WEBVTT - FTX, CPI, ETFs, and Real Estate (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.800 at Bloomberg dot com slash podcast and looking at big 0:00:21.880 --> 0:00:24.120 point up twelve and a half percent here seventeen thousand, 0:00:24.120 --> 0:00:26.720 seven hundred hours per token. But let's face in, folks, 0:00:26.760 --> 0:00:32.200 the crypto spaces facing existential crisis. I would say, Um, 0:00:32.240 --> 0:00:36.800 Samuel Bankman Freed SPF to the kids is the FDx 0:00:37.000 --> 0:00:39.640 cryptocurrency to Rivers Exchange CEO and co founder. They've got 0:00:39.680 --> 0:00:43.040 some real problems there, as does some related businesses there. 0:00:43.080 --> 0:00:45.800 We need to roundtable this discussion with people that actually 0:00:46.240 --> 0:00:49.680 report this on a daily basis, cover from a research perspective. 0:00:49.720 --> 0:00:53.199 Mike mcglogan, senior commodity strategist with Bloomberg Intelligence. He's really 0:00:53.240 --> 0:00:56.040 been our crypto crypto go to from b I and 0:00:56.120 --> 0:01:00.760 Katie Greifeld, cross asset reporter with Bloomberg News, joins us, Hey, Mike, 0:01:01.080 --> 0:01:04.960 you know you've seen booms and bus across a wide 0:01:05.160 --> 0:01:10.440 range of securities and commodities. Is this a Lehman moment 0:01:10.600 --> 0:01:14.440 for the crypto space in your learning opinion? Oh yes, 0:01:14.760 --> 0:01:17.000 I do think so. Was quite the shock they have. 0:01:17.120 --> 0:01:19.080 This happened with Sam Bank and Free and ft X. 0:01:19.160 --> 0:01:20.959 I mean they were He was the stud of the 0:01:21.000 --> 0:01:23.440 play industry. Everybody loved him. He was great, He had 0:01:23.480 --> 0:01:26.480 some great conferences everything. This is a big shocker. Um. 0:01:26.560 --> 0:01:28.240 The question is now where do we go from here? 0:01:28.640 --> 0:01:31.160 And I think what we're going to do is, yes, 0:01:31.200 --> 0:01:33.480 we're going to get through this. The the technology is 0:01:33.520 --> 0:01:36.520 still very valid, but it's going to come when we 0:01:36.560 --> 0:01:39.199 do finally break out to back to the enduring trends 0:01:39.200 --> 0:01:41.280 can probably come from a lower plateau. So I'm looking 0:01:41.280 --> 0:01:44.520 at bitcoin now, is now we know pretty significant resistance 0:01:44.520 --> 0:01:46.759 is twenty thou good supports ten thousand. But the key 0:01:46.760 --> 0:01:49.160 thing to point out is a Serriums holding a thousand 0:01:49.160 --> 0:01:51.200 dollars support. Just put that in context. At the end 0:01:51.200 --> 0:01:55.400 of two thousand, it was I think, you know, discussion 0:01:55.480 --> 0:01:59.200 about bitcoin or ethereum as an asset class. That's not 0:01:59.240 --> 0:02:01.560 what this is really a about. Right after Lehman Brothers, 0:02:01.880 --> 0:02:06.000 you wouldn't have said the dollar is a horrible fiat currency. 0:02:06.160 --> 0:02:08.400 It wasn't about that. It was about what Dick Fold 0:02:08.440 --> 0:02:11.120 did and the decisions made at the bank. This is 0:02:11.160 --> 0:02:14.560 about what Sam Bankman, Sam Bankman, Freed did and the 0:02:14.560 --> 0:02:17.200 decisions he made f t X and al Mada a 0:02:17.440 --> 0:02:20.760 kind of lack of transparency there. What do you think happened, Mike? 0:02:20.880 --> 0:02:24.360 What did SPF do that left a four to eight 0:02:24.360 --> 0:02:28.560 billion dollar hole that he can't pay back? Got overshoes, 0:02:28.639 --> 0:02:31.720 that's a very young person. But how did he take 0:02:31.840 --> 0:02:34.480 customer money from f t X and then gamble it 0:02:34.720 --> 0:02:39.560 on at Almeida. Well, there's a lot of acculation accusations 0:02:39.560 --> 0:02:42.520 that that happened. Exactly what happened within that company, I 0:02:42.560 --> 0:02:44.639 don't really know, I mean, but that's what I hear. 0:02:45.200 --> 0:02:47.240 He came out today on Twitter and he's apologized, so 0:02:47.280 --> 0:02:49.400 he's kind of been meeting errors here at least finally, 0:02:49.440 --> 0:02:52.440 so we can kind of, you know, move forward from that. 0:02:52.520 --> 0:02:54.959 But if I was exactly what he did a similar things, 0:02:55.000 --> 0:02:56.480 I think we've had a lot of space. It's just 0:02:56.520 --> 0:02:59.519 that classic human nature of greed. When you cry, I 0:03:00.000 --> 0:03:02.200 it reminds me of what happened with Japan when they 0:03:02.240 --> 0:03:05.680 collapsed Native was that cross acid. But those are real equities. 