Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Business Week Inside from the reporters and
Speaker 2: editors who bring you America's most trusted business magazine, plus
Speaker 2: global business, finance and tech news. The Bloomberg Business Week
Speaker 2: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 1: We are once.
Speaker 3: Again starting with China today because for a third day
Speaker 3: we're looking at headlines over stimulus, got those overnight. It is,
Speaker 3: of course, the world's second largest economy. What happens in
Speaker 3: China tells us so much about what's going on in
Speaker 3: the global economy. China's gross trajectory being closely watched around
Speaker 3: the world. This is something Nobelle laureate and economist Joseph
Speaker 3: Stieglitz singled out earlier today at the Bloomberg New Economy Forum.
Speaker 4: Unfortunately, we're a real challenge for the emerging markets and
Speaker 4: developing countries is going to be China because we, you know,
Speaker 4: and bypartisan view is that China represents a risk or
Speaker 4: a threat, a threat and you know, I think at
Speaker 4: this point there's very little evidence of that.
Speaker 3: That of course, was Nobel Laurie Joseph Stieglitz at the
Speaker 3: Bloomberg New Economy Forum happening today. So talking about China.
Speaker 3: He often talks about what's going on around the world,
Speaker 3: but certainly emphasizing what's going on there.
Speaker 5: Yeah, and I look, the.
Speaker 6: Question of a risk or a threat is an interesting
Speaker 6: dilemma to look at in terms of the announcements that
Speaker 6: we had today from the Chinese Center Bank cutting interest
Speaker 6: rates at one year policy loans by thirty basis points.
Speaker 6: That's by the most on record in terms of a
Speaker 6: scale of a cut. This follows that package of teramulus
Speaker 6: that we had announced by the PBOC governor yesterday as well.
Speaker 6: This all with a backdrop of the questions continuing to
Speaker 6: be asked about whether or not China is going to
Speaker 6: meet that growth target of around five percent this year.
Speaker 6: Let's get into that. We've got Bloomberg New Senior Editor
Speaker 6: Chris Ansy with us from our Boston bureau. Chris, great
Speaker 6: to have you on. Just talk us through the announcements
Speaker 6: that we had today and how that fits into what
Speaker 6: we learned yesterday from the PBOC governor.
Speaker 7: Well, the one year loan rate was widely expected. This
Speaker 7: was a follow through from the shock and awe as
Speaker 7: it were on Tuesday of announcements of a host of
Speaker 7: different interest rate cuts, a reduction in the banks required
Speaker 7: reserve ratio, and other monetary policy initiatives. As you say,
Speaker 7: this was the biggest on record reduction of this one
Speaker 7: year policy rate. But I would also just focus on
Speaker 7: the magnitude there that was thirty basis points, and the
Speaker 7: benchmark seven day rate that was announced on Tuesday that
Speaker 7: was cut by just twenty basis points. You know, for
Speaker 7: those of us who are used to monitoring the Federal
Speaker 7: Reserve or ECB, and we talked about fifty or seventy
Speaker 7: five being magnitudes of scale, twenty and thirty really doesn't
Speaker 7: sound like a whole lot.
Speaker 3: Is that why I was looking at the NAZEC Golden
Speaker 3: Dragon China Index, those Chinese names that trade in the
Speaker 3: United States yesterday at more than nine percent today giving
Speaker 3: back about two percent in a market that's got a
Speaker 3: fair amount of no direction, if you will, but nonetheless
Speaker 3: giving back. So not as impressive as what we've seen
Speaker 3: Chris as of late in terms of doing something to
Speaker 3: change the narrative in China.
Speaker 7: Well, I think our colleagues at Bloomberg Economics had a
Speaker 7: great way of framing it. They talked about this as
Speaker 7: a growth bump, but not an economy fix. So it's
Speaker 7: enough to move the needle maybe a little bit on
Speaker 7: GDP growth, but the bigger problems that China has the
Speaker 7: property sector, very low consumer confidence levels that never recovered
Speaker 7: since the pandemic hit, and consumer spending that remains, you
Speaker 7: know very much, you know, on a weak trend. You've
Speaker 7: got demographics, all of these kinds of things. This is
Speaker 7: not going to be addressed by a twenty or thirty
Speaker 7: basis point rate cut.
Speaker 3: And yet though Chris, as you well know, it's not
Speaker 3: the only thing that's happened over a series of time,
Speaker 3: not just this past week, but over months, and some
Speaker 3: would say over the last year or so. So what
Speaker 3: is the fix for China? Is there one? Is it
Speaker 3: just going to be a series of many, many moves
Speaker 3: already done to come before we see China maybe the
Speaker 3: growth story change, or is it a case that China
Speaker 3: is a very large economy and moving the nut and
Speaker 3: fixing the real estate thing is something that may take
Speaker 3: much much longer to change, or maybe maybe not at all.
Speaker 7: Yeah, all good questions and questions that China watchers are
Speaker 7: all asking. There does seem to be a kind of
Speaker 7: a universality of expect expectation that there will be some
Speaker 7: sort of next step on the fiscal front, something to
Speaker 7: try to jolt consumer confidence, something more concerted, perhaps to
Speaker 7: fix the property market. And you know, we'll see if
Speaker 7: that eventuates. But you know, you've got the economists saying
Speaker 7: that the scale of response really needs to be very large,
Speaker 7: I mean potentially in the trillions of dollars to really
Speaker 7: address the property market. And we've had no real sign
Speaker 7: yet that Chi Jinping and his lieutenants are prepared to
Speaker 7: endorse you know, that big a fiscal stimulus.
Speaker 6: Yeah, well, that's one of the really interesting questions, isn't it.
Speaker 6: But you know, every time that we talk about stimulus
Speaker 6: in China, it's that question of essentially, has there been
Speaker 6: a shift in position from cheating Ping into what he's
Speaker 6: willing to do to stimulate the economy. I'm looking at
Speaker 6: a story here about one off cash handouts being given
Speaker 6: to people in extreme poverty. That's a direct date measure.
Speaker 6: It's not going to do anything to boost consumer spending
Speaker 6: on a macro level. But is that perhaps an indication
Speaker 6: of the reticence that now exists in China to try
Speaker 6: and put more money from the fiscal side in.
Speaker 7: I think that's exactly right. And you know, some important
Speaker 7: context to keep in mind here is that the parts
Speaker 7: of the economy that Chi Jinping particularly cares about new
Speaker 7: energy vehicles, renewables, you know, solar, wind, nuclear power generations,
Speaker 7: the defense industry, all of those are going gangbusters. In fact,
Speaker 7: the latest monthly data showed double digit increases in areas
Speaker 7: of the economy. The new productive forces that Chigent Ping
Speaker 7: has said are the priority for his government, all of
Speaker 7: those are doing very well. Indeed, so it's not entirely
Speaker 7: clear that he particularly concerned that retail sales are only
Speaker 7: growing at a two percent plus year on your pace,
Speaker 7: rather than the nine percent we saw a pre pandemic.
Speaker 3: I do also wonder a very different China going forward.
Speaker 3: When I see that they're going to do different initiatives
Speaker 3: or the rules seem to change. Foreign investors have to
Speaker 3: be looking perhaps at China very differently going forward. And
Speaker 3: yet I don't know that we've seen dramatic outflows from
Speaker 3: global companies or moving their operations elsewhere, or their involvement elsewhere.
