WEBVTT - US Mortgage Rates Fall Again, Israel Widens War 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.119 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:15.760 Eastern on Apple CarPlay and then broid Auto with the 0:00:15.800 --> 0:00:19.600 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:19.920 --> 0:00:21.600 or watch us live on YouTube. 0:00:23.200 --> 0:00:25.960 And let's get more on housing store Paul us Economists 0:00:25.960 --> 0:00:29.600 with Bloomberg Economics. It joins us now. So those mortgage apps, 0:00:29.640 --> 0:00:32.280 let's start there for a second, up eleven percent. So 0:00:32.479 --> 0:00:34.840 talk to about the refinancing that we saw here, because 0:00:34.840 --> 0:00:37.320 I gotta say refinancing with a six handle. That does 0:00:37.400 --> 0:00:39.199 surprise me. I thought we would have waited until we 0:00:39.280 --> 0:00:40.600 got a lease down to the fives. 0:00:40.920 --> 0:00:43.760 It's interesting. So there are folks who just had to 0:00:43.800 --> 0:00:46.040 buy homes, they had to make moves for jobs, They 0:00:46.120 --> 0:00:50.600 had to end up taking out mortgages over seven percent, 0:00:51.159 --> 0:00:53.760 and those folks now have the opportunity to refly, right, 0:00:53.800 --> 0:00:55.920 I mean, mortgage rates are now down about one hundred 0:00:55.920 --> 0:01:00.279 and fifty basis points from the high post COVID even 0:01:00.400 --> 0:01:02.960 just in the last month, or down about thirty basis points. 0:01:03.000 --> 0:01:06.080 So for folks who bought a home because they had 0:01:06.160 --> 0:01:10.840 to post COVID, there is some more enthusiasm about refinancing 0:01:11.240 --> 0:01:14.480 if you unpack mortgage backed securities. Though overall, and this 0:01:14.640 --> 0:01:18.360 is totally to your points, Alex, the average rate being 0:01:18.440 --> 0:01:20.960 paid on existing homes, the average rate being paid by 0:01:21.040 --> 0:01:24.320 homeowners is still a touch under four percent, so there 0:01:24.400 --> 0:01:27.280 is still more room to run for refinancing. This I 0:01:27.360 --> 0:01:30.560 think is probably, you know, just a little bit of 0:01:30.640 --> 0:01:34.759 enthusiasm for folks who had to take out those long 0:01:34.840 --> 0:01:37.760 term mortgages when rates were significantly higher than they are today. 0:01:38.160 --> 0:01:40.400 It's interesting because we were just talking about KB Home. 0:01:40.440 --> 0:01:44.920 Even though it's down today. Xhb's the ETF that tracks 0:01:44.920 --> 0:01:47.680 the home building index, it's still up trading around records, 0:01:47.720 --> 0:01:49.800 up around twenty eight percent year to date to outpacing 0:01:49.840 --> 0:01:52.440 the broader SMP five hundred. But Bank of America actually 0:01:52.640 --> 0:01:54.560 was talking about how in the three months before and 0:01:54.680 --> 0:01:57.640 after the Fed cuts rates, homebuilder stocks have outperformed the 0:01:57.720 --> 0:01:59.240 S and P five hundred and three of the last 0:01:59.320 --> 0:02:02.400 five period. So wondering what particular level when it comes 0:02:02.440 --> 0:02:05.360 to say mortgage rates, when you're because you're obviously covering 0:02:05.400 --> 0:02:07.440 this very closely, do you feel like you'll see more 0:02:07.440 --> 0:02:09.360 consumers come back in to try to refinance. 0:02:09.760 --> 0:02:11.440 So it's a little bit tricky when you're thinking about 0:02:11.440 --> 0:02:14.639 home builders versus when you're thinking about refinancing, right, because 0:02:14.720 --> 0:02:16.440 you have a few different dynamics that are at play. 0:02:16.800 --> 0:02:19.400 For people like people like Alex or people like me 0:02:19.480 --> 0:02:22.760 who have low mortgage rates that are locked in, you're 0:02:22.800 --> 0:02:25.120 not gonna end up seeing a rush to refinancing. 