00:00:02
Speaker 1: Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Rick Worcester is back with us.
00:00:17
Speaker 2: He's president and CEO of the Charles Schwab Corporation.
00:00:19
Speaker 1: Good to be back with you.
00:00:21
Speaker 3: So fun to be here. Thanks for having me on.
00:00:23
Speaker 1: It's great to have you here. I feel like, go back a couple years, AI was not necessarily the focal point.
00:00:28
Speaker 3: It is now. Is anyone talking about it here at the conference?
00:00:31
Speaker 2: Yes.
00:00:32
Speaker 1: You guys in particular. What's happened? What's the conversations, Rick, that you guys have internally?
00:00:39
Speaker 4: Well, it's been a huge accelerant to our business, and I think to all the advisors here and I think it's primarily helping us in a couple different ways and helping the advisors in a couple different ways. Number one, it's helping us be more efficient and effective with clients. It's streamlining operations. It's helping advisors be more prepared for meetings to recall what the last discussion they had with a client was or what's important to that client. And at the same time, I think it's creating new pathways to engage clients. And for all of us here at this conference, it will allow us to reach new clients that we couldn't have before with a personal relationship.
00:01:09
Speaker 5: Well, one way you're doing that is by investing in Nevis. The booth is just right over there. We talked about this quite a bit yesterday with some members of your team a year ago. You were sitting with us. You had just acquired Forge Global. Is this investment in Nevis part of something bigger?
00:01:21
Speaker 4: Well, it's part of us trying to nail the basics for our advisors. Our biggest advisors have... pretty sophisticated technology stacks. And what Nevis, I think, can do for them is provide an operating layer that makes it easy for them to work across their tech stack and integrate into us. And so what we're trying to do with our investment in Nevis is create ease for the advisor and make it even easier for them to work with us, which hopefully gives us a preferred position in being their custodian of choice.
00:01:49
Speaker 1: How do you think about AI and being cautious? Because I think we're in this narrative around the AI spend.
00:01:55
Speaker 2: Look at Alphabet today, erasing about half a trillion dollars in market cap. And I think there's increasingly the conversation about return on investment and will it all pay off? So how do you think about your moves, whether it's partnerships or doing deals and what makes the most sense versus kind of watching how this ultimately plays out and what will be the ROI for everybody?
00:02:15
Speaker 3: Well, for us, we start with what's the end game? What are we trying to accomplish?
00:02:18
Speaker 4: And at Schwab, it's all about delighting the client, whether it's an advisor or a direct retail client. And so we've been placing our emphasis on how do we bring AI to our clients so in a way that helps their financial journey and their investment life. And I think there's a plethora of ways that that can happen, from stitching together more of their investment life in one place, to having insights that they wouldn't have before, to making all these advisors more productive with their clients. So we'd like to start with the end goal. And I think AI has a really big role to play in all of that.
00:02:47
Speaker 2: I'd love to know what you think about all of the bubble conversation that's been out, whether it's Ken Griffin of Citadel, some concerns, and then there are others who are pushing back over at Blackstone saying, no, no, no, we've.
00:02:59
Speaker 1: Got to keep going. You've seen a few market cycles. What do you think?
00:03:04
Speaker 4: Well, it certainly feels like a boom, and we've had several years of great returns, which is terrific. In terms of a bubble, one thing that gives me some confidence that maybe we're not in a bubble is There is a tremendous number of stocks that I think are either fairly valued or undervalued. You certainly see stocks that are highly valued. Their fundamentals are incredible, and they're creating an entire new market, a new way of working. It's not surprising that they have high valuations attached to them. At the same time, there's so many companies that I look at. I'm like, wow, this company is cheap.
00:03:37
Speaker 2: Yeah.
00:03:38
Speaker 5: So to that end, I mean, we spent a lot of time over the last two days talking about AI in terms of advisor services and what it can do for RIAs and ultimately the end client. But what is AI doing for you at Charles Schwab right now on your back end that's making you more efficient?
00:03:52
Speaker 3: It's helping us all over the place.
00:03:54
Speaker 4: I visited a branch in Austin, Texas last week, and I sat with one of our financial consultants. Their job is to sit with clients and help their financial dreams come true and play an important role. That financial consultant told me that the AI tools we had put on his desktop save him two to three hours a day. And so what he's able to do with those two or three hours a day is go see another family, go talk to another couple trying to retire, an individual trying to buy their first house. That's two or three hours. He's getting back every single day to help more clients.
