WEBVTT - Markets, Trump, and Travel 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.600 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.279 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market movin news. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:55.920 --> 0:00:58.080 Well, let's keep the conversation going as to whether we 0:00:58.160 --> 0:01:01.279 will see an extension of us close Rally into the 0:01:01.280 --> 0:01:04.280 Moon music for January and February. We've got Christina Hooper 0:01:04.440 --> 0:01:08.400 joining us now Chief global market strategist over at Invesco, Christina. 0:01:08.400 --> 0:01:10.920 Always great to have your voice across our programming, and 0:01:11.520 --> 0:01:14.320 you seem to be liking equities at this particular moment 0:01:14.360 --> 0:01:15.759 in terms of risk sentiment. 0:01:16.720 --> 0:01:21.120 Oh, absolutely, Caroline. What I would anticipate is that as 0:01:21.160 --> 0:01:24.399 we head into twenty twenty four, we're likely to see 0:01:24.600 --> 0:01:29.360 markets discount in economic reacceleration in the back half of 0:01:29.440 --> 0:01:33.440 twenty four, and that should benefit small caps and cyclicals 0:01:33.520 --> 0:01:35.960 the most. In fact, I think we've already seen a 0:01:36.040 --> 0:01:39.800 preview of that late in twenty three. I think that 0:01:39.880 --> 0:01:42.080 continues now on the back half of the year. We 0:01:42.240 --> 0:01:46.640 could see some give back just because markets will then 0:01:46.800 --> 0:01:50.120 start to discount twenty twenty five, but I do believe 0:01:50.680 --> 0:01:53.560 the early part of twenty four is likely to be 0:01:53.800 --> 0:01:56.560 very positive, although there could be some volatility because there 0:01:56.640 --> 0:02:02.480 still is some confusion around FED policy given that the 0:02:02.520 --> 0:02:03.960 Fed dot protests too much. 0:02:04.480 --> 0:02:06.160 Okay, so talk to us a little. We're going to 0:02:06.240 --> 0:02:08.040 dig into perhaps where the FED is going to go 0:02:08.080 --> 0:02:11.960 throughout the show. What do you make of central bank policy? 0:02:12.040 --> 0:02:13.680 Do you think that they will be cutting as much 0:02:13.680 --> 0:02:14.680 as the market seems to be. 0:02:14.600 --> 0:02:18.400 Think they will be I think they ultimately will. I 0:02:18.400 --> 0:02:21.080 think they have another goal right now, though, which is 0:02:21.120 --> 0:02:24.440 to tamp down and easing of financial conditions, and so 0:02:24.560 --> 0:02:28.760 that's why we're seeing predictions there on dot plot saying 0:02:28.840 --> 0:02:32.600 only seventy five basis points in cuts this year, and 0:02:32.720 --> 0:02:35.440 of course some of the hawkish language we've heard recently. 0:02:36.120 --> 0:02:40.679 I think that ultimately will be a non event that 0:02:40.720 --> 0:02:43.640 we will see probably between one hundred and one hundred 0:02:43.680 --> 0:02:47.040 and fifty basis points in cuts. Not because the economy 0:02:47.120 --> 0:02:49.200 deteriorates a lot. I don't think that's going to happen. 0:02:49.400 --> 0:02:53.120 I think it's because where monetary policy is is quite restrictive, 0:02:53.720 --> 0:02:55.840 especially if disinflation continues. 0:02:56.400 --> 0:02:59.280 Christine, reading through your notes, I found a juicy nugget 0:02:59.320 --> 0:03:01.720 here in your ex his outlook, we see the greatest 0:03:01.760 --> 0:03:03.560 potential in emerging markets. 0:03:03.600 --> 0:03:04.400 Talk to us about that. 0:03:05.520 --> 0:03:10.360 Sure, well, emerging markets are likely to perform well historically 0:03:10.400 --> 0:03:13.440 they have when the dollar has weakened, and I think 0:03:13.480 --> 0:03:16.880 we're certainly seeing that trend start and I think it 0:03:16.960 --> 0:03:21.760 will continue in twenty four. Emerging markets are well positioned. 