0:02

Welcome to the Bloomberg Penl Podcast. I'm

0:04

Paul Swinge. You, along with my co host Lisa Brahma

0:06

wits each day we bring you the most noteworthy

0:09

and useful interviews for you and your money. Whether

0:11

at the grocery store or the trading floor. Find

0:13

a Bloomberg Penl podcast on Apple podcast

0:16

or wherever you listen to podcasts, as well as at Bloomberg

0:18

dot com. Well,

0:20

President Donald Trump threatened to regulate

0:23

or shutter social media companies, a warning

0:25

apparently aimed at Twitter after

0:27

it began fact checking his tweets. Lots

0:29

of questions in the marketplace. That's knocking in part,

0:32

knocking down the nast back off about one point

0:34

eight percent today. The question is can

0:36

the president do that? Jim

0:38

Anderson, CEO of Social Flow, based in New

0:40

York City, has some answers for social Flow

0:43

and full disclosure. Social Flow is a platform

0:45

used by Bloomberg for social media purposes.

0:48

Jim, thanks so much for joining us here. So

0:50

an interesting response by the President

0:52

to the fact checking that

0:54

was instituted by Twitter. I guess the basic

0:57

question is what can there

1:00

does it really do well?

1:02

It's a great, great question, Paul, I mean there's

1:04

so much to unpack in this story. I guess the first

1:06

thing I'll say is that Twitter's labeled

1:09

of President Trump's tweets were

1:11

around the tweets about baloting

1:13

by mail, not the conspiracy

1:15

about that Joe Scarborough having had

1:17

something to do with the death of a former staffer.

1:19

And and that's an interesting distinction, because

1:22

so much of the energy yesterday was around,

1:24

oh goodness, this is a terrible tweet. How could

1:26

President Trump do this? What's Twitter gonna

1:28

do? And and notably, they did not do

1:31

anything. They didn't play for that tweets, they didn't remove

1:33

it, they didn't do anything. They instead focused

1:35

on an area around mail and balancing, which

1:37

is its own set of controversy. So that's the

1:39

first thing I would notice. I think they

1:41

felt like they were on more solid

1:43

ground with the mail in balloting than

1:46

they were about the Joe Scarborough, which I'm

1:48

struggling to understand. What Twitter

1:51

is. Is it a media platform?

1:54

Well, it is a platform, I think, you

1:56

know, you sort of wrapped up in that question is

1:58

what is a media platform? What is the company?

2:00

And certainly you've seen Facebook

2:03

and Twitter both say they are not media

2:05

companies, and they certainly don't fit the traditional

2:07

definition. You know, they don't. The FCC

2:10

doesn't define them as a media company. They don't

2:12

print a newspaper. But that being

2:14

said, those are both amazingly

2:16

successful advertising sales platforms.

2:18

That's not how we normally as consumers think about

2:21

them. We think about the Twitter or the Facebook experience.

2:23

But you know, they derive almost acent

2:25

of their revenue from advertising. So if you define

2:27

media platform as one that sells advertising,

2:30

well then they certainly fit that definition. I

2:32

think part of what we're all wrestling with is that they're

2:34

not They're not like anything we've historically

2:36

had when it comes to radio and television

2:38

and newspapers. There's there's something really different.

2:41

So I guess it kind of makes a question, what, ultimately

2:44

do you think the responsibility

2:46

is of the facebooks of the world and

2:48

the Twitters of the world and the other social media companies

2:51

who in large part just you know, it's user

2:53

generated content. Do they have a

2:55

responsibility to fact check? Well,

2:58

they have a responsibility to society, I'll

3:00

say responsibility to fact check. You know that the

3:02

challenge with fact checking is, you know, we would all

3:04

love to think that facts are wonderfully objective

3:06

things, and in some cases they are right.

