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- [00:00]
Carol Massar
Bloomberg businessweek is brought to you by Evolving Money, a podcast that explores how cryptocurrency is the next logical evolution of the financial system. Follow the podcast, which is sponsored by Coinbase. Wherever you get your audio programs.
- [00:14]
Lenovo Pro Advertiser
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- [00:44]
Jacob Goldstein
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.
- [01:19]
Chris Whalen
Bloomberg.
- [01:20]
Bloomberg Businessweek Daily Announcer
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 Business Week Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg Radio Hey.
- [01:50]
Carol Massar
One of Wall Street's bond kings is spotting overpriced assets almost everywhere that he looks. In an episode of the Odd Lots podcast recorded to mark the show's 10 year anniversary, Jeff Gundlach called out nosebleed valuations in the equity market. He also warned investors Tim against incredibly speculative bets.
- [02:07]
Tim Stenovec
The Double On Capital founder joined the host of Odd Lots, Joe Wiesenthal and Tracy Alloway.
- [02:12]
Chris Whalen
In recent years, the garbage lending has not gone to the public markets. The garbage lending has gone to these private markets. Next big crisis in the financial markets.
- [02:23]
Tim Stenovec
Is going to be private credit.
- [02:26]
Chris Whalen
It has the same trappings as subprime mortgage repackaging had back in 2026. The health of of the equity market in the United States is it's among the least healthy in my entire career.
- [02:43]
Tim Stenovec
In terms of the P E ratio, the CAPE ratio.
- [02:45]
Chris Whalen
All the classic valuation metrics are off the charts.
- [02:48]
Carol Massar
All right, just three snippets from that interview. That's Double Line Capital founder Jeff Gundlach with the hosts of Odd Lots, Joe Wiesenthal and Tracy Alloway. Highly recommend you check it out on the bloomberg and@Bloomberg.com we want to stay on the markets and the outlook for financial assets in particular and what is kind of a tricky time it feels like for US Financial markets. Great to have with us. Chris Whalen. He's chairman of Whalen Global Advisors. He's also editor of the Institutional Risk Analys. It's a weekly newsletter that looks at the intersection of financial markets and public policy, dissects and analyzes bank balance sheets. Chris is author of Inflated Money, Debt and the American Dream, among others. That book originally published back in 2010, second edition, released in May of this year. We could go on and on on his background. He's so well known to the Bloomberg audience and he really was a go to us during the great financial crisis. Chris joins us here in New York. Chris, it is great to have you here and I feel like there are so many places to begin with. And I kind of want to begin with what we just heard from some of the interview that Jeff Gundlach did with the Odd Lots team, how he's keeping his strategy simple, loading up on cash, staying away from private credit due to garbage lending and unhealthy valuations. His words. The notes you shared with our team, you point out in the credit markets, the wreckage in private equity and credit continues to accumulate. Accumulate wreckage is a big word in my world. So what do you mean by wreckage?
- [04:15]
Chris Whalen
The loss rates on many of these assets, Carol, and thank you for having me, is quite astounding. Remember that you had not just big private equity firms diving into private credit, but you had retail firms selling this to individual investors for the past couple of years. I think it just speaks to a decline in standards in the investment world. I've been an investment banker for 30 years, member of FINRA, and I got to tell you, most of my astute clients, the banks I really have respect for, don't see anything that they like. They're using their private markets to lay off credit risk. They're selling assets to raise cash. And I think that's frankly very consistent with what Jeff Gunlock is saying, which is that there's so much out there that needs to be fixed and the loss rates could be rather considerable. So I think it's only getting started. You saw the story in Bloomberg this morning about Blue Owl. We're going to see a lot more of that. So, you know, just take that example and multiply it across the entire spectrum of private equity. One of the interesting statistics I saw in the last couple of weeks is that something like 2/3 of the existing private equity firms are never going to be able to raise money again because the losses on their portfolio are so profound. So I think we're seeing something episodic. And as good luck said, this is a commercial story this time. This is not about consumers and mortgages. This is purely institutional.
- [05:51]
Tim Stenovec
So the question, well, the question I have is how it manifests. And do you believe it manifests in some sort of crisis? Does it become something that is systemic and has an effect on the entire financial system? Is it that big of an issue?
- [06:06]
Chris Whalen
It is that big. But remember, this is institutional investors. So a lot of it goes on behind the scenes. Lawyers and bankers sitting in conference rooms trying to figure out how to extract value from a situation. So when it impacts a public company. Yes. When a bank has to fess up about a loss, you just saw one with Blackstone, a telecom company, which is going to cost them $150 million. Looks like the whole thing was a fraud from, from the word go. But over time, yes, you're going to see more disclosure from the public players, but the amount of loss is going to be much larger than what the typical investor, the typical media person actually sees, because so much of it is private. I'll give you an example. There's a really great publication called the Real Deal that covers commercial real estate. They can't even begin to cover all of the things that are going on. If you just read their headlines every morning, you get a sense for just how much restructuring there is going on in some pretty important and well located assets here in New York City and other cities around the US and it just continues. And yet the funny part is you have new investors jumping in to buy these assets after they've been marked down, thinking that they're getting a deal. Well, we'll see, you know.
- [07:28]
Carol Massar
Well, we will see, right? I mean, does the spending frenzy play into this?
- [07:35]
Chris Whalen
Oh, very much. I, I covered Silicon Valley for years. Carol is a banker.
- [07:41]
Carol Massar
Right.
