Wealth Manager Stocks Sink as Traders Flee Next AI Casualty

Summary

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Bloomberg Businessweek Podcast Summary

Episode: Wealth Manager Stocks Sink as Traders Flee Next AI Casualty
Date: February 10, 2026
Hosts: Carol Massar & Tim Stenovec
Guests: Neil Sipes (Bloomberg Intelligence), Kathy Jones (Schwab Center for Financial Research), Cheryl McKissick Daniel (McKissick & McKissick), Mark Gangloff (Bloomberg Opinion)

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Overview

This episode explores the sharp declines in wealth management stocks amid burgeoning AI disruption, Robinhood's recent earnings miss, shifting retail investor dynamics, the broader economic outlook, challenges in US infrastructure and energy, and a significant rollback of US climate regulations. The discussions feature insights from industry analysts, a fifth-generation construction executive, and a climate policy commentator.

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Episode Breakdown

1. Robinhood Earnings & Retail Investing Trends

Timestamps: 02:34–08:12
Guests: Neil Sipes (Bloomberg Intelligence); Bloomberg hosts
Key Topics:

• Robinhood’s Q4 Earnings Miss: Shares fell 8% after hours; transaction-based revenue missed expectations, especially in options and cryptocurrencies.
• Revenue Mix:
  • 60% of Robinhood’s revenue is transaction-based (trading in crypto, options, equities).
  • Crypto comprises roughly 20–25%, now declining as crypto prices falter.
• Customer Demographics:
  • 75% of clients are under 40; average account balance is $12,000 vs. $200,000+ at Schwab.
• Prediction Markets Expansion:
  • Newer business segment, 5–10% of revenue, "90% of that is actually sports betting" (05:31).
• Long-Term Viability & 'Graduation Risk':
  • Ongoing concern about young clients "graduating" to more robust platforms like Schwab for broader wealth services.

Notable Quotes:

• “Ultimately, I think the question is...what happens to retail sentiment more broadly as we move forward?” – Neil Sipes (04:24)
• “There’s always been concern of graduation risk…eventually you’ll move on to the more sophisticated platforms like a Schwab.” – Neil Sipes (07:43)

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2. The AI-Tax Scare & Wealth Management Stock Sell-off

Timestamps: 08:15–10:10
Guests: Neil Sipes; Bloomberg hosts
Key Topics:

• Reports of a new AI tax strategy tool trigger sharp stock declines across top wealth managers (Schwab -7.4%, Raymond James -9%, LPL -8.3%, Stifel -3.8%).
• AI’s Real Impact:
  • AI has been part of the sector for years, mainly “aiming to boost advisor productivity,” not wholesale automation or disruption (08:44).
  • Likely incremental fee compression over time, not “complete disintermediation."
• Regulatory and competitive landscape influence the outlook.

Notable Quotes:

• “AI isn’t new in wealth management…most of which are aiming to boost advisor productivity…more about incremental positives from AI.” – Neil Sipes (08:43)

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3. Macro Outlook, Fed Policy, and Consumer Divide

Timestamps: 12:33–19:51
Guests: Kathy Jones (Schwab Center for Financial Research)
Key Topics:

• Recent Market Volatility:
  • Tech and AI bubbles "escalated quickly" before leveraged positions unwound.
• Consumer & Labor Market:
  • Clear divide between high- and low-income Americans. Slower hiring and labor force stagnation (aging, immigration policy) limit GDP upside.
  • “It's tough to get three or three and a half [percent GDP growth]...the labor force is not growing.” – Kathy Jones (15:20)
• Fed Politics & Independence:
  • Unusual attention to the next Fed chair selection (potential appointment of Kevin Warsh).
  • “His [Warsh’s] comments are quite dramatic…breaking heads and…rethinking the way the Fed operates.” – Kathy Jones (17:14)
  • Expect lower rates ahead; “steeper yield curve being the result.” (19:27)

Notable Quotes:

• “The overreaction function is just enormous…technology where people can just…there are systems that look at just one word and there's a trade that gets generated from it.” – Kathy Jones (16:15)
• “Anything that touches the economy needs to be on the table, at least for investigation.” – Kathy Jones (18:32)

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4. Infrastructure Realities & New York’s Power Crunch

Timestamps: 20:05–28:31
Guests: Cheryl McKissick Daniel (McKissick & McKissick)
Key Topics:

• Big Projects:
  • Company portfolio: Barclays Center, Oculus, JFK Terminal 1, Lincoln Financial Field.
  • Some slowdowns (e.g. Hudson River Tunnel) due to political freezes/funding uncertainty.
• Urban Complexity & Relationships:
  • Building in NYC requires coordination with numerous agencies and stakeholders.
  • “Relationships really matter...you don't know if it's going to be the fire department. You don't know what it's going to be. It might even be the MTA…” (23:32)
• All-Electric Construction & Power Grid Challenges:
  • Push for electric buildings amid climate goals, but grid capacity increasingly strained.
  • “Where is all the electricity coming from? …next year we're at capacity with all the electric vehicles, all the buildings, all the data centers.” (25:15)
  • Risk of grid not meeting demand—both resilience and raw power supply in question.
• Black Family Business & Historical Erasure:
  • Fifth-generation family business; book highlights under-recognized Black contributions to US architecture/construction.

