WEBVTT - U.S. Payrolls Growth Misses Big Again 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.040 --> 0:00:23.480 Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You 0:00:23.480 --> 0:00:25.439 can also listen to our radio show at two pm 0:00:25.480 --> 0:00:28.400 Eastern Time on Bloomberg Radio or watch us on YouTube 0:00:28.400 --> 0:00:32.199 search Bloomberg Global News. The US job growth in September 0:00:32.200 --> 0:00:35.919 slowest this year, signaling a tempering of the labor market recovery, 0:00:35.920 --> 0:00:40.320 really complicating that FED decision, that next FED decision when 0:00:40.320 --> 0:00:42.680 it comes to scaling back monetary support before the year 0:00:42.760 --> 0:00:45.120 under the little many still think the FED will kind 0:00:45.120 --> 0:00:47.839 of continue ahead. Here at the front row seat on 0:00:47.840 --> 0:00:50.240 the US labor market and hiring trends and metrics, we 0:00:50.320 --> 0:00:52.839 have a perfect gas. We do. Peter Quigley, as president 0:00:52.880 --> 0:00:57.120 and CEO at Kelly, joins us on the phone from Michigan. Peter, 0:00:57.120 --> 0:01:00.000 it's great to talk to you, again, you haven't really 0:01:00.560 --> 0:01:04.880 interesting role because your firm has really its finger on 0:01:04.920 --> 0:01:07.039 the pulse of what's happening when it comes to labor 0:01:07.120 --> 0:01:10.560 because you provide staffing solutions in many parts of the country. 0:01:10.640 --> 0:01:13.200 So I'm wondering if this report was a surprise to 0:01:13.240 --> 0:01:15.360 you or if you were expecting something that was really 0:01:15.360 --> 0:01:18.800 going to miss and at this magnitude. Well, I think 0:01:18.880 --> 0:01:21.840 the jobs report was disappointing to those that expected a 0:01:21.959 --> 0:01:26.120 bounce due to the expiration of the enhanced unemployment benefits 0:01:26.120 --> 0:01:30.320 and schools reopening, but that didn't materialize. UM. But I 0:01:30.360 --> 0:01:33.720 tend to think of this as these three months July, 0:01:33.800 --> 0:01:38.080 August and September is the UH delta variant book ends. 0:01:38.160 --> 0:01:43.800 So in July we had outstanding jobs report, but the 0:01:43.880 --> 0:01:48.680 survey was taken before this spike, and in September the converse, 0:01:48.680 --> 0:01:51.600 where we had a really disappointing report. Um. But it 0:01:51.640 --> 0:01:53.960 was also at the beginning of September when we were 0:01:53.960 --> 0:01:57.200 in the midst of the spike. So I was encouraged 0:01:57.240 --> 0:02:02.720 by the private sector. Seventeen thousand not overwhelming, but but 0:02:02.920 --> 0:02:06.800 decent um because the big drag was in government payrolls. 0:02:06.800 --> 0:02:10.160 Local education was a big drag um. And this wasn't 0:02:10.200 --> 0:02:14.520 surprising to us because we've seen major talent challenges in uh. 0:02:14.600 --> 0:02:18.160 You know, we support fifteen thousand schools across forty five states, 0:02:18.200 --> 0:02:22.160 and not only there shortages of teachers, but the entire 0:02:22.800 --> 0:02:29.400 education ecosystem, so food service workers, custodians, bus drivers, para educators, um. 0:02:29.560 --> 0:02:32.840 So all of that led us to believe that there 0:02:32.919 --> 0:02:37.840 was going to be some some depression. UM. Okay. So 0:02:37.880 --> 0:02:39.799 one of the things that we discussed, Peter, is that 0:02:40.600 --> 0:02:43.960 the second half of September, at least anecdotally, people have 0:02:44.040 --> 0:02:48.120 talked about that which is not reflected in the Job's 0:02:48.160 --> 0:02:52.080 report this morning, that you are seeing signs of more 0:02:52.120 --> 0:02:54.880 people going into jobs. What are you seeing in the 0:02:55.000 --> 0:02:57.600 leader or what did you see in the later half 0:02:57.639 --> 0:03:00.720 of September. Well, the first thing I would say is 0:03:00.840 --> 0:03:03.800 there is no change in the demand. So that's the 0:03:03.840 --> 0:03:08.120 good news from the economy standpoint. Demand is strong across 0:03:08.200 --> 0:03:11.320 all of the industries we