Bloomberg Money: 'Fed Needs Clear Inflation Target and Messaging'

Summary

Bloomberg Money: "Fed Needs Clear Inflation Target and Messaging"

Podcast Summary – July 31, 2026
Hosts: Tom Keene, Scarlet Fu, David Gura
Key Guests: Richard Clarida (former Vice Chairman, Federal Reserve), Alison Schrager (Bloomberg Opinion), Laurie Calvasina (RBC Capital Markets), Suzanne Woolley (Bloomberg Money), Elena Poppin (Bloomberg News), Hannah Elliott (Hot Pursuit Podcast)

Episode Overview

This episode dives deep into the key issues shaping personal finance, the US economy, and central banking. The panel discusses everything from the struggles of the electric vehicle market, the impact of tariffs, the nuanced reality behind American wealth, current housing market woes, and the ongoing evolution in Federal Reserve policy messaging—topped off with market analysis and practical advice for investors and families.

The centerpiece of the episode is the in-depth interview with Richard Clarida, former Fed vice chairman, who reflects on how the Fed should set clear inflation targets and improve its communication to restore confidence in monetary policy. Other segments address market volatility, the K-shaped recovery, managing "boomerang" adult children, and notable tech and investing trends.

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Key Discussion Points

The Struggles of the EV Market & The China Question

• Discussion: The panel, including Hannah Elliott and Alison Schrager, talks about the declining appetite for expensive electric vehicles (EVs) in the US.
  • Scarlet Fu: "Americans don't want EVs. Unfortunately for companies like Lucid and Tesla and Rivian that are struggling and also for our domestic automakers that are actually pulling back." (02:18)
  • Should Chinese brands be allowed in? Discussion notes likely protectionism from the US government with new tariffs recently enacted.
  • David Gura: "Under this president, unlikely... all about trade wars and tariffs... seeking vengeance on those who have wronged him in the past." (02:56)
  • Scarlet Fu: "Hard to imagine him welcoming Chinese autos into the United States..." (03:10)

American Wealth: Richer but Angrier

• Despite rising wealth—particularly for the top 1%—Americans are reportedly angrier and anxious about the economy.
  • Alison Schrager: "All we hear is people feel like the economy is not working for them... But even lower income people are by most metrics better off than they used to be." (05:04)
• Gen Z’s financial nihilism and lack of risk understanding highlighted.
  • Schrager: "There's more this feeling that success is sort of random... also a lack of financial literacy or a lack of good risk training." (05:55)

The Need for Fed Clarity and Transparency

[Main Segment with Richard Clarida | Starts ~10:16]

• Bond Market Sell-Off: Yields at historic highs, prompting questions about what this signals for the real economy.

  • David Gura: "Thirty-year yield... reached a 19-year high: 5.26%. Rich Clarida, does the sell off... tell us anything about the US Economy and therefore how people's prospects might change?" (10:16)
  • Clarida: Points out diverse drivers of bond market movements, not just the Fed, and notes that break-even inflation expectations have remained relatively anchored since the new Fed chair (Kevin Warsh) took office six weeks ago. (10:33)

• Fed’s Focus: This administration is watching both the stock and bond markets, with particular sensitivity to the 10-year yield due to its impact on borrowing costs. (11:16)

• Clamor for Inflation Target Clarity:

  • The panel references recent comments by Fed Chair Kevin Warsh invoking the Lucas critique—i.e., policymakers must be mindful that their actions and stated targets can alter the very measures they track.
  • Tom Keene: "The news conference was rich in philosophy, process, and institutional aspirations, but poor in operational guidance. The absence of clarity... appears to have spoken louder than Warsh's words." (12:35)
  • Clarida: “An inflation-targeting central bank needs to be clear about what it is it is targeting… it may evolve. And so I think that will be important.” (13:29, 39:01)

• Forward Guidance Limits & Fed-Market Feedback Loops:

  • Clarida: Reflects on the nuances of transparency vs. “mystery” in central banking, advocating for clear reaction functions without boxing the Fed into rigid forward guidance.
  • On market signals: “It’s called sometimes called the hall of mirrors problem in central banking, which is the central bank looks at the market, the market looks at the central bank, it gets circular.” (15:08)
  • Reiterates the need for the market to broadly understand the Fed’s reaction function, even if it isn’t spelled out in detail. (16:13)

• K-Shaped Economy:

  • Clarida: “We do and have had a K-shaped economy for some time… especially in the last six years… if you don’t own your house, don’t own a lot of stocks, you’re living paycheck to paycheck. It’s been a tough six years.” (17:33)

Housing Affordability & Policy Paralysis

• Mortgage rates: At a one-year high of 6.66%, approaching 7%. (07:47)
• Real solutions for housing affordability seem elusive with little legislative progress expected before the midterms.
  • Scarlet Fu: “There’s been some lip service to it. But… the prospect of there being any kind of real landmark legislation… seems unlikely.” (08:04)

Personal Finance: "Boomerang Kids" and Retirement Realities

• Segment with Suzanne Woolley [21:21]:
  • The cost of adult children returning home (“boomerang kids”) averages $1,500/month ($18,000/year).
  • Importance of setting financial and practical boundaries when an adult child moves home.
    • “If it’s coming at the expense of your retirement security, you really have to think twice because your kids will have a long runway for earnings. Your runway… is not.” (22:32)

Market Sentiment & Investor Behavior

• Laurie Calvasina (RBC Capital) Interview [24:14]:
  • Expectation of a “nonlinear” market over the next 12 months, with potential drawdowns but general growth ahead.
  • On retail and institutional investors’ behavior:
    • Retail stock ownership is at a 20-year high; retail has become more sophisticated, but true crisis behavior remains untested since most recent major drawdowns.
    • Calvasina: “Typical drawdowns are 5 to 10%. Be prepared for those… If there’s a serious chance of recession… then you might see a 20% or greater decline.” (28:49)
    • Retail “buy-the-dip” mentality is influencing market floors, but collective memory of larger, sudden drawdowns has faded. (30:19-30:44)
    • 2022 market drop classed as a “recessionary type drawdown” due to inflation and rate shocks—“pretty darn close” to a true recession scenario. (31:53)

