Energy Driven Inflation Risks, Mounting US Debt & The Case Against Cutting Social Security

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1:51This is the Bloomberg Money Podcast. I'm Scarlett Fu with Tom Keen. Join us each week for a smart look at the forces shaping your financial life, powered by the reporting of our global newsroom. We'll explore how people are earning, investing, and building wealth. We're live Fridays at noon Eastern on Bloomberg Television. Subscribe to the podcast wherever you listen, and as always, on the Bloomberg Terminal and the Bloomberg Business app.

2:27Good noon, everyone. Bloomberg Money, our show on personal finance, retirement and wealth management. I'm Scarlett Food. Tom Keen is off today. Coming up on the show today, Richard Haas, Centerview Partners Senior Counselor and President Emeritus of the Council on Foreign Relations. He makes the case that a strong foreign policy begins with meeting domestic challenges like a swelling national debt or a lopsided economy. Plus, we've got Ellen Zentner, Morgan Stanley, wealth management, chief economic strategist and global head of thematic and macro investing. She's done a ton of work on longevity and the new long term opportunities that that creates.

3:02But first, let's get a snapshot of where things stand in the markets. Stocks are rising on a combination of falling oil prices and in pretty much as expected CPI report for the Dow, the S &P and the Nasdaq, the first gain in five days. Notable that the S &P is still about 1.6 percent shy of a record high set back on August 13th. The VIX currently down right now to about 15, but it did get above 18 yesterday. Let's look at the cross asset board because yields are backing off from multi-year highs. The 10-year yield now at 4.94 percent. It almost touched 5 percent overnight, but has managed to back away from that level.

3:38Dollar index, little change at this hour, and oil prices retreating after yesterday topping 104 a barrel. That is the U.S. benchmark WTI. It was a four standard deviation move, I'm told. Tom Keene actually texted me and told me that. And diesel prices, of course, you know, a product of oil rising past six dollars a gallon. We're going to get into all of that shortly. So let's get into the conversation right now, because joining us at the money desk this afternoon is Bloomberg Money Managing Editor Nikki Waller, Bloomberg Intelligence ETF senior analyst Eric Valchunas, our Washington correspondent Tyler Kendall in New York today, and Bloomberg opinion columnist Alison Schrieger, who's also author of the upcoming book, Worth the Risk, the seven myths that keep us from taking the chances we need to take.

4:22So we got to start with the big data point today, which was inflation. And Allison, those numbers came out today at consumer prices, wholesale prices came out previously. They pretty much met or rose slightly more than expected. So if rate hike feels, what, inevitable at this point? Well, it was warm, but not hot. And so the market's now pricing in maybe two rate hikes later this year? I think the question is, though, is that really going to be enough? I think what we're starting to see is maybe sort of what we don't want to realize, which is inflation might just sort of be settling around two and a half, three percent.

5:00And sort of this nice deflationary pressure that we had is played out. And if we really want to get inflation back to two, it's going to really take more than tough talk and a couple of rate hikes. And are we really willing to do what it takes to decrease demand. Because what we do is a lot of this inflation pressures from supply things like energy. So you're going to have to really bring down demand based from where it is now to get your hands around inflation. And it's not clear we really have the appetite for that. Right. That would require a series of rate hikes, not just one 25 basis. Potentially a recession or a recession.

5:32Nikki, you've been looking into the data points of the inflation report. What did you pick up? So one thing to look at is not just what happened last month, but what is going to happen in the future? We saw the other big number that you mentioned earlier, that diesel went up to$6 a gallon. That shows up in the CPI. Fuel costs, obviously a huge part of that number. But the other thing that we're going to see with all of those costs is that diesel is the price of getting your groceries to the grocery store. So even more price hikes are in store for things like the bananas and beans that you're going to be buying at the grocery store right now.

6:10Yeah. You know, when it comes to this oil spike and the Iran situation, there's been this like back and forth with the president, you know, wanting to have peace talks when oil goes too high because he's well aware he does not want to have rates go up. It's horrible for the economy. I think the stock market is kind of a governing force over the whole apparatus. And so the idea that oil goes up, stocks go down. There's always reversal. So I think that's going to keep inflation in check. And I'm going to take the under on the rate hikes and go with zero or even a cut. You've been sticking to this point for a long time, because it all goes back to the president does not want rate hikes.

