December 12, 2025 • 36 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Wall Street traders took profits on the year’s biggest artificial intelligence winners, dragging global gauges back from the brink of record highs. Longer-dated bond yields climbed.
A disappointing sales outlook from Broadcom Inc. sent the chipmaker tumbling 11% and weighed on rivals, further fueling investor anxiety over AI wagers initially prompted by Oracle Corp. The AI bellwether’s stock drop started Thursday following a forecast for rising capital outlays and a longer timeline to a revenue payoff. The slump deepened Friday on a report of delays to some of Oracle’s data center projects. Shares of companies tied to the AI power infrastructure also slid.
The Nasdaq 100 dropped 1.9% while The S&P 500 fell 1.1% after the index had notched a record close in the previous session. The Dow Jones Industrial Average and Russell 2000 pulled back from all-time highs.
The selloff put a damper on the ebullience sparked by the Federal Reserve’s third-straight interest rate cut this week. Investors also had to contend with mixed messages from Fed officials after they left their outlook for a single cut in 2026 intact.
Today's show features:
- Stephanie Guild, Chief Investment Officer at Robinhood Markets, on markets, retail investing trends., interest rates and Federal Reserve policy
- Bloomberg Intelligence Senior Analyst for E-Commerce and Athleisure Poonam Goyal on the coming CEO change at Lululemon as well as the firm’s latest earnings
- Bloomberg News Space Reporter Sana Pashankar and Bloomberg Intelligence Senior Defense Analyst Wayne Sanders on Friday’s Big Take detailing President Donald Trump’s proposed missile and air defense system that could cost more than $1 trillion
- Andrew Krei, Chief Investment Officer at Crescent Grove Advisors, on Federal Reserve policy and the market outlook
See omnystudio.com/listener for privacy information.
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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.
Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business, finance
and tech news as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:32):
Let's broaden out a little bit and let's get into
maybe investors have they been reacting since we got that
FED decision and what we are seeing with investment flows
and what's going on in terms of activity.
Speaker 1 (00:42):
For that, we turned to Stephanie gild, chief investment officer
over at Robinhood Markets. You joined us here in the
Bloomberg Business Week Studio. Stephanie, I wanted to start with
what's happening on the Robinhood platform because you certainly have
a certain segment of the investing population.
Speaker 4 (00:55):
What are you seeing on Robinhood right now?
Speaker 5 (00:57):
We're seeing still not buying, but it's it's been more muted,
i'd say, than it was before, and it's been in
some of the things that have been going down or
had like Netflix, for example, You've also seen where there's
been sales, it's been more in the AI oriented names.
So I've kind of shared this before, but our customers
(01:18):
tend to hold corepositions and trade around them, meaning they
buy when they go down and sell when they go up.
But we're seeing a little bit differently where there seem
to be like being more subjective about what they're investing in.
And that's why I say, like it was kind of
interesting to see in video being sold and you know,
things that are kind of under.
Speaker 3 (01:35):
Pressure, so selling as rather than selling as they have
gone up a lot and taking some profits, they're selling
as they're going down.
Speaker 5 (01:42):
Yeah, but they probably have embedded profits because they will
them all year. So I think that's like kind of
giving up a little bit on the AI trade for now.
Speaker 6 (01:49):
Well, like I totally get it.
Speaker 3 (01:50):
Like you know, Tim and I were talking about Oracle,
like it is still up almost fourteen percent year to date,
but we've seen a more than forty percent decline from.
Speaker 6 (01:58):
Some of them when it hit a record back in
in September.
Speaker 3 (02:02):
Excuse me, so, I mean, are there how much can
you dig deeper into.
Speaker 6 (02:07):
The data in terms of what you're seeing?
Speaker 3 (02:08):
Is it mag seven names that people are getting out
of Is it all tech?
Speaker 6 (02:12):
Is it just AI related? Like what are you just say?
Speaker 5 (02:15):
I related that I've seen, and then some of the
like core we you know those kind of names are like.
Speaker 6 (02:21):
Cloud, Yeah, exactly.
Speaker 5 (02:23):
You've also seen some buying in just broad based ETFs
and some t bill oriented ones that like kind of
make me feel like diversification, you know, kind of parking
things rather than trying to pick.
Speaker 1 (02:38):
So less playing the market and more like long term
diversified index funds I think for.
Speaker 5 (02:43):
Now, Like for now, usually we see that activity when
there's a big dip, like they go into ETFs first
and then they play the differences and names.
Speaker 4 (02:50):
How are they playing this? Uh?
Speaker 1 (02:52):
I don't want to call it a crypto winter yet,
but we're down another three percent on bitcoin, hovering around
ninety thousand dollars per bitcoin right now.
Speaker 4 (02:59):
How's that played out?
Speaker 5 (02:59):
Of the last couple of weeks in the stocks, I've
seen actually some buying and like the micro strategy names,
but on the crypto side, have actually seen more selling
than buying.
Speaker 4 (03:08):
Interesting.
Speaker 1 (03:09):
Yeah, So instead of actually holding the patterns that you're seeing,
instead of actually holding the cryptocurrency, people are instead putting
money into the proxies or the hoarders.
Speaker 5 (03:22):
Yeah there, I mean, if you can make that relationship.
I kind of look at two different dashboards and crypto versus,
but I did think it was interesting to see buying
into the the equity related.
Speaker 1 (03:32):
Yeah, because certainly strategy has had its own set of
of challenges. Okay, so let's bo back out a little
bit big macro picture right now. We haven't had a
chance to speak to you in a few weeks, and
given what we heard from Jay Powell, we just heard
from Mike McKee about different views of the economy coming
from different people, where do you sit.
Speaker 5 (03:50):
I think the economy's okay, actually, like I think when
you're this is totally anecdotal, but at my feeling is
that like New York City is busy, travel is lot,
like I actually think the consumers generally okay. That being said,
the lower end consumer is still not doing well, and
I don't think they've been doing well for a while.
Speaker 2 (04:08):
So I actually and I.
Speaker 5 (04:09):
Do think things got overvalued market wise, So I do,
and I also think that the FED is caught between
a rock and a hard place because you do have
this explosive growth growth in the AI trade growth and
credit markets, and so they have to kind of worry
about that being overblown and that creating increased inflation. Obviously
(04:33):
we don't know what's going to happen with terrorists, but
that's creating an issue for them too. Then you do
have the lower end consumer that is still struggling. So
it makes me think of like Europe post two thousand
and eight, when they had to worry about like Spain
versus Germany. And so that's why I think there's so
much of a debate within the FED. And you know,
Powell did say, like, don't even look at the data
(04:53):
that's going to come out next week.
Speaker 7 (04:55):
Do you agree with him?
Speaker 6 (04:56):
Who doesn't yet?
Speaker 5 (04:57):
I yes, I'm like, and I don't. I worry about
the quality of it too. Like in general, I.
Speaker 3 (05:02):
Want to ask you about I'm looking you know, we're
almost at the end of the year, so we can
look at the S and P five hundred, the major
industry groups and see what really did well or didn't do.
I mean, communications services names thirty one percent, higher information
tech twenty three percent. So even though I mean the
mag seven, even if we start to see you know,
pullbacks on some of these names or the AI trade
(05:25):
still outperforming. Industrials up almost twenty percent, financials up thirteen percent.
I'm looking at the S and P Composite Pharmaceuticals Index.
It's up of almost twenty one percent. Now, yeah, yeah,
finally exactly. So I'm just curious, what else can you
you dig deeper in a year where we've talked so
much about AI, We've talked about rare earths, we have
seen some you know m and a activity going on.
Speaker 6 (05:48):
What is it that you have also.
Speaker 3 (05:49):
Seen that are interesting and you can get an idea
of what investors are interested in what they are not interesting?
Speaker 5 (05:54):
Have been kind of starting I've been bottom fishing, like
we've been, yeah, sort of store. I sorted like the
Russell one thousand into you know, top and bottom players,
and it just felt like there was a rotation that
started on October twenty ninth, which was when we had
that like six percent pullback, and a lot of those names,
like of the top one hundred, the ones that are
up the most one hundred most this year, forty one
(06:14):
of them are in a negative return since October twenty ninth.
So I've been We've been kind of looking around, being
like where is there still growth? And I actually think
like the other thing we've been doing this year is
investing with in alignment to fiscal policy because we do
think like what the Trump administration is doing is important
to understand, and I think the consumer is going to
be more important for them this year or coming into
(06:38):
the next year, I should say. And so we've been
looking more in like the retail space of players that
are interesting and so.
Speaker 6 (06:45):
So retailers, tailor and brand names.
Speaker 5 (06:48):
In retail, like on holding Lululemon, like they're down, you know,
they're down double digits this year or maybe not, maybe
not on after the yes yearly so yes, there is
down fifty percent, it's up ten percent or so today,
And so we just think like there is value to
be found there while we wait to see what happens
(07:09):
in the tech world.
Speaker 1 (07:11):
But on a Lulu for example, there seems doesn't a
lot of that depend on who the next CEO of
the company is, and they don't even know who that's
going to be.
