Trump Restarts Iran Blockade as US Plans 20% Hormuz Charge

25:38He is the chairman, president, and CEO of MassMutual. They provide life insurance, disability, income insurance, long-term care insurance, annuities. They do so much. And he joins us here, as we said, in studio. How are you? I'm good. Nice to be here. Thank you for having me. It's nice to have you here. We're getting ready for earnings. C-suite, always important to us in terms of what we're seeing. And I do want to start macro. How do you see it? There's so much coming at investors, citizens, voters, businesses, executives. How do you see the macro? Look, what we're seeing is the economy's strong.

26:10People are not thrilled about the inflation. And obviously, that's news of the day. Waller's speech yesterday, you're seeing a little backup in rates here. And then the oil issue isn't going to help any of that. but in general economy's good we see our customers are they're nervous but they're they're making money they're saving money they're putting it aside they're thinking about the future so you know cautiously optimistic i guess i'm like i really like that carol went with the history of the company because the point is is that your company has been through so many different cycles and and you know thinking about different types of quote-unquote industrial revolutions right and that's one we're supposedly living through right now when it comes to the ai revolution do you You think we are?

26:50Oh, yeah. You do? This is a big one. I mean, we can argue about electricity and the railroads and the internet and radio and TV. But this is in that genre of things, I think. Does it change the way that you think about asset allocation and making sure that you have the money for your clients when they need it? It doesn't really. Like, the tried and true would be diversified. You know, equities for upside. Bonds for defense. That's, you know, tried and true. But which equities? Which bonds? That's the question. Here's what's interesting. For the things we do, we're mostly bonds because that's kind of what we do.

27:25You want to make sure that you're diversified more than anything. It's really hard to see curveballs. And one of the ways you stay around for 175 years is you just don't blow up. So we're very focused on that blowing up. Well, and as watchers of the market, we do have blowups, right, from time to time. Certainly as an insurance company, you guys have to think about it, right, because you have to be there for your policyholders. One of the things I wanted to ask you about, U.S. Life Insurance held about$807 billion of the most illiquid kind of fixed income instruments last year. So that raised some concerns about overall liquidity and concentration of assets in the sector.

27:58Any exposure or, and if not, or if so, but what's your view on this? Yeah, so we have very long-term liabilities and we monetize the liquidity premiums for our policyholders. You take a half a percent and accumulate it over a lifetime, it's a lot of money. So if you have the right liability structure, we are the right folks to be holding illiquid assets. And we've been doing it since 1851. I'm pretty sure there were not public markets in 1851. So when we started taking in premiums, we were funding at the time, you know, private assets. And we still have about half of our balance sheet in private assets at any time today.

28:30And that's how we add extra value for our policy. So Roger, what do you make around the conversation around private assets? I mean, go back a few years, and Tim and I know this from being at Milken and stuff, that's all anybody ever talked about. And then it just feels like in the last couple of years, the tone has changed as we've moved from zero interest rates to higher interest rate environments that make some of these investments, just I'm speaking generally, maybe not as lucrative or as interesting. So the narrative has changed. But as you said, you've been doing this for a long time. So what's the lesson?

29:04Is it that a market gets so big that there can be some sloppiness in it? Look, anytime lots of money flows into any market, you're going to see value get squeezed and you have the potential for things to get, quote unquote, sloppy. You know, if you buy something private, our view is you need to be prepared to hold it until it matures, right? Hold it through the cycle. So, look, I started so long ago, we used to call them private placements. Yeah. That does not sound particularly exciting. So new names were invented. Yeah. But we got drilled into our heads. You buy it, you own it, and you keep it.

29:36And that means you need to understand your underwriting. Which is something we've talked about, that maybe people aren't really reading the fine print and understanding that these are not things that are liquid, and you have to hold them for a long time. I think a lot of the headlines are as much about people maybe not being sure of what they bought and having second thoughts. You've seen a pretty good institutional bid for these assets as the retail bid has moved back here. I want to talk about some other products and just get the demand sort of side from you. Fixed annuities right now. What's the demand environment that you're seeing right now?

30:05Demand is strong. I mean, people are hearing the headlines about, boy, the equity markets are fully valued and look at the potential for kind of volatility. And if you're later in your career and you remember what happened back in 2000, you remember 2008, you're like, huh, I'm not sure I want to have so much equity exposure. So there are different types of annuities. There's lifetime income annuity, which pays you as long as you live every month. Very valuable part of an asset allocation. Think about Social Security and a lifetime income annuity always going to be there. Then we've got annuities that provide downside protection.

