will come through the traditional bond markets. But we also see scope for the private infrastructure market to play a role. We see scope for these new project finance JV's to do some of the heavy lifting cash flow from operations from the hyperscalers will contribute. We're also expecting equity issuance. Some of the rating agencies have said that. So we shouldn't be afraid of this tech madness. I am not concerned about an access to capital constraint. I just think as we progress through what is a multi-year investment cycle that there will be more nuanced conversations around which market I should be accessing and at what price. That's largely a 2027-2028 event, we think. I want to take a step back [00:29:01] Speaker 3: here because you think about the different generations and Gen Z right now is graduating from college. They're joining the workforce or building up savings. They know about meme stocks. They know about crypto. They know about prediction markets. These are all go big or go home kinds of bets. Is there anything within the fixed income credit space that responds to that impulse. Well we're subject to risk [00:29:20] Speaker 7: sentiment like other markets are in terms of when there's a real risk off tone. We feel it in our market. I would say we tend to be a bit more defensive. We actually put a piece out on this earlier this week. My colleague Spencer did which really emphasized that the credit equity beta has diverged in 2026 in particular meaning credit hasn't been participating as much on the upside but it's also been more defensive on risk off tones on the downside. And I think going back to over the arc of a [00:29:46] Speaker 2: career and investment cycle just being invested is the key. I love that we're doing credit beta. But you're you're at this weekend at some family event or you know friends and Romans and countrymen and somebody says should I buy a five year CD or a three year CD. America is still stuck in that question of personal finance versus a lot of. If they have any money to put in a CD to begin with. Well OK. But the arch question is on duration. How short should I be right now. So we we we like being more towards the [00:30:15] Speaker 7: front and intermediate part of the curve at the longer end of the curve. So 30 year bonds for example. It tends to be a bit more whippy. If you're I'll say. If your question is is do we expect the Fed to be kind of cutting or hiking or holding pat from here. Our economists are expecting the Fed to essentially be on hold through 2026. I would say the Middle East conflict has been flagged as an upside risk in terms of inflation. We know which does provide some risk to that view. But in general we're expecting rates to remain on hold. So staying invested amid an elevated rate environment. You are actually earning some coupon from there as well. All right. So [00:30:46] Speaker 3: staying invested is the message here from Amanda. Amanda line of Goldman Sachs chief credit strategist. Thank you so much for joining us. All right. Coming up on Bloomberg money adult happy meals. They're a thing and they're pulling in customers across tax brackets. More restaurants are trying to lower diners looking for deals. Sometimes the hours are a little bit earlier. You know verging on early bird special. Plus we're bullish on books. Tom and I share what we're [00:31:13] Speaker 2: reading. How do you narrow it down. Classic. I narrowed it down to the classic. Amanda's read it three times. That's all coming up on Bloomberg [00:31:20] Speaker 3: money. Next up we'll have you come up with recommendation too. Jesse Livermore. Bloomberg money is your new destination for personal finance. It's a cross-platform effort that extends beyond your television including our new digital hub at Bloomberg.com slash money. And Tom that reminds me of a story that I saw this week. When was the last time that you enjoyed a happy meal. Happy meal. That was a few years ago to say the least. We just went for the toys. You just went for the toys. Well there's you know some adult happy meals now being offered by restaurants which give you an entree aside an adult beverage of your choice for a flat price. And the reason of course is inflation. Bloomberg's Sarah Foster writes bundle deals that often include an entree aside and a drink are up 15 percent from a year earlier across all restaurant segments. And 21 percent. 