Stock Rally Takes a Break as Crypto World Gets Hit

Summary

---

Bloomberg Businessweek: Stock Rally Takes a Break as Crypto World Gets Hit

Episode Date: December 1, 2025
Hosts: Carol Massar & Tim Stenovec

---

Episode Overview

In this episode, hosts Carol Massar and Tim Stenovec dive into a dynamic post-Thanksgiving market landscape. Key topics include the current state of the stock rally, the evolving Federal Reserve leadership situation, post-pandemic consumer trends (especially in retail), and the tech sector's latest moves—including Nvidia's high-profile investment in Synopsys and developments in AI. Special guests Doug Sioka (Kavar Capital), Ed Ludlow (Bloomberg Tech), Christina Lee (Oaktree Capital), and Dana Telsey (Telsey Advisory Group) provide expert analysis on market volatility, private credit, and the retail outlook for the holiday season.

---

Main Discussion Points & Insights

1. Markets Pause as Uncertainty Looms

• Stock Market Update (02:46–05:07)
  • The S&P has rallied, but post-holiday Mondays are “mellow,” with investors counting down to the upcoming Fed meeting.
  • Doug Sioka (Kavar Capital) discusses how markets at all-time highs are driven by strong earnings, accommodative Fed policy, low taxes and regulation, and a technological revolution:

    "How could we not be at all time highs... we're in the midst of one of the greatest ever like tangible technological revolutions..." —Doug Sioka (04:27)

  • Sioka draws a lighthearted analogy between the Kansas City Chiefs’ struggles and market “mean reversion.”

2. Federal Reserve & Economic Policy

• Fed Chair Speculation (05:07–07:56)

  • Speculation swirls around President Trump’s pending Fed chair pick, with Kevin Hassett seen as a dovish frontrunner.
  • Sioka explains the Fed's "triangulation of tension"—balancing a strong but uneven economy, concerns about excess liquidity, and technological unemployment:

    "The Fed is at a consternation point...they do want to cut rates...as an insurance cut—we think of it more like a cohort cut to a certain very important part of the underlying consumer." —Doug Sioka (06:20)

  • Risk of uncoordinated global policy discussed, especially if Japan hikes rates while the U.S. cuts.

• Societal Impact & Fed Mandate (07:56–10:01)

  • The “K‑shaped economy” leaves many struggling outside the equity markets, raising questions on the effectiveness and risk of further rate cuts.
  • Hosts and guest agree that while the wealthy benefit from asset inflation and AI-driven gains, the Fed must avoid exacerbating inequality with “blunt instruments.”
  • Sioka notes the importance of “widespread prosperity” to the U.S.:

    "If things just become unaffordable...you're helping with one hand and knocking [people] back with the other." —Doug Sioka (09:12)

3. Big Tech & AI: Nvidia’s Strategic Moves

• Nvidia Invests $2 Billion in Synopsys (12:17–16:20)

  • Ed Ludlow (Bloomberg Tech) unpacks the rationale:

    “Synopsys makes the software by which chips are designed...Nvidia’s investment is a sales channel...it gives them entry to a tool that lots of people are using.” —Ed Ludlow (12:58)

  • Responding to "circular financing" concerns, Ludlow asserts it’s about building strategic alliances, not mandating reciprocal purchases.
  • Nvidia CEO Jensen Huang’s investment logic:

    “His answer is always, ‘I thought it would be a great investment and in the future that investment will pay off.’” —Ed Ludlow (15:18)

• AI Competition: DeepSeek’s Advances (16:20–18:06)

  • China’s DeepSeek is lauded for an AI model using “mixture of experts” design, optimizing inference and efficiency.

    “Models at this scale...found a way to access just ten billion parameters...makes the compute much more efficient.” —Ed Ludlow (17:39)

• SoftBank’s Masayoshi Son and Nvidia (18:06–18:41)

  • Son regrets selling Nvidia stock, needing the capital for further AI investments.

    “He wishes he hadn’t sold it but he didn’t have enough money...he needed more money so he sold the thing that could get him money.” —Ed Ludlow (18:26)

4. Private Credit: Growing Pains or Systemic Threat?

• Private Credit Transparency & Risk (19:25–29:46)

  • Christina Lee (Oaktree Capital) addresses recent concerns amid high-profile bankruptcies and limited exits in private credit:

    "You don’t get 8-9% all-in yields by not taking risk." —Christina Lee (20:43)

  • Defaults remain low so far, but Lee notes private credit hasn’t faced a true downturn; risk is rising with more aggressive deal structures and plentiful liquidity:

    "Defaults will likely rise...borrowers put in capital structures when it was a zero interest rate environment...now it’s higher for longer." —Christina Lee (21:46)

  • Hosts probe about transparency; Lee urges investors to scrutinize valuation methodologies:

    “I always tell people to ask...what is your valuation methodology, how often are you looking at your valuation…” —Christina Lee (25:13)

  • Competition is fierce, with leverage up and yields down as M&A resumes; Lee advocates caution and selectivity.

• Private Credit in 401(k)s? (28:10–28:46)

  • Lee sees 401(k) inclusion as the “next frontier,” especially as technological innovation enables broader access.

