Federal Reserve Still on a Path Toward Lower Interest Rates

Summary

Bloomberg Businessweek Podcast Summary

Episode Title: Federal Reserve Still on a Path Toward Lower Interest Rates
Date: March 20, 2025
Hosts: Carol Massar & Tim Stenovec
Featured Guests: Molly Smith, Connor Sen, Randall Williams, Hannah Elliott, Peter Atwater, Paisley Nardini

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Overview

This episode dives into the Federal Reserve’s recent decision not to cut interest rates, the reactions from markets and political figures (notably President Trump), and the broader economic climate. Additional segments discuss notable business and sports news, including a record-setting sale of the Boston Celtics, the evolving auto industry with Mercedes-Benz, and in-depth perspectives on navigating extreme market volatility and shifting global capital flows.

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Key Discussion Points & Insights

1. Federal Reserve Decision & Economic Outlook

(Starts at 01:58)

• The Fed kept rates steady but significantly cut 2025 growth projections and highlighted increased risks to both growth and inflation.
• Bill Dudley (ex-NY Fed President, via prior Bloomberg broadcast):

  "They're flying blind. They don't really know what's going to happen to growth. They don't know what's going to happen to inflation. And you know, that increases the risk of making a policy mistake..." (02:27)

• President Trump publicly urged the Fed to cut rates, breaking norms of central bank independence and adding pressure to monetary policy debates.

Labor & Housing Data:

• Molly Smith (Bloomberg News Economics Editor):
  • Labor market data remains stable, similar to pre-COVID levels (03:13).
  • Housing sales spiked in February, attributed to better weather after disruptions, with persistent high mortgage rates and prices keeping outlook modest (03:45–04:22).
  • Market surprise from better-than-expected housing numbers revealed persistent analyst pessimism.

Market Reaction:

• Despite the Fed's acknowledgment of stagflation risks, the market rallied, mainly because two rate cuts are still projected for 2025 (05:14–06:55).
• Molly Smith:

  "If you saw more cuts priced in, that would have really clued in to say that the Fed is very worried about growth and... expecting more cuts even though inflation is... high." (06:32)

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2. Policy Uncertainty & Risks of “Flying Blind”

(06:55–09:49)

• Many in the economic community feel a heightened sense of uncertainty, with increased M&A pullback and general investor caution.
• Jay Powell (quoted by Molly Smith):

  "Forecasting is really hard. Like, what would you put down?" (07:41)

• The Fed’s job is likened to "threading a needle," with no certainty about the future path for growth or inflation.
• Trump’s direct calls for rate cuts add pressure and break precedent, making the Fed’s task harder and potentially undermining perceptions of independence.

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3. Market Investment Landscape: Post-Fed and Tariff Uncertainty

Guest: Connor Sen (Peachtree Creek Investments, Bloomberg Opinion) at 10:46

• Market has rotated out of momentum-driven plays, partly as optimism over the incoming Trump administration cools.
• Better stock valuations now, with no imminent signs of recession (10:46–13:01).
• International rotation is picking up:

  “From a narrative standpoint... now you’re seeing, well, Europe’s going to grow faster, the US is more mixed, so let’s rotate money out of the US...” (11:44)

• US economy is slowly decelerating; risk of outright recession is low for 2025 but possible stagnation (13:01–14:25).
• AI and tech capital expenditure serve as key support, recession risk linked more to future cuts in that spending.
• On tariffs and stagflation:

  “The tariffs are likely more of a one time impact... not going to be a 1970s thing... prices went up for a few months and then after that... ” (14:29)

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4. Sports Business Feature: Boston Celtics Sold for $6.1B

(18:33–23:28)

• Most expensive sports franchise sale in history, without ownership of the stadium.
• Discussion with Randall Williams and Jason Kelly:
  • Sets a precedent for future NBA expansions.
  • Private equity funds increasingly involved as buyers due to astronomical valuations.
  • Broader implications for the business of sports: “You look crazy in a moment buying any sports franchise. But as long as valuations look good, you look like the wise guy in.” (21:59)

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5. Global Auto Industry & Mercedes-Benz Strategy

(27:10–32:37)

• Hannah Elliott on her interview with Mercedes-Benz CEO Ola Källenius:
  • Demand for flexibility: Mercedes plans to offer both EVs and hybrids in response to volatile consumer preferences.
  • Tariffs, US-China trade, and political risk are looming large.
  • Källenius:

    "Nobody knows the future. What is important is to be very quick and to be very flexible." (30:28)

  • Mercedes emphasizes its deep roots in the US in response to Trump tariffs and nationalist rhetoric.

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6. Market Volatility, Confidence, and Global Flows

(33:08–44:11)

• Peter Atwater (Financial Insights, William & Mary):
  • Investors face a profound “mind shift” since President Trump’s inauguration—narrative focus is now on policy unpredictability and who will benefit/lose from it.
  • US market is becoming, for some, “uninvestable” due to policy volatility and capital flow concerns.
  • On global diversification:

    “Investors have to be more diversified globally than they are. Most American investors are far too concentrated in the US right now...” (43:41)

  • European trust in the US is broken; global capital is shifting.
  • The administration's explicit disinterest in the stock market marks a historic shift from the "Fed put" mentality.

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7. Investment Strategy Amid Chaos

(47:37–55:13) | Paisley Nardini, Simplify Asset Management

• Market corrections and volatility are pushing investors to seek new sources of risk and return.
• Bonds no longer offer reliable portfolio balance—alternatives and commodities (especially gold) see renewed interest.
• Tariffs likely transitory; political “noise” may be negotiation tactics, but long-term, the US market is evolving.
• Core advice: Diversification (especially global) is crucial in a bifurcated, increasingly unpredictable environment.

