November 6, 2025 • 38 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Charles Schwab Corp. agreed to buy Forge Global Holdings Inc., a marketplace for buying and selling shares of private companies, for about $660 million.
Under the terms of the transaction, Schwab will acquire all of Forge’s shares for $45 apiece, according a statement Thursday. That’s about 72% more than the closing price on Wednesday.
The deal would be the first for Schwab under Chief Executive Officer Rick Wurster, who took the helm of the retail brokerage at the beginning of the year. Acquiring Forge could aid his ambition to give customers more opportunities to gain exposure to unlisted companies, especially as those firms stay private for longer.
Westlake, Texas-based Schwab, which is also a bank, was swept up in the regional banking turmoil of 2023, but has since rebounded, reporting third-quarter earnings last month that beat estimates as consumers flocked to investing. Wurster said at the time that new Schwab brokerage accounts topped 1 million for the fourth quarter in a row.
Today's show features:
- Rick Wurster, President & CEO of Charles Schwab on his firm agreeing to buy Forge Global Holdings
- Kevin Gordon, Head of Macro Research and Strategy, Schwab Center for Financial Research on the challenges of investing amid the US government shutdown
- Cayla Culver, Head of Risk & Controls, Schwab Advisor Services, on regulatory risks in the financial sector
- Mike Townsend, Managing Director, Legislative & Regulatory Affairs, Charles Schwab, on evaluating political risks in the financial world on behalf of clients
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
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 Stenebek on Bloomberg Radio.
Speaker 2 (00:32):
Earlier, you know, we did get some deal news. Charles
Schwab agreed to buy Forge Global Holdings. It's a marketplace
for buying and selling shares of private companies.
Speaker 3 (00:40):
The deal about six hundred and sixty million or forty
five dollars to share.
Speaker 2 (00:43):
That is a seventy two percent premium to the Wednesday close.
Rick Worster, as you know, is president and CEO of
Charles Schwab, and he stopped by earlier today for a
second interview with us here at Impact twenty twenty five.
My first question to Rick, why this deal, why now,
and why this company?
Speaker 4 (01:03):
Well, we're thrilled to be able to democratize access to
private investing. This is a market that forever has been
for the high net worth and the ultra high net
worth and with the acquisition of Forge, we'll be able
to bring access to private companies to every investor, and
so we're thrilled about that. Second, it continues our history
of innovation, and our innovation has always centered around what
(01:24):
can we do to provide more access, more opportunity to
our clients so that they can grow and improve their
net worth. So we're just thrilled about this, and Forge
was the firm we really wanted to work with.
Speaker 2 (01:35):
It's been a lot of speculation about this company, as
you know, yes.
Speaker 4 (01:38):
Well you know there's stock who's down ninety percent off
its highs and at the same time they're the leader
in the private company of marketplace, and so for us
to be able to acquire the leading company that has
the deepest relationships with the private companies and who have
the stock opportunity, it's just phenomenal for us.
Speaker 2 (01:54):
Rick was it a bit competitive and I'm just thinking
about the premium that you guys paid, what was it
seventy two percent above the closing price yesterday? I'm thinking
of was that Morgan Stanley just did a deal to
buy equity Zen, which is another similar platform. So it
does feel like big firms are jockeying to provide this
access to their investors. So was there pressure to do
this deal and get it done now?
Speaker 4 (02:15):
Well, as a public company, Forge has to run a process,
and so absolutely this was a competitive process.
Speaker 3 (02:20):
They've been pretty I think transparent about this.
Speaker 5 (02:23):
Yes.
Speaker 4 (02:23):
From our standpoint though, we think we're paying a very
reasonable price where it's five times revenue less than what
we trade on a revenue basis, and the opportunity for
us in private markets is so much bigger than what
we're paying for the company. We're paying six hundred and
sixty million dollars for the company. This market could be huge,
and when we bring our forty six million clients to
(02:45):
this marketplace, I think the opportunity to grow our economics
is significant. But most importantly and why we did this
deal was not about making money.
Speaker 5 (02:52):
Relative to the purchase price.
Speaker 4 (02:54):
It was about democratizing access to private investing and to
helping our clients grow their wealth.
Speaker 2 (03:00):
Will this only be for accredited investors or what's the
plan in terms of new product placement or product offerings
to offer it up to the retail investor.
Speaker 4 (03:09):
What I'm so excited about is we're going to have
an opportunity for every type of investor to invest in
alternatives with this acquisition. Well, three ways that clients can
invest today. We already have for both our rias and
retail clients a menu of alternative managers, the leaders that
you're aware of, some of the big names in private
equity and venture capital. That's one way our clients can invest.
(03:30):
The second way is through this acquisition of Forge, which
owns an asset management company, we will in the first
quarter of next year launch an indexed fund that is
an index.
Speaker 5 (03:40):
Of the sixty biggest private.
Speaker 4 (03:42):
Companies, and any investor with any wealth, if they have
interests in that, we'll be able to invest. And then third,
for accredited investors, we will have a marketplace opportunity for
those investors to buy individual private companies and invest in
those companies directly. That does require you being an accredited investor.
Speaker 2 (04:00):
A couple of questions I want to ask you, so,
how does it kind of improve your ability to win
more wallet share when it comes specifically to clients. We
know that retail investors have been clamoring for more access.
Speaker 3 (04:13):
To private markets.
Speaker 6 (04:14):
I think we've gone I.
Speaker 2 (04:16):
Know it's not about money, yeah, or I know it's
not about in terms of the price you paid, but
it is about right, Like you want to make sure
your clients are happy and they're getting all the offerings.
Speaker 3 (04:27):
So I'm just curious, how does it help you win
more share?
Speaker 4 (04:29):
Over the last ten years, we've become a premier destination
for high net worth and alternate high networth clients. And
the reason for that is we have a product offer
that can't be matched, whether it's access to privates, lending
capabilities that are straightforward, fast efficient with great rates, wealth
support on their tax, trust and estate needs, and access
to live individuals to speak to. They can walk into
(04:51):
one of our four hundred branches all across the country,
have a conversation with a real life person about their
financial needs, have a discussion about financial planning and what's
going on in their life. And so we really have
become over the last decade a premier destination for high
network clients.
Speaker 5 (05:06):
And this acquisition just adds to our capabilities.
Speaker 3 (05:08):
What about from your rias?
Speaker 2 (05:10):
And I think about all the independent advisors who are
here right this is what this event is all about.
Speaker 3 (05:14):
So how much does this kind of help them in
their pitch to clients?
Speaker 2 (05:17):
And I'm just curious, is this to some extent in
response to what you've been hearing from independent advisors.
Speaker 4 (05:22):
It absolutely is and this is a game changer for
us in the RIA space. Today, we have five trillion
dollars of RIA assets that we custody, one point two
percent of them sitting in alternatives. We know there's more
demand that number probably should be closer to five, six
or seven percent. And with this acquisition, we've now given
them three different ways to get invested, and I expect
over the coming years we'll see that one percent grow
(05:43):
more towards the five percent. So the rias are thrilled.
They've wanted us to do more in alternatives, and I
think with this acquisition.
Speaker 5 (05:49):
We've nailed it.
Speaker 3 (05:50):
And you said the new client offering, it's next year.
We'll see early part of next year.
Speaker 4 (05:54):
Well, Forge is up and going today, so hopefully some
of our clients will go find it starting tomorrow and
start getting invested if that's what they want to do.
Speaker 3 (06:01):
But what I have non accredited I think about like that.
Speaker 4 (06:05):
We're going to launch the fund in the first quarter
of next year. That's the current plan, and then we'll
continue to roll out their services in the coming months.
Speaker 2 (06:12):
You know, the other side of this rick is, you know,
concerns about hurdles in terms of transparency and investors really
understanding what they're buying when they tap into anything in
the private markets. So are there any kind of hurdles
that you anticipate, regulatory or otherwise.
Speaker 4 (06:26):
That's why we really wanted to work with Forge, Okay,
because Forge is the market leader in providing robust research
to clients, and so clients will be able to access
that level of research through Forge. In addition to that,
we've also stood up a team of alternative investment experts
at our firm that any client can call and talk
to about, you know, a question they have about a
(06:48):
type of alternative or a particular investment that they want
to make, And so we really are trying to do
everything we can to support clients. This is a great
opportunity for clients to be diversified to grow their wealth
in a new aset class. But at the same time,
we want to make sure we do everything we can
that they for them to be able to do this
in a thoughtful, well researched way.
Speaker 2 (07:09):
Is there a company you're most excited about that's on
the Forge platform or that might be on the Forge platform?
Speaker 3 (07:14):
At some point.
Speaker 2 (07:15):
I mean, there's opening, there's anthropic. Is there any company
that you're really excited about?
Speaker 5 (07:19):
Is not a.
Speaker 4 (07:20):
Particular one I'm interested in, but I am thrilled that
there are a lot of people on our platform and
a lot of people that listen to your show that
are active in markets and they want to get into
cracking because they love crypto or you know, they love
Elon Musk and want to get into SpaceX.
Speaker 3 (07:34):
So that say, sex is another one.
Speaker 5 (07:36):
Yeah, I think that's.
Speaker 4 (07:37):
What's so interesting is that we find a lot of
our investors do have these passions and now they're going
to be able to invest in them through private companies.
Speaker 2 (07:45):
So we know you took over in January, this is
your first deal. Is there more m and A to
coom Like, how are you thinking about what else you
need to bring under the Schwab umbrella.
Speaker 4 (07:53):
Well, with forty six million clients on our platform, we
have an incredible opportunity to continue to add capabilities to
serve and meet more of their financial life. The average
fifty year older than fifty year old client has seven
financial services relationships in their life, so we want to
add more and more capabilities so they can handle more
of their financial life at Schwab. And as we add
(08:15):
those capabilities, we'll either build them, we can partner, or
we can buy, and so we'll look at all three
of those. But we want to round out our capabilities
and do everything we can to stand behind our clients
and make a difference in their financial life.
Speaker 3 (08:26):
And just one last question, mostly small, probably tack ons.
Speaker 2 (08:28):
I mean, you guys already have digested a large company,
so I'm just curious or could it be a pretty
significant and any deal.
Speaker 4 (08:35):
You know, it's going to depend when. Again, we'll look
at build by partner based on what capabilities we want
to add, But I think we're open to just about anything.
We want to grow our company. We want to do
the best job we can serve in clients. We want
to make a difference in their lives. And if there's
a company or capability out there that we can add
to our platform that's going to make a difference, we're going.