6:44He wants rate cuts. And it's pretty straightforward. Yeah. I mean, he sat there and interviewed this guy and I'm sure it came up. And I just think that's it. People overthink it. People overthink it. So, Tyler, you're here in New York. But of course, there was a lot of action in Dallas and you helped cover what was going on at the first ever midterm convention held by the Republicans. Did they bring up gas prices? Did Did they bring up affordability concerns? It's interesting because how we did see it brought up was through what is considered to be a rather unusual proposal with this potential for a$5 ,000 check to be sent to Americans if Republicans end up winning both chambers of Congress.

7:20We have to say that we did have the NEC director, Kevin Hassett, on Bloomberg Television earlier today who said that maybe this could be done through a reconciliation package, which we should put context behind. That would mean that Congress would have to get involved, even if the president has previously floated that maybe he could do it without their authority. I'll also point out, we hear a lot from the president about tariff revenues. Our own analysts have crunched the numbers. This could be a$1 trillion proposal when we talk about all the concerns with the deficit, how difficult it is to politically cut spending in Washington.

7:50But after those tariff rebates, refunds from the Supreme Court case, I think this year we're on track for somewhere close to$115 billion. So we are much farther away from that trillion dollar market. And so, Alice, I want to come to you because that's an interesting point. The tariff revenue that came in, I mean, that does help at least slow the growth of our national debt, doesn't it? It does. I mean, that was one of the benefits, supposedly. I mean, I don't think it's going to take care of our debt problem. And when I try to be generous about tariffs, as an economist, I hate them. But, you know, it is a consumption tax, and I like those.

8:26But the problem is, I mean, I don't know how realistic this$5 ,000 check is, But I think we saw during the pandemic that sending everyone a check is then inflationary. Yeah. And then increases the debt. So, you know, you're sort of then in a bit of a pickle that, you know, even no tariff revenue, even if we're tariffing 20 percent, is going to get you out of, especially because that's another hit to prices. You know, we had the consumer sentiment report coming out of University of Michigan, and it shows sentiment people feeling lousier about the economy because of the rising gas prices, the rising diesel prices, Nikki, that you mentioned.

8:58But it always splits along whether you're a Democrat or a Republican, doesn't it? It does. And I think we see much more positive views of the economy on the red side of the House. At the same time, I think it is deteriorating broadly as people are experiencing the economy and not feeling good about it. Tyler, have the Democrats come up with any kind of counter-programming to what the Republicans said at the midterm convention to get their base fired up? I love that you asked this because this is actually every question that we asked every Democrat that joined us this week on Bloomberg television.

9:30It's difficult at this moment because in one regard, Democrats have the ability to kind of sit back and say that they don't control Congress at this point. So they're going to let Republicans run with what has been negative polling on this. I would point out in the consumer sentiment reading, we're seeing only 35 percent of Republicans believe that the government is doing a good job with the economy. That is at the lowest level since President Trump took office. But Democrats faced headwinds of their own, including intra-party fighting. But you look at the stock market, Eric, and I pointed out it's still about 1.6 percent shy of its record high.

10:03I mean, the stock market keeps chugging along because of corporate profits. And I know you've been making the case for a while now that the stock market is America's retirement vehicle and policymakers can't let it fail. Yeah, the political pressure is just it's going to get grow. It's going to grow and grow, especially as Allison said, you know, as Lynn Alden says, nothing stops this train. Both parties are going to spend. There is no nobody's going to who wants to tax or cut benefits. It's just politically unpopular. So the more the stock market becomes the retirement vehicle for Americans and creates the wealth effect for the top spenders, it's going to be a problem if it goes down too much.

10:37And I think investors sense this because the Fed and the Treasury has stepped in in times past. That's why VU and chill exists. You just buy VU and you don't do anything and it tends to work out. So through all these headlines, all year, all past 18 months, VU has just taken in about a billion a day, as well as a bunch of other ETFs that do the same thing. And that also puts a ceiling on how much they can increase rates, because they increase rates that lower stocks, because that's the discount rate. And if they're taking out everyone's retirement wealth. Yeah. And when you look at retirement wealth, it is higher than it's ever been.

