US Stocks Limp Into Year End While Treasury Yields Rise

Bloomberg Audio Studios, Podcasts, radio news.

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.

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.

With Tim and me.

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.

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 equity mix. That's one area where I continually emphasize that

So what do you think it's going to do?

I think unfortunately I heard you talking about the S.

And P and the lead in. Yeah, you know, I've spent a lot of time around bull market. Yeah.

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

Unless we see a.

Significant change in the economy, it's just really hard to bet that that's not going to happen.

Yet again, Yeah, I you know that.

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.

Oh you saw this.

Every year for the last five years. Well, we doing the show with you.

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.

I think there's some truth to that, but I think it also feeds back in both directions.

Right, given a very.

Very low cost of capital, we're seeing the impact that that has on the investments that these companies can make.

That means that Amazon.

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.

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 in high yield savings accounts, where it's going, where's it going?

Well, where we're really seeing that money trend is one it continues to grow.

So despite the fact that the.

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.

Three to five percent on those.

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, and what historically causes those assets to fall is either the loss of the underlying asset bonds, default companies go bankrupt,

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.

It is an array.

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

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.

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.

Stay with us. More from Bloomberg Business Week Daily coming up after this.

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.

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.

Welcome, Welcome, Thanks Carol, thanks for having me.

How are you thinking about twenty twenty five when it comes to the retail space?

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.

I was just going to say what is that doing for retail? But you answered the question right there, right right close.

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 it out there. We saw so much Nike at Burlington

What does that tell you that they're offloading stuff that just wasn't selling.

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.

Now does that dilute the brand at all? To be so focused on off price?

I think it.

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.

Okay, I want to go back to this thing you said about GLP ones because I actually haven't cool right now?

Very cool?

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?

You know?

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.

Well, if they don't.

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.

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.

Do they stop them because they're no longer eligible?

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.

So don't throw away the clothes, because that's what I tell.

You, my husband. I've never thrown them on.

You into it.

Hey.

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, or a big sector of our population.

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.

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.

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.

I think that.

So, what do you mean they took it to heart that they didn't plan.

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.

Talk to us, Oh good.

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?

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.

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?

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 on prices, being able to watch, you know, real time competitors price.

That's where you get your gold bars.

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?

I think beauty is going to have a resurgence. I think that that we've been in.

Another Stepoora that I go into just outside our office is often packed, and you.

Check out Alta when you're not in Manhattan because they are also packed.

In cover story just in the last couple of months on this Amanda Mall wrote about multi success remarkable.

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.

So who are the winners in the space in twenty twenty six.

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.

Are you talking like eight year olds?

I'm talking a lot eight to eighteen, So.

I guess that's kids.

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.

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.

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.

It's not good news for best Buy.

Give us a big prediction for next year. What happens.

We're saying, getting asks what's the best day to shop at TJX when they get the new delivery.

You know what, I think that that victorious secret gets its momentum back next year.

You know, Dana Telsey talked about Victoria's Secret with us too, that they seem to be going through a redo.

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.

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.

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.

Gotta say, though, Tim, If I had a nickel for every time I said AI or artificial intelligence.

You'd almost be able to share afford a sheriff in video.

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

Yeah, Carol, and think than your remounts for having me.

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

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.

I think that it's very likely they're going to be some hiccups.

As you mentioned.

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

It hasn't been a difficult for these companies to raise funding up till now, but you think next year it could be tough.

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.

Like the losing horses. I don't think.

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 a year.

That's in a much better position.

It has the full stack across the research that chips, the models, the applications, in a much better position to win this.

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.

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.

I foresee.

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

They're more and more moving.

Towards small specialized custom models are the optimus for the use case, and that's the bullyground dot AI needs to win.

All right, we shall see.

We shall see what twenty twenty six brings when it comes to open versus closed Manas, thank you so much, Manos Kuka.

Meet us.

He is CEO of UMI, joining us right here on Bloomberg.

Stay with us. More from Bloomberg Business Week Daily coming up after this.

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.

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.

Happy New Year. I'm happy to be spending the last day of the trading year with you.

Guys.

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 about this.

Well, he used it.

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

And Netflix didn't need it.

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 lower cost of capital, and it involves stock and I think it's just a better deal for it, and.

They're not getting those legacy they wouldn't be getting the Legacy TV Networks.

Yeah, you don't get the legacy cable.

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 with this.

That's not their business.

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.

So we'll go ahead.

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.

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

You know. But we saw what happened to Disney after they absorbed Fox.

It was much harder than anybody thought to make this profitable, and now they.

Finally are getting it together. This is years later.

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.

That's what ultimately.

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.

So I do actually expect them to do that at some point.

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.

But it would also be great.

For their overall business because they wouldn't have to put all this capital to work at much lower returns.

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.

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.

Likeyh, I don't know a pizza, you know costs to them.

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 be satisfied with them vastly overpaying and walking away.

So we'll see I've been wrong.

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.

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 more than ever. It's not just kind of the venue of cable, but we're now seeing kind of regular linear

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

But in real life, when I'm on a YouTube show.

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 want by having enough views. But being on cable TVs.

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?

Very briefly, Well, it'll be spun off like Versont and Versont is the Comcast cable assets, and you know where that goes.

Where are these ships with no future go?

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.

So yeah, I'm.

Sad to say that, I don't think people are gonna be watching cable TV in five and ten years.

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.

This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal