sonali: welcome to bloomberg markets, is a busy week for wall street with companies worth over $16 trillion in market value reporting earnings results this week alone. the s&p 500 is up about one half of 1%, near session highs, trying to inch closer to the 5000 level again. the nasdaq is also on the rise. yields on the decline mostly for the day, nearly 496 on the two-year ahead of critical economic data this week. the 10 year yield, it's roughly flat on the day at about 461.

your biggest mover in the s&p 500 is on the upside and revenue estimates are lagging behind key industry data that falsely aligns with company sales but demand from the ev makers is a bright spot for the ev industry is global sales drop. bloomberg is reporting that the ford commercial unit is expected to become the most profitable segment this year. nvidia is recovering moderately after huge drop after they lost market value and a percent drop friday. the rebound comes as we await tech earnings from multiple magnificent seven stocks. about 180 s&p 500 companies represent 40% of the market cap will report earnings results this week. the latest survey shows many on wall street are confident this will in reinvigorate the s&p 500 after struggles for a

month-long. we have the details. will this earnings season really save the s&p 500 and investors in big tech from the route we saw last week, the worst since 2022? >> so far it seems yes and the attention will shift away from interest rates in the past several weeks to corporate earnings. the overwhelming consensus on wall street is that economic strengthen strong corporate earnings are a way to underpin this rally with herb without a fed rate cut. investors recalibrate their expectations over how many rate cuts we will get this year or if the fed will cut at all. investors expect results from corporate america will help resume the rally. if you look at data from 1999 between what j.p. morgan reported and walmart which are the unofficial starts and ends of the earnings season. the s&p has risen 70% so it shows stocks usually rise.

sonali: what about the ben nevis and seven. -- what about the magnificent seven? are they willing to shake up the jitters you see in that market so far? >> 180 companies reporting results this week but it's all about the mag seven stocks that have lifted the broader equity indexed so far over the past year. the stakes are very high for them. they are expected to deliver on profit growth in their profits are expected to grow 40% from year ago but they are facing challenging year-over-year comparisons. that has slowed down from the court -- from the fourth quarter when profits rose more than 60% from a year ago. investors will be paying attention to what they say about artificial intelligence to make up for that expectation of slowing earnings. sonali: thanks for keeping an eye on what investors need to know. moody's cut its outlook for direct lending funds with ties

to blackrock and kkr, lowering them to negative from stable in my next guest is following how private capital is flowing from public markets to private markets. eric hirsch is from hamilton lane. they have 900 billion of assets under management. thank you for joining. a lot of money has been moving into those private markets recently. there are seemingly some cracks starting to emerge in private credit, arguably the hottest area now. what kind of questions are you getting from investors on how private markets look now? >> great to be here and nice to see you. i think your first segment tells the story which is we are living in an area where public equity investors were being told concentration is a good thing. the entire market seemingly driven by a very small handful of stocks. that's really the reason why the retail investor class is beginning to seek diversification. that move away from the public

equity for small, highly concentrated largely indexed asset classes are moving into the private market side so we've seen huge flows there. that doesn't mean everything is perfect in the private markets. on the credit side, you have seen a tremendous amount of capital coming in. it's still finding good homes and yields continue to be high but we don't expect to have uniform success across all managers now. sonali: how do you think about the retail investor flow? you said every big asset manager is looking to capitalize and blackrock -- and blackstone was a couple of days ago with earnings pitching their retail product. in private equity which has been a complicated space to handicap lately under a higher interest rate environment. how much demand should there be for retail? >> if week step back, the question i would ask his wife with the retail investor look

radically different than the institutional investor? today, the institutional investor as a private market allocation anywhere between 10-20% on average. you see some exceptions on the endowment model north of 30 or 40% in the private markets. the retail investor right now is running allocation that is well below 5% and frankly, a lot of retail investors are sitting at exactly 0%. over the last five, 10, 15, 20 years, the outperformance of the private versus the public market has been significant. that simply has the retail investor asking why not me? why am i not experiencing the same benefit the institutional investors are experiencing? whether it's in private equity or private credit, i think you are seeing the big driver of why these fun flows are moving the way they are. sonali: to the people that they getting out of public markets into private markets would help