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Notable Quotes & Memorable Moments

• "They're flying blind. They don't really know what's going to happen to growth. They don't know what's going to happen to inflation. And... that increases the risk of making a policy mistake..."
  — Bill Dudley (02:27)

• "[President] Trump did this last time, right? Presidents don’t usually comment on monetary policy. That's not their job. Just as Powell will often say we don’t comment on fiscal policy."
  — Molly Smith (09:09)

• "One of the funny parts of the press conference yesterday too was when Powell... said forecasting is really hard—like, what would you put down?"
  — Molly Smith (07:41)

• "The fast money trade, hot money trade has really come out of the market... you're getting better valuations on stocks than you did a month ago without yet the kind of recession concern..."
  — Connor Sen (10:46)

• "Investors have to be more diversified globally than they are. Most American investors are far too concentrated in the US right now..."
  — Peter Atwater (43:41)

• "Nobody knows the future. What is important is to be very quick and to be very flexible."
  — Ola Källenius, CEO, Mercedes-Benz (via Hannah Elliott) (30:28)

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Timestamps for Key Segments

• Fed Decision & Economic Data: 01:58–06:55
• Policy Uncertainty & “Flying Blind”: 06:55–09:49
• Market Outlook & Investment Flows (Connor Sen): 10:46–15:58
• Boston Celtics Sale (Sports Business): 18:33–23:28
• Mercedes-Benz & Global Auto Industry: 27:10–32:37
• Volatility, Global Capital (Peter Atwater): 33:08–44:11
• Investment Strategy Amid Volatility (Paisley Nardini): 47:37–55:13

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Tone & Language

Throughout the episode, hosts and guests employ a frank, conversational style—balancing humor (e.g. “Powell broke into a Grateful Dead song. No, I’m just kidding...” 07:33) with expert commentary. There is a strong emphasis on the word “uncertainty,” reflecting the genuine ambiguity facing investors, business leaders, and policymakers.

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Takeaways

• The Fed is shifting to a more cautious, risk-aware posture, but market reactions remain firmly tied to their forward guidance and external political pressure.
• Uncertainty, both economic and geopolitical, has become a defining feature of markets in 2025, challenging old playbooks and pushing for greater diversification and flexibility.
• Structural changes—from the role of capital, to US investability, to Europe’s growing independence—are unfolding rapidly, with policy unpredictability now a day-to-day reality for investors.

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This summary captures the depth, tone, and complexity of a packed episode that offers a 360-degree view of the interconnected forces shaping today’s global economy, investment decisions, and business headlines.

Transcript

[Carol Massar]

Pinpointing the genetic changes that predispose us to disease Identifying the roots of mental illness Treating congenital anomalies even before birth. At Boston Children's Hospital, we're investing in children's health today to ensure the well being of adults tomorrow. As home to the world's largest pediatric research enterprise and more than 260 specialty programs, Boston Children's is where the world comes for answers. Learn [e-mail] did my card go through? Oh no.

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[Podcast Host]

Business Week insight from the reporters and editors that bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg businessweek podcast with Carol Massar.

[Peter Atwater]

And Tim Stenovec on Bloomberg Radio.

[Podcast Host]

Day.

[Carol Massar]

After the latest fed decision, the second decision of 2025, we have President Trump posting on social media that the Fed should cut interest rates splitting with the US Central bank as officials weigh the economic cost of his tariff push. As you know, the Fed did not cut rates as expected yesterday, but they did sharply reduce their 2025 growth projections. Meantime, one former Fed official, former New York Fed President Bill Dudley, and a Bloomberg Opinion columnist telling us right after the decision that the Fed is in a bit of a tough place.

[Peter Atwater]

You know, I think the reality is they're flying blind. They don't really know what's going to happen to growth. They don't know what's going to happen to inflation. And you know, that increases the risk of making a policy mistake or just.

[Carol Massar]

Being a tough place to be. Former New York President Bill Dudley, Bloomberg Opinion Columnist as well yesterday on Bloomberg Surveillance the Fed decides all right to talk about the day after and also go over some US Economic data points that we got this morning. Back with us is Bloomberg News economics editor Molly Smith. She's here joining me and Tim, she is here in our New York studio. Molly, as always, so much coming at the Economic universe and just investors in general, today's U.S. economic data looks like the labor market, okay, housing market bounced back from some weakness. What do we need to know?

[Molly Smith]

Yeah, the jobless claims numbers have really just been in a bit of like a holding pattern in this kind of like know nothing state. You know, they're really very much in line with pre Covid levels like hovering in this to 20,000 area on the initial claims. And that's nothing really to worry about, which is great. Of course, there are other data that we get later today that are referring to federal workers specifically and those have been drifting higher as we would expect to see per all of the government firings that we've been having.

[Carol Massar]

So that's what is that data that we get later?

[Molly Smith]

So that's still from the jobless claims data. It's just published a little bit later for the federal workers specifically that the Department of Labor also puts this out later on Thursday. So we've been starting to pay closer attention to that. Not something we used to look at before, but obviously makes a lot more sense now and then. On the housing front, we saw existing home sales beat all estimates in February. I think a lot of this was really due to the weather though, that coming back from remember in January had the wildfires in L A. We had really bad winter weather across a lot of the South. So those were the two regions in February that really bounced back, whereas the Northeast and the Midwest not as much.

[Podcast Host]

But why was this such a surprise, Molly? Because we actually saw equity markets turn higher as a result of this stronger than expected housing data. Why did this surprise analysts? They knew about the weather already.

[Molly Smith]

Yeah, you know, this was above the reading was above all estimates in the Bloomberg survey. I think that, you know, the expectation for the housing market right now is really just so grim. Like, you know, it's very much like we're just going to be in this really steady state of like, you know, pretty tepid sales. Mortgage rates, yes, have come down a bit in recent weeks but are still in that 6.7% area. And home prices are still really high. Even though you're getting more inventory coming on the market, it still hasn't really made much of a dent in prices. So the outlook for housing isn't great right now, that said, we're going into the season where home sales do typically pick up in the spring. So that's going to be really key to watch.

[Podcast Host]

Okay, we have that economic data. We talked about the economic data. Now that we've had about a day to really digest what we heard from Jay Powell and the Federal Reserve yesterday. What are your thoughts, Molly? I was a little surprised to see the market reaction yesterday given the uncertainty that Powell expressed. But what it was the best Fed day market going all the way back to July of last year.

[Molly Smith]

I think what Powell's job a lot of the time is to do is understandably not induce panic or to downplay where there might be perceptions of panic. And the ACP summary of economic projections yesterday, that came out before Powell spoke for me, that would have been a bit panic inducing, I think. You know, sharp cuts, very sharp cuts to growth, you know, marked up unemployment, pretty noticeably. Marked up risks to inflation as well. Very. So those are things that all right now, you know, add up to what we say is stagflation risks. And that was really the big word going into the press conference yesterday. But then Powell gets up there and seems to downplay all of these risks, doesn't seem too fazed by it. I think something for me that was really bizarre was his idea that the marking down of growth projections and higher risk to inflation somehow balance each other out. That part I still don't really have great understanding on. But I think the market rally was really just because the Fed still sees two rate cuts this year. And I think there was a real case where what if you saw the dots price in more than that? Because normally we would love to see that and that would be, you know, a good news rally. But I think in this case, if you saw more cuts priced in, that would have really clued in to say that the Fed is very worried about growth and that they would have been expecting more cuts even though inflation is going to be so high.