0:03:22.440 --> 0:03:26.400 We saw some emerging market central banks act more quickly 0:03:26.440 --> 0:03:29.040 in the face of inflation, so they're in a better 0:03:29.080 --> 0:03:33.800 place in terms of normalizing monetary policy, and I think 0:03:33.919 --> 0:03:38.720 we're likely to see especially Asia em perform quite well 0:03:38.760 --> 0:03:43.160 this year, and I think that is going to be 0:03:43.240 --> 0:03:44.880 one of the key stories of twenty four. 0:03:45.080 --> 0:03:45.640 That's a good one. 0:03:45.640 --> 0:03:48.160 I like that we're going to circle back on that 0:03:48.280 --> 0:03:52.320 throughout the year. I look at my Bloomberg Index browser Christina, 0:03:52.320 --> 0:03:55.080 which allows me to see total returns in the fixed 0:03:55.080 --> 0:03:57.800 income space, and the good news is for bond investors 0:03:57.920 --> 0:04:01.000 they have positive returns in twenty twenty three versus some 0:04:01.240 --> 0:04:04.840 brutally negative returns in twenty twenty two. What's your fixed 0:04:04.840 --> 0:04:09.840 income outlook here after a decent twenty three. 0:04:10.160 --> 0:04:13.040 Well, investors certainly went through a lot of pain in 0:04:13.120 --> 0:04:17.280 twenty two and certainly saw a better environment twenty three. 0:04:17.400 --> 0:04:21.080 I think that fixed income is well positioned in twenty four. 0:04:21.120 --> 0:04:26.880 Yields are certainly higher, and my expectation is that investment 0:04:27.040 --> 0:04:31.919 grade bonds are going to be an area of particular opportunity. 0:04:33.080 --> 0:04:35.640 I don't anticipate a soft landing so much as more 0:04:35.680 --> 0:04:37.760 of a bumpy landing in the first half of the year, 0:04:37.839 --> 0:04:41.760 and I think that the sweet spot for the economy 0:04:41.880 --> 0:04:48.040 will be investment grade corporates also excited about emerging market debt. 0:04:48.200 --> 0:04:50.160 I think this is a time where we want to be. 0:04:50.960 --> 0:04:54.080 We want to have a more waiting to both emerging 0:04:54.080 --> 0:04:57.719 markets equities and emerging markets debt. In terms of duration, 0:04:58.360 --> 0:05:01.360 longer duration, we've been taught about that for months now. 0:05:01.440 --> 0:05:06.280 We think that going long is important, and I think ultimately, 0:05:06.400 --> 0:05:09.479 when we've looked at past cycles, it has been a 0:05:09.520 --> 0:05:10.839 good time to go long duration. 0:05:11.800 --> 0:05:15.160 One interesting point from your notes as well was alternative 0:05:15.360 --> 0:05:19.920 assets and within their commercial real estate you like it, 0:05:20.200 --> 0:05:23.200 you fav why and what part? 0:05:24.720 --> 0:05:24.920 Well. 0:05:24.920 --> 0:05:27.920 First, I have to say commercial real estate covers a 0:05:28.560 --> 0:05:32.440 large swath of territory. Office space is only a relatively 0:05:32.480 --> 0:05:37.520 small portion of the commercial real estate picture. But even 0:05:37.600 --> 0:05:41.000 within office space, I think we've seen the worst in 0:05:41.120 --> 0:05:45.280 terms of occupancies. We're in recovery mode. It could take 0:05:45.320 --> 0:05:49.119 some time. But the key is that rates are coming 0:05:49.160 --> 0:05:53.360 down and that has played such an outsized role in 0:05:53.640 --> 0:05:57.800 pricing for real estate. So I think that twenty twenty 0:05:57.839 --> 0:06:02.960 four represents opportunities for commercial real estate. If, as we anticipate, 0:06:03.920 --> 0:06:08.000 rates come down, mortgage rates come down, this could be 0:06:08.600 --> 0:06:10.920 quite an attractive environment, you know. 0:06:11.000 --> 0:06:14.200 Christina mentioning and discussing emerging markets. It makes me think 0:06:14.200 --> 0:06:17.000 about China because it's such a big part of the MSCI. 0:06:18.360 --> 0:06:21.479 China was a disappointing story for most investors in twenty 0:06:21.520 --> 0:06:24.800 twenty three. The economy did not rebound as much as 0:06:24.800 --> 0:06:25.760 people thought on. 0:06:25.720 --> 0:06:28.159 The great reopening. If you will, how do you view 0:06:28.240 --> 0:06:29.640 China in twenty twenty four. 0:06:30.920 --> 0:06:38.960 So China is an interesting investment landscape because you're absolutely right, 0:06:39.120 --> 0:06:42.560 there was some level of disappointment in twenty twenty three. 