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We just want to get a check on kind of how we ended up today and as we get ready for some more big megacap tech earnings. We're talking about Alphabet and Amazon coming our way over the next couple of days. Eric Wiener is in the house back with us senior editor Equities America's at Bloomberg News. Here in our Bloomberg Interactive Brokers studio a lot coming at investors. Certainly we watch for headlines that impact the trade here.
Is it still really though largely about earnings for the most part, although some policies like we saw with the homebuilders today, certainly impacted by some things that could come from the White House.
Well, right now, as far as today is concerned, Anthropic really freaked out the market and software has been selling off software stocks in particular within tech have really done poorly. I mean, if you look at like the Magnificent seven, you can see Microsoft has really come down more than the others, and that's spending on AI and that's also software. So today you got a lot of movement around what is at risk, who is going to survive AI, who
isn't going to survive AI? And as these tools come out and they take the place of other you know, data providers. You saw like the London Stock Exchange down, you saw SMP Global downtild. Yeah, really weird, really weird reactions, and it's because there people are afraid that they're going to be replaced. That's different than the big megacap earnings where you got Google coming in Google, well, Alphabet they're up like ten percent, they were the best performer last year.
The question is that they're within spitting distance of Nvidia, you know, of passing them as the biggest as the biggest stock in the world market keep yeah, yeah, So I mean it's will they will they justify that rally?
Well, you know, speaking of this and we're watching earning so closely, just want to mention Eric super micro computer crossing the Bloomberg terminal we are seeing the stock pop initially here in the after market, let's go to the outlook. The company talking about seeing third quarter net sales of at least twelve point three billion. That is way above the street estimate of ten point two five billion. Ce's third quarter just at EPs at least sixty cents this year.
That's eight cents better than what the street is forecasting. And what's always key is what we're seeing in terms of margins. And right now we're looking back at the second quarter a just to gross margin tim six point four percent, that was a little light point fifty two percent. But nonetheless check in super Micro up about nine percent here in the after mark.
Yeah, the company seeing third quarter net sales at least twelve point three billion, beating estimates of ten point twenty five billion dollars. Eric, before we let you go, does this this report from super Micro a sigh of relief after voluntility like today?
Sure? I mean, and we're seeing examples of this that today may have been overdone. I mean, that is a lot of what we've heard from analysts, what we've heard from traders. It's just you know, it could have been kind of a deep seek moment where you know, people initially react and then sort of come back to the table and think, well, maybe that was overdone and we.
Should say Aman deep seeing a Bloomberg intelligence said you know, software is not all going away, and he said some of it could have been a valuation.
Exactly, well exactly, so, I mean, and you saw like Palenteer did really well. They haven't done great this year, but they got a bounce today because of their earnings. So you know, it's it's sort of a moving target when you're talking about AI with winners and losers, and we're just still in the.
Very early innings. Eric Wiener, Senior Editor Equities America's at Bloomberg News. We wanted to talk to you for longer, but a bit of a busy show, so please come back again.
We'll do it.
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Well our Market's live blog today, pointing out that Neil Utta of Renaissance Macro notes that something typically goes wrong in the stock market when a new FED chair takes over. Years that saw a FED leadership change also saw big s and P five hundred drawdowns, an average of seventeen percent to the downside for the past four chairs alone.
Dot A writing in a note today that quote, if past is prologue, I would not be surprised to see the new FED chair test it, especially given the circumstances of his ascension to the job, a newfound policy dove tasked with convincing those around the FOMC likely suspicious of the motivations to his position. Neil joins us now he's partner and head of economic research at Renaissance of Macro Research. He joins us from New Jersey. Neil, good to see
you. You also write in the note that you've been tracking how Warsha's sentiment has changed since his time as a FED governor during the Great Financial Crisis two thousand and six to twenty eleven. I believe what did you find?
Well, good to be with you. I found what you'd expect, which is he's been hawkish throughout his entire public career up until about the six months during which he's been here for interviewing for the FED job. For a president who calls himself a low interest rate person.
Shocking, I know, isn't it like kind of baffling?
I think when I when the name was announced Neil, I was kind of like, wait, did I miss something?
Like?
So, what do you think is going on here? Are you?
Do?
You feel like?
You know?
