1 00:00:00,840 --> 00:00:04,000 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:05,240 Speaker 1: my co host Matt Miller. 3 00:00:05,640 --> 00:00:09,600 Speaker 2: Every business day we bring you interviews from CEOs, market pros, 4 00:00:09,720 --> 00:00:13,600 Speaker 2: and Bloomberg experts, along with essential market moven news. 5 00:00:14,160 --> 00:00:17,279 Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever 6 00:00:17,360 --> 00:00:20,480 Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. 7 00:00:21,079 --> 00:00:23,360 Speaker 1: All right, Matt, we're going to elect electric vehicles. Matt, 8 00:00:23,360 --> 00:00:25,560 Speaker 1: it's happening. I mean, you were so kind to let 9 00:00:26,120 --> 00:00:28,040 Speaker 1: fired me up with the Bloomberg I mean with the 10 00:00:28,080 --> 00:00:29,040 Speaker 1: Ford f one fifty. 11 00:00:29,880 --> 00:00:30,680 Speaker 3: That was awesome. 12 00:00:30,960 --> 00:00:34,080 Speaker 1: But I'm not going there unless there's like the batteries 13 00:00:34,120 --> 00:00:37,440 Speaker 1: are better into charging stations everywhere we got gas stations. 14 00:00:38,000 --> 00:00:39,600 Speaker 3: I'm not going to be a first adopter. Number of 15 00:00:39,800 --> 00:00:41,720 Speaker 3: reasons I'm not going to be a first adopter there 16 00:00:42,400 --> 00:00:42,919 Speaker 3: about it. 17 00:00:43,120 --> 00:00:46,360 Speaker 4: Yes, call it that, but sorry my mic was off. 18 00:00:46,400 --> 00:00:46,920 Speaker 4: Thank you, Ken. 19 00:00:47,159 --> 00:00:49,000 Speaker 2: There are a number of reasons to be tentative about it. 20 00:00:49,040 --> 00:00:53,040 Speaker 2: But how fun was it to drive the fifty light? 21 00:00:53,200 --> 00:00:54,960 Speaker 1: Yeah, it's a beast. I have to admit that was 22 00:00:55,200 --> 00:00:57,880 Speaker 1: pretty cool. Jeff Chramberlin joins us. He's the CEO of 23 00:00:58,080 --> 00:01:01,000 Speaker 1: Volta Energy technology. He joined just live here in our 24 00:01:01,040 --> 00:01:02,600 Speaker 1: Bloomberg Interactive Broker studio. 25 00:01:02,640 --> 00:01:03,120 Speaker 3: Appreciate that. 26 00:01:03,200 --> 00:01:04,840 Speaker 1: See, when it's a climate, we can get people coming 27 00:01:04,840 --> 00:01:07,160 Speaker 1: into New York. When it's un week, people come into 28 00:01:07,200 --> 00:01:09,000 Speaker 1: New York, you get them in studio. Jeff, tell us 29 00:01:09,000 --> 00:01:11,960 Speaker 1: about your company, Vaulta Energies Technologies. What do you guys 30 00:01:12,040 --> 00:01:13,440 Speaker 1: do here in this EV space? 31 00:01:14,880 --> 00:01:18,720 Speaker 5: We invest in battery and associated tech technologies, including the 32 00:01:18,800 --> 00:01:21,560 Speaker 5: kind of infrastructure you were talking about, charging stations, et cetera. 33 00:01:22,200 --> 00:01:24,680 Speaker 5: A whole bunch of new technology requirements there that will 34 00:01:24,720 --> 00:01:28,240 Speaker 5: be and RB are being adopted. And so our whole 35 00:01:28,280 --> 00:01:31,319 Speaker 5: goal is to invest in companies at that inflection point 36 00:01:31,319 --> 00:01:33,080 Speaker 5: when they come out of science and they're all ready 37 00:01:33,080 --> 00:01:37,119 Speaker 5: for scale, and we're industrialists and we're investors by training 38 00:01:37,200 --> 00:01:39,720 Speaker 5: and by experience, And ultimately I ran all the battery 39 00:01:39,760 --> 00:01:42,760 Speaker 5: work at Ragon National Laboratory for ten years, got to 40 00:01:42,800 --> 00:01:45,720 Speaker 5: see supply chains developing around the entire world and what 41 00:01:45,760 --> 00:01:48,360 Speaker 5: the customer's needs were, so that we believe we can 42 00:01:48,400 --> 00:01:50,560 Speaker 5: place capital more effectively than most. 43 00:01:50,720 --> 00:01:52,280 Speaker 4: So unlike Paul, I am there. 44 00:01:52,360 --> 00:01:54,880 Speaker 2: I'm ready, and I've got my eye on a few 45 00:01:54,920 --> 00:01:57,720 Speaker 2: evs that I think are just amazing in terms of 46 00:01:58,560 --> 00:02:03,960 Speaker 2: the powertrain. And my one concern is that I buy 47 00:02:04,000 --> 00:02:06,840 Speaker 2: something and it becomes obsolete by the time it gets delivered. 48 00:02:07,080 --> 00:02:08,839 Speaker 4: Do you see the same kind. 49 00:02:08,560 --> 00:02:13,799 Speaker 2: Of what's it called Moore's law, you know in batteries 50 00:02:13,919 --> 00:02:17,400 Speaker 2: that we famously saw in chips. Do they just double 51 00:02:17,400 --> 00:02:20,280 Speaker 2: in capacity every year or have in price? 52 00:02:21,240 --> 00:02:22,880 Speaker 5: Yeah? Thanks for the question, Matt, and by the way, 53 00:02:22,880 --> 00:02:25,639 Speaker 5: thanks for having me on. I appreciate it. I come 54 00:02:25,639 --> 00:02:28,360 Speaker 5: from the chip industry, and so we have tried to 55 00:02:28,440 --> 00:02:31,520 Speaker 5: design or declare what a More's law looks like. But no, 56 00:02:31,760 --> 00:02:34,720 Speaker 5: in Moore's law, it's double the density of transistors on 57 00:02:34,760 --> 00:02:37,560 Speaker 5: a way for every twelve to eighteen months. What's happened 58 00:02:37,560 --> 00:02:40,960 Speaker 5: in the battery industry is they were first commercialized lit 59 00:02:40,960 --> 00:02:43,160 Speaker 5: the Mind batteries first commercialized in nineteen ninety two for 60 00:02:43,200 --> 00:02:46,640 Speaker 5: cam quarters. So thirty years have progressed. The average is 61 00:02:46,680 --> 00:02:50,200 Speaker 5: something like in the low single digits, maybe low double 62 00:02:50,240 --> 00:02:54,240 Speaker 5: digits percentage improvements year over year as opposed to a doubling. 63 00:02:54,600 --> 00:02:56,280 Speaker 5: So there is a kind of Moore's law for battery, 64 00:02:56,280 --> 00:02:58,679 Speaker 5: but it's not as extreme as what you're describing me. 65 00:02:58,760 --> 00:03:00,840 Speaker 5: But I do want to say one thing in two 66 00:03:00,880 --> 00:03:04,120 Speaker 5: thousand and four when Tesla started the battery costs the 67 00:03:04,160 --> 00:03:06,440 Speaker 5: unit of meritage dollars per killo what hour they were 68 00:03:06,440 --> 00:03:09,200 Speaker 5: at about four to six thousand dollars per kilo what hour? 69 00:03:09,560 --> 00:03:12,120 Speaker 5: Parody with gas powered vehicles, you need to be about 70 00:03:12,120 --> 00:03:13,720 Speaker 5: one hundred to one hundred and fifty dollars a killo 71 00:03:13,760 --> 00:03:17,280 Speaker 5: what hour. So they had the hubrit the hubris to 72 00:03:17,440 --> 00:03:19,920 Speaker 5: believe economies of scale and better engineering could get you there. 73 00:03:19,919 --> 00:03:23,200 Speaker 5: And guess what it did. The costs are down over 74 00:03:23,320 --> 00:03:25,760 Speaker 5: ninety five percent since they were very close to parody 75 00:03:25,760 --> 00:03:26,360 Speaker 5: with gas. 76 00:03:26,400 --> 00:03:28,079 Speaker 4: So what are we looking at now for killo what hour? 77 00:03:28,600 --> 00:03:31,440 Speaker 5: It's depending on the supplier. It ranges between eighty and 78 00:03:31,440 --> 00:03:33,240 Speaker 5: one hundred and eighty dollars a kilo one hour. So 79 00:03:33,240 --> 00:03:34,399 Speaker 5: we're essentially there. 80 00:03:34,200 --> 00:03:36,640 Speaker 2: Okay, because the ones I like, well, GM has these 81 00:03:36,800 --> 00:03:39,720 Speaker 2: massive two hundred and ten kilowat hour battery packs. I 82 00:03:39,720 --> 00:03:42,120 Speaker 2: don't know how efficient they are, but I just like 83 00:03:42,760 --> 00:03:45,800 Speaker 2: it's like a big block V eight, you know in 84 00:03:45,880 --> 00:03:48,720 Speaker 2: the truck they get four hundred and fifty miles of range. 85 00:03:48,840 --> 00:03:52,360 Speaker 4: The new Escalade EQ I think it's called or Escalate IQ, 86 00:03:52,520 --> 00:03:53,560 Speaker 4: can't remember anyway, The. 87 00:03:53,520 --> 00:03:56,920 Speaker 2: New EV Escalade does zer to sixty and five seconds 88 00:03:56,920 --> 00:04:00,440 Speaker 2: and it weighs damn near ten thousand pounds. It's just 89 00:04:00,760 --> 00:04:05,000 Speaker 2: unbelievable the amount of thrust you get from these electric motors. 90 00:04:06,720 --> 00:04:10,880 Speaker 2: What do you think about the obsolescence of the battery 91 00:04:10,920 --> 00:04:13,120 Speaker 2: though over a few years, Like, you can't just swap 92 00:04:13,160 --> 00:04:15,480 Speaker 2: out a battery from these the way you could with 93 00:04:15,600 --> 00:04:17,159 Speaker 2: an ice engine. 94 00:04:17,760 --> 00:04:19,800 Speaker 5: You can swap them out. I mean you could if 95 00:04:19,800 --> 00:04:21,720 Speaker 5: you wanted to keep your truck and put a more 96 00:04:21,760 --> 00:04:23,480 Speaker 5: modern battery in it. There are ways to do that, 97 00:04:23,520 --> 00:04:25,960 Speaker 5: But my guess is it'll be less costly for you 98 00:04:26,040 --> 00:04:28,560 Speaker 5: as a consumer to buy a new vehicle. I don't 99 00:04:28,600 --> 00:04:31,440 Speaker 5: think obsolescens going to move that quickly. And the battery tech, 100 00:04:31,800 --> 00:04:34,640 Speaker 5: the key that they're aiming for is cost and range today. 101 00:04:34,960 --> 00:04:37,359 Speaker 5: But there's another key that Paul mentioned it that's the 102 00:04:37,360 --> 00:04:39,839 Speaker 5: infrastructure surrounding it. Where can I go to charge my 103 00:04:39,960 --> 00:04:43,720 Speaker 5: vehicle quickly? What is potentially more important than range is 104 00:04:43,800 --> 00:04:47,679 Speaker 5: ubiquitous fast charging. Can I fill my vehicle with energy 105 00:04:47,839 --> 00:04:50,080 Speaker 5: to go three four, five hundred miles in five to 106 00:04:50,120 --> 00:04:52,720 Speaker 5: twenty minutes. That technology is on the rise, It's being 107 00:04:52,760 --> 00:04:53,640 Speaker 5: adopted right now. 108 00:04:53,839 --> 00:04:55,919 Speaker 1: What do we know at this stage of development of 109 00:04:55,960 --> 00:04:59,160 Speaker 1: the evs and batteries, about the supply chain, the raw 110 00:04:59,200 --> 00:05:02,320 Speaker 1: materials need. I've heard from some people that that's going 111 00:05:02,400 --> 00:05:04,400 Speaker 1: to be a gating issue. What do you know about 112 00:05:04,400 --> 00:05:04,840 Speaker 1: that from your. 113 00:05:04,920 --> 00:05:06,960 Speaker 5: Yeah, there's a lot of folks out there that talk 114 00:05:07,000 --> 00:05:10,320 Speaker 5: about lithium being a resource. Lithium is the key, let's 115 00:05:10,320 --> 00:05:12,280 Speaker 5: start there. In fact, I was hoping to talk today 116 00:05:12,320 --> 00:05:14,920 Speaker 5: about a comparison with oil. The last time the human 117 00:05:15,000 --> 00:05:17,560 Speaker 5: race has experienced an energy transition like the one that 118 00:05:17,600 --> 00:05:21,520 Speaker 5: has started was a shift from whale oil to rock oil. 119 00:05:21,640 --> 00:05:25,159 Speaker 5: And this transition is on the scale of that transition. 120 00:05:25,960 --> 00:05:27,920 Speaker 5: By rock oil, I mean petroleum. 121 00:05:29,360 --> 00:05:33,760 Speaker 2: What the shift from foil from whale oil? Which no, no, 122 00:05:33,920 --> 00:05:37,200 Speaker 2: but now what's comparable now to the shift from oil? 123 00:05:37,320 --> 00:05:40,560 Speaker 5: The shift from oil to renewable power and electric transportation 124 00:05:41,080 --> 00:05:43,440 Speaker 5: is on par in terms of the size of the 125 00:05:43,440 --> 00:05:48,160 Speaker 5: shift and the overall impacts on a wide variety of industries. 126 00:05:48,400 --> 00:05:51,160 Speaker 5: As oil was. Oil was started for lanterns right look 127 00:05:51,160 --> 00:05:52,000 Speaker 5: at where it ended up. 128 00:05:52,080 --> 00:05:55,280 Speaker 2: So I'm wondering actually about that in terms of you know, 129 00:05:55,400 --> 00:05:59,080 Speaker 2: how much lithium there is in the ground, how easy 130 00:05:59,120 --> 00:06:01,040 Speaker 2: it's going to be. I guess it's going to get 131 00:06:01,040 --> 00:06:02,720 Speaker 2: easier and easier to get it out of the ground. 132 00:06:02,880 --> 00:06:06,200 Speaker 2: You know, is it as reliable as oil has. 133 00:06:06,040 --> 00:06:07,239 Speaker 4: Been for the last century. 134 00:06:07,279 --> 00:06:09,400 Speaker 5: Short answer is yes. I think there's a lot of 135 00:06:10,160 --> 00:06:12,120 Speaker 5: handwringers that are telling us so there's not enough lithium 136 00:06:12,120 --> 00:06:15,240 Speaker 5: and there's crust there. Definitely is. Your point's a good one. 137 00:06:15,240 --> 00:06:18,120 Speaker 5: Though some is economic today in terms of extracting and 138 00:06:18,160 --> 00:06:20,520 Speaker 5: refining it, some is not. One of the things we 139 00:06:20,560 --> 00:06:22,640 Speaker 5: invest in, and we're not the only ones. Is new 140 00:06:22,680 --> 00:06:25,920 Speaker 5: technology to make the extraction of lithium more economic, and 141 00:06:26,000 --> 00:06:28,200 Speaker 5: so that getting back to the supply chain issue, you know, 142 00:06:28,240 --> 00:06:31,839 Speaker 5: there's the headline is China controls a lot of the materials, 143 00:06:32,200 --> 00:06:34,280 Speaker 5: but in the case of lithium, the vast majority of 144 00:06:34,360 --> 00:06:37,640 Speaker 5: lithium that's ready to use in batteries comes out of China. 