3:08

It's it's Wednesday today in New York

3:11

City, at least it may be a different day,

3:13

and if you go across the date line, etcetera. But

3:15

we're not talking about those kinds of objective

3:17

facts. We're talking about conspiracy

3:19

theories and in you into and all you really need

3:21

to do is turn on any of the other more traditional

3:23

media, turn on television, and depending on the

3:26

channel in which you consume your news, you're gonna

3:28

get very very different answers. So I think it's a very

3:30

slippery slope for the

3:32

platforms to start getting into fact checking. And

3:34

I think, you know, it's it's tough to understand

3:36

how yesterday's decisions

3:39

by Twitter to label two of Donald

3:41

Trump's tweets is going to turn out well for them.

3:43

I mean, you already saw the blowback

3:45

from him and from his campaign, and

3:47

I suspect they're going to get a tremendous amount of

3:50

criticism. Um And so it's a it's

3:52

almost a no win situation for the platforms

3:54

to say, hey, I'm I'm going to be the one who does the fact

3:56

check and I'm going to label or or

3:58

remove content doesn't meet my standards.

4:01

Well, and I guess the other side

4:03

of this story is Facebook, And there was a report

4:05

in the Wall Street Journal yesterday about how even

4:08

Facebook's own experts found

4:10

that, yes, the platform has actually

4:13

enhanced divisions in the country

4:15

and across the world and sort of created

4:18

an increased partisanship, and

4:20

that the platform could do something

4:22

about it, but chose not to

4:24

because ultimately it drove traffic.

4:27

That was a business decision, and it seems

4:29

in contrast to what Twitter is

4:31

doing. Should Facebook

4:33

be rewarded for that, at least with respect

4:36

to shares and with respect to the way

4:38

that it's perceived, given the fact

4:41

that it does have some social responsibility,

4:43

but it also has a responsibility twits shareholders.

4:46

Yeah, it's interesting. I read that same article and

4:48

I've I've seen commentary about that, and you

4:50

know, I think anybody objectively,

4:53

you don't have to be inside of Facebook to note

4:55

that it can be used for divisive topics

4:57

and tends to, at least in some cases and ease

5:00

polarization. Um, you know, saying

5:02

that they did it curry for their business interests. Yes, they

5:04

do have an obligation to their their shareholders,

5:06

but I think there's a missing piece of that, which

5:09

is once they start doing that, especially

5:11

if they talk about how they're going to

5:13

start policing speech or fact checking

5:16

or uh, you know, removing contents.

5:18

I mean, they's a remarkably splicy, slippery

5:20

slope. And again I'm going to go back to the no win scenario.