21 percent. At fine dining establishments like the ones you attend. They're the fastest growing entree category on restaurant menus. And Sarah joins us now. So what's an example of a restaurant that Tom might deign to go to not just the [00:32:23] Speaker 8: McDonald's. Well I was doing a lot of traveling around the city to kind of hunt down these adult happy meals. I [00:32:29] Speaker 2: know I'm sure. I parked at this place called Anson. Reto said get out the Amex and let's bring it up. I will probably be [00:32:35] Speaker 8: holding off on the red meat for a while. But Anson Steak Easy in Greenwich Village that was this place that I parked at. You know what really stood out to me is that these are not your fine you know value menu eaters. They are going for these fine dining restaurants. A lot of them work in finance. A lot of them work in tech. And they are really drawn to these predictable pricing. You know you mentioned the toy thing Tom. It's what's interesting. I think is the adult version of this happy meal always replaces the toy with a cocktail. I think that's what makes them happy. But a lot of them really do say you know they would be interested in a toy too if that adult one would provide it. And these pictures are phenomenal. I think part of this too is when you talk to the restaurateurs is they made sure that they wanted it to be really visually appealing so that people can post it to their social media. What was really fascinating is that a lot of these adult happy meals looked luxurious. I was talking with this one restaurant in D.C. They call it the lobby meal included in that was a glass of champagne and it was branded with that flow click oh you know champagne branding that was really attracting the people. It's fascinating. Listen I'll do a shout out to Michael's which is just iconic and also vote or right right across the street from our effort here is it seems to me everybody's [00:33:49] Speaker 3: simply simplifying the menus. It just seems to be easier now to order than 12 pages of choices from years ago. Yeah makes things easier for the restaurant themselves because they only offer one or two things right. There's not a whole lot of things you have to worry about with your supply chain and your suppliers. [00:34:05] Speaker 8: It's true. It's easier to offer these curated menus because a lot of the diners who I spoke with they say that they face decision fatigue when they go out to eat these days. Exactly. Exactly. You know you see that with line culture tick tock and social media is just proliferating all of these new restaurants to try and sometimes people you know on a busy day they just want to have the meal laid out for them. And some of these deals are hidden too right. It's not totally advertised. You kind of have to be in the know. It's this layer of prestige and exclusivity. It's like a club that if I spoke with one restaurant that was selling so many adult happy meals that they had to kind of pull it away. And now they still sell it to people who ask for it. Stay with us. [00:34:43] Speaker 2: And now, Sarah, this is the acid test. I want to know if you've read my book. We've got two books here on trading. We had a lot of fun with this. We're doing different things. We did Elon Musk. My bow tie is a mess. Come on, Scar. Tell me when the bow tie is out of line. It's right now. We've got the trading game here. This is Scarfoos book. Scar, tell us about the trading game. Okay. It's by Gary Stevenson who is a trader on the FX and rates desk at Citi in London just before and during the financial crisis. [00:35:05] Speaker 3: He grew up in the wrong part of London but went to LSE because he was a math whiz. He made a ton of money for Citi and himself, a 400,000 pound bonus in his first full year as a trader when he was 23. Right. And he had a thesis driving all his trades which is that interest rates would stay low and inequality would worsen. What's interesting to me is that later on, and the book gets into this, he had a come to Jesus moment where he quit the industry and now he has a YouTube channel teaching people about real world economics. [00:35:31] Speaker 2: This is great. The iconic math exam at the London School of Economics. That's what Mr. Jagger who went on to sing. Oh, the one big dagger. Mr. Jagger went on after he bombed out of the math exam at LSE years ago. It's a rigorous test. [00:35:45] Speaker 3: I mean, I'm making him sound preachy here, but he's really not because the book is fun with a lot of descriptions of the characters on trading floors. My book is definitive. [00:35:53] Speaker 2: You read it every five years if you're in the game. This is a book. If Sarah, if you haven't read this book, you're in my timeout chair. Reminiscence of a stock operator. This book is 103 years old and there is a lesson about every four pages. There's a point in here