Bloomberg Money: SK hynix, Federal Reserve Trust, Prenups

20:50Scarlet Fu:And Nikki, this is something where women in book clubs are talking about it, and they are taking more control of their finances and taking a deep dive into financial planning to understand their household finances. It's just as you said. People are reading this book as a cautionary tale and a horror story, and they are phoning their financial advisors and saying, I need to crack open the books on my finances with my husband or partner. And this is the case where women often out earn their husbands or they're at parity, except when they take time off to have kids and they kind of lose some ground here.

21:21Scarlet Fu:So there's this extra urgency and this, once there was a stigma about talking about all of this before getting married, but it's not becoming the case anymore. It's more practical now. It is less of a stigma, but even so, the numbers show that a lot of women, close to half, are entrusting their husbands with all of the financial decision making. Why? We all have our horror stories and our families of this. I have multiple horror stories of I'm the man, I'm smarter than you are, leave me alone, just trust me, I'll give you the passwords when I die. That's the status quo still. Yeah, and we have really smart people.

21:59I mean, take Belle Burden. She is an Ivy League educated corporate lawyer, and she still handed this over. And I think a lot of this comes back to the gendered ways we think about money, that this is men's work and this is women's work. And it's kind of cool to hear from these women who are cracking the books, and even their husbands are saying, well, finally.

22:18Scarlet Fu:There is a broader trend, and this is something you guys wrote about, too, of young couples signing prenups. This idea that it's not just men or the wealthy partner in the group. Everyone is kind of inquiring about this and looking into this to protect whatever assets or liabilities that they come into the marriage with. And there are so many reasons for this. People are marrying later in life. We talk about this all the time. They have more investments, more stockholding. So it's not like getting married at age 20 or 21 and both partners have very little. People are coming into marriage with their own kind of book of business.

22:53Scarlet Fu:Frozen eggs, also one of the assets that people have to kind of delineate. Student debt in terms of liabilities. These are all things to consider. Pets, social media followers? Pets and social media followers as part of your prenup. I bet that came up in the Taylor Swift-Travis Kelsey prenuptial agreement. Did you like the wedding? I mean, did you get it? I haven't seen any pictures. I've only seen other people's outfits. It was a limited invite list. It was a limited invite list. We'll have to see. We were advantaged because Cam Dawson was with us the day of the wedding, and she knows every Taylor Swift lyric there is to know.

23:27Scarlet Fu:Does she? Which is almost as good as her equity knowledge. Here at Bloomberg Money, we like to talk to people with deep knowledge, what is known as domain knowledge. Cameron Dawson owns the absolute high ground on the equity markets at New Edge Wealth. I'm thrilled to have a year for a two-hour conversation. We're going to squeeze in in next to nothing. How bull market is this bull market? Oh, it is certainly a bull market, not just within prices, but certainly within the earnings. And that's why this market has been so powerful and resilient to everything you've thrown at it this year, is because unlike prior times when you've had things like energy shocks and geopolitical crises and you would see earnings estimates get cut, you've seen earnings estimates go up 20 % on a 12-month forward basis this year, which is why this market has been able to shake off any kind of negative news.

24:17On a personal finance basis, are we enjoying it or are we totally out of whack where our allocation should be? Well, if you look at the aggregate allocation metrics out of something like American Association of Individual Investors, what you can see is equity allocations are at all-time highs at 71 % allocation. So this gets you back to prior highs that we saw in times like 2021 or 2018. So certainly this looks like an individual or a household area that is all in on equities. You see a very different story when you look at institutions, where institutions are the ones who've been sitting on the sidelines.

24:53Something like Deutsche Bank's consolidated equity positioning is just in the 41st percentile. So it's a tale of very different cities. Households are all in. Institutions are on the sidelines.