It's interesting? Was a Gavin Newsom who was who did a big interview with our Bradstone and just said, you know, kind of the rule of law is in a part his view in terms of this presidency, but he said, one of the things the president does pay attention to is financial markets and do you think that was kind of in his thinking when he said I got to get I gotta put a FED chair in the market's respect.
Yeah, I don't. I mean, I don't know, I don't. I don't know how to think about that. I mean, I think the upshot to all this is that the FED is bigger than any one person, right. It's it's it's an institution with lots of people, it's a it's an institution that's driven by consensus building, and there are a lot of people on the FYMC that rotated and out from the regional FED banks and there are no slouches, you know, like someone like Lori Logan or Beth Hammock.
You know, their expertise I think is considerably stronger and in lots of places than Kevin Warsh. So I don't think they're going to be intimidated by by Kevin warfh sitting around that table. So I think the upshot here is that the the FED is bigger than any one person, and that probably limits a lot of the sort of anxiety that you might get to markets. I mean, the real test of all of these positions, in my opinion, is really in times of crisis, you know, not so much when things are normal.
So we're going to get to crisis in just a second. But first I'm wondering if we're putting the cart before the horse at this point because of what we've heard from Senator Tom Tillis and the fact that he will not back a nominee until the probes into J. Powell are settled. What does that mean for the outlook?
Well, typically when you have you know, the sort of changing of the guard, if you will, it takes about ninety days from the time the person is nominated by the President to when they're confirmed by the Senate. We'll see how long this one goes. You know, typically the hearing is scheduled before the committee is scheduled about a month after the person is nominated. Now, if Senator Tillis decides to kind of stick to a guns, I mean, he's got nothing to lose. He's not up for a
re election. You know, we'll see. I mean, you know, I think, as is the case with any nominee, the longer they it's like a fish out of water, right, I mean, what happens If a fish is out of water long enough, it starts to smell. And so I think that's that's the risk. I think you run if
both sides kind of hunker down. I mean, the President has basically said, let it go on for as long as it needs to, you know, but to get Tillis to back down, the President will need to back down from the investigation.
Hey, you know, I do wonder what a wash FED will be like, Neil, having seen, like you, lots of different FED chairs, and I remember a time where I feel like you didn't really hear from a lot of FED speakers, and now it's just such the norm. Is he going to be a quieter FED chairman, so that we're not going to be able to pick up cues and speeches that he's going to be giving potentially if again he is indeed FED chair, the next FED chair.
Yeah, I mean, I think that's been one of his sort of critiques of the FED, is that they talk too much?
Do you agree?
And I, you know, sometimes yes I do. I mean I think that there's something to be said for that. But there's also, you know, like with everything, there's a lot of incongruencies in what he's talking about, right, So you know, during his time as a governor, you know, I don't really recall any meaningful speeches that Warsh gave on the economic and policy outlook, and he probably looked at that as a sort of form of forward guidance
that he didn't really believe in. But you know, he kind of is all about like, use less discretion in terms of policy, right, we should have more of a rules based framework. But I think what's interesting about that now is a lot of what he's talking about in terms of you know, trying to get rates down at least up front, is an appeal to discretion. Like, how else would you describe the sort of golden age, right these is that they have to kind of bring rates down, right,
like we're in an economic golden age. It's a productivity boom. Nehru's low. We can cut rates without stoking inflation. Obviously, that's an appeal to discretion at some level. So you're actually going to need a lot of data to convince the people around the table to kind of buy into that theory. You can't just will it into the Fed's policy. The other thing I would say, he's also a big critic of forward guidance.
Now.
One of the things we know about forward guidance right this is, you know, basically guidance on interest rates is that helps move you know, so that basically allows like movements in the front end of the Yeld curve to translate more into the back end of the Yeal curve, right, because then markets anticipate what will come as a result
of what the Fed's doing. Now, if you get away from forward guidance, that kind of goes away and it pushes up term premiums, which all else sql makes longer term interest for its higher, which is something they've said they want to get down. You know, of one of Worsh's big criticism back in twenty twenty four was that the FED wasn't able to get the entire curve down in twenty twenty four, even though they cut interest rates. I think what that misses is the fact that longer
term rates fell into the cut. Right. Had they not had for a guidance, that wouldn't have happened, in which case they may have had to cut even more.
Yeah.