145 00:06:38,279 --> 00:06:41,680 Speaker 5: But it's process there, it's not mind there. And this 146 00:06:41,720 --> 00:06:43,400 Speaker 5: is something I was hoping to talk about, getting back 147 00:06:43,400 --> 00:06:46,640 Speaker 5: to the supply chain, where is in mind the primary 148 00:06:46,680 --> 00:06:50,440 Speaker 5: resources the so called cone in South America. Chile has 149 00:06:50,480 --> 00:06:53,839 Speaker 5: a massive resource, so does Bolivia. In Argentina, that's where 150 00:06:53,839 --> 00:06:56,159 Speaker 5: the biggest resources are. There's some in Australia, there's some 151 00:06:56,200 --> 00:06:59,320 Speaker 5: in China, there's a lot in the US there And 152 00:06:59,360 --> 00:07:01,000 Speaker 5: this is really what I'm saying. We're at the early 153 00:07:01,040 --> 00:07:04,479 Speaker 5: stages of this. It's like finding a new you know, 154 00:07:04,480 --> 00:07:07,360 Speaker 5: it started with spindletop oil oil did in Texas. Then 155 00:07:07,360 --> 00:07:09,880 Speaker 5: we found oil, humans found oil in Saudi Arabia. This 156 00:07:09,960 --> 00:07:11,600 Speaker 5: same thing is going to be happening with lithium. 157 00:07:11,640 --> 00:07:15,440 Speaker 2: So are you you know, at Volta, are you investing 158 00:07:15,560 --> 00:07:19,440 Speaker 2: in or are you involved in other companies investing in 159 00:07:19,720 --> 00:07:20,640 Speaker 2: the processing of. 160 00:07:20,640 --> 00:07:22,760 Speaker 4: These materials here because we don't want it to all be. 161 00:07:23,440 --> 00:07:28,440 Speaker 5: Absolutely, we absolutely are including new technologies to process them 162 00:07:28,840 --> 00:07:32,160 Speaker 5: more efficiently and less costly. So this and that is 163 00:07:32,160 --> 00:07:34,800 Speaker 5: something I want to say. The supply chain movement is 164 00:07:34,880 --> 00:07:38,000 Speaker 5: evidence of the maturity state of this industry. And what 165 00:07:38,040 --> 00:07:40,400 Speaker 5: I mean by that is a guy from the chip industry. 166 00:07:40,800 --> 00:07:43,040 Speaker 5: We'd been preaching to anyone that would listen, investors in 167 00:07:43,080 --> 00:07:46,120 Speaker 5: the government up in Capitol Hill for fifteen years. The 168 00:07:46,160 --> 00:07:48,640 Speaker 5: supply chains are going to move out of China. And 169 00:07:48,680 --> 00:07:51,680 Speaker 5: here's why. In the chip industry it makes sense to 170 00:07:51,720 --> 00:07:57,320 Speaker 5: have centralized manufacturing. The mass of microchips versus their value. 171 00:07:57,440 --> 00:08:00,440 Speaker 5: Their value is massive compared to their mass. So you 172 00:08:00,480 --> 00:08:03,520 Speaker 5: can get economies of scale, centralized manufacturing and Taiwan shipping 173 00:08:03,520 --> 00:08:06,840 Speaker 5: around the world. You can't do that with the battery technology. 174 00:08:06,840 --> 00:08:08,200 Speaker 5: And you don't have to look any further than the 175 00:08:08,240 --> 00:08:11,640 Speaker 5: automotive industry itself to believe me that by units, the 176 00:08:11,720 --> 00:08:14,400 Speaker 5: largest manufacturer of cars in the US is Toyota. They 177 00:08:14,400 --> 00:08:16,720 Speaker 5: don't make their cars in Japan for the American customers. 178 00:08:17,280 --> 00:08:19,480 Speaker 5: It's the same thing with battery tech. Those supply chains 179 00:08:19,520 --> 00:08:20,440 Speaker 5: are moving right now. 180 00:08:20,600 --> 00:08:22,600 Speaker 2: And by the way, in terms of the change in technology, 181 00:08:23,960 --> 00:08:26,240 Speaker 2: what you're saying reminds me of something that Gary Shilling, 182 00:08:27,120 --> 00:08:30,800 Speaker 2: who's a famous eighty six year old economist, He tells 183 00:08:30,840 --> 00:08:34,120 Speaker 2: me when he was a kid, people were wringing their 184 00:08:34,120 --> 00:08:36,600 Speaker 2: hands and worried that there wasn't enough copper in the 185 00:08:36,640 --> 00:08:38,640 Speaker 2: Earth's crust for the telecoms industry. 186 00:08:39,480 --> 00:08:41,880 Speaker 4: And obviously we've moved on from that piece. 187 00:08:42,000 --> 00:08:44,760 Speaker 5: Yes, in the fiber. And there's another thing. There are 188 00:08:44,800 --> 00:08:47,199 Speaker 5: New York Times articles in the nineteen thirties when the 189 00:08:47,200 --> 00:08:49,880 Speaker 5: horseless carriage was really taken off, that there's not enough 190 00:08:50,000 --> 00:08:52,320 Speaker 5: lead in there is crust. And this is an important 191 00:08:52,360 --> 00:08:55,679 Speaker 5: point as well regarding movement of supply chains. Lead is 192 00:08:55,720 --> 00:08:58,280 Speaker 5: recycled lead acid batteries out of vehicles. It's like ninety 193 00:08:58,320 --> 00:09:00,720 Speaker 5: eight point seven percent of those are recycled. The same 194 00:09:00,760 --> 00:09:02,719 Speaker 5: thing is going to happen here. So we may not 195 00:09:02,840 --> 00:09:05,199 Speaker 5: have access to cobalt in those batteries that comes out 196 00:09:05,200 --> 00:09:07,640 Speaker 5: of the congo, but we will because we're going to 197 00:09:07,679 --> 00:09:12,520 Speaker 5: move to so called urban mining waste materials to get copper, cobalt, lithium, 198 00:09:12,559 --> 00:09:13,040 Speaker 5: et cetera. 199 00:09:13,760 --> 00:09:15,160 Speaker 4: Fascinating, So cool it is. 200 00:09:15,520 --> 00:09:17,240 Speaker 1: I mean, I mean, I guess you get bachelor's in 201 00:09:17,320 --> 00:09:19,480 Speaker 1: chemistry from Wake Forest, and what are youna do with that? 202 00:09:19,760 --> 00:09:22,120 Speaker 1: So you triple down you get a PhD in physical 203 00:09:22,200 --> 00:09:25,480 Speaker 1: chemistry from Georgia Tech. I mean, those are some serious 204 00:09:25,559 --> 00:09:28,200 Speaker 1: engineering geeks down there in Georgia Tech. 205 00:09:28,240 --> 00:09:29,400 Speaker 4: So he means that in a good way. 206 00:09:29,480 --> 00:09:33,120 Speaker 1: Yeah, in a good way, some really big ones. So anyway, 207 00:09:33,280 --> 00:09:35,160 Speaker 1: then you go into the electric car business, why not? 208 00:09:35,400 --> 00:09:38,760 Speaker 1: Jeff Chamberlain, CEO Volta Energy Technologies, thanks so much for 209 00:09:38,840 --> 00:09:42,640 Speaker 1: joining us, coming into the Bloomberg Interactive Broker's studio. So again, 210 00:09:42,880 --> 00:09:44,960 Speaker 1: it is a climate week in New York, and so 211 00:09:44,960 --> 00:09:46,480 Speaker 1: we get a lot of smart people coming through here 212 00:09:46,520 --> 00:09:49,000 Speaker 1: talking to us about what's happening out there in the 213 00:09:49,360 --> 00:09:51,040 Speaker 1: evolution of the energy space. 214 00:09:51,960 --> 00:09:55,400 Speaker 6: You're listening to the Team Ken's are Live program Bloomberg 215 00:09:55,440 --> 00:09:58,800 Speaker 6: Markets weekdays at ten am East ding on Bloomberg dot com, 216 00:09:58,880 --> 00:10:02,040 Speaker 6: the iHeartRadio app and the Bloomberg Business App, or listen 217 00:10:02,120 --> 00:10:03,720 Speaker 6: on demand wherever you get your. 218 00:10:03,559 --> 00:10:06,400 Speaker 3: Podcast, Matt. 219 00:10:06,440 --> 00:10:09,800 Speaker 1: Instead of buying the latest car with a scat pack 220 00:10:09,880 --> 00:10:12,600 Speaker 1: or whatever it is, you could put your money into 221 00:10:12,640 --> 00:10:13,120 Speaker 1: your treasure. 222 00:10:13,160 --> 00:10:15,120 Speaker 3: You can get five points zero six percent today. How 223 00:10:15,120 --> 00:10:15,520 Speaker 3: about that? 224 00:10:16,120 --> 00:10:19,400 Speaker 2: I mean, it's probably a smart idea, which is why 225 00:10:19,440 --> 00:10:20,960 Speaker 2: I won't be doing it, but a lot of others 226 00:10:21,040 --> 00:10:23,959 Speaker 2: are not. Just in the twos, right, the fives hit 227 00:10:24,000 --> 00:10:26,120 Speaker 2: the highest level since two thousand and seven. The tens 228 00:10:26,200 --> 00:10:28,200 Speaker 2: hit the highest levels since two thousand and seven, and 229 00:10:28,240 --> 00:10:29,800 Speaker 2: a reminder, you. 230 00:10:29,720 --> 00:10:35,200 Speaker 4: Know that was sixteen years ago. So these rates are incredible. 231 00:10:35,640 --> 00:10:40,760 Speaker 2: And keep in mind, right, prices move in the opposite direction. 232 00:10:40,920 --> 00:10:43,319 Speaker 2: So when we see these high prices, that mean rates, 233 00:10:43,360 --> 00:10:46,720 Speaker 2: It means that the prices are low. Why is everybody 234 00:10:46,800 --> 00:10:51,320 Speaker 2: selling off treasuries right now? Let's ask Joanna Diegos. She's 235 00:10:51,320 --> 00:10:53,480 Speaker 2: the co founder of bond Blocks and she joins us 236 00:10:53,559 --> 00:10:56,280 Speaker 2: right now in the Interactive Brokers studio. So Joanna, I 237 00:10:56,320 --> 00:10:58,720 Speaker 2: know you well from our ETF show or you're a 238 00:10:58,720 --> 00:11:03,640 Speaker 2: frequent guest, and I also know from that show that 239 00:11:04,280 --> 00:11:08,240 Speaker 2: everyone's been getting long in treasuries and they've been losing 240 00:11:08,280 --> 00:11:09,559 Speaker 2: money on that big bet. 241 00:11:09,600 --> 00:11:12,960 Speaker 7: Why yeah, over the last three months that that trade 242 00:11:13,000 --> 00:11:17,000 Speaker 7: is down ten percent if you're going long treasuries twenty plus. 243 00:11:17,200 --> 00:11:20,480 Speaker 7: I think that this is a trend that the treasury 244 00:11:20,760 --> 00:11:23,920 Speaker 7: flow into the long end has been probably the biggest 245 00:11:23,920 --> 00:11:26,760 Speaker 7: percentage of flow into treasuries year on year, So the 246 00:11:26,800 --> 00:11:30,040 Speaker 7: twelve months trailing it's the biggest. It's a thirty percent 247 00:11:30,040 --> 00:11:32,480 Speaker 7: of flows into treasuries for twenty twenty three. I think 248 00:11:32,520 --> 00:11:35,400 Speaker 7: people are just taking a really really big view on 249 00:11:35,480 --> 00:11:38,120 Speaker 7: trying to call the bottom and they're sticking with it, 250 00:11:38,440 --> 00:11:40,679 Speaker 7: which is pretty fascinating that they're doing that. I think 251 00:11:40,720 --> 00:11:41,960 Speaker 7: the good sign is that. 252 00:11:41,920 --> 00:11:45,760 Speaker 2: Today it makes sense, right because we haven't seen yields 253 00:11:45,760 --> 00:11:48,400 Speaker 2: this high and as we just said, sixteen years. 254 00:11:48,280 --> 00:11:48,880 Speaker 4: Yes, yeah. 255 00:11:49,000 --> 00:11:52,080 Speaker 7: I think I think the encouraging thing is that we've 256 00:11:52,160 --> 00:11:54,400 Speaker 7: seen less of than twenty twenty three or recently is 257 00:11:54,480 --> 00:11:56,800 Speaker 7: all of more flow into the short short end, so 258 00:11:57,000 --> 00:12:00,280 Speaker 7: three months, six months and more flow balanced across US 259 00:12:00,600 --> 00:12:04,440 Speaker 7: one one plus years into three, five ten, just as 260 00:12:04,480 --> 00:12:06,600 Speaker 7: you described. I think that's encouraging and people are trying 261 00:12:06,640 --> 00:12:10,240 Speaker 7: to just have feather in more duration into their into 262 00:12:10,320 --> 00:12:10,920 Speaker 7: their portfolio. 263 00:12:10,920 --> 00:12:13,480 Speaker 2: Now, just tell us quickly about your products at bond Blocks, 264 00:12:13,520 --> 00:12:16,839 Speaker 2: because there are some very popular ETFs that people use 265 00:12:16,920 --> 00:12:17,800 Speaker 2: to make these trades. 266 00:12:18,440 --> 00:12:21,840 Speaker 7: Yeah, So for that very reason, we observe that you 267 00:12:21,880 --> 00:12:25,679 Speaker 7: can't actually trade exact duration in the current and in 268 00:12:25,720 --> 00:12:29,840 Speaker 7: the current ETF offering. So we launched eight duration specific 269 00:12:29,880 --> 00:12:31,920 Speaker 7: treasury funds. So if you want one your duration to 270 00:12:31,960 --> 00:12:34,520 Speaker 7: your duration three it duration, you can use our products 271 00:12:34,520 --> 00:12:37,360 Speaker 7: more precisely for exactly the trades I think people are 272 00:12:37,360 --> 00:12:40,680 Speaker 7: trying to put on. If you broadly put on duration 273 00:12:40,800 --> 00:12:43,199 Speaker 7: in your portfolio, you may have you may you may 274 00:12:43,240 --> 00:12:45,880 Speaker 7: overallocate to that duration. And so we want people in 275 00:12:45,920 --> 00:12:48,400 Speaker 7: these markets to be able to be very very prescriptive 276 00:12:48,440 --> 00:12:51,280 Speaker 7: and selective where they go into into high yield. 277 00:12:51,080 --> 00:12:53,240 Speaker 1: Given rates where they are. Are you seeing flows? I 278 00:12:53,320 --> 00:12:56,920 Speaker 1: mean it seems like you're perfectly positioned for where the 279 00:12:56,960 --> 00:12:58,720 Speaker 1: market is today at bond Blocks. I mean are you 280 00:12:58,720 --> 00:13:01,120 Speaker 1: seeing flows come in and if so, kind of where 281 00:13:01,120 --> 00:13:01,560 Speaker 1: are they going? 