Closing Bell - Closing Bell: Navigating Alternative Investments 10/14/25

Episode Date: October 14, 2025

Robert Smith of Vista Equity Partners tells us what he is watching in the market right now. Plus, Goldman Sachs’ Head of Alternatives Kristin Olson tells us about the shift in Alts investing and the new generation that is getting in on the action. And, Ayako Yoshioka from Wealth Enhancement maps out her forecast for stocks and helps break down the final moments of trade.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to closing bell. I'm Scott Wagner live from the Case Alternatives Conference today in Beverly Hills, California. Demand for Alts, it's booming as investors look for bigger returns and more diversified portfolios. We have some big interviews coming up this hour, and we are excited about all of that to cover this fast-growing area of the markets. Robert Smith, a Vista equity partners will be with us in just a moment. A little bit later on, Matt Brown. He's the founder of Case. He'll be here. So will Kristen Olson, and Goldman's head of alternatives for wealth. All of them joining me in moments.

We're of course following these markets today. Let's show you the majors with 60 to go in regulation. Different story, isn't it, from how this day started. A nice reversal from those declines we saw earlier today. Banks and industrials having a strong day and that is obviously helping the markets overall. There's the doubt now good for almost 1%. Nasdaq's still a little bit slow today.

Bank earnings, a big story. Take a look at shares of Wells Fargo, up eight and a half percent on those earnings. J.P. Morgan and Goldman, they posted good results. The stocks were down by around 4% each earlier. They plod their way back to, and that's helping the market as well. Caterpillar, a big winner from the industrial space.

I mentioned technology. It's a loser today. Most of the mega caps are lower, led by Nvidia, Amazon's lower, so is meta today. The other big question hanging over these markets these days, whether there is a bubble in the AI trade. Several of the world's most successful investors have weighed in on that topic recently. So let's welcome in another. Robert Smith, he is the founder, chairman, and CEO of Vista Equity Partners.

He is with me here at the case conference in Beverly Hills, and we're so happy to have you. Thanks for being here. Good to see you, Scott. Thanks for inviting me. All right, so I mentioned all these people who were opining on this topic. Paul Tudor Jones was on CNBC just last week, said it feels exactly like 1999. Ken Griffin, quote, there are obvious echoes of the dot-com era, and we even heard from Jamie Diamond and David Solomon today, similar things from what we've been hearing from some of the most regarded people on Wall Street. So what do you think? Are we in a bubble?

I think, again, it's complex. It's a complex ecosystem, and you have to look at different parts of that ecosystem to actually understand how this is all going to play out. If you look at the early phases of almost any new technology as it's introduced into the market, You see the hardware vendors. Then the scalers, in this case, hyper-scalers start to really catch fire. Now we have hard-re vendors becoming hyperscalers, but typically what happens is there will be a third wave where the application users, those who are actually using this technology

to empower their businesses to become more profitable or accelerate their growth will capture the long-term economic value or economic rent in these marketplaces. So to me, when I look at it, certain parts you may argue You may argue that other marketplace are, you know, very exaggerated in some respects. Other parts, quite frankly, haven't actually felt and had the realization yet of the promise that AI is going to deliver. From our perspective, in enterprise software, AI is going to empower enterprise software in ways if you manage those business as well, that will create growth and profitability, you know, here to before have never been seen. So those sort of dynamics haven't played out in the marketplace and everyone's playing that things are a little more obvious and tangible because it's complex. It's hard work. It's not trivial. But as it manifests, I think we're going to see a massive opportunity in enterprise software, agented enterprise software. So I'm excited about that.

The biggest question in your wheelhouse of software isn't if, is there a bubble necessarily? It's is AI going to kill software? I mean, you've heard that. I know you have because everybody's been talking about it for the better point. part of the last couple of years as all of this has exploded on the scene. Now, the IGV, which encompasses the enterprise software companies in the market, has actually outpaced the S&P 500. Multiple have come down. How do you see that question? What will likely happen is AI is going to enable enterprise software to eat services. If you think about it, what this will do is create a whole class of agentic workers,

Work that will actually happen at a higher frequency, at a lower cost, with higher efficiency. Once it's installed and embedded with high precision in the enterprise, that's the part that has to be done well. You know, you hear reports about, oh, 93% precision. That's not enough for the enterprise. You actually have to have a higher level of precision in the enterprise. That's kind of point number one. Point number two, it's critically important for people to understand the vast majority of enterprise data and workflows actually isn't part of these foundational models.