Speaker 5 (08:55):
To do it.
Speaker 3 (08:57):
That is That is Rick Wurster, He's President's that you
have to Schwab.
Speaker 7 (09:02):
Stay with us.
Speaker 8 (09:03):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (09:10):
You're listening to the Bloomberg Business Week Daily podcast. Catch
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Listen on Applecarplay and Android autto with the Bloomberg Business app,
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Speaker 3 (09:21):
Live on YouTube.
Speaker 2 (09:24):
All right, today we're going to go from Schwab corporate
strategy to really macro strategy today's environment, and he is
back with us. Delighted that he is Kevin Gordon, head
of macro Research and Strategy at Schwab Center for Financial Research.
Speaker 3 (09:36):
Good to have you here, guys, Welcome to Impact. Where's up?
We get such a great feel, so much fun of
how things are going.
Speaker 2 (09:44):
But I do feel like there's kind of this internal
turmoil right now in terms of the environment.
Speaker 3 (09:50):
Is it inflation we have to worry about?
Speaker 2 (09:52):
We saw that companies announced the most job cuts for
any October and more than two decades. This from Challenger,
Gray and Chris Christmas and the did talk about an
AI component to it.
Speaker 3 (10:03):
I can't figure out where we are. What do you think?
Speaker 9 (10:05):
You know?
Speaker 10 (10:06):
It's like the flavor changes almost literally every day, because
this morning, I mean, it was much more labor driven.
You had the Challenger data you mentioned, but you also
had data from Revellio Labs, which has become much more
important to look at in terms of private sector providers
and what they're looking at for job growth, and what
they showed for October was a decline of nine thousand
for payrolls. But you know, for me, the labor market
(10:28):
stuff is almost this hall of mirrors because all of
the different indicators tell you completely different things as to
what's going on in the labor market. If you look
at claims data, which we're not getting at the national level, right,
but if you aggregate everything at the state level, it
still looks relatively healthy.
Speaker 11 (10:42):
It's state relatively low and stable.
Speaker 10 (10:44):
If you look at ADP for October, surprise to the
upside as we learned, you know, a couple of days ago.
If you look at something like Revellio though week if
you look at something.
Speaker 11 (10:52):
Like Challenger also weak.
Speaker 10 (10:54):
The interesting thing with Challenger is, and we always try
to make this, you know, important distinction and emphasis for
investors layoff announcements. They're not exactly cuts themselves. So there
is a little bit of a lag there in terms
of what you can expect.
Speaker 7 (11:06):
Yeah, oftentimes ninety days, right.
Speaker 10 (11:08):
Plus I think the one thing that is i will
say maybe a little bit more worrisome with the one
for October relative to what we saw earlier this year,
because there was a huge pickup and challenge your job
cut announcements earlier this year, but most of that was
at the federal level that was focused on what everything
was going on regarding to this one was a little
bit more broad based. As you mentioned with the AI overlay,
the concentration for the sectors was mostly in tech and warehousing.
Speaker 2 (11:29):
So clearly this cost cutting going on by companies, yeah,
which is never a good feeling.
Speaker 10 (11:34):
No, And I think what's what's been interesting so far
it's been relatively methodical where it's gone sector by sector.
It hasn't been broad based across the economy, which I know.
I've talked about this with you guys a lot and
Lazanne you know who I work with closely on this
are the sort of this concept and thesis of rolling
recessions in the economy. You're still experiencing that to some
extent where it's not filtering up to the surface and
(11:54):
it's not aggregating together to give you a full blown
traditional recession, but it's still happening at pockets.
Speaker 8 (12:00):
Or is Lizan We all call her liz Ane Saunders too.
That's the Lizanne you're referring to.
Speaker 2 (12:04):
Well, yeah, and she's their chief global strategyment strategis so yeah,
the big part.
Speaker 10 (12:09):
And you guys are my first boss, my mentor, and
she loves you on our program yesterday.
Speaker 7 (12:14):
She's the best Kevin corporate Going from.
Speaker 8 (12:18):
The corporate world and thinking about, Okay, what are companies
doing with employees? How are they hiring, how are they firing?
How are they announcing this to consumer spending? Because the
consumer powers this economy. Yeah, we're getting some troubling anecdotes.
Speaker 7 (12:32):
What do you see?
Speaker 10 (12:32):
You know, what's interesting is that when you look at
I mean, this is where the labor market's so crucial
to understand the differences between the stock and the flow.
So the stock of labor is still relatively healthy. I mean,
you look at a mostly fully employed America and that's
where we're at.
Speaker 5 (12:45):
Any of the.
Speaker 10 (12:46):
Layoff activity we've seen, it's just at the margin, relatively minimal.
So if you see relatively low layoffs despite a very
low hiring rate, which we're basically at psycho lows, the
fact that the stock of labor is strong means that
the aggregate income growth month to month, assuming you stay
employed is relatively strong. So that's why real spending is
still positive. But to your point about some of these
anecdotes and some of these cracks under the surface, they
(13:08):
are starting to widen a little bit more, especially if
you look at that bottom half of the what everybody
calls now the K shaped sort of economy.
Speaker 3 (13:15):
There are economists look at that bottom wrong.
Speaker 10 (13:17):
You could break it down by wealth level, I like
the FED data and looking at sort of percentile levels
of well.
Speaker 2 (13:22):
In terms of it like overall economic growth and what
the FED like, how do you think.
Speaker 11 (13:26):
About this is the tough part because you know.
Speaker 3 (13:28):
There's a social answer and then they're sych.
Speaker 10 (13:30):
Well, the multiplier effect up the wealth and the income
spectrum is just much stronger.
Speaker 11 (13:34):
It's just the math.
Speaker 10 (13:35):
And when you look at how well asset markets have
done over the past couple of years, even this year,
the bounce from the April lows. I mean, if you're
benefiting from that as an asset owner, we have household
exposure to equities at an all time high, beyond where
we were just slightly but still beyond where we were
at the at the peak in two thousand.
Speaker 11 (13:51):
So the wealth effect and the power of the market.
Speaker 10 (13:54):
In terms of an economic driver, has become quite strong
and quite potent. So I think when you add that
together with what is true ditionally an economy that has
become more or I shouldn't say traditionally, but over time
has become more powered by that wealthy cohort, then you've
got a pretty strong effect.
Speaker 8 (14:08):
When you say full employment, do you how do you
define that? And then how does the FED define that?
Speaker 10 (14:12):
Because relatively low and employment rate to history compared to history,
there has been a little bit of an uptick. But
you look at that, and you look at overall payrolls
and we're still right around, you know, all time time.
Speaker 8 (14:21):
But does it mean the person who's who's has the
computer science undergraduate degree is working in computer science or
working at Chipotle?
Speaker 11 (14:28):
Oh yeah, exactly.
Speaker 10 (14:29):
Fully, the question just sort of in nominal terms, looking
at at face value, a job being a job, whether
that job is perfectly matched with what the person is doing.
Speaker 5 (14:38):
That's a little bit of how do.
Speaker 8 (14:39):
We measure that well? Because it doesn't that seems like
a concern right now.
Speaker 10 (14:42):
Well, then I think is going to show up, probably
start to show up a lot more within the next year.
In a lot of the labor flows that we're going
to get because one of the you know, one of
the longer term concerns I have for the labor market
is what's happening right now in some of the churn
with the pretty significant decline in immigration, but also not
sort of the lack of replacement.
Speaker 11 (14:58):
A lot of a lot of those jobs. We're just
not seeing that happen.
Speaker 10 (15:01):
And you see that happening in you know, youth unemployment,
black unemployment. It's really starting to spread in some of
those pockets. So the areas that were supposed to benefit,
you know, throughout this year as you had more of
a domestic strengthening the in the fate of born labor force,
it's not yet happening. So it's a little bit lagged.
I hope it's delayed and not completely derailed. But I
think in the next year, figuring out replacements for a
(15:21):
lot of those lost jobs that's going to be key.
Speaker 8 (15:23):
And the reason I brought up the Chipotle computer science
exactly well, always ungry, but that was what's be cited
in that New York Times article back in August. Yes,
computer science degrees having trouble finding those computer science jobs.
Speaker 2 (15:33):
It's kind of this interesting environment we are when we
look at the labor force. Hey, one of the things
I wanted to ask you your team shared with us
that you believe Tina is back, and it's not the
Tina that we think about.
Speaker 3 (15:43):
There is no alternative in terms of like US difequities.
Speaker 2 (15:45):
Yeah, but it's something we started off with about US
government data.
Speaker 10 (15:49):
It is important no alternative. I mean, the depth and
the breadth of the government debt you just can't imagine.
And I think you know, so far, Thank goodness, the
markets have been sort of, maybe in a negative way,
whistling sort of passed the graveyard of no government data.
But you know, they've been able to manage through with
corporate earnings. I think that's been a nice bridge to
get us to when the shutdown ends. I think though,
(16:10):
you know, the longer this goes on, I think what
we have to keep in mind, and what we've really
been emphasizing to our clients is that you know, when
you don't collect this data, yes you can go back
and retroactively.
Speaker 11 (16:20):
Get it, but it's not going to be clean.
Speaker 10 (16:22):
So the longer this extends and we don't get you know,
presumably we're not getting a jobs report tomorrow. Even if
you don't get when the next week, it's weird. So
you're going basically almost a quarter without this really key data.
So you're going to have a delayed third quarter GDP report,
You're going to have missing data in a way for
the fourth quarter, and then you have benchmark revisions coming
in February, which kind of throws another wrench into this
(16:45):
for label.
Speaker 2 (16:46):
So what does it mean for Like I think I
asked Lezanne this yesterday, Zanne Saunders, that do we get
a FED misstep in terms of policy?
Speaker 3 (16:54):
Do they err on the side of doing nothing?
Speaker 10 (16:56):
Yeah, I think they're nudging that way, and you know,
you look at some of the vote and.
Speaker 3 (17:00):
Which is what kind of got from the October meeting, right.
Speaker 11 (17:02):
Yes, exactly.
Speaker 10 (17:02):
I mean Powell mentioned in himself Austin Goosbi was just
out from the Chicago FED saying that he's a little
more he's a little less.
Speaker 11 (17:07):
Comfortable making a move when you're driving in the dark,
in the fog.