Speaker 5 (07:20):
There is execution risks there now for thee with obviously
the change in the CEO, but I think it also
it lost some shine on its brand, and I think
they have done a lot to try to turn that around,
and you've seen that in gap this year, which is
also like, I think they're further into that journey, but
I think it actually creates an opportunity.
Speaker 4 (07:41):
Yeah, perhaps been doing really well of late.
Speaker 3 (07:43):
Yeah, it's now up about eleven percent year to date.
But your point is right that if the consumer feels
better and is out there spending, if we get more
juice in terms of the way of stimulus, you know,
whether you believe it's the right strategy or not, if
there's more money in the pocket of consumers.
Speaker 8 (07:58):
Trying not to invest.
Speaker 3 (07:59):
In my heart, I know, I know, I know, I
know it's going to go somewhere, and so there are
names that will certainly benefit. Great staff love digging deep
into your platform. Stephanie Gilch, chief investment office at robin
Hood Markets, Joining us right here on Bloomberg Business Week Daily.
Speaker 4 (08:17):
Stay with us.
Speaker 1 (08:17):
More from Bloomberg Business Week Daily coming up after this.
Speaker 2 (08:24):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and the Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 3 (08:39):
All right, let's get to a stock we've been talking about.
We're talking about Lululemon. Stock is the number one gainer
in both the S and P five hundred Nasdaq one hundred,
up just shy of twelve percent. Even so, the stock
is still down forty five percent year to date. We
did see the stock rally after the company boosted its
full year outlook and announced him that it's CEO would
step down.
Speaker 1 (08:58):
The company searching for a replacement for Calvin McDonald. Do
will depart the top post at the end of January.
Putamgyle is Bloomberg Intelligence Senior analyst, free Commerce anath Leisure.
She joins us from New Jersey. So, first of all,
were you as surprised by the market as the market
was by this move?
Speaker 9 (09:15):
You know, I kind of expected a move similar to
this because Little Lemon has just not been performing well, right,
So when you have instances in retail where there's just
no point of understanding how they're going to turn this
business around, when it takes a longer time, there is
usually some sort of management change. So this was in
(09:36):
my mind a little overdue. And it'll be interesting to
see on who fills these shoes, because I think that's
key to the turnaround in the vision that they put forward.
Speaker 1 (09:44):
So on that, who do you think, like, what are
some names that are being banded about the analyst community
right now?
Speaker 9 (09:50):
You know, names I don't know about, but we do
know that we want to product lead. I would like
to see a product led leader because at the end
of the day, retail is about product and Lula Lemon
needs to bring its product back in play ahead of
competition and really where consumers feel like they're getting something
that they can't get anywhere else.
Speaker 6 (10:10):
You know, it's interesting.
Speaker 3 (10:11):
First of all, you go to the dees page of
Lululemon and under management.
Speaker 6 (10:15):
There's no no names there right now, which I don't know.
Is there something wrong with my screen or I don't know?
Speaker 1 (10:20):
You think, point, how often is it that we see
a CEO exited.
Speaker 4 (10:25):
Ye out a plan for a new one? Yeah, exactly,
a big deal yesterday.
Speaker 6 (10:29):
So that's a good point put him.
Speaker 3 (10:31):
You say, it's long overdue, and so like, why isn't
it that they internally or the board didn't say this
ain't working because he's been there for a few years now,
So why why did it take them so long? Or
did they not give him enough time to figure it out.
Calvin MacDonald we're talking about.
Speaker 9 (10:49):
Well, he's been with Little Lemon for seven years, I
think since twenty eighteen, right, so he's had a bairent
amount of time there when he came on board. The
excitement once you know all about the personal care remember
us talking about it. Where will they enter this business
that has seventy eighty percent margins and it would be
so great? And I'd say during the pandemic, things were
(11:11):
working great, right for not just them, for anyone who
had active war. That is how people dressed. That was
the movement. It was to be healthy, it was to
be out, It was to work out and really lounge
at home while you're working. So what happened post pandemic?
And that's really where we kind of think about what
did the leadership do to stay ahead of trends? And
(11:32):
I think as we exited the pandemic, we didn't see
as much innovation as we would have liked, because you
saw competitors like Alo, like Vori and others really come
in with competitive product, sometimes at similar price points and
took mind share and wallet share of the shopper. So
that just brought us to question, do we need vision
(11:55):
from a leader that has the product background to really
drive a product ledterc And keep in mind, over the
last few years, Lululeman has had several leaders leave the company,
so there has been turnover.
Speaker 3 (12:09):
You know, it's interesting you go back to Yeah, I
forgot about that when.
Speaker 6 (12:12):
He came in.
Speaker 3 (12:13):
His background, I mean, he had been president CEO of
Sephora USA for five years, right, So the expectation.
Speaker 4 (12:20):
Was Sears I think before that run and.
Speaker 6 (12:21):
Sears before that.
Speaker 3 (12:22):
But the Sephora thing I find interesting because people kind
of love that model. I mean, was the hope right
that they was he was going to bring actual products right,
like whether and which do have incredibly high margins, whether
it's I don't know, is it skincare? Like what was
it that he they thought he was going to bring in?
Speaker 9 (12:40):
So do you remember like the dry powder? You know,
we all go work out and your hair is kind
of sweaty, and you're like, I'd love to gift shape
them powder and go with. So they added dry powder.
They try to deoder. And the thing is with Sephora,
you're not looking for performance in all your product. When
you moved to an active airline, you need to solve
for performance, and that's not easily done. In fact, I
(13:02):
don't even know if there's a product today out there
that actually works to solve real performance issues. I think
it's still a hole in the market.
Speaker 3 (13:10):
It's called anyone take a shower? I mean to be honest, like, yeah,
there's no I don't go work out and then like
go out to dinner.
Speaker 4 (13:18):
Yeah, and like, you know something for shoes. I don't know.
Speaker 7 (13:21):
I don't know.
Speaker 6 (13:21):
Well, I don't know if you're doing yoga you're in
bare feet.
Speaker 4 (13:24):
Yeah, that's a good point, you know.
Speaker 3 (13:25):
Can I just say, like I was thinking about the
pair of yoga pants I wear all the time.
Speaker 6 (13:28):
It's Outdoor Voices.
Speaker 4 (13:30):
I bought them. Has that company has had its own
share of iterations.
Speaker 3 (13:33):
Years ago though, And it was because my daughter wanted
something and I'm like, these.
Speaker 6 (13:36):
Are really cool.
Speaker 3 (13:37):
But it was innovative because they had these side pockets
and I use them for traveling. I can throw my
cell phone in and so and so. So it's not
been Lulu that I have picked up something.
Speaker 1 (13:47):
Well put them Come on in on the idea of
brand value here, because Chip Wilson is a name we
haven't mentioned in a few minutes he's the founder of Lululemon.
He's outspoken. Everybody remembers what happened when he was CEO
of the company. He's out with a state. He's got
like a pr agency. He says, quote, the erosion of
premium brand value in the company's core markets demonstrates that
(14:08):
the board does not understand its target customers anymore or
what will drive shareholder value at Lululemon over the long term.
He blasted them in this statement earlier this morning. Is
that view widely held by analysts.
Speaker 9 (14:24):
I think you can blame anyone right about now because
lul Lemon hasn't been able to perform as it did historically.
But that said, you have to remember that the landscape
has very quickly changed because everyone has access to consumers,
everyone has access to intelligence and data and technology, and
you're leveling the playing field. Lulu Lemon's brand still has
(14:48):
great brand equity. Don't get me wrong. It's still a
very well known and preferred brand, and its sales are
very strong internationally, especially China where many can't even get
in and get it right. So I do give them
credit for their international growth. I give them credit for men,
I give them credit for digital. It's just when it
comes to women, they just haven't had the innovation. I
(15:10):
really think it's a product missed up. They need more innovation.
They need a constant flow of new products that excite
and delight the customer, and they haven't been able to
do that. Well. I agree with you.
Speaker 3 (15:20):
I've walked it in out of there, and I really
do like the quality of their their stuff. I think
there is something to be said for that. But I
agree with you, Punam. I walk in and I'm like,
kind of seen it all before, or I've got it
already at home, and so I need something else. Chip
Wilson just real quickly thirty seconds. Does he have much sway?
I was just looking at the HDS function on the Bloomberg.
Speaker 6 (15:39):
Does he still only.
Speaker 1 (15:40):
Calls himself the top independent active shareholder?
Speaker 4 (15:44):
He calls himself that today.
Speaker 9 (15:47):
I don't have the numbers in front of me, but
he definitely is among the top, and I would say
he does have, you know, some push, especially when a
company isn't doing well right, so you have to think
about the dynamics that play here. Little Lemon isn't performing
while their results domestically are not anywhere where we would
like to see them and they're not going to meet
their twenty twenty six targets based on our analysis. So
(16:09):
at this point, I think when you have a founder
who really established this company, right, who really brought into
it through, he does.