0:02:25.800 --> 0:02:27.840 You know, we saw a rate to move is quite high. 0:02:27.919 --> 0:02:29.840 Your hurdle rate, well, your hurdle rate to move is 0:02:29.880 --> 0:02:33.120 like close to four yeah, right, So there's still a 0:02:33.320 --> 0:02:35.720 a there's still a ton of room to run if 0:02:35.760 --> 0:02:39.480 you think about home builders though, because nobody's rushing to refinance, 0:02:39.600 --> 0:02:42.680 because nobody's rushing to move if they're an existing homeowner 0:02:42.760 --> 0:02:45.840 because they've locked in that low rate, there is room 0:02:45.960 --> 0:02:48.120 for home builders to sort of fill the gap for 0:02:48.639 --> 0:02:51.400 new households that are being formed, young people who are 0:02:51.440 --> 0:02:52.560 trying to buy their first home. 0:02:52.919 --> 0:02:54.760 And like lack of inventory that was such a big 0:02:54.800 --> 0:02:57.680 problem even before COVID, but then was exacerbated so much 0:02:57.880 --> 0:02:59.560 that obviously that they were able to pick up that 0:02:59.600 --> 0:02:59.919 side of it. 0:03:00.560 --> 0:03:05.080 Extraordinary lack of inventory, especially for existing homes for sale. 0:03:05.160 --> 0:03:07.359 The thing that I find shocking, and you'll probably have 0:03:07.480 --> 0:03:10.639 more color on this. For home builders in particular, there 0:03:10.800 --> 0:03:13.960 is still just a massive inventory of new homes new 0:03:14.040 --> 0:03:17.200 construction and units that are currently under construction that are 0:03:17.240 --> 0:03:21.400 available for sale. I mean levels unseen since early two 0:03:21.440 --> 0:03:25.760 thousand and eight, when housing was obviously frothy. So that's 0:03:25.840 --> 0:03:29.200 one thing that we have. These two forces that are 0:03:29.280 --> 0:03:33.200 diverging for new homebuilders. One is just this earth of 0:03:33.280 --> 0:03:36.760 existing homes for sale, but you do have this mounting 0:03:36.880 --> 0:03:39.400 inventory of new homes for sale that I think is 0:03:39.480 --> 0:03:42.160 going to keep home prices new home prices under pressure 0:03:42.240 --> 0:03:43.040 for quite some time. 0:03:43.360 --> 0:03:46.240 Which also spakes a question like the transmission policy mechanism 0:03:46.360 --> 0:03:48.960 from the FED, when you have sort of these structural 0:03:49.160 --> 0:03:51.320 issues that have nothing to do with what the FED 0:03:51.400 --> 0:03:54.040 actually does, and that's an interesting sort of dynamic. 0:03:54.400 --> 0:03:56.920 There was an early there was a question, maybe it 0:03:57.000 --> 0:04:01.040 was in the March press conference JPL March press conference 0:04:01.080 --> 0:04:04.400 following the FOMC meeting, where somebody asked, they said, look, 0:04:04.440 --> 0:04:08.040 you cut rates to the bone during COVID, everybody refines 0:04:08.120 --> 0:04:11.080 sub four percent, and now the transmission of monetary policy 0:04:11.120 --> 0:04:14.240 while you're trying to tighten rates is really really slow. 0:04:14.360 --> 0:04:17.120 Do you regret doing that? And he basically said, no regrets, 0:04:18.520 --> 0:04:21.159 but yeah, I mean interest rate policy has been moving 0:04:21.640 --> 0:04:24.640 very very slowly through the real economy. Housing is the 0:04:24.760 --> 0:04:28.240 number one sector for monetary policy and rates policy to 0:04:28.400 --> 0:04:32.760 move into the real economy. Instead, you're seeing communication tools 0:04:33.160 --> 0:04:37.400 moving into financial markets actually really quickly. The second somebody 0:04:37.480 --> 0:04:39.440 shows their hand just a little bit, you see a 0:04:39.560 --> 0:04:43.320 monster move in two your eelds, for example. So different 0:04:43.839 --> 0:04:46.920 policy tools moving at different speeds into different parts of 0:04:46.920 --> 0:04:47.400 the economy. 0:04:47.440 --> 0:04:49.479 It's really interesting. All right, Thank you so much, Stewart, 0:04:49.480 --> 0:04:53.320 appreciate it. Stuart Paul Us economists with Bloomberg Economics. 