30:34So you get some participation on the upside of equity markets, but you trade some of it away for that downside protection. It's effectively an option strategy embedded in an insurance contract. And then you have relatively simple fixed annuities, which I think maybe you were kind of talking about. For customers, these are fabulous products. They de-risk and they let you adjust your risk exposure. Whether they're a good issue for the insurance company, we'll see, right? I mean, we've been a little concerned about pricing in that market, so we backed off. We remember what happened in the 2000s when people put in big guarantees, and good for customers, not so good for insurers.

31:10And as a mutual company, we are the company, right? So if we write an annuity, we need to think we're going to earn reasonable capital for our policyholders, because most of our policyholders who get those earnings are what we call participating policyholders. They have a whole life policy, and we want that policy to perform. We paid the best dividend in our industry for 20 years in a row. We want to make sure we keep doing that. And so we love our annuity business, but we're a little cautious on pricing right now. So let's talk about the dividend. What are the key factors driving strong growth in your dividend policy holders?

31:40I think you guys have a targeted, let me just look at my notes, a record$2.9 billion in 2026. Yeah. It's kind of unbelievable. So we started paying, we're talking$1 ,851. It's kind of amazing. 31 people pulled$100 ,000. We had the greatest salesman ever to raise$100 ,000 back then. The$100 ,000 is now$34 billion. So we've grown at a 7.6 CAGR for 175 years. So whenever in doubt, take out your calculator and run CAGRs. Compounding at 7.5 for a long time is magical. So it's about twice as fast. I would take that every year. Sorry. Well, and the beauty of the insurance piece is it does create that dependability.

32:14So what is this driven by? Well, look, rates coming back up has helped us a little bit. Strong returns of our non-participating businesses has helped us. We've had good realizations on things like private equity. But we run a very diversified book to try to make that consistent over time. I'm just getting a question from a customer watching right now. How do you get customers that are under 30 years old and go after that next demographic? Yeah. Well, look, it starts with our advisors. Because in a world where you have instant, instant information access with AI and everything, at the end of the day, talking to a person about what matters to you.

32:50Because what we do is a very human thing. thinking about what happens when I'm gone. By definition, we're a multi-generational company. If you don't think about kids and grandkids, it just doesn't make any sense. So we started with making sure we've got a vibrant group of advisors. So we have over 6 ,000 advisors. We're much younger than the advisory industry overall. So that starts. Most people want to talk to somebody kind of like them. And then it's the old-fashioned things. You're starting to get serious about a relationship. Maybe you're thinking about having kids. And those are the basic things.

33:20And it's been that way since 1851. It's that way today in 2026. 30 seconds. AI. Are you playing with it? Enjoying it? Finding a return on investment? Yes. Revenue synergies? Yes, yes, yes. 75 % of our employees use AI every day. We're training our employees like crazy. I say to my employees, I know you're nervous, but you're not going to lose your job to AI. You might lose your job to someone who uses AI better than you. My joke is it's like an amazing Excel spreadsheet. If you learned how to use Excel early, it made you a better employee. Learn how to use AI, you'll be a better employee. So it's going to make us more efficient.

33:51It's going to let our advisors spend time with the actual people. And I think it's going to be game-changing. Did Millard Fillmore have a policy with you guys? He did not, unfortunately. But I wish he had. Listen, this was a delight. Come back sooner. Very nice to see you. Thanks so much. Great to see you. Enjoy the rest of the summer. Roger Crandall, Chairman, President, and CEO of MassMutual, joining us right here in studio. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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35:40You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF. This week on Leaders with me, Francine Lacqua. I speak to tennis legend Rafa Nadal about how he stayed competitive despite injury. I was able to enjoy the victories probably more than if I will not have this issue. One iconic match. In my mind was, I am almost dead.

36:21And whether he misses playing. I don't miss tennis because there was nothing else to offer. Listen and watch Leaders with me, Francine Lacqua, on Bloomberg Television or wherever you get your podcasts. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. The sudden death of U.S. Senator Lindsey Graham, South Carolina, sets up a succession drama in the deeply conservative state that risks throwing the race into chaos less than four months before the midterm elections.

36:59Yeah, it certainly does. President Trump said the late senator's sister, Darlene Graham-Nordone, should serve out his term for the South Carolina seat. If she replaces him, she would serve out the remainder of the term while the state holds a primary for a Republican candidate to replace him on the ballot. So certainly some jockeying there. Eric Wasson is Bloomberg News congressional reporter. He joins us from the Russell Rotunda up on Capitol Hill. Eric, good to have you with us. The senator was set to win this election pretty easily. We don't know what will happen over the next few months, But we know that whoever is appointed over the next few months will have to face, if he or she chooses, re-election come November.

