December 31, 2025 • 31 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Stocks and bonds slipped along with gold and silver on the last day of 2025, bringing a subdued close to an otherwise buoyant year across asset classes that saw US equities post their third straight double-digit gain.
The S&P 500 extended a stretch of post-Christmas losses, paring the benchmark’s advance for 2025 to roughly 17%. Even so, the index is on track for its longest yearly winning streak of gains since 2021. The Nasdaq 100 was down 0.2%. Laggards include big-tech names like Microsoft Corp., Meta Platforms Inc. and Micron Technology Inc.
Silver plunged as a run of heightened volatility featuring price moves of 5% or more entered a fourth day. CME Group raised margin requirements on precious-metal futures for the second time in the space of a week following the volatility.
Investors have enjoyed blockbuster returns this year in a market that has been powered by optimism about the vast economic potential of artificial intelligence and primed by Federal Reserve interest-rate cuts. It hasn’t been a smooth ride, though, with traders weathering swings triggered by a range of forces including US trade policies, geopolitical tensions, concern over lofty valuations and some uncertainty around the path of central-bank monetary policy.
Looking ahead into 2026, market research firm Bespoke Investment Group cautions against expecting solid market performance during the first trading day of the new year. Since 1953, the S&P 500’s median change to kick off a new year was a 0.3% drop, according to a note by Bespoke. The stock market has also traded lower on the first trading day of the each of the past three years, the note said.
Today's show features:
- Mike Green, Chief Strategist and Portfolio Manager for Simplify Asset Management
- Laura Champine, Director of Research and Consumer Sector Head at Tabor Asset Management,
- Manos Koukoumidis, CEO of Oumi, on why the AI investing landscape may become more challenged in 2026 and where the US stands its AI arms race with China
- Ross Gerber, Co-Founder, President and CEO of Gerber Kawasaki Wealth and Investment Management, on how the battle for Warner Bros. Discovery will be won
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 Weekdaily 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 Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:32):
We also have some questions about things like private credits,
private markets, what happens next there? So that is our backdrop.
Let's talk about the alternative investing landscape. We've got Micreen
with US portfolio manager and chief strategist at the old
strategy Ria Simplify Asset Management. They offer an array of
ETFs and funds. Mike, good to have you here.
Speaker 4 (00:52):
With Tim and me.
Speaker 3 (00:53):
As we have just about two hours to go and
we wrap up trading here in the United States, ALT
investing some clear winners and losers. What trends do you
think might carry into twenty twenty six.
Speaker 5 (01:05):
Well, I think one of the trends has been really
critical and it has been introduced with the alternative ETF space,
which really didn't emerge until twenty twenty tied to regulatory changes.
Things like managed futures and actually trend following are one
of the tools that has made its way over into
the ETF space. That has been a leading area of
interest as people look to diversify from the traditional bond
(01:27):
equity mix. That's one area where I continually emphasize that
you're trying not to actually outsmart the market. You're trying
to recognize that there's information being diffused that you don't
necessarily have at that point. So that trend following is
one area. I think other areas that we're seeing increased
demand for various forms of income. Those take the form
(01:48):
of derivative tradings, things like call overwriting strategies or put
selling strategies that are designed to enhance income, or it
can take the form of things like a hedged high
yield credit FID, which is one that I manage at
Simplify asset management, that is designed to reduce the risk
associated with the uncertainty of areas like high yield with
(02:09):
credit spreads relatively tight, you want that fixed income exposure
and that income generation. But we're really not certain how
the economy is going to play out in twenty twenty six.
Does a slowdown continue or does it reaccelerate. It's a
good place to think about other ways to protect some
of the some of the risks that you have in
the portfolio.
Speaker 1 (02:28):
So what do you think it's going to do?
Speaker 5 (02:31):
I think unfortunately I heard you talking about the S.
Speaker 6 (02:33):
And P and the lead in. Yeah, you know, I've
spent a lot of time around bull market. Yeah.
Speaker 5 (02:38):
Well, actually, I think the most important statistic is if
you pull up the statistics to show asset class performance.
We're actually now, I believe in nine out of the
past ten years that large cap momentum and growth orientation
has been the place to be. Unfortunately, as you know,
that echoes the work that I do around the impact
of passive investing in markets. People are largely shunted into
(03:02):
momentum and cap focused indices by virtue of the way
we structure our retirement system in the United States.
Speaker 6 (03:10):
Unless we see a.
Speaker 5 (03:11):
Significant change in the economy, it's just really hard to
bet that that's not going to happen.
Speaker 7 (03:16):
Yet again, Yeah, I you know that.
Speaker 3 (03:18):
I love that you went there, Mike, because I can't
tell you how many years, several years in a row,
where people said momentum trade is over the big tech
you know, megacaps done, It's time to go into some
of the value names, smaller caps. And yet you know,
here we are a third year in a row.
Speaker 6 (03:33):
Oh you saw this.
Speaker 1 (03:33):
Every year for the last five years. Well, we doing
the show with you.
Speaker 3 (03:36):
We see the outperformance. But when I look at the
economy around me, what impacts my world? A lot of
those megacap names are largely what I spend a lot
of time with on a daily basis.
Speaker 5 (03:47):
I think there's some truth to that, but I think
it also feeds back in both directions.
Speaker 7 (03:51):
Right, given a very.
Speaker 5 (03:52):
Very low cost of capital, we're seeing the impact that
that has on the investments that these companies can make.
Speaker 7 (03:58):
That means that Amazon.
Speaker 5 (03:59):
Can go out and make acquisitions, or Google can make
the roughly fifteen hundred acquisitions it's made over the past
seven years. This puts them in front of you, regardless
of whether they earned that place initially.
Speaker 1 (04:12):
Michael, I keep getting these emails from whatever formally high
yield savings account that I had I'll call the highyield
savings account that tells me that the APR is going down.
You know, the yield is going down as a result
of the FED lowering rates, and as a result of
rates coming down, that money that's in money markets, that's
(04:34):
in high yield savings accounts, where it's going, where's it going?
Speaker 5 (04:38):
Well, where we're really seeing that money trend is one
it continues to grow.
Speaker 6 (04:42):
So despite the fact that the.
Speaker 5 (04:43):
Yields are following, money market funds continue to hit new
highs in terms of assets. That is a byproduct of
the money market yield in and of itself. After nearly
a decade of roughly zero yields, suddenly people are getting.
Speaker 6 (04:56):
Three to five percent on those.
Speaker 5 (04:58):
Over the past several years, that's created significant additional income,
which is meant that money doesn't have to be spent
in other areas, particularly for those who are starting with money.
The money can't really leave the money market funds because
when you go to buy, somebody else is going to
sell and receive the assets as well. What can happen,
(05:19):
and what historically causes those assets to fall is either
the loss of the underlying asset bonds, default companies go bankrupt,
et cetera. That requires injections of cash that take the
former primary securities, or we see a surge in new
issuance things like IPOs, credit for new investment purposes, et cetera.
It's that latter part that I think we're actually going
(05:41):
to really see in twenty twenty six. We continue to
see astonishing demand for investment grade debt. Some of it
is increasingly questionable how investment grade it is going into
areas like data centers, but that is an area where
we are continuing to see significant inflows into the fixed
income space.
Speaker 3 (05:59):
Well, that's what I want to ask you, you know,
just going on your website looking at some of the
company ETFs that you guys offer out there.
Speaker 1 (06:04):
It is an array.
Speaker 3 (06:05):
It's government money market, managed futures, volatility, premium focus, high yield, healthcare,
Tesla volt Tesla Revolution, ETF, energy, infrastructure, gold, Bitcoin, China.
These are some of the things that we're going to
tackle over the next three hours. I am curious about,
as we were getting near the end of the year,
(06:26):
were you guys noticing any interesting trends in terms of
flows in and out of some of these spaces, especially
after a year where whether it was gold, whether it
was some of the commodities, whether it was you know,
some of the healthcare names and others that may have
run up over twenty twenty five.