282 00:13:01,600 --> 00:13:04,559 Speaker 7: With a really cool trade this week in our double 283 00:13:04,559 --> 00:13:07,320 Speaker 7: b high yield fund. We have a credit rating a series, 284 00:13:07,360 --> 00:13:11,000 Speaker 7: and I think that's acknowledging the strength that you're seeing 285 00:13:11,040 --> 00:13:14,880 Speaker 7: corporate balance sheets and the resiliency that has been in 286 00:13:14,920 --> 00:13:17,240 Speaker 7: the economy this year. So I think I think people 287 00:13:17,240 --> 00:13:21,160 Speaker 7: are taking on very measured risk and to see a 288 00:13:21,160 --> 00:13:23,400 Speaker 7: trade like that is really compelling. 289 00:13:24,440 --> 00:13:24,840 Speaker 3: Interesting. 290 00:13:25,520 --> 00:13:29,760 Speaker 1: So for bond blocks, I mean, again, what are some 291 00:13:29,840 --> 00:13:32,640 Speaker 1: of the products that are kind of most popular these 292 00:13:32,720 --> 00:13:34,679 Speaker 1: days in your ETF portfolio. 293 00:13:35,040 --> 00:13:37,960 Speaker 7: Yeah, we're starting to see increase interest across duration as 294 00:13:38,000 --> 00:13:40,680 Speaker 7: I mentioned, like moving out a little bit into the 295 00:13:40,760 --> 00:13:44,520 Speaker 7: duration trade, and as well, we're seeing interest in some 296 00:13:44,600 --> 00:13:46,680 Speaker 7: of the corporate products that we have out. We have 297 00:13:46,720 --> 00:13:49,439 Speaker 7: a really robust offering in high yield. We have over 298 00:13:49,480 --> 00:13:51,600 Speaker 7: ten products in high yold. So you can trade sectors 299 00:13:51,600 --> 00:13:54,679 Speaker 7: with bomb blocks, the bond blocks, you can trade credit ratings, 300 00:13:54,720 --> 00:13:57,600 Speaker 7: as I mentioned, and I think Matt would be happy 301 00:13:57,679 --> 00:13:59,360 Speaker 7: to hear that. In the summer, we saw a lot 302 00:13:59,400 --> 00:14:00,880 Speaker 7: of interest in our triple C product. 303 00:14:01,360 --> 00:14:05,880 Speaker 4: It's one of my favorite. So you just picked my favorite. Yeah, 304 00:14:05,880 --> 00:14:06,400 Speaker 4: but they're. 305 00:14:06,240 --> 00:14:09,679 Speaker 7: Tight, right, Yeah, So obviously they do what they say 306 00:14:09,679 --> 00:14:11,760 Speaker 7: they're going to do. They track their indexes, they give 307 00:14:11,760 --> 00:14:15,439 Speaker 7: you that exact exposure. Also, what I think is interesting 308 00:14:15,480 --> 00:14:18,160 Speaker 7: is people are starting to realize that the fundamentals in 309 00:14:18,280 --> 00:14:21,200 Speaker 7: high yield are really strong, and if you think about it, 310 00:14:21,240 --> 00:14:24,120 Speaker 7: relative the other risks that are in your portfolios, those 311 00:14:24,200 --> 00:14:26,680 Speaker 7: high coupon rates are providing you a ton of cushion 312 00:14:26,760 --> 00:14:30,600 Speaker 7: for any relativity that might come going forward in fixed 313 00:14:30,600 --> 00:14:33,800 Speaker 7: income plus relative to equities, which over the last ten 314 00:14:33,880 --> 00:14:37,400 Speaker 7: or fifteen years portfolios have been heavily heavily allocated to 315 00:14:38,080 --> 00:14:42,760 Speaker 7: eke out more return. These are great protocols to look 316 00:14:42,880 --> 00:14:46,880 Speaker 7: for exposure to to get you to those levels of 317 00:14:46,880 --> 00:14:49,040 Speaker 7: return seven ten percent a year, whatever you're looking for, 318 00:14:49,240 --> 00:14:53,320 Speaker 7: with less risk. In fact, the broad high yield category 319 00:14:53,400 --> 00:14:55,600 Speaker 7: has over less than half the risk of the S 320 00:14:55,640 --> 00:14:57,840 Speaker 7: and P five hundred. Yet you're getting all this yield 321 00:14:57,840 --> 00:14:59,920 Speaker 7: and all this cushion and strength and the balance. 322 00:15:00,400 --> 00:15:01,040 Speaker 4: That's interesting. 323 00:15:01,400 --> 00:15:05,120 Speaker 2: So high yield in general, which is what triple b's 324 00:15:05,480 --> 00:15:06,080 Speaker 2: and lower. 325 00:15:06,480 --> 00:15:09,120 Speaker 7: So no triple B is investment grade, so it's double 326 00:15:09,120 --> 00:15:10,440 Speaker 7: B B and triple. 327 00:15:10,160 --> 00:15:12,240 Speaker 4: C double B and lower. 328 00:15:12,400 --> 00:15:17,400 Speaker 2: Yeah, that general category has less risk than buying the 329 00:15:17,520 --> 00:15:18,600 Speaker 2: S and P five hundred. 330 00:15:18,680 --> 00:15:18,840 Speaker 8: Yeah. 331 00:15:18,880 --> 00:15:22,000 Speaker 7: From a Volatiley perspective, over the last ten years, you 332 00:15:22,040 --> 00:15:24,680 Speaker 7: just don't think that you really have to reintroduce yourself 333 00:15:24,720 --> 00:15:27,040 Speaker 7: to some of these categories and fixed income and remind 334 00:15:27,080 --> 00:15:28,760 Speaker 7: yourself of the characteristics of them. 335 00:15:29,160 --> 00:15:29,320 Speaker 2: You know. 336 00:15:29,400 --> 00:15:31,840 Speaker 7: Also, this isn't the same credit cycle we've seen in 337 00:15:32,080 --> 00:15:36,560 Speaker 7: the past. The defaults haven't shown up in past any 338 00:15:36,640 --> 00:15:39,120 Speaker 7: kind of historical highs that they should be. They should be. 339 00:15:40,120 --> 00:15:43,160 Speaker 7: The distressed names in the overall category is pretty low. 340 00:15:43,200 --> 00:15:46,200 Speaker 7: It's only about seven and a half percent. So it's 341 00:15:46,600 --> 00:15:49,800 Speaker 7: an interesting thing if you get familiar with the corporate 342 00:15:49,840 --> 00:15:52,960 Speaker 7: issuers and the corporate categories investment grade two. There's a 343 00:15:53,040 --> 00:15:57,600 Speaker 7: lot of relative risk and reward here that you haven't 344 00:15:57,640 --> 00:15:59,880 Speaker 7: been able to deploy in your portfolio for a long time. 345 00:16:00,120 --> 00:16:02,720 Speaker 4: Do you see demand for up and quality over high yield? 346 00:16:02,720 --> 00:16:06,360 Speaker 7: Now up and quality over high yield like getting getting 347 00:16:06,680 --> 00:16:08,560 Speaker 7: some of these? Yeah, so that's the thing. You can 348 00:16:08,600 --> 00:16:11,360 Speaker 7: be really selective within these categories. With you know, at 349 00:16:11,360 --> 00:16:13,280 Speaker 7: bomb blocks we have, you were able to choose the 350 00:16:13,320 --> 00:16:16,840 Speaker 7: categories very very precisely, and so yeah, you can go 351 00:16:16,920 --> 00:16:20,120 Speaker 7: seek out quality high yield and you can go seek 352 00:16:20,120 --> 00:16:24,480 Speaker 7: out quality corporate exposure. And it sounds like those two 353 00:16:24,480 --> 00:16:26,240 Speaker 7: things aren't supposed to go together, but there's just a 354 00:16:26,280 --> 00:16:29,360 Speaker 7: lot of misconceptions about the category and what's going on 355 00:16:29,400 --> 00:16:29,960 Speaker 7: with them right now. 356 00:16:30,040 --> 00:16:32,840 Speaker 1: Yeah, I'm looking at ETFO on the Bloomberg terminal x 357 00:16:33,080 --> 00:16:38,280 Speaker 1: c c C, the CC triple C rated US A 358 00:16:38,320 --> 00:16:41,360 Speaker 1: dollar high yield corporate bond up twelve percent trailing twel 359 00:16:41,360 --> 00:16:41,960 Speaker 1: month basis. 360 00:16:42,440 --> 00:16:45,760 Speaker 7: Yeah, Yeah, that's that's that yield that is just really 361 00:16:45,800 --> 00:16:49,480 Speaker 7: hard to look away from, especially with as I mentioned, 362 00:16:49,520 --> 00:16:52,920 Speaker 7: the different level of volatility that that gives you in 363 00:16:52,960 --> 00:16:55,480 Speaker 7: your portfolio. And you know, it's twenty twenty three, We're 364 00:16:55,480 --> 00:16:57,400 Speaker 7: almost at the end of twenty twenty three at bomb blocks. 365 00:16:57,400 --> 00:16:59,880 Speaker 7: If we don't see a recession or any downturn half 366 00:17:00,280 --> 00:17:01,680 Speaker 7: through the end of this year or even into the 367 00:17:01,680 --> 00:17:04,720 Speaker 7: beginning of next year, and you're going on your second 368 00:17:05,160 --> 00:17:08,760 Speaker 7: almost third year of this market environment with yields at 369 00:17:08,800 --> 00:17:10,800 Speaker 7: these levels, which are double where they were before the 370 00:17:11,520 --> 00:17:15,359 Speaker 7: Fed started hiking rates. And really, if we think things 371 00:17:15,400 --> 00:17:17,480 Speaker 7: are higher for longer with ja bomb blocks we do 372 00:17:18,480 --> 00:17:21,160 Speaker 7: and we don't see these hard landings, you really need 373 00:17:21,200 --> 00:17:22,760 Speaker 7: to think about what's going on with your portfolio for 374 00:17:22,760 --> 00:17:23,760 Speaker 7: the next two to three years. 375 00:17:23,840 --> 00:17:26,199 Speaker 1: All right, Joanna, always great stuff to chat with you. 376 00:17:26,280 --> 00:17:29,120 Speaker 1: Joanna Diego's co founder of bond Blocks. 377 00:17:29,560 --> 00:17:32,680 Speaker 6: You're listening to the tape cans are live program Bloomberg 378 00:17:32,760 --> 00:17:36,320 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the 379 00:17:36,400 --> 00:17:39,640 Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 380 00:17:39,680 --> 00:17:42,479 Speaker 6: You can also listen live on Amazon Alexa from our 381 00:17:42,520 --> 00:17:47,480 Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 382 00:17:48,359 --> 00:17:51,200 Speaker 3: Danielle di Martino Booth made it here. 383 00:17:51,119 --> 00:17:54,760 Speaker 1: To the studio. She's the CEO, Chief Strategistic QI Research. 384 00:17:55,119 --> 00:17:57,800 Speaker 1: You came in from LaGuardia. Not a quick trip today. 385 00:17:57,800 --> 00:17:58,919 Speaker 4: You need a police escort. 386 00:17:59,080 --> 00:18:02,719 Speaker 3: Yeah, you need to dissk like in a helicopter press. Well, 387 00:18:02,760 --> 00:18:04,760 Speaker 3: we know a guy that could help us out next. 388 00:18:04,960 --> 00:18:07,480 Speaker 9: This is not the right time to like break a leg. Really, 389 00:18:07,760 --> 00:18:09,400 Speaker 9: this is not the right time to need an ambulance 390 00:18:09,440 --> 00:18:10,240 Speaker 9: in Matt. 391 00:18:10,080 --> 00:18:12,520 Speaker 1: Forget about it, particularly on the East side. All right, Danielle, 392 00:18:12,840 --> 00:18:15,960 Speaker 1: you were just talking about housing market. Give us some 393 00:18:16,000 --> 00:18:18,000 Speaker 1: of those stats you were talking about, because Matt and 394 00:18:18,000 --> 00:18:20,240 Speaker 1: I both now are real estate moguls. 395 00:18:20,720 --> 00:18:20,920 Speaker 3: Home. 396 00:18:21,080 --> 00:18:24,040 Speaker 4: Oh, yes, we own property. We own property. 397 00:18:24,720 --> 00:18:27,240 Speaker 3: Exactly what are you seeing in the real estate market? 398 00:18:27,240 --> 00:18:28,439 Speaker 9: Does that mean you topped the market? 399 00:18:29,080 --> 00:18:29,520 Speaker 2: You know what? 400 00:18:29,560 --> 00:18:34,040 Speaker 9: We're seeing is is kind of this this supply over 401 00:18:34,119 --> 00:18:36,400 Speaker 9: supply bloodbath that we've been worried about for a few 402 00:18:36,480 --> 00:18:39,960 Speaker 9: years on the apartment side finally coming to fruition. So 403 00:18:40,040 --> 00:18:42,320 Speaker 9: before the pandemic, you might have had eighty two eighty 404 00:18:42,320 --> 00:18:45,720 Speaker 9: three thousand units absorbed a month. This the last month, 405 00:18:45,760 --> 00:18:47,760 Speaker 9: we had like forty six I want to say a thousand, 406 00:18:47,800 --> 00:18:49,919 Speaker 9: don't quote me, but about about half of what was 407 00:18:50,160 --> 00:18:53,159 Speaker 9: pre pandemic normal from the one hundred and nine thousand 408 00:18:53,280 --> 00:18:55,960 Speaker 9: units that came online out of the pipeline. So you're 409 00:18:55,960 --> 00:18:59,400 Speaker 9: not even getting fifty percent of what's being produced you had. 410 00:18:59,440 --> 00:19:01,800 Speaker 9: You've had one point two million units come on in 411 00:19:01,800 --> 00:19:04,439 Speaker 9: the last three years, and there's another one million units 412 00:19:04,640 --> 00:19:07,400 Speaker 9: in the pipeline. So we saw multi family permits yesterday 413 00:19:07,840 --> 00:19:10,920 Speaker 9: really get hit hard. But you've still got to work 414 00:19:10,960 --> 00:19:13,000 Speaker 9: through a pipeline of another million units. 415 00:19:13,040 --> 00:19:14,399 Speaker 2: Are going to take out a mortgage at seven and 416 00:19:14,440 --> 00:19:17,960 Speaker 2: a half percent to well someday they will, right. It 417 00:19:18,000 --> 00:19:19,879 Speaker 2: looks bad compared to a couple of years ago, but 418 00:19:19,920 --> 00:19:21,520 Speaker 2: not so bad compared to twenty years ago. 419 00:19:21,720 --> 00:19:25,160 Speaker 9: Refinancings were up like thirteen percent in this morning's Mortgage 420 00:19:25,160 --> 00:19:28,560 Speaker 9: Bankers Association dated. Somebody's taking cash out of their homes 421 00:19:28,720 --> 00:19:30,000 Speaker 9: at these mortgage rates. 