This is Bloomberg Wall Street Week.
And we may not have an overall recession, we're having a rolling recession. To conye, roll looks pretty strongly. It is when it comes to jobs. The financial stories that shape our world. Three major regional bank failures send shockwaves through the banking system. We're all trying to figure out what to make of generative AI.
Through the eyes of the most influential voices.
Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America, deebro Lair of the Paulson Institute, well then Hubbard of the Columbia Business School.
Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
A tale of two cities. As the bricks meet in Johannesburg and the central bankers and Jackson Hole, while race just keep going up all around the world. This is Wall Street Week. I'm David Weston. This week, I'm Sonny Bechelists of Rock Creek. On the bricks searching for a new engine for economic growth.
These new countries that got added the accounts for very little in terms of economic clouds.
Dan Trulo of Harvard on new limits on the banks.
These banks really they are facing, I think a real challenge to their business model over the medium term.
And Eric Canter of Molus on what all the new issuance is doing to yield on government bonds.
At some point you will reach a mark in which you know investors say, well, how much more are you going to pay me to keep borrowing like this?
This week Global Wall Street had to keep an eye on two very different events some ten thousand miles apart. In Johannesburg, the so called Bricks countries held their annual summit, seeking to reinject some economic growth through a range of initiatives.
Are we need to fully leverage the role of the new development banks, push forward reform of the international financial and the monetary systems, and past the representation and voice of developing countries.
And while the Bricks were searching for growth, Chair Powell led central bankers out to Jackson Hall, Wyoming in search of some clarity, maybe even steadiness, in the quest to keep growth going but still get inflation under control.
We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.
Regularities are no longer regular, and we have more irregularities than regularities. We cannot exclusively rely on inflation OUTLUK as determined by models.
But there was also a lot going on in between Johannesburg and Jackson Hole, as reports came in midweek that mister Progosian's private plane had gone down northwest of Moscow and what just happened to be the two month anniversary of his mutiny against President put in Washington, the SEC came out with its new disclosure rules for hedge funds and private equity.
Firms, increased fee disclosure for hedge funds and private equity firms. This is a seventeen trillion dollar industry and all across the country.
People took a hard look at mortgage rates over seven point three percent and decided they could wait, as mortgage applications fell to their lowest since nineteen ninety five. On the other hand, owners of Nvidia didn't have to worry much about high mortgage payments as they saw the AI chip maker come out with yet another gangbuster set of numbers and predictions on just how high the sky might be.
This was a historic guidance that we saw from the godfather of Ai, Jensten Nvidia.
And although Tech gave up some of the Nvidia gains on Thursday, the Nasdaq by the end of the week was up a robust two point twenty six percent. The S and P five hundred didn't do quite as well, adding eight ten percent, ending the week at forty four or five. That's just over one hundred points above the median number our Bloomberg L's project for the end of the year, and the yield on the ten year stayed reasonably flat, adding just over two basis points, leaving it
at four point two three percent. Take us through the news in the markets this week. We welcome now Scott Kronert, He's City US equity strategist, and Laurie Capacina, RBC Capital Markets, head of US equity strategy. Welcome to both of you. Great Ja you Lauria. Let me start with you first of all, what were the big stories in the markets this week from your point of view?
So look, I think it was big tech earnings. I was out marketing seeing clients this week. I couldn't get out of a meeting without having a debate over a certain company and then also, I think jackson Hole was the other one, and I would say, look, with jackson Hole, I don't think there were any big surprises there, but I do think it was good to get that event out of the way.
What about Jackson Hole from your perspective, Scott, did you hear anything that surprised you to anything that might change where the markets are headed? Well?
I think what Sherman and Paul gave us was a continuation of an ongoing theme that he's going to stay the course on his focus on inflation and wants to see the path to two percent very clearly. In the meantime, I think the question that continues to come up with many clients and investors as so, how do I think about interest rates breaking through ten percent of the ten year and moving through four point two percent or higher? And so they're the discussion very quickly goes from Okay,
we get it, fed funds probably higher for longer. How do I think about longer term interest rate trends and how does that affect the valuation paradigm on US equity skin.
I think one of the things we've heard from Jaypowe on Friday was we're not sure where we're going, as they say, data dependent. It depends on how the numbers come in. So what do you advise clients. On the one hand, it's four point five percent yield on the ten year versus three point five percent. I mean, that's one percent, but it could make a real difference in the value of stocks.