Speaker 5 (06:43):
Well, there's a couple of areas, and our growth is
largely organic and driven by that innovation. We've seen tremendous
inflows into areas like money market funds. We actually introduced
a money market ETF in the past year. That's power
a significant quantity of growth. Our fixed income strategy, the
high yield strategy that I run, has done well and
has attracted significant assets over the course of the year.
(07:05):
Our other areas in fixed income where we offer differential
exposure to coupon yields in things like mortgages buying new
issue mortgages as compared to the seasoned index, that has
been a beneficiary. The areas that we've seen that have
been I think more alternative in their construction. We have
a true ESG Healthcare Fund run by my good friend
(07:29):
Mike Taylor. Mike donates all the proceeds associated with that
to the Susan G. Coman Foundation, so it's truly giving.
You know, it's doing good. By doing good, It's performed
fantastically well. That area of healthcare is starting to attract
attention as technology starts to lose a little bit of
its luster. The other area that I mentioned was the
(07:52):
managed future space that is now our largest strategy and
has really been a source of continued growth.
Speaker 3 (07:58):
All right, Well, hopefully we can continue talking about that
certainly in the new year. Happy new year, Mike, Thank
you so much. Mike Green, portfolio manager, chief strategist over
at Simplify Asset Management. Joining us here on this Wednesday.
Speaker 1 (08:10):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (08:18):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (08:32):
All right, so we want to talk a little bit
more about retail, more on the trends, the consumption habits,
and also the role of technology increasingly that may shape
what goes on in the consumer space in the new year.
Joining us right now is Laura Champaigne. She's Tabor Asset
Management's director of research and consumer sector head, joining Tim
and me right here in studio.
Speaker 8 (08:50):
Welcome, Welcome, Thanks Carol, thanks for having me.
Speaker 3 (08:52):
How are you thinking about twenty twenty five when it
comes to the retail space?
Speaker 8 (08:56):
Twenty twenty five has been interesting. I think some of
the trends like strengthen apparel and accessories likely extended to
next year. We're excited about GLP ones moving to oral,
not just injectables, so people have to buy new clothes
if they're changing side.
Speaker 1 (09:09):
I was just going to say what is that doing
for retail? But you answered the question right there, right
right close.
Speaker 8 (09:13):
New size exactly, and new clothes may as well have
new accessories to go with it. So we're focused in
on apparel. We think they're interesting things happening. You mentioned Nike.
I think at an earlier segment they are desperate and
eager to grow again, which puts pressure on Adidas, that
puts pressure on Hoka on on running. So I think
that'll be an interesting sector to watch these guys duke
(09:35):
it out there. We saw so much Nike at Burlington
last yesterday in the store. In the store Burlington had
three in caps of Nike and not the weird ones,
not the Dorito's partnership.
Speaker 3 (09:47):
What does that tell you that they're offloading stuff that
just wasn't selling.
Speaker 8 (09:51):
It's a weird time of year, right, so it's a
clearance time of year, and it may be that or
it may be that Nike will grow sales wherever they
can and off price. The three big off pricers are
top ten footwear retailers.
Speaker 1 (10:03):
Now does that dilute the brand at all? To be
so focused on off price?
Speaker 6 (10:07):
I think it.
Speaker 8 (10:08):
Dilutes the brand and potentially it dilutes the returns. So
I think investors are really focused at this moment on sales.
Them trying to turn sales positive, but margins will be lower.
The reason the previous management team focused so much on
direct was to maximize profit. We'll see how the market
views it next year, but I would guess footwar's less
profitable in twenty twenty six.
Speaker 1 (10:29):
Okay, I want to go back to this thing you
said about GLP ones because I actually haven't cool right now?
Speaker 6 (10:33):
Very cool?
Speaker 1 (10:34):
As a society. Are we losing collectively losing so much
weight that we are all changing our closets, we have
to all get new clothes. I mean, is that how
widespread these GLP ones are?
Speaker 7 (10:44):
You know?
Speaker 8 (10:45):
As a CNEC, I'll tell you that we lose weight
and then we gain it back. So most people don't
stay on the GLP one.
Speaker 6 (10:50):
Well, if they don't.
Speaker 1 (10:51):
This was explained to me I'd read this somewhere. The
criticism of having to stay on these is like, well,
if you stop working out, you get out of shape too,
So you have to think about it like that.
Speaker 8 (11:04):
Most of the analysts we've talked to on the GLP
ones say that when people stop GLP ones they might
be eligible again in nine months.
Speaker 1 (11:12):
Do they stop them because they're no longer eligible?
Speaker 8 (11:14):
They stop them because they're expensive. So some of the
moves that people are making to make these drugs cheaper
may help people stay on them longer term. Also injectable,
it's a big deal to shift towards oral we think.
Speaker 1 (11:26):
So don't throw away the clothes, because that's what I tell.
Speaker 6 (11:30):
You, my husband. I've never thrown them on.
Speaker 1 (11:32):
You into it.
Speaker 6 (11:34):
Hey.
Speaker 3 (11:35):
The thing, though, I want to say is that a
lot of the glp ones are actually for people who
are diabetics, and so they tend to stay on them
longer or forever because it's in managing the disease unless
they ultimately don't need it anymore. But those are It's
also a market where people are losing weight dramatically, and
so I mean that is a big sector of our economy,
(11:57):
or a big sector of our population.
Speaker 8 (12:00):
We also think that apparel has benefiting in part because
you mentioned Whirlpool earlier. Big ticket appliance is flooring. Those
sales are way down. Mattresses trying to turn a corner.
Furniture too, and we hope they do next year. But
since those segments have been down and they've been such
a big part of this consumer discretionary budget, it's left
room for people to buy more apparel.
Speaker 1 (12:20):
I just looked at the credit card statement. My wife
not only rejoined Costco today but put in a big
order as well. That's what she's doing Costco for twenty
twenty six. Things looking good.
Speaker 8 (12:31):
Costco has been losing ground to Walmart, and it's a
slightly different customer, although Walmart is gaining with higher income consumers.
Costco took tariffs to heart in a serious way, which
meant that they had less decor for holiday. I've been
in there once again yesterday, a lot less furniture than
they usually have this time of year.
Speaker 4 (12:50):
I think that.
Speaker 3 (12:50):
So, what do you mean they took it to heart
that they didn't plan.
Speaker 8 (12:53):
I mean that they canceled orders and they stopped buying
some categories that they used to buy, so they had
maybe a third as many Christmas trees as they normally
would and are trying to make it up with like
baked goods and wine, which they're awesome at. But I
think it's tough when you take so many big ticket
items out of the store.
Speaker 3 (13:10):
Talk to us, Oh good.
Speaker 1 (13:11):
Just still on Costco is I was looking, I was
actually planning out tomorrow and I was thinking, maybe we
could actually do our Costco order tomorrow. They're closed on
New Year's Day? Is that pretty rare in retail these days?
Speaker 8 (13:22):
It's rare in retail, But Costco is there at Costco
where you want to work, like, they pay well, they
take holidays, they pay good health care. I mean recently
they started disclosing their regional profit trends. They're barely profitable
in the US. It's just the membership fees. So anything
you can buy from there, you really should. They make
most of their money in their international location.
Speaker 3 (13:42):
Looking at Costco down about five and a half percent
year to date, Walmart is up almost twenty four percent
year to date. What is it that Walmart has kind
of figured out? Is it the digital Is it also
kind of playing to a higher end consumer on some level?
Speaker 8 (13:56):
It's that and it's also and they work hand in hand,
so the way they're using tech and AI, A lot
of it's the back end making their deliveries so fast
and helping them carry the right products so better merchandising.
They'll deliver to your house, so if you don't enjoy
the Walmart shopping experience, you can just wait for the truck.
So that's bringing in higher income customers, staying really sharp
(14:18):
on prices, being able to watch, you know, real time
competitors price.
Speaker 1 (14:21):
That's where you get your gold bars.
Speaker 3 (14:23):
That's where I get my gold bars. Yeah, and I
have them delivered. Hey, bringing the truck unpacked. What's the
what's the retail category that you find most interesting right now?
Speaker 8 (14:32):
I think beauty is going to have a resurgence. I
think that that we've been in.
Speaker 3 (14:36):
Another Stepoora that I go into just outside our office
is often packed, and you.