0:03:05.680 --> 0:03:08.880 They are across the holding of tokens, which only have 0:03:09.000 --> 0:03:12.280 value if someone's willing to buy them. Where do you 0:03:12.280 --> 0:03:14.640 think Where do you think this story goes next? Katie? 0:03:14.680 --> 0:03:18.040 I mean it was Sam Bankman Freed with the space 0:03:18.240 --> 0:03:20.560 kind of what what do you guys on the reporting 0:03:20.560 --> 0:03:22.640 side thinking about, Oh my gosh, well, I'll sell you 0:03:22.680 --> 0:03:26.040 on the reporting side. It's a little bit busy right now, 0:03:26.080 --> 0:03:28.720 but I think I will bring it back to the 0:03:28.720 --> 0:03:33.120 conversation we had with Nick Carter of Cowtil Adventures yesterday. 0:03:33.280 --> 0:03:35.920 The immediate news, of course, is what's happening with f 0:03:36.040 --> 0:03:38.480 t X? Are they hurtling towards bankruptcy? What is going 0:03:38.480 --> 0:03:40.680 to happen with Sam BigMan Freed? But you've got to 0:03:40.720 --> 0:03:44.480 look for the fallout because no matter doesn't f t 0:03:44.720 --> 0:03:47.720 X bankruptcy a foregone conclusion? Well, V don't. We haven't 0:03:47.720 --> 0:03:49.680 gotten the headline, we haven't gotten the filowing, so we 0:03:49.760 --> 0:03:52.360 can't say that yet, right, But is there anyone? So 0:03:52.440 --> 0:03:54.440 c Z and Byance have said they're not going to 0:03:54.520 --> 0:03:59.600 rescue him. Sequoia wrote down there um investments, so they're 0:03:59.760 --> 0:04:02.400 clear not going to do it. Soft Bank has made 0:04:02.440 --> 0:04:05.400 some pretty horrible investment decisions, so maybe soft Bank will 0:04:05.440 --> 0:04:07.800 go in there and throw good money after bad. You know, 0:04:07.880 --> 0:04:10.680 we know that Sam BigMan Fried is trying. He said 0:04:10.680 --> 0:04:13.800 that he's going to quote give anything for capital, So 0:04:13.840 --> 0:04:16.200 maybe someone comes out of the woodwork who were not expecting, 0:04:16.240 --> 0:04:19.080 maybe someone from the trad five space. But to your point, 0:04:19.560 --> 0:04:23.000 with four billion dollars, four billion dollars, I know that's 0:04:23.040 --> 0:04:25.800 those are some big bucks there. But beyond what is 0:04:25.839 --> 0:04:28.360 happening with ft X, the chaos that's happening that, I 0:04:28.400 --> 0:04:30.400 think you need to look at the lenders like Nick 0:04:30.480 --> 0:04:34.000 Carter totalist. If Alameda Research, like Sam Bankman Fried said today, 0:04:34.040 --> 0:04:37.599 is really winding down trading, Alameda was, you know, really 0:04:37.640 --> 0:04:39.760 involved with a lot of the lenders that are still 0:04:39.839 --> 0:04:41.719 left in the space. So that's where I would look. 0:04:41.760 --> 0:04:43.359 If you look at the coin level, I know that 0:04:43.440 --> 0:04:46.240 every single coin is rallying today, but you look at 0:04:46.279 --> 0:04:50.360 something like Salana, it's up thirty seven percent right now, 0:04:50.440 --> 0:04:53.039 that seems a little bit hairy when you think about 0:04:53.080 --> 0:04:56.960 what big backing that that blockchain got from Alameda, that 0:04:57.000 --> 0:04:59.159 it got from Sam Bankman Freed. I know there was 0:04:59.200 --> 0:05:01.960 a CPI per but I don't know. And you think 0:05:01.960 --> 0:05:04.240 the rally and and Mike, by the way, what do 0:05:04.279 --> 0:05:07.000 you think, because Katie thinks the big rally and crypto 0:05:07.120 --> 0:05:09.560 really is about the CPI print and the huge rally 0:05:09.600 --> 0:05:12.560 in stocks. Okay, but it's kind of ironic. Finally we 0:05:12.640 --> 0:05:15.240 got a CPI number we can expect, which my colleague 0:05:15.560 --> 0:05:18.279 will have been nailed expected. But the key thing is 0:05:18.320 --> 0:05:20.279 why is it weaker and expected? I published on this 0:05:20.839 --> 0:05:23.919 deflation numbers coming out of China because we're heading towards recession. 