you escape volatility, we've seen plenty of volatility when it comes to private investments. how do you navigate that? >> there is two pieces to this. it's a less liquid asset class of the move out of public into private, you are recognizing you are changing your view on duration. there is new technology and new fund structures helping to mitigate some of that but there is no question you're going for a longer duration and you're going for less liquidity. as to volatility, i say to investors they are both equities and they will both be correlated. the fact that private markets don't mark on a minute by minute basis, i would say puts in some sort of false commuting of volatility but we should recognize there is volatility there. it's still in equity strategy. sonali: the other thing we were talking earlier was the volatility of private credit markets emerging as well. what is the warning sign here? what is the big disclaimer when

we think about this moving into private markets? you think about potentially higher for longer for some of these friends given the credit ratings they have, how do you avoid the pitfalls? >> one of the big questions is in the retail world, when you see these phone flows coming into these managers, you have to have real confidence that monthly inflows can be met with good solid monthly outflows. i don't mean redemptions, i mean deploying that capital. one of the warning signs you will look at his are the firm seeing their cash balances ballooning, meaning they are taking more money than they are able to successfully invest in good opportunities. that's one of the things i would keep a close eye on. sonali: where is the base opportunity now? is it in private credit or is it somewhere else entirely? >> i think it's not one thing. there is a lot of opportunity in private credit so i don't think

the fun flows are misguided. i think yields continue to be good in the banks continue to be majorly involved and flows beginning to pick up in volume is picking up. that continues to look like a very solid place. on the private equity side, we are seeing real flow beginning to reemerge. both sellers and buyers are kind of calibrating to what is the normal and we are beginning to see transactions pick up there. where you're not seeing a lot of great activity is on really high growth nonprofitable businesses, more of the private equity capital going for more traditional well-run high cash flow good margin businesses and we are seeing nice opportunities there. sonali: we are just days off of the having of bitcoin and people are talking about cryptocurrency assets. when you think about the future of crypto and tokenization, is

more of that going to happen on the institutional side? is there more demand coming into traditional assets? >> i spent zero time thinking about crypto. i spend a lot of time thinking about tokenization. i would put those two things into wildly different buckets. tokenization is simply an access tool. it's about using good blockchain technology to provide easier access methodology particular for retail investors wanting to access the private markets. think about taking traditional funds, think about token eyes them on blockchain so that investors can more easily, and go. retail investors want things simple and fast and they want things efficient. no different than they do in every other part of their life whether it's ordering food or ordering arise of the private markets need to adjust. the token highway of transacting is going to be the wave of the future.

you can start with the retail investor and then it will move to the institutional investor. sonali: we thank you so much. coming up, we'll talk about tesla taking hold as elon musk shifts his focus to achieve -- from a cheaper model of the robotaxi. our big take from bloomberg's next. this is bloomberg. ♪

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and dana hull are looking at the companies consumed by the chaos amid elon musk's shifted focus from a $25,000 tesla model to a robotaxi. let's bring in ed ludlow. a thorough story on bloomberg.com and the terminal today. there are decision being made to push tesla forward, which ideas are investors banking on the most? ed: i think they are zeroed in on doing a robotaxi or not and is tesla not doing a $25,000 ev. what we clarify is that muscat did this directive himself. he said we are doing a robotaxi. that is the focus. my understanding is his get executives push back and said please, can we do a $25,000 ev? the net result is the lower cost ev is not scrapped.

it's just misunderstood. the way sources expand to me as they did all the work down to the smallest components and the production process of how it would be built. it will not be some kind of single standalone model. that technology will not be ready until late 2025. what we are looking forward to an earnings this year is the explanation of that and the estimation i got was that all the work will go into the ev's they've already built. they are iterations of those cars but in late 2025. sonali: on one hand, you have tesla down more than 40% and then you have more traditional carmakers like ford up 5%. how does that showing you -- how does that show you the investors shift? ed: it's specific to tesla and elon musk. we got white a lot of pushback on the big tech about the use of the word chaos.

