Moneybeat: Dell’s big bet

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MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: It’s time now to talk business, markets and the economy with financial analyst and advisor David Bahnsen. David heads up the wealth management firm the Bahnsen Group, and he is here now. Good morning to you.

DAVID BAHNSEN: Good morning. Nick, good to be with you.

EICHER: Well, David, I’d like to start with that major gift from Michael and Susan Dell, more than $6 billion. That’s with a “B,” billion, $6 billion to expand the new Trump accounts—this donation filling a gap in the program and giving millions of children some seed money invested in broad index funds.

So economically, David, how do you evaluate this idea, the private philanthropy, the government design beneath it, and what it really means?

BAHNSEN: Well, it’s sort of a mixed bag, because I really love the idea of private citizens funding needs based support for various charitable endeavors, and I would like this whole program so much more if it was entirely private funded. And this extraordinary generosity over $6 billion from for Michael and Susan, if we had a whole lot of people doing some mechanism of funding needs based, you know, future oriented, opportunity driven, charity, philanthropy, I would love it.

My problem with the piece of the “Big, Beautiful Bill Act” that creates the Trump accounts is that it is governmentally funded, and so it essentially becomes another redistribution program. It is indeed borrowed money, obviously, because the government is running $1.8 trillion deficits, and then they’re putting $1,000 in an account for any kid born between 2025 and 2028 and then the parents can add up to $5,000 and the employer can add up to 2500 and so then it kind of creates a sort of future growth situation.

Now many have said, well, wouldn’t this just be a lot cheaper than doing social security? Wouldn’t this be a lot cheaper than some of the other forms of future support? The answer is, generally Yes. Actually, it’s just the problem is that’s not what this is for. It’s not a replacement. In fact, the money is not for people to get when they’re 65 in the form of a retirement payment and whatnot.

So I certainly have nothing negative at all to say about the Dells’ generosity, but I think the whole program would have been better if it were privately funded. And I do have a problem with the redistribution element of the government support to the program.

EICHER: Well, of course, David, the big business story of the week is the Netflix move to try to acquire Warner Brothers.

This is a deal worth north of $70 billion, it would give Netflix the Warner lot, massive franchises, a deep library of content—while also adding a deep library of debt. We’re already seeing early signs of pushback from the Trump administration. How do you evaluate this potential mega deal?

BAHNSEN: Well, from an investment standpoint, there’s no question that it’s going to be a lot more debt than Netflix plays with. They had always been a very significantly equity funded company, but it’s going to be a lot less debt than anybody else doing the deal would have been. And these media mergers and acquisitions, including involving some of the very companies involved, the what Warner Brothers did in buying discovery, or what Paramount and Viacom’s deal was from years ago, the old Time-Warner deal that created Warner Brothers. There’s a history of these things where they created very leveraged companies.

This will have less leverage pro forma than any of the other scenarios. I couldn’t care less about this deal from a matter of anti trust. There’s no question that there’s a gazillion competitors in streaming, in media content, in entertainment content, and so I don’t think that the government has any reason to turn the deal down, but I’m not sure that the government will approve the deal.

The Trump administration is not friendly with Netflix. Netflix is not friendly with them. They are more left leaning, and this FCC chair has shown he’s willing to be pretty political in the way that they go about administering deals, approving deals, and so the White House has already come out and said that they don’t really like this, so I’m not sure, but there’s a very large breakup fee. I believe it was over $6 billion if the deal doesn’t get approved, that has to be paid.

So the companies involved are certainly betting quite a bit that it will get done, and they did a bid much higher than the closest deal, which came from Skydance, which has recently bought Paramount CBS. They hired Bari Weiss to run the CBS News division. And so there’s a lot of interesting things at play here. But it’s the largest merger we’ve seen in that entertainment media world in quite some time.

EICHER: David, lots of attention focused on the Federal Reserve, not simply because of the interest rate meeting for next week, but because the White House has canceled the final interviews for the potential successor to Fed chairman, Jerome Powell, and now we hear—no big surprise, I don’t think—that Kevin Hassett appears to be the president’s choice. What do you make of the process here, and what this might signal about the direction of the Fed?

