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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 2: my co host Matt Miller.

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Speaker 1: Every business day we bring you interviews from CEOs, market pros,

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Speaker 1: and Bloomberg experts, along with essential market movin news.

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Speaker 2: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 3: Well, let's keep the conversation going as to whether we

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Speaker 3: will see an extension of us close Rally into the

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Speaker 3: Moon music for January and February. We've got Christina Hooper

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Speaker 3: joining us now Chief global market strategist over at Invesco, Christina.

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Speaker 3: Always great to have your voice across our programming, and

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Speaker 3: you seem to be liking equities at this particular moment

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Speaker 3: in terms of risk sentiment.

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Speaker 4: Oh, absolutely, Caroline. What I would anticipate is that as

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Speaker 4: we head into twenty twenty four, we're likely to see

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Speaker 4: markets discount in economic reacceleration in the back half of

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Speaker 4: twenty four, and that should benefit small caps and cyclicals

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Speaker 4: the most. In fact, I think we've already seen a

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Speaker 4: preview of that late in twenty three. I think that

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Speaker 4: continues now on the back half of the year. We

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Speaker 4: could see some give back just because markets will then

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Speaker 4: start to discount twenty twenty five, but I do believe

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Speaker 4: the early part of twenty four is likely to be

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Speaker 4: very positive, although there could be some volatility because there

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Speaker 4: still is some confusion around FED policy given that the

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Speaker 4: Fed dot protests too much.

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Speaker 3: Okay, so talk to us a little. We're going to

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Speaker 3: dig into perhaps where the FED is going to go

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Speaker 3: throughout the show. What do you make of central bank policy?

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Speaker 3: Do you think that they will be cutting as much

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Speaker 3: as the market seems to be.

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Speaker 4: Think they will be I think they ultimately will. I

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Speaker 4: think they have another goal right now, though, which is

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Speaker 4: to tamp down and easing of financial conditions, and so

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Speaker 4: that's why we're seeing predictions there on dot plot saying

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Speaker 4: only seventy five basis points in cuts this year, and

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Speaker 4: of course some of the hawkish language we've heard recently.

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Speaker 4: I think that ultimately will be a non event that

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Speaker 4: we will see probably between one hundred and one hundred

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Speaker 4: and fifty basis points in cuts. Not because the economy

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Speaker 4: deteriorates a lot. I don't think that's going to happen.

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Speaker 4: I think it's because where monetary policy is is quite restrictive,

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Speaker 4: especially if disinflation continues.

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Speaker 2: Christine, reading through your notes, I found a juicy nugget

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Speaker 2: here in your ex his outlook, we see the greatest

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Speaker 2: potential in emerging markets.

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Speaker 5: Talk to us about that.

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Speaker 4: Sure, well, emerging markets are likely to perform well historically

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Speaker 4: they have when the dollar has weakened, and I think

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Speaker 4: we're certainly seeing that trend start and I think it

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Speaker 4: will continue in twenty four. Emerging markets are well positioned.

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Speaker 4: We saw some emerging market central banks act more quickly

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Speaker 4: in the face of inflation, so they're in a better

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Speaker 4: place in terms of normalizing monetary policy, and I think

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Speaker 4: we're likely to see especially Asia em perform quite well

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Speaker 4: this year, and I think that is going to be

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Speaker 4: one of the key stories of twenty four.

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Speaker 5: That's a good one.

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Speaker 2: I like that we're going to circle back on that

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Speaker 2: throughout the year. I look at my Bloomberg Index browser Christina,

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Speaker 2: which allows me to see total returns in the fixed

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Speaker 2: income space, and the good news is for bond investors

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Speaker 2: they have positive returns in twenty twenty three versus some

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Speaker 2: brutally negative returns in twenty twenty two. What's your fixed

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Speaker 2: income outlook here after a decent twenty three.

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Speaker 4: Well, investors certainly went through a lot of pain in

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Speaker 4: twenty two and certainly saw a better environment twenty three.

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Speaker 4: I think that fixed income is well positioned in twenty four.

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Speaker 4: Yields are certainly higher, and my expectation is that investment

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Speaker 4: grade bonds are going to be an area of particular opportunity.

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Speaker 4: I don't anticipate a soft landing so much as more

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Speaker 4: of a bumpy landing in the first half of the year,

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Speaker 4: and I think that the sweet spot for the economy

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Speaker 4: will be investment grade corporates also excited about emerging market debt.

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Speaker 4: I think this is a time where we want to be.

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Speaker 4: We want to have a more waiting to both emerging

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Speaker 4: markets equities and emerging markets debt. In terms of duration,

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Speaker 4: longer duration, we've been taught about that for months now.

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Speaker 4: We think that going long is important, and I think ultimately,

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Speaker 4: when we've looked at past cycles, it has been a

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Speaker 4: good time to go long duration.

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Speaker 3: One interesting point from your notes as well was alternative

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Speaker 3: assets and within their commercial real estate you like it,

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Speaker 3: you fav why and what part?

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Speaker 6: Well.

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Speaker 4: First, I have to say commercial real estate covers a

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Speaker 4: large swath of territory. Office space is only a relatively

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Speaker 4: small portion of the commercial real estate picture. But even

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Speaker 4: within office space, I think we've seen the worst in

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Speaker 4: terms of occupancies. We're in recovery mode. It could take

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Speaker 4: some time. But the key is that rates are coming

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Speaker 4: down and that has played such an outsized role in

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Speaker 4: pricing for real estate. So I think that twenty twenty

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Speaker 4: four represents opportunities for commercial real estate. If, as we anticipate,

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Speaker 4: rates come down, mortgage rates come down, this could be

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Speaker 4: quite an attractive environment, you know.

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Speaker 2: Christina mentioning and discussing emerging markets. It makes me think

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Speaker 2: about China because it's such a big part of the MSCI.

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Speaker 2: China was a disappointing story for most investors in twenty

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Speaker 2: twenty three. The economy did not rebound as much as

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Speaker 2: people thought on.

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Speaker 5: The great reopening. If you will, how do you view

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Speaker 5: China in twenty twenty four.

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Speaker 4: So China is an interesting investment landscape because you're absolutely right,

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Speaker 4: there was some level of disappointment in twenty twenty three.