0:06:42.960 --> 0:06:47.040 The economy had a nice reopening, but it wasn't as 0:06:47.080 --> 0:06:50.480 strong as many anticipated. If we were to sort of 0:06:50.520 --> 0:06:55.279 dive down, services did a lot better than manufacturing, and 0:06:55.320 --> 0:06:59.680 I would argue that manufacturing disappointment was largely about a 0:07:00.000 --> 0:07:04.560 increased global demand that impacted many economies. Now, there of 0:07:04.600 --> 0:07:07.880 course were issues, and I think they were largely around 0:07:08.880 --> 0:07:12.440 a consumer sentiment in China and a view that there 0:07:12.480 --> 0:07:15.440 was a need for more stimulus. So we have seen 0:07:15.560 --> 0:07:18.040 in the back half of twenty three more of a 0:07:18.160 --> 0:07:22.000 rollout of policy that has been quite targeted, and I 0:07:22.000 --> 0:07:26.320 think if we see a continuation of target targeted stimulative 0:07:26.400 --> 0:07:30.680 policies coming from China, it could be quite a good 0:07:30.800 --> 0:07:32.800 year for consumer spending. 0:07:32.720 --> 0:07:35.680 Christine, if we think about this time last year, we 0:07:35.720 --> 0:07:37.680 thought China was going to do well, we thought the 0:07:37.760 --> 0:07:39.920 US was going to dip into recession. We got a 0:07:39.960 --> 0:07:42.360 lot of calls wrong, and we're going to be dipping 0:07:42.400 --> 0:07:44.640 into that entire discussion a little bit later. 0:07:44.680 --> 0:07:46.160 But what out of all of. 0:07:46.040 --> 0:07:48.640 This viewpoint that you have in terms of potentially a 0:07:48.680 --> 0:07:51.360 little bit of refirming in China, the fact that US 0:07:51.400 --> 0:07:53.080 equities is going to be good, what are the risks 0:07:53.120 --> 0:07:54.280 to that from your perspective? 0:07:55.760 --> 0:07:59.120 Well, I think the greatest risk facing investors right now 0:07:59.480 --> 0:08:03.320 is that we do see a hard landing for the economy. 0:08:03.360 --> 0:08:07.040 I would assign that a very low probability. But I 0:08:07.120 --> 0:08:11.239 do believe that when you have incredibly aggressive monetary policy 0:08:11.520 --> 0:08:15.680 and it's quite synchronized across a number of different major economies, 0:08:16.120 --> 0:08:19.200 that is the single biggest risk. And of course that 0:08:19.320 --> 0:08:22.920 could take down a stock market that has a very 0:08:22.960 --> 0:08:27.320 different expectation for the economy. But again I would say 0:08:27.360 --> 0:08:31.720 that is a very low risk now in terms of 0:08:31.920 --> 0:08:34.920 whim which markets are going to perform better than others, 0:08:35.559 --> 0:08:38.640 I think because we're going to see that weakening in 0:08:38.679 --> 0:08:41.880 the US dollar, and I think that's I have a 0:08:41.880 --> 0:08:45.480 lot of conviction in that call that that should bode 0:08:45.480 --> 0:08:48.760 well for economies outside the US, and I think there 0:08:48.800 --> 0:08:51.840 are of course other factors at play as well. But 0:08:52.480 --> 0:08:54.400 at the end of the day, we can be wrong, 0:08:54.480 --> 0:08:57.960 especially when it comes to tactical allocations. Everyone can be 0:08:58.240 --> 0:08:59.880 and that's the importance of being well diverse. 0:09:01.040 --> 0:09:03.280 Christina, thank you so much for joining us. As always, 0:09:03.360 --> 0:09:05.640 we're a little bit smarter after spending some time with you. 0:09:05.760 --> 0:09:09.280 Christina Hooper, chief Global market strategist at a little firm 0:09:09.360 --> 0:09:10.280 called Invesco. 