katie: welcome to "bloomberg markets." investors left in the wake of that surprisingly strong u.s. jobs report as markets adjust to a likely more hawkish federal reserve. let's get a quick check on the markets. you can see the question being asked, is this fed going to be as aggressive as the market thought? right now it seems like the answer is no with the s&p 500

down .4% and it's the same thing if you take a look at big tech being weighed down with the bond market really acting up. the 10-year treasury yield is higher by six basis points and we are above 4% as investors rethink their bets. brent crude has to be up there as well with all of the action in the oil markets as we keep an eye on the middle east. brent crude is above 80 for the first time this summer, translating to a 3.3% rise. mid-day movers on the equity side, let's do that with abigail doolittle. abigail: let's take a get some stocks that are down amid a slew of downgrades. humana is down around margins concerns. amazon to cut ahead of its all-important prime day, with one analyst saying that the aws business is not enough, shares

responding, down 2.9 percent, with netflix getting a downgrade and an upgrade ahead of this earnings season. right now the bears are holding it down 1.7% for some analysts thinking that valuation is a concern. turning to the shares of pfizer, they were higher the last time i looked. this is starboard taking a one million-dollar state to do an overall turnaround for a company that has flailed since pandemic and the vaccine revenue. shares again responding well. finally, we have shares of tesla trading lower right now, down 2.2%. this could be ahead of the important robotaxi event on thursday, katie, and we of course have elon musk, ceo giving a lot of support in time to the republican presidential candidate, donald trump. some investors might be worried that his attention is off the company and on politics, which could be another reason this

stock is down for a third day in a row. thank you so much -- katie: thank you so much. turning to the private markets, as appetite for private assets grows, i capital has surpassed $200 billion in global platform assets and with more on this exclusive news i'm pleased to say that we are joined by the chairman and ceo, along with sonali basak. lawrence, it's great to have you with us. two hundred billion dollars in a um. private markets, that's a pretty broad church. where are you seeing the broad flows in the private markets? lawrence: thank you, katie, great to be here, really appreciate it. you can look at the flow question from two different perspectives. first, what are the strategies people are using? second, what are the structures they are using to get into the

asset class? strategies are shifting more towards private credit. if you go back two years to 22 and you remember that uncertain economic environment whe we were about to start a fed rate hike trend, there really was a risk off mode in the market. in that context, private credit, which is shorter duration, people started to shift their. most of those products were floating rate. people had a natural hedge in their investment. as time went on and interest rates went to 5, 6 percent, people were earning almost 10% or a little bit more on their private credit portfolio, which was very, very exciting. we have seen private credit flows of 41%, year to date, compared to private equity of 34%, a flip from last year. the other quick point i would make on the structures is we are

seeing a big shift towards evergreen investment structures as opposed to the traditional private placements that people historically always used, which is a function of more accredited investors coming into the asset class and those products, we have seen them to the tune of 60% of flow year versus 40% for private assets. we have -- sonali: in terms of seeking approval, some need regulatory approval, but looking around the corner for a minute, if they should get this done, how fast do you see more of these entering the market and how will that change the way that retail investors access the funds that have been typically hard to access? lawrence: i would say that you are going to see more of that and you have seen it on the m&a side with traditional asset managers of acquiring, more and

more partnerships coming to the fore, as you are suggesting. as people think more holistically about these portfolios, you know, we always think that we are driving the volume and a lot of alternative assets. but they live somewhere, they live in a portfolio and they have to make sense in the context of the portfolio into what the underlying investor is trying to accomplish. i think you will see more of these types of arrangements and ultimately, it will really help the investor because right now one of the challenges that advisors have is making sense of how to allocate and bring these alternative assets into a portfolio. sonali: when people look at these etf's they say wait, it's illiquid and there are funds covering the year that have been successful with some of them getting into some issues when it comes to redemption requests.