[Carol Massar]

What's the analysis after we kicked it off, mentioning what Bill Dudley, former New York Fed president, said on the Bloomberg broadcast yesterday following the Fed decision, saying, you know, I think the reality is that the Fed is flying blind. They don't really know what's going to happen to growth. They don't know what's going to happen to inflation and how that increases the risk of making a policy mistake. Do most folks that you talk to in the economic community feel like we just don't know what's next? I feel like there is a growing chorus of business leaders who are kind of saying that. And it's why you're seeing maybe M and A pullback. Lots of things pull back.

[Molly Smith]

Yeah, it's totally fair. I mean, I think it's. One of the funny parts of the press conference yesterday too was when Powell had said back to a reporter when.

[Carol Massar]

He broke out into the Grateful Dead song. No, I'm just kidding.

[Podcast Host]

That was your dreams, Carol.

[Molly Smith]

There was one part where he had, like, put it back to a reporter saying, you know, like, forecasting is really hard. Like, what would you put down? I was like, okay, that's more your job than like hours. But it's really hard. To his credit, it is very hard right now. So. And you saw that very much in the economic projections as well. All of the heightened uncertainty around growth, around the labor market, around inflation. He's not wrong. I think none of us really know. And you know, to Michael McKee's great question of how long are you going to wait to see the totality of these policies? Who the heck knows?

[Carol Massar]

Right. And will it be too late? Right. Because you have to be. So I got to say, I, so I, you know, put buttons and like, you know, things that fall off. And threading a needle can be really tough. And I feel like that's where the Fed is right now, threading a needle into terms of what we need for monetary policy. Not easy right now.

[Molly Smith]

Not at all. I don't want their job. We'll just sit here and try to decipher it.

[Podcast Host]

Well, his job getting a little harder too. With President Trump saying last night that the Fed should cut interest rates. Splitting with the US Central bank is a. Officials weigh the economic cost of his tariff push. This is a post on his social media network. The Fed would be much better off cutting rates as US Tariffs start to transition their way to the economy. Do the right thing. April 2nd is Liberation Day in America. How does that complicate Powell's job?

[Molly Smith]

Well, well, one thing, it totally breaks with a long standing practice that, you know, the Fed is an independent institution that.

[Podcast Host]

Yes. Going all the way back to 18. Right.

[Carol Massar]

Molly.

[Molly Smith]

Going back a long time. And Powell has been a very staunch supporters.

[Podcast Host]

Trump did this last time, right?

[Molly Smith]

Yeah. Like presidents don't usually comment on monetary policy. That's not their job. Justice Powell will often say we don't comment on fiscal policy. So that's one thing. The other thing is that if, as I was kind of saying before, if the Fed was going to price in more rate cut expectations this year, I think it honestly would have the inverse effect of what Trump is going for. I think more people would perceive that as the Fed is really worried about growth and that even though inflation's projected to be elevated, we need to step in to save the economy. So I don't think that would honestly have the effect that Trump is going for.

[Carol Massar]

All right. Lots to keep on our mind. Molly, thanks so much. Bloomberg News economics editor Molly Smith. All right. That is your economic update on this Thursday. Now, what it all means for those who have to invest in this market where instability seems to be the norm, volatility. We see it today due to trade war uncertainties. And despite, as we just talked about with Molly, a bounce back in some housing and certainly certainly jobs data looking pretty positive. We do get a big test tomorrow with the expiration of four and a half trillion dollars worth of options contracts. So helping make sense of the trade for us here at Bloomberg is Bloomberg opinion columnist Connor Sen. He is founder of Peachtree Creek Investments. He joins us from Atlanta. Hey, Connor, good to have you back here with Tim and myself. You know, there are always buyers and sellers in the market, right. And whether there's more or less of one really kind of helps develop, you know, or determine the flows, the demand, the pricing. And but I do think about and with that acknowledgement that there's always buyers and sellers, is today's market investable in your view?

[Connor Sen]

I think so. It's just that the market we had coming into the year was very momentum driven, a lot of optimism about the Trump administration. And I think we've seen over the past month that that momentum has really come out of the market. The Trump optimism is more mixed. And so that sort of fast money trade, hot money trade has really come out of the market. But sort of a lot of parts of the market are still not really that concerned about recession. And so basically you're getting better valuations on stocks than you did a month ago without yet the kind of recession concern that you've gotten over the past few years? A few times.

[Podcast Host]

Connor, what about the rotation that we're seeing out of US equities and into international equities? I've spoken to two friends. They're not in finance. They're normal people who are thinking about their own retirement. They have nothing to do with investing day to day in the market. But both of them have said to me, I'm, I'm selling U.S. equities and I'm investing outside of the U.S. i think that it's a little turbulent here right now. And I think the opportunities outside of the U.S. what do you make of that?

[Connor Sen]

I think from a narrative standpoint, I get it in that sort of over the past few years the US was seen as the only game in town globally to invest. And I think that explains a lot of the valuations you saw in US large cap stocks last year when you had Costco at 55 times earnings and Wal Mart at 35 times earnings. It wasn't just the tech stocks. Sort of a belief that don't bet against America. American companies are going to win and there's no growth anywhere else in the world. And so I think now you're seeing, well, you know, there is a need for capital in Europe and we're seeing the stock market perform better there. I'm sure globally a lot of investors who were sort of betting on the US feel kind of just, you know, deceived and so they're looking to repatriate capital. And at least for now, I get the story of well, Europe's going to grow faster, the US is more mixed, so let's rotate money out of the US to other parts of the world.

[Carol Massar]

Hey, one of the things I wanted to ask you. Here we are, Connor, one day after the Fed and Tim was kidding or we kidded at the top of the broadcast like don't look at your 401k right now. I however did and I am wondering about, you know, a column you wrote that gets into where the stock market goes, the economy will follow. We have seen a pullback in stocks so far, certainly this year. So based on that, where do you think the US economy is heading in your view? It sounds like you're not talking about recession, but I am curious how you kind of tie these together.