5. Holiday Retail: Solid Start, Shifting Habits

• Holiday Retail Metrics & Trends (33:08–41:03)

  • Dana Telsey (Telsey Advisory) analyzes Black Friday and Cyber Monday numbers:

    “Metrics tell the story of essentially it was solidly optimistic for this upcoming holiday season...a lot of the metrics surpass their expectations.” —Dana Telsey (34:34)

  • In-store rebound: Gen Z is flocking back to malls for the experience:

    “The teens are going to the mall...everyone wants the experience...talking to each other, saying ‘this looks nice on you’—that communication matters.” —Dana Telsey (35:31)

  • Winners this season are brands with “newness,” such as Steve Madden’s boots, Macy’s cosmetics brands, and Levi’s collaborations.

• Promotions & Payment Methods (37:36–39:10)

  • Promotions have intensified in apparel, but brands like Ralph Lauren are pulling back.
  • “Buy now, pay later” is booming, but Telsey says its prevalence doesn’t yet indicate consumer distress—it’s simply “everywhere now.”
  • Overall picture: The consumer is bifurcated—higher-income shoppers are spending freely, while lower-income consumers are being selective.

• Hot Products and Culture

  • Viral trends: The “Labubu” collectible is the season’s surprise “it” item among youth.

    “Labubu is the hot product...collectible, guys and girls wear them or have them on handbags...the thing this year.” —Dana Telsey (40:23)

---

Notable Quotes & Moments

• “Stocks at all-time highs...how could we not be? Earnings are soaring, the Fed is accommodative, taxes are low, and we’re in the middle of a tech revolution.”
  —Doug Sioka, Kavar Capital (04:27)

• On why Nvidia invests in partners it might still do business with:
  “Jensen Huang’s answer is always: ‘I thought it would be a great investment and that in the future that investment will pay off.’”
  —Ed Ludlow (15:18)

• On private credit’s potential pitfalls:
  “Defaults will likely rise because a lot of these borrowers put in capital structures when it was a zero interest rate environment...now it’s higher for longer.”
  —Christina Lee, Oaktree (21:46)

• Holiday retail snapshot:
  “It was solidly optimistic for this upcoming holiday season. Metrics surpass expectations...teens are going back to the mall for the experience.”
  —Dana Telsey (34:34, 35:31)

---

Key Timestamps

• 02:46 – 05:07: Stock rally analysis, Kansas City Chiefs/macro market analogies
• 05:07 – 10:01: Fed chair speculation, interest rates, societal impact
• 12:17 – 18:41: Nvidia & Synopsys, AI models, SoftBank and Nvidia’s stock
• 19:25 – 29:46: Private credit risk, transparency, liquidity, trends
• 33:08 – 41:03: Holiday retail data, in-store vs. online, Gen Z behavior, promotions, “buy now, pay later,” consumer segmentation, hottest products

---

Episode Takeaways

• Markets are on pause ahead of a key Fed decision, with all eyes on the new chair and the global trajectory of interest rates.
• Tech sector remains hot, as Nvidia leverages investments to cement AI and chip design leadership.
• Private credit is on alert: Record liquidity and competition may mask underlying vulnerabilities as the asset class faces higher rates for the first time.
• The holiday consumer is resilient but bifurcated, eager for celebration and novelty but more reliant than ever on alternative finance options like “buy now, pay later.”
• Retail’s future is omnichannel, blending digital convenience with in-person experiences, especially appealing to Gen Z.

---

For those who missed the broadcast, this episode offers a thorough cross-section of financial market sentiment, tech industry intrigue, and consumer culture at a key seasonal inflection point.

Transcript

[A]

When patients have a disease and the cause is known it usually ends up needing a specific solution on the podcast targeting the toughest diseases we explore the innovative tools methods and unique philosophy vertex pharmaceuticals is using to search for treatments for some of humanity's most challenging diseases subscribe today wherever you listen to podcasts.

[B]

Introducing the all new adobe acrobat studio now with ai powered pdf spaces do more with pdf's than you ever thought possible need ai to turn one hundred pages of market research into five insights with a click do that with acrobat need templates for a sales proposal that'll close that deal do that with acrobat need an ai specialist to tailor the tone of your market report to sound real smart in real time do do that with the all new adobe acrobat studio learn more at adobe dot com dothatwith acrobat did my card go through.

[C]

Oh no your small business depends on its internet so switch to verizon business and you could get lte business internet starting at dollar thirty nine a month when paired with select business mobile plans that's unlimited data for unlimited business there we go get the internet you need at the price you want verizon business starting price for lte business internet twenty five megabits per second unlim data plan with select verizon business smartphone plan savings terms apply.

[B]

Bloomberg audio studios podcasts radio.

[C]

News this is bloomberg business week 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 business week daily podcast podcast with carol massar and tim stanweck on bloomberg radio feels.

[B]

Kind of mellow this monday after thanksgiving and it's not like there's a you know fed meeting in a week and.

[A]

A half tim is everyone just bringing turkey for lunch for leftovers yeah and they're falling asleep at their desk because of the ingredient in turkey that makes you fall asleep supposedly i don't know if that's true it could be i.

[B]

Don'T know i don't know maybe maybe you watch any football we didn't really.

[A]

Watch football i was in ohio so we had to watch the ohio state michigan game for your wife for my wife for everybody family for anybody you walked into anybody you ran into in the entire state if you were walking down the street that's how it works there it's a big football state go you know go ohio state is what.