Speaker 3 (16:16):
Have a say all right, Punham, thank you, thank you,
have a great weekend, Punam Goyle. She's Bloomberg Intelligence Senior
analyst for e Commerce and eth Leisure. Been following this company,
as you can tell, knows it inside and out for
many years.
Speaker 2 (16:29):
This is the Bloomberg Business Week Daily podcast. Listen live
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New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 1 (16:48):
Well a defense system that could defend the US from
the nuclear missile arsenals of Russia, China, and North Korea.
It's the so called Golden Dome and iunce just days
into President Trump's second administration. The president has said the
project will cost about one hundred and seventy five billion
dollars and it'll be completed by the end of his term.
In twenty twenty nine, but defense experts say those targets
(17:09):
are unrealistic. Bloomberg analysis on the final price tag could
reach many multiples of that, And Carol, the tech not
even confirmed that could actually work.
Speaker 3 (17:19):
You know, I think what I find fascinating reminds me
of like President Reagan and is Star Wars.
Speaker 4 (17:24):
We talked about in like grade school as not working.
Speaker 3 (17:27):
Right exactly, although you kind of understood where he's going,
but this certainly feels like and is more of a reality.
Speaker 1 (17:33):
Well, it's a Bloomberg big take and just a fantastic read.
Joining us now is Santa Paschenker, Bloomberg News space reporter. Also,
Wayne Sanders joins us. He's Bloomberg News Bloomberg Intelligence Senior
Defense chanalyst. Santa joins us from Washington, DC. Wayne joins
us from Maryland. First, Sana, I want to start with you,
Carol said, the whole concept reminds her of Star Wars
(17:55):
during the Reagan administration. But explain exactly how the Golden
Dome would work, the satellites, the missiles, what would happen?
Speaker 8 (18:04):
Yeah, totally.
Speaker 10 (18:05):
So the Golden Dome is intended to be a multi
layered defense missile defense shield. So the way it would
work is like, in the case of an attack from
an adversary like Russia, North Korea, or China, a nuclear
missile would first encounter a space based layer of defense,
which would include space space missile interceptors, and that technology
(18:27):
doesn't yet exist, but those are intended, those which were
outlined in President Trump's executive Order as a requirement of
the Golden Dome would attempt to counter the missile at
the very first stage, which is in space, and then
if they make it past that space based layer of defense,
there would be other layers of defense, including the high
(18:49):
atmosphere and even on the ground like using Patriot and
bad batteries to intercept different types of missiles that could
be launched from adversaries.
Speaker 4 (18:58):
So it's really like, go ahead, Sorry I interrupted you.
Speaker 10 (19:02):
Oh, I was just gonna say. It's really like there's
a net on every single level that is hoping to
engage those missiles and destroy them.
Speaker 4 (19:10):
Okay, we're going to cool.
Speaker 1 (19:11):
We're gonna get to the astronomical price tag in just
a minute with this, and also the how realistic a
solution such as this is. But first I want to
bring in Wayne Sanders. He's Bloomberg Intelligence senior defense analyst.
He joins us from Maryland, Wayne as Santa and the
team right in the piece. Up to now, the strategy
to prevent annihilation of the United States has really depended
(19:35):
on deterrence, this idea of mutually assured destruction and nuclear deterrence.
Why why do we need to make a change there?
Speaker 11 (19:46):
Well, I think the first really important piece is there
is a lot that actually goes on within within missile defense,
ballistic missile defense within the United States that we already have.
And one of the biggest you know, precursors to Gold
and Dome was really looking out and saying we have
a lot of capability that is not interoperable. We have
capabilities like Lockheed's AG's defense for the Navy. We've got
(20:08):
ballistic missile defense of Guam, and we have the FAD
batteries that that Saana brings up as well as well
as Patriot and Factory interceptors. We have a lot of capability,
but what we don't have is the ability to see
all of those, to include the sensor layer that she
brings up as well. We have tracking layers from ground
as well as in the air as well as in
(20:28):
space and so long range determined discrimination radars, next generation
overhead persistent you know.
Speaker 7 (20:35):
All these different things.
Speaker 11 (20:36):
But what they don't do is all talk to the
senior military leaders at the same time and say, I
can see a launch coming from country X, it's going
to take x amount of time to get to get
to the US or to one of our allies. You know,
you can shoot a hypersonic missile from mainland China and
reach South Korea and Japan in six to eleven minutes.
You can reach Australia in fifteen minutes. That's that is
(20:59):
a very very quick turnaround in terms of trying to
make a decision. And if you're only picking it up
based off of one commander who has happens to be
in a submarine or a surface vessel that sees this,
they've got to get that to the National Command, the
National Military command authority to make those decisions a lot faster.
Speaker 3 (21:17):
Yeah, I think about, you know, weighing all of the
layers of this, and yes, there's missiles, and you know,
I go back to my college days and we were
talking about ICBMs and you know, deterrence, and you know
how that kind of changed warfare. But but what I
guess what I'm curious about, you know, throwing drones into
this and this is a whole other kind of lower
(21:38):
level I just think about what's needed to protect ourselves
against that, The cost, the implications, how does that even
just kind of complicate or add to the cost of
all of this.
Speaker 11 (21:52):
Well, absolutely, you know the layered defense that Sona brings
up absolutely hundred percent. You have exo atmospheric you think
about those ICBM threats, You think about things that are
going to go into space and come back down.
Speaker 7 (22:02):
We have to be able to reach those.
Speaker 11 (22:05):
But you also then have the drone swarm fight that
is also out there right So part of the Pentagons
Replicator one point zero and Replicator two point zero initiative
is being able to counter drones and then be able
to add to our own arsenal. So when you look
at a billion plus dollars for drone development and counter
uas for the twenty twenty six NDAA, a lot of
(22:26):
that in the Golden Dome piece is really looking at
high powered microwaves. It's looking at high energy laser technologies
and companies that are out there right now building these things.
So they can counter that threat, so that the strategic
level capabilities, the expensive pack freeze right, four to six
million dollars to fire those patriot at the PAC three interceptors.
(22:48):
You don't want to do that against the thirty thousand
dollars drone. So being able to put all these pieces
together and make sure that you can identify the capability
and shoot it down with the right thing.
Speaker 6 (22:58):
So how to come back in on this? All I
can think about is the price tag.
Speaker 3 (23:00):
You know, I've been I've been to countries like Costa
Rica where I think they spend nothing on military and
what they can do in terms of education and healthcare
and just different things. Yeah, it's just so talk to
us about the cost because I think what was it
back in October.
Speaker 1 (23:14):
Seventy five billion? Is is what the President said the
project would cost?
Speaker 3 (23:19):
Right, go ahead, No, But what I was going to
say is that we already have a budget deficit that's
topping and logging a one point eight trillion dollar mark.
What would something like like Tim put out a number?
What the president thinks? What did you guys find out?
And can we afford to do this?
Speaker 6 (23:34):
Sound like my husband? Can we afford to do this?
Speaker 10 (23:38):
Yeah, totally. So when we kind of estimated how much
it would cost to defend against an all out attack
from the combined nuclear arsenals of Russia, China, and North Korea.
So think worst case scenario, the defense systems that we
would need to really successfully counter that would cost about
one point one trillion dollars, so way more than what
(23:59):
Trump is claiming as one hundred and seventy five billion,
if you're adhering to the requirements that he's outlining in
the Executive Order, which is that you know, this golden
dome will protect against any foreign aerial attack. And then
but you know, a golden dome that protects a little
bit less could be built more cheaply, even though that's
not maybe exactly what he said in the Executive Order.
(24:20):
So we also calculated the cost of one that a
golden dome that could protect against an all out attack
from just one adversary like Russia, and we found that
that even that was still eight hundred and forty four
billion dollars.
Speaker 2 (24:33):
And you know a.
Speaker 10 (24:33):
Lot of these costs are just from procuring the systems,
and a lot of them don't even exist yet. Like
I mentioned, space based interceptors, is something that President Trump
specifically states in the Executive Order needs to be part
of this Golden Dome, and that technology doesn't even exist yet,
so you would need a lot of you know, research
and development money as well, and we didn't even include
(24:54):
that in our analysis. So you know, it's I think
it's pretty well known that that that's a potentially underestimate
of what this would actually cost if it is built
to what he's stating in the Executive Order.
Speaker 1 (25:08):
Then how do you get that number, SAWNA up to
one point one trillion dollars this maximum risk scenario estimate?
What does that calculate?
Speaker 10 (25:15):
Yeah, So what we did is we kind of so
the nuclear arsenal of Russia, North Korean and China, those
numbers of what missiles they have have been published by
the Defense Intelligence Agency. So what we did was we
did analysis to kind of find out how many defense
systems we would need to really protect against all of
these missiles coming at the United States at once. And
(25:37):
you know, we did that using a combination of Pentagon documents,
prototype contracts, think tank estimates, and so we kind of
compiled all these costs of all the defense systems as
well as the quantity of the defense systems needed to
come up with this final number of one point one trillion.