37:42What is the Republican Party saying right now about who will run? Well, you know, we're expecting Henry McMaster, the Republican governor, to name Darlene Graham-Nordone as the interim senator. It's not yet clear if she will try to run for the seat, but we think it's unlikely at this point. It's more likely that she's there as a placeholder in order for the other heavyweights in the state to battle it out. Those heavyweights include Lieutenant Governor Pamela Evitt, who ran for governor unsuccessfully against Alan Wilson. They include members of the congressional delegation. We're hearing a lot of buzz about Russell Fry, one of the newer members of the South Carolina delegation.

38:20There's also businessman Mark Lynch, who ran against Lindsey Graham, got a respectable 29 percent in the Senate primary, who's already thrown his hat in the ring. And Ralph Norman, a stalwart member of the House Freedom Caucus, longtime Trump ally, told our colleague at Bloomer Government that he's called Trump and asked him for his endorsement. So a lot of people jockeying for this. You know, it's August 11th to be the latest that they can hold the primary. And we'll see how it plays out. Nancy Mace, sort of an erstwhile friend and enemy of the president, could also jump in. She tends to get a lot of media attention and could be a spoiler in this as well.

38:55I mean, in terms of then, you know, take us to the midterms, does it matter who is there? I mean, I have a bunch of family in South Carolina and you have a lot of people moving in from blue states, you know, into South Carolina, a lot of migration. But I'm just curious, does it really matter who goes up against a Republican candidate? I think, you know, Annie Andrews, a pediatrician who's criticized Graham, is running behind. It is a stalwart, you know, perhaps changing demographic. You know, having reported from the Carolinas, I can say that one of the challenges for the Democratic Party is motivating their base or motivating African-American voters to come out and help to equalize that Republican advantage at the polls.

39:34I think the bigger impact of Lindsey Graham leaving the Senate is on current policy that's going on now in Iran. The Iran war likely would not have happened without Lindsey Graham urging the president to do it. a stalwart ally of Israel, a stalwart ally of Ukraine, who had just announced the Russia sanctions bill. I thought perhaps we would see an announcement already that the Russia sanctions bill would get a vote, but there still seems to be some slow walking of that, with John Thune on the CNN network saying that he's hopeful but not guaranteeing a vote. So, you know, there's a lot of moving parts here, but he certainly was a key part of the Republican defense hawk establishment.

40:09And we're getting news that the Republicans are going to try to move this three hundred fifty billion dollar plus up to the military budget graham would have been key on that and it's hard uh... it's gonna be hard road in the senate to get that passed without who are the defense hawks that remain you know we have people like uh... tom cotton who's certainly a leading hawk with people like roger wicker who's the head of the armed services committee but these are not people that this intense personal relationship with donald trump uh... you know trump talking to graham in the hours and maybe even minutes before he passed away they were very very close despite uh...

40:39Graham at one point being a presidential opponent and harsh critic of the president, he had certainly ingratiated himself and made himself a person of extreme influence inside the White House. So who Eric ultimately feels it the most? Is it, you know, I'm thinking about his role in the Senate, the role among his Republican peers, you know, his role with President Trump. I mean, obviously another Republican can come in, but they're not going to be Lindsey Graham. Talk to us about how important he was. You mentioned some of the measures that certainly he has backed, that he has been influential in.

41:12But I'm just curious, in his absence, what does it mean for this Senate, for this president? You know, it's really, I think my colleague, Catherine Lucy, had a story over the weekend, very smart piece about Ukraine. He's a key ally for Ukraine to the extent that Trump's initial instinct was to cut Ukraine loose, cut a deal Vladimir Putin. Graham was one of the main people are really saying that's a stupid idea. Let's do more sanctions. Let's force at least an honorable settlement on the part of Ukraine. You know, Israel as well. Israel's bipartisan support, longtime bipartisan support, tends to be eroding in the aftermath of the Gaza War and some of the reports of how the Israeli military conducted itself there.

41:52And Graham certainly backing that and pushing back against the idea of America first. You know, he was this Reagan-style, you know, interventionist. and also someone who historically did support foreign aid, something that the Elon Musk contingent of the party slashed and something that Graham was supportive of. He was the top appropriator for the State Department, and there was some evidence he was willing to back, at least on humanitarian side, a continuation of U.S. aid on health and food matters. Eric, a lot of discussion over the last 36 hours, about 24 hours, I guess, about the political evolution of Senator Lindsey Graham and the difference in rhetoric that he had in 2015-2016 about President Trump to ultimately becoming one of the president's staunchest allies.

42:39As you mentioned, he certainly had the president's ear. Who has the president's ear now? You know, certainly Speaker Johnson's very close to the president. You know, president's been very critical of Leader Thune in recent weeks, demanding repeatedly that didn't abolish the filibuster, which there's no real appetite to do here in the Senate. So I certainly think the House leadership is closer to the president at this point. They're certainly trying to advance his agenda. But there's that problem in the Senate. You really can't do a lot, you know, like the Save America Act, this voter ID bill. Without chaining the filibuster, you can't get that past Democrats.