So look, I mean there's a lot of interesting little nuances that we can talk about for hours.
Frankly, well, one nuance I want to ask you, and maybe it isn't just a nuance, but I do wonder about the connection with Stanley drunken Miller. We talked about this with our Eric Shatsker and the ties that he has famed investor, well known on Wall Street, certainly to the Bloomberg audience, to you, that he has ties to Best and the Treasury Secretary right Scott Besson, as well as to Kevin Warsh. I think the ft even talked about the Financial Times about the rise of the shadow
FED chair, meaning Drunken Miller got about thirty seconds. Is that maybe something that could be a reality very quickly.
I mean I don't know. I think a lot of this sort of enthusiasm for a tread treasury Fedicorp is quite misplaced. Okay, you know, I'm not sure. I'm not sure I buy into that. Again, that goes back to this issue around QWI, like why did the fed haf QWI. Did they do it to bail out the federal government or did they do it because the federal government wasn't
doing anything? I mean that if you go back to that time, Carol, we were talking about how the government was doing a sequester and austerity, and you know, I think that kind of gets the causality around policy backward.
All right, listen, We always appreciate when you jump up on Bloomberg.
So thank you so much. Neil.
Have a great week. Neil Data. He's partner head of economics at Renaissance Macro Research. Joining us from New Jersey.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern an 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.
Bloomberg News real estate report of Pat Clark joins us here in the Bloomberg BusinessWeek studio. What did you find out? How would this work?
Well, there are details still to be negotiated right, but it would be what's typically known as a rent to owner pathway to home ownership program, where private investors acquire
homes from homebuilders. These could be homes potentially that are sort of built tailored for this program, so maybe built on the smaller sides, not built yet, not built yet, and they could be built for this program, acquired by private investors who would then rent the homes out and then with some sort of opportunity for renters to convert
into owners. Usually the way that's worked is there's some sort of help or, at least in more recent iterations on the model, there's some sort of program to help renters save a down payment. Some of the talk around this is that, you know, would there be a role for federally back mortgages. You know, does do Fanny and Freddie get involved in some way bring down the cost of you know, cost of in interest payments when you actually go and buy the home that you've been rented.
So private investors Pat find them, provide the money up front for home builders to build, and then who gets all the permitting and all that good stuff. That's always so much fun.
Well, the builders have to build the homes.
But I think you know, the way one person described it to me is like builders are in the they're in the moving business, not the storage business, if like you indulge a cliche. And so the builders are the builders know how to get the homes built, built, and then they give them to someone else, right who can hold them on a balance sheet and figure out how to management manage them. I mean, managing these kinds of properties is not not necessarily.
In the pitfalls before in this rent to own you report it in your story.
It's one pitfall. It's you know, it's complicated, right, who's supposed to take care of the home during a period of time and its own you know, when when ownership is sort of transitory. So that's that's certainly one thing.
It should be easier with newly built homes, right if you're doing this the way this has been done in the past, usually as you buy and exist in home and you know which comes with which could come with all sorts of like deferred maintenance in it, whereas these homes, you know, you would imagine could even have a builder warranty on them, and so that should be easier. The hard part really is coming up with a scheme that lets people convert.
And bind the homes another challenge, I think, and I'm no real estate expert, but I'm told the three most important things when it comes to real estate are location, location, location. I've heard that before. Where are these homes going to be built? Because it kind of doesn't matter if you create a million homes and places where people don't want to live. Sure, you know that's I think.
That that seems like the less hard problem, so really to me personally.
Well, because that's where, to Carroll's point, the permitting comes in. Because a lot of a lot of the challenges with the affordability crisis is zoning and the fact that a lot of these places that are highly desirable with expensive home prices you can't build because of density issues.
Yeah, I guess that could be an issue. I mean there's also, like we're talking about lots and lots of newly built single family homes. These have to go in the suburbs, they have to go where there's land to build them on and you.
Know, as but is that where people want to live? Like? That goes I guess the argument pod because we've been talking about affordability you know this better than we do, like for decades, and so you have so many people working in these major cities, be it New York, be it La like and the ability to live close so you're not commuting an hour or two hours or three hours or whatever the heck it is. You know, it's it's difficult so to find that affordable housing that is
close to where the jobs are. Is that where this I mean if you're buying, if you're building single family homes, that might not be the case.