Speaker 3: But I do wonder what are we seeing in terms
Speaker 3: of investment flows that we really think about China's role,
Speaker 3: at least in the global marketplace as being something very
Speaker 3: very different.
Speaker 7: Well, direct investment into China has turned out to a
Speaker 7: net outflow in recent quarters. As you say, it's not
Speaker 7: a huge outflow. Some of this might be simply reflecting
Speaker 7: less in terms of retained profits being patriated abroad. So
Speaker 7: it's not a wholesale kind of shunning of China. But
Speaker 7: at the same time, it is a shift in direction.
Speaker 7: And if you look at the recent announcements of troubles
Speaker 7: with China sales on the part of BMW, on the
Speaker 7: part of Mercedes, you look at the Calvin Klein Maker
Speaker 7: running into problems with the Chinese authorities with regard to
Speaker 7: sourcing cotton from Shinjiang, China is a much less attractive
Speaker 7: place for a whole host of reasons than it was
Speaker 7: you say, you know, even as much as few as
Speaker 7: five years ago.
Speaker 3: As we say often, we're living in interesting times and
Speaker 3: changing times. Chris Antsy, Thank you so much, so appreciated,
Speaker 3: Bloomberg News Senior Editor, Chris Antsy. There, all right, now,
Speaker 3: we want to get to a story that is getting
Speaker 3: a lot of attention on the Bloomberg today.
Speaker 6: Yeah, look, this is a question about trust. Once upon
Speaker 6: a time, the story was a growing economy lifted everyone,
Speaker 6: the whole rising tide, lifting all boats things. These days, though,
Speaker 6: the rich only seem to be rising, and the presentage
Speaker 6: of Americans are told gallup that they have a great dealer.
Speaker 6: Quite a lot of confidence in major companies has dropped
Speaker 6: from thirty percent in nineteen ninety nine to sixteen percent
Speaker 6: this year. Writing about their republic of distrust is Bloomberg Opinion.
Speaker 6: Senior conlist Beth Coot is here with us in studio. Beth,
Speaker 6: great to see you, Thanks very much for joining us.
Speaker 3: It's depressing.
Speaker 6: This is depressing. But like, lay it out first, why
Speaker 6: do we need to trust companies?
Speaker 8: I mean, I think that this is a huge problem, right,
Speaker 8: This is what if you don't If people don't trust business,
Speaker 8: if they don't trust companies, our economy basically can't run.
Speaker 8: It can't function. People need to believe that big institutions
Speaker 8: in general have their best interested heart, and I think
Speaker 8: that we're seeing that's just not the case in business
Speaker 8: and a lot of other institutions as well.
Speaker 3: Well, let's talk about this because I do think that
Speaker 3: you know you and I feel like Stephen. Over the
Speaker 3: last couple of days, I've been talking about this, but
Speaker 3: I do think about we understand the push back in
Speaker 3: politics where people feel like government doesn't represent them anymore,
Speaker 3: and that goes hand in hand. They feel like there
Speaker 3: is an economy and marketplace that doesn't include them anymore.
Speaker 3: And I feel like the idea of companies taking care
Speaker 3: of employees, is it maybe there anymore?
Speaker 1: Us?
Speaker 3: You know, we work for a really great company. I'm
Speaker 3: going to lay it out fully transparent. We say it
Speaker 3: all the time, but that doesn't many people don't feel
Speaker 3: that way.
Speaker 8: I think that's true, and you know, one of the
Speaker 8: questions I tried to answer is why do people believe that?
Speaker 8: Why do they think that that business has their best
Speaker 8: interest at heart? And I think, if you what we
Speaker 8: really looked at was this sort of twenty five year
Speaker 8: period after World War Two when you know, rising tides
Speaker 8: really did seem to lift all boats right. Everybody prospered,
Speaker 8: you know, obviously some more than others. It wasn't a
Speaker 8: perfect era, but the gap between the wealthiest Americans and
Speaker 8: the poorest actually closed. And for a number of factors
Speaker 8: at play there. But I think a lot of people
Speaker 8: look back to this period and want to return to it,
Speaker 8: and there's some question is that even possible.
Speaker 6: Yeah. I mean, look, there's even the prominent examples of
Speaker 6: of scandals at companies. You able to think about everything
Speaker 6: that happened to Boeing this year, for example, that shifts
Speaker 6: how people think about a company. I mean, how important
Speaker 6: is this for companies to get the handle on as well?
Speaker 8: I think it's huge. I really think it's huge. I mean, yeah,
Speaker 8: I point to some of those in the piece right
Speaker 8: and ron financial crisis. There's just one after another where
Speaker 8: people not only feel like it means that they can't
Speaker 8: trust business, but that the rules don't apply fairly to everybody,
Speaker 8: that somehow the wealthiest leave unscathed. Well, it's sort of
Speaker 8: those at the bottom that bear the front of it.
Speaker 3: What about things like productivity gains technology helping us out
Speaker 3: unions where workers maybe had more of a voice at
Speaker 3: the negotiating table, that we used to be an economy
Speaker 3: that actually made a lot of stuff here before we
Speaker 3: started outsourcing it. We've talked with the folks who talk
Speaker 3: about all the consulting companies, said hey, here's a better idea.
Speaker 3: Outsource it safe costs, but workers have been penalized I
Speaker 3: think as a result here.
Speaker 8: Absolutely, And I think again that sort of golden era,
Speaker 8: that twenty five year period, unions were in their heyday.
Speaker 4: You know.
Speaker 8: I think we people coming back from the front. We
Speaker 8: had a you know, an influx of workers. There was
Speaker 8: a lot of demand for goods. We were making things
Speaker 8: here in this country, as you mentioned, and I think
Speaker 8: that really, you know, there was a very progressive tax code.
Speaker 8: So I think that there were all these factors at play.
Speaker 8: And you know, one one historian I was talking to said,
Speaker 8: you can't ring that belt.
Speaker 1: Whats right?
Speaker 8: Like it was just sort of this confluence of events
Speaker 8: that led to this era. And even people who didn't
Speaker 8: weren't even alive during that time, I think do idolize
Speaker 8: that period, and it's affected the way we do think
Speaker 8: about how business and the economy should work.
Speaker 6: It's interesting to think about the timeline over this as well,
Speaker 6: because when we look at the polling from Gallop on
Speaker 6: where trusting companies is through good times and in bad,
Speaker 6: it's still been pretty weak. Every recently is like this.
Speaker 6: It's not a question of when the economy is doing badly. Yeah,
Speaker 6: that that's the moment when just trust spikes, there seems
Speaker 6: to be something that's lasting kind of as I say it,
Speaker 6: you're good times in bad yeah, And.
Speaker 8: I think part of this is people feel like there
Speaker 8: there is this promise, right, I'm going to work hard
Speaker 8: and that should mean that I can, you know, buy
Speaker 8: a house, May we send my kids to college, that
Speaker 8: the next generation should prosper more than minded And I
Speaker 8: think we're not seeing that.
Speaker 9: You know.
