WEBVTT - Bloomberg Wall Street Week - April 19th, 2024 0:00:00.280 --> 0:00:02.599 This is Bloomberg Wall Street Week. 0:00:02.680 --> 0:00:07.040 The global push into infrastructure, breaking the IPO logjam in text. 0:00:07.160 --> 0:00:09.120 The financial stories that sheep. 0:00:08.880 --> 0:00:12.040 Are work cutting inflation without losing jobs. Do we need 0:00:12.119 --> 0:00:14.560 rate cuts? And if so? How many? Investing in a 0:00:14.560 --> 0:00:16.120 time of geopolitical turmoil. 0:00:16.200 --> 0:00:18.560 Through the eyes of the most influential voices. 0:00:18.720 --> 0:00:22.480 Ten Rogueff Economists of Harvard, former FDIC had Shila Bert 0:00:22.680 --> 0:00:26.520 ge CEO, Larry Kulp, San Francisco FED President Mary Daily. 0:00:26.239 --> 0:00:30.240 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.320 --> 0:00:33.200 The IMF warns aboug growing US debt as it meets 0:00:33.200 --> 0:00:36.840 in Washington. Tesla lays off ten percent of its employees, 0:00:37.080 --> 0:00:39.440 and Fetcher Pal says he wants to wait to be 0:00:39.600 --> 0:00:42.960 sure about that inflation. This is Bloomberg Wall Street Week. 0:00:43.080 --> 0:00:46.360 I'm David Weston this week. Steve Ratner of will of 0:00:46.400 --> 0:00:48.960 Advisors on EV's losing their momentum. 0:00:49.200 --> 0:00:51.960 The industry has been criticized for decades, has been behind, 0:00:52.080 --> 0:00:54.160 and so they really wanted to be ahead of the curve. 0:00:54.360 --> 0:00:57.360 And Kathy Marcus of Pigeum on timing the commercial real 0:00:57.480 --> 0:00:58.160 estate market. 0:00:58.520 --> 0:01:02.160 June series could likely be a very attractive entry point. 0:01:15.120 --> 0:01:18.400 We begin with geopolitics at the top of the news 0:01:18.480 --> 0:01:21.360 again this week, in the wake of the Iranian strikes 0:01:21.360 --> 0:01:25.160 against Israel last weekend and then Israel's drone strikes in 0:01:25.200 --> 0:01:27.600 retaliation at the end of the week, we asked amb 0:01:27.600 --> 0:01:30.400 Bessador Richard has A's centerview partners and author of the 0:01:30.480 --> 0:01:33.120 news at are Home in a way, how much escalation 0:01:33.440 --> 0:01:34.319 we could see. 0:01:34.480 --> 0:01:40.039 We're potentially into a cycle of escalation, not definitely, and 0:01:40.120 --> 0:01:42.639 if it were to happen, I think the most obvious area, 0:01:42.680 --> 0:01:47.360 other than the emotional reaction to violence, there would be 0:01:47.400 --> 0:01:50.520 did the Iranians take steps to close down the straits 0:01:50.560 --> 0:01:51.160 of Homeboos? 0:01:51.440 --> 0:01:54.840 Did the calculus change, even if subtly, with the role, 0:01:55.000 --> 0:01:59.000 whether tacit or active, of Saudi Arabia, UAE and Jordan 0:01:59.240 --> 0:02:02.960 Because retrospect there are reports that in fact that helped 0:02:03.440 --> 0:02:06.000 with the Israeli defenses, which I think may be something 0:02:06.080 --> 0:02:07.080 different in that region. 0:02:08.560 --> 0:02:11.520 It does it shows you just how alienated they are 0:02:11.600 --> 0:02:14.680 from Iran and how worried they are about the Iranian threat. 0:02:15.080 --> 0:02:17.680 But at the same time, when Iran is not front 0:02:17.720 --> 0:02:20.320 and center, and if we were cycle back to Gaza 0:02:20.440 --> 0:02:23.440 or the West Bank, it's difficult to these countries to 0:02:23.520 --> 0:02:27.920 move closer to Israel given their differences over the Palestinian issue. 0:02:28.040 --> 0:02:30.359 So you've almost got a Middle East now that's operating 0:02:30.400 --> 0:02:34.600 along different fault lines, the Israeli Iranian one directly, what's 0:02:34.600 --> 0:02:37.320 happening in Gaza, what's happening in the North, which has 0:02:37.360 --> 0:02:41.600 gotten worse in the last few days, between Israel and Isbela. 