5:23

The minute they start talking about doing

5:25

that, they get highlighted for being inconsistent,

5:28

being unfair, manipulating elections, you

5:30

know, all kinds of things like that that, yes,

5:32

will hurt their business, but also I think they're

5:34

just a very untenable position for them, and I

5:36

think that's one of the reasons why you saw Facebook

5:38

go down the route of creating effectively

5:40

what they like to call their Supreme Court um,

5:43

which is some a non Facebook

5:45

controlled body that will help them be the sort

5:48

of the arbitr of these types of decitions. But like

5:50

any supreme court, like our U S. Supreme

5:52

Court, these this arbitration and these

5:54

decisions happen well well after the fact. I mean

5:56

these we're talking years down the road, I would imagine,

5:59

before these kinds of things get hashed out. So,

6:02

uh, Jim, I mean TV extent, there is some movement

6:04

to regulate some of the social media platforms. Is

6:06

it something that would come from the Federal Communications

6:09

Commission or the courts? How would it

6:11

even be affected? Do you think, Yeah, it's

6:14

a great question. I mean you're talking significant jurisdictional

6:16

issues, but I don't immediately jump to the jurisdictional

6:18

issues. I've gone to the politics of it. Right, So it's

6:21

politically, uh, sort of advantageous

6:24

for President Trump right now to talk about

6:27

regulating the platforms. But you know, historically

6:29

Republicans and Conservatives have not been heavy

6:32

on regulations. So you sort of getting

6:34

what the headlines are, which is, you know, somebody

6:36

saying we should regulate these platforms, and then the devil

6:39

is truly of the details. You know, do you really expect

6:42

a Republican president of Republican control

6:44

Senate, got a Democratic House. Do we

6:46

expect you know, sort of bipartisan consensus

6:49

to come uh, in terms of how those

6:51

platforms are regulated, I will say, I mean it

6:53

is interesting they get criticized from both fines. Right, You've

6:55

got Democrats criticizing these platforms for sort

6:57

of one set of issues, Republicans can criticizing

7:00

for a related set of issues, coming at it from very

7:03

different signs. So there is bipartisan um

7:06

agitation, for lack of a better word, whether

7:08

that emerges in consensus, in

7:10

which agencies, or how that regulation

7:12

will play out. I think that, you know, it's

7:14

going to be years in the making, and probably antitrust

7:17

is the most likely issue to really

7:19

come to the four at least for facebooks, not so much for Twitter.

7:22

Jim Anderson, thank you so much for weighing

7:24

in. Jim Manderson, chief executive officer of Social

7:27

Flow in New York and just for full

7:29

disclosure of Social Flow is a

7:31

platform used by Bloomberg

7:33

for social media purposes. Interesting

7:36

to see the reaction in shares

7:39

on Twitter, the response to President

7:41

Trump's request, or basically

7:44

his his criticism of Twitter. Some

7:46

people were saying, we'll sell Twitter shares, and then

7:48

other people were saying quickly that they would buy

7:50

them. It became a partisan issue whether

7:53

you bought or sold Twitter shares, and I

7:55

guess that the conclusion today,

7:57

Paul has been self for now. I guess

7:59

that's right. Yeah, interesting, it would be I

8:01

think just really a can of worms

8:03

here, so, uh, you know, I think it's a really

8:06

difficult thing to manage and too for

8:08

these social media companies free speech. We

8:13

are approaching the summer and

8:15

then the fall when students return

8:18

to college campuses around the country,

8:20

except that this year there's a high likelihood

8:22

that they will not be doing so, which raises

8:25

a question of whether parents really

8:27

want to be paying and students themselves want

8:29

to be taking out loans to pay colleges when

8:31

they cannot get the full college experience.

8:34

Joining us now to discuss this and what the

8:36

future is for higher education in general is

8:38

Robert kelch In, Associate professor of

8:41

the Department of Education, Leadership, Management,

8:43

and Policy at Seton Hall University, as

8:45

well as Janet Lauren, Endowment's reporter

8:48

for Bloomberg News. Robert,

8:50

I want to start with you, how big of

8:52

an existential threat is COVID

8:54

nineteen and the likelihood that

8:56

many campuses will not open in the fall

8:59

to higher education. It's

9:02

a serious risk to many college campuses

9:04

because students may not pay

9:06

as much intuition, and colleges

9:09

that have students living on campus won't

9:11

get that incredibly important

9:13

revenue from room and board. So,

9:17

Jennet, let's put this into maybe financial

9:20

perspective a little bit. Here. A lot of this

9:22

big universities with multibillion dollar downmands,

9:24

they're likely to be able to weather this

9:27

pandemic risk better than

9:29

others. But I'm thinking about the secondary and

9:31

even smaller colleges and universities.

9:34

How at risk do you think they are from an economic

9:36

perspective. Well, before

9:38

we get to the second tier colleges, just don't

9:40

forget that. Harvard also said

9:43

that they all they have a one point two

9:45

billion dollar budget deficit over to some

9:47

two um academic years, and

9:49

Northwestern also talked

9:52

about its budget deficits. So it's

9:54

the biggest colleges with the biggest endowments

9:56

are not necessarily immune. Uh.

9:58

These are the schools that quickly paid

10:01

out room and board refunds.