Speaker 10 (17:11):
So I can understand why they have to be in
this reactive position. I don't fault the FED at all
for any decision they make. I mean, if they feel
very strongly and highly convicted that inflation is not as
much of a problem. They want to save labor, then
sure you can open up the door for more cuts.
I would be sympathetic to that view if you get
more data like Challenger this morning and Raveluo. But on
(17:31):
the other hand, if you do have the shutdown lasting
longer and more of a delay in a lot of
these government data, then I totally understand why they would
want to wait, especially if corporate earnings look like they do.
I mean, the blended growth rate for S and P
five hundred earnings for the reporting quarter is almost seventeen percent.
So you look at that and you say, well, corporate
America is still relatively healthy. We haven't seen mass layoffs.
They've been in pockets.
Speaker 3 (17:51):
And it wasn't just the MACS seven right exactly.
Speaker 11 (17:54):
It's spread a lot more.
Speaker 10 (17:55):
It's come over to utilities to some extent parts of
just consumer discretionary helping a little bit at x max.
I have an ex tesla on Amazon right, So it
is it is a little bit of a broader story.
Speaker 11 (18:03):
For the quarter.
Speaker 8 (18:04):
Teviick Gordon Macro Research and Strategy at the Schwaba Center
is a document research.
Speaker 7 (18:09):
You know, stay with us more.
Speaker 8 (18:12):
From Bloomberg Business Week Daily coming up after this.
Speaker 12 (18:20):
This is the Bloomberg Business Week Daily Podcast. Listen live
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thirty now.
Speaker 2 (18:39):
You might recall over the summer, it was in August
President Trump signing an executive order directing the Labor Department
to reevaluate guidance to fiduciaries to get them more comfortable
with including private credit, digital assets, and other alternative assets
in their retirement plans.
Speaker 3 (18:55):
Now, the SEC may also issue some new rules or guides.
Speaker 2 (18:57):
To change the definition of a credited investor or qualified purchasers.
There's a lot going on that could open up a
lot of different types of assets to retail investors.
Speaker 3 (19:07):
It's something that we've gotten into with the Schwab CEO and.
Speaker 8 (19:10):
Kind of on pause right now, at least at the
SEC level because the government shut down. Yes, but still
this seems to be the direction that things are moving
all right.
Speaker 2 (19:17):
We have a great guest to get into on all
of this with some thoughts and here at Denver in
Denver at Swab Impact twenty twenty five, Kyla Culvert. She's
head of Risk and Controls for Schwab Advisor Services.
Speaker 3 (19:28):
Good to have you here.
Speaker 2 (19:29):
There's a lot going on that could change, or there's
a lot that is going on that means we won't
see changes. How are you assessing kind of the regulatory
environment and things that could change what investors can be
investing in.
Speaker 9 (19:42):
So I feel like for advisors it's a lot of
whiplash right now. If we look at the prior administration
and SEC Chair Gensler, there was constantly new rules coming
out and it was just like regulation overload for people.
And now under Paul Atkins, we're expecting to see.
Speaker 3 (19:59):
A reduced pace of regulation.
Speaker 9 (20:01):
So we see it as a good opportunity for advisors
to really focus on getting back to basics and making
sure that their compliance programs are up to date.
Speaker 3 (20:10):
That all of their ADVs are accurate.
Speaker 9 (20:13):
What are avs, they're disclosure documents that have to file
with the SEC. Really just making sure that like their
house is in order so that because if we're not
under a constant flood of new things coming out and
then you know, we heard you talking about the executive
order related to four oh one k's and being able
to hold alternatives different things in four oh one k accounts.
(20:36):
That's something that you know, some advisors have interest in
for their clients, and it's going to really depend on
the plan. Like is this something that the plan chooses
to allow for that client or you know, for their
plan participants, or does the plan not want to allow that?
Speaker 8 (20:50):
What direction do you see that moving in if it
does get approved, if it if it happens, if the
sec says okay, this is totally fine, is everyone going
to be Is it going to be like us having
stocks and bonds in our I.
Speaker 3 (20:59):
Don't think it will be for everybody.
Speaker 9 (21:01):
I think that we see you well everybody at the option. Well,
it's going to be up to the plan administrator. So
who's ever sponsoring that plan. They're the fiduciary. They've got
the ability to say you're allowed to invest in X,
or you're allowed to invest in you know, not allowed.
Speaker 8 (21:17):
So would that be at the company level for a
certain company and it's employees, or would it be at
the whoever they decide as the planned administrator?
Speaker 9 (21:24):
Like an empower for example, it's really like the planned sponsor,
who's choosing that?
Speaker 2 (21:29):
Okay, So why would a plan sponsor say no? Why
would a planned sponsor say yes?
Speaker 9 (21:35):
I think they would say yes if they wanted to
give their their participants, you know, additional choices. Some plan
sponsors may say no. You know, we see it on
the Schwab side where we've got some plan sponsors that
have opted into our Personal Choice Retirement account offering where
(21:55):
you can basically have your four oh one K and
you know, self directed invest in stocks, bonds and things
that are outside of the allocation the plan allocation. It
just really depends on their comfort level. Like from a
conservative perspective, you might say, we want to stick more
with you know, these funds that we've chosen.
Speaker 8 (22:14):
Is it a good thing?
Speaker 9 (22:17):
I think it's you know, choice is always a good thing.
So more freedom of choice. But as long as people
are doing it smartly with it, you know, with the
advice of an investment advisor, I think it's a smart decision.
But I think there's always additional risk there.
Speaker 2 (22:34):
Well, the risks are right in terms of all the assets.
Some things are not as liquid or as others, and
you need to understand that if you need to be
able to get out of something it's not liquid like
stocks and bonds.
Speaker 9 (22:46):
Exactly in many ways, And that's why I think doing
things with the advice of a professional versus just you know,
your friend told you this was a good investment, it
makes more sense that way.
Speaker 8 (22:57):
On the regulatory front, and having advisors have less regulation
right now, does more fall on them in terms of
making sure that they're doing what's right because those those
regulations aren't necessarily in place. And I know kind of
a judgment for me to say, you know, quate regulations
with right, that's not what I need to do. But
(23:17):
we know, we know the DNA that Paul Atkins has
the SEC chair when it comes to this stuff, and
he's much more laisse faire than other SEC chairs in
the past.
Speaker 9 (23:26):
Yeah, So what what we keep reminding advisors of is
just because there's you know, all this noise about deregulation
and less new regulations, you still have to follow the
fiduciary duty. You still have. You know, there's still regulations
on the books, there's still rules.
Speaker 5 (23:44):
Who still have to.
Speaker 9 (23:45):
Do all the things and be making sure you're in
the best interest of your client.
Speaker 3 (23:50):
So just because it's.
Speaker 9 (23:51):
A more like laisse fair kind of environment doesn't mean
you still don't have principles that you have to adhere to.
Speaker 2 (23:58):
Our advisors independents a little nervous about like kind of
what's coming at them and the changes, especially when it
comes to all thassets potentially.
Speaker 9 (24:06):
Yeah, I think that they're just there's the unknown. I mean,
we get a lot of questions from advisors right now
about artificial intelligence, so, you know, because everybody wants to
use it, but there's not a lot of guidance out there, advisors,
and so we get a lot of questions on how
can we do this compliantly when there's not really any guidance?
Speaker 3 (24:28):
Kayla, where's that guidance going to come from?
Speaker 2 (24:30):
I mean, you know, and I do this with all
due respect, but with all due knowledge about social media
and things that many folks would say we didn't We
weren't legislators, policymakers just didn't understand the power, the impact
and the oversight and the liabilities perhaps, And so I'm
just thinking, how do we do that with AI?
Speaker 9 (24:52):
Yeah? I think where the thought is that we would.
Speaker 3 (24:55):
Most likely see how do we do it with AI
and get it right? Yeah?
Speaker 9 (24:58):
And you know we've been we've been talking about that.
So I attended the Investment Advisor Association's Advocacy Day in
DC back in September, and artificial intelligence was one of
the topics that we were talking to lawmakers about, and
really just from the standpoint of don't create regulation that
(25:18):
stifles innovation, don't make it be prescriptive, and really reminding
them that advisors already have to follow the fiduciary duty,
so don't be prescripted and what you're trying to do.
I think where we would eventually see something come from,
most likely is probably the SEC. This SEC, well, it's
(25:41):
a very hot topic, so you know that's that's where
we would think it would come from.
Speaker 3 (25:46):
But in how.
Speaker 9 (25:49):
We think it'll be more principles based with this SEC
than prior administrations.
Speaker 8 (25:54):
It sounds like advisors right now have to keep up
with a lot just in thirty seconds. Where do they
where do they do professional education, Where do they make
sure that they are on top of the regulations, they
make sure they're on top of what's happening with AI.
Speaker 9 (26:08):
Well, if they're a Schwab client, we have so many
resources that we make available for them on our website,
we do regulatory webcasts, we put out compliance review articles.
We've got relationships with compliance consultants that they can use.
And then they should also look at alerts that the
SEC and other regulators put out. I'm not pretty getting
out route right now, but on a normal basis, there'll
(26:31):
be things.
Speaker 3 (26:31):
That they put out.
Speaker 2 (26:32):
But certainly for your advisors, there's lots of ongoing education, yes,
which is pretty cool and interesting to hear.
Speaker 3 (26:37):
Hey, Caleb, thank you so much. Thank you.
Speaker 2 (26:39):
This is an important area and I'm so glad we
could cover it with you. Kayla Culver, she's head of
risk and Controls for Schwab Advisors Services.
Speaker 7 (26:46):
Stay with us.
Speaker 8 (26:47):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (26:54):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two two to five ees
during Listen on Apple, Karplay and Android Otto with the
Bloomberg Business app, or watch us live on YouTube.
Speaker 8 (27:08):
I think it's fair to say that Washington and Wall
Street and the markets are inextricably bound in a way
right now that totally kind of feels a bit different
from other times in modern history.
Speaker 2 (27:17):
Yeah, well, listen, we're glued to news out of the
nation's capital because things the President says or administration does,
even today in terms of the drug makers, like it's moving.
Speaker 8 (27:27):
Markets, or maybe even things that are beyond the administration's control,
like what the Supreme Court is going to decide when
it comes to tariff policy, the US government taking ownership
of publicly traded companies, social media posts from the President
that can move markets and take company leaders by surprise.
This is enough to keep Mike Townsend on his toes.
He's Meta director of Legislative and Regulatory Affairs for Charles Schwab.