served. We didn't see a 0:03:11.800 --> 0:03:15.640 I would say, a significant uptick in the availability of 0:03:15.639 --> 0:03:20.840 talent in the back half of September. Um, it's it's anecdotal, 0:03:20.880 --> 0:03:25.000 but um, we probably saw greater inflows of talent in 0:03:25.639 --> 0:03:29.120 areas where schools were fully reopened and not under some 0:03:29.200 --> 0:03:33.200 kind of temporary lockdown UM, and that I think just 0:03:33.240 --> 0:03:38.680 speaks to the importance of UM allowing UM parents to 0:03:38.680 --> 0:03:41.080 get back to work. If anything was concerning about the 0:03:41.160 --> 0:03:46.080 job's report, it was the labor force participation rate dropping 0:03:46.120 --> 0:03:48.640 because so many women and it was all women that 0:03:48.720 --> 0:03:52.880 are leaving the workforce in UH in droves. Yeah, that 0:03:53.000 --> 0:03:56.640 among among the parts that certainly got our attention. Peter, 0:03:56.760 --> 0:03:59.320 I'm wondering what you think this means for the remainder 0:03:59.400 --> 0:04:01.760 of the year and what you can tell us right now, 0:04:01.800 --> 0:04:05.080 because you do have this unique insight into what's happening 0:04:05.160 --> 0:04:06.920 real time when it comes to your clients all over 0:04:06.920 --> 0:04:08.720 the United States. What can you tell us about what 0:04:08.760 --> 0:04:12.280 you're seeing in October as we do get past the 0:04:12.320 --> 0:04:16.960 delta variant. Well, I think the UH the expected bounds 0:04:17.000 --> 0:04:20.160 due to the reopening of schools and and the UM 0:04:20.360 --> 0:04:26.720 exploration of employment benefits, we'll likely see that UM materialized 0:04:26.800 --> 0:04:29.200 later in the year. Whether it's October or November, I 0:04:29.600 --> 0:04:34.599 think remains to be seen. UM. But as well, the UM, 0:04:35.680 --> 0:04:39.640 the supply chain issues that we're having, especially around microchips, 0:04:40.120 --> 0:04:43.560 UM as those begin to be sorted out, I expect 0:04:43.560 --> 0:04:46.960 that there will be UM an improving jobs picture. So 0:04:47.000 --> 0:04:49.240 you're saying, Peter, that people shouldn't hold their breath too 0:04:49.320 --> 0:04:51.800 much for even next month's jobs report because we still 0:04:51.839 --> 0:04:54.920 could see the effect of the expanded unemployment insurance as 0:04:54.960 --> 0:04:58.520 well as people kids going back to school. Yeah, my 0:04:58.600 --> 0:05:03.160 sense is it's gonna be coppy for probably the remainder 0:05:03.240 --> 0:05:07.080 of the year. I think until we get past the UH, 0:05:07.320 --> 0:05:11.239 the delta variant and and you know, other issues surrounding COVID. 0:05:11.760 --> 0:05:13.880 I think it's going to be a little bit uncertain 0:05:13.920 --> 0:05:17.440 in the labor markets because we don't really understand why 0:05:17.520 --> 0:05:21.360 so many people are staying on the sidelines as as 0:05:21.400 --> 0:05:24.960 opposed to coming back to UH the plethora of jobs 0:05:25.000 --> 0:05:28.880 as as you know, record number of jobs across industries. UM. 0:05:29.000 --> 0:05:32.680 So I think it's gonna be um period of time 0:05:32.800 --> 0:05:37.240 probably into two before we see some stabilization. Peter just 0:05:37.320 --> 0:05:41.359 got about fifty seconds left here. You talked about women, 0:05:41.400 --> 0:05:45.400 and we two noticed UH labor participation, women really leaving, 0:05:45.440 --> 0:05:48.039 and we really thought the beginning of pandemic flexibility and 0:05:48.120 --> 0:05:50.559 working was going to be helpful for women. We've learned 0:05:50.600 --> 0:05:53.440 that's not the case. Um. What are you hearing on 0:05:53.480 --> 0:05:56.480 the front that women are leaving the workforce and they 0:05:56.480 --> 0:06:01.039 are not coming back. Yeah, we're hearing that. Um. And 0:06:01.040 --> 0:06:06.160 and largely it's due to childcare or elder care responsibilities. Um. 0:06:06.200 --> 0:06:08.080 You know, if kids don't go to school or if 0:06:08.120 --> 0:06:11.840 they're at home schooling. Um, parents don't go to work 0:06:11.920 --> 0:06:15.120 if they can't work remotely. And even then it adds 0:06:15.160 --> 0:06:18.800 to a level of stress that makes work intolerable at 0:06:18.800 --> 0:06:21.400 some point. So I think this is a really serious 0:06:21.440 --> 0:06:24.159 issue that we need to focus on to ensure that 0:06:24.200 --> 0:06:27.159 we get more women back into the labor force. Right. 