with Jesse Livermore. It's so stressful in New York and Boston. He goes to Florida for vacation and he learns more about trading in Florida from the cotton traders than he does in New York or Boston. This is a classic, classic book. It's criminal that it's not part of a job assignment. What was the last time you read it? I read it about three or four years ago and I'm due to read it again about right now. I think I'll do that. The annotated version is worth its weight in gold. It's a bigger almost like coffee table. Yeah, and it's a hardcover too. Hardcover. Well, yeah, we only do a hardcover on Bloomberg. Oh, you're such a snob. I'm a terrible snob. Sarah, have you read Jesse Livermore? I haven't, but I need to. That's your assignment. I'm going to tell Nikki Waller. Sarah's deep into Jesse Livermore. Well, we have a book section in the Bloomberg Money website. So, of course, this is. Yes. [00:36:56] Speaker 3: Very cool. We have a book newsletter, too. Oh, my word. Yeah, it gives you reviews, recommendations, all of that. Wait, are we a vertical? We're a vertical. We're very vertical. Yeah, we're very vertical. By the way, be sure to subscribe to the On Books newsletter. Coming up next on Bloomberg Money, an epic comes to life, but will it be a revival for the box office? Christopher Nolan. He has a movie called The Odyssey, just like a small movie. Who takes over the show? Other ways you might be spending your money this weekend. Can we say World Cup? Are you? Are you trying to find a ticket here? No, I'm not, but I think Spain will win. All right. This is Bloomberg Money. Spain is in depth. Yes. They have. Have you seen that picture of they know with the Spain player? Yes. It's very cool. Yeah. [00:37:47] Speaker 2: So, Bloomberg Money from New York on a Friday and an eventful Friday. It is Tom King and Scarlet Food. Thank you so much for joining us. It's on personal finance. It's on retirement. It's on wealth management. You say, wait, how can you do that with Noel Rubini? And yet we did it. I mean, I mean, I mean, it's so germane to look out to 2030 and what about Social Security or to pull it right back to when I bought SpaceX. It won 10. And it's crazy. You got it at 1:10? I did at 1:10. I was, I was, you know. You're special. I had to wait. I had to wait. Well, 1:10. And it's, excuse me, not 1:10, 2:10. There we go. 2:10. Okay. That's a very different snapshot now. That's a Bloomberg Money correction there for you. All right. It's Friday. [00:38:28] Speaker 3: So we need to look ahead to the weekend and next week to get a sense of how you're going to spend your money. And I'm going to focus in on earnings because it's going to be a pretty light week for data. There's not a whole lot going on on that front. And of course, Fed officials are in a blackout period before their meeting. So let's focus on earnings because on Tuesday, we got General Motors. And Tom, you know that all the big car makers have seemingly given up on hybrids or electric vehicles. [00:38:52] Speaker 2: They've all put their eggs in the gas guzzling SUV basket. Well, they have. And, you know, I look at Alphabet moving on and then the following week into technology. And it's as big a deal as the bank stocks. Oh, for sure. [00:39:03] Speaker 3: Alphabet is the first of the hyperscalers to report earnings. And people aren't even calling it earnings season anymore. They're calling it capex season. [00:39:09] Speaker 2: Because it's all about what they say when it comes to capital expenditures. And it's really going to be a show me moment. To me, the big thing here, folks, to get a little nerd on you, is the nominal GDP right now. The animal spirit of the country is basically, you know, like a third world country like China or whatever. 5%. 5.6% is well. And that's really important. What we do on Bloomberg Money as well is when there's really important breaking news. We're going to stay with that. Scarlett's going to queue [00:39:38] Speaker 3: up right now. This is on Apple. This is on Apple. Apple is in early settlement talks with the U.S. Department of Justice over an antitrust suit from 2024 that alleges the iPhone maker violated antitrust laws. According to Bloomberg reporting by Mark Gurman and his colleagues, the discussions are active. There are no guarantees that the two sides will reach an agreement. And no trial date has been set in the case. Apple has made multiple offers this year to the DOJ to bring the case to a close. This is according to people familiar with the matter. But the discussions are private. And the discussions can end without an agreement being reached. [00:40:12] Speaker 2: And the initial tick up here is a nice move up back to 332. Again, I said earlier in the show, Devin, I think we've got that headline. Apple at 341-ish is a $5 trillion company. And what's important here and pulls it back into Bloomberg Money is basically who doesn't own Apple. Yes, because within a 401k portfolio, whatever the mix is, it could be something tech dominated where it's four or five, six, eight percent or maybe less or just individual stock ownership. It's part of America. It's kind of like SpaceX. Even if you didn't want it, you have it [00:40:45] Speaker 3: because of exposure to, for instance, the Nasdaq 100. So the DOJ's main allegations here are basically about Apple blocking super apps, programs that include mini apps within them like WeChat in China. And, you know, Apple with its walled garden business model is something that a lot of people have not necessarily complained about, but brought up as something that works against its -- how it's viewed as a competitive company. [00:41:11] Speaker 2: It's been a permanent fixture of people going after Apple for, as you say nicely, the walled garden. What I would suggest, if you talk to the sell side of any persuasion, the Uber bulls, I think of Gene Munster and Dan Ives and others much more cautious, this app section of the business, the service section just continually grows. Well, they have to. It has to because the hardware is increasingly a commodity and [00:41:37] Speaker 3: companies like Apple face increased costs for memory chips. Because everyone in my family is doing Apple movies every night. I look at my [00:41:44] Speaker 2: visa, Apple this, Apple this, Apple that. And the answer is that subset of Apple is so, so important away from the frenzy over iPhones. No, that's a really good point. [00:41:55] Speaker 3: By the way, you mentioned movies on Apple. Yeah, give me a touch here on Odyssey, is it? The Odyssey was released today, so you can go see it. It's the first movie, I believe, that was completely made and designed to be made on the IMAX with IMAX cameras. So this is a big one. Matt Damon plays the main character. Anne Hathaway is part of it. Our producers said the reviews from the U.K. were, it could have been [00:42:18] Speaker 2: better. But I'm excited about this. I've heard very mixed reviews. I mean, it's not like Moana. I mean, you're the celebrity loadstone. [00:42:24] Speaker 3: Moana tanked, right? The live action movies, like, I don't know that they really catch on. I'm not sure who wants the live action movies, aside from the [00:42:31] Speaker 2: studios, because it allows them to renew the asset. But we can summarize with Warner Brothers, with all the merger friends. He had a bang-up year. It's a good year. Is it a good summer for Hollywood? And I think the answer is yes. It's a good year for Hollywood, yes. It's no longer [00:42:46] Speaker 3: resting on the laurels of two movies, like Barbie or Oppenheimer. It's a lot more than that. In the time we've gotten here, I think this is [00:42:52] Speaker 2: really important as we've really enjoyed launching the show and giving you perspective here. For me, the major, major thing here is all the marketing of wealth management, all the concepts and mergers, and we're trying to slice through that, try to figure out, OK, what's really going on? I think with Amanda Lina, and we did a nice job of that today to say, OK, what do you do with bonds? And her message was, all [00:43:15] Speaker 3: bonds aren't the same. Right. And, of course, people are scarred from what happened in 2022 when bonds were supposed to be the ballast for your portfolio. The stock market tanked and bonds didn't do it. Negative returns. Give me an apple banner here. I just think it's so [00:43:29] Speaker 2: important. Apple from 280, 280, the end of June. And it's been not a moonshot that over says it, but nicely up here. It's 331, just below the recent record high. And to get on to 341, $5 trillion company is, remember, I mean, you don't remember this, but, you know, Steve Jobs, John Scully, we're all going to die. Lisa's a failure. It's a long way from that. [00:43:55] Speaker 3: It's a long way from that. And, of course, this is a company that has been kind of behind the curve when it comes to AI adoption, too. But maybe that's a little bit of its saving grace right now as we see some pressure on chipmakers and the [00:44:03] Speaker 2: whole questioning of the AI trade. We'll have to see. All I know is Mark Gurman has the cool orange iPhone. Does he? I do not. Of course he does. He's ahead of everyone. Thank you so much. It's Bloomberg Money. This is Bloomberg. you