Okay, you know, the foundational models have captured all of our consumer data, and that's, you know, pretty obviously. But in the enterprise, I read a report a couple weeks ago only 1%. We're seeing less than 1% in our portfolio of our data actually a part of these foundational models. So ultimately, if you've controlled

and had the sovereignty, dominion of workflows and data sets, you were able to agentify your systems and able to enable your customers to actually become more profitable, grow more effectively and operate their businesses more efficiently. That's that last way that I think is going to create the massive economic opportunity for investing. There will be some disruption, though, for certain types of software companies.

I mean, the debate feels like it's really centered around SaaS, whether you're going to need that in this new era of agentic AI. The way I like to characterize it, enterprise software is going to end up in three categories. Agentic, rule of 70 versus rule of 40, and no right. to exist. So if you actually don't have sovereignty and demeaning around your workflows and data sets, you won't have a right to exist in that new agentic world. But if you manage that well, you actually have not only a right to exist, but a right to excel in that marketplace. You'll be able to deliver product, services, you know, solutions, agentic workforces that

will be able to do things that human beings won't be able to do at the pace and at the rate that agentic engines will be able to accomplish. Okay, so you just mentioned the rule of 70 where is 70's the new 40. Because the traditional way that people like you evaluated software companies was on the so-called rule of 40. For those who don't know, it's the software companies combined revenue growth rate and profit margin should be 40% or higher.

So you're finding yourself now having to reevaluate the way you look at software companies at that much higher level? There's two ways. There's a reevaluation, and then there's a re-underwriting of what you can accomplish. We are now actually saying the work that we've been doing now for over two years of driving a Gen-TIC or GenAI-enabled product development,

go-to-market, the customer support services that are now creating massive operational leverage in the businesses that we're now starting to see. So companies that were operating at 40% EBITDAM margins can now operate at 50% EBITDAM margins or 60% EBITDAM margins. And then it's a function of the agentic solutions actually making a more effective go-to-market strategy to accelerate the growth. That's what we're now seeing.

We've now been at this for over two years. We've built out the systems across all of our portfolio companies. Everyone is using some form of code development, genie unable code development, some form of customer support enable, some form of go-to-market, back office operations. So think about bringing efficiency across an existing portfolio company to make it much more. more profitable and then agented solutions that will work on the outbound motions for sales and sales enablement that actually accelerate the growth. That's the dynamic we're now starting to experience. So am I right to think of it almost as generative AI is kind of the fun part

of AI. It's changed the way we search and it's going to impact in many different things that we do. But agentic AI is the game changer in terms of productivity, efficiency, company growing its revenues, its EBITDA, and all the things that ultimately will matter more for investors. I would agree that agentic will enable that to happen. We've now gotten a number of our companies into that state where they're now delivering agentic solutions. When we were first using enterprise software capabilities to go from on-premise to cloud,

we were seeing about two and a half times economic rent pickup, the ability to capture that much more revenue from existing customers because we can deliver a more efficient system for us and a more efficient cost-adjusted system for them and capture that pickup. We're seeing agentic solutions at an order of magnitude greater. So the movement from a cloud base, SAS, if you want to think about it that way, to an agentic has actually a higher inflection point. It's much more difficult to do. You have to build out capabilities to do that at scale, but the rewards are going to be

exponential relative to what we saw in the first conversion from on-prem to cloud. How should we think about exits in what you do? I mean, we've been talking about potential exits in the private equity world for a while, whether the marketplace had been opening up. If software multiples are not what they were, if you were, say, selling at 25 times EBITDA, if you're now selling for, say, 15 times, for example, is that actually taking place? you having to maybe rethink what the end game is going to look like? We're not seeing that much compression, shall we say, and the multiples I understand as an example. But if you're expanding your EBITDA and you're actually able to inflect your EBITDA, again,

rule of 40 to rule of 70 by reducing your costs sustainably, introducing operational leverage in those businesses, lower cost of customer support, lower cost of your operations, lower cost of your product development, you'll expand your way in terms of EBITDA. values so that even if there's a modest multiple compression, which we're not seeing much of in many places, you'll actually be able to continue to return capital. We've been very fortunate in consistently returning capital to our investors, and this sort of inflection dynamic, we think, will actually accelerate that opportunity. Orlando Bravo was on our network last week from Toma Bravo, and they do a lot of, you know,

they're an enterprise software as well. He suggested that there was a bubble in valuations, especially in the private market. What do you think about that? You see it in different places. You know, like all things in markets, you know I talk about this. Markets all have different equilibrium states. Certain private markets you'll see inflated. You can call it a bubble.

