December 22, 2025 • 37 mins
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Larry Ellison is throwing his personal fortune behind Paramount Skydance Corp.’s bid for Warner Bros. Discovery Inc., aiming to give his son’s company an advantage in a fiercely contested takeover battle with Netflix Inc.
Both suitors moved on Monday to strengthen the financial backing for their offers, though they stopped short of increasing their bids. Netflix refinanced a portion of its planned $59 billion of debt as a way to ensure a lasting investment-grade rating — a key advantage it holds over the lower-rated Paramount.
But it’s the personal guarantee of Ellison, the world’s fifth-richest person with a $246 billion fortune, that could force a rethink by Warner Bros. The board previously urged shareholders to reject Paramount’s offer in part because the billionaire father of its Chief Executive Officer David Ellison had backed the $40.4 billion of equity financing with a revocable trust that could, as the name implies, be withdrawn or amended at any time.
Paramount has been aggressively pursuing Warner Bros. for months and Ellison was taken by surprise when the board agreed to a deal with Netflix for $82.7 billion for the streaming and studio assets. The strength of the financing for each bid has emerged as a decisive issue in the takeover battle, which unleashed two massive debt-fueled offers that rank among the largest in the past decade. Paramount took its offer of $30 a share, or $108.4 billion including debt, for the entire company directly to shareholders.
Today's show features:
- Bloomberg News Media Editor Molly Schuetz and Bloomberg Intelligence Senior Credit Analyst Stephen Flynn on the latest developments in the Warner Bros. Discovery bidding war
- Que Nguyen, Chief Investment Officer, Equity Strategies with Research Affiliates on whether small- and mid-cap stocks are contributing to the bull market and how much more growth we can expect from the AI trade
- Bloomberg Intelligence Senior Commodity Strategist Mike McGlone on trading trends in gold and crypto
- Darrick Hamilton, University Professor, the Henry Cohen Professor of Economics and Urban Policy at the New School, on whether Trump accounts can help close the racial wealth gap in America
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Transcript
Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. This is Bloomberg business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Steneveek on Bloomberg Radio, the.
Speaker 2 (00:32):
Fight for Warner Brothers Discovery Guess what. It's not over yet,
not by a long shot. Both Netflix and Paramount Skuidance
are now strengthening their financial backing for their respective offers.
So where do things stand right now? Let's get a
check in with Bloomberg News Media editor Molly Schutz and
Bloomberg Intelligence Senior credit analyst Stephen Flynn. They join us
(00:52):
here in studio. Thanks so much for being with us. So, Molly,
I'm just going to start with you. Just bring us
up to speed on what Larry Ellison is saying here.
I guess he's throwing his own personal fortune behind this
deal to say, hey, listen, we're good for the money.
Speaker 3 (01:06):
That's right.
Speaker 4 (01:06):
He's putting his name on the line. He's saying, I'm
personally backing this forty billion dollars in equity financing to
help his son David Ellison, who's the CEO of Paramounts Guidance,
succeed in their takeover offer for Warner Brothers.
Speaker 5 (01:24):
But okay, so I want to bring in Stephen here.
Larry Ellison is the fifth richest person in the world
with a fortune of for an two hundred and forty
six billion dollars. Are there any credit risk implications of
his personal guarantee or like this? Having a billionaire really
backstop meaningfully and extend the runway for deals like these.
Speaker 3 (01:41):
Yeah.
Speaker 6 (01:41):
Sure, So it's important you have the backstopping of Larry Ellison.
You also have a lot of other funds involved, and
importantly they also have a fifty four billion dollar secured
credit agreement in place, so there's plenty of financing to
support the thirty dollars per share cash offer for the
tender offer for Warner brother shares.
Speaker 2 (01:58):
So Netflix, though, was talking about a bridge loan right
of your nearly sixty billion dollars. How if you had
to stack it up? Because I'm sure the board right
at Warner Brothers is going through this whole. You know,
pros and coms list. How did these two mile I'll
ask you first, I'd like that you're both your thoughts
on this, but how do these two deals stack up
next to each other when you're talking about I'm just
(02:19):
talking about the financing of the debt. Is there one
that just seems more plausible or more attractive than the other?
Speaker 4 (02:27):
I think the latest offer by Paramount today shows that
that was their effort to say, look, we've got the
solid footing here. This will help with you know, credit
investment grade, help our investment grade, you know, and show
that we're.
Speaker 7 (02:43):
Serious and that this bid is solid.
Speaker 4 (02:46):
Which Netflix already has an investment grade rating and had
was seen originally as having a better solid financial footing.
Speaker 6 (02:55):
What are your Netflix is much much stronger credit than
Paramounts guidance. Netflix has a single A rated balance sheet,
They have a large market cap, they have growing EBITDAG,
growing free cash flow, and very very low net leverage.
So Netflix has plenty of capacity to borrow in the
investment grade corporate bomb market. Now the company has single
A credit ratings. I believe Moody's has already affirmed their
(03:19):
single A rating. I expect S and P to do
the same. So they have plenty of capacity. On the
flip side, Paramount Skuidance, they have a bridge commitment in place,
so the commitment is there.
Speaker 3 (03:30):
From a number of large banks.
Speaker 6 (03:32):
Now that is secure debt, and that they will probably
strive for investment grade ratings on that secure debt, saying hey,
this comes ahead of the other debt that the company has.
And if you use Charter as a comparison, you could
have a split rated capital structure. You have secure debt
that's rated investment grade and certain other debt whether it's
unsecured or security that's inferior to the security provider to
(03:54):
the other debt with high yield ratings.
Speaker 2 (03:56):
So you can get creative with the way you sort
of stack the debt if you will.
Speaker 3 (03:59):
Yeah, playing companies get very creative.
Speaker 7 (04:02):
That so that structure aside.
Speaker 5 (04:04):
Talk to us about a media tech standpoint, what will
it look like if the company merges with Netflix or
with Paramount, which makes more sense?
Speaker 4 (04:13):
Well, both, you know, Netflix and Paramount think their deal
makes more sense for Netflix obviously, it gives them direct
access to the library, one of Hollywood's most iconic libraries
for film and TV content with Warner Brothers, and that's Also,
what Paramount technically is trying to do. Paramount Plus is
(04:34):
a much smaller streaming service right now than Netflix, so
they're really seeing this deal as a way to bulk
them up and allow them to compete better with the
likes of Netflix and Amazon and Disney.
Speaker 2 (04:47):
Is this Larry Ellison offer now a last ditch effort?
Do you think by Paramount skiddance? Because we know that
Warner Brothers is already saying, listen to the shareholders, we
want you, we believe the Netflix is a stronger deal.
We want you to vote that way. Do you think
we're gonna hear yet again from Paramount and what might
that be? It might it be a sweetened offer if
(05:07):
this doesn't work.
Speaker 8 (05:09):
Yeah.
Speaker 6 (05:09):
Well, so mid last week, the Warner Brothers Discovery Board
recommended shareholders do not participate in the tenor offer, and
they listed the reasons why. Now, what Paramount this morning
has done is kind of address many of those reasons,
particularly given the Larry Eedlison guarantee. So I believe Paramount
is going to see how many shares they have to
participate in the tenor offer and if they need to,
you know, conversations with shareholders. If they need to raise
(05:31):
it to a certain level that their struggle is still
comfortable with. I imagine that's what they would do.
Speaker 5 (05:35):
Talk to us about the size of this deal, because
our Bloomberg story said something like it's the biggest in
a decade.
Speaker 4 (05:42):
It's definitely one of the biggest media deals in a
long time. I mean it harcoons back to the days
of Disney and Fox, those kinds of deals. I mean,
this is definitely a big deal, both financially and also
in terms of what it means for Hollywood and for
content production and the creative industries at large.
Speaker 2 (06:02):
Is the debt financing?
Speaker 8 (06:04):
Now?
Speaker 2 (06:04):
You think the deciding factor here for for the board
of Warner Brothers. Is this what it's going to come
down to for them?
Speaker 6 (06:11):
Do you think, Steve no, Because I don't think if
you have a commitment in place. That's why companies get
bridge loans to say that, hey, we're good on the
debt part.
Speaker 3 (06:18):
Look at the financing here.
Speaker 6 (06:19):
It's you know, provided by a slew of banks, so
that typically provides companies with some comfort that the debt
component's going to come through.
Speaker 3 (06:27):
I think what Warner Brothers was asking for more comfort on.
Speaker 6 (06:29):
The equity side right, because there's over forty billion dollars
of equity capitalis part of their acquisition proposal for the
Warner Brothers shares.
Speaker 5 (06:38):
How does Ellison's bet change Paramount's position relative to like Netflix,
YouTube and Amazon. Does it enable a different operating model
or is it just really scale at this point?
Speaker 7 (06:52):
I think I think it's mostly scale. Yeah.
Speaker 4 (06:54):
Paramount's offer, Paramounts argument is that you know, we will
be a good steward of this content, and this will
allow us to because Paramounts Guidance is a pretty small
operator in terms of if you're looking at compared with Disney, Netflix,
even Amazon, and so really having a studio like Warner
Brothers behind them and to be able to tap into
(07:15):
that library of content would really be a step up
for them.
Speaker 2 (07:20):
But I guess a big difference between these two offers
is paramount S Guidance wants the whole thing, including CNN
right TNT, where Netflix doesn't want that. They want the
studios in the streaming service. So what if Netflix does
win this bidding war, what happens to CNN and those
cable properties.