Speaker 8: One of the things I looked at as well is
Speaker 8: CEO pay and the ratio of CEO to work our
Speaker 8: compensation has only that gap has just increased exponentially. So
Speaker 8: there's also this sense of you know, why am I
Speaker 8: struggling so much when those at the very top just
Speaker 8: seem to be getting paid more.
Speaker 3: It's really wild. And you put this in the story.
Speaker 3: And we used to cover the business Roundtable. We would
Speaker 3: do broadcasts from there. But this whole idea of laying
Speaker 3: out a few years ago, we talked about it all
Speaker 3: stakeholders matter, yes, investors, yes.
Speaker 6: Custom stakeholder capitalism that.
Speaker 3: Right, Like, where is that? And I feel like we
Speaker 3: have constant conversations with executives that companies say like our
Speaker 3: employees matter. I mean they can't do it without them.
Speaker 8: Right right, And I think this is a little bit.
Speaker 8: I think there is this of hypocrisy where we have
Speaker 8: seen a lot of companies retreat on some of these
Speaker 8: promises very quickly when under pressure from you know, certain
Speaker 8: conservative groups, right DEI ESG. We've seen a real role
Speaker 8: back there. And it makes people wonder, did you actually
Speaker 8: ever care about this or was this you know, simply
Speaker 8: good marketing.
Speaker 6: But that that's also, I think such an interesting point
Speaker 6: because companies moved into this space and started taking positions
Speaker 6: on it as they failed to importance and they thought
Speaker 6: would drive customer loyalty.
Speaker 3: Did a lot of the pandemic and the murder of
Speaker 3: George Floyd.
Speaker 10: But is that is that?
Speaker 6: I mean, is that gone now? Is that just not
Speaker 6: possible anymore?
Speaker 8: I do think that companies are saying, Okay, maybe maybe
Speaker 8: we went a little too far on this. Maybe we
Speaker 8: don't want to take that, Maybe we don't want to
Speaker 8: take a position, you know. I think the hard thing
Speaker 8: is in this era we are so polarized, there is
Speaker 8: no such thing as a neutral position. Right. If you
Speaker 8: take a position, you're gonna someone's gonna feel like, you know,
Speaker 8: this is against my beliefs. But if you don't, you're
Speaker 8: also sort of taking a position. So that's a tricky line.
Speaker 3: Beth, gotta ask, because we've got we've got We're going
Speaker 3: to talk with a very senior exec at Cisco Systems
Speaker 3: coming up. What do you think we should be asking
Speaker 3: companies about this?
Speaker 8: Yeah, if they are retreating, why you know, why are
Speaker 8: why are we rolling back on some of these positions?
Speaker 8: But also, you know, what do they hear from their workers?
Speaker 8: Do are they feeling some of this erosion?
Speaker 6: And the war for talent right is going to be
Speaker 6: a key factor for that as well.
Speaker 1: Absolutely, all right, good stuff.
Speaker 3: As we said, it's among the most read stories of
Speaker 3: the Bloomberok Beth, thank you as always, Bethcohit She's Bloomberg
Speaker 3: Opinion senior columnist talking is about the Republic of Distress.
Speaker 6: Yeah, you can find it on Bloomberg dot com for
Speaker 6: it Slash Opinion as well if you want to read
Speaker 6: the piece in full. Bath great to have you with
Speaker 6: us in studio. Look, this is a question that I
Speaker 6: think comes through so many of the conversations were at
Speaker 6: a plaza yesterday talking to senior exacts as well. It
Speaker 6: feeds into how people are perceiving companies too. I'm not
Speaker 6: something that's you know, it means you're going to got
Speaker 6: questions ast on that as well.
Speaker 3: Yeah, and you know, important issues, but you know, employees
Speaker 3: feeling taken care of. We talk increasingly too about pensions
Speaker 3: going away. Right, People used to retire and they didn't
Speaker 3: have to worry about things, but that's not necessarily given
Speaker 3: anymore by a lot of companies.
Speaker 2: You're listening to the bloom Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern Listen
Speaker 2: on Apple car Play and then brought auto with a
Speaker 2: Bloomberg Business app, or watch us live on YouTube.
Speaker 3: We mcro call. It was just a couple of weeks ago,
Speaker 3: Tim and I actually caught up with Accenture's global talently.
Speaker 3: We talked about ais impact on work workers and the
Speaker 3: workforce on that Accenture is part of a consortium along
Speaker 3: with Cisco Systems on a build out of the AI
Speaker 3: enabled workforce and the information and communication technology or I
Speaker 3: see T space and our next guests definitely had some
Speaker 3: thoughts on that. We're so delighted at back with us
Speaker 3: in studio friend Casudas, she's executive vice president Chief People,
Speaker 3: Policy and Purpose Officer over at Cisco Systems. As I
Speaker 3: said here in studio, how are you good.
Speaker 11: It's wonderful to be back.
Speaker 3: It's great to have you here. A lot of things
Speaker 3: we want to get to. First up, I want to
Speaker 3: ask you, just as I often do the macro business environment,
Speaker 3: how do you see things going right now?
Speaker 11: So it's funny because I think there's so much going
Speaker 11: on in the world at the moment, but when we
Speaker 11: look at the macro business environment, what we see is
Speaker 11: a tremendous amount of focus still on technology. I think
Speaker 11: today the realization that we're hearing from our customers is
Speaker 11: that cybersecurity AI can't wait, and so I think there's
Speaker 11: a lot of learning. I think there's growth. I think
Speaker 11: anytime you go into an election season there's some hesitancy.
Speaker 11: And I will tell you around the world this year
Speaker 11: sixty elections, and there are countries where we see projects
Speaker 11: being held as people wait to see what happens in
Speaker 11: those countries.
Speaker 3: But just as in terms off of the US elections, you.
Speaker 11: Know what, it's interesting from a US perspective, I don't
Speaker 11: see this much. But I think part of that is
Speaker 11: because when you're talking about cybersecurity. When you're talking about
Speaker 11: the build out of infrastructure, it is pretty critical. I
Speaker 11: think some of the bigger projects that we're looking at
Speaker 11: around the world, you need to have a head of
Speaker 11: state and government that really believes and commits to the change.
Speaker 11: And so I think in those places you are going
Speaker 11: to see a little bit of a pause as well.
Speaker 6: Are those clients the willing to put money into this
Speaker 6: as well? Are they kind of up for spending to
Speaker 6: try and catch that innovation?
Speaker 1: Yeah?
Speaker 11: You know, it's funny. I see two things at the moment.
Speaker 11: So the first is I see around the world this
Speaker 11: belief that AI creates amazing opportunity, and so you have
Speaker 11: countries now around the world that are even creating AI
Speaker 11: ministers that are thinking about how do we capture the opportunity,
Speaker 11: and fortunately, I think a lot of them are also
Speaker 11: thinking about how do we ensure that we don't leave
Speaker 11: a subset of the community behind, and so I think
Speaker 11: that's a big part of the focus. I think many
Speaker 11: governments and companies are still sorting what does that build
Speaker 11: out need to look like? What are the use cases
Speaker 11: really that we'll be using over the next twelve months.
Speaker 3: You know, you mentioned communities feeling left behind. And we
Speaker 3: just talked about a Bloomberg story about how Americans trust
Speaker 3: in big business went from bad to worse, and a
Speaker 3: lot of it has to do with workers feeling left behind.