10:03

Uh. And we've also seen that colleges have had

10:06

to cancel somewhat lucrative summer

10:08

programs which helped fill their campuses.

10:10

So that's one step. You know, most colleges

10:13

are not going to be immune to anything. And

10:15

certainly the second tier colleges UM,

10:18

you know, they're they're having to

10:20

think about who's going to be coming to fill their

10:22

classes. As the top tier

10:24

colleges, you know, take other kids off

10:27

the waitlist, the second tier colleges

10:29

may find that the kids that they thought were coming

10:31

in in the fall may not be there. And

10:34

certainly, tuition revenue is

10:37

a huge part of most

10:39

college budgets. Certainly the wealthiest

10:42

colleges like a Princeton

10:44

Amherst College, more than half

10:46

of their budgets come from endowment um

10:48

investment income. However, most

10:51

schools are very reliant on tuition

10:53

to make their budgets. Robert, there's

10:55

a question here, how much is this

10:57

going to be a temporary shock for universe

11:00

these particularly the ones that have more robust endowments

11:02

and are better weathered or sort of hunker

11:04

down to weather this storm. And how much does this

11:06

shift the whole conversation around higher

11:09

education where we've seen incredible

11:11

inflation of the tuition bills

11:14

over time, and you mean, this is a

11:16

lot of people saying maybe we need to rethink

11:18

this and some of these colleges don't need to exist

11:22

in the short term. This put some incredible

11:24

pressure on colleges to hold a line on tuition

11:27

even as they're spending more money

11:30

to get college campuses ready for students

11:32

in the full world. Will many

11:34

colleges go out of business from this? The

11:37

answer is probably not that many it'll

11:39

be small private colleges serving a few

11:42

hundred students, but most

11:44

public colleges will go

11:46

on even if they're hit hard

11:48

by losses and state funding, and

11:50

most midsized private colleges will

11:53

find a way through, even though it would be a

11:55

difficult few years to come. Jennet,

11:58

we've seen some big, big universities,

12:00

UM, you know, Harvard, Brown, m I, t H

12:03

coming to the bond market. How how

12:06

has higher education generally been

12:08

received in the credit markets and kind of how's

12:10

the outlook today for some of these

12:13

institutions. Well, these

12:15

schools are still very highly rated, they

12:17

have very high demand, and they're taking

12:19

advantage of low interest rates

12:22

UM, and there chances are the

12:24

the institutions you just named are going to continue

12:26

to be around for a very long time. So,

12:29

you know, I think there's still been demand for

12:32

that debt um, you know, considering where

12:34

their market position is. Robert,

12:36

do you think that online education should cost

12:39

the same amount as the in person type?

12:43

Online education will end up costing

12:45

about the same amount unless

12:47

a college can get up to massive scale

12:50

because you're still interacting with faculty.

12:53

Good technology is expensive.

12:56

You don't have some of the in person facilities,

12:58

but the tuition price ends up

13:00

typically being about the same for

13:03

good online versus good in person education.

13:06

That's kind of shocking to me because I would think that

13:08

the classroom, the

13:10

the amount of people that could potentially

13:12

be a participant in the online

13:14

course, the overhead seems

13:17

like it would be a lot less. Why am

13:19

I wrong? Most

13:21

of the overhead here is people, And if you

13:23

want interaction between students and professors,

13:26

you need faculty to do that, and

13:29

good technology for learning management

13:31

systems and working

13:34

with students online is also expensive.

13:36

Although there are returns if you can get large

13:39

class or large universities doing

13:41

this, like an Arizona State, but

13:43

most smaller colleges doing this for one

13:46

or two semesters just won't see

13:48

that economy of scale. Jenet.

13:50

Can any of the I'm thinking more about

13:52

the private colleges and universities.

13:55

Can they expect any support in terms

13:57

of fiscal support fiscal stimulus

14:00

UM the government. Well,

14:02

we've already seen UM universities

14:05

such as you know, Harvard, Princeton, Stanford

14:08

saying they were declining, you know, to

14:10

accept their share of federal

14:13

stimulus stimulus money early on. You

14:15

know, mid a lot of criticism. UM.