Certain private markets haven't actually understood or recognized the opportunity that's actually occurring in those marketplaces. So, you know, there's truth to that, and there's also true to the fact certain markets and the private markets are actually undervalued relative to the potential of those businesses. When you look at the markets overall, I mean, where do you know, think we are in the cycle. People are trying to guess, are we late innings in the expansion that we've seen? I mean, earnings are still good. I would assume software earnings are still going to be good. The Fed's cutting interest rates. If you put all that together against a backdrop

of what feels like it's another bumpy road in the trade picture with China, what does that mean for how you see it? The way, again, we are not stock pickers. What we do is we buy businesses and bring specific sets of value add capabilities and enablement capabilities. If you do that consistently, you'll be able to grow earnings. I fully expect earnings to continue to grow at our businesses and other businesses like ours that are now introducing Gen AI-enabled systems to reduce cost.

Think about that. That dynamic will actually create a massive opportunity for investors to take advantage of. Certain of those elements haven't been realized quite yet in terms of investors' recognizing. Part of our job is to build those systems, build those capabilities. So when we're underwriting new businesses, we can inflect that business by implementing a Gen.A.I. Enabled system

or an Agenic solution. And with our partners in the marketplace, deliver to them the capabilities to drive that business forward at a much more rapid rate. That's how we're thinking about it. When you think about the obvious benefits of the Gentic AI and the companies that you own and the ones you're looking at, What about the dislocation of jobs?

How do you see that developing? If Agentic AI is going to do all of these amazing things for people and businesses, isn't there going to be a dark side to that story? There is, and the way I think about it, every knowledge worker's work will be effective. Now, to what extent is going to be a function of where they are, the value chain, and what they are actually doing. They're about one billion knowledge workers on this planet, making up $40 plus trillion dollars, or call it economic activity.

Every one of those knowledge workers, certain parts of their business and the work that they do can be a gentle. You know, knowledge workers will go into a system, they pull information out of that system, they process it, and put it back in the system or another person. Well, certain parts of that workflow, an agent can be more effective at extracting the information. It might be faster at coming forward with some ideas of what the inferences are from that extraction and what conclusions can be drawn and either put back in that system or acted upon by the individual. Those are the dynamics that as you actually agentify software

companies, you actually have to discern all of those pieces, which pieces can be agentic, which pieces are left with, I'll call it an orchestrator which may be human or maybe agent or maybe an agent. Those are all the dynamics that are really in play today that are going to change the way that we do work. Some jobs you will no longer need. Some jobs will be enhanced by what these agents will do. And all of them are going to be a little bit different, but absolutely every single knowledge worker on the planet will be affected by this new technology. I've heard some people suggest that the argument itself is a little overblown, that they talk about that people will be redeployed rather than replaced. That, you know, that you,

You're not necessarily going to have massive waves of job loss. People would just be redeployed to do different things while still utilizing the powerful nature of what agentic AI and AI in general is going to bring to us. It all depends on the policy that's in place. There may be certain governments that say we are not going to have layoffs. There may be certain governments that say let the free market bear what it will be. You mean because it wouldn't be politically tenable?

So yeah, it may be, right? And so certain environments where they actually have a high number of knowledge workers and those knowledge workers actually brought, you know, those communities or those countries into a different standard of living, they will be effective. And they may say, you will not lay these people off, you have to redeploy them, retrain them. There are going to be certain companies that have those policy approaches as well. So I think, look, we're in the early stages of how agenetic solutions are going to impact broad-based companies and governments.

And it'll be interesting to see how this all plays out. And I think there's going to be a wide variance. Some are going to let a free market take it. They don't need the people, and those people have to go find it on their own. I think others are going to say we're going to retrain them, re-deploy them. And others, I think, are going to have certain edicts to say you can take the profitability from this, but you're going to have to drive that profitability either to your stakeholders, but you cannot let go to people.

So I think it's going to be a mixed bag across the board. I think we recently celebrated the 30th anniversary of 20th. 25th. Okay. I don't want to rush you five more years. The 25th. When you look back from the beginning and then at certain stages of where Vista has been, given that you've always been, and enterprise software has been your expertise,

are you most excited today relative to where you've been in the past because of what the power of AI has the potential to do for software? I am more excited now. When we actually, again, when we started, you know, the early days, Software companies were all on premise. And then as we built our factories to make them cloud and cloud enabled, you got about a two and a half,

two and a half times picked up of economic opportunity. The agentic solutions that we are now producing and building and installing, we're seeing 10 to 20x type returns of economic activity or economic potential that we can enable our customers to actually realize. So it has a massive implication, but you have to get

Right. You have to actually configure these. You have to enable them properly to deliver that value to your customers. Again, that is non-trivial. So you actually have to have the right systems and process and people and procedures to do that across a vast number of companies, which is what we're doing. All right. I appreciate you so very much being with us. I'm going to be doing a panel with you in a little bit, a few hours from now. So we'll restart the conversation about the power of agentic AI. Robert Smith joining us exclusively here from the case conference. We'll see you soon. We're getting some news out of Washington. Amon Javers has that.