0:06:27.160 --> 0:06:29.240 It really speaks to the heart of your organization, really 0:06:29.240 --> 0:06:32.160 the creation of it way back when, Um, Peter, thank 0:06:32.160 --> 0:06:34.360 you so much, Peter, quickly he's president. Cef Kelly, I 0:06:34.400 --> 0:06:36.960 have to say, my sister got a college degree years 0:06:37.000 --> 0:06:40.599 and years ago, um, to get a job, how to 0:06:40.640 --> 0:06:43.800 get some secretarial skills, went to Kelly, got a job 0:06:43.800 --> 0:06:47.159 in the city, uh, and ended up getting your masters 0:06:47.160 --> 0:06:49.840 and doing really really well. So I can understand that path. 0:06:50.000 --> 0:06:51.960 How it it helps. Look, it was called the Kelly 0:06:52.000 --> 0:06:55.640 Girl Company at nineties and nineteen fifties. You're listening to 0:06:55.760 --> 0:06:59.719 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes 0:06:59.760 --> 0:07:03.440 too Stovic on Bloomberg Radio. We've been talking about Mark 0:07:03.520 --> 0:07:07.440 and their experimental pill for COVID nineteen should be accompanied 0:07:07.480 --> 0:07:09.760 by other treatments as soon as they're available to cut 0:07:09.760 --> 0:07:13.000 the risk of drug resistance that would limit its effectiveness. 0:07:13.280 --> 0:07:18.400 Welcome Foundation director Jeremy far saying that, Yeah, this is 0:07:18.400 --> 0:07:20.600 a story that caught our attention because of all the 0:07:20.640 --> 0:07:24.200 attention that Mark's experimental pill for COVID nineteen got over 0:07:24.200 --> 0:07:27.440 the last week. We saw mark stock rise starting Friday 0:07:27.480 --> 0:07:30.160 as a result of it. Riley Griffin is US healthcare 0:07:30.200 --> 0:07:32.040 reporter for Bloomberg News, and she joins us now on 0:07:32.080 --> 0:07:34.000 the phone from New York City. So, so let's start 0:07:34.000 --> 0:07:36.680 with with where things stand with regulators and Mark's pill. 0:07:37.360 --> 0:07:39.680 What is it and what is the well. I don't 0:07:39.680 --> 0:07:41.560 want to say promise because it hasn't been fully approved 0:07:41.560 --> 0:07:44.600 by regulators rally, but what's it supposed to do? Yeah, 0:07:44.760 --> 0:07:48.440 Mark's pill is really important because what we don't have today, 0:07:49.000 --> 0:07:51.960 um TIM, is a cheap and effective pill that can 0:07:52.000 --> 0:07:54.560 be prescribed to people who have contracted COVID. Right now, 0:07:54.560 --> 0:07:57.680 the treatment landscape is rather barren. You can get the 0:07:57.720 --> 0:08:00.200 mono quota antibodies which are in an a few shin, 0:08:00.440 --> 0:08:03.960 or if you proceed to the hospitalized setting, you might 0:08:04.040 --> 0:08:08.320 get dexa meta zone, a steroid or rem deservie. But 0:08:08.440 --> 0:08:11.320 what we really want is something like Tamma bloo, something 0:08:11.320 --> 0:08:13.200 that you can take from home, you don't have to 0:08:13.280 --> 0:08:17.000 venture too far, and it will stop COVID in its tracks, 0:08:17.120 --> 0:08:21.040 stop that replication process. We've been following Mark's pill four 0:08:21.120 --> 0:08:24.360 months now. Actually had a feature in Business Week back 0:08:24.440 --> 0:08:28.960 in spring about this very concept um and now we've 0:08:29.000 --> 0:08:31.800 got the data and it looks fairly promising. But the 0:08:31.880 --> 0:08:34.720 question at hand um that the director of the Welcome 0:08:34.760 --> 0:08:37.680 Foundation is posing, is is it going to face drug 0:08:37.800 --> 0:08:41.080 resistance like we've seen with some of those monoquona antibodies. 