[B]

I have to say well yeah it was a lot of football this past weekend let's let's go talk a little bit about the markets because we've been bouncing around here and it does look like we're counting down in next week's fed meeting with us right now is doug sioka he's chief executive officer partner at kavar capital partners the firm has about one point six billion in assets under management he joins us from leawood kansas doug there is so much going on so many important things you've got that next fed meeting next fed chair the spend on ai the crypto fallout so many important things but we've got to start tim with what's really the most important thing and that is the kansas city chiefs we got to ask they're in danger of missing the playoffs for the first time in more than a decade they've been in the last three super bowls i'm always rooting for them i love watching them play they always come back yet this year seems like it's something different how painful is that for you you know it's tough.

[C]

It'S more painful to hear tim rooting for the ohio state buckeye come on but we do we still have a lot of confidence in our chiefs it's it's funny it may be a lot unlike markets there's mean reversion that tends to take place and the chiefs have lost six games all within one score and really the last seven or eight years they seem to win all those one score games so they may have used up some of this year's luck in prior seasons but we still have a long way to go if you think of it if they can win ten or eleven games they have a decent chance to get into the playoffs so we're still hopeful wow what's he's.

[B]

Hopeful what's easier the market the equity market continuing to move to the upside or the chiefs actually getting a chance at another super bowl hey i mean.

[C]

Look the stock market and we wrote a piece a couple months ago that just talked about these all time highs and certainly there's an obsession about where we go when you get to those inflection points which is defensible right but it's how could we not be at all time highs and we have earnings growing as fast as they have we have a fed that's in a very accommodative posture we have low taxes and regulation and we're in the midst of one of the greatest ever like tangible technological revolutions our country or the world has ever seen so we're not too terribly surprised that we're at all time highs nor are we too terribly surprised when we see a little bit of consternation and maybe some intermittent volatility that transpires around these levels so okay so.

[A]

Let'S broaden this out a little bit and think about the people who are in control of interest rates and that would be of course the federal reserve we spoke with christina lee a little earlier and it seems like carol people are pretty set on the fact that it could be kevin hassett the president said he's made a decision yeah we just don't know who that is no kevin hassett as fed chair does it change your view what do you make.

[C]

Of it you know we knew whoever president trump was going to pick was going to be very dovish and kevin certainly came to the top of almost all lists over the course of the last couple months i didn't think anyone ever thought mirren was going to get the nod as the chair because he likely would never get confirmed kevin warsh seema fall off the table going back to the fighting irish i had a soft spot for chris waller since he used to teach economics at the university but i think kevin hass would be a very good choice and i do think look i mean the fed wants to cut rates carol mentioned on lead in we've got a fed meeting in the next week and a half i think that the fed we've got this theory that they're in this sort of this triangulation of fed tension right as i mentioned we have a really strong economy but it's very uneven in its benefit distribution we have a fear of excess liquidity if we see a lowering of interest rates but it's also at a time where there's a very very significant cohort of the consumer that is dying for a little reprieve with lower rates because they have floating rate debt because they have jobs and don't keep up with the cost of living in the increasing price of things because they don't have money in the market right and then the third thing is we have this incredible technological revolution it's ubiquitous in its industry application and it's unprecedented in its efficiency elevation but it's exacerbating unemployment right so the fed really is at a consternation point i think they do want to cut rates they've talked about doing it as an insurance cut we think of it more like a cohort cut to a certain very important part of the underlying consumer what does.

[A]

The path look like beyond december then.

[C]

Yeah that's a great that's a really good question to me you know i think again maybe that comes back to haccp where you know interestingly president trump had said for a while in some of his his denigration of chair powell that shoot we need to be closer to where japan is in europe is and we need to cut rates by three hundred fifty basis points well if you look at the bond market this morning we're in the midst of one of the biggest sell offs we've had in the last couple of months because there was an expectation overnight that japan is going to hike rates so if we have sort of a monetary policy that's not globally coordinated that could create a little more consternation in fixed income markets but it could underscore the need for the us to be a little bit accommodative more so than we otherwise would have to be if the rest of the world was on the same.

[B]

Page hey i want to go back to though i don't disagree i think a lot of people don't disagree that when you look at the k shaped economy that there are many folks that are struggling in this economic environment and you're right doug they're not in the equity markets we now are talking about the three three a pillars whether it's you know asset prices going up because of the spend on a and that is making the rich people even richer affluent and so you know they have a lot of money to spend and we know the wealthier consumer is really important to the overall consumer spend having said that society wise socially it's important right to take care of all citizens because there's a lot of americans that aren't in the equity market having said that the fed's mandate is to watch inflation and to watch the labor market and is there a risk if they go on a trajectory of cutting rates if they just do it in december do you think there's any risk of creating some excess liquidity in a market where you say earnings look good and there's a lot of good stuff out there so is there you know the possibility of a risk and who knows how that plays out and what kind of a crisis maybe none of but i just wonder i don't know if.

[C]

It'S crisis like carol but i do think again this goes back to this this tension that the fed is really walking a tightrope because to your point i do think widespread prosperity is one of the things that makes our country so special with that expectation is it is within the reach for full participation and i think the issue becomes like if things just become unaffordable and that you're you're helping this important car with one hand and you're knocking them back with the other so that's the part where they unfortunately have a pretty blunt instrument yeah there might be other ways right whether that is just balance sheet management of things along those lines right whether that becomes some of the onshoring that takes place with fiscal policy incentives to increase employment because it is a really challenging time without question no and.

