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- [00:00]
Host/Anchor
At Marsh, we believe that perspective powers progress. That's why our individual businesses have come together as one company. A new marsh built to solve the world's most complex challenges and uncover new opportunities for our clients. We're better positioned than ever to help your business navigate obstacles and unlock potential across risk, reinsurance and capital, people and investments and management consulting. Learn more@visitmarsh.com podcast there's a fire inside you you can't ignore. Stand still.
- [00:33]
Geetha Ranganathan
Not a chance.
- [00:34]
Host/Anchor
You're a lifelong learner who's come this far. Now we're here to help you keep going further. Capella University what can't you do? Visit capella. Edu to learn more.
- [00:45]
Joanna Gallegos
Hey, this is U.S. olympic gold medalist Tara Davis Woodhull.
- [00:48]
Tim Stanweck
And I'm U.S. paralympic gold medalist Hunter Woodhull.
- [00:50]
Joanna Gallegos
As athletes, our lives are about having.
- [00:52]
Tim Stanweck
A clear path and a team that.
- [00:54]
Eric Clarke
You can absolutely trust.
- [00:56]
Joanna Gallegos
So when it came to getting the best mortgage, we chose PennyMac. PennyMac is proud to be the official mortgage provider of Team USA and you.
- [01:03]
Eric Clarke
Learn more at pennymac.com pennymac loan services llc/housing lender nmls id 35953 licensed by.
- [01:10]
Host/Anchor
The Department of Financial Protection and Innovation.
- [01:11]
Eric Clarke
Under the California Residential Mortgage Lending Act. Conditions and restrictions may apply.
- [01:17]
Host/Anchor
Bloomberg Audio Studios Podcasts Radio national news this is Bloomberg businessweek Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.
- [01:47]
Tim Stanweck
Yeah, let's bring in Eric Clarke. He's chief investment officer of the Riavest Global Advisors. About 1.2 billion doll in assets under management. Portfolio manager, too, of the Alpha Brands logo ETF. He covers about 200 consumer stocks, including Netflix. It's the 11th biggest holding in the logo ETF. Erik joins us from San Diego, which I understand it's like 69 degrees there. It's not like here, Eric, where the High today was 21 degrees, so don't rub it in. Yeah, I don't even know why you guys, like watch Netflix in San Diego. You just should be playing outside all the time. A decline of 4% after hours right now. Are you buying more Netflix?
- [02:25]
Eric Clarke
I will buy more Netflix tomorrow, absolutely. Because it's 75 here, by the way.
- [02:31]
Tim Stanweck
Oh, my bad.
- [02:32]
Host/Anchor
Thanks. Thanks very much for that. We're done with this interview. All right. So why are you going to be buying tomorrow?
- [02:38]
Eric Clarke
Well, you know, bigger picture, nothing's really changed with the business. It's just that people have left Netflix stock because of the Warner Brothers. The time that it takes to get a deal done like this. So people just say, I just don't want to have my money tied up in something that's going to be a little more uncertain than maybe, quote, dead money. That's the opportunity. So the Stock's down over 30% and business is still doing really well. And at this point where the stock is now, I don't even think it matters what the outcome of the Warner Brothers deal is. You're just getting the stock at a great price here. So you just have to be patient, that's all.
- [03:14]
Tim Stanweck
Are you, are you saying that the Warner Brothers Discovery deal will happen? Netflix will get that.
- [03:22]
Eric Clarke
That one is a little tough because there are the unknowns of the regulatory part. I think, generally speaking, I agree with the concept that Netflix really is competing with all of our time, not just, you know, other streamers or cable. It's YouTube and TikTok and Instagram, etc. But within the streaming, within the quote, you know, kind of core cable TV viewing, they obviously are the dominant one. It's just there's much more than just streaming and, and there's room for every brand here. You know, Netflix is the first place that people generally start that gives them that pricing power. And then we bolt on the Paramount for the Landman and, you know, mayor of Kingstowne, etc. And you know, HBO Max, etc. But you know, the assets in Warner are so powerful and they are in the best hands with Netflix. It's impossible to know about the regulatory stuff.
- [04:15]
Host/Anchor
But Eric, what if Netflix doesn't get Warner Brothers? Do you still like Netflix going forward or do you think then this would be a big loss? We've done some reporting. I think we've had some stories that say, you know, this is going to help shape Hollywood, you know, for years to come, whoever gets this property. So I'm just curious, if they don't get it, Netflix does not get it, then what?
- [04:37]
Eric Clarke
Well, I think they're just going to go back to the same playbook that has, you know, driven 17% annual subscriber growth for the last decade. I mean, they're just, nobody can compete with them on the content spend, so they're just going to go back to doing the spending. Maybe they do some tuck in acquisitions. You know, it's. It's hard to know. But, you know, you have to give management the cr. The benefit of the doubt. They've done generally Speaking a pretty amazing job building this brand. And so you have to assume that they're going to continue making solid decisions and you're getting, you know, a stock that's 30% off the highs with strong free cash flow. I know they will continue to grow margins, they will continue to grow subscriber growth. The ad tier is growing like a weed. So I. There's just a lot to like here. So. I love this thing on a dip.
