WEBVTT - Market Volatility, Real Estate, And The Supply Chain

0:00:00.800 --> 0:00:04.040
<v Speaker 1>Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

0:00:04.040 --> 0:00:06.920
<v Speaker 1>my co host Matt Miller. Every business day we bring

0:00:06.960 --> 0:00:11.520
<v Speaker 1>you interviews from CEOs, market pros, and Bloomberg experts, along

0:00:11.560 --> 0:00:15.560
<v Speaker 1>with essential market moving news. Find the Bloomberg Markets podcast

0:00:15.560 --> 0:00:18.479
<v Speaker 1>called Apple Podcasts or wherever you listen to podcasts, and

0:00:18.480 --> 0:00:22.159
<v Speaker 1>at Bloomberg dot com slash podcast. Well, the I m

0:00:22.200 --> 0:00:26.680
<v Speaker 1>F today cut World growth forecast on weaker US and

0:00:27.080 --> 0:00:30.200
<v Speaker 1>China outlooks. Let's get the latest. We can do that

0:00:30.240 --> 0:00:33.400
<v Speaker 1>with Ellen Zetner, chief US economists from Morgan Stanley. She

0:00:33.479 --> 0:00:35.279
<v Speaker 1>grew up in Austin, Texas. Did you know that? Man?

0:00:36.200 --> 0:00:38.400
<v Speaker 1>I did know that. You did know that? Okay, so

0:00:39.600 --> 0:00:42.760
<v Speaker 1>business Ohio was awesome, But I am a little jealous.

0:00:42.840 --> 0:00:44.479
<v Speaker 1>I feel like growing up in Texas would be the

0:00:44.520 --> 0:00:46.599
<v Speaker 1>second best. That would be cool thing to Growing up

0:00:46.600 --> 0:00:50.240
<v Speaker 1>in Austin is like the it town right now. Back

0:00:50.280 --> 0:00:52.280
<v Speaker 1>then it was like up and coming right. Let's ask going,

0:00:52.400 --> 0:00:54.920
<v Speaker 1>I know, Ellen, Ellen, tell us about Austin. Should we

0:00:55.000 --> 0:00:57.800
<v Speaker 1>be relocating there like all the kids are doing. I've

0:00:57.840 --> 0:01:00.840
<v Speaker 1>been there since the nineteen seventies. The I own real

0:01:00.960 --> 0:01:03.200
<v Speaker 1>estate there, so I'm on the winning end of it

0:01:03.360 --> 0:01:05.800
<v Speaker 1>right now. But it's a shock if you grew up

0:01:05.840 --> 0:01:08.320
<v Speaker 1>there and you go back to visit, it's like, what,

0:01:08.480 --> 0:01:11.759
<v Speaker 1>I have to wait for a reservation? What do you mean,

0:01:11.800 --> 0:01:15.280
<v Speaker 1>I can't just walk in anywhere. Can tell you. As

0:01:15.319 --> 0:01:17.959
<v Speaker 1>shocking as it is, if you grew up there, it

0:01:18.120 --> 0:01:20.360
<v Speaker 1>is still a really cool town when you go back

0:01:20.400 --> 0:01:24.559
<v Speaker 1>to visit. I just love the old keep Austin weird,

0:01:24.840 --> 0:01:28.040
<v Speaker 1>you know that. I like the new awesome because they

0:01:28.040 --> 0:01:31.880
<v Speaker 1>put in CODA and I've seen UM Formula one there.

0:01:32.000 --> 0:01:35.399
<v Speaker 1>I've seen Moto g P there. It's absolute and absolute

0:01:35.400 --> 0:01:37.200
<v Speaker 1>blasts such a great trap. I think that was a

0:01:37.200 --> 0:01:39.080
<v Speaker 1>good move when they when they put it in there. Hey,

0:01:39.280 --> 0:01:42.080
<v Speaker 1>you know, I used to do economic development modeling for

0:01:42.200 --> 0:01:44.760
<v Speaker 1>the State of Texas when GW was still governor there,

0:01:44.760 --> 0:01:47.400
<v Speaker 1>and boy, we really did a good job at attracting

0:01:47.400 --> 0:01:50.080
<v Speaker 1>those big venues. You know. It's a great place to

0:01:50.120 --> 0:01:52.560
<v Speaker 1>do business, by the way, you know what it I

0:01:52.600 --> 0:01:56.120
<v Speaker 1>often think of the housing um bubble or the housing situation.

0:01:56.200 --> 0:01:58.280
<v Speaker 1>Maybe it's a bubble, maybe not um when I think

0:01:58.320 --> 0:02:00.919
<v Speaker 1>of Austin, how do you look at you know, the

0:02:01.000 --> 0:02:04.760
<v Speaker 1>incredible rise in prices that we've seen coupled with lack

0:02:04.800 --> 0:02:08.400
<v Speaker 1>of inventory. Well, the lack of inventory is always the

0:02:08.480 --> 0:02:11.360
<v Speaker 1>number one reason why that pushes up prices, and of

0:02:11.360 --> 0:02:14.120
<v Speaker 1>course homebuilders finally catch up and then that's usually when

0:02:14.120 --> 0:02:17.720
<v Speaker 1>the cycle turns. But I think this time, you know,

0:02:18.680 --> 0:02:23.000
<v Speaker 1>we did some work back in nineteen pre COVID that

0:02:23.080 --> 0:02:25.120
<v Speaker 1>where we looked at the demographic trends in the U

0:02:25.240 --> 0:02:29.760
<v Speaker 1>S where millennials plus gen Z our biggest demographic bubble ever.

0:02:30.080 --> 0:02:32.680
<v Speaker 1>I mean, they dwarf the baby boomers, and when we

0:02:32.760 --> 0:02:37.600
<v Speaker 1>looked at their preferences and how they approach housing, it's

0:02:37.600 --> 0:02:41.680
<v Speaker 1>set up for a really strong trend of fundamental demand

0:02:41.840 --> 0:02:45.320
<v Speaker 1>for housing and specifically single family rentals because they still

0:02:45.360 --> 0:02:48.079
<v Speaker 1>want mobility UM and want to be able to work wherever.

0:02:48.280 --> 0:02:51.640
<v Speaker 1>Then COVID hits and it's that additional catalyst. So I

0:02:51.680 --> 0:02:54.080
<v Speaker 1>think we're seeing a lot of magration patterns around the

0:02:54.200 --> 0:02:57.560
<v Speaker 1>US that we're already gravitating toward these areas with high

0:02:57.600 --> 0:03:01.040
<v Speaker 1>home prices already, that have just continued UH to pressure

0:03:01.040 --> 0:03:04.200
<v Speaker 1>those areas higher. Now, eventually home prices will be so

0:03:04.280 --> 0:03:07.040
<v Speaker 1>out of line with with fundamental income that it will

0:03:07.080 --> 0:03:11.000
<v Speaker 1>push people back towards UH multi family units or delay

0:03:11.000 --> 0:03:14.160
<v Speaker 1>their home buying decisions. But you've got to reach that point.

0:03:14.440 --> 0:03:17.760
<v Speaker 1>We also had obviously incredibly low interest rates plus a

0:03:17.760 --> 0:03:21.040
<v Speaker 1>ton of fiscal stimulus. Did that add to it? And

0:03:21.080 --> 0:03:25.280
<v Speaker 1>are we set up for a reckoning? Now? Yeah? Well

0:03:25.320 --> 0:03:27.200
<v Speaker 1>I think so certainly it added to it. I mean,

0:03:27.200 --> 0:03:30.040
<v Speaker 1>I think out of out of all that we've talked about,

0:03:30.040 --> 0:03:34.200
<v Speaker 1>including covid UM, the number one determined is always the

0:03:34.240 --> 0:03:37.000
<v Speaker 1>cost of housing, which the interest rates are a big

0:03:37.080 --> 0:03:40.080
<v Speaker 1>chunk of that. So you've got record low mortgage rates

0:03:40.640 --> 0:03:43.640
<v Speaker 1>UM that had moved lower from already very low levels

0:03:44.040 --> 0:03:46.320
<v Speaker 1>uh in the last cycle. So that was that was

0:03:46.480 --> 0:03:50.680
<v Speaker 1>a huge boost behind the REFI way, freeing up more income,

0:03:51.120 --> 0:03:54.320
<v Speaker 1>getting more people into homes being able to afford them.

0:03:54.400 --> 0:03:57.640
<v Speaker 1>So you know, naturally, right as the cycle gets uh,

0:03:57.680 --> 0:03:59.880
<v Speaker 1>you know, the economy gets tighter and tighter, the FED

0:04:00.000 --> 0:04:02.520
<v Speaker 1>does want to slow that down, and they slow that

0:04:02.560 --> 0:04:05.560
<v Speaker 1>down by restricting access to credit, and they're doing that

0:04:05.680 --> 0:04:09.360
<v Speaker 1>by raising rates. UM. Now how quickly they raise rates

0:04:09.360 --> 0:04:11.680
<v Speaker 1>will matter. I mean, they don't want to choke off

0:04:11.680 --> 0:04:15.520
<v Speaker 1>economic activity. Uh. And so you know, the fear out

0:04:15.560 --> 0:04:17.120
<v Speaker 1>there in the market is that the Fed's going to

0:04:17.240 --> 0:04:20.640
<v Speaker 1>hike in March and just keep on going almost you know,

0:04:20.720 --> 0:04:24.279
<v Speaker 1>being deaf to any kind of incoming data or financial conditions.

0:04:24.279 --> 0:04:26.800
<v Speaker 1>And that's just not the case, right The FED will

0:04:26.800 --> 0:04:31.039
<v Speaker 1>still be uh. FED path will be determined by incoming data. UM.

0:04:31.040 --> 0:04:33.479
<v Speaker 1>But I tell you what I'm most interested that was

0:04:33.560 --> 0:04:36.640
<v Speaker 1>also the case last cycle, and that is that, unlike

0:04:37.560 --> 0:04:42.080
<v Speaker 1>pre GFC cycles, the household balance sheet is locked in

0:04:42.279 --> 0:04:45.400
<v Speaker 1>at an extraordinarily low fixed rate. So one thing that

0:04:45.440 --> 0:04:47.400
<v Speaker 1>we saw in the last cycles, what's what we when

0:04:47.440 --> 0:04:51.160
<v Speaker 1>we finished the leveraging, we never levered back up. And

0:04:51.440 --> 0:04:55.919
<v Speaker 1>the longer that the rates remain low, the more chance

0:04:56.000 --> 0:04:58.039
<v Speaker 1>you give for the balance sheet to transition into those

0:04:58.160 --> 0:05:01.320
<v Speaker 1>very low fixed rates. The majority of debt we hold

0:05:01.360 --> 0:05:04.799
<v Speaker 1>is in mortgages, and the outstanding yield on effective yield

0:05:04.800 --> 0:05:08.400
<v Speaker 1>on all of those mortgages is in the threes uh.

0:05:08.560 --> 0:05:12.960
<v Speaker 1>And so it's just we're just very insensitive to a

0:05:13.080 --> 0:05:15.800
<v Speaker 1>rising interest rate environment right now in terms of the

0:05:15.839 --> 0:05:20.279
<v Speaker 1>household side. It's encouraging talk to just real quickly. What

0:05:20.360 --> 0:05:21.800
<v Speaker 1>was your take on the I m F move today

0:05:21.839 --> 0:05:24.919
<v Speaker 1>to cut the GDP forecasts? Is that surprise you at all? No?

0:05:25.120 --> 0:05:26.800
<v Speaker 1>I mean, I think you know what we've seen is

0:05:26.839 --> 0:05:28.240
<v Speaker 1>that the I m F tends to get into this

0:05:28.279 --> 0:05:33.280
<v Speaker 1>pattern of lagging behind changes in in street forecasts. I mean,

0:05:33.760 --> 0:05:36.240
<v Speaker 1>you know when the Build Back Better Plan, so so

0:05:36.400 --> 0:05:39.920
<v Speaker 1>as you mentioned it's driven by China and US downgrades. Well,

0:05:39.960 --> 0:05:44.039
<v Speaker 1>I downgraded first quarter GDP growth um sharply on the