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Speaker 4: The economy had a nice reopening, but it wasn't as

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Speaker 4: strong as many anticipated. If we were to sort of

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Speaker 4: dive down, services did a lot better than manufacturing, and

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Speaker 4: I would argue that manufacturing disappointment was largely about a

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Speaker 4: increased global demand that impacted many economies. Now, there of

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Speaker 4: course were issues, and I think they were largely around

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Speaker 4: a consumer sentiment in China and a view that there

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Speaker 4: was a need for more stimulus. So we have seen

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Speaker 4: in the back half of twenty three more of a

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Speaker 4: rollout of policy that has been quite targeted, and I

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Speaker 4: think if we see a continuation of target targeted stimulative

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Speaker 4: policies coming from China, it could be quite a good

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Speaker 4: year for consumer spending.

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Speaker 3: Christine, if we think about this time last year, we

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Speaker 3: thought China was going to do well, we thought the

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Speaker 3: US was going to dip into recession. We got a

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Speaker 3: lot of calls wrong, and we're going to be dipping

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Speaker 3: into that entire discussion a little bit later.

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Speaker 6: But what out of all of.

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Speaker 3: This viewpoint that you have in terms of potentially a

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Speaker 3: little bit of refirming in China, the fact that US

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Speaker 3: equities is going to be good, what are the risks

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Speaker 3: to that from your perspective?

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Speaker 4: Well, I think the greatest risk facing investors right now

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Speaker 4: is that we do see a hard landing for the economy.

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Speaker 4: I would assign that a very low probability. But I

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Speaker 4: do believe that when you have incredibly aggressive monetary policy

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Speaker 4: and it's quite synchronized across a number of different major economies,

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Speaker 4: that is the single biggest risk. And of course that

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Speaker 4: could take down a stock market that has a very

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Speaker 4: different expectation for the economy. But again I would say

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Speaker 4: that is a very low risk now in terms of

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Speaker 4: whim which markets are going to perform better than others,

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Speaker 4: I think because we're going to see that weakening in

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Speaker 4: the US dollar, and I think that's I have a

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Speaker 4: lot of conviction in that call that that should bode

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Speaker 4: well for economies outside the US, and I think there

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Speaker 4: are of course other factors at play as well. But

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Speaker 4: at the end of the day, we can be wrong,

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Speaker 4: especially when it comes to tactical allocations. Everyone can be

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Speaker 4: and that's the importance of being well diverse.

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Speaker 2: Christina, thank you so much for joining us. As always,

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Speaker 2: we're a little bit smarter after spending some time with you.

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Speaker 2: Christina Hooper, chief Global market strategist at a little firm

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Speaker 2: called Invesco.

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Speaker 7: You're listening to the team Ken's are Live program Bloomberg

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Speaker 7: Markets weekdays at ten am eastering on Bloomberg dot com,

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Speaker 7: the iHeartRadio app and the Bloomberg Business app, or listen

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Speaker 7: on demand wherever you get your podcasts.

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Speaker 2: Looking back on twenty twenty three, boy geopolitics was front

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Speaker 2: and center, probably a lot more than people would like

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Speaker 2: for a lot of reasons. For he had Ukraine and

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Speaker 2: now the Middle East flaring up yet again, and you

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Speaker 2: have to factor that into your investment outlook.

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Speaker 5: That's certainly been the case throughout this year.

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Speaker 2: That's why we're happy to speak with Wendy Shulder, Professor

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Speaker 2: at Brown University, professor, thanks so much for joining us.

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Speaker 2: I want to start just on the domestic political front here.

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Speaker 2: There are a lot of states that are questioning whether

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Speaker 2: former president of Biden can even be on the ballot. Trump,

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Speaker 2: former president, thank you very much, can never even be

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Speaker 2: on the ballot this year. How do you make what

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Speaker 2: do you make of what's happening here on some of

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Speaker 2: these states.

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Speaker 8: Well, I mean we've had Colorado and the state Supreme

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Speaker 8: Court ruled there, and then Maine. It was a decision

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Speaker 8: by the Secretary of State of Maine. And the issue is,

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Speaker 8: you know, did Donald Trump commit insurrection in allegedly inciting

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Speaker 8: the January sixth riots, but also you know, trying to

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Speaker 8: sort of undermine or change the electoral results of twenty

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Speaker 8: twenty fake elector schemes. You know, all of his claims

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Speaker 8: were thrown out sixty different court cases, but he was

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Speaker 8: not ever convicted of insurrection, which is really important part

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Speaker 8: for the fourteenth Amendment. If you commit insurrection, if you

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Speaker 8: were a Confederate soldier and you took up arms against

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Speaker 8: the United States the Union, you were considered an insurrectionist.

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Speaker 8: But even Jack Smith is not charging former President Trump

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Speaker 8: with insurrection. So in this case, it's a pretty wide

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Speaker 8: application of the Fourteenth Amendment for somebody who has not

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Speaker 8: been convicted in the court of law of insurrection.

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Speaker 3: Nevertheless, does it set the stage for some sort of

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Speaker 3: constitutional showdown as some experts think, is this going to

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Speaker 3: the Supreme Court?

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Speaker 8: Well, the Supreme Court has to decide. Certainly the decision

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Speaker 8: in the colle or state supreme court. That's a natural

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Speaker 8: path to go from a state supreme court to the

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Speaker 8: federal courts. And of course this is a state question.

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Speaker 4: Who gets on the ballot?

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Speaker 8: Is time manner in place? In other words, that clause

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Speaker 8: of the Constitution that's controlled by states, not the federal

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Speaker 8: government unless it's overridden by a federal law. We don't

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Speaker 8: have actual massive federal law on ballot access.

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Speaker 4: We leave that to the states.

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Speaker 8: So Supreme Court has to decide, are they going to

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Speaker 8: punt it and just say this is a state matter

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Speaker 8: altogether they've been devolving a lot of things to the

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Speaker 8: state in their term, or will they say this is

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Speaker 8: a misapplication of the provision of the Fourteenth Amendment and

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Speaker 8: get involved. And I think people don't know yet, but

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Speaker 8: now that there's a second state involved, I do think

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Speaker 8: it's going to be more pressurable build on them to

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Speaker 8: at least hear the coloradle case.

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Speaker 3: Meanwhile, of course many anticipate here is indeed the front

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Speaker 3: Russer runner as it stands for the Republican nomination. We

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Speaker 3: also know he'll be up against one current President Biden.