[B]

Listen totally agree it's got to have the wealth has to spread out to a lot more folks across the country doug sioka always appreciate it kavar capital.

[A]

Park partners stay with us more from bloomberg businessweek daily coming up after this when patients have a disease and the cause is known it usually ends up needing a specific solution on the podcast targeting the toughest diseases we explore the innovative tools methods and unique philosophy vertex pharmaceuticals is using to search for treatments for some of humanity's most challenging diseases subscribe to today wherever you listen to podcasts.

[D]

Support for the show comes from public dot com you're thoughtful about where your money goes you've got your core holdings some recurring crypto buys maybe even a few strategic option plays on the side the point is you're engaged with your investments and public gets that that's why they built an investing platform for those who take it seriously on public you can put together a multi asset portfolio for the long haul stocks bonds options crypto it's all there plus an industry leading three point six percent apy high yield cash account switch to the platform built for those who take investing seriously go to public dot com market and earn an uncapped one percent bonus when you transfer your portfolio that's public dot com market paid for by public.

[E]

Investing all investing involves the risk of loss including loss of principal brokerage services for us listed registered securities options and bonds in a self directed account are offered by public investing inc member finra and sipcrypto trading provided by zerohash complete disclosures available at public dot com disclosures.

[F]

If a lenovo computer for your business is on your holiday list don't shop around just go directly to the source lenovo dot com you'll find exclusive deals on the pcs you want for your business like the thinkpad x nine fourteen aura edition and yoga seven i two in one so avoid all that shopping chaos and price comparing and just go directly to the source lenovo dot com where pcs are up to fifty percent off that's lenovo dot com lenovo lenovo.

[B]

You'Re listening to the bloomberg businessweek daily podcast catch us live weekday afternoons from two to five eastern listen on apple carplay and android auto with the bloomberg business app or watch us live on youtube let's get now to developments in big tech as the king of ai bellwethers we're talking about nvidia invested two billion dollars in chip design software maker synopsis as part of a broader engineering and design tie up aiming tim to infuse its ai computing technology into more.

[A]

Industries with the tech roundup we head to the bloomberg news studio and bureau in san francisco where we find the co host of bloomberg tech ed ludlow ed why is nvidia doing this why.

[G]

Now yeah i guess there's a question of why is nvidia doing this and then what does synopsis get out of it you know like synopsis makes the software by which chips are designed but also validated so before you send a chip through the fab to be manufactured you want to know that that design works and that's a big part of what synopsis does with all kinds of tech companies and so part of the interpretation of why is nvidia doing this is it's a sales channel because synopsis is basically saying imagine how good our software would be if it was underpinned by nvidia's gpu's and nvidia's catalog of software which largely is called cuda x it's basically a library of building blocks for ai that just make existing software platforms better and so the next thing you're going to ask me about is probably circular financing but from perspective you know it gives them entry to to a tool or a platform that lots of people are using.

[B]

So circular financing i mean come on like carol did it is it just getting crazy or.

[G]

I don't know the parties on this specific deal nvidia and synopsis would say this is not circular financing in the same way that the graphic you're showing to our video audience illustrates there is no requirement that synopsis purchases from nvidia nvidia's gpu's additionally and this is all according to nvidia ceo jensen huang who was speaking this morning additionally as i said synopsis does business with all kinds of chip makers and nvidia also does business with other makers of chip design software siemens is one for example and none of that's going to change everyone is free to carry on as they want and it goes back to the why is nvidia doing this you know this is an area of the technology while we call electronic design automation eda software and a lot of people feel that those systems which have historically been run on cpu's old engineering platforms platforms could be a lot better if they were run on gpu's or ai accelerators they're just better pieces of software as a result but there are loads of players now everyone's free to have better software is how nvidia would put it.

[B]

But why i mean synopsis wants to have nvidia as a customer right like yeah so why did they need correct like what does that two billion dollars.

[G]

Investment do so this is like highly analogous with the intel situation and it's highly analogous with the nokia situation and so this year i've had two specific opportunities to ask jensen huang what's the rationale behind taking a stake like why do you need to own between two and three percent of these companies and his answer is always i thought it would be a great investment and that in the future that investment will pay off so nvidia got these synopsis shares at four hundred and fourteen dollars seventy nine cents apiece the stock's now higher than that i can't see on the screen four hundred and forty dollars apiece but i remember back in october when we were in dc i asked the same question of jensen why did you have to take almost three percent of nokia and he was like well it looks like a pretty genius move now doesn't it because nokia shares are up twenty percent and i just thought in the moment i couldn't believe that was his answer but he genuinely believes that it's going to be a great investment because he sees those engineering partnerships changing the respective fields that they're going into.

[A]

Okay ed we only have three minutes left but there's two more stories we want to hit with you one is deep seek because china's deep seek unveiled two new versions of an experimental ai model that it released weeks ago it adds fresh capabilities the startup said would help with combining reasoning and executing certain actions autonomously i'm old enough to remember earlier this year when a deep sea update comes out and tank shares of nvidia we don't see that and we haven't seen that where is deep seek when it comes to competition okay so.