Notable Quotes:

• “You wonder how anything ever gets built [in NYC]...Developing very good relationships...everyone has to be on board…” – Cheryl McKissick Daniel (23:32)
• “As we know, it's difficult to have a second generation…to make it to the fifth generation is incredible.” – Cheryl McKissick Daniel (27:10)

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5. Climate Policy Rollback & Extreme Weather Economics

Timestamps: 30:54–40:53
Guests: Mark Gangloff (Bloomberg Opinion)
Key Topics:

• EPA’s Repeal of Greenhouse Gas Endangerment Finding:
  • Marks Trump administration’s “most consequential retreat from the fight against climate change.”
  • The move aims to dismantle the 2009 foundation for federal emissions standards.
  • Faces legal hurdles due to Clean Air Act and more; may be limited in scope to vehicles/industry, not power plants.
• Economic & Legal Landscape:
  • “There’s all this precedent, legal precedent, that says EPA has to do this.” – Mark Gangloff (32:42)
  • “A lot of the deregulation is sold as a way to cut electricity costs…But you can’t say that…while you’re also making it difficult to build solar and wind.” (34:34)
• Extreme Weather Costs:
  • US has taken a $7 trillion hit from extreme weather over the past 12 years—double the cost of the Great Depression.
• State vs. Federal Action:
  • States like California likely to proceed with stricter policies regardless of federal moves.
  • Automakers and businesses anticipate future regulatory swings.
• Resilience & Optimism:
  • Ongoing energy transition, investment in green infrastructure continues globally.
  • “Long-term, the momentum is just too much to overcome...the issue right now is the damage that can be done in the short term.” (40:53)

Notable Quotes:

• “You have to be able to acknowledge that you're going to get all kinds of weather…overall, we’re getting hotter.” – Mark Gangloff (37:07)
• “It does feel like there is a…an energy to this [green transition] that, that you can’t push back against forever.” – Mark Gangloff (40:53)

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Noteworthy Moments & Quotes

• On AI in Wealth Management:
  “AI isn't new in wealth management…it's more about incremental positives from AI, albeit over the long run.” – Neil Sipes (08:43)
• On Infrastructure & Power Shortages:
  “I think next year we're at capacity with all the electric vehicles, all the buildings, all the data centers.” – Cheryl McKissick Daniel (25:15)
• On Market Sentiment:
  “You get to a point where valuations are really high…the story is widespread, and then anything can come along and kind of burst the bubble, at least temporarily.” – Kathy Jones (13:07)
• On Climate Policy Repeal:
  "There’s all this precedent, legal precedent, that says EPA has to do this.” – Mark Gangloff (32:42)

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Segment Timestamps

• Robinhood Earnings & Retail Investing: 02:34–08:12
• Wealth Manager Sell-off & AI Fears: 08:15–10:10
• Macro Policy, Fed, & Labor Markets: 12:33–19:51
• Infrastructure & Energy Discussion: 20:05–28:31
• Climate Policy Rollback & Extreme Weather: 30:54–40:53

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Summary Conclusion

This episode offers a rounded perspective on how technological, regulatory, and economic shifts are intensifying uncertainty for financial institutions, retail investors, infrastructure builders, and climate policymakers alike. The common threads: AI’s incremental (but not earth-shattering) disruption, the outsized impact of regulation and demographic shifts, and the fundamental, ongoing tension between near-term political maneuvers and long-term investment or social trends, especially in climate and energy.

Listeners gain valuable context on why wealth managers’ stocks are dropping, the risks facing platforms like Robinhood, the challenges confronting builders and urban planners, and how climate policy and weather-driven costs are reshaping the US economic and regulatory landscape.

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Transcript

[US Olympic Gold Medalist]

Hey, this is US Olympic Gold medalist.

[Tara Davis Woodhull]

Tara Davis Woodhull and I'm US Paralympic.

[Hunter Woodhull]

Gold medalist Hunter Woodhull.

[US Olympic Gold Medalist]

As athletes, our lives are about having.

[Tara Davis Woodhull]

A clear path and a team that you can absolutely trust.

[US Olympic Gold Medalist]

So when it came to getting the.

[Tara Davis Woodhull]

Best mortgage, we chose PennyMac.

[US Olympic Gold Medalist]

PennyMac is proud to be the official mortgage provider of Team USA and you.

[PennyMac Representative]

Learn more at pennymac.com PennyMac Loan Services.

[Public Investing Platform Announcer]

LLC equal housing lender NMLS ID35953 licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. Conditions and restrictions may apply. Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete Disclosures available at public.comDisclosures Every Lenovo.

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[US Olympic Gold Medalist]

Bloomberg Audio Studios Podcasts Radio 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 Stenbeck on Bloomberg Radio Video we're going.

