WEBVTT - Tesla Beats Estimates With Less-Drastic Drop in EV Sales 0:00:00.600 --> 0:00:08.160 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.520 --> 0:00:12.880 This is Bloomberg business Week Inside from the reporters and 0:00:13.080 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.240 --> 0:00:30.000 And now to one stock that is certainly surging today, 0:00:30.120 --> 0:00:33.879 Tesla up eight point six percent for a six consecutive day. 0:00:33.920 --> 0:00:36.239 It's the longest winning streak in about a year. This 0:00:36.280 --> 0:00:39.120 after the company reported deliveries for the second quarter that 0:00:39.159 --> 0:00:42.120 beat the average analyst estimate. ED love those with us 0:00:42.159 --> 0:00:44.960 now he's co host of Bloomberg Technology on Bloomberg TV. 0:00:45.000 --> 0:00:47.920 He joins us from our San Francisco bureau. So ed 0:00:48.040 --> 0:00:50.600 better than feared? Is that the way to describe the 0:00:50.720 --> 0:00:52.320 decline in sales year over year? 0:00:53.040 --> 0:00:56.080 Yeah, I mean there's a mixed response. The stocks up significantly, 0:00:56.120 --> 0:00:58.360 I think on track for his biggest jump since April. 0:00:58.400 --> 0:01:01.440 But I would say there's a rain of response. There's 0:01:01.480 --> 0:01:04.400 those that look at this and say, well, it is 0:01:04.440 --> 0:01:08.640 a back to back sequential decline first quarter, second quarter 0:01:08.680 --> 0:01:10.839 in terms of a drop year on year in deliveries. 0:01:11.240 --> 0:01:15.280 So it could signal that things are not great, but 0:01:15.319 --> 0:01:17.600 they're improving from where they were in the first three 0:01:17.600 --> 0:01:20.039 months of the year, or you can kind of look 0:01:20.040 --> 0:01:22.000 at it the other way, which is it's still a 0:01:22.120 --> 0:01:25.759 drop in deliveries year on year, and either you believe 0:01:25.800 --> 0:01:29.200 that delivering electric vehicles is the mainstay of Tesla's business, 0:01:29.600 --> 0:01:31.680 or you look at elsewhere and think you say, it's 0:01:31.840 --> 0:01:35.000 just not where Tesla's headed, and so we don't have 0:01:35.040 --> 0:01:36.200 that much concern about it. 0:01:36.800 --> 0:01:38.640 Ed, I've been waiting all day to talk to you 0:01:38.680 --> 0:01:40.920 about this. I hello, ED. 0:01:41.040 --> 0:01:43.720 So let's talk about some comments that we got from 0:01:43.920 --> 0:01:46.720 Jessica Caldwell. I know that you're familiar with her as 0:01:46.760 --> 0:01:48.080 well from dot com. 0:01:48.800 --> 0:01:52.600 She was basically talking about Tesla's limited lineup here. 0:01:52.800 --> 0:01:56.640 It has a pretty narrow lineup as compared to most carmakers, 0:01:56.720 --> 0:01:59.480 and she said, quote, we've seen the automaker exhaust its 0:01:59.520 --> 0:02:02.760 bag of by lowering prices and increasing incentives to spur 0:02:02.840 --> 0:02:07.040 demand without much success in the US market. So these 0:02:07.120 --> 0:02:09.640 numbers they were better than feared. But where does Tesla 0:02:09.680 --> 0:02:10.320 go from here? 0:02:11.720 --> 0:02:15.520 So, just in Corwell, it is an auto analyst that 0:02:15.560 --> 0:02:17.680 looks through the consumer lens, right, She looks at the 0:02:17.720 --> 0:02:21.919 marketplace for consumer cars, and so that is an opinion 0:02:21.919 --> 0:02:24.480 that's shared by many. You know, the model why at 0:02:24.480 --> 0:02:26.760 this point is several years old. They have a limited 0:02:26.840 --> 0:02:29.440 range of cars. Let's say you compare with a Volksbangen 0:02:29.560 --> 0:02:33.840 or a Toyota. Think about all of the different models 0:02:33.840 --> 0:02:36.640 that they offer and actually subplates, you know, both at 0:02:36.680 --> 0:02:39.480 the luxury end and at the base end. Tesla just doesn't 0:02:39.480 --> 0:02:43.239 do that. So that's a cause for concern. The other 0:02:43.280 --> 0:02:45.880 problem is one that Elon Musk has already talked about 0:02:46.280 --> 0:02:48.680 that there's a lot of evidence that pure play battery 0:02:48.720 --> 0:02:52.640 electric cars are battling for the attention of consumers against hybrids. 