00:04:22
Speaker 5: Are you seeing it show up on the bottom line at all in terms of earnings?
00:04:25
Speaker 3: Absolutely, we are.
00:04:26
Speaker 4: We for sure have... fewer people per client answering phone calls. We're able to serve more clients with each of our financial consultants. Now, we're still net positive from a hiring standpoint, but we're more efficient. We have 1,600 more people than we had two years ago, so we're growing. But if you look at the number of people we have per client, per client account, we continue to scale our business.
00:04:51
Speaker 3: And AI has been an important part of that.
00:04:54
Speaker 1: So making you more efficient in certain areas, you are hiring. Where are you hiring?
00:04:57
Speaker 4: We are hiring a lot of client-facing people. And the interesting thing I'm seeing about AI, and there's so much talk about it, and justifiably so, at the same point, relationships matter either just as much or even more. And when I look at all the statistics in our business, relationships are driving more growth in technology. When we have a financial consultant relationship in a branch like we have here in Boston, and we have a client relationship, That client relationship grows three times faster than when we don't have that person-to-person relationship. Likewise, our RRA business is the fastest-growing segment of our business, and that is entirely fueled by the relationship these wonderful advisors have with their end clients.
00:05:37
Speaker 1: So kids, go get a liberal arts degree, right? We do think about it. What do we tell the next generation in this environment?
00:05:45
Speaker 4: Well, I think EQ matters a lot, no matter what you choose to do. And I think there's probably lots of ways to learn EQ.
00:05:51
Speaker 5: So I want to talk a little bit. There's a lot we want to get to with you. But you know at this point that when you sit down with us, I'm going to ask you about prediction markets. There was a market on that. I wake up this morning and I see the news. CalSheet, a $ 40 billion valuation, raising another billion dollars today from a large group of investors, including some financial services firms, interestingly enough. Are you missing the boat on prediction markets?
00:06:12
Speaker 4: Well, my point of view on prediction markets is... Things related to financial events that could make sense in your portfolio, we think there's a market for that and a justification to have it in your portfolio, and we pursued that. We're working with the CBOE to make financial-related prediction markets available. I do not think, and I strongly feel... that sports gambling is not an asset class, despite what some of these firms that offer it say.
00:06:37
Speaker 3: It's gambling.
00:06:38
Speaker 1: They say it's not gambling.
00:06:39
Speaker 3: It's good.
00:06:40
Speaker 1: They push back constantly. What do you say?
00:06:42
Speaker 4: I believe it's 100% gambling, and I have no problem against gambling. People like to go to Vegas, go to Vegas, have a good time. But you need to realize when you do that, that you are very likely to lose some money.
00:06:54
Speaker 3: That is.
00:06:55
Speaker 4: completely different than being an investor. And I just want to make sure people understand the difference, particularly young people who are being marketed to with sports gambling being an asset class. Listen, go gamble if you want to.
00:07:09
Speaker 3: Take money.
00:07:09
Speaker 4: You might have gone out to dinner with gamble. But don't mix that with buying stocks that if you're 22 years old when you're 65 are going to be worth a lot more.
00:07:16
Speaker 1: Why is that bad?
00:07:17
Speaker 5: Prediction markets say there's no difference between Betting on the outcome of sports.
00:07:22
Speaker 1: Or the markets.
00:07:22
Speaker 5: Or betting on the outcome of what Fed Chair Kevin Warsh will do at the next meeting.
00:07:27
Speaker 4: I think it's factually incorrect to say that sports gambling is the same as being an investor. Nine cents and a dollar on average people lose when they sports gamble.
00:07:36
Speaker 3: And again, that's fine.
00:07:37
Speaker 4: You go out to dinner. You leave with less money. You had a nice time with your wife or your friend. You're happy that you spent the money. And people enjoy sports and have a good time with it. If people want to do that, I think it's great. I just want to make sure the young investor in our country doesn't think that sports is an asset class the same way that investing in stocks is because they are fundamentally different. One has a positive expected return that will benefit you in your financial life and make you wealthy.
00:08:03
Speaker 3: The other is going to take money out of your pocket.
00:08:05
Speaker 2: Do you ever think that these prediction markets are going to grow substantially when it comes to the financial markets and having a role in the financial system?
00:08:13
Speaker 4: Yeah, I don't know because there's so many ways to participate in markets today and take different positions.
00:08:18
Speaker 3: I don't know how much... that adds.
