Good noon, everybody. 25 days until the midterm elections. I'm Tom Keene. Of course, Scarlet Fu leading the challenge here. Everything is overwhelmed on personal finance and wealth management. That concern, the sentiment. That statistic this morning speaks volumes about the tension in America.
People feel lousy because no one likes high oil prices, no one likes high mortgage rates, and now someone can do something about it when they go to the polls.
We are doing this every Friday. We are trying to move away from the elite discussion that we do every day on Bloomberg, because more than half of America with that statistic is flat on our back.
Then you look at GDP numbers, and it looks like everything is just fine. Corporate earnings next week also just fine. More than fine.
A beautiful October it is in New York City. Again, we welcome all of you with important conversation. Peter Orszag will join us today of Lazard, but his definitive work on American retirement over the arc of his career. Thrilled to have Dr. Orszag with us.
Later, Anastasia Amoroso will be sitting down with us. We will get her view on how the great bond selloff resets the table for valuations in stocks.
She has been wonderful about the courage to stay in the market as well. Right now I have to stay in the market. I have not bought a first share yet. Cash runs doing well this week. I don't care about stocks. Some do. What is important is the bull market statistic for Anastasia. 14.92 on the VIX is a wild statistic.
We are looking at a fourth-straight year of double-digit gains and also gains in equities. Let's show you what is happening with yields. The 10-year yield moving up. That has been a familiar sight. The dollar up slightly and oil prices for WTI just below $92 a barrel.
Our roundtable this morning. Getting started with good conversations. Gura inflicted upon us photographs of children playing football. David Gura really on top of the midterm debate. With us, Jessica Karl, author of Bloomberg Opinion today. It is a huge summation of all that we are doing at Bloomberg Opinion. And Max Chafkin is with us.
He has written about something called AI surveillance pricing, which is like dynamic pricing, but personalized based on who you are and what you have done before. Is that right?
This is the idea that as pricing algorithms get more sophisticated, we already have this to some extent with social media advertising, where you have a pair of shoes that follows you around the internet. There are groups, many of them left-leaning, and trying to get populist rage going, warning about the potential for these same kinds of technologies to apply to things like grocery stores. The idea — and this is mostly theoretical at this point — that you are walking to the grocery store and the price will change based on other stuff you have in your shopping cart. For instance — and this came up in a story I just wrote — Walmart has a patent that suggests they would change the price of mayonnaise if you already had tuna in the cart. Walmart responded to this by saying, we are not changing the price of mayonnaise yet, this is just a patent. We are not doing this, they are committed to the company, you know, the slogan, which is everyday low prices. But it does sort of show you there are some people within these companies thinking about this stuff, and we are seeing this in less high-profile examples.
So, the technology is there but it may not be implemented at the moment? This seems like something politicians would jump on.
I can imagine they would.
Even Republicans have got to look at this. Is it in place now? If Jessica Karl books an airplane ticket and comes back six hours later, do they change the price?
The airplane one is one where it is pretty muddy. The airlines say, no, we don't do that. No one who has bought an airline ticket will see that the prices change very often. There are these kind of, like, one-off cases. One came up during the hearing in Congress. Josh Hawley has been ringing the bell on this. I think the issue is they have so many different fare classes, potentially dozens, even hundreds, where it starts to get close to personalized.
I get taken to the cleaners. The reason Jessica Karl is here, she is good at social media, unlike the rest of us. Give us an update as we talked to Max about the new digital impact on Americans that are not hipsters and into social? It permeates our society, doesn't it?
I think you hear a story like that and that story about tunafish, that would go viral and that is what is feeding into the negative consumer sentiment you are seeing. Even if it is not happening, people on social media, there are these rage bait stories that are pushing politicians to address these issues in a different way on social media.
Speaking of politicians trying to address this, President Trump has renamed artificial intelligence into super intelligence, and this focus on semantics is interesting. I know you have been writing about it in your newsletter.
Yesterday he wanted to label everyone who still says AI as the enemy. I was joking my name is not Jessica, it is the enemy now. When consumers see him focusing on the name of AI when there is so much anger and pessimism directed at this technology — people are worried it is price gouging them, it is going to eliminate their jobs, so there is a lot of fear around this and that label seems silly in the grand scheme of things.
I don't buy for a minute AI matters in the election. David Gura, you are on top of this. Let's assume AI doesn't matter. What, then, does on the first Tuesday in November?
I think it does matter. You are seeing referenda around the construction of data centers. You look at the debate that took place in Michigan last night. Both candidates came out against building more data centers at this moment. It is a tangible totem of what an electorate is seeing as emblematic of data centers right now. But it is affordability. Democrats have seized on that as an issue they want to keep talking about. Republicans are fearful of the fact that they don't have an answer to it.