Tech Update: Apple’s Supply Chain & Leasing Model

• Elena Poppin reports:
  • Apple shares are down on memory chip shortages. Leasing models for hardware may make retention easier but underscore continued demand. (33:08-34:18)
  • Despite “China being a weak spot,” Apple’s sales in other areas matched or beat expectations—supply, not demand, is the bottleneck. (34:37)
  • Tom Keene jokes: “Why do I need a foldable iPhone?” (35:21)
  • Apple’s new leasing model is highlighted as a long-term retention strategy. (33:57-34:18)

Book Recommendations & Cultural Notes

• Tom Keene: “Chip War” by Chris Miller for the definitive story on semiconductors. (36:17)
• David Gura: “How to Rule the World: Education and Power at Stanford University” by Theo Baker, which captures both the ambition and the networking culture of elite universities. (37:08-38:05)

Looking Ahead: Economic Data & Market Events

• Major events on the horizon: jobs report (expectation of 88,000 jobs added), SpaceX earnings, entertainment picks for the weekend in NYC (BTS, Rush concert).
  • Tom Keene: “I’m still not used to the new jobs number with immigration… 88,000 is terrible. And yet… that’s actually pretty well.” (40:55)

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Notable Quotes & Moments

• Alison Schrager: "There is more this feeling that success is random... also a lack of financial literacy or a lack of good risk training." (05:55)
• Richard Clarida: “An inflation-targeting central bank needs to be clear about what it is it is targeting. It can, it may evolve.” (13:29, 39:01)
• Tom Keene: “The absence of clarity like analytical specificity appears to have spoken louder than Warsh's words.” (12:35)
• Richard Clarida (on his personal hobby): "My splurge is my hobby is music. So I buy guitars, I buy recording equipment... my new album's coming out later this year." (18:44)

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Timestamps for Key Segments

• EVs, China, and Tariffs – 02:16–03:26
• American Wealth & Financial Nihilism – 04:47–06:33
• Fed Transparency & Inflation Targeting Interview (Richard Clarida) – 10:16–18:44
• K-Shaped Recovery & Real Economy Impacts – 17:14–18:22
• Boomerang Kids & Managing Family Finances (Suzanne Woolley) – 21:21–23:17
• Market Volatility, Retail Investors, and Drawdowns (Laurie Calvasina) – 24:14–31:53
• Apple Results & Tech Consumption – 33:08–35:48
• Book Recommendations – 36:03–38:17
• Looking Ahead: Jobs Report & Market Preview – 39:01–41:20

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Overall Tone

Engaged, informed, and conversational—panels alternate between expert analysis, practical financial advice, and occasional light-hearted pop culture banter, maintaining relevance for a broad audience of investors, professionals, and curious listeners.

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This summary captures the full scope of expert insight and practical takeaways on Fed policy, markets, and wealth—making it ideal for anyone who missed the show or wants a reference for its rich content.

Transcript

[Karen Moscow]

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[Tom Keene]

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[Richard Clarida]

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[Karen Moscow]

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Listen to Bloomberg Daybreak each morning on Apple, Spotify or anywhere you listen to. Yeah, maxing is so maxing right now, bro. Get ready for spicy chicken maxing because Carl's Jr. Is saving you big with a 5.99 maxed out double stack double stack double stack spicy chicken sandwich. Seriously, just 5.99 double stack spicy chicken. This is unreal value in the bromosphere. The new spicy chicken Max Wallet Friendly Max Tasty only at Carl's Jr available for limited time at participating restaurants, tacked on, included. Not valid for use within a combo or in combination with any other offered discount.

[David Gura]

Bloomberg Audio Studios Podcasts, Radio News Bloomberg Money.

[Tom Keene]

This is the Bloomberg Money Podcast. I'm Tom Keene with Scarlet Fu. Join us each week for a smart look at the forces shaping your financial life. On personal finance, on retirement and wealth management, we will explore how people are earning, investing and building wealth. We are live Fridays at noon Eastern on Bloomberg Television. Subscribe to the podcast wherever you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app and we get it out of the park today. Gurs here for Bloomberg this week, right? It's wonderful to see David Gur of Bloomberg this week and Alison Schrager here with an important story and this is a real pleasure. Hannah Elliott, what you do is you go to Baylor and if you do Baylor Autos. Hannah Elliott or is this working with Matt Miller on an esteemed auto podcast? Let's get it started. I walk by a Lucid. A Lucid $200,000 or something. Are they selling? Are we going to buy fancy overpriced EVs with our wealth management?

[David Gura]

Apparently not.

[Tom Keene]

The sale.

[Alison Schrager]

The sales say no. The sales say Americans don't want EVs. Unfortunately for companies like Lucid and Tesla and Rivian that are struggling and also for our domestic automakers that are actually pulling back on a lot of EVs. They had one question.

[Tom Keene]

Yeah, I'm Scarlet probably as I'm going to steal it from her. Should the Chinese be let into America to sell us cheap EVs?

[Scarlet Fu]

You know what?

[Alison Schrager]

I'm not an economist Jim Farley at ford thinks that EVs from China will be here in the next five years or so. A lot of people, Keith Naughton, our esteemed automotive reporter, came on the podcast yesterday, agrees it's only a matter of time.

[David Gura]

It's only a matter of time. But I mean, under this president, unlikely, right? David Gura, because he is all about trade wars and tariffs and making sure that he seeks vengeance on those who have wronged him in the past. And you see this across the policy spectrum.

[Scarlet Fu]

That's absolutely correct. I mean, he's somebody who loves tariffs. As he says time and time again, I would have a hard time imagining him welcoming Chinese autos into the United States as he invites American automakers to the lawn of the White House over and over again. We saw him put these new tariffs in place just a few days ago so that it's very much the direction

[Tom Keene]

of travel because of camp. We also have a president, the United States, at camp. He's at Camp David right now, 60 miles north of the White House. The history of this Cabinet Room is extraordinary, I guess, of everything. I remember Menachem Begin and Anwar Sadat with Carter in 79. Why is the president there? And it's a place where they talk about war, isn't it?