Speaker 6 (07:39):
So the way the Netflix deal is set up is
that they're gonna have Warner Brothers Discovery spin off their
global networks business that includes many of the channels that
you describe here, and what will be left behind is
the studios, which is very valuable in the streaming business,
which is very valuable.
Speaker 3 (07:54):
And then Netflix will acquire that remaining company.
Speaker 6 (07:57):
And that's what makes it a little bit tough to
compare the valuations here because Netflix was offering twenty seven
to seventy five per share, mostly cash with some Netflix
stock for the remaining company. So investors had to figure out, Okay,
what's the per share value in the global linear networks
that's being spun off. Paramount S Guidance is saying, hey,
that's only worth a dollar. Some people are saying, well,
that's worth several dollars. And so that twenty seven to
(08:19):
seventy five plus the value of those that stub piece
is your total value compared to thirty dollars a share
in cash from Paramounts Guidance for the whole company.
Speaker 5 (08:30):
Who is the which one is the front runner here?
Speaker 6 (08:32):
So far in your opinion, Well, clearly from the board
of Warner Brothers, Netflix is right.
Speaker 3 (08:37):
They accepted Netflix offer.
Speaker 6 (08:40):
They wrote, you know, put out a letter last week
saying that why investors should reject the Paramount Skuiddance offer.
So it's you know, it's hard to break a deal.
It can happen, but it's hard. So it's it seems
that Netflix, given what's going on so far, is ahead,
but this is going to last quite some time, right.
(09:01):
Paramount Skuiddance has significant financial backers.
Speaker 3 (09:05):
They really want this.
Speaker 6 (09:06):
You could argue that they really need this, They need
to gain scale and so they're motivated.
Speaker 3 (09:10):
So I think we still have a ways to go
in this.
Speaker 2 (09:13):
So if this thing drags into twenty twenty six, which
it looks like a very well, might we know the
media landscapes continuing to change. Let's just say, you know
what Paramount doesn't get Warner Brothers. What does Paramount do
who or do they eye another company? And if so,
who might that be?
Speaker 4 (09:27):
I mean, I think that's the I think that's the
big question. Now, you know, where will they go from here?
David Ellison has said, I mean, despite the fact that yeah,
he really really does want this company, he says, well, Okay,
if we don't get it, we'll we'll be able to
proceed and will still continue to produce great, great movies
and great content and we'll find other ways to grow
and to compete.
Speaker 3 (09:49):
Yeah.
Speaker 6 (09:49):
Well, let's remember Paramount Skuideance was recently formed, right, you merged.
You had David Ellison's Skydance merged with Paramount and they
took out the National Amusements on the Paramounts. So that
company was just formed. They had a plan. They were
going to cut costs, grows certain areas, and so improve
the overall business. And now Warner Brothers would give them
a certain amount of scale. If this doesn't work out,
(10:11):
I'm sure they could look for other assets for additional scale.
Speaker 2 (10:14):
All Right, we're gonna have to leave it there, but
certainly we're going to see how this all plays out.
As I guess the board continues to look at these
deals through the holiday. I think a lot of folks
saw them. We can wrap this thing up Netflix. My mind,
I thought we can wrap this thing up and I'll
celebrate the new year. But there are still lots and
lots of question marks. Our thanks to Bloomberg News Media
Editor Molly Shuts and Bloomberg Intelligence Senior Credit Analystephen Flynn
(10:35):
for being here in our studio to help break down
what really has become a quite complicated scenario for all
of these companies. Lots of tangled webs So thanks a
lot for being with.
Speaker 9 (10:45):
Us, Stay with us. More from Bloomberg Business Week Daily
coming up after this.
Speaker 1 (10:54):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoon from two to five East during
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Business app, or watch.
Speaker 7 (11:06):
Us Live on YouTube.
Speaker 5 (11:09):
So, Alexis, it's been really a stellar year for markets
in the US and across the globe, and we've talked
about how the SMP is on track to see it's
eighth winning streak, its longest winning streak since twenty at
and n already next.
Speaker 7 (11:20):
Year is looking quite optimistic.
Speaker 5 (11:21):
We have sales sized strategists really putting their price targets
for the SMP out there, and the range is around
seven thousand to eight thousand, one.
Speaker 7 (11:28):
Hundred, and it's quite the range we try to range,
but it's high for context.
Speaker 5 (11:33):
We're around sixty eight hundred to sixty nine hundred at
this point, and it's really hard to make sense of
the markets next year because we have a lot of optimism,
but we do have a lot of uncertainties as well,
and joining us to make sense of all of that
and to give us a look ahead is Kuaigman. She's
the chief investment officer of equity Strategies at.
Speaker 7 (11:50):
The Research Affiliates. She's with us in the Interactive Broker Studio.
Speaker 5 (11:53):
So thank you so much for joining us on this
Monday to help us make sense of all of this.
We're seeing a bull market right now, and it's a
bullmark that's broadening beyond megacap tech into mid caps and
small cap stocks.
Speaker 10 (12:04):
Absolutely.
Speaker 7 (12:05):
Why does that matter to make this rally durable?
Speaker 10 (12:08):
I mean, I think that when you have very very
narrow leadership, the danger is always that there's a hiccup
in something and whatever it is that's driving that narrow leadership,
And we saw that recently with the whole AI story.
People wondering whether or not these stocks are overvalued. But
I think one of the things that you're seeing is
that a lot of other stocks are benefiting as well.
So as long as people have a lot of options
(12:30):
to choose from that continue to do well, people will
stay invested.
Speaker 2 (12:34):
Do you have reason to believe we're going to branch
out from the sort of narrow stocks we've been looking
at driving the rally this year, and by that, I mean,
are we going to break out of AI and start
to see some opportunity elsewhere.
Speaker 10 (12:49):
I think we're already beginning to see that. I mean,
if you take a look at what's happened in the
markets this year, everybody is focusing on the mag seven, right,
everybody's focusing on n Video on Alphabet. But if you
really think about it, and Video is not the top
performing chip stock this year, and Video is up something
like thirty six percent, and you have Intel, remember that
(13:11):
stock from long ago, that's up eighty two percent. So
I think you're already beginning to see broadening out within
technology itself, but you're also seeing broadening out to other sectors.
Financials are doing well, healthcare stocks are seeing signs of
life now.
Speaker 5 (13:26):
So there's massive capital flowing into AI, and short term
we're seeing who are the winners, but not everyone will
be a winner longer term. So how real is the
risk of overinvestment in AI, because already we have investors
kind of feeling jittery that they it might not be
paying back at least in the short term horizon.
Speaker 10 (13:42):
Sure, I mean I think that one of the things
that we see is that the companies that are investing
in AI are really strong, cash flowing companies. They're very,
very strong. There is some debt behind this, but it's
not an overwhelming amount of debt. So I do think
that there is the risk of overinvestment. I don't necessarily
see a real risk quite yet. But also I think
(14:05):
it's really hard to pick who the winner is. So
the best way to invest in this is to stay diversified.
Speaker 2 (14:10):
We're most likely going to be in an environment of
lower interest rates. I mean, it looks like the market
is banking on two interest rate cuts. As long as
we don't get an interest rate hike anytime soon, we
might very well see these financials do well, these smaller
and MidCap stocks do well. But is there an area
of this market you wish was seeing a little more
love that isn't that maybe you know should be and
(14:33):
that people are just overlooking.
Speaker 10 (14:35):
So one of the areas that I do think is
highly overlooked is really the consumer sector. Right, So you
see a lot of the large names consumer discretionary doing poorly.
I mean, Walmart's done well this year, but you see
a lot of companies not doing so well. You see Target,
for example, a beloved American brand, and again there the
(14:57):
issues are changing consumer tastes of whether or not they
can keep.
Speaker 5 (15:00):
But I love the you in your talking points. The
very first one is short term interest rates are coming down.
Everything else is commentary. Is that really their story right now?
Our investors already looking past beyond.
Speaker 10 (15:12):
The rate cuts now. I think that if you take
a look at what drives markets, markets just tend to
go up. They stay with whatever momentum it is unless
something happens to change that. And what usually happens was
usually necessary to change the upward trajectory that we're in
right now is a tightening of financial conditions. If you
take a look at you know, bear markets, meaning they
(15:36):
go down twenty percent over a certain period of time,
they're always preceded by some sort of tightening financial conditions,
and we're not seeing that right now. I do think
that lower interest rates are benefiting US equities, but they're
also benefiting non US equities, namely emerging markets as well.
So I think investors are going to have a variety
of opportunities to choose from next year.
Speaker 2 (15:57):
I'm really glad you talked. You brought up em because
emerging markets have sort of been the sleeper story I
think of the year. They've really done quite well, and
even Europe has sort of come along further ride. So
if you're looking for opportunities to diversify outside of US equities,
where in particular might you be looking next year?
Speaker 11 (16:14):
Oh?
Speaker 10 (16:14):
I definitely think emerging markets are exciting, particularly China. I mean,
China got so cheap and what you're seeing there is Yes,
there are difficulties with growth, but I think you have
a lot of world class companies there. A lot of
money was flowing out of it. Now money is flowing
back in because of the valuation opportunities. We're also seeing
more of a stabilization of the trade situation. All of
(16:37):
these things really do help emerging markets a lot.
Speaker 7 (16:40):
And I want to go back quickly.
Speaker 5 (16:41):
You've pointed out that AI is already changing the investing landscape,
especially in the startup world.