0:08:41.400 --> 0:08:44.120 In the backtrack for a second, what is drug resistance 0:08:44.640 --> 0:08:48.240 that occurs when the virus and bacteria evolved to blunt 0:08:48.440 --> 0:08:52.480 or defeat a drug mechanism of attack, which is what 0:08:52.520 --> 0:08:54.760 we don't want to have happened, right And this is 0:08:54.760 --> 0:08:57.280 what's fearful right now. I feel like we're in that 0:08:57.720 --> 0:09:01.240 Netherlands right now of right to people who have had 0:09:01.360 --> 0:09:03.880 vaccines or waiting, not all of his supply, you know, 0:09:03.960 --> 0:09:07.240 can get boosters, and you're just wondering, am I still safe? 0:09:07.320 --> 0:09:09.560 Is there going to be a Okay, we're kind of dealing. 0:09:09.679 --> 0:09:11.560 We are dealing with the delta variant, But is there 0:09:11.559 --> 0:09:13.000 going to be a variant that all of a sudden 0:09:13.040 --> 0:09:15.640 is going to be like, yeah, fiser moderna vaccine J 0:09:15.679 --> 0:09:19.480 and J vaccine not a problem. Yeah, And and people 0:09:19.480 --> 0:09:23.800 are following that with vaccines. But viruses are really wildly things. 0:09:24.280 --> 0:09:27.000 They mutate to survive and we've always seen this with 0:09:27.080 --> 0:09:31.640 anti virals in particular um and so that's a question here. 0:09:32.040 --> 0:09:34.640 But Mark I spoke with them just yesterday, one of 0:09:34.679 --> 0:09:39.120 the leaders of developing this pill, and he says the 0:09:39.160 --> 0:09:42.240 bar for resistance with mona peer of year the COVID 0:09:42.280 --> 0:09:45.400 pill is rather high. He sees it as different from 0:09:45.400 --> 0:09:48.400 other anti virunts in the past. Can can it be 0:09:48.520 --> 0:09:53.199 changed in real time the way that other treatments or 0:09:53.280 --> 0:09:56.040 vaccines have been. At least the hope has been that 0:09:56.080 --> 0:09:59.400 they can be changed and tweaked with two help attack. 0:09:59.480 --> 0:10:04.880 Some of these are potentially resistance. So typically how companies 0:10:04.960 --> 0:10:08.680 do this is they actually combine one anti viral with another. 0:10:08.880 --> 0:10:12.439 You might have heard the term cocktail to describe a 0:10:12.600 --> 0:10:16.160 silly term, right, But it really means you're combining more 0:10:16.200 --> 0:10:20.160 than one thing, and together, Um, you're combating resistance, and 0:10:20.160 --> 0:10:23.720 you might also be encouraging greater levels of efficacy. But 0:10:23.840 --> 0:10:26.160 that's not what Mark is claiming here. To get a 0:10:26.160 --> 0:10:31.960 little wonky with you, guys, Um, I like wanky too, 0:10:32.520 --> 0:10:35.200 he had said to me. Nick Kurt Sunis, the senior 0:10:35.280 --> 0:10:38.560 vice president of clinical research for infectious Diseases and Vaccines 0:10:38.559 --> 0:10:42.840 at Mark, that earlier experiments with other viruses showed that 0:10:42.880 --> 0:10:46.960 the evolution of resistant mutations was really rare with mulipure beer. 0:10:47.440 --> 0:10:50.720 And another thing, the course of treatment is short, meaning 0:10:50.720 --> 0:10:54.400 that viruses get very few chances to evolve into resistant 0:10:54.480 --> 0:10:58.040 forms during that course. UM. And then the last reason 0:10:58.080 --> 0:11:00.280 he shared with us was the drugs met kind of 0:11:00.720 --> 0:11:04.240 mechanism of action. To put it in as simple terms 0:11:04.320 --> 0:11:06.560 as I can, the way manipeer of your works is 0:11:06.600 --> 0:11:12.000 by inducing errors into the coronavirus's genetic material. Those errors 0:11:12.000 --> 0:11:17.760 are then replicated until the virus is practically defunct. And 0:11:17.800 --> 0:11:22.080 what Marcus found is that by UM inducing those errors, 0:11:22.120 --> 0:11:26.079 they're actually spread more or less randomly throughout the viral genome, 0:11:26.360 --> 0:11:29.800 which again means that the virus has fewer opportunities to 0:11:29.920 --> 0:11:34.560 develop those mutant forms that will overcome those errors, and 0:11:34.600 --> 0:11:37.440 that in and of itself, he said, makes resistance to 0:11:37.480 --> 0:11:40.640 manopere of your a tufting. Only time will tell you know. 0:11:40.720 --> 0:11:43.960 That's that's marks perspective right now. Um, And they're