התמלול המלא של Election 'Blue Wave' & Your Wallet; Navigating AI-Driven Market Volatility

conversation because as Democrats sweep to power, they feel they have a mandate that they need to fulfill. But what does the midterms actually mean for your money? How much change can they actually affect? 00:05:28 Speaker 8: Not as much as they want to affect is probably the quick answer. I think we are tracking a lot of tax provisions and seeing what temporary measures from the Big Beautiful Bill might be able to be extended, like the overtime and tax on tips measures that have proven pretty popular. A lot of other pieces of the Big Beautiful Bill are going to be harder to shake. we are going to be looking to them to deal with Social Security because the Social Security cliff is coming to us in about three. 00:05:58 Speaker 2: And a half years, give or take. 00:06:00 Speaker 1: So the guys who are just elected are going to be the ones who need to confront that, right? 00:06:03 Speaker 9: Right. 00:06:04 Speaker 8: And the debate is going to be, is it going to be cutting Americans' benefits or raising revenue in other ways, perhaps? 00:06:10 Speaker 4: We have a jewel in London, John Stepak, and he writes this thing called Money Distilled, and it's just like incredibly abrupt money. personal finance. Like, you know, it's just like, this is the way it is. Save money. What does John Stepak say about this moment for America? 00:06:26 Speaker 8: Well, John is writing a lot about what the midterms mean for global investors. And then also, if you saw what he put out this morning, looking at the AI swerve that we're talking about in markets today, first of all, this comes back to some of the basic wisdom that we have in money, which is to know what's in your portfolio. We talked a couple of weeks here about concentration risk and the fact that even if we think we have diversified portfolios, we are heavy into a lot of tech stocks. 00:06:56 Speaker 2: And if you look at your 401k, that will be the result. 00:06:58 Speaker 4: Here's mental John Steffek, Scarlett. If you'd bought the S & P since World War II... 20 midterm elections, you made money every time. 00:07:08 Speaker 1: So you have to stay in it. 00:07:09 Speaker 4: Every time. 00:07:09 Speaker 1: You don't move out. You don't panic. You stay committed. 00:07:12 Speaker 4: I was in cash already, and I'm staying in cash. 00:07:14 Speaker 1: All right, so you're committed to cash. I mean, people's feelings on their personal finance, their outlook, depend a lot on whether they're employed, Mike. And I want to go back to the jobs report for a moment, because even though it was a big win, 165,000 jobs added in the month of October, growth has been very uneven month to month. It wasn't that long ago, July, that... the economy lost 10,000 jobs. 00:07:35 Speaker 6: Well, we're seeing those numbers all get revised up. And at this point, it's looking like a strengthening economy. And today's number was surprisingly strong because the labor force has been shrinking and the administration's immigration policies have been a big reason for that. And with this labor force shrinking, you need fewer people getting jobs, which is why we've seen them well below 100,000. So to have something that's sort of three times what's expected... It does suggest the economy is picking up steam. Now, does that end up being something the Fed or Congress has to worry about? 00:08:10 Speaker 10: No. 00:08:10 Speaker 6: It's going to be interesting because you were just talking about what Congress can do. They can't do a lot to bring down gasoline prices. They could do a ton. temporary suspension of the tax. But they are going to have a shot with the one big beautiful bill provisions on Medicaid and snap the child food benefits. And they're really determined to do something about that. So that could add a little bit more stimulus to the economy next year. 00:08:39 Speaker 4: Quickly, I spent the whole week trying to tell if that was David Gurra or Joe Matthews or Kaylee Lines. So I got to ask a Kaylee Lines question to Kaylee Lines. What I learned is not only the shifting population state to state, but for example, in your Virginia, the shifting populations within a state. What do you envision for 2030 after the census? 00:09:02 Speaker 7: Well, this is really important because the Electoral College map is going to get very difficult for Democrats after the census, at least with the political status quo prior to Tuesday, in that so much of the population center has moved south to states that historically, at least in recent history, have been red. So the ability to see Democratic victory statewide in states like Texas or in South Carolina is crucial to Democrats as they look to presidential cycles ahead when they are going to need to be able to compete in in those centers where there are now higher populations and where states could be getting more electoral college votes as they try to get to 270. It's less of an issue for 2028, but after that census, it's going to be a much bigger deal. 00:09:40 Speaker 1: You think about all the Northeast kids who now go to college in South Carolina. If they go and they stay there, the politics changes as well. 00:09:47 Speaker 4: Did you know Phoebe from Annapolis is going to Wake Forest? 00:09:51 Speaker 1: I did not know that. 00:09:51 Speaker 4: Within her family. There's like eight generations back to when the young Greeley got off the Mayflower or whatever, and she's going to Wake Forest. This southern migration is an outrage. 00:10:02 Speaker 1: It continues. 00:10:02 Speaker 4: They're giving up on the northern schools. 00:10:04 Speaker 1: Well, they would say the northern schools gave up on them. 00:10:06 Speaker 4: Ithaca is cold. 00:10:08 Speaker 1: And no one wants to be there in January or February. 00:10:10 Speaker 4: We'll have to see. Mike McKee and I will stay up. Nikki Waller, thank you so much on short notice. And thank you, John Stepak, for the money. Still, Michael McKee is always seven days a week. Can you