Speaker 7 (16:46):
How does AI lower.
Speaker 5 (16:48):
The barrier to entry compared to other tech supercycles?
Speaker 10 (16:52):
So I think AI is just the most recent tech supercycle.
I mean, if you really think about the tech bubble,
you know, the late nineties, if you wanted to throw
up an e commerce company pets dot Com, for example,
you had to go out and invest a lot in
computers and servers in bandwidth. It was very, very expensive
to have a startup. The cloud came along and essentially
(17:16):
you could just license a lot of this stuff out right.
It became much much more cost effective or less capital
intensive to have a startup. And I think now what
you're really seeing is on the software side, you're getting
a lot of a lot of benefit from AI. What
I'm hearing from people is that if you wanted to
start up a company like uber or Lyft, you need
(17:38):
a lot of coders right to create that entire codebase
for you. But now with AI, all coders are becoming
or at least the coders that know how to use
it are becoming much more productive. You need to hire
far fewer people. That said, it's most beneficial when you
have a new code base, right, So if you have
an existing code base, it's not nearly as productivity enhancing.
(18:01):
And so in some ways, I think one of the
things that we're seeing is that I wouldn't be surprised
if there was a lot more new ideas being put
into play into in the venture world, a lot more
disruption that happens in technology.
Speaker 2 (18:12):
All right, We're going to leave it there Quay when
Chief Investment Officer Equity Strategies with Research Affiliates. Thanks for
coming by and giving us your thoughts on where the
market is now and headed into the new year.
Speaker 9 (18:26):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 12 (18:34):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern up on applecar
Play and the Android Auto with the Bloomberg Business app.
You can also listen live on Amazon Alexa from our
flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (18:54):
Things are shaping up to be sort of a festive end,
if you will, Isabelle to the year for the markets,
and let's start to the new year. We have the
stops now US equities erasing those December losses. The S
and P set for its eighth straight month of gains.
Speaker 5 (19:09):
It seems like the Santa Claus rally is really shaping up.
And Santa Claus Rally is, of course, the last trading
days of December five last in the first two in January,
and we haven't Mark Hackett of Nationwide saying that the
Santa Claus rally is typically the best two weeks of
any trading year since nineteen fifty. So, as you said,
it's great water cooler chat and I will definitely use it.
From December twenty four, then, even a.
Speaker 2 (19:30):
Trading volume is thin because we know lots of Federsture
participating also just want to throw when their fund managers
are maintaining record low levels of cash right now, so
they're really putting money to work in this market. Markets
are still banking on two rate cuts next year, and
we had FED Governor Stephen Myron on Bloomberg Television earlier
today and he said the central Bank actually risks sparking
a recession unless it continues lowering rates next year, though
(19:52):
we know he has a bias right now to lowering
rates in a more aggressive way.
Speaker 7 (19:57):
So the bullishness is really there.
Speaker 5 (19:58):
But inflation remains above the Fed's time, unemployment has ticked higher,
and the heavy AI spending has yet to be realized.
So I feel like there's also uncertainty. Even if all
the bulls here are like rah rah twenty twenty six
is going to be great.
Speaker 2 (20:10):
There's not a lot of clarity. I still going going
into the new year. Precious metals, by the way, have
been on a tear this year, gold and silver on
course for their strongest annual performance since nineteen seventy nine,
Gold up more than sixty five percent and silver up
better than one hundred percent so far this year, with
still a few more trading days left. How much further
(20:30):
can they go? Mike McLoone covers commodities for Bloomberg Intelligence.
He joins us from the Bloomberg Miami Bureau. So Mike,
first of all, I got to ask, because we have
seen all year long stocks rising in tandem with precious metals.
This normally doesn't happen. To explain to us why that
phenomenon is happening this year if you can.
Speaker 8 (20:51):
That's the harder question.
Speaker 11 (20:53):
Why it's The key thing is gold is basically grabbing
outa in a significant way. So it's up almost seventy
percent done the year, SMB five hundreds, maybe twenty percent,
so it's way over outperforming.
Speaker 8 (21:05):
I think part of it.
Speaker 11 (21:06):
The main thing is was it made triggerous twenty twenty
two Russians invasion of Ukraine and some of the.
Speaker 8 (21:11):
Issues with the dollar.
Speaker 11 (21:12):
But gold just absolutely loves our new president, mister Trump,
is pushing back on the FED, you know, potentially creating
more infreation, inflation, running it hot. It's all good and
valtil is all good for gold. The significance I look
for and gold now is looking forward. As you mentioned,
how extend it is, how stretched it is, History does
not really bode well for new longs at these levels.
Speaker 8 (21:35):
One good example is silver.
Speaker 11 (21:37):
Its peak it's closed in nineteen seventy nine was thirty two,
and this year's low it was twenty eight.
Speaker 7 (21:43):
So we have golden sacks.
Speaker 5 (21:44):
Among the several banks who predict that prices will keep
rising in twenty twenty six. They're issuing a base case
scenario of four nine hundred dollars an ounce.
Speaker 7 (21:52):
With risks to the upside.
Speaker 5 (21:53):
Do you see more runway for growth for gold here
or are we going to see maybe a correction soon
because we have keptain rising high and hire up around
sixty percent this year.
Speaker 11 (22:02):
There's an old saying in markets, you're supposed to be
selling when they're yelling. That's the inklings I got in
cryptos last year, and that kicked in this year, and
I'm getting those inklings in gold and silver now now
I've been bullish forever, but there's never wrong where you
can say take.
Speaker 8 (22:14):
Profits when it goes pair bulks.
Speaker 11 (22:16):
So momentum could easily carre it to five thousand, but
a normal correction from such stretched levels, baby, that's almost
one hundred percent above it's sixty month moving averages is
the night and most since nineteen seventy ninety could easily
get gold back to thirty five hundred. That's just how
it works and has worked in history. So I look
at gold here as just absolutely frightening for what it
means to me. And implications of gold going up at
(22:38):
this high velocity and crude al going down at this
high velocity. It's potentially global deflationary inklings, and potentially it's
signaling a down year for the S and P five
hundred next year.
Speaker 8 (22:50):
But wouldn't.
Speaker 2 (22:51):
I mean, I'm looking at sort of everything around the
precious metals, like geopolitical tensions, the things that would make
people sort of run to the unquote safety of these
precious metals. I feel like twenty twenty six has a
lot of geopolitical tension, Mike, I got to tell you,
and I think that maybe that could be a tailwind
for these metals, don't you think.
Speaker 11 (23:11):
Well, absolutely, you're describing a current bull market. Things we
talked about five years ago, things that were happening. But
the bottom line is, as commoditie strategies now is just
look at the lessons of history. Once you get to
these levels, everybody points out to the fundamentals, there's always good reasons,
but you have to flip over to your risk management
hat and said you realistically think it's the relative value
is probable is good for getting overweight long at these levels,
(23:33):
and it typically is not.
Speaker 8 (23:35):
So I'm very concerned.
Speaker 11 (23:36):
One thing that's never happened history is we've never had
gold rally at this velocity, almost a one hundred percent
difference versus sixty month moving average, with stock market volatilely
staying this low. That's never happened. That to me, is
I fearful. I think it's gonna incate next year. Is
that stock market volatily one hundred and twenty day volatily
eleven percent, which will be the lowest.
Speaker 8 (23:56):
Since twenty seventeen.
Speaker 11 (23:57):
He's just gonna pick up and get to his average
next year, which is closer to twenty percent. Not a
big deal, but that might seem a big deal when
the market correct.
Speaker 8 (24:04):
So that's the signals I'm getting. It's just purely frightening.
Speaker 5 (24:08):
We've seen goldback ETFs seeing enflows rise week over week
in the past I think one month. But you know
what has seen outlows bitcoin ETFs, and I know you
also read about bitcoin and crypto. Can you talk to
us about your outlook briefly for next year? What are
we expecting? And that as it costs, So I.
Speaker 11 (24:25):
Think Bitcoin's more likely to revert back to its enduring
mean around fifty thousand dollars, which has been in the
case on the annual charts since twenty twenty one.
Speaker 8 (24:35):
I don't think it gets much above one hundred thousand.
Speaker 11 (24:37):
It has the curse of the best back test in
history and the biggest ETF launch in history, and now
we're finance the realization what happens with the great back
test Usually that means the best is over. The thing
about bitcoin, it was one cryptocurrency in two thousand and
nine and now there's twenty eight million. So it's basically
the whole cryptocurrency space is a bunch of pigeons versus
four doves, which is gold, silver, platinum, pladium in press metals,
(25:00):
So that to me is what's happening. In the bottom
line I think for cryptos next year is the stock
market absolutely has to go up or that bloomboard Galaxy crypto,
which is down about twenty percent on the year, which
is the same price since twenty twenty one, will probably continue.
Speaker 8 (25:15):
To drop next year.
Speaker 11 (25:16):
I think the whole space is just getting over hyped,
over got a little bit too bullish, and I'm fearful
creshes metals are getting a little bit over hyped and
a little too bullish now.
Speaker 2 (25:24):
So Mike, as you look into your crystal ball for
twenty twenty six, which precious metal has more runway in
your opinion.
Speaker 8 (25:32):
Well, I think Gold's can continue.
Speaker 11 (25:34):
I'll performing virtually all commodities and Virtus' own stock market,
but this time potentially with the stock market.
Speaker 8 (25:39):
Going down rather than going up.
Speaker 11 (25:42):
So the key thing you remember about gold is almost
always outperforms almost everything except maybe treasury bonds when the
stock market's going down.
Speaker 8 (25:49):
And to me, that's the biggest risk for next year.
It's not in anybody's model.
Speaker 11 (25:52):
It's everybody's assumes its stock market's going to be up
eleven percent, which means it better be or we got issues.
And the gold's the ratio between bitcoin in gold has
been a key indicator this year. It's dropped it down
about nineteen ounces of gold per one bitcoin. That's the
lowest level almost two years. That's a good leading indicator.
It's pointing lower. I think that Rachel is more likely
to go to ten than anywhere get above thirty.
Speaker 2 (26:14):
All right, good stuff. Something tells me we're gonna be
talking to you a lot, Mike mcgloney in the new year.
We always appreciate your insights. Bloomberg Intelligence Senior Commodity Strategist,
Mike mcglohone. They are joining us in sunny, warm Miami
as we are here in cold, ugh chillie.
Speaker 10 (26:28):
Please New York City.
Speaker 9 (26:30):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (26:38):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East. During
this listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (26:53):
I want to switch gears and talk about these Trump accounts. Right,
they're part of the President's one big, beautiful bill. They're
designed to create these investment nest egg for kids. And
here's how it would work as well. Right, so, children
born now through twenty twenty eight, they're going to be
given one thousand dollars from the federal government into an
(27:13):
account that would act sort of like a hybrid IRA
or five twenty nine planned because there are some tax
consequences here. It would be managed by parents until the
child turns eighteen. And we know they have the backing
of some deep pocketed investors like Ray Dalio. Michael Dell
and his wife are donating six and a quarter billion
dollars to help this fund to help fund the Trump accounts,
(27:33):
and Michael Dell spoke earlier this month with Bloomberg's Caroline
Hide about his donation.
Speaker 13 (27:39):
We do think that this will be catalytic and that
more philanthropists and companies will will join us over time,
and again, this is a platform for the future of
these children long term. We think investing these accounts in
(28:01):
the S and P. Five hundred is a very good
way to compound over time for these children.
Speaker 2 (28:10):
Well, our next guest says Trump accounts, they're not the
answer when it comes to closing the wealth gap for
the next generation. Derek Hamilton is a Henry Cohen Professor
of Economics and Urban Policy at the New School. He's
also the brainchild behind baby bonds. Connecticut was the first
state to implement this concept just a couple of years ago,
and since then we've had more states come on board,
(28:30):
including California. I also believe Washington, DC, and Derek Hamilton
joins us here in studio. Derek, thanks so much.
Speaker 3 (28:36):
For being here. Thank you glad to be on the.
Speaker 2 (28:38):
Show, especially ahead of the holiday. I guess there's a
lot to dig into, but let me just start with
what is I guess the main difference between baby bonds
and the Trump accounts, because on their face there seem
to be a lot of similarities.
Speaker 14 (28:51):
Well, conceptually, the goal is to provide access to asset
building by way of having some financial capital so that
you can get in task at building. The problem with
the Trump accounts versus Baby bonds is baby bonds. Focus
on what actually is the problem. It's one of endowment, essentially,
the way wealth is created. As wealth begets more wealth.
(29:13):
It's having a large enough nest egg so that you
can get into a home or get into an education
without debt, or to be able to have some capital
to start a business. The Trump accounts essentially emphasize savings
by way of the tax code, So in an ironic way,
it's structured in a way that's potentially going to subsidize
(29:34):
those that have the wherewithal to raise capital in the
first place.
Speaker 5 (29:38):
What does it signal to you when billionaires step in
to fund use wealth building programs? Are we seeing it
as innovation that government couldn't achieve on its owner. Is
it just a quiet shift away from maybe public responsibility.
Speaker 14 (29:52):
I mean, I applaud philanthropy, the desires to be vanguards
and trying to create pathways to democratize wealth. However, the
mechanism in this case is only feeding into.
Speaker 3 (30:04):
A bad system.
Speaker 14 (30:05):
The federal government should not be ultimately subsidized for their duty.
We shouldn't be reliant on the charitable contributions of a
billionaire for our salvation. But what a billionaire can do
is provide demonstration, be a catalyst, seed some momentum so
that we ultimately can have them invested. And you know,
(30:27):
I'll make one another quick point, which is when you
think about the six point four billion dollars, which is
a huge number, it requires context.
Speaker 3 (30:35):
So two context points.
Speaker 14 (30:37):
One is it's contextual to that four trillion dollar, big
beautiful bill that was referenced at the beginning of the segment.
So if we're thinking about the ways in which the
federal government is spending wealth towards advancing access to asset
building for the population, that six point four billion deserves
(30:57):
context to that four trillion dollars, which is from our
public agress. And then the other context about eighty percent
of children between the ages of zero and ten will
have some access to this donation this agress. But if
you were to disaggregate that, that amounts to about two
(31:17):
hundred and fifty dollars per child. So essentially that's not
going to be the catalyst. So it's distracting a little bit.
Speaker 2 (31:25):
You know, some countries have done this pretty successfully, right
I believe Germany is among them. They'll give an allowance,
a monthly allowance to parents for kids of a certain age.
Some countries use it as an incentive to get people
to have more children. It's now These baby bonds have
been implemented in let's say Connecticut since twenty twenty three.
(31:46):
I believe they were the first state. How are things
going oh, it's still in the infancy there. But how
are things going?
Speaker 14 (31:51):
I mean, Connecticut is a really great model, and it's
a state, so it doesn't have the capacities of the
federal government. But here you have a scenario with every
Medicaid birth will receive thirty two hundred dollars automatically at birth,
and the treasurer is managing that money in a collective
fund in an astute way with responsible investing, where the
(32:11):
projections are that the children, you know, low income children
born as part of a Medicaid birth from rural to
urban areas throughout the state will have about twelve to
eighteen thousand as some seed capital to begin wealth building.
And then you know, other examples would be the UK
did it, they didn't fund it to the extent that
we would call for in the US. And then here's
(32:32):
perhaps even the best counterfactual. The United States has done
similar programs with the GI bill.
Speaker 3 (32:39):
That's right, right, right, We have a history of doing this.
Speaker 5 (32:42):
Do you think that programs like these have an influence
to affect economic policy long term or do you think
the create risking a system that just really hinges on
to your point philanthropy of maybe rich individuals are big corporations.
Speaker 14 (32:57):
And that's exactly why it should be a government responsibilit
And here's the point. This is not charity. This is
an investment. So if you believe in the market, if
you don't believe in the market, regardless, Again, it's pretty simple.
The way wealth is created. It is that down payment
to put you in an asset that passively appreciates over
your life. So if you are authentically somebody who believes
(33:20):
in transaction in the market, then you should support people
having some seed capital to get into that asset. So
again it's a question of endowment, not savings behavior.
Speaker 2 (33:31):
Is there anything about the Trump accounts that you actually like?
Speaker 3 (33:34):
I mean, we have to.
Speaker 2 (33:35):
I think we can agree that you know the concept,
I mean, the heart's in the right place.
Speaker 3 (33:40):
Well, I mean, that's just it.
Speaker 14 (33:41):
The attention on trying to make sure that we democratize
access to wealth, that's a good thing. But the structure,
the five twenty nine structure. We have lessons from that,
where you know five twenty nine saving tax provision savings
so that we can provide access to college for our children.
The bottom half percent of earners essentially don't participate. Only
(34:02):
about two point five percent of Americans participate, So there
are really good ways we can do it. My fear
is that we co opt a good idea. It's a
really good idea. We have pathways to really facilitate a
good value for our American economy, which is inclusion.
Speaker 3 (34:20):
We just got to work on the delivery.
Speaker 7 (34:22):
To Alexis point.
Speaker 5 (34:23):
There's the idea of corporation match welfare embedded here. Are
there any upsides to that? What should policymakers be cautious about?
Speaker 14 (34:32):
I apologize for laughing, but the phrasing of corporate welfare Again,
I take the Dells as being not disingenuous but really
trying to be supportive.
Speaker 3 (34:44):
I think there's better ways.
Speaker 14 (34:46):
There's more catalytic ways they could spend that sixty point
four billion dollars. But at the end of the day,
the American people don't want to be at the whim
of billionaires. And then there are other aspects as well
that we should be leary about, which is state private partnerships,
for which we have to be concerned about the potential
for grift when we're relying on billionaires to provide economic
(35:09):
security for the American people.
Speaker 2 (35:11):
So if we're thinking you know, look, a lot of
folks are not going to take advantage of a five
to twenty nine plan. Is that because they don't have
the money to do it? Is that because they don't
know they exist? Is that because a lot of Americans
cannot be left to their own devices to save for themselves.
I mean, think about how you know, some of our
programs like Social Security came to be. It's because it
(35:34):
was supposed to be some sort of a safety net.
So is it a good idea for the government to
put aside some money for folks who might not otherwise
do it?
Speaker 14 (35:42):
I mean, that actually is a great idea, but just
how in the mechanisms by which we do it that's
the problem. So it is the case that clearly we
have an affordability crisis in this country. So people don't
have the wherewithal to save on mass and that's a
big reason why people don't participate in the five to
twenty nine counts. Not as if they don't love and
adore their children and desire for them to have savings.
(36:04):
It's wherewithal. And then the other big point is for
those that have a mass wealth in America, it's not
active savings that's driving that. And by active savings income
that we actively save, it's passive savings. It's that down payment.