Sure, that's that's fair, right, is like, can you actually find a market for these kinds of properties? I mean there's there's It's not as though there are not homes. You know, homes are being built in the suburbs, right, some of them are built. You know a lot of capitals formed around this idea of built to rent, which is homes that are built for the purpose of renting out very often in communities, you know, in whole communities.
Sometimes people call them horizontal apartment buildings. I think those are renting. I mean it's possible that, you know, not every project has rented as well as the developer thought it would when they started, because that happens too. And I think anytime you think about building at scale, there's a real estate cycle to contend with.
But I.
You know, I think that there are plenty of markets where you could find demand for this kind of product.
I'm wondering about the companies that could benefit here. Lenar is up three percent in a day when the broader market is lower. We're seeing home builders in general higher apart from just a handful who are potential winners here?
Yeah, I think anyone in the new home space right like builders building supply. You know, I don't. It's it's I wasn't able to unearth a lot of details regarding investor. You know, who is forming the capital to do this right and and and who gets to invest in this and on what kinds of terms? But you know, there's you could certainly see opportunities.
So is it a fund is created and then home builders tap into that fund? Is that kind of how it works? Or we don't. We don't know yet. And I'm the other thing that, like I was thinking is that Okay. Now you have investors in Boved, you have home builders involved. These are all layers that have to make some money on this project, and I'm curious about
how expensive these might be. I know the whole idea is about affordable homes, but I do think about people taking a piece of the action and how that drives up prices.
Essentially, I think it's complicated.
I think there's there's I always you know, I think we.
Tried to get this across in the story.
This is a this is a complex.
Idea, and it may prove too complex to actually, you know, operationalize, but the you know, it's you know, at the same time, I think you could think about it as it may turn out that this is an idea that the housing industry broadly is trying to put in front of the Trump administration, because you know, both sides recognize that there is a housing affordability crisis and it needs to be
addressed in some way. Everyone has an interest in doing something, and so, you know, if it turned out this was a conversation starter, I wouldn't be shocked. At the same time, you know, we have Trump accounts, right, we have Trump we have these this does seem to be a template that you know, some people have at least pushed from just idea to something that exists in the real world. And so it wouldn't shock me at that time.
Were actually going to talk about TRUP account a little bit later on, No, it's interesting. Would they be called Trump homes?
That's the way people are talking about them now? Yeah, all right, and so one way to get it in front of the president.
Right, yeah, knew your audience, as some might say, Pat great story and it is a Bloomberg exclusive, so highly I'm everybody check it out on the Bloomberg at Bloomberg dot com pac clock. Thank you. He is Bloomberg News real estate reporter joining us right here in studio.
If you are 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.
It is time now for our weekly discussion focused on women, money and power. We speak to some of the most influential women that are out there from across the world of finance, really across the business world. Great to have back with US Jamie Madera. She is managing director, head of US Wealth Advisory and head of Retirement at the world's largest asset manager. We're talking about Blackrock and she's here in studio.
How are you, How are you?
I'm good.
It's great to be here.
It's great to have you here. And I do want to kind of start with that because I think about these funds what it might mean for more Americans. We talk about the ability to create wealth and that's whether it's to buy a house, to just think about your retirement. What do you think this means in terms of retirement planning for more America.
Yeah, so, look, I think first of all, taking a step back retirement, right, It is such an interesting conversation. It is changing so drastically, the ecosystem, everything about it is changing. And when you think about anything we can do as a society to help people save earlier, invest earlier, and fund those longer lives, that is a great thing.
And when you think about what these accounts will do for helping people actually put money away towards their retirement, but start at a much younger age, it is about time in the market, right, you just need to have more time, and the idea of helping people start saving earlier is a wonderful thing.
So you give the seed amount of money and then hopefully the people who get that have exposure to the market, and then they start to get more as well. I think the challenge for a lot of people might be
they don't necessarily have the money to add to that. So, you know, it's a complicated it's a complicated program, I think, an one that won't necessarily it's a simple program, but a complicated issue that won't necessarily saw if we think about from the broader perspective of Americans being prepared for retirement, what are you seeing from clients out there right now making sure that in an environment like this where we're
seeing some volatility. Charlie was just talking about double digital clients and some software names today because of disruption from AI. What are you hearing from them about how to hold on to their assets?
