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Speaker 2: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 3: And now to one stock that is certainly surging today,
Speaker 3: Tesla up eight point six percent for a six consecutive day.
Speaker 3: It's the longest winning streak in about a year. This
Speaker 3: after the company reported deliveries for the second quarter that
Speaker 3: beat the average analyst estimate. ED love those with us
Speaker 3: now he's co host of Bloomberg Technology on Bloomberg TV.
Speaker 3: He joins us from our San Francisco bureau. So ed
Speaker 3: better than feared? Is that the way to describe the
Speaker 3: decline in sales year over year?
Speaker 4: Yeah, I mean there's a mixed response. The stocks up significantly,
Speaker 4: I think on track for his biggest jump since April.
Speaker 4: But I would say there's a rain of response. There's
Speaker 4: those that look at this and say, well, it is
Speaker 4: a back to back sequential decline first quarter, second quarter
Speaker 4: in terms of a drop year on year in deliveries.
Speaker 4: So it could signal that things are not great, but
Speaker 4: they're improving from where they were in the first three
Speaker 4: months of the year, or you can kind of look
Speaker 4: at it the other way, which is it's still a
Speaker 4: drop in deliveries year on year, and either you believe
Speaker 4: that delivering electric vehicles is the mainstay of Tesla's business,
Speaker 4: or you look at elsewhere and think you say, it's
Speaker 4: just not where Tesla's headed, and so we don't have
Speaker 4: that much concern about it.
Speaker 5: Ed, I've been waiting all day to talk to you
Speaker 5: about this. I hello, ED.
Speaker 1: So let's talk about some comments that we got from
Speaker 1: Jessica Caldwell. I know that you're familiar with her as
Speaker 1: well from dot com.
Speaker 5: She was basically talking about Tesla's limited lineup here.
Speaker 1: It has a pretty narrow lineup as compared to most carmakers,
Speaker 1: and she said, quote, we've seen the automaker exhaust its
Speaker 1: bag of by lowering prices and increasing incentives to spur
Speaker 1: demand without much success in the US market. So these
Speaker 1: numbers they were better than feared. But where does Tesla
Speaker 1: go from here?
Speaker 4: So, just in Corwell, it is an auto analyst that
Speaker 4: looks through the consumer lens, right, She looks at the
Speaker 4: marketplace for consumer cars, and so that is an opinion
Speaker 4: that's shared by many. You know, the model why at
Speaker 4: this point is several years old. They have a limited
Speaker 4: range of cars. Let's say you compare with a Volksbangen
Speaker 4: or a Toyota. Think about all of the different models
Speaker 4: that they offer and actually subplates, you know, both at
Speaker 4: the luxury end and at the base end. Tesla just doesn't
Speaker 4: do that. So that's a cause for concern. The other
Speaker 4: problem is one that Elon Musk has already talked about
Speaker 4: that there's a lot of evidence that pure play battery
Speaker 4: electric cars are battling for the attention of consumers against hybrids.
Speaker 4: And many consumers right now where things are difficult, interest
Speaker 4: rates super high, and many are still not convinced about
Speaker 4: that the utility of an electric vehicle in their lifestyle.
Speaker 4: Hybrid's a great option. That's something you'll must have talks about.
Speaker 4: So that may be reflected in these numbers as well.
Speaker 3: So, ed where does if hybrids are indeed the transitional
Speaker 3: vehicle that gets us and I'm talking about us as
Speaker 3: a globe to a world of evs eventually, how long
Speaker 3: is that transition? I mean, I actually know folks who
Speaker 3: had completely electric vehicles who traded them in for hybrids.
Speaker 4: Yeah, it's really tricky, I would say, like most estimates,
Speaker 4: including like Bloomberging Energy Finance right, which is our in
Speaker 4: house research arm that looks at the market for battery
Speaker 4: electric vehicles among other things, still see a massive jump
Speaker 4: from where we are today twenty twenty four to the
Speaker 4: proportion of vehicles on the roads that are battery electric
Speaker 4: in twenty thirty and twenty forty. We're still heading in
Speaker 4: that direction. The market for battery electric is not shrinking,
Speaker 4: it's growing at a decelerated rate. But you know, you
Speaker 4: think about the average American family, it's the best use
Speaker 4: case to think of. Tesla is offering financing on a
Speaker 4: brand new Tesla vehicle at two percent, which is very competitive,
Speaker 4: but for many the product itself just doesn't work. Like
Speaker 4: if you have several kids, the only three row option
Speaker 4: out there right now is the Rivian our one else,
Speaker 4: which isn't selling brilliantly itself. It all comes down to
Speaker 4: household economics and what's available on the market. And hybrids
Speaker 4: have had a real resurgence in the first six months
Speaker 4: of this year.
