The Bank of Mom & Dad; College Sports Going Pro & The Return of the Suit

Bloomberg Money

This episode of Bloomberg Money explores a series of structural shifts occurring across macroeconomics, personal finance, and even fashion.

Key takeaways

• Henry McVey of KKR identifies a regime change where stocks and bonds are now positively correlated due to higher inflation and geopolitical tension.
• Alicia Levine of B/NY Wealth warns that frequent trading can lead to underperforming the market by 5% annualized due to missing key growth days.

Main topics

• Macroeconomic regime change
• Private equity and long-term investing

Notable quotes

Put your own oxygen mask before you have someone else.

Conclusion

The episode highlights how both institutional investors and individual

Transcript preview

Speaker 8 (0:02) Bloomberg Audio Studios. Podcasts. Radio. News. Bloomberg Money. Speaker 5 (0:12) This is the Bloomberg Money Podcast. I'm Tom Keen with Scarlett Fu. Join us each week for a smart look at the forces shaping your financial life on personal finance, on retirement, and wealth management. We will explore how people are earning, investing, and building wealth. We are live Fridays at noon Eastern on Bloomberg Television. Subscribe to the podcast wherever you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App. Speaker 5 (0:54) Bloomberg Money, always on personal finance, retirement, and wealth management. Back from the summer, Scarlett Fu and Tom Keenan. It does feel in New York City like we're back from the summer. Speaker 3 (1:04) Yeah, it's really crisp outside. And Speaker 5 (1:06) of Speaker 3 (1:06) course, next week, we've got a whole world descending upon our doorstep. Speaker 5 (1:09) We do. You can see it coming in right now on Fifth Avenue, all the security up right now. But part of it is Wall Street. And to me, away from Bloomberg Money, do you want to trade stocks? 23 hours a day. I guess that's coming up. I don't buy it. Speaker 3 (1:22) I mean, the argument is that people outside of the U.S. want to trade our stocks 24-7. I Speaker 5 (1:26) guess so, but it's like Bitcoin. I mean, Bitcoin I can trade Sunday. You Speaker 3 (1:30) almost said BitDog, didn't you? Speaker 5 (1:31) I almost said BitDog. But the answer is this is a revolution like the market moving down to Texas, maybe. Speaker 3 (1:36) Oh, yeah. I mean, more companies moving in that direction. I think Dillard's was the latest one. Lots Speaker 5 (1:40) of it. And I learned today, Paul Sweeney told me Dillard's is from Arkansas. Yes, Little Rock. You learn something every day. We say good morning and good noon to you as well. With us this noon, Henry McVeigh will join us, partner at KKR, a really important regime change essay out, head of global macro and asset allocation. Speaker 3 (2:00) And we'll be sitting down with Alicia Levine, BNY Wealth Chief Investment Officer, on what a set it and forget it investment strategy looks like when you're at the start of a new rate hiking cycle. Speaker 5 (2:09) Right to it with good conversation ahead. Let's get the stocks right now as we can. Sort of a Friday feel to it after this hellacious week that we've had. But, you know, all in all, holding on. I would say, Scarlett, more than anything, looking at bonds, looking at commodities, looking at foreign exchange, it's a miracle where that VIX is. It's all there is to it. Speaker 3 (2:28) It's pretty subdued given what we've seen this week. The S &P 500 set for a second straight week of declines. You flip up the board and we look at the 10-year yield. We're right back at around that 5%. percent level just a hair below it what does that mean for stocks um not clear the dollar modestly higher at the moment it's pretty much at a seven week high and we're looking at new york food at 101 a barrel it is about to close out a third straight week of gains Speaker 5 (2:53) oh three weeks of gains but we were 109 two cups of coffee ago and we've come in nicely that dovetailed right with the fed well before the Speaker 3 (3:00) war we're at 65 so yeah Speaker 5 (3:01) well there's big changes do you see diesel oh more than six dollars i figured out that like what gura drives the f-450 you know the big thing eight tons or whatever 312 dollars for the to fill it up i Speaker 3 (3:13) think he lives in brooklyn it's Speaker 5 (3:14) painful off the scene it's bigger painful a great set of guests with us this morning to get us started always a wide-ranging conversation nikki waller with us driving all of our bloomberg money and personal