[Scarlet Fu]

It's a great question. And were I the president, I wouldn't go for the day and leave as he's going to do. He's headed to Bedminster after this. But yet this is in the Catoctin Mountain in Maryland, as you say, 60 miles outside of Washington, D.C. we saw FDR go there during his presidency, which called Shangri La back then. And Dwight Eisenhower didn't like the name. He thought that was a little too effete. So he changed it to Camp David in honor of his grandson. He went there for many weeks after he had a heart attack in Denver. There is some talk of this being the first Cabinet meeting at Camp David. No, this. This one is not. Eisenhower convened them while he was there.

[Tom Keene]

There's a photo, Scarlett, I saw of President Obama playing pool. And you could. I could see President Trump bowling.

[David Gura]

President Trump bowling.

[Scarlet Fu]

There is a bowling alley. There is a bowling alley.

[David Gura]

That would be an image. I don't know if we'll get that on Truth Social.

[Scarlet Fu]

But this is really just a venue change. It's the same kind of Cabinet meeting we've seen. He's invited the press. And I'll say lastly on your point about the significance of this venue, I mean, presidents have liked this place in the past because the Press hasn't been able to go and we see President Trump kind of turning that on its head. He's got a live filmed cabinet meeting taking place at Campbell.

[David Gura]

Well, he's being true to his spirit. Alison, I want to bring you into the conversation because you recently had a column on how Americans are rich, richer than ever before, but they're also angrier than ever before as well. The top 1% is richer or is everyone getting richer because you wonder how much of this is, you know, kind of relative gains?

[Alison Schrager]

Well, everyone is getting richer. The top 1% has gotten way, way richer. Even if you look at the income distribution, it's true the middle class is smaller, but because more people have entered the upper middle class, but even lower income people are by most metrics better off than they used to be. But it's sort of extraordinary because all we hear is people feel like the economy is not working them. So, you know, there's a lot of reasons why that could be. It could be some, like, necessary services are still expensive. Could be relative gains are what matters.

[David Gura]

You know, I wonder whether how much of this is tied to fundamental misunderstandings about how investing or financial markets work. You think about Gen Z and they've really adopted this financial nihilism where they bet the house on crypto, prediction markets, all these other things. And you know, because why not Everything's. Everything doesn't look good for them anyway. They feel like everything's rigged regardless. Success. Yeah, it's.

[Alison Schrager]

There is more this feeling that success is sort of randomly rather than, you know, or I'm also seeing this sort of disconnect and understanding risk. That risk comes from taking, you know, from risking more. Like you get higher rewards for more taking more risk. And I don't think this of that relationship has been well understood. Also, I feel like there's a dearth of risk taking in a lot of their lives in other ways. So I feel like it's expressing themselves through taking sort of outside risks in other ways. Like maybe they won't invest in S&P 500, but they'll invest in, you know, the, you know, Kelsey or whatever. So it might be sort of also a lack of financial literacy or a lack of good risk training.

[Tom Keene]

Well, you mentioned financial literacy. You own the high ground on this with your book and with your academics as well. We're going to have the former vice chairman of the Fed on and with your heritage, the Manhattan Institute and all that. What did you think, think of the press conference?

[Alison Schrager]

You know, there's two things I've changed my mind about in the last five years. One is drug legalization and the other is monetary policy transparency, which I, I was like a big fan of. You know, actually Rich was chair of the department when I was at Columbia, so I learned all this stuff from him. And it's just, I feel like the Fed sort of started to box itself in a little bit too much of forward guidance.

[Tom Keene]

Okay.

[Alison Schrager]

So to some degree, I think, you know, well, maybe we're just not communicating so well right now. You know, maybe a little mystery and a little like, hey, we think inflation

[Tom Keene]

use that word the other day, the mystery. Or how does he pull away from too much mystery?

[Alison Schrager]

Well, you want a clear reaction function, you want clear rules, but you also don't want to say, hey, we're going to probably increase rates in five years or for the year. So you want to straight that down.

[Tom Keene]

The Bloomberg money angle. And this is the yield. I'm sorry, we're in mortgage rates in two weeks.

[David Gura]

Mortgage is now at 6.66%. That's a one year high.

[Tom Keene]

7%. You're going to love it.

[David Gura]

We're not at 7% yet, but it does make homeownership a lot more expensive. And David, there's a lot of talk about the affordability crisis. Has DC Come up with any solutions that will, I don't know, resonate with voters before the midterm elections?

[Scarlet Fu]

No, not really. I mean, there was this housing bill that the President liked until he didn't like. And so I think that there's been some lip service to it. But we're at a point now, as we approach the midterms, where I think the prospect of there being any kind of real landmark legislation coming together seems pretty unlikely. But I think that, you know, going back to the meeting that's taking place right now, the President has his difficulties overseas and in the US and this is certainly something.

[Tom Keene]

I think that's what, 30 seconds? Hannah gave you the last word. Is everybody leaving California?

[Alison Schrager]

Oh, gosh. If you're rich, maybe. Yes.

[Tom Keene]

Yeah. Talk about personal finance.

[Karen Moscow]

It's really, it's really tricky.

[Alison Schrager]

Everybody's watching the mayoral race. This is a real life in L. A.

[David Gura]

Specifically, you're going to Texas, you're going to Florida.

[Tom Keene]

Do you have Red Sox, Dodgers tickets this weekend?

[Alison Schrager]

I do not. I'm a Knicks fan, Tom.

[Tom Keene]

Oh, okay, Nice. She can stay.

[David Gura]

I want to thank our panelists. Thank you so much, everyone. David Gura, co host of Bloomberg this Week weekend. And of course, be sure to tune in because they will be hosting their next episode at 7am Eastern Time tomorrow. And on Sunday, Alison Schrager, Bloomberg opinion columnist. You can check out her latest work on bloomberg.com/opinion and Hannah Elliott, her Hot Pursuit podcast with one Matt Miller comes out every Friday at noon. Just tune in after the show.

[Tom Keene]

Coming up, a conversation and after that press conference, an important conversation for global economics. Richard Clarida, the former vice chairman of the Federal Reserve, his academics is directly involved in the uproar that chairman war started here on Wednesday. Richard Clarida next from New York City, it's Bloomberg Money.

[David Gura]

You studied under clarity can ever become collectibles.

[Alison Schrager]

That's a great.