25:04Scarlet Fu:Interesting dichotomy there. You look at the S &P 500. We've had three straight years of double-digit gains. The S &P is up about 10.5 % now. When we're in this long-running bull market like we have right now, do individual investors tend to turn more conservative, stay with what's worked, buy and hold, or are they more willing to go out on a limb and consider moving some assets into uncorrelated securities or products, maybe venture into private assets? Well, I think there's two different questions there because the first one is, do people start chasing the hot dot when it comes to market leadership.

25:40And one of the reasons why the quality anomaly exists, why if you look over the long run, the quality factor has actually added a lot to portfolios from a return basis and not added to risk is because people do tend to chase the hot dots in markets like this. They want the non-profitable tech company. They want this shiny new object. But what you find is that just as fast as those kind of assets go up, you have the same kind of problem where they can have very deep corrections on the other side. When we think about allocating to private markets, that's where you're looking and saying, look, we've had 15 years of effectively double the average returns for public markets.

26:16So we need to diversify the return streams, diversify the income streams, and you need to look to private markets in order to find those different sources of ways to get to overall portfolio diversification. Let's go. Can we go Matthew on a Friday? Go Matthew. Let's go Matthew. Here it is right now. Now, this is one of the most famous money must reads out of the Wall Street Journal years and years ago, 2003. Back in the archives. Mark Horowitz, yeah. As an extreme example, consider the equity allocation of 1793. Today, you would be 99 % equities, an all-stock portfolio over time, much riskier than a classic 60-40.

26:53Cam Dawson, explain the best approach on the X axis to proper retirement allocation. Well, I think that there has to be a very holistic approach to the entirety of somebody's portfolio. Not formulaic. Not formulaic. And I think that this is the big issue within wealth management is that most people try to make everything institutional and homogenous. They try to treat everybody the same. But just as we talked about with things like financial planning and wealth strategy and something like prenups, those considerations have to be reflected in the portfolio. Those liquidity needs have to be reflected in the portfolio.

27:28So having the right allocation is not just going on the efficient frontier. It's actually doing the holistic work to understand somebody's complete balance sheet in order to get the mix of assets that allows them to withstand volatility. Nikki, help me here with all your experience on this, from John Templeton to William Bernstein to all of rebalancing and the formulaic approach. It's a cottage industry of reallocation along the way, rebalancing, isn't it? Yeah, no one makes money if you just leave everything alone.

27:59Scarlet Fu:That's very well said. She said the quiet part out loud. She just cuts to the chase. She said the quiet part out loud. I mean, it's an industry thing, right? I mean, one of the most interesting stories we're seeing this morning is that J.P. Morgan built an AI that can outdo the 60-40 portfolio. These are really good points. Gabby Santos was on the other day. Is she out of a job? Is Gabby Santos out of a job with AI? I think Gabby Santos will always have a job, but the ways that people are using AI to trade and beat the formulas we've always had, this is something to watch. I want to go back to that point, Cam, where you talked about tailored portfolios, tailored allocations, and tailored approaches to managing your portfolio.

28:42Scarlet Fu:Does that mean things like model portfolios, which are kind of cookie cutter, don't make sense for wealth investors? I think that as somebody's wealth grows and as they get even more complicated, typically we do see complications or certainly expand as the amount of assets do grow, that we find that we have to tailor different portions of the portfolio to have the right kind of allocation. Because if you have high liquidity needs, having something that's invested in completely private markets makes absolutely no sense. So instead of treating an allocation like going to a big golden corral and putting everything off the menu, you really have to choose the things that are having the right functions for what you need.

29:22How much of our certitude about this, what Nikki Waller deals with every single day, the myths that we have, the foundations was built on the great moderation where it was just price up, yield down forever. And then in 2022, we hit a wall. Well, and I think that all of these asset allocations, these mean variance optimizations are all built on one very problematic assumption, which is that you'll have standard normal outcomes, that you will have predictable outcomes. Could you see, did you, would you tear up over that standard normal outcomes? We're going to go Gaussian in a moment. Finish up and save the interview.