get on the golf stream and go home? 00:10:22 Speaker 1: I hope so. I have a toddler waiting for me. 00:10:25 Speaker 4: Congratulations. 00:10:26 Speaker 2: But it's great to see you all in New York. 00:10:27 Speaker 4: Great week of election day. What a joy and perfectly timed Kate Moore of Citigroup will join us. I can't imagine what she's going to publish for Monday. 00:10:39 Speaker 1: We're looking forward to what she has to say about stocks and gold in particular. This is Bloomberg Money. 00:10:46 Speaker 6: We can certainly ask her about Teton High School. 00:10:51 Speaker 4: You're listening to Bloomberg Money. Stay with us with more to come after this. Bloomberg Money, and we say good noon to you. Retirement, wealth management, personal finance, election withdrawal. 00:11:09 Speaker 1: I know. 00:11:09 Speaker 4: What are we going to do next week? 00:11:11 Speaker 1: You know, there's always going to be some data point. I think inflation numbers are coming out. 00:11:14 Speaker 4: Are they coming out next week? We'll have to see on that as well. A good conversation now. With Kate Moore of City Wealth, her prodigious abilities to synthesize everything together is perfect on a Friday after the cacophony of the week as well. I want to talk to you about the short-termism which you fight every day at Citigroup. You fight it every single day. And yet we're all caught up in the narrative. Bring up the chart, if you would, Luigi. The control room is a little short staffed today, folks. They had a party last night. So we'll see if we can get the right chart up. Here's the chart of the week. And there it is. It's the Ibbotson from Yale, except not SPX. It's the Dow with the depression. It's log Dow and up, up, away. Do we care about politics when we look at a chart like that? 00:12:03 Speaker 5: I mean, I think we have to care about politics for a number of reasons. But, you know, one of the things that's been frustrating for me over the course of this week is how much people are trying to project future policy into 2027. 00:12:15 Speaker 2: First of all, we don't know. 00:12:17 Speaker 5: And by the way, I know you guys were just talking about politics and demographics and everything. But, you know, the Democratic Party and the Republican Party are not monoliths. There are major factions within each. And everyone's going to have to figure out how to work together. We honestly don't know what policy is going to look like over the next two years. And people are just projecting their biggest fears around change into the market. So what I saw over the last couple of days was incredibly technical and not fundamentally driven. 00:12:43 Speaker 1: So the conventional wisdom is political gridlock is good for markets. But I feel like we are more politically divisive than we've ever been, at least in modern times. So government shutdowns, debt ceiling showdowns, they're kind of a normal thing now. And the markets tend to recover from that. Do we just assume that they'll continue to recover because over the last five to 10 years they have? 00:13:03 Speaker 2: Well, I think we're reaching some critical levels. 00:13:05 Speaker 5: I mean, this is one of the things we're really focused on is what happens to deficits, you know, in not just the next two years, let's call it in the next four to six years. You know, it's my strongly held conviction that deficits are going up under a Republican or Democratic administration. 00:13:18 Speaker 1: Because everyone's spending. 00:13:19 Speaker 2: It's spending or, you know, cutting taxes. 00:13:22 Speaker 5: There's very little stomach and desire, frankly, to do something to be kind of deficit positive. So that we have to bake into the background. I think that's an assumption we can all have. But in terms of anything that changes in terms of, you know, technology or data center development, I think we're guessing at that point. And a gridlocked Congress, and a gridlocked Congress that has to find some ways to agree in order to position itself, each of these individuals for 2028, could actually be growth positive. 