[Tom Keene]

Did you pass the math? Welcome back at Bloomberg money. Thrilled you're with us. Tom Keene and Scarlet Fu is going to be an important interview, but, well, maybe it's a little more important than it was Wednesday at 1pm Richard Claire is with us with Pimco of Columbia University. Always and always the vice chairman, former vice chairman, I should say, of the Federal Reserve System. And I think, you know, we're going to straddle here between Bloomberg Money and everything else.

[David Gura]

Yeah. And we got to start with what we saw in the bond market this week because we had a sell off in the 30 year yield this week reached a 19 year high, 5.26%. Rich Clarida, does the sell off in the long bond tell us anything about the US Economy and therefore how people's prospects might change?

[Richard Clarida]

Well, there are a lot of reasons bond yields can go up and down, not just the Fed. The Fed's an important part of it. What I would point to is that so far Kevin Warsh has been chair really only six, seven weeks. But an important measure in the bond market which is break even inflation. So sort of traders expectation of inflation is at or below where it was at least after 10 years when he became chairman. But certainly the reaction during the press conference was probably not one that was welcome.

[Karen Moscow]

Right.

[David Gura]

We know the first Trump administration cared a lot about the stock market and the second one seems to have added the bond market to its list of things that it's watching. Which part of the bond market does this administration care Most about? The 30 year yield, the 10 year yield?

[Richard Clarida]

Oh my goodness. I'm not sure I would defer probably to Secretary Besson. I do think at one point he may have said that he's focused more on the 10 year yield than he is on the Fed funds rate. Well, so much of the economy people borrow long for car loans or mortgages or corporate loans. And so that's probably what he had in mind.

[Tom Keene]

So what we're going to do here, it's Bloomberg money. We do personal finance, we do wealth management, we do retirement. But we also have Richard Claire to where this is in the heart of this debate over the chairman of the Fed. So it's going to be a little bit sort of like Scarfu and I'm doing Bloomberg surveillance like more Protect the children.

[David Gura]

The lines are blurry.

[Tom Keene]

Protect the children at home. Okay so so former vice chairman, with great respect, I don't want to turn this into a history lesson, but you have Warsh, nominally of Stanford talking about the Lucas critique and then going over people people don't know is you're directly involved with this. Let's first listen to Chairman Warsh on Wednesday. Some version of the Lucas critique should remind us that when we talk about

[Richard Clarida]

measures of inflation or something else and

[Tom Keene]

we describe those measures as being consistent

[Richard Clarida]

with our objectives, we might make them such that they're not very good measures

[Tom Keene]

or very good objectives. The chairman before he had the Questions from Michael McKee of Bloomberg. The world lit up and along with legit cred out of Lucas, Chicago was fiery. The news conference was rich in philosophy, process and institutional aspirations, but poor in operational guidance. The absence of clarity like analytical specificity appears to have spoken louder than Worcester's at words. So Lucas did what he did. CGG Claire to Golly and Gertner reinvented modern economics with something called dynamic stochastic goal general equilibrium theory. We come out now in, as Claudia Sahm says, we have a chairman who's not sure what he's looking at in inflation. How does he get the rails back on? Does he need to reaffirm PC is the inflation series?

[Richard Clarida]

Well, I think what he said at the press conference is is for now until next January at least that's going to correct. The Fed adopted that again in January. He left open the possibility that the task forces could recommend other measures. They could go to an average instead of picking one index. They could look at cpi, ppe. There are a lot of things they could do but I think Anna, as usual raises an important point is that inflation targeting central bank needs to be clear about what it is it is targeting. It can, it may evolve. And so I think that will be important.

[Tom Keene]

Very, very importantly then here if we need to get the system back with a confidence about the Fed. How does he do that at Jackson Hole? Does he have to reaffirm, as Saam says, that inflation is the appropriate measurement and not a policy?

[Richard Clarida]

Well, I think Jackson Hole may serve a couple of purposes. Historically, as we've seen, chairs have used Jackson Hole as sort of a sneak preview of coming attractions at the September, November and December meetings. Chairman Warsh Hannity may do that. He's also interested in what he called some big question, big picture questions that he sort of previewed at this meeting. And he's also talking to the task forces. I think it's too early to tell what he'll do at Jackson Hole, but he may, he may do that as well.

[David Gura]

I find it really interesting that he doesn't want to tell the bond market a whole lot of things and he's kind of waiting to take his cue from the bond market. From a layperson's point of view, it feels very circular. Right. The central bank sets a benchmark interest rate. The bond market takes its cue from that. What's the rationale for the Fed to take its cue from the bond market that's relying on the Fed to set policy? Help me understand that.

[Richard Clarida]

So, so here's the way I would express it. The Fed is a very important part of 10 year treasury yields. It's not the only thing that drives yields. So I think the chairman was important to emphasize that the Fed does want to step back and interpret movements in bond yields. It could be inflation, it could be global growth, Middle east hostilities. But certainly the chairman and the Fed understands that an important part of 10 year yields is the expected path of the funds rate. And to Scarlet's point and I actually Ben Bernanke gave a speech on this, as did I as Vice Chair it's called sometimes called the hall of Mirrors for problem in central banking, which is the central bank looks at the market, the market looks at the central bank, it gets circular.

[Tom Keene]

Let's go back to your paper galley. And Gertler didn't know this. Richard Claire to channeling Alan Blinder. Having looked at monetary policy from Joni Mitchell's Both Sides Now I can testify that central banking in practice is as much an art as a science. How does Warsh get back to science? Declarative silence versus some mom and pop philosophy you learned at Stanford?

[Richard Clarida]

Oh, well, I think Kevin Wash and the committee understand that. Look, I. Kevin came in, Chairman Warsh came in with an ambitious agenda and I think that they're going to both focus on implementing that agenda as well as getting to where they need to be on policy. I guess where I would try to relate, Clara, to Galli Gertler to the current conversation is perhaps specifically in the domain of forward guidance. And so in the CGG model, there's actually not a role for forward guidance because the market understands the Fed's reaction function and the Fed understands the market. If you're not going to do forward guidance, then it's incumbent for the markets to have a broad understanding of how the central bank will react to data. If we had six bad months in a row of inflation data, would they hike and by how much? They're not committing to that, but they're saying if the data comes out this

[Tom Keene]

way for everybody on Bloomberg Money and I got goosebumps, this is like the real deal. I mean this is what the adults in the room are arguing about right now.

