# Supply Shocks Hit Your Wallet, Investor & Consumer Sentiments Diverge, Expensive Suburbs

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 10 Oct 2026, 43 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/1b0c2805-9805-43e6-9662-b4ab0110f413/3892ab6f-0d44-4566-8ecf-b4de0152fce7/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Bloomberg Money takes the pulse of your financial life, powered by the reporting of our global newsroom. This week's show features Peter Orszag, Lazard CEO & Chairman, Anastasia Amoroso, Chief Investment Strategist, Partners Group and more. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios. Podcasts.
[0:05] Speaker 2: Radio.
[0:06] Speaker 3: News.
[0:07] Speaker 4: Bloomberg Money.
[0:12] Speaker 5: This is the Bloomberg Money Podcast. I'm Tom Keen with
[0:16] Speaker 5: Scarlett Fu. Join us each week for a smart look
[0:19] Speaker 5: at the forces shaping your financial life on personal finance,
[0:23] Speaker 5: on retirement, and wealth management. We will explore how people
[0:27] Speaker 5: are earning, investing, and building wealth. We are live Fridays
[0:32] Speaker 5: at noon Eastern on Bloomberg Television. Subscribe to the podcast
[0:36] Speaker 5: wherever you listen, and as always on the Bloomberg Terminal
[0:40] Speaker 5: and the Bloomberg Business app.
[0:55] Speaker 4: Good noon, everyone.
[0:55] Speaker 5: Bloomberg Money, personal finance, retirement, wealth management, touch of politics,
[1:00] Speaker 5: 25 days.
[1:01] Speaker 4: To the midterm elections. I'm Tom Keene. Of course, Scarlett
[1:04] Speaker 4: Foon leading the challenge here.
[1:05] Speaker 5: And the thing, everything is overwhelmed on personal finance, retirement
[1:09] Speaker 5: and wealth management by consumer sentiment. That 44 statistic this
[1:14] Speaker 5: morning speaks volumes about the tension in America.
[1:17] Speaker 1: People feel very lousy because no one likes high oil prices.
[1:20] Speaker 1: No one likes high mortgage rates. And now people can
[1:23] Speaker 1: do something about it when they go to the polls.
[1:25] Speaker 5: And would you agree that when we're doing this every
[1:28] Speaker 5: day and we're doing this every Friday at 12 noon,
[1:30] Speaker 5: we're trying to move away from the elite discussion that
[1:33] Speaker 5: we do every.
[1:33] Speaker 4: Day on Bloomberg?
[1:35] Speaker 5: Because half more than half of America with that statistic
[1:38] Speaker 5: of 44 is flat.
[1:39] Speaker 4: On their back.
[1:39] Speaker 1: Yes, but then you look at GDP numbers, which is
[1:41] Speaker 1: an aggregate number, and it looks like everything's just fine.
[1:44] Speaker 1: Corporate earnings, which are going to begin in earnest next week,
[1:47] Speaker 1: also just fine, actually more than fine.
[1:48] Speaker 5: Well, the mix here in October, and a beautiful October
[1:51] Speaker 5: it is in New York City. Again, we welcome all
[1:54] Speaker 5: of you with important conversation. Peter Orszag will join us today,
[1:58] Speaker 5: of Lazard, of course, but his definitive work on American
[2:02] Speaker 5: retirement over the arc.
[2:04] Speaker 4: Of his career. Thrilled to have Dr. Orszag with us.
[2:07] Speaker 1: And later on in the hour, Anastasia Amoroso, Chief Investment
[2:10] Speaker 1: Strategist for Partner Group's Private Wealth and Retirement Business Unit,
[2:13] Speaker 1: will be sitting down with us. We'll get her view
[2:15] Speaker 1: on how the great bond sell-off resets the table for
[2:18] Speaker 1: valuations and stocks.
[2:19] Speaker 5: And she has been wonderful about the courage to stay
[2:22] Speaker 5: in the market as well. Right now, I've got to
[2:24] Speaker 5: stay in the market. I went to, wait, I was
[2:25] Speaker 5: in all cash too low. I haven't bought a first
[2:28] Speaker 5: share yet. Triple leverage, all cash runs doing well this week.
[2:31] Speaker 5: I don't care about stocks. Some do. What's important here
[2:35] Speaker 5: is the bull market statistic for Anastasia. 14.92 on a
[2:39] Speaker 5: VIX is a wow statistic.
[2:42] Speaker 1: Yeah, and we're looking at a fourth straight year of
[2:43] Speaker 1: double-digit gains right now, and also gains for the week
[2:46] Speaker 1: in equities. Let's flip it up and show you what's
[2:48] Speaker 1: happening with yields. The 10-year yield moving up, that's been
[2:51] Speaker 1: a familiar sight. It touched a new multi-decade high of 5.36%
[2:54] Speaker 1: on Wednesday.
[2:54] Speaker 3: Dollar and.
[2:57] Speaker 1: Up slightly and oil prices for WTI just below $ 92
[3:00] Speaker 1: a barrel.
[3:02] Speaker 4: A roundtable this morning to get us started with good conversation.
[3:05] Speaker 4: The zeitgeist of a Friday.
[3:06] Speaker 5: It's already been scarred because Gura inflicted upon us children
[3:10] Speaker 5: photographs of flag football.
[3:12] Speaker 4: We'll survive.
[3:12] Speaker 5: David Gura is with us from Bloomberg this weekend and
[3:15] Speaker 5: really on top of the midterm.
[3:18] Speaker 4: Debate as well.
[3:19] Speaker 5: With us, Jessica Carl, author of Bloomberg Opinion today. It's
[3:22] Speaker 5: a huge summation of all that we're doing with Tim
[3:25] Speaker 5: O'Brien's shop at Bloomberg Opinion. And Max Chavkin's with us
[3:29] Speaker 5: with Everybody's Business podcast. And I know, Scarlett, you really
[3:33] Speaker 5: wound up about a Max story here.
[3:35] Speaker 1: Yeah, absolutely. He's written about what's something called AI surveillance pricing,
[3:39] Speaker 1: which is like dynamic pricing, but personalized based on who
[3:43] Speaker 1: you are and what you've done before.
[3:45] Speaker 4: Is that right?
[3:45] Speaker 6: Yeah, this is the idea that as pricing algorithms get
[3:49] Speaker 6: more and more sophisticated, we already have this to some
[3:52] Speaker 6: extent with social media advertising, where you have a pair
[3:56] Speaker 6: of shoes that follows you.
[3:57] Speaker 1: Around the internet. There are groups, many of them left-leaning,
[4:00] Speaker 1: many of.
[4:01] Speaker 6: Them trying to kind of get populist rage going, warning
[4:05] Speaker 6: about the potential risk. for these same kinds of technologies
[4:09] Speaker 6: to apply to things like at grocery stores. So the idea,
[4:12] Speaker 6: and this again is mostly theoretical at this point, but
[4:15] Speaker 6: that you're walking through a grocery store and the price
[4:18] Speaker 6: of a good will change based on other stuff you
[4:20] Speaker 6: have in your shopping cart. So, for instance, and this
[4:24] Speaker 6: came up in the story I just wrote, Walmart has
[4:27] Speaker 6: a patent that suggests that they would change the price
[4:30] Speaker 6: of mayonnaise if you already had tuna fish in their cart. Now,
[4:34] Speaker 6: I should say, Walmart responded to this by saying, we
[4:37] Speaker 6: are not changing the price of mayonnaise yet.
[4:39] Speaker 1: This is just a patent. We're not doing this.
[4:42] Speaker 6: They're committed to the slogan, which is everyday low prices.
[4:47] Speaker 6: But it does sort of show you that there are
[4:50] Speaker 6: at least some people within these companies that are thinking
[4:52] Speaker 6: about this stuff. And we are seeing this in maybe
[4:55] Speaker 6: less high-profile examples.
[4:57] Speaker 1: So the technology is there, but it may not be
[5:00] Speaker 1: implemented at the moment. It feels like this is something
[5:03] Speaker 1: that politicians would jump on, especially those who are running
[5:05] Speaker 1: for election in November.
[5:07] Speaker 7: Well, I can imagine that they would, yeah.
[5:09] Speaker 4: Even Republicans got to look at this. I mean, is
[5:12] Speaker 4: it in place now?
[5:14] Speaker 5: If Jessica Carl books an airplane ticket and she comes
[5:17] Speaker 5: back six hours later, do they jack up the price
[5:20] Speaker 5: because they know she was there six hours ago?