0:04:52.720 --> 0:04:53.039 On that. 0:04:54.680 --> 0:04:58.520 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:04:58.640 --> 0:05:01.560 weekdays at ten am EAS. You're on applecar Play and 0:05:01.680 --> 0:05:04.560 androuid Otto with the Bloomberg Business Act. You can also 0:05:04.680 --> 0:05:08.160 listen live on Amazon Alexa from our flagship New York station. 0:05:08.560 --> 0:05:11.279 Just say Alexa play Bloomberg eleven thirty. 0:05:13.000 --> 0:05:14.880 I want to take a moment here and get dive 0:05:15.000 --> 0:05:17.920 into geopolitics to take a look at what's happening with 0:05:18.000 --> 0:05:20.960 Israel and Hesbela. Israel stepping up its heaviest air attacks 0:05:20.960 --> 0:05:24.719 on Hesbela targets in Lebanon since two thousand and six, 0:05:24.880 --> 0:05:27.120 after shooting down the first missile ever fired by the 0:05:27.160 --> 0:05:29.560 militant group at Tel Aviv. Joining us now in studio 0:05:29.640 --> 0:05:33.360 is Bobby Gosh, Bloomberg News Senior editor. Bobby, can you 0:05:33.440 --> 0:05:36.479 walk us through the sequence of events in the recent 0:05:36.520 --> 0:05:39.160 week that got us here and what things you're looking 0:05:39.160 --> 0:05:41.240 at over the next day forty eight twenty four hours. 0:05:42.040 --> 0:05:47.000 Yeah, it started, you remember with those those pages that 0:05:47.120 --> 0:05:53.040 went off, the thousands of pages exploded, most of them 0:05:53.480 --> 0:05:58.000 belonging to hesbe law operatives and fighters. The suspicion is 0:05:58.040 --> 0:06:00.680 that Israel was responsible for them. Israel as neither confirmed 0:06:00.720 --> 0:06:04.760 nor denied it, which is there very much in the 0:06:04.880 --> 0:06:07.279 Israeli m A. The following day there was a whole 0:06:07.279 --> 0:06:10.480 bunch of walkie talkies, again many of them belonging to 0:06:10.600 --> 0:06:15.600 Hisbellah commanders and fighters, that went off. Israel also then 0:06:15.680 --> 0:06:19.760 began targeted attacks against top level Hisbella commanders, the types 0:06:19.800 --> 0:06:23.560 of people who would be very important in the event 0:06:23.640 --> 0:06:28.880 of an all out war between Hesbellah and Israel. Simultaneously, 0:06:29.000 --> 0:06:35.320 Israel has been essentially attacking targets across its borders with Lebanon, 0:06:35.960 --> 0:06:42.839 specifically targeting missile bases, rocket launching facilities. It's all designed 0:06:43.040 --> 0:06:48.000 to reduce Hisbellah's ability to strike at Israeli targets. Israel 0:06:48.080 --> 0:06:51.760 says that the objective is to allow Israelis who had 0:06:51.800 --> 0:06:54.320 been living close to the border and who for many 0:06:54.360 --> 0:06:58.280 months now were forced to leave their homes. It's that 0:06:58.440 --> 0:07:01.200 this entire campaign is designed to allow those Israelis to 0:07:01.240 --> 0:07:04.359 go back to their homes and live in relative peace. 0:07:06.080 --> 0:07:08.080 But depending on how you want to look at it, 0:07:08.400 --> 0:07:11.360 this can also seem like an attempt to soften up 0:07:11.800 --> 0:07:15.520 Hezbelah for a larger campaign by Israel, whether that is 0:07:15.600 --> 0:07:19.680 a ground campaign or a campaign from the air. It 0:07:19.800 --> 0:07:20.880 can't give that impression. 0:07:21.160 --> 0:07:24.640 What has the Biden administration said about these latest earstrikes? 0:07:24.640 --> 0:07:27.240 Because I know that Joe Biden just gave his final 0:07:27.280 --> 0:07:30.160 address to the UN General Assembly this week. 0:07:30.800 --> 0:07:33.640 Well, the Biden administration for months and months now has 0:07:33.720 --> 0:07:36.120 been saying pretty much the same thing. On the one hand, 0:07:36.160 --> 0:07:41.200 it continuously repeats the chiboulette that Israel has a right 0:07:41.280 --> 0:07:44.040 to defend itself as it does, but at the same 0:07:44.080 --> 0:07:47.680 time it says that Israel should not escalate tensions in 0:07:47.760 --> 0:07:51.360 the region with its neighbors, and it has been warning 0:07:51.440 --> 0:07:54.240 against the risk of a larger war that will draw 0:07:54.320 --> 0:07:58.600 in