0:02:52.960 --> 0:02:57.040 And many consumers right now where things are difficult, interest 0:02:57.120 --> 0:03:00.239 rates super high, and many are still not convinced about 0:03:00.320 --> 0:03:05.040 that the utility of an electric vehicle in their lifestyle. 0:03:05.639 --> 0:03:08.480 Hybrid's a great option. That's something you'll must have talks about. 0:03:08.520 --> 0:03:10.600 So that may be reflected in these numbers as well. 0:03:10.800 --> 0:03:15.359 So, ed where does if hybrids are indeed the transitional 0:03:15.440 --> 0:03:18.040 vehicle that gets us and I'm talking about us as 0:03:18.080 --> 0:03:21.919 a globe to a world of evs eventually, how long 0:03:22.040 --> 0:03:24.079 is that transition? I mean, I actually know folks who 0:03:24.160 --> 0:03:28.200 had completely electric vehicles who traded them in for hybrids. 0:03:29.280 --> 0:03:32.320 Yeah, it's really tricky, I would say, like most estimates, 0:03:32.320 --> 0:03:34.960 including like Bloomberging Energy Finance right, which is our in 0:03:35.080 --> 0:03:38.840 house research arm that looks at the market for battery 0:03:38.840 --> 0:03:44.080 electric vehicles among other things, still see a massive jump 0:03:44.080 --> 0:03:46.200 from where we are today twenty twenty four to the 0:03:46.240 --> 0:03:49.440 proportion of vehicles on the roads that are battery electric 0:03:49.480 --> 0:03:52.480 in twenty thirty and twenty forty. We're still heading in 0:03:52.480 --> 0:03:56.000 that direction. The market for battery electric is not shrinking, 0:03:56.480 --> 0:04:01.520 it's growing at a decelerated rate. But you know, you 0:04:01.520 --> 0:04:04.160 think about the average American family, it's the best use 0:04:04.200 --> 0:04:07.640 case to think of. Tesla is offering financing on a 0:04:07.640 --> 0:04:11.279 brand new Tesla vehicle at two percent, which is very competitive, 0:04:11.840 --> 0:04:15.040 but for many the product itself just doesn't work. Like 0:04:15.080 --> 0:04:17.680 if you have several kids, the only three row option 0:04:17.760 --> 0:04:19.480 out there right now is the Rivian our one else, 0:04:19.520 --> 0:04:23.400 which isn't selling brilliantly itself. It all comes down to 0:04:23.440 --> 0:04:26.800 household economics and what's available on the market. And hybrids 0:04:26.800 --> 0:04:28.800 have had a real resurgence in the first six months 0:04:28.839 --> 0:04:29.479 of this year. 0:04:29.600 --> 0:04:31.480 And we have like a minute life together, and I 0:04:31.520 --> 0:04:33.839 need to ask you about the cyber truck. I actually 0:04:33.839 --> 0:04:36.000 saw one on the highway over the weekend, and I 0:04:36.040 --> 0:04:38.680 actually slowed down just so I could stay close to 0:04:38.720 --> 0:04:40.120 it for a little bit longer and just get a 0:04:40.160 --> 0:04:42.960 really good look. What's going on with the cybertruck? When 0:04:42.960 --> 0:04:44.600 are we going to get numbers around that? 0:04:45.320 --> 0:04:48.120 So we have some indicative numbers because of the recalls. 0:04:48.240 --> 0:04:50.799 You know, the cyber truck has had some physical issues. 0:04:51.080 --> 0:04:53.400 So the regulators tell us, at least in the US, 0:04:53.440 --> 0:04:55.360 like this is how many we record, so you can 0:04:55.440 --> 0:04:57.120 kind of do the math on how many have been delivered, 0:04:57.120 --> 0:04:59.200 and the answer is not that many. In many ways, 0:04:59.240 --> 0:05:03.359 it's a niche produc act. You know, the Tesla bulls 0:05:03.360 --> 0:05:05.760 would say, hey, you guys are wrong. The lineup's not stale. 