0:05:44.080 --> 0:05:46.960
<v Speaker 1>back of the Build Back Better Plan that failed to pass,

0:05:47.000 --> 0:05:49.880
<v Speaker 1>simply because we had assumed that that child tax credit

0:05:50.279 --> 0:05:53.279
<v Speaker 1>that low income households were getting would be extended, and

0:05:53.360 --> 0:05:56.839
<v Speaker 1>so that takes a chunk out of uh personal consumption

0:05:57.160 --> 0:06:00.520
<v Speaker 1>in the first quarter. Besides the omicron effects, you've got

0:06:00.520 --> 0:06:03.840
<v Speaker 1>to account for the omicron effects as well. Uh. You know,

0:06:03.880 --> 0:06:06.000
<v Speaker 1>we haven't even started to get the really bad data

0:06:06.080 --> 0:06:08.840
<v Speaker 1>yet because we haven't gotten January data yet. So as

0:06:08.839 --> 0:06:11.080
<v Speaker 1>we're moving into February and we're already on the other

0:06:11.120 --> 0:06:13.800
<v Speaker 1>side of o Macron, we're gonna be getting January data

0:06:13.880 --> 0:06:16.359
<v Speaker 1>confirming just how big of us slow down there was,

0:06:16.400 --> 0:06:18.200
<v Speaker 1>so you could get as low as a one handle

0:06:18.240 --> 0:06:21.359
<v Speaker 1>on GDP this quarter. But the FEDS looking through that

0:06:21.600 --> 0:06:23.520
<v Speaker 1>going to give that a pass. And here's why, because

0:06:23.520 --> 0:06:25.760
<v Speaker 1>there are so many factors you can point to that

0:06:25.800 --> 0:06:28.040
<v Speaker 1>are one off. So I think they're going to deliver

0:06:28.120 --> 0:06:29.839
<v Speaker 1>that March hike. I know you're gonna be talking to

0:06:29.920 --> 0:06:32.359
<v Speaker 1>Danielle about that. She's a she's a she's a great

0:06:32.360 --> 0:06:35.880
<v Speaker 1>gal um. But but yeah, but I think the growth

0:06:35.960 --> 0:06:38.640
<v Speaker 1>scare is real and I think people have been building

0:06:38.680 --> 0:06:40.560
<v Speaker 1>that into their forecast. All right, Ellen, thank you so

0:06:40.640 --> 0:06:42.400
<v Speaker 1>much for joining us to really appreciate getting your thoughts.

0:06:42.440 --> 0:06:44.839
<v Speaker 1>Ellen's that in their chief US economist from Morgan Stanley

0:06:45.080 --> 0:06:53.280
<v Speaker 1>and an avid fly Fisher person. All right, let's talk

0:06:53.279 --> 0:06:55.800
<v Speaker 1>about the consumer. It's some better and expected numbers out today.

0:06:55.880 --> 0:06:58.560
<v Speaker 1>Joining us to break it down. Lyn Franco, director of

0:06:58.560 --> 0:07:01.440
<v Speaker 1>the Economic Indicators and Serve is at the conference board.

0:07:01.800 --> 0:07:04.840
<v Speaker 1>Lynn talked to us about the consumer. How is he

0:07:05.200 --> 0:07:09.600
<v Speaker 1>and or she looking? The consumer is holding up, I

0:07:09.600 --> 0:07:12.600
<v Speaker 1>think remarkably well. Even though we did have a bit

0:07:12.600 --> 0:07:16.040
<v Speaker 1>of a dip in January where we saw the index decline,

0:07:16.680 --> 0:07:19.680
<v Speaker 1>but mixed news there. We saw the consumers gave the

0:07:19.720 --> 0:07:22.880
<v Speaker 1>present situation a stronger rating than they had in December,

0:07:23.520 --> 0:07:27.280
<v Speaker 1>a little bit of softening in terms of their expectations. Um,

0:07:27.320 --> 0:07:32.400
<v Speaker 1>but holding up remarkably well. So talk to us about

0:07:32.560 --> 0:07:33.800
<v Speaker 1>you know, one of the things I think when I

0:07:33.800 --> 0:07:36.800
<v Speaker 1>think about the consumer is the labor market. You know,

0:07:36.920 --> 0:07:38.800
<v Speaker 1>I keep hearing about there are three or four or

0:07:38.800 --> 0:07:42.360
<v Speaker 1>five million people that are not back in the labor market.