0:02:42.480 --> 0:02:45.320 Many of us follow the news carefully, whether on TV 0:02:45.520 --> 0:02:48.360 or reading the New York Times, Wall Street Journal, but 0:02:49.000 --> 0:02:51.440 much of what's going on we don't see. It's below 0:02:51.480 --> 0:02:53.959 the services were you were part of that. When you're 0:02:53.960 --> 0:02:56.560 in the State Department with Colin pow you've been in 0:02:56.680 --> 0:02:59.600 those rooms. Give us some sense of what you think 0:02:59.639 --> 0:03:01.600 maybe going on that we don't know about it, and 0:03:01.600 --> 0:03:04.960 particularly what the US role is or should be in this. 0:03:05.520 --> 0:03:05.680 Well. 0:03:05.720 --> 0:03:07.760 The big thing is the is the US is trying 0:03:07.800 --> 0:03:10.399 to be reassuring to Israel at the same time they're 0:03:10.400 --> 0:03:13.600 trying to urge them not to respond against Iran. The 0:03:13.680 --> 0:03:15.640 parallel here, David is when I was at the White 0:03:15.639 --> 0:03:18.600 House in nineteen ninety one, it was the opening. 0:03:18.320 --> 0:03:20.119 Days of the go for Iraqi. 0:03:20.200 --> 0:03:23.959 Scuds were landing on Israel, and we the Bush administration 0:03:24.040 --> 0:03:27.520 Bush forty one prevailed upon the Israelis not to retaliate 0:03:27.560 --> 0:03:30.800 directly against Iraq. We were worried that could break apart 0:03:30.880 --> 0:03:33.640 this coalition we had built, but we were in a 0:03:33.760 --> 0:03:36.920 very strong position. Then. We had half a million American 0:03:36.960 --> 0:03:39.280 men and women in uniform over in the Middle East. 0:03:39.520 --> 0:03:40.760 We were at the center of it. 0:03:41.280 --> 0:03:44.400 The Biden administration does not have that kind of influence 0:03:44.840 --> 0:03:47.880 over Israel right now, so I think It's hand is 0:03:48.440 --> 0:03:49.280 somewhat weaker. 0:03:50.000 --> 0:03:51.640 A turn fo Roe, if you went to Ukraine, there 0:03:51.640 --> 0:03:53.240 are a lot of reports that the Russians are really 0:03:53.240 --> 0:03:55.720 putting more and more pressure on Ukrainian forces in the 0:03:55.720 --> 0:03:58.120 east of the country. And we have this debate going 0:03:58.120 --> 0:03:59.880 in the United States and efforts in Europe to try 0:03:59.880 --> 0:04:02.360 to give more support to Ukraine. How bad is the 0:04:02.400 --> 0:04:03.480 situation do you think. 0:04:04.160 --> 0:04:07.280 Well, it's bad, it's getting worse. The shortages of munitions, the. 0:04:07.240 --> 0:04:12.720 Shortages of equipment is it's frustrating, it's tragic, it's irresponsible, 0:04:12.840 --> 0:04:16.560 let's be honest. Hopefully the House of Representatives will correct 0:04:16.600 --> 0:04:19.719 this and reopen this figot of aid to Ukraine, and 0:04:19.760 --> 0:04:22.520 if they do, Ukraine will not be able to liberate 0:04:22.640 --> 0:04:24.960 Crimea or the Eastern Lands. But they'll be able to 0:04:25.000 --> 0:04:27.840 hold the Russians at bay, as they've pretty much done 0:04:27.920 --> 0:04:30.080 for the best part of the last two years. 0:04:30.080 --> 0:04:30.880 So this is critical. 0:04:30.920 --> 0:04:32.920 This is critical for not just for Ukraine, but for 0:04:32.960 --> 0:04:36.280 stability in Europe, and this is critical really for stability 0:04:36.320 --> 0:04:39.400 in the world. Chinese are taking note what we're doing here, 0:04:39.440 --> 0:04:41.600 and people are judging the United States. You know, when 0:04:41.600 --> 0:04:44.200 you're a great power, you don't have the luxury of 0:04:44.520 --> 0:04:47.200 doing things in isolation. What you do on one square 0:04:47.200 --> 0:04:50.799 of the chessboard affects inevitably how you're perceived by friends 0:04:50.880 --> 0:04:52.720 and foes alike everywhere else. 0:04:53.040 --> 0:04:55.200 Richard, you always take a strategic view of these things, 0:04:55.240 --> 0:04:57.400 not just tactical, but given what you just said about 0:04:57.440 --> 0:05:00.440 Ukraine at this point, realistically, are we, if I can 0:05:00.480 --> 0:05:02.560 put us together with Ukraine in the Western world, are 0:05:02.600 --> 0:05:04.480 we playing for a tie rather than a win? As 0:05:04.480 --> 0:05:07.159 you said, it's unlikely that Ukraine anytime soon is going 0:05:07.200 --> 0:05:08.839 to liberate the eastern part of the country. 