11:10Americans have an average of, I think,$151 ,000 in their 401ks. And we just reported from Fidelity last week, that the number of 401k millionaires is higher than ever before. It's a matter of whether people do anything with it because it's on paper, right? It's not actualized just yet, but it creates that wealth effect. So putting this all together, Eric, because you talk about vu and chill, you wrote the book on Vanguard and its founder, Jack Bogle. I've heard you use Vanguard as both an adjective and a verb, the first person to do that. Why does Vanguard matter so much to how we save and how we invest?

11:45Yeah, because they made everything basically free. I mean, they created what's an investor utopia right now. You can basically just, you don't have to get out of bed. You could get, you just pick up your phone, type a few things and own anything under the sun for almost no fee. And if Bogle hadn't set up Vanguard to be a mutually owned company that lowered fees naturally over 50 years, none of this would exist. There would really be no economic incentive to go this low. But honestly, he did it. We call it the Vanguard effect or the Bogle effect. And it's now hitting active, even actives now getting cheap.

12:18So investors are in a very good period right now and also think that's why they don't leave. It's not just the Fed put, but they feel like they found a product they can get married to. They don't need to date anymore with different active managers. They just buy VU and they are off the market. VU and chill or VU and retire at this point. All right. Thank you so much to our roundtable. Bloomberg Money Managing Editor Nikki Waller, Bloomberg Intelligence ETF Senior Analyst Eric Bauchunas, Bloomberg opinion columnist Alison Schrager, and Bloomberg Washington correspondent Tyler Kendall in New York today.

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15:26Welcome back to Bloomberg Money. I'm Scarlett Fu. Joining us now is Richard Haas, Centerview Partners Senior Counselor and President Emeritus at the Council on Foreign Relations. And of course, we're pleased to have you here on this 25th anniversary of 9-11. We're going to talk about foreign policy, but more importantly, we're going to talk about domestic policy too and the health of our domestic institutions. One of your thesis is that foreign policy begins at home. American power is not just nuclear weapons or aircraft carriers. It rests on the economic, political and social strength of the U.S.

15:57itself. So my question to you, Richard, is how strong are these foundations of American power in September 2026? Short answer, Scarlett, is they're not as strong as they were. And the short answer is there's not they're not as strong as they need to be. People don't have the same confidence. us. They don't see us the same way politically, whether it's January 6th or other sorts of polarization. Economically, they look at the scale of our debt and basically say, are you Americans willing and able to deal with your obligations, your responsibilities? Because you're not just any other country. We are dependent upon you.

16:34They look at frictions in our society. So, yeah, I think there's unfortunately real reason to be concerned about, if you will, the state of the country. And it gives, it creates a permission structure for other countries to do something similar for other actors to kind of follow in our footsteps. Well, we're certainly not setting an example. A lot of them would want to emulate. That was the whole idea of soft power, that people would see the vibrancy of our economic system, our political system, our society, and they'd say, hey, we want to be more like them. I don't think a whole lot of other countries are doing that.

17:03Plus, we're not leaning on them in the same way. I mean, we're not going to we're not going to push them. So we say to the contrary, you had these elections in Germany the other day instead of expressing concern about our right wing pro Russia and sympathetic to the Nazi past party. You have the president and Elon Musk congratulating them. So, yeah, we're in a very different place. So the president has pulled the U.S. out of all kinds of multilateral organizations and agreements. You've made the argument that this kind of retreat would ultimately make Americans feel less secure and less prosperous.

17:33And we see this reflected in lots of consumer sentiment surveys. Explain the connection here. Why should an American who is struggling with housing, with health care, with retirement care whether Washington continues to underwrite global order? Because what happens there doesn't stay there. Here we are today, 25 years after 9-11. What was one of the great lessons of 9-11? That stuff happening in places like Afghanistan could travel here. You had Saudis getting trained by terrorists in Afghanistan. coming over here, killing nearly 3 ,000 people in a single day. What does that tell us? The idea of a border, we have to rethink it.

18:13Well, more recently, COVID, what began, whether it was in a market or a laboratory in Wuhan, China, again, came here and killed so many Americans. Look at trade. All the Americans have lost their jobs because of trade or new technology, or in some cases have gotten jobs because of the ability to export to others. So the idea of foreign policy being foreign, We really need a new template for that. We have to understand that what happens here, your first question, affects what goes on elsewhere, but also the other way that we're not. These two oceans, the Atlantic and the Pacific, whatever else they are, they're not moats.