30:01Scarlet Fu:So I guess what it comes down to is any portfolio, especially one tailored for an individual, needs to account for emergency liquidity. Yes. Where does that come from? Well, I think that it's building out a certain degree of a cash side of portfolios to meet the liquidity needs over a shorter period of time. Having an income generation part of the portfolio that has income sources from different sources. So this is not just fixed income, bonds generating income. It's looking at something like potentially private credit. If you can absorb the illiquidity there in certain areas, do it carefully, GP stakes.

30:34And so you have to think about diversification, not just within the overall asset class, but what you're trying to achieve by each asset class. Was becoming a ballerina years ago, seriously, you're like really good at it. Was it expensive? Oh, extraordinarily. It was like stupid expensive. I mean, my parents told me that they spent all my college money on doing that. So I had to figure out something else for college. That's what we're going to cover next. Thank you, Kim Dawson. Thank you so much for being with us. Fabulous. I'm going to feature my Twitter feed and LinkedIn feed. I'm going to be doing this afternoon is off of Cam Dawson's work.

31:04It's on rebalancing. Coming up, what are we going to do on Bloomberg Money? We're going to talk about youth sports in the expense. Soccer, ballet.

31:15Scarlet Fu:Hockey. Nikki Waller, did you play a sport in your youth? Poorly, I played softball. She played softball and her parents spent money on it, I'm sure. Yeah, Lisa Mateo's the whole softball thing as well. Is hockey the worst? I think so. Yeah, well, the travel part is the worst. Youth sports. Stay with us. The Bloomberg Sustainable Business Summit returns to Singapore on July 22nd. Our fifth annual Asia-Pacific Summit will explore how business and finance leaders are shaping the next phase of globalization by strengthening resilience and driving a multi-speed energy transition across Asia's diverse markets.

31:48Scarlet Fu:Join us for solutions-driven discussions and networking opportunities. Thank you to our summit advisor, Bangkok Bank. Learn more at BloombergLive.com slash SBS dash Singapore.

32:05Scarlet Fu:France winning last night in a World Cup match against Morocco, Spain and Belgium facing off tonight in the quarterfinals. Is this all you guys watch at home now? It's like ridiculous. Would it go away? It's changed our lives. It's really enjoyable. I love watching Telemundo, to be honest. Oh, yes, because it's a whole different experience. It's a whole different culture and energy and it's just fabulous. Were you following Team USA as carefully? No. Well, Well, I mean, after last week, you know, it's kind of a disappointment. I was really upset about that. I was not alone on that. Yeah, well, the U.S.

32:35Scarlet Fu:team's loss to Belgium in the World Cup has revived this growing concern among Americans, which is a rising cost of youth sports. According to one estimate from the Aspen Institute, family spending on youth sports is up 46 percent over the last five years. Our senior reporter, Randall Williams, he covers business of sports, has been following this story, and he joins us now. And Randall, by some estimates, this is a$40 billion plus industry that is funded by private equity. And so no surprise then it's become hyper competitive and hyper specialized. Yeah, I mean, when private equity gets into something, of course, they want to maximize profit.

33:09And that's not always a good thing for youth sports. People think of youth sports as the level before college sports. And college sports, of course, is welcoming private equity as well. But with NIL, with a bunch of different mechanisms, it's sort of the amateur level. And I think youth sports isn't meant to be that, but it's becoming that because you can identify talent earlier on, which therefore could lead to brand collaborations and so many other things. So youth sports is a huge industry that we're seeing private equity get into and other investors as well.

33:36Scarlet Fu:How has technology accelerated this? Because we talk about private equity getting in. We talk about NIL. Those are two distinct things. But technology has made it even more hyper, hyper intense. Well, it's interesting. When I was growing up, my dad and my mom would have a film camera that they would shoot it for, but that was just for fun. I had my aspirations of going to the NFL ended at 15, but now you have people using apps like Game Changer, which you can literally just film the entire thing, create a highlight reel for your child, and then email it to scouts themselves. Of course, the supporters behind an app like Game Changer are going to pour money into it and say, hey, use our app, and then you can go and market yourself.