Speaker 3 (25:54):
All right, So, Wayne, we live in a world where
we talk a lot about AI and you know tech spend,
and you know you've got to do upgrades on things
like this. Isn't a case of we build this dome
and set it and forget it right or help me
out here.
Speaker 6 (26:07):
Are we going to.
Speaker 3 (26:07):
Constantly having to be doing kind of upgrades, improvements and
so on.
Speaker 7 (26:13):
No, they're definitely going to require that.
Speaker 11 (26:15):
I think a lot of the AI integrators that you're
already seeing right even with one of the Golden Dome
pieces early on was Palentteer with SpaceX and saying, hey,
we want to be able to play in this space
as well. During the bidding portion for Golden Dome, you're
going to end up having to do that. So a
lot of this also includes, like cybersecurity, making sure that
(26:36):
you have the open system architecture necessary to be able
to provide the upgrades. But like Saana said too, is
you also have to build the scalability. You're still going
to come down to industrials. You have to build the
satellites capable of doing this. You have to build the
radars and the sensors to be able to meet that,
and then you have to get to the interceptor's point
to be able to do that. Right, you and I
(26:58):
we've had this conversation before. If you even take just
the pack three interceptors, right, they're using the Patriot system locked.
You know, they were at five hundred and fifty per
year that they build and then you're they're up to
seven fifty that they're hoping for twenty twenty six, twenty seven.
They're adding additional lines, so they're doing a great job
of actually being able to reach some of the demand.
Speaker 7 (27:19):
But those are for ground based Patriot systems.
Speaker 11 (27:22):
If you're now all of a sudden trying to add in,
I need to create an interceptor capability space based interceptor
that's going to be in orbit, that's going to go
on these satellites. You've got to build to that capacity
as well, and then add on to all of that piece, Right,
is that AI integration.
Speaker 7 (27:38):
Every time that there is something new that.
Speaker 11 (27:41):
China RuSHA does, we have to be able to make
sure that we can defend that in the cybersecurity arena
for the satellite platform.
Speaker 1 (27:47):
Themselves, Wayne, we got to run, but just yes or no?
Does this happen by the end of President Trump's term?
Speaker 7 (27:53):
No?
Speaker 11 (27:53):
Phase one can happen where interoperability all their stuff can
happen space based noe.
Speaker 1 (27:58):
All right, if the ballroom was going to get done, No,
that's an easier it's not in space.
Speaker 3 (28:05):
Saana Pashankar and of course our Wayne Sanders, thank you
so much.
Speaker 6 (28:09):
Incredible story.
Speaker 1 (28:11):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (28:19):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (28:35):
You know today's an IPO day, is it? Yeah?
Speaker 1 (28:37):
Wealth Front started trading. That's the robo advisor fintech company.
Speaker 6 (28:41):
Yeah.
Speaker 1 (28:42):
I think UBS was supposed to buy it a few
years ago. It's now trading just up about three point
three percent value though, at a two point one billion dollars.
Speaker 4 (28:51):
Wow, how can its debut today?
Speaker 6 (28:53):
I didn't see that, did it.
Speaker 5 (28:54):
What's it doing?
Speaker 4 (28:55):
It's up three point two percent? Oh interesting, Yeah you could.
Speaker 1 (28:58):
It's not too late to add to one of your
Gainers maybe do an honorable mention it.
Speaker 6 (29:01):
I am so overwhelmed with Gainers today.
Speaker 4 (29:04):
Christy.
Speaker 1 (29:05):
You well, he's not a robo advisor. He's a real
person we're talking about. Andrew Cries, chief investment officer at
Crescent Grove Advisors. The firm has about five billion dollars
in assets under management. Andrew joins us from Milwaukee this afternoon. Andrew,
good to have you on the program. Last time you
were here with us in the studio. A lot has
happened since then, and I'm you know, a lot of
(29:26):
questions I think too, as we just heard from Jordan
and from Charlie about where we are or are not
when it comes to AI spend and an AI bubble.
Speaker 4 (29:36):
How are you looking at that in the context of
the trade.
Speaker 12 (29:40):
Yeah, everybody wants to know where this AI theme is going.
And also great to be with you. So I think
from our perspective, the risk going forward is that the
so much is in the price at this point, right,
You've got such a sort of perfect outlook that's being
priced into these companies at this point. In a particular,
take a company like Oracle, where you're seeing more debt
(30:02):
funding come into play as opposed to you know, some
of the other MAG seven members that are largely funding,
they're spending out of free cash flow. You know, you
introduce sort of a unique element to that specific stock.
But ultimately, you know, people are saying, can they deliver
on the promise the productivity gains, the you know, the
ultimately the earnings, the return on invested capital, all this
(30:24):
money that's being sunk into this theme, can we see
that produce something of value? And if not, then I
think these valuations are probably a little bit hard to justify.
So it's it's data point by data points, sort of
case by case is you as you look at it.
But that's certainly top of mind as you move into
twenty twenty six.
Speaker 3 (30:45):
When clients come to you and I know it's long term,
and they it's about you know.
Speaker 1 (30:51):
They say, I want to go back in time when
I want you to put all my money in Vidia
ten years ago?
Speaker 3 (30:55):
No no, no, no, no, no, yeah, yeah, exactly right,
or by Bitcoin ten years ago?
Speaker 6 (31:00):
Where do they want to put money?
Speaker 3 (31:01):
And I understand everybody's got their own individual goals and
a lot of it's about you.
Speaker 6 (31:04):
Know, maintaining wealth, not only growing it.
Speaker 3 (31:08):
But so I'm just curious, what is it that they
ask you most about when it comes to different trends, narratives,
investment plays.
Speaker 12 (31:17):
I think right now, what we've heard a lot from
clients is just this uncomfortable sense about this rally. You know,
since libration day kind of off the April lows that
it just feels uncomfortable for some reason. You get a
lot of talk about all time highs and do we
pull back with our equity allocations, and certainly we're not
(31:37):
opposed to taking some chips off the table and in
particular thinking about where do we rotate to find relative
value across markets? And you know, I think one of
the big themes is we look out in the next
year and talk about with inequities in particular that have
done so well so the growthy side of equities, these
megacap tech names, you know, taking chips off the table there,
which would be the first order effects of AI and
(31:57):
the theme that we're talking about here with you know,
the this outsized performance that we've seen from the mag
seven and related names. Think about what's the next play,
what's the second order the third order effect here? Yeah,
I was just gonna say from that perspective. We think
it's the diffusion of AI through the economy into more
of these legacy kind of old economy type names. So
(32:18):
you know, that's something that we're positing to clients. Is okay,
we appreciate the fact that there's this sort of momentum
play in markets, and you're a little bit skittish about
levels here in valuations. Let's think about, you know, areas
where we can rotate into things that offer better value
right now in markets while maintaining some of your exposure.
Speaker 6 (32:35):
In aggregate like healthcare or what yeah.
Speaker 12 (32:39):
I think healthcare industrials, you know, sort of these manufacturing
segments of the economy. Again, just this these old line
areas of the economy, even business services, more traditional businesses
like that. And we look at it only from the
public market side of things, but the private market side
of things. So we spend a lot of time looking
at you know, private equity or certainly venture capital growth equity.
But if you think about private equity in the way
(33:00):
that they can touch these traditional businesses, small medium sized
businesses apply some AI in a thoughtful, novel way and
drive real productivity gains. And if you can find a
manager that can do that in a really systematic fashion
and has some sort of edge in terms of the
way that they're deploying that throughout their portfolio. We think
that's a really interesting compliment to what you're seeing on
(33:21):
the public market side as well.
Speaker 1 (33:23):
Well, let's go back to public markets and just think
about geographies for a second. Where do you think this
happens in terms of AI spilling out into the non
AI companies over the next couple of years. Does it
happen in the US or do investors would investors be
good to look outside of the US?
Speaker 8 (33:40):
Yeah, I think it happens globally.
Speaker 12 (33:42):
And this weaves into another theme that we're seeing and
expecting to continue to play out, which is really deglobalization,
but reregionalization, I suppose, is the way we would frame
that in the sense that Europe gets more europe centric
in the way that it thinks about maybe even its
own AI technology, you know, and sort of the sovereignty
around its AI capabilities. But we think AI will be
(34:05):
a universal technology that gets deployed across the world in
different capacities, and then that really ties back into this
relative value theme as well. Right where you're looking at
markets xus that are trading at much more reasonable valuation
starting points, but continue to have a pretty good catalyst
in terms of you know, fiscal spending picking up defense spending,
(34:25):
certainly within Europe as a sort of poster child there.
Speaker 8 (34:28):
You've got loose fiscal policy in Japan.
Speaker 12 (34:31):
You've got China which looks set to continue to be
providing stimulus to its markets. So you've seen this positive
revision in earnings expectations if you look at the EFA,
if you look at emerging markets indices. We think that
then is kind of the relative value rotation theme for
us where you come out of you know, some of
these megacap tech names that have done so well, look
(34:52):
at other areas of the market that are poised to
sort of accelerate their earnings growth into twenty twenty six.