[Tara Davis Woodhull]

To talk about Robinhood because the company just out with earnings shares actually Moving lower in the after hours, the company reported net revenue for the fourth quarter that missed the average analyst estimate coming in at one point to $8 billion. Transaction based revenue missed expectations. Options revenue came in below expectations. Equities revenue came in above expectations. Net interest revenue came in slightly below expectations. Adjusted operating expenses came in below expectations. Is everyone keeping up?

[Kathy Jones]

Yeah, yeah.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

And we've got a little bit about outlook, right. Sees 2026 adjusted operating expenses and SBC 2.6 billion. That's a little bit 2.6 billion to 2.73 billion. So again, that stock, we're looking at a decline of about 6% here in the aftermarket.

[Tara Davis Woodhull]

I want to bring in Neil Sipes. He's a financials analyst for Bloomberg Intelligence or the Bloomberg Intelligence Financials analyst. He joins us here in the Bloomberg Interactive Brokers studio. Robin, it's, it's an amazing story of what the company's been able to do over the last few years and go from being this upstart to competing with the biggest names that are out there. Expectations going into this were relatively high, even though the shares have been under pressure of late, but down 8% in the after hours. What's your immediate reaction?

[Hunter Woodhull]

Yeah, so I think the immediate reaction is that we know that Robinhood is, is sort of building a franchise in the, you know, in the shadow of Schwab, we'll call it. Right. But ultimately today Robinhood as we know it earns about 60% of revenue from transaction based sources. So the things you were listing off crypto trading, options trading, equities trading, all that is incredibly important and, you know, part of the lifeblood of the fundamentals for Robinhood, which has been really strong in 2025, in the fourth quarter, you know, activity was pretty strong. It looks like we missed estimates on crypto, which of course is a very big story to start 2026 in terms of the, the sort of dive that we've seen in prices in that space. And so ultimately, I think the question is, you know, what happens to retail sentiment more broadly as we move forward? We've obviously had pretty steep pockets of unevenness in the markets tied to software, tied to AI scares, etc. And when crypto is, you know, 20 25% of your revenue, and that's, you know, very well off the highs as well. The question is how, you know, how engaged do the retail traders stay where, you know, 75% of customers are below the age of 40. On Robinhood, the average account balance is $12,000 in those accounts. Right. So where do you go from here when some of the things that you were most active in trading in are not going up into the right.

[Tara Davis Woodhull]

Well, maybe that's prediction markets and that's.

[Hunter Woodhull]

You know, something that I'm sure they'll point to on the call today. And, you know, that's a business that frankly didn't exist 12 to 18 months ago and now it's, you know, somewhere between 5 and 10% of of run rate revenue for Robinhood. So they've created that sort of out of thin air. What we do know that when you say prediction markets, you know, 90% of that is actually sports betting.

[Mark Gangloff]

Yes.

[Hunter Woodhull]

So that's certainly, you know, a question that we have broadly across the industry of should that be right on the application where you're, you know, supposed to be investing long term. But ultimately what Robinhood has really done and the mantra is, you know, giving clients what they want, access to it in a very easy, cheap way to use. And that's what they're doing. So for now, it's there. And you know, that's going to be a tailwind for the to the extent that it's allowed by regulators to stay there. So we'll have to see how that develops.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Yeah, you know, it's interesting. I was just thinking about. All right, so Robinhood is about a $77 billion market cap company. Schwab is about 181 billion. We've spent a lot of time with the Schwab folks and at some of their big financial events and they play a lot with the registered investment advisors and wealth management.

[Tara Davis Woodhull]

And Robinhood doesn't have that business.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Well, that's why I'm think like, are they apples to apples? Is it that, you know, can Robinhood really become an entity that really gives Schwab a run for their money or those that are also competitors of Schwab a run for their money or is it not the same thing?

[Hunter Woodhull]

I think today you see two very different business models. I think, you know, the long term goal of Robinhood and I think the businesses that they've been pushing in, which is, by the way, a small unit in RIA custody as well, is sort of going to look like that business. The problem is maybe not the problem, but, you know, the client profile on Robinhood just is very different. We talked about $12,000 average account balances that certainly could be different in spot rates in February than it was at the end of the year as well, mind you. And you look at Schwab, where the average account's north of 200,000. Right. So it's a different client set. They transact differently, they invest, they trade differently. So ultimately the monetization of those customers is different. In 20, 30 years, when the average customer on Robinhood looks more like Schwab's today, perhaps the revenue makeup will resemble more like Schwab, something that's perhaps a little bit more durable, less cyclical, but still different today.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

One question before we move on though. I mean Neil, do clients on Robinhood, as they get a little bit older and make more money, are they staying on Robinhood or are they going elsewhere?

[Hunter Woodhull]

I think that's the question. And we're still sort of in that feel out period where there's always been concern of graduation risk we call it for Robinhood, where eventually you'll move on to the more sophisticated platforms like a Schwab that are perhaps less flashy on the mobile app and you can do less things all in one place, but are more geared towards those longer term investors and by the way, give you access to those wealth platforms which Robinhood is looking to do, but those customers just aren't really demanding it yet.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Or maybe I just replaces a perfect segue.

