Canada Chooses its Leader and Tariffs Dominate Traders' Minds
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This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. A really interesting path to investment management. Russ Kosterich is out of Brandeis and Boston College Law.

Also at Columbia, really just a wonderful set of academics. We're thrilled that Russ Kostrich could join this morning from BlackRock, where he has a focus on scientific active equities. Russ Kostrich, the science right now is a new study of international investment. You push against that. You say beware a focus on international investment. Discuss that.

Good morning, Tom. So right now we've had an unusual start to the year, to put it mildly. And one of the many things that's been going on, which was not expected when we started 2025, was this dramatic outperformance of international markets, particularly Europe.

And people will remember that began early in the year before we really knew the full extent of the tariffs. But it's actually continued, albeit at a slower pace. So one of the questions we're getting from our clients frequently with the Global Allocation Fund is, should we be more invested in international? And while I do think that there's always a good argument for international diversification,

It's not clear to us that that strong outperformance of Germany, of the rest of Europe that began the year can continue in an environment in which economic growth is slowing. There's a lot of policy uncertainty and trade is likely to be very different than it's been for the past several decades. So we are still of the view that many of the best companies in a multi-asset portfolio are going to be from the United States.

So, Russ, how do you think about some of this? You know, all the headwinds investors are trying to deal with right now. Has that changed the way you allocate between stocks and bonds and maybe alternatives? Are you trying to get it to play a little closer to the vest, a little bit more conservative or defensive? How are you guys playing this?

Well, that's definitely the case. We have brought in our risk. So we had an equity overweight for most of 2024, actually much of '23 as well. We brought that closer to home. We've added a little bit of duration back in the portfolio. So yes, given the uncertainty, we're definitely thinking about where do we want to bring risk in, where do we want to make our bets? But there are a couple of other areas too that I think go to your question, one of which, are bonds going to work as a hedge? Now,

We've shifted from an environment where for a lot of the last three years, the concern was inflation to more of the concern about recession. If the recession is the issue, then generally bonds work better in mitigating equity risk. The question is, are we going to get a recession or are we going to see higher inflation in the back of the tariffs? That's one thing we're wrestling with. The other, which has definitely had an impact on how we allocate and goes to the question about alternatives, is gold. Right now, the biggest risk to markets is uncertainty.

There's also a risk about whether or not international investors are going to trim their allocation to dollar-denominated assets. In that environment, we found that gold is actually very helpful in the portfolio, obviously at record highs. That's another place we've actually been increasing our bet to over the last three to six months. So in terms of fixed income, Russ, is there any call here

to take credit risk or do you just sit kind of in the three to five year treasury kind of belly of the curve kind of thing well i think it's actually both i think we do like the belly of the curve in general we've been cautious about the long and the curve for a while and it really hasn't done too much so far year to date but absolutely we think that credit is one of the areas you can actually find opportunity and the reason is there's a lot of risk on the economy but even if we were to get a recession our views would be a mild recession

Corporate balance sheets, at least for large companies, are in good shape. Many of them termed out their debt back in 2021. In other words, they extended the maturity of their debt. And for the first time in years, really more than a decade, you can build a portfolio of high quality credit, get seven, seven and a half percent.

That's looking pretty good in an environment where equity returns are obviously more questionable and you get more volatility. So credit is one of the areas we definitely like in a multi-asset portfolio. Russ, got to get you into the studio here to do a much longer interview. A couple more questions here before we dash to Canada. Russ Kosterich,

Like the BlackRock Science and Technology Fund, what Tony Kim is doing, the bottom line is it's what retail loves, big tech companies as well. With it all, as you mentioned, the maelstrom of the Q1, the first hundred days of President Trump, are the persistent cash flows of those science and technology leaders, NVIDIA, Amazon, Microsoft, the rest, are they still in place?

I think so, Tom. Now, Tony could do much more justice to that question than I can. Sure. But I think it's the right question because this is something that's going to become increasingly important. We came into the year expecting a stronger economy. If we have a weaker economy, which is almost certain, we're going to focus on companies that can produce reliable cash flow.

And yes, there are questions about the build out on AI, but the reality is many of the companies you mentioned, these are platform companies. Their profitability is much higher than average.