34:15And a lot of times this NIL money that athletes are able to sign earlier and earlier can change a family's life. So the parents are pushing it and having to spend more as well. Exactly like you. I remember exactly where I was standing when I realized I would not play for the Montreal Canadiens. Are we telling the kids today, I'm sorry, name, what's it, name, image, likeness? Yeah. You're playing D3 if you're lucky. Are we within all the different sports informing the children of how special those people are playing major D1 and pro? I don't think so. Not anymore. And the reason for that is because, you know, you have low-level athletes who can make anywhere from$50 to$60 to$20 to$30 to sometimes hundreds of thousands of dollars a semester.

34:57And so their families are like, listen, you don't have to go to the NFL, the NBA, the MLB, the MLS, and so many other leagues anymore. You just have to go and play in college as long as you can so that you can provide for our family for a four to five year period. And then they go into jobs like us. And so it is a very interesting time in college sports where you have people who want to play for five, six, sometimes seven years in college just so they can make money in name, image and likeness.

35:21Scarlet Fu:I started off by talking about the World Cup. How has the professionalization of youth sports contributed perhaps to the U.S. not being as well prepared for something like the World Cup? Because that's the criticism. Right. Right. I think that if you look at Europe and Europe has these youth camps that you think of Lionel Messi, he was with Barcelona at a very young age and then raised in that system against a lot of top tier competition. That doesn't really exist here. Of course, we have youth soccer clubs and camps, but it's not to the same level. You've never seen a 13 or 13 year old sign to NYCFC.

35:55It just doesn't happen the same way. And so because of that and because of the rising cost, you think of the travel, you think of the cleats, you think of the lodging and tournaments and all of these different fees. You have parents who are like, you know, I think I'm good. You can play a different sport or you could just go and be an academic scholar. Can anybody beat France? I think they can. I think Spain can. I think England can. I think Argentina can. But it's going to take you on your best day and you're going to have to shut down a bunch of different superstars. It's like playing against the Golden State Warriors with Steph Curry and Kevin Durant and Klay Thompson and Draymond Green.

36:26They are at that level good.

36:28Scarlet Fu:That was a good way to put it. Who are you rooting for? I root for a good story. So, of course, it's either. I'd rather, I would like to see a rematch of the 2022 final, which was Argentina and France. That is probably the greatest sporting event that I've ever watched. So, seeing that. We're out of time. We're out of time. The control room never talks to me. They only talk to you. Because they know I listen. Luigi's vicious. I mean, you know, I have no idea. I want to ask like six more questions. We'll get him back on next time. We'll get him on next week. I'm around. All right. Thanks so much, Randall.

36:56Scarlet Fu:Williams, our Bloomberg Business of Sports senior reporter.

37:03Bloomberg Money, where we do Shakespeare, we'll do that right now. We're doing Shakespeare? See the line where the sky meets the sea, it calls me. And no one knows how far it goes. If the wind in my sail and the sea stays behind me, one day I'll know if I go, there's just no telling how far I'll go. This is not Shakespeare. This is Moana.

37:22Scarlet Fu:Okay, there we go. The Shakespeare of 2026. It is. truly. And it's Friday, so of course we're looking ahead to the weekend and to next week, so for that we bring in Bloomberg's this weekend's anchor, Lisa Matteo. Lisa, Moana is at the box office. If you're going into the theaters this weekend, it's going to be Moana. Tom knows, of course, why this is tops on my list because, Scarlett, I have a huge crush on Dwayne the Rock Johnson, so that's the reason for it. But this is the remake, so the 2016 animated film that's done phenomenal. So now they're doing the live action. So now you have the real actor.