Amen, what are we learning? Scott President Trump just wrapped up a meeting at the White House with Argentine president, Javier Miele. And in that meeting, he discussed this $20 billion currency swap that's been proposed by Treasury to bail out the Argentine government. The president said that bailout will be going forward, but he also said that it will largely be contingent on the outcome of the upcoming midterm elections in Argentina, in which the incumbent president's party

faces some political challenges. Here's what the president had to say. If the president doesn't win, I know the person that he'd be running against, I believe, probably. We probably have the person. A person is extremely far left and a philosophy that got Argentina

into this problem in the first place. So we would not be generous with Argentina if that happened. If he loses, we are not going to be generous with Argentina. A couple of other points, Scott. The president said that in his view, the Argentine government doesn't have to stop selling soybeans to China in order to be ineligible for this kind of U.S. government assistance. But he said he doesn't want the Argentine government engaging in any kind of military economic transactions with the Chinese at the same time.

He also said that he views the BRICS nations, the creation of BRICS itself as an assault on the U.S. dollar in its role in the global economy. and he threatened to put tariffs on Spain, given that he said he's very upset with Spain for their lack of spending on military material under NATO. He said he wants Spain to be up to 5% of GDP. They're not there yet. He said they're the only country that's not living up to their expectation,

and he threatened tariffs as a result of that, Scott. Back over to you. Okay, Amon, appreciate that very much. Damon Jabriss from our Bureau in Washington. Shares of most of the big alt managers are rebounding today. They've been unsettled, as you know, lately due to concerns in some parts of the credit market. Leslie Picker's been following that money.

She is yet again for us today. Hey, Les. Hey, Scott, yeah, shares of alts with the most private credit exposure. Think Blue Owl and Apollo, Ares and KKR really jumping today. Those names had been dragged down, as you mentioned, for weeks now over concerns about those two auto bankruptcies, first brands and tricolor, and what they were, whether they were the canary in the coal mine. As we had been reporting, though, direct lenders had very little exposure to those two names. Recently, the banking industry has been more center stage here, has been more impacted. Jeffrey's shares have been quite volatile, and its executives actually published a letter over the weekend, seeking to reassure investors that it can absorb any potential losses

from exposure to first brands. The tricolor bankruptcy contributed to $170 million in charge-offs for JP Morgan during the third quarter, a small amount for a firm that size. but chairman and CEO, Jamie Diamond, addressing it on the analyst call. My antenna goes up with things like that happened, and I probably shouldn't say this, but when you see one cockroach, there's probably more.

And so we should, everyone should be forewarned on this one. And first brands, I put in the same category, and there are a couple other ones out that I've seen, and I put in similar categories. But we always look at these things, and we're not omnipotent. You know, we make mistakes, too, so we'll see. None of the other banks that reported this morning indicated any exposure, but there were lots of questions, as you can imagine, on the calls about the credit quality of the industry's loans to non-bank financial institutions, Scott. All right. Still following that story, of course. Leslie Bickert, thank you very much. We're just getting started from here in Beverly Hills. Coming up next, the case founder and CEO Matt Brown. He'll join us right here on set. He'll give us his forecast for the future of Alts. We're live in the Case Alternatives Conference in Beverly Hills.

watching closing bell on cnbc welcome back to man for all it isn't showing any signs of slowing down more than 2,000 firms supporting 62,000 registered investment advisors are now on the case platform which links to two groups mac ground is the founder chairman and ceo of case he joins us now Good to see you. Good to see you. Thanks for having us back. This is year four for you. 1,200 attendees, 800 FAs.

Can you give me an idea where we are now in ALTS, both in adoption and acceptance? Yeah, I think what's happening right now, like the noise behind us, excuse me, the crowd, the asset management community, the ALTS asset management community, has really focused on wealth management as an investor base that they want to cater to. And they're investing in the teams and the products, the education, to really make sure the wealth community understands the strategies and how to implement them. And at the same time, the advisor community is realizing that just too much of the U.S. companies are in the private fund, so they need to be able to get access there if they want to participate in the growth.