It is critical for young adults to really have some
capital so that they can get into that automatic vehicle
(36:26):
to save.
Speaker 2 (36:27):
All right, we're gonna have to leave it there. But
it's not the last we've heard of baby boonds. We'll
see if they come into other states. Are they coming
to other states soon?
Speaker 11 (36:33):
Do we know?
Speaker 2 (36:33):
Is this in the pipeline?
Speaker 14 (36:34):
Lots of momentum at the state level. There are demonstrations.
I have to give a quick plug which is at
the Institute on Race Power and Political Economy. That's Racepowerpolicy
dot org. We have a whole list of where they
are flourishing the various states, the demonstrations with its ideas
incubating across the United States.
Speaker 2 (36:55):
Derek Hamilton University Professor, Henry Colham, Professor of Economics and
Urban Policy at the New School, Thanks so much for
coming in, especially ahead of the holiday talk baby bonds.
Speaker 1 (37:04):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(37:25):
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(00:23):
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with Carol Masser and Tim Steneveek on Bloomberg Radio, the.
Speaker 2 (00:32):
Fight for Warner Brothers Discovery Guess what. It's not over yet,
not by a long shot. Both Netflix and Paramount Skuidance
are now strengthening their financial backing for their respective offers.
So where do things stand right now? Let's get a
check in with Bloomberg News Media editor Molly Schutz and
Bloomberg Intelligence Senior credit analyst Stephen Flynn. They join us
(00:52):
here in studio. Thanks so much for being with us. So, Molly,
I'm just going to start with you. Just bring us
up to speed on what Larry Ellison is saying here.
I guess he's throwing his own personal fortune behind this
deal to say, hey, listen, we're good for the money.
Speaker 3 (01:06):
That's right.
Speaker 4 (01:06):
He's putting his name on the line. He's saying, I'm
personally backing this forty billion dollars in equity financing to
help his son David Ellison, who's the CEO of Paramounts Guidance,
succeed in their takeover offer for Warner Brothers.
Speaker 5 (01:24):
But okay, so I want to bring in Stephen here.
Larry Ellison is the fifth richest person in the world
with a fortune of for an two hundred and forty
six billion dollars. Are there any credit risk implications of
his personal guarantee or like this? Having a billionaire really
backstop meaningfully and extend the runway for deals like these.
Speaker 3 (01:41):
Yeah.
Speaker 6 (01:41):
Sure, So it's important you have the backstopping of Larry Ellison.
You also have a lot of other funds involved, and
importantly they also have a fifty four billion dollar secured
credit agreement in place, so there's plenty of financing to
support the thirty dollars per share cash offer for the
tender offer for Warner brother shares.
Speaker 2 (01:58):
So Netflix, though, was talking about a bridge loan right
of your nearly sixty billion dollars. How if you had
to stack it up? Because I'm sure the board right
at Warner Brothers is going through this whole. You know,
pros and coms list. How did these two mile I'll
ask you first, I'd like that you're both your thoughts
on this, but how do these two deals stack up
next to each other when you're talking about I'm just
(02:19):
talking about the financing of the debt. Is there one
that just seems more plausible or more attractive than the other?
Speaker 4 (02:27):
I think the latest offer by Paramount today shows that
that was their effort to say, look, we've got the
solid footing here. This will help with you know, credit
investment grade, help our investment grade, you know, and show
that we're.
Speaker 7 (02:43):
Serious and that this bid is solid.
Speaker 4 (02:46):
Which Netflix already has an investment grade rating and had
was seen originally as having a better solid financial footing.
Speaker 6 (02:55):
What are your Netflix is much much stronger credit than
Paramounts guidance. Netflix has a single A rated balance sheet,
They have a large market cap, they have growing EBITDAG,
growing free cash flow, and very very low net leverage.
So Netflix has plenty of capacity to borrow in the
investment grade corporate bomb market. Now the company has single
A credit ratings. I believe Moody's has already affirmed their
(03:19):
single A rating. I expect S and P to do
the same. So they have plenty of capacity. On the
flip side, Paramount Skuidance, they have a bridge commitment in place,
so the commitment is there.
Speaker 3 (03:30):
From a number of large banks.
Speaker 6 (03:32):
Now that is secure debt, and that they will probably
strive for investment grade ratings on that secure debt, saying hey,
this comes ahead of the other debt that the company has.
And if you use Charter as a comparison, you could
have a split rated capital structure. You have secure debt
that's rated investment grade and certain other debt whether it's
unsecured or security that's inferior to the security provider to
(03:54):
the other debt with high yield ratings.
Speaker 2 (03:56):
So you can get creative with the way you sort
of stack the debt if you will.
Speaker 3 (03:59):
Yeah, playing companies get very creative.
Speaker 7 (04:02):
That so that structure aside.
Speaker 5 (04:04):
Talk to us about a media tech standpoint, what will
it look like if the company merges with Netflix or
with Paramount, which makes more sense?
Speaker 4 (04:13):
Well, both, you know, Netflix and Paramount think their deal
makes more sense for Netflix obviously, it gives them direct
access to the library, one of Hollywood's most iconic libraries
for film and TV content with Warner Brothers, and that's Also,
what Paramount technically is trying to do. Paramount Plus is
(04:34):
a much smaller streaming service right now than Netflix, so
they're really seeing this deal as a way to bulk
them up and allow them to compete better with the
likes of Netflix and Amazon and Disney.
Speaker 2 (04:47):
Is this Larry Ellison offer now a last ditch effort?
Do you think by Paramount skiddance? Because we know that
Warner Brothers is already saying, listen to the shareholders, we
want you, we believe the Netflix is a stronger deal.
We want you to vote that way. Do you think
we're gonna hear yet again from Paramount and what might
that be? It might it be a sweetened offer if
(05:07):
this doesn't work.
Speaker 8 (05:09):
Yeah.
Speaker 6 (05:09):
Well, so mid last week, the Warner Brothers Discovery Board
recommended shareholders do not participate in the tenor offer, and
they listed the reasons why. Now, what Paramount this morning
has done is kind of address many of those reasons,
particularly given the Larry Eedlison guarantee. So I believe Paramount
is going to see how many shares they have to
participate in the tenor offer and if they need to,
you know, conversations with shareholders. If they need to raise
(05:31):
it to a certain level that their struggle is still
comfortable with. I imagine that's what they would do.
Speaker 5 (05:35):
Talk to us about the size of this deal, because
our Bloomberg story said something like it's the biggest in
a decade.
Speaker 4 (05:42):
It's definitely one of the biggest media deals in a
long time. I mean it harcoons back to the days
of Disney and Fox, those kinds of deals. I mean,
this is definitely a big deal, both financially and also
in terms of what it means for Hollywood and for
content production and the creative industries at large.
Speaker 2 (06:02):
Is the debt financing?
Speaker 8 (06:04):
Now?
Speaker 2 (06:04):
You think the deciding factor here for for the board
of Warner Brothers. Is this what it's going to come
down to for them?
Speaker 6 (06:11):
Do you think, Steve no, Because I don't think if
you have a commitment in place. That's why companies get
bridge loans to say that, hey, we're good on the
debt part.
Speaker 3 (06:18):
Look at the financing here.
Speaker 6 (06:19):
It's you know, provided by a slew of banks, so
that typically provides companies with some comfort that the debt
component's going to come through.
Speaker 3 (06:27):
I think what Warner Brothers was asking for more comfort on.
Speaker 6 (06:29):
The equity side right, because there's over forty billion dollars
of equity capitalis part of their acquisition proposal for the
Warner Brothers shares.
Speaker 5 (06:38):
How does Ellison's bet change Paramount's position relative to like Netflix,
YouTube and Amazon. Does it enable a different operating model
or is it just really scale at this point?
Speaker 7 (06:52):
I think I think it's mostly scale. Yeah.
Speaker 4 (06:54):
Paramount's offer, Paramounts argument is that you know, we will
be a good steward of this content, and this will
allow us to because Paramounts Guidance is a pretty small
operator in terms of if you're looking at compared with Disney, Netflix,
even Amazon, and so really having a studio like Warner
Brothers behind them and to be able to tap into
(07:15):
that library of content would really be a step up
for them.
Speaker 2 (07:20):
But I guess a big difference between these two offers
is paramount S Guidance wants the whole thing, including CNN
right TNT, where Netflix doesn't want that. They want the
studios in the streaming service. So what if Netflix does
win this bidding war, what happens to CNN and those
cable properties.
Speaker 6 (07:39):
So the way the Netflix deal is set up is
that they're gonna have Warner Brothers Discovery spin off their
global networks business that includes many of the channels that
you describe here, and what will be left behind is
the studios, which is very valuable in the streaming business,
which is very valuable.
Speaker 3 (07:54):
And then Netflix will acquire that remaining company.
Speaker 6 (07:57):
And that's what makes it a little bit tough to
compare the valuations here because Netflix was offering twenty seven
to seventy five per share, mostly cash with some Netflix
stock for the remaining company. So investors had to figure out, Okay,
what's the per share value in the global linear networks
that's being spun off. Paramount S Guidance is saying, hey,
that's only worth a dollar. Some people are saying, well,
that's worth several dollars. And so that twenty seven to
(08:19):
seventy five plus the value of those that stub piece
is your total value compared to thirty dollars a share
in cash from Paramounts Guidance for the whole company.
Speaker 5 (08:30):
Who is the which one is the front runner here?