Iran, which is Hisbella's main patron, which might draw 0:07:58.640 --> 0:08:01.600 in the United States. The problem is, of course, that 0:08:01.760 --> 0:08:04.160 all of that rhetoric from the Biden administration does not 0:08:04.360 --> 0:08:08.120 seem to be moving the needle. Prime Minister Natanya, who 0:08:08.200 --> 0:08:12.920 of Israel, seems to be operating on his own agenda, 0:08:14.000 --> 0:08:17.400 pursuing his own interests and paying almost no heed at 0:08:17.480 --> 0:08:20.440 all to the American president, which is not a good 0:08:20.480 --> 0:08:21.520 look for the United States. 0:08:21.560 --> 0:08:23.400 Well, I thought it was so interesting because as we 0:08:23.520 --> 0:08:26.320 were President Biden was speaking yesterday at the UN, we 0:08:26.360 --> 0:08:29.000 were also getting headlines on the terminal about Netanyahu and 0:08:29.120 --> 0:08:32.360 some things saying he was saying that was not peace 0:08:32.480 --> 0:08:34.040 and unity and ending the. 0:08:34.120 --> 0:08:35.360 War in Gaza. 0:08:35.480 --> 0:08:40.360 So it was very striking. What do you think, how 0:08:40.400 --> 0:08:43.599 do you think the election impacts this in terms of 0:08:43.720 --> 0:08:47.319 what Hesbal and Israel are thinking with six weeks to 0:08:47.400 --> 0:08:47.719 kind of go. 0:08:48.440 --> 0:08:50.559 Well, there's a school of thought in Israel and in 0:08:50.679 --> 0:08:53.679 some quarters in this country that Bibi Natnia was holding 0:08:53.720 --> 0:08:56.080 out for the election, that he's not going to change 0:08:56.160 --> 0:08:59.720 tech until there's an election. Until there's a new president 0:08:59.800 --> 0:09:03.280 in the United States. And according to this school of thought, 0:09:03.360 --> 0:09:06.000 he's betting on Donald Trump to return to the to 0:09:06.200 --> 0:09:09.439 the presidency on the assumption that Donald Trump will be 0:09:09.640 --> 0:09:13.840 more permissive and allow him a freer hand. I don't 0:09:13.920 --> 0:09:17.120 buy that, for one thing, more permissive than what It's 0:09:17.200 --> 0:09:20.760 not like Biden has really been restraining that Yahoo, There's 0:09:20.800 --> 0:09:25.240 only been rhetorical attempts at restraining him. That that's not working. 0:09:26.080 --> 0:09:31.240 And also I don't think necessarily that Donald Trump wants 0:09:31.320 --> 0:09:34.160 to come to the office with a major conflict in 0:09:34.280 --> 0:09:37.760 the Middle East to deal with. Remember, the big part 0:09:37.840 --> 0:09:42.000 of his message to his voter base is America first. 0:09:42.040 --> 0:09:44.880 The United States should not get involved too much in 0:09:44.920 --> 0:09:49.040 foreign affairs, should get out of the old conflicts, particularly 0:09:49.120 --> 0:09:52.240 in the Middle East. So if that is indeed bb 0:09:52.360 --> 0:09:56.000 Netniaho's calculus that Donald Trump would be better for him 0:09:56.120 --> 0:09:59.240 than Biden, I think he may have to calculate again. 0:10:00.240 --> 0:10:02.120 Such a pleasure to talk to you. You are always 0:10:02.320 --> 0:10:05.199 such a great reporter and you definitely help paint a 0:10:05.240 --> 0:10:07.640 picture for us. Bobby Goes Bloomberg, new senior editor, joining 0:10:07.720 --> 0:10:11.240 us on the latest between Hesbula Israel, as well as Goza. 0:10:12.760 --> 0:10:16.600 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:10:16.720 --> 0:10:19.480 weekdays at ten am Eastern on fo Cardplay and then 0:10:19.520 --> 0:10:22.400 broyd Otto with the Bloomberg Business App. Listen on demand 0:10:22.480 --> 0:10:26.120 wherever you get your podcasts, or watch us live on YouTube. 0:10:27.960 --> 0:10:30.520 I'm Alex d alongside Jun Tuck Gerndis Menon. Paul Sweeni 0:10:30.640 --> 0:10:32.679 is off today. This is Bloomberg Intelligence Radio and we 0:10:32.720 --> 0:10:35.560 are broadcasting to live from Interactive Broker Studio right here 0:10:36.040 --> 0:10:39.559 in Midtown Manhattan where Gridlock reigns. Want to get a 0:10:39.559 --> 0:10:40.160 take on the market. 