Speaker 3: What are you hearing about that on your front? We've
Speaker 3: talked with you a lot about people who issues employees shoes.
Speaker 3: This is your world. What do you hear back in
Speaker 3: terms of feedback from your workforce about what's important and
Speaker 3: maybe why they maybe feel behind. Not yours particular, but
Speaker 3: in general.
Speaker 11: You know what, I think it's real. I think that
Speaker 11: anytime you see such significant changes in technology that will
Speaker 11: truly impact roles, I think it's natural for people to say,
Speaker 11: will I be relevant? What is changing?
Speaker 1: But it's funny.
Speaker 11: I think I would say around eighteen months ago it
Speaker 11: was a bit more negative. I think the delta is
Speaker 11: that today our employees are playing with the technology, they're experimenting,
Speaker 11: they're learning that in many cases the technology will make
Speaker 11: them better. I do think we have to admit that
Speaker 11: there's areas where jobs are going to go away.
Speaker 3: But letting go a bunch of workers you talked about
Speaker 3: in your earnings report, and a lot of it said
Speaker 3: it wasn't financially related, right or profitability related, but it
Speaker 3: was that you guys were having a strategy shift.
Speaker 1: It was a mix of both.
Speaker 3: It was a mix of both.
Speaker 11: And I think that it's important for us to always
Speaker 11: focus on growth innovation, what we're going to need moving forward.
Speaker 11: And I think the commitment that we need to make
Speaker 11: to our people is that we're going to help them
Speaker 11: understand the changes that are coming and help them build
Speaker 11: the skills that they need. And it's funny it ties
Speaker 11: to where you started, Carol, But when we did that
Speaker 11: AI Consortium body of work with Accenture and Google and
Speaker 11: Microsoft IBM, what we found was that all of us
Speaker 11: collectively believe that the large majority of technical roles are
Speaker 11: going to shift, and what we can see is that
Speaker 11: some of the skills and the task will evolve. The
Speaker 11: beautiful thing is when you have that blueprint, it allows
Speaker 11: you to start to train and prepare your people. And
Speaker 11: that's the commitment that we're making. And I think Cisco
Speaker 11: and all of us need to do a better job
Speaker 11: of helping people get ready for what's coming.
Speaker 6: But how much you need to prepare it in budget
Speaker 6: terms for training as well. Surely some of these people.
Speaker 6: It's a question of hiring in different skill sets. But
Speaker 6: if you're going to invest in adopting, that's a commitment financially.
Speaker 11: It's so funny because I think in some cases retraining
Speaker 11: your people is a lot less expensive than hiring from
Speaker 11: the outside, and I think it's it's a bit of
Speaker 11: a win win. I think what's so different that we're
Speaker 11: going to have to figure out how to scale to
Speaker 11: both from a budget perspective, but maybe even more so
Speaker 11: from a time perspective, is that we're not talking about
Speaker 11: freshening up your skills once a year.
Speaker 6: What we're talking it's not a power points learning.
Speaker 11: Yeah, that's and we're talking about maybe it's weekly, maybe
Speaker 11: it's monthly. Maybe there's one day a month where we're
Speaker 11: going to have to all go through training to be
Speaker 11: able to leverage the technology that's in front of us.
Speaker 11: And I think it's the mindset shift that's actually going
Speaker 11: to be bigger than the budget requirement.
Speaker 3: I feel like we're hearing that a lot. I mean,
Speaker 3: we do it sort of as an organization here that
Speaker 3: there's whether it's something going on in markets and so
Speaker 3: on and so forth. Having said that, then do workers
Speaker 3: need a college degree.
Speaker 11: So this transition, and it's funny because so many of
Speaker 11: the transitions from a workforce perspective were there already and
Speaker 11: the technology is really bringing it to fruition. What we've
Speaker 11: seen over the last five years is that you don't
Speaker 11: need a college degree the way that you did in
Speaker 11: the past. I remember a time when at Cisco, if
Speaker 11: you didn't have a college degree, you couldn't apply for
Speaker 11: a role. I think Cisco and so many other companies
Speaker 11: moved away from that when we had a talent shortage
Speaker 11: because we realized there's amazing skills that are out there,
Speaker 11: and if you can invest in training and onboarding talent,
Speaker 11: you can get to tremendous talent. And so I think
Speaker 11: that shift has started. I think it's very possible with
Speaker 11: what we're talking about that you're going to see an
Speaker 11: emergence of multiple paths for talent, and I think that's
Speaker 11: great for the US and beyond.
Speaker 6: That's something that actually links into while you're here in
Speaker 6: New York for the globe, but cites an event as well,
Speaker 6: because that's one of the things that Cisco is involved
Speaker 6: in with that organization, fostering new talent as well. I
Speaker 6: wonder you know, in an environ I and where we're
Speaker 6: talking about perceptions of where companies are positioning themselves. How
Speaker 6: important is it for a company like Cisco to be
Speaker 6: involved in Global citizens?
Speaker 11: You know, I think at this moment we see a
Speaker 11: couple of really important trends. And so the first is
Speaker 11: there's this realization that it's through public private partnerships and
Speaker 11: in many cases including nonprofits that have incredible capability and scale,
Speaker 11: that we're having the biggest impact on communities. So that's
Speaker 11: the first thing. The second thing that I would say
Speaker 11: is I see both employees and candidates wanting to work
Speaker 11: for companies that are doing good. And then from a
Speaker 11: Cisco perspective, because of our technology, because we drive connection,
Speaker 11: one of the biggest ways that we can impact poverty
Speaker 11: as an example, which is where Global Citizen truly focuses
Speaker 11: is around education. And so this year, Cisco will have
Speaker 11: trained twenty three and a half million students in technology
Speaker 11: over the last twenty five years, and it's a great
Speaker 11: way for us to really partner with Global Citizen and
Speaker 11: having this impact around the world. And so I think
Speaker 11: it's critical and more and more I see our corporate
Speaker 11: partners out there doing a lot of good.
Speaker 3: Come back soon because I feel like there's stuff too.
Speaker 3: When you talk about communities around the world and the
Speaker 3: education emerging world, love to dig even deeper into that.
Speaker 3: Friend as always, thank you so much, really appreciate it.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on applecar Play
Speaker 2: and Androyd Auto with the Bloomberg Business App. You can
Speaker 2: also listen live on Amazon Alexa from our flagship New
Speaker 2: York station, Just Say Alexa playing Bloomberg eleven thirty.
Speaker 3: Hey, there's even a local New York City landmark. It's
Speaker 3: got its own eighty three foot climbing wall that is
Speaker 3: among the New York City pricey properties that can be
Speaker 3: yours or yours for the right price. As for we
Speaker 3: meet our mortals, we're just excited that rates are coming
Speaker 3: down from mortgages because mortgage refinancings we have seen them
Speaker 3: take up surging for a second week in a row.
Speaker 3: So we wanted to talk real estate specifically what's going
Speaker 3: on with the high end New York City residential real
Speaker 3: estate market. And back with us is Louise Phillips Forbes.
Speaker 3: She's an agent, real estate broker at Brown Harris Stevens.