0:05:05.760 --> 0:05:08.360 They just introduced cybertruck. Look how wacky it is. But 0:05:08.400 --> 0:05:10.839 for many it doesn't resonate with the average buyer of 0:05:10.880 --> 0:05:11.520 any content. 0:05:11.680 --> 0:05:12.320 That's fair to say. 0:05:12.480 --> 0:05:14.640 You think it weighs about a million pounds. 0:05:14.760 --> 0:05:17.960 Yeah, yeah, so, but it's a fantastic vehicle. I actually 0:05:18.120 --> 0:05:20.240 get to drive it, you know, I've been in close proximity. 0:05:20.480 --> 0:05:22.680 But I think that's the question that for now, it's 0:05:22.720 --> 0:05:25.600 a niche low volume products. Hence why Tesla doesn't break 0:05:25.640 --> 0:05:27.160 it out as its own category. 0:05:27.640 --> 0:05:29.800 All right, why don't I either go to you or 0:05:29.839 --> 0:05:32.080 you come over here and we'll test drive a cyber truck. 0:05:32.120 --> 0:05:33.240 That sounds so let's do it. 0:05:33.680 --> 0:05:36.120 Yeah, if you're listening, it's a good idea. 0:05:36.200 --> 0:05:38.520 Hannah Elliott drove one. She loved it. It was in Bloomberg 0:05:38.560 --> 0:05:41.039 Pursuits a few months ago. She loves She is really cool. 0:05:41.080 --> 0:05:43.560 She is awesome. Hey, also awesome. Ed Ludlow, Coast of 0:05:43.600 --> 0:05:47.040 Bloomberg Technology on Bloomberg TV, joining us from San Francisco. 0:05:47.960 --> 0:05:51.400 You're listening to the Bloomberg Business Week podcast. Can't Just 0:05:51.520 --> 0:05:54.760 Live weekday afternoons from two to five pm Eastern Listen 0:05:54.800 --> 0:05:56.960 on Apple car Play and then Bright Auto with a 0:05:57.000 --> 0:06:07.240 Bloomberg Business at or Wann't just Live on YouTube? 0:06:06.200 --> 0:06:09.520 Change Well. 0:06:09.600 --> 0:06:11.719 Jamaica could be facing up to a billion dollars of 0:06:11.760 --> 0:06:14.880 damage as Hurricane Barrel durns through the Atlantic. It's the 0:06:14.920 --> 0:06:19.880 earliest ever Category five storm after devastating the Caribbean's Windward Islands. 0:06:20.240 --> 0:06:23.880 Girl's breakneck intensification into a major hurricane is a grim 0:06:23.920 --> 0:06:26.640 sign for the rest of the Atlantic storm season, which 0:06:26.680 --> 0:06:29.160 is still months away from its typical peak, and the 0:06:29.240 --> 0:06:32.400 latest indication of how extreme heat driven by climate change 0:06:32.839 --> 0:06:36.520 is triggering weather disasters around the world. We got with 0:06:36.600 --> 0:06:40.160 us Bloomberg's Mark Gongloff. He's Bloomberg opinion editor who covers 0:06:40.240 --> 0:06:44.480 climate change. He's here in our Bloomberg Interactive broker's studio. Mark. 0:06:44.680 --> 0:06:46.279 We talk a lot about how the stock market is 0:06:46.279 --> 0:06:48.440 not the economy. The economy is not the stock market. 0:06:48.560 --> 0:06:52.040 Weather is not climate change. Climate change is not weather, 0:06:52.839 --> 0:06:57.159 yet these things are intertwined. Please explain, Well, there have 0:06:57.200 --> 0:07:00.760 always been hurricanes, but the thing about this hurricane is 0:07:00.760 --> 0:07:03.119 that it is a kind of a freak, literal freak 0:07:03.160 --> 0:07:05.920 of nature. That is the as you mentioned, the earliest 0:07:05.960 --> 0:07:10.400 Category five in history. The other the scary thing about it, 0:07:10.400 --> 0:07:12.480 maybe even scarier thing about it, is that it went 0:07:12.520 --> 0:07:15.960 from zero to category four in like less than two days, 0:07:16.160 --> 0:07:19.000 which has only happened like six previous times in history. 0:07:19.200 --> 0:07:22.120 And usually that happens in September when the ocean water 0:07:22.200 --> 0:07:24.720 is really warm. And so we've got this thing where, 0:07:24.960 --> 0:07:28.440 yes it's a hurricane, Yes hurricanes happen, but the ocean 0:07:28.480 --> 0:07:30.840 water is like a bathtub. It's like September level hot 0:07:30.920 --> 0:07:33.840 right now. Part of that's al Nino again, Al Nino's happened, 0:07:35.040 --> 0:07:39.720 but the combination of El Nino and human made climate 0:07:40.200 --> 0:07:43.720 change has made ocean temperatures like almost literally off the 0:07:43.800 --> 0:07:46.840 charts hot. And so that is fueling this crazy storm. 