The easy answer for me is that we look for pullbacks to be more opportunistic getting long US equities going into a fairly robust target for the end of this year at forty six hundred and our midyear target for next year five thousand. So we're looking at any market pullback is a function of valuation compression around the rate
discussion as ultimately a buying opportunity. As we think under the surface, the S and P five hundred is probably less connected to the aggregate US economy the most expect and in that regard, earning has become a more important driver. And there were table pounding bullish in terms of how corporate America is contending with the macro influences.
Right now, Laurier, we have a rare opportunity here tonight because we have not one but two bloomberg Ols President you and Scott and he just mentioned he's at forty six hundred year end this year, you're at forty two to fifty, right and the forty three hundreds the median. Is there very much difference between forty six hundred and forty two to fifty in what might push you to the lower number.
So we're basically at the median right now. And that's also basically the average of six different models that we run, and our most bullish model gets us up to forty eight hundred on the S and P. That's looking at where we think valuations could be and our earnings forecast. But the real drag on our model, I would say, is actually our cross asset indicators, which look at stocks
relative to bonds. Now, that was a reason to be bearish at the beginning of the year, but we did see some improvement on those models in the second quarter. What we've seen recently with this move up in bond yields is that those models are rapidly getting more or less favorable for equities, more of a pressure point, and we are actually starting to see money flows come out of the US equity.
Market as well.
That was just my question because you've always, Laurie been telling us you know, we really need to be in equities. People are underrating equities, but are you starting to see flows? It is substantial right now as the bonds become more attractive with those yields.
So what's interesting is that to start the year everyone said, okay, bonds are more attractive than equities, and we did see money flow go into bonds, and then we actually saw in the second quarter money come back into US equities as it was being pulled out of Europe. So there was an international dynamic that helped the US equity market. But what we are seeing now is that we're getting to a point in the year where these flow trends
tend to fade a bit. You're seeing those European equity flows stabilize and that money is actually coming specifically out of the growth part of the market, and that's pulling the overall US equity flows down.
Scott, one of the things that make people into equities is earnings. Where are you on earnings right now? What do you think about the seasons we've just been through, and what are you looking at in twenty twenty four.
So the change with Q two earnings was that in comparison to Q one we saw earnings for the four yer move higher posts Q one, but you didn't see too much in the out quarter side of the equation. With Q two, we began to see an upper revision bias to Q three and Q four. We think at this point the twenty three earnings and around two twenty are more or less dialed in.
But where we think.
This is headed is that as we work through either economic slowing or mild recession, the path is still for higher earnings as we move into twenty twenty four, and we're on the more bullish side of the outlook for twenty twenty four looking for roughly two forty five of earnings.
There's some sector differences in here that influence the way this year versus next year play out, and so we're looking for let's call it less disperse sector setup as an underlying driver of an earnings acceleration into twenty twenty four.
Lord, do you see some sector differences as you look into twenty twenty four.
So what we've seen for next year is that if you look at the change in anticipating growth rates on earnings, I believe it's healthcare and energy are the two that have actually seen some upward revisions recently to that year specifically, and those have actually been two of the better performing sectors in August in the US equity market for the SMP specifically, so you are seeing investors pay attention to
that kind of issue. I think the other thing though, to keep in the back of your mind on twenty twenty four earnings is that inflation is anticipated to moderate. I think this will affect energy and healthcare less. But as that happens, our model actually shows it's a drag on revenue. So we think there could be some earnings pressures people need to get prepared for.
Inflation may moderate, but we've heard Scott say there maybe a slowdown or even a recession in twenty twenty four. That's still a possibility. Did you think earnings will hold up in that situation.
I think there are a lot of cross currents. But we have found that revenues in SMP earnings are really dictated by two things, inflation and GDP trends. So I do think it would be tough if we do see sort of the session just pushed into twenty twenty four. I think that ends up being another challenge to earnings. It's hard to get around.
Scott, how much attention do you pay to the GDP, because you know, though GP numbers coming in, some of the numbers are really extraordinary for five plus percent at this point, do you believe those numbers? And how much does that affect your advice?
I think that the correlation of earnings to GDP is certainly high and an impoortant element. I think we have to look at correlation alongside leverage or beta to GDP, and there I'd be a little bit differentiated. In terms of the way we break the SMP down, it's essentially in the three clusters, growth, cyclicals, and defensives. Our growth cluster is roughly forty percent of the SMP, so almost
by definition it should be less economic sensitive. Defensives we know are defensive for a reason, they're less economic sensitive.
So that leaves your thirty.