37:56So you have Dwayne Johnson himself actually out there. Is Lisa taking over the show? So he's out there. My Dwayne is now part of the show. Yes, my Dwayne is part of the show. The reviews haven't been so great, but that's out there and that's at the box office this weekend. For music fanatics, okay, for those, the Rolling Stones are back there. I will listen this weekend. They're still making music. They're still making music. I'm telling you, the 25th studio album, Foreign Tongues, That's what it's called. So it's 14 tracks. There's 12 original, two covers. And they're grouping up with different people.

38:31They're doing different collaborations. One is with Paul McCartney. The last album released in 2023. So this is, I know Tom's weekend is going to be spent. I will put headphones on and I will listen. And it will be with immense respect for Charlie Watts.

38:44Scarlet Fu:How much does an album cost these days now? Like, I don't know. I'm just streaming it on title is what I'm going to do. But the answer is how much did it cost to make this? It took them years to put this thing together. This was not some rich guy six-week project. They really put a lot of effort into it. They had to mend a lot of issues there. What else you got going on? They're still going. They're still going. So I want to go to EcoData because we have a jam-packed calendar coming up. So we start off on Tuesday, we have CPI. Oh. Yes, yes. And then on Wednesday, we have PPI. So aside from that, then we go into Thursday retail sales is a big number.

39:19Sure. And then Friday, we have housing starts, building permits. When I was looking at the prior and then what the expectations are, the biggest kind of difference I saw was actually in housing starts. You know, the prior was a dip of about 15 percent. The forecast is for a rise of about 13 percent. So that was a difference there. And then I also want to point out this Bank of America survey that talked about how much consumers are spending for June. And they're spending more. This is looking at credit card data. This is also looking at prices are higher. Well, the reason why is because the prices aren't higher, but they're spending more because gas is cheaper, right?

39:54So they have a little bit more discretionary income. And the World Cup, of course, June. So they're starting to spend more. Yeah. Are you doing like 10 ,000 steps a day now after Nathan's famous last week? You did see that, didn't you? For the 4th of July, you were out in Coney Island. I was out in Coney Island for Bloomberg this weekend. Yes, I had a tray of hot dogs. You had a tray of hot dogs. I did not have any of them because they were in the boiling sun for so long. I was like, maybe I shouldn't eat these. But it was fun. It was a good experience. I'm a Brooklyn girl, so being back, you know, in Coney Island.

40:26And you're good. It was just nice. It was a good experience. What do you have coming up this weekend? We're talking a lot because all the talk has been about SK Hynix. So we're tapping into that. As Ed Ludlow is going through the weekend, he's joining us as well. So that'll be a good time on top of that. He's just killed it. We make jokes about it, folks, but Ed Ludlow's leadership here on all this technology. I'm looking literally right now at the SpaceX 30-year bond. I'm getting killed on it. Are you kidding me? It's gone price down, yield up, and it hasn't found a bid yet. It's ugly. That'll be a theme for Ed Ludlow on Bloomberg this weekend.

41:03Look for that with David in all this weekend.

41:07Scarlet Fu:All right, Lisa Matteo, thank you so much. And of course, be sure to watch Bloomberg this weekend, every Saturday and Sunday morning, starting at 7 a.m. Eastern Time. This is the Bloomberg Money Podcast, bringing you a smart look. Three, two. This is the Bloomberg Money Podcast, bringing you a smart look at the forces shaping your financial life. I'm Tom Keen with Scarlet Fu. You can watch the show live on Bloomberg TV every Friday at noon Wall Street time. Subscribe to the podcast on Apple, Spotify, or wherever you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app.

41:47The official language of football is trash talk, late night group chats, memes, and unbelievable highlight clips. That's why Boost Mobile brings you our new global connection plan. The first plan ever made for WhatsApp. Get unlimited data, talk and text, international roaming and calls to over 100 countries for just$40 a month. $40 price includes$5 a month auto pay discount. After 40 gigabytes of premium high-speed data, speeds will be lowered. Coverage not available everywhere. Visit store or boostmobile.com for details.

42:18Scarlet Fu: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. And 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.