0:05:23.960 --> 0:05:25.920 The market just hasn't figured out yet. You look at 0:05:25.920 --> 0:05:28.520 the forward curve FED funds a year from now, they 0:05:28.600 --> 0:05:31.280 dropped twenty five basis points obviously two or no. Two. 0:05:31.320 --> 0:05:32.599 But to me, this is what the part of we 0:05:32.600 --> 0:05:35.800 should expect CPI inflation dums will start being weaker and 0:05:35.920 --> 0:05:38.120 expect because my colleague on along and b I it's 0:05:38.160 --> 0:05:41.240 predicting a hundred percent chance or models recession next year 0:05:41.480 --> 0:05:43.440 and then we start tilting over. But this is the 0:05:43.480 --> 0:05:48.200 whole tie. Now, this is chance that seems like a 0:05:48.320 --> 0:05:51.640 dangerous call. Same person called a five percent you know 0:05:51.960 --> 0:05:56.000 fed funds, right, you know? Okay, it was clearly going. 0:05:56.080 --> 0:05:57.960 I mean we all kind of knew that we did 0:05:58.000 --> 0:06:00.480 and that was way out of I would say, six, 0:06:00.600 --> 0:06:04.320 but calling for a chance of something happening next year 0:06:04.360 --> 0:06:07.640 other than the sun coming up. All right, this is 0:06:07.839 --> 0:06:09.480 this is Mike, We're gonna have to leave it. Then 0:06:09.480 --> 0:06:12.400 we're gonna come back. We'll do that later. Mike mcglowan, 0:06:12.440 --> 0:06:16.360 Senior Commodity Strategies from Bloomberg Intelligence. Katie Greifeld Cross Asset Reporter, 0:06:16.400 --> 0:06:17.960 and Matt You've got a show on this stuff, right, 0:06:18.040 --> 0:06:21.039 It's a special, an hour long special today at one 0:06:21.160 --> 0:06:25.000 pm Thursday afternoon, six pm in London, will tell you 0:06:25.040 --> 0:06:27.280 all about what's going on with f t X and 0:06:27.360 --> 0:06:34.160 al Maida markets. Definitely moving on this a CPI print. 0:06:34.800 --> 0:06:37.200 We want to check in with Christian Chan. He's the 0:06:37.279 --> 0:06:42.080 chief investment officer at Asset Mark. Uh. Christian, you see 0:06:42.120 --> 0:06:45.360 the collect that you see the moves in equity markets 0:06:45.440 --> 0:06:48.760 and the fixed income markets today, what does that tell 0:06:48.800 --> 0:06:51.440 you about kind of where this market is in terms 0:06:51.480 --> 0:06:54.960 of you know, expectations pent up, the meaning for a pivot, 0:06:55.160 --> 0:06:57.279 waiting for a pivot? I mean, how do you interpret 0:06:57.320 --> 0:07:02.279 today's data? Egg Good morning a body, Uh yeah, really 0:07:02.320 --> 0:07:04.560 great inflation number. I think all around, if you can 0:07:04.600 --> 0:07:07.760 consider seven point seven percent year on year growth in 0:07:07.880 --> 0:07:10.880 prices as as a good print. UM. But I think 0:07:10.920 --> 0:07:13.040 what everybody is cheering for is that it looks like 0:07:13.080 --> 0:07:16.320 we're finally on the downside of this slope here. Um. 0:07:16.360 --> 0:07:18.480 The core number even fell a bit, so I think 0:07:18.560 --> 0:07:22.240 better than certainly expectations. And when we look across the 0:07:22.320 --> 0:07:26.480 breadth of prices, UM pretty good in terms of UM 0:07:26.600 --> 0:07:30.120 all of the components of CPI that fell, um, and 0:07:30.160 --> 0:07:33.160 it's really just shelter that was you know, still contributing 0:07:33.200 --> 0:07:36.040 to a you know, the pretty good price increase. But 0:07:36.360 --> 0:07:39.560 I think that, as we all know, takes a while 0:07:39.600 --> 0:07:42.680 to percolate through the you know, through the CPI numbers. 