[5:21] Speaker 6: The airplane one is one where it is not. It's
[5:25] Speaker 6: pretty muddy. So the airlines say, no, we don't do that.
[5:29] Speaker 6: Anyone who's bought an airline ticket, though, will see that
[5:32] Speaker 6: the prices change very often. There are these kind of
[5:35] Speaker 6: like one-off cases. In fact, one came up during a
[5:38] Speaker 6: hearing in Congress. You brought up Republicans. Josh Hawley has
[5:41] Speaker 6: been kind of ringing the bell on this. I think
[5:43] Speaker 6: the issue is that they have so many different fare classes,
[5:47] Speaker 6: you know, potentially dozens, even hundreds, where it starts to
[5:51] Speaker 6: get very close to personal.
[5:52] Speaker 4: My summer is I'm getting taken to the cleaners.
[5:54] Speaker 5: The reason Jessica Carroll's here, she actually is good at
[5:57] Speaker 5: social media, unlike the rest of it. Give us an update,
[6:01] Speaker 5: as we talk to Max about this, about the new
[6:03] Speaker 5: digital impact on Americans that aren't hipsters and into social.
[6:07] Speaker 5: I mean, it permeates our society, doesn't it?
[6:10] Speaker 2: I think you hear a story like that, and that
[6:12] Speaker 2: story about tuna fish in the cart with the mayonnaise,
[6:15] Speaker 2: that would go viral, and that's kind of what's feeding
[6:18] Speaker 2: into the negative consumer sentiment that you're seeing.
[6:20] Speaker 8: Even if it's not actually happening.
[6:22] Speaker 2: I think people on social media, there's these rage bait
[6:24] Speaker 2: stories that really are pushing politicians to sort of address
[6:29] Speaker 2: these issues in a different way on social media, I think.
[6:33] Speaker 1: Speaking of politicians trying to address this in a different way,
[6:36] Speaker 1: President Trump has renamed artificial intelligence AI AI. into super intelligence,
[6:41] Speaker 1: and this focus on semantics is super interesting. I know
[6:44] Speaker 1: you've been writing about it in your newsletter. Yes, yesterday.
[6:46] Speaker 2: He wanted to label everyone who still says AI as
[6:49] Speaker 2: the enemy, and I was joking.
[6:50] Speaker 8: My name is not Jessica.
[6:51] Speaker 1: It's the enemy now.
[6:53] Speaker 8: But yeah, I think.
[6:55] Speaker 2: When consumers see, like, oh, he's focusing on the name
[6:57] Speaker 2: of AI, when there's so much anger and pessimism directed
[7:02] Speaker 2: at this technology, people are worried it's price gouging them,
[7:05] Speaker 2: it's going to eliminate their jobs.
[7:07] Speaker 1: So there's a lot of.
[7:08] Speaker 2: Fear around this, and that label sort of just seems
[7:10] Speaker 2: silly in the grand scheme of things.
[7:12] Speaker 5: I don't buy for a minute AI matters in the election.
[7:14] Speaker 5: David Gerro, Bloomberg this weekend, you're on top of this.
[7:16] Speaker 5: You're talking to Republicans and Democrats. Let's assume AI doesn't matter.
[7:21] Speaker 5: What then does matter the first Tuesday of November?
[7:24] Speaker 4: Well, I think that it does matter.
[7:25] Speaker 7: And so you're seeing in a lot of states and
[7:26] Speaker 7: local levels referendums surrounding AI and the construction of data centers.
[7:29] Speaker 7: You look at the debate that took place in Michigan
[7:31] Speaker 7: last night. Both of the candidates, Republican and Democrat, came
[7:34] Speaker 7: out against building more data centers at this moment.
[7:36] Speaker 8: So it's a very tangible debate.
[7:38] Speaker 7: Totem of what I think the electorate is seeing as
[7:40] Speaker 7: representative of data centers right now. But it's affordability, as
[7:44] Speaker 7: we've talked about week after week after week. Democrats have
[7:47] Speaker 7: wisely ceased on that as an issue that they want
[7:48] Speaker 7: to keep talking about. Republicans are quite fearful of the
[7:51] Speaker 7: fact that they really don't have a good answer to it.
[7:52] Speaker 4: I make it up as I go.
[7:53] Speaker 5: You actually read the literature, Cook Political Report out today
[7:57] Speaker 5: with a redo on the House in a lot of seats.
[7:59] Speaker 4: I get it.
[8:00] Speaker 7: No, they've moved their forecast, 18 Democratic seats now in
[8:05] Speaker 7: their list of what they think is going to happen
[8:07] Speaker 7: with the House. Look, Democrats have to get to 218.
[8:08] Speaker 7: They had to gain three seats to do that. What
[8:12] Speaker 7: the Cook Political Report nonpartisan outfit is predicting now is
[8:15] Speaker 7: something more like 224 or above. So really a kind
[8:19] Speaker 7: of sea change here in the House. And if you
[8:21] Speaker 7: look at them and Eurasia Group and Morgan Stanley, I
[8:23] Speaker 7: think that there's this expectation the Senate is still going
[8:25] Speaker 7: to be difficult for Democrats, but Democrats are making inroads
[8:28] Speaker 7: on that.
[8:28] Speaker 4: Side as well.
[8:29] Speaker 1: When you talked about the surveillance pricing, this is something
[8:32] Speaker 1: that certain people have jumped on. And these are people
[8:34] Speaker 1: who worked with Elizabeth Warren, the senator. Is this now
[8:37] Speaker 1: a Democratic issue?
[8:38] Speaker 6: I mean, there are Republicans, as David is kind of
[8:40] Speaker 6: hinting at, there are Republicans who are trying to claim
[8:42] Speaker 6: the mantle on AI and on affordability. I think the
[8:45] Speaker 6: reason why the Democratic groups that I talk to see
[8:49] Speaker 6: this as a good issue is because it hits two buckets.
[8:52] Speaker 4: It hits AI.
[8:53] Speaker 6: I'm upset about AI. There's a lot of money going in.
[8:55] Speaker 6: There's a sense that maybe regular people are not benefiting
[8:59] Speaker 6: from this, whatever you call it. And then there's affordability
[9:02] Speaker 6: and the kind of... The thing for them that's appealing
[9:06] Speaker 6: about this is this combines both. This is AI skepticism
[9:09] Speaker 6: and affordability. AI is not just this thing that might
[9:12] Speaker 6: take away your job at some point in theory. It's
[9:14] Speaker 6: also maybe driving your prices up, which whether or not
[9:18] Speaker 6: it's happening in grocery stores, it's certainly happening from an
[9:20] Speaker 6: inflation perspective. AI is driving inflation.
[9:23] Speaker 8: It speaks to this notion that you don't really know
[9:24] Speaker 8: what's happening.
[9:25] Speaker 7: I think you feel like AI is developing and going somewhere,
[9:27] Speaker 7: but you don't have a grasp on what it can
[9:28] Speaker 7: do and what it is doing, what it will do.
[9:31] Speaker 7: And I think this is just another example to kind
[9:32] Speaker 7: of confuses or renders apparent to the electorate, I don't
[9:35] Speaker 7: have a handle on where this technology, which is so
[9:37] Speaker 7: radically changing our lives, is headed.
[9:38] Speaker 1: And this is a common theme in all the opinion
[9:40] Speaker 1: pieces that our Bloomberg opinion contributors write about, and you
[9:43] Speaker 1: have to kind of synthesize.
[9:44] Speaker 2: Yes, yeah, there's so much uncertainty just in general with
[9:46] Speaker 2: the economy and the AI skepticism feeds into that, and
[9:50] Speaker 2: I think you see it in spending on, I mean,
[9:52] Speaker 2: discretionary spending is staying in line, but I think you
[9:56] Speaker 2: see people kind of becoming hesitant to spend on bigger things.
[9:59] Speaker 4: Can you get rid of all the AI garbage on Twitter?
[10:03] Speaker 8: I would love to. I think if I did, I
[10:05] Speaker 8: wouldn't be working here anymore.
[10:07] Speaker 5: It would like another wave of unusability on Twitter, on
[10:11] Speaker 5: X or whatever, because they.
[10:12] Speaker 1: Got all this fiction stuff.
[10:14] Speaker 7: Is the triple leveraged all cash fund now available as
[10:16] Speaker 7: an ETF?
[10:17] Speaker 5: Yeah.
[10:17] Speaker 4: It is. We've talked about it. It's in registration. Belchunas
[10:21] Speaker 4: is on the board. Eric Belchunas, our ETF guru. But
[10:24] Speaker 4: the roadshow, the merch, it's going to be bow ties.