[G]

Deep seek v three point two has been out for a number of weeks now in the form of deep sea v three point two xp experimental they just dropped the xp bit and it's an open source model that against benchmarking performs very well against gpt five openai's latest model where they've made a difference in this open source world is that like openai deep seq wants to make the tool more useful so they have the human reasoning element it parrots the behavior of a human but it replies the tool in a more useful way markets reacted in january through april the way they did because they didn't understand how deep seek had achieved that performance for a model at the low cost point that it did.

[B]

That does the world need to be worried those or i guess like what's how does this fit in how competitive is it real.

[G]

Quickly it's competitive models at this scale have tens of billions of parameters or more and what deep seq did is called mixture of experts or moz designs where if you have one hundred billion parameter model when you run the inference you actually run it you don't need to access all one hundred billion parameters they found a way of just accessing say ten billion parameters or sixty billion parameters which makes the cost of running it and the compute much more efficient so the model is as performant it's just easier to run i do feel.

[B]

Like everything's now about efficiency in terms of power use and just getting things done hey what do we need to know about masayoshi son the softbank founder who said he wouldn't have sold off nvidia shares of his company had unlimited money to bankroll its next investments in artificial intelligence is there something important here that we should acknowledge all you need.

[G]

To know is that he wishes he hadn't sold it but he didn't have enough money he needed more money so he sold the thing that could get him money in video shares and then he used it to invest in the thing he thinks will make him more money in the future open ai and it's as simple as that all right.

[A]

I love even he needs more money.

[B]

What does that say how about buy.

[A]

Now pay later society this is the world we live in carol everybody needs.

[B]

More money all right going to leave it there ed always glad we can go around the world of technology with you ed ludlow of course he is co host of bloomberg tech at bloomberg television catch ed and caroline hyde eleven am wall street time every monday through friday on bloomberg tv this is the.

[C]

Bloomberg businessweek daily podcast listen live each weekday starting at two pm eastern on apple carplay and android auto with the bloomberg business app you can also listen live on amazon alexa from our flagship new york station just say alexa play bloomberg.

[A]

Well a bloomberg opinion piece grabbed our attention today paul j davies he's based in london he writes that quote the lack of transparency in private credit is one reason that investors and journalists could be more fearful than is warranted by historical performance but there's illustrating data too illuminating data rather from analysts and ratings companies that show the outlook for repayment problems and bankruptcies isn't great in fact it's getting worse that again from.

[B]

His column davies goes on to write that he's quote talking about junk rated loans made by private credit funds to mostly mid sized companies often used to fund private equity buyouts and similar to the leveraged loans that banks underwrite and sell to investors to be fair there's a lot of questions that have emerged in recent weeks about private credit and we have yet to see kind of a systemic issue or problem at least that's what we hear from a lot of the voices we talk to let's.

[A]

Bring in christina lee she's managing director and co portfolio manager for us private debt strategy over at oaktree capital management a firm that's got more than two hundred billion dollars in assets under management welcome it's good to have you well.

[H]

Thank you so much for having me.

[A]

You must have been watching the events over the last few weeks with with great interest and i'm wondering just your view on the chatter around greater concerns when it comes to private credit and again i'm using the term like you know a monolith but not all private credit is the same yeah i think.

[H]

It'S been called the great cockroach wars you name it i think one of the issues that i think people are having is there's been some high profile bankruptcies that have happened recently and people are saying is this systemic is this a pattern of what's next i think sometimes you do have to take a step back and remember we're doing sub investment grade credit you are taking risks there will be defaults there will be restructuring so you don't get eight to nine percent all in yields by not.

[B]

Taking risk okay so having said that when you guys especially you know in terms of private credit i think what really tripped a lot of investors or investments up in the private world private credit private equity for that matter is that there weren't the exits that were normally there right we've seen them pushed off and i think it's starting to come back but then you had terms renegotiated you just like all these things started to happen and you just wonder whether it gets a little bit fuzzier and that there is more opportunities or more touch points for things to come undone roll that in and how we should be thinking about that part of.

[H]

It i think defaults have been very very low in private credit and if you were to look at various managers their loss ratios etcetera default rates would probably all be relatively similar and that's because private credit hasn't really been through a downturn yet right the advent of the class when it really started booming was maybe ten years ago right i think covid was too short i think what you're seeing right now also is defaults will likely rise because a lot of these borrowers put in capital structures right when it was a zero interest rate environment which is you know now it's higher for longer and i think that's why you're seeing defaults and some.

[B]

Cracks emerge does it get worse though because you're right an investment in a zero rate where money costs nothing is very different from where we are today right it's just the business dynamics and the financial dynamics of a deal looks very different so do do we see more cracks going forward is jamie dimon right that there's never just one cockroach.

[H]

I think you likely will see some cracks but what will be dependent as the cracks have been mass the cracks have been around for a year or two is there's a lot of liquidity in private credit and even in private equity they weren't necessarily deploying in new investments but they were helping the resisting.

[B]

Investments what forgive me for when does too much liquidity though become a problem where you're chasing after there's so much more folks involved in the private market world private credit private equity and when there's a lot of money around it's like people are chasing deals and maybe more likely to take on even more risk so when does it get messy or does it not in this world.