Where is demand really going? I mean, look, we just launched an industry. inside alt news letter at at cnbc because it's it's obviously captured something that investors want more access to the private markets they want alternatives to stocks and bonds how big is this going to get look we're in their early innings uh you know case was founded 15 years ago and i still feel like we're the bottom of the first of scott you have to just kind of put in perspective, 80% of companies in America with revenue over 100 million are private. How can investors participate in the growth in the United States economy if they're not actually

allocating to private markets? You also take a look at the public markets. 25 years ago, 7,000 companies listed, today 4,000. So a complete portfolio, if you're a financial advisor to have your end client participate and generate return must include the private market category. And that's what's happening now, a thirst for knowledge on the strategies. You've evolved as well. I mean, just as the business itself is growing. So of you, you're kind of like a one-stop shop at this point. You provide the tech, the education, the due diligence, also how to construct the right portfolio. Tell me about that. So we've created the complete end-to-end toolkit for a financial advisor. So everything from, as you just mentioned, education, due diligence

frameworks, portfolio construction, also the execution of the alternative investment, and then all the monitoring of it as well. So as a financial advisor, you look at Case really as the toolkit that's going to allow you to streamline and scale your alts. But the other side of the equation is important too. For the alternative asset managers on our platform, the product providers, They're now able to access thousands of firms that want to have access to their strategies. So it's really a mutual benefit, a two-sided marketplace. Tell me more about the education side of it. I ask you that question at a time where we're discussing issues in the private lending market.

It's raised concerns about the just meteoric growth in private credit. How well do you think investors know the alt market? the risks and the possible rewards. The fact that we're talking about largely illiquid investments, there's an opacity to some part of this, too. How much do you still need to educate people on what we're actually talking about here? I think you hit the nail on the head.

It is absolutely the main event. From day one, cases always led with learning. We think that the best advisor is an advisor who understands all strategies and can convey that to their end client. Look, when you take some illiquidity in your portfolio, you have to go in with open eyes. But what I'm most encouraged about is that the advisor community and the alternative asset management community also recognize that you and I are talking about the need for education on all strategies

and the impact of those strategies and products. Where do you see the most transactions taking place now on the platform? Which parts of all are we talking about? Well, I think right now what you're seeing the most in is a combination of private equity and private credit. in terms of strategy. But interestingly, there's also structures and wrappers of these funds. So we see a lot of flow into strategies that are being presented in registered fund format because registered funds allow for credited investors when usually funds historically were

only for the wealthiest individuals. So the SEC has been able to kind of push forward the agenda of democratizing alternative investments. It's been welcomed by the Alts community and welcome by the community. by the advisory committee. I mean, you think we're going to get to a point where being invested in ALCH is going to be as easy as buying an ETF. I think the term ALS is going away within three to five years.

They're just going to be investments. They're going to be a well-rounded portfolio, including equities, fixed income, and private markets. There's no way around that. And why do we have to have these labels? What about a retirement account? I mean, we're having a debate, we're having a conversation of some, in some respects, of whether you should have, whether 401 account should have access to this type of stuff.

Well, if you look at the defined contribution of 401k market, let's just take a second and say those are long-term investors for the long-term time horizon matched with investment products that have long-term time horizons. I think that makes a ton of sense. We will need more clarification from the DOL and the SEC to give the confidence to really start to allocate from that channel. But I think it's only a matter of time. It's not a question of if it's just when.

All right, we'll leave it there. Matt's good to see as always. Thanks for having us. That's Matt Brown of Case, joining us at his conference. Still ahead, the new Alts generation. There's new data from Goldman Sachs on who's really fueling the Alt's boom. It might be surprised Goldman's Kristen Olson. So join us just ahead.

Closing Bell back in Beverly Hills after this. We're less than 30 from the Bell, and this rebound looks pretty good. on the street. There's the Dow up better than 330 points. Financials today are a story. So are industrials, shares of Caterpillar helping that picture look pretty good. Right now, Staples are having a good day as well. Materials, it's pretty broad-based technology, really, the only area, which is having some trouble down about 1% as a group today, which is why the NASDAQ is still read, as I said, with about 25 minutes to go. Coming up next, Goldman's Head of Alts for wealth, Kristen Olson.

She's back. She'll tell us about the shift in Alts investing and the new generation that's getting in on the action. The bell's back after this. Welcome back. One reason alternative assets continue to draw so much capital is from what Goldman Sachs calls a new alt generation, younger investors, more familiar with and interested in diversifying their own portfolios in this fast-growing area. Kristen Olson is Goldman's head of alternatives for wealth. She joins us here now. It's so nice to see you. Thanks for having me, you said this is your first time here, which speaks to me, I guess, a lot about where Goldman sees the whole alts thing. going, right?