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Speaker 3: President Biden being busy at the moment, he's taking to

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Speaker 3: the air waves talking about an overnight Russia attack launched

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Speaker 3: larged aerial assault on Ukraine and the latest attack shows

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Speaker 3: Putin's objective remains unchanged. All of this while really President

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Speaker 3: Brden tries to garner some sort of support for further

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Speaker 3: aid to Ukraine and indeed to Israel. At that how

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Speaker 3: much is that likely to be passed? How much is

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Speaker 3: that going to be taking up the headspace of well

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Speaker 3: the administration at the moment.

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Speaker 8: Well, the issue is that there's a very short window

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Speaker 8: until the first deadline for refunding the government for fiscal

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Speaker 8: year twenty twenty four comes, which is January nineteenth, and

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Speaker 8: then the bigger blow up date is February second, And

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Speaker 8: so the House of Representatives is the place to watch

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Speaker 8: certainly living you know Linston, the leader from Louisiana, and

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Speaker 8: thinking about the speaker, thinking about whether that clucus can

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Speaker 8: hold together. There's a very strong opposition to sending more

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Speaker 8: money to on behalf of Ukraine. Certainly the amount of

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Speaker 8: the bid administration is asking for, which is fifty or

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Speaker 8: sixty billion, there's only fourteen billion or so for Israel.

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Speaker 8: Point is, there's enough people in that Republican clock is

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Speaker 8: to kill any aid bill, So Democrats will have to

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Speaker 8: come to the rescue and Israel. Gauzla is very controversial

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Speaker 8: in the Democrat Party. So the appetite for sending more

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Speaker 8: money to overseas countries while you're fighting about cutting the

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Speaker 8: US budget, which is the fight the Democrats and Republicans are

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Speaker 8: going to have. That is an incredibly difficult path to

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Speaker 8: walk for the current speaker in a divided Republican.

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Speaker 2: Claus And when it appears that one of the strategies

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Speaker 2: from the Republican Party is to tie any aid to

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Speaker 2: Ukraine and Israel to border security and maybe border policy,

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Speaker 2: what's the status of that.

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Speaker 8: Well, that's actually a win for the administration. If the

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Speaker 8: bidenmistration is forced quote unquote to accept more aid to

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Speaker 8: reinforce the border, that means that they'll probably reinforce the

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Speaker 8: border and diminish some of the migration that's happening, which

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Speaker 8: is a soft spot for Biden going into twenty four.

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Speaker 8: So if he has to quote unquote compromise, it's actually

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Speaker 8: something that is in his favor because it better insulates

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Speaker 8: him against charges on the border. We saw the Sector

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Speaker 8: of State actually go to Mexico to talk about how

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Speaker 8: we can get.

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Speaker 6: Mexico to help with the border.

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Speaker 8: So I think the Biden administration realizes this is a

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Speaker 8: very important factor going into the election. Even people very

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Speaker 8: far away from the border seem to be very concerned

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Speaker 8: about it, And there's a big balance between worrying about

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Speaker 8: Ukraine and Israel and our southern border.

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Speaker 4: But that's a gift to Biden.

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Speaker 8: Even though Republicans want it and they'll claim credit for it,

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Speaker 8: it's also a gift to Biden that I think he'll

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Speaker 8: happily accept.

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Speaker 2: Hey, Wendy, want are good friends in Washington do come

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Speaker 2: back to work in the new year.

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Speaker 5: They've got a big to do list.

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Speaker 2: I wonder what's a I would guess at the top

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Speaker 2: of that to do list is it's keeping this government

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Speaker 2: open and funded. How is that going to proceed? Do

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Speaker 2: you think are we just going to kick the can

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Speaker 2: down the road the entire year.

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Speaker 8: Well, I mean, because of the debtinally negotiations, it's very

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Speaker 8: difficult to kick the can down the road. If they

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Speaker 8: don't do certain things, bigger cuts will happen in the summer,

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Speaker 8: which is closer to the November elections, so very few

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Speaker 8: people want that. The problem for the Republicans is Donald

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Speaker 8: Trump may very well win the Iowa caucuses on January fifteenth,

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Speaker 8: The deadline is the nineteenth, and then he's propelled into

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Speaker 8: the twenty third, which is New Hampshire primary. He is

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Speaker 8: going to be the spokesperson for the Republican Party and

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Speaker 8: for some people that's fantastic news. For other people, that's chaos.

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Speaker 8: So if the Republicans in the House do not manage

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Speaker 8: to keep the government open, that's further chaos. So it

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Speaker 8: sets the stage for the Republicans bearing the label of

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Speaker 8: chaotic and unable to govern. And I think that's what

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Speaker 8: the Democrats are counting on to push Republicans to prevent

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Speaker 8: any long term shutdown.

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Speaker 3: This kind of takes us a nicely full circle back

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Speaker 3: to the discussion of an election of twenty twenty four

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Speaker 3: and who will be the front run of for the Republicans.

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Speaker 3: I mean, just of late, we've seen Nicki Haley, who

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Speaker 3: is gaining some momentum, sort of do an unforced era

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Speaker 3: once again, sort of being brought into a racially charged

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Speaker 3: controversy that seems to be coming time and time again.

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Speaker 3: And then twenty twenty four fight, is she just unlikely

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Speaker 3: to manage to win out Anne indeed Dessantis at that point.

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Speaker 8: Well, we have to look at Iowa. You know, Trump

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Speaker 8: has such a big lead in Iowa. Does that translate

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Speaker 8: into a really big win in the caucuses or does

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Speaker 8: it really tighten up when they go in to vote.

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Speaker 8: And if there's actually momentum, If either disantras Her or

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Speaker 8: Nicki Elli gets something like thirty percent of the caucus

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Speaker 8: vote rather than where they are on the polls now

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Speaker 8: or thirty five percent, that shows some vulnerability for Trump

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Speaker 8: going to New Hampshire. If Nicki Alli doesn't win but

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Speaker 8: comes in a really close second, for example, again more

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Speaker 8: momentum for the challengers to Trump, then I think it's

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Speaker 8: a little bit less certain that the party goes with Trump.

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Speaker 8: So I think that's the big thing to watch in

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Speaker 8: the next couple of weeks. Nickielli's remarks really reflect the

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Speaker 8: divide in the Republican Party. Desantans has already gone this

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Speaker 8: way in Florida on the issue of revisiting slavery, discrimination,

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Speaker 8: the legacy of the country. You know, there's a real

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Speaker 8: appetite to move on from that in the Republican Party.