422 00:19:30,160 --> 00:19:34,040 Speaker 2: Wow, So does this is this what the FED wanted 423 00:19:34,320 --> 00:19:40,960 Speaker 2: or does this make the transition transmission mechanism slower? 424 00:19:41,880 --> 00:19:44,200 Speaker 9: It makes it a lot slower. Yeah, And I think 425 00:19:44,280 --> 00:19:45,520 Speaker 9: that's exactly what we've seen. 426 00:19:46,040 --> 00:19:50,520 Speaker 2: And because some people say, you know, when we talked 427 00:19:50,520 --> 00:19:53,680 Speaker 2: to Danny Blanchflower, he says it takes eighteen to twenty 428 00:19:53,680 --> 00:19:56,080 Speaker 2: four months for these great hikes to work their way 429 00:19:56,119 --> 00:20:00,480 Speaker 2: through the economy. But other people like jan Hatzias say, actually, 430 00:20:01,040 --> 00:20:05,040 Speaker 2: the lags are much quicker than they had been the past, 431 00:20:05,240 --> 00:20:07,960 Speaker 2: which is why he thinks that they've worked their way 432 00:20:07,960 --> 00:20:08,479 Speaker 2: through the coom. 433 00:20:08,800 --> 00:20:11,679 Speaker 9: They could have been quicker, could have been, but the 434 00:20:11,680 --> 00:20:15,639 Speaker 9: fiscal impulse kicked right back up. So that's not normally 435 00:20:15,720 --> 00:20:18,679 Speaker 9: what you see when you're when your economy is slowing, 436 00:20:18,680 --> 00:20:20,240 Speaker 9: when you're getting to the end of the cycle. You 437 00:20:20,280 --> 00:20:23,560 Speaker 9: don't normally see the government re up completely re up 438 00:20:23,640 --> 00:20:26,960 Speaker 9: as if we're at war, fiscal spending along with the 439 00:20:27,000 --> 00:20:30,240 Speaker 9: employee retention credit which is now on hold, thank you god. 440 00:20:30,440 --> 00:20:32,760 Speaker 4: But no one talks about the fiscal side. 441 00:20:32,840 --> 00:20:34,600 Speaker 2: But if we were either when it comes to a 442 00:20:34,640 --> 00:20:37,680 Speaker 2: driver of inflation, nor when it comes to the economy, 443 00:20:37,800 --> 00:20:38,320 Speaker 2: everyone talks. 444 00:20:38,400 --> 00:20:41,280 Speaker 9: In the month of July, the employer retention credit pumped 445 00:20:41,280 --> 00:20:44,000 Speaker 9: out twenty nine point eight billion dollars in one month 446 00:20:44,400 --> 00:20:48,679 Speaker 9: in cash directly deposited into people's check just like the 447 00:20:48,680 --> 00:20:51,640 Speaker 9: stimulus checks were those one two three stimulus checks. It's 448 00:20:51,680 --> 00:20:55,119 Speaker 9: the same exact thing that bypasses monetary policy and the 449 00:20:55,119 --> 00:20:56,960 Speaker 9: fed'sibility to try and slow the economy. 450 00:20:57,000 --> 00:20:58,960 Speaker 4: Now the plug's been pulled on. 451 00:20:58,960 --> 00:21:03,640 Speaker 9: That, so you know, and student loans, people are preemptively 452 00:21:03,640 --> 00:21:05,880 Speaker 9: getting out there and paying their student loans. Who would 453 00:21:05,920 --> 00:21:08,159 Speaker 9: have predicted this, that we would have seen this spike 454 00:21:08,240 --> 00:21:11,400 Speaker 9: and fiscal in government revenues in the month of August. 455 00:21:11,920 --> 00:21:14,400 Speaker 9: People are like, hey, interest is going to start back up. 456 00:21:14,520 --> 00:21:16,479 Speaker 9: This is just a fact of life. My budget's going 457 00:21:16,520 --> 00:21:17,800 Speaker 9: to take a hit. I might as well just start 458 00:21:17,800 --> 00:21:18,760 Speaker 9: paying right now in August. 459 00:21:18,760 --> 00:21:21,280 Speaker 1: And they did, all right, putting all the millions of 460 00:21:21,320 --> 00:21:23,320 Speaker 1: pieces of data that you look at and your team 461 00:21:23,359 --> 00:21:26,040 Speaker 1: of QI research look at, what's your recession call. 462 00:21:27,800 --> 00:21:31,920 Speaker 9: I think that the reason we're seeing some for lack 463 00:21:31,960 --> 00:21:35,400 Speaker 9: of a better way to describe it, preemptive Chapter eleven filings, 464 00:21:36,000 --> 00:21:39,320 Speaker 9: some stores just up. I mean, we're seeing massive amounts 465 00:21:39,320 --> 00:21:42,600 Speaker 9: of stores closing, closing, closing, closing. I think we're seeing 466 00:21:42,600 --> 00:21:44,040 Speaker 9: it because they know that the holidays are not going 467 00:21:44,080 --> 00:21:46,600 Speaker 9: to save them, So I think we're I think I 468 00:21:46,600 --> 00:21:49,000 Speaker 9: think we're finally getting to the hard part of the 469 00:21:49,080 --> 00:21:51,320 Speaker 9: landing as opposed to where we've. 470 00:21:51,119 --> 00:21:54,879 Speaker 3: Been, because I'm not buying it to that soft landing rhetoric. 471 00:21:56,200 --> 00:21:57,080 Speaker 8: No, it's certainly not. 472 00:21:57,119 --> 00:21:58,040 Speaker 9: With the UAW on. 473 00:21:58,080 --> 00:22:01,240 Speaker 2: Strike, Okay, the government shutdown, and the government shutdown, u 474 00:22:01,240 --> 00:22:05,240 Speaker 2: aw on strike, Student loan payments getting ready to resume. 475 00:22:05,520 --> 00:22:07,200 Speaker 4: I've got a whole list I can't do. I don't 476 00:22:07,200 --> 00:22:07,399 Speaker 4: have it. 477 00:22:07,480 --> 00:22:10,760 Speaker 9: Uprate crisis as high as they are, people are substituting 478 00:22:10,760 --> 00:22:11,280 Speaker 9: out things. 479 00:22:11,960 --> 00:22:16,880 Speaker 2: Credit card debt rising, credit card delinquencies rising, auto load 480 00:22:16,960 --> 00:22:18,240 Speaker 2: delinquencies rising. 481 00:22:18,480 --> 00:22:19,040 Speaker 5: And where is it. 482 00:22:19,040 --> 00:22:21,280 Speaker 9: It's in that sweet spot the thirty to thirty nine 483 00:22:21,359 --> 00:22:25,280 Speaker 9: year old who has the biggest student loan payment. That's 484 00:22:25,320 --> 00:22:28,240 Speaker 9: where you're seeing credit card delinquencies the highest, according to 485 00:22:28,280 --> 00:22:31,880 Speaker 9: New York Fed data. Same thing with auto loan delinquencies 486 00:22:32,240 --> 00:22:35,679 Speaker 9: the highest. Auto Finance weekly it's kind of a trade 487 00:22:36,920 --> 00:22:40,520 Speaker 9: trade weekly. They said that repossessions this year are tracking 488 00:22:40,560 --> 00:22:45,359 Speaker 9: at two million for the year, and there repossessions right 489 00:22:45,400 --> 00:22:48,000 Speaker 9: now are just a factor of how many cars per 490 00:22:48,080 --> 00:22:54,720 Speaker 9: day can the repo men get. There's literally it's capacity constrained. 491 00:22:54,880 --> 00:22:57,960 Speaker 2: I have Danielle di Martino, booth fan, who always writes 492 00:22:57,960 --> 00:23:01,320 Speaker 2: in when you're on he He has sent me like 493 00:23:01,359 --> 00:23:05,640 Speaker 2: eight questions so far, but I'll state I'll just suppose one, 494 00:23:05,680 --> 00:23:08,560 Speaker 2: which I think is really interesting. Do you fear the 495 00:23:08,600 --> 00:23:13,760 Speaker 2: whoe home data is lulling investors into lazy risk adding, 496 00:23:14,320 --> 00:23:15,879 Speaker 2: which makes sense to me. 497 00:23:16,920 --> 00:23:20,480 Speaker 9: I do, especially because you have to understand that going 498 00:23:20,520 --> 00:23:23,480 Speaker 9: into the Great Financial Crisis, we didn't have like a 499 00:23:23,600 --> 00:23:28,160 Speaker 9: trillion plus dollar fixed income exchange trade at fund Universe, 500 00:23:28,560 --> 00:23:30,840 Speaker 9: but now we do. So the structure of the financial 501 00:23:30,880 --> 00:23:34,920 Speaker 9: system has changed, and what we see reflected in kind 502 00:23:34,920 --> 00:23:38,040 Speaker 9: of high yield spreads, and that's where you're like danger, danger. 503 00:23:38,640 --> 00:23:40,800 Speaker 9: We're not seeing it reflected in spreads because of the 504 00:23:40,840 --> 00:23:45,560 Speaker 9: ETF structure, So you're just seeing spreads reflect inflows and 505 00:23:45,640 --> 00:23:50,359 Speaker 9: redemptions from these gigantic fixed income ETFs and the super 506 00:23:50,400 --> 00:23:54,200 Speaker 9: liquid names that trade when there's redemptions and when there's inflows, 507 00:23:54,320 --> 00:23:56,960 Speaker 9: So you don't see the ninety percent of the garbage 508 00:23:56,960 --> 00:24:00,040 Speaker 9: that's trading by appointment only reflected in spreads, So that 509 00:24:00,119 --> 00:24:04,080 Speaker 9: gives investors, I think another this this air of confidence 510 00:24:04,119 --> 00:24:05,360 Speaker 9: that they should not have. 511 00:24:06,040 --> 00:24:07,320 Speaker 4: Al Right, that's fascinating. 512 00:24:07,400 --> 00:24:11,320 Speaker 1: Does the FED share your sense of caution? Do you 513 00:24:11,359 --> 00:24:14,880 Speaker 1: think such that they will just settle down and stop? 514 00:24:15,800 --> 00:24:18,440 Speaker 9: I would have to say no, given how sanguine John 515 00:24:18,480 --> 00:24:21,399 Speaker 9: Williams is, and that he runs the New York FED, 516 00:24:21,600 --> 00:24:24,719 Speaker 9: where the market's desk is housed, and that's where they 517 00:24:24,720 --> 00:24:28,119 Speaker 9: get their markets intelligence throughout the Federal Reserve system, So 518 00:24:28,160 --> 00:24:30,119 Speaker 9: I would have to say absolutely not. 519 00:24:30,440 --> 00:24:33,160 Speaker 4: So when's the when's the cliff risk? 520 00:24:33,720 --> 00:24:33,960 Speaker 5: Here? 521 00:24:34,040 --> 00:24:36,880 Speaker 2: Is it when unemployment jumps? Is it when we don't 522 00:24:36,920 --> 00:24:39,040 Speaker 2: get a great holiday shopping season? 523 00:24:39,400 --> 00:24:40,879 Speaker 4: Is it's? 524 00:24:40,920 --> 00:24:44,160 Speaker 9: I think it's both of those things. Remember Yellow trucking 525 00:24:44,320 --> 00:24:49,720 Speaker 9: had severance. Okay, so we didn't see that thirty thousand hit. 526 00:24:50,000 --> 00:24:52,720 Speaker 4: The truck bankers initial jobs. A lot of people lost jobs. 527 00:24:52,480 --> 00:24:54,879 Speaker 9: But thirty thousand people lost their jobs, but we didn't 528 00:24:55,200 --> 00:24:58,680 Speaker 9: see that hit because of severance. So we've only got 529 00:24:58,680 --> 00:25:03,040 Speaker 9: three states left that don't rising continuing jobless claims Oklahoma, Kansas, 530 00:25:03,119 --> 00:25:06,480 Speaker 9: and Alaska. That's it. We had zero states with rising 531 00:25:06,480 --> 00:25:10,520 Speaker 9: continuing jobs claimed last September. Now we have forty seven, 532 00:25:11,680 --> 00:25:12,880 Speaker 9: fifty one forty seven. 533 00:25:12,960 --> 00:25:19,080 Speaker 1: So you think the FED should sit stop raising rates 534 00:25:19,119 --> 00:25:20,720 Speaker 1: and or should they actually cut rates? 535 00:25:20,920 --> 00:25:21,359 Speaker 4: Where are you? 536 00:25:21,720 --> 00:25:25,360 Speaker 9: I don't think we're necessarily at the juncture of cutting rates. 537 00:25:25,560 --> 00:25:27,880 Speaker 9: But even when we get there in twenty twenty four, 538 00:25:28,320 --> 00:25:30,240 Speaker 9: keep shrinking the balance sheet? 539 00:25:30,720 --> 00:25:31,720 Speaker 3: And is the FED doing that? 540 00:25:32,320 --> 00:25:34,880 Speaker 9: Oh yeah, okay, it's slowed a little. 541 00:25:34,640 --> 00:25:36,520 Speaker 4: Bit and a half trillion now for eight and a 542 00:25:36,520 --> 00:25:37,720 Speaker 4: half billion. It slowed a. 543 00:25:37,720 --> 00:25:40,400 Speaker 9: Little bit during the debt ceiling showdown, which was very 544 00:25:40,520 --> 00:25:41,359 Speaker 9: that was very clever. 545 00:25:41,560 --> 00:25:45,760 Speaker 4: Fed space bowl go okay, Fed space Baal, go on 546 00:25:45,800 --> 00:25:46,800 Speaker 4: the Bloomberg terminal. 547 00:25:46,880 --> 00:25:48,320 Speaker 9: But what are you not going to hear asked at 548 00:25:48,320 --> 00:25:51,000 Speaker 9: the press conference today. Nobody's going to ask them about 549 00:25:51,000 --> 00:25:53,240 Speaker 9: the balance sheet. It's like the press is gagged. 550 00:25:54,240 --> 00:25:55,280 Speaker 4: Why is that horedible? 551 00:25:55,400 --> 00:25:58,199 Speaker 2: Because Neil Grosman comes in here, he calls it QD 552 00:25:58,640 --> 00:25:59,560 Speaker 2: quantitative drip. 553 00:26:00,800 --> 00:26:04,879 Speaker 9: Well again, but the first time they tried QT, they 554 00:26:04,920 --> 00:26:08,280 Speaker 9: were trying to empty out a lake. Now every central 555 00:26:08,280 --> 00:26:11,000 Speaker 9: bank in the world jumped in after the pandemic. So 556 00:26:11,040 --> 00:26:14,000 Speaker 9: now QT is working where they're trying to empty out 557 00:26:14,000 --> 00:26:17,720 Speaker 9: an ocean. So it's it's a it's a different dynamic, 558 00:26:17,800 --> 00:26:20,120 Speaker 9: but that does not mean that it's not happening. And 559 00:26:20,160 --> 00:26:23,080 Speaker 9: by the way, it's global, right, and it wasn't. 560 00:26:23,119 --> 00:26:24,639 Speaker 4: It was a ton of supply. 