Yes. I mean, look, we've been investing in alternatives for a very long time, three decades. We have over 540 billion in alternative assets, so we're one of the largest managers of alternatives. And we're really focused now on how we can help wealth clients access alternative investments. And so you couldn't have had an event like this four or five years ago because you actually just didn't have the types of alternative investment products that were fit for individual investors. You guys made an announcement yesterday that just plays right into this whole story with industry

Ventures. It's basically you want to give clients access to the innovation economy, and a lot of that exists in the private market. Yeah, look, I mean, if you look at opportunities today, you have most of the economy, you know, over 85% of large companies are private. And so if you want to access that part of the economy, you need to be invested in the private markets. The way I led into this segment is interesting to me. What you found in this survey, what you call the new alt's generation. The fact that younger investors have an appetite for this, they have a greater familiarity than their older counterparts. Ninety-six percent of younger investors in your survey are familiar with ALTS, and they also want a greater allocation. Why? Yeah, so I found that surprising.

Like, I think part of that is they've grown up in this tech revolution, and they've seen the tremendous wealth creation that's happened in the tech space, and they recognize that a lot of that in private hands. And so they need to be more familiar with alternatives to access that type of opportunity. But I think when you step back and you think about the survey that we commissioned, you know, we looked at 1,000 individual investors and how they're thinking about investing in alternatives. And what we found is their participation in ALTS increases with their network, which isn't surprising. Oh, the more money you have, the more money you want to put towards ALS. Exactly. But what I did think was interesting was if you look at the one to five million

segment, 39% of those investors were allocating to alternatives. That's a pretty high percentage for that $1 to $5 million range where they really haven't had a lot of opportunity to invest in ALS in the past. But I think the important piece that came out of it, though, is education. So we talk about millennials and them being interested in, but more broadly, how do we educate around the role of alternatives and portfolio? And frankly, that's part of the reason for an event like this today is really education about alternatives.

I think I saw some of the stats about the attendees here. Only 38% of the advisors here had actually invested in an alternatives before. And we looked at our survey, 80% of those investors had an advisor, but only 40% of those advisors had spoken to them about alternatives. Well, I mean, obviously that's changing with events like this, where you're able to have advisors make a direct connection with the asset managers in a place like case, which is aiming to connect that to. I thought it was also interesting that over half of investors in this survey label ALTS as, quote, high risk.

What do you make of that? Yeah, I think it was 56% of investors labeled them as high risk, second only to cryptocurrency. I think part of that is the lack of education, lack of familiarity. Because also, if you look at the data, the investors that we surveyed who had participated in ALS generally found them less risky. They only 39% of them labeled that as high risk. So I think there's the familiarity that they need to have, there's education, and then when you look at the $10 million plus segment, they have 15% in alternatives according to the survey. So they're using alternatives, and a lot of the reason they're using it is for portfolio diversification. So they actually understand that by adding alternatives into a portfolio, they actually might be reducing their overall portfolio risk.

So I think there's a big perception gap and an education gap that'll help bridge that perception of risk and alternatives. But there are higher risks in certain respects. As I said with Matt Brown a short time ago, highly illiquid markets, they're certainly much more opaque. I was asking all of my guests a year ago at this very conference is private credit in a bubble, for example. Now the question is, well, are we seeing the first cracks starting to show up if there is an issue that many investors just may not be aware of? How do you try and educate people about that, the illiquidity, the opacity, some of the issues that you might not even realize that you have exposure to? Yeah, I mean, look, it all goes back to education. We're investing very heavily in that. We've launched our Goldman Sachs Investment University. We're resourcing yet to spend a lot of time with advisors on education.

The risks are different in the private markets than they are in the public markets, and you referenced a lot of them, but illiquidity, right? Some people are calling these products semi-liquid. we try to stay away from that. We don't want to mention the word liquid because even though there is a modicum of liquidity, it might not be there when you need it most. So you're staying clear of that? Try not to call it semi-liquid. Evergreen, open-ended, but we just don't want people to associate these investment products with liquidity.

Interesting. It's great catching up with you. Thanks for being here. Thanks for having us. All right, that's Kristen Olson of Goldman Sachs. Coming up next, we're going to take inside the market zone. We're tracking the biggest movers, of course, into the close. Christina Parts of Nebulos is standing by with that. Hi, Christina. Hi, Scott. Well, one industrial

giant hits a new all-time high on AI data center growth. A grocery train surges double digits on strong digital sales and an automaker makes a bold split to unlock shareholder value. Those stock movers next. Stock's taking a bit of a hit in the last few moments following a new social media post from the president. Amon Jabbers has that for us. Amon, what's happening? Yeah, Scott, the market is moving because the president is talking about China on social media. Here's what he posted.