[10:28] Speaker 5: Yeah.
[10:29] Speaker 8: I'm going to wait for the merch.
[10:30] Speaker 5: The merch is going to be unbelievable. It's going to
[10:33] Speaker 5: be four-pull leverage. We'll see how that goes.
[10:35] Speaker 3: Yeah.
[10:35] Speaker 1: Well, you can't do triple leverage right now, according to
[10:37] Speaker 1: the SEC, unless it's something.
[10:38] Speaker 3: I know.
[10:38] Speaker 4: That's a problem. I said to the counselor, why'd you leave?
[10:40] Speaker 4: He wouldn't let me do it.
[10:42] Speaker 1: Yeah, Gensler would have let you do it. All right,
[10:43] Speaker 1: thank you to all of our panelists here. David Gurra,
[10:46] Speaker 1: he is co-anchor of Bloomberg this weekend. Jessica Carl, author
[10:49] Speaker 1: of the Bloomberg Opinion Today newsletter. And Max Chafkin, Bloomberg
[10:51] Speaker 1: Businessweek columnist and co-host of everybody's podcast. I know, we're excited.
[10:57] Speaker 1: Coming up on Bloomberg Money, Peter Orszag, Lazard's CEO and chairman.
[11:02] Speaker 1: And of course, he's behind some of the ideas that
[11:04] Speaker 1: are critical to the 401k. This is Bloomberg Money.
[11:09] Speaker 5: You're listening to Bloomberg Money. Stay with us with more
[11:12] Speaker 5: to come after this. On a perfect Friday from New
[11:21] Speaker 5: York City, Bloomberg Money, Tom Keen and Scarlett.
[11:24] Speaker 4: I thought that was a spirited conversation.
[11:26] Speaker 5: The heart of the matter is 25 days to the midterm.
[11:29] Speaker 5: It will be seismic, to say the least.
[11:31] Speaker 1: Yeah, AI dominating everyone's thoughts and also rising prices. Can't
[11:35] Speaker 1: get away from rising gas prices, rising mortgage rates. rising
[11:39] Speaker 1: food prices.
[11:40] Speaker 5: And the food prices to me is the emotion. In fact,
[11:42] Speaker 5: it's one of the brilliances of our guests. Peter Orszag
[11:45] Speaker 5: is with us, chairman and chief executive officer of Lazard
[11:48] Speaker 5: that barely describes his contribution to modern retirement in America.
[11:54] Speaker 5: Coming out of LSE a number of years ago, he
[11:56] Speaker 5: wandered in and got.
[11:57] Speaker 4: A job and he said, you know what?
[11:59] Speaker 5: When we take a new job, we should automatically be
[12:03] Speaker 5: in the 401k of the company. You say, well, that's
[12:06] Speaker 5: no big deal. At the time, it was absolutely seismic.
[12:11] Speaker 5: He also looks at his economics as well as running
[12:13] Speaker 5: the shop at Lazard. Here is a seismic essay from
[12:17] Speaker 5: January this year. The risk of higher U.S. inflation in 2026.
[12:22] Speaker 5: Research demonstrates a consumer perception of inflation is is based on,
[12:26] Speaker 5: here's the grocery part, the frequency of purchase of, say, eggs.
[12:31] Speaker 5: Inflation rising above 4% by the end of 2026 is
[12:35] Speaker 5: plausible and a most likely scenario.
[12:38] Speaker 4: You and Adam Posen nailed it. Where do we go
[12:42] Speaker 4: from here? Well, I think the.
[12:44] Speaker 9: Important thing about that is not necessarily the kind of
[12:47] Speaker 9: victory lap, but instead, why did we say that? And
[12:50] Speaker 9: the reason we said that is we are living in
[12:51] Speaker 9: a new supply side era where if you want to
[12:54] Speaker 9: understand inflation today, you need to look at the supply
[12:57] Speaker 9: shocks that happened a year or two ago. And the thought,
[13:01] Speaker 9: in fact, I just read a piece of research suggesting,
[13:04] Speaker 9: don't worry, the next few months you'll see a tailing
[13:07] Speaker 9: off of inflation because these one-time effects will erode. Okay,
[13:11] Speaker 9: but our other point is there are going to be
[13:13] Speaker 9: continual new supply shocks. So we're living in this era,
[13:17] Speaker 9: supply-side era 2.0. in which you're going to be hit
[13:20] Speaker 9: by these things on an ongoing basis. And so treating
[13:22] Speaker 9: them each as a one-off thing is a mistake.
[13:25] Speaker 5: Our Bloomberg Money audience is hit by it each and
[13:27] Speaker 5: every moment and wrapped around personal finance and retirement and
[13:32] Speaker 5: wealth management.
[13:32] Speaker 4: Without getting into.
[13:33] Speaker 5: The mathiness, does there need to be a new set
[13:37] Speaker 5: of a higher interest rate, what the fancy people call
[13:40] Speaker 5: a higher actuarial assumption? Are we shifting in our interest
[13:44] Speaker 5: rate now?
[13:45] Speaker 9: I definitely think that the interest rate environment is different
[13:48] Speaker 9: today than it was three or four years ago. It's unfortunate,
[13:51] Speaker 9: by the way, that we didn't take advantage of that
[13:53] Speaker 9: moment when we had extended moment when we had low
[13:56] Speaker 9: rates to extend the maturity of treasuries, which is something
[13:59] Speaker 9: that Bob Rubin and Joe Stiglitz and I had called for. Instead,
[14:03] Speaker 9: we have been shortening maturity. That's too bad. But I
[14:06] Speaker 9: think we are in a new era in which, frankly,
[14:08] Speaker 9: the bond vigilantes are coming back.
[14:10] Speaker 4: Oh, we could digress.
[14:12] Speaker 1: I know. If we start talking about the bond market,
[14:14] Speaker 1: we can go in a different direction. Getting back to
[14:16] Speaker 1: that inflation story that you were just talking about, is
[14:19] Speaker 1: AI inflationary? I mean, there's the build-out, then there's the implementation,
[14:22] Speaker 1: and then there's the application. And we haven't totally gotten
[14:25] Speaker 1: to the mass application yet.
[14:27] Speaker 9: Yeah, I think on AI, the build-out is massive, maybe three,
[14:31] Speaker 9: three and a half percent of GDP investment, which is
[14:34] Speaker 9: larger than railroads, highways, electrification by a significant margin. That's
[14:40] Speaker 9: also putting upward pressure on interest rates. My own view
[14:43] Speaker 9: is I think that I'm a, I think we need
[14:45] Speaker 9: to separate the technology and the business model here. I'm
[14:48] Speaker 9: a huge believer in the technology.
[14:49] Speaker 10: I use it.
[14:49] Speaker 9: I probably have 70 or 80 agents running as we speak.
[14:53] Speaker 9: I'm astonished by how rapidly things are progressing. But because
[14:57] Speaker 9: so much of the investment is debt financed, I do
[15:00] Speaker 9: think the risk of financial distress in this ecosystem is
[15:05] Speaker 9: higher than people appreciate. Because when it's debt financed, if
[15:08] Speaker 9: the token spend, instead of doing this, just does.
[15:10] Speaker 1: That, you've got a problem.
[15:12] Speaker 9: If it were equity financed, it's a different thing. But
[15:14] Speaker 9: because so much of it is debt financed, and that
[15:17] Speaker 9: token spend, going from this to that, could come from
[15:20] Speaker 9: open weight, which we've already talked a lot about, but
[15:22] Speaker 9: also from local compute. I think that's the part that
[15:24] Speaker 9: people are not appreciating, is the ability to run the
[15:29] Speaker 9: models on an air-gapped computer based on local compute.
[15:32] Speaker 4: You're not drawing in the cloud. Can I do a
[15:33] Speaker 4: family shout-out?
[15:34] Speaker 3: Please.
[15:34] Speaker 4: My brother's dead on in this local weight. He says
[15:37] Speaker 4: you're 100% right. On local compute, yeah. On local computing.
[15:39] Speaker 1: So there's so much we don't know yet about how
[15:41] Speaker 1: AI is going to work and how it's going to
[15:43] Speaker 1: affect the economy. One thing we do know is what
[15:45] Speaker 1: Tom referenced, which was your work on the research that
[15:48] Speaker 1: led to automatic enrollment in 401ks. Your view on the
[15:52] Speaker 1: Trump accounts, which have now made clear that those kids
[15:56] Speaker 1: under 18 will now be automatically enrolled in these Trump accounts.
[15:59] Speaker 1: Is it a good thing?