[Tara Davis Woodhull]

We're speaking with Neil Sipes, financials analyst for Bloomberg Intelligence. An AI tool aimed at creating tax strategies sparked a sell off in wealth management stocks today. Speaking of Charles Schwab down 7.4%, Raymond James down 9%. LPL Financial down 8.3, Stifel fell 3.8%. Is this overdone?

[Hunter Woodhull]

I think early days, we're still digesting what it all means. But I think you could argue that some of the fears are perhaps a little more draconian than they should be. AI isn't new in wealth management. You've had big players like Schwab, Morgan Stanley talking about, you know, AI initiatives that they've been rolling out over the past handful of years, which most, most of which are aiming to boost advisor productivity. So we were just talking about Schwab, talking about Robinhood, that's mostly self directed, right? You're pulling out your phone, you're making the trades that you want to do. When we think about Schwab and you know, Raymond James, lpl, Morgan Stanley, these are much more that human touch advice. You're going in to meet with the, with the advisor and providing more of a holistic and comprehensive financial plan for your life. Those are, you know, relationship driven businesses that yes, can be shifted by AI or actually enhanced, we think by AI rather than disrupted and you know, completely, completely disintermediated by removing the human and completely shifting the wealth management model. We think that's less of the story here and more about incremental positives from AI, albeit over the long run. You can see some of those efficiencies competed away in the way of fee compression. So if things are easier and cheaper to provide that financial advice, like some of that tax planning software that came out today, frankly that helps financials and financial advisors do their job, which really just kind of improves that productivity.

[Tara Davis Woodhull]

Stay with us. More from Bloomberg Businessweek Daily Coming up after this.

[Public Investing Platform Announcer]

Support for the show comes from Public, the investing platform for those who take it seriously. On Public, you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI, it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, llc. SEC Registered Advisor. Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosure is available at public.com disclosures.

[PennyMac Representative]

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[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

No.

[PennyMac Representative]

A toaster? No. A hamster in a jetpack.

[Kathy Jones]

Fun.

[PennyMac Representative]

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[Hunter Woodhull]

Good boy.

[PennyMac Representative]

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[Cheryl McKissick Daniel]

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[US Olympic Gold Medalist]

Hey, this is US Olympic gold medalist.

[Tara Davis Woodhull]

Tara Davis Woodhull and I'm US Paralympic.

[Hunter Woodhull]

Gold medalist Hunter Woodhull.

[US Olympic Gold Medalist]

As athletes, our lives are about having.

[Tara Davis Woodhull]

A clear path and a team that.

[Hunter Woodhull]

You can absolutely trust.

[US Olympic Gold Medalist]

So when it came to getting the.

[Tara Davis Woodhull]

Best mortgage, we chose PennyMac.

[US Olympic Gold Medalist]

PennyMac is proud to be the official mortgage provider of Team USA and you.

[PennyMac Representative]

Learn more at pennymac.com pennymac loan services.

[Public Investing Platform Announcer]

Llc/Housing lender nmls.id 35953 licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. Conditions and restrictions may apply.

[US Olympic Gold Medalist]

You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tara Davis Woodhull]

I want to bring in Kathy Jones, chief fixed income strategist at the Schwab center for Financial Research. She joins us here in the Bloomberg Interactive Brokers studio. I got a nice chuckle with your most recent note because I'm kind of a sucker for Ron Burgundy. But you said, well, that escalated quickly. And you were talking about. It's funny, you know, you were talking about what happened last week with the anthropic and Claude and, you know, the sass stocks and concerns about leak, like, what happened. I know, I know. You're. You're covering it from the fixed income perspective, but that's how your note starts.

[Kathy Jones]

Yeah, I know. I think it's, you know, you get to a point where valuations are really high, the story is widespread, and then anything can come along and kind of burst the bubble, at least temporarily. And it looked like there were a lot of leveraged positions that were being undone. And, you know, we see this in cycles. We've seen it over and over again. So I think that that was mostly what was going on.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Tim just wants to say, I'm Ron Burgundy. I feel like if you're a guy, like, they all know the words of the movie completely.

[Tara Davis Woodhull]

Hey, Kathy's the one who wrote about it.

[Hunter Woodhull]

I know.

[Kathy Jones]

I love. I love. It is a great, quotable movie.

[Cheryl McKissick Daniel]

It is a great movie.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

So let's think about the environment, retail sales. Like, we had a great discussion with our Stuart, Paul, and Ira Jersey to talk about the data and also the reaction in the treasury trade. It's a long ways away, though, to the next Fed meeting. A lot can happen. So I don't know what's. What's the constructive discussion for you when you look at a weak print on retail sales and what's going on the consumer? And it's not just that we talked about consumer delinquencies and so on and so forth.

[Kathy Jones]

Yeah, I think people have talked for a long time about this division between the well to do and the not well to do. And no matter what letter you want to assign to it, there is a pretty big divide based on upper income versus lower income. And I think what we're seeing is the slowdown in Hiring, the tightness in the job market now has probably leaked through to people's confidence in terms of spending and activity. And, and I think that that's something that probably will continue to unfold. But in aggregate, which is the numbers that we looked at, the economy is still growing at a healthy pace, 15% worth.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

President Trump put that out there. So I have to keep going there.

