CPI Data Supports Bonds as Rate-Hike Bets Wane

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Earning growth has actually been too strong. We've got with his Michael Ball, Bloomberg News macro strategist. He's got a great background. He was at the New York Fed during the crisis. That was 2006 to 2013 is when he was there. So I think it's fair to say he's seen some stuff. He was a consultant. He was a macro analyst advising institutional clients. He was doing some trading. And now we get him here at Bloomberg. Welcome. Good to have you. Thanks for having me, guys. Good to be on the show. So I want to start with this idea that earnings growth has actually been too good. Like, why is that at that time? Yeah, again, it's what is the next catalyst for the lake higher. Right? We've been pinned at the SPX. We've seen a healthy rotation within that as July really saw a lot of the prior AI winners come off. And then the earnings picks are just improved throughout July. And now we have that 20 to 30% change in how much we're seeing forward EPS growth. Now we can't get too much more given the macro backdrop, meaning like, where are we going to lean again on for leadership? Is it going to go back to AI? Or is it going to be continuing breadth of earnings improving? And the actual economic growth story, although very strong given the uncertainty we're constantly dealing with with tariffs, with the war, with the general state of the consumer, there's not too much more we can kind of squeeze out. And when I go through all the earnings calls, it's really this margin expansion story because they've been able to hold pricing power. And now you're asking yourself, like, what's the next driver for things? So it's not like a bad thing. I'm not trying to say you should be getting out of stocks. But if we want to get to the next lake higher, let's say 8,000 on the SPX, it's like, how do we get that extra, you know, 5, 10% now earnings growth into the year end? And that's the question. We'll get the GDP margin come out this week and say, that's what we're going to see. Yeah, I mean, this is it. This is the argument, don't the consumer has to basically now it can't just be AI cat-ex. Now it has to be abroad. The earning story did show the consumers there. The data was better for Q2. We saw that in the GDP. We're going to get retail sales tomorrow. That's expected to be a little weaker. But overall, the consumer is not as bad. Now you got B of A saying it's a C economy, not a K economy anymore because they've seen strength in both the bottom and top. So this is this real? Is this tangible? Is it going to equate to the earnings? We just talked about that. Got best in says that too. He doesn't like the idea of the K. Well, sorry, you know, like pick your letter here. But Rebecca Humc has talked about it. She said the K is still intact, but the lower rung is actually maybe outspending or doing more spending than the upper rung. But it's still there. Maybe the gap isn't as big as it used to be. Having said that, earnings are important in terms of economic growth though, right? If we think about. So what does it mean? A normal correction perhaps? Like, where are people? We can tread water. I get your point. I think what I'm a little worried about, and just put this in the grander context, post July FOMC, we had kind of a grab for upside. Basically, we also had that shake out of what was going on in a lot of the AI lagers as we saw CID had come in, stabilize the momentum trade. Basically, we put it bottom in on the AI winners. Those guys have obviously done quite a lot of work. Wait, was that thing with a situation lower in this? Was that considered as a stabilizer to the overall AI trade? Yes. I mean, if you look at momentum, which is basically the socks and eggs or the all the the AI lagers in July, they all sort of bottomed around the same day. Now, obviously, we also had the July FOMC, which was more dovish, give sort of a boost to sort of financial conditions, rates sort of stabilized, oil is being stable. Everything basically flatlined and equities have rallied, but we were up 10% in the NASDAQ. Since then, call spreads, call skew, everything you see for grab for upside is all kind of at very high percentiles now, which means that people now are basically bold up again. So again, to go higher now, we need a new catalyst. What is it? I don't know. We're speaking with Michael Ball, macro strategist for Bloomberg News. He's trying to see here in the Bloomberg Interactive Brokers studio. So what does all this mean ahead of Nvidia earnings at the end of the month? Because if you think about the catalyst that I think about it in August, it's like, okay, yeah, we're getting a little bit of economic data ahead of a September Fed meeting, but really it's Jackson Hall is the next big event where we're going to hear Fed Chair Kevin Worsh communicate with us. The other big event is Nvidia. 