0:09:11.679 --> 0:09:15.119 You're listening to the team Ken's are Live program Bloomberg 0:09:15.160 --> 0:09:18.520 Markets weekdays at ten am eastering on Bloomberg dot com, 0:09:18.600 --> 0:09:21.760 the iHeartRadio app and the Bloomberg Business app, or listen 0:09:21.840 --> 0:09:24.120 on demand wherever you get your podcasts. 0:09:25.640 --> 0:09:30.360 Looking back on twenty twenty three, boy geopolitics was front 0:09:30.360 --> 0:09:32.480 and center, probably a lot more than people would like 0:09:32.480 --> 0:09:34.200 for a lot of reasons. For he had Ukraine and 0:09:34.200 --> 0:09:37.920 now the Middle East flaring up yet again, and you 0:09:38.000 --> 0:09:40.360 have to factor that into your investment outlook. 0:09:40.360 --> 0:09:41.960 That's certainly been the case throughout this year. 0:09:42.679 --> 0:09:44.760 That's why we're happy to speak with Wendy Shulder, Professor 0:09:44.760 --> 0:09:47.839 at Brown University, professor, thanks so much for joining us. 0:09:48.040 --> 0:09:51.240 I want to start just on the domestic political front here. 0:09:52.520 --> 0:09:54.720 There are a lot of states that are questioning whether 0:09:54.760 --> 0:09:58.720 former president of Biden can even be on the ballot. Trump, 0:09:59.240 --> 0:10:02.240 former president, thank you very much, can never even be 0:10:02.360 --> 0:10:05.920 on the ballot this year. How do you make what 0:10:05.960 --> 0:10:07.400 do you make of what's happening here on some of 0:10:07.440 --> 0:10:07.920 these states. 0:10:08.960 --> 0:10:11.240 Well, I mean we've had Colorado and the state Supreme 0:10:11.240 --> 0:10:13.520 Court ruled there, and then Maine. It was a decision 0:10:13.600 --> 0:10:16.679 by the Secretary of State of Maine. And the issue is, 0:10:16.720 --> 0:10:22.480 you know, did Donald Trump commit insurrection in allegedly inciting 0:10:22.800 --> 0:10:26.440 the January sixth riots, but also you know, trying to 0:10:26.480 --> 0:10:30.640 sort of undermine or change the electoral results of twenty 0:10:30.679 --> 0:10:33.840 twenty fake elector schemes. You know, all of his claims 0:10:34.240 --> 0:10:37.240 were thrown out sixty different court cases, but he was 0:10:37.320 --> 0:10:40.760 not ever convicted of insurrection, which is really important part 0:10:40.800 --> 0:10:44.000 for the fourteenth Amendment. If you commit insurrection, if you 0:10:44.040 --> 0:10:46.080 were a Confederate soldier and you took up arms against 0:10:46.120 --> 0:10:50.120 the United States the Union, you were considered an insurrectionist. 0:10:50.440 --> 0:10:53.360 But even Jack Smith is not charging former President Trump 0:10:53.440 --> 0:10:57.240 with insurrection. So in this case, it's a pretty wide 0:10:57.360 --> 0:11:00.640 application of the Fourteenth Amendment for somebody who has not 0:11:00.720 --> 0:11:03.400 been convicted in the court of law of insurrection. 0:11:04.440 --> 0:11:07.640 Nevertheless, does it set the stage for some sort of 0:11:07.679 --> 0:11:10.599 constitutional showdown as some experts think, is this going to 0:11:10.640 --> 0:11:11.400 the Supreme Court? 0:11:12.360 --> 0:11:16.040 Well, the Supreme Court has to decide. Certainly the decision 0:11:16.120 --> 0:11:18.600 in the colle or state supreme court. That's a natural 0:11:18.760 --> 0:11:21.400 path to go from a state supreme court to the 0:11:21.440 --> 0:11:25.400 federal courts. And of course this is a state question. 0:11:25.520 --> 0:11:26.600 Who gets on the ballot? 0:11:26.679 --> 0:11:29.000 Is time manner in place? In other words, that clause 0:11:29.000 --> 0:11:32.120 of the Constitution that's controlled by states, not the federal 0:11:32.120 --> 0:11:35.800 government unless it's overridden by a federal law. We don't 0:11:35.880 --> 0:11:39.160 have actual massive federal law on ballot access. 