Percent of the market that we characterize as cyclicals that ought to be more exposed and leveraged to GDP.
Okay, Laur Kalacina and Scott Krohnitt will be staying with us as we turn to new paradigms for the markets in the wake of the Great Financial Crisis, and by the way, that pandemic. That's next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
This is Wall Street. I'm David Weston. Central bankers gathered in Jackson Hole this week to take a broader and longer term look at the economy and their approaches to monetary policy. Which rains is the question whether overall we're facing something of a paradigm shift after the traumas of the Great Financial Crisis and then the pandemic. It's got cornative city and Lori Calvacina of RBC Capital Markets have stayed with us to give us the markets perspective on
where we may be headed. So Scott, let me start with you on this paradigm shift. Overturn used term, but it may well apply here. We've had the paradigm since the Great Financial Crisis and then we had to respond to the pandemic. Where are we headed next?
Well, I want to focus on two elements of this, David, So I think first is regarding interest rates, which is continues to be elephant in the room, and we've talked about this in the context of valuations. But what we have to remember is that, Yes, we've been in a certain interest rate regime in the post GFC timeframe, but when you go back to look historically, it's fascinating the correlation between nominal and ten yure yields and SMP performance
has varied by decade, going back to the sixties. So we do have to be all eyes open that as we move forward from here, higher for longer rates may be part of the investment landscape. And that's just an important element to keep a focus on. Is we look for the impact of rates on equity valuations. Now, the offset of that is growth drivers, and we do have a new sheriff in town, if you will, with AI. Over the past decade, we've had focus on areas such
as cloud computing as a driver of productivity. Going forward enter AI. We definitely think there are going to be companies within the S and P five hundred that have a very real revenue and earnings benefit from AI. But more broadly and perhaps more important is under the surface. We think the productivity enhancement that can come to the
broader industry economy is really fascinating to us. It has us structurally overweight industrials and it has us very focused on this notion that as corporate America is better able to real time manage their business models courtesy of technology, you may implicitly lower the economic sense at a bias to the underlying index.
So Scott and Laura, I must say you have something of an ally here in Larry Summers, the former Treasury secretary wh's a special contributor here. I talked to him earlier today and one of the things he emphasized was possible a paradigm shift in the Fed fund rates and exactly what's going on with the interest rates. This is part we had to say.
You may see the Fed funds rate have to go up once or even more than thatch over the next few few months. I think that there is an underappreciation in general of the fact that substantially enlarged government budget deaths means substantially more absorption of saving, means substantially more demand, and all of that means that the neutral interest rate is increased and is increase now and in the future.
So Laurie, let me turn to you. To what extent do you agree with Larry, and if so, what does it mean for your clients?
So I would say, on you know, the issue of the neutral rate. One of the things our Rate Strategies pointed out today that was that powising to kind of punt on that issue and say we don't really know what it is and kind of squirm out of it a little bit. I have some sympathy for that, but I will say, as I talk to investors, I'm not quite so sure. I think this notion is completely unappreciated.
I talk to mostly equity folks, and I think they are very much of the opinion that we do have to brace ourselves for higher interest rates, you know, not a FED sitting at zero essentially propping everything up with the balance sheet, and also associated with that, frankly, they're looking for, you know, a higher run rate on inflation.
So I was also struck today by chairmpin Powell's comments of really, you know, kind of reinforcing the idea of the two percent target, because frankly, a lot of the equity folks I talk to think maybe it should be a little bit higher.
In a word, is AI going to bail us out? Scott thinks it may help us.
Look, I think that AI is a positive driver. I agree with what a lot of what he said I view it as another productivity enhancing tool, not necessarily something that's going to completely change things, but I do think, you know, it's an important component of the idea that we do need to get used to a new world, and whether that's more technological innovation or reinvigorating the old economy. The reindustrialization theme, I think is another paradigm shift we're
going through, really reversing globalization. I think it's all part of the same ball of wax.
And there's the question when it comes when we get that productivity gain. Many thanks to Lori Calvasena of RBC Capital Markets and Scott Kroner of City. Higher rates for longer seems to be the order of the day. But how much higher and for how much longer? And what will these higher rates mean for things like deal making, which was all already struggling to come back. For some answers to these questions. Welcome now back Eric Canter. He's
a vice chairman at Molison Company. Mister Canter earlier served from Virginia in the US Congress, including as House Majority of Leaders. So Eric, thank you so much for being a Wall Street We really appreciate it.