Earnings are much more consistent than average. This is still an opportunity long term for a lot of investors. I said in the beginning, while we still like the U.S., because we find more of these companies in the U.S. than in other regions. Russ, we've got to leave it there. I'm so sorry. Russ Kostrich, please get into our studio. He's got to get into the studio. Sure. I mean, you know, exactly. Russ, the food court. You'll love it. Russ Kostrich from BlackRock. Thank you.

She was in Michigan.

and did a paper or whatever, and it ended up being a book, "The River Runs Black." Think of what? Oppenheimer, Barbie? That's the way "The River Run Black" worked within the academics on China. Elizabeth Economy immediately rose

to a claim on analysis of the Pacific Rim. She's followed up with any set of books, including The World According to China and The Third Revolution. We note her public service to the nation with Secretary Raimondo at Commerce. She is the Hargrove Senior Fellow, co-director, U.S.-China and World Program, this on the left goes Hoover Institution.

at Stanford University. Dr. Economy, when you hear diplomats of China in an organized manner call the President of the United States for bullying, how do you translate that?

I think it's pretty straightforward. Look, I think right now the two countries are in a game of chicken and the Chinese are waiting for a real signal from President Trump in the form of dropping the unilateral tariffs or reducing them substantially. I think actually President Trump did blink.

last week when he said that he expected to reduce those tariffs. But I think the Chinese decided not to recognize that. At least the Chinese officials decided not to recognize it. Maybe they saw it more as a wink than a blink and they don't trust it.

But I think, you know, it's not just the Chinese, frankly, it's the world. And I think China's pretty confident in their assessment of President Trump and that, you know, many other countries are also looking at the United States in the same way. Within the Xi real politic, do they have the power and the leverage to say to other nations, if you dance with President Trump,

you won't dance with China. Do they have that power to say that, to act on that? You know, it's been interesting to me as I've watched the Chinese go around first with the charm offensive in Asia and Europe, and then with the more coercive sort of approach that you just noted. I've been surprised at the extent to which China has not managed to translate, you know, the sort of chaotic policy and bullying behavior of the United States.

into a sort of a greater leverage for China itself. I think we saw Australia say, you know, when China reached out to them, you know, no, thank you. We're not about to join hands. We saw Canada do the same. I think the EU is flirting with China, but, you know, they have their own economic problems with China. And they're also, you know, they continue to be extremely unhappy with China's support for Russia and Ukraine.

So what I've seen really is that China's not been able, either through coercive messaging or through sort of a more positive approach, to bring countries to its side. That being said, I think there are probably some countries, you know,

emerging and middle income economies that are heavily reliant on China, where that kind of coercive tactic is likely to work. But I think it's important to remember that while China is the largest trading partner for most countries in the world, that the U.S. is a larger export market for most countries in the world. And I think that's also playing into this.

So we saw, Elizabeth, just yesterday up in Canada, we saw the result of President Trump's kind of verbal attacks on Canada, 51st state and all that type of stuff, really united the people of Canada here behind a candidate here. Is something similar happening in China? Are the people uniting behind President Xi on this nationalism platform?

Absolutely. I mean, I think the tariffs in that regard have been a real boon to Xi Jinping and to his standing. I think, you know, previously you saw that there was a lot of negative sentiment, for example, in social media in China about the state of the Chinese economy. And it was really directed toward the Chinese government with the tariffs.

Basically, the US has become a scapegoat for all of China's economic ills. And so there's a rally around the flag element to what's going on in China. And frankly, I was in Hong Kong last week, and I will tell you that there's increasing confidence in China. I was at a conference with a lot of leaders from China's tech sector.

And they're you know, they not only feel that they can get around any kind of export restrictions or other kinds of tariffs that the U.S. might be placing on China. But they also just have they're just looking at the United States and thinking, how many own goals can the U.S. government score here? And so I just I think.

That is what the tariffs are triggering primarily in China. Good evening to the Pacific Rim on YouTube. Thank you so much for tuning in with us. Our conversation of the month, indeed, perhaps the second quarter. Elizabeth Economy, Hargrove Senior Fellow,

at the Hoover Institution at Stanford University, here on all of our expertise on China and how America must and will respond. We do this with red and green on the screen. The Secretary-Treasurer is scheduled to speak here in 20 minutes. That'll be interesting. Paul? Which country has the stronger hand here in negotiations going forward?