0:07:47.080 --> 0:07:49.040 And so what does that mean for the rest of 0:07:49.200 --> 0:07:52.760 hurricane season If we're starting early, maybe. 0:07:52.640 --> 0:07:54.720 Will end early, maybe not? Or maybe will this just 0:07:54.760 --> 0:07:55.680 be super intense? 0:07:56.040 --> 0:07:58.040 Unfortunately, it looks like it's going to be super intense. 0:07:58.080 --> 0:08:01.840 Before it even started. The the number crunchers came up 0:08:01.880 --> 0:08:05.200 with forecasts for it that were like, again, like it 0:08:05.240 --> 0:08:08.440 was going to be a record season, thirty thirty big storms, 0:08:08.720 --> 0:08:11.720 seven major hurricanes which are like category three or above, 0:08:12.080 --> 0:08:14.320 and that which is more than like the usual like 0:08:14.400 --> 0:08:16.760 three and a lot most of those are going to 0:08:16.800 --> 0:08:18.800 affect the US in some way. This one may end 0:08:18.920 --> 0:08:22.560 up affecting like Texas, and so it's the water's going 0:08:22.640 --> 0:08:24.160 to stay hot, is not going to get any cold 0:08:24.200 --> 0:08:28.280 cooler until like October November and so, and then this 0:08:28.560 --> 0:08:31.880 rapid intensification thing that we're seeing is another feature that 0:08:31.920 --> 0:08:33.440 we can expect throughout this season. 0:08:33.440 --> 0:08:33.640 Two. 0:08:33.720 --> 0:08:36.679 Unfortunately, one thing I think about a lot markets. It's 0:08:36.720 --> 0:08:39.719 not climate migration, which you've shared with us before, and 0:08:39.840 --> 0:08:42.480 the idea of moving from one country to another country 0:08:42.640 --> 0:08:45.360 as a result of what's happening in your in your 0:08:45.400 --> 0:08:48.360 own climate, which we're seeing right now certainly, or is 0:08:48.400 --> 0:08:51.959 the effects of what's happening with climate, but something that's 0:08:51.960 --> 0:08:54.880 happening more local. The idea of not necessarily living in 0:08:54.920 --> 0:08:58.040 a part of the country because you're concerned about fires 0:08:58.480 --> 0:09:02.360 or hurricanes, right insurance rates in places like California, or 0:09:02.400 --> 0:09:06.160 being dropped by your insurance in California because of fire risk, 0:09:06.400 --> 0:09:11.080 and that essentially becoming a place for some people that's 0:09:11.080 --> 0:09:12.960 not inhabitable because they don't want to deal with that. 0:09:14.240 --> 0:09:17.360 What happens first, do we start to see like a 0:09:17.440 --> 0:09:22.680 reversal in what we're doing as humans to slow climate change, 0:09:22.800 --> 0:09:25.040 or do we just right off these parts of the 0:09:25.080 --> 0:09:27.880 country that get hit over and over again. 0:09:27.960 --> 0:09:30.360 Well, apparently what happens first is everybody moves into those 0:09:30.360 --> 0:09:35.480 parts of the country really in a big way. Florida, Texas, Arizona, Phoenix, 0:09:35.520 --> 0:09:37.880 where it's like one hundred and twenty people are like 0:09:37.960 --> 0:09:42.160 cooking on the streets, are the fastest growing places in 0:09:42.200 --> 0:09:45.640 the country, and so a lot of people are moving 0:09:45.640 --> 0:09:48.760 there because it's cheaper. It's going to stop, it's already stopping. 