- [07:41]
Chris Whalen
And I have a lot of respect for real technologists as opposed to salespeople. I don't think AI, as is it's described to most investors today is going to amount to anything except the convenience for consumer users of the Internet. When you talk about real intelligence on the part of a machine that is based on its ability to observe and integrate new information. That's not what we're doing here. We're simply taking existing language, existing words, and putting massive horsepower behind search. Okay, so they summarize the first page of Google results. That's it.
- [08:20]
Tim Stenovec
So, so that to be fair, just to be fair and to make sure I understand this right, you're arguing that the. What we're seeing right now with, with such as chat from OpenAI and cloud from Anthropic, that's the extent of the innovation that we're going to see when it comes to the investment in AI.
- [08:38]
Chris Whalen
The head of AI at Metta, who's a really smart man, I was watching some of his videos yesterday over the weekend, and, you know, he just dismisses this entire phase. And I understand what he's talking about. I used to cover companies that did what we called natural language processing, where we were trying to teach computers words and then be able to integrate those words. We're not even doing that with AI. We're just simply throwing muscular search at it and say, okay, what's the top 10 search results? Let's build a summary. That's not intelligence. So I think a lot of the spend, and you've heard this from other people, is going to end up being wasted. When it comes to AI, That's a lot.
- [09:22]
Tim Stenovec
That's a lot of money. And that's a lot of big bets that in your, in your view, will not, don't get me wrong, a lot of money. Sorry, go ahead.
- [09:31]
Chris Whalen
Well, I don't think it will generate revenue proportional to the spend, let's put it that way.
- [09:38]
Carol Massar
So, okay, so I made a lot.
- [09:39]
Chris Whalen
Of money on Nvidia, don't get me wrong. And I love that stock. I love the company. But I think, you know, the desire for investable assets has just overwhelmed these opportunities. We see inflation everywhere we look in the financial markets today, and that is defined as too much money chasing too few opportunities.
- [10:00]
Carol Massar
I just, I want to push back a little bit, Chris. Like, you know, I've been talking about this piece that was on 60 Minutes last night about the founder of Anthropic.
- [10:09]
Tim Stenovec
Yeah, Dario Amade.
- [10:11]
Carol Massar
Right. And he talks specifically about how, like AI in health care, and I've talked to doctors, too. We just actually, even on Friday, we were at Boston Children's about the use of, of, you know, they can't keep up to date on everything. And that how I can data points and so on really come together to help create in terms of diagnoses, treatment, and also in terms of innovation. But AMADE Saying on 60 Minutes, basically, he's talking about this thing of, of condensing, basically. Let me just look what he says. The compressed 21st century. That's the phrase he uses to describe what could happen. He says the idea would be the point that we AI systems to this level of power where they're able to work with the best human scientists, could we get 10 times the rate of progress and therefore compress all the medical progress that's going to happen throughout the entire 21st century in five or ten years? I realize it's his book, but, I mean, those of us who've started playing around with it are kind of blown away with it in terms of what it can do. But again, do you think it's just a productivity tool or something more that maybe creates at this stage?
- [11:20]
Chris Whalen
Yes, it's. Remember in the old days, Right. Chris Weil was one of the early advocates of AI, and he said, well, it's not intelligence, it's simulated cognition. And he was right. But then he had so many people throwing money at him to go to conferences and speak that over time he adopted a more liberal, more, you know, I guess, accepting view of this technological phenomenon. But to me, as a writer, when I use AI, use Google, for example, it's. It's nice if you know what you're looking for specifically, but I'll always ask the machine two or three times the same question. Differently worded.
- [11:59]
Carol Massar
Yeah.
- [12:00]
Chris Whalen
And you always get different outputs. So let me give you another example. Imagine using AI for a mortgage lender to deal with customers who are calling, you know, for a variety of reasons. And you want to use it to try and sift through those inquiries, answer the ones that you can in a reliable fashion. Also use it to do summations of phone calls that have to be reviewed and okayed before they're, you know, finalized. Right. These are all valid functions, but ultimately all we're really doing here is summarizing. And that's what computers do. They sort. They do summations and averages and everything else, but it's not intelligence. It's not the ability to learn on the fly. And particularly without a monitor and a companion, if you will, in a human sense. So for a lot of companies, they look at the horsepower, they look at the speed and the robustness of these AI tools. Right. But they don't quite get there in terms of rolling it out because of the high error rates. Well, so that's the thing.
- [13:05]
Carol Massar
Okay. Tim and I are like, fighting who gets to ask the next question. Go ahead, Tim, because I'm gracious.
- [13:09]
Tim Stenovec
So are you out of Nvidia then? Because if this doesn't amount to.
- [13:14]
Carol Massar
Everybody seems to be getting a lot of people.
- [13:17]
Chris Whalen
I got in a long while ago, I wrote it up, then I got out Then I got back in and each time it went up so much it got to be such a big percentage of my portfolio that I had to sell it.
- [13:28]
Carol Massar
Well, the thing I want to ask you, Chris, is how does this end? Because I'm looking at a day where Amazon did a big. Their first US dollar bond offering in three years looking to raise 12 billion but attracts them at 80 billion of.
- [13:42]
Tim Stenovec
15 billion the size of US dollar bond offering at 15 billion.
- [13:45]
Carol Massar
It's like. And Meta did it like. So how does this end? I mean, I mean it when we turn to you so many times during the great financial crisis and this was something that there was so much FOMO and people, you know, didn't want to miss the gains. But we know how it all ended. So how do you. I don't want to be alarmist, I want to be smart here. How does this potentially end? The AI component? Who's impacted?