18:46We are affected by what goes on elsewhere. Let's talk about fiscal policy, because today, you know, collectively, we're seeing the bond market and economists sending warning signals about the national debt, more than 40 trillion dollars. How high does that$40 trillion of national public debt rank as a national security issue? It is a national security issue because the rest of the world loses confidence in our ability to manage our economy. They'll move away from the dollar. They'll stop financing the debt. We will then have to take all sorts of economic measures, for example, raising rates, not to cool an overheated economy, but simply to attract the financing that we that we want and need.

19:25And then we're not going to have that money available for other things, whether it's to build better schools or build bridges or be nice to have some high speed rail in this country. And we go down the list. There's a million things we won't be able to do. We've already kind of gotten close to that point. The service on the debt, essentially paying the interest on our debt, is now greater than what we spend on defense. That is crazy. This is money going down the drain. We want to spend money, the budget, on productive things. We want to invest in ourselves and our future. We don't want to simply pay off our past profligacy.

19:58And that is what we're doing. Well, it brings to mind this erosion of trust. And it's not just foreign countries' trust in America. It's also our own trust in ourselves. There's a new poll from APNORC that shows more Americans have stopped believing in the government. Public trust in federal government information about inflation and cost of living is now 18 percent from 26 percent in 2024. Trust in information about the labor market down to 15 percent. Trust in elections and politics down to 13 percent. Can government or our institutions rebuild or repair that trust, Richard? First of all, it's really depressing to hear statistics like that.

20:35That's kind of what you get when politicians continually tear down the government, raise questions about the legitimacy of our elections. When we looked at it, take the 2020 elections, we looked at it, what, it's 60 court cases. There was nothing there. when you have people talking about the deep state as though the government, the tens of millions of Americans who work for the government, are somehow something else? No, they're us. They're our wives, our husbands, our children, our neighbors. And we want the best and brightest to go into government. We need to trust our country, our government, because we're so affected by its decisions, what it does and doesn't do.

21:11Look, it's going to take a few things. It's going to take leadership that stops tearing us down. That would help from the top, but also from the bottom. We need to, for example, have civics taught in our schools. You should not be able to get a high school or college degree, I would argue, without understanding the basics of democracy, the relationships between this country and its individual citizens, your rights, but also your obligations. What do you owe this country? We want more people to do public service, whether it's military or civilian, international or domestic. We have to rebuild the bonds that made this country so special.

21:43So when the Tocqueville came over here, what, 200, 150 years ago, he looked at America and he said, wow, this is a country that works together, that's unified. Again, here we are, 9-11. What happened after 9-11? Unity. We came together. What did President Bush do? He went to the mosque in Washington and said, we are all Americans. Whatever our religion, however we dress, we have to be there for one another. We need to hear a little bit more of that. All right. A fired up Richard Haass here on the 25th anniversary of 9-11. You're going to stick with us right now. Now, later on, according to that survey, more and more young people are also looking at other ways of building wealth.

22:19They're considering things like sports gambling and prediction markets as a form of investing. That's something we'll get into a little bit later on. This is Bloomberg Money.

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23:08But with Chase for Business, you're not alone. They bring together local support and a broad range of resources to more than 7 million customers. With a deep understanding of your day-to-day needs, they provide products and guidance built to help you thrive. Right now, earn$500 when you open a new Chase Business Complete Checking account for new business checking customers with qualifying activities. Offer expires January 21st, 2027. Chase Business Complete Checking has the flexible tools you need to accept payments, make deposits, and manage your finances with confidence. Learn more at chase.com slash podcast biz offer.

23:43Chase, make more of what's yours. Fees may apply to Chase Business Complete Checking Accounts. The$500 offer is available for new business checking accounts with qualifying activities through 1-21-2027. Eligibility and qualification requirements must be met. Additional restrictions may apply. Please speak with a business banker for more information. JPMorgan Chase Bank, N.A., member FDIC. For big business, AI opened up a world of promise, but that world of promise turned into a world of pain. Cost spiraling, data scattered across disconnected systems, security and governance increasingly complex, AI initiatives struggling to scale, and ROI that remains frustratingly out of reach.