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Speaker 8: But the independent voters and suburban voters that might be

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Speaker 8: Nikki Haley's big base that can cross over and vote

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Speaker 8: Republican primaries, for example, they're uncomfortable with abandoning that and

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Speaker 8: they don't like that side of the Republican Party. So

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Speaker 8: she's really caught strategically in a really difficult place and

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Speaker 8: who she appeals to in the next basically the next month.

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Speaker 5: Wendy Schiller.

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Speaker 2: There's a lot of topics, and I think we're going

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Speaker 2: to be talking to you often in the new year

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Speaker 2: as we think about domestic politics, geopolitics.

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Speaker 5: In an election year.

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Speaker 2: Wendy Schiller, she is professor at Brown University, and there's

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Speaker 2: a lot of ground to cover in that type of discussion.

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Speaker 7: You're listening to the tape cans are live program Bloomberg

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Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio. Tune

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Speaker 7: it up Bloomberg dot Com Bloomberg Business app. You can

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Speaker 7: also listen live on Amazon Alexa from our flagship New

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Speaker 7: York station. Just say Alexa play Bloomberg eleven thirty.

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Speaker 2: And continuing on personal finance, you got to talk about

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Speaker 2: residential real estate and real estate in general because for

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Speaker 2: many Americans, their home is their biggest asset.

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Speaker 5: And boy, we've had a.

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Speaker 2: Really really high interest rates and real shock to the system.

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Speaker 2: But now rates you're coming back down. So what does

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Speaker 2: that mean for the residential real estate market. Well, Selma

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Speaker 2: Hepp joined us. She's a chief economist at Core Logic. Salma,

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Speaker 2: thanks so much for joining us here. I mean, I

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Speaker 2: guess the key question for me is affordability. That is

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Speaker 2: really a challenge for many folks out there.

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Speaker 5: Talk to us about where we are there.

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Speaker 9: Yeah, so, I mean, we're seeing definitely a lot of

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Speaker 9: improvement in terms of affordability simply because you're paying much

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Speaker 9: more on your cosset of home ownership is much lower

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Speaker 9: with decline and mortgage rates. So let's put this in numbers.

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Speaker 9: You know, when mortgage rates were over eight percent and

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Speaker 9: with the decline now to six point six six percent

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Speaker 9: over the last week, you're looking at the saving of

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Speaker 9: about three hundred dollars on a five hundred thousand dollars mortgage, right,

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Speaker 9: And so the more expensive the mortgage gets, the more

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Speaker 9: the more of savings you have. The issue really these

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Speaker 9: days is in terms of affordability, even when mortgage rates

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Speaker 9: come down, is that it's really difficult in many ways

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Speaker 9: to find to get a mortgage unless you are a

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Speaker 9: very credit worthy borrower.

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Speaker 6: And also you're competing a lot against a lot of

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Speaker 6: people that.

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Speaker 9: Have cash or are coming down with large cash down payments,

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Speaker 9: and so you know, there's many aspects of affordability.

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Speaker 6: It's not just mortgage rates at the moment exactly right.

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Speaker 2: And you know what I'm kind of thinking about is

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Speaker 2: one of the key issues in the real estate market

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Speaker 2: is nobody wants to move out of their house. Therefore

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Speaker 2: there's no existing home sales or they're very very low.

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Speaker 5: If you want a home, you got to go look

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Speaker 5: for a new one.

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Speaker 2: So my question, is there a mortgage rate do you

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Speaker 2: think that would kind of like be a clearing rate,

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Speaker 2: if you will, where it would entice sellers to sell

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Speaker 2: and buyers to buy. Deserves when you talk to you

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Speaker 2: get a sensor's a clearing rate, Yeah.

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Speaker 9: That's a billion dollar question this year because everybody is

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Speaker 9: asking at what point people will give up that inventory.

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Speaker 9: There's been some surveys out and they show that five

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Speaker 9: point five percent seems to be a magic rate.

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Speaker 6: It's really difficult to say that.

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Speaker 9: That would actually happen, at least for sellers because a

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Speaker 9: majority the median rate is still about three point eight percent,

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Speaker 9: so people are still locked in in that rate and

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Speaker 9: they bought probably before you know more home prices have

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Speaker 9: gone up some forty percent. So when you think about

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Speaker 9: how much you've seen how much appreciation we've had over

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Speaker 9: the last few years.

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Speaker 6: It's been forty percent. So that's a lot to consider.

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Speaker 9: You know, it's not just your mortgage rates you're giving up,

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Speaker 9: but you're also giving up the much lower of a home,

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Speaker 9: so you know, so that's.

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Speaker 6: You know, that's kind of I think. What's going to

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Speaker 6: keep people put for a little while.

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Speaker 3: What is sentiment like right now? How many consumers out

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Speaker 3: there think this is a decent time to buy.

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Speaker 6: Or not many? Not many?

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Speaker 9: And it's actually that sentiment has been on a decline

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Speaker 9: at least until you know, We'll see what happens in

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Speaker 9: next month or two. With the decline that we solve

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Speaker 9: over the last couple of weeks. I think that will

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Speaker 9: improve the sentiment. The other thing is, you know, we

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Speaker 9: are going into spring home buying season that tends to

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Speaker 9: be see a better sentiment, and people do tend to

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Speaker 9: come out in a spring home buying season. And you know,

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Speaker 9: if you remember what happened last year, mortgage rates peaked

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Speaker 9: in November and then they declined coming into spring home

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Speaker 9: buying season, and we had a really good season at

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Speaker 9: least in terms.

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Speaker 6: Of how many buyers came out.

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Speaker 9: The problem was that sellers didn't come out, and so

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Speaker 9: we saw a lot of home press appreciation. That actually

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Speaker 9: may happen again this year. We'll see more buyers than sellers.

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Speaker 9: It will put pressure on home prices and that tends

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Speaker 9: to challenge affordability again.

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Speaker 2: Hey sama, one of the challenges I know out there

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Speaker 2: is that while the builders and their home building company

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Speaker 2: stocks have just ripped in twenty twenty three, done really

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Speaker 2: really well because there's so much demand out there, But

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Speaker 2: I'm wondering what are they building. Are they just building

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Speaker 2: the next McMansion around the corner, or are they building

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Speaker 2: the homes that kind of starter homes that you.