- [14:09]
Chris Whalen
I think you're going to see a correction in some of these valuations simply because they've gone up so much in a relatively short period of time. Let me give you another interesting example. Company I actually like a lot so far. So far is the best performing bank stock in the United States. It has been for the last 18 months. You know what the next one is by the way, among big banks, Citi. The rest of the big guys have fallen behind. So why did so far do so well? Well, slowly they're growing into their overhead. Their overhead was massive. It's still too high relative to the size of the bank. It's about $50 billion in assets now. But they had a tech component, a Silicon Valley component, a little bit of bitcoin. You know, all of these pieces that made equity managers love it. And they drove the thing up over 100% over the last 12 months. I think stories like that are going to cool off. I think bitcoin frankly is in big trouble because it was kind of co opted by Wall street. When you see ETFs with Bitcoin, it's not a good thing. This was supposed to be a means of exchange, remember? Well, you know, so I think all of these markets are going to have to retreat a little bit. Carol, will they go down way much like 2008? No. Because there's still too many dollars chasing these opportunities.
- [15:26]
Carol Massar
Yeah, there's a lot of liquidity out there. Chris. So, so glad already we're at. My team is like, when can we get Chris back? Thank you so much. Really.
- [15:35]
Tim Stenovec
Time to rebook him. We have lots of follow up questions.
- [15:38]
Carol Massar
We have lots of follow up so far by the way is up almost. It's up about 74% year to date. Citigroup's up about 40% comparison. JP Morgan also having a good year but a gain of about 25% year to date. Chris Whalen, thank you, thank you. So appreciate it. Chris is chairman of Whale and Global Advisors, author of Inflated Money Debt in the American Dream, which we didn't even get to talk about.
- [15:59]
Tim Stenovec
That's why we're going to rebook him.
- [16:00]
Carol Massar
Because it's so relevant to today. Coming up, the CEO of Generac. That's next.
- [16:04]
Tim Stenovec
Stay with us. More from Bloomberg businessweek Daily coming up after this.
- [16:12]
Carol Massar
Bloomberg businessweek is brought to you by Evolving Money, a podcast that explores how cryptocurrency is the next logical evolution of the financial system. The program investigates how traditional finance firms are integrating crypto into their operations now that Washington has begun to pass much needed regulations. Follow the podcast, which is sponsored by Coinbase wherever you get your audio programs.
- [16:36]
Lenovo Pro Advertiser
Pro drivers live for race day. But for small business owners, every day is race day. That's why going pro with Lenovo Pro matters one on one advice. IT solutions and customized hardware powered by Intel Core Ultra processors. Keep your business on the right track. Business goes pro with Lenovo Pro. Sign up for free@lenovo.com Pro Lenovo Lenovo.
- [17:09]
Chris Whalen
Hey everyone. Ed Helms here and hi, I'm Kalpen and we're the hosts of Irsay, The Audible and iHeart Audiobook Club. This week on the podcast, I am sitting down with Jenny Garth, host of the iHeart podcast. I choose me to discuss the new Audible adaptation of the timeless Jane Austen.
- [17:30]
Lenovo Pro Advertiser
Classic Pride and Prejudice.
- [17:33]
Chris Whalen
This is not a trick question. There's no wrong answer. What role would I play?
- [17:39]
Carol Massar
You know what? I can see you as Mr. Darcy. You got a little call in Firth.
- [17:45]
Chris Whalen
Okay, that's really sweet. I appreciate that. But are you sure I'm not the dad? I'm not Mr. Bennett here. Listen to Earsay the Audible and iHeart Audiobook Club on the iHeartradio app or.
- [18:00]
Lenovo Pro Advertiser
Wherever you get your podcasts.
- [18:05]
Bloomberg Businessweek Daily Announcer
You're listening to the Bloomberg Businessweek Daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android with the Bloomberg business app or watch us live on YouTube.
- [18:19]
Carol Massar
All right, we want to switch gears, talk a bit about the company Generac. Shares of Generac are well off their highs this year, drop up nearly 30% since mid August and slumping about 21% since the company reported earnings late October. Now those earnings from the power equipment company, you know who they are. They make generators and a lot more stuff. Included the company cutting its adjusted EBITDA margin and net sales sales growth forecast for the full year. The firm also posted adjusted profit and net sales for the third quarter that fell short of expectations. We had so much fun last time Matt was here. Matt Miller. And we talked with the company's chairman and CEO and president, and he's back with us to talk about the business and the outlook. He is Aaron Yuckfeld. He is, as we said, the president, CEO and chairman of Generac and he joins us from Wisconsin. Aaron, it is good to have you back here on Bloomberg Business Week Daily. How are you?
- [19:11]
Aaron Yuckfeld
Good. How are you guys doing?
- [19:13]
Carol Massar
Doing okay. It's, I can't believe that it's already November of 2025. I know it's, it's been a lot. Hey, talk to us about earnings because investors seem pretty disappointed in the results. What do we need to know now that it's a couple weeks since.
- [19:30]
Aaron Yuckfeld
Yeah. So, you know, we have two parts of our business, right? The part that probably most people know us for. The residential machines that we, that we build here in Wisconsin and around the US Home backup systems. You know, it was a soft season this year, really driven by two things, I would say. The first thing is just we actually had really nice weather most of the summer. In the fall, no landed hurricanes, which is great for the people who live along the coast. But if you're in a business like ours, obviously that does impact demand. So demand was softer just on the back of, you know, basically nicer weather. And secondarily we're starting to see some demand destruction I think with the consumer, you know, just, we've had to put more pricing into the marketplace over the last five years coming off of COVID response to the, you know, the tariff environment today. And that is starting to wear on the consumer and starting to impact our business a bit.