0:11:39.200 --> 0:11:40.360 We leave that to the states. 0:11:40.640 --> 0:11:42.680 So Supreme Court has to decide, are they going to 0:11:42.720 --> 0:11:44.880 punt it and just say this is a state matter 0:11:44.960 --> 0:11:47.600 altogether they've been devolving a lot of things to the 0:11:47.640 --> 0:11:50.360 state in their term, or will they say this is 0:11:50.400 --> 0:11:54.040 a misapplication of the provision of the Fourteenth Amendment and 0:11:54.080 --> 0:11:56.560 get involved. And I think people don't know yet, but 0:11:56.640 --> 0:11:59.360 now that there's a second state involved, I do think 0:11:59.480 --> 0:12:01.720 it's going to be more pressurable build on them to 0:12:02.080 --> 0:12:03.760 at least hear the coloradle case. 0:12:04.360 --> 0:12:07.080 Meanwhile, of course many anticipate here is indeed the front 0:12:07.120 --> 0:12:10.600 Russer runner as it stands for the Republican nomination. We 0:12:10.679 --> 0:12:14.319 also know he'll be up against one current President Biden. 0:12:14.600 --> 0:12:17.400 President Biden being busy at the moment, he's taking to 0:12:17.440 --> 0:12:20.600 the air waves talking about an overnight Russia attack launched 0:12:20.640 --> 0:12:23.400 larged aerial assault on Ukraine and the latest attack shows 0:12:23.440 --> 0:12:28.400 Putin's objective remains unchanged. All of this while really President 0:12:28.400 --> 0:12:30.640 Brden tries to garner some sort of support for further 0:12:30.679 --> 0:12:34.120 aid to Ukraine and indeed to Israel. At that how 0:12:34.200 --> 0:12:36.320 much is that likely to be passed? How much is 0:12:36.360 --> 0:12:39.520 that going to be taking up the headspace of well 0:12:39.559 --> 0:12:41.079 the administration at the moment. 0:12:41.679 --> 0:12:43.760 Well, the issue is that there's a very short window 0:12:43.920 --> 0:12:48.240 until the first deadline for refunding the government for fiscal 0:12:48.360 --> 0:12:51.920 year twenty twenty four comes, which is January nineteenth, and 0:12:51.960 --> 0:12:55.040 then the bigger blow up date is February second, And 0:12:55.120 --> 0:12:57.400 so the House of Representatives is the place to watch 0:12:57.440 --> 0:13:03.640 certainly living you know Linston, the leader from Louisiana, and 0:13:04.240 --> 0:13:07.679 thinking about the speaker, thinking about whether that clucus can 0:13:07.720 --> 0:13:11.200 hold together. There's a very strong opposition to sending more 0:13:11.280 --> 0:13:14.040 money to on behalf of Ukraine. Certainly the amount of 0:13:14.040 --> 0:13:16.760 the bid administration is asking for, which is fifty or 0:13:16.760 --> 0:13:19.680 sixty billion, there's only fourteen billion or so for Israel. 0:13:19.920 --> 0:13:22.360 Point is, there's enough people in that Republican clock is 0:13:22.400 --> 0:13:25.000 to kill any aid bill, So Democrats will have to 0:13:25.000 --> 0:13:28.239 come to the rescue and Israel. Gauzla is very controversial 0:13:28.240 --> 0:13:31.720 in the Democrat Party. So the appetite for sending more 0:13:31.880 --> 0:13:35.880 money to overseas countries while you're fighting about cutting the 0:13:36.000 --> 0:13:38.640 US budget, which is the fight the Democrats and Republicans are 0:13:38.679 --> 0:13:41.840 going to have. That is an incredibly difficult path to 0:13:41.960 --> 0:13:45.280 walk for the current speaker in a divided Republican. 