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Speaker 5: Young people need to get into the market.

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Speaker 2: We have a sense of what's coming onto the market

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Speaker 2: in terms of new construction.

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Speaker 9: Yeah, it does feel like they are tending to move

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Speaker 9: towards more traditional, smaller homes. In the data we've seen

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Speaker 9: recently the size of a home declined by some ten

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Speaker 9: percent for twenty twenty builds versus twenty twenty three builds,

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Speaker 9: So it does seem like they're building smaller home They're

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Speaker 9: trying to adjust to who their buyers are at the moment.

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Speaker 3: One thing I suppose while consumers out there don't feel

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Speaker 3: like it's a good time to buy, there are people

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Speaker 3: sitting pretty. There are people who have looked at the

442
00:23:00,080 --> 00:23:02,520
Speaker 3: you of the home equity and probably felt a little

443
00:23:02,560 --> 00:23:05,879
Speaker 3: bit more buoyant and stride in their step. Who have

444
00:23:05,960 --> 00:23:08,240
Speaker 3: those people been Where have been benefiting the most of.

445
00:23:08,280 --> 00:23:12,199
Speaker 9: Like, Yeah, that's the really interesting is that, you know,

446
00:23:12,240 --> 00:23:15,679
Speaker 9: Ecological we do a home equity report every quarter and

447
00:23:15,760 --> 00:23:21,399
Speaker 9: in the last report we saw home equity increase to

448
00:23:21,440 --> 00:23:24,840
Speaker 9: about three hundred and four thousand dollars on average per

449
00:23:24,880 --> 00:23:29,080
Speaker 9: mortgage borrowers. So that means across country right on average,

450
00:23:29,080 --> 00:23:30,520
Speaker 9: people have over three hundred.

451
00:23:30,240 --> 00:23:31,400
Speaker 6: Thousand dollars in equity.

452
00:23:31,640 --> 00:23:35,360
Speaker 9: Now that's much larger in more expensive markets and more

453
00:23:35,760 --> 00:23:36,880
Speaker 9: markets that have seen.

454
00:23:36,680 --> 00:23:38,240
Speaker 6: More appreciation over time.

455
00:23:38,359 --> 00:23:44,600
Speaker 9: So one market that leads, one state that leads is Hawaii,

456
00:23:44,720 --> 00:23:49,040
Speaker 9: that's over six hundred thousand dollars on average in equity,

457
00:23:49,200 --> 00:23:54,160
Speaker 9: followed by California about five hundred and eighty thousand dollars.

458
00:23:54,760 --> 00:23:58,120
Speaker 9: So some of that what's interesting about this is particularly

459
00:23:58,160 --> 00:24:00,440
Speaker 9: California for example, or Washington State.

460
00:24:00,720 --> 00:24:02,760
Speaker 6: Those are also the markets where we see a lot

461
00:24:02,760 --> 00:24:04,199
Speaker 6: of migration from.

462
00:24:04,400 --> 00:24:09,080
Speaker 9: So those folks not only have tend to have higher incomes,

463
00:24:09,119 --> 00:24:11,359
Speaker 9: but they also have more of that cash saved up,

464
00:24:12,440 --> 00:24:15,680
Speaker 9: you know, and so that actually tends to feed into

465
00:24:15,800 --> 00:24:18,840
Speaker 9: home press appreciation in other markets that they're moving to.

466
00:24:19,680 --> 00:24:23,040
Speaker 2: Hey, some interesting development, A bill introduced in the House

467
00:24:23,080 --> 00:24:26,640
Speaker 2: and Senate would prevent hedge funds from owning single family

468
00:24:26,760 --> 00:24:30,000
Speaker 2: host houses in the United States. From your perspective, how

469
00:24:30,040 --> 00:24:33,560
Speaker 2: prevalent has Wall Street institutional investors been in buying up

470
00:24:33,600 --> 00:24:35,520
Speaker 2: residential real estate over the last several years.

471
00:24:36,200 --> 00:24:39,960
Speaker 9: Yeah, much more so during the pandemic. Before the pandemic,

472
00:24:40,000 --> 00:24:43,160
Speaker 9: we saw about eighteen percent of single family homes being

473
00:24:43,200 --> 00:24:46,919
Speaker 9: bought by investors, and that share increased to about twenty

474
00:24:46,920 --> 00:24:50,600
Speaker 9: eight percent at the peak of the pandemic, but actually

475
00:24:50,680 --> 00:24:54,000
Speaker 9: it remained there. The reason is that overall sales are up,

476
00:24:54,080 --> 00:24:56,760
Speaker 9: so as a share it does remain elevated. But one

477
00:24:56,760 --> 00:25:00,000
Speaker 9: thing to keep in mind is that it's mostly small investors.

478
00:25:00,720 --> 00:25:03,800
Speaker 9: Over fifty percent of these purchases are actually small and

479
00:25:03,880 --> 00:25:08,119
Speaker 9: medium investors. At large investors, the institutional investors that we're

480
00:25:08,119 --> 00:25:12,200
Speaker 9: worried about, they actually comprise pretty small share overall purchases

481
00:25:12,200 --> 00:25:13,359
Speaker 9: of single family homes.

482
00:25:14,000 --> 00:25:16,560
Speaker 3: Samma, it's great to have you from Colgank.

483
00:25:16,600 --> 00:25:17,320
Speaker 6: It's the chief.

484
00:25:17,080 --> 00:25:20,760
Speaker 3: Economist Selma hat joining us on all things real to state,

485
00:25:20,800 --> 00:25:24,320
Speaker 3: whether it's hedge funders, whether it's me mortals trying to

486
00:25:24,320 --> 00:25:25,080
Speaker 3: be buying a home.

487
00:25:25,680 --> 00:25:28,760
Speaker 7: You're listening to the tape cans our live program, Bloomberg

488
00:25:28,880 --> 00:25:32,480
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

489
00:25:32,520 --> 00:25:35,760
Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

490
00:25:35,800 --> 00:25:38,600
Speaker 7: You can also listen live on Amazon Alexa from our

491
00:25:38,640 --> 00:25:43,680
Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

492
00:25:44,600 --> 00:25:47,480
Speaker 10: Let's get more on what exactly travel trends are looking like.