not 0:11:44.040 --> 0:11:48.560 actively pursuing combinations. But should we c say Fiser's oral 0:11:48.559 --> 0:11:52.760 anti viral proved successful as well, I'd be asking could 0:11:52.840 --> 0:11:56.000 they combine the two together? Aren't two better than one? 0:11:56.040 --> 0:12:01.079 Maybe we've certainly seen that in meta history and treatment 0:12:01.160 --> 0:12:04.520 history before. Um. Riley, thank you so much, really clarified 0:12:04.559 --> 0:12:06.960 a lot on that. Roley Griffin Cheese u S healthcare 0:12:06.960 --> 0:12:09.120 report at Bloomberg News. Joining us on the phone in 0:12:09.160 --> 0:12:13.160 New York City. This is Bloomberg Business Week with Carol 0:12:13.200 --> 0:12:17.680 Masser and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. 0:12:18.080 --> 0:12:20.440 We do want to just rehash a former Win Resorts 0:12:20.440 --> 0:12:22.800 executive and a private equity investor found guilty in the 0:12:22.800 --> 0:12:25.760 first trial of parents accused of cheating to get their 0:12:25.840 --> 0:12:29.720 children into elite US universities. We're talking about varsity blues. 0:12:30.160 --> 0:12:32.520 Uh and UH it looks like the two of them 0:12:32.640 --> 0:12:37.400 are potentially facing some jail time. Um. Yeah, and you 0:12:37.440 --> 0:12:39.600 know what, it actually is a perfect segue into our 0:12:39.640 --> 0:12:42.480 next story that talks a lot about wealthy parents and 0:12:43.000 --> 0:12:46.120 what wealthy parents are doing to help their kids, uh 0:12:46.280 --> 0:12:49.880 afford homes, specifically in New York City that weren't necessarily 0:12:49.920 --> 0:12:52.160 meant for them exactly. It's in the new issue of 0:12:52.160 --> 0:12:54.400 Bloomberg Business Week magazine. It's among the most right. We're 0:12:54.400 --> 0:12:57.880 not saying, I think illegals being done, that there's no parallel. 0:12:57.880 --> 0:12:59.640 I don't want to apply a parallel that there is 0:12:59.640 --> 0:13:03.280 anything illegal. But it's time just working on my segway, Carol. 0:13:03.440 --> 0:13:05.520 It's among our most read on the Bloomberg Today's story 0:13:05.520 --> 0:13:08.280 about New York City's real estate tax breaks that, as 0:13:08.320 --> 0:13:10.280 Tim mentioned, have turned out to be a loophole for 0:13:10.400 --> 0:13:13.000 rich kids. That tale and reality. Let's get to it 0:13:13.040 --> 0:13:16.680 with Bloomberg News Financial Investigations reporter Caleb Melby. He is 0:13:16.720 --> 0:13:20.160 on the phone, he's hard working, he's in St. Louis. Caleb, 0:13:20.800 --> 0:13:24.120 interesting story. First of all, tell us about this tax 0:13:24.160 --> 0:13:29.680 break and how that's become a loophole for some Yeah. Absolutely, 0:13:30.440 --> 0:13:35.040 this is a program uh called the HDFC cooperative program 0:13:35.440 --> 0:13:39.640 here in New York that stands for Housing Development Funded Corporation, 0:13:39.760 --> 0:13:42.840 a whole elpha bit soup of a name. And what 0:13:43.000 --> 0:13:45.800 happened in the in the nineties seventies was, of course, 0:13:45.840 --> 0:13:48.439 you had white flight out of New York, you had 0:13:48.440 --> 0:13:51.199 the financial crisis in New York City, and you had 0:13:51.200 --> 0:13:53.839 the slum lords who both stopped making repairs to their 0:13:53.840 --> 0:13:58.800 buildings and stopped paying taxes. UH. The government eventually sees 0:13:58.880 --> 0:14:01.400 those buildings runpaid taxes, but didn't want them to go 0:14:01.480 --> 0:14:03.600 back to the same landlords for fear that the same 0:14:03.640 --> 0:14:06.079 thing would happen all over again. So they looked to 0:14:06.160 --> 0:14:09.120 this um UH state law that allowed them to create 0:14:09.600 --> 0:14:14.559 UH cooperatives designed to be low for low income people, 0:14:14.640 --> 0:14:17.520 to provide income for low income people. They turned these 0:14:17.559 --> 0:14:20.640 buildings over to the former renters for two hundred fifty 0:14:20.640 --> 0:14:24.160 dollars a unit um UH, and it was kind of 0:14:24.200 --> 0:14:28.200 historic transfer of wealth and