561 00:26:24,640 --> 00:26:26,200 Speaker 2: This is what we're just talking about with Ira Jersey 562 00:26:26,240 --> 00:26:28,080 Speaker 2: right at the same time we're getting one and a 563 00:26:28,119 --> 00:26:28,719 Speaker 2: half trillion. 564 00:26:28,760 --> 00:26:31,600 Speaker 4: I think he said, yep, supply maybe through And I. 565 00:26:31,560 --> 00:26:33,960 Speaker 9: Mean, you know, for the moment. You know, if you 566 00:26:34,080 --> 00:26:38,480 Speaker 9: if you dig deep pension funds, life insurance companies, they're delighted. 567 00:26:38,800 --> 00:26:41,080 Speaker 9: They don't know what to do with themselves with these yields. 568 00:26:41,119 --> 00:26:42,920 Speaker 9: They're like, oh my gosh, I can do this weird 569 00:26:42,920 --> 00:26:45,960 Speaker 9: thing called asset liability matching, which I haven't been able 570 00:26:46,000 --> 00:26:47,840 Speaker 9: to do for years. I've been stuck in private equity 571 00:26:48,200 --> 00:26:52,159 Speaker 9: paying god knows what fees for diversification that I you know, 572 00:26:52,200 --> 00:26:54,040 Speaker 9: all of a sudden, I can't get why are we 573 00:26:54,080 --> 00:26:58,879 Speaker 9: seeing CIOs of public pensions falling quickly one after another 574 00:26:59,000 --> 00:26:59,760 Speaker 9: like dominoes. 575 00:27:00,600 --> 00:27:02,600 Speaker 3: All right, Jess saying I'm glad you made it to 576 00:27:02,640 --> 00:27:04,440 Speaker 3: the studio. It was worth every minute. 577 00:27:04,560 --> 00:27:07,720 Speaker 1: Danielle di Martino Booth, she's the CEO and chief strategistic 578 00:27:07,800 --> 00:27:09,760 Speaker 1: QI Research, one of our favorite folks I talked to 579 00:27:10,040 --> 00:27:12,240 Speaker 1: about these markets, about the Federal Reserve. She did spend 580 00:27:12,280 --> 00:27:14,520 Speaker 1: some time at the Federal Reserve Bank of Dallas, so 581 00:27:14,920 --> 00:27:17,280 Speaker 1: she knows of what she speaks. Again, we're gonna hear 582 00:27:17,359 --> 00:27:19,880 Speaker 1: from the Fed today. We'll get those minutes at two 583 00:27:19,880 --> 00:27:23,439 Speaker 1: pm Wall Street Time. Bloomberg Surveillance TV coverage starts at 584 00:27:23,480 --> 00:27:25,200 Speaker 1: one thirty. That's gonna be simulcast on radio. 585 00:27:25,240 --> 00:27:27,960 Speaker 3: I believe the FED decide FED sides well full cover. 586 00:27:28,960 --> 00:27:32,359 Speaker 6: You're listening to the team Ken's her live program Bloomberg 587 00:27:32,440 --> 00:27:35,800 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com, 588 00:27:35,880 --> 00:27:39,000 Speaker 6: the iHeartRadio app, and the Bloomberg Business App, or listen 589 00:27:39,080 --> 00:27:41,359 Speaker 6: on demand wherever you get your podcasts. 590 00:27:44,680 --> 00:27:46,639 Speaker 1: It's not working in New York City the way I 591 00:27:46,720 --> 00:27:49,840 Speaker 1: thought it was, which is city approved dispensaries and nice 592 00:27:49,880 --> 00:27:53,359 Speaker 1: shops and all every block has two or these, two 593 00:27:53,440 --> 00:27:55,879 Speaker 1: or three of these, you know, kind of I don't know, 594 00:27:55,960 --> 00:27:57,080 Speaker 1: under the table kind of. 595 00:27:57,400 --> 00:27:59,760 Speaker 2: I mean, the road to hell is paid with good intentions. 596 00:28:00,000 --> 00:28:03,879 Speaker 2: I think the cannabis management in New York State wanted 597 00:28:03,920 --> 00:28:06,480 Speaker 2: to do the right thing and then just ended up 598 00:28:06,640 --> 00:28:09,240 Speaker 2: making a mess of it because there's only a few 599 00:28:09,960 --> 00:28:14,840 Speaker 2: legal well there's only a few licensed dispensaries around here, 600 00:28:14,880 --> 00:28:18,000 Speaker 2: but you can't get any of the products that everybody wants, 601 00:28:18,400 --> 00:28:20,680 Speaker 2: so they go to everywhere else. 602 00:28:20,680 --> 00:28:23,560 Speaker 1: All right, Kyle Kasen joins as he's the CEO of Glasshouse. 603 00:28:24,280 --> 00:28:30,560 Speaker 1: Over the counter, ghbf WF is the ticker GHBWF. Yes, 604 00:28:30,600 --> 00:28:32,040 Speaker 1: GHBWF is the ticker. 605 00:28:32,080 --> 00:28:32,399 Speaker 5: Thank you. 606 00:28:32,680 --> 00:28:35,240 Speaker 1: He joined us live here in our Bloomberg Interactive Broker studio. 607 00:28:35,440 --> 00:28:38,480 Speaker 3: Kyle, you're in the city here today. You've seen it all. 608 00:28:38,840 --> 00:28:39,760 Speaker 3: What did New York City? 609 00:28:40,000 --> 00:28:41,120 Speaker 4: Well, what does Glasshouse do? 610 00:28:41,320 --> 00:28:42,200 Speaker 3: What does glass House do? 611 00:28:42,480 --> 00:28:44,600 Speaker 5: Let's go there, so thank you for having me on. 612 00:28:45,080 --> 00:28:49,760 Speaker 10: Glasshouse Brands is a vertically integrated company in California. We 613 00:28:49,800 --> 00:28:53,920 Speaker 10: own the largest greenhouse facility or cultivation facility in the 614 00:28:54,000 --> 00:28:57,960 Speaker 10: history of man mankind. It's five point five billion square feet. 615 00:28:58,160 --> 00:29:01,000 Speaker 10: Coupled with our other two greenhouses, if we have six 616 00:29:01,040 --> 00:29:04,360 Speaker 10: million square feet of cultivation. We have ten stores throughout 617 00:29:04,360 --> 00:29:07,400 Speaker 10: the state, and we have a manufacturing facility. So we're 618 00:29:07,400 --> 00:29:12,240 Speaker 10: only in California and we're basically the largest seller of 619 00:29:12,240 --> 00:29:14,000 Speaker 10: cannabis in the biggest state in the country. 620 00:29:14,320 --> 00:29:18,160 Speaker 1: How is that business rolling out in the state of California. 621 00:29:18,960 --> 00:29:23,800 Speaker 10: You know, it has been very, very difficult. The industry 622 00:29:23,840 --> 00:29:26,880 Speaker 10: is littered with just carnage and lots of lost money 623 00:29:26,880 --> 00:29:31,760 Speaker 10: and things like that. We are of cash flow positive, 624 00:29:31,960 --> 00:29:34,040 Speaker 10: maybe the only company in the state of California is 625 00:29:34,080 --> 00:29:37,200 Speaker 10: cashul a positive and we pay our two ade which 626 00:29:37,280 --> 00:29:40,640 Speaker 10: without getting wonky. It just we can't deduct a lot 627 00:29:40,640 --> 00:29:43,840 Speaker 10: of our expenses because it's federally illegal. So it is 628 00:29:44,360 --> 00:29:47,240 Speaker 10: the craziest industry I've ever been in. But I love 629 00:29:47,320 --> 00:29:50,200 Speaker 10: being in it, and we grow cheaper and better than 630 00:29:50,240 --> 00:29:51,640 Speaker 10: anyone else in the country. 631 00:29:51,720 --> 00:29:52,280 Speaker 4: But you can't. 632 00:29:52,440 --> 00:29:56,360 Speaker 2: Your brands are not allowed to be sold in New 633 00:29:56,480 --> 00:29:59,280 Speaker 2: York State and I imagine a number of other states 634 00:29:59,280 --> 00:30:02,600 Speaker 2: because of the way the regulation works. Is there any 635 00:30:03,160 --> 00:30:04,560 Speaker 2: potential for that to change? 636 00:30:05,000 --> 00:30:05,280 Speaker 3: Yes. 637 00:30:05,360 --> 00:30:07,760 Speaker 10: So the cause of that is the federal government. The 638 00:30:07,760 --> 00:30:11,520 Speaker 10: federal government has absolutely done zero's we're a schedule on 639 00:30:11,640 --> 00:30:15,320 Speaker 10: drug which is the most dangerous and right now checked 640 00:30:15,440 --> 00:30:17,479 Speaker 10: I checked that the ticker just where I came in. 641 00:30:17,680 --> 00:30:20,560 Speaker 10: The total number of overdose deaths in the history of 642 00:30:20,640 --> 00:30:23,640 Speaker 10: human beings from cannabis is still at zero. So it 643 00:30:23,720 --> 00:30:27,040 Speaker 10: is absolutely ridiculous what's happening. But we're starting to see 644 00:30:27,040 --> 00:30:30,240 Speaker 10: some federal relief potentially coming. 645 00:30:31,320 --> 00:30:35,080 Speaker 4: You have a number of brands. One of your brands 646 00:30:35,120 --> 00:30:39,160 Speaker 4: is the Plus Gummies. Yes, And someone I know very. 647 00:30:39,000 --> 00:30:42,920 Speaker 2: Well who hadn't smoked weed in years was given a 648 00:30:42,960 --> 00:30:45,840 Speaker 2: box of those and thought nothing of it until he 649 00:30:46,000 --> 00:30:48,720 Speaker 2: just decided to take it one day, and the experience was, 650 00:30:48,760 --> 00:30:50,080 Speaker 2: I think different than he imagined. 651 00:30:50,080 --> 00:30:50,760 Speaker 4: He ended up. 652 00:30:52,240 --> 00:30:56,960 Speaker 2: Reorganizing his filing cabinet, cleaning out, you know, the dressing room, 653 00:30:57,000 --> 00:31:01,000 Speaker 2: and it just was was something that was different than 654 00:31:01,080 --> 00:31:02,640 Speaker 2: he may he may have expected. 655 00:31:02,800 --> 00:31:04,800 Speaker 4: Do you hear that kind of story a lot all 656 00:31:04,840 --> 00:31:05,240 Speaker 4: the time. 657 00:31:05,360 --> 00:31:07,600 Speaker 10: And the one that I would tell you people that 658 00:31:07,640 --> 00:31:10,000 Speaker 10: are of an older age, they go with the sleep 659 00:31:10,040 --> 00:31:13,000 Speaker 10: gummies because they don't like ambien, they don't like, you know, 660 00:31:13,160 --> 00:31:15,840 Speaker 10: some of the other things that are available pharmaceutically, and 661 00:31:15,880 --> 00:31:18,200 Speaker 10: they can just take a five miligram gummy. 662 00:31:18,440 --> 00:31:21,240 Speaker 5: And they sleep like a baby. 663 00:31:21,280 --> 00:31:22,480 Speaker 10: There's no bad effects. 664 00:31:22,480 --> 00:31:23,120 Speaker 3: It's a plant. 665 00:31:23,600 --> 00:31:26,640 Speaker 10: And so that and then the next question from somebody 666 00:31:26,680 --> 00:31:29,400 Speaker 10: like my eighty year old aunt and uncle that when 667 00:31:29,400 --> 00:31:30,960 Speaker 10: they go on their RV they always have to have 668 00:31:31,000 --> 00:31:34,520 Speaker 10: their Plus gummies is can I do something and maybe 669 00:31:34,520 --> 00:31:36,600 Speaker 10: take the edge off, drink a little less wine? 670 00:31:36,640 --> 00:31:39,200 Speaker 5: And we and we absolutely have those in the gummies as. 671 00:31:39,120 --> 00:31:40,800 Speaker 2: Well, I mean I know a lot of people who 672 00:31:41,120 --> 00:31:45,200 Speaker 2: quit drinking completely. Thanks in Part two plus gummies. 673 00:31:46,320 --> 00:31:49,760 Speaker 10: I love that, And yes, I think cannabis is much 674 00:31:49,760 --> 00:31:50,840 Speaker 10: more benign than alcohol. 675 00:31:51,960 --> 00:31:54,000 Speaker 3: All right, competing, what's it like to compete in the 676 00:31:54,000 --> 00:31:55,760 Speaker 3: state of California. Who are your competitors? 677 00:31:55,800 --> 00:31:58,920 Speaker 2: Oh my goodness, you've got to compete against Kana, You've 678 00:31:58,960 --> 00:32:02,280 Speaker 2: got Camino, Well, you've got Stizzy. I mean, you've got 679 00:32:02,400 --> 00:32:04,240 Speaker 2: a lot of big name brands that you have to 680 00:32:04,280 --> 00:32:04,800 Speaker 2: go up against. 681 00:32:04,880 --> 00:32:07,360 Speaker 10: I was not expecting to hear a California expert. 682 00:32:07,560 --> 00:32:08,800 Speaker 3: You are absolutely right. 683 00:32:09,040 --> 00:32:10,200 Speaker 4: I have friends in California. 684 00:32:10,240 --> 00:32:13,360 Speaker 10: Wild would be Wild, would be seriously upset. I don't 685 00:32:13,360 --> 00:32:17,000 Speaker 10: know if you just mentioned Wild, But what I would 686 00:32:17,040 --> 00:32:19,239 Speaker 10: tell you is the future of cannabis. If you're an 687 00:32:19,240 --> 00:32:20,920 Speaker 10: investor and you say, hey, I want to look at 688 00:32:21,080 --> 00:32:23,960 Speaker 10: investing in a multi state operator, first go to California 689 00:32:24,040 --> 00:32:27,920 Speaker 10: to see on our stores. Again, we're vertically integrated, but 690 00:32:27,960 --> 00:32:30,000 Speaker 10: in our stores we sell twenty five to thirty percent 691 00:32:30,320 --> 00:32:33,040 Speaker 10: of our own products. We have to carry all these 692 00:32:33,040 --> 00:32:36,120 Speaker 10: other brands that you mentioned because the consumer is very 693 00:32:36,120 --> 00:32:39,720 Speaker 10: discerning in California and they want a selection, and so 694 00:32:40,080 --> 00:32:42,040 Speaker 10: the trader Joe's model that you might see in a 695 00:32:42,080 --> 00:32:44,800 Speaker 10: lot of the other states. We don't get that. We 696 00:32:45,000 --> 00:32:47,240 Speaker 10: have to run it like we just have to run 697 00:32:47,280 --> 00:32:50,000 Speaker 10: it straight and get the best products, and hopefully there 698 00:32:50,040 --> 00:32:52,880 Speaker 10: are ours as well. And so yes, our cell throughout 699 00:32:52,960 --> 00:32:55,440 Speaker 10: a lot of other stores that are also vertically integrated. 700 00:32:55,480 --> 00:32:57,400 Speaker 4: So it's it's a very interesting Well, it's like beer. 701 00:32:57,440 --> 00:32:58,920 Speaker 2: I mean, this is the problem I have with the 702 00:32:59,000 --> 00:33:03,040 Speaker 2: New York City or New York State o CM Brooklyn 703 00:33:03,120 --> 00:33:07,760 Speaker 2: Lauger is a fine beverage. But if I want Sierra Nevada, 704 00:33:07,920 --> 00:33:10,040 Speaker 2: I don't want it to be illegal for me to 705 00:33:10,080 --> 00:33:10,920 Speaker 2: buy it somewhere. 