0:07:42.680 --> 0:07:46.480 So from the market's perspective, yeah, I think you know. 0:07:46.520 --> 0:07:50.320 The way I think about this is, yes, it's good news, um, 0:07:50.320 --> 0:07:53.320 particularly with I think what was feared, and I kind 0:07:53.320 --> 0:07:55.880 of think of the CPI number as the same way 0:07:55.920 --> 0:07:58.920 we thought about earnings really over the last couple of quarters, 0:07:58.960 --> 0:08:02.080 which is better than fear. Let let me just run 0:08:02.120 --> 0:08:04.480 through the numbers quickly for our listeners so they know 0:08:04.560 --> 0:08:07.360 what we got at eight thirty this morning, so about 0:08:07.360 --> 0:08:10.800 two hours ago, we got the headline number at seven 0:08:10.840 --> 0:08:14.000 point seven percent. It's still as shockingly high inflation as 0:08:14.000 --> 0:08:18.600 I was saying before. It's still um a very big number, 0:08:18.680 --> 0:08:21.560 but it's the lowest that we've gotten this year. And 0:08:21.600 --> 0:08:24.000 we were looking for seven point nine percent, and the 0:08:24.040 --> 0:08:26.560 previous print was eight point two percent, So seven point 0:08:26.640 --> 0:08:29.920 seven makes us feel good. The core was up, or 0:08:29.960 --> 0:08:32.880 at least cp I excluding food and energy was up 0:08:32.920 --> 0:08:37.880 month over month zero point three percent. Um we were 0:08:37.920 --> 0:08:40.040 we were looking for zero point five percent, though, so 0:08:40.080 --> 0:08:41.920 it's much better than that, and we're down from zero 0:08:41.920 --> 0:08:46.280 point six percent, so we're still looking at serious inflation. Christian, 0:08:46.320 --> 0:08:48.120 you mentioned the rent component, and this is something that 0:08:48.120 --> 0:08:51.559 a lot of people have been talking about. Obviously, people 0:08:51.559 --> 0:08:55.520 don't sign new rental contracts every month, so you know 0:08:55.760 --> 0:08:58.920 those effects take a year to play out. Is this 0:08:59.040 --> 0:09:02.960 why you know the market is optimistic about a seven 0:09:02.960 --> 0:09:05.880 point seven percent number, because they don't really believe it's 0:09:05.920 --> 0:09:09.280 as bad as it as it looks. Yeah, I think 0:09:09.360 --> 0:09:13.120 that's exactly right. And when when I think about, you 0:09:13.160 --> 0:09:16.040 know that that rental piece in particularly as you mentioned it, 0:09:16.040 --> 0:09:19.800 it does take a while for for lower rents to 0:09:19.800 --> 0:09:22.120 to work through into the CBI numbers, same thing with 0:09:22.160 --> 0:09:25.319 the owner's equivalent rent um. But I think you're exactly right. 0:09:25.400 --> 0:09:28.880 I think that we're hopefully on this, you know, down 0:09:29.000 --> 0:09:32.200 slope of inflation UM. And I think about the other 0:09:32.280 --> 0:09:35.320 parts of the market and what's happened, so the inflation 0:09:35.360 --> 0:09:38.640 swaps UM. So I think yesterday they're trading at three 0:09:38.679 --> 0:09:41.480 point four percent, so implying at three point four percent 0:09:41.520 --> 0:09:45.160 inflation rate one year from today down to about two 0:09:45.160 --> 0:09:47.480 point nine percent. So I think people are pricing in 0:09:47.960 --> 0:09:50.640 a different not just a different level inflation, but a 0:09:50.720 --> 0:09:53.840 different path in terms of the progression back down to 0:09:54.480 --> 0:09:57.480 something closer to two or three percent UM in a 0:09:57.559 --> 0:10:02.800 year or so. You University of Michigan expectations tomorrow morning. Um, 0:10:02.880 --> 0:10:06.920 Right now, it looks like the economists that we've talked 0:10:06.960 --> 0:10:10.480 to expect the one year inflation outlook to be five 0:10:10.559 --> 0:10:13.080 point one percent. That's still very high. That's higher than 0:10:13.080 --> 0:10:15.559 it previously was. But you know, maybe that number is 0:10:15.600 --> 0:10:19.840 a beat. Um. University Michigan such a strong football team 0:10:19.880 --> 0:10:22.480 this year they are. That's really worries me. A huge 0:10:22.480 --> 0:10:25.840 game as high state. I'm concerned about that. But in 0:10:25.920 --> 0:10:28.120 terms of the markets, Christian what do you what are 0:10:28.160 --> 0:10:32.959 you expecting? Because we've really rallied up to over on 0:10:33.000 --> 0:10:35.559 the SNP. You