property in New York City. UM. 0:14:28.360 --> 0:14:30.760 But a lot of those people didn't have money to 0:14:30.840 --> 0:14:34.120 repair their buildings either, so the government created this tax 0:14:34.120 --> 0:14:38.000 break to try to help them out in but throughout time, 0:14:38.240 --> 0:14:43.360 nobody has really created any stringent rules about um what 0:14:43.520 --> 0:14:46.840 these units can go for UM or how much how 0:14:46.920 --> 0:14:48.760 much you can have in way of assets to buy them. 0:14:48.840 --> 0:14:51.200 So they have these income limits on them, but no 0:14:51.360 --> 0:14:55.000 asset limits. And UH, that actually means there's kind of 0:14:55.000 --> 0:14:57.600 a perfect buyer out there and the sort of person 0:14:57.640 --> 0:14:59.520 who would love to live in Manhattan where a lot 0:14:59.560 --> 0:15:03.640 of these a are uh, low income, high asset Uh 0:15:03.680 --> 0:15:06.840 you know, children of the affluent who are moving here 0:15:06.840 --> 0:15:08.840 to the city. Okay, so let's say you are an 0:15:08.840 --> 0:15:11.720 aspiring you know, fill in the blank, uh, and you 0:15:11.720 --> 0:15:14.680 moved to New York City after graduating from college. You're 0:15:14.720 --> 0:15:17.800 making you know, between thirty thousand and fifty thousand dollars 0:15:17.840 --> 0:15:21.240 a year, scraping by in a lot of cases, but 0:15:21.320 --> 0:15:25.640 not really because you perhaps have access to half a 0:15:25.640 --> 0:15:29.840 million dollars from parents, from wealthy relatives like you lay 0:15:29.840 --> 0:15:32.320 out in your story, you're kind of the perfect fit 0:15:32.520 --> 0:15:36.120 to actually buy one of these homes, and you're getting 0:15:36.160 --> 0:15:39.720 it at a huge discount compared to uh a house 0:15:39.760 --> 0:15:42.880 that doesn't have the limits. That's exactly right, Timm, And 0:15:43.080 --> 0:15:44.960 you raise another good point, which is that because some 0:15:45.000 --> 0:15:48.320 of these buildings still have some level of financial distress, 0:15:48.360 --> 0:15:51.040 banks won't lend to them. They can still be beautiful, 0:15:51.280 --> 0:15:54.040 you know, lovely buildings, um that have a little bit 0:15:54.080 --> 0:15:55.800 of debt on the books. But that means you do 0:15:55.920 --> 0:15:58.280 need to have all cash, and they will sometimes advertise 0:15:58.280 --> 0:16:00.800 themselves as all cash all. So you can't take a 0:16:00.840 --> 0:16:03.880 mortgage out to get one of these. Well, for for 0:16:03.920 --> 0:16:06.520 the more stabilized ones, you can, but in a lot 0:16:06.520 --> 0:16:10.000 of cases you can't. And that's where you'll see them advertised. 0:16:10.040 --> 0:16:12.200 You must make, as you say, something like less than 0:16:12.240 --> 0:16:16.600 sixty dollars, but also have five dollars cash or more 0:16:16.680 --> 0:16:21.400 on hand. It's, um, it's quite an absurd situation. Um 0:16:21.600 --> 0:16:24.960 as as this is unfolded through history to our present moment. 0:16:25.200 --> 0:16:27.560 So how many are taking advantage of you know, to 0:16:27.600 --> 0:16:31.480 some extent gaming the system? Not illegal, but it's certainly 0:16:31.520 --> 0:16:35.080 not getting to the population that it was intended for. 0:16:35.120 --> 0:16:37.640 I mean, right, this is for to help out those 0:16:37.680 --> 0:16:41.760 that are lower income. Um. How how how much has 0:16:41.760 --> 0:16:45.960 it been being gamed? Basically? Yeah, So, so the universe 0:16:46.000 --> 0:16:49.760 of these buildings is about a thousand UM with about 0:16:49.920 --> 0:16:53.520 seventeen or eighteen thousand units in them. Uh, to give 0:16:53.560 --> 0:16:56.640 you an idea that I mean, that's roughly twice the 0:16:56.720 --> 0:17:00.680 size of Stevenson Town Peter Cooper Village for our listeners 0:17:00.720 --> 0:17:04.520 in the New York area, very big multi block complex 0:17:04.520 --> 0:17:06.920 in the city, a lot of units, but because they 0:17:06.960 --> 0:17:11.399 do offer such tremendous protection against rising costs in the city, 0:17:11.480 --> 0:17:14.800 even