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25:09This is Bloomberg Money. I'm Scarlett Foo. Back with us is Richard Haas, a senior counselor at Centerview Partners and formerly with the Council of Foreign Relations. Bloomberg Money is our show on personal finance, retirement, wealth management. What's your personal strategy for investing, for saving? Look, I'm not smart enough to do market timing, so I tend to invest for the long term. I'm also heavily diversified. I'm uneasy right now. I'm a pessimist by nature. as you know from having had me on various shows. And there are times in life, I think, to make money. And there's also times in life not to lose money.

25:42So I would think I'm increasingly in the latter camp. So I'm still pretty invested. I'm also not a kid anymore. Because of where you are in your investing career or because of where we are geopolitically? The idea that we're going to get through the next couple of years without some type of a crisis. We haven't had a recession in a decade and a half. We talked about the$40 trillion debt. You have to be a real optimist to think that something's not going to happen. And energy infrastructure has not, for the most part, been destroyed in this war. What happens if that were to change? And then you would have$200 a barrel of oil.

26:11So, you know, also, you know, when you get older, you've got to have a more conservative investing posture. So I've dialed down gradually. Not flip the switch, but dialed down. All right. Before I let you go, I've always wanted to ask you about your connection to the big Lebowski, because the dude quoted President George H.W. Bush and his comment on how this will not stand, this aggression, in the context of a rug dispute. You played a key role in shaping H.W. Bush's policy response that led to that famous line, didn't you? Well, this is taking an interesting turn. Yeah, I met the president on the South Lawn that day.

26:45This was, I think, it was the Sunday of the war. He was coming back from Camp David. I handed him a message. But it was his line. It was not for me. And he basically said, what have we heard from all of our allies? What happened? Has Saddam made any moves out? And he got really angry when I told him what was happening and what was not happening. And then that was that was him. That was from his heart. You know, this aggression against Kuwait will not stand. And it really is and was the signature line of his presidency. I remember Colin Powell, who was then the chairman of the Joint Chiefs, got really furious with me saying, you put the president up to saying that we haven't made this decision yet.

27:20I said, take it to the boss. It wasn't you. It was him. But it was your policy suggestion, I suppose, that pushed him in that direction. Richard, always appreciate your time. Thank you so much. Richard Haas, formerly with the Council of Foreign Relations. Now, Social Security will start running out earlier than expected. These are according to the latest projections, and some fiscal hawks say that's a good thing because the benefits are too high, and they're not meant to be the sole source of income for a middle-class retirement. Bloomberg Opinions' Catherine Ann Edwards disagrees. She writes, rather than seeing Social Security as a reflection of 1935's problems, The goal should be to see the program as an answer to 2026's problems.

28:00Catherine joins us now to discuss. So, Catherine, Social Security was created in 1935. The country was in a very different place with very different demographics. There have been changes instituted along the way, but not enough. So is it just time to make a change to it? Well, it's absolutely time to make a change to it because the trust fund will be depleted in the fourth quarter of 2032. What I argue is not to treat this upcoming trust fund depletion as an accounting exercise. We know how to make a budget balance, at least when it comes to Social Security. But that's missing the overall point of the program to have a compact between citizens and their government to provide economic security at some minimum level going forward.

28:42In 1935, one of the most pressing issues was the desperate poverty of elderly Americans, the number who were showing up to work lines because they simply did not have anything else. Social Security solved that problem. It did an outstanding job. But that doesn't mean that the answer in 2026 is to therefore cut and say mission accomplished. We should think about this very successful tool that the federal government has and how to deploy it in other cases. Right. There have been changes along the way. The most major reform coming in 1983. 1983. What was the thinking in 1983 in terms of how to approach Social Security?

29:14That the trust fund was about to be depleted and they needed to do something in order to balance the program's finances. Social Security really has two eras. In the first half of its 91-year existence, it was a program that was constantly being changed. It was added to, it was expanded, who was covered, what situations was covered. It was not at the start of the program in 1935 that there were benefits for survivors or children, that it covered disability, that it covered all workers or that the benefits were set in stone. In the first four and a half decades, it was a lot of experimentation. What do we want this program to look like?

29:44How do we make it work? Once it hit a pretty dire fiscal state in the end of 1982 leading into 1983, we passed a massive reform, and it's been basically in a glass box ever since. We haven't touched it in any significant way. That's the entirety of my lifetime and almost five decades in between reforms. That's a mistake in and of itself. This is a program that benefits from responding to the needs of Americans. I think there's some people who would argue that because of the actual dollar amount of the benefits, maybe they're too high today. I think that that's relatively inaccurate, considering that the replacement rates of benefits are meant to be even over generations.