0:13:44.920 --> 0:13:47.520 Claus And when it appears that one of the strategies 0:13:47.559 --> 0:13:51.560 from the Republican Party is to tie any aid to 0:13:51.760 --> 0:13:55.959 Ukraine and Israel to border security and maybe border policy, 0:13:56.280 --> 0:13:57.360 what's the status of that. 0:13:58.320 --> 0:14:01.160 Well, that's actually a win for the administration. If the 0:14:01.160 --> 0:14:04.880 bidenmistration is forced quote unquote to accept more aid to 0:14:04.920 --> 0:14:08.480 reinforce the border, that means that they'll probably reinforce the 0:14:08.520 --> 0:14:12.360 border and diminish some of the migration that's happening, which 0:14:12.400 --> 0:14:14.760 is a soft spot for Biden going into twenty four. 0:14:15.120 --> 0:14:18.120 So if he has to quote unquote compromise, it's actually 0:14:18.120 --> 0:14:21.360 something that is in his favor because it better insulates 0:14:21.440 --> 0:14:24.120 him against charges on the border. We saw the Sector 0:14:24.160 --> 0:14:26.960 of State actually go to Mexico to talk about how 0:14:27.000 --> 0:14:27.680 we can get. 0:14:27.520 --> 0:14:28.920 Mexico to help with the border. 0:14:29.000 --> 0:14:31.160 So I think the Biden administration realizes this is a 0:14:31.320 --> 0:14:34.520 very important factor going into the election. Even people very 0:14:34.600 --> 0:14:36.520 far away from the border seem to be very concerned 0:14:36.520 --> 0:14:39.360 about it, And there's a big balance between worrying about 0:14:39.440 --> 0:14:41.320 Ukraine and Israel and our southern border. 0:14:41.560 --> 0:14:43.160 But that's a gift to Biden. 0:14:43.200 --> 0:14:45.440 Even though Republicans want it and they'll claim credit for it, 0:14:45.440 --> 0:14:47.440 it's also a gift to Biden that I think he'll 0:14:47.440 --> 0:14:48.280 happily accept. 0:14:48.600 --> 0:14:50.960 Hey, Wendy, want are good friends in Washington do come 0:14:50.960 --> 0:14:52.000 back to work in the new year. 0:14:52.040 --> 0:14:53.480 They've got a big to do list. 0:14:53.520 --> 0:14:55.520 I wonder what's a I would guess at the top 0:14:55.560 --> 0:14:57.840 of that to do list is it's keeping this government 0:14:58.360 --> 0:15:01.120 open and funded. How is that going to proceed? Do 0:15:01.120 --> 0:15:02.600 you think are we just going to kick the can 0:15:03.040 --> 0:15:04.680 down the road the entire year. 0:15:05.240 --> 0:15:09.240 Well, I mean, because of the debtinally negotiations, it's very 0:15:09.240 --> 0:15:11.160 difficult to kick the can down the road. If they 0:15:11.160 --> 0:15:14.320 don't do certain things, bigger cuts will happen in the summer, 0:15:14.360 --> 0:15:17.160 which is closer to the November elections, so very few 0:15:17.160 --> 0:15:20.200 people want that. The problem for the Republicans is Donald 0:15:20.200 --> 0:15:23.760 Trump may very well win the Iowa caucuses on January fifteenth, 0:15:24.040 --> 0:15:26.880 The deadline is the nineteenth, and then he's propelled into 0:15:26.920 --> 0:15:29.200 the twenty third, which is New Hampshire primary. He is 0:15:29.280 --> 0:15:32.640 going to be the spokesperson for the Republican Party and 0:15:32.720 --> 0:15:36.240 for some people that's fantastic news. For other people, that's chaos. 0:15:36.520 --> 0:15:38.920 So if the Republicans in the House do not manage 0:15:38.960 --> 0:15:42.080 to keep the government open, that's further chaos. So it 0:15:42.120 --> 0:15:44.720 sets the stage for the Republicans bearing the label of 0:15:44.920 --> 0:15:48.440 chaotic and unable to govern. And I think that's what 0:15:48.480 --> 0:15:51.880 the Democrats are counting on to push Republicans to prevent 0:15:52.320 --> 0:15:53.720 any long term shutdown. 0:15:54.160 --> 0:15:56.600 This kind of takes us a nicely full circle back 0:15:56.640 --> 0:15:59.200 to the discussion of an election of twenty twenty four 0:15:59.240 --> 0:16:01.280 and who will be the front run of for the Republicans. 0:16:01.400 --> 0:16:03.440 I mean, just of late, we've seen Nicki Haley, who 0:16:03.480 --> 0:16:07.360 is gaining some momentum, sort of do an unforced era 0:16:07.920 --> 0:16:10.920 once again, sort of being brought into a racially charged 0:16:10.960 --> 0:16:13.520 controversy that seems to be coming time and time again. 