00:13:54 Speaker 4: Okay, I want to do this quickly here. This is a paragraph sentence from Kate Moore and all of Citigroup. This jumped right out of the screen before the election, during the election, and here it is right now. And it's just simply on gold. We remain underweight duration, that's bond talk for time, and we hold gold as a partial duration replacement. And then you bring up the chart of gold. This goes back before Nixon and $ 35 an ounce. Kate Moore nailed this in her academics years ago. And it's just a gold and all the people saying gold doesn't matter. You know what? You've been wrong for 40 years. Again, you go long gold. 00:14:31 Speaker 2: I go long gold. 00:14:32 Speaker 5: We stay long gold. And frankly, we got a lot of pushback on it as gold was squishy at points of last year. 00:14:39 Speaker 4: Squishy, excuse me. That's jargon. That's CFA level four. 00:14:43 Speaker 1: I love it. 00:14:44 Speaker 5: That's Friday, CFA level four jargon. You know, this is after a really long week. And people said to us, you know, it's not a yielding asset, an environment of rising yields. Like, what are you going to do with that? And I say, well, look, I'm looking at the entire opportunity set. Every asset we could potentially put in a multi-asset portfolio. And I can't get comfortable with adding duration to portfolios. We've been underweight for a long time and the duration of my time at Citi. And we really wanted to think about how do we balance out some of our equity risk? What might be a less correlated asset? And we found that gold was, as we tested it, was performing a lot of those qualities. 00:15:18 Speaker 1: So does gold replace bonds completely or does it just replace some of your bond exposure? 00:15:22 Speaker 2: Some of it, yeah. 00:15:22 Speaker 5: We have, of course, we still own fixed income and multi-asset portfolios,

but we're short of duration and we're continuing. 00:15:27 Speaker 2: To stick to that. And our expectation is that yields are going to rise. We saw a lot of that bond volatility in the last couple days. 00:15:33 Speaker 5: But the fiscal side I was just mentioning, combined with what we think is going to be, and of course some of the data this morning on the labor market supported this, incredibly strong economic growth going into 2027, should all be a good backdrop for higher real yields and, at the very least, a support at these levels. 00:15:49 Speaker 4: Can I just do an audible? 00:15:51 Speaker 1: Please. 00:15:52 Speaker 4: Drew's watching. We're up to 42 viewers. It's really good. Drew, thank you for watching. Drew sends in a blistering note that says they're going to UVA because they want to go to UVA. You went south for school, right? 00:16:05 Speaker 2: Went south for my undergrad. 00:16:06 Speaker 9: I did. 00:16:07 Speaker 4: Okay, why is the South different now? Everybody wants to go. Phoebe is going to Wake Forest and on and on and on. Why is this? 00:16:15 Speaker 5: Hey, look, my niece and nephew, who are seniors in high school right now, are both very, very, very focused on a bunch of the Southern schools, as are a lot of their peers. I think the weather helps, to be honest with you, but I would also suggest some of these big universities are more appealing to a lot of students. Like, you're getting lots of different schools, lots of different kind of academic challenges. 00:16:35 Speaker 11: Right. 00:16:35 Speaker 5: And, you know, they want that breadth instead of sometimes the sort of more narrow. 00:16:40 Speaker 4: Certitude of the northern schools, all of them except Cornell. 00:16:44 Speaker 1: Does it change what we think the economies in the South are going to look like in 5 to 10, 15 years? 00:16:50 Speaker 5: Well, it's a question of whether or not people stay after their undergrad or whether or not they go back to major northern cities. 00:16:57 Speaker 2: I mean, that will be a real question. 00:16:58 Speaker 1: It's more affordable in the South, certainly, compared to the Northeast. 00:17:01 Speaker 2: Yeah, it's a little bit different. 00:17:02 Speaker 5: I was kind of forced to wear a dress to my first football game at Virginia, which was extremely unsettling for me. 00:17:07 Speaker 4: That's a first for Bloomberg money. That's all I can say. Kate, I'm fascinated then what Citigroup sees about population change within our personal finance, the rebuilding of the New South. I mean, we're going in a different direction here. 00:17:21 Speaker 5: Yeah, we are going in a different direction, but I'm going to step back to a bigger demographic thing that I'm very focused on, which is that with changes in immigration, which we don't expect to be reversed anytime soon, with declining populations across a lot of the developing world, You know, governments and companies are going to need to think about how do we get the workers that we need in order to produce or to serve, whether or not we're talking about goods or services. This is one of the reasons why, you know, in addition to the technology that's come out, we've been pounding the table on physical AI, to be fair. Something I've been fixated on was this idea that, you know, at this time last year, we had just over 400,000 unfilled manufacturing. 00:17:58 Speaker 2: Jobs, and it's 25% higher here in 2026. 00:18:02 Speaker 5: This is without a massive expansion in manufacturing capacity in the U.S., but something people expect to be larger going forward. People don't want to do these manufacturing jobs. The younger generations want to be, you know, influencers or be outside or whatever the heck it is. And so demographics and worker preference are going to drive a different layer of investment. 00:18:23 Speaker 4: And politics as well. Yeah. 00:18:25 Speaker 1: It has a huge implication on how you think about how the economy is going to grow moving forward. Kate, you were just telling us how you would recommend gold, not in place of bonds, but in addition to bonds, maybe replacing some of the bonds. 00:18:37 Speaker 2: Subbing some of the duration. 00:18:38 Speaker 1: Subbing. 00:18:39 Speaker 4: Okay. 00:18:39 Speaker 1: Is that what you do for your personal portfolio? 00:18:41 Speaker 5: So I will be honest with you. I don't own any bonds in my personal portfolio. 