[16:00] Speaker 4: I think that part is a good thing.
[16:01] Speaker 9: And the power of inertia and the power of defaults
[16:05] Speaker 9: is very, we all know it from our own lives,
[16:07] Speaker 9: if something's even a little difficult, often you don't do it.
[16:10] Speaker 9: And that was the point about auto-enrollment into retirement savings plans.
[16:15] Speaker 9: And also, if you're going to set up something for kids,
[16:18] Speaker 9: it's better to auto-enroll them.
[16:19] Speaker 4: I've got to get this in. I think a lot
[16:20] Speaker 4: of people don't know Lazard.
[16:22] Speaker 5: Your stewardship of Lazard here, the way you're out on social,
[16:24] Speaker 5: everywhere he goes, you have to run five miles with
[16:27] Speaker 5: Peter Orzek.
[16:27] Speaker 4: Yeah. I mean, every city, it's ridiculous.
[16:29] Speaker 1: That's one way to weed people out.
[16:31] Speaker 4: Jack Lew is on.
[16:32] Speaker 5: And, you know, Social Security is going to fall apart here.
[16:35] Speaker 5: If I had to pick, you know, Republican, Democrat, whatever,
[16:38] Speaker 5: to be on Jack Lew, you'd be on the short,
[16:39] Speaker 5: short list for that. How close are we to Social
[16:43] Speaker 5: Security failing after the presidential election of 28?
[16:48] Speaker 9: Both Social Security and Medicare have looming problems associated with
[16:53] Speaker 9: their financing. They will have to be addressed. This is
[16:55] Speaker 9: part of an overall fiscal imbalance of 6% to 7%
[16:58] Speaker 9: of GDP. And history shows we don't deal with these
[17:02] Speaker 9: problems until they're crises. The last Social Security reform... did
[17:07] Speaker 9: not occur until checks were literally not about to go
[17:09] Speaker 9: out the door. That's the part of the Greenspan Commission
[17:12] Speaker 9: that people missed from 1983. You need that forcing event
[17:16] Speaker 9: to really focus people's attention. We don't have that forcing
[17:19] Speaker 9: event yet.
[17:19] Speaker 1: Peter, I wanted to talk to you about junior bankers
[17:21] Speaker 1: because I know this is something you think about a lot.
[17:23] Speaker 1: For years, private equity was aggressively poaching junior bankers from
[17:26] Speaker 1: the investment bank. Citigroup recently cut its investment banking program,
[17:30] Speaker 1: analyst program, to two years from three years so that
[17:33] Speaker 1: these junior bankers can advance faster. What does the environment
[17:36] Speaker 1: look like at Lazard now? Are you responding in a
[17:39] Speaker 1: similar way?
[17:40] Speaker 9: We really, I'm thrilled by the talent we're able to
[17:43] Speaker 9: attract to Lazard. I think the most exciting thing for
[17:45] Speaker 9: junior bankers today is the opportunity to change the way
[17:49] Speaker 9: that we work.
[17:50] Speaker 3: Mm-hmm.
[17:50] Speaker 9: So that you have leaner deal teams. We're hiring more
[17:54] Speaker 9: managing directors, so there will be more deal teams, but
[17:56] Speaker 9: on each deal team, a leaner deal team. I remember
[18:00] Speaker 9: early in my career, the most exciting thing was to
[18:02] Speaker 9: be able to assume more responsibility as rapidly as you can,
[18:05] Speaker 9: and when you have larger deal teams, it's just a
[18:08] Speaker 9: little bit stultifying. The technology will enable us to make
[18:13] Speaker 9: the deal teams leaner, and to have that upward trajectory,
[18:16] Speaker 9: and also cultivate and train the characteristics that we think
[18:20] Speaker 9: are gonna be particularly valuable in our business in the future,
[18:24] Speaker 9: the ability to engender trust, the in-person client.
[18:27] Speaker 4: The soft skills.
[18:28] Speaker 9: The softer skills. There's a great book out called Messy Jobs,
[18:32] Speaker 9: which goes through the things that are going to be
[18:35] Speaker 9: valued versus less valued as AI develops. A senior banker's
[18:40] Speaker 9: role is definitely a messy job, and we want to
[18:42] Speaker 9: be training people and cultivating the skills for that. And
[18:45] Speaker 9: it's really an exciting moment.
[18:46] Speaker 5: I will suggest Peter Orszag dodged the bullet of silly
[18:50] Speaker 5: exhaustion in investment banking today. How do you deal with
[18:53] Speaker 5: the stereotype of the young kids exhausted?
[18:57] Speaker 9: This is, I think, a crucial moment for us to
[19:01] Speaker 9: weed out all of that inefficiency sitting around at 2 a.m.
[19:05] Speaker 9: for no reason.
[19:06] Speaker 4: Thank you.
[19:06] Speaker 9: I have always believed in working really hard, but when
[19:08] Speaker 9: you're working really hard on things that are meaningful and that...
[19:12] Speaker 9: You're not just kind of wasting time. It's a much
[19:15] Speaker 9: different experience than, you know, literally something that seems totally inefficient.
[19:20] Speaker 9: There's a lot of opportunity to improve the process.
[19:24] Speaker 1: There's a lot of opportunity to improve the process, but
[19:25] Speaker 1: sometimes you have to go through the process to be
[19:27] Speaker 1: able to know what to do. And are we depriving
[19:29] Speaker 1: young people of that?
[19:30] Speaker 4: Well, that comes back to the training.
[19:32] Speaker 9: I think there are lots of ways of trying to
[19:33] Speaker 9: train people, give them the at-bats. But honestly, the 176th
[19:38] Speaker 9: time that you're moving... the boxes around on a PowerPoint slide,
[19:43] Speaker 9: you're not learning that much. And so the question becomes,
[19:46] Speaker 9: how can we train people? I'll give you an analogy,
[19:49] Speaker 9: which is we have gotten very good at training airplane pilots,
[19:52] Speaker 9: including through simulators and not just real life experiences. I
[19:58] Speaker 9: think the new technology is opening up all sorts of
[20:00] Speaker 9: opportunities for us to be able to, again, cultivate the
[20:03] Speaker 9: skill sets that we think are valuable and then make
[20:05] Speaker 9: sure there are enough at-bats to give you the experience
[20:09] Speaker 9: that you need to spot that seems off. We've got
[20:11] Speaker 9: to push back on the AI on that output.
[20:14] Speaker 4: All right.
[20:14] Speaker 1: Good stuff, Peter. Thank you so much for joining us today.
[20:16] Speaker 4: Great to be with you.
[20:17] Speaker 1: Peter Orszag, chairman and CEO of Lazard.
[20:20] Speaker 4: And I didn't have to jog with Peter Orszag.
[20:22] Speaker 1: No five miles for you.
[20:23] Speaker 4: A success.
[20:25] Speaker 10: All right.
[20:25] Speaker 1: Coming up, high earners are bucking the trend and not
[20:29] Speaker 1: necessarily maxing out their 401ks. We're going to learn why
[20:31] Speaker 1: they're rejecting this classic money advice. Plus, Anastasia Amoroso joins
[20:36] Speaker 1: us as well. This is Bloomberg Money.
[20:41] Speaker 5: You're listening to Bloomberg Money. Stay with us with more
[20:44] Speaker 5: to come after this.
[20:57] Speaker 1: Bloomberg Money is our destination for personal finance, and one
[21:00] Speaker 1: of the stories that caught our audience's attention this week
[21:03] Speaker 1: is whether to maximize your contributions to 401ks because some
[21:07] Speaker 1: high earners are now questioning that strategy. Bloomberg's Sarah Foster
[21:11] Speaker 1: has been reporting on this story, and she joins us
[21:13] Speaker 1: now to discuss. And you talked to a 40-year-old who
[21:15] Speaker 1: decided to cut her contribution down to 5% from 20%.
[21:20] Speaker 1: So she can still capture her full employer match, but
[21:23] Speaker 1: she no longer wants to put that other amount into
[21:26] Speaker 1: her 401k. She's redirecting it elsewhere.
[21:29] Speaker 3: It's been months, I think, of writing stories about maxers.
[21:32] Speaker 3: I guess it's time that we write a story about anti-maxers.
[21:35] Speaker 3: I spoke with one of these savers who told me
[21:37] Speaker 3: that she's still saving and investing for her future. She's
[21:40] Speaker 3: just not putting it in the 401k.
[21:41] Speaker 8: She's looking at the Roth IRA, brokerages.
[21:44] Speaker 3: She wants access to the funds earlier, and she wants
[21:46] Speaker 3: more control over her investments.