You know, I think to some extent China has the stronger hand. I think we had a little bit of an arrogance on our part because we thought given that there's a $300 billion trade deficit and China is so much more reliant on the U.S. market than the U.S. is on the China market in terms of exports, I think we thought that we had the upper hand.

I think it ignored a couple of important facts. Number one, that we are reliant on China for some very critical inputs like critical minerals and rare earths, magnets that we need for our technology and defense industries. And in fact, for 30% of the products that we import from China, we are reliant on them to 70% or more, right? So we have more close to single source

supply dependency on China than they do on us. So I think there's that element is playing out. That being said, the Chinese economy was struggling before we put the tariffs on. I think many Chinese factories, low-end, low-margin factories that do consumer electronics and apparel and toys are extremely concerned because the U.S. market was really important.

And so I do think there are calls now in China for the Chinese government to recognize actually that President Trump did blink last week and to say, take the win and get to the negotiating table.

And we just saw a really interesting article come out in the Chinese newspaper Unsigned, which signals that it's coming from the Chinese government that basically said, you know, go look at Mao's unprotracted war and get hunkered down and stop talking about getting back to the negotiating table. There's a debate going on in China. But this is brilliant. Elizabeth Economy, this is the heart of the matter, as we have experts like you, I think, Leland Miller, China, Facebook, of course, the giant Spence and Orville Schell.

you read the material and you say, this is the voice of the government. Now, in your book, The Third Revolution, you talk about the lion awakens. You talk about the road forward. Because of President Trump, is the road forward for Xi radically different now? And does he have a new power given to him by the stumbling of President Trump?

I mean, I think it depends on how long the president stumbles and in which direction. I mean, I think there's a stumble, one might say, on the tariffs. There's a stumble on, you know, undercutting investment in our universities. There's probably a stumble in moving away from

you know, clean energy, which is, you know, the choice of most of the world for the 21st century. So while we're looking backwards to the, you know, 1950s and the rest of the world is looking to 2050, I think there are a number of different stumbles. But it really, we're only 100 days into this administration, and there's plenty of time for, I think, course correction. And it's really going to depend on people, I think, in this administration. I got to ask this question, Paul. It's really, it's a really rude question.

If the Secretary of Commerce now took Raimondo Manners 101, would Howard Lutnick be a lot more effective if he had the grace of your former boss at Commerce?

I don't think it's just a matter of race. I think there's an essential fundamental understanding of the way the government works, of the way the economy works, and an understanding of what American workers and businesses want most. I think, you know, she brings the whole package. You know, I'm not exactly sure what Secretary Lutnick is bringing to the table at this point. Well, that was diplomatic. Exactly.

Elizabeth, I think about a company like Apple. It's just so inextricably linked to China. And then I kind of just take that out to the overall U.S. economy. Are the two sides here really prepared to decouple here? It just seems like in this global world, can you really do that? Does either side really want that?

I mean, you know, I think certainly U.S. business, most U.S. business that's engaged in business, whether exporting or invested manufacturing in China, is not interested in a complete decoupling. I do think based on the COVID, based on Russia's invasion of Ukraine, there has been a shift in many boardrooms in terms of their understanding of, you know, an over dependence on any single source, in particular China.

But I don't think there's an interest in decoupling. That being said, I think within the US government, there are definitely people at the most senior most levels who wouldn't mind a complete decoupling. And I think, look, supply chain movement began during the Biden administration. There was definitely a push to encourage companies to rethink their China strategy and to begin to manufacture elsewhere.

Under the Trump administration, I think that's, you know, 10, you know, magnified tenfold. And I think there are people who are actually driving toward decoupling. I would include someone like Peter Navarro in that group. And they do have the president's ear. So, you know, I'm not sure where this, you know, all is going. I think the administration is actually divided.

One final question, Dr. Economy, and you mentioned earlier that the Trump administration is trying to look back to another time and place. A Xi platform was to look back to Mao and all the different certitudes of the 50s and the 60s in China. Do the people of China want to look back?

So I would say that Xi Jinping looked back politically and no, most people in China don't support the very regressive and repressive policies that Xi Jinping has instituted. On the other hand, when it comes to innovation and technology, Xi Jinping is full on 21st century and beyond.