how are investors thinking about the structure? will it be semi liquid, daily liquid, or do they not want liquidity? lawrence: it's really early days for all of this and a lot of people are experimenting on how to make it all work. the one thing that you have to keep in mind is that an alternative assets, generally speaking, is an illiquid investment. when you think about some of the funds that have had gates put up -- which is, by the way, a feature and not a bug of how those products are designed, they are ultimately investing in a long line of illiquid assets and people are trying to figure out how to put a hospitable wrapper around the product so that people can have the access, but you can't get away from the fact that these are still, you know, the underlying investments are very illiquid, so people have to understand that. one of the things i find quite

frustrating is the description of these assets as semi liquid, because human nature being what it is, people hear what they want to hear when they hear that, they hear liquid, but generally speaking these products are illiquid with liquidity features and that's an important component of the education that has to go on in the space. we certainly spend a lot of time on it, as do many leading asset managers, helping people to understand the underlying character of these products, how they work and how they are supposed to work for these investors. katie: that's a great point, making sure that is communicated to prospective retail investors. i know a lot of issuers are thinking carefully about that. but when it comes to retail investors moving into private assets, why bother when you have public assets up 21% year to date on the s&p 500, for example ?

what role do you see private assets playing in the typical portfolio of the average investor? lawrence: if you look at the large family offices and institutions, many of them are allocated in excess of 50%. looking at the allocations at most of the large private banks, they are suggesting allocations of 15% to 25% in two investments for wealth clients. the view is clearly that there is an opportunity for incremental return, people buying these things for the same reasons large family institutions do, they are seeking integral -- incremental return and diversification of the portfolio and in the private markets today, there are hundreds of thousands of private companies and 4000 5000 public companies. so, if you think about the market, you know, not investing

in private is shutting down a very significant part of the marketplace to the underlying investor. private plays an important role in a complete portfolio. most certainly, not be for everyone because of the liquidity conversations we had, with other reasons, but for the right investor base they can be additive. katie: it's an interesting point when you think about the fact that we don't have a lot of ipo's lately. we have seen some delicious things. it feels like the public market is shrinking. speaking of private, in your notes you made the point that private credit had a good run, had a lot of the lines share as well, but you see private equity growing in the months ahead. walk us through that. lawrence: it's the inverse of what i talked about earlier where interest rates were coming down and private credit became very attractive -- sorry, went

up, private became very attractive and the spread between the expected total return on credit in the yield and equity was narrowing. now starting a reduction cycle on interest rates, you are going to see the spread start to get wider again. as we get into the climate equities, it performs quite well. private credit strategies would very much be a core part of the alternative holdings and as you look forward and think about how people allocate, at some point people are going to stop even referring to the assets as alternative. i think people will have an equity portfolio that will have common stocks, etf's, private companies, private equity funds and venture funds with you

knees, treasuries, corporate bonds. you will see a blending of the private markets and public markets, people are going to think about how to combine these things to get to the portfolio outcomes they are looking for. katie: lawrence, really appreciate your time therefrom i capital. thanks of course to sonali basak, who has a busy day tomorrow morning, she will be interviewing the founder of bridgewater associates, ray dalio. we will of course be dipping in on that. coming up, a rare amazon skeptic. up next, why one analysts report has shares falling. this is bloomberg. ♪

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katie: this is "bloomberg markets," time for the stock of the hour. amazon shares are falling after a rare analyst downgrade. wells fargo cut the stock to equal weight from overweight with analysts saying the growth in the cloud computing business is not likely to compensate for shrinking market trend -- shrinking market trends, cup from $225 to $183, one of the lowest on wall street. for more, i'm pleased to say we are joined by our bloomberg intelligence analyst. the core of this call is that aws strength alone is not enough. your reaction? shares are really getting punished here. >> if you look at it, amazon has

done well over the last 12 months to showcase our profit potential. this is something that we reported back in november, there is so much more that the company can do. looking for example at the operating profits, like for their cloud division, last year operating margins were at 24%. this year they went up 35 .5. an improvement of 11 percentage points. obviously, you would not expect that level of improvement to continue over the next few years. having said that, we feel fairly confident that over the next three years or so you will see higher profit from all of the divisions coming out. whether things change seasonally because of investments or, for example, next year maybe they do a lot of investments related to genai, and that is possible could curtail their margins, we don't disagree with some of those things but practically speaking over a long term we