100%. And I think we're getting better at predicting Nvidia because at this point, we basically have all their customers telling us what they've done. We have TSMC, who they're a customer of, I mean, ASMR, all the kind of top-top guys telling us what they've already done. So there's better clarity as we've come to understand sort of the beast that is Nvidia. Now interestingly enough, it historically does quite well into its earnings and it has done quite well. We're back at 220 on the stock price. That's sort of where the high is. 225 I think was the high prior to the July pullback. So I'm not actually expecting too much disruption. I don't know what the exact implied wall for the earning release is, but let's assume it's probably come off a little. But to your point, the Jackson Hall stuff is probably the bigger picture because we need stabilization in the rates market. We saw the long end kind of come unhinged as Warscape, his FOMC presser in the July and everyone got worried because he wasn't really committing to any actions and wasn't really even speaking words that made sense. Like I said, you were at the New York Fed from 2006 to 2013. So you understand the Fed and you spend a lot of time observing Fed communicators after that I assume. Do you think he learned lessons in communicating from that press conference? I think Kevin's been around a long time. He would have learned that already. I think he's got a game plan that made me the markets aren't really hip to yet. This feels like a strategy. Yeah. It's coordinated with bests it in some ways and it certainly has a deeper feeling where he does want to adhere some control back to the market, reduce the footprint of the Fed, which is admirable in a lot of ways because financial repressions are real problem. And that's how bubbles are created. We have the boom bus cycles that we've had in the past. But like he's yet to clarify that. And I think these task force are part of that. Like we're talking about a nine month to one year sort of clarity. In the meantime, he's basically saying, I'm going to let markets do the work for me in tight and financial conditions if they think that's appropriate. The long end just said, okay, we'll pick up your job right now. And that's why we had the tantrum sort of right after that FOMC press in July. Interesting. We're going to have Dan Ives on in the four o'clock hour and talk about what he's up to. But I thought it was interesting to send video story where they are signing up six financial powerhouses and attempt to bring more outside capital into the space and reassure investors. I don't know my read that like how am I supposed to read that? How our market watchers reading that? Because to me it says we're trying to be like calm down calm down. We're all these people who are willing to play with us financially. Yeah, I mean, again, I've been speaking to this all day. Obviously, it's been 24 hours since I came out. It's an interesting concept because we are well aware of the physical restraints, whether it's electricity, whether it's even labor, electricians, whether it's the GPUs. Now we have this financial constraint where we're trying to push a lot of capital through a tiny straw that needs to be a giant pipeline because the CapEx story every quarter gets bigger and bigger and momentum is growing and we have no end in cypher capacity to man. So this is part of that. Like we want to grow the pie responsibly and it can't all just be cash flow recycled back to a few people like Nvidia who are really at the top of the food chain there. They need to figure out how to get the capital back in without looking too circular. So again, the devil will be in the detail. I'm still not really sure either, so I heard your hesitation. I'm with you there. But I think overall, this is going to be something where you'll see a better financing option. And then when we got, like we looked at CoreWeave today, we had the next day, we had the the Neoclouds today. Yeah. They were saying the backlogs are looking good. They can kind of collateralize that into securities and get a better sense and a lower cost. The best thing out of CoreWeave today was that they're actual like financing costs were coming down notably and obviously their backlogs are growing. So that alleviates some of this debt problem because that was obviously the big thing with Oracle and CoreWeave going into sort of the sell-offs we see not only in July, but prior to that as well. All I would say is backlogs, great. But what if people cancel orders, right? Right. Like there is always that and people are starting to talk about power on data centers and multiple contracts. And there's also reluctance to lock in longer term contracts because the price is keep going up. Okay. So you don't want to, you can actually hurt your future earnings growth because we don't know exactly where the demand goes. It's so inelastic right now. All right. We got to run. Michael Ball of Bloomberg News, macro strategist joining us right here in studios. Stay with us more from Bloomberg Business Week Daily coming up after this. At Radio Lab, we love nothing more than nerding out about science, neuroscience, chemistry. But we do also like to get into other kinds of stories. 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He's also chairman of HyperLiquid Strategies. Welcome, welcome. - I know a thing or two about running a big bang too. - Yes, I bet he has some stories. Also with us, Elliot Lorenz, is founder and CEO of Edge Focus. They, as the company, reminds us, delivers technology, capital, and access to consumer credit. Welcome, welcome to both of you. Thank you for bringing this to us. I want to first get to the investment. And Elliot, let's talk about this investment. What does this equity investment specifically do for you? It has to do with operations, doesn't it? - It does. The important thing for us is being able to go into more asset classes and really invest in the long side of our partners. What we do, as you mentioned, Carol is provide capital as well as access, as well as several other things to the consumer lending market. We're ultimately looking to do. We stick in there. - A massive market, by the way. - Huge market, $200 million in secure consumer last year. We're trying to connect, at the end of the day, big investment firms, like a