better than a rent stabilized apartment, people do hold 0:17:14.840 --> 0:17:17.600 onto them for a very very long time, and so 0:17:17.640 --> 0:17:21.640 they do trade infrequently. But kind of like how whenever 0:17:21.920 --> 0:17:24.399 home cells and an up and coming neighborhood, and it 0:17:24.480 --> 0:17:26.800 always tends to go in one direction, up and up 0:17:26.800 --> 0:17:29.920 and up. Um, these buildings are doing the same. Uh. 0:17:30.280 --> 0:17:32.200 And we're seeing that again and again that even though 0:17:32.240 --> 0:17:35.399 these units trade infrequently, for the ones on the Upper 0:17:35.400 --> 0:17:39.440 West Side or Central Harlem or the East Village, these 0:17:39.480 --> 0:17:42.880 neighborhoods that in the seventies and eighties weren't places everybody 0:17:42.880 --> 0:17:46.280 wanted to be, but are now much more desirable places 0:17:46.320 --> 0:17:49.120 to be. You're seeing more and more of these deals. 0:17:49.680 --> 0:17:51.560 So what did the parents say, who did you talk to? 0:17:51.880 --> 0:17:53.760 I'm curious about that, right, because that's who you really 0:17:53.760 --> 0:17:58.880 wanted to talk to. Yeah, yeah, I mean, um, I 0:17:58.880 --> 0:18:01.760 I talked to it to one parent who um you know, 0:18:02.240 --> 0:18:05.280 she she had been a lawyer herself. Her husband had 0:18:05.320 --> 0:18:08.760 been a partner and engineering firm, and they had a 0:18:08.840 --> 0:18:12.119 daughter who was a musician, and they were worried about 0:18:12.119 --> 0:18:15.000 her having an even income being in the city, but 0:18:15.119 --> 0:18:17.080 wanting to be in the city, so they you know, 0:18:17.480 --> 0:18:20.520 the daughter was able to pay four hundred thousand dollars 0:18:20.560 --> 0:18:23.359 cash for a one bedroom on the fr West Side 0:18:23.400 --> 0:18:28.200 where she can have rehearsals away from her roommates, any roommates, 0:18:28.480 --> 0:18:31.720 and also not worry about, you know, the very burdensome 0:18:31.880 --> 0:18:35.360 housing costs that exist for most renters or even owners 0:18:35.880 --> 0:18:39.600 in in New York. Um and I also talked to 0:18:40.240 --> 0:18:43.399 a lot of musicians who have since become adults, a 0:18:43.400 --> 0:18:47.040 couple of them that have actually transitioned from being musicians 0:18:47.040 --> 0:18:51.679 into real estate brokers specializing in exactly these kinds of units. 0:18:51.720 --> 0:18:53.480 That one was a bass guitar player, one was a 0:18:53.600 --> 0:18:57.719 jazz flutist. Um and uh and talk to them about 0:18:58.600 --> 0:19:01.320 you know, how this pro graham has unspooled in a 0:19:01.359 --> 0:19:05.160 way that the city definitely didn't didn't help well. Also 0:19:05.160 --> 0:19:07.239 seems like the rules aren't hard and fast. I mean, 0:19:07.280 --> 0:19:10.280 you do share the example of anecdotes of people printing 0:19:10.280 --> 0:19:13.240 out you know, turbo tax tax returns that potentially might 0:19:13.240 --> 0:19:17.400 not reflect a real income for somebody. Yeah, and that's 0:19:17.400 --> 0:19:21.520 exactly right. So, and every diminishing number of these buildings 0:19:21.560 --> 0:19:25.120 has formal regulatory agreements with the city. They may require 0:19:25.200 --> 0:19:27.800 that they actually file documentation around the stuff, but the 0:19:27.880 --> 0:19:31.399 vast majority of them, especially the more expensive ones, no 0:19:31.520 --> 0:19:34.200 longer have any sort of regulatory agreement, and the city 0:19:34.240 --> 0:19:36.840 has basically thrown up its hand to try and regulate 0:19:36.880 --> 0:19:39.480 these at all. So so to the extent that there 0:19:39.480 --> 0:19:41.960 are even income caps on a lot of these these days, 0:19:41.960 --> 0:19:46.040 they're essentially functioning on an honor system. So it will continue. 