[Connor Sen]

We've had negative momentum in the US economy I would say for about a year. I think the soft landing ended last spring. Full employment ended by spring. But the deceleration in growth we're seeing is just very, very slow and it's not fall off a cliff like we saw with Lehman Brothers in 2008 or with COVID And so I think that's a case where I don't think we're going to have recession over the next six months for I think housing is already kind of dead, so it's hard to kill housing again. And AI is the other risk of the economy that I see. And that seems like more of a 2026 story with all the CapEx spending that's going to happen this year. And so I do think that high end consumption growth could be slower, maybe Pretty stagnant this year, but you're not really seeing signs of growth falling off a table or the kinds of fragilities that would lead to a recession at least over the next few months.

[Podcast Host]

What's the risk that you see? I'm here in San Francisco right now. Everybody's talking about Nvidia gtc. We're going to be hearing from Ed in just a few minutes. What's the risk?

[Connor Sen]

For me it's a sort of the dollars being spent. So if tens or hundreds of billions of dollars are being spent on chips and data centers and, and power generation in utilities, it's really that going away that would create the recession risk. And I think just the lead times to cutting spending on that are more than a few months, a few quarters. And so it's really companies have committed to spend money in 2025. It's really 2026 that the question mark is and we're just not going to know about that for at least six months. So I think in 25, maybe markets don't do well, but the economy, probably a stagnation is the worst case scenario rather than a bad recession.

[Carol Massar]

But not stagflation.

[Connor Sen]

I don't think so. I'm kind of with the Fed that the tariffs are likely more of a one time impact and it might be a significant one time impact depending on how sizable they are. But it's just not going to be a 1970s thing, even a 2022 thing. It'll just be, you know, some prices went up for a few months and then after that one time price shock, it sort of happened. And that's even if companies feel like they can pass along those prices, and that's not clear at the moment that they're willing to do so.

[Carol Massar]

All right, so I'm going to get a bunch of hate mail, but I'm only, you know, piggybacking back on what Fed Chair Jay Powell said about tariffs like transitory. We never get that wrong. Not a hot word here. But I mean, truly, do you believe that the impact of tariffs will be transitory even if they stay and don't go away, or is it only if they stay, don't go away and there isn't more piled on and we get easing regulatory environment and we get tax cuts.

[Connor Sen]

It kind of depends on the underlying conditions in the economy. And when Russia invaded Ukraine in early 2022, we had a very overheated economy, low rates. That was kind of the perfect dynamic for that inflation to stick around and be amplified. Right now you have an economy where the cyclical parts of it are pretty weak. The hiring last year that was strong was government, health care and education. That looks to weaken this year. There's just not a lot of underlying growth momentum in the economy. So it's not clear that companies are in a position to pass along those price increases. So I think it's a the economy is weaker and that's why I think it's more likely to be transitory.

[Carol Massar]

Okay, so 20 seconds. Don't be worried. Investors. Is that your final?

[Connor Sen]

I mean, I think, you know, if you were super invested heading into the year, that was probably a mistake. After the sell off. I think you need sort of more bad things to happen this year than just spooks. I think the spook move has already happened.

[Carol Massar]

All right, we're going to leave it there. Hey Connor, thanks so much. Glad we could check in with you. Bloomberg opinion columnist Connor Sen. He is the founder of Peachtree Creek Investments. Pinpointing the genetic changes that predispose us to disease Identifying the roots of mental illness, congenital anomalies even before birth. At Boston Children's Hospital, we're investing in children's health today to ensure the well being of adults tomorrow. As home to the world's largest pediatric research enterprise and more than 260 specialty programs, Boston Children's is where the world comes for answers. Learn [e-mail].

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[Carol Massar]

Well, some big news in the world of sports. And no, it's not March Madness, although that is also big. And we'll get to that in just a moment. But among our most read stories on the Bloomberg Terminal at this hour is a consortium reaching a deal to buy the NBA's Boston Celtics for $6.1 billion. Takeover makes it the biggest NBA deal ever, surpassing the $4 billion valuation for the Phoenix Suns back in late 2022. So let's talk about this. Joining us is Bloomberg News U.S. sports business reporter Randall Williams. He's here in studio along with Bloomberg Originals chief correspondent Jason Kelly. Guys, I want to kick it off. Randall, first talk to us about this deal. A lot of money.

[Randall Williams]

A lot of money. It's the most ever paid for a sports franchise. That edges out Josh Harris's purchase of the Commanders and NBA owners in the league is happy he got the 6 billion.

[Carol Massar]

Jason is shaking his head. Why are you shaking me?

[Jason Kelly]

It's unbelievable when you think about the last even during the period where these guys have owned the Boston Celtics, they bought it for $360 million.

[Randall Williams]

Correct.

[Jason Kelly]

Back in 2022 and 2000.

[Carol Massar]

2002.

[Jason Kelly]

For 2002, they won a couple of championships. They put it on the market for essentially estate planning on the part of the Grassback family. You know, I don't know what you heard, Randle. It wasn't a certainty that they were going to get to this price, but they did.

[Randall Williams]

No, I mean, when they don't own their own stadium. And you know, the stadium is a big part of this because basketball in the NBA, you fill up the stadium 41 times a year. But there's 365 days in a year. You want to fill that with concerts, you want to fill that with other events, festivals. And so when you don't own that, you lose out on revenue. For the Celtics to reach $6 billion without owning their own stadium, it sets the precedent for the NBA expansion owners who are going to be bidding for this, who will own their stadium. It's like, oh, they sold for that without a stadium? I'm good.

[Carol Massar]

But that begs the question, why did they pay so much without the stadium?

[Randall Williams]

Well, pride, there's a lot of reasons why? There's a lot of reasons why. But the first thing that I would say is that when you're buying a sports team, you do want to get to a price. And I think that for the league and for the Boston basketball Group, they wanted that 6 billion. They got it. And there's some, there's some unhappy people too, like Steve Pagli Yuga, he put out a statement and said, look, we were going to pay Pat, we're going to, excuse me, we're going to pay cash into this. And he lost. And we're seeing that Bill Chisholm's Group, which has 6th street and Rob Hale and Bruce A. Beal Jr. From relative companies, they won.

[Podcast Host]

Come on, Jason.

[Carol Massar]

Yeah, yeah.

[Podcast Host]

Jason, does, does the deal make sense to you? I mean, somebody who's, who's looked at these valuations for a long time, does it actually pencil out or is it pretty shocking to you? And look, we should say something is worth whatever somebody is going to pay for it. So obviously it's worth this much, but it's kind of mind blowing.