0:10:40.240 --> 0:10:40.360 Here. 0:10:40.640 --> 0:10:42.400 Nothing's going on, so it's a good time to kind 0:10:42.440 --> 0:10:44.959 of recalibrate. What do you do as yields kind of 0:10:45.000 --> 0:10:47.200 come down the back end, though still stays a little 0:10:47.200 --> 0:10:50.400 bit higher. How do you position yourself for that when 0:10:50.480 --> 0:10:54.400 tech also is still outperforming. Nancy Dowd, a private wealth 0:10:54.559 --> 0:10:57.920 advisor at Americpriz Financial and CEO of Opus, joins us 0:10:57.920 --> 0:11:01.199 now to discuss her take on the markets. Nancy, we've 0:11:01.240 --> 0:11:03.720 sort of gotten through a seminal moment with the Fed. 0:11:04.040 --> 0:11:06.920 How do you need to rethink what your portfolio looks like? 0:11:09.240 --> 0:11:10.400 So it was a big surprise. 0:11:10.559 --> 0:11:13.840 We all bet on a quarter of a point cut, 0:11:14.000 --> 0:11:18.640 but I guess the FED decided to frontload the rate cuts, 0:11:18.760 --> 0:11:22.920 although overall the plan is still the same is to 0:11:23.080 --> 0:11:25.920 you know, to get to a certain target or by 0:11:26.000 --> 0:11:29.719 three percent by midyear twenty twenty six. So it was 0:11:29.760 --> 0:11:32.160 a bit of an enigma as to why they front 0:11:32.200 --> 0:11:36.480 loaded this rate cut, But in digging deeper in the details, 0:11:38.120 --> 0:11:41.959 the justification really had to do largely with the inflation 0:11:42.120 --> 0:11:44.959 numbers not being quite where they really want them to be, 0:11:45.040 --> 0:11:47.440 at least two out of the three that they watch, 0:11:48.400 --> 0:11:53.280 and also the employment numbers are weakening, and that gave 0:11:53.360 --> 0:11:56.800 a little bit of concern to the FED, so they 0:11:56.960 --> 0:12:01.920 just cut more aggressively. So now this is what we're 0:12:01.920 --> 0:12:04.720 dealing with. And I think the biggest impact was mortgage 0:12:05.360 --> 0:12:08.520 mortgage applications. I think that's probably the biggest impact in 0:12:08.600 --> 0:12:09.400 the last two weeks. 0:12:10.280 --> 0:12:13.040 So what do you think the playbook is as far 0:12:13.120 --> 0:12:16.320 as what you're advising clients to buy, what you're advising 0:12:16.360 --> 0:12:19.959 them to sell, because traditionally, I mean, every rate cutting 0:12:19.960 --> 0:12:21.959 cycle can be very different, but normally you would see 0:12:22.040 --> 0:12:25.839 safe for instance, bond proxy sectors like utilities outperform and 0:12:25.880 --> 0:12:28.160 tech underperform. The first six months after rate cut. But 0:12:28.440 --> 0:12:31.080 you've already had sectors like utilities taking off a lot 0:12:31.120 --> 0:12:33.320 of that's tied to the AI store and this sector 0:12:33.440 --> 0:12:35.240 is the second best performer in the S and P 0:12:35.360 --> 0:12:37.199 five hundred so far this year. So where do you 0:12:37.320 --> 0:12:37.920 put your money. 0:12:39.480 --> 0:12:42.480 Well, if you're fully invested, clearly stay the course. But 0:12:43.360 --> 0:12:46.760 I think that the reaction over the last six weeks 0:12:47.040 --> 0:12:50.080 and certainly over the last two weeks is way overdone 0:12:50.280 --> 0:12:53.120 in the stock market, and I would err on the 0:12:53.200 --> 0:12:56.000 side of caution that I think we are probably due 0:12:56.040 --> 0:13:00.120 for a pullback or even a correction or more. It 0:13:00.160 --> 0:13:03.400 wouldn't be so unreasonable at this time because it's this 0:13:03.600 --> 0:13:04.520 is just overdone. 0:13:04.720 --> 0:13:07.760 So would you use them to add to you know, 0:13:07.880 --> 0:13:09.119 use that as a buying opportunity. 