US Consumer Spending Powers On Even as Inflation Persists

21:44Support for the show comes from public dot com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

22:22An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results.

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23:23Carol Massar:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

24:02Carol Massar:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. Wise is the smart way to manage the currencies you need around the globe. If you've ever sent money internationally using a traditional bank, there's a good chance you've paid more than you realized. Hidden fees, exchange rate markups, and extra charges can quietly add up before your money even arrives.

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25:24Carol Massar: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. In the meantime, we continue to piece together the life of Jeffrey Epstein. Bloomberg News has gone through more than 18 ,000 emails from Epstein's personal Yahoo account that was obtained by Bloomberg News. That cash revealing, Carol, a sweeping array of details about not just his public life, but his private life as well. Exactly. We want to get into it. It is today's Bloomberg Big Take.

25:59Carol Massar:Bloomberg News finance reporter Max Abelson, part of the team who wrote it. He's here in studio. Max, so good to have you here. Another incredible read. It is among our most read stories on the Bloomberg. First of all, step back. We've been covering this, right? These emails. Remind everybody the emails that Bloomberg got access to and what you guys have been going through. Yeah, that's right. It's been one of the highlights of my, you know, 20 years in journalism to be a part of this team with Suri Amatu and Jason Leopold and Ava Benny Morrison, many others. So, you know, Epstein, who remains so profoundly central to the public imagination and yet such a profound enigma, Bloomberg News obtained, you know, thousands, more than 10 ,000, more than 18 ,000 emails.

26:45And I want to be clear, these are these are private emails. These aren't things that have been recycled through. It's not things everyone knows about. This is new stuff. and it's from a private email address. Actually, for example, there was one email where someone says, listen, I need to talk to you about something private. What email would be good? And he writes back and says, this one, to give you a sense of what we're talking about here. And my colleagues, including Harry Wilson and others, did some really remarkable reporting on Peter Mendelsohn, who lost his job as the UK ambassador to the United States.

27:20Exactly. In the week of their story. and even Betty Morrison and Jason Leopold and others have done great work on Gillian Maxwell and really carefully showing that her relationship to Epstein was just much deeper and their partnership was much closer than either had admitted. And what this story, which I wrote with this wonderful team, what this story is about is in some ways, I hope, you know, not the usual, you know, Epstein is of course in some ways a story about sex and sex crimes, But I think what you'll find is that what this story is about is about what I cover. It's really a story about money and a story about power and a story about connections.

27:59And that's how we talked about it with our editors, including Lauren Eder.

28:04Carol Massar:And it's a but can I just pop in that there's a bunch of people pictures. And I'll be honest with you. I think when we both I didn't recognize most of them. Well, that's what I think was so notable about this. I mean, there are certainly the names that have been associated with Epstein for years, like Alan Dershowitz, for example. And there's new information, new emails from there and a conversation that your team had with him about that. But there's also a name that I'd never seen before. Mary Spaeth, somebody who's a crisis strategist. She was director of media relations at one time for the White House under Ronald Reagan.

28:34What role did she serve? Well, thanks for that question, because I think what's special about the piece, and I hope viewers and listeners check it out. I think what makes it a valuable piece of journalism, especially at this moment when Epstein is really in the news and all of a sudden has gone from being an exclamation point to a real question mark. And there are a lot of questions about what's going to happen now over the next few days and weeks and months with Epstein and his files. What our story is about and why Mary Spieth comes up is that it's about the depth and the breadth of his relationships.

29:09And, you know, it is not a story about Republicans versus a story about Democrats. It's a story about powerful people. And it's a story about different kinds of power. It's a story about academics and researchers, people who made it, make it into high elite echelons of intellectual life. It's about people who offer, like Mary Spaeth offers, a basically strategy for people who are in trouble, crisis strategy, public relations. And it's a story about counselors and lawyers. and to answer your question about about mary there was a point believe it or not where investigators are closing in jeffrey epstein this is early 2008 you know he's about to go to jail for the um it's like about a year so it's a little bit longer than a year right um and after that he's a free man for a very long time i think about a decade until the 2019 charge um sex trafficking and then he dies.

30:03He's found dead in prison or jail right after that. But back in 2008, investigators are circling. Epstein's in trouble. And what do we find in these emails? But these draft apology options where she sends him three different kinds of apologies. One is very meek. It talks about his memories of being a kid. It's actually, I found it very deep. I imagine, you know, all of us remember being kids and having to apologize. Second one is very short. It's really terse. But the third one, it's the word we use is elegiac. And it is. He cites William James. I'm hoping it's the first Bloomberg News story that calls out William James, 19th century American philosopher, talks about the hour of terror and the hour of satiety.