David's a pleasure to be here.
So now you're on Wall Street having been back down on the Capitol, give us a sense of where the rates are and where they're headed.
Well, I mean, listen, I think many would say that the days of free money are over and that we are no longer going to see sort of the benefit of that and perhaps be paying the price for that. But there's no question that now we are seeing real interest rights now exists, and the cost for borrowing has gone up. And you know, from a deal making perspective, I think what we would like to see from Molas's perspective is a little bit more certainty. You know, you know,
people projectble. Is there going to be a soft landing, is there going to be a recession? I mean, from our standpoint, it's about the Fed reaching a point where you can gain some certainty with the rate hikes.
And the thing keep saying their data dependent depends on what the data are. It comes in what they're going to do. One point of data that seems not to be up for debate is how much money the US governments have to borrow the issuance of treasuries, because that certainly is a factor on what happens to the rates. The more we have to issue, the more interest you have to pay.
Well, there's no question, and as we know, we went right up the country went right up to the edge in terms of the debt ceiling, which caused the coffers to really empty out, which has now caused the federal government to have to incur an incredible amount over twenty dollars of issuances. I think since that sort of standoff in Washington, So you know, look, David, I think that certainly you could look at some of the auctions that
have taken place. Some haven't gone as well as expected, but most by far have gone very well.
I don't think the.
Federal government has a problem in borrowing right now, but at some point you will reach a mark in which, you know, investors say, well, you know, is how much more are you going to pay me to keep barring like this? And that's the point you don't want to get to. And I think from a deal making perspective, again, it gets back to the point of certainty. When are we going to see the ability for this country to have policies in place to grow at a quicker rate
than the debt is growing. And that's ultimately the goal.
Right now, we're seeing projections, for example, coming out of the Congressional Budget Office suggesting that because of just the increase we've already seen in the rates, our interest payments are going to be much much higher. It's going to add a fair amount to that debt that we have to service at some point starts to crowd out other things that we will be doing with the money.
So I think this is the accurate statistics that the interest cost has gone up over thirty five percent over the past year. We are going to reach a point, maybe in fiscal year twenty four or twenty five, that the federal government and it's interest bill will be as much as what the federal government funds the Pentagon with. I mean, that's a really dawning thought, and so we
can't sustain that. You know, there's a great sort of stat in history when you look at the interest bill for the federal government on an annual basis, When you look at it in two thousand, it was two hundred and twenty three billion dollars. If you look at it in twenty fifteen, it was two hundred and twenty three billion dollars, And you have to sort of ask yourself why is that, Because in fact, during that period of time there was nine point seven trillion dollars of additional
debt incurred. How in the world are you paying the same amount of interest? It's because rates have been so low and so again that's not sustainable. And that's when I say again, we're going to have to do something about this. And that's why I think the markets too are now looking to see longer term while the ten year has gone up so much erictually.
Really great to have you on, Thank you so much of the time. That is Eric of Molus and Company coming up, the group that was supposed to challenge the economic supremacy of the G seven nations. We'll talk about Sunny Bachelors of Rock Creek, about the Bricks meeting in Johannesburg this week and what we learned.
She really really needed a major breakthrough this week.
That's next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
The Bricks Brazil, Russia, India, China and South Africa, a group of countries with fast growing economies that are expected to dominate the world by twenty fifty.
It is a club of you know, nations that have the same outlook in terms of how the world should look in terms of mutelectural operations.
And they have grown fast. Accounting for just over twenty percent of global GDP when first discussed back in two thousand and one, they've shot up to over a third and are projected to be over forty percent by twenty forty, while the G seven has gone the other way, from
over forty percent down to thirty percent today. What started out is simply a way of thinking about investments has turned into a more formal arrangement among governments holding annual summits this year in Johannesburg, where they decided to expand their membership from five to eleven.
We have decided to invite the Argentine Republic, the Arab Republic of Egypt, the Federal Democratic Republic of Ethiopia, the Islamic Republic, ran, the Kingdom of Saudi Arabia, and the United Arab Emirates to become.
Full of bigs. But as much as they may consider themselves a group, the five countries in the bricks are pursuing very different economic paths, with China being the outstanding growth leader over the last twenty years, as observed this week by Jim O'Neil, the person at Goldman behind the original idea of the Bricks.
Economically, the only reason why the group is that interesting, frankly, is because of course China.
Though China shows signs of giving up its economic leadership, the second big problem they have is Ji.
Who has reasserted control of the economy, who many of our investors that we talked to their field doesn't even even understand economics.