Speaker 6 (08:32):
So far in your opinion, Well, clearly from the board
of Warner Brothers, Netflix is right.
Speaker 3 (08:37):
They accepted Netflix offer.
Speaker 6 (08:40):
They wrote, you know, put out a letter last week
saying that why investors should reject the Paramount Skuiddance offer.
So it's you know, it's hard to break a deal.
It can happen, but it's hard. So it's it seems
that Netflix, given what's going on so far, is ahead,
but this is going to last quite some time, right.
(09:01):
Paramount Skuiddance has significant financial backers.
Speaker 3 (09:05):
They really want this.
Speaker 6 (09:06):
You could argue that they really need this, They need
to gain scale and so they're motivated.
Speaker 3 (09:10):
So I think we still have a ways to go
in this.
Speaker 2 (09:13):
So if this thing drags into twenty twenty six, which
it looks like a very well, might we know the
media landscapes continuing to change. Let's just say, you know
what Paramount doesn't get Warner Brothers. What does Paramount do
who or do they eye another company? And if so,
who might that be?
Speaker 4 (09:27):
I mean, I think that's the I think that's the
big question. Now, you know, where will they go from here?
David Ellison has said, I mean, despite the fact that yeah,
he really really does want this company, he says, well, Okay,
if we don't get it, we'll we'll be able to
proceed and will still continue to produce great, great movies
and great content and we'll find other ways to grow
and to compete.
Speaker 3 (09:49):
Yeah.
Speaker 6 (09:49):
Well, let's remember Paramount Skuideance was recently formed, right, you merged.
You had David Ellison's Skydance merged with Paramount and they
took out the National Amusements on the Paramounts. So that
company was just formed. They had a plan. They were
going to cut costs, grows certain areas, and so improve
the overall business. And now Warner Brothers would give them
a certain amount of scale. If this doesn't work out,
(10:11):
I'm sure they could look for other assets for additional scale.
Speaker 2 (10:14):
All Right, we're gonna have to leave it there, but
certainly we're going to see how this all plays out.
As I guess the board continues to look at these
deals through the holiday. I think a lot of folks
saw them. We can wrap this thing up Netflix. My mind,
I thought we can wrap this thing up and I'll
celebrate the new year. But there are still lots and
lots of question marks. Our thanks to Bloomberg News Media
Editor Molly Shuts and Bloomberg Intelligence Senior Credit Analystephen Flynn
(10:35):
for being here in our studio to help break down
what really has become a quite complicated scenario for all
of these companies. Lots of tangled webs So thanks a
lot for being with.
Speaker 9 (10:45):
Us, Stay with us. More from Bloomberg Business Week Daily
coming up after this.
Speaker 1 (10:54):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoon from two to five East during
this listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch.
Speaker 7 (11:06):
Us Live on YouTube.
Speaker 5 (11:09):
So, Alexis, it's been really a stellar year for markets
in the US and across the globe, and we've talked
about how the SMP is on track to see it's
eighth winning streak, its longest winning streak since twenty at
and n already next.
Speaker 7 (11:20):
Year is looking quite optimistic.
Speaker 5 (11:21):
We have sales sized strategists really putting their price targets
for the SMP out there, and the range is around
seven thousand to eight thousand, one.
Speaker 7 (11:28):
Hundred, and it's quite the range we try to range,
but it's high for context.
Speaker 5 (11:33):
We're around sixty eight hundred to sixty nine hundred at
this point, and it's really hard to make sense of
the markets next year because we have a lot of optimism,
but we do have a lot of uncertainties as well,
and joining us to make sense of all of that
and to give us a look ahead is Kuaigman. She's
the chief investment officer of equity Strategies at.
Speaker 7 (11:50):
The Research Affiliates. She's with us in the Interactive Broker Studio.
Speaker 5 (11:53):
So thank you so much for joining us on this
Monday to help us make sense of all of this.
We're seeing a bull market right now, and it's a
bullmark that's broadening beyond megacap tech into mid caps and
small cap stocks.
Speaker 10 (12:04):
Absolutely.
Speaker 7 (12:05):
Why does that matter to make this rally durable?
Speaker 10 (12:08):
I mean, I think that when you have very very
narrow leadership, the danger is always that there's a hiccup
in something and whatever it is that's driving that narrow leadership,
And we saw that recently with the whole AI story.
People wondering whether or not these stocks are overvalued. But
I think one of the things that you're seeing is
that a lot of other stocks are benefiting as well.
So as long as people have a lot of options
(12:30):
to choose from that continue to do well, people will
stay invested.
Speaker 2 (12:34):
Do you have reason to believe we're going to branch
out from the sort of narrow stocks we've been looking
at driving the rally this year, and by that, I mean,
are we going to break out of AI and start
to see some opportunity elsewhere.
Speaker 10 (12:49):
I think we're already beginning to see that. I mean,
if you take a look at what's happened in the
markets this year, everybody is focusing on the mag seven, right,
everybody's focusing on n Video on Alphabet. But if you
really think about it, and Video is not the top
performing chip stock this year, and Video is up something
like thirty six percent, and you have Intel, remember that
(13:11):
stock from long ago, that's up eighty two percent. So
I think you're already beginning to see broadening out within
technology itself, but you're also seeing broadening out to other sectors.
Financials are doing well, healthcare stocks are seeing signs of
life now.
Speaker 5 (13:26):
So there's massive capital flowing into AI, and short term
we're seeing who are the winners, but not everyone will
be a winner longer term. So how real is the
risk of overinvestment in AI, because already we have investors
kind of feeling jittery that they it might not be
paying back at least in the short term horizon.
Speaker 10 (13:42):
Sure, I mean I think that one of the things
that we see is that the companies that are investing
in AI are really strong, cash flowing companies. They're very,
very strong. There is some debt behind this, but it's
not an overwhelming amount of debt. So I do think
that there is the risk of overinvestment. I don't necessarily
see a real risk quite yet. But also I think
(14:05):
it's really hard to pick who the winner is. So
the best way to invest in this is to stay diversified.
Speaker 2 (14:10):
We're most likely going to be in an environment of
lower interest rates. I mean, it looks like the market
is banking on two interest rate cuts. As long as
we don't get an interest rate hike anytime soon, we
might very well see these financials do well, these smaller
and MidCap stocks do well. But is there an area
of this market you wish was seeing a little more
love that isn't that maybe you know should be and
(14:33):
that people are just overlooking.
Speaker 10 (14:35):
So one of the areas that I do think is
highly overlooked is really the consumer sector. Right, So you
see a lot of the large names consumer discretionary doing poorly.
I mean, Walmart's done well this year, but you see
a lot of companies not doing so well. You see Target,
for example, a beloved American brand, and again there the
(14:57):
issues are changing consumer tastes of whether or not they
can keep.
Speaker 5 (15:00):
But I love the you in your talking points. The
very first one is short term interest rates are coming down.
Everything else is commentary. Is that really their story right now?
Our investors already looking past beyond.
Speaker 10 (15:12):
The rate cuts now. I think that if you take
a look at what drives markets, markets just tend to
go up. They stay with whatever momentum it is unless
something happens to change that. And what usually happens was
usually necessary to change the upward trajectory that we're in
right now is a tightening of financial conditions. If you
take a look at you know, bear markets, meaning they
(15:36):
go down twenty percent over a certain period of time,
they're always preceded by some sort of tightening financial conditions,
and we're not seeing that right now. I do think
that lower interest rates are benefiting US equities, but they're
also benefiting non US equities, namely emerging markets as well.
So I think investors are going to have a variety
of opportunities to choose from next year.
Speaker 2 (15:57):
I'm really glad you talked. You brought up em because
emerging markets have sort of been the sleeper story I
think of the year. They've really done quite well, and
even Europe has sort of come along further ride. So
if you're looking for opportunities to diversify outside of US equities,
where in particular might you be looking next year?
Speaker 11 (16:14):
Oh?
Speaker 10 (16:14):
I definitely think emerging markets are exciting, particularly China. I mean,
China got so cheap and what you're seeing there is Yes,
there are difficulties with growth, but I think you have
a lot of world class companies there. A lot of
money was flowing out of it. Now money is flowing
back in because of the valuation opportunities. We're also seeing
more of a stabilization of the trade situation. All of
(16:37):
these things really do help emerging markets a lot.
Speaker 7 (16:40):
And I want to go back quickly.
Speaker 5 (16:41):
You've pointed out that AI is already changing the investing landscape,
especially in the startup world.
Speaker 7 (16:46):
How does AI lower.
Speaker 5 (16:48):
The barrier to entry compared to other tech supercycles?
Speaker 10 (16:52):
So I think AI is just the most recent tech supercycle.
I mean, if you really think about the tech bubble,
you know, the late nineties, if you wanted to throw
up an e commerce company pets dot Com, for example,
you had to go out and invest a lot in
computers and servers in bandwidth. It was very, very expensive
to have a startup. The cloud came along and essentially
(17:16):
you could just license a lot of this stuff out right.
It became much much more cost effective or less capital
intensive to have a startup. And I think now what
you're really seeing is on the software side, you're getting
a lot of a lot of benefit from AI. What
I'm hearing from people is that if you wanted to
start up a company like uber or Lyft, you need
(17:38):
a lot of coders right to create that entire codebase
for you. But now with AI, all coders are becoming
or at least the coders that know how to use
it are becoming much more productive. You need to hire
far fewer people. That said, it's most beneficial when you
have a new code base, right, So if you have
an existing code base, it's not nearly as productivity enhancing.