00:18:46 Speaker 2: Yeah. 00:18:46 Speaker 5: But I do own gold as a ballast to my very strong growth-tilted equity portfolio. Look, I'm in a place at this point in my life where I'm continuing to look for capital appreciation and I'm also a professional investor. 00:18:59 Speaker 2: I'm comfortable with volatility. 00:19:00 Speaker 5: If we have drawdowns, it doesn't keep me up at night because I really believe in the compounding possibilities and the kind of the future for the growth equities I own. 00:19:10 Speaker 1: Okay, growth stocks and some gold. How is the gold, how do you express that? 00:19:14 Speaker 2: Well, gold I own in an ETF form. 00:19:15 Speaker 1: Okay. So no physical gold for you? 00:19:17 Speaker 2: Well, except for jewelry, no. But I own the ETF form. 00:19:21 Speaker 5: And then across the growth stocks, I own a global diversified set of stocks and a couple of very specific strategies. As you can imagine, in my job and in my previous job, I was quite restricted on trading and stuff myself. So in some cases, I have to use someone else's strategy in order to express my view. But fortunately enough, these are people I've known in the business for a long time and I have faith in. 00:19:41 Speaker 4: I want to have you back in, let's say, January just to talk about a single statement. I don't own bonds. I just think that's a profound statement on Bloomberg Money. 00:19:51 Speaker 1: All right. We have a lot to look forward to then when we have Kate Moore back in 2027. Thank you so much for joining us today. 00:19:57 Speaker 2:

Thanks for having me. 00:19:58 Speaker 1: Don't forget to check out the Bloomberg Money newsletter for the latest stories about your money. 00:20:02 Speaker 4: Bloomberg Money here on personal finance, on retirement, and on wealth management as well. Markets lifting today. I guess that means Monday we're going to go down. 00:20:09 Speaker 1: Yeah, probably. That's the way I look at it. It's been a big swing back and forth. Well, this is Bloomberg Money, and we are, of course, your new destination for personal finance. It's a cross-platform effort that extends beyond your television, including our new digital hub at Bloomberg.com slash money. And Tom, this week, one story that really caught our eye and is super relevant is all about how affordability was a major, major topic in this year's election cycle. And we saw that on election night with the blue wave. 00:20:37 Speaker 6: People across the political spectrum are hungry for a different kind of politics. 00:20:43 Speaker 9: Tonight's results are a wake-up call for corporate special interests and billionaires who have been rigging the economy, for the cowards in Congress who have enabled health care cuts, tariffs, and war. 00:20:53 Speaker 8: I will work with anyone to provide relief for the people of Michigan, including President Trump and the federal government. 00:20:58 Speaker 4: My name. 00:21:01 Speaker 4: Is Abdulrahman Muhammad Al Sayyed. We all know that my name and my faith aren't the reason you can't afford your gas. 00:21:07 Speaker 12: This is all about the economy. It's about making sure that people who work a full-time job can feed their family. It's about addressing healthcare. They're putting people first. so that you can make a living, you can afford your health care. It's a vote for affordability. It's a vote to make sure that if I'm a farmer in Iowa or Kansas, that I can make a living. Tariffs have been a killer. 00:21:29 Speaker 1: We are going to drive down costs for the people of this state. 00:21:32 Speaker 12: We are going to lower insurance premiums for the people of this state. 00:21:36 Speaker 4: We are going to make housing more affordable for the people of this state. 00:21:40 Speaker 13: We're going to fight hard to make sure that we can ensure that every single American can afford to go see a doctor when they need one. 00:21:54 Speaker 1: Bloomberg News, Boston Bureau Chief Brooke Sutherland was out in the field on election night in Maine, and she's here with us in New York. I counted one Republican in all those sound bites, and it's from Florida. Susan Maine, you were covering that race out in Maine. Did she talk about affordability on the campaign trail? 00:22:11 Speaker 9: She did, and I mean, it was an interesting sort of microcosm of this debate in terms of who is to blame for these affordability challenges, because Susan Collins' opponent was Troy Jackson, who spent a long time in the Maine state legislature, Collins unsuccessfully tried to make the case that the cost of living was really a state issue. That is not a message that really resonated with Maine voters. As we saw Jackson ultimately proving victorious in Maine, those heating oil costs were very, very top of mind. It's starting to get cold in Maine, especially at night, and those heating oil costs are hitting a record. And I think Jackson successfully tied that to the war in Iran. 00:22:46 Speaker 1: And of course, you are from Kansas originally. Tom was all jazzed to talk to you about what's happening in Kansas because we didn't think that we would, not we, the Democrats, would get something other than Republican. 00:22:56 Speaker 9: No, and I think that was a bit of a surprise just in terms of how close that race was. There was obviously a lot of attention on it in the final stretch, but I think what's interesting there is that Adam Hamilton is not your traditional Democrat. He was actually a Republican up until February, and so he was very much running as a moderate, and he tapped into that angst over rising prices, over tariffs, over lowering the tariffs on beef imports. 