While Russia and South Africa have fallen behind, the first in the aftermath of the war in Ukraine and the second facing a wide range of problems. President Ramafosa has been in lots of international meetings looking for ways to pull the country forward, leaving it largely to India to drive the bricks forward. Despite some disappointment in the past.
A line that I've always repeated without India is that this is a country that has consistently disappointed the optimists in the pessimists. So the last few years it has clearly disappointed the pessimists because it's done much better than what the worst forecasts were. Now, I think that we just have to be careful that India doesn't follow its past pattern and disappoint the optimists as well.
When it comes to emerging markets, particularly the bricks, there's nobody who knows it quite as well as of Sunny pecialist of Rock Creeky Walk or back now to ostri Rica, Sonny, thanks so much for being back with us. So it turned out to be a fairly eventful meeting in Johannesburg as they decided to go from five members to eleven members. Were you surprised and what do you think brought this about?
So, David, I think President she really really needed.
A major breakthrough this week.
And with everything that we saw that is going on, almost ten billion leaving UH, leaving the markets in China over just the last few weeks. You have consumers not not really buying into consuming in China. You have the real estate problems, you have growth rates down, you have youth unemployment.
He had everything going wrong.
So this meeting could not have been at the worst time, and he really worked hard to convince the other members, including Modi and Brazil to UH to agree to this extension, and.
It seems like the timing was good for India.
You know, India did manage to UH to be the fourth country that's landed on Moon this week, while Russia actually could not land on Moon, even though it had been an early early UH player in space. So so I think India felt comfortable that it may not necessarily be in a weak position in this grouping. So that's I think how the various leaders got to agree to have these six new countries, which are a rather mismatch of countries to join the new groupings.
Well, let me ask about that mismatch. Let me ask about the mismatch, because I don't know, by the way, what they're going to call it when they admit these countries, assuming that they do. There's some formalities or things. But when it was created back by Jim O'Neil at Goldman Sachs, it was a way of looking at the fastest growing economies a group of them there were four originally later at five as an investment matter, where to invest What is this new entity now, because as you say, it
is a mismatch. It doesn't fit together the way when Jim O'Neil created it.
Absolutely, and I think Jim, you know, in two thousand and one, when he created it.
He was absolutely right. These countries were growing.
So fast they were really changing directions. Usually, we saw poverty go down in China, we saw poverty go down a little bit in India. We saw a major major change among the largest economies, which was sort of the brick and then the S got added to bricks with South Africa.
And if you look at.
Actual market terms, I think the S and P was up about four hundred and twenty percent. If we go back to two thousand and one when he coined the term, and EM was up maybe around four hundred and three percent, so you know, pretty much in line with the.
Rest of the market.
Things changed a lot by the time that the actual organization got set up in two thousand and six, and then really started going downhill, particularly because of China, Russia and South Africa's returns being so negative. So now you know, you went from a group that had some cohesion in terms of economic growth to a group even before the six got added, that have really.
Very little to do with each other economically.
And this countries that got added include three oil producers, and then you have Egypt, you have Ethiopia, and and you know these are countries that are in Argentina. Again, countries that do not necessarily have very much in common with each other except maybe grievance against the West.
In some form or other. And moving forward, like you said, it will be interesting to see what name they come up with.
But it's much more of a geopolitical group versus what Jim really was talking about, which was an economic block.
Well, let's focus on what Jim were resiltually focusing on. With the addition of these new countries. Does it make the countries, any of them, more investable? Does it address some of the issues you've already mentioned For President g does it make his economy stronger at all to have this expanded bricks.
First of all, you know you're going from a group of countries. This five account for close to about third of the world's purchasing power parity, if you know, we go with PPP, they account for about a third of.
Global PPP.
But if you look at these new countries that got added, they account for very little in terms of economic power, so they're not really bringing in They're bringing in a lot of population, but again not the largest countries necessarily in terms of population and consumers. You know, one country, namely Iran has its own sanctions and troubles, and what we saw already with Russia being part of this entity, the Brick Bank that is trying to lend kind of anemically to the block was not able to.
Help Russia in its time of need. So it is not.
Clear that this grouping is really functioning very well Economicallysani.
As you suggest, Most economists I've heard from are skeptical about the US dollar losing its position as a reserve currency. But is there something other than that there might be almost as a trading currency, that this sort of conglomeration of countries could move toward that they would trade in their own currencies. I guess that's one of the things they're studying, right, to have a common currency.