0:19:46.119 --> 0:19:50.720 So it's going to just continue. Twenty seconds left here. Um, 0:19:51.480 --> 0:19:53.240 it's gonna be very hard to put this one back 0:19:53.320 --> 0:19:55.280 in the bottle. You try, you try to put price 0:19:55.320 --> 0:19:57.520 caps on these when there wasn't them before, you're going 0:19:57.560 --> 0:19:59.600 to get law suits. And it's not clear that the 0:19:59.600 --> 0:20:02.160 city wanted to do that. All right, Well, a very 0:20:02.280 --> 0:20:05.080 interesting story in terms of what's going on. Hey, Caleb, 0:20:05.080 --> 0:20:08.920 thank you. Caleb Melby, financial investigations reporter of Bloomberg News 0:20:09.240 --> 0:20:12.639 on the road in St. Louis, And uh what I 0:20:12.680 --> 0:20:14.439 opened up my Twitter feed this morning? And this was 0:20:14.480 --> 0:20:16.640 like the story that everybody was talking about a lot 0:20:16.640 --> 0:20:20.240 of rage tweeting, was there. Yeah, yeah, well understandably. So 0:20:25.240 --> 0:20:29.280 this is Bloomberg Business Week with Carol Masser and Bloomberg 0:20:29.359 --> 0:20:35.320 Quick Takes Tim Stinovic on Bloomberg Radio. So you are 0:20:35.400 --> 0:20:38.440 listening to Bloomberg Business Week on this Friday, and this 0:20:38.560 --> 0:20:41.000 happens to be also among one of our most read 0:20:41.000 --> 0:20:43.560 on the Bloomberg. We were all talking about it, certainly 0:20:43.600 --> 0:20:45.680 in our call It's a Store by Bloomberg. Simon Kennedy 0:20:45.760 --> 0:20:48.240 and Timid notes that the US were already in a 0:20:48.280 --> 0:20:52.040 recession based on consumer sentiment, which is based on a 0:20:52.160 --> 0:20:55.480 new study co authored by former Bank of England policymaker 0:20:55.560 --> 0:20:58.560 Danny blanche Flower. He is professor of economics at Dartmouth College, 0:20:58.880 --> 0:21:02.080 and he joins us on the phone from Hanover, New Hampshire. Danny, 0:21:02.160 --> 0:21:06.120 nice to have you back. How are you are. I'm 0:21:06.119 --> 0:21:09.960 actually teaching class again. It's great. I know you're on campus. 0:21:10.040 --> 0:21:13.440 It's great. I'm looking out of my office windows. Great. Um, 0:21:13.480 --> 0:21:18.200 so what's going on here? We're already in a recession? Well? Um. 0:21:18.200 --> 0:21:20.560 I called this earlier in the week with my co 0:21:20.680 --> 0:21:23.960 author Alex Bryson Um. I mean the issue here is 0:21:24.440 --> 0:21:27.159 what actually can you use to say something about a 0:21:27.160 --> 0:21:31.160 recession coming before it hits. So the NBR dating group 0:21:31.200 --> 0:21:33.160 tells you six to eight months to a year later, 0:21:33.880 --> 0:21:36.399 the labor market data tells you pretty much at the 0:21:36.440 --> 0:21:39.640 point that you turn what can you use to predict 0:21:39.680 --> 0:21:41.919 it common? And it turns out we can success now 0:21:42.000 --> 0:21:45.200 and the new paper we show we successfully predict every 0:21:45.200 --> 0:21:48.760 one of the last six recessions beforehand. And essentially what 0:21:48.800 --> 0:21:51.840 we're seeing today is almost identical to what we saw 0:21:51.880 --> 0:21:55.640 in two thousand seven across the whole economy and particularly 0:21:55.640 --> 0:21:59.240 across the eight biggest states. These measures of sentiment what 0:21:59.240 --> 0:22:03.240 do people think is happening? Turned around May, and that 0:22:03.359 --> 0:22:07.000 suggests that recession will probably start around Christmas time. So 0:22:07.119 --> 0:22:10.600 the predictors are almost exactly as they were in two 0:22:10.640 --> 0:22:13.480 thousand seven. And this is how you can predict every 0:22:13.520 --> 0:22:17.480 prior recession to it. So these this prediction came well before, 0:22:17.840 --> 0:22:20.119 obviously a couple of days before the non farm perils, 0:22:20.119 --> 0:22:22.719 which didn't surprise me, and I expect to see nonfarm 0:22:22.800 --> 0:22:27.200 payrolls declining and probably going negatives by negative by the 0:22:27.240 --> 0:22:29.640 end of the year. Wow. That's certainly yeah. I mean 0:22:29.680 --> 0:22:32.600 that that's the problem is obviously the labor market data 0:22:32.920 --> 0:22:34.920 isn't giving us a very good deer, but people don't 0:22:34.920 --> 0:22:38.000 seem to understand what's going on. There's base and composition effect. 0:22:38.440 --> 0:22:40.160