706 00:33:11,000 --> 00:33:12,040 Speaker 3: Right. Why is it illegal? 707 00:33:12,320 --> 00:33:13,760 Speaker 4: Well, because in New York. 708 00:33:13,640 --> 00:33:17,640 Speaker 2: They can only sell products that are grown in state, 709 00:33:18,240 --> 00:33:21,840 Speaker 2: so any of the California brands can't be sold here. 710 00:33:22,800 --> 00:33:23,120 Speaker 3: Go on. 711 00:33:23,200 --> 00:33:25,800 Speaker 2: But I mean, you're you know you're gonna go to 712 00:33:25,840 --> 00:33:28,680 Speaker 2: You're gonna end up going to an unlicensed vender, is 713 00:33:28,680 --> 00:33:32,000 Speaker 2: what's gonna happen, obviously, And then there are problems because 714 00:33:32,040 --> 00:33:35,000 Speaker 2: you could get something that's counterfeit, and you could get 715 00:33:35,000 --> 00:33:38,440 Speaker 2: something that's more dangerous than a typical marijuana product is 716 00:33:38,480 --> 00:33:39,160 Speaker 2: in the first place. 717 00:33:39,640 --> 00:33:41,680 Speaker 10: When I just want to sit and listen, because you're 718 00:33:41,680 --> 00:33:43,400 Speaker 10: making the argument better than I could. 719 00:33:43,400 --> 00:33:44,760 Speaker 1: All Right, when you walk down the streets here in 720 00:33:44,760 --> 00:33:47,000 Speaker 1: New York City and you see all these unlicensed places, 721 00:33:47,880 --> 00:33:48,800 Speaker 1: what's the city doing? 722 00:33:48,880 --> 00:33:49,840 Speaker 3: How did they screw this up? 723 00:33:50,080 --> 00:33:52,480 Speaker 10: What's amazing to me is and I would agree with 724 00:33:52,520 --> 00:33:55,120 Speaker 10: the initial quote of you know, the road to Hell's 725 00:33:55,160 --> 00:33:57,040 Speaker 10: paid with good intentions. All they had to do is 726 00:33:57,040 --> 00:33:59,240 Speaker 10: look at look at the city of Los Angeles, who 727 00:33:59,280 --> 00:34:02,360 Speaker 10: did this some time ago. We have illicit market and 728 00:34:02,440 --> 00:34:05,959 Speaker 10: illicit market that's huge in California, and if you don't 729 00:34:06,360 --> 00:34:10,279 Speaker 10: properly regulate the market, they will own it. And we 730 00:34:10,360 --> 00:34:12,319 Speaker 10: have one store in the city of Los Angeles. It's 731 00:34:12,320 --> 00:34:15,120 Speaker 10: our worst performing store because there's ten illegal stores around us. 732 00:34:15,320 --> 00:34:17,640 Speaker 10: So when I saw what New York was doing, I 733 00:34:17,680 --> 00:34:20,480 Speaker 10: thought it was crazy. And what's interesting is, you know 734 00:34:20,560 --> 00:34:22,600 Speaker 10: you're gonna end up. They're gonna grow cannabis in the 735 00:34:22,640 --> 00:34:26,120 Speaker 10: Hudson Valley. It's going to be far more expensive than 736 00:34:26,200 --> 00:34:27,560 Speaker 10: what we grow in California. 737 00:34:27,960 --> 00:34:29,880 Speaker 4: And so what's. 738 00:34:29,640 --> 00:34:31,840 Speaker 10: Interesting is I think you're gonna just unless they decide 739 00:34:31,840 --> 00:34:33,560 Speaker 10: they're going to take a harder line and regulate this 740 00:34:33,680 --> 00:34:36,879 Speaker 10: market properly, you're gonna see California products continually sold. 741 00:34:36,920 --> 00:34:39,480 Speaker 2: Yeah, because also maybe not as good, right, Hudson versus Humbled. 742 00:34:39,560 --> 00:34:42,960 Speaker 2: It's a big delta. Do you expect the DA to 743 00:34:43,400 --> 00:34:44,840 Speaker 2: make a decision this year. 744 00:34:45,960 --> 00:34:48,399 Speaker 10: I expect them to make a decision. I've been told 745 00:34:48,400 --> 00:34:50,359 Speaker 10: it'll probably before the end of the calendar year, and 746 00:34:50,400 --> 00:34:52,719 Speaker 10: it will likely be a schedule three and go with 747 00:34:53,320 --> 00:34:57,400 Speaker 10: the recommendation from the Health and Human Services Secretary. 748 00:34:57,560 --> 00:34:59,320 Speaker 1: All Right, Kyle, we spent a lot more time, a 749 00:34:59,320 --> 00:35:00,719 Speaker 1: lot more to talk, but I also want to talk 750 00:35:00,719 --> 00:35:03,759 Speaker 1: about the real estate business in southern California. So we'll 751 00:35:03,760 --> 00:35:05,120 Speaker 1: get in touch with you again. And of course, the 752 00:35:05,120 --> 00:35:07,600 Speaker 1: next summer in New York, let us know, Kyle casn 753 00:35:07,640 --> 00:35:11,000 Speaker 1: he's to see a glasshouse talking about the cannabis industry. 754 00:35:11,040 --> 00:35:13,480 Speaker 1: More and more states are going there, but some more 755 00:35:13,520 --> 00:35:14,880 Speaker 1: successfully than others. 756 00:35:15,200 --> 00:35:18,360 Speaker 6: You're listening to the tape catch are live program Bloomberg 757 00:35:18,400 --> 00:35:22,000 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the 758 00:35:22,040 --> 00:35:24,000 Speaker 6: tune in app, Bloomberg dot Com, and. 759 00:35:23,960 --> 00:35:25,279 Speaker 5: The Bloomberg Business App. 760 00:35:25,320 --> 00:35:28,120 Speaker 6: You can also listen live on Amazon Alexa from our 761 00:35:28,160 --> 00:35:34,080 Speaker 6: flagship New York station, Just Say Alexa, Play Bloomberg eleven thirty. 762 00:35:33,880 --> 00:35:36,520 Speaker 3: All right, let's talk real estate here. Some he joins us. 763 00:35:36,520 --> 00:35:41,280 Speaker 1: She's a chief economist at Core Logic, So some give. 764 00:35:41,160 --> 00:35:41,560 Speaker 3: Us a sense. 765 00:35:41,600 --> 00:35:45,120 Speaker 1: Here, we got mortgage rates just continuing to climb higher. Here, 766 00:35:45,560 --> 00:35:47,800 Speaker 1: how's that impacting the real estate market? 767 00:35:49,480 --> 00:35:52,360 Speaker 11: Yeah, it's been really bad for the housing market. It 768 00:35:52,400 --> 00:35:55,439 Speaker 11: continues the housing market down to continues to drag home 769 00:35:55,480 --> 00:35:59,799 Speaker 11: sales activity, particularly for existing homes because you know, there's 770 00:36:00,080 --> 00:36:04,600 Speaker 11: inventory issue there that continues with elevated mortgage rates. So 771 00:36:05,840 --> 00:36:09,799 Speaker 11: existing market is just crushed with higher mortgage rates. 772 00:36:09,960 --> 00:36:12,719 Speaker 1: Sema, we cannot but notice in your zoom there's nobody 773 00:36:12,920 --> 00:36:13,560 Speaker 1: in your office. 774 00:36:13,600 --> 00:36:16,000 Speaker 4: There is does it work from home day? 775 00:36:18,040 --> 00:36:18,120 Speaker 10: No? 776 00:36:18,360 --> 00:36:19,239 Speaker 8: This is my back. 777 00:36:20,040 --> 00:36:20,799 Speaker 3: Oh, it's your back. 778 00:36:22,600 --> 00:36:22,920 Speaker 4: Okay. 779 00:36:23,200 --> 00:36:26,080 Speaker 2: By the way, for listeners who aren't aware, you can 780 00:36:26,120 --> 00:36:29,680 Speaker 2: go to YouTube dot com and search Bloomberg Radio and 781 00:36:29,800 --> 00:36:34,040 Speaker 2: watch US streaming. You can see Selma there as well. Selma, 782 00:36:34,520 --> 00:36:40,360 Speaker 2: how uh how bad is it in terms of you know, 783 00:36:40,440 --> 00:36:45,879 Speaker 2: the drop in transactions, especially with previously owned homes, and 784 00:36:46,120 --> 00:36:47,800 Speaker 2: when do you expect that to change? 785 00:36:47,880 --> 00:36:49,719 Speaker 4: What's going to be the breaking point? 786 00:36:50,320 --> 00:36:53,279 Speaker 11: Right? So home sales, existing home sales are trending some 787 00:36:53,360 --> 00:36:57,480 Speaker 11: twenty three percent a year to date. I'll compare to 788 00:36:57,520 --> 00:37:01,560 Speaker 11: a year before twenty twenty two, and decline is shrinking 789 00:37:01,680 --> 00:37:04,799 Speaker 11: because home sales dropped off in latter part of last year, 790 00:37:04,880 --> 00:37:07,520 Speaker 11: so because of the base effect, that is shrinking. But 791 00:37:07,600 --> 00:37:11,440 Speaker 11: we are still expecting some twenty percent decline in existing 792 00:37:11,440 --> 00:37:14,719 Speaker 11: home sales compared to twenty twenty two now that you 793 00:37:14,719 --> 00:37:18,319 Speaker 11: know historically looking that lines up where we were in 794 00:37:18,400 --> 00:37:23,480 Speaker 11: twenty fourteen. So it is pretty low and I don't 795 00:37:23,520 --> 00:37:27,759 Speaker 11: see it improving anytime soon, unfortunately, because of high mortgage rates. 796 00:37:27,760 --> 00:37:30,000 Speaker 11: I mean, I think really we'd have to see mortgage 797 00:37:30,040 --> 00:37:33,400 Speaker 11: rates come down to closer to that six percent handle 798 00:37:33,440 --> 00:37:37,200 Speaker 11: on the lower end, like six point two before we 799 00:37:37,280 --> 00:37:41,040 Speaker 11: see any significant pickup in home sales activity and inventory 800 00:37:41,080 --> 00:37:44,520 Speaker 11: for that matter, because inventory is really a huge constraint 801 00:37:44,560 --> 00:37:47,160 Speaker 11: in addition to lack of affordability. 802 00:37:47,480 --> 00:37:50,000 Speaker 1: Isn't there a little bit of a timing or I 803 00:37:50,000 --> 00:37:53,160 Speaker 1: don't know, any point where mortgage rates are, whether it's 804 00:37:53,280 --> 00:37:56,600 Speaker 1: three percent, whether it's six percent or seven point five percent, 805 00:37:57,000 --> 00:37:58,799 Speaker 1: if they stay there for a while, don't people kind 806 00:37:58,800 --> 00:38:01,680 Speaker 1: of get used to it that if nothing else, people 807 00:38:01,680 --> 00:38:03,200 Speaker 1: start just doing deals again. 808 00:38:04,239 --> 00:38:06,600 Speaker 11: Yeah, yeah, no, I mean that's definitely true, and we 809 00:38:06,719 --> 00:38:11,520 Speaker 11: do see people moving for family reasons. So we you know, 810 00:38:11,600 --> 00:38:14,200 Speaker 11: people are people that were going to move, that have 811 00:38:14,320 --> 00:38:15,200 Speaker 11: to move anyways. 812 00:38:15,239 --> 00:38:17,960 Speaker 8: You know, there's life events that happen and make people move. 813 00:38:18,080 --> 00:38:21,400 Speaker 11: So you know, because of that, we're not seeing a 814 00:38:21,520 --> 00:38:24,839 Speaker 11: larger decline in home sales activities. So if people were 815 00:38:24,920 --> 00:38:27,680 Speaker 11: just staying put, I think that that decline would be 816 00:38:27,719 --> 00:38:31,759 Speaker 11: even larger. But people do move every year because of 817 00:38:31,840 --> 00:38:35,800 Speaker 11: family reason, job reasons, and these are now the major 818 00:38:35,840 --> 00:38:37,440 Speaker 11: reasons that are driving those moves. 819 00:38:37,800 --> 00:38:39,239 Speaker 1: You know, I look, I'm looking at the stocks of 820 00:38:39,280 --> 00:38:42,759 Speaker 1: the homebuilders and are all up fifty percent kind of 821 00:38:42,840 --> 00:38:45,080 Speaker 1: this year alone, up more than that on a trailing 822 00:38:45,080 --> 00:38:46,440 Speaker 1: twelve month basis. So it's good to be in the 823 00:38:46,480 --> 00:38:50,160 Speaker 1: homebuilding business. How much longer they can they enjoy this 824 00:38:50,239 --> 00:38:50,840 Speaker 1: kind of demand? 825 00:38:52,280 --> 00:38:54,080 Speaker 8: Well, I mean, I think we have a lot of 826 00:38:54,080 --> 00:38:54,880 Speaker 8: pent up demand. 827 00:38:55,000 --> 00:38:58,279 Speaker 11: And when you think about that housing shortage that we 828 00:38:58,400 --> 00:39:01,399 Speaker 11: keep talking about for many years now, we are down 829 00:39:01,520 --> 00:39:04,759 Speaker 11: you know, anywhere between two and five million homes. And 830 00:39:05,080 --> 00:39:09,120 Speaker 11: you know, while the number of home news starts has increased, 831 00:39:09,400 --> 00:39:11,000 Speaker 11: well not in the latest reading, but you know, with 832 00:39:11,080 --> 00:39:14,760 Speaker 11: the permits being uh and we do expect home sales 833 00:39:14,800 --> 00:39:17,640 Speaker 11: to pick up again. You know, I think we still 834 00:39:17,640 --> 00:39:21,000 Speaker 11: have years to go because before we can, uh, you know, 835 00:39:21,040 --> 00:39:24,560 Speaker 11: make up for that that loss or that inventory. 836 00:39:24,120 --> 00:39:26,040 Speaker 8: That wasn't built. So we do have a lot of 837 00:39:26,080 --> 00:39:26,800 Speaker 8: paint of demand. 838 00:39:26,840 --> 00:39:30,360 Speaker 11: And you know, it's not just millennials, it's it's baby 839 00:39:30,440 --> 00:39:34,080 Speaker 11: boomers who are now retiring and moving to other areas. 840 00:39:34,640 --> 00:39:38,920 Speaker 11: People are still moving because they can work some some areas. 841 00:39:38,960 --> 00:39:41,120 Speaker 11: You know, you still can work from home, and you're 842 00:39:41,160 --> 00:39:43,520 Speaker 11: moving for that reason too. So I think we still 843 00:39:43,560 --> 00:39:44,760 Speaker 11: have a lot of paint of demand. 