- [05:25]
Tim Stanweck
You know, I'm looking at the. The note. The most. The 10 most watched movies from the second half of 2025. Carol K. Pop, Demon Hunters, Happy Gilmore 2, Frankenstein, My Oxford. I did not see one of these.
- [05:38]
Geetha Ranganathan
I know.
- [05:38]
Host/Anchor
I was just thinking movies. Wait. The woman in cabin 10, a House of Dynamite.
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Tim Stanweck
Those are movies, not shows.
- [05:44]
Host/Anchor
Oh, okay, okay.
- [05:44]
Tim Stanweck
And Even the top 10 shows didn't see a single one of them Wednesday. Stranger Things 5, Untamed Squid game. Stranger Things. Eric, this is interesting. The. The way that people watched the different seasons of Stranger Things in the second half of the year in anticipation for season five in the second half of the year. Stranger. Different. Different seasons of stranger things were three of the top 10 shows most watched on Netflix. So is that, is that an issue for Netflix moving forward? That's it for Stranger Things?
- [06:19]
Eric Clarke
No, I don't think so. They. They will continue to bring out other stuff. I mean, they're. They're just so good at this concept. I mean, listen, if they get Warner, that's even better because there's so much more that they can do to refresh that entire library.
- [06:32]
Tim Stanweck
Oh, so you're saying, you're saying like, o Happy Gilmore 2 was in there, so maybe like another version of a classic HBO show or another version of, of classic Warner Brothers movies? Is that what you're saying?
- [06:46]
Eric Clarke
I think there, I think, you know, you get a bunch of creative people in a room and they. They take something. Let's say, let's say Sopranos, for instance. What could we do to refresh Sopranos in the same theme? There's just so many, so many things that they could potentially do.
- [07:01]
Tim Stanweck
Hard to.
- [07:02]
Eric Clarke
Again, because you need the budget and nobody else has the budget.
- [07:05]
Tim Stanweck
Does. Does Paramount, Skydance? If they get the assets, do they have the creatives, do they have the budget to do with the catalog? What you think Netflix could do?
- [07:16]
Eric Clarke
I don't think that they can compete with Netflix. And remember, they're still going to have a metric ton of debt to deal with. So I look at this like a private equity owner. If I owned Warner, and that was My baby, who would. I love to be able to sell that library, too. That would put it in the best shape for the rest of time. And that's clearly Netflix. It is not Paramount Sky.
- [07:42]
Tim Stanweck
Okay.
- [07:43]
Host/Anchor
All right, so top of mind on the call with analysts and investors. Eric, like, what is it that, you know, we need to be asking this company right now, or is it just really all about their pursuit of Warner Brothers?
- [07:55]
Eric Clarke
Well, I just think that there's obviously just a lot of noise and there's a lot of assumptions. There's a lot of assumptions in a lot of industries like AI too. But I think that if you widen the lens, nothing has changed. It's still an important part of people's consumption. It's still an absolute crazy good value at 20, even at 25 bucks. I mean, I go out to dinner in San Diego and you get a drink and a half and it's 25 bucks. I can watch an unlimited amount of content on Netflix. So that's. There's still a lot of value there. And, you know, recurring revenue. Business global in size and scope, you know, reaching kids as well as my mom at 83, male, female. I mean, like, there's just a lot to love about a business like this. And I feel the same way about Spotify, too. Similar, you know, similar business, slightly different category, but. But for the same reason. And Spotify is off 35% too.
- [08:53]
Host/Anchor
You know, it's interesting too. They talk about, you know, we've already begun to launch video podcast from our partnerships with Spotify, the Ringer, iHeartMedia and Barstool Sports, and have just announced two new original podcasts with Pete Davidson, the comedian and NFL legend Michael Irvin. So, like, you know, we talked too about just podcasts taking off, and now it's not just audio anymore, it's video. So is this a big opportunity for this company or just a nice side business?
- [09:22]
Eric Clarke
No, I think it's a big. I think it's a big opportunity. I don't know about you guys, but I can consume 5, 10, 10 times more content when I can listen to it in the car and, you know, listen to it on a bike ride or whatever. It's not just about reading anymore. People want audiobooks, they want music, they want videos, they want podcasts. There's just, there's. There's so much opportunity. And both of these brands have just a wild opportunity, you know, long term gathering subscribers and bolting on new opportunities that drive operating efficiencies. Add AI to the, to the mix and more engagement, better profitability there's, there's just a lot of lot to like and you don't often get a compounder on sale like both of these companies. So you should take advantage of it if you can look through some of the short term, you know, kind of noise.
- [10:14]
Tim Stanweck
Eric loves Netflix.