Speaker 3: Back here in our interactive Brokers studio. How are you.
Speaker 1: I'm great, longtime no see, I have long time no see.
Speaker 3: How are things going? How are things changed from we
Speaker 3: just talked a little while ago.
Speaker 1: Like I said, when I was here last fastened your seatbelt.
Speaker 1: It just took a little bit longer for the Feds
Speaker 1: to respond and be cautious in the dropping and the
Speaker 1: process that they've given. Since October of twenty twenty three,
Speaker 1: we have a shift in the buying power of literally
Speaker 1: seventy thousand dollars for an individual today and that's so
Speaker 1: what you would have paid in October of twenty twenty three.
Speaker 1: Today it is upwards of eleven hundred dollars difference. It's cheaper,
Speaker 1: you're buying that much more buying power. So it's exciting
Speaker 1: to watch, and the buyers are out and active.
Speaker 6: I'm always curious, as you know, we if you're going
Speaker 6: to buy a home, I wonder how close you really
Speaker 6: are watching the fad to say, you know, as soon
Speaker 6: as the fad rights are caught, then I'm going to
Speaker 6: jump into the house. Is there a really kind of
Speaker 6: a as quick a function. Are you getting calls after
Speaker 6: the you know, Jerome pals Listen.
Speaker 1: Cash has been king for some time, but cash can't
Speaker 1: compete when you have five people looking at the same property,
Speaker 1: whereas it was two in a one week and we
Speaker 1: have twenty in a day. I did twenty six buyer
Speaker 1: tours in a two week period. My team and myself
Speaker 1: is that a lot, I don't know for perspective, over
Speaker 1: a hundred appointments of apartments for individual people, and that
Speaker 1: performed for us. I'm three times higher buyer transactions than
Speaker 1: i am exclusives. That's that's pretty significant and that started
Speaker 1: the conversations that I had talking to the beginning of
Speaker 1: the year. We had a huge surge unexpectedly in the
Speaker 1: first quarter because people didn't want to compete with all
Speaker 1: the buyers that are in the market. Now it's already
Speaker 1: affecting our rental market, and there's an efficiency.
Speaker 3: What what's going on in the rental markets?
Speaker 1: When rates go down, so do rents. When rates go up,
Speaker 1: we sit on the sideline. So that is a cause
Speaker 1: and effect. And New York, unlike some places in the country,
Speaker 1: have product to sell, so people are in, you know,
Speaker 1: they're figuring out whatever they need to do to purchase
Speaker 1: a home.
Speaker 6: Talk to us about where cash like. It feels like
Speaker 6: there's an AFO, a lout of cash buyers in the city.
Speaker 1: So yes, absolutely, Well what proportion are we looking at
Speaker 1: a quarter? I mean, well, the first and second quarter
Speaker 1: I did about sixty seven percent of my transactions were cash.
Speaker 1: That doesn't mean and there's also a tax opportunity there.
Speaker 1: If you're paying cash, then you can pull money out
Speaker 1: and you write off all of the interest on that.
Speaker 1: Talk to your accountant. I'm not an accountant, but but
Speaker 1: there's an opportunity.
Speaker 3: Don't play one on TV either, Yep, Nope, don't want to.
Speaker 1: Play one on TV. But there's an opportunity that people
Speaker 1: are taking advantage of that tax credit and so not
Speaker 1: that in today, we're seeing people even considering refinancing things
Speaker 1: I sold less than twenty four months ago, even twelve
Speaker 1: months ago. If it's not real property and they don't
Speaker 1: have a mortgage recording tax, it doesn't cost anything to refinance.
Speaker 3: What's the tyficult property that you when you talk about
Speaker 3: all these showings you've done over the last couple of weeks,
Speaker 3: give us is there an yeah, I know it runs
Speaker 3: the gamut.
Speaker 1: I know it does. We're from six hundred to twenty million,
Speaker 1: so but but but these are five million down to
Speaker 1: a million two and the million to two million to
Speaker 1: two and a half. That is a market where people
Speaker 1: are back in very strongly and they're being absorbed. Things
Speaker 1: that have been on the market in some cases on
Speaker 1: and off for three years are now in contract. So
Speaker 1: it's it's it's an efficient market.
Speaker 6: What does that mean for repricing? Are people rethinking?
Speaker 1: It's you know, you're going to find more today than
Speaker 1: less tomorrow because as interest rates continue to drop, prices
Speaker 1: are going to continue to climb.
Speaker 3: Remind us too, and I know what we always love
Speaker 3: to talk about the demographic first time buyers, second time buyers,
Speaker 3: foreign bar buyers, who's buying.
Speaker 1: Let me just say, there's there's a whole tech search
Speaker 1: that's been happening here. I spoke about my project at
Speaker 1: three ninety three West End Avenue, which is a small
Speaker 1: boutique seventy five unit building. One out of three not
Speaker 1: only purchases, but every appointment, which I'm talking hundreds in
Speaker 1: the last year and a half are tech individuals. But
Speaker 1: the first time buyers are in the market now parents
Speaker 1: are facilitating by supporting their children co purchasing. We have
Speaker 1: empty nesters. I mean, listen, we uh we just did
Speaker 1: sixteen transactions in August and part of September, maybe the
Speaker 1: tail end of July, and I would say that four
Speaker 1: of those of the sixteen were parents co purchasing with
Speaker 1: their kids because they don't I want to pay rent
Speaker 1: and why not build equity in that asset so cord
Speaker 1: to those transactions. Wow, yeah, that's a lot.
Speaker 3: Where's foreign buyers and all this? I know, I always
Speaker 3: like to ask because I'm always cious about it.
Speaker 1: I mean, you know, listen, we have a very strong
Speaker 1: presence of mechs. I did three transactions with people from Mexico.
Speaker 1: I've had a big strong contingency in Asia, but we
Speaker 1: also have Italian and people are Look. New York has
Speaker 1: been on really a discount. It's been for sale and
Speaker 1: on at very low entry level for us historically since
Speaker 1: we've been on the national the international platform of the market.
Speaker 1: And so people are parking their money here and they'll
Speaker 1: park it for everybody wants to buy a piece of
Speaker 1: the rock.
Speaker 3: So I find this investment it's in no no, their user.
Speaker 1: They may be investment temporarily while their kids tell their
Speaker 1: kids go to school here or they leave. I have
Speaker 1: a lot of Israeli money coming here, so I think
Speaker 1: that it's the gam it because of the war. No,
Speaker 1: I think it's it's it's wanting to buy a piece
Speaker 1: of what is stable. We are stable, We are, you know,
Speaker 1: a leader and in our economies of all sorts, whether
Speaker 1: it's real estate, you know, the stock market, or the tech,
Speaker 1: the tech scene.
Speaker 6: I want to go back to this idea of that
Speaker 6: all these tech people that are that are buying as well.
Speaker 6: I mean, are they typical buyers? Are they people that
Speaker 6: are buying everyone in their level?
Speaker 1: You have you have new Wealth where you have gen
Speaker 1: X individuals that started some dot com thing or maybe
Speaker 1: that's not even the hip thing now.
Speaker 3: But a AI, we don't even know if we can
Speaker 3: say hip thing anymore. Yeah, it's just forget it or
Speaker 3: edited constant.