And I think that's what we're seeing, not only in the innovation sector, but in the deployment of new technologies of robotics and AI. That's where they're really going to eat our lunch if we don't get our act together. So I think politically, yes, backwards move. But in terms of tech and innovation, they're charging 100 times faster forward than we are. Elizabeth Economy, thank you so much. Hargrove Senior Fellow, the Hoover Institution.

Financial professionals, did you know MassMutual is more than just insurance? More than protecting what's important today? They have a full suite of wealth management solutions designed to help your clients build and grow for the future. Their unique open architecture gives you the freedom to offer a range of products that best serve your clients' needs while still offering a feeling of independence.

an autonomy that comes with a full support of MassMutual resources, technology, and guidance so you don't have to do everything on your own. MassMutual's compensation often outperforms the wirehouses so you can keep more of what you earn. It's a feeling that you can build a business that's flexible, rewarding, and truly focused on your client's success.

It's a feeling you won't find just anywhere. The feeling is MassMutual. Learn more at massmutual.com slash wealthmanagement.

When you're with Amex Business Platinum, you have the card that helps businesses dream bigger. Get a flexible spending limit that adapts with your business and earn 1.5 times membership rewards points on select business purchases so you can stock up on what you need to take your business further and get rewarded for growing bigger. That's the powerful backing of American Express. Not all purchases will be approved. Terms apply. Learn more at AmericanExpress.com slash AmexBusiness.

You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube. Thank you, Ethan Harris, for your support. Legendary at Lehman, at Bank of America. Ethan Harris said, I'll be retired, but I'm not. He's writing on LinkedIn. Absolutely brilliant. Ethan, thank you for the LinkedIn expertise. I love your headline.

of a few days ago, two weeks ago, "Beatings will continue until morale improves." Tell us, Dr. Harris, how bad the beatings are for the American consumer. Well, one of the amazing things that we've seen in the last three months is that the negotiating tactic of the Trump administration is to create uncertainty, to put your opponent off the balance by

talking in very aggressive terms. This is certainly the way the trade war is playing out. It's also true for downsizing government and for encouraging immigrants to self-deport. So you've got this kind of shock and awe approach.

to trying to change policy. But the problem is that everyone's hearing this, including business leaders and consumers and investors. And so it's really bad for the markets and the economy to have this super aggressive shock and awe approach. And that's what I mean by the beatings. It's kind of like, you know, if they don't stop this tactic, we will get a recession.

The appointed and assigned is Besant of the hedge fund industry. Besant used to work for Mr. Soros. Besant, who is Secretary of Treasury. Do you believe the Secretary can modify the beatings that will continue until Morrell approves? I think he's the best hope for that. I do think that he's gotten the ear of the president.

pointed out that the way we're heading, you're going to have a really bad equity market going forward. And he's, I think, the architect of the recent softening of rhetoric. So he's helping because he comes from a more moderate background than a lot of the other advisors. The problem is, of course, that I don't think this is going to end quickly. This back and forth and threats and counter threats and nasty negotiations,

We have to get used to it. This is the new normal for a while here. And so it's going to continue to be a big headwind to the economy. Surveillance idea. Paul, should we have Dr. Harris on every time we're waiting for a press conference? I think we can do that. It's brilliant. I think we can do that. You're going to have to raise my pay if you're going to do that. We know some people here.

Hey, Ethan, I mean, you do an undergraduate degree and then a PhD in economics. I'm guessing you had a class or two on tariffs. Are there scenarios where tariffs are effective economic policy and are we employing them in that way this time? Well, I think that there's an agreement among economists that there are issues with completely free trade that you need to, you want to protect

regional economies when there's a flood of foreign competition coming in. You don't want to let that just roll over the economy without any support. And we didn't do that. We didn't support local communities. So there were problems in the expansion of free trade. And a lot of that was China. It was China just dumping really cheap stuff on global markets. So I think that economists would agree that you need to

deal with China and the unfair trade practices of China

But that's not what they're doing. China should be the focus. Why are we beating up on Canada and Mexico? We have a free trade agreement with them. They are our closest allies. Why are we beating up on Europe? Europe's trade is relatively unfettered with the United States. So it's not the right way to go about it. The tariffs should be focused on issues of geopolitics,

and on unfairness not this kind of us against everyone um america alone is not a good policy ethan i think some of the uh the uncertainty that you talk about that we all kind of are are hearing about from companies as they talk about their guidance um is it uncertain yes it relates to economic growth or is it more on the inflation side where's the bigger concern for you