BAHNSEN: I think it’s important for us to point out that the White House has not actually said it’s Kevin Hassett going forward, but that is certainly the implication. And when the media asked President Trump, he smiled. And certainly all my sources are telling me the same thing. I think it’s a very fair presumption. They haven’t technically confirmed that it is Hassett, but I am hearing that that’s the case, and that seems to be the expectation these other interviewees, by the way, had interviewed several times. There was just supposed to be a quote, unquote final round that, as you point out, they ended up canceling.

And so look, if they’ve already made their mind up, I suppose it’s better for everyone involved to have not wasted their time more. Kevinwould not have been the choice that I would have wanted. In this particular case, Kevin’s been a friend of mine for a long time. I’ve known him a long time. I’ve spoken with him over 10 times over the years. I’ve hosted him in my offices for different events.

But I really do believe that the independence of the Fed chair is important, and I think that Kevin Hassett is getting this job because he’s saying all the things the President wants to hear. And I think that’s unfortunate. I really do believe that Kevin may be in the position where he goes and does the right things as the Fed Chair for the wrong reasons. And I’m more concerned about it long term than I am short term.

EICHER: Well, David an eye catching piece in The New York Times over the weekend, arguing that remote work is hurting young employees in measurable areas, skill development, mentoring, opportunity. What do you see in that research? And David, who could have seen this coming?

BAHNSEN: Well, they cite a really, really good research paper that came from some economists at Virginia, Harvard and the Federal Reserve the University of Chicago had done a really, really constructive podcast on this subject over a year ago. So it is very much in line with things I wrote in the appendix to my book on work several years before that. So I guess I’ll take credit for being ahead of even all these other great researchers, the data is pretty clear, though, and you notice the argument they make is not emotional, it’s not preferential, it’s not nostalgic, it’s not, you know, a get your tail back to work kind of a thing.

It’s these young people are not getting the mentorship, the apprenticeship, that was a significant part of their position historically, and it’s done in the context of very particular types of jobs. And I believe it is painfully obvious, and so I agree with you, it’s nice to see that validation, but it’s very well documented and explained how the benefits of young people receiving mentorship from folks in office face to face in real time and place, circumstances being diminished with remote work impacts the career trajectory of young people.

So I found it to be a wonderful paper, and I think a message I very much agree with.

EICHER: David, one more thing before we go, you mentioned Bari Weiss, and she runs a number of things, not the least of which is CBS News, but The Free Press. And in The Free Press, she ran a couple of columns debating where the real poverty line is. The provocative column that kicked off the debate was an argument that $140,000 a year for a family of four is the poverty line.

And then a piece by Tyler Cowen completely took that idea apart. I’m curious, and I know you’ve heard about this, but I’m curious where you come down on the question, what is the right way to think about the actual cost of living?

BAHNSEN: Well, first of all, the poverty line being written as a sort of governmental policy number is obviously going to have a certain arbitrariness or subjectivity to it. It’s used to kind of set various policy for where means based support is going to have to come in.

And the piece you referred to by Michael Green stating that the number was 140,000 whereby a family of four could actually make a living and be able to afford their basic needs, which he includes as housing, childcare, food and healthcare. And I think most people know just intuitively that there are a heck of a lot of people supporting those four things for. Family of four with less than 140,000 but to state it as the poverty line rightly incurred a great deal of ire from folks, and there are a lot of really good economists, including some of the folks you refer to at the Free Press that hammered it.

I’m less concerned with where we set the actual policy line as to where we talk about just the basic cost of living for where a family can have the kind of life that people want to have. And I certainly understand that that is going to be a very different number than the poverty line. I think that the poverty line at 32,000 right now for a family of four is much too low.

But I will say that the problem here is that where we set this number becomes a basis for facilitating greater healthcare support and transfer payments from a federal treasury that doesn’t have the money to do it. So all at once, Nick, embedded in this conversation is a need for men and women of faith to better take on and understand what our responsibilities are in charity and philanthropy.

For families, to understand their responsibility as providers and what the realities are of cost of living, employers to understand what support is needed and where they want to think about their payroll. But unfortunately, this conversation can’t be real seriously had when people referring to $140,000 as a poverty line, and they’re obviously a lot of Americans living between 60 and 140,000 that don’t believe that they are poor.

EICHER: All right. David Bahnsen—founder, managing partner, and chief investment officer of The Bahnsen Group. He writes at DividendCafe.com and at WORLD Opinions. David, hope you have a great week.

BAHNSEN: Thanks so much, Nick. Good to be with you.

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