0:05:09.080 --> 0:05:10.760 Look, tie is not as good as a win, but 0:05:10.800 --> 0:05:12.440 it's a hell of a lot better than a loss. 0:05:12.880 --> 0:05:16.120 And I believe given Russia's scale, given its war economy, 0:05:16.200 --> 0:05:19.599 the best Ukraine can get for the foreseeable future through 0:05:19.760 --> 0:05:23.640 military force is a tie. Then I think over time, 0:05:23.680 --> 0:05:26.240 and this may have to wait, David, beyond Vladimir or Putin. 0:05:26.520 --> 0:05:29.599 I think Ukraine, if it has close ties to the EU, 0:05:29.680 --> 0:05:32.320 close ties to NATO, we continue to arm it can 0:05:32.400 --> 0:05:35.680 play for a win, not through military liberation, but through 0:05:35.720 --> 0:05:39.279 diplomacy and the use of economic coercion. So you almost 0:05:39.320 --> 0:05:42.120 need to break this down in phases. For the foreseeable future, 0:05:42.480 --> 0:05:45.640 Let's get a tie. Let's get a situation where Ukraine 0:05:45.640 --> 0:05:49.720 can continue to exist as a viable, successful country, where 0:05:49.720 --> 0:05:53.400 Putin is frustrated. Then over time we can get Ukraine 0:05:53.480 --> 0:05:54.480 what's rightfully theirs. 0:05:55.400 --> 0:05:58.159 So Richard will of course try to address long term investors, 0:05:58.160 --> 0:06:01.040 big time investors here at Bloomberg. Give us your best 0:06:01.080 --> 0:06:02.919 advice that you would give to investors right now, you 0:06:02.960 --> 0:06:04.880 talk about the Middle East, you talk about Ukraine. By 0:06:04.920 --> 0:06:08.080 the way, we haven't mentioned China with now new tariffs 0:06:08.080 --> 0:06:11.040 on Chinese steel coming in in an election year, and 0:06:11.080 --> 0:06:13.480 we have an election year which itself may pose some 0:06:13.560 --> 0:06:16.679 real issues for the United States and even for financial markets. 0:06:16.760 --> 0:06:19.080 If you're an investor, what do you need to have 0:06:19.200 --> 0:06:21.280 on your dashboard. What do you need to be most 0:06:21.360 --> 0:06:22.040 concerned about. 0:06:23.680 --> 0:06:26.279 You need to have a seat belt and keep it fastened, David, 0:06:26.440 --> 0:06:30.440 more than anything else. Look, you've got the two parties competing. 0:06:31.880 --> 0:06:36.200 Over how tough they can be on China, over protectionism 0:06:36.240 --> 0:06:39.440 to some extent, which is all problematic, and obviously it 0:06:39.520 --> 0:06:43.680 has all sorts of consequences for inflation. The pressure will 0:06:43.680 --> 0:06:47.160 be to titan flows across the border whatever, even though 0:06:47.160 --> 0:06:50.560 that's a good thing, I would argue in terms of security. Also, again, 0:06:50.600 --> 0:06:53.599 that could add to inflationary pressures if we suddenly don't 0:06:53.640 --> 0:06:54.799 have so much. 0:06:54.680 --> 0:06:56.279 Labor that's available. 0:06:56.560 --> 0:06:59.960 I worry, David about the seventy five days between election 0:07:00.320 --> 0:07:03.560 day and inauguration day. That's the period four years ago 0:07:03.600 --> 0:07:05.200 when January sixth happened. 0:07:05.360 --> 0:07:06.960 Imagine this is a close contest. 0:07:07.360 --> 0:07:11.160 Imagine we have not just division and dysfunction, but political violence. 0:07:11.960 --> 0:07:14.320 A lot of people around the world could get unnerved. 0:07:14.320 --> 0:07:17.120 A lot of foes around the world might see that 0:07:17.160 --> 0:07:18.600 as a moment of opportunity. 