14:17

I also did a story about the p

14:19

p P money that some uh,

14:21

small colleges, we're not sure

14:24

if they were allowed to apply for it because

14:26

of the requirement on workers and

14:29

their student student workers had been counted

14:31

even though you know they had all gone home.

14:34

UM. So you know, depending

14:36

on if the smaller colleges um

14:39

do uh you know, meet the threshold

14:41

for employees, they could get some money from

14:43

the p p P, you know, because they really

14:46

are small businesses. Robert

14:48

Kelchin, thank you so much for joining us. Robert Kelchin, Associate

14:50

pressor, Professor, the Partner of Education

14:53

Leadership Management Policy at Seton Hall

14:55

University UH in New Jersey and China.

14:57

Lauren a Downance reporter for Bloomberg News on

14:59

the phone, really fascinating

15:02

discussion there. I would think I kind of agree with you,

15:04

Lisa. I would think just intuitively, there would

15:06

be a discount for online versus

15:09

being on campus. Yeah, I'm going to pray

15:11

for that. I mean, it sounds like that's not going to be the

15:13

case. And honestly, it's good to have people

15:15

paid for what they offer. Still,

15:17

as a parent, the idea of having

15:20

a little bit of deflation in that intuition

15:22

payments not the worst thing in the world. I do want to

15:24

bring you this headline crossing that

15:26

the US will not certify Hong

15:28

Kong's autonomy. That's basically throws

15:31

into question whether that

15:33

region will continue to get special trading

15:35

status, sort of first step to dessertisfying

15:38

them again. Paul, though this the question

15:40

in my mind is who will that hurt

15:42

more? The U s for Beijing, the

15:45

people in Hong Kong. Yeah, we're coming back to

15:47

that discussion that that we've had prior to

15:49

the pandemic. It's about the trade wars and who

15:52

really gets hurt the most. Who can weather

15:54

a disruption in the relationship more

15:57

the US are China. Looks like we're about to find out on

15:59

a bit different front. About

16:04

a month ago, Paul, everyone was talking

16:06

about the transformation in the way

16:08

that we've viewed society on the heels of COVID

16:11

nineteen, and that particularly applied

16:13

to the auto industry, where sales

16:15

have plunged and are expected to plunge by

16:18

twenty per cent. Is

16:21

that really accurate though? How much will

16:23

we see permanent changes to the auto industry

16:25

as a result of the pandemic? Kevin Tynan

16:27

has been following the senior autos analyst

16:29

for Bloomberg Intelligence, Kevin, what's

16:32

your take here? Are there permanent changes

16:34

they're going to take hold of the auto industry

16:37

as a result of the pandemic? I

16:40

think so? Um,

16:42

you know, but I don't think it's structural

16:45

in the way that two thousand and eight two tho

16:47

nine was. I think there will be

16:49

improvements to processes,

16:52

and whether that's at the manufacturing

16:55

level or at the retail sales

16:57

level. That that I would say

16:59

this crisis sort of accelerated.

17:03

But but you know, in terms of a tear

17:05

down and rebuild of the entire

17:08

automotive process from the

17:10

build to the sale, you know, I think

17:12

that's a little bit overstated, So

17:15

Kevin, I you know, one point before the pandemic,

17:17

there was a reasonable discussion

17:20

about whether we as a US

17:22

society had reached peak auto,

17:24

you know, with Uber another ride sharing companies,

17:27

UH, the fact that more and more young people were moving

17:29

to urban centers where they can depend

17:31

more on mass transportation. There was really

17:34

a debate about peak auto

17:36

in this country. Where do you think we are as

17:38

it relates to that, How do you think about

17:40

long term auto demand in this country,

17:42

Yeah, I think, you know, and looking at

17:45

the numbers in terms of vehicle

17:47

registrations by state, which is something

17:49

I was just you know, I was just compiling

17:51

that data, and you know, there is a

17:53

definitive trend to less

17:56

private vehicle ownership and that's

17:58

over you know, a decade or so. Um,

18:02

you know, in terms of the fear of mass

18:04

transit or the fear of ride hailing.