[Tara Davis Woodhull]

Because you're not going to get, you are not going to get the answer you want unless you talk to, to President Trump.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

I know.

[Tara Davis Woodhull]

Well, and this was from his conversation with Larry Kudlow.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

The White House is listening. Come on, on. But I mean, the realist, you know, because things catch headlines, things go around on social media and people are like, look, we can get 15% growth. We can't get 15% growth.

[Kathy Jones]

No. And in fact, it's tough to get three or three and a half, which we have right now, because the labor force is not growing. In fact, it's stagnating and declining because of the immigration policies and then older people retiring out of the workforce. So when, when you look at gdp, one simple way to think about it, it's the number of people in the labor force and what they produce, right? And if the number of people in the labor force is declining, then they have to produce a whole lot more just to keep growing.

[Tara Davis Woodhull]

This is such an interesting demographic conversation because immigration has, for so many years, people coming into the United States has helped the US with its, you know, we're not having enough kids problem. But that might not be the case moving forward. Kathy, I want to talk more about today's environment because this is now your first rodeo. You've seen some stuff. What's unique about this environment today?

[Kathy Jones]

Well, I think one thing is the immediacy of the reaction to every headline that we get because you have so many active traders and you have actually technology where people can just. There are systems that look at just one word and there's a trade that gets generated from it. So the reaction, the cycle of reaction is very, very fast. And then it corrects and then it goes back and forth. But the overreaction function is just enormous. The other thing that's unusual is all this business with the Fed. Generally speaking, the changing of the guard at the Fed is not that big a deal and not followed.

[Tara Davis Woodhull]

But you said, you said generally speaking, these are not generally speaking times.

[Kathy Jones]

That's true. What is different now is this whole Dr. Around who's going to be the Fed chair. Usually it's a pretty dry conversation that just people like me hear about.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Do you have discussions with your family? They're like, so, Kathy, tell us about Kevin Morse.

[Kathy Jones]

Well, actually, I do get questions from the family because they.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Well, because they know you.

[Kathy Jones]

Right. And they're spectators to this. They're not involved, but they're spectators. And they're like, whoa, what's going on with this? You know, so it is, though, much more in focus. And it's not just that Kevin Warsh is the nominee, but, and that, you know, he was in the running, but he came from behind and all that. But that his. The things that he said are quite dramatic in terms of, you know, breaking heads and, you know, making major changes and rethinking the way the Fed operates. Those are very big comments for an institution that typically is pretty slow moving.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Do you believe that the Fed is overreached in terms of the things it touches? Like, there's some things. People have even talked about climate change and other things as, you know. Have they overreached?

[Kathy Jones]

Well, you know, I think to the extent that these things have economic impacts, it's something that the Fed should consider. We don't want to wake up one day and have everybody saying, gee, we should have thought about some of these major issues that affect the economy because it's the Fed's responsibility. So I don't think it's overreach. I mean, and, you know, people have their own opinions about all this.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

But I think that putting politics aside.

[Kathy Jones]

Yeah, no, we, anything that touches the economy needs to be on the table, at least for investigation.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Do you have faith that the Fed will stay independent?

[Kathy Jones]

I do. I think it's, you know, clearly the President would like, wanted to select somebody who was in favor of cutting rates. So presumably that's, that's what we've got. But it's a committee of 12. I think when Warsh comes in, he's got this theory about productivity allowing to cut rates and redoing the balance sheet. He's going to have some tough conversations, I think, with the Fed staff. You know, you've got hundreds of PhDs in economics are going to come in and say, well, show me your model. Show me how it works. Demonstrate to me. And these are the people who inform the various voting members at the fomc.

[Tara Davis Woodhull]

The bond market has thus far said okay.

[Kathy Jones]

The bond market said okay to everything. So pretty, pretty steady, right?

[Tara Davis Woodhull]

That's good.

[Kathy Jones]

Yeah, it is a good thing. That's what bonds are supposed to do. I think that, you know, our perspective is you've got an administration that really wants lower rates. You've got a Fed now that's going to want lower rates. You've got treasury secretary who's on board with doing something to help lower rates. We're probably going to see lower rates. So I think you kind of roll with this. But we see a steeper yield curve being the result.

[US Olympic Gold Medalist]

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.

[Tara Davis Woodhull]

Our next guest has an incredible window into all that. Her 120 year old family run firm to construction firm. It's behind been behind some well known and very large projects that everybody knows. The Barclays center in Brooklyn, the Oculus in Manhattan, the new Terminal 1 at JFK. The Lincoln Financial Field where the Philadelphia Eagles play.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

These are cool.