[Jason Kelly]

No, it's hard to pencil it out. But then again, you know, Randall and I were talking about this before we came on air. People thought Steve Ballmer was crazy for paying $2 billion for the L A Clippers. People thought Matt Ishba was crazy for paying $4 billion for the Phoenix Suns and Mercury. And people thought these guys were crazy for paying $360 million, you know, 20 some odd years ago. So you're exactly right. I think one thing that to build on what Randall was saying, the other real interesting thing about this is this is an expensive team, right? They have a very high payroll. And this is not the sort of cash machine that maybe people would think it is. Right?

[Randall Williams]

And I'd say going back to your point about, you know, how crazy it is, you look crazy in a moment buying any sports franchise. But as long as valuations look good, you look like the wise guy in. So as long as these valuations keep rising and the NBA has a new media deal, everybody looks smart on the Celtics side, no stadium ownership and you have a lot of money to pay out to players. So they have to definitely go back to the drawing board and go back to their books and figure out like, how do we make this work long term.

[Podcast Host]

But Randall, as we were talking about, it wasn't just the biggest NBA deal in history, it's the biggest sports franchise deal in history. So you got the Washington Commanders last year for 6 billion, Manchester United last year for 5.4 billion. The Broncos for 4.6 billion back in 2022. It's football, it's soccer, it's basketball. What's going on here, Randall? Is it just supply and demand?

[Randall Williams]

It's a little bit of both. I mean, you're seeing the influx of private equity in these deals. And so with these franchises rising as quickly as they are, the number of people who are able to buy these teams outright is diminishing. Like, it's just getting so much smaller. That's why you see 6th street in this deal having a billion dollars to offer up and help pay for this. With that in mind, if private equity is going to pay a billion dollars for this $6 billion team, then even the number of limited partners from individual people is going to be small as well. So it all depends on how you're forming your ownership group, whether you want private equity, whether you want people. It just really depends. But private equity is a silent partner in this.

[Carol Massar]

All right. Well, man, whenever we talk about these big deals, we could go on forever because it's always fascinating and the amount of money and the buyers continue to pay up. Randall, thank you so much. We'll look for more of your coverage on. Randall Williams, US Sports business reporter here at Bloomberg News. We're going to stay with sports because didn't know or maybe did you notice that March Madness is underway? Kelly, Listen, we do our own version here at Bloomberg, and it's, it's now hitting what, its 10th anniversary.

[Jason Kelly]

So. 10th anniversary. This is called brackets for a cause. This is something I've been really excited to be a part of, along with our Chairman emeritus, Peter Grauer. For the last 10 years, we've raised $6 million, more than $6 million so far, setting a new record in this year's contest. 61 participants pledging $20,000. I'm not as good at math as you are, Carol Massar and Tim Sandovic, but that's $1.2 million plus a purse. It's going to be split among some really good charities. We couldn't be more excited.

[Podcast Host]

All right, who's playing this year? I did not do my bracket yet, by the way, which means I can't do it because the games have started. So come on, 2026 for me.

[Carol Massar]

Yeah.

[Jason Kelly]

Who.

[Podcast Host]

Who did get there? Who did get their act together, though, this year?

[Jason Kelly]

Some really good names, some names very familiar to the Bloomberg businessweek audience. We're talking about John Gray. We're talking about David Solomon. John Gray, of course, President Blackstone. David Solomon, the CEO of Goldman Sachs Jenny Johnson, she is, of course running Templeton. Carolyn Tish Blodgett, she is an owner, her family of the New York Football Giants, as well as the controlling owner of Gotham fc.

[Carol Massar]

Katie Katz of tcw.

[Jason Kelly]

Yes. Katie Koch. John Winklered from tpg. So it is a murderer's row, is it?

[Carol Massar]

So most of these guys are. Who's been there from, like, day one.

[Jason Kelly]

So Gary Cohn has been there from day one. He won the very first contest, of course, now the vice chairman of IBM, former president of Goldman Sachs. We actually got some of the champions together for a dinner a few weeks ago. And Gary was there, of course. He served in the first Trump administration. He's been just ride or die for this for a long time. John Gray has been with us pretty much since the beginning as well. He won a couple of years ago. These people show up, they get very excited. And you know, Cliff Asness, Dwight Anderson, like, lots of names. Bill Ackman.

[Carol Massar]

I always kid you when I used to sit next to you, and it would be like Jason would come in, in the morning and they would be like messaging him. Like, did you see. Well, like, how well I did.

[Jason Kelly]

I mean, honestly, this will come again as no surprise. These gu. These men and women, very competitive. I'll get emails all weekend about, you know, where they are. And they're gaming it out, especially as it gets toward the finals. And keep in mind, we're looking at the men's bracket and the women's bracket.

[Carol Massar]

Yes.

[Jason Kelly]

It's split evenly between the two. So 600,000 will go for the men's, 600,000 will go for the women's.

[Carol Massar]

Yeah.

[Podcast Host]

Jason, I can still do my women's bracket, right?

[Jason Kelly]

Yes. You should be able to do bracket on the terminal. Yes.

[Podcast Host]

Yeah, that's until tomorrow at 11:30. So that one is still open.

[Jason Kelly]

Yeah. Get in there. Get in there, Tim.

[Carol Massar]

Stanford, be the go on the Bloomberg terminal. You know what we'll never get, Tim, on Jason's feet are bracket sneakers.

[Jason Kelly]

Yes.

[Carol Massar]

We will never get them.

[Jason Kelly]

They are limited edition.

[Carol Massar]

Limited edition sneakers. Bracket sneakers.

[Jason Kelly]

I'm going to. You can take a picture and put them out on your socials.

[Connor Sen]

Yeah, Jason, I know.

[Jason Kelly]

Plus the hoodie.

[Podcast Host]

What size is your shoe, Jason? Maybe we can share.

[Jason Kelly]

Yeah, no, not for.

[Connor Sen]

Not.

[Jason Kelly]

Not for sharington. All right, have fun in San Francisco.

[Carol Massar]

Jason Kelly, thank you so much.

[Podcast Host]

This is the Bloomberg Business week podcast. Listen live each weekday starting at 2pm.

[Peter Atwater]

Eastern on Apple CarPlay and Android Auto.

[Podcast Host]

With the Bloomberg business app. You can also listen live on Amazon Alexa from our Flagship New York station.

[Peter Atwater]

Just say Alexa, play Bloomberg 1130.