18:07

I feel like, you know, there's

18:10

probably some temporary

18:13

effect of that, but at

18:15

the same time, I don't think you're gonna

18:17

get private vehicle

18:19

ownership and storage

18:21

and repair and maintenance and insurance

18:24

for people that live in urban

18:26

areas. It just doesn't make sense, you know. And

18:28

I just looked at it total

18:31

cost of ownership on a new vehicle, which

18:33

is roughly about thirty eight nine thou

18:35

dollars over five years all

18:37

in on the cost is about nineties thousand

18:40

dollars. So, uh, you know, it

18:42

just doesn't make sense for for that

18:44

sort of structural shift to private

18:46

vehicle ownership for a lot of cities,

18:49

uh and people. So so maybe a little

18:51

bit and maybe for a short term,

18:53

but over the longer stretch, I think that move

18:56

away from vehicle ownership is probably

18:58

going to continue. Greg, Jared has

19:00

a question for you. He wants to pick up

19:03

a cheap car on the Hurts liquidation

19:05

that we've all been expecting, given the fact

19:07

that they've filed for bankruptcy. Are

19:09

we going to see that? Yeah,

19:12

you know, and I've looked at this and I don't think

19:14

and I get this question a lot obviously since

19:16

Friday. Um, Look,

19:18

I don't think it affects the new vehicle market.

19:21

Right. These are off rental vehicles,

19:23

so maybe there's a little bit of an

19:25

impact and residual value in

19:27

the pre owned market. But I would

19:29

even argue that the pre

19:31

owned buyer. Uh

19:34

maybe there's a small subsegment

19:36

or a niche of that market that may be an off

19:38

rental buyer, but pre owned buyers

19:40

are probably going to gravitate

19:43

more to the off lease a

19:45

little bit higher quality, a little higher

19:47

technology, better equipped vehicles

19:50

than you know, sort of this rental

19:52

car uh dump. But I see

19:54

that, as you know, the lowest end

19:57

of the of the pre owned market where

19:59

buyers would be. So I don't see it causing

20:01

a ripple all the way up to the new vehicle

20:04

market. Kavin just give us

20:06

a sense of the relative health from a bounce seat

20:08

liquidity perspective of the big US

20:10

automakers right now. Yeah, liquidity

20:13

seems to be okay

20:15

in terms of how long

20:17

we think the downturn less and again very

20:20

different than oh eight oh nine, which

20:22

started as really a banking crisis

20:24

and credit markets were frozen.

20:26

You couldn't bet a mortgage, you couldn't get a car loan.

20:28

This is not that the automo makers

20:31

couldn't take down any you know, any

20:33

additional liquidity. So this isn't

20:35

really that And I think, you

20:37

know, we're looking at you know, the consensus

20:39

for May is already

20:42

back to a ten, which is funny

20:44

almost to say, but from you know, in eight

20:46

six to a ten in a month, if that's

20:48

the beginning of the trend of

20:51

recovery, uh, it would

20:53

seem to say that the worst is behind. So

20:56

if this is the inflection point

20:59

which was April, you know, then I would

21:01

say that that there should be no issues

21:04

going forward in terms of liquidity on the balance

21:06

sheet for for the large automakers.