0:07:18.880 --> 0:07:21.120 And then again after inauguration day. 0:07:20.960 --> 0:07:24.160 What would be functional or dysfunctional is what's happening over 0:07:24.240 --> 0:07:27.200 this aid bill. Is that an exception to the rule. 0:07:27.600 --> 0:07:30.000 Will that be the rule after the election. So I 0:07:30.000 --> 0:07:32.400 think there's lots of issues that obviously if mister Trump 0:07:32.440 --> 0:07:35.640 water win, does he try to undo a lot of 0:07:35.640 --> 0:07:38.600 the architecture in the world that has served this country 0:07:38.640 --> 0:07:40.800 well over seventy five years. 0:07:41.000 --> 0:07:42.920 Richard is always so very helpful to talk with you. 0:07:42.960 --> 0:07:43.320 Thank you. 0:07:43.440 --> 0:07:47.040 That is Richard has of Center View Partners. Market spent 0:07:47.120 --> 0:07:49.840 the week trying to come to terms with that geopolitical risk, 0:07:49.880 --> 0:07:51.280 and in the end it may have been the path of 0:07:51.320 --> 0:07:53.440 the FED and some doubts about big tech that drove 0:07:53.480 --> 0:07:55.160 equities as much as anything else, with the S and 0:07:55.200 --> 0:07:57.840 P five hundred down three percent for the week to 0:07:57.920 --> 0:08:00.920 ended forty nine sixty seven, dipping below that five thousand 0:08:00.920 --> 0:08:03.240 mark for the first time since February and well below 0:08:03.280 --> 0:08:05.840 the consensus year end number of our Bloomberg elves of 0:08:05.880 --> 0:08:09.360 fifty one seventy. The Nasdaq did even worse, giving up 0:08:09.400 --> 0:08:11.400 five and a half percent on the week, while the 0:08:11.480 --> 0:08:14.160 yield on the tenure was up just under ten basis 0:08:14.160 --> 0:08:16.760 points to end the week at four point six percent. 0:08:16.840 --> 0:08:19.480 To take us through it all, welcome back now, Peter Krauss, 0:08:19.720 --> 0:08:21.720 Chairman and CEO of Aperture. 0:08:21.320 --> 0:08:23.240 Investors, Peters such a delight to have you with us. 0:08:23.280 --> 0:08:24.720 Thank you. So give us your take on what the 0:08:24.760 --> 0:08:26.680 markets went through, because we did have the geopolitics at 0:08:26.680 --> 0:08:28.320 the beginning in the end, and then we had a 0:08:28.320 --> 0:08:29.800 fair amount of speculation about the FED. 0:08:29.840 --> 0:08:32.160 In between, well, there was some mixture. I agree with that. 0:08:32.480 --> 0:08:35.440 I do think the geo politics kind of resolved itself 0:08:35.520 --> 0:08:40.280 with Israel taking a somewhat modest approach to retaliation to 0:08:40.360 --> 0:08:43.679 the Iran attack. I think the bigger issue is the 0:08:43.720 --> 0:08:47.520 combination of how people perceive the Fed's behavior and what 0:08:47.559 --> 0:08:49.640 the FED will do over the course of the year, 0:08:50.240 --> 0:08:53.800 and how that interplays with the valuations in the marketplace. 0:08:54.400 --> 0:08:57.720 Coming into the year, as was true last year, people 0:08:57.760 --> 0:08:59.920 were quite optimistic that the FED was going to cut rates. 0:09:00.400 --> 0:09:03.440 Inflation data actually early in the year looked like it 0:09:03.520 --> 0:09:05.520 was benign and actually getting better, and then it got 0:09:05.559 --> 0:09:08.120 strong and then the FED said no, I'm not going 0:09:08.160 --> 0:09:08.760 to cut rates. 0:09:08.760 --> 0:09:11.880 In the market ultimately was very unhappy about. 0:09:11.679 --> 0:09:14.480 That, and so what I think we're seeing is people 0:09:14.600 --> 0:09:18.720 reassessing their positions as a result of the FED saying 0:09:18.800 --> 0:09:21.280 I'm not going to cut rates. There's also a scenario 0:09:21.800 --> 0:09:24.680 that people believe could be happening that if the FED 0:09:24.720 --> 0:09:29.040 doesn't cut rates and in fact companies reporting weaker earnings, 0:09:29.800 --> 0:09:32.640 then the FED maybe behind the curve and could create 0:09:32.679 --> 0:09:33.240 a recession. 0:09:33.640 --> 0:09:36.120 And that's also causing people to take off. 0:09:36.000 --> 0:09:38.120 Risk at the present time, and that may be some 0:09:38.160 --> 0:09:39.319 of what we see in the tech world. 