[H]

Maybe it's something different i think right now what you're seeing is there's still a supply demand imbalance as you had mentioned there's less exits there's less m and a and so private credit dry powder has increased but if we were to look at kind of the exit pace that private equity needs to do m and a should increase starting in twenty twenty six and that supply demand imbalance should lessen but right now what you're seeing is there's really an imbalance right now and so you are seeing that competitive nature of private credit and does that mean looser underwriting standards a lot of time yes we should not.

[A]

Howard marks the co chairman principal co founder of oaktree capital management out just last month it was in the beginning of november with a traditionally long memo about private credit but in bold on the second page he writes so no i don't think this is necessarily the beginning of a trend and by the way it's called cockroaches in the coal mine it's not an indictment of the whole sub investment grade debt market or the whole private credit market rather it's just a reminder that the yield spreads people care about so much are there for a reason because sub investment grade debt entails credit risk you agree this is essentially just part of investing in.

[H]

This type of debt exactly if you don't take on risk that usually means that you're yielding something lower right it goes hand in hand and i think because we've been in such a benign market where you haven't seen a lot of defaults etcetera that's why people i think are surprised so then what's the.

[A]

What'S the what are the products or what are what's the credit that that investors should avoid right now like how do you separate because because another criticism i guess you could say is that there's not a lot of transparency necessarily with this type of investment so then how do investors know what they should invest in and what they should stay.

[H]

Away from yeah i think one of the things to look out for is one of the questions i think that we all talk about our valuation marks right is there transparency is there not transparency i always tell people to ask them what is your valuation methodology how often are you looking at your valuation because in the end we are in a private illiquid market there's no mark to market there is no market and so there is a subjectiveness and a judgment on the manager and i think a lot of it is do they mark their investments aggressively or are they conservative right how do you know i think you have to ask your questions of how what methodology does you use do you use discounted cash flow how much does current yield matter what is your recovery rates this is what she.

[A]

Wrote about last week well yeah yes.

[B]

But this is where like i think about christina that a firm whether it's oak tree or somebody else right if you're you're playing games in terms of valuations or not being so transparent or whatever for your investors the deals aren't going to pay off right and investors are not going to give you any more money so is that kind of a checks and balance in some way in terms of ensuring you guys are doing the work like they trust a manager yeah and that you guys are making sure you have the transparency before you go into a deal exactly because.

[H]

If you are way too aggressive and all your marks are overinflated you will have a really hard time with your investors right right that is reputation risk and also just inherently as a creditor you are always worried about kind of what's next what's the next risk because your upside is getting what's contractually due to you right so a lot of just inherently as a credit investor you tend to be conservative because that's why.

[B]

Some you know and some of the conversations we've had in trying to figure out like is there more are there more cockroaches out there that maybe some of what some have said is smaller players that maybe do maybe don't do as much homework or something that that's where we might see some problems talk to us about the market overall where you guys are finding opportunities right now and what kind of kind of opportunities and i'm curious if it tells you kind of what this investment environment is it a healthy one is it a stressed one like i'm just curious i.

[H]

Would say right now it is there's supply demand imbalance so what does that mean it's very competitive if you think about the first nine months of the year with with the tariffs right with all of the uncertainty m and a went to a screeching halt for the most part now m and a has kind of come back after labor day and so now you're seeing what i call a little bit of fomo where you're seeing a lot of lenders rush to get deals done and i think this is the time that you want to be very selective you want to be a credit picker because the terms are getting more aggressive leverage is going up pricing is going down and so from like oaktree's philosophy standpoint is you really need to be selective it's a yellow light proceed with caution you're not going to stop investing but you got to pick and choose your spots do.

[A]

You think this type of asset class will end up in the four hundred one ks of many americans i think.

[H]

That is i call it the next frontier i think from a technology standpoint if you think about private credit it's a relative i'm talking about more sponsored direct lending it's a pretty mature asset class at this point right right and i think where you're going to see innovation is what i call technologies on reaching new investors or fund construction and so i do think for one case will be the next horizon but that's also where private equity is also going into right and so will that help a little bit with the supply demand.

[A]

Yes right right whether whether people want it or not in their four hundred one ks i don't know well it.

[B]

Does though it creates another demand right for for what's going on there just got about a minute left can you can you share with us i don't know an interesting deal that you recently did i don't know how specific you can get but just give us an idea in terms of maybe the type of deal terms or whatever you can.

[H]

Share just not about a specific deal but just what we're seeing in the market right now is it's counterintuitive but as the interest rates go lower you're seeing leverage creep up because borrowers can actually make their interest charges now and so before when interest rates were say four percent on sofr you didn't really see deals go over six times yeah because otherwise a borrower couldn't pay their interest now it's actually going the other way where you're getting lower yields but higher leverage and that just notes the level of competition so we're hoping that twenty twenty six there will be a little bit more balance in deals yeah but that's what we're seeing at the.

[B]

Moment so does this assume too that you think the fed will continue to cut rates even into twenty twenty six.

[H]

I think it all depends on who gets appointed.

[A]

You really what about so.

[B]

Yeah do you think is it is it a done thing that if if it's kevin hassett that you can assume that there'll be lower rates just got about thirty seconds i'm not going to.

[H]

Make an assumption around it but we all have an understanding of what the administration wants is lower rates right interesting time and we'll see where the underlying economy also says but hopefully will also dictate where the rates land right that.

[B]

The fed sticks to the mandate and what needs to be done thank you so much really appreciate it christine ali managing director and co co portfolio manager for us private debt strategy over at oaktree capital management joining us right here in our bloomberg interactive broker stay with.