Yeah, So if we take a step back and we think about what are we turn to all for when we talk about helping more Americans achieve retirement security. So retirement security means the freedom to choose what's next, the freedom to do what's next, the freedom to support your longer life. And when we talk to clients about it, it's two things. It's giving appropriate access to the full power of the capital markets and it's managing risk across
these longer lives. And when you think about how you pull those two things together, that's what we focus on with our clients. In fact, Blackrock, a lot of people don't realize we're a retirement company. Right people think of Blackrock in many ways we're a retirement company. Over half of the assets, half of our fourteen trillion, is in
service of helping people say for retirement. Right back in nineteen ninety three, we created invented this elegant design of a solution, which is a target date fund that helps people access the capital markets and then manages them through in an appropriate way so that when they retire they
have money to use during their retirement. The challenge is the world's changed, right, so people are living longer, The responsibility of retirement saving is now so much more on the individual than ever before, and the capital markets have evolved so much so you need to almost rewire the whole thing and understand and figure out what are you solving for and the resources and tools you have to deliver on that.
So, Jamie, what are some of the things that you think about in that rewindering.
Yeah, so there's two really big themes. The first is we talk about people living longer. People are living longer, and they've always been focused on saving to get to a certain number, but who knows what that number should be and how do you actually then convert that and do the math to figure out how much income that should get you. So the first one is all about turning savings into income. And you think about penn plans
for years. What's the benefit of a pension? You get a defined benefit, a defined income stream, and to date four to one K plans haven't provided that. More and more people are asking for it. Over fifty percent of Americans are more scared of outliving their assets than dying, Like that's a really scary thing. And what they're really saying is any clarity on figuring out how much income can I get and how do you actually give me
the lifetime income, the guaranteed income to get there. And so one of the things that we've been talking with our clients about is a target date fund that has the option of embedded lifetime income provided by an insurance company. And so you've elegantly brought together the target date fund solution, which is the number one solution for any four to one K plan, but you've now embedded it into that, or you've embedded lifetime income into that.
So is that anity that goes in there?
Then yeah, it's the option.
So you know, we do think that first of all, people need choice and people want options. And the beautiful thing about life Path paycheck, which is our target date fun with income is not only does it give you the option to get that guaranteed income an annuity provided by an insurance company, but it also helps you figure out what that income could be and how much it could be to throughout your life.
Well, how is this different than people saving assets use and then supplementing social Security with selling some of those assets every year? Why when they reach retirement is there an aversion then to selling the assets? And people want income generated from the assets instead of actually disposing of the assets.
Look, I think at the end of the day, we're all human, right, and you want some sort of security. That's the beautiful thing about social security. It gave me some type of security. And so you could do the math and figure out what your withdrawal is and how you actually sustain those assets that you've saved, and you can work with an advisor or various tools to do that. That's a perfectly fine approach. Or you could also get the security of having that guaranteed income and having that
income stream for you. And we call it life path paycheck because people work and work and work, and then suddenly they retire and where is my income coming from? And so through life path paycheck, you actually get that paycheck after you stop working. Fascinating.
And one of the things before before we wrap up is, you know, we talk a lot about the wealth, the great Wealth transfer and whether it's to a younger generation. But increasingly again you talk about people living longer. Women tend to outlive men. And I am curious here you are having more conversations with women, either as part of a marriage or a partnership and kind of planning around that idea that, Okay, one of us might not be around and it's likely to be maybe the woman who lives longer.
Yeah, so average longevity rates have increased by seven years over the past two decades. Now when you think about women, women, as you say, tend to in general outlive men. The other thing that's interesting is in partnerships, more often than not, the woman is younger, and so she has that bigger gap to fill. You know, when we talk to women about return ron savings, this is where security really matters.
The confidence Let me know I have some type of guarantee, and then I will use the rest of my savings on discretionary items or doing the things I want to do. Confidence, security, and clarity. Clarity is the big word for everyone. Let me know how much I need and how I'm going to fund it.
It sounds so simple, right, but it's amazing how it's not there, and you're right. I think people get to the end and they're like, wait a minute, this isn't what I expected.
Never have time.
Come back soon. I will love it, love it. Jamie mcjeras. She's managing director, head of US Wealth Advisory and head of Retirement over at Blacklow, joining us right here in studio.
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