Speaker 3 (34:58):
Biggest risk the new year just quickly just got about
thirty seconds.
Speaker 8 (35:03):
Yeah, it's inflation to us.
Speaker 12 (35:05):
If inflation stays stubbornly high, and we're already seeing you know,
the ten year today's taking back up towards four point
two percent. But if you see inflation expectations really rerating
to the upside, you see that ten year move back
towards five percent. We think that's that's the big concern.
Then all of the knock on effects that come alongside
sort of longer duration securities repricing as a function of
(35:27):
elevated inflation expectations. So that's what we're watching really really
closely in the next year.
Speaker 1 (35:32):
Andrew cry thanks so much for joining us chief investment
officer at Crescent Grove Advisors. Hopefully next time we see
you back here in New York.
Speaker 2 (35:41):
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Speaker 9 (36:11):
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Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
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Speaker 3 (00:32):
Let's broaden out a little bit and let's get into
maybe investors have they been reacting since we got that
FED decision and what we are seeing with investment flows
and what's going on in terms of activity.
Speaker 1 (00:42):
For that, we turned to Stephanie gild, chief investment officer
over at Robinhood Markets. You joined us here in the
Bloomberg Business Week Studio. Stephanie, I wanted to start with
what's happening on the Robinhood platform because you certainly have
a certain segment of the investing population.
Speaker 4 (00:55):
What are you seeing on Robinhood right now?
Speaker 5 (00:57):
We're seeing still not buying, but it's it's been more muted,
i'd say, than it was before, and it's been in
some of the things that have been going down or
had like Netflix, for example, You've also seen where there's
been sales, it's been more in the AI oriented names.
So I've kind of shared this before, but our customers
(01:18):
tend to hold corepositions and trade around them, meaning they
buy when they go down and sell when they go up.
But we're seeing a little bit differently where there seem
to be like being more subjective about what they're investing in.
And that's why I say, like it was kind of
interesting to see in video being sold and you know,
things that are kind of under.
Speaker 3 (01:35):
Pressure, so selling as rather than selling as they have
gone up a lot and taking some profits, they're selling
as they're going down.
Speaker 5 (01:42):
Yeah, but they probably have embedded profits because they will
them all year. So I think that's like kind of
giving up a little bit on the AI trade for now.
Speaker 6 (01:49):
Well, like I totally get it.
Speaker 3 (01:50):
Like you know, Tim and I were talking about Oracle,
like it is still up almost fourteen percent year to date,
but we've seen a more than forty percent decline from.
Speaker 6 (01:58):
Some of them when it hit a record back in
in September.
Speaker 3 (02:02):
Excuse me, so, I mean, are there how much can
you dig deeper into.
Speaker 6 (02:07):
The data in terms of what you're seeing?
Speaker 3 (02:08):
Is it mag seven names that people are getting out
of Is it all tech?
Speaker 6 (02:12):
Is it just AI related? Like what are you just say?
Speaker 5 (02:15):
I related that I've seen, and then some of the
like core we you know those kind of names are like.
Speaker 6 (02:21):
Cloud, Yeah, exactly.
Speaker 5 (02:23):
You've also seen some buying in just broad based ETFs
and some t bill oriented ones that like kind of
make me feel like diversification, you know, kind of parking
things rather than trying to pick.
Speaker 1 (02:38):
So less playing the market and more like long term
diversified index funds I think for.
Speaker 5 (02:43):
Now, Like for now, usually we see that activity when
there's a big dip, like they go into ETFs first
and then they play the differences and names.
Speaker 4 (02:50):
How are they playing this? Uh?
Speaker 1 (02:52):
I don't want to call it a crypto winter yet,
but we're down another three percent on bitcoin, hovering around
ninety thousand dollars per bitcoin right now.
Speaker 4 (02:59):
How's that played out?
Speaker 5 (02:59):
Of the last couple of weeks in the stocks, I've
seen actually some buying and like the micro strategy names,
but on the crypto side, have actually seen more selling
than buying.
Speaker 4 (03:08):
Interesting.
Speaker 1 (03:09):
Yeah, So instead of actually holding the patterns that you're seeing,
instead of actually holding the cryptocurrency, people are instead putting
money into the proxies or the hoarders.
Speaker 5 (03:22):
Yeah there, I mean, if you can make that relationship.
I kind of look at two different dashboards and crypto versus,
but I did think it was interesting to see buying
into the the equity related.
Speaker 1 (03:32):
Yeah, because certainly strategy has had its own set of
of challenges. Okay, so let's bo back out a little
bit big macro picture right now. We haven't had a
chance to speak to you in a few weeks, and
given what we heard from Jay Powell, we just heard
from Mike McKee about different views of the economy coming
from different people, where do you sit.
Speaker 5 (03:50):
I think the economy's okay, actually, like I think when
you're this is totally anecdotal, but at my feeling is
that like New York City is busy, travel is lot,
like I actually think the consumers generally okay. That being said,
the lower end consumer is still not doing well, and
I don't think they've been doing well for a while.
Speaker 2 (04:08):
So I actually and I.
Speaker 5 (04:09):
Do think things got overvalued market wise, So I do,
and I also think that the FED is caught between
a rock and a hard place because you do have
this explosive growth growth in the AI trade growth and
credit markets, and so they have to kind of worry
about that being overblown and that creating increased inflation. Obviously
(04:33):
we don't know what's going to happen with terrorists, but
that's creating an issue for them too. Then you do
have the lower end consumer that is still struggling. So
it makes me think of like Europe post two thousand
and eight, when they had to worry about like Spain
versus Germany. And so that's why I think there's so
much of a debate within the FED. And you know,
Powell did say, like, don't even look at the data
(04:53):
that's going to come out next week.
Speaker 7 (04:55):
Do you agree with him?
Speaker 6 (04:56):
Who doesn't yet?
Speaker 5 (04:57):
I yes, I'm like, and I don't. I worry about
the quality of it too. Like in general, I.
Speaker 3 (05:02):
Want to ask you about I'm looking you know, we're
almost at the end of the year, so we can
look at the S and P five hundred, the major
industry groups and see what really did well or didn't do.
I mean, communications services names thirty one percent, higher information
tech twenty three percent. So even though I mean the
mag seven, even if we start to see you know,
pullbacks on some of these names or the AI trade
(05:25):
still outperforming. Industrials up almost twenty percent, financials up thirteen percent.
I'm looking at the S and P Composite Pharmaceuticals Index.
It's up of almost twenty one percent. Now, yeah, yeah,
finally exactly. So I'm just curious, what else can you
you dig deeper in a year where we've talked so
much about AI, We've talked about rare earths, we have
seen some you know m and a activity going on.
Speaker 6 (05:48):
What is it that you have also.
Speaker 3 (05:49):
Seen that are interesting and you can get an idea
of what investors are interested in what they are not interesting?
Speaker 5 (05:54):
Have been kind of starting I've been bottom fishing, like
we've been, yeah, sort of store. I sorted like the
Russell one thousand into you know, top and bottom players,
and it just felt like there was a rotation that
started on October twenty ninth, which was when we had
that like six percent pullback, and a lot of those names,
like of the top one hundred, the ones that are
up the most one hundred most this year, forty one
(06:14):
of them are in a negative return since October twenty ninth.
So I've been We've been kind of looking around, being
like where is there still growth? And I actually think
like the other thing we've been doing this year is
investing with in alignment to fiscal policy because we do
think like what the Trump administration is doing is important
to understand, and I think the consumer is going to
be more important for them this year or coming into
(06:38):
the next year, I should say. And so we've been
looking more in like the retail space of players that
are interesting and so.
Speaker 6 (06:45):
So retailers, tailor and brand names.
Speaker 5 (06:48):
In retail, like on holding Lululemon, like they're down, you know,
they're down double digits this year or maybe not, maybe
not on after the yes yearly so yes, there is
down fifty percent, it's up ten percent or so today,
And so we just think like there is value to
be found there while we wait to see what happens
(07:09):
in the tech world.
Speaker 1 (07:11):
But on a Lulu for example, there seems doesn't a
lot of that depend on who the next CEO of
the company is, and they don't even know who that's
going to be.
Speaker 5 (07:20):
There is execution risks there now for thee with obviously
the change in the CEO, but I think it also
it lost some shine on its brand, and I think
they have done a lot to try to turn that around,
and you've seen that in gap this year, which is
also like, I think they're further into that journey, but
I think it actually creates an opportunity.
Speaker 4 (07:41):
Yeah, perhaps been doing really well of late.
Speaker 3 (07:43):
Yeah, it's now up about eleven percent year to date.
But your point is right that if the consumer feels
better and is out there spending, if we get more
juice in terms of the way of stimulus, you know,
whether you believe it's the right strategy or not, if
there's more money in the pocket of consumers.
Speaker 8 (07:58):
Trying not to invest.
Speaker 3 (07:59):
In my heart, I know, I know, I know, I
know it's going to go somewhere, and so there are
names that will certainly benefit. Great staff love digging deep
into your platform. Stephanie Gilch, chief investment office at robin
Hood Markets, Joining us right here on Bloomberg Business Week Daily.