[Tara Davis Woodhull]

Yeah, they're big. This is, this is infrastructure.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

This is infrastructure. Great to have back with us as we dig into our weekly Women, Money and Power where we speak with some of the most influential women women across the business world. Cheryl McKissick, Daniel is chair of the board of McKissick and McKissick. She joins us from Westchester. She's also author of the Black Family who built America, the McKissicks, two centuries of daring Pioneers. That book coming out last August. Cheryl, it is good to have you back with us. We want to talk to you about a few things. But first up, we are kind of throughout the three hours here on Bloomberg businessweek daily looking at the economy in different ways and when people are building things or talking about building things, willing to commit to projects that might take a few years to complete or even longer. It's a great read on the economy and comfort about the longer term. What are you seeing? Are people comfortable about building and making plans to build right now?

[Cheryl McKissick Daniel]

I believe they're cautiously optimistic. I think that's the best way to put it. You know, we just finished JPMorgan Chase's corporate headquarters. Beautiful building constructed over a period of I want to say five years. And then we're at JFK Terminal 1. And Terminal 1, as you know is was supposed to open in July, but now it's opening in October. But there has been a little slowing down of phase B while we're in the process of securing new new airlines to take gates. And so it's really depends on the market you're in. I know you're aware of what's happening with Gateway. Yes, huge concern for the construction community. You know A loss of a thousand jobs on Friday and numerous consultants who were participating on that much needed, critical, critical infrastructure.

[Tara Davis Woodhull]

This is the $16 billion Hudson River Rail Tunnel that's largely come to a halt due to the Trump administration's decision to freez its funding. Is McKissick, McKissick working on that at all? Is it involved with that?

[Cheryl McKissick Daniel]

No, we are not working on that project. We were on the original project when Governor Christie stopped the project.

[Tara Davis Woodhull]

I know that's how long this has been. That's how long this has been going on. I don't need to tell Carol because she comes from New Jersey every day.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Oh, my God. And New Jersey politics is always engaging.

[Tara Davis Woodhull]

It is, but it raises a really important, important question, Cheryl, and that's about cities and the federal government working together. It's about private companies, family owned companies, large corporations working with cities and the federal government. That dynamic seems to have really shifted in the last year. And I'm curious about your view because you work with, with so many different agencies, state, local and federal, how you navigate an environment such as this?

[Cheryl McKissick Daniel]

Well, you know, when you look at the complications of just building sheer building in New York City, you wonder how anything ever gets built. But what I have learned is by developing very good relationships with the building department, with the architects, the engineers, the politicians, the developers, everyone has to be on board because you don't ever know when you're going to need to contact one of those individuals to help push a project along. And I have seen that over my 35 years of building in New York City that the relationships really matter. You don't know if it's going to be the fire department. You don't know what it's going to be. It might even be the mta, because the mta, you know, is throughout the entire city. And if you build within a certain range of their property, then you have to involve them. And so it's just one of the most complex, complicated cities to build in, in the world.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

What's interesting about construction right now is it, you know, I think about, it's interesting we're talking about the White House and the EPA and kind of getting ready to feels like rollback things that have been so important to protecting climate and people's health in general. And so we've seen trends in buildings being cleaner, LEED certified and so on and so forth. But when you look at what's going on, are there, what are the trends that you are seeing when it comes to construction right now?

[Cheryl McKissick Daniel]

Well, definitely now we have the Climate Control Board and the climate control goals that the governor would like to see in place. So we're definitely seeing more buildings come online that are all electric, which creates a whole nother problem all by itself. Because where is all the electricity coming from? We are so close to capacity. You know, I think next year we're at capacity with all the electric vehicles, all the buildings, all the data centers.

[Tara Davis Woodhull]

So what does that, what are the implications of that? Does that mean that we don't actually have the electricity that we need? Does it mean we see rolling blackouts? Does it mean, mean we see people who have electric heat not being able to heat their homes in the winter?

[Cheryl McKissick Daniel]

Well, yeah, I think we've run into that already. You know, the grid just cannot support the supply.

[Tara Davis Woodhull]

But those are, those are two different things, right? One is grid resilience and the other one is actually electrical capacity.

[Cheryl McKissick Daniel]

The power itself.

[Tara Davis Woodhull]

The power itself. And you're saying, you're saying we don't have the power.

[Cheryl McKissick Daniel]

Yeah, we need both. We need both.

[Tara Davis Woodhull]

Yeah. I think this winter has proven that here in New York for sure.

[Cheryl McKissick Daniel]

Yes. And so we're going to have to be innovative around that. If it's firing up old plants, you know, hydro, electricity, whatever it's going to take because the demand is just so.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Great, it's time to harness the sun. At this point, like now, it's just, it's pretty, you know, we talk about the affordability issues. I mean, we were just talking at home last night about our electrical bills, like trying to understand and we've done things, you know, energy efficient light bulbs and all that good stuff. And it's just crazy. Hey, before you go, I know already we're going to have to have you back your book, this book, the Black Family who Built America. You are the fifth generation leader of your family owned and run film roots back to Tennessee. Really family roots even further back here. Tell us why you wanted to write this.