30:24I mean, the question is, what are the other problems that Americans are facing? Is there some way that we could continue to expand this program or think creatively about benefits given today's economy. What's the number one solution you can come up with at least short term to kind of address this? I don't know if that's even possible at this point, but should there be one? Oh, there's no like smoking gun. All we need to do is pull out this like secret thing and then Social Security is fixed for forever. We need to make a lot of changes to the program, especially on the revenue side. But there's also ways to expand it.

30:54Social Security could be the source of a universal pay family medical leave program so that every worker in United States has dignity when for some reason life happens and they can't go to work for a few months. Social Security could be the program that, you know, administers a fully federal and generous unemployment system, especially in the face of the impending AI job loss that so many people are worried about. This is a program that functions extremely well, that has very low administrative costs and extremely high trust from the United States people, something that the rest of government cannot say at the current moment.

31:25So let's use this tool as what I try to advocate. Yeah, that goes back to the poll that we're just telling everyone about. Catherine, thank you so much, Catherine and Edwards of Bloomberg Opinion on Social Security and why it should be not fixed, but I should say it should be preserved the way it is. Joining us right now on Bloomberg Money is Ellen Zentner. She is chief economic strategist and global head of thematic and macro investing at Morgan Stanley Wealth Management to talk about personal investing, retirement and how you plan for your wealth. But I want to get your reaction, first of all, to Social Security.

31:58What does the projection of Social Security running out earlier than anticipated mean for how someone manages their personal finances? I guess it depends on whether you're a baby boomer, you're Gen X, or you're a millennial. Yeah, absolutely. I mean, I'm Gen X, and I remember my parents telling me when I was younger, don't count on Social Security. And I mean, the way costs are going in this economy, maybe my Social Security would help pay for a few groceries by the time I can collect. But anyhow, you know, I have just come off a marketing trip to see a lot of our clients on the West Coast. There's not one meeting that goes by where they don't ask about Social Security, about the sustainability of our federal debt.

32:38These are things that families are really concerned about. And as an economist for Social Security. You know, we have an aging population. We know this. We've got a lot of aging baby boomers aging out of the labor market. We need a very robust replacement rate, meaning bodies coming into the labor market and paying into the Social Security system. And of course, that is waning. We heard Catherine talk about possibly AI taking jobs. We don't have population growth in this economy. Immigration has been cut off. Right. And we just had the slowest growth in our country's history in population. Birth rates are falling.

33:14And so just for like conversation starter, just to get people like saying, what? I'll say things like, thank God for AI because we don't have the bodies that we need. And so you unit economic tax, the robotics, humanoids, all of these things that are replacing labor. And that's what's paying into the system. And I think that's where we're headed because that's what fills the coffers of social security. This feels very dystopian. Well, you constantly have to have, well, right, but, well, look at the world that we're living in and look at the technological advancements that we're going through. So we have to think outside of the box of how do you continue to fill those coffers of social security?

33:57It's a revenue problem and that would bring in more revenues. So you've done a lot of proprietary work on longevity and this is kind of some of what you think about as well. You point out that fertility rates are declining, having kids, super expensive, so fewer people are doing that, and people are living longer. Are we going to end up with a lot more older adults who are driving the economy? Their spending is the engine of this economy? Not necessarily. I would think of it as with each generation that comes along, they've got different priorities and they do spend differently. I think what I would do is focus on more the aging of the population.

34:33And people that are the demographers believe that people are 65 today and developed countries with good access to health care are going to live in into their 90s. That that's not even, you know, children that are born today where they believe more than 50 percent of children born today will live to be 100. We have more clients than I can count that are in their 90s that are over 100. And so what we've been focused on is when we are living longer, which is a great thing, what do we do when people that would normally inherit in their 40s, in their 50s, and use that to buy a home or pay off their mortgage or put their kids through college, what do they do when they're inheriting in their 60s and their 70s?