Speaker 8 (14:41):
Check out Alta when you're not in Manhattan because they
are also packed.
Speaker 1 (14:45):
In cover story just in the last couple of months
on this Amanda Mall wrote about multi success remarkable.
Speaker 8 (14:52):
And carrying a good mix of beauty, skincare, healthcare which
which others are, hair care which others don't. Do you know,
Sophora's really focused in on makeup, and Alta does a
great job of carrying like mid tier brands.
Speaker 1 (15:04):
So who are the winners in the space in twenty
twenty six.
Speaker 8 (15:07):
Yeah, we like Alta look for kids, and we're seeing
a lot more kids in makeup. Five below I think
is a winner. I think five below had great price
points on You say kids.
Speaker 3 (15:16):
Are you talking like eight year olds?
Speaker 7 (15:17):
I'm talking a lot eight to eighteen, So.
Speaker 6 (15:21):
I guess that's kids.
Speaker 8 (15:22):
Yeah, yeah, I know, but I do see them in
Alta and I see them in five below in that
kind of lipstick area, you know, and also buying the
fake that they had some great fake Kelly's yesterday when
I was in stores, and of course the Alhambra. They're
really good at, you know, making it look luxurious for
the little kids.
Speaker 3 (15:40):
We led talking about Carvana, which has just taken off
in a big way this year. eBay was up Whirlpool,
as you mentioned, best Buy to the downside, any of
those names that you think are worth noting, and.
Speaker 8 (15:52):
Best Buy, we're still concerned about. The data we see
does not look great for them, and they got some
help with the new gaming systems this year that probably
doesn't recur, so best Buy it once again. Walmart taking
consumer electronics very seriously in gaining with a higher income customer.
Speaker 7 (16:09):
It's not good news for best Buy.
Speaker 1 (16:10):
Give us a big prediction for next year. What happens.
Speaker 3 (16:13):
We're saying, getting asks what's the best day to shop
at TJX when they get the new delivery.
Speaker 8 (16:18):
You know what, I think that that victorious secret gets
its momentum back next year.
Speaker 3 (16:23):
You know, Dana Telsey talked about Victoria's Secret with us too,
that they seem to be going through a redo.
Speaker 8 (16:30):
And we don't need them to be massively successful for
the stock to work. They're peak. They were selling forty
five percent of all brawls and units in the US.
They're down to twenty percent. Move up to twenty five
or thirty you know, new closed, new sizes, new undergarments.
Speaker 1 (16:46):
All right there it is. That's what we're going to end.
That's the prediction. Well, hopefully we see you less than
a year from now. But happy new year, Laura, thanks
so much for joining us. Laura champai and is Tabor
Asset and Management's Director of Research and the Consumer sector head.
Speaker 2 (17:00):
This is the Bloomberg Business Week Daily Podcast listen live
each weekday starting at two pm Eastern on Apple car
Play and 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 3 (17:18):
Gotta say, though, Tim, If I had a nickel for
every time I said AI or artificial intelligence.
Speaker 1 (17:22):
You'd almost be able to share afford a sheriff in video.
Speaker 3 (17:25):
I would not be here probably no. No, love my job,
love my job. But you just think about how many
times every conversation, even over the last couple of days.
As we get ready to wrap up twenty twenty five
artificial intelligence. Just in our world, there are questions about
the spend, the buildout and so on and so forth.
But curious to see what our next guest has to
say about all of this. Manos Kuko metes He is
(17:47):
CEO of UMI. He previously led the science and engineering
for Google Cloud's Natural language services, while also bootstrapping and
leading the Google Cloud jen Ai efforts. He has been
working on Jenai system since twenty sixteen Microsoft and then
a Meta Man. It's great to have you here on
Bloomberg Business Week and Bloomberg Markets a reminder that AI
(18:07):
has been around for a long time. So I'm curious
when you look at where we are today, how do
you put it into perspective and what's kind of the
significance of what happened in twenty twenty five after what's
been three NonStop years of talking about AI and AI investing.
Speaker 7 (18:27):
Yeah, Carol, and think than your remounts for having me.
Speaker 4 (18:31):
As you mentioned, I've been working on AI since tw
thousand and sixteen, or actually even earlier than that. Twenty
sixteen was the first time I tried with some of
Michael founders to me when we're still at Microsoft to
build something like bet back in twenty sixteen, but it
was just a little bit pretty much sure, And as
you mentioned, in the last couple of years has been
tremendous progress. I mean, it's especially you know five, it's
(18:54):
been moving forward and advancing at the breakneck speed that
it's hard to keep up to and very exciting at
the same time.
Speaker 3 (19:01):
Do you buy all of the momentum? Do you believe
that the spend and the build out it's going to
continue at this level or that there's going to be
some hiccups, especially when it comes to power finding the
necessary power to keep all of these data centers going.
Speaker 4 (19:17):
I think that it's very likely they're going to be
some hiccups.
Speaker 7 (19:20):
As you mentioned.
Speaker 4 (19:20):
Definitely we can build data centers, but it's not enough
power to power them, then we can't use them. That's
definitely a challenge that is yet to be solved. But
if I were to look in twenty twenty six, I
think a bigger hiccup that I foresee is going to
be coming in twenty twenty six, or it maybe a
little bit later. But if it's later, it's going to
be only because of the sun cast fallacy. Is some
(19:42):
AI bubbles popping. I don't think we're in AI bubble,
but I think there's some companies like Open Ai, Anthropic
and others that increasingly they're going to start looking like
the losing horse. And I think they're going to be
hiccups in any infrastructure they aspired to build and any
funding they aspire to collect.
Speaker 1 (20:00):
It hasn't been a difficult for these companies to raise
funding up till now, but you think next year it
could be tough.
Speaker 4 (20:07):
I think things are going to be getting harder and harder.
I think it's about time, and it's already happening. Investors
that are coming to realize, even though it may be
hard for them, because again of all the sound casts
and all the billions that pour into supporting these companies,
that they are actually looking increasingly.
Speaker 7 (20:24):
Like the losing horses. I don't think.
Speaker 4 (20:28):
I think the the code read that OpenAI declared a
couple of weeks ago was highly justifiable. There is, you know, heemuth,
a much bigger player that can have all the talent
that open ai hasn't much more, that's making four hundred
billion revenue per year as opposed to losing ten billion
(20:50):
a year.
Speaker 7 (20:51):
That's in a much better position.
Speaker 4 (20:53):
It has the full stack across the research that chips,
the models, the applications, in a much better position to
win this.
Speaker 1 (20:58):
We're going to be speaking of Josh We're going to
be speaking to Josh win Grove in just a minute.
Before we do that, I just just set us up
for that conversation with where the US is compared to
the rest of the world when it comes to this
technology and what the US needs to do very briefly
in order to be the leader here.
Speaker 4 (21:14):
Yes, so I think we may be doing good now
in terms of the closed models, and this is important
for us to be doing well. But I think we
are missing on the most important AI battleground and this
is open source AI.
Speaker 7 (21:27):
I foresee.
Speaker 4 (21:28):
Looking in twenty twenty six, we've been talking to many
enterprises from the smallers to the largest ones right and
one trend that is clear is more and more than
moving towards open models. And unfortunately this is now primarily
by Alibaba's Qua model as oppose to a US one.
So that's I think the most important battleground that we
need to win. More and more enterprises as they're much
shooting with their use of the NAI. They're moving from
(21:50):
large of the self and the inferentiated close models like
ZPT Claude or Zemini that was building at Google.
Speaker 7 (21:57):
They're more and more moving.
Speaker 4 (21:58):
Towards small specialized custom models are the optimus for the
use case, and that's the bullyground dot AI needs to win.
Speaker 7 (22:05):
All right, we shall see.
Speaker 3 (22:06):
We shall see what twenty twenty six brings when it
comes to open versus closed Manas, thank you so much,
Manos Kuka.
Speaker 7 (22:12):
Meet us.
Speaker 3 (22:13):
He is CEO of UMI, joining us right here on Bloomberg.
Speaker 1 (22:17):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (22:25):
If you're listening to the Bloomberg Business Weekdaily podcast, catch
us live weekday afternoons from two to five pm Eastern.