know, two weeks ago, three weeks ago, 0:10:35.640 --> 0:10:37.319 we were at thirty six hundred. Are we going to 0:10:37.440 --> 0:10:41.559 finish the year at these levels or even higher? I 0:10:41.600 --> 0:10:44.720 think that's a that's a really distinct possibility. I think, um, 0:10:44.920 --> 0:10:47.040 you know, certainly, earnings have been better than I think 0:10:47.080 --> 0:10:49.760 we had feared, better than a lot of folks have 0:10:49.760 --> 0:10:53.319 have expected. Um. And if we continue to get good 0:10:53.400 --> 0:10:57.760 prints on CPI I think we could see you know, 0:10:57.840 --> 0:11:00.560 these levels hold or even trade higher. I don't think 0:11:00.559 --> 0:11:03.720 we'll rip, you know, well above four thousand, but um 0:11:04.000 --> 0:11:06.920 and and stay there for that long. But um, I 0:11:06.920 --> 0:11:10.240 think that the big macro driver today is clearly inflation. 0:11:10.760 --> 0:11:13.520 And if we start to get a sensor that's under 0:11:13.559 --> 0:11:17.400 control and we're pricing that properly in the marketplace, UM yeah, 0:11:17.440 --> 0:11:21.120 I think we could finally see inflation prints being a 0:11:21.120 --> 0:11:24.520 bit of a tail wind for both equity and bond 0:11:24.600 --> 0:11:27.720 markets as opposed to, um, you know, the big headwind 0:11:27.760 --> 0:11:29.920 that they've been over the last six months or so. 0:11:30.160 --> 0:11:34.240 All Right, Christie, you're based in Concord, California, right, yes, alright, 0:11:34.280 --> 0:11:36.679 just east of San Francisco. Are you guys gonna get 0:11:36.679 --> 0:11:40.600 snow up at Tahoe this this this winter, that's what 0:11:40.640 --> 0:11:43.400 we're hoping for. I don't know that we have much yet, 0:11:43.440 --> 0:11:46.640 but uh yeah, we're all hoping for a good skies 0:11:46.679 --> 0:11:48.680 and that's for sure. I love tom It's a great 0:11:48.679 --> 0:11:51.920 place to ski up there. Squaw Valley, you know that's 0:11:51.960 --> 0:11:54.840 my favor I love well. I love the movie Hot Dog. 0:11:55.040 --> 0:11:57.120 You've got to be a certain age to even remember 0:11:57.160 --> 0:11:59.360 that movie, but that was based at Squaw Valley. That's 0:11:59.360 --> 0:12:01.600 some good stuff up there. We're all basically we're hoping 0:12:01.600 --> 0:12:05.880 for a mild winter for continental Europe, but we want 0:12:05.920 --> 0:12:08.680 as much snow as possible in the Alba Stand in 0:12:08.679 --> 0:12:11.679 the Rockies, exactly out of the Sierra Nevada. Christian Chan, 0:12:11.920 --> 0:12:17.360 CEO of a st Market, joins us, we've got the 0:12:17.400 --> 0:12:20.080 infestrates pulling back today, but we think about the mortgage 0:12:20.160 --> 0:12:23.440 rates out there, they've searched the north of seven percent. 0:12:23.520 --> 0:12:25.240 I think Matt might have locked in something like three 0:12:25.240 --> 0:12:28.240 and a quarter percent when he bought his house recently. 0:12:28.240 --> 0:12:30.680 So a big, big move up in reinfest rates really 0:12:30.720 --> 0:12:33.880 impacting the real estate business. So the Federal Reserve is 0:12:33.880 --> 0:12:35.680 certainly haven't an impact there. We want to talk about 0:12:35.720 --> 0:12:38.960 the commercial real estate business and for that we checked 0:12:38.960 --> 0:12:42.880 on the Hassam Naji, President and CEO of Marcus and Millichap, 0:12:42.960 --> 0:12:46.160 which is a New York Soaker change traded company. M 0:12:46.360 --> 0:12:49.840 m I is the symboliscott of market capitalization about one 0:12:49.840 --> 0:12:52.960 point four billion dollars. Hassan, thanks so much for joining 0:12:53.040 --> 0:12:55.600 us here, so talk to us about the state of 0:12:55.600 --> 0:12:59.920 the commercial real estate business. We've seen the residential business 0:13:00.000 --> 0:13:01.800 are to roll over here with the higher rates. What 0:13:01.840 --> 0:13:05.040 are we seeing in your commercial space? Good morning, Thanks 0:13:05.080 --> 0:13:08.320 for having me on the program. Very similar to the 0:13:08.320 --> 0:13:12.000 trans you mentioned on the residential side of the marketplace. 