0:07:42.880 --> 0:07:44.680
<v Speaker 1>Yet I see for sales, I mean, I see, you know,

0:07:44.720 --> 0:07:47.760
<v Speaker 1>help wanted signs everywhere. How does the labor market play

0:07:47.760 --> 0:07:51.560
<v Speaker 1>into consumer confidence data that you see, It plays a

0:07:51.680 --> 0:07:55.520
<v Speaker 1>very big role. And actually we're getting some very positive readings.

0:07:55.560 --> 0:07:57.840
<v Speaker 1>So in terms of the percent of consumers who tell

0:07:57.920 --> 0:08:00.440
<v Speaker 1>us that jobs are plentiful, we did a little bit

0:08:00.480 --> 0:08:05.040
<v Speaker 1>of a dip from nine to one, but by historical standards,

0:08:05.080 --> 0:08:08.120
<v Speaker 1>a very strong reading and the present to tell us,

0:08:08.360 --> 0:08:10.480
<v Speaker 1>you know, jobs are hard to get dipped a little bit.

0:08:10.600 --> 0:08:13.160
<v Speaker 1>So I think they're very positive on the labor market,

0:08:13.520 --> 0:08:16.280
<v Speaker 1>a little bit of softening in their expectations um, but

0:08:16.480 --> 0:08:19.880
<v Speaker 1>still strong. So we expect that this, coupled with, you know,

0:08:19.920 --> 0:08:22.160
<v Speaker 1>some of the wage increase that we're seeing, to help

0:08:22.600 --> 0:08:26.080
<v Speaker 1>continue to support consumer confidence in the months ahead. Is

0:08:26.120 --> 0:08:29.360
<v Speaker 1>there any concern about FED rate rises? I mean, we've

0:08:29.400 --> 0:08:32.520
<v Speaker 1>gone from expecting too to seeing three in the dots

0:08:32.640 --> 0:08:35.719
<v Speaker 1>to now Goldman Sachs forecast four saying the risk is

0:08:35.760 --> 0:08:40.640
<v Speaker 1>to the upside. Um. Does this hit consumer confidence at all?

0:08:42.120 --> 0:08:44.920
<v Speaker 1>It's not really hitting consumer confidence. I mean, we do

0:08:45.000 --> 0:08:48.840
<v Speaker 1>ask a question about interest rates. Um, and it's not

0:08:48.920 --> 0:08:52.240
<v Speaker 1>really having any significant impact. You know, we'll see if

0:08:52.280 --> 0:08:56.080
<v Speaker 1>it does, and when it occurs, soften growth a little

0:08:56.120 --> 0:08:59.040
<v Speaker 1>bit and that could hurt confidence, but it's not having

0:08:59.040 --> 0:09:03.520
<v Speaker 1>an impact. Neither is inflation. Surprisingly, we've actually seen back

0:09:03.559 --> 0:09:08.760
<v Speaker 1>to back months declined in consumers inflation expectations, so which

0:09:08.800 --> 0:09:12.320
<v Speaker 1>seems that at least the heightened uncertainty and concern that

0:09:12.360 --> 0:09:15.480
<v Speaker 1>they were expressing in November seems to be cooling a bit.

0:09:16.120 --> 0:09:18.160
<v Speaker 1>All right, Lynn, thank you so much. We appreciate that

0:09:18.320 --> 0:09:22.040
<v Speaker 1>as always getting that monthly data check from you. Linn Franco,

0:09:22.080 --> 0:09:25.439
<v Speaker 1>Director of Economic Indicators and Surveys at the conference board.

0:09:30.160 --> 0:09:33.640
<v Speaker 1>On the train today, Matt, there was like again nobody

0:09:33.679 --> 0:09:35.720
<v Speaker 1>on the train of my commute in here. That's awesome.