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (22:39):
Let's get a little bit deeper though, into this media mania.
Ross Gerber is with us. He's co founder, president CEO
of Gerbert Kawasaki Wealth and Investment Management out there on
the West Coast. So good to have you here. Happy
New Year to you, Ross.
Speaker 9 (22:54):
Happy New Year. I'm happy to be spending the last
day of the trading year with you.
Speaker 6 (22:57):
Guys.
Speaker 3 (22:58):
Well, we love our conversations with you, and and it's
fun to be talking about this with you. I mean,
you did join Bloomberg recently, and I just asked Chris
about it. This idea about whoever wins Warner Brothers will
define the future of Hollywood. Chris made the point that
whoever gets it, it's going to be a rough twenty
twenty six or twenty twenty seven for that company. How
do you see it? Talk to us a little bit
(23:19):
about this.
Speaker 6 (23:19):
Well, he used it.
Speaker 9 (23:20):
Chris used the term that I've used about Warner too,
which is called the Albatross, and albatross is you know,
this thing around your neck that constantly driving you nuts
and never helps you, right. I think it was Ryan
and the Ancient Mariner where that book was the Albatross
was from. But the reality is Warner has never made
(23:41):
anybody any money ever since the old days, since Steve
Ross started it, you know, And so every buyer of
Warner Brothers has regretted it, and I think the buyer
of Warner Brothers here will will ultimately regret paying what
they're paying for this, because this is really a battle
for control of the last piece of asset, you know,
on the monopoly board of Hollywood. And it's a pretty
(24:02):
good asset, but it's a difficult one at best.
Speaker 6 (24:05):
And Netflix didn't need it.
Speaker 9 (24:07):
But the last thing they we're going to do is
seed all those assets to Paramount and really create a
real competitor to them to them by letting zaslof and
and Ellison team up against Netflix. So in the end
now they're you know, they're both paying a ton for it.
The Netflix deal is better structured and it has much
(24:27):
lower cost of capital, and it involves stock and I
think it's just a better deal for it, and.
Speaker 1 (24:32):
They're not getting those legacy they wouldn't be getting the
Legacy TV Networks.
Speaker 6 (24:35):
Yeah, you don't get the legacy cable.
Speaker 9 (24:36):
The only reason Ellison wants the legacy cable is to
shut down CNNs for Trump, you know. And so that's
kind of behind the scenes of all this is this
battle for CNN. And you know, the truth is Hastings
as a Democrat and and Netflix is more of a
liberal company, and so you know they want to save
CNN the way it is and just not be dealing
(24:57):
with this.
Speaker 6 (24:57):
That's not their business.
Speaker 9 (24:59):
Where Ellison really has more than just money on his
mind here. This is about power and certainly that's where
the support from the Trump administration comes for the Ellison
bid is because he wants to kill soon N.
Speaker 6 (25:12):
So we'll go ahead.
Speaker 1 (25:13):
Well, Russ, we only have a couple a few minutes,
so I want to make sure we got all the questions.
And on the Netflix side of things, if Netflix doesn't
succeed in getting this, is that seen in your view
as ultimately a win for shareholders? After all, Netflix shares
are lower after making this bid for Warner Brothers Discovery.
Speaker 9 (25:30):
You know, I've made a lot of money in Netflix
stock over the last decade, and I love the company
and I think it's one of the best assets you
could own. But we sold some of our Netflix when
this deal went down, because the valuation of Netflix is
predicated on the business model that they have today, and
by buying warners, if they succeed, it changes the business model,
and I think they deserve a lower pe ratio if
(25:52):
there are going to be a traditional studio with all
this clunkiness and also lack of clarity of what that
future brings. Now, they can make great movies and it's
huge success, or they can make crap and it's a
big loss.
Speaker 6 (26:03):
You know. But we saw what happened to Disney after
they absorbed Fox.
Speaker 9 (26:06):
It was much harder than anybody thought to make this profitable,
and now they.
Speaker 6 (26:10):
Finally are getting it together. This is years later.
Speaker 9 (26:13):
So I always thought that Netflix was just bidding it
up so that, you know, Ellison would just overpay substantially
for this asset and be stuck with it in the end,
and then Netflix wins anyways, and.
Speaker 6 (26:24):
That's what ultimately.
Speaker 9 (26:25):
If Elson wants the asset, he's going to have to
pay ten billion more for it, and that's the only
way Warner Brothers will go for this, And.
Speaker 6 (26:31):
So I do actually expect them to do that at
some point.
Speaker 9 (26:35):
And then if Netflix like loses, they really win, and
that would bring the stock price back, you know, back
to one hundred and twenty and all that kind of stuff.
Speaker 6 (26:43):
But it would also be great.
Speaker 9 (26:44):
For their overall business because they wouldn't have to put
all this capital to work at much lower returns.
Speaker 3 (26:49):
So ross do you expect what one more offer from Paramount,
another higher offer, and then that's it? And then Netflix
says I'm out.
Speaker 9 (26:56):
Well, I think that you know, they got, you know,
Daddy Ellison to side off and say, you know, I'll
pay for this if my kid actually gets this deal,
not just say I'm going to pay for it, I'm
actually going to pay for it. And then secondly, what's
another ten billion to the Allison's You know, when you're
worth hundreds of billions of dollars, another ten billion is.
Speaker 6 (27:14):
Likeyh, I don't know a pizza, you know costs to them.
Speaker 9 (27:18):
So I think the real issue is they're vastly overpaying
for the asset, even out one hundred billion, so it's
just like ten billion down the drain that goes to Zaslav.
And boy, these these payoffs that Zaslov and the executives
getting are for hundreds of hundreds of millions of dollars.
So something's going to happen. And I just don't see
Ellison going away that easy. And I think Netflix would
(27:41):
be satisfied with them vastly overpaying and walking away.
Speaker 6 (27:45):
So we'll see I've been wrong.
Speaker 9 (27:46):
I was wrong about this in the beginning because I
didn't think Netflix would bit, But we'll see how badly
Netflix really wants to win versus just win the game
of business.
Speaker 3 (27:56):
Can I ask you? And maybe this is something that's certainly,
of course near and dear our hearts as we are
in the media and news business, and that has changed
dramatically over the last ten twenty years, and I just
do wonder how this plays out and what it means
for these cable news channels or even these network channels,
where it does seem like they are being even politicized
(28:16):
more than ever. It's not just kind of the venue
of cable, but we're now seeing kind of regular linear
really being politicized. The problems in that as we think
about the importance of news and media in our world
or is it not so important because everybody's on social media,
although that has its problems too.
Speaker 9 (28:36):
Right, right, So you know where a lot of people
are watching your Bloomberg is on YouTube, and I know
you guys have a YouTube channel that's very active because
I get all these alerts of every time you post
my stuff on YouTube. And we all know that media
organizations are smart to be reposting stuff on YouTube because
that's where people are watching. And by that matter, I'm
a big Google investor as well. I think when you
(29:02):
look at people my age or below, the way people
consume media is one hundred percent different news media than
my age or above. You know, so my mom is
still watching CNN, you know, but nobody I know who
is younger watches CNN unless they're in an airport. So
that's when I get most of the calls from my
friends is when I'm on CNN. Is when they're in
(29:23):
the airport and they're like, oh, I saw you in
the airport. You know, I'm like, wow, that's great. And
the other place I'm really popular is in gyms and
country clubs where they still watch CNBC or have it on.
Speaker 6 (29:35):
But in real life, when I'm on a YouTube show.
Speaker 9 (29:37):
One hundred people are like, oh I saw your YouTube show,
and da da da da da. So it's the world
has changed and the media landscape is changing. Cable is dead.
It's just a dying thing. So if I'm a news organization,
I have to repurpose my content for social media and
have five or six different platforms that I'm putting out
my content, and then I'll get the result that I
(29:58):
want by having enough views. But being on cable TVs.
Speaker 1 (30:01):
So Russ, we only have thirty seconds left and then
we're gonna do some news and then we'll come back
and get more time with you on Tesla. But if
that's the case, then then what happens if Paramount or
if Paramount doesn't get the bid Netflix does. What happens
to the cable assets?