00:08:20
Speaker 4: I think it simplifies things and it might be a unique way for younger investors to engage.
00:08:24
Speaker 3: Maybe it's easier.
00:08:26
Speaker 4: But I think the reason you see 90 plus percent of the volume in sports gambling is because it's got around the sports gambling rules and it's opened it up nationally and allowed people to do that.
00:08:35
Speaker 5: So just last question on this, when do you think we'll see the actual prediction products from you?
00:08:40
Speaker 4: Well, we already are in it in a small way. We're beginning with a relationship with CBOE where we have financial contracts on the S & P that are structured as prediction markets. We will launch more in the next year, but they are going to be financially driven.
00:08:53
Speaker 3: We're going to stay away from sports. Again, I have no problem with sports gambling. Have at it. Just don't confuse it with investing.
00:08:59
Speaker 2: I want to go back to AI and agentic AI. And I know you've had some, I think, thoughts about this in terms of that ability that do we want to be able to open up and let agents basically make decisions on your portfolio or your retirement assets?
00:09:14
Speaker 1: Do you have a view on that as you guys lean more and more into AI?
00:09:17
Speaker 4: I think at the moment, I think very few people want to do that, number one. And number two, we're not going to allow it on our platform. There's too much risk for the client.
00:09:24
Speaker 3: Well, I'm not going to commit to ever. Things can change.
00:09:28
Speaker 4: But as we sit here today, I think it's too much risk for the client to bear and too much risk for us to bear. Now, interestingly, we are blocking traffic from agents that are unauthorized. But here's an interesting thing. We track traffic. how many times we have to block a client. We've got 49 million client accounts. I get a weekly report with the weekly hits. It's like 30 times that news was blocked, 40 times that clog was blocked. Clients are not yet willing to give their passwords to these agents to go take activity on their behalf.
00:09:56
Speaker 3: I'm not ready.
00:09:57
Speaker 1: I'm not ready.
00:09:58
Speaker 3: I don't think I ever will be ready.
00:09:59
Speaker 5: I mean, it's sort of the most sacred thing that somebody can do is part with their money and to make that decision themselves. But maybe I'm just old fashioned.
00:10:06
Speaker 3: I don't know.
00:10:07
Speaker 4: Well, you look at examples like Hugging Face, and there's been others where agents maybe do things that they weren't intended to do. By the way, I'm very pro-AI. I think AI is terrific, and it's going to help us in lots of ways. But the idea that you might expose all your money or give your password and credentials to an AI agent, that makes me very nervous and certainly uncomfortable. It makes us nervous that our clients would do that, which is why we don't allow it. But we will create safe ways in because we know clients want to use large language models. We've got two ways for clients to engage with us and use their large language models, but in a very safe and secure way.
00:10:42
Speaker 2: So, Rick, I've got to say, every morning I think I feel like Tim and I get up separately. But we are a little stressed. Sorry, a little joke, a little levity. No, but we talk about, sorry, large family, you know, crazy stuff.
00:10:55
Speaker 1: The wars. Sorry, now I'm going to do a hard turn. Midterms. There's just AI.
00:11:01
Speaker 2: There's just so much coming at investors right now. And I know you and John Beattie, right, did a keynote earlier. And you guys were kind of talking about the outlook. How do you see the outlook right now?
00:11:12
Speaker 4: Well, the markets are strong. The economy is strong. And that's a good place to be. Employment's good.
00:11:16
Speaker 1: Why does it always feel so bad, though?
00:11:18
Speaker 4: Well, there's always things to be concerned about. And the market doesn't love uncertainty. And the midterms create uncertainty. But we'll get past that soon. And if you look at the past midterms, 19 of the last 19 midterms, after we've got through them, the market's gone up.
00:11:33
Speaker 3: So maybe we'll make it 20 in a row. But, yes, there's been uncertainty.
00:11:36
Speaker 4: But I think what's kept the markets continuing to go is that the economy's strong. You're seeing incredible productivity growth, this birth of AI that's driving a lot of incredible level of investment, certainly level of investments I've never seen in my career. So fundamentally, there's a lot of great things happening.
00:11:53
Speaker 1: What's one risk that you keep on your mind?
00:11:57
Speaker 4: I think to me the biggest risk is inflation because the way inflation could hurt the markets is if bond yields continue to go up, There's a lot of debt in the world. And so that debt becomes more expensive. The discount rate on equities becomes higher. And so I think inflation is something to watch.