0:09:39.520 --> 0:09:42.520 The FED says, at least it's concentrated on full employment 0:09:43.000 --> 0:09:45.880 and inflation period, not so much worry about what happens 0:09:45.920 --> 0:09:49.079 to corporations and the consequences of that. Do we believe them. 0:09:49.200 --> 0:09:52.640 I mean, they haven't been too concerned about loosening financial conditions. 0:09:53.080 --> 0:09:57.880 I think right now the economy is relatively strong and 0:09:58.200 --> 0:10:02.280 it's actually in the numbers, and I think the FED, 0:10:02.640 --> 0:10:05.280 when the economy is as strong, actually sticks to those 0:10:05.280 --> 0:10:06.080 two principles. 0:10:06.559 --> 0:10:09.200 If the economy really weak, then they would start. 0:10:08.960 --> 0:10:13.280 Worrying about the impact that corporations might have on the 0:10:13.320 --> 0:10:16.400 overall economy if in fact they started laying off workers, 0:10:16.720 --> 0:10:19.720 and if in fact they had defaults on their securities 0:10:19.960 --> 0:10:22.520 and we had real chaos in the market and the 0:10:22.559 --> 0:10:25.439 equity market then would go down dramatically, and then I 0:10:25.480 --> 0:10:26.520 think the FED would start. 0:10:26.320 --> 0:10:28.520 Paying attention to that indicator as well. 0:10:28.640 --> 0:10:31.199 But when the market and the economy is relatively strong. 0:10:31.320 --> 0:10:33.160 The Fed's going to stick to its two principles. 0:10:33.280 --> 0:10:35.560 The value of equity Designer stated is basically a discount 0:10:35.559 --> 0:10:38.880 of future cash flow, which you're expected to do, and 0:10:38.920 --> 0:10:42.160 that it's important what the discount rate is. So if 0:10:42.160 --> 0:10:44.600 the interest date's higher, that means the stock values today 0:10:44.640 --> 0:10:46.600 is lower, particularly with some of the stocks that are 0:10:46.600 --> 0:10:49.160 expecting it in the out years not having it right away. 0:10:49.679 --> 0:10:51.880 Is that a simple explanation for what may be going 0:10:51.920 --> 0:10:53.640 on right now that we were going too far too 0:10:53.720 --> 0:10:55.080 fast with the equity evaluations. 0:10:55.480 --> 0:10:58.840 Well, it's certainly part of the explanation, but I think 0:10:59.000 --> 0:11:05.480 it's maybe a little bit to one, you know, one indicator, 0:11:05.679 --> 0:11:07.360 one dimensional, thank you, one dimensional. 0:11:07.640 --> 0:11:08.840 I think it's I think. 0:11:08.720 --> 0:11:12.080 What we're seeing is more sophisticated than that, or more 0:11:12.200 --> 0:11:13.000 nuanced than that. 0:11:13.679 --> 0:11:17.040 I think that earnings are going to go up. 0:11:17.120 --> 0:11:22.239 The market is reflecting a relatively strong economy. The multiples 0:11:22.280 --> 0:11:25.320 at which stocks trade, which is related to the discount rate, 0:11:25.520 --> 0:11:28.040 that may be under pressure a bit. Remember we had 0:11:28.040 --> 0:11:30.960 a pretty fast increase in stock prices at the beginning 0:11:30.920 --> 0:11:33.599 of the year. Sp was up ten percent, NASDEK was 0:11:33.679 --> 0:11:36.760 up twelve or thirteen percent. Even the tal which was lagging, 0:11:36.920 --> 0:11:39.280 was up five or six percent in a short period 0:11:39.320 --> 0:11:41.439 of time, and that's usually what you get for a 0:11:41.480 --> 0:11:44.640 whole year. So I think that investors are taking a 0:11:44.640 --> 0:11:48.880 breather effectively, and they're reacting to this lack of FED 0:11:49.040 --> 0:11:52.520 enthusiasm for cutting rates. There's also another question of what 0:11:52.559 --> 0:11:54.320 does the yield curve shape look like. 0:11:54.840 --> 0:11:56.520 You know, the yield curve shape has been. 0:11:56.400 --> 0:11:59.480 Inverted for a very long period of time relative to history. 