He's a political analyst based in Washington. He also the
(27:50):
host of Schwab's Washington Wise podcast. He joins us here
on site at Schwab Impact twenty twenty five. You said
that you can't walk like five steps without somebody grabbing
you and saying, can I ask you.
Speaker 7 (28:00):
A question about politics?
Speaker 5 (28:02):
Right now?
Speaker 6 (28:02):
What are they asking you? Well, I mean obviously just
since we've been here, right. I spoke on the main
stage at the opening session on Tuesday. Then Tuesday night
we had the election results. Then Wednesday we had the
Supreme Court case. You know, argued on the terrace and
so this is my life now, Like ten things happen
then the course are every day that people want to
(28:22):
talk about, so pretty fascinating times.
Speaker 3 (28:24):
So what do you make of what we've had in
the last forty eight.
Speaker 11 (28:27):
Hours or so?
Speaker 6 (28:28):
Yeah, I mean, you know, the first thing I would
say on the election in particular is that it's very
easy and I think you're seeing a lot now of
the sort of overreaction to an off year election. And
I said, you know, I told the conference here, off
yr elections are kind of unique to their particular places
New York City, Virginia, and New Jersey. Obviously the California
(28:49):
district initiative, but they're relatively confined to those places. So
no question, big, big night for the Democrats.
Speaker 3 (28:56):
But is it a referendum on the sitting president?
Speaker 6 (28:59):
I mean some degree I think it is. But you know,
I live in Virginia and that race was about federal
workers being you know, fired from their jobs, and you know,
the economy and that sort of thing, So you know,
I yes, it was partly a referendum. I certainly think
you can read it as a rebuke to the president
in some of his actions, but whether that extrapolates out farther.
(29:20):
We'll have to see you.
Speaker 8 (29:21):
Went to voting college in Maine. Also someone who went
to vote in college Zorron Mamdani, the mayor elect of
New York City. You guys did not overlap because he's
only been out of there for like you, I've never
met him, but he's a Democratic socialist, and I'm wondering
if you see that as insulated to New York and
(29:42):
New York politics or if you see him as the
face of the Democratic Party moving forward.
Speaker 6 (29:48):
So I think you can answer that question in sort
of both ways, right, So, I think it was unique
to New York. He is a very dynamic personality. He's
very very good at social media, and he clearly touched
a nerve with people in terms of the issues he
was focusing on.
Speaker 8 (30:02):
Sorry, you could have just been describing President Trump. Those
things you just said applied totally to President Trump.
Speaker 6 (30:08):
So so absolutely so, I think and President Trump has
probably taught us that personality is a huge, huge part
of the political landscape now. So I think, Mom, Dommy,
you know, did did you know incredible at connecting with
people and reaching out to people who maybe hadn't felt
heard in the public in the political process. Does that
(30:28):
mean that he's going to become the face of the
Democratic Party? I you know, I think Republicans are certainly
going to try to make that the case. But I
also think, you know, he's going to have to He's
going to have a really hard time doing a lot
of the things that he said he wants to do.
That's just the nature of the role. And you know,
the ability of the mayor of New York City to
act unilaterally is extremely narrow. So you know, we'll have
(30:52):
to see. And I do think you're seeing. You know,
you can juxtapose that with the retirem announcement of Nancy
Pelosi earlier today, You're seeing some generational change in the
Democratic Party that I think is really you know, important
and probably necessary for the Democrats.
Speaker 2 (31:06):
So is that her passing the baton or acknowledging that
that era is over?
Speaker 3 (31:10):
Like, what is that in your view?
Speaker 6 (31:11):
Yeah? I mean, I think that it's a realization that
the Democratic Party has to get younger and appeal to
younger people. I mean, the leaders, you know, the most
of the veterans of the Democratic Party, particular in the House,
are in their eighties. In Nancy Pelosi, Stanny hoy or
Jim Clyburn, and so I think you're seeing that kind
of transition happen.
Speaker 2 (31:31):
One thing I wanted to ask you, and I think
about the titles we give to politicians a Republican Donald Trump,
most people would say he's not really your standard Republican
Zara Mundani, like, we're talking to socialists. But you know what,
he's going to have to take the job and look
at his entire constituents. Do those classifications even matter in
today's political environment.
Speaker 6 (31:50):
Yeah, I think that's a really good question, because, you know,
one of the things that really fascinates me is what
does the Republican Party look like post twenty twenty eight
into twenty twenty nine, after Donald Trump is no longer president,
no longer on the ballot, Do what we would call
traditional Republicans sort of wake up and think, oh, that
was weird. Let's go back to you know, and if
(32:12):
you want a great example of it, look at the
Supreme Court case that was that was held on Wednesday,
where you have essentially Republicans arguing for restricted trade and
higher taxes and Democrats arguing the opposite. That can be
seen as a complete flip of the world.
Speaker 8 (32:32):
A little bit right, Yeah, Okay, speaking of bizarre worlds,
when when the US government buys ten percent of Intel
owns of a publicly traded company, or takes a stake
in MP Materials, for example, that's.
Speaker 3 (32:48):
A bizarre world or Intel, did you say that?
Speaker 7 (32:49):
Yeah, Yeah, that's that's that's what we're living in right now.
Speaker 6 (32:52):
Yeah. And it's amazing to me how little reaction there
has been to that.
Speaker 7 (32:57):
Are you worried about that?
Speaker 6 (32:59):
I think it's a very strange and I think it
has a lot of risk to it.
Speaker 8 (33:05):
But we are we getting to the point of state
ownership of state owned enterprises.
Speaker 6 (33:09):
I mean, this is like, I mean, the President today
was in the in the White House talking about with
a couple of drug companies about lowering the prices of drugs,
and he made, you know, one of his offann references
about maybe we should buy a stake in your company,
and you know, that's just become part of funny.
Speaker 2 (33:25):
Not funny, not funny. Yeah, we're talking with Mike Townsend.
He's managing director of Legislative and Regulatory Affairs for Charles Schwab.
Speaker 3 (33:32):
He's based in Washington. He's also a host of Schwab's
Washington Wise podcast.
Speaker 2 (33:35):
You know, I was talking to her Britt this morning,
and he said, you know, you guys are a young country.
Your political environment is still a baby or a toddler,
or however you want to classify it. You're going to
go through these tough moments.
Speaker 3 (33:48):
And she's thinking about Britain.
Speaker 2 (33:50):
And all the king well, all the things that it's
gone through, right, and taxing, and there were kings that
tax and then there was pushback and you know, didn't
have maybe that power or anymore.
Speaker 3 (34:01):
How should we as Americans?
Speaker 2 (34:02):
And I do think there's we're kind of apathetic in
terms of some of these severe things that are going on.
Speaker 3 (34:08):
So I'm just trying to understand where we are in
our political process.
Speaker 6 (34:12):
I think a couple of things. First of all, when
you say you're apathetic the thing's going on, I think
it's just overwhelmed by the things going on. You can't
react to everything.
Speaker 7 (34:19):
I mean ten things have produce that could you.
Speaker 6 (34:23):
But you know, and I think the ordinary person, the
ordinary voter, just can't take it all in every day
and can't figure out what to be mad at. But
you know, when I go around the country, I talk
to clients all over about the intersection between Washington and
the markets, and there's so much emotion. I feel like
I'm part emotional counselor right now. And part of what
(34:44):
I say is a lot of what you may be
emotional about isn't affecting the markets. It's not The market
is not concerned about that. That's fine that you have
those feelings, but remember to separate those feelings from your investing.
Speaker 3 (34:56):
How many records have we had in the S and
P five.
Speaker 6 (34:58):
Thirty year thirty something records? Yeah? So yeah, I think
you know, historically, probably the most common question I've been
getting asked over the last couple of days is is
this the worst you've ever seen?
Speaker 2 (35:10):
Right?
Speaker 6 (35:10):
Or is this the worst we've ever been in terms
of our partisan divide? And you think, well, we had
a civil war, you know, we're not there, so that
seem pretty divisive. You know. So historically there's kind of
a pendulum, and maybe we're way out on one end
of the pendulum. Historically the pendum comes back toward the middle.
Speaker 7 (35:26):
You know.
Speaker 8 (35:26):
David Sachs, the AIS are for this administration, said today
on in a post on X there will be no
federal bailout for AI. He said, the US has at
least five major frontier model companies. If one fails, others
will take its place. He said in a follow up post,
the White House wants to make permitting empower generation easier
from the executive branches perspective. How can they actually do that?
Speaker 6 (35:50):
Yeah, I mean, I think this is a really fascinating question.
I tell people all the time. I fly in and
out of Dallas Airport in Washington. If you fly out
of Dallas, you look down, you see these gigantic buildings
with all these air conditioning units on the top.
Speaker 5 (36:04):
Right.
Speaker 6 (36:04):
Those are the data centers. They can't build them fast enough. Well,
what's happening in northern Virginia. Electricity prices are going up
and water prices are going up because of the cooling
for the water, And all of a sudden, you've brought
this kind of back to ordinary people's bills, right, and
they're they're sort of paying for it. So when the
administration says something like that, I get it politically and
it makes sense, and I think a lot of people
(36:26):
want to hear that. But what can the government actually
do to lower my water bill? I'm not as sure.
Speaker 3 (36:33):
I don't know. Maybe make those who are building the
AI data centers.
Speaker 2 (36:37):
Pay some kind of fee they're using or like x,
I don't know, some kind of tax or something.
Speaker 6 (36:41):
And I've seen some of these companies are like building
their own power generating, you know, to try to take
on some of that.
Speaker 2 (36:47):
Yeah, they're partnering with like utilities directly. I'm just good
about a minute, Mike Man. I could go really.
Speaker 11 (36:52):
Long and I should come back.
Speaker 10 (36:54):
Yeah.
Speaker 2 (36:54):
Yeah, it is an investment investing audience that's here at
Schwab Impact.
Speaker 3 (36:58):
It's certainly the Bloomberg audience. What's your final thoughts to that?
Speaker 6 (37:01):
Yeah, you know, again, my one of my biggest things is,
you know, try to separate how emotional you feel about
everything that's going on in Washington and remember that relatively
few things are actually affecting the market. The market cares
about what the Fed is doing. The market cares a
lot about this Fed independence battle that is going to
be play out in the Supreme Court in January over
Lisa Cook's firing. The FED cares about it. I mean,
(37:23):
the market cares about tariffs and cares about tax policy
that sort of thing. But you know that's not that
all those things aren't what people are emotional about and
you've got to sort of separate that.