21:09

Kevin, thanks so much for joining us. We appreciate

21:11

that update on the auto industry. Kevin Tynan,

21:13

He's the senior auto's analyst for Bloomberg

21:16

Intelligence. He's been covering the auto industry for decades

21:18

at least. It's just some anecdotal evidence. I was uh

21:21

meeting with a buddy mine last weekend who manages

21:23

an auto dealership, and he kind of confirmed, uh,

21:25

what Kevin was saying that kind of that March April

21:27

time frame was the trough there because they weren't able

21:30

to even have anybody into their dealership. Now they're booking

21:32

appointments. Uh, and and these

21:35

said sales are running about of

21:38

normal, which was a big improvement

21:40

from that March April time frame, So hoping

21:43

that can continue. There is some pent up demand out

21:45

there. He was saying, people

21:48

were buying cars, they are leasing

21:50

cars, uh, just at obviously reduced

21:52

rape. But in terms of the trough, it

21:54

seems to have been hit in March and April. So you

21:56

know, if that is in fact the case, maybe the auto

21:58

industry had kind of weather

22:01

the storm here and may do a little bit better than say,

22:03

uh, you know, some of the cruise lines or

22:05

some of the airlines of some of the other consumer facing businesses

22:09

that likely will have to deal with a

22:11

longer rebound than maybe

22:13

some other industries. Well,

22:18

do you do sports gambling? I do

22:20

not. Okay, that doesn't surprise

22:22

me. Evidently the people who do a sports

22:25

gambling have migrated

22:27

over to the stock market, and

22:29

we've heard this reported increasingly. There

22:31

was actually a great story looking at that

22:33

in the Financial Times with some data

22:35

about brokerage accounts and what we're seeing,

22:37

which really raises a question about

22:40

the sentiment in the retail sector.

22:42

Sure, the betters, but also mom

22:44

and pop investors who are looking at the wild

22:46

swings and wondering what to make of it.

22:49

Joining us now, someone with a front row seat

22:51

to that sentiment, Julia carl Carlson,

22:54

founder and chief executive officer of Financial

22:56

Freedom Wealth Management Group, joining

22:58

us from Newport, Oregon. Julia, we're

23:00

so glad to have you on the show. Really important

23:02

to get a sense of the retail component,

23:05

especially since a lot of people are saying that this

23:07

aspect of the market is accounting

23:09

for a greater proportion of the sentiment

23:11

right now than others. Can you give us

23:13

a sense of the retail client

23:16

that you deal with and where their mind

23:18

is at right now. Yeah,

23:20

thanks for having me, Lisa and Paul. You

23:23

know clients what I am feeling are

23:25

calmer now. And I

23:27

think this definitely is perspective

23:30

on where you are at in the country. We

23:32

are in organ it's rule and

23:34

I think given the magnitude of the rally

23:37

that's happened off of the March twenty three

23:39

lows, clients are actually

23:42

pleasantly surprised looking at

23:44

their account values. And

23:46

I think some of the some of our clients

23:48

that chose not to look

23:51

back in March and we're you

23:53

know, either fearful or just saying

23:55

I'm gonna just not watch. When

23:58

we say encourage them to go in and

24:00

look, it's really not that bad. They

24:02

do look and they're like, wow, I am

24:05

surprised. So we

24:08

are seeing Um. I would

24:10

say the best word for it is a sense of calmness

24:13

out there. It's interesting enjoy

24:15

a sense of calmness here in the financial markets

24:17

with Lee, Lise and I often comment that you

24:20

know a little bit of surprise in how

24:22

the market has rebounded off of the bottom

24:24

um given some of the dire economic news

24:26

that we get in terms of jobless claims and GDP

24:29

princes and so on and so forth. Has your

24:31

clients and are they were

24:33

they on kind of the risk curve here. As

24:35

you talk to them, I will are they willing to take take

24:37

on a little bit more risk, maybe shift from

24:39

bonds into equities, or maybe get a little bit

24:42

more further out on the risk curve for

24:44

some of their investments. Well,

24:47

I don't know if we I would say adding risk

24:49

at this point, but we definitely when the market

24:51

was um low, we were rebalancing,

24:54

and so they were they and

24:57

putting into positions where they were

24:59

putting them the position to capture

25:02

more of the upside as it recovered.