- [20:18]
Tim Stenovec
The demand destruction that you're talking about, I want to home in on that a little bit. What specifically is, is being hurt right now? Is it the purchasing power of the consumer? Talk a little bit more about that, what you're seeing in the marketplace right now.
- [20:33]
Aaron Yuckfeld
No, thanks, Tim. And specifically for us, you know, this is any, this is a home improvement project. Right. For the most part. So because it's tied to the home and investment in the home, I think, you know, there's, there's, I think housing just in general has just been slower. Right. So the number of sales and Purchases of homes, new construction of homes. All of those statistics are lower than I think where we'd like to see them at this point. We're not making enough housing in this country, unfortunately, and people investing in their homes, picking those types of projects. I think there's just a reticent right now, given some uncertainty, just where is the economy headed more broadly? As we turn the page on 2025.
- [21:12]
Carol Massar
Are you a little bit more subdued then like as you look into 2026? I mean it's just around the corner.
- [21:16]
Aaron Yuckfeld
Here certainly in our residential business, I would say that's the case. I think interestingly enough in our commercial and industrial business where we make larger generators for backup manufacturing plants, hospitals, hotels and data centers, which is a new market for us. We're actually seeing some very nice indicators of strength obviously on all of the capex spending in data centers in that market with being driven by AI of course, as you guys have reported and everybody's reporting, but we're getting swept up in that a bit and that is I think going to offset, largely be a nice counterweight for what we do and what we're probably going to see here in the residential market.
- [21:52]
Tim Stenovec
What is the connection between severe weather patterns, outages and then, you know, a few weeks or a few months later, your own sales?
- [21:59]
Aaron Yuckfeld
Yeah, typically for us, what you would see. So if you go back, you wind the clock back to last year we had a very strong hurricane season. Three landed storms starting in July and then we had two storms in October and one in November, one in October, one in November. Typically you would see a pattern of increased demand for a couple of quarters after that, which we did see first half of last year and kind of coming actually into the season this year in anticipation for another season. We thought was going to be active based on all the long range forecasts, but it just didn't play out that way. So the weather patterns were a lot more mild and as a result, you know, it just we didn't see products sell through at the same rate.
- [22:35]
Tim Stenovec
Hey, I want to take a bigger kind of step back and look at the big picture environment of what you sell into the US energy grid. Because we talk a lot, each and every day about the new data centers that are coming along, the increased demand that we're seeing, not just from consumers, but from companies when it comes to energy, increasing energy prices. And we understand the grid is definitely cobbled together and what a grid looks like in one community is not what it looks like in another community. But, but how would you characterize the resilience of the US Energy grid right now?
- [23:08]
Aaron Yuckfeld
Well, you know, they do grade the, the grid and they grade a lot of the major infrastructure every year. And I think the grid got a D this year. So you know, I think when you, when you look at the, that's a report from the civil engineers who we.
- [23:20]
Tim Stenovec
Should note are the ones who want to be, you know, building and building this stuff. So we have to take those grades with a grain of salt, I think.
- [23:26]
Aaron Yuckfeld
Well, I think you're right on that. But still, nonetheless, I mean, outages have been on the rise, right? Maybe this year, this, this past season was, was a pretty mild one, but, but outages are on the rise in terms of the frequency of the outages and also the duration. And you know, it used to be weather delivered a lot of those knockout punches to the grid in terms of 80% of all outages caused by something driven by weather directly. You know, hurricanes, ice storms, things like that. What we've been seeing is, is an ongoing trend here, a trend that's been forming around outages that are happening because you've got constraints of supply where demand is overwhelming supply. If you go back, probably the best case we can give you example is February of 2021 in Texas with the freeze down there, right? So you had just very cold temperatures down in Texas. Not historically cold, but very cold. And all of the heat is either electrical in nature, heat pump or baseboard heating. And it overwhelmed the amount of supply that was available. And what you saw there is ercot, the grid operator was they basically had to make a tough choice to turn everybody off. You know, they took the decision to disconnect millions of homes and businesses to save the major elements of the grid from, from long term destruction. And so we're seeing these types of patterns. You know, you mentioned we're seeing demand growing at a rate that it hasn't, that we haven't seen in two decades. So you know, they're only talking about a couple of percentage points increase and it sounds like something small to you and I. But when you talk about the grid in kind of the greater context, a couple of percentage points of increases in demand is a lot. It's projected especially with, when you look at the data center, build out 100 gigawatts of power is going to be needed over the next five years. And so, you know, that's like the equivalent of adding 20 New York cities. Like. So if you think about just the amount of power that, that is the raw power on the grid, that's going to be needed and it's happening at a time when we're actually retiring a lot of older assets, coal fired plants and some other things like that.
- [25:21]
Carol Massar
Well, you know, one thing I want to ask you Aaron, just to like provide some synergy with our earlier guest Chris Whalen, a Whalen global advisor, someone who we've talked to since the great financial crisis. He analy banks the financial system but we talked a lot about AI and the spend that's going on and he's got a little bit more subdued view of the impact that I will have on us longer term, that maybe it won't be as innovative or disruptive as some are saying. If it's not like how do you think about that? That what if it isn't as big as everybody says? How do you as a CEO of a company think about smartly what your exposure, what your build or what your spend should be and exposure to that when there is still the TBD is a big tbd.