[David Gura]

Well, for people who are watching this and don't quite know all the names that you and Rich are throwing out there, I want to bring it back to the real economy and real people's concerns. Do you agree with those people who say that we have a K shaped economy where the higher income and asset owners are doing well and everyone else is kind of strong, struggling that downward arm and if so, how do we solve for that?

[Richard Clarida]

Well, yes, broadly we, we do and have had a K shaped economy for some time. But the K, the branches of the K have been diverging more widely in the last six or seven years. The way I like to think about it Scarlett, is roughly 60% of Americans live in a, in a house that's owner occupied housing, sometimes with their parents, but it's owned Buffalo. 40% rent, most of that 60% own stocks, most of the other 40% doesn't. So we've been in an economy for some time, but especially in the last six years when stocks have gone up, house prices have gone up. So the top of that K is doing pretty well. If you're in the other part of the K, you don't own your house, you don't own a lot of stocks, you're living paycheck to paycheck. It's been a tough six years and so there's, there's no doubt we're in a K shape.

[David Gura]

Yeah. The service as costs just keep getting more expensive as well.

[Richard Clarida]

Yeah.

[Tom Keene]

From New York City on a Friday, Bloomberg Money, Tom Keene and Scarlet Fu. And with Scarlet Fu, Richard Claire.

[David Gura]

And you know, Bloomberg Money is about how you invest and make your money, but it's also about how you spend your money. So Rich Claire, I want to ask you on this Friday, what's your splurge first of all and how do you save? What do you save?

[Richard Clarida]

Well, I leave the saving to my wife. See she he's pretty good at it. My splurge is my hobby is music. So I buy guitars, I buy recording equipment.

[Karen Moscow]

Really?

[Richard Clarida]

I spend money on recording my album. So yeah, that's my splurge.

[David Gura]

Didn't you record an album in 2016?

[Richard Clarida]

I did. Available Spotify, Apple Music, stream for free on YouTube. The new album's coming out later this year. Maybe we'll do a rollout party on this show.

[David Gura]

Oh, it's a follow up.

[Richard Clarida]

Yeah, yeah.

[David Gura]

Oh, what's it called?

[Richard Clarida]

It's going to be called Take Two.

[David Gura]

Take Two. Okay. And what folk music like, what's your vibe?

[Richard Clarida]

Folk rock. Yeah, folk rock. Someone who listened to too many Beatles albums.

[Tom Keene]

And I will editorialize as I have heard it, it is not a vanity album. It is exquisite. I was shocked.

[Elena Poppin]

Well, thank you.

[Tom Keene]

Really, really quite.

[Alison Schrager]

Thank you.

[David Gura]

And you're the solo star. Like I don't hear a band name in there.

[Richard Clarida]

I write the songs and do the vocals. But I work with professional studio musicians in London, LA and Nashville. So all the music you hear is really good playing and then I do some singing on it.

[Suzanne Woolley]

All right.

[David Gura]

Richard Clarida's new album coming out. What day?

[Richard Clarida]

Well, by December 31st.

[David Gura]

By December 31st. Richard Clarida, thank you so much. Pimco global economic adviser, the former Federal Reserve vice chairman and of course Columbia University professor as well. Coming up, a conversation with Laurie Calvert of RBC Capital Markets on your retirement fund. This is Bloomberg Money.

[Karen Moscow]

That is.

[David Gura]

AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining trade offs shaping the future of AI. Thank you to our presenting sponsor, Salesforce and supporting sponsors Ida Ireland and Schneider Electric. Learn more at bloomberg live.com/tech London. Bloomberg Money is your new destination for personal finance. It's a cross platform effort that extends beyond your television, including at our new digital hub at bloomberg.com/money. And this week's story I saw on that site is Focus on Boomerang Kids. It used to be that after the kids graduated from college, they were out on their own, off your payroll, out of your house in 2026. That is no longer a safe assumption. Suzanne Woolley joins us now to discuss how to protect your money and maybe your sanity when an adult child requires support. Suzanne, great to see you. And I guess the first question is how much does it cost? What is the cost, financial cost of letting a grown child move back into your home.

[Suzanne Woolley]

Financial of planners talk about an average of fifteen hundred dollars a month, which comes out to about eighteen thousand a year. So it's more significant than you might think.

[David Gura]

And it's not just recent graduates either. I mean, your adult children could be separating or divorcing and have kids, have pets on their own and bring them back home. How do you plan for this? What are the planners saying you can do to kind of get ahead of this?

[Suzanne Woolley]

Well, like you say, I mean, an important part is to set a expectations. So when your adult child wants to come live back home, talk about, you know, will they pay some rent?

[Karen Moscow]

Sure.

[Suzanne Woolley]

You'll give them below market rent, of course, you know, which. But it may increase over time, you know, so they have sort of an incentive to not make this arrangement last forever.

[David Gura]

Yeah.

[Suzanne Woolley]

So setting expectations about rent and about privacy and just how things are going to work is just really important to.

[Tom Keene]

Can I ask a question, please? I'm asking for a friend. How do you get them out the door once they move back in?

[Suzanne Woolley]

Well, Tom, you must have made it a little too comfortable for them.

[Tom Keene]

That's the major thing. Comfortable?

[David Gura]

Yeah. You definitely don't want to be raiding your retirement account or drawing down on your savings and perhaps not retiring because they've come home to live.

[Suzanne Woolley]

Exactly. I mean, that's the key. If it's coming at the expense of your retirement security, you really have to think twice because your kids will have a long Runway, you know, for earnings. Your Runway, if you're closer. Tiring is not.

[Tom Keene]

I'm going to get upset now. I remember sitting on the bed with my father. I came home from school and all that, and he said, you got four weeks to move out. That was the Runway. The Runway was four.

[David Gura]

Are you giving your kids four weeks?

[Tom Keene]

No, they've been very good about it, actually. But I admit, just like you say, we're all writing checks.

[Suzanne Woolley]

Yeah, you're writing checks. And I mean, and sometimes it's great to have your kid move back, you

[David Gura]

know, for a while, at least for a while.