0:16:13.560 --> 0:16:16.920 And then twenty twenty four fight, is she just unlikely 0:16:17.000 --> 0:16:19.640 to manage to win out Anne indeed Dessantis at that point. 0:16:20.440 --> 0:16:22.480 Well, we have to look at Iowa. You know, Trump 0:16:22.480 --> 0:16:24.720 has such a big lead in Iowa. Does that translate 0:16:24.760 --> 0:16:27.240 into a really big win in the caucuses or does 0:16:27.240 --> 0:16:30.160 it really tighten up when they go in to vote. 0:16:30.360 --> 0:16:33.560 And if there's actually momentum, If either disantras Her or 0:16:33.880 --> 0:16:36.640 Nicki Elli gets something like thirty percent of the caucus 0:16:36.720 --> 0:16:38.280 vote rather than where they are on the polls now 0:16:38.400 --> 0:16:41.720 or thirty five percent, that shows some vulnerability for Trump 0:16:41.920 --> 0:16:44.520 going to New Hampshire. If Nicki Alli doesn't win but 0:16:44.600 --> 0:16:47.600 comes in a really close second, for example, again more 0:16:47.680 --> 0:16:50.400 momentum for the challengers to Trump, then I think it's 0:16:50.400 --> 0:16:53.480 a little bit less certain that the party goes with Trump. 0:16:53.760 --> 0:16:55.920 So I think that's the big thing to watch in 0:16:55.960 --> 0:16:59.160 the next couple of weeks. Nickielli's remarks really reflect the 0:16:59.160 --> 0:17:02.000 divide in the Republican Party. Desantans has already gone this 0:17:02.040 --> 0:17:06.720 way in Florida on the issue of revisiting slavery, discrimination, 0:17:06.960 --> 0:17:09.320 the legacy of the country. You know, there's a real 0:17:09.359 --> 0:17:12.320 appetite to move on from that in the Republican Party. 0:17:12.560 --> 0:17:15.399 But the independent voters and suburban voters that might be 0:17:15.480 --> 0:17:17.840 Nikki Haley's big base that can cross over and vote 0:17:17.840 --> 0:17:22.520 Republican primaries, for example, they're uncomfortable with abandoning that and 0:17:22.520 --> 0:17:25.080 they don't like that side of the Republican Party. So 0:17:25.160 --> 0:17:30.800 she's really caught strategically in a really difficult place and 0:17:30.880 --> 0:17:33.840 who she appeals to in the next basically the next month. 0:17:34.640 --> 0:17:35.360 Wendy Schiller. 0:17:35.480 --> 0:17:37.280 There's a lot of topics, and I think we're going 0:17:37.320 --> 0:17:39.880 to be talking to you often in the new year 0:17:39.960 --> 0:17:43.679 as we think about domestic politics, geopolitics. 0:17:43.359 --> 0:17:44.160 In an election year. 0:17:44.200 --> 0:17:47.640 Wendy Schiller, she is professor at Brown University, and there's 0:17:47.680 --> 0:17:50.560 a lot of ground to cover in that type of discussion. 0:17:51.119 --> 0:17:54.280 You're listening to the tape cans are live program Bloomberg 0:17:54.320 --> 0:17:58.240 Markets weekdays at ten am Eastern on Bloomberg Radio. Tune 0:17:58.240 --> 0:18:01.480 it up Bloomberg dot Com Bloomberg Business app. You can 0:18:01.520 --> 0:18:04.760 also listen live on Amazon Alexa from our flagship New 0:18:04.840 --> 0:18:09.080 York station. Just say Alexa play Bloomberg eleven thirty. 0:18:10.119 --> 0:18:12.560 And continuing on personal finance, you got to talk about 0:18:12.560 --> 0:18:14.840 residential real estate and real estate in general because for 0:18:15.520 --> 0:18:18.760 many Americans, their home is their biggest asset. 0:18:18.800 --> 0:18:20.919 And boy, we've had a. 0:18:20.400 --> 0:18:22.879 Really really high interest rates and real shock to the system. 0:18:22.880 --> 0:18:25.400 But now rates you're coming back down. So what does 0:18:25.400 --> 0:18:28.040 that mean for the residential real estate market. Well, Selma 0:18:28.080 --> 0:18:31.520 Hepp joined us. She's a chief economist at Core Logic. Salma, 0:18:31.560 --> 0:18:33.840 thanks so much for joining us here. I mean, I 0:18:33.880 --> 0:18:37.359 guess the key question for me is affordability. That is 0:18:37.520 --> 0:18:40.760 really a challenge for many folks out there. 