0:09:35.760 --> 0:09:39.720
<v Speaker 1>People are not coming into the office. I don't know

0:09:39.800 --> 0:09:41.920
<v Speaker 1>when or if they ever will. I don't know what

0:09:41.960 --> 0:09:45.840
<v Speaker 1>that means for the people who own these beautiful, huge,

0:09:45.920 --> 0:09:49.320
<v Speaker 1>sky high office towers here in New York City. UM,

0:09:49.360 --> 0:09:51.320
<v Speaker 1>but let's check in and get some with a professional

0:09:51.320 --> 0:09:55.400
<v Speaker 1>who might have some color on that. Hassam Naji, President

0:09:55.440 --> 0:09:57.840
<v Speaker 1>and CEO of Marcus and Mill Chup. That's a publican

0:09:57.880 --> 0:09:59.839
<v Speaker 1>traded company on the n Y S C M M.

0:10:00.080 --> 0:10:02.760
<v Speaker 1>I for those folks that are interested in the real

0:10:02.840 --> 0:10:05.800
<v Speaker 1>estate bis So Hassam, thanks so much for joining us here.

0:10:06.400 --> 0:10:08.080
<v Speaker 1>I don't get it. I don't think people are coming

0:10:08.080 --> 0:10:11.040
<v Speaker 1>back to work. I don't know who is going to

0:10:11.160 --> 0:10:13.720
<v Speaker 1>ever take up a lot of this commercial office space.

0:10:14.000 --> 0:10:17.040
<v Speaker 1>What do you think, Well, there's definitely a transition going

0:10:17.080 --> 0:10:20.280
<v Speaker 1>on within the office sector. If you zoom out, commercial

0:10:20.320 --> 0:10:24.080
<v Speaker 1>real estate has such a menu of options from drug

0:10:24.200 --> 0:10:27.520
<v Speaker 1>stores and fast food restaurants being very, very stable and

0:10:27.640 --> 0:10:31.800
<v Speaker 1>have done very well throughout the pandemic. We call necessity retail,

0:10:31.920 --> 0:10:37.160
<v Speaker 1>grocery anchored stores ironically in retail doing very well. Apartments

0:10:37.200 --> 0:10:40.400
<v Speaker 1>on fire because demand is at record levels, and you

0:10:40.440 --> 0:10:44.000
<v Speaker 1>switch over to the office buildings and seniors housing facilities,

0:10:44.000 --> 0:10:46.679
<v Speaker 1>those are the two where there's a lot of uncertainty

0:10:46.679 --> 0:10:50.360
<v Speaker 1>and clouds over future demand because of what's happened through

0:10:50.360 --> 0:10:54.880
<v Speaker 1>the pandemic. People are changing lifestyles, they are working virtually

0:10:54.880 --> 0:10:58.720
<v Speaker 1>and they're going to be we believe, for forever. But

0:10:58.920 --> 0:11:02.480
<v Speaker 1>that doesn't mean that the office market is in for

0:11:02.760 --> 0:11:05.920
<v Speaker 1>a permanent doom and gloom. In that you see the

0:11:06.160 --> 0:11:09.600
<v Speaker 1>new demand forming new company formations are at a record

0:11:09.679 --> 0:11:14.000
<v Speaker 1>level just in the last nine months of New York

0:11:14.000 --> 0:11:16.920
<v Speaker 1>at it almost two hundred thousand jobs. A lot of

0:11:16.960 --> 0:11:20.559
<v Speaker 1>those jobs are being executed virtually right now. But as

0:11:20.600 --> 0:11:24.600
<v Speaker 1>the virus becomes more of a kind of a part

0:11:24.600 --> 0:11:27.760
<v Speaker 1>of normal life and not a constant speed bump and

0:11:27.880 --> 0:11:31.520
<v Speaker 1>you know resurgence and panic kind of on and off

0:11:32.120 --> 0:11:35.600
<v Speaker 1>interruption to business. In the next two to three years,

0:11:35.960 --> 0:11:38.080
<v Speaker 1>we really do believe people will come back into the

0:11:38.120 --> 0:11:41.400
<v Speaker 1>office because of the collaboration and teamwork. Demand will be