[Suzanne Woolley]

And if they're contributing rent and maybe doing chores, empty the dishwasher, walking dog, all of that.

[David Gura]

Suzanne, thank you so much. Suzanne Woolley is a member of our Bloomberg Money team.

[Tom Keene]

Laura Calvin is over here taking notes. She's got young cherubs and she says, is this what. This is what I had with COVID Cena Money. We are thrilled to bring in our Laurie Covid Cena, head of US equity strategy at RBC Capital Markets. Scary PowerPoints In a view of the equity market. This allowed people to be invested given their fears. Let's do this. Let's bring it up right now as we can. Our money must read here from COVID Cena. It's from 480 page PowerPoints. It's like Mary Meeker on steroids. Laurie Covid. Our main sentiment model points to a gain of 10.88% over the next 12 months. You look here at the drawdown, 50%, great financial crisis, World War II, 40%. And then you got to get out front and still be optimistic. Do you fear the big drawdown?

[Karen Moscow]

So our base case has been we're going to be higher over the next 12 months, but it's not going to be in a linear fashion. And we assume that we're going to have at least one, maybe more drawdowns of 5 to 10, 10%. We call that tier one on our tiers of fear framework. What we do, you know, as sort of things come up in the market, right. We'll look at what we call tier 2, tier 3, tier 4, and sort of evaluate is there a risk of falling into one of those? Not because we're telling everybody, you know, especially sort of in retail investor land to sell, but to be prepared for what might.

[Tom Keene]

Your job is to go out and talk to people and say to them, let the fear go, Let it go, let it go, let it go, go. They're frozen because they're worried about that big drawdown. What percentage of us are worried about a negative 35% bear market?

[Karen Moscow]

So if you look at the conference board survey that just came out, they actually have a question that gets very, very little attention. But I like it a lot. And it's on stock market optimism going forward. I forget the exact number, but it's still extremely elevated and actually ticked up just a little bit. It hit a new high in late 2024 and it's been kind of hovering around that level ever since. So when we look at that as a gauge of retail investors, we think that they're not too worried. Now, if I talk about institutional investors, you know, we might look at something, say the CFTC futures positioning data, which is easing. You had seen sort of one standard deviation above the long term average. Basically that's, you know, complicated speak for saying people were feeling good and well positioned, but not crazy, not euphoric. And that's easing down. It doesn't look under owned. And I would say there's some nervousness creeping into the institutional community, but I don't think there's panic There either.

[David Gura]

So you serve institutional investors. But I know that one thing that comes up a lot in those conversations is the role of the retail investor and how they influence the market. Overall retail stock ownership I think is at a 20 year high. How do you think that's changed the stock market over your time covering it?

[Karen Moscow]

You know, it's interesting because when I started, I started back in 2000 and at a different firm and I remember being taught, you know, by a very seasoned, you know, extremely bright strategist that you would look at the retail funds flow data and do whatever the opposite was. Right. So if they were all buying, you'd sell and if they were all selling, you'd buy. And I don't think it quite works that way anymore. You know, I do think retail investors have gotten much more sophisticated in their understanding of financial markets. There's a lot of innovation in the, in the, in the industry that's helping people out. You know, and I, you know, we were talking earlier about how I travel. I run into, to people in airports, I run into, you know, people who are driving me places and, you know, and you know, talk to people on airplanes and people sometimes, you know, will start talking about the stock market and they know a lot. And I think that's very different from early on in my career when sort of the purview of all the intricacies of our industry were really just limited to the institutional community.

[David Gura]

Okay, so it's changed a lot in your 20 plus years. But is it going to look like Korea? You look at the Korean stock market and it was, had, it had a banana week, right? It was down 10% on Tuesday, so 16% overnight year to date, it's up massively. Retail investors are huge presence there. They love the trade, they love these leveraged single stock ETFs. Is that what the US stock market is headed towards?

[Karen Moscow]

You know, it's hard to say. I don't see that right now. I feel like we have more guardrails in place. But the reality is that if you look at sort of this theme of democratization of the equity market, I mean, we got a lot of color on that from financial companies in this reporting season talking about new instruments and why they might be doing one thing or another thing. Did retail want it? Did institutions want it? Was it something, you know, they should be doing, you know, sports. Right. For example, in prediction markets was something we saw a few companies say we're not going to do even though there might be appetite for it. But I do think this trend of Getting typical Americans engaged in the stock market. I don't think that's changing.

[Tom Keene]

What would you you do as a retiree now? The old rule was take 4%, be happy, move on, maybe buy an annuity, whatever. What's the RBC advice for someone with an equity pot and how to manage it, given that retirees never die?

[Karen Moscow]

Well, I think the first thing you always do is, and this is always my first advice for people is work with a financial advisor. And I think even in my purview as sort of an equity person, you know, I would, would want sort of that device, that advice on diversification, the distance. I think that I know a certain corner of the market very well and there's a certain corner of the market I don't know very well. So I would want some advice, frankly to come in and sort of balance me out. But I do think staying diversified is something that just makes sense. And not trying to play the short term, not trying to play every little twist and turn, how do you not

[Tom Keene]

play the short term? If you're watching Bloomberg surveillance or 5 of scars, meeting media properties religiously, but you're supposed to be long term, how do you do that with modern media?

[Karen Moscow]

This goes back to our tears of fear, right? And so typical drawdowns are 5 to 10%. Be prepared for those. And there's always a big test. Once you kind of get to 9%, 10%, are you going to go lower? And what we tell the institutions, and I tell this to, you know, if, as I talk to as well, is if you don't think that there's a serious chance of a recession or these days we're all also talking about interest rate shocks, then you're probably going to bottom out at 10%. But if there is something that's unknown that happens in the market, right. If you looked back at 2018, we had tariffs for the first time, we had some concerns about the Fed. We had a 20% drawdown. We have these growth scares that can go to like the 15 to 20% range, but just kind of know what's coming, be educated ahead of time, be prepared and don't overreact in the moment. If you don't think that there's sort of a serious chance of a recession, and we talked a lot to hedge funds and about this last year around tariffs, then you're probably not going to have like a 25 or 33% type drawdown, which is what you see in recessions. Kind of 20% might be the worst. And so it's really just being educated and knowing that markets can be volatile and what do these different levels signify? And just, again, not overreacting in the moment.