[21:48] Speaker 1: And if she were to put it in her 401k,
[21:50] Speaker 1: she would be penalized if she took her money out early.
[21:52] Speaker 1: So this is for people who want to work hard,
[21:54] Speaker 1: save hard, and retire early.
[21:56] Speaker 3: It's one of those stories where I think finance has
[21:59] Speaker 3: to kind of fit around your personal goals. And so
[22:02] Speaker 3: if you're someone who maybe wants to take on a
[22:05] Speaker 3: little more risk or maybe retire early before those typical
[22:08] Speaker 3: rules with the traditional 401k, that's when it probably makes
[22:12] Speaker 3: sense to max out, or to not max out, excuse me.
[22:15] Speaker 3: But I think the big question now is, A lot
[22:19] Speaker 3: of retirement planners are a little bit worried about it.
[22:21] Speaker 4: I'm worried about it.
[22:22] Speaker 5: The thing that's changed from Peter Orszag and his landmark
[22:25] Speaker 5: work at Brookings years ago is I believe we're all
[22:27] Speaker 5: living longer. Is that part of this equation that some
[22:32] Speaker 5: 39-year-old actually understands that if there's a couple, say? the
[22:36] Speaker 5: actuarial ability to get to 90 is pretty tangible.
[22:39] Speaker 3: That's actually a big concern for a lot of the
[22:42] Speaker 3: retirement experts I spoke with. You know, it's not just
[22:45] Speaker 3: the fact that the 401k was so successful as a
[22:47] Speaker 3: wealth building tool because it was a set it and
[22:49] Speaker 3: forget it method, but it was also successful for saving
[22:52] Speaker 3: for retirement because people were unable to access the money.
[22:56] Speaker 3: You know, even if you were tempted to spend it,
[22:58] Speaker 3: you couldn't. And now this is a concern here if
[23:01] Speaker 3: it is something that you have more access to sooner.
[23:03] Speaker 1: So this 39-year-old, she's redirecting her money to where? To
[23:07] Speaker 1: a health savings account? To a brokerage account?
[23:11] Speaker 3: A brokerage account and a Roth IRA. And actually, she
[23:13] Speaker 3: maxed out the Roth IRA this year, but now she
[23:16] Speaker 3: plans to not max out that next year and instead
[23:19] Speaker 3: fund most of the investments to the brokerage account because
[23:21] Speaker 3: she is one of those people who wants to retire.
[23:23] Speaker 5: Is there an assumption within retirement that you go to
[23:26] Speaker 5: a lower tax bracket? So many people I've talked to
[23:28] Speaker 5: say it's a fiction. You know, you retire and it's like, yay,
[23:31] Speaker 5: lower tax bracket.
[23:32] Speaker 4: No, oops.
[23:33] Speaker 8: The tax consideration is part of it, too.
[23:35] Speaker 3: I think, you know, even with the advent of Roth 401ks,
[23:38] Speaker 3: it's not really kind of helping people think about it,
[23:41] Speaker 3: especially if you were.
[23:42] Speaker 8: The original incentive of the 401k was.
[23:44] Speaker 3: To take the tax break, lower your taxable income, you know,
[23:47] Speaker 3: pay it in retirement when hopefully you're in a lower
[23:49] Speaker 3: tax bracket then.
[23:50] Speaker 8: But I think.
[23:51] Speaker 3: As we've seen that tax rates are historically low, there
[23:55] Speaker 3: is a lot more room to go up than down.
[23:57] Speaker 1: That's a really good point. All right, Sarah, thank you
[23:59] Speaker 1: so much. Sarah Foster, she writes for our Bloomberg Money.
[24:02] Speaker 4: Is she on every week?
[24:03] Speaker 1: I think we do have a contract.
[24:05] Speaker 3: I like it.
[24:05] Speaker 8: It's good.
[24:06] Speaker 5: That's because the reporting is so damn good. Sarah, thank
[24:09] Speaker 5: you so much. Joining us now, and this is really
[24:11] Speaker 5: important for all of you who've missed the bull market,
[24:14] Speaker 5: Anastasia Amoroso. Chief Investment Strategist, Partners Group. Her ability along
[24:20] Speaker 5: the way to say find courage and stay in the
[24:23] Speaker 5: market has been a landmark as well.
[24:25] Speaker 4: Are you still a bull?
[24:26] Speaker 8: I'm still a bull. I'm still a bull, Tom.
[24:28] Speaker 11: I do allow for the possibility that the market will.
[24:30] Speaker 8: Go down at some point. I do allow for that,
[24:33] Speaker 8: of course.
[24:33] Speaker 11: But look, it's been a phenomenal ride to be in
[24:35] Speaker 11: the equity markets.
[24:36] Speaker 3: Right.
[24:36] Speaker 11: I just sort of refresh the longer-term data set and look.
[24:39] Speaker 11: Over the last 15 years, the S & P averaged
[24:41] Speaker 11: something like 11%, 12%. So it's been a phenomenal time
[24:45] Speaker 11: to accumulate that personal wealth.
[24:47] Speaker 4: Let's look at the money market, the money MMR right now.
[24:51] Speaker 4: Excuse me.
[24:52] Speaker 5: This is Anastasia Amarosa. This should continue. Standard and poor
[24:56] Speaker 5: is expected. ginormous quarter look for that next week starting
[25:00] Speaker 5: with jp morgan standard and poor's 493 the rest of
[25:03] Speaker 5: them still expected to deliver 18 growth edgar denny this
[25:07] Speaker 5: afternoon's at 12 percent growth earnings revisions consistently positive and
[25:12] Speaker 5: here's the money anastasia line this should continue that's the
[25:17] Speaker 5: hope and prayer come on at some point.
[25:19] Speaker 11: It ends Well, it ends if the Fed ties the
[25:24] Speaker 11: policy so much that it does slow the economy. It
[25:27] Speaker 11: ends if the technology hope that we now all have,
[25:31] Speaker 11: for some reason, that bubble bursts. But I don't see
[25:33] Speaker 11: either one of those things on the horizon, Tom. And
[25:35] Speaker 11: I think the reason why I certainly continue to be
[25:37] Speaker 11: a bull into your end is I do think a
[25:39] Speaker 11: lot of the fears that we had for the market
[25:41] Speaker 11: are in the process of being resolved. We're in the
[25:43] Speaker 11: process of being absorbed, digested, and that we can move
[25:46] Speaker 11: on to the next thing. And what I'm talking about is,
[25:47] Speaker 11: let's say, the price of oil. And yes, we're still
[25:50] Speaker 11: hovering around.
[25:51] Speaker 3: $ 100 a barrel.
[25:51] Speaker 11: But the fact of the matter is a big chunk
[25:53] Speaker 11: of the Middle East production is actually making its way
[25:56] Speaker 11: out of the Middle East because of the rerouting and
[25:59] Speaker 11: just reshaping of that region.
[26:00] Speaker 8: So that's the first point.
[26:01] Speaker 11: The second point is, yes, yields have risen quite significantly.
[26:05] Speaker 11: but it's against the backdrop of really solid economic growth.
[26:08] Speaker 11: And also, they have risen to the point where it's
[26:10] Speaker 11: attractive for investors. You know, it's attractive for investors. You
[26:13] Speaker 11: don't see end-user demand step back at the U.S.
[26:16] Speaker 8: Treasury auctions. You actually see it strengthen.
[26:18] Speaker 11: So, I think 5.25 on a 10-year will generate investor appetite,
[26:23] Speaker 11: which in and by itself can cap the level of
[26:25] Speaker 11: yields from here on out.
[26:26] Speaker 5: Okay.
[26:27] Speaker 1: So, this great bond sell-off has revived the case for bonds.
[26:29] Speaker 1: What does it mean for the valuations of equities?
[26:32] Speaker 11: Well, Look, of course, on the margin is going to
[26:35] Speaker 11: dent the valuations of equities. And I would say we've
[26:37] Speaker 11: actually seen that to some extent. So first of all,
[26:40] Speaker 11: if you looked at the S & P beginning of
[26:42] Speaker 11: this year, you were looking at a 23 times multiple.
[26:44] Speaker 8: Today, it's a 19 times multiple.
[26:46] Speaker 11: And I think part of the reason is we had
[26:48] Speaker 11: to absorb the geopolitical uncertainty and also the rates uncertainty.
[26:51] Speaker 8: So that has reset. We've also seen that reset play
[26:53] Speaker 8: out in private markets as well.