0:12:00.320 --> 0:12:04.520 That creates capital allocation that is not efficient, because when 0:12:04.520 --> 0:12:06.240 you have interest rates in the short end that are 0:12:06.280 --> 0:12:09.120 higher than industrates in the long end, investors then don't 0:12:09.160 --> 0:12:12.760 take risk. In fact, you know they're piling into shorter 0:12:12.880 --> 0:12:15.760 rates because they're more attractive than longer rates. That has 0:12:15.760 --> 0:12:19.760 a tendency to effectively retard economic growth. That's the main 0:12:19.880 --> 0:12:22.640 point of the FED actually having an inverted gild curve. 0:12:22.960 --> 0:12:24.600 But they can't keep it like that forever. 0:12:25.040 --> 0:12:26.720 Thank you so much for Peter Crass. It's really great 0:12:26.720 --> 0:12:30.960 to have you always. Peter Crasse of Avererateuur Investors. Coming up, 0:12:31.040 --> 0:12:33.760 we take a close look at the specific asset class 0:12:33.760 --> 0:12:37.079 of real estate, commercial and otherwise with Kathy Marcus of 0:12:37.160 --> 0:12:38.280 PGM real Estate. 0:12:38.600 --> 0:12:40.880 A lot of the Gyman gloom about the sector has 0:12:40.880 --> 0:12:41.960 been somewhat overblown. 0:12:44.000 --> 0:12:46.040 This is Wall Street Week on Bloomberg. 0:12:50.440 --> 0:12:54.680 This is Bloomberg Wall Street Week with David Weston from 0:12:54.800 --> 0:13:00.480 Bloomberg Radio. 0:13:02.320 --> 0:13:04.720 This is Wall Street Week. I'm David weston commercial real 0:13:04.840 --> 0:13:07.120 estate investments. At least some of them have had a 0:13:07.160 --> 0:13:09.679 hard time of late, but there may be signs that 0:13:09.720 --> 0:13:12.679 we've seen the worst of it. With news this week 0:13:12.760 --> 0:13:15.480 that Ken Griffin is going forward with his sixty two 0:13:15.600 --> 0:13:18.560 story office tower on Park Avenue, and Bank of America 0:13:18.600 --> 0:13:21.560 is saying it's seeing losses on its office property loans. 0:13:21.600 --> 0:13:24.560 Easy for the perspective of a major real estate investor. 0:13:24.679 --> 0:13:28.280 Welcome back now, Kathy Marcus, co CEO and Global Chief 0:13:28.320 --> 0:13:31.480 Operating Officer of PGIUM Real Estate. Okay, so tell us 0:13:31.480 --> 0:13:33.160 where we are on the cycle. Last time you were 0:13:33.160 --> 0:13:36.800 with us, you said it's coming. Basically, the repricing is 0:13:36.840 --> 0:13:38.840 not quite done yet. Where are we on the repricing? 0:13:39.600 --> 0:13:42.600 In terms of the repricing, it's about twenty percent on 0:13:42.760 --> 0:13:46.640 average across the sectors, and that can range from something 0:13:46.679 --> 0:13:50.280 like manufactured housing that has had really almost zero declines 0:13:50.600 --> 0:13:54.000 to office that's closer to thirty five percent, So at 0:13:54.000 --> 0:13:57.320 peach and real estate, we've projected that by the end 0:13:57.360 --> 0:13:59.440 of the day sort of peaked a tross, it'll be 0:13:59.480 --> 0:14:02.720 probably on average twenty two percent. So for a twenty 0:14:02.840 --> 0:14:06.480 we're very close, and so we're feeling a lot better. 0:14:06.640 --> 0:14:09.079 And you know, from my perspective, a lot of the 0:14:09.160 --> 0:14:12.560 gum and gloom about the sector has been somewhat overblown. 0:14:12.440 --> 0:14:14.080 So I'm sure you're not a market timer. 0:14:14.080 --> 0:14:15.839 At the same time, you have to have some sense 0:14:15.880 --> 0:14:18.400 of that cycle, because if you wait too long, the 0:14:18.400 --> 0:14:19.480 price can come back up. 0:14:19.440 --> 0:14:20.560 And you lose some opportunities. 0:14:20.600 --> 0:14:22.600 Do you have any sense of where it really makes 0:14:22.600 --> 0:14:24.000 sense you need to get back in. 0:14:24.360 --> 0:14:27.640 We're advising our investors that June thirtieth could likely be 0:14:27.800 --> 0:14:31.280 a very attractive entry point, and at that point it's 0:14:31.320 --> 0:14:34.280 possible that maybe you're a quarter early, maybe there's one 0:14:34.320 --> 0:14:37.480 more quarter of some value declines, but in this case, 0:14:37.560 --> 0:14:40.080 we really believe that it's better to be a quarter 0:14:40.120 --> 0:14:43.160 early than a quarter late. There's broad consensus that there's 0:14:43.240 --> 0:14:46.160 a lot of capital on the sidelines that is going 0:14:46.200 --> 0:14:47.960 to come in as soon as they feel like the 0:14:48.040 --> 0:14:49.440 values have bottomed. 