[Carol Massar]

Do you want to talk a little bit about cars? Gotta say, one of the best, best known global auto brands. Great read on the global auto economy and the luxury global consumer. We're talking about Mercedes Benz. And our Hannah Elliott recently catching up with the company's CEO for more on where and why because there was a hilltop villa involved and we want to know the details. Hannah, of course is Bloomberg Pursuits auto columnist. She's also co host of the Hot Pursuit podcast that she does with Matt Miller. You can find [e-mail] or wherever you get your podcast. Hannah, so good to check in with you. You are on the west coast as you often are. You're in Irvine, California today at Karma Automotive, the headquarters. First of all, let's start there. Where are you? Why are you. Who are they?

[Hannah Elliott]

Well, it's, it's a funny thing you should bring it up. I can't actually tell you too much because I'm embargo. But the good news is I am at the headquarters of Karma Automotive and they are bringing forth a new vehicle that should be hitting the streets in 2026. So I can't say much more than that. It's going to be electric, of course. And of course we remember Karma. They had, there was a Karma Fisker. There have been multiple iterations of this company. They've struggled but they're going to, they're going to fight again. So I'm here to report about it.

[Podcast Host]

Can they. Well, okay. I was going to ask you more questions. I'm like so scared of. Yeah, I'm so scared. I'm so scared.

[Hannah Elliott]

I'll tell you if I can answer or not. I mean it's fascinating.

[Podcast Host]

Well, okay, before we get to Mercedes, I do want to like, it's really, really hard for an American car company to start and pull this off. I mean, look at Tesla, look at revision. But the road of, you know, of that is paved with like the bodies of so many car companies. Can they pull it off?

[Hannah Elliott]

I don't know. It's going to take a lot of money. It's going to take a lot of money. And at this point, and this is a great segue into Mercedes, I don't know if they can catch up, up enough in the technology world to compete with Mercedes. And I say that having just driven the third generation Karma Rivero from L. A down here and the technology is moving so fast these days for a small startup to now compete with Mercedes. And I just spent a week in Rome With Mercedes with their new cla sedan, it's going to be extremely difficult. And one thing I always said about the startups were, you know, the big OEMs did not produce electric cars at first because they didn't have to. It didn't mean they couldn't, it just mean they didn't had, have to. Now as OEMs realize they're going to have to and they need to, to offer options for everybody, the market is even more competitive. So I don't know, it's really a tough challenge.

[Carol Massar]

God, it feels like I don't know is just so, you know, the word of, of the era right now because there's just so much coming out. People I want to ask you about your conversation. I mean take us to the hilltop villa and what you saw, but who you talk to. And I am curious about the global environment, the global business environment, especially with, you know, tariffs coming out of the United States, global supply chains being maybe potentially rethought. What did he have to say?

[Hannah Elliott]

So I spoke with Ola Colinius, who is the chief executive officer and chairman of Mercedes Benz Group. This is the guy where the buck stops. And he also is saying he doesn't know the future. This is a common thread that we've seen. When I ask him about tariffs, when I ask him about China, when I ask him about EV sales in the us he is very open saying nobody knows the future. What is important is to be very quick and to be very flexible. And so Mercedes is, is working to speed up everything and to be incredibly flexible so they can pivot and turn if they need to to satisfy the market. What they're hearing and what the CLA sedan really provides is that some people do want EVs but a lot of people still want a combustion option. So this CLA sedan is really interesting because it's very affordable. It should be around €50,000. US pricing hasn't been announced, but for Mercedes that's considered entry level. But it also is very advanced and it will be offered in a hybrid version in the US next year. So it's debuting as an electric vehicle, but there will be a hybrid version coming next year. Again, it's all about options and it's also about going against Tesla, the kind of original startup that made good this is, this is Mercedes now going directly to Tesla.

[Podcast Host]

Well, speaking of that, Tesla is at least in the ones that are sold in the US are made in the US Concern about and closely aligned now with President Trump, with Elon Musk, how closely aligned he is what is the concern that Mercedes has about tariffs about President Trump, given the comments that he's made about German car companies?

[Hannah Elliott]

It's a huge, huge concern. I asked Ola about it. He used the word reciprocity. He, of course, is following very closely. But he really made the point that Mercedes has been in the U.S. for decades. They've got two factories in the U.S. they are one of the nation's largest exporters. And he really emphasized we feel American, we're part of the American fabric. We hope there's a sense of reciprocity as we're talking about these tariffs.

[Carol Massar]

All right. Great stuff as always. So glad we could check in with you, Hannah. Thank you. Thank you. Thank you. Hannah Elliott, she is Bloomberg Pursuits auto columnist out there in Irvine, California. Highly recommend you check out her story. It's on the bloomberg [e-mail] you can find out a little bit more too about the cla, the from the Mercedes, from Mercedes, I should say, and her experience doing a test drive.

[Podcast Host]

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and and Auto.

[Peter Atwater]

With the Bloomberg Business app or watch.

[Podcast Host]

Us live on YouTube. The NASDAQ 100 is in correction. It's down about 11% from its January highs. The S&P 500, Carol, it's down by 8%. Look, corrections happen. Stocks go down. Yet the volatility that we're seeing right now stemming from a back and forth trade war, uncertainty over future economic conditions, that's something, Carol, that investors in this market may not be used to.

[Carol Massar]

That's for sure. And the question that Peter Atwater has for investors is do they stay buckled in in the passenger seat with President Trump behind the wheel or do they jump from the car? It is great to have back with us on Bloomberg businessweek. Peter Atwater, he's president of Financial Insights and adjunct professor of economics at William and Mary. He's also author of the 2023 book the Confidence Map, Charting a Path From Chaos to Clarity. He also coined the term K shaped recovery. He joins us from Williamsburg, Virginia. Peter, so glued to be talking with you again. I feel like I'm not even quite sure where to start because there's so much coming at us. The volatility, you know, you get into investors feeling vulnerable, uncertain, powerless. Sentiment is a big factor. I don't know this market environment like where do we go from here? Do we even know? Bill Dudley of the New York Fed said, you know, really that the Fed doesn't even really kind of know where to go next.

[Peter Atwater]

Yeah, we never really know where to go. But what's so interesting to me about where we are today is that there has been this huge mind shift from inauguration data today. So, you know, coming into inauguration, people were fantasizing wildly about where the markets were going, where the new administration was going to take the economy and the markets. And since then, investors have had to come to grips with the fact that there is without question a shift in behavior out of Washington where President Trump is behind the wheel. And so investors are used to being in the passenger seat with specific companies with, you know, next to CEOs, for good and for ill. But now they're having to look at their entire portfolio and decide, are the investments I'm involved in going to be beneficiaries of the new administration or victims of them?