[26:56] Speaker 11: But if that is happening against the backdrop of strong
[27:00] Speaker 11: economic growth, that earnings growth, Tom, that I.
[27:03] Speaker 8: that I discussed, that is accelerating.
[27:05] Speaker 11: So that allows companies the freedom, the room to absorb
[27:09] Speaker 11: those higher.
[27:09] Speaker 5: This is a great conversation for the has. On Bloomberg Money,
[27:12] Speaker 5: I want you to talk about the personal finance. I
[27:15] Speaker 5: look at you, Anastasia. You come to America from Eastern Europe.
[27:20] Speaker 5: You come over here. You're in New Mexico. You're not
[27:22] Speaker 5: in some fancy school in New York City or name
[27:24] Speaker 5: the city. You're in New Mexico. There's a huge body
[27:27] Speaker 5: of America that's not participating in the conversation we're having here.
[27:32] Speaker 5: about earnings and future earnings, PEs and fancy ratios. Consumer
[27:36] Speaker 5: sentiment out hours ago.
[27:38] Speaker 4: It's terrible.
[27:39] Speaker 5: How do we dovetail our investor prosperity into an America
[27:44] Speaker 5: that feels flat on their back? I don't understand how
[27:47] Speaker 5: those two meet.
[27:48] Speaker 11: I mean, it's such a huge disconnect right now. And look,
[27:51] Speaker 11: everywhere you look, consumers do feel depressed about their personal finances.
[27:55] Speaker 8: And I can understand why.
[27:56] Speaker 11: Because everywhere you go, the average selling prices are moving higher.
[28:01] Speaker 8: And what I've sort of realized just.
[28:02] Speaker 11: Traveling this week and just this year is that we're
[28:05] Speaker 11: in an environment where consumer demand is actually quite strong.
[28:09] Speaker 11: We feel like we're breaking even as consumers, but we're
[28:12] Speaker 11: still doing okay. So the demand side of the equation
[28:14] Speaker 11: is fine. But what's happened also is that we are
[28:16] Speaker 11: capacity constrained, whether it's the travel industry, whether it's the
[28:19] Speaker 11: leisure hospitality, whether it's the industrials industry.
[28:22] Speaker 8: So as a result... corporations have pricing power.
[28:26] Speaker 11: They're using that pricing power, which is why we're seeing
[28:28] Speaker 11: those record earnings. So the bottom line, Tom, it is
[28:31] Speaker 11: not a phenomenal time.
[28:32] Speaker 8: To be a consumer.
[28:33] Speaker 11: It's sort of an okay or maybe a bad time
[28:35] Speaker 11: to be a consumer, but it's actually a phenomenal time,
[28:37] Speaker 11: a very solid time to be an investor. Because if
[28:40] Speaker 11: you can invest in the companies that are solving those
[28:43] Speaker 11: capacity bottlenecks and they're delivering record earnings in the meantime,
[28:47] Speaker 11: that's the way to, I think, even out the playing
[28:49] Speaker 11: field and to have those consumers become investors.
[28:53] Speaker 1: Anastasia, on Bloomberg Money, we like to ask our guests
[28:56] Speaker 1: how you are investing, how you've changed your approach to
[28:58] Speaker 1: investing given everything that's happening right now. What would surprise
[29:01] Speaker 1: people about the way that you think about investing personally?
[29:06] Speaker 11: Well, I don't know if that's surprising necessarily, but I
[29:09] Speaker 11: do invest across all the various asset classes.
[29:11] Speaker 8: Of course, the core pillar of the portfolio still has to.
[29:14] Speaker 11: Be that S & P exposure, the NASDAQ exposure, the
[29:17] Speaker 11: AI trade that absolutely has to be a part of it.
[29:19] Speaker 1: So you're in private assets too?
[29:20] Speaker 8: Of course, yeah, private assets.
[29:22] Speaker 11: But I don't think that would be surprising given that
[29:24] Speaker 11: I do work for a private markets company. But I
[29:26] Speaker 11: do extend the universe from public to private. And I
[29:29] Speaker 11: think of it as a continuum. So if you're going
[29:31] Speaker 11: to invest in equities, make it public equities, but also
[29:34] Speaker 11: make it private. If you're going to invest in fixed income, look,
[29:37] Speaker 11: bonds are great, high grade is great, Treasuries are becoming greater.
[29:42] Speaker 11: But at the same time, I'm quite attracted to private credit.
[29:46] Speaker 11: And the fact is that you have that substantial yield
[29:49] Speaker 11: that you can earn there.
[29:49] Speaker 5: I want to bring up this chart. It is my
[29:51] Speaker 5: Bill Gross chart. I used it first with William Gross many,
[29:54] Speaker 5: many years ago. It is a 10-year yield back before
[29:57] Speaker 5: anybody in this room besides me was born. It's the
[30:00] Speaker 5: great moderation from the Volcker years down, and you see
[30:03] Speaker 5: the surge up here in inflation and in yield that's
[30:06] Speaker 5: been extraordinary. What do you say to the crew addicted
[30:10] Speaker 5: to price up and the low yields that we had
[30:13] Speaker 5: for five, six, seven years?
[30:15] Speaker 8: Well, that's not the future. That's what I would say
[30:17] Speaker 8: to that.
[30:18] Speaker 11: And look, bygone is the era of those lower yields
[30:21] Speaker 11: and the term premium that has been suppressed. You know,
[30:24] Speaker 11: if you dissect the move higher in the 10-year Treasury yield,
[30:27] Speaker 11: some of it has to do with sick inflation.
[30:29] Speaker 8: Some of it has to do with robust growth, which
[30:31] Speaker 8: is great.
[30:31] Speaker 11: And some of it has to do with the fact
[30:33] Speaker 11: that the bond market has more uncertainty about the trajectory
[30:36] Speaker 11: of the budget deficit and just growth patterns.
[30:39] Speaker 10: Globally.
[30:40] Speaker 11: So I think we have to get used to the fact, Tom,
[30:42] Speaker 11: that the term premium is going to revert to the
[30:44] Speaker 11: historical norms. And that means that the 10-year treasury is
[30:47] Speaker 11: not going to be at 2%.
[30:49] Speaker 8: It is likely to hover around 5%. This has been wonderful.
[30:53] Speaker 4: Anastasia Amoroso, thank you.
[30:54] Speaker 5: And congratulations on The quality of her bull market calls along.
[30:59] Speaker 1: The way, I got to go to cash.
[31:01] Speaker 4: I'm afraid. I'm afraid.
[31:02] Speaker 3: No.
[31:03] Speaker 1: Hold tight.
[31:04] Speaker 4: Hold tight. Next earnings, revenues will be there. Earnings will
[31:07] Speaker 4: be there. Thank you so much.
[31:08] Speaker 8: Thanks so much.
[31:09] Speaker 5: For coming in today. This is going to be fascinating.
[31:12] Speaker 5: I love what you're going to talk about here, Scott. Right.
[31:14] Speaker 1: Because coming up, this discount of leaving New York City
[31:17] Speaker 1: for the suburbs like New Jersey, Connecticut. Well, it's not
[31:20] Speaker 1: what it used to be. We've got the details on
[31:22] Speaker 1: that because you might be surprised if you decamped for
[31:25] Speaker 1: New Jersey what you're paying for now, especially when you're
[31:28] Speaker 1: sending kids to sports and summer camps and all that.
[31:31] Speaker 1: This is Bloomberg Money.
[31:35] Speaker 4: You're listening to Bloomberg Money.
[31:37] Speaker 5: Stay with us with more to come after this.
[31:43] Speaker 1: Bloomberg Money is your new destination for personal finance. It's
[31:46] Speaker 1: a cross-platform effort that extends beyond your television screen, including
[31:49] Speaker 1: our new digital hub at Bloomberg.com slash money. And Tom,
[31:53] Speaker 1: this week we saw the story about how the New
[31:56] Speaker 1: Jersey discount to New York and Philadelphia, it's gone with
[31:59] Speaker 1: the cost of living in the suburbs now starting to
[32:02] Speaker 1: outpace the.
[32:02] Speaker 4: I wouldn't even say nationwide.
[32:04] Speaker 1: Yeah, absolutely. Paulina Cacero reported on the story and she
[32:07] Speaker 1: joins us now. And Paulina, what's happening in New Jersey
[32:10] Speaker 1: where costs are rising so much faster than even New
[32:13] Speaker 1: York City?
[32:14] Speaker 12: Yeah, so I think like from 2020 to since 2021
[32:17] Speaker 12: during the pandemic, we saw housing costs increase, right? People
[32:21] Speaker 12: could suddenly work from anywhere. They wanted to move to
[32:23] Speaker 12: the suburbs, have a little bit more space under COVID-19 lockdowns.