- [10:16]
Host/Anchor
Hey, before you go, I think we'd be remiss considering the day that we've had. We've seen selling, broad based selling and we're trying to make sense of geopolitics news out of the White House. Greenland, there's lots of stuff we love talking to you. Amazon, Taiwan 1 Semi, Apple, Alphabet ServiceNow, Walmart, Liberty Media. These are among your top holdings. Anything in terms of how you think about the potential for opportunity in this investment environment. Anything changing just quickly before we go.
- [10:45]
Eric Clarke
Nothing's changing too much. It's still important for consumption as well as the consumption supply chain. You know who's allowing all of this consumption to happen. When you combine the two, that's the logo ETF and it's a pretty, pretty interesting compounder type of portfolio that's still pretty concentrated at 30, 30 names.
- [11:04]
Host/Anchor
All right.
- [11:04]
Tim Stanweck
Eric, always good to see you. Thanks for, great to see you hanging out with us.
- [11:09]
Eric Clarke
Come out here.
- [11:09]
Tim Stanweck
Yes, yeah, we will.
- [11:12]
Host/Anchor
I think the studio is about 10 degrees.
- [11:14]
Tim Stanweck
We were out there last year and it was actually like kind of June gloom when we were out in San Diego.
- [11:19]
Host/Anchor
Was it kind of.
- [11:20]
Bob Michael
Oh, it was, yeah.
- [11:21]
Tim Stanweck
I don't know it was but you know, was it. I don't remember that.
- [11:24]
Host/Anchor
I remember, you know, I can't remember last week at this point.
- [11:28]
Tim Stanweck
Netflix shares. Let's stay on this. The company shares fell in the after hours as much as 5.1%. This after it forecast first quarter EPS below the average analyst estimate. The company also plans deposit share buybacks in an effort to accumulate cash to fund the pending acquisition of Warner Brothers. I want to bring in Bloomberg Intelligence senior media analyst Geetha Ranganathan. She joins us from, from Princeton, New Jersey where Bloomberg Intelligence headquarters are. Geetha, just your, your takeaway from, from this report. The outlook is a concern spending on content. Got to tell you, this is like an age old story for Netflix, right? The concern about oh you guys are spending way too much. We could have had this discussion a dozen years ago.
- [12:10]
Geetha Ranganathan
I know. And yes, content spending. So it was up about 7% in 2025. They're projecting about a 10% increase in content spend going into 2026. And then the costs related to the Warner Brothers deal. And I think it's not just the cost side, right? Yes. Operating margin, the guidance, Tim, looks a little bit light. It's below 32%. I think the street was looking for something like closer to 33%. But also the ad revenue, you know, definitely not bad, but not gangbuster. So this is the very first time that they've actually reported advertising revenue. They said it was about a one and a half billion dollars in 2025. They expect to double that going into 20. Again, definitely not bad given that, you know, this company made its foray into ads just a few years ago versus all of the other media giants. But again, not really a number to kind of get too, too thrilled about.
- [13:08]
Tim Stanweck
Was. So that's not. I was just going to ask is that in line or below or above the expectations that you've been making of late? I mean, nice to get some new data from the company especially.
- [13:18]
Geetha Ranganathan
Yeah.
- [13:18]
Tim Stanweck
In recent quarters that you know, they're not doing the same. Same sort of disclosures they have in the past.
- [13:25]
Geetha Ranganathan
No, absolutely. I mean so really 2020, so you know, as we kind of zoom out and we just take a look at Netflix. So 2024 was all about subscriber growth, right? They had about 42 million new subscribers. 2025 was all about pricing, right? Huge price increases. Again, pretty stable subscriber growth. They obviously did add close to almost 25 million subscribers. But then 2026, as we kind of looked at 2026 here was like the big head scratcher, right? What is the big growth catalyst for this company going? That's really where people were wondering whether, you know, that's why they had to buy Warner. And of course one of the big things that everybody was looking for was ad revenue. Again, it has gotten off to I would say an okay start, but slightly on the lower side than I think people were expecting. People were probably expecting something closer to about two to two and a half billion dollars in 2025. So definitely, I think fell slightly lower than, than general expectations.
- [14:16]
Host/Anchor
You know, I always think about Giza like what's the next markets or how much more is there out there? In their company release they talk about, you know, we rel work to earn more of our consumers attention. And they say despite our success over the years, our share of TV time remains below 10% in the major markets in which we operate. And then they said, for example, according to Nielsen in December, our share of US TV time reached an all time high of 9%, 0.5 points year over year. Yet linear TV still comprises over 40% of US TV screen time. You know, is this just blowing smoke or is it really that there is still a lot out there for either Netflix or Amazon or some others to still grab when it comes to screen time?