30:52How about that word? And he talks about the American dream. Talks about the American dream and his substantial rewards. and he says this is a public and heartfelt apology. I just want to say Space Firm was hired through a lawyer to provide communications options for Mr. Epstein and his legal team. She said in response to questions for the story, she said, quote, I ultimately terminated the engagement because of my discomfort with it. That's right. That's right. Thanks for saying that. I think it's really important out of fairness that we add things like that. And, you know, she also said, you know, because of confidentiality and privilege, she can't comment further.

31:25But, you know, we don't know. We don't know what was going on here. I wanna be clear with our viewers. You know, for all we know, Epstein was really very close to saying sorry, but he did not. He did not in the sense of giving a broad apology, certainly to his victims. And I wanna be clear, the US Department of Justice says there are more than a thousand of them, more than a thousand of them. And Epstein did not give a heartfelt William James quoting apology as far as we know. but our story shows what it could have potentially sounded like if he had.

32:01Carol Massar:It's why we say there are so many questions still out there. And you guys, by going through these emails, maybe there's not direct conclusions, but you start to piece together, you know, kind of a little bit more of the life around Jeffrey Epstein. Max, thank you as always. Max Abelson, he's finance reporter at Bloomberg News. This is The Big Take. Check it out on the Bloomberg. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

32:29Support for the show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On Public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the rest. Monitoring the market, watching for your conditions and executing your strategies exactly as defined.

33:08An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokerage services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand.

33:47But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

34:09Carol Massar:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

34:47Carol Massar:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

35:35Whether you're sending money to family overseas, spending while on your holiday abroad, or paying bills across borders, Wise makes moving money simple, transparent, and straightforward. Wise offers 24-7 customer service and runs over 7 million daily checks to spot and stop fraud. And most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. Join millions, saving billions. Be smart. Get Wise. Visit Wise.com or download the Wise app today. T's and C's apply.

36:35Carol Massar:Um, however, there is one name that is definitely on our radar. I've had to play around with the gainers that I'm going to talk about with my TV colleagues, because as soon as we saw the headline popping about electronic art said to be near a takeover by Silver Lake, initially reported by the Wall Street Journal, this is about a$50 billion maybe deal to go private. That's big. According to people familiar, that would be massive. It's not just Silver Lake, but also Saudi Arabia's public investment fund. And this is according to people with knowledge of the matter. The video game maker is known for Madden NFL, The Sims, and then Carol's favorite, Battlefield.

37:11I walk by, she's playing that all the time. Love it. Could announce a deal as soon as next week, said the person who asked not to be identified, discussing confidential information.

37:19Carol Massar:Stock up about 14 % as we speak. So we said it could be a$50 billion take private right now. The market cap at$48.2 billion. All right. Let's talk about, not necessarily that, unless she wants to, but let's talk about the stocks overall. for the day, for the week. Carol Schleif is back with us, Chief Market Strategist at BMO Private Wealth, joining us from Minneapolis. BMO Private Wealth, by the way, $315 billion in assets under management. And I got to say, if you're lucky enough to have a 401k and you've looked at it recently and you're buying the market, Carol, you're pretty happy. It's thumbs up.

37:54Carol Massar:Yeah, yeah, you are pretty happy. And it almost doesn't matter what segment you're in. And it's actually better to have spread it around this year because in particular, diversification, which we preach all the time, it definitely worked this year. So let's talk a little bit about valuations, because earlier this week, we heard from Fed J.J. Powell. He was asked about stock valuations. There was not an irrational exuberance moment. No, no, there was not. He did say it's not a time of elevated financial stability risks. But he also said, Carol, Carol S., some asset prices elevated versus historical levels.

38:32And by many measures, equity prices are fairly highly valued. Is he right?

38:39Carol Massar:Yeah, they're rich, but it's also important to put the caveat in there. And actually, the piece I wrote this week for our field was called bear hunting. And we talked about valuations in there. And one of the things that's important to recall is that valuations are not what kills a bear market, nor do they, or kills a bull market, nor do they revive a bear market. Things can stay over or undervalued for a great length of time. And it's usually something structural that breaks, that brings markets down. And so, yes, the valuations are high, but earnings estimates and GDP estimates have been brought down low because no one knows exactly how to filter through all the impacts of everything thrown us this year.