00:23:20 Speaker 4: We lost the punchline here. You grew up, your great-grandparents lived next to Annie M and the Wizard of Oz, so I get it. Okay, Kansas is different. When the president is gone, what will all those disaffected Kansans do? 00:23:34 Speaker 9: I mean, I think it's going to be really interesting to see if this trend continues. I don't think you can come in there with a far left type of Democrat. But remember that Kansas has had a Democratic governor for two terms. And so this is a bit more of a purple state than people gave it credit for. But I do think there is a lot of angst about this particular moment, especially from that farming community. Immigration is another topic that did not actually play that well with the farmers because they were having a hard time getting workers. Immigration rates, especially high profile ones, were keeping people at home. And so I do think this was a unique moment for Kansas. But I also think there's a lot of themes here that might continue, especially if we do see Adam Hamilton following through on some of the topics that he talked about, fighting corruption, making lives better for people in Kansas. He's also talked a lot about bringing down the national debt. So I think these are messages that can continue to work in Kansas. 00:24:25 Speaker 5: All right. 00:24:25 Speaker 1: Good stuff. Brooke, thank you so much. Brooke Sutherland is our Bloomberg Boston bureau chief. She was out reporting in Portland, Maine. She's going to head back to Boston where it's cold and she's got to pay for her heating oil. 00:24:36 Speaker 4: On Monday, we'll stop talking about politics. Tim O'Brien won't. He's senior executive editor of Bloomberg Opinion, which barely describes his holistic view of our political economy. His work on President Trump is just flat out definitive as well. I want to talk to you about the first caucuses.

Help me here. There are centrist Democrats. There's liberal Democrats. They have two separate caucuses. There's some overlay. What's the body language going to be like in those first 100 and 200 people caucuses? 00:25:10 Speaker 11: Well, I mean, I hope the body language is that they want to work together to find common solutions to the problems Americans are experiencing that got them elected. and that they don't mistake phenomenal wind in their sails, which they got from this election. 00:25:24 Speaker 4: It's a historic election. It is a mandate for change. 00:25:28 Speaker 11: But the voters have really, big blocks of voters have moved between the parties with great rapidity and in huge numbers for a number of cycles. I don't think the Democrats should take Latino voters as a permanent member of their coalition. 00:25:44 Speaker 4: Younger voters, we could go on down the line. 00:25:46 Speaker 11: So the way you keep voters in your tent is you solve problems for them and clearly affordability is the major piece of furniture. 00:25:55 Speaker 4: Wrap in your world and your expertise on it into the nation's confidence in our personal finance. There's a huge body of Americans You know, we're doing a fancy show here, talking duration on gold with Kate Moore. A huge body of Americans, Tim, don't have that personal finance dream anymore. 00:26:15 Speaker 11: Well, and they don't, you know, not enough of them have exposure to markets and exposure to the upside that comes with equity investing, the way to create wealth. Most people's personal wealth is still tied up in homes. But to expand that, I think they need to have faith in the idea that things aren't constantly volatile. whether it's the macro economy or the markets themselves. 00:26:34 Speaker 4: And I think they need to. 00:26:36 Speaker 11: Have faith in institutions. They need to have the kind of wages that generate excess money to save for goals, including retirement. And I think they need to believe that the political system is supporting them in that way. 00:26:49 Speaker 1: You mentioned how it's hard for the Democrats who just want to do very much on affordability within two years. If President Trump works with them, then it might be more possible. And he did give at least initial indication that he's prepared to work with Democrats. Do you believe that? 00:27:03 Speaker 4: We'll see, Scarlett. 00:27:04 Speaker 11: You know, he's not somebody when he's cornered who wants to come out and hold hands with people. He tends to lash back. I do think there's things that I think there'd be bipartisan support out of the gates, regardless of Trump, to address tariffs. and the war in Iran, and if that war got wound down, and if I think a lot of the frantic and irrational parts of the tariff policies got wound down, you would get a pretty quick and early macroeconomic bump from that. The larger things that I think have to be pursued are how to deliver healthcare to average voters, affordable, reliable healthcare. better wages and opportunities. 00:27:42 Speaker 4: You, more than anyone I know, is definitive on the President of the United States. It was a book any number of good years ago where Tim O'Brien looked into a younger Donald Trump. This vignette is just great from a recent O'Brien essay. He once dismissed the idea of seeing a therapist when I inquired as we drove to his New Jersey golf course. I have found I am not a disbeliever in it, And then, of course, he switches, as Trump can do, and says he's really got some problem with the debate and the stability of it all. You, more than anyone, is going to help us get to Donald Trump 80, 81. 