844 00:39:45,840 --> 00:39:50,279 Speaker 2: I wonder in terms of the FED activity or the 845 00:39:50,320 --> 00:39:54,720 Speaker 2: FED uh you know, rate rising cycle, when this comes 846 00:39:54,719 --> 00:39:57,359 Speaker 2: to an end, do you think, uh, and when we 847 00:39:57,400 --> 00:40:00,440 Speaker 2: know it, do you think, you know, seven percent mortgages 848 00:40:00,440 --> 00:40:03,720 Speaker 2: are going to look slightly less terrifying or are people 849 00:40:03,760 --> 00:40:05,480 Speaker 2: going to wait for them to cut rates? 850 00:40:07,040 --> 00:40:07,400 Speaker 8: Well? 851 00:40:07,440 --> 00:40:11,600 Speaker 11: Right, So the knowing part is the critical part because 852 00:40:11,760 --> 00:40:14,560 Speaker 11: I think that would introduce some certainty into the market. 853 00:40:14,960 --> 00:40:17,719 Speaker 8: And we've talked about mortgage spread being. 854 00:40:17,600 --> 00:40:20,880 Speaker 11: High before and it still remains high because of that 855 00:40:21,000 --> 00:40:23,960 Speaker 11: uncertainty around what the FED is going to do and 856 00:40:24,440 --> 00:40:27,440 Speaker 11: what inflation. You know, inflation seems to be an issue 857 00:40:27,440 --> 00:40:31,320 Speaker 11: again now with rising gas prices and food prices. So 858 00:40:31,520 --> 00:40:35,960 Speaker 11: all of that uncertainty introduces some risks that investors are 859 00:40:36,000 --> 00:40:38,120 Speaker 11: not happy with or not not not you know, they 860 00:40:38,200 --> 00:40:41,279 Speaker 11: want to account for that. So until we do have 861 00:40:41,360 --> 00:40:45,160 Speaker 11: that more of that certainty, that's where when the spread 862 00:40:45,239 --> 00:40:47,000 Speaker 11: is going to come down. And I think that's when 863 00:40:47,000 --> 00:40:49,279 Speaker 11: people are going to come back in so, you know, 864 00:40:49,320 --> 00:40:49,760 Speaker 11: and then. 865 00:40:49,640 --> 00:40:53,360 Speaker 8: Obviously federal reserve cutting rates will help as well. 866 00:40:53,480 --> 00:40:53,680 Speaker 4: Well. 867 00:40:54,120 --> 00:40:56,759 Speaker 2: When I was a kid, a lot of people used 868 00:40:56,880 --> 00:41:02,480 Speaker 2: arms and post financial crisis rate mortgages and post financial crisis, 869 00:41:02,480 --> 00:41:05,719 Speaker 2: nobody except for Paul Sweeney has done so is that 870 00:41:05,760 --> 00:41:06,640 Speaker 2: going to change. 871 00:41:07,520 --> 00:41:10,560 Speaker 11: Well, we've seen pickup in arms over the last year, 872 00:41:10,680 --> 00:41:14,440 Speaker 11: but honestly, even arms have gotten more expensive, so the 873 00:41:14,880 --> 00:41:17,520 Speaker 11: share of arm or origination has gone down. 874 00:41:17,440 --> 00:41:18,160 Speaker 8: As a result. 875 00:41:18,840 --> 00:41:21,000 Speaker 11: But people, I mean people are trying in any way 876 00:41:21,480 --> 00:41:23,240 Speaker 11: anyway that it can to save some money. 877 00:41:24,160 --> 00:41:27,840 Speaker 1: So if a buyer finds something, h what is the 878 00:41:27,840 --> 00:41:29,880 Speaker 1: mortgage market like, can I get a mortgage? 879 00:41:29,920 --> 00:41:32,880 Speaker 2: Can I can of a competitive out there? What is 880 00:41:32,920 --> 00:41:35,320 Speaker 2: the more banks rolling back? Are they much more cautious? 881 00:41:36,480 --> 00:41:39,359 Speaker 11: Yeah, I mean I think there are particularly in that 882 00:41:39,600 --> 00:41:42,880 Speaker 11: jumble market, you know, in the markets that is anyway, 883 00:41:43,440 --> 00:41:47,719 Speaker 11: more uncertainty we've had more price reductions, there's less inventory. 884 00:41:47,719 --> 00:41:50,319 Speaker 11: I mean, the markets that are suffering, they suffer too 885 00:41:50,960 --> 00:41:56,360 Speaker 11: in terms of availability of lending. But overall, an interesting 886 00:41:56,400 --> 00:41:59,600 Speaker 11: thing that I recently saw from HAMDA data is just 887 00:41:59,680 --> 00:42:04,040 Speaker 11: how MU originations went to higher income households. So higher 888 00:42:04,040 --> 00:42:07,080 Speaker 11: income households don't have as part of a time getting 889 00:42:07,160 --> 00:42:09,840 Speaker 11: a loan as much as a lower income households. 890 00:42:09,920 --> 00:42:12,719 Speaker 8: So so you know, that's that's really the concern here 891 00:42:12,760 --> 00:42:15,279 Speaker 8: with lack of affordability. And then on top of that 892 00:42:15,320 --> 00:42:16,799 Speaker 8: you can't even get a mortgage. 893 00:42:18,000 --> 00:42:20,720 Speaker 1: So what's the what is your expectation of Core Logic? 894 00:42:20,760 --> 00:42:22,200 Speaker 1: You know, a year from now, where do you think 895 00:42:22,520 --> 00:42:23,759 Speaker 1: mortgage rates will be? 896 00:42:25,560 --> 00:42:28,719 Speaker 11: Oh my crystal ball is not working these days. But 897 00:42:30,120 --> 00:42:33,040 Speaker 11: you know, I think I'm hoping closer to six again. 898 00:42:33,120 --> 00:42:34,799 Speaker 11: You know, our forecast for the end of this year 899 00:42:34,880 --> 00:42:37,520 Speaker 11: six point seven. I think by the middle of next 900 00:42:37,640 --> 00:42:40,279 Speaker 11: year we could be down to that six point to 901 00:42:40,600 --> 00:42:41,359 Speaker 11: six point three. 902 00:42:42,280 --> 00:42:43,920 Speaker 3: All right, Salma, thanks so much for joining us. 903 00:42:43,960 --> 00:42:46,560 Speaker 1: Some a heaps chief economists at core Logic talking about 904 00:42:46,600 --> 00:42:47,440 Speaker 1: the real estate biz. 905 00:42:47,920 --> 00:42:51,080 Speaker 6: You're listening to the tape Cats are Live program Bloomberg 906 00:42:51,120 --> 00:42:54,719 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the 907 00:42:54,800 --> 00:42:58,000 Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business app. 908 00:42:58,040 --> 00:43:00,719 Speaker 6: You can also listen live on Amazon and Alexa from 909 00:43:00,719 --> 00:43:04,520 Speaker 6: our flagship New York station, Just say Alexa play Bloomberg 910 00:43:04,520 --> 00:43:05,320 Speaker 6: eleven thirty. 911 00:43:06,560 --> 00:43:09,560 Speaker 1: Boy, what perfect timing? UK delayed ban on sale of 912 00:43:09,640 --> 00:43:12,719 Speaker 1: new petrol diesel cars until twenty thirty five, pushing it back. 913 00:43:12,880 --> 00:43:14,200 Speaker 3: Our next guest probably hasn't. 914 00:43:14,560 --> 00:43:17,000 Speaker 2: It's the worst timing. Why would they announce this during 915 00:43:17,000 --> 00:43:17,560 Speaker 2: Climate Week? 916 00:43:17,640 --> 00:43:18,840 Speaker 3: I don't know, That's my point. 917 00:43:18,920 --> 00:43:20,959 Speaker 1: So I'm thinking what is going on there? Ian sim 918 00:43:21,000 --> 00:43:24,279 Speaker 1: joins us. He's the CEO of Impacts Asset Management and 919 00:43:24,320 --> 00:43:25,480 Speaker 1: the reasons this is irrelevant? 920 00:43:25,680 --> 00:43:29,319 Speaker 3: Ian? How what's your investment strategy at Impacts? What do 921 00:43:29,360 --> 00:43:29,879 Speaker 3: you guys do? 922 00:43:30,920 --> 00:43:34,560 Speaker 12: So we're investing in the transition to a more sustainable economy, 923 00:43:34,600 --> 00:43:38,520 Speaker 12: which essentially is the industrial revolution around clean energy. 924 00:43:38,640 --> 00:43:42,399 Speaker 1: So your UK Prime Minister during Climate Week says we're 925 00:43:42,480 --> 00:43:43,719 Speaker 1: going to slow it down a little bit. 926 00:43:44,719 --> 00:43:47,160 Speaker 12: Well, the UK had become an outlier in the sense 927 00:43:47,200 --> 00:43:50,600 Speaker 12: of banning or announcing a ban on internal combustion engine 928 00:43:50,640 --> 00:43:53,520 Speaker 12: vehicles new sales by twenty thirty and just about everyone 929 00:43:53,560 --> 00:43:55,960 Speaker 12: else that's got that twenty thirty five, how the European 930 00:43:56,040 --> 00:43:58,440 Speaker 12: Union had committed to something five years later. So this 931 00:43:58,520 --> 00:44:00,359 Speaker 12: is just an alignment with what the rest, all right. 932 00:44:00,360 --> 00:44:02,600 Speaker 1: The other thing that blew me away just from chatting earlier, 933 00:44:02,760 --> 00:44:06,960 Speaker 1: like environmental investing here has lost the momentum in the 934 00:44:07,040 --> 00:44:09,480 Speaker 1: United States, and I know it's way different in Europe, 935 00:44:09,480 --> 00:44:13,480 Speaker 1: particularly Northern Europe. But you got fifty billion dollars in 936 00:44:13,520 --> 00:44:16,520 Speaker 1: assets under management. You're making big bets here. 937 00:44:17,400 --> 00:44:17,640 Speaker 5: Yeah. 938 00:44:17,680 --> 00:44:19,200 Speaker 12: So we've been going for twenty five years since I 939 00:44:19,200 --> 00:44:21,640 Speaker 12: started the business in nineteen ninety eight, So we're running 940 00:44:21,640 --> 00:44:24,120 Speaker 12: money for about one hundred institutional investors around the world, 941 00:44:24,160 --> 00:44:26,680 Speaker 12: including many in the US. So actually, this is not 942 00:44:26,719 --> 00:44:31,160 Speaker 12: about environmental investing. This is the industrial revolution, around renewable energy, 943 00:44:31,239 --> 00:44:35,239 Speaker 12: around energy efficiency, around electric vehicles. These are producing better 944 00:44:35,280 --> 00:44:38,960 Speaker 12: products for consumers, cheaper products, and this is good for everybody. 945 00:44:39,239 --> 00:44:41,680 Speaker 4: Talk to us about like what might be a couple 946 00:44:41,680 --> 00:44:42,880 Speaker 4: of the big areas where. 947 00:44:42,680 --> 00:44:44,320 Speaker 3: You guys have invested in. Give us a sense of 948 00:44:44,400 --> 00:44:46,839 Speaker 3: kind of how that works for. 949 00:44:46,800 --> 00:44:49,759 Speaker 2: You, And I mean to sort of build on the 950 00:44:49,800 --> 00:44:53,640 Speaker 2: idea that this is a revolution. We were talking a 951 00:44:53,680 --> 00:44:58,080 Speaker 2: little bit earlier with someone who's invested in battery technology, 952 00:44:58,160 --> 00:45:01,560 Speaker 2: and he told us this is like the shift from 953 00:45:01,600 --> 00:45:06,040 Speaker 2: whale oil to petrocarbons, Like it's that big of a deal. 954 00:45:06,840 --> 00:45:09,640 Speaker 12: Yeah, I mean, solar power has come down and cost 955 00:45:09,680 --> 00:45:12,839 Speaker 12: by ninety five percent over the last twenty years. It's 956 00:45:12,920 --> 00:45:13,680 Speaker 12: cheaper than. 957 00:45:13,640 --> 00:45:17,080 Speaker 2: As has the price per kilo at hour for batteries precisely. 958 00:45:17,160 --> 00:45:20,239 Speaker 12: Yeah, so that means that that you can get cheaper transportation, 959 00:45:20,880 --> 00:45:25,680 Speaker 12: cheaper electrons when you plug a device into to the grid. 960 00:45:26,080 --> 00:45:27,960 Speaker 12: So what are we investing in? What we're investing in 961 00:45:28,120 --> 00:45:32,560 Speaker 12: large scale wind projects, We're investing in building's energy projects. 962 00:45:32,680 --> 00:45:35,640 Speaker 12: If you just taken the average office building, you can 963 00:45:35,680 --> 00:45:38,839 Speaker 12: typically reduce the energy use by thirty percent just by 964 00:45:38,840 --> 00:45:42,200 Speaker 12: putting it a better building management system, better software, better sensors. 965 00:45:42,640 --> 00:45:45,240 Speaker 12: So these are global opportunities, massive markets. 966 00:45:45,280 --> 00:45:47,560 Speaker 2: Well, and I think it's nice that you highlight the 967 00:45:47,600 --> 00:45:53,080 Speaker 2: office investment case because Paul and I we talk about 968 00:45:53,160 --> 00:45:55,600 Speaker 2: us a lot, right, we like to talk about ourselves. 969 00:45:55,880 --> 00:45:59,680 Speaker 2: But this isn't about as much consumer adoption as it 970 00:45:59,760 --> 00:46:02,200 Speaker 2: is CapX. At least that's what corporate capex. That's what 971 00:46:02,280 --> 00:46:04,600 Speaker 2: Jeff Chamberlain was telling us. He's the CEO of Vaulta 972 00:46:04,719 --> 00:46:08,759 Speaker 2: Energy Technologies used to run Argon National Laboratory, and he 973 00:46:08,800 --> 00:46:11,040 Speaker 2: said that's why he got into this business. Because you're 974 00:46:11,040 --> 00:46:17,880 Speaker 2: going to see large multinational conglomerates really shifting spend into 975 00:46:17,920 --> 00:46:18,640 Speaker 2: this transition. 976 00:46:19,440 --> 00:46:22,040 Speaker 12: Yeah. I mean, this essentially is a game around strengthed 977 00:46:22,080 --> 00:46:24,759 Speaker 12: assets or avoiding them. Because if you're an auto manufacturer 978 00:46:24,800 --> 00:46:27,680 Speaker 12: and you've got a plant that's producing thousands of vehicles 979 00:46:27,719 --> 00:46:31,080 Speaker 12: a year with internal combustion engines, but twenty thirty five, 980 00:46:31,360 --> 00:46:33,359 Speaker 12: you're not going to have a market in Europe, so 981 00:46:33,400 --> 00:46:36,880 Speaker 12: you need to pivot that manufacturing process to an electric 982 00:46:37,000 --> 00:46:39,279 Speaker 12: vehicle process, and that's not easy. So this is where 983 00:46:39,320 --> 00:46:41,400 Speaker 12: the investment capital comes in, because what we're trying to 984 00:46:41,400 --> 00:46:43,600 Speaker 12: do is find for companies that are going to be 985 00:46:43,600 --> 00:46:46,520 Speaker 12: winners over the next five to ten years. And those 986 00:46:46,560 --> 00:46:48,239 Speaker 12: are the companies have got strategies that are going to 987 00:46:48,239 --> 00:46:49,879 Speaker 12: be successful with twenty thirties. 