- [14:59]
Geetha Ranganathan
Oh absolutely. There is still a lot more room for streaming to grow and I think it absolutely will. So I think one of the big things that we've seen, especially towards the end of 2025 and going more into 2026, is that, you know, most of the marquee sports properties are now moving to streaming. So obviously you have the big launch of espn, you know, for the very first time in the history of television, all of the marquee sports are now available for people to watch on streaming. They don't have to subscribe to a pay TV bundle anymore. And I think that makes a huge difference. You know, consumer behavior is changing, it's changing rapidly. And so obviously there is, you know, a lot more room for a Netflix for an Amazon, as you pointed out, but also equally for a YouTube to grow. And this is where you have this whole, this whole debate with AI, right? Because as AI comes in and kind of democratizes content creation, you have more and more user generated content. Are people going to be spending more time on YouTube and less time with like premier platforms like a Netflix, like an HBO Max?
- [15:59]
Host/Anchor
I've just seen so much junk is obsessed with YouTube.
- [16:03]
Tim Stanweck
Yeah, but, but not with the AI junk. I mean social feeds. Have you seen anything good, Geeta? I mean I've seen nothing good, nothing creative. It's like the junk with AI you're talking.
- [16:15]
Host/Anchor
Oh, you're not talking YouTube?
- [16:16]
Tim Stanweck
No, I was talking like the junkiest junk you can find out there.
- [16:22]
Geetha Ranganathan
Not yet Tim, but I think just give it about a year or two and I think soon we're going to be seeing pretty high quality stuff come out. I mean I know some of the industry experts have basically projected that, you know, another two to two and a half years you will see the first high quality, fully AI generated movie, you know, come out. So again, have to wait and watch. But definitely a possibility and definitely something Netflix is preparing for.
- [16:45]
Tim Stanweck
I wonder what that looks like. I wonder. I've watched some stuff that felt like it was written by ChatGPT.
- [16:51]
Host/Anchor
That's why I can't wait to like pretty bad stuff and put, you know, Tim and K pop Demon Hunters or something. Wouldn't that be fun?
- [16:58]
Tim Stanweck
Or on Dancing with Stars because the.
- [17:01]
Host/Anchor
Biggest challenge for Hollywood, wouldn't he be great at like just taking an AI.
- [17:05]
Tim Stanweck
Generated Tim and putting my kids love.
- [17:08]
Host/Anchor
The K Pop America's top Model perhaps.
- [17:10]
Tim Stanweck
I don't know. All right, we gotta go. Geetha Ranganathan, Senior Media Analyst at Bloomberg Intelligence. Stay with us. More from Bloomberg Business Week Daily Coming up after this.
- [17:24]
Host/Anchor
Business challenges and opportunities are Never one Dimensional At Marsh, we believe that to thrive, you need perspective. That's why our individual businesses have come together as one company, a newmarsh where each layer of our organization works even more closely together to provide you with a stronger, more panoramic perspective. We're now one firm solving the world's most complex challenges and unlocking opportunities for you across risk, reinsurance and capital, people and investments, and management consulting. As business continues to evolve, Marsh will always be here to help you overcome new challenges, answer new questions, and take advantage of new opportunities. We're better positioned than ever to provide the perspective you need to fuel progress forward. See how@visitmarsh.com podcast Running a Business is.
- [18:19]
Eric Clarke
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- [19:20]
Joanna Gallegos
This is US Olympic gold medalist Tara.
- [19:22]
Tim Stanweck
Davis Woodhull and I'm US Paralympic gold medalist Hunter Woodhull.
- [19:25]
Joanna Gallegos
As athletes, our lives are about having.
- [19:27]
Tim Stanweck
A clear path and a team that you can absolutely trust.
- [19:30]
Host/Anchor
So when it came to getting the.
- [19:32]
Joanna Gallegos
Best mortgage, we chose PennyMac. PennyMac is proud to be the official mortgage provider of Team USA and you.
- [19:38]
Host/Anchor
Learn more at pennymac.com PennyMac Loan Services.
- [19:41]
Eric Clarke
LLC equal housing lender NMLS ID 35953 licensed by the Department of Financial Protection.
- [19:46]
Host/Anchor
And Innovation under the California Residential Mortgage Lending Act.
- [19:48]
Eric Clarke
Conditions and restrictions may apply.
- [19:50]
Host/Anchor
You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [20:04]
Tim Stanweck
Great to have back with us on all this and more. Bob Michael He's Chief Investment Officer and head of Global Fixed income, Currency and commodities at J.P. morgan Asset Management. Also co chair of the Asset Management Investment Committee, a member of the Asset and Wealth Management Operating Committee and the Asset Management Operating Committee. Dude in the studio. Perfect day to have you. Whether we're talking about Japan, whether we're talking about what's going on in Europe, I kind of want to start with the President's latest assaults on European allies and market reaction that we are seeing. Is that is the talk actually turning into something that our allies are concerned about?