(18:01):
And so in some ways, I think one of the
things that we're seeing is that I wouldn't be surprised
if there was a lot more new ideas being put
into play into in the venture world, a lot more
disruption that happens in technology.
Speaker 2 (18:12):
All right, We're going to leave it there Quay when
Chief Investment Officer Equity Strategies with Research Affiliates. Thanks for
coming by and giving us your thoughts on where the
market is now and headed into the new year.
Speaker 9 (18:26):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 12 (18:34):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern up on applecar
Play and the Android Auto with the Bloomberg Business app.
You can also listen live on Amazon Alexa from our
flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (18:54):
Things are shaping up to be sort of a festive end,
if you will, Isabelle to the year for the markets,
and let's start to the new year. We have the
stops now US equities erasing those December losses. The S
and P set for its eighth straight month of gains.
Speaker 5 (19:09):
It seems like the Santa Claus rally is really shaping up.
And Santa Claus Rally is, of course, the last trading
days of December five last in the first two in January,
and we haven't Mark Hackett of Nationwide saying that the
Santa Claus rally is typically the best two weeks of
any trading year since nineteen fifty. So, as you said,
it's great water cooler chat and I will definitely use it.
From December twenty four, then, even a.
Speaker 2 (19:30):
Trading volume is thin because we know lots of Federsture
participating also just want to throw when their fund managers
are maintaining record low levels of cash right now, so
they're really putting money to work in this market. Markets
are still banking on two rate cuts next year, and
we had FED Governor Stephen Myron on Bloomberg Television earlier
today and he said the central Bank actually risks sparking
a recession unless it continues lowering rates next year, though
(19:52):
we know he has a bias right now to lowering
rates in a more aggressive way.
Speaker 7 (19:57):
So the bullishness is really there.
Speaker 5 (19:58):
But inflation remains above the Fed's time, unemployment has ticked higher,
and the heavy AI spending has yet to be realized.
So I feel like there's also uncertainty. Even if all
the bulls here are like rah rah twenty twenty six
is going to be great.
Speaker 2 (20:10):
There's not a lot of clarity. I still going going
into the new year. Precious metals, by the way, have
been on a tear this year, gold and silver on
course for their strongest annual performance since nineteen seventy nine,
Gold up more than sixty five percent and silver up
better than one hundred percent so far this year, with
still a few more trading days left. How much further
(20:30):
can they go? Mike McLoone covers commodities for Bloomberg Intelligence.
He joins us from the Bloomberg Miami Bureau. So Mike,
first of all, I got to ask, because we have
seen all year long stocks rising in tandem with precious metals.
This normally doesn't happen. To explain to us why that
phenomenon is happening this year if you can.
Speaker 8 (20:51):
That's the harder question.
Speaker 11 (20:53):
Why it's The key thing is gold is basically grabbing
outa in a significant way. So it's up almost seventy
percent done the year, SMB five hundreds, maybe twenty percent,
so it's way over outperforming.
Speaker 8 (21:05):
I think part of it.
Speaker 11 (21:06):
The main thing is was it made triggerous twenty twenty
two Russians invasion of Ukraine and some of the.
Speaker 8 (21:11):
Issues with the dollar.
Speaker 11 (21:12):
But gold just absolutely loves our new president, mister Trump,
is pushing back on the FED, you know, potentially creating
more infreation, inflation, running it hot. It's all good and
valtil is all good for gold. The significance I look
for and gold now is looking forward. As you mentioned,
how extend it is, how stretched it is, History does
not really bode well for new longs at these levels.
Speaker 8 (21:35):
One good example is silver.
Speaker 11 (21:37):
Its peak it's closed in nineteen seventy nine was thirty two,
and this year's low it was twenty eight.
Speaker 7 (21:43):
So we have golden sacks.
Speaker 5 (21:44):
Among the several banks who predict that prices will keep
rising in twenty twenty six. They're issuing a base case
scenario of four nine hundred dollars an ounce.
Speaker 7 (21:52):
With risks to the upside.
Speaker 5 (21:53):
Do you see more runway for growth for gold here
or are we going to see maybe a correction soon
because we have keptain rising high and hire up around
sixty percent this year.
Speaker 11 (22:02):
There's an old saying in markets, you're supposed to be
selling when they're yelling. That's the inklings I got in
cryptos last year, and that kicked in this year, and
I'm getting those inklings in gold and silver now now
I've been bullish forever, but there's never wrong where you
can say take.
Speaker 8 (22:14):
Profits when it goes pair bulks.
Speaker 11 (22:16):
So momentum could easily carre it to five thousand, but
a normal correction from such stretched levels, baby, that's almost
one hundred percent above it's sixty month moving averages is
the night and most since nineteen seventy ninety could easily
get gold back to thirty five hundred. That's just how
it works and has worked in history. So I look
at gold here as just absolutely frightening for what it
means to me. And implications of gold going up at
(22:38):
this high velocity and crude al going down at this
high velocity. It's potentially global deflationary inklings, and potentially it's
signaling a down year for the S and P five
hundred next year.
Speaker 8 (22:50):
But wouldn't.
Speaker 2 (22:51):
I mean, I'm looking at sort of everything around the
precious metals, like geopolitical tensions, the things that would make
people sort of run to the unquote safety of these
precious metals. I feel like twenty twenty six has a
lot of geopolitical tension, Mike, I got to tell you,
and I think that maybe that could be a tailwind
for these metals, don't you think.
Speaker 11 (23:11):
Well, absolutely, you're describing a current bull market. Things we
talked about five years ago, things that were happening. But
the bottom line is, as commoditie strategies now is just
look at the lessons of history. Once you get to
these levels, everybody points out to the fundamentals, there's always good reasons,
but you have to flip over to your risk management
hat and said you realistically think it's the relative value
is probable is good for getting overweight long at these levels,
(23:33):
and it typically is not.
Speaker 8 (23:35):
So I'm very concerned.
Speaker 11 (23:36):
One thing that's never happened history is we've never had
gold rally at this velocity, almost a one hundred percent
difference versus sixty month moving average, with stock market volatilely
staying this low. That's never happened. That to me, is
I fearful. I think it's gonna incate next year. Is
that stock market volatily one hundred and twenty day volatily
eleven percent, which will be the lowest.
Speaker 8 (23:56):
Since twenty seventeen.
Speaker 11 (23:57):
He's just gonna pick up and get to his average
next year, which is closer to twenty percent. Not a
big deal, but that might seem a big deal when
the market correct.
Speaker 8 (24:04):
So that's the signals I'm getting. It's just purely frightening.
Speaker 5 (24:08):
We've seen goldback ETFs seeing enflows rise week over week
in the past I think one month. But you know
what has seen outlows bitcoin ETFs, and I know you
also read about bitcoin and crypto. Can you talk to
us about your outlook briefly for next year? What are
we expecting? And that as it costs, So I.
Speaker 11 (24:25):
Think Bitcoin's more likely to revert back to its enduring
mean around fifty thousand dollars, which has been in the
case on the annual charts since twenty twenty one.
Speaker 8 (24:35):
I don't think it gets much above one hundred thousand.
Speaker 11 (24:37):
It has the curse of the best back test in
history and the biggest ETF launch in history, and now
we're finance the realization what happens with the great back
test Usually that means the best is over. The thing
about bitcoin, it was one cryptocurrency in two thousand and
nine and now there's twenty eight million. So it's basically
the whole cryptocurrency space is a bunch of pigeons versus
four doves, which is gold, silver, platinum, pladium in press metals,
(25:00):
So that to me is what's happening. In the bottom
line I think for cryptos next year is the stock
market absolutely has to go up or that bloomboard Galaxy crypto,
which is down about twenty percent on the year, which
is the same price since twenty twenty one, will probably continue.
Speaker 8 (25:15):
To drop next year.
Speaker 11 (25:16):
I think the whole space is just getting over hyped,
over got a little bit too bullish, and I'm fearful
creshes metals are getting a little bit over hyped and
a little too bullish now.
Speaker 2 (25:24):
So Mike, as you look into your crystal ball for
twenty twenty six, which precious metal has more runway in
your opinion.
Speaker 8 (25:32):
Well, I think Gold's can continue.
Speaker 11 (25:34):
I'll performing virtually all commodities and Virtus' own stock market,
but this time potentially with the stock market.
Speaker 8 (25:39):
Going down rather than going up.
Speaker 11 (25:42):
So the key thing you remember about gold is almost
always outperforms almost everything except maybe treasury bonds when the
stock market's going down.
Speaker 8 (25:49):
And to me, that's the biggest risk for next year.
It's not in anybody's model.
Speaker 11 (25:52):
It's everybody's assumes its stock market's going to be up
eleven percent, which means it better be or we got issues.
And the gold's the ratio between bitcoin in gold has
been a key indicator this year. It's dropped it down
about nineteen ounces of gold per one bitcoin. That's the
lowest level almost two years. That's a good leading indicator.
It's pointing lower. I think that Rachel is more likely
to go to ten than anywhere get above thirty.
Speaker 2 (26:14):
All right, good stuff. Something tells me we're gonna be
talking to you a lot, Mike mcgloney in the new year.
We always appreciate your insights. Bloomberg Intelligence Senior Commodity Strategist,
Mike mcglohone. They are joining us in sunny, warm Miami
as we are here in cold, ugh chillie.