Speaker 1: And we have like a minute life together, and I
Speaker 1: need to ask you about the cyber truck. I actually
Speaker 1: saw one on the highway over the weekend, and I
Speaker 1: actually slowed down just so I could stay close to
Speaker 1: it for a little bit longer and just get a
Speaker 1: really good look. What's going on with the cybertruck? When
Speaker 1: are we going to get numbers around that?
Speaker 4: So we have some indicative numbers because of the recalls.
Speaker 4: You know, the cyber truck has had some physical issues.
Speaker 4: So the regulators tell us, at least in the US,
Speaker 4: like this is how many we record, so you can
Speaker 4: kind of do the math on how many have been delivered,
Speaker 4: and the answer is not that many. In many ways,
Speaker 4: it's a niche produc act. You know, the Tesla bulls
Speaker 4: would say, hey, you guys are wrong. The lineup's not stale.
Speaker 4: They just introduced cybertruck. Look how wacky it is. But
Speaker 4: for many it doesn't resonate with the average buyer of
Speaker 4: any content.
Speaker 3: That's fair to say.
Speaker 5: You think it weighs about a million pounds.
Speaker 4: Yeah, yeah, so, but it's a fantastic vehicle. I actually
Speaker 4: get to drive it, you know, I've been in close proximity.
Speaker 4: But I think that's the question that for now, it's
Speaker 4: a niche low volume products. Hence why Tesla doesn't break
Speaker 4: it out as its own category.
Speaker 1: All right, why don't I either go to you or
Speaker 1: you come over here and we'll test drive a cyber truck.
Speaker 5: That sounds so let's do it.
Speaker 4: Yeah, if you're listening, it's a good idea.
Speaker 3: Hannah Elliott drove one. She loved it. It was in Bloomberg
Speaker 3: Pursuits a few months ago. She loves She is really cool.
Speaker 3: She is awesome. Hey, also awesome. Ed Ludlow, Coast of
Speaker 3: Bloomberg Technology on Bloomberg TV, joining us from San Francisco.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Can't Just
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Speaker 6: Change Well.
Speaker 3: Jamaica could be facing up to a billion dollars of
Speaker 3: damage as Hurricane Barrel durns through the Atlantic. It's the
Speaker 3: earliest ever Category five storm after devastating the Caribbean's Windward Islands.
Speaker 3: Girl's breakneck intensification into a major hurricane is a grim
Speaker 3: sign for the rest of the Atlantic storm season, which
Speaker 3: is still months away from its typical peak, and the
Speaker 3: latest indication of how extreme heat driven by climate change
Speaker 3: is triggering weather disasters around the world. We got with
Speaker 3: us Bloomberg's Mark Gongloff. He's Bloomberg opinion editor who covers
Speaker 3: climate change. He's here in our Bloomberg Interactive broker's studio. Mark.
Speaker 3: We talk a lot about how the stock market is
Speaker 3: not the economy. The economy is not the stock market.
Speaker 3: Weather is not climate change. Climate change is not weather,
Speaker 3: yet these things are intertwined. Please explain, Well, there have
Speaker 3: always been hurricanes, but the thing about this hurricane is
Speaker 3: that it is a kind of a freak, literal freak
Speaker 3: of nature. That is the as you mentioned, the earliest
Speaker 3: Category five in history. The other the scary thing about it,
Speaker 3: maybe even scarier thing about it, is that it went
Speaker 3: from zero to category four in like less than two days,
Speaker 3: which has only happened like six previous times in history.
Speaker 3: And usually that happens in September when the ocean water
Speaker 3: is really warm. And so we've got this thing where,
Speaker 3: yes it's a hurricane, Yes hurricanes happen, but the ocean
Speaker 3: water is like a bathtub. It's like September level hot
Speaker 3: right now. Part of that's al Nino again, Al Nino's happened,
Speaker 3: but the combination of El Nino and human made climate
Speaker 3: change has made ocean temperatures like almost literally off the
Speaker 3: charts hot. And so that is fueling this crazy storm.
Speaker 1: And so what does that mean for the rest of
Speaker 1: hurricane season If we're starting early, maybe.
Speaker 5: Will end early, maybe not? Or maybe will this just
Speaker 5: be super intense?
Speaker 7: Unfortunately, it looks like it's going to be super intense.
Speaker 7: Before it even started. The the number crunchers came up
Speaker 7: with forecasts for it that were like, again, like it
Speaker 7: was going to be a record season, thirty thirty big storms,
Speaker 7: seven major hurricanes which are like category three or above,
Speaker 7: and that which is more than like the usual like
Speaker 7: three and a lot most of those are going to
Speaker 7: affect the US in some way. This one may end
Speaker 7: up affecting like Texas, and so it's the water's going
Speaker 7: to stay hot, is not going to get any cold
Speaker 7: cooler until like October November and so, and then this
Speaker 7: rapid intensification thing that we're seeing is another feature that
Speaker 7: we can expect throughout this season.