0:13:12.400 --> 0:13:16.640 We're seeing essentially a reaction to a shock delivered by 0:13:16.679 --> 0:13:22.360 the rapid and steep interest or increases. Therefore, pricing is challenged, 0:13:22.800 --> 0:13:26.439 maturing loans that now need to be refinanced are challenged, 0:13:26.920 --> 0:13:29.800 and the market is just recalibrating to try and figure 0:13:29.840 --> 0:13:35.080 out what the actual valuations on each asset should be 0:13:35.080 --> 0:13:37.680 because of the cost of debt. Debt is a very 0:13:37.679 --> 0:13:42.480 big component of commercial real estate transactions, especially among private investors, 0:13:42.480 --> 0:13:46.480 which make up the vast majority of transactions and ownership 0:13:46.720 --> 0:13:50.199 throughout the US. So when rates go up two d 0:13:50.360 --> 0:13:54.720 and fifty basis points, it does make a very big 0:13:54.760 --> 0:13:58.120 difference on the valuation component. The second part of we're 0:13:58.120 --> 0:14:03.600 seeing this especially if um, a lot of businesses feel 0:14:03.679 --> 0:14:06.439 like they can just act half of their office space, right, 0:14:06.480 --> 0:14:08.560 I mean, if you have so many employees working from 0:14:08.559 --> 0:14:11.080 home and it looks like that's no longer just a 0:14:11.080 --> 0:14:15.239 pandemic thing for at least a significant portion of your workforce, 0:14:15.880 --> 0:14:18.400 it's going to stay that way. You just don't need 0:14:18.440 --> 0:14:22.520 as much room, do you. On the office side of 0:14:22.560 --> 0:14:25.720 the equation, You're absolutely right. There is a reduction of 0:14:25.800 --> 0:14:29.480 footprint that is created by the hybrid workplace that is 0:14:29.520 --> 0:14:31.360 here to stay. We really do believe that, most of 0:14:31.400 --> 0:14:34.640 our clients believe that. But it's also to some extent 0:14:34.880 --> 0:14:37.160 overstated in that even I mean here right here in 0:14:37.200 --> 0:14:39.920 New York today and you're seeing people come back into 0:14:39.920 --> 0:14:43.080 the city office occupancies probably half of what it was 0:14:43.320 --> 0:14:46.360 pre pandemic, and it will probably take two or three 0:14:46.400 --> 0:14:49.840 more years for it to become more normal, if you will. 0:14:50.320 --> 0:14:53.720 But you're bringing up a great point. Valuations for office 0:14:53.960 --> 0:14:58.400 under are under the most pressure. Valuations for apartments and 0:14:58.680 --> 0:15:02.400 uh Indu streel which were the lowest yields because there 0:15:02.400 --> 0:15:05.840 were the darling of the industry, are very challenged because 0:15:05.920 --> 0:15:09.640 the higher interest rates are challenging those yields a lot 0:15:09.680 --> 0:15:13.240 more than say shopping centers, which were trading already trading 0:15:13.280 --> 0:15:16.160 at a higher yield. Therefore they had some room to 0:15:16.240 --> 0:15:20.800 absorb the interest rate shock. But the good news all 0:15:20.840 --> 0:15:24.080 around commercial real state, with the exception of office, is 0:15:24.120 --> 0:15:27.520 that supply and demand or in grade shape vacancies were 0:15:27.560 --> 0:15:31.240 at all time low. There's not been an overbuilding cycle, 0:15:31.640 --> 0:15:34.360 and there hasn't been an over leveraging cycle like we 0:15:34.400 --> 0:15:37.840 had an eight o nine where the basically the credit 0:15:37.840 --> 0:15:41.320 markets collapsed. We don't see any of that happening, but 0:15:41.880 --> 0:15:44.880 I can tell you live from mine interactions, there's a 0:15:44.960 --> 0:15:46.920 there's a shock factor on the interest rate side. What 0:15:46.960 --> 0:15:50.160 about the stores we used to have on this block. 