it is chaos internally. these were deep layoffs that were staggered over seven days. people believe they were safe and then found out last night they are not. investors at the heart of their thesis, a single cheap ev was everything but that's not happening anymore. for others, they price the stock-based on only robotaxi away from legacy wall street. those are considerations the other automakers don't have to think about. they are just trying to convert from combustion engine to ev on the one wildcard as elon musk himself. my understanding is that he will come back to paying attention to tesla and look at what's happened in the first three months of the year and said no, we are doing a different way, my way. sonali: we thank you so much for your time, don't miss his story on bloomberg.com and the terminal. tesla one of the worst

performers on the s&p 500 this year so far. coming up next, we will talk about goldman sachs exiting robo investing. another exit from the consumer business, more and that up next. this is bloomberg. ♪

sonali: this is bloomberg markets. it's time for the wall street beat. great dalio's diversification treatise buttering. we reported on what's happening to this trade. why did risk parity perform soap poorly in recent years and how has that spurred an investor exit? >> if we go back to what is risk parity, it's all about

diversification. you put more of your money in commodities and bonds. the problem with markets is that diversification simply is not been a winning trade. everyone who looks at their personal account can tell. the best bet has been the s&p 500. if you are in a trade it's all about diversification then that will not look as good as a simple 60/40 portfolio. sonali: what's fascinating is the thesis itself flawed or has something changed about the market particularly given investor thinking about how to diversify? 60/40 has been a huge controversy. >> exactly and i think part of the problem is that even for many sophisticated institutional investors who are thinking about diversification, they just don't

think risk parity is the answer anymore. many people are turning into private assets are turning to hedge funds. they are just not turning to risk parity and that makes sense. a lot of risk parity proponents would tell you the problem is hindsight bias. everyone is thinking about the last few years but if you look back before that at the global financial crisis, it sure looked pretty good to have some commodities and have some bonds. they are telling people to hang on because you never know what markets will look like next. sonali: what does this mean for bridgewater after ray dalio was such a driver of this business? what are investors saying? >> bridgewater did not comment on the story but in some of their commit occasions with tensions which are public, we've seen them present this defense that of course risk parity is not done as well the last 10 years but if you look at a lot

of the forces that it helped equities in the last 10 years, they are turning. they are talking about deglobalization and the fact that rates are going up. they are telling clients to hang on but i think they are also falling prey to this general trend. they've seen assets and the all weather fun to go down as well. sonali: thank you for your time. take a look at the story when you get a chance. we have goldman sachs exiting the robo investing business and joining us now is the writer who broke this story. what does this mean for the market strategy? >> it's not just the big wall street trades that are sputtering. we've been talking about the ark of the customers and how they been scaling back because it's not really worked out. the wealth advisory channel is

we know goldman sachs is really known for its prowess in advising the ultra-wealthy. this was away for them to reach out to the little guy, the retail investor. it's not quite worked out much like some of their other consumer products. goldman has been scaling back in with his deal they struck where they transfer over their clients and assets associated with them, they paid back their digital banking strategy was still remains the key part of that and that's the market savings account which they are still committed to but everything around that has fallen apart. sonali: what is the point of markets if it will not be bigger than a savings account? there was the first rate cut in anticipation of rate cuts. do you think they will still be up to drop money into markets to lower the goldman cost of funding if they don't have things like this product? >> what is the end goal of having markets? is it to become a digital banking leader?

that's what they set out to do. they decided they could go big with it. big bank, big technology can be as nimble as a startup and be a disruptor out there. that was the kind of talk you heard from goldman management. for that to happen, you needed a suite of other products. if your goal is to diversify your source of funding and not just rely on wholesale funding, reduce your funding cost because fund secured borrowing is still expensive. when you have a channel like the marcus savings account which has more than 110 million dollars in deposits, you can understand why goldman wants to stick with it. it's not really a can -- a coherent strategy but it's good funding for the firm. sonali: is this a good business? betterment is buying this business, did they gaining thing by owning it? >> incumbents will tell you it's a good business. digital investing shops

especially these robo advisors have gained skill. betterment is one of the largest when it comes to independent digital investment advisors but you also think of the big wealth management players have also moved into the strategy where they have a part of their offerings in these rover advisory services -- these robo advisory services. people are looking for without paying an arm and a leg. you can get away with 15 business points were 30 business points and fees and have your account manage. that will continue to grow, maybe not for goldman but there are many other players out there. sonali: k it's-shaped investing. we appreciate you keeping an eye on all things banking. we are still looking at a little bit of green on the screen ahead of a busy earnings week area there is more economic data and the s&p 500 is up about 0.6%. that does it for bloomberg markets and this is bloomberg. ♪

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