Speaker 2: Two.
Speaker 3: Unfortunately, one thing I think about a lot markets. It's
Speaker 3: not climate migration, which you've shared with us before, and
Speaker 3: the idea of moving from one country to another country
Speaker 3: as a result of what's happening in your in your
Speaker 3: own climate, which we're seeing right now certainly, or is
Speaker 3: the effects of what's happening with climate, but something that's
Speaker 3: happening more local. The idea of not necessarily living in
Speaker 3: a part of the country because you're concerned about fires
Speaker 3: or hurricanes, right insurance rates in places like California, or
Speaker 3: being dropped by your insurance in California because of fire risk,
Speaker 3: and that essentially becoming a place for some people that's
Speaker 3: not inhabitable because they don't want to deal with that.
Speaker 3: What happens first, do we start to see like a
Speaker 3: reversal in what we're doing as humans to slow climate change,
Speaker 3: or do we just right off these parts of the
Speaker 3: country that get hit over and over again.
Speaker 7: Well, apparently what happens first is everybody moves into those
Speaker 7: parts of the country really in a big way. Florida, Texas, Arizona, Phoenix,
Speaker 7: where it's like one hundred and twenty people are like
Speaker 7: cooking on the streets, are the fastest growing places in
Speaker 7: the country, and so a lot of people are moving
Speaker 7: there because it's cheaper. It's going to stop, it's already stopping.
Speaker 7: That cheapness is already going away as they're discovering they
Speaker 7: can't maybe get a mortgage on their house, or insurance
Speaker 7: race or skyrocketing, or they can't get insurance at all,
Speaker 7: or they have to clean up. And so what you're
Speaker 7: seeing is some first we're going to see some maybe
Speaker 7: some gentrification of some of these areas where you know,
Speaker 7: if you're if you're wealthy, you're going to move to
Speaker 7: You're going to buy a house on the coast, and
Speaker 7: if it gets knocked over, you're gonna build it back
Speaker 7: up again. One of the things we maybe need to
Speaker 7: do is to stop sort of subsidizing that. Like, if
Speaker 7: that's what you want to do, cool, go for it.
Speaker 7: You know, I love the beach too, But if your
Speaker 7: house keeps getting knocked down, we don't have to pay
Speaker 7: for to rebuild it. And at some point, I mean,
Speaker 7: I personally think we need to work on some sort
Speaker 7: of managed migration, some sort of managed retreat from some
Speaker 7: of these areas. But the market is sort of forcing
Speaker 7: us into that right now because we're not doing the
Speaker 7: managed stuff. We're being forced to buy. You can't get
Speaker 7: insurance anymore, or your house is getting knocked down, that
Speaker 7: sort of thing.
Speaker 5: Let's talk about New Jersey.
Speaker 3: Oh, this is so near and dear to Mark's heart.
Speaker 3: I love to he loves New Jersey Transit. If you
Speaker 3: don't know this about Mark, he's got a real soft
Speaker 3: spot for New Jersey, I'm going.
Speaker 1: To take you completely at face value, and I want
Speaker 1: to talk about New Jersey. We were talking about the
Speaker 1: commute yesterday getting longer costler, and you wrote when it
Speaker 1: comes to New Jersey Transit last week is failing the
Speaker 1: climate test, and it feels like a lot of what
Speaker 1: we're talking about.
Speaker 5: I mean it's very local too.
Speaker 7: Yeah, well it's local, but it's also national because you know,
Speaker 7: it blows my mind. Tim is being facetious about my
Speaker 7: love for New Jersey Transit. As you probably guessed, it
Speaker 7: makes me crazy. It has put ten years on it's
Speaker 7: taken ten years off of my life. But it affects
Speaker 7: the entire country because there's this ten mile stretch between
Speaker 7: Newark and Penn Station that it has these wires, these
Speaker 7: electrical wires that were built around World War two, and it's.
Speaker 5: The only place in the country piece of history.
Speaker 7: It's a piece of history, and you can look out
Speaker 7: and gaze on it. When when your train is sitting
Speaker 7: there doing nothing for like three hours while you're waiting
Speaker 7: to move.
Speaker 3: Think Mark says, it's a piece of something.
Speaker 6: It is a piece of.