493
00:25:47,600 --> 00:25:50,840
Speaker 10: Joining us now is the Points guy, Brian Kelly. Very

494
00:25:50,920 --> 00:25:54,240
Speaker 10: nice to have him on the program. Brian, Obviously we're

495
00:25:54,240 --> 00:25:57,200
Speaker 10: coming out of the holiday travel season for twenty twenty three.

496
00:25:57,240 --> 00:25:59,680
Speaker 10: We're just coming out of twenty twenty three as a whole,

497
00:25:59,680 --> 00:26:02,119
Speaker 10: and when you're looking ahead to twenty twenty four, how

498
00:26:02,200 --> 00:26:05,399
Speaker 10: much is that travel demand going to be resilient? The

499
00:26:05,440 --> 00:26:07,760
Speaker 10: CEO of Carnival there just suggested that this is no

500
00:26:07,800 --> 00:26:11,639
Speaker 10: longer revenge travel, that we're seeing that that's over and

501
00:26:11,720 --> 00:26:13,800
Speaker 10: demand is still sticking around. How do you see it?

502
00:26:14,880 --> 00:26:18,040
Speaker 11: Yeah, I see it the same. You know, revenge travel

503
00:26:18,119 --> 00:26:20,680
Speaker 11: to me is sort of like people were paying ridiculous

504
00:26:20,720 --> 00:26:23,320
Speaker 11: amounts to go to Miami. I remember when hotel rooms

505
00:26:23,320 --> 00:26:26,320
Speaker 11: in Miami were like two thousand dollars a night, and

506
00:26:26,359 --> 00:26:29,600
Speaker 11: I think now consumers are much more discriminating. They want

507
00:26:29,640 --> 00:26:33,400
Speaker 11: better experiences. So we're seeing a big shift into adventure

508
00:26:33,480 --> 00:26:37,679
Speaker 11: travel on hotels dot Com hold a bunch of data

509
00:26:37,720 --> 00:26:41,040
Speaker 11: recently people are now looking to stay at really unique

510
00:26:41,080 --> 00:26:46,440
Speaker 11: accommodations and riokens and going to Morocco and staying at riodds.

511
00:26:46,480 --> 00:26:49,399
Speaker 11: So I think consumers are spending they just don't want

512
00:26:49,440 --> 00:26:53,440
Speaker 11: to do get stuck in that pandemic habit of overpaying

513
00:26:53,720 --> 00:26:55,280
Speaker 11: for moderate hotels.

514
00:26:55,920 --> 00:26:58,200
Speaker 5: So, Brian, where are we?

515
00:26:58,480 --> 00:27:00,640
Speaker 2: You know, we just heard the CEO, Josh To CEO

516
00:27:00,640 --> 00:27:03,199
Speaker 2: of Carnival, talking about he's just mentioning he was in

517
00:27:03,200 --> 00:27:05,280
Speaker 2: a New York's in a New York hotel and it's

518
00:27:05,280 --> 00:27:08,120
Speaker 2: not having a great experience. Some of the services maybe

519
00:27:08,160 --> 00:27:11,640
Speaker 2: have been cut back. You know, initially when things were

520
00:27:11,640 --> 00:27:13,720
Speaker 2: opening back up, hotels would say we're not going to

521
00:27:13,760 --> 00:27:15,720
Speaker 2: make your room every day, We'll make it once every

522
00:27:15,720 --> 00:27:17,720
Speaker 2: two or three days. And you know, we did see

523
00:27:17,720 --> 00:27:20,560
Speaker 2: some service issues as that industry tried to get back.

524
00:27:20,440 --> 00:27:20,920
Speaker 5: On its feet.

525
00:27:21,000 --> 00:27:24,280
Speaker 2: Understandably, where we in terms of the hotel industry and

526
00:27:24,400 --> 00:27:28,080
Speaker 2: staffing and service levels, are we back to pre pandemic levels.

527
00:27:28,800 --> 00:27:31,040
Speaker 11: We are not at pre pandemic levels. And really that

528
00:27:31,280 --> 00:27:33,840
Speaker 11: in the mid tier they took the pandemic as an

529
00:27:33,880 --> 00:27:38,040
Speaker 11: opportunity to roll back room service, cleaning. You kind of

530
00:27:38,080 --> 00:27:40,680
Speaker 11: still have to argue at some of those mid tier

531
00:27:40,720 --> 00:27:43,399
Speaker 11: properties to get those same perks back. I think at

532
00:27:43,400 --> 00:27:46,280
Speaker 11: the luxury side of things, the luxury hotels are now

533
00:27:46,359 --> 00:27:50,040
Speaker 11: competing like never before. I think the service levels are

534
00:27:50,200 --> 00:27:54,680
Speaker 11: back at the high end of the spectrum. But now

535
00:27:54,720 --> 00:27:56,679
Speaker 11: in general, a lot of hotel chains took this as

536
00:27:56,720 --> 00:27:59,200
Speaker 11: an opportunity to cost cut in the name of safety

537
00:27:59,560 --> 00:28:02,040
Speaker 11: and then really take it back to where it was.

538
00:28:02,480 --> 00:28:05,639
Speaker 10: Well, Brian, you talk about the high end of the spectrum,

539
00:28:05,800 --> 00:28:08,440
Speaker 10: what is the difference between kind of the luxury tourism

540
00:28:08,440 --> 00:28:11,600
Speaker 10: and travel now and those seeking deals? Are there still

541
00:28:11,640 --> 00:28:13,800
Speaker 10: good deals to be found and where are they?

542
00:28:14,640 --> 00:28:17,080
Speaker 11: Yeah, there are actually really good deals and airfare has

543
00:28:17,119 --> 00:28:19,640
Speaker 11: come down quite a bit. Gas prices are down as well,

544
00:28:19,680 --> 00:28:22,280
Speaker 11: so there is the positive outlook for travelers in twenty

545
00:28:22,280 --> 00:28:25,800
Speaker 11: twenty four. The budget airlines are actually struggling because the

546
00:28:25,880 --> 00:28:29,919
Speaker 11: consumers are spending on these bespoke experiences and they're spending

547
00:28:29,960 --> 00:28:32,120
Speaker 11: in first and business class. I don't know if any

548
00:28:32,119 --> 00:28:34,639
Speaker 11: of you looked at flights to Europe this past summer.