Speaker 4 (08:17):
Stay with us.
Speaker 1 (08:17):
More from Bloomberg Business Week Daily coming up after this.
Speaker 2 (08:24):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and the Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 3 (08:39):
All right, let's get to a stock we've been talking about.
We're talking about Lululemon. Stock is the number one gainer
in both the S and P five hundred Nasdaq one hundred,
up just shy of twelve percent. Even so, the stock
is still down forty five percent year to date. We
did see the stock rally after the company boosted its
full year outlook and announced him that it's CEO would
step down.
Speaker 1 (08:58):
The company searching for a replacement for Calvin McDonald. Do
will depart the top post at the end of January.
Putamgyle is Bloomberg Intelligence Senior analyst, free Commerce anath Leisure.
She joins us from New Jersey. So, first of all,
were you as surprised by the market as the market
was by this move?
Speaker 9 (09:15):
You know, I kind of expected a move similar to
this because Little Lemon has just not been performing well, right,
So when you have instances in retail where there's just
no point of understanding how they're going to turn this
business around, when it takes a longer time, there is
usually some sort of management change. So this was in
(09:36):
my mind a little overdue. And it'll be interesting to
see on who fills these shoes, because I think that's
key to the turnaround in the vision that they put forward.
Speaker 1 (09:44):
So on that, who do you think, like, what are
some names that are being banded about the analyst community
right now?
Speaker 9 (09:50):
You know, names I don't know about, but we do
know that we want to product lead. I would like
to see a product led leader because at the end
of the day, retail is about product and Lula Lemon
needs to bring its product back in play ahead of
competition and really where consumers feel like they're getting something
that they can't get anywhere else.
Speaker 6 (10:10):
You know, it's interesting.
Speaker 3 (10:11):
First of all, you go to the dees page of
Lululemon and under management.
Speaker 6 (10:15):
There's no no names there right now, which I don't know.
Is there something wrong with my screen or I don't know?
Speaker 1 (10:20):
You think, point, how often is it that we see
a CEO exited.
Speaker 4 (10:25):
Ye out a plan for a new one? Yeah, exactly,
a big deal yesterday.
Speaker 6 (10:29):
So that's a good point put him.
Speaker 3 (10:31):
You say, it's long overdue, and so like, why isn't
it that they internally or the board didn't say this
ain't working because he's been there for a few years now,
So why why did it take them so long? Or
did they not give him enough time to figure it out.
Calvin MacDonald we're talking about.
Speaker 9 (10:49):
Well, he's been with Little Lemon for seven years, I
think since twenty eighteen, right, so he's had a bairent
amount of time there when he came on board. The
excitement once you know all about the personal care remember
us talking about it. Where will they enter this business
that has seventy eighty percent margins and it would be
so great? And I'd say during the pandemic, things were
(11:11):
working great, right for not just them, for anyone who
had active war. That is how people dressed. That was
the movement. It was to be healthy, it was to
be out, It was to work out and really lounge
at home while you're working. So what happened post pandemic?
And that's really where we kind of think about what
did the leadership do to stay ahead of trends? And
(11:32):
I think as we exited the pandemic, we didn't see
as much innovation as we would have liked, because you
saw competitors like Alo, like Vori and others really come
in with competitive product, sometimes at similar price points and
took mind share and wallet share of the shopper. So
that just brought us to question, do we need vision
(11:55):
from a leader that has the product background to really
drive a product ledterc And keep in mind, over the
last few years, Lululeman has had several leaders leave the company,
so there has been turnover.
Speaker 3 (12:09):
You know, it's interesting you go back to Yeah, I
forgot about that when.
Speaker 6 (12:12):
He came in.
Speaker 3 (12:13):
His background, I mean, he had been president CEO of
Sephora USA for five years, right, So the expectation.
Speaker 4 (12:20):
Was Sears I think before that run and.
Speaker 6 (12:21):
Sears before that.
Speaker 3 (12:22):
But the Sephora thing I find interesting because people kind
of love that model. I mean, was the hope right
that they was he was going to bring actual products right,
like whether and which do have incredibly high margins, whether
it's I don't know, is it skincare? Like what was
it that he they thought he was going to bring in?
Speaker 9 (12:40):
So do you remember like the dry powder? You know,
we all go work out and your hair is kind
of sweaty, and you're like, I'd love to gift shape
them powder and go with. So they added dry powder.
They try to deoder. And the thing is with Sephora,
you're not looking for performance in all your product. When
you moved to an active airline, you need to solve
for performance, and that's not easily done. In fact, I
(13:02):
don't even know if there's a product today out there
that actually works to solve real performance issues. I think
it's still a hole in the market.
Speaker 3 (13:10):
It's called anyone take a shower? I mean to be honest, like, yeah,
there's no I don't go work out and then like
go out to dinner.
Speaker 4 (13:18):
Yeah, and like, you know something for shoes. I don't know.
Speaker 7 (13:21):
I don't know.
Speaker 6 (13:21):
Well, I don't know if you're doing yoga you're in
bare feet.
Speaker 4 (13:24):
Yeah, that's a good point, you know.
Speaker 3 (13:25):
Can I just say, like I was thinking about the
pair of yoga pants I wear all the time.
Speaker 6 (13:28):
It's Outdoor Voices.
Speaker 4 (13:30):
I bought them. Has that company has had its own
share of iterations.
Speaker 3 (13:33):
Years ago though, And it was because my daughter wanted
something and I'm like, these.
Speaker 6 (13:36):
Are really cool.
Speaker 3 (13:37):
But it was innovative because they had these side pockets
and I use them for traveling. I can throw my
cell phone in and so and so. So it's not
been Lulu that I have picked up something.
Speaker 1 (13:47):
Well put them Come on in on the idea of
brand value here, because Chip Wilson is a name we
haven't mentioned in a few minutes he's the founder of Lululemon.
He's outspoken. Everybody remembers what happened when he was CEO
of the company. He's out with a state. He's got
like a pr agency. He says, quote, the erosion of
premium brand value in the company's core markets demonstrates that
(14:08):
the board does not understand its target customers anymore or
what will drive shareholder value at Lululemon over the long term.
He blasted them in this statement earlier this morning. Is
that view widely held by analysts.
Speaker 9 (14:24):
I think you can blame anyone right about now because
lul Lemon hasn't been able to perform as it did historically.
But that said, you have to remember that the landscape
has very quickly changed because everyone has access to consumers,
everyone has access to intelligence and data and technology, and
you're leveling the playing field. Lulu Lemon's brand still has
(14:48):
great brand equity. Don't get me wrong. It's still a
very well known and preferred brand, and its sales are
very strong internationally, especially China where many can't even get
in and get it right. So I do give them
credit for their international growth. I give them credit for men,
I give them credit for digital. It's just when it
comes to women, they just haven't had the innovation. I
(15:10):
really think it's a product missed up. They need more innovation.
They need a constant flow of new products that excite
and delight the customer, and they haven't been able to
do that. Well. I agree with you.
Speaker 3 (15:20):
I've walked it in out of there, and I really
do like the quality of their their stuff. I think
there is something to be said for that. But I
agree with you, Punam. I walk in and I'm like,
kind of seen it all before, or I've got it
already at home, and so I need something else. Chip
Wilson just real quickly thirty seconds. Does he have much sway?
I was just looking at the HDS function on the Bloomberg.
Speaker 6 (15:39):
Does he still only.
Speaker 1 (15:40):
Calls himself the top independent active shareholder?
Speaker 4 (15:44):
He calls himself that today.
Speaker 9 (15:47):
I don't have the numbers in front of me, but
he definitely is among the top, and I would say
he does have, you know, some push, especially when a
company isn't doing well right, so you have to think
about the dynamics that play here. Little Lemon isn't performing
while their results domestically are not anywhere where we would
like to see them and they're not going to meet
their twenty twenty six targets based on our analysis. So
(16:09):
at this point, I think when you have a founder
who really established this company, right, who really brought into
it through, he does.
Speaker 3 (16:16):
Have a say all right, Punham, thank you, thank you,
have a great weekend, Punam Goyle. She's Bloomberg Intelligence Senior
analyst for e Commerce and eth Leisure. Been following this company,
as you can tell, knows it inside and out for
many years.
Speaker 2 (16:29):
This is the Bloomberg Business Week Daily podcast. Listen live
each weekday starting at two pm Eastern on applecar Play
and the Android Auto with the Bloomberg Business app. You
can also listen live on Amazon Alexa from our flagship
New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 1 (16:48):
Well a defense system that could defend the US from
the nuclear missile arsenals of Russia, China, and North Korea.
It's the so called Golden Dome and iunce just days
into President Trump's second administration. The president has said the
project will cost about one hundred and seventy five billion
dollars and it'll be completed by the end of his term.
In twenty twenty nine, but defense experts say those targets
(17:09):
are unrealistic. Bloomberg analysis on the final price tag could
reach many multiples of that, And Carol, the tech not
even confirmed that could actually work.