Speaker 7: Something, and this is a family show. I guess I'll
Speaker 7: say what it is. But these wires are ancient, and
Speaker 7: when it gets hot, they sag, and it gets they
Speaker 7: get tangled up in the trains, and then all the
Speaker 7: trains shut down. And there's a bunch of other nonsense
Speaker 7: like that there's a bridge that you have to raise
Speaker 7: and lower every time, like anything bigger than a sailboat
Speaker 7: needs to go through. All the traffic on the Eastern
Speaker 7: Seaboard shuts down. It's bananas, and so they're working on that,
Speaker 7: but it's going to take a long long time to
Speaker 7: fix it. They're talking about like fifteen sixteen years to
Speaker 7: fix it, which again, in my opinion, just as not
Speaker 7: just as a New Jersey transit commuter, but just as
Speaker 7: somebody who's like, you know, this is the this is
Speaker 7: the biggest rail line. This is also Amtrak, So it
Speaker 7: affects traffic going from DC to Boston. You know, this
Speaker 7: is a major artery. And if we're going to prepare
Speaker 7: for a world in which we maybe drive less, maybe
Speaker 7: burn less fossil fuels, we need better transit. And if
Speaker 7: we just want an economy that functions, if we want
Speaker 7: you know, productivity, we want people to come into this
Speaker 7: city and go in and out and just travel, then
Speaker 7: we need to fix this much more quickly. I think
Speaker 7: one thing that might be frustrating to some people, Mark
Speaker 7: is that there's a huge economic part of this too,
Speaker 7: the idea that in order for a city like New
Speaker 7: York to be an engine of economic growth for a
Speaker 7: country and for a region, there needs to be really
Speaker 7: viable transit. And we haven't seen that necessarily from the agencies. No, no,
Speaker 7: we haven't. And it's a it's a big political ask
Speaker 7: and I understand that too. I mean, my New Jersey
Speaker 7: transit train doesn't fill up your gas tank or put
Speaker 7: cereal in your and your cereal bowl. You know, people
Speaker 7: are worried about inflation, that sort of thing people have,
Speaker 7: but immediate economic concerns. The difficult thing, the political trick
Speaker 7: to to to turn here is to express to people
Speaker 7: just how much economic damage will happen if we don't
Speaker 7: fix this stuff now. You know, if you don't invest
Speaker 7: in mitigating climate change in the next decade, the cost
Speaker 7: of doing so will double in the decades to come.
Speaker 7: And so it is a matter of and we're just
Speaker 7: bad at this. I'm bad at this, I'm bad at
Speaker 7: saving for you know, retirement, I'm bad at everything, you know,
Speaker 7: saving thinking about the future, thinking beyond what I'm going
Speaker 7: to eat for dinner tonight. But we have to start
Speaker 7: thinking that way as a society. You know, how can
Speaker 7: we save money in the future by spending more now?
Speaker 3: Mark Onngoloff. He's a must read whenever he has a
Speaker 3: call him out. He's Bloomberg Opinion editor covering climate change.
Speaker 3: Joining us here in the Bloomberg Interactive at Broker's studio.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 3: New York's housing market facing the tightest squeeze in five decades,
Speaker 3: and little relief is in sight. A rental vacancy rate
Speaker 3: of just one point four percent is pushing the cost
Speaker 3: of living in New York City higher, and last month,
Speaker 3: developers filed the fewest permits in a decade to build
Speaker 3: new multi family buildings. Experts fear it all adds up
Speaker 3: to a bleak reality for for the most populous US city. Soon,
Speaker 3: New York may price out all but the very wealthy.
Speaker 3: Someone who's got a front row seat to everything happening
Speaker 3: in New York City real estate is Francis Katzen. She's
Speaker 3: founder of the Kats and team at Douglas Alloman. She's
Speaker 3: back with us here in our Bloomberg Interactive broker's studio.
Speaker 3: How are you.
Speaker 8: I'm well, thank you for having me.
Speaker 3: Yeah, thanks for joining us. When Charlie was talking about
Speaker 3: the yield on the tenure, you were like shaking your head, yeah,
Speaker 3: because certainly mortgage rates follow the tenuere but correct. To
Speaker 3: be fair, a lot of your a lot of your
Speaker 3: clients don't take mortgages.
Speaker 9: Well, I mean we just saw a huge barometer about that, right.
Speaker 9: We saw the market from basically four million to four
Speaker 9: point nine ninety five go down fifty nine point two
Speaker 9: percent in May and then basically uptick to fifty seven
Speaker 9: percent in non movement, meaning nothing's happening. Every other segment
Speaker 9: has this sort of movement, but the tenure treasury I'll
Speaker 9: used to basically track the thirty year fix. Now we're
Speaker 9: at seven percent on average. It's very stressful because the
Speaker 9: people that need that amount of borrowed leverage to get
Speaker 9: in to the upper movement, and there's an opportunity to
Speaker 9: get in much less can't make it happen. And that's
Speaker 9: the fifty nine point three percent reduction of non trading
Speaker 9: in that segment.