[Cheryl McKissick Daniel]

Well, you know, I wanted to get this story out because it's extremely fascinating to have a black family that's in a very difficult profession of architecture and construction to make it to five generations. I mean, as we know, it's difficult to have a second generation. It's about 40%, third generation's 18 and fourth generation's like 3%. So to make it to the fifth generation is an incredible feet. And so I also wanted to get out this book, especially during the time of erasure of black history. This book talks about another side of history that a lot of people don't know because now the name of our book is the Black Family who Built America. But of course we didn't build all the buildings in America, but black people had largely a big head in building a lot of the structures in America. And we're like the hidden figures. And it makes sense. I mean, you know, history and books follow money, power and authorship, right? Not necessarily labor. And we were able to labor behind these buildings and structures, weren't able to steal documents. And so although we could have been constructing and designing, yeah, we were pretty much forgotten.

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[Tara Davis Woodhull]

The EPA plans this week to repeal a policy that provides the legal foundation for a raft of rules regulating greenhouse gas emissions marking President Trump's most consequential retreat from the fight against climate change. Some more details here. A move to scrap the Obama era endangerment finding. It's a 2009 scientific determination that greenhouse gases endanger human health and welfare is expected as early as Wednesday. This, according to a person familiar with the details. That policy, though, underpins rules including federal emissions standards for cars and for trucks. It's just one of the many things that Mark Gangloff watches. He's an editor for Bloomberg Opinion who covers the climate. He joins us here in the Bloomberg Interactive Brokers studio. So I want to talk about some of your recent columns. But but first we want to talk about this there. The Trump administration has almost successfully dismantled, from what I've read, much of the work that has gone into having the EPA serve as sort of a stopgap against climate change.

[Mark Gangloff]

Yeah.

[Tara Davis Woodhull]

An accurate assessment.

[Mark Gangloff]

Well, not yet. Not entirely yet. This the goal of getting the EPA to undo what's called its endangerment finding is a long term goal of a lot of conservatives who are now running the White House. It started back in, in 2007, there was a Supreme Court case where the Supreme Court said that the EPA was required to, you know, manage greenhouse gas, regulate greenhouse gas emissions. Great. The EPA in 2009 under Obama said we're going to do that. And we find that greenhouse gas emissions are a danger to the economy, a danger to public health. So we're going to regulate it for that reason. Perfect. So then there were a series of other moments where the EPA said, yeah, we're still doing that, still doing that. But all along people were trying to undermine that, that the there was that 2007 Supreme Court decision. The one of the people who dissented on that was John Roberts. Now he has a 6, 3 majority. And so the hope is that ultimately they will get to the Supreme Court where the Supreme Court will say, yeah, never mind, we're going to redo that, undo that. But for now, it's very illegal to do what the EPA is talking about doing. Because the Supreme Court has said this, that it's. It's required for them to do this under the Clean air Act of 1963. In 2022, we passed the IRA, which feels like 100 years ago now, but in the IRA, Congress, in its infinite wisdom, said the EPA has to regulate greenhouse gas emissions. And then under the one big beautiful bill act, the Republicans who passed that didn't bother to overturn it then. So there's all this precedent, legal precedent, that says EPA has to do this. And so that may be one of the reasons why they kind of softened it a bit. They did cut it down to just like vehicles and maybe some industry stuff where. And they're leaving power plants alone, which, again, is a little bit of cognitive dissonance there. You can manage some emissions, but not others. Where do you draw the line?

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Yeah, and. Well, we can draw lines right around a coal plant or something and just say, it's just going to impact this environment. It's not going to get into the space.

[Tara Davis Woodhull]

Right.

[Mark Gangloff]

You're being. Sorry, sarcasm.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

A lot of siblings. I grew up on sarcasm. No, but you know what's interesting is I go back to esg, Environmental, social, governance. Like, if you really go to the core, it was like how these kinds of factors could impact a company. Right. Or an investment. And these are things to be thinking about. Companies see the impact of climate change, and you get into your coverage nonstop. You Talk about the US alone has taken $7 trillion, a $7 trillion hit from extreme weather in the past 12 years, making it twice as expensive as the Great Depression. There is a cost from flooding from a higher earth, you know, from a hotter earth, I mean, in multiple ways.

[Mark Gangloff]

In multiple ways, it affects business. You know, a lot of this stuff, a lot of this deregulation is presented, sold as a way to cut electricity costs. And okay, fine, but you can't say that you're doing that while you're also making it difficult to build solar and wind, which is probably cheaper and easier to build than a lot of other stuff right now.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Wait, so this stuff is supposed to cut electricity costs by taking some of the away?

[Mark Gangloff]

Yeah, they're going to cut electricity costs, are going to take this away. They're going to make it easier to burn fossil fuels. They're going to. They're also going to do a big coal rollout tomorrow. They're going to try to, you know, put the heart paddles on coal again. I mean, it's still alive, it's still there. I mean, you know, we could get into you know, the pit here, but it is still alive. And it's, but it's in the icu. But he's, he's going to keep trying to bring it back, all in the name of lowering costs. But you're lowering those cost. You're only lowering some costs. You're not, you're, you're doing away with a whole bunch of energy supply. At the same time, you're raising demand with all these data centers and stuff. And at the same time, as you say, these hits to the economy keep growing, and other central banks around the world realize that, other governments around the world realize that. And so those, those costs are mounting. And there's health costs and, and economic costs, too. And both of these are making health insurance and home insurance much worse. And so, you know, this is a whole bunch of stuff that the epa, you know, the US Government has a big interest in that it's just going to wash its hands of.