988 00:46:49,719 --> 00:46:52,400 Speaker 2: Which are the most exciting ones. I mean, I love cars, 989 00:46:52,440 --> 00:46:54,520 Speaker 2: so I always think of battery later vehicles. But you 990 00:46:54,560 --> 00:46:58,240 Speaker 2: could tell me like new HVAC systems are even more important, 991 00:46:58,239 --> 00:46:59,920 Speaker 2: I would have no idea. 992 00:47:00,160 --> 00:47:02,080 Speaker 12: Well, we're investing across the board. There isn't like a 993 00:47:02,120 --> 00:47:04,840 Speaker 12: silver bullet here, that's going to be the one to 994 00:47:05,239 --> 00:47:08,239 Speaker 12: go for. So and it's not just all about energy, right. Look, 995 00:47:08,320 --> 00:47:10,759 Speaker 12: look what's happened in the water sector this year. We've 996 00:47:10,760 --> 00:47:15,359 Speaker 12: got a huge contention in the UK around sewage overflows, 997 00:47:15,440 --> 00:47:19,040 Speaker 12: pollution of rivers. I think there were problems with one 998 00:47:19,040 --> 00:47:21,280 Speaker 12: of the big athletic events in Paris because people couldn't 999 00:47:21,280 --> 00:47:24,359 Speaker 12: swim in the River Seine for the triathlon. That this 1000 00:47:24,440 --> 00:47:27,880 Speaker 12: is a major investment opportunity as well. Look at garbage, 1001 00:47:27,880 --> 00:47:30,600 Speaker 12: the amount of money that's just been put into landfill 1002 00:47:31,239 --> 00:47:34,279 Speaker 12: by throwing stuff away. Regulations are trying to tighten up 1003 00:47:34,320 --> 00:47:36,640 Speaker 12: on that. So there's new regulations in France now that 1004 00:47:36,680 --> 00:47:42,359 Speaker 12: are requiring buildings developers, buildings owners to guarantee the use 1005 00:47:42,400 --> 00:47:45,200 Speaker 12: of certain levels of recycled product and also guarantee the 1006 00:47:45,719 --> 00:47:48,280 Speaker 12: removal of waste when they're doing construction. 1007 00:47:48,880 --> 00:47:49,240 Speaker 4: Wow. 1008 00:47:49,400 --> 00:47:52,120 Speaker 1: Yeah, So what are some of the where are the 1009 00:47:52,120 --> 00:47:55,160 Speaker 1: new ideas coming from for to manage this transition? Are 1010 00:47:55,160 --> 00:47:57,480 Speaker 1: are there certain parts of the world that are you 1011 00:47:57,600 --> 00:47:59,560 Speaker 1: find the companies are kind of sprouting up. 1012 00:48:00,160 --> 00:48:01,680 Speaker 12: One of the reasons we opened an office in Hong 1013 00:48:01,760 --> 00:48:04,000 Speaker 12: Kong in two thousand and eight was because we could 1014 00:48:04,000 --> 00:48:06,360 Speaker 12: see that a lot of the technology around this revolution 1015 00:48:06,480 --> 00:48:08,680 Speaker 12: was going to come out of the Asian region. So 1016 00:48:08,719 --> 00:48:11,120 Speaker 12: we've built a very smart investment team in Hong Kong. 1017 00:48:11,120 --> 00:48:13,879 Speaker 12: We've just added some capability in Tokyo as well, so 1018 00:48:13,920 --> 00:48:16,759 Speaker 12: that sort of access from Singapore up to Tokyo via 1019 00:48:16,800 --> 00:48:20,040 Speaker 12: Hong Kong, Greater China, Korea, Japan, that's where a lot 1020 00:48:20,040 --> 00:48:21,719 Speaker 12: of this is coming from. But it's not just an 1021 00:48:21,719 --> 00:48:24,360 Speaker 12: Asian story. There's great technology coming out of the lambs 1022 00:48:24,400 --> 00:48:26,680 Speaker 12: in the US, as out of Europe as well. 1023 00:48:27,320 --> 00:48:30,719 Speaker 2: In your athas under management are big. I don't know 1024 00:48:30,719 --> 00:48:33,400 Speaker 2: if we said or not, but fifty billion right dollars? 1025 00:48:34,920 --> 00:48:38,279 Speaker 2: What's the trajectory, like, is it growing and where is 1026 00:48:38,320 --> 00:48:39,800 Speaker 2: that money coming from? 1027 00:48:40,200 --> 00:48:43,120 Speaker 12: So it's been growing rapidly recently, it's been plateaued for 1028 00:48:43,160 --> 00:48:45,319 Speaker 12: the last twelve months or so because we're in quite 1029 00:48:45,360 --> 00:48:48,200 Speaker 12: a fragile market for equity investing in general. So what 1030 00:48:48,200 --> 00:48:50,839 Speaker 12: I've been talking about are the fabulous opportunities in this 1031 00:48:50,920 --> 00:48:53,000 Speaker 12: industrial revolution. But we can't get away from the fact 1032 00:48:53,000 --> 00:48:55,640 Speaker 12: that equity market sentiment is quite weak at the moment. 1033 00:48:55,920 --> 00:48:59,040 Speaker 12: So that's meant that our flows are fairly flat right now. 1034 00:48:59,320 --> 00:49:02,040 Speaker 12: So looking at head eighteen months two years. We're expecting 1035 00:49:02,040 --> 00:49:04,759 Speaker 12: that to pick up again. But we've got distribution now, 1036 00:49:04,840 --> 00:49:08,080 Speaker 12: sales to clients across the world, one hundred sales and 1037 00:49:08,200 --> 00:49:10,960 Speaker 12: marketing people. So we're expecting that new money to come 1038 00:49:10,960 --> 00:49:13,920 Speaker 12: in from pension funds, sovereign wealth funds we're in dialogue with. 1039 00:49:13,920 --> 00:49:15,600 Speaker 12: We just won a mandate a year ago with the 1040 00:49:16,120 --> 00:49:19,280 Speaker 12: Government Pension Fund of Japan. We managed money for calsters 1041 00:49:19,280 --> 00:49:22,040 Speaker 12: out of California. But also the man and woman in 1042 00:49:22,080 --> 00:49:25,480 Speaker 12: the street are really starting to vote with their checkbooks 1043 00:49:25,480 --> 00:49:28,120 Speaker 12: through their money managers in favor of these new industries. 1044 00:49:28,160 --> 00:49:30,000 Speaker 12: There's a lot of private wealth money coming out way. 1045 00:49:30,000 --> 00:49:33,600 Speaker 2: I think it's interesting that growth in assets has been flat, 1046 00:49:33,640 --> 00:49:36,240 Speaker 2: considering we got over the last twelve months of the IRA. 1047 00:49:36,440 --> 00:49:38,960 Speaker 2: In that period, right, you're starting to see governments put 1048 00:49:39,600 --> 00:49:44,080 Speaker 2: not just millions or billions, but hundreds of millions, approaching 1049 00:49:44,160 --> 00:49:49,759 Speaker 2: trillion trillions of dollars behind this transition. Isn't that like 1050 00:49:50,400 --> 00:49:51,960 Speaker 2: the whistle to get on board? 1051 00:49:52,800 --> 00:49:54,960 Speaker 12: Yeah, So, the Inflation Reduction Act in the US, the 1052 00:49:55,000 --> 00:49:57,480 Speaker 12: Green Deal in Europe, and similar policies out of China 1053 00:49:57,520 --> 00:50:01,880 Speaker 12: are really propelling corporate investment. That's great for earning's outlook 1054 00:50:01,920 --> 00:50:03,759 Speaker 12: over the next sort of next few years. But we 1055 00:50:03,760 --> 00:50:05,440 Speaker 12: can't get away from the fact that multiples and the 1056 00:50:05,440 --> 00:50:08,520 Speaker 12: equity market are depressed because sentiment is weak as inflation 1057 00:50:08,880 --> 00:50:10,959 Speaker 12: has come through and central banks has been raising rates. 1058 00:50:10,960 --> 00:50:14,240 Speaker 12: But as right starts a plateau and inflation's under control, 1059 00:50:14,320 --> 00:50:17,000 Speaker 12: we can definitely see sentiment improving for equities, and that 1060 00:50:17,040 --> 00:50:20,640 Speaker 12: should be fabulous for growth at a reasonable price, transition 1061 00:50:20,719 --> 00:50:24,160 Speaker 12: to more sustainable garment when the sentiment, when that sentiment improves. 1062 00:50:23,880 --> 00:50:26,120 Speaker 1: Right, We have a guest that comes on occasionally when 1063 00:50:26,200 --> 00:50:30,719 Speaker 1: when he's in town. His focus is not necessarily new technology. 1064 00:50:30,760 --> 00:50:34,600 Speaker 1: His focus is just kind of capturing the energy that's lost, 1065 00:50:34,760 --> 00:50:38,000 Speaker 1: even like fossil fuels. You know, he's got some crazy number, 1066 00:50:38,040 --> 00:50:41,400 Speaker 1: you know, the the amount of energy that's lost. Me 1067 00:50:41,400 --> 00:50:42,719 Speaker 1: to take a barrel of oil out of the ground 1068 00:50:42,760 --> 00:50:45,799 Speaker 1: and it gets into whatever it's Jonathan Maxwell, right from 1069 00:50:45,840 --> 00:50:48,680 Speaker 1: Sustainable Development Capital. He also wrote the book The Edge, 1070 00:50:49,200 --> 00:50:51,960 Speaker 1: How competition for re sources is pushing the world and 1071 00:50:52,000 --> 00:50:54,600 Speaker 1: its climate to the brink yep And so, how do 1072 00:50:54,640 --> 00:50:56,600 Speaker 1: you guys think about that little part We're not little part, 1073 00:50:56,640 --> 00:50:59,720 Speaker 1: but that part of the whole move towards Green Industrial Revolution. 1074 00:51:00,239 --> 00:51:02,880 Speaker 12: Well, that's sting waste, I guess, right, mean, that's just 1075 00:51:02,920 --> 00:51:05,080 Speaker 12: money that's sort of lying on the sidewalk to be 1076 00:51:05,120 --> 00:51:07,880 Speaker 12: picked up. It's an absolute no brainer to invest in 1077 00:51:07,960 --> 00:51:10,120 Speaker 12: energy efficiency. The payback periods for many of the things 1078 00:51:10,120 --> 00:51:12,640 Speaker 12: that we're investing in that space for two three years. 1079 00:51:12,640 --> 00:51:14,480 Speaker 12: Another reason that they're not at scale is because I 1080 00:51:14,600 --> 00:51:17,880 Speaker 12: quite often very fragmented. So that's where our insights come 1081 00:51:17,920 --> 00:51:19,719 Speaker 12: in as analysts around the world is looking for these 1082 00:51:19,719 --> 00:51:23,320 Speaker 12: opportunities that can scale quite quickly with the right capital support. 1083 00:51:24,440 --> 00:51:27,239 Speaker 2: Interesting, it's I mean, I'm glad Climate Week happen because 1084 00:51:27,239 --> 00:51:30,759 Speaker 2: I've been learning a ton about an issue that you know. 1085 00:51:30,800 --> 00:51:34,400 Speaker 2: The problem is, I think for a lot of Americans, 1086 00:51:34,400 --> 00:51:35,880 Speaker 2: they get kind of beaten over the head of this 1087 00:51:36,280 --> 00:51:37,959 Speaker 2: ESG thing and it gets kind of. 1088 00:51:39,280 --> 00:51:41,680 Speaker 4: Muddied in with the whoe thing complain. 1089 00:51:42,280 --> 00:51:45,319 Speaker 2: It's become very politicized, and that makes it harder to 1090 00:51:45,360 --> 00:51:49,520 Speaker 2: talk about from an investment from a completely logical point 1091 00:51:49,520 --> 00:51:50,120 Speaker 2: of view. 1092 00:51:50,360 --> 00:51:53,160 Speaker 12: Yeah, we need to bear at ESG. ESG is an unhelpful, 1093 00:51:53,280 --> 00:51:55,440 Speaker 12: muddy concept. We need to move on from that. 1094 00:51:55,840 --> 00:51:57,640 Speaker 1: Because I like the way you phrase it, because I 1095 00:51:57,680 --> 00:52:01,600 Speaker 1: could take that message down the Tallahassee, Florida, Austin, Texas, 1096 00:52:01,600 --> 00:52:02,080 Speaker 1: and pitch. 1097 00:52:02,320 --> 00:52:02,759 Speaker 3: I think the. 1098 00:52:02,760 --> 00:52:05,600 Speaker 1: Pension funds well. And I wouldn't be physically thrown out 1099 00:52:05,600 --> 00:52:08,080 Speaker 1: of the office. You would be if you said esg right. 1100 00:52:08,080 --> 00:52:09,239 Speaker 12: But and if you go in and you say, look, 1101 00:52:09,280 --> 00:52:11,280 Speaker 12: if you buy an electric vehicle, it's got forty percent 1102 00:52:11,280 --> 00:52:13,359 Speaker 12: of the parts of an internal combustion engine vehicle. It's 1103 00:52:13,360 --> 00:52:15,440 Speaker 12: more reliable, it's going to be cheaper, it's going to 1104 00:52:15,480 --> 00:52:17,000 Speaker 12: be more fun to drive. Why wouldn't you want to 1105 00:52:17,000 --> 00:52:19,200 Speaker 12: buy one of those rather than the clunky old guests? 1106 00:52:19,520 --> 00:52:21,839 Speaker 3: Thusiads all right, Ian, thanks so much for joining US. 1107 00:52:21,840 --> 00:52:24,880 Speaker 1: Ian sim he's the CEO of Impacts Asset Management, joining 1108 00:52:24,920 --> 00:52:25,480 Speaker 1: US live. 1109 00:52:25,960 --> 00:52:29,080 Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can 1110 00:52:29,120 --> 00:52:32,880 Speaker 2: subscribe and listen to interviews on Apple Podcasts or whatever 1111 00:52:33,000 --> 00:52:36,720 Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 1112 00:52:36,920 --> 00:52:38,839 Speaker 2: at Matt Miller nineteen seventy three. 1113 00:52:39,280 --> 00:52:41,680 Speaker 3: And I'm fall Sweeney. I'm on Twitter at pt Sweeney. 1114 00:52:41,800 --> 00:52:44,480 Speaker 1: Before the podcast, you can always catch us worldwide at 1115 00:52:44,480 --> 00:52:46,240 Speaker 1: Bloomberg Radio.