82 and beyond. How significantly do you see him changing from the time you did your iconic book? 00:28:28 Speaker 11: Well, I mean, he's clearly older. He became president. I think he forgot the lessons of the 2024 campaign in which, you know, you can argue that Joe Biden lost reelection when inflation started soaring. you know, in 2022 or so. And I think one of the things that kept President Trump aloft was he was a lot of average people's idea of what you would do if you won the lottery, how you would live your life, what you would do with your money. 00:28:56 Speaker 1: Aspirational. 00:28:57 Speaker 11: Aspirational, and obviously part of personal finance is about that. 00:29:00 Speaker 4: Nice tie in there. Right? He can come back. 00:29:03 Speaker 11: It's very much about that. And I think he was doing all these things that lost sight of that. He said he wasn't gonna go to war. He went to war. He said he would make the economy stronger. He pursued inflationary policies. No one felt their wallet was stronger right before this election and he paid the price of that. 00:29:21 Speaker 1: We also know that for the last two years of his term, he's going to be in legacy building mode. He wants to leave something behind that will endure. Is there any common ground between him and the Democrats that he's capable of collaborating on that fits in with his worldview? 00:29:34 Speaker 11: That's such a good question, because, Carla, what I think he sees as his legacy is the triumphal arch and a big ballroom in the White House. 00:29:44 Speaker 1: Real estate, essentially. 00:29:45 Speaker 11: Real estate with his name on it and his legacy the voters want is a better and more affordable America. You are professional at herding cats. This morning you heard David Drucker with a brilliant Bloomberg opinion essay and talks about the senator from New York pulling his 20th century and dragging the Democrats into the 21st century. century as well. Talk about the Schumer-Jeffries shift that has to happen. Well, remember, I mean, both of those men got a lot of heat that, you know, the Democrats were unpopular. They weren't putting candidates in place who could get elected. And now we learn through reality that they actually helped engineer an historic win. And I think they were smart about finding moderates in

states where the voters wanted a moderate Democrat, progressives in state like Michigan, where they were very happy to have a progressive Democrat. And I think the challenge, as David points out now, is they let sort of a thousand flowers bloom, but now they're going to have to actually make sure they can keep growing that mandate, and that's going to come down to really some hard-nosed politicking to get policy out the door. 00:30:52 Speaker 1: Okay, so herding cats in a big, big, big way. 00:30:55 Speaker 4: Yes. 00:30:56 Speaker 1: In other words, Tim, thank you so much. 00:30:57 Speaker 4: Thanks, Scarlett. 00:30:58 Speaker 1: Tim O'Brien. 00:30:58 Speaker 4: We have to dismiss Tim O'Brien because we have breaking news. 00:31:02 Speaker 1: We do have breaking news. He is our senior executive editor here at Bloomberg Opinion. All right, breaking news is that Microsoft is winding down its deal with Oracle to rent AI cloud capacity. We've seen Oracle shares. turn red. They're now down more than 3%. And this goes back to that idea that what we're seeing with the AI trade perhaps slowing down, some people might even say collapsing, it's coming to fruition as we see a lot of higher costs embedded in the AI build-out. And there's now question marks over whether that will proceed as planned. 00:31:31 Speaker 4: I just can't emphasize enough how this will play out to me within the bond market. oracle bonds, core weave bonds. 00:31:39 Speaker 1: And the credit default swaps that people buy to insure against those defaults, potential defaults. Coming up, the state of financial literacy in America. We're going to dig into that and how it could change in the coming years with Anna Maria Lussardi. She is Stanford Institute for Economic Policy and Research Senior Fellow. This is Bloomberg Money. 00:32:01 Speaker 4: You're listening to Bloomberg Money. Stay with us with more to come after this. Bloomberg Money, and we say good afternoon to you on retirement, on personal finance, on wealth management. We're promising next week we'll try to get back on track. 00:32:22 Speaker 10: I know. 00:32:22 Speaker 1: Well, it was a big week. We're still digesting all of it. The stock market is as well because we've come back from yesterday's big losses. We faded some of those gains. The S & P 500 up only half of one percent. The Nasdaq Comps index gaining more than one percent, although we did get news just now about Microsoft winding down an Oracle deal to rent AI cloud capacity. So Oracle has turned negative and the VIX has eased off from 28 to 25. 