Speaker 1: Exactly, please edit. But but the bottom line is is
Speaker 1: that that they're the amount of job security. I mean
Speaker 1: when I in two thousand and five, when Google started,
Speaker 1: they committed five hundred people here, I don't even know
Speaker 1: how many they are, but they're more I mean, yes,
Speaker 1: I mean, and and they have helped compliment the tri
Speaker 1: States on top of the city, and they're not just downtown.
Speaker 1: As they get older, they want to move to the
Speaker 1: uptown market where the schools are. So it's a very
Speaker 1: interesting transition that that's metamorphosed through the last twenty years.
Speaker 3: Anybody they're waiting to say, okay, if that's going to
Speaker 3: cut even more, so I can just hold off a
Speaker 3: little bit. But or are They're like, Nope, we're going
Speaker 3: to do it.
Speaker 1: It doesn't make sense because it's okay if you can't
Speaker 1: afford your payment. That's one question, that's one decision, right,
Speaker 1: But the bottom line is what's priced today is going
Speaker 1: to be higher when when the buying power gets stronger
Speaker 1: because of the increased demands and more people are in
Speaker 1: the market. So there is a concern about bubbles, like
Speaker 1: immediate bubbles where a lack where you have a certain
Speaker 1: niche of a market where there's not enough inventory and
Speaker 1: there's so many people parents trying to support their kids.
Speaker 1: They'll have eleven offers on an apartment that's coming, that's
Speaker 1: coming across the nation.
Speaker 3: A couple questions how much new inventory is coming in
Speaker 3: terms of building because you know, obviously there's just New
Speaker 3: York City is only so big, But that doesn't mean
Speaker 3: that there isn't new construction still going up or building's
Speaker 3: being torn, new stuff coming up? Do people?
Speaker 10: You know?
Speaker 3: So what are we seeing in terms of new supply?
Speaker 3: And I am also curious about again the office concern,
Speaker 3: the excess office that's still in New York City, how
Speaker 3: that maybe impacts an area.
Speaker 1: You would never know that you're sitting in the Bloomberg building,
Speaker 1: just to be bilar but.
Speaker 3: There is a fair amount of occupancy. Now there's been
Speaker 3: nice pictures put up, but we the container store went out,
Speaker 3: and Out of Republic went out, Victoria's Secret went out.
Speaker 3: I mean, there's a whole host of retail ye that
Speaker 3: is gone and it hasn't been replaced.
Speaker 7: Me.
Speaker 1: Part of that is the pattern that we've been anticipating,
Speaker 1: the shifting on. I mean, listen, I just ordered a
Speaker 1: brace for my son's niece, my son's knee.
Speaker 3: Yeah came.
Speaker 1: I ordered it last night and it was here today
Speaker 1: at before by before we left it four o'clock to
Speaker 1: go back to school. So yeah, an, the access of
Speaker 1: what we have has changed, how the patterns of shopping
Speaker 1: is done. But from a from the concern on office
Speaker 1: is there we are going to see people trying to
Speaker 1: convert office to residential. There are a lot of challenges
Speaker 1: because they're deep and they need light wells, so the
Speaker 1: construction costs on that is difficult, and the tax base
Speaker 1: is going to be higher than your traditional residential markets.
Speaker 6: So we need to see prices go significantly higher to
Speaker 6: mat We were talking about the Goat former Goldman building
Speaker 6: being converted recently as.
Speaker 1: Two fifty West Street. Yeah, well every no excuse me,
Speaker 1: that was the City Bank. But they were anticipating that
Speaker 1: to be very, very challenging, but they made it a
Speaker 1: lifestyle building because they had the square footage to create
Speaker 1: fifty five thousand square feet of amenities. So you know,
Speaker 1: I find that those are going to continue to have
Speaker 1: an attraction, both domestic and international.
Speaker 3: What's your favorite kind of property right now to be
Speaker 3: involved in and represent in terms of selling?
Speaker 1: Oh wow, I mean I love selling places that. I mean,
Speaker 1: I love old architecture.
Speaker 3: But I find that what you know, like I'm just saying,
Speaker 3: when you're offered up like a got that one, that's
Speaker 3: gonna be an easy one?
Speaker 1: Oh gosh, I mean, you know, I find that if
Speaker 1: we price prepare and present properly, then we can sell anything.
Speaker 1: It's all about pricing because people want to have a
Speaker 1: piece of this rock. And it's really such a great
Speaker 1: city that has had a challenging time that we all
Speaker 1: have recovery still occurring from the pandemic.
Speaker 3: Is there an area though with this?
Speaker 1: I am all over the city. I would say that
Speaker 1: there's nothing better than a West Village townhouse, which I
Speaker 1: did a couple of those this past the last quarter,
Speaker 1: and I've got more coming. Those are amazing because the
Speaker 1: history that's behind them, right and the stories that can
Speaker 1: be told about who lived in them. I find that
Speaker 1: to be fascinating. And then I love you know, my
Speaker 1: backyard is the Upper west Side, but the East Village
Speaker 1: also is like it's unique to me because I live
Speaker 1: on the Upper west Side. So there's something for everyone,
Speaker 1: which is what makes Manhattan so special. And there are
Speaker 1: no boundaries. It's like, oh, you can't go this over this,
Speaker 1: It's it's not safe. It's just not the case.
Speaker 6: I'm going to ask a really European question, are people worried?
Speaker 3: Are you shopping for a place in New York City?
Speaker 6: Did the bosses want to know a co sponsor?
Speaker 1: Can call me.
Speaker 6: I'm the climate proofing older properties. This is such a
Speaker 6: big conversation being hot in parts of the world of
Speaker 6: how much money you need to put into it to
Speaker 6: make sure that it's more heated fish and more energytician.
Speaker 6: Are people are buyers interested in that?
Speaker 1: Absolutely? They would be crazy not to be listen. I
Speaker 1: just took We refinanced my own building where I live
Speaker 1: from a from a two million dollar mortgage to a
Speaker 1: seven million dollar mortgage to do a four million dollar improvement,
Speaker 1: which we did it. And you know it's it's really
Speaker 1: the local law eleven and ninety seven. All of these
Speaker 1: are safety opportunities that are going to make the world
Speaker 1: better and and ourselves. But you have to go in
Speaker 1: with your eyes open and know what you're getting in.
Speaker 1: And it's it's up to those brokers to educate themselves.
Speaker 3: It is that safety or climate, just quickly both.
Speaker 1: It's both safety. I mean the elevator laws have changed
Speaker 1: how we do local law leven meaning the point work
Speaker 1: so bricks don't fall off buildings, all of that, and
Speaker 1: then the climate comes with what our exmissions are and
Speaker 1: the quality of the energy savings.
Speaker 3: We're talking with Louise Phillips Forbes. She's real estate broker
Speaker 3: at Brown Harris Stevens. We do want to remind everybody
Speaker 3: we are watching actually a live feed in Pittsburgh, Pennsylvania.