Speaker 2 (37:33):
Emotion ten seconds. Do folks in Washington policymakers care that
the FED stays independent? I think they, even in this administration.
Speaker 6 (37:42):
I think they do. I think that would be a huge,
huge setback for the country and the whole concept of
central banks.
Speaker 5 (37:49):
So could we.
Speaker 2 (37:50):
See policy makers, even members of the Trump team fight
back if that was in question real quickly.
Speaker 6 (37:55):
I don't know if you'll see members of the Trump
team fight back, but I think a lot of policymakers
will be upset.
Speaker 3 (38:01):
Mike Townsend of SCHWAP, thank you so much.
Speaker 1 (38:04):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(38:25):
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(00:23):
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Speaker 2 (00:32):
Earlier, you know, we did get some deal news. Charles
Schwab agreed to buy Forge Global Holdings. It's a marketplace
for buying and selling shares of private companies.
Speaker 3 (00:40):
The deal about six hundred and sixty million or forty
five dollars to share.
Speaker 2 (00:43):
That is a seventy two percent premium to the Wednesday close.
Rick Worster, as you know, is president and CEO of
Charles Schwab, and he stopped by earlier today for a
second interview with us here at Impact twenty twenty five.
My first question to Rick, why this deal, why now,
and why this company?
Speaker 4 (01:03):
Well, we're thrilled to be able to democratize access to
private investing. This is a market that forever has been
for the high net worth and the ultra high net
worth and with the acquisition of Forge, we'll be able
to bring access to private companies to every investor, and
so we're thrilled about that. Second, it continues our history
of innovation, and our innovation has always centered around what
(01:24):
can we do to provide more access, more opportunity to
our clients so that they can grow and improve their
net worth. So we're just thrilled about this, and Forge
was the firm we really wanted to work with.
Speaker 2 (01:35):
It's been a lot of speculation about this company, as
you know, yes.
Speaker 4 (01:38):
Well you know there's stock who's down ninety percent off
its highs and at the same time they're the leader
in the private company of marketplace, and so for us
to be able to acquire the leading company that has
the deepest relationships with the private companies and who have
the stock opportunity, it's just phenomenal for us.
Speaker 2 (01:54):
Rick was it a bit competitive and I'm just thinking
about the premium that you guys paid, what was it
seventy two percent above the closing price yesterday? I'm thinking
of was that Morgan Stanley just did a deal to
buy equity Zen, which is another similar platform. So it
does feel like big firms are jockeying to provide this
access to their investors. So was there pressure to do
this deal and get it done now?
Speaker 4 (02:15):
Well, as a public company, Forge has to run a process,
and so absolutely this was a competitive process.
Speaker 3 (02:20):
They've been pretty I think transparent about this.
Speaker 5 (02:23):
Yes.
Speaker 4 (02:23):
From our standpoint though, we think we're paying a very
reasonable price where it's five times revenue less than what
we trade on a revenue basis, and the opportunity for
us in private markets is so much bigger than what
we're paying for the company. We're paying six hundred and
sixty million dollars for the company. This market could be huge,
and when we bring our forty six million clients to
(02:45):
this marketplace, I think the opportunity to grow our economics
is significant. But most importantly and why we did this
deal was not about making money.
Speaker 5 (02:52):
Relative to the purchase price.
Speaker 4 (02:54):
It was about democratizing access to private investing and to
helping our clients grow their wealth.
Speaker 2 (03:00):
Will this only be for accredited investors or what's the
plan in terms of new product placement or product offerings
to offer it up to the retail investor.
Speaker 4 (03:09):
What I'm so excited about is we're going to have
an opportunity for every type of investor to invest in
alternatives with this acquisition. Well, three ways that clients can
invest today. We already have for both our rias and
retail clients a menu of alternative managers, the leaders that
you're aware of, some of the big names in private
equity and venture capital. That's one way our clients can invest.
(03:30):
The second way is through this acquisition of Forge, which
owns an asset management company, we will in the first
quarter of next year launch an indexed fund that is
an index.
Speaker 5 (03:40):
Of the sixty biggest private.
Speaker 4 (03:42):
Companies, and any investor with any wealth, if they have
interests in that, we'll be able to invest. And then third,
for accredited investors, we will have a marketplace opportunity for
those investors to buy individual private companies and invest in
those companies directly. That does require you being an accredited investor.
Speaker 2 (04:00):
A couple of questions I want to ask you, so,
how does it kind of improve your ability to win
more wallet share when it comes specifically to clients. We
know that retail investors have been clamoring for more access.
Speaker 3 (04:13):
To private markets.
Speaker 6 (04:14):
I think we've gone I.
Speaker 2 (04:16):
Know it's not about money, yeah, or I know it's
not about in terms of the price you paid, but
it is about right, Like you want to make sure
your clients are happy and they're getting all the offerings.
Speaker 3 (04:27):
So I'm just curious, how does it help you win
more share?
Speaker 4 (04:29):
Over the last ten years, we've become a premier destination
for high net worth and alternate high networth clients. And
the reason for that is we have a product offer
that can't be matched, whether it's access to privates, lending
capabilities that are straightforward, fast efficient with great rates, wealth
support on their tax, trust and estate needs, and access
to live individuals to speak to. They can walk into
(04:51):
one of our four hundred branches all across the country,
have a conversation with a real life person about their
financial needs, have a discussion about financial planning and what's
going on in their life. And so we really have
become over the last decade a premier destination for high
network clients.
Speaker 5 (05:06):
And this acquisition just adds to our capabilities.
Speaker 3 (05:08):
What about from your rias?
Speaker 2 (05:10):
And I think about all the independent advisors who are
here right this is what this event is all about.
Speaker 3 (05:14):
So how much does this kind of help them in
their pitch to clients?
Speaker 2 (05:17):
And I'm just curious, is this to some extent in
response to what you've been hearing from independent advisors.
Speaker 4 (05:22):
It absolutely is and this is a game changer for
us in the RIA space. Today, we have five trillion
dollars of RIA assets that we custody, one point two
percent of them sitting in alternatives. We know there's more
demand that number probably should be closer to five, six
or seven percent. And with this acquisition, we've now given
them three different ways to get invested, and I expect
over the coming years we'll see that one percent grow
(05:43):
more towards the five percent. So the rias are thrilled.
They've wanted us to do more in alternatives, and I
think with this acquisition.
Speaker 5 (05:49):
We've nailed it.
Speaker 3 (05:50):
And you said the new client offering, it's next year.
We'll see early part of next year.
Speaker 4 (05:54):
Well, Forge is up and going today, so hopefully some
of our clients will go find it starting tomorrow and
start getting invested if that's what they want to do.
Speaker 3 (06:01):
But what I have non accredited I think about like that.
Speaker 4 (06:05):
We're going to launch the fund in the first quarter
of next year. That's the current plan, and then we'll
continue to roll out their services in the coming months.
Speaker 2 (06:12):
You know, the other side of this rick is, you know,
concerns about hurdles in terms of transparency and investors really
understanding what they're buying when they tap into anything in
the private markets. So are there any kind of hurdles
that you anticipate, regulatory or otherwise.
Speaker 4 (06:26):
That's why we really wanted to work with Forge, Okay,
because Forge is the market leader in providing robust research
to clients, and so clients will be able to access
that level of research through Forge. In addition to that,
we've also stood up a team of alternative investment experts
at our firm that any client can call and talk
to about, you know, a question they have about a
(06:48):
type of alternative or a particular investment that they want
to make, And so we really are trying to do
everything we can to support clients. This is a great
opportunity for clients to be diversified to grow their wealth
in a new aset class. But at the same time,
we want to make sure we do everything we can
that they for them to be able to do this
in a thoughtful, well researched way.
Speaker 2 (07:09):
Is there a company you're most excited about that's on
the Forge platform or that might be on the Forge platform?
Speaker 3 (07:14):
At some point.
Speaker 2 (07:15):
I mean, there's opening, there's anthropic. Is there any company
that you're really excited about?
Speaker 5 (07:19):
Is not a.
Speaker 4 (07:20):
Particular one I'm interested in, but I am thrilled that
there are a lot of people on our platform and
a lot of people that listen to your show that
are active in markets and they want to get into
cracking because they love crypto or you know, they love
Elon Musk and want to get into SpaceX.
Speaker 3 (07:34):
So that say, sex is another one.
Speaker 5 (07:36):
Yeah, I think that's.
Speaker 4 (07:37):
What's so interesting is that we find a lot of
our investors do have these passions and now they're going
to be able to invest in them through private companies.
Speaker 2 (07:45):
So we know you took over in January, this is
your first deal. Is there more m and A to
coom Like, how are you thinking about what else you
need to bring under the Schwab umbrella.
Speaker 4 (07:53):
Well, with forty six million clients on our platform, we
have an incredible opportunity to continue to add capabilities to
serve and meet more of their financial life. The average
fifty year older than fifty year old client has seven
financial services relationships in their life, so we want to
add more and more capabilities so they can handle more
of their financial life at Schwab. And as we add
(08:15):
those capabilities, we'll either build them, we can partner, or
we can buy, and so we'll look at all three
of those. But we want to round out our capabilities
and do everything we can to stand behind our clients
and make a difference in their financial life.
Speaker 3 (08:26):
And just one last question, mostly small, probably tack ons.
Speaker 2 (08:28):
I mean, you guys already have digested a large company,
so I'm just curious or could it be a pretty
significant and any deal.
Speaker 4 (08:35):
You know, it's going to depend when. Again, we'll look
at build by partner based on what capabilities we want
to add, But I think we're open to just about anything.
We want to grow our company. We want to do
the best job we can serve in clients. We want
to make a difference in their lives. And if there's
a company or capability out there that we can add
to our platform that's going to make a difference, we're going.
Speaker 5 (08:55):
To do it.
Speaker 3 (08:57):
That is That is Rick Wurster, He's President's that you
have to Schwab.
Speaker 7 (09:02):
Stay with us.
Speaker 8 (09:03):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (09:10):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five e's during
Listen on Applecarplay and Android autto with the Bloomberg Business app,
or watch us.
Speaker 3 (09:21):
Live on YouTube.
Speaker 2 (09:24):
All right, today we're going to go from Schwab corporate
strategy to really macro strategy today's environment, and he is
back with us. Delighted that he is Kevin Gordon, head
of macro Research and Strategy at Schwab Center for Financial Research.