0:15:50.440 --> 0:15:51.840 I don't know where you are in New York right now, 0:15:51.880 --> 0:15:54.560 but you should come over on this block. We used 0:15:54.560 --> 0:15:57.880 to have a container store. There was an H and M. 0:15:57.920 --> 0:16:03.560 There was Jay Crew Ah, there was a Victorious secret Um. 0:16:03.720 --> 0:16:06.720 You know, all of those places are not only gone, 0:16:07.120 --> 0:16:10.520 but nothing has filled them in yet. They're still just 0:16:10.560 --> 0:16:13.680 sitting here empty in one of Dare I say, the 0:16:13.800 --> 0:16:17.840 nicest buildings in midtown Manhattan on a block that used 0:16:17.840 --> 0:16:19.800 to be you know, I mean we're across street from 0:16:19.800 --> 0:16:25.600 blooming Tail's right, Matt to your point, Urban retail and 0:16:25.800 --> 0:16:29.840 older shopping centers in the suburbs that don't really have 0:16:30.160 --> 0:16:35.320 a sustainable anchor tenant anymore, or the hardest hit among 0:16:35.360 --> 0:16:37.440 retail that will take a long time to come back. 0:16:37.920 --> 0:16:40.840 If they come back. Some of those older shopping centers 0:16:40.840 --> 0:16:45.800 are being reimagined and really acquired for reuse, which is 0:16:45.800 --> 0:16:48.600 the reinvention of retail. But I'll tell you our core 0:16:48.960 --> 0:16:54.640 neighborhood shopping center clients and even the strip centers that 0:16:54.680 --> 0:16:57.560 are more in the path of traffic outside of core 0:16:57.680 --> 0:17:02.880 urban areas, are they come back? It? Uh. Those shopping centers, 0:17:02.920 --> 0:17:06.960 because they're tied to restaurants, fitness and entertainment, which is 0:17:07.000 --> 0:17:11.520 back in full force, are doing very well. Um. In fact, 0:17:11.600 --> 0:17:14.720 they're they're leading in terms of the sales trans for 0:17:14.760 --> 0:17:17.879 a third quarter versus all the property types. So the 0:17:17.920 --> 0:17:20.560 real estate is always changing. That's the one thing to remember. 0:17:20.840 --> 0:17:23.600 So if if I'm a commercial real estate investor, is 0:17:23.640 --> 0:17:28.000 it as simple as going along the Nashville's, the Austin's, 0:17:28.040 --> 0:17:30.919 the Miami's, the world and you know, maybe not so 0:17:31.000 --> 0:17:33.919 much some of the northern cities, the higher tax cities. 0:17:34.000 --> 0:17:37.959 Is as simple as that. You know, they follow the demographics. 0:17:38.000 --> 0:17:41.320 And the sun Belt is a winner Florida, Texas, some 0:17:41.400 --> 0:17:44.359 of the markets you mentioned, uh in the Northwest. I 0:17:44.359 --> 0:17:48.879 think Seattle is an incredibly strong market with great demographics. 0:17:49.440 --> 0:17:52.320 So you're absolutely right. Those are the growth markets, follow 0:17:52.400 --> 0:17:55.959 the growth. But I also have to say that some 0:17:56.000 --> 0:17:59.439 of the urbier markets San Francisco, Bay Area in southern California, 0:17:59.520 --> 0:18:03.640 New York, not so much Chicago. Yet those core markets 0:18:04.080 --> 0:18:07.440 where pricing is adjusted and is adjusting further, all of 0:18:07.480 --> 0:18:09.919 a sudden become the diamond in the rough. You have 0:18:10.000 --> 0:18:12.960 to think five years out, where will the recovery have 0:18:13.920 --> 0:18:16.280 not just gone with the demographics, but what are some 0:18:16.359 --> 0:18:19.680 of the metro's you know, left for big bruises and damage. 0:18:20.160 --> 0:18:22.640 That can be the diamond and the rough investment. I'm 0:18:22.640 --> 0:18:24.800 a big believer in the fact that urban America will 0:18:24.840 --> 0:18:27.400 come back. It will take time, but it will come back. 0:18:27.600 --> 0:18:29.200 I love it. I'm still hung up on the strip 0:18:29.240 --> 0:18:33.600 mall success that's pretty awesome. I mean e commerce, I 0:18:33.600 --> 0:18:36.440 mean some e commerce searched during the pandemic. But what 0:18:36.520 --> 0:18:39.920 we're hearing for some retailers is foot traffic is coming back. 0:18:41.200 --> 0:18:45.119 It is people really want that experiential retail. Every one 0:18:45.160 --> 0:18:47.879 of our clients that owns the shopping center that has 0:18:47.920 --> 0:18:51.240 a nice mix of restaurants, bars, in other forms of 0:18:51.359 --> 0:18:56.680 entertainment and fitness, uh, you know, personal care, beauty, all 0:18:56.680 --> 0:18:59.960 of those things are attracting consumers back, especially in