Speaker 3: We are expecting Vice President Kamala Harris to make some
Speaker 3: comments unveiling her economic plan. That's how it's been played
Speaker 3: up and promoted. If you will, so as soon as
Speaker 3: she takes to the podium, we will take you there
Speaker 3: live to listen to her comments. Meantime, I'm Carol Masser
Speaker 3: along with Stephen Carroll right here on Bloomberg BusinessWeek. You know,
Speaker 3: I love talking with folks like you. You obviously love
Speaker 3: what you do. You're excited real estate. It's like I
Speaker 3: read the business pages, but it's my next thing that
Speaker 3: I always like, right best it? No, it is, It's
Speaker 3: just everybody wants to talk about it. You've seen different cycles.
Speaker 3: Are we back to where we were pre pandemic?
Speaker 1: Where are think so?
Speaker 3: I don't think so.
Speaker 1: I think there's certain things like listen that you read
Speaker 1: about iconic pieces of property trading for seventy nine million
Speaker 1: that didn't even come on the market. You know, those
Speaker 1: are those are luxury buys that our trophy and to
Speaker 1: some of the elite that we have. We attract those
Speaker 1: kinds of owners, and that's a domestic, local person who
Speaker 1: bought that too. I think that, you know, I think
Speaker 1: it was still great opportunity and huge growth to come forth,
Speaker 1: you know, come forth when you were when I was
Speaker 1: selling real estate, when Bloomberg rezoned forty percent of the
Speaker 1: land mass, the opportunities in the shift in the boundaries
Speaker 1: of where people would live was amazing. And we've got
Speaker 1: that continuing. Yeah.
Speaker 3: I was just going to say, didn't this used to
Speaker 3: be what was the department store?
Speaker 1: Yes, it was think of Alexander's Alexander Sorry, like an
Speaker 1: old brand. Yeah, that's what I mean.
Speaker 3: And then you look at kind of what's here now?
Speaker 1: Yep, yeah, forget me.
Speaker 6: No, this is trivia. I feel like I need to
Speaker 6: store away and be able.
Speaker 1: You can't go shopping anymore here? Well you can, well
Speaker 1: right there, Yeah, fair enough.
Speaker 6: I wanted to ask about the question around in your
Speaker 6: conversations with buyers and sallus, does anyone bring up the election?
Speaker 6: Is anyone thinking about they're going to hold off?
Speaker 7: Well?
Speaker 1: Well, I will say that there has been a little
Speaker 1: more optimism since there was this shift, and I think
Speaker 1: that you know if you know, if you didn't know Kamala,
Speaker 1: which I didn't, she's held her own in hers and
Speaker 1: how she speaks, what her what her principles are. So
Speaker 1: I think there was a lot of unknown about that,
Speaker 1: and I think people feel have embraced it. Secondly, my
Speaker 1: experience is historically it has there's a pause where people
Speaker 1: are like, let's wait and see what happens.
Speaker 6: Are we in that zone now?
Speaker 1: No? I mean you've got to remember, we're coming off
Speaker 1: of twenty twenty now on top of that COVID, so
Speaker 1: nobody they've been waiting a long time, and interest rates
Speaker 1: are giving them that motivation that's going to override their
Speaker 1: life decisions over who's going to be president.
Speaker 3: What about though, Donald Trump coming out right, he came
Speaker 3: to Long Island like it was kind of an unusual,
Speaker 3: you know, campaign stop. I think many build it as.
Speaker 1: Plus he's shut down four ninety five. I was stuck there.
Speaker 1: I watched a movie with my husband on the street.
Speaker 3: Not exactly probably in your plan, but he pledged salt
Speaker 3: taxes to lift a cap on state and local taxes,
Speaker 3: and that deduction that is means so much to those
Speaker 3: of us who live in the New York Metro era
Speaker 3: absolutely where there's a lot of taxes and we can't
Speaker 3: deduct them. And I understand people say, you make those choices,
Speaker 3: that isn't shifting people politically. You think about when they're
Speaker 3: buying or mean, think about that.
Speaker 1: I think there are everybody they think about it who
Speaker 1: lives in New York who's in that top whether it's
Speaker 1: two percent or ten percent. Elections financially will will sway some,
Speaker 1: But to me, it's really about what's best for our country.
Speaker 1: I mean, listen, I went from ninety thousand dollars worth
Speaker 1: of real estate taxes that I rode off to ten
Speaker 1: I didn't. I had multiple pieces of property. Yeah, so
Speaker 1: that's forty five thousand dollars that I'm paying the government now.
Speaker 1: So I think you have to it. It's going to
Speaker 1: mean more to some than others. I don't live my
Speaker 1: life through what's in my wallet.
Speaker 3: You didn't sell your home, you didn't move, you didn't
Speaker 3: move to another state, And I think.
Speaker 1: That that your home is a long view.
Speaker 6: When things are hot? Right now? Is that the simes
Speaker 6: I'm getting right? You know, the Fed's coat rights were
Speaker 6: into this cycle. Where what are you thinking about in
Speaker 6: six months or a year. I mean, is that does
Speaker 6: that demands to light?
Speaker 4: There?
Speaker 10: You do?
Speaker 6: You have see that long line at your door?
Speaker 1: Absolutely? You know. Look, I think that we have room
Speaker 1: for a big recovery and we have room for growth
Speaker 1: because as Carol said, there's only so much real estate
Speaker 1: and floor to be built or converted or whatever, and
Speaker 1: so owners buyers need to have a long view and
Speaker 1: I push, I push my buyers today buy more. I
Speaker 1: know you really want to only spend this much, but
Speaker 1: why you want to have a second child? Reach this
Speaker 1: is the time and refinance again. So that's my advice
Speaker 1: is by long and stay and buy more today than
Speaker 1: less tomorrow.
Speaker 3: Before you go, I want to bring up there's a
Speaker 3: story kind of teed up in the introduction. This is
Speaker 3: written by our James Ptarmi about the New York City
Speaker 3: townhouse with an eighty three foot climbing wall listing for
Speaker 3: twenty million. It's the Manetta Lane Home. It's a local
Speaker 3: landmark and as our James Ptarmi mentioned, it can now
Speaker 3: be yours obviously if you can afford it. But I
Speaker 3: do think about old buildings, as you said, you know,
Speaker 3: with a history with people who lived in them or
Speaker 3: some really cool stuff to it, whether it's a pool,
Speaker 3: whether it's a climbing wall, what have you. Is there
Speaker 3: something we've noticed in properties where there is even just
Speaker 3: more and more being added in terms of a mendic Absolutely.
Speaker 1: I mean, listen, the West Village. I just sold a transaction.
Speaker 1: I did a transaction on Perry Street earlier this year,
Speaker 1: and that is like mecca for a location of the
Speaker 1: West Village, right down the street from uh Sex and
Speaker 1: the City Townhouse. And you know, they hadn't it hadn't
Speaker 1: been on the market for forty five years, right, so
Speaker 1: they paid one hundred and thirty five thousand dollars for it.
Speaker 1: That we had eight offers in eight days and it
Speaker 1: went two million dollars over the asking price, and most
Speaker 1: of the people that wanted to make those offers wanted
Speaker 1: to spend seven million dollars and then flip it for
Speaker 1: twenty six unbelievable, and that would have been possible.
Speaker 3: Love that. That's such a great way to wrap up.