Speaker 10 (26:28):
Please New York City.
Speaker 9 (26:30):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (26:38):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East. During
this listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (26:53):
I want to switch gears and talk about these Trump accounts. Right,
they're part of the President's one big, beautiful bill. They're
designed to create these investment nest egg for kids. And
here's how it would work as well. Right, so, children
born now through twenty twenty eight, they're going to be
given one thousand dollars from the federal government into an
(27:13):
account that would act sort of like a hybrid IRA
or five twenty nine planned because there are some tax
consequences here. It would be managed by parents until the
child turns eighteen. And we know they have the backing
of some deep pocketed investors like Ray Dalio. Michael Dell
and his wife are donating six and a quarter billion
dollars to help this fund to help fund the Trump accounts,
(27:33):
and Michael Dell spoke earlier this month with Bloomberg's Caroline
Hide about his donation.
Speaker 13 (27:39):
We do think that this will be catalytic and that
more philanthropists and companies will will join us over time,
and again, this is a platform for the future of
these children long term. We think investing these accounts in
(28:01):
the S and P. Five hundred is a very good
way to compound over time for these children.
Speaker 2 (28:10):
Well, our next guest says Trump accounts, they're not the
answer when it comes to closing the wealth gap for
the next generation. Derek Hamilton is a Henry Cohen Professor
of Economics and Urban Policy at the New School. He's
also the brainchild behind baby bonds. Connecticut was the first
state to implement this concept just a couple of years ago,
and since then we've had more states come on board,
(28:30):
including California. I also believe Washington, DC, and Derek Hamilton
joins us here in studio. Derek, thanks so much.
Speaker 3 (28:36):
For being here. Thank you glad to be on the.
Speaker 2 (28:38):
Show, especially ahead of the holiday. I guess there's a
lot to dig into, but let me just start with
what is I guess the main difference between baby bonds
and the Trump accounts, because on their face there seem
to be a lot of similarities.
Speaker 14 (28:51):
Well, conceptually, the goal is to provide access to asset
building by way of having some financial capital so that
you can get in task at building. The problem with
the Trump accounts versus Baby bonds is baby bonds. Focus
on what actually is the problem. It's one of endowment, essentially,
the way wealth is created. As wealth begets more wealth.
(29:13):
It's having a large enough nest egg so that you
can get into a home or get into an education
without debt, or to be able to have some capital
to start a business. The Trump accounts essentially emphasize savings
by way of the tax code, So in an ironic way,
it's structured in a way that's potentially going to subsidize
(29:34):
those that have the wherewithal to raise capital in the
first place.
Speaker 5 (29:38):
What does it signal to you when billionaires step in
to fund use wealth building programs? Are we seeing it
as innovation that government couldn't achieve on its owner. Is
it just a quiet shift away from maybe public responsibility.
Speaker 14 (29:52):
I mean, I applaud philanthropy, the desires to be vanguards
and trying to create pathways to democratize wealth. However, the
mechanism in this case is only feeding into.
Speaker 3 (30:04):
A bad system.
Speaker 14 (30:05):
The federal government should not be ultimately subsidized for their duty.
We shouldn't be reliant on the charitable contributions of a
billionaire for our salvation. But what a billionaire can do
is provide demonstration, be a catalyst, seed some momentum so
that we ultimately can have them invested. And you know,
(30:27):
I'll make one another quick point, which is when you
think about the six point four billion dollars, which is
a huge number, it requires context.
Speaker 3 (30:35):
So two context points.
Speaker 14 (30:37):
One is it's contextual to that four trillion dollar, big
beautiful bill that was referenced at the beginning of the segment.
So if we're thinking about the ways in which the
federal government is spending wealth towards advancing access to asset
building for the population, that six point four billion deserves
(30:57):
context to that four trillion dollars, which is from our
public agress. And then the other context about eighty percent
of children between the ages of zero and ten will
have some access to this donation this agress. But if
you were to disaggregate that, that amounts to about two
(31:17):
hundred and fifty dollars per child. So essentially that's not
going to be the catalyst. So it's distracting a little bit.
Speaker 2 (31:25):
You know, some countries have done this pretty successfully, right
I believe Germany is among them. They'll give an allowance,
a monthly allowance to parents for kids of a certain age.
Some countries use it as an incentive to get people
to have more children. It's now These baby bonds have
been implemented in let's say Connecticut since twenty twenty three.
(31:46):
I believe they were the first state. How are things
going oh, it's still in the infancy there. But how
are things going?
Speaker 14 (31:51):
I mean, Connecticut is a really great model, and it's
a state, so it doesn't have the capacities of the
federal government. But here you have a scenario with every
Medicaid birth will receive thirty two hundred dollars automatically at birth,
and the treasurer is managing that money in a collective
fund in an astute way with responsible investing, where the
(32:11):
projections are that the children, you know, low income children
born as part of a Medicaid birth from rural to
urban areas throughout the state will have about twelve to
eighteen thousand as some seed capital to begin wealth building.
And then you know, other examples would be the UK
did it, they didn't fund it to the extent that
we would call for in the US. And then here's
(32:32):
perhaps even the best counterfactual. The United States has done
similar programs with the GI bill.
Speaker 3 (32:39):
That's right, right, right, We have a history of doing this.
Speaker 5 (32:42):
Do you think that programs like these have an influence
to affect economic policy long term or do you think
the create risking a system that just really hinges on
to your point philanthropy of maybe rich individuals are big corporations.
Speaker 14 (32:57):
And that's exactly why it should be a government responsibilit
And here's the point. This is not charity. This is
an investment. So if you believe in the market, if
you don't believe in the market, regardless, Again, it's pretty simple.
The way wealth is created. It is that down payment
to put you in an asset that passively appreciates over
your life. So if you are authentically somebody who believes
(33:20):
in transaction in the market, then you should support people
having some seed capital to get into that asset. So
again it's a question of endowment, not savings behavior.
Speaker 2 (33:31):
Is there anything about the Trump accounts that you actually like?
Speaker 3 (33:34):
I mean, we have to.
Speaker 2 (33:35):
I think we can agree that you know the concept,
I mean, the heart's in the right place.
Speaker 3 (33:40):
Well, I mean, that's just it.
Speaker 14 (33:41):
The attention on trying to make sure that we democratize
access to wealth, that's a good thing. But the structure,
the five twenty nine structure. We have lessons from that,
where you know five twenty nine saving tax provision savings
so that we can provide access to college for our children.
The bottom half percent of earners essentially don't participate. Only
(34:02):
about two point five percent of Americans participate, So there
are really good ways we can do it. My fear
is that we co opt a good idea. It's a
really good idea. We have pathways to really facilitate a
good value for our American economy, which is inclusion.
Speaker 3 (34:20):
We just got to work on the delivery.
Speaker 7 (34:22):
To Alexis point.
Speaker 5 (34:23):
There's the idea of corporation match welfare embedded here. Are
there any upsides to that? What should policymakers be cautious about?
Speaker 14 (34:32):
I apologize for laughing, but the phrasing of corporate welfare Again,
I take the Dells as being not disingenuous but really
trying to be supportive.
Speaker 3 (34:44):
I think there's better ways.
Speaker 14 (34:46):
There's more catalytic ways they could spend that sixty point
four billion dollars. But at the end of the day,
the American people don't want to be at the whim
of billionaires. And then there are other aspects as well
that we should be leary about, which is state private partnerships,
for which we have to be concerned about the potential
for grift when we're relying on billionaires to provide economic
(35:09):
security for the American people.
Speaker 2 (35:11):
So if we're thinking you know, look, a lot of
folks are not going to take advantage of a five
to twenty nine plan. Is that because they don't have
the money to do it? Is that because they don't
know they exist? Is that because a lot of Americans
cannot be left to their own devices to save for themselves.
I mean, think about how you know, some of our
programs like Social Security came to be. It's because it
(35:34):
was supposed to be some sort of a safety net.
So is it a good idea for the government to
put aside some money for folks who might not otherwise
do it?
Speaker 14 (35:42):
I mean, that actually is a great idea, but just
how in the mechanisms by which we do it that's
the problem. So it is the case that clearly we
have an affordability crisis in this country. So people don't
have the wherewithal to save on mass and that's a
big reason why people don't participate in the five to
twenty nine counts. Not as if they don't love and
adore their children and desire for them to have savings.
(36:04):
It's wherewithal. And then the other big point is for
those that have a mass wealth in America, it's not
active savings that's driving that. And by active savings income
that we actively save, it's passive savings. It's that down payment.
It is critical for young adults to really have some
capital so that they can get into that automatic vehicle
(36:26):
to save.
Speaker 2 (36:27):
All right, we're gonna have to leave it there. But
it's not the last we've heard of baby boonds. We'll
see if they come into other states. Are they coming
to other states soon?
Speaker 11 (36:33):
Do we know?
Speaker 2 (36:33):
Is this in the pipeline?
Speaker 14 (36:34):
Lots of momentum at the state level. There are demonstrations.
I have to give a quick plug which is at
the Institute on Race Power and Political Economy. That's Racepowerpolicy
dot org. We have a whole list of where they
are flourishing the various states, the demonstrations with its ideas
incubating across the United States.
Speaker 2 (36:55):
Derek Hamilton University Professor, Henry Colham, Professor of Economics and
Urban Policy at the New School, Thanks so much for
coming in, especially ahead of the holiday talk baby bonds.
Speaker 1 (37:04):
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(37:25):
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