I make it up as I go. You actually look at the literature. Cook Political Report with a redo on the House.
Eight Democratic seats. 18 Democratic seats now in their list of what they think is going to happen in the House. Democrats have to get to 218. What the Cook Political Report is predicting now is something more like 224 or above. I think there is this expectation the Senate is still going to be difficult for Democrats, but Democrats are making inroads there as well.
This is something certain people have jumped on, and these are people that worked with Elizabeth Warren, the senator. Is this now a Democratic issue?
There are Republicans trying to claim the mantle on AI and affordability. I think the reason why the Democratic groups I talked to see this as a good issue is because it hits two buttons. It hits AI, I'm upset about AI, there is a lot of money going in, there is the sense people are not benefiting from this, whatever you call it. And then there is affordability and the theme for them that is appealing is this combines both: skepticism and affordability. AI is not just this thing that might take away her job at some point in theory. It is also driving your prices up, which whether or not it is happening in grocery stores is happening from an inflation perspective.
It speaks to this notion that you don't know what is happening. Feel like AI is developing but you don't have a grasp of what it is doing, what it will do. This is another example. It renders apparent the electorate: I don't have a handle on where this technology is headed.
This is a common theme in the opinion pieces our contributors write about.
There is so much uncertainty with the economy and AI skepticism feeds into that, and I think you see spending on — it's area spending is staying in-line, but you see people become hesitant to spend on bigger things.
Can you get rid of all of the AI garbage on Twitter?
I would love to. I think if I did I wouldn't be working here.
It is another way of an usability — un-usability on Twitter.
Eric Bell Tunis is on the board, Eric Bell Tunis. But the roadshow, the merchandise is going to be bowties. The merchandise is going to be a believable. We will see how that goes.
You can't do triple leverage right now according to the SEC.
That is the problem. Terry Gensler, why did you leave?
Thank you to all of our panelists. David Gura is co-anchor at Bloomberg "This Weekend." Jessica Karl, and Max Chafkin.
We are excited. Coming up, Peter Orszag, Lazard CEO and Chairman. He is behind some of the ideas that are critical to the 401(k). This is Bloomberg Money.
On a perfect Friday from New York City. "Bloomberg Money." Tom Keene and Scarlet Fu. That was a spirited conversation. The heart of the matter is 25 days until the midterms.
AI is dominating everyone's posts. Cannot get away from rising gas prices, mortgage rates.
Food prices. Peter Orszag is with us, Chairman and Chief Executive Officer of Lazard. His contribution to modern retirement in America. He wandered in and got a job and said, you know what? When we take a new job, we should automatically be in the 401(k) of the company. At the time it was absolutely seismic. He also looks at his economics at Lazard. Here is a seismic essay from January this year. The risk of higher U.S. inflation in 2026. Research demonstrates the frequency of purchases of eggs. Inflation rising above 4% at the end of 2026 is plausible and a most likely scenario. You and Adam Posen nailed it.
The most important thing is not the victory lap but why did we say that? We are living in a new supply-side era where if you want to understand inflation today you need to look at the supply shocks that happened a year or two ago. I just read research suggesting that do not worry, in the next few months you will see a tailing off of inflation. OK, but our other point is there will continue to be supply shocks. We are living in the supply-side era 2.0 in which you will be hit by these on an ongoing basis.
Our "Bloomberg Money" audience is hit by it every moment. Retirement and wealth management. Does there need to be a new set of a higher interest rate? What the fancy people call a higher actuary assumption.
I think the interest rate environment is different today than it was three or four years ago. It is unfortunate that we did not take advantage of that extended moment when we had low rates to extend the maturity of Treasuries. We said we have been shorting maturity. That is too bad. We are in a new era for the bond vigilantes are coming back.
We could digress for two hours.
Getting back to the inflation story you were just talking about. Is AI inflationary? There is the buildout, implementation. We have not gotten to the mass application yet.
On AI, the buildout is massive — 3%, 3.5% of GDP investment. More than railways, electrification by a significant margin. That is putting upward pressure on interest rates. I think we need to separate the technology and the business model. I'm a huge believer in the technology. I have 70 or 80 agents running as we speak. I'm astonished by how rapidly things are progressing. But because there is so much debt-financed, the risk of financial distress in this ecosystem is higher than people appreciate. When it is debt-financed, if it just does that, you have a problem. If it were equity-financed, it would be different. The token spend, going from this to that could come from open-weight but also from local compute. That is the part people are not appreciating. The ability to run the models on a computer based on local compute.
A family shoutout — my brother is dead on on his local weight. Local computing.