- [20:44]
Bob Michael
I think so. It feels very chaotic again. So Besson is right to refer back to April of last year when there was a panic. I know last night I went to bed in a panic and woke up in one and it didn't get any better because of Japan, because of so many things. We thought the President was going to Davos to talk about housing and credit card affordability. Suddenly now it's become about Greenland affordability. How are we going to buy or take it? And how are the European countries going to finance us? Are we going to retarrif them? And it seems crazy except that things have a way of happening which people didn't think would happen. So you have to back away and de risk a Japan. I don't know if that necessarily came out of the blue, but we're now faced with that where the bond markets become unanchored because they're going to be snap elections and everyone's going to compete for fiscal stimulus. If we're looking at the bond markets and assessing all of these things, it feels that the fiscal austerity, which everyone embraced after the great financial crisis is out the window. It's now borrow and spend. There seems to be plenty of capital around to finance it and a back up in yields may not be so bad. So yeah, things are a bit chaotic and the markets do feel a bit panicked.
- [22:17]
Host/Anchor
So Bob, you know, there's chaos, there's chaotic moves, there's de risking and then there's de risking. So is this like a short term think until we really feel figure out how much of what the President is saying is just rhetoric or the first negotiating ploy or something that sticks around longer and impacts the investment landscape longer?
- [22:38]
Bob Michael
It's hard to know. I would have liked to have heard something at One o'. Clock. Instead, it's sounding like a domestic victory lap. Then board Air Force One and head to Davos and deal with a whole international array of problems. And my guess is the administration is going to put everyone on their heels and negotiate the best deal, whether it's Greenland, whether it's Venezuela, whether it's tariffs, whether it's with China, who knows?
- [23:09]
Host/Anchor
Should the President be taking a victory lap based on what you've seen in the past year?
- [23:15]
Bob Michael
If I'm purely objective and sit here in January and say we're heading into 2026 with some momentum, we closed out the fourth quarter pretty strong. We're expecting somewhere either side of 2 1/2% for GDP and inflation. In the U.S. the U.S. is collecting some tariffs, the effective rates about 16%. So that's a source of revenue. The markets are at highs and that momentum looks like it's going to continue. So yeah, I think you can claim that if you want to a chance.
- [23:56]
Tim Stanweck
Though that the bond market and you know, perhaps even the equity market are overreacting, that the president, you know, for much of last year there was the taco trade. The idea that what the President said wasn't necessarily what ended up happening. And I think, you know, that so called Liberation Day tariffs are a perfect example of that.
- [24:15]
Bob Michael
We're entitled to overreact. I think we've been pretty well behaved for a while. Volatility metrics have been abnormally low. We're allowed to throw our toys out of the pram every so often. I think this is a message from market participants to the administration. We can only go so far and they've got to figure out where the line is. I think what Bessant forgot to include was, yeah, the market had a fit in April and then they backed off of a lot of things and then calm ensued. We need to hear some of the same kinds of things.
- [24:52]
Tim Stanweck
We should note the President is still making comments at the press conference. We'll go back to it when he does. Take questions from the press. You can see it right there on the screen. Also check it out on Live Go on the Bloomberg terminal. You mentioned the reaction back in April. I believe the technical term the President used was the bond market got a bit yippee. Is the bond market yippee now?
- [25:13]
Bob Michael
Not yet. If you look at Japan, Japan has a whole host of domestic things to deal with. So that's become unanchored. When I look at the US market, yeah, we backed up a little bit. But you know what? We've got a Fed funds rate at about 3 and 58 the two years within touching distance of that you've got somewhat of a normal steepness to the yield curve from fed funds to twos to the 10 year and the 30 year. It all feels pretty orderly now. A bit of a pause. So I actually think things feel okay.
- [25:51]
Host/Anchor
Anytime we I feel like Bob, we pull up geopolitics and people are like well who holds US Treasuries? And we've got a story on the Bloomberg that talks about European countries holding trillions of dollars of US Bonds and stocks, some of which sit with public sector funds. And so there's, you know, the speculation that could our allies or even folks like China or something like sell US Debt. Is there really any alternative into US Debt realistically?
- [26:17]
Bob Michael
No, there is not. And we did this about a year ago. We went through this in March, April, May. We spent a lot of time talking to our clients, particularly our non US Clients. They looked at everything and came back to when you look at the US Debt markets, which includes governments, but it's corporates, it's securitized. No other markets have the depth and the breadth. They have confidence in the country. They're not willing to abandon it. They see the presidency as two two year terms when you throw in the midterm election elections. So they're willing to ride through it. I don't think there will be wholesale selling of U.S. treasury debt.
- [27:01]
Tim Stanweck
So you're referring to the Danish pension fund, academic or pension.
- [27:04]
Host/Anchor
Well that's treasury and that's a small But I just in general like I think about, we've talked about it in terms of China or just any, you know, that this is a great lever that foreign investors or foreign governments could pull against the US but the reality is they're not likely to because there kind of is no alternative.
- [27:24]
Bob Michael
We had a lot of very large non US clients look at alternatives and line up plans. If we were to sell this, this is where we would go. And they paused putting more money into US Bonds but they didn't take any out. And by the end of the summer they were putting money back in again.