[Podcast Host]

It's just so interesting to hear this because I think there's this narrative that emerged following the first Trump administration that this is a guy who looks to the Dow in the S&P 500 as a scorecard, as a sort of report card. And indeed, during his first administration, he touted numbers there. Yet we heard a different narrative emerge this time. Peter, do you buy it that he's not paying attention to the stock market?

[Peter Atwater]

One of the things we know about President Trump is he loves to cite metrics that work in his favor. So I'm not surprised with the markets dropping, that he's looking for alternative measures of. Of consumer and satisfaction in the economy. But I think at the end of the day, what he is trying to demonstrate more than anything else is that he and he alone is going to dictate economic policy, American diplomatic policy, and that everyone else needs to come to grips with that.

[Carol Massar]

But is there a point like. Yeah, no. It's interesting, Peter, because how many conversations I've had with folks and they're like, oh, you know how this is going to play out. It's just like, you know, you reported on at the first go round, and it feels so different, and I think so many people are realizing this is different this time around. Having said that, is there a point, a breaking point, where the team around the president somehow has a bigger say, like they did in the first administration? Because right now it does feel like absolutely like, you lay it out, the president's in the driver's seat and everyone is there in the backseat to back him up.

[Peter Atwater]

Yeah. One of the things that I say to my students is falling confidence, individuals grow spines. And so what we're likely to see is that should the markets continue to drop, should consumer confidence continue to fall, those around him will feel compelled to react. Whether that's sufficient or not, we don't know. And to be fair, Carol, there are a number of organizations and individuals who feel wildly empowered now. Now. And so we're, we're in this interesting moment where individuals and organizations are having to decide in which camp do they expect to fall. Because one of the things we see with, with dominant leaders such as Trump is there are clear benefits and there are also clear punishments. Establishment.

[Podcast Host]

Well, how do you advise people to weather this storm if you indeed think it is a storm? Because there are a lot of people we talk to Peter who say, okay, wait a second. Once he gets tax cuts figured out, once we get to April and there's more clarity when it comes to trade, things will become less volatile. What do you say to that?

[Peter Atwater]

So I think that investors have to be thinking, I say a lot, you know, plan for what you can imagine, but be prepared for what you can't. In this environment, investors and corporate executives need to have two playbooks at once. One is in anticipation of things going on in their favor, but also a very clear playbook for if this goes against me, what do I do? What is my, what are my preparations planned ahead in anticipation of that? Because the outcome here is going to be very binary. And that's what we see over and over, is that when you create beneficiaries and victims, the vulnerability that comes from the victims sets things in motion. We're seeing that in Europe right now, where I'm going to the geopolitical vulnerability has leaders on edge and they're mobilizing in response.

[Podcast Host]

I'm going to ask you something crazy, Peter. Is, is one of the outcomes here, on an investor perspective, that the US Becomes uninvestable in your view?

[Peter Atwater]

I think that is a clear possibility. I really did that investors have to be made comfortable that the United States is interested in foreign capital, in retaining domestic capital. And appreciate, Tim, that if you look at labor, goods and capital, we are seeing, we've already seen restrictions and walls go up on the immigration front. We're seeing tariffs creating friction in terms of the mobility of goods. It is, to me, only a question of time when capital falls into that same playing field where public policy begins to intervene. And not just in the United States, but, but globally in terms of wanting it, not wanting it, hoarding it, pushing it away. Those, those are completely in sync with what we're seeing with labor and goods.

[Carol Massar]

All right. So playing this out, Peter, what kind of economy, then is the US Economy? How different might it become?

[Peter Atwater]

I think one of the things that is so unusual about where we are is that we were coming off of, of extraordinary invulnerability, invincibility, particularly in tech. And so this, to me, is a very different setup than we saw in, in 2016 in that valuations and the economic growth may already be peaking, may already have peaked. And so the administration, I think, needs to be very sensitive to the risk that they're pouring water on a fire that was already poised to go out.

[Carol Massar]

Peter, One thing I do think about, too, and I think we talk about it, is, God, it always happens whenever there's a new administration, okay, in two years, we have or less than two years, we have midterms. In another four years, we have another presidential election, or less than four years. Is the world, though, moving on in many ways, because it just feels like no matter what changes politically again, it just can't count on the US like it has.

[Peter Atwater]

Yeah. I think that trust, when broken, is incredibly difficult to rebuild. And as I talk to folks from Europe, it is unquestionable that they feel that trust with the United States has been broken. And so the likelihood that it, the midterms, or even the 2028 election figure will bring back what has been, isn't the case. Extreme vulnerability changes us, and we will not endure it again. And as I look at what we're seeing, particularly in Europe right now, they are, they are poised to make sure that the vulnerability they've just experienced doesn't come back to bite.

[Carol Massar]

All right, so just to stress again, because Tim asked about, you know, is the U.S. you know, not really a market you want to invest in, then perhaps in the future, what's your advice to investors? I mean, we've seen Europe certainly outperform. It came from a lower base, and valuations were different. Just got about 30 seconds. Should investors be looking in Europe or elsewhere?

[Peter Atwater]

I think investors have to be more diversified globally than they are. Most American investors are far too concentrated in the US Right now to begin with. But I think that the administration needs to demonstrate that as a place to put capital, America remains the, the preferred choice globally. And that is now, I think, very much in question.

[Carol Massar]

All right, Peter, we got to run. Thank you so much. But another really big think conversation so important to the environment today. Peter, thank you again, Peter Atwater, president of Financial Insights, adjunct professor over at William and Mary of Economics, and author of the book the Confidence Mat, Life's messy.

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[Paisley Nardini]

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[Carol Massar]

Lenovo. I'm driving in my car. How about you let me drive? Oh, no, no, no, no.

[Podcast Host]

This is not a twin.

[Carol Massar]

Who's gonna drive you home?

[Connor Sen]

Honey, please.

[Peter Atwater]

I'll do the driving.

[Molly Smith]

Drive on.

[Connor Sen]

Excuse me, I want to drive.

[Carol Massar]

It's the question that drives us.

[Podcast Host]

This is the drive to the close.

[Peter Atwater]

That funky music will drive us till.

[Podcast Host]

The dawn on Bloomberg Radio. All right, look at that. We got less than 20 minutes to go until the close of us trading here in San Francisco. Carol Massar is In New York. That's where the equity markets are, at least for now, until everything moves to Texas.

[Jason Kelly]

Carol, isn't it amazing?