the 0:19:00.040 --> 0:19:03.040 birds rights on because people those people who are working 0:19:03.080 --> 0:19:05.640 from home. You know, my wife, Um, she doesn't ever 0:19:05.720 --> 0:19:07.840 have to go into the office anymore. So now instead 0:19:07.840 --> 0:19:11.720 of doing pilates downtown in Manhattan, she does pilates on 0:19:11.800 --> 0:19:15.840 Central Park Avenue and Scarsdale exactly. I mean, you're you're 0:19:15.920 --> 0:19:18.160 you're nailing the trend right there. But I do think 0:19:18.160 --> 0:19:20.400 in the next two or three quarters there will be 0:19:20.720 --> 0:19:24.920 some very unique buying opportunities because values of commercial real 0:19:25.000 --> 0:19:28.400 estate in general have to adjust to the higher interest rates. 0:19:28.440 --> 0:19:31.080 I think the FED was behind the curve. Now they're 0:19:31.160 --> 0:19:33.960 hitting the economy with the head sledge hammer. As soon 0:19:34.000 --> 0:19:36.159 as we get a little relief on you know, the 0:19:36.200 --> 0:19:39.400 worst of the interest rates being interested, increases being over 0:19:39.920 --> 0:19:44.480 and the inflation curve starting to go the other way 0:19:44.520 --> 0:19:47.160 like we saw this morning. And look at the market reaction, 0:19:47.400 --> 0:19:50.479 you're gonna see some you know, relief rally and commercial 0:19:50.560 --> 0:19:53.240 real estate too. But I do think there will be 0:19:53.240 --> 0:19:56.520 some buying opportunities. Alright, good stuff, as always saw Nay, 0:19:56.840 --> 0:20:01.840 president and CEO of Marcus and MILLICHEP, publicly traded real 0:20:01.920 --> 0:20:04.880 estate company m m I is the ticket to put 0:20:04.880 --> 0:20:08.600 into your Bloomberg terminal. They're commercial real estate. Yeah, and Matt, 0:20:08.640 --> 0:20:10.760 there is actually a store going in at fifty nine 0:20:11.000 --> 0:20:13.320 and Lex here in our building, so they are putting something. 0:20:13.359 --> 0:20:15.240 What is it? I don't know. Oh, I think it's 0:20:15.240 --> 0:20:21.840 gonna be a bank, like a bank slash lounge market. 0:20:21.880 --> 0:20:24.840 Since Charlie was just reporting a moving seriously higher to 0:20:25.040 --> 0:20:27.560 yes booming. You know what This kind of rally is 0:20:27.560 --> 0:20:32.480 called face ripping. Face ripping rally. That's a little hard, 0:20:32.680 --> 0:20:34.960 I think, but it is just ripping. It's the most 0:20:35.240 --> 0:20:39.439 smps up, the most since twenty twenty. I used that 0:20:39.480 --> 0:20:42.679 sense function that Lisa Brahmwoods like, we're not allowed to 0:20:42.720 --> 0:20:48.440 tell listeners because you know that's an internal function. Other 0:20:48.720 --> 0:20:51.400 clients don't have access to that function. Is that right? 0:20:51.920 --> 0:20:54.600 Why it doesn't do anything? I don't know why, but 0:20:54.960 --> 0:20:57.320 all right, yeah, alright, I use it and I'm proud 0:20:57.359 --> 0:20:59.320 to use it. Right. Amanda Rebella joins us here in 0:20:59.320 --> 0:21:02.280 our Bloomberg her active broker studio. She's ahead of passive 0:21:02.359 --> 0:21:05.560 sales US on shore d w S group. We've determined 0:21:05.640 --> 0:21:09.199 that as a Deutsche Bank group there what is chassive sales? 0:21:09.320 --> 0:21:10.840 What does that mean? We we go over this but 0:21:10.880 --> 0:21:13.440 I forget now, which that's okay. It's basically anything which 0:21:13.480 --> 0:21:16.200 is tracking an index, so um E t S would 0:21:16.240 --> 0:21:18.040 be the main thing. But also we have scope for 0:21:18.200 --> 0:21:22.600 offering clients as opposed to active because there are obviously 0:21:22.600 --> 0:21:25.080 e t f s with active managers. But you're just 0:21:25.160 --> 0:21:28.479 looking at the passive side of But working with our 0:21:28.560 --> 0:21:30.959 Steam colleagues on the active side as well, there's no 0:21:31.359 --> 0:21:34.639 passive or active. You know, they make sense in the 0:21:34.640 --> 0:21:37.320 portfolio together. All right, every time we talk to your man, 0:21:37.359 --> 0:21:39.280