finance reporting story after story that I'm forced to read. I never read Janet Lauren because it's all about tuition. Nobody can afford driving all of our educational product. Janet Lauren with us this morning as well. In slipping in before a ginormous week ahead for Bloomberg this weekend, Sunday, you're at the Plaza, Speaker 1 (3:45) right? Yes, Speaker 5 (3:46) as Speaker 1 (3:46) I often am. No, it's the Qatar Economic Forum, powered by Bloomberg, and I'm going to be there hosting the show in the morning, and then a series of panels to follow that will be on Bloomberg TV. You and Speaker 5 (3:54) I decided to go beyond. that to a huge event this week and the rumors, I believe Politico first reporting it, that the president of the United States, like JFK and Adenauer, like JFK with De Gaulle, is going to go out to the airport to pick up the luggage for the president. Speaker 1 (4:11) Well, reportedly he'll go to Joint Base Andrews to greet President Xi when he arrives. And I think that just underscores the importance of this summit. And as Ambassador Nick Burns has pointed out, this could be the first of three. meetings these two leaders have here in the months ahead, but incredibly important, yes, because of trade, but also because of AI, the conversation that we've been having over the course of the week, really front and center. I mean, that's on Speaker 3 (4:30) the agenda, but we don't know exactly how they're going to address it. Also, I wonder whether on the agenda is Chinese students and their visas and their ability to come to the U.S. Janet, I want to bring you into the conversation because the Trump administration, through its Department of Justice, is taking aim at a broader swath of colleges. It's not just Harvard that it's looking to punish anymore. Speaker 7 (4:50) Well, we met with Harmeet Dhillon from the Justice Department a few weeks ago in Washington, and she had a lot to say about universities. Yes, it's not just Harvard and Columbia, but we're starting to see more schools getting inquiries about their medical school, their law school. Duke was the top of that list as well. And Speaker 3 (5:07) foreign influence on schools, too. Speaker 5 (5:08) I look at this, Janet. This is a third rail for me. Basically, the Trump administration has blown up the graduate programs of education in America. Is that an exaggeration? Speaker 7 (5:19) No. Do you know that half of the entire student loan portfolio is graduate school loans? Up until July 1st, you could borrow up to the cost of attendance. In some cases, $125,000. thousand dollars per year times two or three years of your program and the interest rates for those loans were nine percent so Speaker 5 (5:38) if a child decides to get a graduate degree in screenwriting they go to the first national bank of mom and dad no overlay no Speaker 7 (5:45) they go to the federal government and that's all changed now Speaker 5 (5:50) that didn't happen continue the show i start crying i know Speaker 3 (5:53) exactly well there are limits to those federal loans now nikki waller let's bring you in because tom mentioned the bank of mom and dad our reporting shows that more and more we're seeing baby boomers fund a lot of their grandkids' needs and the costs of living in a way that they hadn't had to before. And I'm guessing that must have an impact on how they save for their retirement. It has a huge impact. And what Speaker 8 (6:14) we're seeing these grandparents providing isn't just temporary help. I'm actually thinking of it kind of like the grandparent economy. The cost of raising a kid is $300,000, not counting college. And I know for all of us in New York, that actually kind of feels like a deal. But families need more money to raise their family, raise the kids. And the grandparents are stepping in. Speaker 3 (6:37) In terms of what that means for retirement, they're just raiding their own retirement accounts then as a result, and they're picking up jobs on the side? In a lot of cases, we talk Speaker 8 (6:44) to some people in their 60s who are picking up extra jobs so that they can help their adult children, or they're picking up the job of taking care of kids, which is... something historically that grandparents have done. But in other cases, the spending is cutting into their own retirement saving and cash flow. And that's something that financial advisors are saying, stop, put on your own oxygen mask before you have someone else. I'm thinking Speaker 5 (7:07) of oxygen masks. I'm thinking of the summed number of summer camps that