549
00:28:34,880 --> 00:28:39,120
Speaker 11: I was absolutely shot eight thousand dollars to go to

550
00:28:39,200 --> 00:28:42,480
Speaker 11: Paris from the US. So the airlines are making a fortune.

551
00:28:42,560 --> 00:28:44,800
Speaker 11: You know. United has a big bet on the Pacific.

552
00:28:44,920 --> 00:28:49,040
Speaker 11: They just launched a new route to christ Church, New Zealand.

553
00:28:49,560 --> 00:28:52,760
Speaker 11: They're seeing strong bookings Asias now, not quite back to

554
00:28:52,840 --> 00:28:56,760
Speaker 11: where it was, but increasing dramatically. So the gains in

555
00:28:56,800 --> 00:28:59,760
Speaker 11: travel I think are international and luxury. You know, the

556
00:29:00,240 --> 00:29:02,840
Speaker 11: loes and spirits of the world. They have a much

557
00:29:02,960 --> 00:29:05,760
Speaker 11: less rosy outlook. And I was just checking. And back

558
00:29:05,760 --> 00:29:08,000
Speaker 11: to your question on where to find the deals. I

559
00:29:08,040 --> 00:29:10,440
Speaker 11: love this tip and no one knows about but Google flights.

560
00:29:10,520 --> 00:29:13,000
Speaker 11: So Google dot com slash flights. That's where most people

561
00:29:13,280 --> 00:29:16,040
Speaker 11: travel experts go to search airfare. They have a little

562
00:29:16,040 --> 00:29:19,960
Speaker 11: feature called Explore, so it'll say flights. Click the Explore map.

563
00:29:20,280 --> 00:29:23,040
Speaker 11: You can actually type in New York to say Caribbean,

564
00:29:23,160 --> 00:29:25,520
Speaker 11: so you want to go for a week in March.

565
00:29:25,880 --> 00:29:29,320
Speaker 11: You can basically reverse engineer. And this is what I'm

566
00:29:29,320 --> 00:29:31,520
Speaker 11: telling people. There are deals out there, you just need

567
00:29:31,720 --> 00:29:33,200
Speaker 11: to know where they are, so you can put New

568
00:29:33,280 --> 00:29:35,480
Speaker 11: York to Caribbean and see where the cheap flights are.

569
00:29:36,920 --> 00:29:38,160
Speaker 11: That's how you find your parises.

570
00:29:38,440 --> 00:29:40,400
Speaker 10: Always not me on Fogle flights right now, Yes, I know,

571
00:29:40,720 --> 00:29:43,480
Speaker 10: I'll take a so Brian.

572
00:29:43,760 --> 00:29:46,080
Speaker 2: My personal flying policy these days is I only fly

573
00:29:46,120 --> 00:29:48,320
Speaker 2: when I get paid to fly, with a couple of

574
00:29:48,360 --> 00:29:53,640
Speaker 2: exceptions coming up. But where's the airline industry in terms

575
00:29:53,640 --> 00:29:57,840
Speaker 2: of capacity today? Can they handle these record flights and

576
00:29:57,920 --> 00:30:00,600
Speaker 2: record number of flyers we're seeing and that includes the

577
00:30:00,600 --> 00:30:03,920
Speaker 2: whole tsa folks, Where's our system these days.

578
00:30:04,720 --> 00:30:07,080
Speaker 11: You reminded me of Naomi Campbell. You only get out

579
00:30:07,120 --> 00:30:08,720
Speaker 11: of bed for ten thousand dollars or more.

580
00:30:09,360 --> 00:30:09,840
Speaker 7: I like it.

581
00:30:10,840 --> 00:30:13,520
Speaker 11: So capacity is an issue. You know, there still are

582
00:30:13,600 --> 00:30:18,520
Speaker 11: strains on air traffic. The FAA actually just opened up

583
00:30:18,560 --> 00:30:21,960
Speaker 11: new lanes along the East Coast to allow more planes

584
00:30:22,000 --> 00:30:25,560
Speaker 11: to fly. But our airports are congested, especially in New York.

585
00:30:26,000 --> 00:30:29,680
Speaker 11: And while there are some renovations going on at JFK

586
00:30:30,000 --> 00:30:32,160
Speaker 11: and some of our nation's biggest airports, it's not really

587
00:30:32,200 --> 00:30:35,560
Speaker 11: going to create the capacity we need, so there are

588
00:30:35,680 --> 00:30:38,440
Speaker 11: issues there. Airlines can't just expand and add tons of

589
00:30:38,440 --> 00:30:41,680
Speaker 11: new routes, especially to places like London. We've seen Jeff

590
00:30:41,720 --> 00:30:45,520
Speaker 11: Blue try to expand to Amsterdam and London. They're getting

591
00:30:45,560 --> 00:30:48,760
Speaker 11: the second tier airports. So you know, these airlines are

592
00:30:49,040 --> 00:30:53,360
Speaker 11: struggling to grow and running into a lot of challenges.

593
00:30:53,920 --> 00:30:56,360
Speaker 11: So they need to figure out how to maximize the

594
00:30:56,400 --> 00:30:58,200
Speaker 11: revenue of what they have today. And that's why we've

595
00:30:58,200 --> 00:31:01,560
Speaker 11: seen airlines really charge up premium and customers are paying

596
00:31:01,600 --> 00:31:03,960
Speaker 11: for first class. You know, ten years ago, eighty percent

597
00:31:03,960 --> 00:31:06,480
Speaker 11: of first class seats on Delta were given to elite

598
00:31:06,560 --> 00:31:09,920
Speaker 11: members for free. Now it's flipped. Eighty percent of people

599
00:31:09,920 --> 00:31:12,640
Speaker 11: are buying first class and twenty percent are going to

600
00:31:12,680 --> 00:31:16,160
Speaker 11: elite travelers. So the airlines are doing whatever they can

601
00:31:16,240 --> 00:31:18,840
Speaker 11: to maximize everything on board that they have today.

602
00:31:19,440 --> 00:31:19,680
Speaker 6: Yeah.

603
00:31:19,720 --> 00:31:22,440
Speaker 10: I just recently went to Europe, and to your point, Brian,

604
00:31:22,560 --> 00:31:24,880
Speaker 10: the actual business class tickets where you get the live

605
00:31:24,920 --> 00:31:27,680
Speaker 10: flat seats and everything were wildly expensive. So I did

606
00:31:27,680 --> 00:31:29,160
Speaker 10: premium economy from the first time.