[David Gura]

Individual investors seem to have mastered the art of buying the dip. They come in, they are kind of, you know, they don't get rattled by stock market declines. They come in, they're like, I'm buying, I'm buying. Have the. Have institutional investors looked at that and kind of adjusted their behavior as a result?

[Karen Moscow]

One thing we've noticed is that there are certain valuation gauges, you know, we can look at P and where they typically bottom out at. And on certain charts, they make higher and higher lows. And I think that's because of these dip buyers coming in. So you do have to have it in the back of your mind.

[Tom Keene]

You just said, I disagree with. Not you, but I disagree with the zeitgeist that we've learned something new. We haven't woken up on a Monday being down 22% or being down 30.

[David Gura]

Is the government going to let that happen?

[Tom Keene]

Well, that may be. That's an Eric Balchunas question. But Laurie, I think we don't have a collective memory of a massive drawdown anymore. And our behavior will change if we get that.

[Karen Moscow]

Well, you know, I take your point. We have a lot of conversations, you know, I would just say in the financial community about, when did you start? So I started in 2000. I didn't see the tech bubble melt up, but I certainly saw the other. Other side.

[Tom Keene]

You enjoyed 2008. 9.

[Karen Moscow]

Yeah, I lived through it. Right. I remember.

[David Gura]

Didn't enjoy. She lived through it.

[Karen Moscow]

I lived through it. I remember being in conference rooms, I want to say, like in 2006, with mice running across the floor. And home building companies talked to packed rooms, you know, and you couldn't. You were violating some fire code. Right. Because there were too many people. And so I remember the height of that bubble, you know, very clearly. And I do think there's a lot of people in the institutional community who weren't around for the GFC fc. Right. Who weren't around for the tech bubble. So I take Tom's point. But remember, we did have a massive drawdown around Covid, which was a typical recession type drawdown. And it was, it was interesting. I mean, we've done a lot of work around that, especially, you know, as kind of the Middle east situation has flared back up. And I reminded people, I said, you know, we did a recession's worth of decline in about a month. And, you know, and I think people have Kind of forgotten about that one. But you can see fair how fast and steep and, and you know, difficult, frankly. You know, those kind of declines.

[David Gura]

2022 wasn't pretty either.

[Karen Moscow]

No, no, that was a, that was a weird one. We've had trouble classifying that one, you know, in sort of our tiers. We think what essentially happened was the misery index spiked because of inflation. It felt like a recession. It wasn't. You got a recessionary type drawdown in the market and you also had a massive interest rate shock. Just expectations of Fed hikes piled in and you threw a war on top of that. Right. It was, it was a little bit worse than a growth scare. Not quite as bad as a recession, but pretty darn close.

[Tom Keene]

Laurie, thank you so much. Really appreciate you coming in on a Friday. Really, really appreciate. RBC Capital Markets get your PowerPoints. Exquisite. Get it from RBC Capital Markets.

[Karen Moscow]

As markets move and headlines break, what

[Tom Keene]

matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help

[Karen Moscow]

you connect the dots.

[Tom Keene]

Visit bloomberg.com/podcast offer to learn more.

[David Gura]

All right, we're looking at shares of Apple down as much as 11% right now after component shortages weighed on the company's sales forecast. Elena Pulpit of Bloomberg News joins us now to discuss. When we're talking about shortages, it's really the memory chips and we've seen prices for those things spike up and a company like Apple, Apple needs to contend with it.

[Alison Schrager]

Yeah.

[Elena Poppin]

And CEO Tim Cook said that memory chip shortage is similar to 100 year flood. The demand is so high and the shortage is so widespread that in the coming quarter there will be more shortages and some wait times for some of the key products like including MacBook Mini. So that may weigh on the revenue outlook. Now we're talking about the outlook for the quarter ending in September. This is the quarter when the key iPhones usually go out. This is the quarter when, you know, mom and pop investors buy apples and then your iPhones for their kids, they go back to school. So that supply shortage is going to weigh on sentiment and this is what is driving shares lower today.

[David Gura]

Okay. Apple also came out with this new innovative way of funding your iPhone purchases, or maybe purchase is the wrong word. You're now going to be able to lease your iPhone the way that you can lease a car.

[Elena Poppin]

Yeah, that's pretty much the case. And not just your Apple. You can release your iPad, you can lease your MacBook Mini, MacBook Pro for up to three years. And then after that point, you can decide if you want to keep it, if you want to return it, if you want to just, you know, upgrade to a new cycle. So that's pretty much, you know, Apple's way of saying, listen, just keep staying with us forever and keep upgrading.

[Tom Keene]

But from a consumption standpoint, somebody had this out on Twitter this week where everybody's omg, they don't have the chips or the this supply. This. The reason they don't have the supply is they have massive demand. Do we see within our reporting, Mark Gurman, you and everybody else, do we see any way on a unit basis that they're stumbling?

[Elena Poppin]

They're not, they're not really stumbling. I mean, China remains a weak spot, but it's always been a weak spot. So we cannot demand any strong numbers out of China. But you know, when you look at the sales of the wearables, they were in line with, with expectations.

[Tom Keene]

I mean, Scarlett needs a blush Neo, right? I mean, that's really what this is.

[Elena Poppin]

If you look at the sales for MacBooks, this matched expectations by landslide, you know, so the iPhone expectations also were above estimates. So across the board, people kept buying. So consumers, your retail traders, they had nothing to do with that weak forecast. It's more of a supply constraint issue rather than a demand issue.

[David Gura]

Apple has had to raise prices as well. And you wonder how much these new foldable iPhones that they're going to release are going to end up costing.

[Tom Keene]

Why do I need a foldable iPhone?

[David Gura]

That's so you can fit it into your pocket, won't fall out.

[Elena Poppin]

It's the next goal.

[David Gura]

Your pockets are bigger than the Neo

[Tom Keene]

came out as a joke and it's the hottest thing going, right? Yeah, it's talk about Bloomberg money. Everybody watching this show on personal finance again, the kid. I need a blue. I guess I like my my air, but I really need a new.