There is so much we do not know about how AI will work and affect the economy. The research led to automatic enrollment in 401(k)s. Your view on the Trump accounts that have made clear kids under 18 will automatically be enrolled in Trump accounts. It is a good thing?
That part is a good thing. The power of inertia and the power of default, if something is even a little difficult, often you do not do it. That was the part about automatic enrollment into retirement savings plans. If you are going to set up something for kids, it is better to auto enroll.
Everywhere he goes you have to run five miles with Peter Orszag. Every city.
That is one way to weed people out.
Social Security will fall apart. If I had to pick Republican/Democrat, you would be on the short, short list for that. How close are we to Social Security failing after the presidential election of 2028?
Social Security and Medicare have looming problems with financing. They will have to be addressed. It is part of a fiscal imbalance of 6%-7% of GDP. History shows we do not deal with these problems until they are crises. The last Social Security reform did not occur until literally checks were not about to go out the door. You need that forcing event to focus people's attention.
Peter, stay with us. Peter Orszag is our guest right now. Later on in "Bloomberg Money," the Knicks are in the preseason and you checked out the price for a ticket.
It is ridiculous. I'm looking for the Lazard box myself.
I do not know if they can pick up the price tag.
We will talk about how much that costs. This is "Bloomberg Money."
"Bloomberg Money." The fish are alive in the opening segment. Peter Orszag with us from Lazard.
I want to talk about the junior bankers feared for years. Private equity was aggressively poaching junior bankers. Citigroup cut its analyst program from three years to two years so the junior bankers can advance faster.
I am thrilled by the talent we are able to attract to Lazard. The most exciting thing for junior bankers today is the opportunity to change the way that we work. We are hiring more managing directors so there will be more deal teams. I remember early in my career, the most exciting thing was to be able to assume more responsibility as rapidly as you can. When you have larger deal teams, the technology will enable us to make the deal teams leaner, and how that upward trajectory. Also cultivate and train the characteristics we think will be particularly valuable in our business in the future. The ability to engender trust.
The softer skills. There is a great book out called "Messy Jobs" that takes us through the things that will be more valued as AI develops. A senior banker's role is a messy job. It is an exciting moment.
I would suggest Peter Orszag dodged a bullet of exhaustion and investment banking. How do you deal with the stereotype of the young kids exhausted?
This is a crucial moment for us to weed out all of that inefficiency sitting around for no reason.
I have always believed in working really hard. When you are working really hard on things that are meaningful and you are not just wasting time, it is a much different experience than literally something that seems totally inefficient. There is a lot of opportunity to improve the process.
Sometimes you have to go through the process to know what to do.
Are we depriving young people of that?
There are a lot of ways to train people. Honestly, the 176th time you are moving the boxes around on a PowerPoint slide, you are not learning that much. How can we train people? We have gotten very good at training airplane pilots, including through simulators, not just real-life experiences. I think the new technology is opening up opportunities for us to cultivate the skill sets we think are valuable and make sure there are enough at-bats to give you the experience you need. That seems off, we have to push back.
Good stuff. Peter Orszag, Chairman and CEO of Lazard.
You did not have to jog with Peter Orszag. [Laughter]
Coming up, high earners are bucking the trend and not necessarily maxing out their 401(k). Plus, Anastasia Amoroso joins us as well. This is "Bloomberg Money."
A perfect Friday in New York City with a perfect set of conversations for your "Bloomberg Money." What a love is that Peter Orszag with his foundation help in American retirement, how much further we have to go, the percentage of Americans that are distant from a successful 401(k).
They are looking at the stock market to save them. The last three years it has done very well.
Anastasia Amoroso says it is never going down again. I think we need a stock market check to see if we are still in a bull market.
We very much are. The Dow Jones is leading the way among the major indexes. You have gains of about .5% for the S&P and Nasdaq. Both record highs this week.
It just won't go down. The VIX under 15%. Oil, $104 a barrel. West Texas Intermediate at $91. Not telling the story. Over the weekend, follow Bloomberg and our wonderful Middle East desk for any news out there, and particularly on Brent crude.
"Bloomberg Money" is our destination for personal finance. One of the stories that caught our eyes is whether to maximize contributions to 401(k)s. You talked to a 40-year-old who decided to cut her contribution down to 5% from 20% so she can still capture her full employer match, but she no longer wants to put that other amount into her 401(k). She is redirecting it elsewhere.
It has been months of writing stories about maxers. I guess it is time to write a story about anti-maxers. I talked to someone who said she was maximizing her future. She is looking at the Roth IRA, the brokerages. She wants access to the funds earlier and wants more control over her investments.