[A]

Us more from bloomberg businessweek daily coming up after this.

[D]

Support for the show comes from public dot com you're thoughtful about where your money goes you've got your core holdings some recurring crypto buys maybe even a few strategic option plays on the side the point is you're engaged with your investments and public gets that that's why they built an investing platform for those who take it seriously on public you can put together a multi asset portfolio for the long haul stocks bonds options crypto it's all there plus an industry leading three point six percent apy high yield cash account switch to the platform built for those who take investing seriously go to public dot com market and earn an uncapped one percent bonus when you transfer your portfolio that's public dot com market paid for.

[E]

By public investing all investing involves the risk of loss including loss of principal brokerage services for us listed registered securities options and bonds in a self directed account are offered by public investing inc member finra and sipc crypto trading provided by zerohash complete disclosures available at public dot com disclosures if a lenovo computer.

[F]

For your business is on your holiday list don't shop around just go directly to the source lenovo dot com youm'll find exclusive deals on the pcs you want for your business like the thinkpad x nine hundred fourteen aura edition and yoga seven i two in one so avoid all that shopping chaos and price comparing and just go directly to the source lenovo dot com where pcs are up to fifty percent off that's lenovo dot com.

[E]

Running a business is hard enough so why make it harder with a dozen different apps that don't talk to each other one for sales another for inventory a separate one for accounting before you know it you are drowning in software instead of growing your business this is where odoo comes in odoo is the only business software you'll ever need it's an all in one fully integrated platform that handles everything crm accounting inventory e commerce hr and more no more app overload no more juggling logins just one seamless system that makes work easier and the best part odoo replaces multiple expensive platforms for a fraction of the cost it's built to grow with your business whether you are just starting out or already scaling up plus it's easy to use customizable and designed to streamline every process so you can focus on what really matters running your business thousands of businesses have made the switch so why not you try odoo for free at odoo dot com that's o d o o dot com you're listening.

[B]

To the bloomberg business week daily podcast catch us live weekday afternoons from two to five eastern listen on apple carplay and android auto with the bloomberg business app or watch us live on youtube so our bloomberg intelligence team writing earlier today that holiday retail sales appear to be off to a good start despite mixed store traffic there's a bunch of metrics coming at us you have retail next coming out saying visits to malls were soft down three point six percent mastercard saying black friday's online and in store sales rose four point four one percent salesforce says global online spending will increase eight percent to reach fifty three point seven billion while us spending will rise by four percent to thirteen point four billion and then there's adobe analytics.

[A]

Tim they noted a sharp nine point one percent acceleration in digital sales as consumers leaned into the ease and convenience of buying online well someone who knows how to read through all of these numbers she does her own in depth research too she understands the retail industry dana telsey is back with us founder ceo and chief research officer of chelsea advisory group she's been joining us here at bloomberg quite a bit carol going back to black friday she was here wednesday she was here wednesday he's here on she's here on cyber monday she joins us here in the studio today.

[I]

Thank you for having me there's a.

[B]

Lot i think you have a desk with your name on it it's easy.

[I]

Thank you and convenient to my office.

[B]

We love we love is there there are so many different metrics that come at us is there a metric that catches your attention more than most or is it that you rely just on kind of the work you guys do.

[I]

I rely on what we do but i also look at all the metrics to tell a story and frankly what you're seeing the metrics tell the story of essentially it was solidly optimistic for this upcoming holiday season they're good metrics a lot of the metrics surpass their expectations the other thing when you look at online versus in store in store is always going to be lower than online because online is a smaller part of the business but one of the differences this year is online sales the rate of growth slowed it's going off a bigger base while you're looking at in store the rate of in store sales increased for some traffic is holding steady with what it's been year to date and i think for whatever you want to say the gen z ers the teens they like that experience of being in stores that's what i saw on friday when i traveled all the.

[A]

Stores what do you mean by that like this is like the same people who watch friends ironically because they you know didn't watch it the first time around are now going to the mall.

[I]

The teens are going to the mall yeah that's what i mean everyone wants the experience i think what everyone missed from COVID talking to each other saying this looks nice on you or look at this deal that communication matters so.

[A]

What'S old is new again carol they're going back to the mall just like we did when we were kids well.

[B]

I know who doesn't love them all i don't love them all anymore having said that though dana like my daughter twenty two there was something she was going to buy online but we went to bloomingdale's to try it on and she ended up like okay this doesn't work and not buying it so it's like interesting kind of this mix of how we're figuring it out of how.

[I]

To shop and it's always the surprise because when you buy something you've had before maybe you do get the same size or you know what it is when you're buying something new and one of the things this year is there's newness to wardrobing you're looking at shoes where people are going back to whether it's black brown suede boots like steve madden is selling yeah whether it's wide leg denim jeans it's not just the same old same old and partially because events are taking place so we look.

[A]

At retail sales as this monolith but we know that's not the way that they're actually sliced what would you say characterizes the the companies that are doing a good job and actually bringing consumers through the door versus the ones that.