Speaker 3 (09:36):
Good to have you here, guys, Welcome to Impact. Where's up?
We get such a great feel, so much fun of
how things are going.
Speaker 2 (09:44):
But I do feel like there's kind of this internal
turmoil right now in terms of the environment.
Speaker 3 (09:50):
Is it inflation we have to worry about?
Speaker 2 (09:52):
We saw that companies announced the most job cuts for
any October and more than two decades. This from Challenger,
Gray and Chris Christmas and the did talk about an
AI component to it.
Speaker 3 (10:03):
I can't figure out where we are. What do you think?
Speaker 9 (10:05):
You know?
Speaker 10 (10:06):
It's like the flavor changes almost literally every day, because
this morning, I mean, it was much more labor driven.
You had the Challenger data you mentioned, but you also
had data from Revellio Labs, which has become much more
important to look at in terms of private sector providers
and what they're looking at for job growth, and what
they showed for October was a decline of nine thousand
for payrolls. But you know, for me, the labor market
(10:28):
stuff is almost this hall of mirrors because all of
the different indicators tell you completely different things as to
what's going on in the labor market. If you look
at claims data, which we're not getting at the national level, right,
but if you aggregate everything at the state level, it
still looks relatively healthy.
Speaker 11 (10:42):
It's state relatively low and stable.
Speaker 10 (10:44):
If you look at ADP for October, surprise to the
upside as we learned, you know, a couple of days ago.
If you look at something like Revellio though week if
you look at something.
Speaker 11 (10:52):
Like Challenger also weak.
Speaker 10 (10:54):
The interesting thing with Challenger is, and we always try
to make this, you know, important distinction and emphasis for
investors layoff announcements. They're not exactly cuts themselves. So there
is a little bit of a lag there in terms
of what you can expect.
Speaker 7 (11:06):
Yeah, oftentimes ninety days, right.
Speaker 10 (11:08):
Plus I think the one thing that is i will
say maybe a little bit more worrisome with the one
for October relative to what we saw earlier this year,
because there was a huge pickup and challenge your job
cut announcements earlier this year, but most of that was
at the federal level that was focused on what everything
was going on regarding to this one was a little
bit more broad based. As you mentioned with the AI overlay,
the concentration for the sectors was mostly in tech and warehousing.
Speaker 2 (11:29):
So clearly this cost cutting going on by companies, yeah,
which is never a good feeling.
Speaker 10 (11:34):
No, And I think what's what's been interesting so far
it's been relatively methodical where it's gone sector by sector.
It hasn't been broad based across the economy, which I know.
I've talked about this with you guys a lot and
Lazanne you know who I work with closely on this
are the sort of this concept and thesis of rolling
recessions in the economy. You're still experiencing that to some
extent where it's not filtering up to the surface and
(11:54):
it's not aggregating together to give you a full blown
traditional recession, but it's still happening at pockets.
Speaker 8 (12:00):
Or is Lizan We all call her liz Ane Saunders too.
That's the Lizanne you're referring to.
Speaker 2 (12:04):
Well, yeah, and she's their chief global strategyment strategis so yeah,
the big part.
Speaker 10 (12:09):
And you guys are my first boss, my mentor, and
she loves you on our program yesterday.
Speaker 7 (12:14):
She's the best Kevin corporate Going from.
Speaker 8 (12:18):
The corporate world and thinking about, Okay, what are companies
doing with employees? How are they hiring, how are they firing?
How are they announcing this to consumer spending? Because the
consumer powers this economy. Yeah, we're getting some troubling anecdotes.
Speaker 7 (12:32):
What do you see?
Speaker 10 (12:32):
You know, what's interesting is that when you look at
I mean, this is where the labor market's so crucial
to understand the differences between the stock and the flow.
So the stock of labor is still relatively healthy. I mean,
you look at a mostly fully employed America and that's
where we're at.
Speaker 5 (12:45):
Any of the.
Speaker 10 (12:46):
Layoff activity we've seen, it's just at the margin, relatively minimal.
So if you see relatively low layoffs despite a very
low hiring rate, which we're basically at psycho lows, the
fact that the stock of labor is strong means that
the aggregate income growth month to month, assuming you stay
employed is relatively strong. So that's why real spending is
still positive. But to your point about some of these
anecdotes and some of these cracks under the surface, they
(13:08):
are starting to widen a little bit more, especially if
you look at that bottom half of the what everybody
calls now the K shaped sort of economy.
Speaker 3 (13:15):
There are economists look at that bottom wrong.
Speaker 10 (13:17):
You could break it down by wealth level, I like
the FED data and looking at sort of percentile levels
of well.
Speaker 2 (13:22):
In terms of it like overall economic growth and what
the FED like, how do you think.
Speaker 11 (13:26):
About this is the tough part because you know.
Speaker 3 (13:28):
There's a social answer and then they're sych.
Speaker 10 (13:30):
Well, the multiplier effect up the wealth and the income
spectrum is just much stronger.
Speaker 11 (13:34):
It's just the math.
Speaker 10 (13:35):
And when you look at how well asset markets have
done over the past couple of years, even this year,
the bounce from the April lows. I mean, if you're
benefiting from that as an asset owner, we have household
exposure to equities at an all time high, beyond where
we were just slightly but still beyond where we were
at the at the peak in two thousand.
Speaker 11 (13:51):
So the wealth effect and the power of the market.
Speaker 10 (13:54):
In terms of an economic driver, has become quite strong
and quite potent. So I think when you add that
together with what is true ditionally an economy that has
become more or I shouldn't say traditionally, but over time
has become more powered by that wealthy cohort, then you've
got a pretty strong effect.
Speaker 8 (14:08):
When you say full employment, do you how do you
define that? And then how does the FED define that?
Speaker 10 (14:12):
Because relatively low and employment rate to history compared to history,
there has been a little bit of an uptick. But
you look at that, and you look at overall payrolls
and we're still right around, you know, all time time.
Speaker 8 (14:21):
But does it mean the person who's who's has the
computer science undergraduate degree is working in computer science or
working at Chipotle?
Speaker 11 (14:28):
Oh yeah, exactly.
Speaker 10 (14:29):
Fully, the question just sort of in nominal terms, looking
at at face value, a job being a job, whether
that job is perfectly matched with what the person is doing.
Speaker 5 (14:38):
That's a little bit of how do.
Speaker 8 (14:39):
We measure that well? Because it doesn't that seems like
a concern right now.
Speaker 10 (14:42):
Well, then I think is going to show up, probably
start to show up a lot more within the next year.
In a lot of the labor flows that we're going
to get because one of the you know, one of
the longer term concerns I have for the labor market
is what's happening right now in some of the churn
with the pretty significant decline in immigration, but also not
sort of the lack of replacement.
Speaker 11 (14:58):
A lot of a lot of those jobs. We're just
not seeing that happen.
Speaker 10 (15:01):
And you see that happening in you know, youth unemployment,
black unemployment. It's really starting to spread in some of
those pockets. So the areas that were supposed to benefit,
you know, throughout this year as you had more of
a domestic strengthening the in the fate of born labor force,
it's not yet happening. So it's a little bit lagged.
I hope it's delayed and not completely derailed. But I
think in the next year, figuring out replacements for a
(15:21):
lot of those lost jobs that's going to be key.
Speaker 8 (15:23):
And the reason I brought up the Chipotle computer science
exactly well, always ungry, but that was what's be cited
in that New York Times article back in August. Yes,
computer science degrees having trouble finding those computer science jobs.
Speaker 2 (15:33):
It's kind of this interesting environment we are when we
look at the labor force. Hey, one of the things
I wanted to ask you your team shared with us
that you believe Tina is back, and it's not the
Tina that we think about.
Speaker 3 (15:43):
There is no alternative in terms of like US difequities.
Speaker 2 (15:45):
Yeah, but it's something we started off with about US
government data.
Speaker 10 (15:49):
It is important no alternative. I mean, the depth and
the breadth of the government debt you just can't imagine.
And I think you know, so far, Thank goodness, the
markets have been sort of, maybe in a negative way,
whistling sort of passed the graveyard of no government data.
But you know, they've been able to manage through with
corporate earnings. I think that's been a nice bridge to
get us to when the shutdown ends. I think though,
(16:10):
you know, the longer this goes on, I think what
we have to keep in mind, and what we've really
been emphasizing to our clients is that you know, when
you don't collect this data, yes you can go back
and retroactively.
Speaker 11 (16:20):
Get it, but it's not going to be clean.
Speaker 10 (16:22):
So the longer this extends and we don't get you know,
presumably we're not getting a jobs report tomorrow. Even if
you don't get when the next week, it's weird. So
you're going basically almost a quarter without this really key data.
So you're going to have a delayed third quarter GDP report,
You're going to have missing data in a way for
the fourth quarter, and then you have benchmark revisions coming
in February, which kind of throws another wrench into this
(16:45):
for label.
Speaker 2 (16:46):
So what does it mean for Like I think I
asked Lezanne this yesterday, Zanne Saunders, that do we get
a FED misstep in terms of policy?
Speaker 3 (16:54):
Do they err on the side of doing nothing?
Speaker 10 (16:56):
Yeah, I think they're nudging that way, and you know,
you look at some of the vote and.
Speaker 3 (17:00):
Which is what kind of got from the October meeting, right.
Speaker 11 (17:02):
Yes, exactly.
Speaker 10 (17:02):
I mean Powell mentioned in himself Austin Goosbi was just
out from the Chicago FED saying that he's a little
more he's a little less.
Speaker 11 (17:07):
Comfortable making a move when you're driving in the dark,
in the fog.
Speaker 10 (17:11):
So I can understand why they have to be in
this reactive position. I don't fault the FED at all
for any decision they make. I mean, if they feel
very strongly and highly convicted that inflation is not as
much of a problem. They want to save labor, then
sure you can open up the door for more cuts.
I would be sympathetic to that view if you get
more data like Challenger this morning and Raveluo. But on
(17:31):
the other hand, if you do have the shutdown lasting
longer and more of a delay in a lot of
these government data, then I totally understand why they would
want to wait, especially if corporate earnings look like they do.
I mean, the blended growth rate for S and P
five hundred earnings for the reporting quarter is almost seventeen percent.
So you look at that and you say, well, corporate
America is still relatively healthy. We haven't seen mass layoffs.
They've been in pockets.
Speaker 3 (17:51):
And it wasn't just the MACS seven right exactly.