fortress, with really large consumer lending firms like a SOFI. - Yeah, Bob, come on in on this investment. There's a lot of noise around credit markets, around private credit right now, in particular. It's, you have a very diverse portfolio at Atlas Merchant Capital. Why make this investment right now? - You know, we have seen a real, unbelievable development in the credit markets since 2008, the great financial crisis. And I think so much of credit ended up on bank balance sheets prior to 2008, particularly outside the US, you know, the big banks in France, the big banks in the UK, all the credit was on the bank balance sheets. And we have seen a real development, some call it private credit. You know, it's edge focus, it's fortress. There is so much diversification. And I think that's why we have had such a long period, without a real blip in credit, it's become, you know, it's a real credit to the US capital markets. I think in terms of consumer credit, and I saw this, you know, through the lens of Barclays, I saw it very much through Barclay Card, which dominated the credit card, and consumer credit market in the UK, is again, it's much more diverse, it can be spread a lot. And I think we have originators of consumer credit, like SOFI, in edge focus. We have capital that likes to invest in consumer credit, like fortress. And I think one of the things that we can do together is we can find more originators, we can find more investors. And you know, when we look for an investment, you know, you wanna have someone that has a unique position in their market, that's edge focus. You wanna find someone that has strong leadership, that's elegant, and the team. You wanna find a business that's profitable, but most importantly for us, you wanna find a business that has both the willingness and ability to grow. And this can be a significant increase over the next three, four, five years with access to capital to grow this business. So it's unusual and financial services to look at investments where they can be multiples of where they are today. But what Elliot and the team have built can be multiples of this. It's a big market. >> You mentioned unique focus that Elliot has and his team, what is that unique focus, Elliot? Because the consumer credit market, a lot of players, a lot of folks in there, what is it that you guys are doing differently? And I'm curious then, like what you think they're doing differently, that's appealing. >> We do three things really well. We have access to a ton of data, our modeling approach, and then access to various other consumer lenders. From a data standpoint, hundreds of billions of data points in the US consumer across lots of platforms. We know really well at all times what the consumer is. >> Where's the data coming from? >> Two main sources. From platforms themselves who issue loans, as well as the credit bureaus. Lots of alternative data sources as well. From a modeling standpoint, we have PhD researchers where all they do every day is research how to model the consumer, see what the latest trends are, and then finally access. None of this matters unless you have really good access across lots of different platforms. >> Bobby. >> They have one more thing. They have incredible. >> This is someone who did, I see the due diligence. >> Let's get a lot of work on this. They have incredible discipline. And both the originators and the providers of capital love what they see here because of the discipline with their own capital, but also with their advice and counsel. So it's in underwriting, but also in advising. >> Does that mean only certain types of consumer credit that you're going to, like certain categories, certain types of, like tell us is it top tier? Like what are you going for? >> We look across the board, generally speaking, we can provide the most value in near prime and sub-prime credit. >> Near prime and sub-prime. >> Okay. >> So on that, Elliot, so fine happy money are two existing deals that our Bloomberg news team has reported on. Would you think about expanding to, I don't know, other places like by now pay later firms, for example? >> Absolutely, I think it's part of the reason for the investment. We want to grow beyond unsecured, which we're really big and right now. We're getting much bigger in auto. We want to be in point of sale medical. We want to be in home improvement. There's a ton of areas for us to grow into. >> What are you talking right now to any specific by now pay later firms or any of those firms in the spaces that you just mentioned right now? >> Many of them, absolutely. >> So we should expect deals to be-- >> Absolutely. >> Our LPs are asking for it as well. >> Okay. >> It's got really unique characters. >> Do you think that? >> We're actually going to have a pretty big announcement in about two weeks, so. >> I love this. >> So, all right, we got to come back. >> So, Mark, you date. >> But that's appealing to you, that part of the market. >> You know, Carol, as I said, it's about a unique position which they have. It's about strong leadership. It's about profitability, but most importantly, what we love is we're not just great investors, we're great operators. We love to roll up our sleeves, go out and visit clients, help them think about expansion. And when you look at a business that is this discipline and this profitable and this focus with the market out there and consumer credit and beyond consumer credit, it's just, this is exactly the kind of investment that gets us up in the morning. >> Well, so then, what are you going to do, Bob, for Elliott and his team? You know, you say to your, you guys