[I]

Are not newness i think the newness and product innovation really matter something that they don't have in their closets you think about the newness even in consumer electronics whether it's nintendo whether it's oura rings there's new things out there same old same old you're going to watch for the deals and what the value you're getting but today when you have whether it's coach adding new items to their tabby collection whether it's macy's who now has forty percent newness twenty new cosmetics brands in their stores whether it happens to be steve madden which i mentioned the brown suede boots the closed toed shoes at birkenstock or you look at levi's which frankly has new collaborations that's driving demand so what are you showing me this year that you didn't.

[B]

Show me last year what about promotions because i have to say leading up to it i saw some big promotions fifty sixty and they built through that through kind of the weekend so we.

[I]

Do a tracker eighty five retailers that we track every holiday we've been doing it for over ten years we did see promotions build particularly in some of the specialty apparel retailers but not everyone we saw some promotional increases whether it's the bath and body works we saw it in and you've seen a wider range of promotions instead of maybe last year forty to fifty maybe it's forty to sixty percent you're going to watch that at the same time you know who had fewer promotions or less promotion ralph lauren thirty percent off instead of forty percent off last year so what's.

[A]

The picture that all of this paints of the consumer i think it paints.

[I]

A consumer who's a bifurcated consumer higher income continuing to spend lower income basically being very discerning in what they're spending on their particularly on essentials but it's also showing consumers want to celebrate the holiday season and they'll think about january and january and they'll spend for holiday.

[B]

How much though i think about this a lot i mean how are they buying we saw some information about the buy now pay later continuing to be an important payment option for consumers adobe forecasting twenty point two billion will be spent through the payment method this holiday eleven percent growth over twenty twenty four.

[I]

I think on the buy now pay later look who it's going after it's going after those consumers who have more limited spending power and it's picking up interest you are seeing companies who've had buy now pay pay later for a long time it's still important everywhere now it is everywhere so it's not as differentiated as it had been in the.

[A]

Past it's not a sign of anything.

[I]

In your view no i'm watching credit card delinquencies a lot we're looking to see what that looks like we're watching certainly what consumer spending looks like and if anything you're still seeing some pretty solid results take a look at the retailers earnings the past few weeks well they've been mixed some of the outliers i mean who would have thought kohl's kohl's basically showed some improvement and we've seen some good results more to come this week because this week everyone from macy's victoria's secret ulta signet are all reporting and we'll get some more color.

[B]

On discretion so it feels pretty good.

[I]

It feels okay tariff driven price increases i mean the demand elasticity is something.

[B]

To be watching carefully so that's definitely there like is this this does it feel like a season where folks were like holidays are important and so i'm budgeting so that i can spend here and maybe i will do something else.

[I]

I think there's some of that but i think they're also spending saying i'll pay it back later i think they want to celebrate given it's been a tough year with a lot going at consumers all at the same time so.

[A]

You said that nintendo has done a good job this year of bringing consumers through the door companies including steve madden levi's ralph lauren ralph lauren what are the hot products as we look to.

[B]

Discuss you have to say labubu oh.

[I]

Labubu is the hot product oh yes.

[B]

I don't even know what a labubu.

[I]

It'S like a little it's a collectible thing collectible yep it could be on handbags backpacks guys and girls wear labubu or have labubus and is the hospitality no i don't okay just a second.

[B]

No i don't no but it's just.

[A]

Kind of well now i know what i'm getting each of you for the.

[B]

Holidays thank you is there like an it thing is that that is the.

[I]

Thing the boo boo is the thing i mean there's other things out there that are certainly trending legos are always trending and are very popular so who can't take that away yeah when it's gotten colder out so you're definitely seeing sweaters and outerwear take center stage i.

[B]

Love it dana telsey founder ceo and chief research officer of telsey advisory group.

[C]

This is the bloomberg businessweek daily podcast available on apple spotify and anywhere else you get your podcasts listen live weekday afternoons from two to five pm eastern on bloomberg dot com the iheartradio app tunein and the bloomberg business app you can also watch us live every weekday on youtube and always on the bloomberg terminal.

[F]

If a lenovo computer for your business is on your holiday list don't shop around just go directly to the source lenovo dot com youm'll find exclusive deals on the pcs you want for your business like the thinkpad x nine hundred fourteen aura edition and yoga seven i two in one so avoid all that shopping chaos and price comparing and just go directly to the source lenovo dot com where pcs are up to fifty percent off off that's lenovo dot.

[G]

Com lenovo lenovo.

[C]

Hey ryan reynolds here wishing you a very happy half off.

[F]

Holiday because right now mint mobile is.

[C]

Offering you the gift of fifty percent off unlimited to be clear that's half.

[F]

Price not half the service mint is.

[G]

Still premium unlimited wireless for a great.

[C]

Price so that means a half yeah.

[F]

Give it a try at mintmobile dot.

[H]

Com switch upfront payment of forty five dollars for three month plan equivalent to fifteen dollars per month required new customer offer for first three months only speed flow after thirty five gigabytes of networks busy taxes and fees extra see mintmobile.

[C]

Dot com ah greetings from my bath festive friends the holidays are overwhelming but i'm tackling this season with paypal and making the most of my money getting five percent cash back when i pay in four no fees no interest i used it to get this port portable.

[F]

Spa with jets now the bubbles can cling to my sculpted but pruny body.

[C]

Make the most of your money this holiday with paypal save the offer in the app ends twelve thirty one see paypal dot com promoter terms points can be redeemed for cash and more paying.

[B]

For subject to terms and approval paypal inc and mls nine one zero four five seven.