everybody went to sitting around the desk this year. Are we broke in asking mom and dad to help because we're asking too much of fancy childhoods? Speaker 8 (7:22) That is a great question, and I think it depends on what you see as a great childhood. You know, a lot of the grandparents don't want to see their grandkids missing out on the good things in life. Speaker 5 (7:34) We turn now to surveillance child expert David Gurro with us here as well. Your childhood was a Martin, I think it was a D18 or D28 or whatever. Just shut up and practice. And nowadays, kids, my vintage kids, your vintage kids, we won't even talk about Janet Lauren's kids. I mean, off to a fancy school and all that. The answer is it's just gotten so much more complex in our youth. Speaker 1 (7:58) One moment. First, I have to note, you're taking on a second job here hosting this show. It makes me a little worried, Grandpa, about what's happening. It is. The Speaker 5 (8:05) surveillance casket is, Nikki, you don't know this, the surveillance casket is right outside the radio. We're not allowed to talk about the surveillance Speaker 1 (8:11) casket. No, you're absolutely right, and I think that there is a lot of tacit pressure. implied pressure among families certainly in cities like New York where you look at the summer and it can't just be running around in the park or going to a day camp there are all these other programs you can pick and I think even what has been in vogue these kind of remote camps that are focused on old school being in the wilderness are now out of vogue it's time to start practicing for this test or that test or thinking about college and all that costs money We learn. You know what else costs money? Making Speaker 3 (8:40) sure that your kid can play sports and getting to college. Put Speaker 5 (8:44) the puck in the net. Put Speaker 3 (8:45) the puck in the net, you know, hit the ball over the fence. For schools with big basketball or football programs, Janet, they're looking for new revenue sources because we're in this new era of paying college players. And that's turned a lot of college campuses into districts that look like professional sports stadiums, hasn't it? They are Speaker 7 (9:02) borrowing a page from the professional sports, and that's because they're paying players and they're generating revenue to find money to pay them. The new trend is building or renovating the sports arenas. You're seeing that at major colleges, including Kansas. We were just talking about this. Not a football powerhouse, but David Booth gave them $300 million to try to make the stadium better. And what is the key? Premium seats. fancy experiences, things that charge a lot of money and bring in more money to pay those players. Speaker 5 (9:34) We should mention that David Booth reinvented Bloomberg money, personal finance, retirement, wealth management. He was academically definitively dimensional of getting things done. Very well said. Speaker 3 (9:46) He's a Speaker 5 (9:46) real deal. So Speaker 3 (9:47) when it comes to these new stadiums and these new school, these new offerings, luxury amenities, where does the school part of it fit in? I mean, because the tuition Speaker 5 (9:55) keeps Speaker 3 (9:56) going up, doesn't it? Yes. Well, in some cases Speaker 7 (10:00) that they're they're looking to private equity at the University of Tennessee. They're building this new district that will have hotels, apartments, you name it. And they are the landlord. They own the land and they will be sharing revenue from whatever comes in for those developments. Speaker 5 (10:14) Speaking of sharing revenue, is there a name image likeness for the New York Mets? Oh, I knew you were going Speaker 7 (10:21) there. Well, you know, Pete Alonzo. Took the name image likeness down to Speaker 5 (10:26) the land of Rubenstein. Speaker 7 (10:28) 300th home run at Baltimore, and he was here at Citi Field doing it. It was kind of a nice honor for him. Yeah, it's too bad. It's too bad. He doesn't hang Speaker 5 (10:40) on the way out the door. That's Speaker 7 (10:41) the Speaker 5 (10:41) life of Speaker 7 (10:42) a Speaker 5 (10:42) New York Mets fan. Yeah. Janet Lorne, thank you. Thank you so much. Nikki Waller, thank you and your team for great work on personal finance. I don't know what to say to you. You've got like a 24 hour Sunday, don't you? 24 hour Speaker 1 (10:52) Sunday. Big event, as I said, coming up. I'm particularly looking forward to talking to Howard Marks. We're going to talk about AI and the economy. So he'll be