0:09:49.160 --> 0:09:51.720 That cheapness is already going away as they're discovering they 0:09:51.720 --> 0:09:53.840 can't maybe get a mortgage on their house, or insurance 0:09:53.960 --> 0:09:56.160 race or skyrocketing, or they can't get insurance at all, 0:09:56.840 --> 0:09:58.360 or they have to clean up. And so what you're 0:09:58.360 --> 0:10:00.280 seeing is some first we're going to see some maybe 0:10:00.280 --> 0:10:03.160 some gentrification of some of these areas where you know, 0:10:03.520 --> 0:10:05.400 if you're if you're wealthy, you're going to move to 0:10:05.600 --> 0:10:07.120 You're going to buy a house on the coast, and 0:10:07.120 --> 0:10:09.120 if it gets knocked over, you're gonna build it back 0:10:09.200 --> 0:10:11.560 up again. One of the things we maybe need to 0:10:11.559 --> 0:10:14.000 do is to stop sort of subsidizing that. Like, if 0:10:14.040 --> 0:10:15.720 that's what you want to do, cool, go for it. 0:10:16.320 --> 0:10:18.240 You know, I love the beach too, But if your 0:10:18.240 --> 0:10:20.080 house keeps getting knocked down, we don't have to pay 0:10:20.120 --> 0:10:22.839 for to rebuild it. And at some point, I mean, 0:10:22.840 --> 0:10:25.240 I personally think we need to work on some sort 0:10:25.280 --> 0:10:28.200 of managed migration, some sort of managed retreat from some 0:10:28.240 --> 0:10:31.800 of these areas. But the market is sort of forcing 0:10:31.880 --> 0:10:33.680 us into that right now because we're not doing the 0:10:33.679 --> 0:10:35.800 managed stuff. We're being forced to buy. You can't get 0:10:35.840 --> 0:10:38.520 insurance anymore, or your house is getting knocked down, that 0:10:38.559 --> 0:10:39.080 sort of thing. 0:10:39.840 --> 0:10:41.360 Let's talk about New Jersey. 0:10:41.679 --> 0:10:43.720 Oh, this is so near and dear to Mark's heart. 0:10:43.760 --> 0:10:45.959 I love to he loves New Jersey Transit. If you 0:10:45.960 --> 0:10:48.439 don't know this about Mark, he's got a real soft 0:10:48.440 --> 0:10:49.960 spot for New Jersey, I'm going. 0:10:49.840 --> 0:10:52.360 To take you completely at face value, and I want 0:10:52.400 --> 0:10:54.000 to talk about New Jersey. We were talking about the 0:10:54.000 --> 0:10:58.080 commute yesterday getting longer costler, and you wrote when it 0:10:58.120 --> 0:11:01.160 comes to New Jersey Transit last week is failing the 0:11:01.200 --> 0:11:02.680 climate test, and it feels like a lot of what 0:11:02.720 --> 0:11:03.560 we're talking about. 0:11:04.400 --> 0:11:05.800 I mean it's very local too. 0:11:06.080 --> 0:11:08.959 Yeah, well it's local, but it's also national because you know, 0:11:09.600 --> 0:11:13.600 it blows my mind. Tim is being facetious about my 0:11:13.679 --> 0:11:16.560 love for New Jersey Transit. As you probably guessed, it 0:11:16.640 --> 0:11:19.079 makes me crazy. It has put ten years on it's 0:11:19.120 --> 0:11:23.880 taken ten years off of my life. But it affects 0:11:23.920 --> 0:11:26.839 the entire country because there's this ten mile stretch between 0:11:26.880 --> 0:11:30.800 Newark and Penn Station that it has these wires, these 0:11:30.840 --> 0:11:34.080 electrical wires that were built around World War two, and it's. 0:11:33.960 --> 0:11:35.720 The only place in the country piece of history. 0:11:36.000 --> 0:11:37.400 It's a piece of history, and you can look out 0:11:37.440 --> 0:11:39.200 and gaze on it. When when your train is sitting 0:11:39.200 --> 0:11:41.440 there doing nothing for like three hours while you're waiting 0:11:41.440 --> 0:11:41.840 to move. 0:11:41.720 --> 0:11:43.200 Think Mark says, it's a piece of something. 0:11:43.640 --> 0:11:44.360 It is a piece of. 0:11:44.320 --> 0:11:46.439 Something, and this is a family show. I guess I'll 0:11:46.480 --> 0:11:48.680 say what it is. But these wires are ancient, and 0:11:48.679 --> 0:11:50.440 when it gets hot, they sag, and it gets they 0:11:50.440 --> 0:11:52.680 get tangled up in the trains, and then all the 0:11:52.720 --> 0:11:55.000 trains shut down. And there's a bunch of other nonsense 0:11:55.040 --> 0:11:56.680 like that there's a bridge that you have to raise 0:11:56.720 --> 0:11:58.840 and lower every time, like anything bigger than a sailboat 0:11:58.880 --> 0:12:01.000 needs to go through. All the traffic on the Eastern 0:12:01.040 --> 0:12:04.480 Seaboard shuts down. It's bananas, and so they're