Speaker 8: Nuts.
Speaker 1: Well, when it comes to the people who are moving,
Speaker 1: I forget how many des there are, but divorce, death, diamonds, diapers.
Speaker 5: That's another one.
Speaker 1: Dis yeah when I get yeah, and then they buy
Speaker 1: a house, certain apartment or whatever. The people who are
Speaker 1: still moving, specifically in New York, I mean, are they moving.
Speaker 5: Because they have to? Are we seeing things loosen up
Speaker 5: on that front?
Speaker 9: Those are the only movements and they're far and few
Speaker 9: between because most are renting. That's why you're seeing a
Speaker 9: forty point five percent uptick in rental. It's the highest
Speaker 9: amount of Lisa's signed year of a year in like
Speaker 9: the six increase in like seven months.
Speaker 8: Nuts.
Speaker 9: So I think some are buying, but some are priced
Speaker 9: out or simply can't get their head around a seven
Speaker 9: percent versus a two and a half.
Speaker 1: I want to talk a little bit more about the
Speaker 1: rental market because I actually recently moved thanks. I was
Speaker 1: like two weeks ago. I had wanted to buy a
Speaker 1: year ago. I quickly discarded that dream, and then we
Speaker 1: found this this apartment, and the listing price or the
Speaker 1: price per month was just a little bit too high.
Speaker 1: So we said we'll pay you five hundred dollars less
Speaker 1: per month, and they said, okay, great as yours, which
Speaker 1: I was really surprised about. I know that it's just anecdata,
Speaker 1: but what is the state of the rental market? I mean,
Speaker 1: it seems like rents are still going up, but then
Speaker 1: you hear stories like mine.
Speaker 9: Well, you're lucky thinking, I can say, because what we're
Speaker 9: dealing with is multiple applications that are cannibalizing.
Speaker 4: Yeah.
Speaker 8: I just did it it for fifty East eighty third Street.
Speaker 8: We had seven.
Speaker 9: Apps and one is over five hundred bucks more. Actually
Speaker 9: we sold it. We rented it above the ask. The
Speaker 9: concessions are still very little. There's twenty seven point five
Speaker 9: percent more inventory now on the rent side, and I
Speaker 9: suspect because people don't want to take less than what
Speaker 9: they want for a sale, so they're basically converting. I
Speaker 9: think you're the anomaly. Honestly. I think there's such a
Speaker 9: tight look. It's a double edged sword. It's like way
Speaker 9: of a price rental or who can help you get
Speaker 9: the hit to make the numbers work until there's a
Speaker 9: refit that takes place maybe at the end of the
Speaker 9: first quarter of next year.
Speaker 8: I don't know.
Speaker 1: Yeah, I will say I think we were lucky. I
Speaker 1: promise it's a nice apartment when we moved into.
Speaker 5: But Manhattan, oh yeah, pretty sad.
Speaker 9: Well, that's one of the segments that's sort of very
Speaker 9: interesting actually for opportunity.
Speaker 1: Well tell me more. I mean I already signed my
Speaker 1: lease and were moved in. But interesting in what way.
Speaker 9: Depending on how far east you are from the west
Speaker 9: side of the East Side, if that even makes sense. Yeah,
Speaker 9: there's a little bit more negotiability because I think that
Speaker 9: people want to be close to their commute, so there's
Speaker 9: a little bit less desirability and a lot of that
Speaker 9: product maybe not as desirable based on post war lowest ceiling,
Speaker 9: not particularly the main event. In terms of inventory, you're
Speaker 9: competing with a lot more newer product. It seems to
Speaker 9: be a nice opportunity for family centric need next to
Speaker 9: schools to get in on the Upper east Side.
Speaker 3: Where are you seeing activity downtown?
Speaker 8: The usual Brooklyn? Oh my gosh on fire.
Speaker 3: Please keep going. I've been saying this for years. It's
Speaker 3: where all the cool people live.
Speaker 8: It really is.
Speaker 5: I think it's very that's popping relative to Brooklyn.
Speaker 8: I don't know.
Speaker 9: Going only, it's just it's it's exceeding price per square
Speaker 9: foot demand. People used to walk in and say, I
Speaker 9: want to look at West Village, Tribeca.
Speaker 8: And maybe Flat Iron.
Speaker 9: Now they're like they want to They'll do West Village
Speaker 9: and Brooklyn, and they'll do Green Point, or they'll do
Speaker 9: you know, Carroll Gardens, or they'll do Williamsburg whatever.
Speaker 8: But it's no longer this outlier. It's part of the day.