like to roll up your sleeves, you're making this injection of capital, you're now a minority owner in the firm. That's just the beginning, right? >> Do you have an officer in the form? >> For most when Carol and Tim call, I come here to boomer. >> I like that. (laughing) >> And maybe, I mean, they're on Denver, so maybe you could go do some skiing this winter, too. >> It's out in the ether now, so. (laughing) But yeah, how in fault? Like it sounds like good old fashion. >> The Portus is a great partner. >> Yeah. >> There are other institutions that David, Shamus and I and Brian Saunders have been very close to over the years and other investments are in our career. And you know, David was with, with, with, with, with JC Flowers in my time at Barclays. We know a lot of people that would be interested in being capital providers, but until now, they have not heard about edge focus, and they have not heard about the business model. >> Who are the investors already involved with you? What other investors might be coming in? You just talk about the capital providers. Like who, who are we talking about? >> All the really large private credit firms you've probably heard of. Like I said, we've talked about Forchist, probably a bit, several others as well. >> Okay, some more. >> Yes. >> More. >> You know, I noticed in the press release that, that this is focused on hiring efforts, part of this injection of capital, partly focused on hiring efforts to, to build out a big part of your team. I'm curious about talent that your firm is, is targeting in a market that's really, really competitive. >> Incredibly competitive market. The biggest thing for us is hiring researchers, especially in the age of AI, making sure that we can invent folks who really understand the data, can use our tools effectively, efficiently. It's one of the most important things for us. Over two, there's our firm is technology based. >> What, what goes further? You're already very technology focused, AI focused. I'm curious, like, what's the next step, where do you go with all of this? >> New asset classes. We've done a lot of consumer insecure. We have a long way to go in subprime auto. We have a really long way to go in point of sale. And there's several other asset classes for us to get into. >> Bob, provide some context here, given your history in banking. And, you know, how, what Elliott's firm is doing in your view, is different from the way that a big bank can profile a consumer. >> I think it's a number of things, but I think first and foremost, the traditional banks prior to 2008, just a very, very different approach to managing what was in their portfolio. You can see the quarterly yearning, you can see a little bit of provision here and provision there, but it was not really asset or loan-specific. Even in Barclaycard, which was really consumer credit, an unscored consumer credit, it didn't have the depth of this. So it's the incredible discipline and the incredible technology that they've brought to understanding credits. So that the separation from kind of near prime to prime and subprime and things like that, the number of gradations on that continuum are incredible. And that's what they've done. So they're much, much better at managing access to credit and the return that comes from credit. And I think we've seen it broadly in the market, like since 2008, we haven't had a blip in credit. We've never had a cycle like this. And I don't think it's about to stop because there are so many more participants, so much more technology, artificial intelligence that's being applied to analyzing the risks associated with every single piece of credit. - Are you saying this time is different? - I am saying the cycle is very different. - Because of technology, because of AI, because of firms like Edge Focus, yeah. - Okay. Meaning that-- By the way, it doesn't mean there won't be mistakes. Right. People that don't use that technology. People that don't use edge focus. You know, there will still be mistakes, but I don't think they'll be systemic. They're not going to be across the piece. They're not going to be a crisis for the industry. They may be a crisis for an individual fund. So in other words, not just that the risk is spread, but if somebody who doesn't have the great oversight-- Right. There's still be mistakes made, Carol. Yeah. Absolutely. And I think what will separate edge focus is more and more people are going to want to have access to people like Elliot and his team so they can move into that echelon without trying to build it themselves. So let me ask you, they're always cycles. And I'm just curious how exposed edge focus is specifically to consumer credit. And how will you guys be protected if ultimately we see financial conditions tighten? We are things go through cycles. And then we start to see end user delinquencies increase significantly. I mean, these things happen. Absolutely. We're very long consumer credit. There's no question about it. At the end of the day, we need to-- But what do you do to mitigate risk? Like how? It's all about having that low and level selection where we can use all the data we have at the individual bar level to ultimately buy better portfolios of assets for investors. So you're just saying the data, the algorithms, the AI-- It's not going to be a big deal. And we also have to monitor really well, too. We've built out tons of proprietary internal platforms where we can watch this stuff in a real-time basis to understand exactly how the consumers are evolving. And so far, in terms of issues that have gotten you into trouble, like what percentage? I