- [26:07]
Aaron Yuckfeld
Yeah, I'm sure as the case with Generac and other companies, you know, a lot of boardroom conversations around this topic, right? Is it a bubble? How long will it last? Is it, you know, is it a five year run, a ten year run, a two year run? You know, I think what we know now and we can look kind of look at our own business, how we're deploying AI, right? So we're using AI in our operations, in the manufacturing floor, we're using in our customer support functions, we're using across the business to drive optimizations and we're doing that as a trade off for adding heads, right? So I think a lot of businesses are looking at AI as a way to, okay, can we gain enough efficiencies where we don't have to add as many, as many new heads into the business. And so I think those trends are very well pronounced. In fact, you know, we have a bunch of conversations and a lot of projects that are ongoing to utilize AI in that fashion. So I look inward and we see we're using it and we see a lot of opportunity in the future to use AI even more deeply in our operations. And every company in America is going through this same process large and small. And I think personally I think this is something that is a game changer obviously for businesses in the way we are productive and how productive we can be as a business and the impact it can have on our customers and the impacts it can have on our products as well. So when I look at that and you look at the kind of game changing nature of it. I think even if it, let's say for the sake of argument that maybe it's not going to play out over the next two years the same way. We all different forecasts have said it's going to be dramatically higher than anything we've ever seen. Let's say it doesn't turn out that way. I do think over time you're talking about this is a game changer in terms of the technology and the way it's being deployed. And I don't think there's any reason to believe that this isn't going to be something that's going to obviously have a tremendous amount of spending underpinning it for a long time.
- [27:54]
Tim Stenovec
But the connection to your business and what it does for people in companies that want to buy machines from, from Generac, does it mean the grid becomes more resilient and more reliable because it needs these upgrades and upgrades in order to support the power demand? Is that net net not so great for your business because, well, things are more reliable?
- [28:14]
Aaron Yuckfeld
Yeah, that's very true. I think in the context of a broader grid kind of network. Right. The ability to kind of shift if you've got a problem in one part of the network to a part of the network that doesn't have a problem. I think in our business though, frankly what happens is it's kind of the last mile. Right. So that line that connects directly to your home, Right. If a tree falls on that line, there's not a lot that AI is going to be able to do for you personally, for your home or your business. And that really is at the heart of our kind of our resiliency part of our business. I would say that the other side of this coin, of course is as we put more data centers on the ground and you see that demand for power continue to increase if we don't have enough supply. You know, I do think that we're going to have continued problems here. The Texas example that I gave you is an example from several years ago. But what we're seeing is localized pockets where there's just not enough power. That's a problem.
- [29:07]
Carol Massar
Aaron, someone listening, watching right now said, hey, ask Aaron, when the 28 kilowatt generator that you were talking about when you were on with us in August, when that's going to I guess be available. Just got about 30 seconds. Yeah.
- [29:22]
Aaron Yuckfeld
Today we just opened shipping for the product today. So it's a brand new product line for us and it's the largest air cooled home standby generator on the market. So great product.
- [29:32]
Sevasti Belafast
All right.
- [29:33]
Carol Massar
Good stuff, good stuff. Hey listen, we always appreciate time with you. Be well. Aaron Yuckfeld joining us, Chairman, President and CEO of Generac joining us from Wisconsin on this Monday.
- [29:44]
Tim Stenovec
Stay with us. More from Bloomberg businessweek Daily Coming Coming up after this.
- [29:52]
Lenovo Pro Advertiser
Pro drivers live for race day. But for small business owners, every day is race day. That's why going pro with Lenovo Pro matters one on one advice IT solutions and customized hardware powered by Intel Core Ultra processors. Keep your business on the right track. Business goes pro with Lenovo Pro. Sign up for free@lenovo.com Pro.
- [30:24]
Chris Whalen
Hey audiobook lovers. This week on the podcast I'm sitting down with musician, producer and walking encyclopedia Questlove. We're talking about Mark Ronson's memoir, Night how to be a DJ in 90s New York City. All right, like we talked about before, Mark Ronson found sanctuary in the in the DJ booth. What's a tool or piece of equipment in the studio or on stage that gives you the most control? So I have two microphones on stage.
- [30:49]
Tim Stenovec
We have the microphone that you hear as the audience. Then we have a second microphone in.
- [30:55]
Chris Whalen
Which we communicate with each other. I feel like that second microphone kind of saved all of our friendships.
- [31:01]
Tim Stenovec
No band likes each other after 20 years or 25 years.
- [31:06]
Chris Whalen
The Beatles broke up in seven and a half years and we're going on 35. Listen to HearSay, the Audible, and iHeart Audiobook Club on the iHeartRadio app or wherever you get your podcasts.
- [31:25]
Jacob Goldstein
This is Jacob Goldstein from what's yous Problem? Business software is expensive and when you buy software from lots of different companies, it's not only expensive, it gets confusing. Slow to use, hard to integrate. Odoo solves that because all Odoo software is connected on a single affordable platform. Save money without missing out on the features you need. Odoo has no hidden costs and no limit on features or data. Odoo has over 60 apps available for any needs your business might have, all at no additional charge. Everything from websites to sales to inventory to accounting, all linked and talking to each other. Check out odoo@o-o o.com that's O-O-O.com youm're.
- [32:10]
Bloomberg Businessweek Daily Announcer
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.