Speaker 1: Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Rick Worcester is back with us.
00:00:17
Speaker 2: He's president and CEO of the Charles Schwab Corporation.
00:00:19
Speaker 1: Good to be back with you.
00:00:21
Speaker 3: So fun to be here. Thanks for having me on.
00:00:23
Speaker 1: It's great to have you here. I feel like, go back a couple years, AI was not necessarily the focal point.
00:00:28
Speaker 3: It is now. Is anyone talking about it here at the conference?
00:00:31
Speaker 2: Yes.
00:00:32
Speaker 1: You guys in particular. What's happened? What's the conversations, Rick, that you guys have internally?
00:00:39
Speaker 4: Well, it's been a huge accelerant to our business, and I think to all the advisors here and I think it's primarily helping us in a couple different ways and helping the advisors in a couple different ways. Number one, it's helping us be more efficient and effective with clients. It's streamlining operations. It's helping advisors be more prepared for meetings to recall what the last discussion they had with a client was or what's important to that client. And at the same time, I think it's creating new pathways to engage clients. And for all of us here at this conference, it will allow us to reach new clients that we couldn't have before with a personal relationship.
00:01:09
Speaker 5: Well, one way you're doing that is by investing in Nevis. The booth is just right over there. We talked about this quite a bit yesterday with some members of your team a year ago. You were sitting with us. You had just acquired Forge Global. Is this investment in Nevis part of something bigger?
00:01:21
Speaker 4: Well, it's part of us trying to nail the basics for our advisors. Our biggest advisors have... pretty sophisticated technology stacks. And what Nevis, I think, can do for them is provide an operating layer that makes it easy for them to work across their tech stack and integrate into us. And so what we're trying to do with our investment in Nevis is create ease for the advisor and make it even easier for them to work with us, which hopefully gives us a preferred position in being their custodian of choice.
00:01:49
Speaker 1: How do you think about AI and being cautious? Because I think we're in this narrative around the AI spend.
00:01:55
Speaker 2: Look at Alphabet today, erasing about half a trillion dollars in market cap. And I think there's increasingly the conversation about return on investment and will it all pay off? So how do you think about your moves, whether it's partnerships or doing deals and what makes the most sense versus kind of watching how this ultimately plays out and what will be the ROI for everybody?
00:02:15
Speaker 3: Well, for us, we start with what's the end game? What are we trying to accomplish?
00:02:18
Speaker 4: And at Schwab, it's all about delighting the client, whether it's an advisor or a direct retail client. And so we've been placing our emphasis on how do we bring AI to our clients so in a way that helps their financial journey and their investment life. And I think there's a plethora of ways that that can happen, from stitching together more of their investment life in one place, to having insights that they wouldn't have before, to making all these advisors more productive with their clients. So we'd like to start with the end goal. And I think AI has a really big role to play in all of that.
00:02:47
Speaker 2: I'd love to know what you think about all of the bubble conversation that's been out, whether it's Ken Griffin of Citadel, some concerns, and then there are others who are pushing back over at Blackstone saying, no, no, no, we've.
00:02:59
Speaker 1: Got to keep going. You've seen a few market cycles. What do you think?
00:03:04
Speaker 4: Well, it certainly feels like a boom, and we've had several years of great returns, which is terrific. In terms of a bubble, one thing that gives me some confidence that maybe we're not in a bubble is There is a tremendous number of stocks that I think are either fairly valued or undervalued. You certainly see stocks that are highly valued. Their fundamentals are incredible, and they're creating an entire new market, a new way of working. It's not surprising that they have high valuations attached to them. At the same time, there's so many companies that I look at. I'm like, wow, this company is cheap.
00:03:37
Speaker 2: Yeah.
00:03:38
Speaker 5: So to that end, I mean, we spent a lot of time over the last two days talking about AI in terms of advisor services and what it can do for RIAs and ultimately the end client. But what is AI doing for you at Charles Schwab right now on your back end that's making you more efficient?
00:03:52
Speaker 3: It's helping us all over the place.
00:03:54
Speaker 4: I visited a branch in Austin, Texas last week, and I sat with one of our financial consultants. Their job is to sit with clients and help their financial dreams come true and play an important role. That financial consultant told me that the AI tools we had put on his desktop save him two to three hours a day. And so what he's able to do with those two or three hours a day is go see another family, go talk to another couple trying to retire, an individual trying to buy their first house. That's two or three hours. He's getting back every single day to help more clients.