Speaker 3: I will say, walking around Williamsburg in this day and
Speaker 3: age is like walking around the West Village. Not in
Speaker 3: terms of not in terms of or maybe so in
Speaker 3: terms of retail, not in terms of the character by
Speaker 3: any means, but in terms of what retail is there,
Speaker 3: it's pretty incredible.
Speaker 9: It's incredible those those restaurants, the vibe, the indie feel
Speaker 9: of it, the independent nature of these stores. And in Greenpoint,
Speaker 9: it's cool. It's got it going on, and the pricing's
Speaker 9: only getting stronger.
Speaker 3: When your least expires. You can move to Brooklyn in
Speaker 3: two years.
Speaker 5: Absolutely not.
Speaker 1: I think I going to New Jersey after that. But
Speaker 1: I mean, after the second ND I'll tell you exactly
Speaker 1: where I moved. But I do want to clarify. I mean,
Speaker 1: we got a deal in this apartment, but I will
Speaker 1: say when we were looking around, maybe a little bit
Speaker 1: closer to the Bloomberg office, there were bidding wars for
Speaker 1: rental apartments.
Speaker 8: Thank you.
Speaker 1: We toured one beautiful apartment and then we followed up
Speaker 1: later that night over email, and they said, tell us
Speaker 1: what you would be willing to pay, because everyone who
Speaker 1: saw today wants it.
Speaker 3: We like it was like best and final.
Speaker 5: Yes, best and final for a rental.
Speaker 8: Yeah, that's what happens.
Speaker 9: That's what's happening right now on all of my product
Speaker 9: Oh yeah, yeah, oh yeah.
Speaker 5: And I mean how does this end? I mean, how
Speaker 5: do things get better.
Speaker 8: So it's a really good question, right, It's like the
Speaker 8: chicken or the egg. I think that. So here's the dilemma.
Speaker 8: Right now, nobody is really buying.
Speaker 9: At the same pace that they did in twenty twenty
Speaker 9: one and twenty twenty two, right, So there's this inherent
Speaker 9: opportunity to get in at a wholesale price and really
Speaker 9: buy up. The big issue for most is how to
Speaker 9: tolerate that really high carry. So my advice is you
Speaker 9: don't want to be buying when everybody else is buying
Speaker 9: because there is no inherent value to that. You're basically
Speaker 9: paying upmarket pricing based on supply and demand. So you
Speaker 9: can refy, and you can always refight, you can't refinance
Speaker 9: the purchase, and so the refi becomes the play how
Speaker 9: long do you have to carry that higher number? And
Speaker 9: to me, that's the inherent value I've heard.
Speaker 3: I've heard higher for longer in certain places, mainly this
Speaker 3: studio and from J. Powell and company.
Speaker 5: Out on the street.
Speaker 3: On the street are talking about in Brooklyn, No, we
Speaker 3: don't talk about it in Brooklyn. Before we let you go.
Speaker 3: I'm curious about where people move when they do list
Speaker 3: apartments with.
Speaker 8: You where are they going out of here?
Speaker 3: Like New Jersey, Like Katie said.
Speaker 8: Not necessarily, We've got people.
Speaker 9: Yeah, I mean some of it is New Jersey, some
Speaker 9: of it is Florida, some of it is going to
Speaker 9: be in west Chester. I mean, it's like they want
Speaker 9: to get out of the city. These are people who've
Speaker 9: had their run and they want to cash out, or
Speaker 9: they're at a time in their life where they don't
Speaker 9: want to do stairs anymore. Literally, big you know finance
Speaker 9: players who just were like, I've got too much real estate.
Speaker 9: I want to size down, but I want to take
Speaker 9: a rental and stand near my kids in the city.
Speaker 8: But I'm going out. I'm going to go get something
Speaker 8: somewhere else that's interesting. I wasn't that specific on that
Speaker 8: one because they're all so different.
Speaker 1: Specifically stairs though, they don't want to go up and
Speaker 1: down the stairs.
Speaker 9: Some very interesting Yeah, we're getting to the point where
Speaker 9: we don't want to do that. Yeah, And they're perfectly fine, but.
Speaker 3: It's not I feel like young parents too, who left
Speaker 3: strollers up and downstairs. They do that for a little while.
Speaker 8: And then they're like, so the townhouse is gone.
Speaker 1: Actually yeah, yeah, the townhouses they're beautiful from the outside.
Speaker 8: But in terms of practicality, don't leave your keys on
Speaker 8: the top floor.
Speaker 3: Yes, hey, France is always good to see you, really
Speaker 3: nice to see for joining us. That's Francis kats And
Speaker 3: of the Cats and Team. She's the founder of the
Speaker 3: Cats and Team over at Douglas Element.
Speaker 5: Mac the Journal.
Speaker 3: How about you let me drive?