- [27:45]
Tim Stanweck
We're speaking with Bob Michael, chief investment officer, head of the global fixed income currency and Commodities Group for J.P. j.P. Morgan Asset Management. The president still taking, still speaking at the White House. He does we do expect him to take questions too in just a little while. Back to this pension because Anders Shelby cited this is the fund's chief investment officer cited Trump's talk of taking over Greenland, concerns about fiscal discipline and A weaker dollar for reasons for the decision. You don't buy the, the fiscal discipline and the weaker dollar part of this. You think this is just political.
- [28:17]
Bob Michael
Where is their fiscal discipline now? It's hard to find it. Like go to the old stalwarts. Germany not there. Look at what Japan could and couldn't do. That seems to have been abandoned. Now the US for sure will see who the next Fed chair is, but it sure ain't going to be the next Paul Volcker walking in. So I think fiscal discipline is a thing of the past and there is a feeling that deficits can be financed and Japan is kind of telling us you can get to 300% and life's still good.
- [28:53]
Host/Anchor
So when do we pay the piper on this global lack of fiscal discipline? I think about Andrew Ross Sorkin, who was just on to talk about his book 1929 and we talked about crises in particular in general and that leverage and debt. Right. These are the things that get us into trouble, whether we're an individual, a company or a country or Ken. So is that potentially the next crisis, just the lack of fiscal discipline globally or do we just kind of continue to go along here?
- [29:18]
Bob Michael
So I read 1929 was very engrossing. I don't see the problems that existed then here today I don't see the rampant leverage throughout the system which is becoming problematic. It can't be just, it can't be served as it's being written down even.
- [29:38]
Host/Anchor
On a government or sovereign level.
- [29:40]
Bob Michael
Yeah, it's not happening at the government or sovereign level. And that new tool called QE allows that to perpetuate. Right.
- [29:50]
Host/Anchor
Well, but that's the point. I think about years ago I remember not doing an interview, a business news interview or markets interview without talking up about the US government debt. And then it went away and now we are back again. So I guess I think we kind of continue to try and find out what. When is it really a problem. Certainly as rates go higher, it becomes more expensive to service, certainly here in the US But I'm just wondering like.
- [30:13]
Bob Michael
When, I think when it gets thrown away. I started in the business in 81. I worked through the twin deficits. I was taught the US will never be allowed to finance itself below 10% again. And we promptly dropped from 16% to 3, 10 of a percent. And in the Clinton era, suddenly, you know, the deficit was gone. We look at where the money is being spent and we may not always agree where it's being spent, but it does create some productivity. We talk to all the municipalities that are accessing the various programs they can they're actually going in, taking capital, they're hiring people, they're consuming resources and they're investing in their townships or their states or their cities or whatever it can be ultimately that generates activity that gets taxed. And I think that's what we saw in the late 80s into the early 90s.
- [31:13]
Tim Stanweck
Last question. I'm going to make you push ahead to our conversation with Robert Kaplan, vice chair at Goldman. And we're going to be hearing from him in just a few minutes. On the Fed Polymarket has Kevin Warsh as the favorite for the nomination. In fact, Rick Reeder is now number two, which is interesting to see who has the bond market priced in as the next Fed chair.
- [31:37]
Bob Michael
I don't think the bond market has a great idea readers. Number two for me, I've known him for close to 40 years. I think he'd be an excellent Fed chair. I think he'd be somebody very different. Let's get a true bond markets practitioner in there who's had to live with the aftermath of Fed decisions. So I'm certainly a supporter of his. But he's number two behind Bessant is still my number one. I think the president is still stalling and trying to negotiate with Bessant. I don't see Warsh too hawkish. Hasset's got to be removed because of the DOJ and Waller. I don't know that that the administration feels they can control Waller. So you know Rick is Rick is the, you know, shining knight that comes in out of left field. Smart guy will do the right thing. But I still think it's Bessant wasn't number one.
- [32:38]
Tim Stanweck
Was not expecting to hear that.
- [32:39]
Host/Anchor
So right thing whether it's Besson or Reader or whomever will be independent or that depends.
- [32:45]
Bob Michael
I've never fully believed that they're independent because they're political appointees. So they get appointed for their core views. I believe when they're in office that they always try to do the best thing. But some believe that fiscal austerity is the best policy and other believes that a lower cost of funding and economic activity and monetarism will help stimulate the economy.
- [33:12]
Host/Anchor
That discussion around the table right. Means something. Right. And all those different voices. Your voice always means a lot to us. Thank you so much.
- [33:19]
Bob Michael
Really happy to be here. Great day for it.
- [33:22]
Host/Anchor
We thought that on our planning call we're like we're so glad he's here today. Bob. Michael, be well. We really appreciate chief investment officer head of global fixed income currency commodities over at JP Morgan Asset Management.
- [33:33]
Tim Stanweck
Stay with us. More from Bloomberg Business Businessweek Daily Coming up after this.