39:21And the one theme that's been very consistent is the resiliency of businesses,

39:27Carol Massar:the economy and consumers. You know, it's kind of wacky, right? Like we just in terms of the moods of this market, like you go back to January and I think we weren't you know, we were still in the Biden economy and people were still talking about U.S. exceptionalism. And then we got the inauguration and the White House started, you know, implementing executive orders and different initiatives. And then, of course, the tariffs and we saw stocks sell off. And then we've seen the bounce back as things kind of eased when it comes to tariffs. It's just been kind of all over the place. Is there a dynamic, though, to this market, you know, that you kind of can cling to?

40:12Carol Massar:I think the dynamic we've been clinging to and the thing we've urged investors to cling to all years to follow the fundamentals and to look at companies and to listen to what companies are doing and watch what they're doing. And it's interesting because we also had, in addition to all of that, we also had the big disconnect between the hard data and the soft data for a long time or the sentiment. And you still see inklings of that, particularly among consumers. But we've also encouraged clients to step back and think through. This is really the mirror image of what you had in Trump 1.0, where when he came in there, you had a lot of really optimistic things going on with the economy.

40:50Carol Massar:And then we had tariffs hit in the back half of that. And then we had COVID and everybody has collective lack of recall of what came before COVID in a lot of cases. This time around, if you recall, after the election and into early January, we came in with a lot of optimism. Wall Street staffed up thinking we were going to have all the M &A and IPOs and all of that go on. And then we got hit all of a sudden with tariffs and trade policy and geopolitical issues. And markets took a step back and looked at that. And now we're back to where a lot of that stuff's pushed aside. Markets are desperately trying to get to the other side of tariffs and focus on something else.

41:29But businesses through it all, and that's one of the advantages we have, is that we bank multi-generational businesses, and we also manage the money for those businesses when the liquidity events happen.

41:42Carol Massar:And so we're plugged into a lot of that. And when we talk to the business owners and the commercial teams we have that serve those business owners, they've told us throughout that they're adapting and adopting as best they can. And they're nervous, but they still have to grow and they have to continue to do business because they have shareholders and bankers and employees. What are they nervous about? I think they're just nervous like anybody else trying to figure out, you know, where does the next policy change or shift come from? I think the answer is truth social. That's where it comes from.

42:18Carol Massar:Maybe it's social media. But the hard part is, is it amplifies moves, too. And even, you know, even when you go do a search on social media, your search is going to feed you your your personal personal preferences, if you will. You have to be active about searching a variety of sources or active about searching out something that's going to be neutral and down the middle. And so it's definitely been a challenging year. But it's a big process of having to write every week really helps because we're trying to sort through the OK of all of this stuff going on. Right. What is impact for portfolios moving forward?

42:58Carol Massar:Carol, but I thought it was interesting that you said that the work that you guys are doing for businesses, that even though there's some concerns and uncertainty and fears out there, that they're making decisions. Right. Because they have to run a business. And if it's a competitive world, as we all know, and if they kind of delay, miss something, there's potential that they're going to lose share. Right. And they're going to fall behind. So that they're pulling, you know, that they're actually moving ahead with things, even like we see the IPO market. That's a good sign. Yeah, it's a great sign.

43:29Carol Massar:And we've been talking about for some time, when you look at the stats of what's out there, because we've had such a locked up IPO market for such a long time, I've seen some estimates recently of as many as 30 ,000 companies that are revenue and earnings generated mature companies in venture capital and private capital portfolios, if even 1 % of those go public. You know, the other thing that's really interesting is when you were tracking the earnings as they came in in the second quarter, they're technically, according to Bloomberg, there were only 497 names in the S &P 500. So we've had this net reduction of public companies out there.

44:10Carol Massar:And so having some IPOs, because we peaked in terms of public companies back in 1996, I think it was. And currently there are more ETFs than there are publicly held companies in the US. Interesting. Wait. All right. Wait. We got to go. But we got to come back on that point in the future, because I think it's an interesting dynamic to this market and what it says. Carol, thanks. Glad we could reconnect. Carol Schleif, she's Chief Market Strategist at BMO Private Wealth, joining us from Minneapolis. This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts.

44:53Carol Massar: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.

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46:48Carol Massar:That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com.