[Podcast Host]

Yeah, it's like, I know, I'm talking about the nasdaq. Was it the NASDAQ this week that said they might be opening up a little shop in Texas?

[Carol Massar]

I know everything. Everything's going to Texas or Florida.

[Podcast Host]

It is. Hey, let's stay in California though and talk to Paisley Nardini, portfolio manager at the Simplify Asset Management. They've got about $7 billion in assets under management. It paisley joins us from Newport Beach, California, where I imagine it is sunny and warm like it is every single day. Paisley, good to have you with us this afternoon. We're looking at a market right now that earlier in the day was searching for direction, but now solidly in the red, down the S&P 500 by about 310 of 1%. We just spoke to Peter Atwater all about the uncertainty playing out right now. What are you hearing from clients given the uncertainty in the environment?

[Paisley Nardini]

Yeah. Well, thanks for having me. Exciting day. It's opening day of March Madness as well. So I'm sure many people are multitasking as they're listening in and looking at their brackets. But I would concur with what Peter had shared around market uncertainty. I mean, coming into this year, one of my kind of theories is around this chaos theory and really what this means is a dynamic balance between order and disorder. And how does this relate to markets? Well, it means that small changes can have these disproportionate large effects which ultimately just provides a greater backdrop of uncertainty and risk. I think the positive note coming out of that though is that there is also opportunity where there is uncertainty. So as we're chatting with clients, as we're hearing concerns, I think for the most part, although markets have entered an official correction, or they had, it seems like we may have found a floor. How can clients think about navigating this? I mean, we've seen so much interest as clients are looking for diversifiers. It's really been the thorn in the side of a balanced portfolio for the last decade or so. So it's really healthy to see some of these tides shifting. And I think a lot of what we've seen year to date so far has been more of a rotation trade than an all out recession flag. I mean, if we were expecting a recession, I think we would would see the 10 year break below this kind of arbitrary kind of floor of four and a quarter. We're kind of hovering around that for whatever reason, markets don't want to break below that. Even today, as we talk about being in the red here at the close, not all areas of the equity market are in the red. I think we've seen again, this rotation into international markets. We've seen a rotation into more, you know, outside the top five or seven names in the S&P 500. So. So as we're looking out, I think we're going to continue to see more of this uncertainty, which provides a backdrop of risk. But if clients are prepared and they have their portfolios positioned to weather this uncertainty, take advantage of these opportunities through diversifiers and alternatives, I think people are kind of looking out and maybe optimistic of what the next couple months could provide.

[Carol Massar]

How are you thinking about the factor that is the President of the United States and the policy? And as we just talked with Peter Atwater, you know, his seeming to not kind of care about the equity markets, which everybody was so certain he would, and the policies that are being put in place, be it geopolitically, tariffs, you know, alienating allies, you know, whether or not this is a significant shift certainly is a shift from what we've seen from past presidents in terms of policy. But is it something that is much more lasting, that makes, makes the US Economy a very different economy and the US Investment market a very different market? Are you having those kinds of conversations in and around the office? Are clients wondering whether, you know, what is the US Market that they've known for so long? Is it different going forward?

[Paisley Nardini]

Yeah, absolutely. So I would say first and foremost, when we, when we found out Trump was going to be the president again, markets became euphoric. We were focused on deregulation, we were focused on tax cuts. We saw a massive spike in small business optimism. Consumers were excited, and I think we had too much euphoria. We weren't, we weren't really looking through the noise at the time. And so now what we're faced with is this, this kind of negative kickoff to the year and really this focus on tariffs and the implications of that, I think that's going to be short lived. I think tariffs are really being seen as a negotiation tactic. And as we all know, whether you love him or hate him, wonderful negotiator, able to kind of pull strings, get what he wants. And so I think as we look out, really, Trump's focused on how to get what he wants out of this. And the tariffs, of course, are just noise in the interim. And so as we're speaking with clients, I think coming into this year a lot of that euphoria was quickly kind of eroded. And I think that was, that's what we're experiencing right now, just the digestion of what this uncertainty and this noise might mean. I think as it relates to the administration, they've also been quite explicit that they're not concerned about the stock market. At the end of the day, stock market drives a lot of activity in the economy and vice versa. So I think that's maybe just kind of a narrative that they're putting out there. But I do think we need to take that at face value because we, we haven't really seen kind of the, the administration or politicians jump in to put kind of a put or a floor on the markets. And I think that's a divergence than what we've seen in the past. I think historically we've seen, you know, whether it was not the President explicitly, but a lot of people in power and even at the Fed coming through and ensuring the markets that everything was going to be fine. And as Scott Besant shared last week or the week prior, we're in a detox period. And I think it's rare to actually hear them come out and say that because that they're essentially alerting us all that we should be prepared for volatility. And so as we focus on what it may look like as markets detox, we're focused on diversification as a response to how to, how to get through that.

[Podcast Host]

Okay, well that's where I want to go, Paisley, because you're also a portfolio manager and asset allocation strategist. So how are you diversifying client portfolios right now? And look, I know one size doesn't fit all. An 80 year old is not going to have the same portfolio as a 40 year old. But in general, what could you say?

[Paisley Nardini]

Yeah, in general I'd say we're really focused on unique sources of risk and return. We're looking at, you know, from a correlation perspective, asset classes or strategies that are not going to move in tandem as, or if equities sell off. And I think with that backdrop as well, investors has become really comfortable over the last 10 to 15 years that all you need in a portfolio is stocks and bonds. Bonds. Bonds have been that balance. Bonds show up for your portfolio. When we see equity volatility and really since mid-2022, bonds haven't been that balanced, we've seen a bit of a rally year to date. I think there's a little bit of kind of short lived. Are we going to see rates continue to rally as equities sell off. Perhaps not just given kind of where we are from a deficit perspective, there's obviously some pressure on rates also just given inflation. So how can investors think beyond just just the stock bond portfolio? And a comment I had shared last week is really thinking beyond like what we call this two legged stool and really thinking about incorporating that third leg of the stool for stability. And that third leg is alternative, it's diversifier. So whether we're talking about commodities, obviously we've seen significant tailwinds year to date in gold just given the uncertainty. But we think there's a broader opportunity in commodities beyond just just gold. And especially if you're dynamic in your commodity allocations being able to go long and short. Beyond commodities, we're also looking at divergence in policy. Got it from interest rates, which might support currencies as well.

[Carol Massar]

Got it run Paisley. Thank you so much. Paisley Nardini, Portfolio Manager at Simplify Asset Management, joining us there from Newport Beach, California.

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