Speaker 9 (30:14):
Very briefly, Well, it'll be spun off like Versont and
Versont is the Comcast cable assets, and you know where
that goes.
Speaker 6 (30:24):
Where are these ships with no future go?
Speaker 9 (30:26):
I don't know, but it's smart for those companies to
jettison those declining yet profitable assets because in five years,
maybe last, they'll probably be worth almost nothing.
Speaker 6 (30:38):
So yeah, I'm.
Speaker 9 (30:39):
Sad to say that, I don't think people are gonna
be watching cable TV in five and ten years.
Speaker 1 (30:45):
Ros Gerber, We're gonna come back to you. We got
to leave it there for now, because the closing ball
is happening soon. Ross Gerbert, co founder, president CEO of
Gerbert Kawasaki Wealth Management.
Speaker 2 (30:54):
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(31:15):
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Speaker 2 (00:08):
This is Bloomberg business Weekdaily reporting from the magazine that
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Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:32):
We also have some questions about things like private credits,
private markets, what happens next there? So that is our backdrop.
Let's talk about the alternative investing landscape. We've got Micreen
with US portfolio manager and chief strategist at the old
strategy Ria Simplify Asset Management. They offer an array of
ETFs and funds. Mike, good to have you here.
Speaker 4 (00:52):
With Tim and me.
Speaker 3 (00:53):
As we have just about two hours to go and
we wrap up trading here in the United States, ALT
investing some clear winners and losers. What trends do you
think might carry into twenty twenty six.
Speaker 5 (01:05):
Well, I think one of the trends has been really
critical and it has been introduced with the alternative ETF space,
which really didn't emerge until twenty twenty tied to regulatory changes.
Things like managed futures and actually trend following are one
of the tools that has made its way over into
the ETF space. That has been a leading area of
interest as people look to diversify from the traditional bond
(01:27):
equity mix. That's one area where I continually emphasize that
you're trying not to actually outsmart the market. You're trying
to recognize that there's information being diffused that you don't
necessarily have at that point. So that trend following is
one area. I think other areas that we're seeing increased
demand for various forms of income. Those take the form
(01:48):
of derivative tradings, things like call overwriting strategies or put
selling strategies that are designed to enhance income, or it
can take the form of things like a hedged high
yield credit FID, which is one that I manage at
Simplify asset management, that is designed to reduce the risk
associated with the uncertainty of areas like high yield with
(02:09):
credit spreads relatively tight, you want that fixed income exposure
and that income generation. But we're really not certain how
the economy is going to play out in twenty twenty six.
Does a slowdown continue or does it reaccelerate. It's a
good place to think about other ways to protect some
of the some of the risks that you have in
the portfolio.
Speaker 1 (02:28):
So what do you think it's going to do?
Speaker 5 (02:31):
I think unfortunately I heard you talking about the S.
Speaker 6 (02:33):
And P and the lead in. Yeah, you know, I've
spent a lot of time around bull market. Yeah.
Speaker 5 (02:38):
Well, actually, I think the most important statistic is if
you pull up the statistics to show asset class performance.
We're actually now, I believe in nine out of the
past ten years that large cap momentum and growth orientation
has been the place to be. Unfortunately, as you know,
that echoes the work that I do around the impact
of passive investing in markets. People are largely shunted into
(03:02):
momentum and cap focused indices by virtue of the way
we structure our retirement system in the United States.
Speaker 6 (03:10):
Unless we see a.
Speaker 5 (03:11):
Significant change in the economy, it's just really hard to
bet that that's not going to happen.
Speaker 7 (03:16):
Yet again, Yeah, I you know that.
Speaker 3 (03:18):
I love that you went there, Mike, because I can't
tell you how many years, several years in a row,
where people said momentum trade is over the big tech
you know, megacaps done, It's time to go into some
of the value names, smaller caps. And yet you know,
here we are a third year in a row.
Speaker 6 (03:33):
Oh you saw this.
Speaker 1 (03:33):
Every year for the last five years. Well, we doing
the show with you.
Speaker 3 (03:36):
We see the outperformance. But when I look at the
economy around me, what impacts my world? A lot of
those megacap names are largely what I spend a lot
of time with on a daily basis.
Speaker 5 (03:47):
I think there's some truth to that, but I think
it also feeds back in both directions.
Speaker 7 (03:51):
Right, given a very.
Speaker 5 (03:52):
Very low cost of capital, we're seeing the impact that
that has on the investments that these companies can make.
Speaker 7 (03:58):
That means that Amazon.
Speaker 5 (03:59):
Can go out and make acquisitions, or Google can make
the roughly fifteen hundred acquisitions it's made over the past
seven years. This puts them in front of you, regardless
of whether they earned that place initially.
Speaker 1 (04:12):
Michael, I keep getting these emails from whatever formally high
yield savings account that I had I'll call the highyield
savings account that tells me that the APR is going down.
You know, the yield is going down as a result
of the FED lowering rates, and as a result of
rates coming down, that money that's in money markets, that's
(04:34):
in high yield savings accounts, where it's going, where's it going?
Speaker 5 (04:38):
Well, where we're really seeing that money trend is one
it continues to grow.
Speaker 6 (04:42):
So despite the fact that the.
Speaker 5 (04:43):
Yields are following, money market funds continue to hit new
highs in terms of assets. That is a byproduct of
the money market yield in and of itself. After nearly
a decade of roughly zero yields, suddenly people are getting.
Speaker 6 (04:56):
Three to five percent on those.
Speaker 5 (04:58):
Over the past several years, that's created significant additional income,
which is meant that money doesn't have to be spent
in other areas, particularly for those who are starting with money.
The money can't really leave the money market funds because
when you go to buy, somebody else is going to
sell and receive the assets as well. What can happen,
(05:19):
and what historically causes those assets to fall is either
the loss of the underlying asset bonds, default companies go bankrupt,
et cetera. That requires injections of cash that take the
former primary securities, or we see a surge in new
issuance things like IPOs, credit for new investment purposes, et cetera.
It's that latter part that I think we're actually going
(05:41):
to really see in twenty twenty six. We continue to
see astonishing demand for investment grade debt. Some of it
is increasingly questionable how investment grade it is going into
areas like data centers, but that is an area where
we are continuing to see significant inflows into the fixed
income space.
Speaker 3 (05:59):
Well, that's what I want to ask you, you know,
just going on your website looking at some of the
company ETFs that you guys offer out there.
Speaker 1 (06:04):
It is an array.
Speaker 3 (06:05):
It's government money market, managed futures, volatility, premium focus, high yield, healthcare,
Tesla volt Tesla Revolution, ETF, energy, infrastructure, gold, Bitcoin, China.
These are some of the things that we're going to
tackle over the next three hours. I am curious about,
as we were getting near the end of the year,
(06:26):
were you guys noticing any interesting trends in terms of
flows in and out of some of these spaces, especially
after a year where whether it was gold, whether it
was some of the commodities, whether it was you know,
some of the healthcare names and others that may have
run up over twenty twenty five.
Speaker 5 (06:43):
Well, there's a couple of areas, and our growth is
largely organic and driven by that innovation. We've seen tremendous
inflows into areas like money market funds. We actually introduced
a money market ETF in the past year. That's power
a significant quantity of growth. Our fixed income strategy, the
high yield strategy that I run, has done well and
has attracted significant assets over the course of the year.
(07:05):
Our other areas in fixed income where we offer differential
exposure to coupon yields in things like mortgages buying new
issue mortgages as compared to the seasoned index, that has
been a beneficiary. The areas that we've seen that have
been I think more alternative in their construction. We have
a true ESG Healthcare Fund run by my good friend
(07:29):
Mike Taylor. Mike donates all the proceeds associated with that
to the Susan G. Coman Foundation, so it's truly giving.
You know, it's doing good. By doing good, It's performed
fantastically well. That area of healthcare is starting to attract
attention as technology starts to lose a little bit of
its luster. The other area that I mentioned was the
(07:52):
managed future space that is now our largest strategy and
has really been a source of continued growth.