00:32:46 Speaker 4: It's not back to all common Western front, but it's, you know. 28 to 25 helps us out. That's the cross asset right now that we want to do here at Bloomberg. And, of course, yields flat after some real dynamics off that killer jobs report. I do want to note this. Thank you for putting this up, Luigi. Stronger dollar. And I'm watching Japanese yen, which is not cooperating with strong yen. That's inside baseball here, but that's okay. 00:33:12 Speaker 1: That's okay. 00:33:13 Speaker 4: We'll have to see on that. I want to do a preface here because John Chauvin is one of my heroes. Out at Stanford years ago, The Stanford Institute for Economic Policy, John Taylor, who helped me get this act started, said, Tom, you really got to come out. And there was John Chauvin and Michael Boskin and other brilliances leading the way. And they began a cottage industry, literally scarlet, out of one course, Economics 43, on financial literacy. And they found a young professor on the East Coast and said, You are the chosen to drive it forward. 00:33:49 Speaker 1: And we're so pleased to welcome her. She is Anna Maria Lussardi, senior fellow at the Stanford Institute for Economic Policy. Tom talks about a class on financial literacy in college. We're now starting to see high schools offer that as well. The College Board is now offering an AP business with personal finance course and exam. Do you think this is something that will move the needle that will help Americans get more financially literate, maybe even investment literate? 00:34:15 Speaker 2: Absolutely. 00:34:15 Speaker 3: I think it's, first of all, necessary. We need to start as soon as possible. And we need to have it in every state, not just the 30 states that have mandated financial education in high school. Young people face a very different world. We need to start investing as soon as possible. And so I think this is a very important movement, and I hope the direction goes forward to have many more courses. 00:34:41 Speaker 1: And you were just telling me that there's a difference between financial literacy and investment literacy. And there was a study that recently found that people who have some investment literacy, that can actually be more dangerous than having no investment literacy because that encourages risk-taking. Tell me a little bit more about that. 00:34:56 Speaker 3: Yeah, it's the study we did recently with the FINRA Investory Survey. And what we found is, first of all, financial literacy is really the knowledge of all the basic concepts. 00:35:08 Speaker 2: You know, not just investments. 00:35:09 Speaker 3: So, for example, knowing interest compounding, knowing inflations and so on. And then we actually look at more of the knowledge that's related to investing. And what we do find, indeed, is that, you know, the people we are in the middle of that, you know, investment and financial literacy often cannot detect a scam. 00:35:30 Speaker 1: They cannot detect a scam. They fall victim to that. 00:35:33 Speaker 4: Oh, yeah. I sent a nasty letter to a major provider the other day. I couldn't tell if it was them or a scam. That's how pervasive it is. There's a built-in optimism to the Stanford experiment, the academics that go back decades and decades and decades. At Bloomberg, we fought the gloom as well. Matt Winkler, the founder of Bloomberg News, John Micklethwaite, our

editor-in-chief now, every day we try to fight the gloom. How does the media gloom color our financial literacy? 00:36:03 Speaker 3: Well, I think we need to be optimistic that we are going to fight this low level of financial literacy. And I think the initiative that you're doing here and providing news that's important for also helping the population become more financial literacy is important. And this is, I think, how we are fighting the gloom. The statistics are gloomy. We are going in. 00:36:28 Speaker 1: The wrong direction. 00:36:29 Speaker 4: Market is not. I mean, basically people are underinvested in equities because they're worried, worried, worried. And I would suggest it's fed by so much of the financial media. 00:36:40 Speaker 1: Well, the tension is what the. 00:36:42 Speaker 4: Media is addicted to. 00:36:43 Speaker 1: Is what people are taught in journalism school to focus on. 00:36:48 Speaker 3: But there is also one thing we find, which is that risk and risk diversification is the topic that people know the least. 00:36:55 Speaker 11: Right. 00:36:56 Speaker 3: So in order to actually get less gloomy and also to have more people invest, we also really need to invest in financial literacy, not just in school, but also in other places. 00:37:07 Speaker 1: What about the other places? Do they include Reddit and TikTok? They feature influencers offering advice on things from budgeting to credit score hacks to options trading. And this has made financial literacy very accessible, particularly to Gen Z. Do they teach you diversification, for instance? I mean, how would you grade them? I am. 00:37:28 Speaker 3: Skeptical, I have to say, because there is such a variety of quality. And I think we need to be careful about quality. I mean, some of these topics are very complex. And that's why we teach it in Stanford, and we have PhDs, economists, which teach this topic. The fact that you want to simplify a concept doesn't mean that the concept is simple. So we need quality, and I think actually schools are better suited to teach this perhaps than social media. 00:37:59 Speaker 4: One of the great things I see, which you've alluded to, both of you, is that we failed coming out of ERISA 74. We're all late. Oh, 42, I think I'll start. 