43:14So I think right now Trump is probably feeling a lot closer to House leadership. But, you know, they do need to get things through the Senate to get them into law. Yeah, it's, you know, it's interesting. I am curious, too, as you look at the midterms, I mean, the months are ticking down. I know it's only July, but it just feels like we are racing a little bit towards the midterms. Is it a given that I think there's an assumption that the voters are frustrated and feeling squeezed, whether it's inflation and other things, that the Democrats are going to pick up a lot of seats? You are someone who has watched a lot of congressional compositions and races and midterms and so on.

43:58Nothing's certain until it happens, correct? Correct. So I think Democrats have been the favorite to win the House. The Republicans have been the favorite to keep the Senate. But those projections are in flux. We're seeing, you know, the rise of a Democratic Socialist wing of the party. I was just looking at a Michigan House race where, you know, if the left wing candidate gets the nomination, I don't see how the Democrats would flip that seat. You know, there are certain elements that's going on with internal party dynamics that could jeopardize that calculus. The Senate, you know, is a tougher road.

44:30You know, my sources believe that having Plattner out of the race opens the possibility of getting Susan Collins out of there with Plattner having been a very damaged candidate. But we'll have to see who they choose. In other races I'm following, like North Carolina, we're seeing a tightening today of the Roy Cooper-Michael Watley race, where Cooper had seemed to be walking away with it, but both sides acknowledging it's getting tighter and tighter. And that's even before Republicans unleash a torrent of money in that race. So, you know, the Senate picture is still likely Republican, but there's a chance Democrats could run the table and take the Senate as well with a tidy majority.

45:06There's a there are a lot of if we I don't want to call it. Well, I guess I can't call it infighting both in the Democratic Party and the Republican Party. What would you say are the issues in the Republican Party right now that are causing the most friction? Well, certainly the Save America Act, which is this push led by Mike Lee in the Senate to condition all congressional business on an attempt to pass this bill that doesn't have the votes, is stalling the agenda. And it's causing a lot of problems. You know, we saw this over the weekend with a bipartisan housing bill, the biggest housing bill in decades, not being signed by the president, but being allowed to come into law.

45:41A lot of Republicans from French Hill, the head of the Financial Services Committee in the House, and Tim Scott, the head of the banking committee in the Senate, wanted to see the president sign this, make a big deal about a push to reduce the cost of housing, to stop private equity from buying up single-family homes, to stop the environmental red tape that's causing a lack of building in the sector. And there was no fanfare. There was really no, not only was there no fanfare, but the president called it a big yawn. This is stepping on the message. They want the president to go out there and promote what they're calling the Working Families Tax Cut Act, which used to be called the Big Beautiful Bill.

46:16They want him to go out there and promote other Republican ideas to potentially tackle affordability. But he's not doing that. He's picking a very specific battle about voter ID that's just not going to make it through Congress. Hey, Eric, before we go, you know, we are talking once again a lot about the war between the United States and Iran and obviously problems in the Strait of Hormuz again. We've seen oil prices, WTI and Brent kicking up and rallying again. How much, I'm just curious what you're hearing up on the Hill today, that members of Congress, Republicans in particular, are just kind of fed up with this and want to just be done with?

46:58You know, to be honest, a lot of Republicans really are towing the line when I talk to them that we cannot allow Iran to have a nuclear weapon. But I do feel like there is a general sense that if gas prices, I definitely have heard those gas prices are$4 in the fall, though the midterms will go very, very badly. And the gas prices have dropped down from that$4 level in most places, but they're at risk of going up again as we see renewed hostility. So I think if we see those energy prices getting to climb and other energy utility prices are affected as well by natural gas imports, you know, you're going to see Republicans sort of pushing for for more of an end to the conflict, I think.

47:36Yeah, that certainly makes sense. Eric Watson, thank you so much. Incredible. Eric Watson, Bloomberg News congressional reporter up there in the Russell Rotunda up on Capitol Hill. This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

48:16He's dribbling the ball with everything on the line. He's driving down the pitch. He's facing price hikes and cuts past him. Carrier Contracts tries to block him. Oh, he leaves him in the dust. He's at the edge of the box. He cuts past the nonstop group chat trash talk. He clears on goal. He shoots. No! Unlimited data for$25 a month forever. Visit your local Boost Mobile store today to get unlimited data with a price that never changes. Boost Mobile. After 30 GB, customers may experience lower speeds. customers will pay$25 a month as long as they remain active on the Boost$25 Unlimited plan. Ask yourself, what are your best people spending their time on right now?

48:52Expense reports, receipt chasing, month-end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF. Hi, I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you conversations with the people who shape markets, investing, and business. I speak with CEOs, Nobel laureates, market innovators, and legendary investors.

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