00:04:22
Speaker 5: Are you seeing it show up on the bottom line at all in terms of earnings?
00:04:25
Speaker 3: Absolutely, we are.
00:04:26
Speaker 4: We for sure have... fewer people per client answering phone calls. We're able to serve more clients with each of our financial consultants. Now, we're still net positive from a hiring standpoint, but we're more efficient. We have 1,600 more people than we had two years ago, so we're growing. But if you look at the number of people we have per client, per client account, we continue to scale our business.
00:04:51
Speaker 3: And AI has been an important part of that.
00:04:54
Speaker 1: So making you more efficient in certain areas, you are hiring. Where are you hiring?
00:04:57
Speaker 4: We are hiring a lot of client-facing people. And the interesting thing I'm seeing about AI, and there's so much talk about it, and justifiably so, at the same point, relationships matter either just as much or even more. And when I look at all the statistics in our business, relationships are driving more growth in technology. When we have a financial consultant relationship in a branch like we have here in Boston, and we have a client relationship, That client relationship grows three times faster than when we don't have that person-to-person relationship. Likewise, our RRA business is the fastest-growing segment of our business, and that is entirely fueled by the relationship these wonderful advisors have with their end clients.
00:05:37
Speaker 1: So kids, go get a liberal arts degree, right? We do think about it. What do we tell the next generation in this environment?
00:05:45
Speaker 4: Well, I think EQ matters a lot, no matter what you choose to do. And I think there's probably lots of ways to learn EQ.
00:05:51
Speaker 5: So I want to talk a little bit. There's a lot we want to get to with you. But you know at this point that when you sit down with us, I'm going to ask you about prediction markets. There was a market on that. I wake up this morning and I see the news. CalSheet, a $ 40 billion valuation, raising another billion dollars today from a large group of investors, including some financial services firms, interestingly enough. Are you missing the boat on prediction markets?
00:06:12
Speaker 4: Well, my point of view on prediction markets is... Things related to financial events that could make sense in your portfolio, we think there's a market for that and a justification to have it in your portfolio, and we pursued that. We're working with the CBOE to make financial-related prediction markets available. I do not think, and I strongly feel... that sports gambling is not an asset class, despite what some of these firms that offer it say.
00:06:37
Speaker 3: It's gambling.
00:06:38
Speaker 1: They say it's not gambling.
00:06:39
Speaker 3: It's good.
00:06:40
Speaker 1: They push back constantly. What do you say?
00:06:42
Speaker 4: I believe it's 100% gambling, and I have no problem against gambling. People like to go to Vegas, go to Vegas, have a good time. But you need to realize when you do that, that you are very likely to lose some money.
00:06:54
Speaker 3: That is.
00:06:55
Speaker 4: completely different than being an investor. And I just want to make sure people understand the difference, particularly young people who are being marketed to with sports gambling being an asset class. Listen, go gamble if you want to.
00:07:09
Speaker 3: Take money.
00:07:09
Speaker 4: You might have gone out to dinner with gamble. But don't mix that with buying stocks that if you're 22 years old when you're 65 are going to be worth a lot more.
00:07:16
Speaker 1: Why is that bad?
00:07:17
Speaker 5: Prediction markets say there's no difference between Betting on the outcome of sports.
00:07:22
Speaker 1: Or the markets.
00:07:22
Speaker 5: Or betting on the outcome of what Fed Chair Kevin Warsh will do at the next meeting.
00:07:27
Speaker 4: I think it's factually incorrect to say that sports gambling is the same as being an investor. Nine cents and a dollar on average people lose when they sports gamble.
00:07:36
Speaker 3: And again, that's fine.
00:07:37
Speaker 4: You go out to dinner. You leave with less money. You had a nice time with your wife or your friend. You're happy that you spent the money. And people enjoy sports and have a good time with it. If people want to do that, I think it's great. I just want to make sure the young investor in our country doesn't think that sports is an asset class the same way that investing in stocks is because they are fundamentally different. One has a positive expected return that will benefit you in your financial life and make you wealthy.
00:08:03
Speaker 3: The other is going to take money out of your pocket.
00:08:05
Speaker 2: Do you ever think that these prediction markets are going to grow substantially when it comes to the financial markets and having a role in the financial system?
00:08:13
Speaker 4: Yeah, I don't know because there's so many ways to participate in markets today and take different positions.
00:08:18
Speaker 3: I don't know how much... that adds.