0:18:40.800 --> 0:18:42.000 Talk to us about where we are there. 0:18:43.359 --> 0:18:45.480 Yeah, so, I mean, we're seeing definitely a lot of 0:18:45.520 --> 0:18:49.560 improvement in terms of affordability simply because you're paying much 0:18:49.640 --> 0:18:53.800 more on your cosset of home ownership is much lower 0:18:53.840 --> 0:18:56.680 with decline and mortgage rates. So let's put this in numbers. 0:18:56.920 --> 0:19:00.760 You know, when mortgage rates were over eight percent and 0:19:00.840 --> 0:19:03.679 with the decline now to six point six six percent 0:19:03.800 --> 0:19:06.719 over the last week, you're looking at the saving of 0:19:06.760 --> 0:19:12.119 about three hundred dollars on a five hundred thousand dollars mortgage, right, 0:19:12.160 --> 0:19:15.560 And so the more expensive the mortgage gets, the more 0:19:16.119 --> 0:19:19.280 the more of savings you have. The issue really these 0:19:19.359 --> 0:19:22.440 days is in terms of affordability, even when mortgage rates 0:19:22.440 --> 0:19:26.240 come down, is that it's really difficult in many ways 0:19:26.280 --> 0:19:28.719 to find to get a mortgage unless you are a 0:19:28.840 --> 0:19:30.560 very credit worthy borrower. 0:19:31.480 --> 0:19:34.200 And also you're competing a lot against a lot of 0:19:34.240 --> 0:19:34.760 people that. 0:19:34.720 --> 0:19:39.040 Have cash or are coming down with large cash down payments, 0:19:39.119 --> 0:19:42.960 and so you know, there's many aspects of affordability. 0:19:43.000 --> 0:19:46.280 It's not just mortgage rates at the moment exactly right. 0:19:46.359 --> 0:19:48.840 And you know what I'm kind of thinking about is 0:19:49.520 --> 0:19:51.000 one of the key issues in the real estate market 0:19:51.040 --> 0:19:53.000 is nobody wants to move out of their house. Therefore 0:19:53.040 --> 0:19:56.000 there's no existing home sales or they're very very low. 0:19:56.200 --> 0:19:57.480 If you want a home, you got to go look 0:19:57.520 --> 0:19:58.280 for a new one. 0:19:58.640 --> 0:20:01.159 So my question, is there a mortgage rate do you 0:20:01.200 --> 0:20:03.800 think that would kind of like be a clearing rate, 0:20:03.840 --> 0:20:07.159 if you will, where it would entice sellers to sell 0:20:07.480 --> 0:20:10.960 and buyers to buy. Deserves when you talk to you 0:20:11.000 --> 0:20:13.919 get a sensor's a clearing rate, Yeah. 0:20:13.760 --> 0:20:16.960 That's a billion dollar question this year because everybody is 0:20:17.000 --> 0:20:19.840 asking at what point people will give up that inventory. 0:20:20.600 --> 0:20:23.399 There's been some surveys out and they show that five 0:20:23.440 --> 0:20:25.920 point five percent seems to be a magic rate. 0:20:26.760 --> 0:20:28.440 It's really difficult to say that. 0:20:28.320 --> 0:20:32.000 That would actually happen, at least for sellers because a 0:20:32.119 --> 0:20:36.320 majority the median rate is still about three point eight percent, 0:20:36.440 --> 0:20:39.040 so people are still locked in in that rate and 0:20:39.400 --> 0:20:44.000 they bought probably before you know more home prices have 0:20:44.080 --> 0:20:46.200 gone up some forty percent. So when you think about 0:20:46.520 --> 0:20:48.960 how much you've seen how much appreciation we've had over 0:20:49.000 --> 0:20:50.680 the last few years. 0:20:50.480 --> 0:20:53.720 It's been forty percent. So that's a lot to consider. 0:20:53.840 --> 0:20:56.200 You know, it's not just your mortgage rates you're giving up, 0:20:56.520 --> 0:21:01.240 but you're also giving up the much lower of a home, 0:21:01.640 --> 0:21:03.560 so you know, so that's. 0:21:03.240 --> 0:21:05.159 You know, that's kind of I think. What's going to 0:21:05.240 --> 0:21:07.040