- [33:41]
Eric Clarke
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Joanna Gallegos
This is US Olympic gold medalist Tara.
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Tim Stanweck
Davis Woodhull and I'm US Paralympic gold medalist Hunter Woodhull.
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Joanna Gallegos
As athletes, our lives are about having.
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Tim Stanweck
A clear path and a team that you can absolutely trust.
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Host/Anchor
So when it came to getting the.
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Joanna Gallegos
Best mortgage, we chose PennyMac. PennyMac is proud to be the official mortgage provider of Team USA and you.
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Host/Anchor
Learn more at pennymac.com pennymac loan services.
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Eric Clarke
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Host/Anchor
The Department of Financial Protection and Innovation.
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Eric Clarke
Under the California Residential Mortgage Lending Act. Conditions and restrictions may apply. Well, the holidays have come and gone.
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Host/Anchor
Once again, but if you've forgotten to.
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Eric Clarke
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Eric Clarke
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Host/Anchor
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Joanna Gallegos
Plan taxes and fees.
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Host/Anchor
Extra speeds may slow after 50 gigabytes per month when network is busy. See Terms. You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App or watch us live on YouTube. Hey, one of the stories and not stories, but reality in terms of the global trade. Borrowers venturing back into Europe's marketplace for debt today though some companies staying away amid the tensions with the US Over Greenland. And that's after we saw global bond sales having their biggest ever start to a year as borrowers of every stripe seized on investors insatiable appetite for risk risk us alone. That first full week of the year was one of the busiest for US Corporate debt sales on record and risk premiums we saw staying low even amid heavy issuance. But the amount of bonds teetering on the brink of junk surging last year, that's according to JPMorgan Chase. They put this out a little bit more than a week ago at least and we included it in our reporting. So we want to kind of dig a little bit deeper into this market.
- [36:38]
Tim Stanweck
It's time now for our weekly Women, Money and Power where we speak with some of the most influential women from from across the business world. We've got Joanna Gallegos with us, co founder of Bond blocks. It's the ETF issuer focused on fixed income, more than $7 billion in assets under management. We spent a lot of time in sort of the first 45 minutes of the program today talking about what's happening overseas and US treasury market reaction. I want to want to focus a little bit on corporate credit and the outlook in 2026. Carol mentioned some of the sort of the busyness that we've seen already this year. But what is the outlook on corporate credit right now?
- [37:13]
Joanna Gallegos
Yeah, I think we would say it's the same red thread we've seen over the last three years in corporate credit and that is the resiliency of American companies and the debt that they're issuing even all the way down into high yield, you're seeing, you know, lower or average default rates. People can count on the fundamentals of these firms year over year. So it's these companies have started pre pandemic with really good foundations in their fundamentals and that's continued. So the resiliency, the economy, the strength is actually the story when you see those tight spreads. What we focus on at bond blocks is your ability to trade or your ability to access different points of income for risk across all the asset classes and fixed income.
- [37:58]
Host/Anchor
Well talk to us about flows in app that you've seen seen maybe as you wrapped up the end of last year. And then what you've seen as we kicked off 2026 as we kid was it Mike, who said that folks have been saying it's like already felt like a decade here in 2026. So give us a little comparison.
- [38:13]
Joanna Gallegos
Yeah, I think 2025, you know, more record years in my space in my industry. ETFs are an incredible tool for people to access fixed income markets. It just continues to grow.
- [38:23]
Host/Anchor
But where did they, where did you see most of the money coming in? You're still last year and then what's changing this year?
- [38:28]
Joanna Gallegos
Strength. It's sort of a familiar story. A ton of strength in shorter duration assets. People look for, you know, the most attractive yield and risk combination they can and it's shorter duration has been a huge category for ETFs and it continues to be so really strong growth in corporates. I think your previous two commentators talked about how, you know, towards the the middle and the end of the year people were still looking at the strength of corporate debt. In, in, in ETFs it was the same story. And then we're seeing on our desk we talk a lot to clients about public versus private debt and how to access that. So a lot of conversations, a lot of interest in how to complement existing bond portfolios with other sources of yield or looking for a way to enhance.
- [39:16]
Tim Stanweck
Yield on the public side of the 10 year yield getting our attention at least today for 29 where it is right now. You were shocked to see it that high.
- [39:25]
Host/Anchor
Well hitting for you know, 4.3% right. On the 10 year. I was a little surprised. I mean it could be 5% we have, you know. But I was kind of surprised you.
- [39:34]
Tim Stanweck
Have the recent move higher that we've seen. Why has that been?
- [39:37]
Joanna Gallegos
I think that you know, in all these bouts of volatility again as we've looked over the long term, We've seen the 10 year approach 5% a few times.
- [39:44]
Host/Anchor
Times.
- [39:44]
Joanna Gallegos
And it just represents the concern and look and you know, hopefully structurally the yield curve is changing towards rates being higher on the long end and shorter on the shorter and lower on which.