Speaker 11 (17:54):
It's spread a lot more.
Speaker 10 (17:55):
It's come over to utilities to some extent parts of
just consumer discretionary helping a little bit at x max.
I have an ex tesla on Amazon right, So it
is it is a little bit of a broader story.
Speaker 11 (18:03):
For the quarter.
Speaker 8 (18:04):
Teviick Gordon Macro Research and Strategy at the Schwaba Center
is a document research.
Speaker 7 (18:09):
You know, stay with us more.
Speaker 8 (18:12):
From Bloomberg Business Week Daily coming up after this.
Speaker 12 (18:20):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
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 played Bloomberg eleven
thirty now.
Speaker 2 (18:39):
You might recall over the summer, it was in August
President Trump signing an executive order directing the Labor Department
to reevaluate guidance to fiduciaries to get them more comfortable
with including private credit, digital assets, and other alternative assets
in their retirement plans.
Speaker 3 (18:55):
Now, the SEC may also issue some new rules or guides.
Speaker 2 (18:57):
To change the definition of a credited investor or qualified purchasers.
There's a lot going on that could open up a
lot of different types of assets to retail investors.
Speaker 3 (19:07):
It's something that we've gotten into with the Schwab CEO and.
Speaker 8 (19:10):
Kind of on pause right now, at least at the
SEC level because the government shut down. Yes, but still
this seems to be the direction that things are moving
all right.
Speaker 2 (19:17):
We have a great guest to get into on all
of this with some thoughts and here at Denver in
Denver at Swab Impact twenty twenty five, Kyla Culvert. She's
head of Risk and Controls for Schwab Advisor Services.
Speaker 3 (19:28):
Good to have you here.
Speaker 2 (19:29):
There's a lot going on that could change, or there's
a lot that is going on that means we won't
see changes. How are you assessing kind of the regulatory
environment and things that could change what investors can be
investing in.
Speaker 9 (19:42):
So I feel like for advisors it's a lot of
whiplash right now. If we look at the prior administration
and SEC Chair Gensler, there was constantly new rules coming
out and it was just like regulation overload for people.
And now under Paul Atkins, we're expecting to see.
Speaker 3 (19:59):
A reduced pace of regulation.
Speaker 9 (20:01):
So we see it as a good opportunity for advisors
to really focus on getting back to basics and making
sure that their compliance programs are up to date.
Speaker 3 (20:10):
That all of their ADVs are accurate.
Speaker 9 (20:13):
What are avs, they're disclosure documents that have to file
with the SEC. Really just making sure that like their
house is in order so that because if we're not
under a constant flood of new things coming out and
then you know, we heard you talking about the executive
order related to four oh one k's and being able
to hold alternatives different things in four oh one k accounts.
(20:36):
That's something that you know, some advisors have interest in
for their clients, and it's going to really depend on
the plan. Like is this something that the plan chooses
to allow for that client or you know, for their
plan participants, or does the plan not want to allow that?
Speaker 8 (20:50):
What direction do you see that moving in if it
does get approved, if it if it happens, if the
sec says okay, this is totally fine, is everyone going
to be Is it going to be like us having
stocks and bonds in our I.
Speaker 3 (20:59):
Don't think it will be for everybody.
Speaker 9 (21:01):
I think that we see you well everybody at the option. Well,
it's going to be up to the plan administrator. So
who's ever sponsoring that plan. They're the fiduciary. They've got
the ability to say you're allowed to invest in X,
or you're allowed to invest in you know, not allowed.
Speaker 8 (21:17):
So would that be at the company level for a
certain company and it's employees, or would it be at
the whoever they decide as the planned administrator?
Speaker 9 (21:24):
Like an empower for example, it's really like the planned sponsor,
who's choosing that?
Speaker 2 (21:29):
Okay, So why would a plan sponsor say no? Why
would a planned sponsor say yes?
Speaker 9 (21:35):
I think they would say yes if they wanted to
give their their participants, you know, additional choices. Some plan
sponsors may say no. You know, we see it on
the Schwab side where we've got some plan sponsors that
have opted into our Personal Choice Retirement account offering where
(21:55):
you can basically have your four oh one K and
you know, self directed invest in stocks, bonds and things
that are outside of the allocation the plan allocation. It
just really depends on their comfort level. Like from a
conservative perspective, you might say, we want to stick more
with you know, these funds that we've chosen.
Speaker 8 (22:14):
Is it a good thing?
Speaker 9 (22:17):
I think it's you know, choice is always a good thing.
So more freedom of choice. But as long as people
are doing it smartly with it, you know, with the
advice of an investment advisor, I think it's a smart decision.
But I think there's always additional risk there.
Speaker 2 (22:34):
Well, the risks are right in terms of all the assets.
Some things are not as liquid or as others, and
you need to understand that if you need to be
able to get out of something it's not liquid like
stocks and bonds.
Speaker 9 (22:46):
Exactly in many ways, And that's why I think doing
things with the advice of a professional versus just you know,
your friend told you this was a good investment, it
makes more sense that way.
Speaker 8 (22:57):
On the regulatory front, and having advisors have less regulation
right now, does more fall on them in terms of
making sure that they're doing what's right because those those
regulations aren't necessarily in place. And I know kind of
a judgment for me to say, you know, quate regulations
with right, that's not what I need to do. But
(23:17):
we know, we know the DNA that Paul Atkins has
the SEC chair when it comes to this stuff, and
he's much more laisse faire than other SEC chairs in
the past.
Speaker 9 (23:26):
Yeah, So what what we keep reminding advisors of is
just because there's you know, all this noise about deregulation
and less new regulations, you still have to follow the
fiduciary duty. You still have. You know, there's still regulations
on the books, there's still rules.
Speaker 5 (23:44):
Who still have to.
Speaker 9 (23:45):
Do all the things and be making sure you're in
the best interest of your client.
Speaker 3 (23:50):
So just because it's.
Speaker 9 (23:51):
A more like laisse fair kind of environment doesn't mean
you still don't have principles that you have to adhere to.
Speaker 2 (23:58):
Our advisors independents a little nervous about like kind of
what's coming at them and the changes, especially when it
comes to all thassets potentially.
Speaker 9 (24:06):
Yeah, I think that they're just there's the unknown. I mean,
we get a lot of questions from advisors right now
about artificial intelligence, so, you know, because everybody wants to
use it, but there's not a lot of guidance out there, advisors,
and so we get a lot of questions on how
can we do this compliantly when there's not really any guidance?
Speaker 3 (24:28):
Kayla, where's that guidance going to come from?
Speaker 2 (24:30):
I mean, you know, and I do this with all
due respect, but with all due knowledge about social media
and things that many folks would say we didn't We
weren't legislators, policymakers just didn't understand the power, the impact
and the oversight and the liabilities perhaps, And so I'm
just thinking, how do we do that with AI?
Speaker 9 (24:52):
Yeah? I think where the thought is that we would.
Speaker 3 (24:55):
Most likely see how do we do it with AI
and get it right? Yeah?
Speaker 9 (24:58):
And you know we've been we've been talking about that.
So I attended the Investment Advisor Association's Advocacy Day in
DC back in September, and artificial intelligence was one of
the topics that we were talking to lawmakers about, and
really just from the standpoint of don't create regulation that
(25:18):
stifles innovation, don't make it be prescriptive, and really reminding
them that advisors already have to follow the fiduciary duty,
so don't be prescripted and what you're trying to do.
I think where we would eventually see something come from,
most likely is probably the SEC. This SEC, well, it's
(25:41):
a very hot topic, so you know that's that's where
we would think it would come from.
Speaker 3 (25:46):
But in how.
Speaker 9 (25:49):
We think it'll be more principles based with this SEC
than prior administrations.
Speaker 8 (25:54):
It sounds like advisors right now have to keep up
with a lot just in thirty seconds. Where do they
where do they do professional education, Where do they make
sure that they are on top of the regulations, they
make sure they're on top of what's happening with AI.
Speaker 9 (26:08):
Well, if they're a Schwab client, we have so many
resources that we make available for them on our website,
we do regulatory webcasts, we put out compliance review articles.
We've got relationships with compliance consultants that they can use.
And then they should also look at alerts that the
SEC and other regulators put out. I'm not pretty getting
out route right now, but on a normal basis, there'll
(26:31):
be things.
Speaker 3 (26:31):
That they put out.
Speaker 2 (26:32):
But certainly for your advisors, there's lots of ongoing education, yes,
which is pretty cool and interesting to hear.
Speaker 3 (26:37):
Hey, Caleb, thank you so much. Thank you.
Speaker 2 (26:39):
This is an important area and I'm so glad we
could cover it with you. Kayla Culver, she's head of
risk and Controls for Schwab Advisors Services.
Speaker 7 (26:46):
Stay with us.
Speaker 8 (26:47):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (26:54):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two two to five ees
during Listen on Apple, Karplay and Android Otto with the
Bloomberg Business app, or watch us live on YouTube.
Speaker 8 (27:08):
I think it's fair to say that Washington and Wall
Street and the markets are inextricably bound in a way
right now that totally kind of feels a bit different
from other times in modern history.
Speaker 2 (27:17):
Yeah, well, listen, we're glued to news out of the
nation's capital because things the President says or administration does,
even today in terms of the drug makers, like it's moving.
Speaker 8 (27:27):
Markets, or maybe even things that are beyond the administration's control,
like what the Supreme Court is going to decide when
it comes to tariff policy, the US government taking ownership
of publicly traded companies, social media posts from the President
that can move markets and take company leaders by surprise.
This is enough to keep Mike Townsend on his toes.
He's Meta director of Legislative and Regulatory Affairs for Charles Schwab.
He's a political analyst based in Washington. He also the
(27:50):
host of Schwab's Washington Wise podcast. He joins us here
on site at Schwab Impact twenty twenty five. You said
that you can't walk like five steps without somebody grabbing
you and saying, can I ask you.
Speaker 7 (28:00):
A question about politics?
Speaker 5 (28:02):
Right now?
Speaker 6 (28:02):
What are they asking you? Well, I mean obviously just
since we've been here, right. I spoke on the main
stage at the opening session on Tuesday. Then Tuesday night
we had the election results. Then Wednesday we had the
Supreme Court case. You know, argued on the terrace and
so this is my life now, Like ten things happen
then the course are every day that people want to
(28:22):
talk about, so pretty fascinating times.
Speaker 3 (28:24):
So what do you make of what we've had in
the last forty eight.