mean, look, there's no investments ever perfect, right? There's-- No, fair. We're about to-- No fair. --to 2022, 2023, for example. Inflation was really challenging on the consumer. There's no doubt. But you learn a lot from that. You add into your algorithms, you add into your models, and ultimately you create a much more sustainable, defensible platform. Well, Carol brings up a good point. And what I heard from you just now speaks to what it sounds like you have this-- what you think is a very solid real-time view of how consumers are doing. We try to figure that out each and every day on this program by looking at the data that we get from the Fed data that we get from different bureaus, alternative data, as well. How is the consumer doing? Yeah, we have a lot of really cool insight into how the consumer is doing. What I can tell you is that applications continue to increase across all the platforms we have. Applications are up year over year on the-- Is that a good thing? You know, we're actually seeing delinquencies stay very, very consistent. But consumers need more credit. They are. And we're actually seeing an increase overall in debt to income ratios across consumers. So although the consumer looks to be needing some more credit, and that's being shown in the applications, delinquencies are being pretty constant right now. Why is that? Public, when you look at that cycle or those data points-- Which part of it is the purpose? Where you said that debt to income is rising, and yet delinquencies are low. How do we explain that? You know, I think it's more discipline in the system. And more providers of capital. So I think the same thing I talked about since 2008 on the investor side or the bank side in terms of their portfolios, I think consumers are much more mature, much more sophisticated. So it's not surprising that you would see less of an increase in delinquencies than you would in the amount of outstanding credit. That would be unsurprising. So Bob, this is a minority investment in edge focus right now. Are you going to ask when it's going to be a majority? Yeah, that's exactly what I was going to ask. It's the beginning of something. Perfection is never. Is this the beginning of something? Or is this-- Absolutely the beginning of something. Is there going to be more money coming from you or do you think this is enough for them to go out, do their thing, and then there's an exit at the end? I think the beauty of being Atlas Merchant Capital is a couple of things. One is our investors are very, very patient. If we go to them in three or four or five years and say, this isn't going to be a normal cycle, we want to stay in this longer. We have a number of large sovereigns. The biggest issue they face every day is reinvestment, not exit. So we have that option in terms of the relationship we have with our investors. But I think most importantly, if there was need for more capital because the business is growing and valuations are going up, that's a good presentation for us. It doesn't mean we would go to majority. That would be unusual, and that might be in a distressed situation, which would be the furthest thing from our mind in this situation. But if we have opportunities down the line to add additional investment at higher valuations because the business is growing both in terms of products and in terms of customers and clients, that's fantastic. So we'd be remiss. We've only got about a minute or so left here, Bob. You have seen, I can't for anybody who's watched Wall Street and financial markets. You've seen a lot of different cycles. Good, bad, different. What do you make of this market cycle? Which is, there's angst, and yet we hit records, and had an excess. Well, I think two things, Carol, and I think on one side, and I see this, I've been very, very fortunate to be the Chair of the Advisory Board for the US Export Import Bank with John Jovanovic and the team. And they, for the first time in decades, are profitable. They are really driving performance with middle-market companies across the US. And what shocks me is how profitable they are. What shocks me is how excited they are at the tailwinds coming from this administration in terms of less regulation, more pro business. And so the CEOs of middle-market companies across the states are pretty excited. I think in terms of the cycle with AI that people are talking about, and I suspect that's the other piece that they're asking. It is. I think there'll be a correction. There'll always be a correction. Every technical innovation we've had from railroads, from electricity, from the internet will have a massive correction at some point. It doesn't feel like it's going to be tomorrow. But you know, with any technical revolution like this, there's going to be corrections. It's not going to be one. It doesn't feel like it's around the corner. But I can assure you there'll be a correction. I just can't assure you when it's going to be. I don't know. Everybody keeps talking about it. It's good till 2030. And then it's like a big question. No one's like-- No one's like-- Hope's not a strategy. That is so true. Don't move when you have more news. Please come back. We really enjoy this. And thank you for giving us this opportunity. Thanks very much. Bob Diamond, founding partner and CEO of Atlas Merchant Capital. Also, he's chairman of Hyper Liquid Strategies. Among many other things, also here, Elliott Lorenz, the co-founder and CEO of Edge Focus. Guys, thanks a lot. Thank you. Thank you. Hi, I'm Tom Keane, inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smarter every business day. I'm Paul Swini. We bring