00:08:20
Speaker 4: I think it simplifies things and it might be a unique way for younger investors to engage.
00:08:24
Speaker 3: Maybe it's easier.
00:08:26
Speaker 4: But I think the reason you see 90 plus percent of the volume in sports gambling is because it's got around the sports gambling rules and it's opened it up nationally and allowed people to do that.
00:08:35
Speaker 5: So just last question on this, when do you think we'll see the actual prediction products from you?
00:08:40
Speaker 4: Well, we already are in it in a small way. We're beginning with a relationship with CBOE where we have financial contracts on the S & P that are structured as prediction markets. We will launch more in the next year, but they are going to be financially driven.
00:08:53
Speaker 3: We're going to stay away from sports. Again, I have no problem with sports gambling. Have at it. Just don't confuse it with investing.
00:08:59
Speaker 2: I want to go back to AI and agentic AI. And I know you've had some, I think, thoughts about this in terms of that ability that do we want to be able to open up and let agents basically make decisions on your portfolio or your retirement assets?
00:09:14
Speaker 1: Do you have a view on that as you guys lean more and more into AI?
00:09:17
Speaker 4: I think at the moment, I think very few people want to do that, number one. And number two, we're not going to allow it on our platform. There's too much risk for the client.
00:09:24
Speaker 3: Well, I'm not going to commit to ever. Things can change.
00:09:28
Speaker 4: But as we sit here today, I think it's too much risk for the client to bear and too much risk for us to bear. Now, interestingly, we are blocking traffic from agents that are unauthorized. But here's an interesting thing. We track traffic. how many times we have to block a client. We've got 49 million client accounts. I get a weekly report with the weekly hits. It's like 30 times that news was blocked, 40 times that clog was blocked. Clients are not yet willing to give their passwords to these agents to go take activity on their behalf.
00:09:56
Speaker 3: I'm not ready.
00:09:57
Speaker 1: I'm not ready.
00:09:58
Speaker 3: I don't think I ever will be ready.
00:09:59
Speaker 5: I mean, it's sort of the most sacred thing that somebody can do is part with their money and to make that decision themselves. But maybe I'm just old fashioned.
00:10:06
Speaker 3: I don't know.
00:10:07
Speaker 4: Well, you look at examples like Hugging Face, and there's been others where agents maybe do things that they weren't intended to do. By the way, I'm very pro-AI. I think AI is terrific, and it's going to help us in lots of ways. But the idea that you might expose all your money or give your password and credentials to an AI agent, that makes me very nervous and certainly uncomfortable. It makes us nervous that our clients would do that, which is why we don't allow it. But we will create safe ways in because we know clients want to use large language models. We've got two ways for clients to engage with us and use their large language models, but in a very safe and secure way.
00:10:42
Speaker 2: So, Rick, I've got to say, every morning I think I feel like Tim and I get up separately. But we are a little stressed. Sorry, a little joke, a little levity. No, but we talk about, sorry, large family, you know, crazy stuff.
00:10:55
Speaker 1: The wars. Sorry, now I'm going to do a hard turn. Midterms. There's just AI.
00:11:01
Speaker 2: There's just so much coming at investors right now. And I know you and John Beattie, right, did a keynote earlier. And you guys were kind of talking about the outlook. How do you see the outlook right now?
00:11:12
Speaker 4: Well, the markets are strong. The economy is strong. And that's a good place to be. Employment's good.
00:11:16
Speaker 1: Why does it always feel so bad, though?
00:11:18
Speaker 4: Well, there's always things to be concerned about. And the market doesn't love uncertainty. And the midterms create uncertainty. But we'll get past that soon. And if you look at the past midterms, 19 of the last 19 midterms, after we've got through them, the market's gone up.
00:11:33
Speaker 3: So maybe we'll make it 20 in a row. But, yes, there's been uncertainty.
00:11:36
Speaker 4: But I think what's kept the markets continuing to go is that the economy's strong. You're seeing incredible productivity growth, this birth of AI that's driving a lot of incredible level of investment, certainly level of investments I've never seen in my career. So fundamentally, there's a lot of great things happening.
00:11:53
Speaker 1: What's one risk that you keep on your mind?
00:11:57
Speaker 4: I think to me the biggest risk is inflation because the way inflation could hurt the markets is if bond yields continue to go up, There's a lot of debt in the world. And so that debt becomes more expensive. The discount rate on equities becomes higher. And so I think inflation is something to watch.