Well, I'm actually a bit more worried about the growth hit here. What's happening right now is that the corporate sector is like a deer in the headlights. They don't know what to do. I mean, if you're a corporation that has heavy dealings with the federal government,

that deal has immigrant workforce that is involved in trade. All of those sectors are being touched by high levels of uncertainty. You can't figure out where to put your next plant if you don't know what tariffs are going to be four years from now.

You can't go out and hire workers if you know that your workplace is going to be raided any minute and you may end up with serious penalties. You can't do anything related to government if you don't know who's going to be working at the agency. So it's very broad uncertainty shock that just is freezing up activity. This is Ethan Harris.

Rumor is he's retired. I don't buy it for a minute. Of Lehman and Iconic at Bank of America. Out of scenic Clark University. Coldest university in New England. Worcester, Mass. Worcester, yeah. It's out there. This is a big background. I'm actually on a golf course right now. That's good. Okay, well, that's good to know. Ethan, to go to Ned Phelps, the giant, so supportive of what I do, in his modern word of dynamism,

- Has President Trump broken America's dynamism? - I don't think he's broken it, but he certainly put some major sand in the gears. You know, there's a short run problem that we've been talking about, which is the kind of deer in headlights effect on business activity.

There are other things though that are even deeper fundamental issues like what's going to happen to our STEM community, our scientific community going forward? This is the secret sauce of American capitalism. We have the best tech sector in the world, we have the best scientists in the world, and we draw the smartest people in the world into the US educational system. That's actually a longer run kind of damage

that nobody's really talking about because it seems like a political fight. But we really need to get the smartest people in the world to keep coming to the US because Americans don't seem to want to do science. We've got too many economists.

not enough engineers. But yeah, there's little bits of more permanent effects starting to play out. And I would point to that as my number one long run concern. Ethan, what role, if any, can the Federal Reserve play in kind of inserting itself in this time of uncertainty here? I mean, they're a steady hand. I think that Powell is doing exactly what he should do.

keep reiterating that we're an independent central bank. We don't play politics. We can't react to what we're seeing right now because there's too much uncertainty and we don't know whether we're dealing with an inflation problem or a growth problem. And so I think they're a steady hand on the tiller here. And that's about all they can do. Fold in the fiscal analysis. This morning, folks, in the zeitgeist is

is the two Congresses, one looking for a hurried, rushed, large tax program, and the other with some patience to guess what? Another debt ceiling debate. This debate's different, Dr. Harris, because of our fiscal situation, isn't it?

Yeah, I think that there's certainly a fiscal hawk wing of the Republican Party that's making it harder to reach these budget deals. And the deficit is out of control.

You look at the proposals on the table, tax cuts are much bigger than the spending cuts. So it's not like we're in the process of coming to terms with this. And so it's going to continue to be a weight around uncertainty in the markets.

It may be starting to affect the bond market. It may be the bond market is starting to wonder whether there's adequate funding for the massive and growing budget deficit, particularly when you have these trade wars going on. So it's something we need to keep one eye on, even though it's old stuff. I mean, we've seen these fights over and over again. They usually end up okay.

But the stakes are higher now. Ethan, let me slip in one final question here, and we may have to cut you off as we go, but let's be optimistic. And that is simply the recession call. You were an expert at this at Lehman Brothers, at the Bank of America, many years positing a 90% recession. I'll let you decide. Isn't a huge body of America in recession right now?

No, I don't think so. I think we're hearing. I don't think we've tipped into a recession yet. And I do think it's in the hands of the Trump administration. They can decide. Are they going to continue to back off from shock and awe? And by the way, I think that Besant today will probably try to be assuring to the markets. If that continues, I think we avoid a recession. If it doesn't,

The damage just builds and we do get recession. So I'm a two-armed economist. I'm going to tell you, maybe we get a recession and maybe we don't. Were you retired for one or two days? How did that work, Ethan?