you complete coverage of stocks, bonds, commodities, even crypto, all the information you need to excel in the markets. And I'm Alexis Christopheros. Listen to us for essential conversations with the smartest names and economics, finance, investment, and international relations. That's the Bloomberg Surveillance Podcast. Subscribe today on Apple, Spotify, or anywhere you listen. Catch us live weekday afternoons from 2 to 5 Eastern. So we're wrapping up our editorial call this morning. We plan-- Just at the call. We plan the entire show. 10 a.m. OK. And then we're like-- And then what happens? A headline crosses the Bloomberg. Josh Kushner and Bob Eiger are going to buy the LA Lake or just a $12.5 billion immediately. Let's get Randall. We got to get Randall on the show. We got Ty. And here he is. He was stuck at home because everybody was bothering him. Well, it was originally going to be a work from home day. And then I was trying to inch my way into the office and it was like email, email, email. So I got here about the-- Did everybody see his shirt? It's a lakeers. I'm not a lakeers fan for the record. I'm a Kobe fan. But obviously, I think lakeers fans feeling different about today. OK. This is huge for a couple of reasons. One, I think, is because the lakeers just traded hands not so long ago. Two, the valuation, $12.5 billion. Where do we even start? Well, I think you started the valuation in the fact that this franchise sold for $10 billion last summer for it to add $2.5 billion in value is ridiculous. And so what that means across forts is there's no one who's going to want to pay for anything more than the lakeers. And we sort of saw that with the sea hawks. The sea hawks sold for $9.6 billion. And I think it was probably clear from an investor standpoint that some people were like, we're not going to buy the Seattle sea hawks for more than what the lakeers sold for. Now the lakeers are sold for $12.5 billion. It is a huge number. That's the appreciation. I mean, does it make sense? I mean, it's the lakeers. I mean, when you think about a franchise-- It's a plan to land, right? I guess so. There's only one, right? Exactly. Exactly. And I think that what is more telling is why it was sold, which is Mark Walter, who is, of course, under investigation by the Department of Justice for alleged loan fraud. And so with that in mind, I wonder from Joshua Kushner and Bob Iger, they were in Vegas trying to buy an expansion team there. Bob Iger told me earlier today that the little birdie told him, hey, you should look into whether Mark Walter would be willing to sell the lakeers. And of course, they had a private conversation. And this deal came together within the last three or four days. Unbelievable. How quickly? Was the bus family involved at all in this-- did they completely sell to-- So there is some remaining shares around, but they're no longer the majority owner of the lakeers. So Jeannie Bus is the controlling governor. She's still running the day-to-day operations. No decision has been made on whether Iger or Kushner will replace her and Iger told me that they're not ready to have any conversations about that just yet. I mean, these two guys, Josh Kushner and Bob Iger, they have a lot of money, but 12 and half billion dollars is a lot of money. I'm the deal get done. Yeah, like where's the money coming from right now? Who are you saying? Who are you saying? How much are they putting up? Do we know? We don't. I mean, Forbes has Bob Iger's estimated network between 600 to 700 million dollars. He's not on the Bloomberg billionaires index. Right. Who knows how much money Bob Iger actually has? And the same can be said for Joshua Kushner. And of course, there's also a drive eternal that is his private equity firm or his venture firm venture fund. There's a lot of money in sports and there's a lot of very rich people that we just can't track them all. So if it closed, that means the money is there. Now how it got there, we don't know. It happened so quickly. Do we know anything about whether or not it was being shopped at all? Like we don't know. No, not at all. I think whoever gave Bob Iger and Joshua Kushner the tip that they should look into the Lakers probably deserve some sort of vacation somewhere. Because if this hit the market, that is the main thing. If Mark Walter had put this on the market, you have to wonder, "Sportico valued the Cowboys and I believe $15 billion today." Imagine what the Lakers would sell for and the type of people who would raise their hand to buy that. Well then why wouldn't you put it on the market? If you are interested in selling, let's say someone comes to you. I'm going to say we should ask Mark Walter that question. Which is, you know, I wonder from Mark Walter's standpoint, did he think that this was the smartest thing to do? The easiest way for him to get cash at $2.5 billion estimated to go directly into his pockets, I could therefore pay some of these loans off. Don't know. It's a lot of money. Well you know, if you're selling a house, sometimes you just want the deal done quickly. You need the money. Whatever. But I'm trying to put myself in the house. Bob Iger was floating today on the call. Tell me about that because this seems like such a great fit. He said he loves surprises and he compared it to when the picks are in the marvel and some of those deals completed. And then of course he said that Joshua Kushner said that this was like buying the Mona Lisa and this is that a beach front property. This is all of those things. It's equivalent to one of them. You put the Lakers on Mount Rushmore in terms of sports properties