- [32:24]
Carol Massar
Want to get to our conversations from the C Suite community continuing on this Monday? And something that caught our Attention was from our Bloomberg law team, and they wrote about OpenAI and its most recent update to its usage policies for ChatGPT. That provides kind of a window into the company's efforts to insulate itself from potential liability for handing out legal advice to its users. Tim. The company's update, they tweak policies about how ChatGPT and other products can be used to provide legal and medical device. And although some lawyers prematurely and inaccurately celebrated changes as an outright ban on giving legal advice, the update was more a change in wording. ChatGPT still produces legal advice, including drafting contracts if asked to do so.
- [33:07]
Tim Stenovec
Okay, so a brave new world. Don't take legal advice from us.
- [33:10]
Carol Massar
No, choose.
- [33:12]
Tim Stenovec
Choose whether or not you want to take it from a large language model. Curious what Laura Chambers has to say about this. And sort of everything that is this layer of technology that's kind of underlying everything in our ecosystem right now. She's CEO of Mozilla Corporation. She joins us from San Francisco. Mozilla is the global nonprofit dedicated to ensuring the Internet remains open, inclusive, and equitable. And you might know the company from its Firefox web browser. And that's really where I want to start and sort of understanding this layer of technology that, that we're talking about so much that so many of us are using. And I wonder how you look at it as a way, as a way that it's, it's part of the ecosystem now. Laura, is this like, is it a web browser? Is it like Internet access was in the 1990s? Are there going to be no such thing as, like, you know, AI companies? Because everything is going to be an AI company. How should we be thinking about it?
- [34:03]
Laura Chambers
Yeah, it's a moment of tremendous change. One of the big shifts we're seeing is a really renewed interest in browsers as a category. Perplexity just launched their Comet browser. OpenAI just launched their Atlas browser. And it makes sense. The browser has been around for decades, and it's a product we use all the time, but we don't think about it very often. And it's not surprising that AI companies are getting into this space. The browser has incredible access into credentials, your tabs, where you're browsing, how you're spending your time. And as you know, AI companies are very hungry for that information. So it is, it is sort of a moment of resurgence for the browser right now.
- [34:42]
Tim Stenovec
Is the browser the gateway to all of this, or is it not because we're using apps like Claude or ChatGPT?
- [34:52]
Laura Chambers
What we're finding is that the folks that created those apps are feeling that the interface is a little clunky right now, that you might be in a browser and then you have to go to another other tab and back and forth a little bit. And so I think that there will be a role to play for apps. But what we're certainly seeing from OpenAI and others is that they're really interested in getting into the browser space. But I think the browser's changing. The browser has traditionally been a container. You know, you have a URL and a search bar, you have some tabs, and the browser renders content on the web for you. The shift that we're expecting to see is that the browser will become more of an agent to actually do work on your behalf in that browser interface. But with that shift becomes a big shift in power of data as well. The AIs now have more information about your credentials, where you're spending your time, where you're spending your money. And we know that people are worried about that. 60% of people in the US are really worried about privacy with AI, and the other 40% probably should be as well. And so I think to be successful in this space, people are going to have to go back to those values that Mozilla and, and Firefox are really built on, which is around privacy and choice and control over your experience and your data.
- [36:03]
Carol Massar
Do you feel like it's difficult to compete against the behemoths that are out there?
- [36:09]
Laura Chambers
It's always challenging to be a smaller company. The big tech companies consolidate a lot of power. They lock you in, they have vertical integration. But it's something that is incredibly important to do. The Internet, if left to its own devices, would always trend to being closed, to being exposed, expensive and to just have a few players. And that's why it's important to have open source solutions. It's important for alternatives for Firefox like Firefox to be there. You know, we have our own browser engine called Gecko. There are only three browser engines left, Microsoft and Opera. Everyone else moved over to Chromium. It's expensive to run a browser engine. I know why they did it. But we think it's incredibly important to invest in options like that because very quickly, otherwise you end up in a very sort of monopolistic world, which is bad for the health of the Internet and it's bad for the users of the Internet.
- [37:02]
Tim Stenovec
So is, are you creating a web browser? Are you changing Firefox in order to be an AI first browser so it can compete with whatever browser OpenAI ultimately has, whatever browser Perplexity ultimately offers in the way Chrome changes from Alphabet's Google.
- [37:19]
Laura Chambers
Yeah, Firefox, we always adapt to where users are going and what they need. And not all of our users want AI. About 20% of users in the US actually don't want AI. So there'll always be an experience for them. But we are actually, we just launched Smart Windows. We have signups for those available right now, which will be our version of AI, but it's going to be centered on privacy, on trust and on transparency. So it will be, you'll be able to have a great experience in the Firefox browser, but it's going to be one that is really oriented around what users really need and how it can do a great job of protecting data.
- [37:54]
Carol Massar
Yeah, I am curious too about, you know, you're thinking about who actually owns the data. We know the data is what's going to make AI and LLMs really powerful. So I'm just thinking about, you know, is some of your concerns too about certain companies, again, going back to the big guys, the big players, that they will have the access to most data out there as more and more folks use their search within their AI chat engines, if you will.
- [38:24]
Laura Chambers
Yeah, I think that users should be really thoughtful about their data. Now the good news about data is it can create great experiences, right? You can have seamless, faster experiences. There's a lot of good things that data can do. But as you give away more and more data, you're actually giving away control. And so the big tech companies control what you see, where you spend your time, how you spend your money, by sort of the algorithms of what they decide to show you. And so even though on the Internet it feels like you have a lot of choice, actually that choice has already been pre narrowed and it's pre narrowed by the data that's been collected for you. So I think it's incredibly important for users to think about who's got my data, how is it shaping what I'm seeing, what I'm buying, how I'm spending my time, how I'm spending my money and to not sort of give that data away without really thinking it through and to make choices that help to preserve privacy.