Speaker 3 (07:58):
All right, Well, hopefully we can continue talking about that
certainly in the new year. Happy new year, Mike, Thank
you so much. Mike Green, portfolio manager, chief strategist over
at Simplify Asset Management. Joining us here on this Wednesday.
Speaker 1 (08:10):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (08:18):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (08:32):
All right, so we want to talk a little bit
more about retail, more on the trends, the consumption habits,
and also the role of technology increasingly that may shape
what goes on in the consumer space in the new year.
Joining us right now is Laura Champaigne. She's Tabor Asset
Management's director of research and consumer sector head, joining Tim
and me right here in studio.
Speaker 8 (08:50):
Welcome, Welcome, Thanks Carol, thanks for having me.
Speaker 3 (08:52):
How are you thinking about twenty twenty five when it
comes to the retail space?
Speaker 8 (08:56):
Twenty twenty five has been interesting. I think some of
the trends like strengthen apparel and accessories likely extended to
next year. We're excited about GLP ones moving to oral,
not just injectables, so people have to buy new clothes
if they're changing side.
Speaker 1 (09:09):
I was just going to say what is that doing
for retail? But you answered the question right there, right
right close.
Speaker 8 (09:13):
New size exactly, and new clothes may as well have
new accessories to go with it. So we're focused in
on apparel. We think they're interesting things happening. You mentioned Nike.
I think at an earlier segment they are desperate and
eager to grow again, which puts pressure on Adidas, that
puts pressure on Hoka on on running. So I think
that'll be an interesting sector to watch these guys duke
(09:35):
it out there. We saw so much Nike at Burlington
last yesterday in the store. In the store Burlington had
three in caps of Nike and not the weird ones,
not the Dorito's partnership.
Speaker 3 (09:47):
What does that tell you that they're offloading stuff that
just wasn't selling.
Speaker 8 (09:51):
It's a weird time of year, right, so it's a
clearance time of year, and it may be that or
it may be that Nike will grow sales wherever they
can and off price. The three big off pricers are
top ten footwear retailers.
Speaker 1 (10:03):
Now does that dilute the brand at all? To be
so focused on off price?
Speaker 6 (10:07):
I think it.
Speaker 8 (10:08):
Dilutes the brand and potentially it dilutes the returns. So
I think investors are really focused at this moment on sales.
Them trying to turn sales positive, but margins will be lower.
The reason the previous management team focused so much on
direct was to maximize profit. We'll see how the market
views it next year, but I would guess footwar's less
profitable in twenty twenty six.
Speaker 1 (10:29):
Okay, I want to go back to this thing you
said about GLP ones because I actually haven't cool right now?
Speaker 6 (10:33):
Very cool?
Speaker 1 (10:34):
As a society. Are we losing collectively losing so much
weight that we are all changing our closets, we have
to all get new clothes. I mean, is that how
widespread these GLP ones are?
Speaker 7 (10:44):
You know?
Speaker 8 (10:45):
As a CNEC, I'll tell you that we lose weight
and then we gain it back. So most people don't
stay on the GLP one.
Speaker 6 (10:50):
Well, if they don't.
Speaker 1 (10:51):
This was explained to me I'd read this somewhere. The
criticism of having to stay on these is like, well,
if you stop working out, you get out of shape too,
So you have to think about it like that.
Speaker 8 (11:04):
Most of the analysts we've talked to on the GLP
ones say that when people stop GLP ones they might
be eligible again in nine months.
Speaker 1 (11:12):
Do they stop them because they're no longer eligible?
Speaker 8 (11:14):
They stop them because they're expensive. So some of the
moves that people are making to make these drugs cheaper
may help people stay on them longer term. Also injectable,
it's a big deal to shift towards oral we think.
Speaker 1 (11:26):
So don't throw away the clothes, because that's what I tell.
Speaker 6 (11:30):
You, my husband. I've never thrown them on.
Speaker 1 (11:32):
You into it.
Speaker 6 (11:34):
Hey.
Speaker 3 (11:35):
The thing, though, I want to say is that a
lot of the glp ones are actually for people who
are diabetics, and so they tend to stay on them
longer or forever because it's in managing the disease unless
they ultimately don't need it anymore. But those are It's
also a market where people are losing weight dramatically, and
so I mean that is a big sector of our economy,
(11:57):
or a big sector of our population.
Speaker 8 (12:00):
We also think that apparel has benefiting in part because
you mentioned Whirlpool earlier. Big ticket appliance is flooring. Those
sales are way down. Mattresses trying to turn a corner.
Furniture too, and we hope they do next year. But
since those segments have been down and they've been such
a big part of this consumer discretionary budget, it's left
room for people to buy more apparel.
Speaker 1 (12:20):
I just looked at the credit card statement. My wife
not only rejoined Costco today but put in a big
order as well. That's what she's doing Costco for twenty
twenty six. Things looking good.
Speaker 8 (12:31):
Costco has been losing ground to Walmart, and it's a
slightly different customer, although Walmart is gaining with higher income consumers.
Costco took tariffs to heart in a serious way, which
meant that they had less decor for holiday. I've been
in there once again yesterday, a lot less furniture than
they usually have this time of year.
Speaker 4 (12:50):
I think that.
Speaker 3 (12:50):
So, what do you mean they took it to heart
that they didn't plan.
Speaker 8 (12:53):
I mean that they canceled orders and they stopped buying
some categories that they used to buy, so they had
maybe a third as many Christmas trees as they normally
would and are trying to make it up with like
baked goods and wine, which they're awesome at. But I
think it's tough when you take so many big ticket
items out of the store.
Speaker 3 (13:10):
Talk to us, Oh good.
Speaker 1 (13:11):
Just still on Costco is I was looking, I was
actually planning out tomorrow and I was thinking, maybe we
could actually do our Costco order tomorrow. They're closed on
New Year's Day? Is that pretty rare in retail these days?
Speaker 8 (13:22):
It's rare in retail, But Costco is there at Costco
where you want to work, like, they pay well, they
take holidays, they pay good health care. I mean recently
they started disclosing their regional profit trends. They're barely profitable
in the US. It's just the membership fees. So anything
you can buy from there, you really should. They make
most of their money in their international location.
Speaker 3 (13:42):
Looking at Costco down about five and a half percent
year to date, Walmart is up almost twenty four percent
year to date. What is it that Walmart has kind
of figured out? Is it the digital Is it also
kind of playing to a higher end consumer on some level?
Speaker 8 (13:56):
It's that and it's also and they work hand in hand,
so the way they're using tech and AI, A lot
of it's the back end making their deliveries so fast
and helping them carry the right products so better merchandising.
They'll deliver to your house, so if you don't enjoy
the Walmart shopping experience, you can just wait for the truck.
So that's bringing in higher income customers, staying really sharp
(14:18):
on prices, being able to watch, you know, real time
competitors price.
Speaker 1 (14:21):
That's where you get your gold bars.
Speaker 3 (14:23):
That's where I get my gold bars. Yeah, and I
have them delivered. Hey, bringing the truck unpacked. What's the
what's the retail category that you find most interesting right now?
Speaker 8 (14:32):
I think beauty is going to have a resurgence. I
think that that we've been in.
Speaker 3 (14:36):
Another Stepoora that I go into just outside our office
is often packed, and you.
Speaker 8 (14:41):
Check out Alta when you're not in Manhattan because they
are also packed.
Speaker 1 (14:45):
In cover story just in the last couple of months
on this Amanda Mall wrote about multi success remarkable.
Speaker 8 (14:52):
And carrying a good mix of beauty, skincare, healthcare which
which others are, hair care which others don't. Do you know,
Sophora's really focused in on makeup, and Alta does a
great job of carrying like mid tier brands.
Speaker 1 (15:04):
So who are the winners in the space in twenty
twenty six.
Speaker 8 (15:07):
Yeah, we like Alta look for kids, and we're seeing
a lot more kids in makeup. Five below I think
is a winner. I think five below had great price
points on You say kids.
Speaker 3 (15:16):
Are you talking like eight year olds?
Speaker 7 (15:17):
I'm talking a lot eight to eighteen, So.
Speaker 6 (15:21):
I guess that's kids.