that are out there. There are still even though these aren't public-traded entities. There are still regulatory issues that have to be solved here. There were reports that this duo or parts of this duo were looking at teams in other parts of the country owning, have ownership in other parts in other teams in the league. How does that work? So Joshua Kushner owns a piece of the Miami Heat. He previously owned a piece of the Memphis Grizzlies in order to buy the Miami, a piece of the Miami Heat. He sold his piece of the Memphis Grizzlies and now a similar thing will happen. So he'll sell that piece of the Miami Heat. They basically admitted to abandoning interest in Las Vegas. And if this deal gets approved by the NBA Board of Governors and I think that they could very well be the controlling and I think Bob Iger would probably be the alternate governor, probably by the end of the year. I know if you've got to franchise, you don't want to sell it. Is there anything though that this deal would make some owners say, "Well, maybe I need to think about." No, no. Selling? I think owners have their reasons for selling. And you have to wonder, with the NBA's new media deal, $76 billion media deal over 11 years is now the right time to sell. And I would tell you, I think the answer right now is no. Okay. Basically because of the fact that NBA expansion teams are coming. Those expansion fees are split amongst the owners. So if you have the opportunity to get a $300 or $400 million check, why wouldn't you? And now you have $300 million. Now you can sell and get another $3 billion, $4 billion, $5 billion or more. Money in sports. It's like unbelievable. It continues to grow out. So Bob Iger known as being the man who turned around Disney and was at the helm of Disney for so long. Josh Kushner, private equity, he's been in real estate, comes from a big real estate family. Probably cloth is a lie. Oh, I was going to say his brother is Jared Kushner. Really? The president's son and lawnmerry to Ivanka Trump. Is that relevant here? We'll see. We'll see. I think that it remains to be seen, but I don't know his direct involvement in the Trump administration. Josh Kushner has not said a lot. No, he's been very quiet. So what I anticipate what happened is that they will do a press conference and it'll be telling to see if it's Bob Iger and Josh Kushner or just Bob Iger speaking about this transaction. Is Bob going to buy any more sports teams? Do you say anything? He did not. He said Thrive is interested in more, but he did not say that he was going to be raising his income. All right, so stay tuned, stay tuned. Thank you so much. I know it's been a busy day. Love. The Lakers? My COVID-19 doesn't love. It's like, hey, renovations. Thank you all forever, man. Thank you. Thank you. Thank you, always Bloomberg News Senior Reporter, the co-host at the Bloomberg Business of Sports Podcast. Find it wherever you get your podcast. Also find it on the Bloomberg. I'm Paul Swini. I'm offering you complete coverage of stocks, bonds, commodities, even crypto, all the information you need to excel in the markets. And I'm Alexis Christopheres. Catch us live weekday afternoons from two to five Eastern. All right, everybody, TikTok. We've got about 20. Yeah, I can't do math. 27 minutes until we wrap up the trade on this. Is it less than that 18 minutes to go? You take a low-end weekend and basic math. I love this. I love this. I love this. It was good. It was kind of what I needed. All right, S&P 500 just up about 20 points. We heard Charlie's call it little change up about 208 points on the NASDAQ 100 up 7 tons of a percent. We're seeing a little bit of selling as we get closer to the end of trading today. We have a CPI print. We just want to get to our gas. Let's go there. Constance Hunter is here. She's chief economist and head of research at the Economist Intelligence Unit. She does macroeconomic and geopolitical forecasts. Among many other things, also economist enterprise now. They're keeping you busy over there. Keeping me busy. I'm happy to have you here. We got a lot of stuff going on. We do. And you have a lot of stuff to keep track of. We're going to start with the big picture stuff. We got the CPI report today. What was the term you used earlier today? What? Lamer team. Lamer team. I love that. Lamer team. Lamer team. Lamer team. Oh. The print. I thought it was team. I think it's because it solidifies what we saw in June. On the other hand, I can see why certain Fed presidents like Beth Hammack, she goes out to her district. She speaks to people and they all say, yeah, but prices aren't coming down. And as economists, of course, what we look at is, well, what is this current data say about where inflation is going to be three, six months from now? And that, all the indicators show that it's moderating. It's still sticky, but it's less sticky and it's softening where it needs to soften. So the Fed doesn't need to cut rates or raise rates. Yes. We're going to be raised rates. They can leave rates on hold. Yeah. And that's still a prudent policy. And I think what today's print provided, of course, that the August data continues along this trend. I think you're going to see Neil Kashkari move off being a dissenter. And I think you could even see Lori Logan move off being a dissenter because she's pointed to this combination of a strong economy and strong labor market, which of course we saw soften a little bit. But is it a strong labor market in terms of people who've left the workforce? Is it a strong labor? It is a very funky labor market because we've had an aging population leave the