- [39:53]
Host/Anchor
Makes more sense which logically. But you kind of get.
- [39:56]
Joanna Gallegos
Yeah.
- [39:56]
Host/Anchor
In terms of the short term volatility that we continue to see whether it's White House strategy. That is certainly upending.
- [40:02]
Joanna Gallegos
Yeah. I mean that, that is embedded, you know the, there's, there's going to be, you know the tariffs are now embedded in the outlook in 2026 for, for investors volatility is always on now and in the equity markets. What we like to call people's attention to is that a year like last year, if you aren't looking at fixed income and you aren't looking at bonds and how to add more income into your portfolios to offset volatility. Like you're missing out on these huge cushions, which was like, I feel like.
- [40:30]
Host/Anchor
It'S been the talk for the last year or so or a couple of years, right. Where you think about what you can get on U.S. treasury, right. In terms of yield and return and lock it in. Like why wouldn't you? Especially if you're thinking longer term. A lot of your offerings obviously are within the U.S. treasury market. You guys do do some emerging market, right?
- [40:50]
Joanna Gallegos
Yeah.
- [40:50]
Host/Anchor
What's, what kind of activity have you seen right now? I'm looking, I think 5.2 emerging market.
- [40:55]
Joanna Gallegos
As a category in fixed income was the best performing category across fixed income last year. So a lot of interest in dollar denominated debt and then also just getting non US exposure was a trade last year. So what we think is important across fixed income is just understanding how you position your bet or how you position the way you think about that. And one thing about emerging market debt is it's typically very, very long dated debt. So there's an implicit two things going on. There's a relationship to the US dollar and then there's also just the duration risk in there and interest rate risk. So what we try to do is like update that space because people really do want to be shorter and that's something that I think.
- [41:38]
Host/Anchor
So it's active in terms of the change in terms of composition.
- [41:41]
Joanna Gallegos
No, it's an index fund. It's just a shorter duration. I think that appeals to people to think about like how do you think about a 40 year exposure and should you be dialing that back in these markets? This is a simple one to ten year exposure and I think that that's, that's, that's this, that's what's going on in fixed income markets as they relate to equity markets in your portfolio is now people really understand the maybe pain of interest rate risk and what can happen when rates zoom up and what you're anticipating for this year if rates continue to go down. But we think that's going to be very moderate this year.
- [42:14]
Tim Stanweck
We're going to be speaking with Emily Griffeo, Bloomberg News cross asset reporter in just a few minutes and she's written a lot about ETFs and the how competitive the space is. I mean it's just, I don't have to tell you or anyone watching or listening, there are so many ETFs out there. Do you plan to launch any new ETFs this year?
- [42:30]
Joanna Gallegos
Yeah, we have some in registration.
- [42:33]
Tim Stanweck
Where's the white space? Like, where's that. Where the areas where that. That haven't been covered?
- [42:37]
Joanna Gallegos
Well, I think like a big innovation from last year was private credit. And Emily's written. Emily's written a ton on private credit. That's where you're going, you know, and. And the reason is, is because ETFs tend to touch places that you need more transparency in. You want to have access in and liquidity. And so those are the spaces that people put time and effort in in terms of innovation. And I don't think that that's done. I think that the important work in how you can access alternative yields, alternative returns is important to ETF investors because ETFs are used in big, broad swaths of wealth portfolios, and they need to be more precise. Markets are more precise. The modern markets are more precise. And so having an ability to add private credit has been the talk. She's written a lot about it. Is it private credit? Is it not private credit? Our private credit product, pcmm, was the first to give you access to middle market exposures completely. So it's a pure approach, and that's what clients are really buzzing about when we're talking to them about what to do next.
- [43:39]
Geetha Ranganathan
Am I right?
- [43:40]
Host/Anchor
In terms of asset management, it's about187.87 million.
- [43:43]
Joanna Gallegos
Yeah. And it's surprisingly like that's the leader in the category in terms of, like, adoption. And that's sort of. I think the next frontier is improving people's exposure to that in their portfolios and improving their perception of what is in a private credit etf.
- [44:00]
Host/Anchor
All right, got to leave it there, Joanna. Thank you so much. Joanna Goya goes. She is co founder at Bon Block. They've got about 7 billion in assets under management joining us right here in our studio.
- [44:11]
Eric Clarke
This is the Bloomberg Business Week daily podcast, available on Apple, Spotify, and anywhere else you get.
- [44:18]
Tim Stanweck
Your podcasts listen live weekday afternoons from.
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Eric Clarke
2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and and always on the Bloomberg terminal. This is Jacob Goldstein from what's yous Problem? When you buy business software from lots of vendors, the costs add up and it gets complicated and confusing. Odoo solves this. It's a single company that sells a suite of enterprise apps that handles everything from accounting to inventory to sales. Odoo is all connected on a single platform in a simple and affordable way. You can save money without missing out on the features you need. Check out Odoo at o d o o.com that's o d o o.com tired.
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