- [39:14]
Carol Massar
Yeah, certainly lots of issues. We're kind of finding our way through all of this. Really good to get your perspective. Laura Chambers, she's chief Executive officer of Mozilla, joining us from San Francisco.
- [39:23]
Tim Stenovec
Stay with us. More from Bloomberg businessweek Daily coming up after this.
- [39:31]
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- [40:04]
Chris Whalen
Hey everyone, Ed Helms here and hi, I'm Kal Penn and we're the hosts of EAR SA, the Audible and iHeart Audiobook Club. This week on the podcast I am sitting down with Jenny Garth, host of the iHeart podcast. I choose me to discuss the new Audible adaptation of the timeless Jane Austen.
- [40:25]
Lenovo Pro Advertiser
Classic Pride and Prejudice.
- [40:28]
Chris Whalen
This is not a trick question. There's no wrong answer. What role would I play?
- [40:34]
Carol Massar
You know what? I can see you the at Mr. Darcy. You got a little Colin Firth.
- [40:40]
Chris Whalen
Okay, that's really sweet, I appreciate that. But are you sure I'm not the dad? I'm not Mr. Bennett. Here, listen to Earsay the Audible and iHeart Audio Book Club on the iHeartradio.
- [40:54]
Lenovo Pro Advertiser
App or wherever you get your podcasts.
- [41:00]
Jacob Goldstein
This is Jacob Goldstein from what's yous Problem? Business software is expensive. And when you buy software from lots of different companies, it's not only expensive, it gets confusing. Slow to use, hard to integrate. Odoo solves that because all Odoo software is connected on a single affordable platform. Save money without missing out on the features you need. Odoo has no hidden costs and no limit on features or data. Odoo has over 60 apps available for any needs your business might have have, all at no additional charge. Everything from websites to sales to inventory to accounting. All linked and talking to each other. Check out Odoo at o d o o dot com. That's o d o o dot com.
- [41:44]
Bloomberg Businessweek Daily Announcer
You'Re listening to the Bloomberg Businessweek 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.
- [41:58]
Carol Massar
Yes indeed everybody, we're driving to the close on this Monday. Just ready. I know time flies. 17 minutes until we wrap up the trade. And what's going to be a super busy week. As we've mentioned in video, on Wednesday we get their results. We get Fed minutes. Also on Wednesday we've got retail earnings coming our way. And then we get delayed. Much delayed. September jobs report now that the government is back open and running. So we'll get that on Thursday in the Meantime, time, we've got some selling here on Monday.
- [42:24]
Tim Stenovec
Yeah, we do. Taking a look, as we just heard from Charlie at the s and P500, seen it down 1.3% just off our worst levels of the session, The S&P5 or, excuse me, 1.25%. The Nasdaq Composite down 1.3%. The Dow down 1.4%.
- [42:38]
Carol Massar
Yeah, most names in the S and P are lower. Hey, let's get to it. With us. Back with us is Sevasti Belafast. She is founder and CEO at Goldvest Advisory. The firm has about 720 million in assets under management. And great to have her back here in our Bloomberg Interactive broker studio. It's been a little while. Good to have you. Thank you. How are you and how are you thinking about? I mean, I can't believe we're almost ready to wrap up 2025, but the market environment, we talked about, Bitcoin, that's pulling back. We've seen stocks pull back. Questioning of the AI trade. There's concerns about we don't get another Fed rate cut come December. How do you sum up the market environment right now?
- [43:15]
Sevasti Belafast
Look, this is a healthy breather. I think it's been a great market. We have to remember that we're still up double digits on the S and P over, you know, 13 or 14%. And tech is up even more. So a lot of clients that had a greater percentage of tech in their portfolios, they're doing great. Even bonds are up. If you look at the aggregate bond index, up over 6 or 7% for the year. So, yes, we've had a little bit of a pullback. I think it's a healthy breather. But good, good results so far for the year.
- [43:43]
Tim Stenovec
You said healthy breather a couple times there. Where are we in the breath, like the beginning of the deep breath or like, is this the end of the deep breath we're breathing out now?
- [43:51]
Sevasti Belafast
We'll find out more from Nvidia on Wednesday. We mentioned that, but I think we're still early on in the AI trade.
- [43:57]
Carol Massar
You're a believer.
- [43:58]
Sevasti Belafast
I am a believer. This is just early innings. We're still early innings. And there was some recent commentary of, you know, some prominent people shorting some stocks and taking a look and like, really questioning, do we have the energy capacity that we will need? Do we have all of this? So I think it's heavy, healthy, but at the same time, and we'll hear this on Wednesday, I mean, it was just last month that the CEO of Nvidia was talking about over $500 billion of commitments that he's already seeing for next year. So I think we're still early innings in this AI trade, But how do.
- [44:31]
Carol Massar
We know it's just not an overspend? And we talk about the circular financing that we seem to be seeing of companies linking up and they do a deal, open air Nvidia and then they're, I don't know, spending on Nvidia, like chips, like it's just, it seems a little close.
- [44:48]
Sevasti Belafast
That's some part of the market. And I'll say some companies like Oracle for example, are getting their stock prices are down more than others like Microsoft that are seeing real earnings and real return on their investment already. So I think it's not going to be the same for anyone. They're going to be winners and losers and that's not clear already today. But there are some that you can see. So Oracle taking on some that maybe they don't, you know, that's raising some alarms. But there are companies that are making real return on their investments.