I think they certainly are looking at the common currency, digital currency.
A number of different options.
I think that if we look at it very carefully, these countries are so disparate from each other, there is I see very little likelihood that India would want to have a common currency with China. For example, India is setting up one of the most sophisticated payment systems inside of India. In fact, some countries are working with India because it's AI generated payment systems are extending even to its own rural population.
The question of.
India moving away to give that sort of power up to have one common currency with this group, I think is very unlikely.
Sunny, It's always so good to have you on. Really appreciate your time as a Sony bachcialist of Rock Creek Coming up. Students may be having trouble covering the cost of tuition, but what about the twenty thousand dollars they may need for their sorority rush out fit. That's next on Wall Street League on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Wall Street Week notes the passing this week of one of its stalwarts, Loslo Beinie. He was one of the program's chief alves for years, earning him a place in the Wall Street Week Hall of Fame for his stock predictions, something in which he took great pride.
As of today, we have the ninth best year in history, and you know, I think that no one would have expected this year to be there in top ten, So I think we've got a.
Pretty good year. And Lewis Ruckheiser showed his appreciation on the program whenever Laslo Barini joined him on the air.
As it happens, we have with us tonight one of only two of our chief elves who are still bullish on this market, meaning that they expect the DOO six months from now to be at least one hundred points higher than it is tonight. He's Laslow Berni. And the operative question is why is this man smiling?
We lost a Wall Street Week legend this week who had Lazoborini died at the age of seventy nine. Finally, one more thought. An investment in knowledge always pays the best interest, so wrote Benjamin Franklin in The Way to Wealth in seventeen fifty eight. And these days it better pay a pretty good rate of interest, given the amount
of investments some schools are asking for. We all know about the level of student debt, something President Biden tried to address with a debt forgiveness plan struck down by the Supreme Court.
I know there are millions of Americans, millions of Americans this country who feel disappointed and discouraged or even a little bit angry with the course decision today.
One student did, but.
As much trouble as some middle class students may have paying for their college, there are others who don't appear to need much help at all, even for high school. Take, for example, students at the prestigious Deerfield Academy in Massachusetts, who will soon enjoy a new dining hall built just for them for a mere eighty nine million dollars, financed
conveniently with minicial bonds. But then again, Deerfield students pay a mere seventy thousand dollars a year to attend, more than one hundred grand less than the students at the ultra exclusive Institute alf dem Rosenberg in Switzerland, for which you will pay one hundred and seventy five thousand dollars a year, with meals prepared by chefs from Michelin starred restaurants, physical therapists on call, and a fleet of Audietrons to drive.
As Town and Country reports, the head of the school justifies the tuition simply saying we like excellence and that comes at a price. Not clear whether that price includes using cell.
Phones Ernie Love mobiles on weekends.
Thomas supposed to call my therapist. It isn't just the elite prep schools attracting all that money. These days, we sort of expect that the Harvards and the Yales attract big contributions from alums, though former Harvard president Larry Summers told us that wasn't the reason he's opposed to so called legacy admissions.
MIT has long been without legacy admissions, and it seems to do very well financially.
But the big bucks aren't just going to the ivys anymore. McPherson College in McPherson, Kansas may have just eight hundred students, but it just got a one billion dollar anonymous donation, and I'll tell you I for one am a big fan. McPherson offers the only four year Bachelor of Science degree in the country in restoring classic cars like this nineteen fifty three Mercedes Benz three hundred s that students restored
for the Pebble Beach Concord Delegon. And not all the money being spent on students these days is going for what you'd call traditional education. There's a good deal being invested in the phenomenon known as the sorority rush. Most particularly the rush has experienced at the University of Alabama. Now there's nothing new about the ritual of rushing fraternities
and sororities. But what is new is pledges at BAMA have taken to TikTok to show off their outfits for the big event, including brand details that lets one TikToker provide us all with a detailed accounting of how much these young co eds are spending, like this.
One Menichus's David German.
These are Eniton, David Gruman and David German.
That outfit including accessories, tools, up to just under six thousand dollars, way below some others which reach up to over twenty grand, which may cause some of us to ask where all that money is coming from.
Maybe these Bama, these students are are not the aspiracial consumer.
Maybe they're you know, their parents are paying for a hundred Oh gosh, I I hope so yeah. I mean, if I'm mainteening can get a twenty thousand cardier like rock On.
That does it For this episode of Wall Street Week, I'm David Weston. This is Bloomberg. See you next week.