Speaker 3 (17:19):
You know, I think what I find fascinating reminds me
of like President Reagan and is Star Wars.
Speaker 4 (17:24):
We talked about in like grade school as not working.
Speaker 3 (17:27):
Right exactly, although you kind of understood where he's going,
but this certainly feels like and is more of a reality.
Speaker 1 (17:33):
Well, it's a Bloomberg big take and just a fantastic read.
Joining us now is Santa Paschenker, Bloomberg News space reporter. Also,
Wayne Sanders joins us. He's Bloomberg News Bloomberg Intelligence Senior
Defense chanalyst. Santa joins us from Washington, DC. Wayne joins
us from Maryland. First, Sana, I want to start with you,
Carol said, the whole concept reminds her of Star Wars
(17:55):
during the Reagan administration. But explain exactly how the Golden
Dome would work, the satellites, the missiles, what would happen?
Speaker 8 (18:04):
Yeah, totally.
Speaker 10 (18:05):
So the Golden Dome is intended to be a multi
layered defense missile defense shield. So the way it would
work is like, in the case of an attack from
an adversary like Russia, North Korea, or China, a nuclear
missile would first encounter a space based layer of defense,
which would include space space missile interceptors, and that technology
(18:27):
doesn't yet exist, but those are intended, those which were
outlined in President Trump's executive Order as a requirement of
the Golden Dome would attempt to counter the missile at
the very first stage, which is in space, and then
if they make it past that space based layer of defense,
there would be other layers of defense, including the high
(18:49):
atmosphere and even on the ground like using Patriot and
bad batteries to intercept different types of missiles that could
be launched from adversaries.
Speaker 4 (18:58):
So it's really like, go ahead, Sorry I interrupted you.
Speaker 10 (19:02):
Oh, I was just gonna say. It's really like there's
a net on every single level that is hoping to
engage those missiles and destroy them.
Speaker 4 (19:10):
Okay, we're going to cool.
Speaker 1 (19:11):
We're gonna get to the astronomical price tag in just
a minute with this, and also the how realistic a
solution such as this is. But first I want to
bring in Wayne Sanders. He's Bloomberg Intelligence senior defense analyst.
He joins us from Maryland, Wayne as Santa and the
team right in the piece. Up to now, the strategy
to prevent annihilation of the United States has really depended
(19:35):
on deterrence, this idea of mutually assured destruction and nuclear deterrence.
Why why do we need to make a change there?
Speaker 11 (19:46):
Well, I think the first really important piece is there
is a lot that actually goes on within within missile defense,
ballistic missile defense within the United States that we already have.
And one of the biggest you know, precursors to Gold
and Dome was really looking out and saying we have
a lot of capability that is not interoperable. We have
capabilities like Lockheed's AG's defense for the Navy. We've got
(20:08):
ballistic missile defense of Guam, and we have the FAD
batteries that that Saana brings up as well as well
as Patriot and Factory interceptors. We have a lot of capability,
but what we don't have is the ability to see
all of those, to include the sensor layer that she
brings up as well. We have tracking layers from ground
as well as in the air as well as in
(20:28):
space and so long range determined discrimination radars, next generation
overhead persistent you know.
Speaker 7 (20:35):
All these different things.
Speaker 11 (20:36):
But what they don't do is all talk to the
senior military leaders at the same time and say, I
can see a launch coming from country X, it's going
to take x amount of time to get to get
to the US or to one of our allies. You know,
you can shoot a hypersonic missile from mainland China and
reach South Korea and Japan in six to eleven minutes.
You can reach Australia in fifteen minutes. That's that is
(20:59):
a very very quick turnaround in terms of trying to
make a decision. And if you're only picking it up
based off of one commander who has happens to be
in a submarine or a surface vessel that sees this,
they've got to get that to the National Command, the
National Military command authority to make those decisions a lot faster.
Speaker 3 (21:17):
Yeah, I think about, you know, weighing all of the
layers of this, and yes, there's missiles, and you know,
I go back to my college days and we were
talking about ICBMs and you know, deterrence, and you know
how that kind of changed warfare. But but what I
guess what I'm curious about, you know, throwing drones into
this and this is a whole other kind of lower
(21:38):
level I just think about what's needed to protect ourselves
against that, The cost, the implications, how does that even
just kind of complicate or add to the cost of
all of this.
Speaker 11 (21:52):
Well, absolutely, you know the layered defense that Sona brings
up absolutely hundred percent. You have exo atmospheric you think
about those ICBM threats, You think about things that are
going to go into space and come back down.
Speaker 7 (22:02):
We have to be able to reach those.
Speaker 11 (22:05):
But you also then have the drone swarm fight that
is also out there right So part of the Pentagons
Replicator one point zero and Replicator two point zero initiative
is being able to counter drones and then be able
to add to our own arsenal. So when you look
at a billion plus dollars for drone development and counter
uas for the twenty twenty six NDAA, a lot of
(22:26):
that in the Golden Dome piece is really looking at
high powered microwaves. It's looking at high energy laser technologies
and companies that are out there right now building these things.
So they can counter that threat, so that the strategic
level capabilities, the expensive pack freeze right, four to six
million dollars to fire those patriot at the PAC three interceptors.
(22:48):
You don't want to do that against the thirty thousand
dollars drone. So being able to put all these pieces
together and make sure that you can identify the capability
and shoot it down with the right thing.
Speaker 6 (22:58):
So how to come back in on this? All I
can think about is the price tag.
Speaker 3 (23:00):
You know, I've been I've been to countries like Costa
Rica where I think they spend nothing on military and
what they can do in terms of education and healthcare
and just different things. Yeah, it's just so talk to
us about the cost because I think what was it
back in October.
Speaker 1 (23:14):
Seventy five billion? Is is what the President said the
project would cost?
Speaker 3 (23:19):
Right, go ahead, No, But what I was going to
say is that we already have a budget deficit that's
topping and logging a one point eight trillion dollar mark.
What would something like like Tim put out a number?
What the president thinks? What did you guys find out?
And can we afford to do this?
Speaker 6 (23:34):
Sound like my husband? Can we afford to do this?
Speaker 10 (23:38):
Yeah, totally. So when we kind of estimated how much
it would cost to defend against an all out attack
from the combined nuclear arsenals of Russia, China, and North Korea.
So think worst case scenario, the defense systems that we
would need to really successfully counter that would cost about
one point one trillion dollars, so way more than what
(23:59):
Trump is claiming as one hundred and seventy five billion,
if you're adhering to the requirements that he's outlining in
the Executive Order, which is that you know, this golden
dome will protect against any foreign aerial attack. And then
but you know, a golden dome that protects a little
bit less could be built more cheaply, even though that's
not maybe exactly what he said in the Executive Order.
(24:20):
So we also calculated the cost of one that a
golden dome that could protect against an all out attack
from just one adversary like Russia, and we found that
that even that was still eight hundred and forty four
billion dollars.
Speaker 2 (24:33):
And you know a.
Speaker 10 (24:33):
Lot of these costs are just from procuring the systems,
and a lot of them don't even exist yet. Like
I mentioned, space based interceptors, is something that President Trump
specifically states in the Executive Order needs to be part
of this Golden Dome, and that technology doesn't even exist yet,
so you would need a lot of you know, research
and development money as well, and we didn't even include
(24:54):
that in our analysis. So you know, it's I think
it's pretty well known that that that's a potentially underestimate
of what this would actually cost if it is built
to what he's stating in the Executive Order.
Speaker 1 (25:08):
Then how do you get that number, SAWNA up to
one point one trillion dollars this maximum risk scenario estimate?
What does that calculate?
Speaker 10 (25:15):
Yeah, So what we did is we kind of so
the nuclear arsenal of Russia, North Korean and China, those
numbers of what missiles they have have been published by
the Defense Intelligence Agency. So what we did was we
did analysis to kind of find out how many defense
systems we would need to really protect against all of
these missiles coming at the United States at once. And
(25:37):
you know, we did that using a combination of Pentagon documents,
prototype contracts, think tank estimates, and so we kind of
compiled all these costs of all the defense systems as
well as the quantity of the defense systems needed to
come up with this final number of one point one trillion.
Speaker 3 (25:54):
All right, So, Wayne, we live in a world where
we talk a lot about AI and you know tech spend,
and you know you've got to do upgrades on things
like this. Isn't a case of we build this dome
and set it and forget it right or help me
out here.
Speaker 6 (26:07):
Are we going to.
Speaker 3 (26:07):
Constantly having to be doing kind of upgrades, improvements and
so on.
Speaker 7 (26:13):
No, they're definitely going to require that.
Speaker 11 (26:15):
I think a lot of the AI integrators that you're
already seeing right even with one of the Golden Dome
pieces early on was Palentteer with SpaceX and saying, hey,
we want to be able to play in this space
as well. During the bidding portion for Golden Dome, you're
going to end up having to do that. So a
lot of this also includes, like cybersecurity, making sure that
(26:36):
you have the open system architecture necessary to be able
to provide the upgrades. But like Saana said too, is
you also have to build the scalability. You're still going
to come down to industrials. You have to build the
satellites capable of doing this. You have to build the
radars and the sensors to be able to meet that,
and then you have to get to the interceptor's point
to be able to do that. Right, you and I
(26:58):
we've had this conversation before. If you even take just
the pack three interceptors, right, they're using the Patriot system locked.