- [45:18]
Carol Massar
I mean, how do we know that companies aren't signing up to make sure they have access to data centers and are playing around or having access to LLMs and that they're playing around with it now, but that they're going to say that's pretty expensive, I don't really need to be doing this. And so we start to, to see some fallout at some point.
- [45:41]
Sevasti Belafast
We might see that fallout at some point, but for what we're seeing even into next year, the capital expenditures that companies had talked about are there. And so companies have been talking about that CEOs. So you know, it's kind of hard to tell what's going to happen three years out, five years out. But I think if we take a shorter term view, even the next 12 months, that that's real money that's there. So at some point it will be an overinvestment, but I don't think we're there yet and we just don't have have clarity as a result. What do you do? You can't be invested in only tech, right? That's where, that's where the diversification needs to come in.
- [46:15]
Tim Stenovec
We just spoke with Zach Pandal, head of research over at the Crypto Asset Manager, Grayscale Investments. I know you caught part of the conversation. He was talking about the crypto being treated like an alternative inside a portfolio. Are you doing that?
- [46:27]
Sevasti Belafast
Not yet. No, we're not. No, we're not there yet. No, we're not. Using Bitcoin, similar to maybe what we were talking about earlier, you were mentioning earlier. Like, I also. Either you're a believer or you're not quite there yet. And the people that are believers, they're. They're backing bitcoin and see it as an alternative investment. I think there are other better ways to capture alternative.
- [46:52]
Carol Massar
But is it a way that we ultimately are all transacting and so that we all will have access to it? Like, who doesn't need yet?
- [46:59]
Sevasti Belafast
Yeah, I don't see the need yet. I can't explain it to my clients. Why you're going to hold this asset that's based on price, you know, the supply and demand. Maybe the price goes up, maybe the price comes down. As it is now, I have a hard time explaining to my clients what the fundamental value is. Where is the cash flow, where is it going to get to?
- [47:17]
Carol Massar
Which is what you were kind of asking.
- [47:19]
Tim Stenovec
Yeah, I mean, it was what I was asking, but maybe a better question for him. And I'll ask you this question now, because I thought of it just now, is do you have gold in their portfolio?
- [47:26]
Sevasti Belafast
Okay, we do have gold in our portfolio.
- [47:28]
Tim Stenovec
How do you. Yeah, so how do you explain the use of gold?
- [47:30]
Sevasti Belafast
Okay, so more recently and since the Ukraine invasion that happened a few years ago now, you have been seeing large funds, large central bank buying of gold in portfolios. And I think that continues. I don't think we're done with that. So you're seeing more adoption and you're seeing more of that buying. And that was a big driver of gold along with inflation. And gold has been around a lot longer than Bitcoin. And so we've seen the correlation. Also, if we're worried about inflation, and yes, that is something that we worry about on behalf of our clients, then gold is another better way to put it in your portfolio as an alternative.
- [48:07]
Carol Massar
But could society at some point, like, rethink of what crypto is and think of it as really like gold? And so we shift it could be enough perception. Perception or is it real value?
- [48:20]
Sevasti Belafast
Well, I think it's about perception and the adoption. How much will people start using Bitcoin? I think that's a big part of it. Yeah. And that's why some people are taking the approach, again, we haven't done this for our clients at this point, but some people are taking the approach of saying, why wouldn't you take. Yeah, depending on your total asset allocation, take a percent, take 2%.
- [48:39]
Chris Whalen
Right.
- [48:39]
Sevasti Belafast
It's like a lottery ticket. If it does get to that. You know, some smart people. Cathie Wood are talking about bitcoin at over $1 million. So why not take a small percentage.
- [48:49]
Chris Whalen
And put it in there?
- [48:50]
Carol Massar
All right. Sevasti Belafast, thank you so much of Goldfest Advisory. She's the CEO.
- [48:55]
Bloomberg Businessweek Daily Announcer
This is the Bloomberg businessweek daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm eastern on bloomberg.com the I Heart radio app Tune in and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.
- [49:26]
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- [50:01]
Chris Whalen
That's what I'm talking about.
- [50:02]
Lenovo Pro Advertiser
With performances by Lamy Wilson, Kelsey Ballerini.
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Chris Whalen
Zach Topp, Riley Green, Ella Langley, Kenny Chesney, Megan Maroney, Brandi Carlisle and the.
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Lenovo Pro Advertiser
Hottest collabs, Miranda Lambert and Chris Stapleton.
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Chris Whalen
Jabuzzi and Steven Wilson Jr. Big X.
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Lenovo Pro Advertiser
The Plug featuring Liv Combs.
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Chris Whalen
It's country music's biggest night hosted by.
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Carol Massar
Your girl, Lainey Wilson.
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The CMA Awards live Wednesday, 8, 7.
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Chris Whalen
Central on ABC and next day on Hulu. This podcast is brought to you by FedEx. The new power Move hey, you know those people in your office who are always pulling old school corporate power moves? Like the guy who weaponizes eye contact. He's confident, he's engaged, he's often creepy. It's an old school power move. But this alpha dog laser gaze won't keep your supply chain moving across borders. The real power move? Having a smart platform that keeps up with the changing trade landscape. That's why smart businesses partner with FedEx and use the power of digital intelligence to navigate around supply chain issues before they happen. Set your sights on something that will actually improve your business. FedEx the new power Move.