He says, I believe that China purposely not buying our soybeans and causing difficult. for our soybean farmers is an economically hostile act. We are considering terminating business with China having to do with cooking oil and other elements of trade as retribution. As an example, we can easily produce cooking oil ourselves. We don't need to purchase it from China. Note that word considering there, Scott, because even though there's been a lot of intense rhetoric

from President Trump and Treasury Secretary Besson over the past four days, the thing to focus on is what hasn't happened, which is any action, action actually to raise tariffs or to retaliate concretely so that we're considering the retaliation there in the social media post. Now, I'm told that that's part of an intentional effort by the U.S. to manage through this situation. So even as tensions are rising, the U.S. action here has been proportional to the Chinese action. And because the Chinese have so far threatened to impose export controls on rare earths, but not yet actually done it, the U.S. retaliation remains in the

realm of hypothetical for now, too. Now, that means there's still a way to dial back from this relatively quickly if the two sides can find an off ramp. One point a senior administration official made to me today. The Chinese Ministry of Commerce, they feel, has taken a much more aggressive role in the negotiations than the Chinese Ministry of Foreign Affairs, which has been part of the reason for the flare-up. U.S. officials are concerned that some in the Chinese Ministry of Commerce are adopting a more hostile style of diplomacy known as the Wolf Warrior ethos. One person who's getting a lot of attention in that regard, Scott, is Li Cheng Gong, the Chinese Vice Minister of Commerce.

You see him here. He's said to be one of the most aggressive officials on the Chinese side of these negotiations and a potential disruptor or problem in these talks. But it doesn't seem to the U.S. side that all of the Chinese officials are adopting this approach. And so that raises the question of how much of this Chinese, this is Chinese domestic politics playing out and how much of it is intentional good. cop, bad cop strategy. U.S. officials see the trade truce since the talks in Geneva this summer

as fragile but stable despite the rhetoric of the past four days. And for now, the betting in Washington is that face-to-face meeting between President Trump and Xi Jinping will actually happen at the end of the month, Scott. So some insight into sort of what's going on behind the scenes here. The other issue that I can't help think about is here we are on the same day we're talking once again about our support for the Miele regime in Argentina, which is entangled in the issue of soybean purchases to begin with. The fact that, you know, we have given them this lifeline at the same time that some have criticized Argentina for cutting their export taxes to make soybeans cheaper for the Chinese to purchase

rather than purchase the soybeans from our farmers. So it's almost like a triangle of controversy over the very issue of soybeans. On the day we are pledging our support once again for Argentina, we are once again criticizing the Chinese for not purchasing them. Right. I mean, it's like sort of this series of knock-on effects that kind of cascades, right, from the initial trade war.

And so here's the president saying he wants China to purchase the soybeans. But he also said earlier today, as we were just talking about earlier, that he doesn't see Argentine sales of soybeans as preventative for the U.S. to engage in an economic transaction to back up Argentina's market. So he's saying the Argentines can sell those soybeans to China. He doesn't want them dealing with military equipment from China, but they can engage in agricultural trade, even as he's trying to backfill those purchases for the U.S. and for U.S. farmers.

So it's getting very complicated, Scott. Yeah, no doubt. Amon, thank you, Amon Jabbers in Washington for us. We're also getting some news out of the Fed at this moment. Steve Leasman, of course, has that for us, Steve. Hey, Scott. Yeah, Boston Fed President, Susan Collins, a voter this year making some doveish comments saying

it's prudent to normalize policy a bit further. She's also saying that even if they cut a little bit more, that the Fed will still be mildly restrictive. I'm just looking for these notes here, Scott. She goes on to say that she believes that inflation is a, is really a matter of tariffs. And she sees growth remaining solid despite headwinds from tariffs and uncertainty. She's greater downside risk to employment and that side of the mandate. Broadbase slowdown, she says, in hiring raises the risk that labor demand may fall off sharply.

And job gains have declined notably with a big rise in unemployment. Leave it there, Scott, except. to say that two rate cuts fully priced in after some dovish comments by the chair, both regarding the outlook for rates as well as the balance sheet, but also a bit of a bid now on a third continuous cut becoming in January at around 51% right now market going back and forth on that one. Scott, of course, with the downgraft and yields and the rally in the bond market today. Steve, you're not in Philadelphia by accident, of course.

That's where the Fed share was speaking earlier today at the NABE conference. your biggest takeaway from what chair pal had to say was what obviously it was news on the balance sheet coming to a close it's it's come down quite a bit relative to GDP not quite as much in dollar terms that's pretty big news for the bond market i think that's going to be helpful for yields going forward but also the idea that he didn't dissuade anybody from the pricing that i just laid out there in the market he didn't come back and say look you guys are in the wrong place on this market fully priced for two cuts and the chair seemed I'm happy to let that stand.