607
00:31:29,240 --> 00:31:29,840
Speaker 5: Yeah, how was us?

608
00:31:29,880 --> 00:31:32,560
Speaker 10: It's pretty nice, you know, it definitely made a difference.

609
00:31:32,600 --> 00:31:33,520
Speaker 5: Also, I couldn't do that.

610
00:31:34,160 --> 00:31:38,160
Speaker 10: Yeah, please, okay, not for everybody. And Brian, you've got

611
00:31:38,160 --> 00:31:40,640
Speaker 10: me on Google Flights now. Yeah, just so you're aware.

612
00:31:40,760 --> 00:31:44,240
Speaker 10: Sixty seven dollars round trip New York to Miami January

613
00:31:44,240 --> 00:31:47,800
Speaker 10: twenty first to twenty seventh on Frontier on fothing tells

614
00:31:47,840 --> 00:31:49,320
Speaker 10: me maybe Paul wouldn't.

615
00:31:49,040 --> 00:31:50,840
Speaker 5: Be a fly in Frontier.

616
00:31:51,240 --> 00:31:53,120
Speaker 10: Brian, you were talking about how airlines are able to

617
00:31:53,160 --> 00:31:55,080
Speaker 10: maximize all this stuff. They're getting people to pay for

618
00:31:55,120 --> 00:31:57,560
Speaker 10: first class, and that brings me to lounges. When we

619
00:31:57,560 --> 00:31:59,840
Speaker 10: think about points and rewards, it feels like everybody gets

620
00:31:59,880 --> 00:32:01,560
Speaker 10: to in the lounge now, and the lounges are too

621
00:32:01,560 --> 00:32:04,680
Speaker 10: crowded and they're starting to pull everything back. How much

622
00:32:04,720 --> 00:32:07,320
Speaker 10: more kind of restriction in that are we going to see?

623
00:32:08,120 --> 00:32:10,480
Speaker 11: Well, so back to the point, the airlines need to

624
00:32:10,480 --> 00:32:12,560
Speaker 11: make more money out of what they have today adding

625
00:32:12,600 --> 00:32:14,760
Speaker 11: tons of new planes and routes. They can't even buy

626
00:32:14,800 --> 00:32:17,160
Speaker 11: new planes, you know, there's backlogs. So what they're doing

627
00:32:17,200 --> 00:32:20,040
Speaker 11: is turning to loyalty. All of the credit card you know,

628
00:32:20,080 --> 00:32:23,480
Speaker 11: all the major airlines, Delta, United, American, they're making billions

629
00:32:23,520 --> 00:32:26,600
Speaker 11: from their credit card partnerships and they're doubling down. So

630
00:32:27,320 --> 00:32:30,120
Speaker 11: what we're seeing now in terms of lounge access, you know,

631
00:32:30,240 --> 00:32:34,200
Speaker 11: Delta really is pulling back next year and especially in

632
00:32:34,200 --> 00:32:37,640
Speaker 11: twenty twenty five. American Express Platinum used to be able

633
00:32:37,680 --> 00:32:39,680
Speaker 11: to use that to get in the Delta lounges and

634
00:32:40,000 --> 00:32:42,960
Speaker 11: even bring guests into their own Sentorian lounges. Now they're

635
00:32:43,000 --> 00:32:45,720
Speaker 11: making you spend at least seventy five thousand dollars on

636
00:32:45,760 --> 00:32:47,760
Speaker 11: the card to get a perk that used to be

637
00:32:47,840 --> 00:32:50,680
Speaker 11: for free. So and it's brilliant business when you think

638
00:32:50,680 --> 00:32:52,920
Speaker 11: about it, because every time you use a credit card

639
00:32:52,960 --> 00:32:55,600
Speaker 11: or an airline co branding card, that airline's making money.

640
00:32:55,840 --> 00:32:57,200
Speaker 11: So they need to figure out how to take their

641
00:32:57,200 --> 00:32:59,600
Speaker 11: customers at fly a couple times a year and get

642
00:32:59,600 --> 00:33:02,440
Speaker 11: a piece said, They're spend every single day. So that's

643
00:33:02,480 --> 00:33:06,680
Speaker 11: the trend. These frequent flyer programs are now frequent buyer programs.

644
00:33:06,560 --> 00:33:09,680
Speaker 2: Real quickly, Brian thirty seconds. What's a wellness resort? It

645
00:33:09,680 --> 00:33:12,280
Speaker 2: doesn't sound like something that's down my alley.

646
00:33:13,440 --> 00:33:16,680
Speaker 11: Yeah, yoga, you know, no ask Actually some of them

647
00:33:16,720 --> 00:33:20,360
Speaker 11: have alcohol. Mira Ball and Mira Ball's a Hiatt property.

648
00:33:20,360 --> 00:33:23,920
Speaker 11: You can use your Higatt points at Mirrorball properties. But

649
00:33:24,560 --> 00:33:26,800
Speaker 11: you know that definitely is a trend people wanting to

650
00:33:27,200 --> 00:33:28,880
Speaker 11: escape and focus on wellness.

651
00:33:29,000 --> 00:33:31,600
Speaker 2: But all right, I like the escape part, I'm just

652
00:33:31,640 --> 00:33:33,080
Speaker 2: not sure sure about the wellness.

653
00:33:33,080 --> 00:33:36,200
Speaker 5: Brian Kelly, Thank you very much, Brian Kelly. He's the

654
00:33:36,240 --> 00:33:36,680
Speaker 5: Points Guy.

655
00:33:36,720 --> 00:33:40,520
Speaker 2: We always learn something today every time we speak to Brian.

656
00:33:40,920 --> 00:33:42,440
Speaker 5: He's the founder and CEO of the Points Guy.

657
00:33:42,920 --> 00:33:46,040
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can

658
00:33:46,040 --> 00:33:49,840
Speaker 1: subscribe and listen to interviews in Apple Podcasts or whatever

659
00:33:49,920 --> 00:33:53,640
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

660
00:33:53,840 --> 00:33:56,880
Speaker 1: at Matt Miller nineteen seventy three and on Ball.

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Speaker 2: Sweeney I'm on Twitter at pt Sweeney. Before the podcast.

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Speaker 2: You can always catch us worldwide at Bloomberg Radio