0:14:49.800 --> 0:14:51.560 We've heard some talk about a wall of maturities? 0:14:51.680 --> 0:14:53.480 Is there a wall of matoritis coming where people are 0:14:53.520 --> 0:14:55.120 going to all have to refine its at the same 0:14:55.160 --> 0:14:56.080 time and have problems. 0:14:56.320 --> 0:14:58.120 There is a wall of maturity? Is There's lots of 0:14:58.120 --> 0:15:01.280 different numbers out there. One of the more popular numbers 0:15:01.320 --> 0:15:05.120 is two point two trillion dollars of maturities that are 0:15:05.120 --> 0:15:07.920 coming somewhere between two thousand and four and two thousand 0:15:08.240 --> 0:15:08.760 and seven. 0:15:09.120 --> 0:15:09.960 I've been at this. 0:15:10.000 --> 0:15:12.880 For a little over thirty five years. In that time, 0:15:12.960 --> 0:15:15.560 there have been at least three other times where a 0:15:15.640 --> 0:15:18.680 wall of maturities was about to crush us any minute, 0:15:18.760 --> 0:15:21.400 and it never came to fruition. And what happens in 0:15:21.400 --> 0:15:23.720 real life is very different than what a chart on 0:15:23.800 --> 0:15:25.800 a piece of paper is going to tell you. The 0:15:25.840 --> 0:15:29.360 fact is that borrowers get ahead of their maturities. Loans 0:15:29.360 --> 0:15:33.120 are extended, loans are restructured, and loans are repaid. And 0:15:33.160 --> 0:15:36.520 even in a very capital constrained environment like we're in 0:15:36.600 --> 0:15:39.080 right now, loans are being repaid every day. 0:15:40.000 --> 0:15:42.400 We tend in the media, we tend to talk about 0:15:42.600 --> 0:15:46.720 real estate or commercial real estate, but how specific is it? 0:15:46.800 --> 0:15:50.680 Even within the office space, some offices presumably are created 0:15:50.720 --> 0:15:51.720 more equal than others. 0:15:52.560 --> 0:15:55.640 There's a lot of divergence in the office space. And 0:15:55.720 --> 0:15:59.120 it's a really good point because in reality, especially if 0:15:59.160 --> 0:16:02.480 you look at the public markets, the public markets are 0:16:02.520 --> 0:16:06.440 pricing office the sector broadly as if it's a very 0:16:06.440 --> 0:16:10.000 homogeneous sector, and it's not a homogeneous sector. It's never 0:16:10.080 --> 0:16:13.560 been a homogeneous sector. But right now it's the least 0:16:13.560 --> 0:16:16.720 homogeneous that it's ever been. And there are you know, 0:16:16.800 --> 0:16:19.640 as many people have talked about winners and losers in 0:16:19.680 --> 0:16:21.760 the office sector, and what do the winners look like. 0:16:22.000 --> 0:16:25.640 The winners generally have some level of green certification. We've 0:16:25.680 --> 0:16:29.240 seen recently that there's about a fifty percent difference in 0:16:29.280 --> 0:16:33.760 the availability rate in office buildings that have some level 0:16:33.960 --> 0:16:38.800 of green certification are close to transit. There's a huge 0:16:38.840 --> 0:16:41.880 difference in how those assets are faring. 0:16:42.240 --> 0:16:44.280 At what point does it make sense to invest in 0:16:44.320 --> 0:16:47.600 an existing office building to bring it up upscale when 0:16:47.640 --> 0:16:50.160 it comes to things like green and office air quality. 