35:20So we have to think about wealth and transferring wealth in a different way, because as we live longer, we might have different chapters of ourselves in the labor force, Right. We might pass on money beforehand. We might do a lot more generation skipping. Planning, financial planning has to change overall. That's become a lot more complex, hasn't it? To plan for your finances, to plan for a transfer of wealth, especially since you're saying different stages, it might happen early on and then it might have to happen again. Yeah. And what I've been telling clients that I've been meeting with, because on the wealth side of the business is very personal conversations and they're very hyper personalized.

36:01And so, you know, as an economist, yes, the equity market is going like gangbusters. Everybody's seen their financial wealth increase, but it's still the case that the bulk of wealth creation in the U.S. is generally through homeownership. And you've got a generation that is just shut out of homeownership. So we talk about it taking a village to raise a child takes a village to buy a home. And so just helping the next generation, you're sitting on the wealth. It's compounding. A lot of people don't even realize how much it's compounding. By the time they retire, they think they're retiring with a few million dollars and they find that they're retiring with 10 million.

36:43They had no idea that they had no idea. And so give it to your children, help them buy a home, that first home, help them start to create wealth that way. So the other thing about the people who figure out that they actually have a lot of money, oftentimes that's women because they tend to outlive men. What do we know about how women approach saving and spending that's different than men? It is different than men. So we have more than$130 trillion in wealth transfer that's coming. More than$50 trillion of that will go to women first. Exactly what you said. It's not our fault. We live longer. So so and and they behave differently.

37:20We find that they are much more apt to invest in philanthropic activities and impact investing. And they just move through the world differently. They they are more involved in education and health care. Oftentimes the oldest and it happens to be female in the family. the oldest child is the caregiver for the aging parents. And so they've got different priorities. And so we try to do deep dives into understanding how women invest differently so we can prepare our financial advisors for that coming wealth transfer. And we're starting to see that already take place and it's only going to accelerate in the next 20, 30 years.

37:59It is. And I'll tell you what's really interesting that's coming up in conversations as well is that in 2008 with the financial crisis, we were really worried, economists were really worried about millennials because in social economics, we believe that your entire lifetime earnings is determined by where we are in the business cycle when you graduate. And it took them so long to get jobs. But you look today at new data from the Fed. And if you take the median age of a millennial today, they are very much better off than baby boomers were at that age, than Gen X, my generation, was at that age.

38:37Because of the stock market. Because of the stock market and the accumulation of wealth. So they've caught up. All right. Growth stocks and being aggressive in their allocation then. Ellen, thank you. A pleasure. And really come back to Bloomberg Money soon. Ellen Zentner, Morgan Stanley, Wealth Management. Really appreciate it. Thank you.

38:58Bloomberg Money is your new destination for personal finance. This is a cross-platform effort that extends beyond your television screen, including our new digital hub at Bloomberg.com slash money. And one story that ComII this week was about online gambling. According to a new Bank of America report, one in five respondents to the survey saw sports betting as an investment, or at least one kind of investment. This week at Bloomberg's Power Players event held here in New York, I sat down with the president of FanDuel and directly asked him if he thinks that sports betting is a form of entertainment or some kind of investing.

39:29Here's what he said. It's primarily, it's pretty much purely entertainment for me personally. And I think that's, you know, that's the way, that's the experience of most of the customers on our platform. I think you're not going to hear us talk to our customers about spending time on FanDuel as a place that they're going to be investing their money for return. Bloomberg's Zijia Song wrote the story about this report, and she joins us now. So what surprised you in the findings of this report? Because you've written about how the lines are blurring for young investors between sports betting and investing.

40:05Yeah, exactly. I think this report really provides a new insight into kind of the recovery ratio for investors. Actually, not investors, bettors, in this instance. Freudian slip there. Exactly. So this Bank of America report shows that for every dollar that's put into these online betting companies, which includes like sports betting sites like FanDuel or Prediction Markets, only 75 cents are recovered. Of course, some of the winnings might stay on the platform so that people can roll that into future wagers. But it really shows that online betting is really not a form of sustainable income or payment.

40:46All right, Zizia, thank you so much. Zijia Song with the latest on how increasingly scores of young sports fans are placing their first bets and treating it as investing.

41:07This is the Bloomberg Money Podcast, bringing you a smart look at the forces shaping your financial life. I'm Scarlett Fu with Tom Keen. You can watch the show live on Bloomberg Television every Friday at noon Wall Street time. Subscribe to the podcast on Apple, Spotify, or anywhere you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app.

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