Speaker 4: No, no, honey, please, gravel, I want to try.
Speaker 9: It's good question.
Speaker 2: This is the Drive to the Globe on Bloomberg Radio.
Speaker 3: Well, we just heard the numbers from Charlie Palette and
Speaker 3: Bill Maloney. The dal hired by four tenths of one percent,
Speaker 3: the S and P five hundred hired by happy percentage point,
Speaker 3: the Nasdaq hire by seven tenths of one percent.
Speaker 5: You lead with the Dow.
Speaker 3: Yeah, I'm just in order.
Speaker 5: Yeah, you guys do things different over here.
Speaker 9: Now.
Speaker 3: I don't always lead with the Dow.
Speaker 1: Yeah.
Speaker 5: I always lead with the S and P five hundred.
Speaker 3: Well, well that's pretty cool, Katie. Yeah, you're in our
Speaker 3: house now.
Speaker 1: I start large and then I go small. Russell two
Speaker 1: thousand is what I typically did.
Speaker 3: Well, what are your thoughts on the market today? On
Speaker 3: the trade?
Speaker 5: Uh, you know what I'm gonna say, it's pretty quiet
Speaker 5: out there, you know.
Speaker 3: Uh seen volume down absolutely.
Speaker 1: I mean this time yesterday volume was a little bit
Speaker 1: actually above average. And I think that's the last day
Speaker 1: this week that we're going to see that because things
Speaker 1: quiet down from here theoretically.
Speaker 3: Okay, well, let's see what so new Varghesese has to say.
Speaker 3: Sony's a vice president and global macro strategist at the
Speaker 3: Carson Group. Sony, it's good to have you with us
Speaker 3: for our drive to the clothes. How are you good?
Speaker 6: Thank you for having me. Awesome to be here.
Speaker 3: Thanks so much for joining us. What do you see
Speaker 3: out there beyond this week? I mean, certainly, I think
Speaker 3: it could. It's fair to say it could be a
Speaker 3: quiet week when it comes to trading, not so quiet
Speaker 3: when it comes to economic news and FED speakers. But
Speaker 3: as you look at the fifteen percent rise that we've
Speaker 3: seen in the first half of the year, what does
Speaker 3: the second half parten?
Speaker 6: I think momentum is one thing, So momentum begets. Momentum
Speaker 6: is like what I like to think of. Oh, I
Speaker 6: like to think about markets, and we've had a lot
Speaker 6: of that. Right from Q four of last year into
Speaker 6: Q one, we had a bit of a bertle in April,
Speaker 6: and then things came back. I mean, what's one thing
Speaker 6: that's happening is the market's gone up, but it's gone
Speaker 6: up on the back of earnings too. Out of the
Speaker 6: fifteen percent gain over the first half of the year,
Speaker 6: more than half, a little over a half has come
Speaker 6: from earnings growth and diffidends, right, So about seven to
Speaker 6: seven and a half percent, what's another point eighty basis
Speaker 6: points or so has come from diffidence growth, and so
Speaker 6: I think that's what powering markets hire. And next week
Speaker 6: we start again with earning season. One thing that's interesting
Speaker 6: is forward earnings expectations have been rising and on the
Speaker 6: back of margins too. Margins have been a big part
Speaker 6: of that. I think that's what continues to drive the
Speaker 6: market higher.
Speaker 1: So I definitely hear what you're saying that you think
Speaker 1: about the fundamentals, you think about the earnings picture, and
Speaker 1: it really helps justify what we're seeing at the broad
Speaker 1: benchmark level. But you think about forward earnings expectations, I mean,
Speaker 1: when do expectations just get too rosie? When does that
Speaker 1: bar just get too high and you start to see
Speaker 1: companies actually start to disappoint.
Speaker 6: I think companies are good at playing this game at
Speaker 6: the expectations game too, right, So as we get into
Speaker 6: earning season, just before earnings, you can see that maybe
Speaker 6: forward expectations tamp down a little bit and then it
Speaker 6: sort of slows down. One thing that's kind of been
Speaker 6: surprising over the last four weeks, really really since the
Speaker 6: end of earning season, forward expectations have actually gone up
Speaker 6: even more so. One thing I'm watching is do companies
Speaker 6: come in and say, wait a minute, you know you're
Speaker 6: stretched a little too far, analysts all of you, and
Speaker 6: maybe pull that back a little bit, right, So, because
Speaker 6: at the end of the day, I think companies write
Speaker 6: me expectations on the earnings call on the day of
Speaker 6: the earning so I think they know how to play
Speaker 6: that game. So I think from that front, it'll be
Speaker 6: a gradual shift if anything, if at all. Right, we
Speaker 6: just may not see a continued ramp up in forward
Speaker 6: earnings expectations that we have seen, but I don't think
Speaker 6: they go down unless Look when nomenal GDP growth is
Speaker 6: running around four and a half to five five and
Speaker 6: a half percent, you know that's a strong backdrop for
Speaker 6: earning scroll.