0:16:50.520 --> 0:16:54.040 That's actually a very strong strategy right now, and in 0:16:54.080 --> 0:16:57.800 particular in Europe. In Europe, you know, one of the 0:16:57.840 --> 0:17:01.280 investment theses that we believe very strongly in is in 0:17:01.400 --> 0:17:06.720 taking existing office stock in someplace like Paris and investing 0:17:06.760 --> 0:17:10.560 to make it enable it to have the EESG certifications 0:17:10.800 --> 0:17:13.880 that both tenants and then ultimately investors are looking for. 0:17:14.080 --> 0:17:16.800 So we're going to talking about offices. What about multifamily dwellings, 0:17:16.800 --> 0:17:19.120 I mean, where does that stand? Because we've seen some 0:17:19.160 --> 0:17:21.280 sort of a suppression in the building of new homes. 0:17:21.400 --> 0:17:25.119 Yes, for sure, we're seeing a suppression in supply of 0:17:25.200 --> 0:17:28.440 new homes, but also in sales of existing homes, which 0:17:28.480 --> 0:17:30.560 is really being driven by interest rates. 0:17:30.560 --> 0:17:31.960 So we're very we have a. 0:17:31.880 --> 0:17:34.919 Lot of conviction around the living sectors broadly, and in 0:17:34.960 --> 0:17:39.440 particular in this idea of people renting for longer. More 0:17:39.520 --> 0:17:43.480 people renting for longer, so there's a lot of growth 0:17:43.600 --> 0:17:48.680 in the population cohort that tends to rent. Single family dwellings, 0:17:48.920 --> 0:17:53.040 and single family dwellings from an ownership perspective, are less 0:17:53.080 --> 0:17:55.680 and less attainable by people because of a lot of 0:17:55.760 --> 0:17:59.080 trends that we've talked about, this longer, higher for longer 0:17:59.119 --> 0:18:01.320 interest rate and environment, the fact that there's not a 0:18:01.320 --> 0:18:04.520 lot of supply of new homes. All of that leads 0:18:04.560 --> 0:18:07.439 to you know, less and less people being able to 0:18:07.680 --> 0:18:10.639 afford to actually buy a single family home and therefore 0:18:10.680 --> 0:18:14.480 they're going to rent one. So historically the pricing difference, 0:18:14.800 --> 0:18:19.280 the cost between renting a single family home and owning 0:18:19.320 --> 0:18:21.879 a single family home has been somewhere in the thirty 0:18:21.880 --> 0:18:24.680 to thirty five percent range. Now, because of interest rates 0:18:24.720 --> 0:18:27.840 and the cost of for sale housing, it's closer to 0:18:27.920 --> 0:18:31.960 seventy percent. So it's really like an historic delta, and 0:18:32.000 --> 0:18:34.000 it's going to take a while. It will come down, 0:18:34.280 --> 0:18:36.160 but we think it's actually going to be years before 0:18:36.160 --> 0:18:37.760 it even gets close to forty percent. 0:18:38.480 --> 0:18:38.920 One of the. 0:18:38.840 --> 0:18:40.720 Topics we taluched on this last time as well, and 0:18:40.760 --> 0:18:43.720 that's data centers. We hear about data center's an awful lot. 0:18:43.840 --> 0:18:46.560 Where is that market right now? Is it close to saturation? 0:18:47.200 --> 0:18:50.399 I wouldn't say it's close to saturation. From a demand perspective, 0:18:50.680 --> 0:18:53.600 there's still a tremendous amount of demand. There's a very 0:18:53.640 --> 0:18:56.200 long lead time in terms of you know, bringing a 0:18:56.280 --> 0:18:58.919 data center online a law if you will, It can 0:18:58.960 --> 0:19:00.800 be years because first you have to get the power 0:19:01.440 --> 0:19:04.000 and then you start building. So it really can be 0:19:04.080 --> 0:19:07.360 and there are certain markets in the US where it's 0:19:07.480 --> 0:19:10.560 years to get the power that you need. And if 0:19:10.560 --> 0:19:14.399 you think about, you know, the investment thesis and the 0:19:14.440 --> 0:19:18.680 demand side. You think about the ubiquity of cloud computing, 0:19:19.000 --> 0:19:23.280 and you think about the continued adoption of AI. You know, 0:19:23.480 --> 0:19:27.040 we see a long term demand fundamental here and you 0:19:27.080 --> 0:19:29.400 know you also it's very much of a landlord's market 0:19:29.720 --> 0:19:33.200 right now, and the rental increases have been double digit 0:19:33.240 --> 0:19:34.639 and are expected to continue. 0:19:34.760 --> 0:19:36.600