[32:26] Speaker 1: And we saw housing prices drop.
[32:28] Speaker 12: Just expand then obviously everyone came back bosses were calling
[32:33] Speaker 12: workers back to the office and everyone started moving you
[32:36] Speaker 12: know closer along the Hudson River so they could commute
[32:39] Speaker 12: back into the city and you know since then overall
[32:43] Speaker 12: inflation has risen New York City has gotten a lot
[32:45] Speaker 12: more expensive and people that might not have moved to
[32:48] Speaker 12: the suburbs started to in large part and now child
[32:52] Speaker 12: care costs are what's driving up the cost of raising
[32:54] Speaker 12: a family in New Jersey.
[32:56] Speaker 1: And It used to be housing was cheaper in the
[32:59] Speaker 1: suburbs and you got more bang for your buck there.
[33:01] Speaker 1: But now that's starting to equalize a little bit too.
[33:04] Speaker 12: Yeah, especially with interest rates where they're at. If you
[33:07] Speaker 12: could probably find a rental that's comparable to the cost
[33:10] Speaker 12: of your mortgage in New Jersey. And you might be
[33:12] Speaker 12: getting more space, but the cost you might be saving,
[33:16] Speaker 12: you're spending on commuting back into the city and in
[33:18] Speaker 12: the higher... cost of child care as well.
[33:21] Speaker 1: This chart, which looks complicated, but all you need to
[33:23] Speaker 1: know is that the New Jersey suburbs are seeing much
[33:27] Speaker 1: faster growth in prices than other places. I mean, most
[33:30] Speaker 1: of that is New Jersey. Monmouth County, Hudson County, Passaic County,
[33:34] Speaker 1: you don't go there.
[33:34] Speaker 4: I can't see it. You can't see it?
[33:37] Speaker 1: But you've been a Manhattan diehard this whole time.
[33:39] Speaker 5: I've been a Manhattan diehard the whole time, but I
[33:41] Speaker 5: have the luxury. I think this is hugely emotional nationwide.
[33:46] Speaker 5: I'm going to go to your time at the University
[33:47] Speaker 5: of Southern California. And the basic idea of, is LA
[33:51] Speaker 5: any different? I don't think so. I think this is nationwide.
[33:55] Speaker 12: Yeah, I think we're definitely seeing it on a national level.
[33:57] Speaker 12: I think families always kind of move to the exurbs
[34:00] Speaker 12: or the suburbs to get more space and save a
[34:02] Speaker 12: little bit. But because there's so many people doing that,
[34:05] Speaker 12: it's not cheaper anymore.
[34:05] Speaker 4: The bargain was public schools.
[34:07] Speaker 5: Are you saying that you're reporting that the public school
[34:10] Speaker 5: bargain is broken?
[34:12] Speaker 12: I don't know if it's the public school bargain, but
[34:14] Speaker 12: in major cities like New York City, we are expanding
[34:16] Speaker 12: our universal child care program. That really helps with those
[34:20] Speaker 12: early costs of child care. And actually, child care in
[34:22] Speaker 12: New York City is about $ 5, 000 cheaper than it is
[34:25] Speaker 12: in New Jersey.
[34:26] Speaker 5: This is something I'm blind on. I am blind to
[34:29] Speaker 5: the immense challenge today in personal finance of childcare.
[34:35] Speaker 4: I had a gift. It was way cheaper when I
[34:39] Speaker 4: was doing it.
[34:39] Speaker 1: Well, it's been a long, long time. And not to mention,
[34:42] Speaker 1: the immigration crackdown means that the options for childcare have
[34:47] Speaker 1: gone down, have slimmed down considerably, too.
[34:49] Speaker 5: Yeah, it's a huge thing. What else are you working
[34:51] Speaker 5: on besides? I mean, this is a huge theme you've
[34:53] Speaker 5: got going here. What's the next story? Get out in
[34:55] Speaker 5: front of it.
[34:56] Speaker 8: The next story?
[34:57] Speaker 12: I mean, I think it's just thinking about where do
[34:59] Speaker 12: people go if they want to raise a family? It
[35:01] Speaker 12: seems like there's not really anywhere to hide.
[35:04] Speaker 8: There's no safe house.
[35:05] Speaker 5: And I don't mean to interrupt because we've got to
[35:06] Speaker 5: move on, but this is critical because I've seen two, three,
[35:09] Speaker 5: four articles this week on the staggering decline In birth rate,
[35:14] Speaker 5: in children.
[35:15] Speaker 4: I mean, we're becoming like Italy.
[35:17] Speaker 1: People have pets rather than kids. Yeah. Pets are cheaper.
[35:20] Speaker 4: We make light of that. It's a joke, but come on,
[35:22] Speaker 4: from a societal standpoint?
[35:24] Speaker 3: Yeah.
[35:24] Speaker 12: It's interesting because from the parents that I talk to,
[35:27] Speaker 12: a lot of people wanted to have like one or
[35:29] Speaker 12: two kids, but because they're not able to afford having
[35:31] Speaker 12: kids until later in their life, and then they're just
[35:34] Speaker 12: trying to get their kids to two kids.
[35:35] Speaker 1: It gets all pushed out.
[35:36] Speaker 8: It gets pushed out. What are you, talking the story
[35:38] Speaker 8: of my life?
[35:38] Speaker 3: No.
[35:40] Speaker 4: Let's move on.
[35:41] Speaker 1: All right, let's move on. We talked about living in
[35:43] Speaker 1: the suburbs. To live in the suburbs is to be
[35:46] Speaker 1: a sports parent. And among sports parents, hockey parents are
[35:49] Speaker 1: legendarily a unique breed. You can chalk it up to
[35:52] Speaker 1: 6 a.m. games every Saturday, hauling the equipment. back and
[35:55] Speaker 1: forth from the rink, driving to weekend tournaments in Massachusetts,
[35:58] Speaker 1: only to realize that you left the gloves at home.
[36:00] Speaker 1: So my book of the week that I'm reading is
[36:02] Speaker 1: Pee Wee's Confessions of a Hockey Parent by Rich Cohen.
[36:06] Speaker 1: It's his memoir that follows the interminable season of competitive
[36:10] Speaker 1: youth hockey in Connecticut, which starts in September, goes through March,
[36:13] Speaker 1: then you've got tryouts, which you have to pay separately for,
[36:16] Speaker 1: in April. Rich Cohen recounts how he lived vicariously through
[36:20] Speaker 1: his kids' on-ice performance. He rode the high of every breakaway,
[36:24] Speaker 1: suffered the indignity of every penalty.
[36:26] Speaker 4: I want to do this right now.
[36:28] Speaker 5: Just in the last hour, Bloomberg News has reported, Rich Cohen,
[36:32] Speaker 5: we are fortunate because he wrote one of the definitive
[36:34] Speaker 5: books on the Chicago Bears.
[36:35] Speaker 3: Yes, he did.
[36:36] Speaker 4: And we've lost a giant here.
[36:38] Speaker 5: Mike Ditka, I believe at 86 years old, I don't
[36:41] Speaker 5: have that in front of me, but he formed what
[36:43] Speaker 5: tough was for an entire generation.
[36:45] Speaker 1: Someone was just remarking that he always looked angry, but
[36:48] Speaker 1: I think that's just kind of his persona. He would,
[36:51] Speaker 1: you know, I'm serious about what I do.
[36:52] Speaker 4: Right. You know, we should do this as an aside
[36:55] Speaker 4: on Bloomberg Money.
[36:56] Speaker 5: So many people affected by Mike Ditka in a good
[36:59] Speaker 5: and wonderful way.
[37:00] Speaker 1: And, of course, you know, memorialized in SNL as Da Bears.
[37:04] Speaker 4: Yeah, absolutely.
[37:06] Speaker 5: You know, my book here today, if we can jump
[37:08] Speaker 5: onto this, on the suburbs as well, is a suburb
[37:11] Speaker 5: that is long and gone. It was about a glass
[37:14] Speaker 5: of vermouth at 10 a.m., and no one wrote about
[37:17] Speaker 5: it like John Cheever. For those younger, this is 1954.
[37:22] Speaker 5: Two lifetimes ago, and no one wrote about the angst.
[37:27] Speaker 5: If you loved Mad Men, the ethos of Mad Men
[37:31] Speaker 5: came 100% from the magnificent work of John Chee.