00:38:08 Speaker 1: I think investment illiteracy means you don't know. 00:38:10 Speaker 4: What ERISA 74 is. The kids today have looked at the fossils and said, we have to do better. What do our grandchildren, what are they going to do with this disastrous American retirement system? 00:38:23 Speaker 3: I hope that we are going to better prepare them for this. And I think, you know, starting in school and as soon as possible, I think is going to be helpful. I also think this movement of investing very, very early on when people are born or, you know, starting investing. 00:38:42 Speaker 1: Like Trump accounts? 00:38:43 Speaker 3: Even the Trump accounts, you know, we need people to be exposed to to that knowledge, and also I think this idea that the money is going to be invested in stock index fund at very low cost, I think is going to be a good financial education experiment, but also we need to use time. Young people have a great resource. They are all rich in time, and we need to use them in their favor. 00:39:07 Speaker 1: They're rich in time. What do they know? What do they understand about personal responsibility for their own retirement that their parents, the baby boomers, don't need to worry about? I mean, as a Gen Xer, I'm pretty much convinced that Social Security will be insolvent by the time I retire, and I'm going to have to rely on my 401k and whatever else I happen to own. 00:39:23 Speaker 3: I actually don't think that Social Security is going to go away. It's going to be an important institution, but it will have to be scaled back. And so we need to make sure that young people are better prepared for the future. And that prepare, you know, and we need to start as soon as possible, as I've mentioned. So I think we need to make sure that they are aware that many more decisions and much more of their financial security depends on themselves. 00:39:50 Speaker 4: I'm depressed. Scarlett's a Gen Xer, and I'm not. Really? 00:39:54 Speaker 1: You're a Gen X in spirit. 00:39:55 Speaker 4: In spirit. 00:39:56 Speaker 9: Okay. 00:39:56 Speaker 4: Professor, this is just so important. What is the international model? that you would say is the best Bloomberg money model? Is it Australia? Is it the Netherlands? What's the nation that gets this right? 00:40:09 Speaker 1: Good question. 00:40:10 Speaker 3: I have a favorite nation to suggest, which is Finland. 00:40:14 Speaker 4: Finland. 00:40:15 Speaker 3: And the reason I like Finland is they are very bold in their objective. What they said, they came to financial literacy relatively later. 00:40:25 Speaker 2: Than other countries. 00:40:27 Speaker 3: And so I'm glad you have mentioned New Zealand and Australia, which have started looking at financial literacy earlier on. But now Finland said, by 2030, we want to be the most financially literate country in the world. I love that challenge and I love that ambition. And I think we should all strive to do better in financial literacy. 00:40:50 Speaker 2: It's so important. It equips us with the skill we need. 00:40:54 Speaker 1: So they're putting the resources behind that intention. Really, really interesting. Thank you so much for joining us today. 00:40:59 Speaker 2: Thank you so much for having me. 00:41:01 Speaker 1: All right, Anna Maria Lussardi of Stanford. Coming up on Bloomberg Money, somehow, believe it or not, it is only early November. Yeah, but holiday shopping is upon us. It's been that case since September. According to Costco, and we know who goes to Costco. 00:41:16 Speaker 4: We do know who goes to Costco. Next, Bloomberg Money's Costco correspondent. 00:41:21 Speaker 1: Lisa Mateo will be joining us next. This is Bloomberg Money. 00:41:24 Speaker 4: Thank you. 00:41:25 Speaker 1: That was wonderful. So interesting. Stay put for a second. 00:41:34 Speaker 4: Bloomberg Money. Good afternoon, everybody. I'm too upset. I was walking down Lexington Avenue today. The Christmas creep is out there with Bloomberg this weekend. Lisa Mateo, she was praying for July decorations. Why do we have this idiotic Christmas creep? 00:41:51 Speaker 2: I know it is. 00:41:52 Speaker 10: In Costco, the decorations are out in like August, September. 00:41:55 Speaker 2: Like it's crazy. 00:41:56 Speaker 10: But the Christmas music was playing this weekend. So the question is, is it the smart money move to start buying now? Should you start buying your Christmas presents? 00:42:03 Speaker 1: I kind of trust Costco in all things. 00:42:05 Speaker 4: I know. 00:42:06 Speaker 12: I know. 00:42:06 Speaker 4: And there's some good. 00:42:07 Speaker 10: If you start now, you can save money, right? Because you're saving money because you're giving yourself enough time to do these things. You're giving yourself enough time for returns. But the bad side is that you can overspend, too. So there's kind of two sides to it. 00:42:18 Speaker 1: You've got to find someplace that takes returns. That's the key part. But that takes time and money as well. So, Lisa Mattel, thank you so much. Make sure to watch Bloomberg this weekend with Lisa every Saturday and Sunday starting at 7 a.m. Eastern time. That's all for Bloomberg Money. Have a great weekend. 00:42:38 Speaker 4: This is the Bloomberg Money Podcast, bringing you a smart look at the forces shaping your financial life. I'm Tom Keen with Scarlett Fu. You can watch the show live on Bloomberg TV every Friday at noon Wall Street time. Subscribe to the podcast on Apple, Spotify, or wherever you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app.