think that operating profit will improve for a whole. katie: we spent a lot of time talking about aws, but talk to us about the e-commerce side of the business. it's been a sore spot for pretty much every retailer in every industry with their dominance. >> if you go back to look at it during the pandemic, they doubled their footprint off of logistics. this was critically needed for them to differentiate e-commerce compared to others and when you have supply chain challenges and inflation kicking in, they are raising the hourly wage for their employees, that thing ebbs and flows, but frankly speaking they are creating a deeper mode for their business and again in the longer term we think that will be a far more profitable than what it is today. katie: really great to catch up

with you therefrom bloomberg intelligence. the analyst behind that amazon call will be on "the close" later this afternoon. another company we are watching his pfizer, shares rising on the news of a large investor stake in the company. they have taken a stake of about one billion in pfizer, that's in an effort to spur turnaround of the company. i am pleased to say that we are joined now by leanna baker. what is star board asking for here? what are they hoping to achieve? leanna: it's too early to know, has no information is public, but activists as a rule of thumb like to push. starboard has reportedly approached former kaiser executives.

potentially they would want to bring in some of their own talent, maybe add a board seat. this could be too early but these are the things they might be thinking about. katie: getting the band back together, interesting. talk to us about pfizer itself. we all knew that their success with covid vaccine fizzled. liana: one thing to look at is the obesity space. from what i understand, i'm no health care pharma expert, but some of the bets in that space have flopped, so that is an area where they could look to expand and cost-cutting is already a focus of the current ceo, so there might be more that they could do there to help turn the ship around. katie: and rebranding themselves as a cancer company. they haven't exactly found the hit that they did like in the

covid vaccine. talk us through what happens next. we know they have taken this $1 billion stake, so what else should we be looking out for? liana: there's not a lot of information, so if we could see any of the moves they are making at the board and what their plan is to fend off this activist -- sometimes we see companies working with activists in the activists become so-called constructivists, to use the jargon, so maybe there is something they can do together, but really there is no sort of near-term pressure point next week. we don't know if they are doing a proxy fight or anything like that, it is too early to tell. we will be watching if other activists emerge. they have gone after other companies, like salesforce, where we saw activist swarms. that's the trail head activists

investing. katie: well, it will be fascinating to watch and i know that your team is all over it. thank you. a new wave of etf's is being promoted on tiktok, youtube, and read it, with promises for payoffs that have some insiders waving red flags. that conversation, coming up next. this is bloomberg. ♪ ♪♪ ♪♪ ♪♪

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katie: welcome back to "bloomberg markets." wall street is printing new etf set a faster pace than just a few months ago. amateurs are now plunging into the complicated world that promises huge payouts and regulators are urging caution. the big take today here, for more i'm pleased to say that we

are joined by some of the reporters behind the story. we covered these all the time in terms of the performance and the flows, but talk to us about the social media aspect of this all. >> is very important for this boom. deal max will have more on the product but if you zoom out on the community, there are hundreds of thousands of people gathering every day to discuss the best fee, what's good for your portfolio, so we decided to look at the numbers more broadly and they are staggering. we had to keep looking at the data every day, filings kept coming in. it's a record number of etf's this year. if you look at the a um it's growing so fast. five years ago it was 50 billion and now it's 300 billion. so, it's really rapid growth. there are some small firms like

jp morgan and those big names, but smaller firms that were not around two years ago, now surpassing 4 billion, five billion in the span of one or two years, which is incredible, charging higher than average fees. katie: talk to us about why this is happening now, why are we seeing this explosion of interest? >> is part of the rule changes of 2020, but 2022 was an interesting year where pretty much nothing worked. then there were the coal strategies that did quite well. investors got more interested in that approach, seeking upside and providing dividends on the way. since then we have seen incredible proliferation. so many stock products. people aw lanching whatever you can think of with so many twists and turns.

katie: well, it's a great story. i would suggest everyone going read the story. that does it for us for now, i'm katie greifeld, this is bloomberg. ♪ ♪ ♪ with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

>> in the world of politics of

the world of business, this is "balance of powerlive, from was. counting -- to them: counting the costs of candidate proposals with new research on what the trump and harass tax plans would mean for debt and deficits. thanks for joining us. i'm joe mathieu alongside kailey leinz. welcome to the monday edition. great to see you, hope you had a great weekend. the committee for a responsible federal budget is out with new numbers that probably won't make the numbers happy. kailey: no, the central estimate for donald trump, seven point $5 trillion at the high-end, that's what's astounding.