working on that, 0:12:04.559 --> 0:12:06.760 but it's going to take a long long time to 0:12:06.760 --> 0:12:09.000 fix it. They're talking about like fifteen sixteen years to 0:12:09.000 --> 0:12:11.320 fix it, which again, in my opinion, just as not 0:12:11.440 --> 0:12:14.240 just as a New Jersey transit commuter, but just as 0:12:14.240 --> 0:12:17.480 somebody who's like, you know, this is the this is 0:12:17.480 --> 0:12:20.760 the biggest rail line. This is also Amtrak, So it 0:12:20.800 --> 0:12:23.480 affects traffic going from DC to Boston. You know, this 0:12:23.600 --> 0:12:27.360 is a major artery. And if we're going to prepare 0:12:27.400 --> 0:12:30.839 for a world in which we maybe drive less, maybe 0:12:30.840 --> 0:12:34.079 burn less fossil fuels, we need better transit. And if 0:12:34.080 --> 0:12:36.360 we just want an economy that functions, if we want 0:12:36.400 --> 0:12:38.760 you know, productivity, we want people to come into this 0:12:38.840 --> 0:12:40.560 city and go in and out and just travel, then 0:12:40.600 --> 0:12:42.800 we need to fix this much more quickly. I think 0:12:42.880 --> 0:12:46.200 one thing that might be frustrating to some people, Mark 0:12:46.800 --> 0:12:51.440 is that there's a huge economic part of this too, 0:12:52.280 --> 0:12:55.600 the idea that in order for a city like New 0:12:55.679 --> 0:12:57.720 York to be an engine of economic growth for a 0:12:57.760 --> 0:13:00.000 country and for a region, there needs to be really 0:13:00.040 --> 0:13:07.200 viable transit. And we haven't seen that necessarily from the agencies. No, no, 0:13:08.000 --> 0:13:10.240 we haven't. And it's a it's a big political ask 0:13:10.280 --> 0:13:12.880 and I understand that too. I mean, my New Jersey 0:13:12.920 --> 0:13:15.360 transit train doesn't fill up your gas tank or put 0:13:15.400 --> 0:13:18.079 cereal in your and your cereal bowl. You know, people 0:13:18.080 --> 0:13:20.400 are worried about inflation, that sort of thing people have, 0:13:20.840 --> 0:13:26.199 but immediate economic concerns. The difficult thing, the political trick 0:13:26.320 --> 0:13:32.160 to to to turn here is to express to people 0:13:32.280 --> 0:13:35.000 just how much economic damage will happen if we don't 0:13:35.120 --> 0:13:38.960 fix this stuff now. You know, if you don't invest 0:13:39.000 --> 0:13:42.319 in mitigating climate change in the next decade, the cost 0:13:42.360 --> 0:13:46.160 of doing so will double in the decades to come. 0:13:46.440 --> 0:13:48.440 And so it is a matter of and we're just 0:13:48.480 --> 0:13:50.080 bad at this. I'm bad at this, I'm bad at 0:13:50.080 --> 0:13:53.120 saving for you know, retirement, I'm bad at everything, you know, 0:13:53.160 --> 0:13:55.920 saving thinking about the future, thinking beyond what I'm going 0:13:55.960 --> 0:13:57.960 to eat for dinner tonight. But we have to start 0:13:57.960 --> 0:13:59.920 thinking that way as a society. You know, how can 0:13:59.920 --> 0:14:02.199 we save money in the future by spending more now? 0:14:02.800 --> 0:14:04.920 Mark Onngoloff. He's a must read whenever he has a 0:14:04.920 --> 0:14:07.600 call him out. He's Bloomberg Opinion editor covering climate change. 0:14:07.679 --> 0:14:14.760 Joining us here in the Bloomberg Interactive at Broker's studio. 0:14:13.760 --> 0:14:17.600 You're listening to the Bloomberg Business Week podcast. Listen live 0:14:17.720 --> 0:14:20.920 each weekday starting at two pm Eastern on Applecar Play 0:14:20.920 --> 0:14:23.800 and Android Auto with the Bloomberg Business App. You can 0:14:23.840 --> 0:14:27.080 also listen live on Amazon Alexa from our flagship New 0:14:27.120 --> 0:14:31.840 York station, Just Say Alexa Play. Bloomberg eleven thirty. 