[37:35] Speaker 1: Depressed people, beautiful depressed people living in their homes in
[37:38] Speaker 1: the suburbs.
[37:38] Speaker 4: Well, you're describing me. Be careful here.
[37:41] Speaker 5: The answer is there was an element of that tension,
[37:44] Speaker 5: and maybe it was depression, but it was mostly depression.
[37:46] Speaker 5: the post-World War II struggle in the IGY 1957.
[37:50] Speaker 1: I was looking this up, and John Cheever lived in
[37:52] Speaker 1: Scarborough on Hudson, which is between Briarcliff Manor and Austin,
[37:55] Speaker 1: and Austin was the home of the fictional Betty and
[37:58] Speaker 1: Don Draper in Mad Men. And at one point, he
[38:00] Speaker 1: rented a house that was previously occupied by Richard Yates, who,
[38:04] Speaker 1: of course, wrote Revolutionary Road, which itself was a big
[38:08] Speaker 1: thing about soul-sucking suburbs that.
[38:09] Speaker 3: Got turned into.
[38:10] Speaker 5: And what's magical about this is it folds right back
[38:12] Speaker 5: to Bloomberg Money and personal finance issues. We perceive now,
[38:16] Speaker 5: and I would go with this, it just was easier
[38:19] Speaker 5: then to be average or be above average.
[38:22] Speaker 4: And now with the budgets and the bills.
[38:25] Speaker 1: Yeah, it's crazy hard.
[38:26] Speaker 4: It's way different than the time of John Cheever.
[38:29] Speaker 1: The competitiveness has gone out the window. All right, Paulina,
[38:32] Speaker 1: thank you so much for joining us. Paulina Cacero, Bloomberg
[38:35] Speaker 1: Money Reporter. And for the latest reviews and recommendations from Bloomberg,
[38:38] Speaker 1: subscribe to the On Books newsletter.
[38:45] Speaker 4: Bloomberg Money. I mean, it's as simple as this. I
[38:47] Speaker 4: have a new iPhone. It's boring.
[38:49] Speaker 5: It's got a boring case. Randall is rocking. That's like
[38:54] Speaker 5: a Jalen Brunson look.
[38:55] Speaker 2: I love it.
[38:55] Speaker 4: I mean, it's just rocking.
[38:57] Speaker 10: This is the phone from last year, but I appreciate
[38:59] Speaker 10: the compliment on my case.
[39:01] Speaker 1: Randall always comes in and surprises us. We want to
[39:03] Speaker 1: talk to you about Jalen Brunson and the Knicks. But
[39:05] Speaker 1: before we get to that, flag football, because David Gurra
[39:08] Speaker 1: was saying his 13-year-old daughter plays flag football. And that
[39:11] Speaker 1: is something that we've seen a lot of, this growth
[39:13] Speaker 1: in flag football, that the NFL is very much behind.
[39:16] Speaker 10: Yeah, the NFL has invested $ 192 million alongside a multitude
[39:20] Speaker 10: of partners with the goal of creating a pro men
[39:25] Speaker 10: and women's.
[39:25] Speaker 4: Flag football league.
[39:26] Speaker 10: And a lot of that has gone to the grassroots
[39:28] Speaker 10: level as well. And so it's no surprise that I
[39:30] Speaker 10: think some younger women are choosing flag football over a
[39:33] Speaker 10: sport like soccer or softball, even volleyball, because the gateway
[39:37] Speaker 10: to entry is a lot lower.
[39:38] Speaker 4: It's cheaper. It's cheaper too. I mean, think about it.
[39:41] Speaker 10: In regular football, you need the pads, you need the helmet,
[39:43] Speaker 10: you need everything. In flag football, you need flags, you
[39:45] Speaker 10: need Maybe gloves and cleats.
[39:47] Speaker 4: Excuse me, you need a glass, of course, 3-2 beer
[39:50] Speaker 4: in your left hand while you're playing. At least that's
[39:52] Speaker 4: what it was when we were doing it.
[39:54] Speaker 10: I mean, it's interesting the perception of flag football has changed.
[39:58] Speaker 10: When I was playing, I'd be like, oh, we're not
[39:59] Speaker 10: playing flag. It's for lesser men, I'd say. But now
[40:03] Speaker 10: I think the NFL is leaning into it because if
[40:06] Speaker 10: you think about the other leagues that exist, the NWSL,
[40:08] Speaker 10: the WNBA, those sports are booming.
[40:10] Speaker 4: The valuations are growing. And so.
[40:12] Speaker 10: What we're going to find out is can the NFL
[40:14] Speaker 10: build an infrastructure, not necessarily with their own league, but
[40:17] Speaker 10: at the grassroots level, high school, and eventually college, for
[40:21] Speaker 10: this to be a booming business.
[40:22] Speaker 1: Okay, let's talk about the NBA and Jalen Brunson.
[40:25] Speaker 3: Mrs.
[40:25] Speaker 1: Keene calls him my Jalen. People are getting excited about
[40:28] Speaker 1: the first game of the season where the Knicks will
[40:31] Speaker 1: play the 76ers. And Tom's been scanning the prices.
[40:34] Speaker 5: $ 32, 000 down close.
[40:36] Speaker 3: What?
[40:36] Speaker 4: Two tickets. So you said $ 32, 000? $ 33, 000 down close.
[40:38] Speaker 5: $ 33, 000.
[40:38] Speaker 4: That doesn't surprise me. $ 76, 000. It doesn't surprise me.
[40:42] Speaker 5: This is nirvana. This opening, Nick, $ 76, 000. I mean, it's
[40:45] Speaker 5: this experience thing in sports.
[40:47] Speaker 1: Now, isn't it? Jalen Brunson versus LeBron James.
[40:49] Speaker 4: And everyone else. But it doesn't surprise me.
[40:52] Speaker 10: Look, there was some drama behind the tickets a couple
[40:55] Speaker 10: weeks ago with season ticket holders. And a lot of
[40:57] Speaker 10: people were saying, like, these prices are too high. The
[41:00] Speaker 10: Knicks redid the process. They are, I mean, $ 32, 000 is
[41:03] Speaker 10: a lot of money, so you might need to go
[41:04] Speaker 10: a little higher. But generally speaking, this is Madison Square
[41:07] Speaker 10: Garden we're talking about, and this is a world champion Knicks.
[41:09] Speaker 10: James Dolan is not going to give you, myself, or
[41:12] Speaker 10: Scar any sort of discount in that experience.
[41:14] Speaker 4: I got eight other questions. We could go with him
[41:16] Speaker 4: for a whole other hour.
[41:17] Speaker 1: I'm just grateful that I went to see the Knicks
[41:19] Speaker 1: last year before they won, and I could actually buy
[41:21] Speaker 1: the tickets back then.
[41:22] Speaker 5: Are they distracted with their success? If you're doing SNL
[41:26] Speaker 5: and all the rest of this stuff.
[41:28] Speaker 10: No, I actually don't think the players are, but I
[41:30] Speaker 10: do think that James Dolan not paying some of these
[41:33] Speaker 10: players is going to inevitably self-destruct the team if he's
[41:37] Speaker 10: trying to make everyone take the Jalen Brunson pay cut.
[41:40] Speaker 3: Ooh.
[41:40] Speaker 4: I think that could happen.
[41:41] Speaker 1: There's the tension for this year.
[41:43] Speaker 4: Yeah, absolutely.
[41:43] Speaker 10: I mean, the Knicks just put out a statement today
[41:45] Speaker 10: that said they're calling off contract negotiations.
[41:48] Speaker 4: Ten seconds. Cleveland or White Sox? Ooh, I'll go White
[41:51] Speaker 4: Sox because I can go outside of Chicago.
[41:53] Speaker 1: I stopped watching because the Yankees are out. Randall Williams,
[41:55] Speaker 1: thank you so much. Your senior business and sports reporter.
[41:58] Speaker 1: That does it for Bloomberg Money this week. From Tom
[42:01] Speaker 1: and me, have a great weekend.
[42:09] Speaker 5: This is the Bloomberg Money Podcast, bringing you a smart
[42:13] Speaker 5: look at the forces shaping your financial life. I'm Tom
[42:17] Speaker 5: Keen with Scarlett Fu. You can watch the show live
[42:21] Speaker 5: on Bloomberg TV every Friday at noon Wall Street time.
[42:25] Speaker 5: Subscribe to the podcast on Apple, Spotify, or wherever you listen.
[42:29] Speaker 5: And as always, on the Bloomberg Terminal and the Bloomberg
[42:33] Speaker 5: Business app.
[42:35] Speaker 12: Thank you.

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