0:13:10.200 --> 0:13:13.200 Well, yeah, absolutely, that's the best time because longer term 0:13:14.080 --> 0:13:17.480 prospects obviously are very good. So if there is this 0:13:17.720 --> 0:13:22.240 correction or pull back, it's a grand opportunity to buy 0:13:22.360 --> 0:13:28.320 in or rebalanced, reconsolidate how you're allocated according to your 0:13:28.360 --> 0:13:33.000 timeframe and your risk tolerance. But certainly the sectors that 0:13:33.080 --> 0:13:36.360 you mentioned are very attractive. You know, defensive stocks will 0:13:36.400 --> 0:13:40.880 be a good play right now, such as materials, industrials, utilities. 0:13:42.400 --> 0:13:45.600 The big enigma really is energy. You know, I still 0:13:46.040 --> 0:13:49.760 look into energy, but the big enigma has been why, 0:13:50.000 --> 0:13:54.199 with all the geopolitical risk that we are experiencing, and 0:13:54.559 --> 0:13:56.400 more and more so in the last week or so, 0:13:57.640 --> 0:14:00.960 why energy is down. That's a enigma, but I would 0:14:01.760 --> 0:14:02.599 I would still buy it. 0:14:03.960 --> 0:14:05.839 When you take a look at, say, if you don't 0:14:05.840 --> 0:14:09.480 get the draw down, one part of that story is like, hey, 0:14:09.520 --> 0:14:11.720 there's over six million dollars sitting in money market funds 0:14:11.760 --> 0:14:13.680 that belong somewhere. Does it go into the equity market, 0:14:13.720 --> 0:14:16.439 does it go into the bond market? Do you think 0:14:16.480 --> 0:14:18.480 that that is part of this story that we're going 0:14:18.520 --> 0:14:18.840 to see? 0:14:20.320 --> 0:14:23.680 Well, clearly, broader diversification is highly indicated at this time. 0:14:24.760 --> 0:14:29.480 When you're too concentrated in one sector, you feel the 0:14:29.840 --> 0:14:35.520 volatility and the pullback will be felt significantly more, especially 0:14:35.600 --> 0:14:38.200 in the technology sector because that tends to be significantly 0:14:38.280 --> 0:14:43.520 more volatile. But diversification is very good right now, especially 0:14:43.640 --> 0:14:48.400 in the fixed income side, still maintaining shorter durations because 0:14:48.440 --> 0:14:53.520 it's still very iffy with the rate cuts. And I 0:14:53.640 --> 0:14:57.560 do believe that the geopolitical risk is just being ignored 0:14:58.120 --> 0:15:01.760 and is not factored into the market, and when that 0:15:01.880 --> 0:15:04.720 does happen, it could be significant. 0:15:05.760 --> 0:15:08.480 I know that you've previously used a four percent inflation 0:15:08.560 --> 0:15:12.760 assumption in your financial plans the past few decades. I'm 0:15:12.800 --> 0:15:16.880 sure just given where the dynamic inflation was prior to COVID, 0:15:17.440 --> 0:15:20.880 maybe your clients didn't appreciate it as fully until recent years. 0:15:20.920 --> 0:15:23.360 But with inflation have been closer to that two percent target. 0:15:23.680 --> 0:15:26.960 How does that impact how you construct your portfolio models. 0:15:27.000 --> 0:15:28.560 Is that something that you'll still include or are you 0:15:28.680 --> 0:15:29.680 going to adjust that now? 0:15:31.400 --> 0:15:34.520 No, I will not be adjusting it because by using 0:15:34.680 --> 0:15:37.680 a more conservative inflation rate it has really helped my 0:15:37.840 --> 0:15:41.400 clients achieve their outcomes much better. Because remember, you know, 0:15:41.560 --> 0:15:45.600 the overall inflation rate is not the same as the 0:15:46.360 --> 0:15:49.880 day to day inflation rate. I'm talking about food, gas, electricity, 0:15:50.000 --> 0:15:53.720 and heat, which is these are the non negotiables of 0:15:53.960 --> 0:15:58.960 everyday living. You may give up buying, going to go 0:15:59.040 --> 0:16:02.800 around out to eat, to travel, or discretionary spending, but 0:16:02.920 --> 0:16:05.240 you're never going to give up food, gas, and electricity. 0:16:05.440 --> 0:16:08.240 So these are the things that matter the most, and 0:16:08.400 --> 0:16:11.040 in fact, those are the things that go up the 0:16:11.160 --> 0:16:13.800 most over the last three to four decades that I've 0:16:13.840 --> 0:16:15.160 been advising clients. 