0:14:32.240 --> 0:14:35.560 New York's housing market facing the tightest squeeze in five decades, 0:14:35.640 --> 0:14:38.560 and little relief is in sight. A rental vacancy rate 0:14:38.600 --> 0:14:40.680 of just one point four percent is pushing the cost 0:14:40.720 --> 0:14:42.920 of living in New York City higher, and last month, 0:14:42.960 --> 0:14:46.080 developers filed the fewest permits in a decade to build 0:14:46.120 --> 0:14:49.400 new multi family buildings. Experts fear it all adds up 0:14:49.400 --> 0:14:53.400 to a bleak reality for for the most populous US city. Soon, 0:14:53.600 --> 0:14:56.840 New York may price out all but the very wealthy. 0:14:57.240 --> 0:14:59.480 Someone who's got a front row seat to everything happening 0:14:59.520 --> 0:15:01.680 in New York City real estate is Francis Katzen. She's 0:15:01.720 --> 0:15:04.080 founder of the Kats and team at Douglas Alloman. She's 0:15:04.120 --> 0:15:07.040 back with us here in our Bloomberg Interactive broker's studio. 0:15:07.080 --> 0:15:07.480 How are you. 0:15:07.800 --> 0:15:09.160 I'm well, thank you for having me. 0:15:09.240 --> 0:15:12.000 Yeah, thanks for joining us. When Charlie was talking about 0:15:12.000 --> 0:15:15.440 the yield on the tenure, you were like shaking your head, yeah, 0:15:15.480 --> 0:15:19.280 because certainly mortgage rates follow the tenuere but correct. To 0:15:19.320 --> 0:15:20.720 be fair, a lot of your a lot of your 0:15:20.760 --> 0:15:21.920 clients don't take mortgages. 0:15:22.520 --> 0:15:26.800 Well, I mean we just saw a huge barometer about that, right. 0:15:26.840 --> 0:15:32.040 We saw the market from basically four million to four 0:15:32.080 --> 0:15:36.040 point nine ninety five go down fifty nine point two 0:15:36.080 --> 0:15:40.120 percent in May and then basically uptick to fifty seven 0:15:40.160 --> 0:15:45.560 percent in non movement, meaning nothing's happening. Every other segment 0:15:45.640 --> 0:15:48.760 has this sort of movement, but the tenure treasury I'll 0:15:48.960 --> 0:15:51.600 used to basically track the thirty year fix. Now we're 0:15:51.600 --> 0:15:55.520 at seven percent on average. It's very stressful because the 0:15:55.560 --> 0:15:59.720 people that need that amount of borrowed leverage to get 0:15:59.760 --> 0:16:03.240 in to the upper movement, and there's an opportunity to 0:16:03.240 --> 0:16:06.360 get in much less can't make it happen. And that's 0:16:06.440 --> 0:16:10.160 the fifty nine point three percent reduction of non trading 0:16:10.200 --> 0:16:10.960 in that segment. 0:16:11.160 --> 0:16:11.520 Nuts. 0:16:11.680 --> 0:16:13.960 Well, when it comes to the people who are moving, 0:16:14.280 --> 0:16:19.920 I forget how many des there are, but divorce, death, diamonds, diapers. 0:16:19.440 --> 0:16:20.040 That's another one. 0:16:20.120 --> 0:16:23.080 Dis yeah when I get yeah, and then they buy 0:16:23.120 --> 0:16:26.200 a house, certain apartment or whatever. The people who are 0:16:26.240 --> 0:16:29.119 still moving, specifically in New York, I mean, are they moving. 0:16:28.880 --> 0:16:31.960 Because they have to? Are we seeing things loosen up 0:16:31.960 --> 0:16:32.800 on that front? 0:16:33.320 --> 0:16:36.400 Those are the only movements and they're far and few 0:16:36.480 --> 0:16:38.960 between because most are renting. That's why you're seeing a 0:16:38.960 --> 0:16:43.200 forty point five percent uptick in rental. It's the highest 0:16:43.240 --> 0:16:46.480 amount of Lisa's signed year of a year in like 0:16:47.000 --> 0:16:49.160 the six increase in like seven months. 