[David Gura]

Well, the parents want to pay for the Neo, not the Air.

[Elena Poppin]

Also, the new is a low cost model, so that's part of the appeal.

[David Gura]

That's a selling point. Thank you so much, Elena Poppin of Bloomberg.

[Karen Moscow]

All right.

[David Gura]

And you know, it's Friday, it's Bloomberg Money, so we always talk about books. I know that I've got a huge reading list on my phone that I got to get to. Do you read books or do you like, use the Kindle?

[Tom Keene]

No, no, I tried the Kindle and I've tried other things and now I'm very much back to just reading hardcover books.

[David Gura]

Only hardcover, though.

[Tom Keene]

Old school. Yes, sometimes I can, but you know, old school books. How about the must read books that we've got right now.

[David Gura]

What's yours?

[Tom Keene]

My Mind is a foundation read. If you care about Elena Poppins. Technology Chip War is my book of the year. Two years ago, Chris Miller's out of tufts up in Boston and this is absolutely absolute, absolutely the seminal read on the history of semiconductors. And he just captures beautifully the turf wars, whether it's obviously Silicon Valley or Charles river in Boston or even over to the Netherlands at asml.

[David Gura]

Or Taiwan for that matter.

[Tom Keene]

Or Taiwan. Excuse me. The Taiwan story is actually the invention of Taiwan. Semiconductors may be the most emotional story in the book.

[David Gura]

Yeah, I can't. I can't wait to get to that point. I'm really excited about it. My book kind of ties into that. It's how to Rule the World and Education and Power at Stanford University by Theo Baker. This book is a lot of things.

[Tom Keene]

Oh yeah.

[David Gura]

But what I enjoy the most is the picture that it paints of Stanford. For super bright and ambitious kids, Stanford's a place where the coding or hacking clubs they join have access to slush funds provided by tech companies so they can party on yachts and socialize with billionaires. VCs hang out there on campus at the cafe. Cafe, I think it's called the Koopa Cafe. To scout future talent which leads to offers of funding their startups later on for billions of dollars. With the none.

[Tom Keene]

I take issue with the romance of this and that. Mostly what the kids do is work. They're particularly undergraduate. They're working on first principle, heavyweight mathematics, their operational research. I mean, so much of this is Michael Spence, the laureates invention. But I think it's underplayed how much the bright kids at these bright schools on the west Coast, Harvey Mudd, Caltech, Stanford. I'd mentioned Cornell on the east coast. Frankly, the kids work. I mean, Scarlet slid through just in

[David Gura]

case, you know, there is that. But the ones that get farther are the ones who are hobnobbing with the billionaires. You know, they're getting the like early look deals with those guys.

[Tom Keene]

I like hobnobbing better of the network

[David Gura]

sounds a little bit like, you know, friendlier. Right. All right, for the latest reviews and recommendations from Bloomberg, be sure to subscribe to the on Books newsletter.

[Tom Keene]

Bloomberg Money from New York City on a Friday, a summer Friday. The streets are just. It's a summer Friday. It's easier to get to work and get home.

[David Gura]

Yeah, there's no traffic whatsoever.

[Tom Keene]

There's no, no question about it. So I guess we're going to look Ahead here. Can we look back?

[David Gura]

Yeah, let's do that to this hour. Right?

[Tom Keene]

Yeah, this hour. Richard Claire was with the vice Chairman. We ripped it up and did a much, you know, Federal Reserve conversation surveillance and the excitement of that was Anna Wong's work of Bloomberg Economics. She was on fire. Here is Richard Clarida.

[Richard Clarida]

He left open the possibility that the task forces could recommend other measures. They could go to an average instead of picking one index. They could look at cpi, ppi. There are a lot of things they could do but I think as usual raises an important point is that an inflation targeting central bank needs to be clear about what it is it is targeting. It can, it may evolve. And so I think that will be

[Tom Keene]

important and published this morning as well. Look for that at Bloomberg Economics across the weekend and we'll get our videos will be out as well.

[David Gura]

All right, well it's great to have Richard Clarity here with us but it is Friday so we need to look ahead to the weekend and next week as well. This Saturday and Sunday, BTS will be holding their first headline performance concert in New York since they got to be sold out.

[Tom Keene]

Mental, mental, sold out.

[David Gura]

I was checking on StubHub. You can still get stage rate tickets for $800 for a pair each and then the nosebleed is at 176. So that's a huge spread. But I thought maybe you would be more interested in Rush.

[Tom Keene]

Right?

[Alison Schrager]

Yeah.

[David Gura]

They have a reunion tour. They're now halfway through their four night residency at msg. The OG band members Gaddy Lee and Alex Lyson will be there minus drummer Neil Per who passed away sadly in 2020.

[Tom Keene]

They did a bang up job on this. They went out and they just really looked for a new drummer which is incredibly hard for any bands. They will all say that Annika Nas is from Germany and she's like legit classical rock train. Jeff Picaro was a huge hero from Toto and the answer is she's the real deal. Literally ran an academic department at a university.

[David Gura]

Know that it's a woman of many

[Tom Keene]

talents I would suggest is a non Rush fanatic. It's been hugely successful.

[David Gura]

All right, well they are playing at MSG again this four night concert residency that they're they're calling it also of course next week we've got the jobs report for the month of July and the consensus estimate right now is for 88,000 jobs added in the month of July versus 57,000 in job.

[Tom Keene]

I'm still not used to the new jobs number with immigration being under 100,000. To me, 88,000 is terrible. And yet Anna Wong would tell you that's actually pretty well you look at

[David Gura]

the unemployment rate, it's going to stay unchanged at 4.2%. And average hourly earnings, pretty much staying in line.

[Tom Keene]

And that's brilliant that you do that through August through September. For Bloomberg Money, the inflation adjusted wage got to be front and center as well.

[David Gura]

And don't Forget, forget earnings. SpaceX reports its first set of results as a listed company.

[Tom Keene]

That's worked out so far. This is the Bloomberg Money podcast, bringing you a smart look at the forces shaping your financial life. I'm Tom Keene with Scarlet Fu. You can watch the show live on Bloomberg TV every Friday at noon, Wall street time. Subscribe to the podcast on Apple, Spotify or wherever you you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app.