Speaker 11 (28:27):
Hours or so?
Speaker 6 (28:28):
Yeah, I mean, you know, the first thing I would
say on the election in particular is that it's very
easy and I think you're seeing a lot now of
the sort of overreaction to an off year election. And
I said, you know, I told the conference here, off
yr elections are kind of unique to their particular places
New York City, Virginia, and New Jersey. Obviously the California
(28:49):
district initiative, but they're relatively confined to those places. So
no question, big, big night for the Democrats.
Speaker 3 (28:56):
But is it a referendum on the sitting president?
Speaker 6 (28:59):
I mean some degree I think it is. But you know,
I live in Virginia and that race was about federal
workers being you know, fired from their jobs, and you know,
the economy and that sort of thing, So you know,
I yes, it was partly a referendum. I certainly think
you can read it as a rebuke to the president
in some of his actions, but whether that extrapolates out farther.
(29:20):
We'll have to see you.
Speaker 8 (29:21):
Went to voting college in Maine. Also someone who went
to vote in college Zorron Mamdani, the mayor elect of
New York City. You guys did not overlap because he's
only been out of there for like you, I've never
met him, but he's a Democratic socialist, and I'm wondering
if you see that as insulated to New York and
(29:42):
New York politics or if you see him as the
face of the Democratic Party moving forward.
Speaker 6 (29:48):
So I think you can answer that question in sort
of both ways, right, So, I think it was unique
to New York. He is a very dynamic personality. He's
very very good at social media, and he clearly touched
a nerve with people in terms of the issues he
was focusing on.
Speaker 8 (30:02):
Sorry, you could have just been describing President Trump. Those
things you just said applied totally to President Trump.
Speaker 6 (30:08):
So so absolutely so, I think and President Trump has
probably taught us that personality is a huge, huge part
of the political landscape now. So I think, Mom, Dommy,
you know, did did you know incredible at connecting with
people and reaching out to people who maybe hadn't felt
heard in the public in the political process. Does that
(30:28):
mean that he's going to become the face of the
Democratic Party? I you know, I think Republicans are certainly
going to try to make that the case. But I
also think, you know, he's going to have to He's
going to have a really hard time doing a lot
of the things that he said he wants to do.
That's just the nature of the role. And you know,
the ability of the mayor of New York City to
act unilaterally is extremely narrow. So you know, we'll have
(30:52):
to see. And I do think you're seeing. You know,
you can juxtapose that with the retirem announcement of Nancy
Pelosi earlier today, You're seeing some generational change in the
Democratic Party that I think is really you know, important
and probably necessary for the Democrats.
Speaker 2 (31:06):
So is that her passing the baton or acknowledging that
that era is over?
Speaker 3 (31:10):
Like, what is that in your view?
Speaker 6 (31:11):
Yeah? I mean, I think that it's a realization that
the Democratic Party has to get younger and appeal to
younger people. I mean, the leaders, you know, the most
of the veterans of the Democratic Party, particular in the House,
are in their eighties. In Nancy Pelosi, Stanny hoy or
Jim Clyburn, and so I think you're seeing that kind
of transition happen.
Speaker 2 (31:31):
One thing I wanted to ask you, and I think
about the titles we give to politicians a Republican Donald Trump,
most people would say he's not really your standard Republican
Zara Mundani, like, we're talking to socialists. But you know what,
he's going to have to take the job and look
at his entire constituents. Do those classifications even matter in
today's political environment.
Speaker 6 (31:50):
Yeah, I think that's a really good question, because, you know,
one of the things that really fascinates me is what
does the Republican Party look like post twenty twenty eight
into twenty twenty nine, after Donald Trump is no longer president,
no longer on the ballot, Do what we would call
traditional Republicans sort of wake up and think, oh, that
was weird. Let's go back to you know, and if
(32:12):
you want a great example of it, look at the
Supreme Court case that was that was held on Wednesday,
where you have essentially Republicans arguing for restricted trade and
higher taxes and Democrats arguing the opposite. That can be
seen as a complete flip of the world.
Speaker 8 (32:32):
A little bit right, Yeah, Okay, speaking of bizarre worlds,
when when the US government buys ten percent of Intel
owns of a publicly traded company, or takes a stake
in MP Materials, for example, that's.
Speaker 3 (32:48):
A bizarre world or Intel, did you say that?
Speaker 7 (32:49):
Yeah, Yeah, that's that's that's what we're living in right now.
Speaker 6 (32:52):
Yeah. And it's amazing to me how little reaction there
has been to that.
Speaker 7 (32:57):
Are you worried about that?
Speaker 6 (32:59):
I think it's a very strange and I think it
has a lot of risk to it.
Speaker 8 (33:05):
But we are we getting to the point of state
ownership of state owned enterprises.
Speaker 6 (33:09):
I mean, this is like, I mean, the President today
was in the in the White House talking about with
a couple of drug companies about lowering the prices of drugs,
and he made, you know, one of his offann references
about maybe we should buy a stake in your company,
and you know, that's just become part of funny.
Speaker 2 (33:25):
Not funny, not funny. Yeah, we're talking with Mike Townsend.
He's managing director of Legislative and Regulatory Affairs for Charles Schwab.
Speaker 3 (33:32):
He's based in Washington. He's also a host of Schwab's
Washington Wise podcast.
Speaker 2 (33:35):
You know, I was talking to her Britt this morning,
and he said, you know, you guys are a young country.
Your political environment is still a baby or a toddler,
or however you want to classify it. You're going to
go through these tough moments.
Speaker 3 (33:48):
And she's thinking about Britain.
Speaker 2 (33:50):
And all the king well, all the things that it's
gone through, right, and taxing, and there were kings that
tax and then there was pushback and you know, didn't
have maybe that power or anymore.
Speaker 3 (34:01):
How should we as Americans?
Speaker 2 (34:02):
And I do think there's we're kind of apathetic in
terms of some of these severe things that are going on.
Speaker 3 (34:08):
So I'm just trying to understand where we are in
our political process.
Speaker 6 (34:12):
I think a couple of things. First of all, when
you say you're apathetic the thing's going on, I think
it's just overwhelmed by the things going on. You can't
react to everything.
Speaker 7 (34:19):
I mean ten things have produce that could you.
Speaker 6 (34:23):
But you know, and I think the ordinary person, the
ordinary voter, just can't take it all in every day
and can't figure out what to be mad at. But
you know, when I go around the country, I talk
to clients all over about the intersection between Washington and
the markets, and there's so much emotion. I feel like
I'm part emotional counselor right now. And part of what
(34:44):
I say is a lot of what you may be
emotional about isn't affecting the markets. It's not The market
is not concerned about that. That's fine that you have
those feelings, but remember to separate those feelings from your investing.
Speaker 3 (34:56):
How many records have we had in the S and
P five.
Speaker 6 (34:58):
Thirty year thirty something records? Yeah? So yeah, I think
you know, historically, probably the most common question I've been
getting asked over the last couple of days is is
this the worst you've ever seen?
Speaker 2 (35:10):
Right?
Speaker 6 (35:10):
Or is this the worst we've ever been in terms
of our partisan divide? And you think, well, we had
a civil war, you know, we're not there, so that
seem pretty divisive. You know. So historically there's kind of
a pendulum, and maybe we're way out on one end
of the pendulum. Historically the pendum comes back toward the middle.
Speaker 7 (35:26):
You know.
Speaker 8 (35:26):
David Sachs, the AIS are for this administration, said today
on in a post on X there will be no
federal bailout for AI. He said, the US has at
least five major frontier model companies. If one fails, others
will take its place. He said in a follow up post,
the White House wants to make permitting empower generation easier
from the executive branches perspective. How can they actually do that?
Speaker 6 (35:50):
Yeah, I mean, I think this is a really fascinating question.
I tell people all the time. I fly in and
out of Dallas Airport in Washington. If you fly out
of Dallas, you look down, you see these gigantic buildings
with all these air conditioning units on the top.
Speaker 5 (36:04):
Right.
Speaker 6 (36:04):
Those are the data centers. They can't build them fast enough. Well,
what's happening in northern Virginia. Electricity prices are going up
and water prices are going up because of the cooling
for the water, And all of a sudden, you've brought
this kind of back to ordinary people's bills, right, and
they're they're sort of paying for it. So when the
administration says something like that, I get it politically and
it makes sense, and I think a lot of people
(36:26):
want to hear that. But what can the government actually
do to lower my water bill? I'm not as sure.
Speaker 3 (36:33):
I don't know. Maybe make those who are building the
AI data centers.
Speaker 2 (36:37):
Pay some kind of fee they're using or like x,
I don't know, some kind of tax or something.
Speaker 6 (36:41):
And I've seen some of these companies are like building
their own power generating, you know, to try to take
on some of that.
Speaker 2 (36:47):
Yeah, they're partnering with like utilities directly. I'm just good
about a minute, Mike Man. I could go really.
Speaker 11 (36:52):
Long and I should come back.
Speaker 10 (36:54):
Yeah.
Speaker 2 (36:54):
Yeah, it is an investment investing audience that's here at
Schwab Impact.
Speaker 3 (36:58):
It's certainly the Bloomberg audience. What's your final thoughts to that?
Speaker 6 (37:01):
Yeah, you know, again, my one of my biggest things is,
you know, try to separate how emotional you feel about
everything that's going on in Washington and remember that relatively
few things are actually affecting the market. The market cares
about what the Fed is doing. The market cares a
lot about this Fed independence battle that is going to
be play out in the Supreme Court in January over
Lisa Cook's firing. The FED cares about it. I mean,
(37:23):
the market cares about tariffs and cares about tax policy
that sort of thing. But you know that's not that
all those things aren't what people are emotional about and
you've got to sort of separate that.
Speaker 2 (37:33):
Emotion ten seconds. Do folks in Washington policymakers care that
the FED stays independent? I think they, even in this administration.
Speaker 6 (37:42):
I think they do. I think that would be a huge,
huge setback for the country and the whole concept of
central banks.
Speaker 5 (37:49):
So could we.
Speaker 2 (37:50):
See policy makers, even members of the Trump team fight
back if that was in question real quickly.
Speaker 6 (37:55):
I don't know if you'll see members of the Trump
team fight back, but I think a lot of policymakers
will be upset.
Speaker 3 (38:01):
Mike Townsend of SCHWAP, thank you so much.
Speaker 1 (38:04):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(38:25):
and always on the Bloomberg terminal
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