workforce. We've had people leave the country, right? And then we've had people who are here get their temporary status revoked so they can't work. So the Haitians and Syrians had their temporary status revoked. So that'll show up in the August report. So we have a smaller labor supply. It feels like buybacks with a stock. You know, when a company does buybacks and they reduce the number of shares out there and love the earnings per share, it looks better. It does feel really funky in terms of the labor market. Yes. And that's why the fall in the unemployment rate can't be read as the signal is great. We have this really strong economy. On the other hand, if you're looking at a lower labor supply with the same level of demand, you could say, well, could that be inflationary? So I think it is a very unusual time. And there are so many rolling one-off hits to be accounted for whether we're talking about the government shutdown and how it's impacting the collection of rent prices and housing prices, whether we're talking about the supply shocks from the war, which, of course, wasn't in the July report. And we'll probably show up in the August report because we've had a resumption of tensions. Maybe this is my own problem just because it sort of reveals my own anxieties about the future. But we're talking about a lot of demographic shifts in a very short period of time that are, cause us to do a reset. And we talked about this last week a little bit with the jobs report. But if we have a smaller or shrinking labor force, what does that mean for when we all get older and we need a labor force to support us with social security? Like there are some real fundamental questions about what this smaller labor force means in an environment where immigration was making up for the fact that none of us are having kids anymore. So in a pay-go system like that. the one we have, that is a problem, right? And in a pay-go system, by the way, that only invests in US treasuries. So if we cast ourselves back to when George W. Bush was president, and he wanted to change social security and have it begin to look a little bit like Australia's superannuation fund in terms of the way it invests, there was a huge amount of pushback, oh, you're going to be giving money to Wall Street to do these investments. And so it was never enacted. But had we changed our asset allocation, right? Along with increasing the retirement age, we wouldn't be facing the solvency problems that I think you're alluding to with your question about that map and what it would mean. Yeah, it's spent some more time with me, Carol. I'll make you anxious about these. I know you. The thing is, you know, constants, are there not smart economists in the government that know when you do things like limit immigration? I mean, you need a healthy immigration system, right? In terms of growth. I understand about illegal versus legal immigration. And most people would say, we've got to have a system in place so that it happens well. But I do wonder if it's getting worse than that, where people don't even want to come to the country. And then what that means for growth going forward. I mean, I certainly think if you look around the world, our image is not what it was. No. And people are scared to come because they hear these horror stories. And what I find interesting is when I travel for my job and I go to places and people say, oh, I went to the US and it wasn't as bad as it shows up in the news. Because you know, if it bleeds, it leads, right? With that said, I think there is a populist, undercurrent, globally, so not just in the US, right? This is not just the US where this is the issue. And I think, look, if we look at social media, if we look at deregulation of media, we have a lot of misinformation out there. We have a, you know, what drives clicks and hits is not, oh, this fabulous immigrant camp family came to the United States and look, they put like their kids through college now and their business they own is doing well. I mean, that hits the news in a different way than sensationalist reports that drive eyeballs. And so on social media, I think we're driving populism. Okay. So you think, so it's, I agree with you, but that becomes more than just a rational cell, right? You have to, people's were, are humans are hardwired to look for danger, to look for difficulty. And so when you have a storyline that says, well, here's the, here's the danger, here's the difficulty, you can sell what looks like a quick fix that may have longer term negative implications. As you're anxiety now. (laughing) - I'm sorry, I'm sorry, we're out of time. - But all of us are communicators, right? This is, we are perfect communicators. We use that information to communicate. And the trick is for all of us that are in this realm is to communicate facts in a compelling way. So it lands with a broader audience. - Well, thank you. As you communicate really, really well. - We really appreciate it. - Thank you. - Concentre. Steve Economist had a research at the Economist Intelligence Unit joining us right here in studio. This is the Bloomberg Business Week Daily podcast. Available on Apple, Spotify, and anywhere else you get your podcasts. Listen, live weekday afternoons from two to five PM Eastern on Bloomberg.com, the iHeartRadio app, tune in and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal. (upbeat music) - Hi, I'm Tom Keane, inviting you to join me for the Bloomberg Surveillance Podcast. - I'm Paul Swini. - And I'm Alexis Christopheres. - That's the Bloomberg Surveillance Podcast. Subscribe today on Apple, Spotify, or anywhere you listen.