I think it was zero. Zero. Yeah. I never really wanted to fully retire. I love this stuff. This is an amazing time to be an economist. No question about it. I can speak for all of Bloomberg. Ethan Harris, thank you so much for the output again, folks. I can't state enough the LinkedIn, what Microsoft has done there, the LinkedIn value when you see it in the essays,

Thank you so much, Dr. Harris, for a brief involving a lot of perspective over the years. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app.

You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. It is an honor, and knowing Mark Carney for years, I should state that. And of course, Mr. Carney did board work for Bloomberg LP. I want to state that as well. We have seen history in Canada.

We went out today and we looked for a voice that understands completely the modern Canada. David Dodge, Queen's University, and of course Princeton is the esteemed economist of Canada. He's the former governor of the Central Bank of Canada, equivalent to our chairman of the Federal Reserve. We're so honored that Dr. Dodge could join us this morning. Dr. Dodge, what does the new Canada look like?

Slightly confused because it's the first time in a very long time that we've basically got a parliament that has just the two parties, the minor parties, which have been very important in being part of governing coalition, were basically decimated last night. Mr. Carney is now prime minister with...

without a, um, a, uh, uh,

dominant majority. He's a few seats, still a few seats short. And so he is going to be governing, having to govern with his eyes always on his ability to get the votes in parliament. How will he defend...

against the abruptness, some would say rudeness, of a request for a 51st state. I mean, this dream of selected Americans goes back easily into the 19th century. David Dodge, how should Mr. Carney, how should Canada push away the idea of a 51st state?

Well, the first thing is the day-to-day negotiations, which are going to have to take place on trade, not just Canada-U.S., but the three countries in North America and Australia.

North American agreement. That's all got to be redone. And that's kind of a very practical thing that Mr. Carney is going to have to focus on as well.

as will the president of Mexico. And that all becomes really important to understand then what is the role of the United States in terms of a trade block, if you will, in the world as the world

seems to be dividing itself into blocks. And then how does North America fit? Because obviously North America is stronger taken as a whole than not. And so the practical thing is going to be to discuss with the American administration

Not just the economic and trade arrangements, but the security arrangement for North America, which is particularly important. How we're going to deal with the Arctic, which is very important. So when you say, how will we deal with it, we'll start with the practicalities of dealing with those things that

that have to be dealt with on both sides, the American side and ourselves. - Dr. Dodge, realistically, what can Mr. Carney do to try to reorient the Canadian economy

with less reliance on the US trade. Yeah, that is the big issue. That has been the issue basically since the great financial crisis when investment has been lagging in Canada and innovation has been lagging. And so that requires really quite a major reset

And the difficulty in that reset, it essentially means that there's going to be a smaller share of GDP is going to go to consumption and a larger share has to go to investment. And that means for the ordinary middle class, that means slower growth in consumption in the short run over the next few years in order to get

get productivity up and hence have growth in the future. David Dodge, one final question, if we may. Ken Dryden changed the perspective of America on Canada, not only in the hockey with the Montreal Canadiens, but he changed college hockey at Cornell as well. Working as a public official in Canada, and you know Ken Dryden so well, quote, in the Toronto Globe and Mail,

We have never met a big guy like the United States. What does Canada need to do to defend against the big guy? Well, defend, the best defense is a good offense. And that offense has to be to come with a proposition on trade and security that is good, not just for Canada, but good for the United States. It has to be good for both parties.

And so that will be the issue going forward. And Mark Carney has laid out some of the key parameters in that. And his problem is going to be trying to ensure that there is –

some way to manage the fact domestically that for a period of time the amount of the average household has for consumption is not going to grow right David we have to leave it there but Dr Dutch thank you so much for joining Bloomberg this morning uh David Dodge of course the seventh governor of the Bank of Canada thrilled that he could be with us on some important day uh

north of our border. Financial professionals, did you know MassMutual is more than just insurance, more than protecting what's important today? They have a full suite of wealth management solutions designed to help your clients build and grow for the future. Their unique open architecture gives you the freedom to offer a range of products that best serve your clients' needs while still offering a feeling of independence.

an autonomy that comes with a full support of MassMutual resources, technology, and guidance so you don't have to do everything on your own. MassMutual's compensation often outperforms the wirehouses so you can keep more of what you earn. It's a feeling that you can build a business that's flexible, rewarding, and truly focused on your client's success.