[Tara Davis Woodhull]

So that brings us to another recent column that you wrote, and it is about the recent cold snap that we're in, or we're just coming out of the snowstorm two weeks ago and the effect on the economy in the United States of extreme weather. What is this in the context of an environment that many argue is one that experiences climate change? But then folks are coming out and saying, wait a second, it's so cold. Like the president, he said this recently. He said this 10 years ago. He said it recently. Wait a second, it's so cold. There is no global warming.

[Mark Gangloff]

Well, ironically enough, the senator that went on the floor of the Senate decades ago with a snowball and said, there's no climate change because I got a snowball. The woman who put the snowball in his hand is one of the people who wrote the EPA endangerment thing that's going out, that's going out right now. So these are people who have been ideologues about this for decades, and they don't care about the science. And you can look at the chart, and cold weather hasn't gotten worse or better over the past 20, 30 years. Some people say it could get worse because of the changes in the jet stream. So you could get more polar vortexes. They haven't proven that yet. But what we can prove is that cold weather doesn't go away. It's still cold up there in the Arctic. Cold enough to freeze pipes, you know, dump a whole bunch of snow, wreck infrastructure, take lives. That cold staff took a lot of lives. And so you can't ignore that. At the same Time as you're all, you have to be able to do both. You have to be able to acknowledge that you're going to get all kinds of weather. The environment is just getting more chaotic and some of it could be cold weather, but a lot of it overall, we're getting hotter. So a lot of it is going to continue to be wildfires, floods, et cetera.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Hey, one of the things I was thinking about, Mark, and I think about California, who kind of just, you know, goes its own way when it comes to rules and regulations and often sets the path for the rest of the nation. So EPA can do this, right? But are states going to still do their own thing? I mean, they've got to think about attracting citizens who want to live in their state. And if the environment is crappy, they're not going to be able to do that.

[Mark Gangloff]

Totally. I mean, I think, and I think that may be one reason why some people have kind of pushed off on this EPA thing. Because if the federal government says we're in charge of everything, then you can turn around, say, California, you can't manage emissions. The federal government's doing it right. And now that's not doing it anymore. So California can say, okay, we're going to manage emissions. And there's another little weird thing there with like, if you tell automakers, hey, don't worry, blow all the, all the emissions out of your tailpipes that you want, they're not necessarily going to rush to do that because consumers don't want it. California probably doesn't want it.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

Also costs expensive things to retool. Right. And how they make things right.

[Mark Gangloff]

And then when, if you get somebody sort of a reality based president or, you know, Congress coming in another four years, they may go back and say, hey, fix your emissions again. And so they're not in a rush to undo all this stuff.

[Tara Davis Woodhull]

I think one, one challenge that people have is unless they've sort of seen this up close, whether they've lived through the Palisades fire or a flooding, you know, in Florida, they don't necessarily see the effects of this stuff. I'm wondering if that could change. We just spoke to Cheryl McKissick, Daniel, from McKissick and McKissick, and she said, you know, we're in a position in the United States where we think we're going to essentially run out of electricity or even the, you know, the grids are not being able to handle the demand that we're seeing in the coming years. Like, do we take it for granted? I Think in the United States that when you turn on a light, it goes on. People who, from lots of other countries around the world who come to the United States are like, when I turn on my stove, there is not a flame there sometimes where I come from. And that's just the way life is. Is. Is that a possibility here in the.

[Mark Gangloff]

US not broadly speaking, that I can see in the immediate future. I mean, Puerto Rico is part of the US and as Bad Bunny reminded us the other night, they have plenty of electricity problems. If you don't manage your infrastructure, you do get these kind of problems. And in some places, you will see that happen. Data center demand might not rise to the level we expect. We can do things more efficiently. And again, if Congress and the President were just working on energy efficiency, which they also don't want to do, right, then you could. You could milk a whole lot more out of the fossil fuels, out of natural gas and at least burn less of it in order to get more, you know, economic growth and more energy that you need. So there. There are plenty of things that we can do, plenty of levers that we can pull.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

All right, so every time we talk with you about the environment and climate, and sometimes, like, Tim and I are super depressed about it, and you're like, but wait a minute, you always have optimism. Do you still have optimism?

[Mark Gangloff]

I guess I have to in order to, you know, keep doing this every day. I do think, you know, you look around the world and you look Even in the U.S. i mean, we canceled $35 billion in clean energy projects last year, but.

[Bloomberg Businessweek Host (possibly Tim Stenbeck)]

We saw some wind farm stuff go through, right?

[Mark Gangloff]

Courts are letting wind farms go through stock and bond. Investors are investing in green infrastructure and the energy transition around the world. The demand keeps rising for this stuff, and it does feel like there is a. An energy to this that, that you can't push back against forever. You know, the issue right now is the damage that can be done in the short term, but I think in the long term, the momentum is just too much to overcome.

[US Olympic Gold Medalist]

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