Speaker 3: Louise as always so appreciated. Thank you, Thank you, Louise
Speaker 3: Phillips Forbes real estate broker at Brown Harris Stevens. Here
Speaker 3: in our Interactive Broker studio working on properties for Stephen
Speaker 3: Carroll to come to New York.
Speaker 1: City be able to dose h here.
Speaker 6: We might be waiting for a while, work.
Speaker 3: Assic immigration things or whatever it is. I don't know
Speaker 3: what it's worked for.
Speaker 1: I think I'm happy that I'm going before Tamala. Then
Speaker 1: after there might have been questions.
Speaker 3: There might have been questions. Art Luis, thank you so much.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple car Play and then Bright Auto with a
Speaker 2: Bloomberg Business act or want us live on YouTube.
Speaker 6: Let's bring in on Zachron, expanding partner co CEO at
Speaker 6: IQ Capital from Foster City, California. As we drive to
Speaker 6: the close here on Bloomberg Radio. So Alan, look, yesterday
Speaker 6: was the forty first record for the S and P
Speaker 6: five phonded. This year, we're not going to get forty two.
Speaker 6: It looks like we're doing about a quarter of one
Speaker 6: percent on the S and P five funded. What breaks
Speaker 6: this bull run? What takes us out of this the
Speaker 6: level that we're seeing so many records for stocks?
Speaker 5: Thanks for having me on your show. It takes us
Speaker 5: out of this market.
Speaker 9: It is some unexpected event because when valuations are the site,
Speaker 9: you just had less root for error. The reality is,
Speaker 9: I think the feed is pretty much articulated. The soft
Speaker 9: landing few people thought they could, and growth is still
Speaker 9: there and inflation is moderating.
Speaker 5: So what it's not what you know what you know,
Speaker 5: and you know what you don't know. It's what you
Speaker 5: don't know that you don't know that's going to hurt you.
Speaker 9: If things stay as planned, the market is going to
Speaker 9: slowly continue to work its way up. Most of the
Speaker 9: valuation increase in multiples has probably been witnessed. But if
Speaker 9: earnings can continue to grow at a moderate pace, the markets.
Speaker 5: Can plot their way higher from here. So the unexpected
Speaker 5: is what's going to take us down.
Speaker 3: Hey, one thing I want to ask you is we
Speaker 3: continue to monitor Vice Presid Kamala Harris there in Pittsburgh
Speaker 3: trying to get more details of what the specifics are
Speaker 3: on when it comes to our economic plan, and to
Speaker 3: be fair, as our Mike Dorning pointed out, we want
Speaker 3: more specifics when it comes to what a second term
Speaker 3: of a Trump White House would be. Having said that,
Speaker 3: you talk with investors, you guys, are investing money. Do
Speaker 3: you often have your clients, institutional or otherwise saying, hey,
Speaker 3: you know, I'm a little confused. I want to know
Speaker 3: what the economic plans are. Our folks is saying here's
Speaker 3: what I want to do with my money.
Speaker 9: For the most part, we're finding both individual as well
Speaker 9: as institutional investors are basically focused on economic growth and inflation,
Speaker 9: because at the end of the day, no matter which
Speaker 9: administration is in office, let alone, and which Democrats are
Speaker 9: Republicans controlling Congress, who makes the rules taxes, inflation.
Speaker 5: And economic growth of what drive asset dount and so both.
Speaker 9: Parties more or less look like we're going to be
Speaker 9: in an environment where the deficit ind continued to grow
Speaker 9: and where the biggest differences.
Speaker 10: Are sector wise, whether you're going to focus on traditional
Speaker 10: energy versus electric vehicles and de electrification is a big
Speaker 10: issue of change or perhaps moderate changes of.
Speaker 5: Respect to the healthcare system.
Speaker 9: But for the most part, the administrations aren't that much
Speaker 9: a part, other than probably potential tax changes from the
Speaker 9: TCGA that we're imposed during the Trump administration. So we
Speaker 9: see handfuls of clients that take on let's wait and
Speaker 9: see what happens with the US president's election outcome.
Speaker 5: The reality is the markets move in the end on
Speaker 5: economic growth, not on who's in the office as a president.
Speaker 6: And look, the economic picture pretty solids by all accounts.
Speaker 6: They always de forecasts out today seeing US GDP for
Speaker 6: rising two point six percent this year, one point six
Speaker 6: percent next year. Though, where are you on your outlook
Speaker 6: on a soft landing and your concerns about where growth
Speaker 6: is going up from here?
Speaker 9: I think the soft landing has actually been achieved, and
Speaker 9: you're seeing things like rates have come down now on
Speaker 9: the long end of the curve, and you're seeing actually
Speaker 9: refinancing applications of spiked. They've had more big index on
Speaker 9: mortgage refinancings is the highest point has been since April
Speaker 9: of twenty twenty two. So you can begin to see
Speaker 9: the fact of slower rates rekindling economic growth.
Speaker 5: Where we come out as you're going to be in
Speaker 5: a GDP growth.
Speaker 9: Environment of two to three percent, you are going to
Speaker 9: be in a higher inflationary environment closer to three percent
Speaker 9: peranum than what it was prior to COVID.
Speaker 5: So what COVID and it's saving COVID.
Speaker 9: By printing tons trillions of dollars has created a higher
Speaker 9: inflationary environment going forward, and so that ultimately needs to
Speaker 9: probably have moderately higher yields, and that in turn tells
Speaker 9: you that there's probably less room from here twenty times
Speaker 9: forward earnings for the S ANDP to expand its PE multiple,
Speaker 9: and therefore market growth public equity market growth of here
Speaker 9: is more dependent on earnings growth down on PE multiple expansion. Hence,
Speaker 9: they answered my first question, there's less room for error
Speaker 9: because the likelihood of exceptional additional multiple expansion from here
Speaker 9: is pretty limited.
Speaker 3: All right, sounds like you're also then starting to think
Speaker 3: about earnings. Is that kind of your next focal point?
Speaker 3: Just got about thirty seconds here, Alan real quickly.
Speaker 9: Yes, we need to see earnings growth to merit the
Speaker 9: relatively high multiples that investors continue to pay on the markets.
Speaker 9: So if you think the market and trading a little
Speaker 9: SMB five hundred training a little over twenty times forward
Speaker 9: earnings is fully valued, then your expectation if the multiple
Speaker 9: holes is the market growth at the rate of earnings growth,
Speaker 9: that might be something lowered or of six to eight percent.
Speaker 5: For the next couple of years. All right, not terrible,
Speaker 5: better than bonds, but not.
Speaker 3: Extraor yeah, exactly right. It's a little perspective there, Alan,
Speaker 3: Thank you so much, as always appreciate you jumping around
Speaker 3: as we had watching the vice president in Pittsburgh and
Speaker 3: just something's going on here. Are keeping us busy on
Speaker 3: this Wednesday, Alan Zaffron, founding partner co CEO at IQ
Speaker 3: Capital out there on the West Coast.
Speaker 2: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
Speaker 2: and anywhere else you get your podcasts. Listen live weekday
Speaker 2: afternoons from two to five pm Eastern on Bloomberg dot com,
Speaker 2: the iHeartRadio app, tune In, and the Bloomberg Business App.
Speaker 2: You can also watch us live every weekday on YouTube
Speaker 2: and always on the Bloomberg Jerminal