Speaker 8 (15:22):
Yeah, yeah, I know, but I do see them in
Alta and I see them in five below in that
kind of lipstick area, you know, and also buying the
fake that they had some great fake Kelly's yesterday when
I was in stores, and of course the Alhambra. They're
really good at, you know, making it look luxurious for
the little kids.
Speaker 3 (15:40):
We led talking about Carvana, which has just taken off
in a big way this year. eBay was up Whirlpool,
as you mentioned, best Buy to the downside, any of
those names that you think are worth noting, and.
Speaker 8 (15:52):
Best Buy, we're still concerned about. The data we see
does not look great for them, and they got some
help with the new gaming systems this year that probably
doesn't recur, so best Buy it once again. Walmart taking
consumer electronics very seriously in gaining with a higher income customer.
Speaker 7 (16:09):
It's not good news for best Buy.
Speaker 1 (16:10):
Give us a big prediction for next year. What happens.
Speaker 3 (16:13):
We're saying, getting asks what's the best day to shop
at TJX when they get the new delivery.
Speaker 8 (16:18):
You know what, I think that that victorious secret gets
its momentum back next year.
Speaker 3 (16:23):
You know, Dana Telsey talked about Victoria's Secret with us too,
that they seem to be going through a redo.
Speaker 8 (16:30):
And we don't need them to be massively successful for
the stock to work. They're peak. They were selling forty
five percent of all brawls and units in the US.
They're down to twenty percent. Move up to twenty five
or thirty you know, new closed, new sizes, new undergarments.
Speaker 1 (16:46):
All right there it is. That's what we're going to end.
That's the prediction. Well, hopefully we see you less than
a year from now. But happy new year, Laura, thanks
so much for joining us. Laura champai and is Tabor
Asset and Management's Director of Research and the Consumer sector head.
Speaker 2 (17:00):
This is the Bloomberg Business Week Daily Podcast listen live
each weekday starting at two pm Eastern on Apple car
Play and 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 3 (17:18):
Gotta say, though, Tim, If I had a nickel for
every time I said AI or artificial intelligence.
Speaker 1 (17:22):
You'd almost be able to share afford a sheriff in video.
Speaker 3 (17:25):
I would not be here probably no. No, love my job,
love my job. But you just think about how many
times every conversation, even over the last couple of days.
As we get ready to wrap up twenty twenty five
artificial intelligence. Just in our world, there are questions about
the spend, the buildout and so on and so forth.
But curious to see what our next guest has to
say about all of this. Manos Kuko metes He is
(17:47):
CEO of UMI. He previously led the science and engineering
for Google Cloud's Natural language services, while also bootstrapping and
leading the Google Cloud jen Ai efforts. He has been
working on Jenai system since twenty sixteen Microsoft and then
a Meta Man. It's great to have you here on
Bloomberg Business Week and Bloomberg Markets a reminder that AI
(18:07):
has been around for a long time. So I'm curious
when you look at where we are today, how do
you put it into perspective and what's kind of the
significance of what happened in twenty twenty five after what's
been three NonStop years of talking about AI and AI investing.
Speaker 7 (18:27):
Yeah, Carol, and think than your remounts for having me.
Speaker 4 (18:31):
As you mentioned, I've been working on AI since tw
thousand and sixteen, or actually even earlier than that. Twenty
sixteen was the first time I tried with some of
Michael founders to me when we're still at Microsoft to
build something like bet back in twenty sixteen, but it
was just a little bit pretty much sure, And as
you mentioned, in the last couple of years has been
tremendous progress. I mean, it's especially you know five, it's
(18:54):
been moving forward and advancing at the breakneck speed that
it's hard to keep up to and very exciting at
the same time.
Speaker 3 (19:01):
Do you buy all of the momentum? Do you believe
that the spend and the build out it's going to
continue at this level or that there's going to be
some hiccups, especially when it comes to power finding the
necessary power to keep all of these data centers going.
Speaker 4 (19:17):
I think that it's very likely they're going to be
some hiccups.
Speaker 7 (19:20):
As you mentioned.
Speaker 4 (19:20):
Definitely we can build data centers, but it's not enough
power to power them, then we can't use them. That's
definitely a challenge that is yet to be solved. But
if I were to look in twenty twenty six, I
think a bigger hiccup that I foresee is going to
be coming in twenty twenty six, or it maybe a
little bit later. But if it's later, it's going to
be only because of the sun cast fallacy. Is some
(19:42):
AI bubbles popping. I don't think we're in AI bubble,
but I think there's some companies like Open Ai, Anthropic
and others that increasingly they're going to start looking like
the losing horse. And I think they're going to be
hiccups in any infrastructure they aspired to build and any
funding they aspire to collect.
Speaker 1 (20:00):
It hasn't been a difficult for these companies to raise
funding up till now, but you think next year it
could be tough.
Speaker 4 (20:07):
I think things are going to be getting harder and harder.
I think it's about time, and it's already happening. Investors
that are coming to realize, even though it may be
hard for them, because again of all the sound casts
and all the billions that pour into supporting these companies,
that they are actually looking increasingly.
Speaker 7 (20:24):
Like the losing horses. I don't think.
Speaker 4 (20:28):
I think the the code read that OpenAI declared a
couple of weeks ago was highly justifiable. There is, you know, heemuth,
a much bigger player that can have all the talent
that open ai hasn't much more, that's making four hundred
billion revenue per year as opposed to losing ten billion
(20:50):
a year.
Speaker 7 (20:51):
That's in a much better position.
Speaker 4 (20:53):
It has the full stack across the research that chips,
the models, the applications, in a much better position to
win this.
Speaker 1 (20:58):
We're going to be speaking of Josh We're going to
be speaking to Josh win Grove in just a minute.
Before we do that, I just just set us up
for that conversation with where the US is compared to
the rest of the world when it comes to this
technology and what the US needs to do very briefly
in order to be the leader here.
Speaker 4 (21:14):
Yes, so I think we may be doing good now
in terms of the closed models, and this is important
for us to be doing well. But I think we
are missing on the most important AI battleground and this
is open source AI.
Speaker 7 (21:27):
I foresee.
Speaker 4 (21:28):
Looking in twenty twenty six, we've been talking to many
enterprises from the smallers to the largest ones right and
one trend that is clear is more and more than
moving towards open models. And unfortunately this is now primarily
by Alibaba's Qua model as oppose to a US one.
So that's I think the most important battleground that we
need to win. More and more enterprises as they're much
shooting with their use of the NAI. They're moving from
(21:50):
large of the self and the inferentiated close models like
ZPT Claude or Zemini that was building at Google.
Speaker 7 (21:57):
They're more and more moving.
Speaker 4 (21:58):
Towards small specialized custom models are the optimus for the
use case, and that's the bullyground dot AI needs to win.
Speaker 7 (22:05):
All right, we shall see.
Speaker 3 (22:06):
We shall see what twenty twenty six brings when it
comes to open versus closed Manas, thank you so much,
Manos Kuka.
Speaker 7 (22:12):
Meet us.
Speaker 3 (22:13):
He is CEO of UMI, joining us right here on Bloomberg.
Speaker 1 (22:17):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (22:25):
If you're listening to the Bloomberg Business Weekdaily podcast, catch
us live weekday afternoons from two to five pm Eastern.
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (22:39):
Let's get a little bit deeper though, into this media mania.
Ross Gerber is with us. He's co founder, president CEO
of Gerbert Kawasaki Wealth and Investment Management out there on
the West Coast. So good to have you here. Happy
New Year to you, Ross.
Speaker 9 (22:54):
Happy New Year. I'm happy to be spending the last
day of the trading year with you.
Speaker 6 (22:57):
Guys.
Speaker 3 (22:58):
Well, we love our conversations with you, and and it's
fun to be talking about this with you. I mean,
you did join Bloomberg recently, and I just asked Chris
about it. This idea about whoever wins Warner Brothers will
define the future of Hollywood. Chris made the point that
whoever gets it, it's going to be a rough twenty
twenty six or twenty twenty seven for that company. How
do you see it? Talk to us a little bit
(23:19):
about this.