0:16:15.600 --> 0:16:17.600 All right, thank you very much, and see we really 0:16:17.640 --> 0:16:20.800 appreciate Nancy Dawd joining US private wealth advisor at Maryripri's 0:16:20.840 --> 0:16:23.800 Financial and CEO of Opus. On the markets. 0:16:25.400 --> 0:16:29.240 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:29.360 --> 0:16:32.880 weekdays at ten am Eastern on applecar Play and Android 0:16:32.920 --> 0:16:35.640 Auto with the Bloomberg Business app. You can also listen 0:16:35.800 --> 0:16:38.880 live on Amazon Alexa from our flagship New York station. 0:16:39.280 --> 0:16:42.000 Just say Alexa play Bloomberg eleven thirty. 0:16:43.920 --> 0:16:46.200 This is Bloomberg Intelligence Radio. We cover all the top 0:16:46.280 --> 0:16:49.400 news in business, economics and finance. And right now in 0:16:49.440 --> 0:16:51.200 New York City, what's happening is you have the You 0:16:51.320 --> 0:16:53.600 and General Assembly, and you have Climate Week. So the 0:16:53.680 --> 0:16:56.400 benefit is we get a lot of companies now coming 0:16:56.440 --> 0:16:59.000 in that are involved in the energy transition. Then we 0:16:59.080 --> 0:17:00.720 get to talk to them about the really cool stuff 0:17:00.760 --> 0:17:02.600 that they're doing. And one of them is a company 0:17:02.640 --> 0:17:06.520 called a MSc. Now you just look at a chart 0:17:06.640 --> 0:17:09.200 of its market cap. Over the last five years, it 0:17:09.280 --> 0:17:12.679 went for about two hundred million dollars to now almost 0:17:12.800 --> 0:17:15.960 a billion dollars. It's been a tremendous rise. 0:17:16.080 --> 0:17:18.600 It stocks up one hundred and sixteen percent year to date. 0:17:19.040 --> 0:17:20.880 What does it do? I'm not really sure. It's called 0:17:20.880 --> 0:17:24.680 American Superconductor Corporation or CEO is here to break it 0:17:24.760 --> 0:17:27.720 all down for us. Dan McGann joining us. All right, Daniel, 0:17:27.920 --> 0:17:29.400 what do you guys do? Break it down? 0:17:29.600 --> 0:17:33.280 We basically provide resiliency equipment for the grid. Today, we 0:17:33.400 --> 0:17:36.000 help bring more renewables onto the grid and we have 0:17:36.080 --> 0:17:39.000 a nascent business that's starting to grow pretty rapidly supporting 0:17:39.800 --> 0:17:42.000 ships in the fleet to protect them from harm's way. 0:17:42.200 --> 0:17:44.440 So do you like make the stuff that helps a 0:17:44.520 --> 0:17:46.440 solar farm plug into the grid? 0:17:46.480 --> 0:17:48.560 Are you like we're the big equipment that sits on 0:17:48.720 --> 0:17:50.800 the grid that allows that power to be able to 0:17:50.840 --> 0:17:53.160 come on and make sure it harmonizes with the grid 0:17:53.240 --> 0:17:55.240 in the way that the grid can accept it and 0:17:55.400 --> 0:17:55.639 take it. 0:17:55.800 --> 0:17:58.280 There's been a shortage of this stuff, right, like a 0:17:58.400 --> 0:18:00.639 huge backlog and shortage of the stuff that you make. 0:18:00.920 --> 0:18:03.240 Yeah, we just had a record quarter where we delivered 0:18:03.840 --> 0:18:06.240 new orders about one hundred and twenty seven million. Just 0:18:06.320 --> 0:18:08.280 to put it in context, we're about one hundred and 0:18:08.320 --> 0:18:12.440 forty six for the entire year. We grew last quarter 0:18:12.680 --> 0:18:16.200 thirty percent versus the year ago period, and we just 0:18:16.320 --> 0:18:19.119 guide it for thirty percent growth quarter on quarter, so 0:18:19.240 --> 0:18:20.680 we're kind of hitting it out of the park on 0:18:21.200 --> 0:18:22.080 all levels right now. 0:18:22.200 --> 0:18:25.800 And you've also made some recent acquisitions. I read about 0:18:25.800 --> 0:18:29.080 how and WL. It's a private company based in New 0:18:29.200 --> 0:18:33.280 Jersey that provides power supplies in industrial and military customers. 0:18:33.320 --> 0:18:35.400 But then also you're getting into the wind turbine electrical 0:18:35.520 --> 0:18:38.040 control systems with some recent deals as well. So how 0:18:38.119 --> 0:18:40.320 much do you expect those types of deals to help 0:18:40.359 --> 0:18:42.320 bolster your revenue growth moving forward? 