0:16:49.760 --> 0:16:50.080 Nuts. 0:16:50.280 --> 0:16:52.320 So I think some are buying, but some are priced 0:16:52.360 --> 0:16:55.120 out or simply can't get their head around a seven 0:16:55.120 --> 0:16:56.560 percent versus a two and a half. 0:16:56.640 --> 0:16:58.080 I want to talk a little bit more about the 0:16:58.080 --> 0:17:02.400 rental market because I actually recently moved thanks. I was 0:17:02.560 --> 0:17:05.080 like two weeks ago. I had wanted to buy a 0:17:05.200 --> 0:17:08.639 year ago. I quickly discarded that dream, and then we 0:17:08.760 --> 0:17:12.399 found this this apartment, and the listing price or the 0:17:13.240 --> 0:17:15.040 price per month was just a little bit too high. 0:17:15.119 --> 0:17:18.040 So we said we'll pay you five hundred dollars less 0:17:18.160 --> 0:17:20.760 per month, and they said, okay, great as yours, which 0:17:20.840 --> 0:17:23.840 I was really surprised about. I know that it's just anecdata, 0:17:23.960 --> 0:17:26.560 but what is the state of the rental market? I mean, 0:17:26.760 --> 0:17:28.399 it seems like rents are still going up, but then 0:17:28.440 --> 0:17:29.720 you hear stories like mine. 0:17:29.880 --> 0:17:33.120 Well, you're lucky thinking, I can say, because what we're 0:17:33.160 --> 0:17:37.000 dealing with is multiple applications that are cannibalizing. 0:17:37.040 --> 0:17:37.240 Yeah. 0:17:37.240 --> 0:17:39.679 I just did it it for fifty East eighty third Street. 0:17:39.720 --> 0:17:40.840 We had seven. 0:17:40.560 --> 0:17:46.120 Apps and one is over five hundred bucks more. Actually 0:17:46.960 --> 0:17:49.600 we sold it. We rented it above the ask. The 0:17:49.680 --> 0:17:53.600 concessions are still very little. There's twenty seven point five 0:17:53.600 --> 0:17:57.080 percent more inventory now on the rent side, and I 0:17:57.119 --> 0:17:59.480 suspect because people don't want to take less than what 0:17:59.560 --> 0:18:03.080 they want for a sale, so they're basically converting. I 0:18:03.080 --> 0:18:05.720 think you're the anomaly. Honestly. I think there's such a 0:18:05.840 --> 0:18:08.840 tight look. It's a double edged sword. It's like way 0:18:08.880 --> 0:18:12.040 of a price rental or who can help you get 0:18:12.080 --> 0:18:14.919 the hit to make the numbers work until there's a 0:18:14.960 --> 0:18:18.119 refit that takes place maybe at the end of the 0:18:18.119 --> 0:18:19.280 first quarter of next year. 0:18:19.320 --> 0:18:19.760 I don't know. 0:18:20.040 --> 0:18:22.480 Yeah, I will say I think we were lucky. I 0:18:22.520 --> 0:18:25.119 promise it's a nice apartment when we moved into. 0:18:25.200 --> 0:18:27.480 But Manhattan, oh yeah, pretty sad. 0:18:27.920 --> 0:18:30.720 Well, that's one of the segments that's sort of very 0:18:30.760 --> 0:18:32.439 interesting actually for opportunity. 0:18:32.520 --> 0:18:34.600 Well tell me more. I mean I already signed my 0:18:34.640 --> 0:18:39.080 lease and were moved in. But interesting in what way. 0:18:37.960 --> 0:18:41.160 Depending on how far east you are from the west 0:18:41.200 --> 0:18:44.399 side of the East Side, if that even makes sense. Yeah, 0:18:44.440 --> 0:18:47.800 there's a little bit more negotiability because I think that 0:18:47.920 --> 0:18:50.800 people want to be close to their commute, so there's 0:18:50.800 --> 0:18:53.119 a little bit less desirability and a lot of that 0:18:53.240 --> 0:18:57.760 product maybe not as desirable based on post war lowest ceiling, 0:18:59.000 --> 0:19:03.320 not particularly the main event. In terms of inventory, you're 0:19:03.320 --> 0:19:05.840 competing with a lot more newer product. It seems to 0:19:05.840 --> 0:19:09.639 be a nice opportunity for family centric need next to 0:19:09.680 --> 0:19:11.760 schools to get in on the Upper east Side. 0:19:11.840 --> 0:19:15.560 Where are you seeing activity downtown? 0:19:16.520 --> 0:19:21.200 The usual Brooklyn? Oh my gosh on fire. 0:19:21.000 --> 0:19:25.479 Please keep going. I've been saying this for years. It's 0:19:25.480 --> 0:19:26.399 where all the cool people live. 0:19:26.520 --> 0:19:27.480 It really is. 0:19:27.840 --> 0:19:31.520 I think it's very that's popping relative to Brooklyn. 0:19:32.600 --> 0:19:33.080 I don't know. 0:19:34.000 --> 0:19:39.040 Going only, it's just it's it's exceeding price per square 0:19:39.040 --> 0:19:42.560 foot demand. People used to walk in and say, I 0:19:42.640 --> 0:19:45.480