It's a feeling you won't find just anywhere. The feeling is MassMutual. Learn more at massmutual.com slash wealthmanagement.

When you're with Amex Business Platinum, you have the card that helps businesses dream bigger. Get a flexible spending limit that adapts with your business and earn 1.5 times membership rewards points on select business purchases. So you can stock up on what you need to take your business further and get rewarded for growing bigger. That's the powerful backing of American Express. Not all purchases will be approved. Terms apply. Learn more at AmericanExpress.com slash AmexBusiness.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. The key reason

that YouTube is growing is Lisa Mateo's newspapers. Let us begin. I need some bird chirping again. That's what we need to make this go through. I want to start with an interesting look at those buy now, pay later options, like apps like Afterpay, Klarna. So they were popular for luxury items like appliances, things like that. But now there's an interesting take. A new study says more people are using it for everyday items like groceries. Really? So they're using these buy now, pay later. I've never used it.

- Klarna is really popular. I know a lot of people who use that. So it showed that one quarter shoppers have used the service for groceries. That's up 14% from a year ago, so more people are doing it. But here's the kicker, 41% said they paid back that loan late over the past year. So they're using the, thank you for the bird chirping, now I feel better.

They're using these apps and things like that, but they're not even paying them back on time, too. Oh, interest rates, I'm guessing they're high. No. See, that's the thing. They're popular for people who want to avoid the risks like with credit cards or paying interest on a loan. But the thing is, is that it can also lead to overspending. Okay. And people are kind of extending their debt even further because of these. Yeah. And that's the problem with it. Yeah.

But it just goes, interesting take on like how inflation is starting to affect people in different ways. That's one sign. Huge, this is a huge story. And it's odd daily, it's percolating. It's a huge story. Just on groceries alone. Yeah, that's not. Next, what do you got? Okay, single women across Asia, they're opening their hearts and their wallets for a new mobile dating game. Okay, it's called Love and Deep Space.

And women love the fictional character. His name is Silas. He's six foot two, red eyes, not blue, 28. He's an Aries. Okay. Does he have a trust fund? Does not have a trust fund, but it's not just him. There's like five love interests. But the thing is the app is free to download, but women are on this thing for like four hours a day. Wow. And they're spending, not on the game because it's free, but they spend on the things kind of like how these other video games, you use them for like,

outfits and you buy, you know, extra money to spend on this or that. And they're spending like some spend like $3,000 a year, you know, to on all these like online different things to, to improve their character. But it's huge in Asia. Like there's hundreds of women are showing up to these live events for this game. It's crazy. So I, to me, it's the digital, you know, this new digital world we're living in.

And people are basically running through their charge card without knowing it. And, you know, they're consuming. Yep. You know, forget about the finance of it. It's the psychology of it. It is. And they say they like the idea of dating, but not having to deal with a real man. It's a fictional guy. It's a fictional guy. Yes. Okay. All right. There's nothing like that here in the States. I think there was a divorce lawyer once who called me that. Okay.

Okay, this could be dangerous. So watch out for this. There's another way to make purchases online and that's through chat GPT. OpenAI has been trying to extend people, grabbing more users. So they have the competition from Anthropic, you know, Alphabet, Google, Elon Musk, XAI. So how it works is that they have about like 500 million active users. So you go on there, you compare, you can ask to compare different products and it will actually send you a

link and you can click on that link and go to that person's website and our company's website and buy the product there so now it's another way that you can buy different products right off the screen you can spend money it makes it like how we show it makes it easy to buy things

This whole AI thing, I think is an existential threat to Google's search business. It is. I don't understand it. I'm surprised this stock is hanging in there. Maybe I just don't get it, but I could see a scenario where...

Well, typing into the Google search is just, it ain't happening. But what you just said is really important. We don't get it. Yeah. We don't get it because, as Google just said, their search engine numbers were great. I know. I know. So now you're looking at this and you're saying, it doesn't make sense. Lisa Mateo, thanks so much to newspapers. She's off to...

Look at some Asian data thing that I don't understand. This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 7 to 10 a.m. Eastern, on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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