Speaker 3: Okay, from earnings, I want to go to the labor market.
Speaker 3: Because we've got Jolt's Job Openings labor turnover survey results
Speaker 3: today at ten o'clock. We actually saw that come in
Speaker 3: higher than estimated. It's a little bit of well, quite
Speaker 3: a bit of strength in the labor market. Not entirely
Speaker 3: fed friendly. How are you looking at the labor market?
Speaker 6: I think it's more I would characterize the Joel's report.
Speaker 6: I mean you look at openings of the total story,
Speaker 6: the totality of openings, hires, quits, layoffs, all of it.
Speaker 6: It was a bit of Actually, yes, openings went up
Speaker 6: to about just over eight million, but otherwise it was
Speaker 6: a bit of a snoozer, wasn't it. With hires didn't
Speaker 6: move it moved up to three point six percent. The
Speaker 6: hiring rate, quits were the quick rate was around two
Speaker 6: point two percent as well. Layoffs remain really lower on
Speaker 6: one point five one point six million, one percent as
Speaker 6: a percentage of the employed workforce. So more of the same.
Speaker 6: I think one thing that we're seeing is hiring is
Speaker 6: ease a lot right from last year and even let
Speaker 6: alone two years ago. But one why is net employment? Ye,
Speaker 6: it's because separations are low, wits low layoffs low. I think,
Speaker 6: like palels that today in CenTra that the labor market
Speaker 6: as east has cooled off, but it's happening gradually, right,
Speaker 6: It's not happening suddenly. That's a good thing, so that
Speaker 6: keeps them on track. At the same time, I think
Speaker 6: they are aware bring the FED back into this. They
Speaker 6: are aware of the double sided risk, right, the risk
Speaker 6: that they don't act and the labor market weekends even
Speaker 6: more and that becomes a snowball and avalanche eventually, versus
Speaker 6: the risk of undoing all the gains they made on
Speaker 6: inflation so far. So I think they're aware of both
Speaker 6: sides that And.
Speaker 1: Just a little quick point on the Joel style, I
Speaker 1: thought it was interesting you bring up the quits rate.
Speaker 1: It's been two point two percent for several readings in
Speaker 1: a row, so it's been interesting to watch that line
Speaker 1: pretty much do nothing but zooming out a little bit.
Speaker 1: Of course, we're talking about the labor market, we're talking
Speaker 1: about the economy. And that follows our conversation on earnings,
Speaker 1: and I'm curious, from where you're sitting, what is this
Speaker 1: market response to Are we really just paying attention and
Speaker 1: being driven by those corporate earnings or is this still
Speaker 1: a FED driven a macro driven market at this point.
Speaker 6: Between Q one and Q two, I would say it
Speaker 6: was definitely in response to response to earnings, because earnings
Speaker 6: have come out so strong, especially if you look at
Speaker 6: Q one. At the end of Q one, the SMP
Speaker 6: was up about ten percent. Most of that, about seven
Speaker 6: percentage points came from valuations. You can think of that
Speaker 6: like sentiments, right, and three percentage points are thereabouts from
Speaker 6: earnings growth. Now fast forward one more quarter, the SMP
Speaker 6: is up about fifteen percent. More than half of it
Speaker 6: has come from earnings growth, right, So it was an
Speaker 6: earning stroth, and I should mention margins too that powered that.
Speaker 6: Now again, not to ignore these things are all correlated, right,
Speaker 6: It's not like earnings is happening in a vacuum and
Speaker 6: the economy is doing something else. Now, the economy is
Speaker 6: also doing fine. You're seeing this inflation too, So I
Speaker 6: think markets are expecting the FED too, you know, drop
Speaker 6: rates on the back of those disinflatory trends, which I
Speaker 6: think the FED probably got hooked a little bit by
Speaker 6: the Q one data. But as Powell said today, you know,
Speaker 6: the disinflationary trend is back on. I mean, I don't
Speaker 6: you know, from our perspective, I don't know if we
Speaker 6: ever got out of the disinflaciory trend. It was just
Speaker 6: for various idiosyncratic reasons that Q one inflation came in part.
Speaker 6: But you know, we got to follow what the FED says, right.
Speaker 1: All right, Yeah, that's really interesting, and we didn't even
Speaker 1: really get to the politics of it all. But unfortunately,
Speaker 1: I think we're gonna have to leave it there are thanks,
Speaker 1: of course to so new of.
Speaker 5: Our geese, of the Carson Group.
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