You know, they were at five hundred and fifty per
year that they build and then you're they're up to
seven fifty that they're hoping for twenty twenty six, twenty seven.
They're adding additional lines, so they're doing a great job
of actually being able to reach some of the demand.
Speaker 7 (27:19):
But those are for ground based Patriot systems.
Speaker 11 (27:22):
If you're now all of a sudden trying to add in,
I need to create an interceptor capability space based interceptor
that's going to be in orbit, that's going to go
on these satellites. You've got to build to that capacity
as well, and then add on to all of that piece, Right,
is that AI integration.
Speaker 7 (27:38):
Every time that there is something new that.
Speaker 11 (27:41):
China RuSHA does, we have to be able to make
sure that we can defend that in the cybersecurity arena
for the satellite platform.
Speaker 1 (27:47):
Themselves, Wayne, we got to run, but just yes or no?
Does this happen by the end of President Trump's term?
Speaker 7 (27:53):
No?
Speaker 11 (27:53):
Phase one can happen where interoperability all their stuff can
happen space based noe.
Speaker 1 (27:58):
All right, if the ballroom was going to get done, No,
that's an easier it's not in space.
Speaker 3 (28:05):
Saana Pashankar and of course our Wayne Sanders, thank you
so much.
Speaker 6 (28:09):
Incredible story.
Speaker 1 (28:11):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (28:19):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (28:35):
You know today's an IPO day, is it? Yeah?
Speaker 1 (28:37):
Wealth Front started trading. That's the robo advisor fintech company.
Speaker 6 (28:41):
Yeah.
Speaker 1 (28:42):
I think UBS was supposed to buy it a few
years ago. It's now trading just up about three point
three percent value though, at a two point one billion dollars.
Speaker 4 (28:51):
Wow, how can its debut today?
Speaker 6 (28:53):
I didn't see that, did it.
Speaker 5 (28:54):
What's it doing?
Speaker 4 (28:55):
It's up three point two percent? Oh interesting, Yeah you could.
Speaker 1 (28:58):
It's not too late to add to one of your
Gainers maybe do an honorable mention it.
Speaker 6 (29:01):
I am so overwhelmed with Gainers today.
Speaker 4 (29:04):
Christy.
Speaker 1 (29:05):
You well, he's not a robo advisor. He's a real
person we're talking about. Andrew Cries, chief investment officer at
Crescent Grove Advisors. The firm has about five billion dollars
in assets under management. Andrew joins us from Milwaukee this afternoon. Andrew,
good to have you on the program. Last time you
were here with us in the studio. A lot has
happened since then, and I'm you know, a lot of
(29:26):
questions I think too, as we just heard from Jordan
and from Charlie about where we are or are not
when it comes to AI spend and an AI bubble.
Speaker 4 (29:36):
How are you looking at that in the context of
the trade.
Speaker 12 (29:40):
Yeah, everybody wants to know where this AI theme is going.
And also great to be with you. So I think
from our perspective, the risk going forward is that the
so much is in the price at this point, right,
You've got such a sort of perfect outlook that's being
priced into these companies at this point. In a particular,
take a company like Oracle, where you're seeing more debt
(30:02):
funding come into play as opposed to you know, some
of the other MAG seven members that are largely funding,
they're spending out of free cash flow. You know, you
introduce sort of a unique element to that specific stock.
But ultimately, you know, people are saying, can they deliver
on the promise the productivity gains, the you know, the
ultimately the earnings, the return on invested capital, all this
(30:24):
money that's being sunk into this theme, can we see
that produce something of value? And if not, then I
think these valuations are probably a little bit hard to justify.
So it's it's data point by data points, sort of
case by case is you as you look at it.
But that's certainly top of mind as you move into
twenty twenty six.
Speaker 3 (30:45):
When clients come to you and I know it's long term,
and they it's about you know.
Speaker 1 (30:51):
They say, I want to go back in time when
I want you to put all my money in Vidia
ten years ago?
Speaker 3 (30:55):
No no, no, no, no, no, yeah, yeah, exactly right,
or by Bitcoin ten years ago?
Speaker 6 (31:00):
Where do they want to put money?
Speaker 3 (31:01):
And I understand everybody's got their own individual goals and
a lot of it's about you.
Speaker 6 (31:04):
Know, maintaining wealth, not only growing it.
Speaker 3 (31:08):
But so I'm just curious, what is it that they
ask you most about when it comes to different trends, narratives,
investment plays.
Speaker 12 (31:17):
I think right now, what we've heard a lot from
clients is just this uncomfortable sense about this rally. You know,
since libration day kind of off the April lows that
it just feels uncomfortable for some reason. You get a
lot of talk about all time highs and do we
pull back with our equity allocations, and certainly we're not
(31:37):
opposed to taking some chips off the table and in
particular thinking about where do we rotate to find relative
value across markets? And you know, I think one of
the big themes is we look out in the next
year and talk about with inequities in particular that have
done so well so the growthy side of equities, these
megacap tech names, you know, taking chips off the table there,
which would be the first order effects of AI and
(31:57):
the theme that we're talking about here with you know,
the this outsized performance that we've seen from the mag
seven and related names. Think about what's the next play,
what's the second order the third order effect here? Yeah,
I was just gonna say from that perspective. We think
it's the diffusion of AI through the economy into more
of these legacy kind of old economy type names. So
(32:18):
you know, that's something that we're positing to clients. Is okay,
we appreciate the fact that there's this sort of momentum
play in markets, and you're a little bit skittish about
levels here in valuations. Let's think about, you know, areas
where we can rotate into things that offer better value
right now in markets while maintaining some of your exposure.
Speaker 6 (32:35):
In aggregate like healthcare or what yeah.
Speaker 12 (32:39):
I think healthcare industrials, you know, sort of these manufacturing
segments of the economy. Again, just this these old line
areas of the economy, even business services, more traditional businesses
like that. And we look at it only from the
public market side of things, but the private market side
of things. So we spend a lot of time looking
at you know, private equity or certainly venture capital growth equity.
But if you think about private equity in the way
(33:00):
that they can touch these traditional businesses, small medium sized
businesses apply some AI in a thoughtful, novel way and
drive real productivity gains. And if you can find a
manager that can do that in a really systematic fashion
and has some sort of edge in terms of the
way that they're deploying that throughout their portfolio. We think
that's a really interesting compliment to what you're seeing on
(33:21):
the public market side as well.
Speaker 1 (33:23):
Well, let's go back to public markets and just think
about geographies for a second. Where do you think this
happens in terms of AI spilling out into the non
AI companies over the next couple of years. Does it
happen in the US or do investors would investors be
good to look outside of the US?
Speaker 8 (33:40):
Yeah, I think it happens globally.
Speaker 12 (33:42):
And this weaves into another theme that we're seeing and
expecting to continue to play out, which is really deglobalization,
but reregionalization, I suppose, is the way we would frame
that in the sense that Europe gets more europe centric
in the way that it thinks about maybe even its
own AI technology, you know, and sort of the sovereignty
around its AI capabilities. But we think AI will be
(34:05):
a universal technology that gets deployed across the world in
different capacities, and then that really ties back into this
relative value theme as well. Right where you're looking at
markets xus that are trading at much more reasonable valuation
starting points, but continue to have a pretty good catalyst
in terms of you know, fiscal spending picking up defense spending,
(34:25):
certainly within Europe as a sort of poster child there.
Speaker 8 (34:28):
You've got loose fiscal policy in Japan.
Speaker 12 (34:31):
You've got China which looks set to continue to be
providing stimulus to its markets. So you've seen this positive
revision in earnings expectations if you look at the EFA,
if you look at emerging markets indices. We think that
then is kind of the relative value rotation theme for
us where you come out of you know, some of
these megacap tech names that have done so well, look
(34:52):
at other areas of the market that are poised to
sort of accelerate their earnings growth into twenty twenty six.
Speaker 3 (34:58):
Biggest risk the new year just quickly just got about
thirty seconds.
Speaker 8 (35:03):
Yeah, it's inflation to us.
Speaker 12 (35:05):
If inflation stays stubbornly high, and we're already seeing you know,
the ten year today's taking back up towards four point
two percent. But if you see inflation expectations really rerating
to the upside, you see that ten year move back
towards five percent. We think that's that's the big concern.
Then all of the knock on effects that come alongside
sort of longer duration securities repricing as a function of
(35:27):
elevated inflation expectations. So that's what we're watching really really
closely in the next year.
Speaker 1 (35:32):
Andrew cry thanks so much for joining us chief investment
officer at Crescent Grove Advisors. Hopefully next time we see
you back here in New York.
Speaker 2 (35:41):
This is the Bloomberg Business Week Daily 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,
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Speaker 9 (36:11):
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If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!