Speaker 6 (23:19):
Well, he used it.
Speaker 9 (23:20):
Chris used the term that I've used about Warner too,
which is called the Albatross, and albatross is you know,
this thing around your neck that constantly driving you nuts
and never helps you, right. I think it was Ryan
and the Ancient Mariner where that book was the Albatross
was from. But the reality is Warner has never made
(23:41):
anybody any money ever since the old days, since Steve
Ross started it, you know, And so every buyer of
Warner Brothers has regretted it, and I think the buyer
of Warner Brothers here will will ultimately regret paying what
they're paying for this, because this is really a battle
for control of the last piece of asset, you know,
on the monopoly board of Hollywood. And it's a pretty
(24:02):
good asset, but it's a difficult one at best.
Speaker 6 (24:05):
And Netflix didn't need it.
Speaker 9 (24:07):
But the last thing they we're going to do is
seed all those assets to Paramount and really create a
real competitor to them to them by letting zaslof and
and Ellison team up against Netflix. So in the end
now they're you know, they're both paying a ton for it.
The Netflix deal is better structured and it has much
(24:27):
lower cost of capital, and it involves stock and I
think it's just a better deal for it, and.
Speaker 1 (24:32):
They're not getting those legacy they wouldn't be getting the
Legacy TV Networks.
Speaker 6 (24:35):
Yeah, you don't get the legacy cable.
Speaker 9 (24:36):
The only reason Ellison wants the legacy cable is to
shut down CNNs for Trump, you know. And so that's
kind of behind the scenes of all this is this
battle for CNN. And you know, the truth is Hastings
as a Democrat and and Netflix is more of a
liberal company, and so you know they want to save
CNN the way it is and just not be dealing
(24:57):
with this.
Speaker 6 (24:57):
That's not their business.
Speaker 9 (24:59):
Where Ellison really has more than just money on his
mind here. This is about power and certainly that's where
the support from the Trump administration comes for the Ellison
bid is because he wants to kill soon N.
Speaker 6 (25:12):
So we'll go ahead.
Speaker 1 (25:13):
Well, Russ, we only have a couple a few minutes,
so I want to make sure we got all the questions.
And on the Netflix side of things, if Netflix doesn't
succeed in getting this, is that seen in your view
as ultimately a win for shareholders? After all, Netflix shares
are lower after making this bid for Warner Brothers Discovery.
Speaker 9 (25:30):
You know, I've made a lot of money in Netflix
stock over the last decade, and I love the company
and I think it's one of the best assets you
could own. But we sold some of our Netflix when
this deal went down, because the valuation of Netflix is
predicated on the business model that they have today, and
by buying warners, if they succeed, it changes the business model,
and I think they deserve a lower pe ratio if
(25:52):
there are going to be a traditional studio with all
this clunkiness and also lack of clarity of what that
future brings. Now, they can make great movies and it's
huge success, or they can make crap and it's a
big loss.
Speaker 6 (26:03):
You know. But we saw what happened to Disney after
they absorbed Fox.
Speaker 9 (26:06):
It was much harder than anybody thought to make this profitable,
and now they.
Speaker 6 (26:10):
Finally are getting it together. This is years later.
Speaker 9 (26:13):
So I always thought that Netflix was just bidding it
up so that, you know, Ellison would just overpay substantially
for this asset and be stuck with it in the end,
and then Netflix wins anyways, and.
Speaker 6 (26:24):
That's what ultimately.
Speaker 9 (26:25):
If Elson wants the asset, he's going to have to
pay ten billion more for it, and that's the only
way Warner Brothers will go for this, And.
Speaker 6 (26:31):
So I do actually expect them to do that at
some point.
Speaker 9 (26:35):
And then if Netflix like loses, they really win, and
that would bring the stock price back, you know, back
to one hundred and twenty and all that kind of stuff.
Speaker 6 (26:43):
But it would also be great.
Speaker 9 (26:44):
For their overall business because they wouldn't have to put
all this capital to work at much lower returns.
Speaker 3 (26:49):
So ross do you expect what one more offer from Paramount,
another higher offer, and then that's it? And then Netflix
says I'm out.
Speaker 9 (26:56):
Well, I think that you know, they got, you know,
Daddy Ellison to side off and say, you know, I'll
pay for this if my kid actually gets this deal,
not just say I'm going to pay for it, I'm
actually going to pay for it. And then secondly, what's
another ten billion to the Allison's You know, when you're
worth hundreds of billions of dollars, another ten billion is.
Speaker 6 (27:14):
Likeyh, I don't know a pizza, you know costs to them.
Speaker 9 (27:18):
So I think the real issue is they're vastly overpaying
for the asset, even out one hundred billion, so it's
just like ten billion down the drain that goes to Zaslav.
And boy, these these payoffs that Zaslov and the executives
getting are for hundreds of hundreds of millions of dollars.
So something's going to happen. And I just don't see
Ellison going away that easy. And I think Netflix would
(27:41):
be satisfied with them vastly overpaying and walking away.
Speaker 6 (27:45):
So we'll see I've been wrong.
Speaker 9 (27:46):
I was wrong about this in the beginning because I
didn't think Netflix would bit, But we'll see how badly
Netflix really wants to win versus just win the game
of business.
Speaker 3 (27:56):
Can I ask you? And maybe this is something that's certainly,
of course near and dear our hearts as we are
in the media and news business, and that has changed
dramatically over the last ten twenty years, and I just
do wonder how this plays out and what it means
for these cable news channels or even these network channels,
where it does seem like they are being even politicized
(28:16):
more than ever. It's not just kind of the venue
of cable, but we're now seeing kind of regular linear
really being politicized. The problems in that as we think
about the importance of news and media in our world
or is it not so important because everybody's on social media,
although that has its problems too.
Speaker 9 (28:36):
Right, right, So you know where a lot of people
are watching your Bloomberg is on YouTube, and I know
you guys have a YouTube channel that's very active because
I get all these alerts of every time you post
my stuff on YouTube. And we all know that media
organizations are smart to be reposting stuff on YouTube because
that's where people are watching. And by that matter, I'm
a big Google investor as well. I think when you
(29:02):
look at people my age or below, the way people
consume media is one hundred percent different news media than
my age or above. You know, so my mom is
still watching CNN, you know, but nobody I know who
is younger watches CNN unless they're in an airport. So
that's when I get most of the calls from my
friends is when I'm on CNN. Is when they're in
(29:23):
the airport and they're like, oh, I saw you in
the airport. You know, I'm like, wow, that's great. And
the other place I'm really popular is in gyms and
country clubs where they still watch CNBC or have it on.
Speaker 6 (29:35):
But in real life, when I'm on a YouTube show.
Speaker 9 (29:37):
One hundred people are like, oh I saw your YouTube show,
and da da da da da. So it's the world
has changed and the media landscape is changing. Cable is dead.
It's just a dying thing. So if I'm a news organization,
I have to repurpose my content for social media and
have five or six different platforms that I'm putting out
my content, and then I'll get the result that I
(29:58):
want by having enough views. But being on cable TVs.
Speaker 1 (30:01):
So Russ, we only have thirty seconds left and then
we're gonna do some news and then we'll come back
and get more time with you on Tesla. But if
that's the case, then then what happens if Paramount or
if Paramount doesn't get the bid Netflix does. What happens
to the cable assets?
Speaker 9 (30:14):
Very briefly, Well, it'll be spun off like Versont and
Versont is the Comcast cable assets, and you know where
that goes.
Speaker 6 (30:24):
Where are these ships with no future go?
Speaker 9 (30:26):
I don't know, but it's smart for those companies to
jettison those declining yet profitable assets because in five years,
maybe last, they'll probably be worth almost nothing.
Speaker 6 (30:38):
So yeah, I'm.
Speaker 9 (30:39):
Sad to say that, I don't think people are gonna
be watching cable TV in five and ten years.
Speaker 1 (30:45):
Ros Gerber, We're gonna come back to you. We got
to leave it there for now, because the closing ball
is happening soon. Ross Gerbert, co founder, president CEO of
Gerbert Kawasaki Wealth Management.
Speaker 2 (30:54):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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