0:18:42.520 --> 0:18:44.639 Yeah, we think that the backlog continues to grow. I 0:18:44.680 --> 0:18:47.000 think we went up from about one forty last quarter 0:18:47.119 --> 0:18:50.639 to about one sixty for the twelve month backlog. Total 0:18:50.720 --> 0:18:54.040 backlog for all time is even higher than probably two 0:18:54.160 --> 0:18:56.639 hundred or so, so we're in well positioned to kind 0:18:56.680 --> 0:18:58.720 of grow quarter on quarter here. That's what we just 0:18:58.920 --> 0:19:01.320 updated our guidance for the current quarter, which we'll end 0:19:01.680 --> 0:19:04.120 here in a week or so, and we think we're 0:19:04.160 --> 0:19:06.760 well positioned. I mean, the past year has been fantastic 0:19:06.840 --> 0:19:10.840 for us. We went from being really excited about reaching 0:19:10.880 --> 0:19:13.159 thirty million per quarter on a revenue basis to now 0:19:13.200 --> 0:19:16.480 we just goid it to fifty, So the business is 0:19:16.560 --> 0:19:20.840 really taking off. It's very healthy, and then the backlog 0:19:20.960 --> 0:19:23.000 is very deep along all product lines. 0:19:23.359 --> 0:19:26.399 What's the biggest constraint that you have in delivering the 0:19:26.560 --> 0:19:29.760 key product that everyone needs to then connect. 0:19:29.480 --> 0:19:29.880 To the grid. 0:19:30.320 --> 0:19:31.960 I think if you'd asked me that question a couple 0:19:32.000 --> 0:19:34.000 of years ago, I would say supply chain was part 0:19:34.080 --> 0:19:36.760 of it, just to be able to deal with the speed. 0:19:37.520 --> 0:19:41.200 Now it's really we're scaling, we're scaling production, we're hiring, 0:19:41.880 --> 0:19:45.320 So it's really typical type business challenges on how do 0:19:45.400 --> 0:19:47.960 you manage that growth and how do you remain effective 0:19:47.960 --> 0:19:49.280 for your customers as you grow? 0:19:49.560 --> 0:19:51.840 And what are some of the top questions or concerns 0:19:51.880 --> 0:19:54.119 you're actually hearing from your customers at this point. What 0:19:54.160 --> 0:19:55.879 do you think that tells us about the direction of 0:19:55.920 --> 0:19:56.440 the economy. 0:19:56.840 --> 0:19:58.960 I think the good signs we've seen as we've seen 0:19:59.040 --> 0:20:02.560 lead times on our pum drop, so our lead times 0:20:02.560 --> 0:20:04.959 at one point we're approaching eighteen months on some products, 0:20:05.000 --> 0:20:06.800 and now we have stuff today we're delivered in four 0:20:06.880 --> 0:20:10.080 or five six months. So wow, the demand is growing 0:20:10.280 --> 0:20:13.320 and the demand for products sooner is growing as well, 0:20:13.400 --> 0:20:15.600 and that's really a competitive vantage for us. In the market. 0:20:15.720 --> 0:20:17.960 Do you have a better way to move electrons? I 0:20:18.040 --> 0:20:20.680 mean the name implies, you know, superconductors. 0:20:20.840 --> 0:20:23.440 So at the heart of what we do, particularly on 0:20:23.520 --> 0:20:26.879 the ship business, is about superconductors. So we move electricity 0:20:26.920 --> 0:20:27.760 in a much better way. 0:20:27.880 --> 0:20:30.360 But you've got to keep that really cold. 0:20:30.520 --> 0:20:33.280 For super cold. Yeah, we do that as well. So 0:20:33.400 --> 0:20:35.560 that's part of our scope and what we that's very cool. 0:20:35.680 --> 0:20:38.680 We do a fully integrated system for the US Navy 0:20:38.720 --> 0:20:41.560 and we just got a contract nexcess to seventy five 0:20:41.600 --> 0:20:44.480 million dollars for the Royal Canadian Navy, so we're going 0:20:44.560 --> 0:20:47.440 to be on Canadian ships as well, and that's all superconductor. 0:20:47.680 --> 0:20:49.399 So with better lead times, is that just due to 0:20:49.840 --> 0:20:52.359 the supply constraints with the chain just they're not as 0:20:52.359 --> 0:20:53.080 bad as they would have been. 0:20:53.080 --> 0:20:55.080 Because they're not as bad, we've done more to be 0:20:55.119 --> 0:20:58.240