25:04

And so I would say, no, we're not adding risk

25:07

because most of our clients are

25:09

in retirement. They want they've

25:11

built their wells, they want that more

25:14

moderate portfolio that

25:16

aren't going to be, you know, subject to

25:18

these wild swings. And

25:21

although we do feel very

25:23

confident in the long term opportunity and equities

25:26

that that those remain attractive, especially

25:30

compared to the alternative like cash or

25:32

fixed income, we're not we're not

25:34

necessarily willing to say let's

25:36

add risk at this point because most

25:38

likely there may be a pullback

25:40

here in the shorter term. I wonder if sixty

25:43

forty still works given how low bond

25:45

fields are Are you still recommending that

25:48

kind of allocation to bonds as

25:50

a hedge. Well,

25:54

I would say yes, we are in line in alignment

25:57

with a sixty forty, although we don't

25:59

expect a lot from that forty

26:02

moving forward. It's more for that stability

26:05

and peace of mind part

26:07

of the portfolio. So

26:10

joy we saw bank Rate came

26:12

out with a study recently that about

26:15

of working or recently unemployed adults

26:17

with retirement savings have either tapped

26:19

into or planned to tap into the retirement

26:21

funds as an immediate source of income

26:24

because of the pandemic. Have you seen

26:26

that from your client base? You

26:29

know, we haven't. When I read that statistic,

26:31

I was wondering, what was the statistic

26:33

before all this happened, and

26:36

but it sounds like it's it's in regards

26:38

to you know, the people

26:40

that have lost their jobs or have been

26:43

um on unemployment. I

26:45

mean, for the most part, even our clients

26:47

that are still working, they're spending

26:49

less. And our clients that

26:51

are in retirement are actually

26:54

stopping their r m d s because

26:56

they can, and

26:58

they are reducing that monthly income

27:00

just because they're not traveling. They're not

27:03

out, uh, spending the money that

27:05

they were, you know, three or four short

27:07

months ago. Just

27:09

looking forward, What are you looking for

27:12

in order to advise your clients perhaps

27:14

to take a little risk off the table and

27:17

temper their expectations for the year. Well,

27:22

I think that the amount of stimulus

27:24

that's come into not only

27:27

now in the US, but worldwide. You

27:29

know, I think that that is what we're seeing

27:32

in the in the stock market rallies and

27:35

I but we're also I think pricing

27:37

in that we are going

27:39

back to work, that we will get a vaccine. We're

27:42

pricing in all of these perfect scenarios

27:44

that um, you know,

27:46

there's going to be something that rocks about and

27:49

and comes in and and has a

27:51

pullback. So I we

27:54

always recommend that you

27:56

stay invested per your risk

27:58

profile, per your or um

28:01

financial objective, and

28:03

wouldn't necessarily say let's add

28:06

risk um because there

28:08

is still uncertainty and how

28:10

this will all play out. Julia,

28:12

thanks so much for joining us. We appreciate your perspective.

28:15

Julia Carlson, founder and CEO

28:17

Financial Freedom Wealth Management,

28:20

located in a beautiful Newport, Oregon,

28:22

right on the coast. They're beautiful

28:24

part of the country. Kind of saying, stay the course

28:27

here. Um, you know, the

28:29

rebound has been pronounced

28:31

coming off of that initial sell off, but the joy

28:33

was suggesting, you know, stay the course. There's certainly

28:36

could be some more volatility, but certainly

28:39

stay invested. Thanks

28:41

for listening to the Bloomberg P and L podcast. You

28:43

can subscribe and listen to interviews at Apple

28:45

Podcasts or whatever podcast platform you prefer.

28:48

Paul Sweeney, I'm on Twitter at pt Sweeney.

28:51

I'm Lisa abram Woyds. I'm on Twitter at Lisa

28:53

A. Bramwoits one before the podcast, you

28:55

can always catch us worldwide. I'm Bloomberg

28:57

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