Steve, good stuff. Thank you for that. Steve Leesman in Philadelphia, of course. We're now in the closing bell market zone. CNBC Senior Markets commentator, Mike Santoli, and wealth enhancements. Ayako Yoshioca here to break down these crucial moments of the trading day. I'm going to go to you first because you're here at the case conference. So we're still, we are at risk of social media posts from the president.

This is the kind of market that we found ourselves in since Friday. Yeah, absolutely. Volatility is back again as we start earning season. And it's been a couple of days of just, you know, uneasiness in markets. Mike, it was an interesting day to day for sure. You know, we got pretty good earnings from the banks. And they didn't participate early on. But some of the turns that we saw, Goldman and J.P. Morgan came off their lows. Wells Fargo having a day.

I don't know how else you want to say it. Having a day. And it got us focused on the fact that this is the start. of earning season and what is expected to be pretty good? For sure. So that you would put in the asset column, not the liability column. And it was a real broad reversal to the upside as well for the indexes. And also for some of the kind of riskiest, gamiest stuff, you know, the small caps and the profitless stuff. So it feels as if there was a kind of a mechanical dip-by in the morning where basically Friday's low was barely touched or almost touched.

The 50-day moving averages right there, and the machines decided to make a bet. and the retail dip buyers, that that could hold. We're going to still color between the lines. So I'm not saying it's not about the trade headlines, but it's not entirely about the trade headlines. The trade headlines is what broke the low volatility upward grind that we had going into Friday, and that therefore kind of moves around,

opens up this window for a little bit more chop. I find it interesting that we went right back to some of the risky speculative stuff. If we needed to get that cleared away, we didn't do it, on the other hand, you're right. We have earnings coming through, Treasury yields are down, rate sensitive stuff got a bid today, home builders are up 3%. So the market is trying to digest this and not blow it out of proportion and not think that

it's really a huge macro risk, even if it's a reminder that the backdrop is not perfect. Yeah, Iya, where do we go from here then? I think we continue to chop a little bit. You know, we have some volatility that's entered back, but I think we're going to go back to what comes out of earnings season. And I think what has powered markets higher has been tech. power, the AI theme, and I think that continues. And so every little sort of social post and geopolitical sort of risks that we see that are going

to give the markets a little wobble, I think they're going to be buying opportunities. Yeah, see, Mike, that's very much the prevailing view, I think, is just keep your eye on the ball, ignore some of the noise, and keep your eye on the earnings ball of where we think the sectors that have gotten us here in the first place are going to continue to deliver to carry us even further? Sure. I mean, there's no doubt that that ultimately is going to be what matters more than these other factors. I do think we did work ourselves into a spot, though, going into late last week, where people were pretty far out on the risk curve. They thought that the fourth quarter ramp was just a foregone conclusion. It was an entitlement. We didn't have to

necessarily dip before that. And everyone wants a very clean outlook for 2026. A re-accelerating economy, rates much lower. We're going to anniversary the initial tariff threat. So I feel like anything that complicates that picture or shows that there's any positioning stress along the way you know maybe we have to pay a little interim price for that it's not really clear we're not seeing real flare-ups you see credit spreads are widened out just a little bit you see the VIX above 20 we're bracing for the possibility that people have to de-risk a little bit further but I don't see it necessarily is you know really going out of bounds here

where he did only have a 3% peak to the trough decline in the S&P 500 usually not something to get too over excited about. But I do think, you know, the fact that it was just a reminder that trade's not settled yet is something that probably is going to stick with us for a little while at least. It feels like, Mike, we did get a move today on that Fed balance sheet announcement that Steve was talking about. Yields came down and stocks went up on that announcement from Chair Powell, right? Kind of confirmation of what we expected, which is they're unlikely to keep shrinking the balance sheet very much more. The general idea, of Fed's going to be more accommodative or less restrictive, and that's a net positive.

Certainly if the economy hangs in there, and I think that the cyclical sectors of this market, probably you'd want to see them kind of catch a little bit more of a tailwind pretty soon here because they have been under some pressure, things like consumer cyclicals. So we'll see if the banks maybe can help along that process. Well, they are having a good day today. Michael, thank you. That's Mike Sandville. You're going to hear the bell ring in just a moment. It's been an interesting day. It's been volatile, as you know, NASDAQ and the S&P look like they're going to close red, but the Dow is going to get a lift, again, from some of the financial names that have come off below,

some industrial stocks, too, as those two sectors have had a pretty good day. That does it for us out here in Beverly Hills. I'll send it into overtime.