0:11:41.480 --> 0:11:45.080
<v Speaker 1>less because people will be in a hybrid work model,

0:11:45.520 --> 0:11:48.520
<v Speaker 1>partly virtual, partly in the office. But new demand is

0:11:48.559 --> 0:11:51.920
<v Speaker 1>going to also offset some of that short term. Remember

0:11:52.000 --> 0:11:54.760
<v Speaker 1>most leases that are in place now, sty'll have three

0:11:54.760 --> 0:11:57.640
<v Speaker 1>and a half to four years before they expire, so

0:11:57.720 --> 0:12:01.320
<v Speaker 1>the tenants are obligated to pay rent, so it's it's

0:12:01.400 --> 0:12:04.240
<v Speaker 1>kind of a buffer. But as these leases roll over,

0:12:04.920 --> 0:12:07.560
<v Speaker 1>that's where the uncertainty kicks in with a new demand

0:12:07.600 --> 0:12:10.840
<v Speaker 1>offset the hybrid work model or is the office market

0:12:10.920 --> 0:12:14.480
<v Speaker 1>in for some you know revaluations and price corrections. Well,

0:12:14.480 --> 0:12:18.280
<v Speaker 1>and we've seen kind of a bifurcation, you know, on

0:12:18.360 --> 0:12:22.000
<v Speaker 1>Wall Street there are some firms that are saying, hey,

0:12:22.000 --> 0:12:26.080
<v Speaker 1>you know what, I'm gonna reduce my UM commercial real

0:12:26.200 --> 0:12:30.760
<v Speaker 1>estate bills and UM save some costs that way because

0:12:30.800 --> 0:12:33.040
<v Speaker 1>I don't need as many people in the office. Others

0:12:33.120 --> 0:12:35.640
<v Speaker 1>are saying, you know what, we need a lease extra

0:12:35.720 --> 0:12:39.600
<v Speaker 1>space because we can't be sitting these people, um like

0:12:39.720 --> 0:12:42.320
<v Speaker 1>little hamsters right next to each other and they're tiny

0:12:42.320 --> 0:12:45.800
<v Speaker 1>little bullpen the way I do it here, desks, I'm

0:12:45.840 --> 0:12:47.720
<v Speaker 1>not I'm not criticizing the way we do it here.

0:12:48.040 --> 0:12:50.400
<v Speaker 1>I love the way we do it, but um, not

0:12:50.520 --> 0:12:52.800
<v Speaker 1>everybody likes to be sitting in these little desks and

0:12:52.840 --> 0:12:54.960
<v Speaker 1>not have your own office and not have any space

0:12:55.040 --> 0:12:57.560
<v Speaker 1>and not have any privacy. So you know, you're seeing

0:12:57.840 --> 0:13:01.520
<v Speaker 1>um people go at this and differ of ways. That's

0:13:01.520 --> 0:13:06.439
<v Speaker 1>exactly right. And we're seeing more team oriented space reconfiguration.

0:13:07.160 --> 0:13:10.040
<v Speaker 1>You're seeing some of the tech giants acquire new office

0:13:10.040 --> 0:13:13.960
<v Speaker 1>buildings and and the fact that many many industries rely

0:13:14.120 --> 0:13:17.760
<v Speaker 1>heavily on that in person training, in person interaction, and

0:13:17.800 --> 0:13:19.800
<v Speaker 1>I do think I mean look at the IBM, for example,

0:13:20.200 --> 0:13:23.559
<v Speaker 1>that led the charge in telecommuting over the last fifteen years,

0:13:23.559 --> 0:13:25.560
<v Speaker 1>and a few years ago they put an end to

0:13:25.600 --> 0:13:28.800
<v Speaker 1>that because of the inefficiencies it was creating for the

0:13:29.000 --> 0:13:33.000
<v Speaker 1>cultural part of their team, collaboration and so on. People

0:13:33.080 --> 0:13:35.200
<v Speaker 1>want to be together, they want to work together. I

0:13:35.240 --> 0:13:37.720
<v Speaker 1>just don't think we need to come back into the office,

0:13:37.800 --> 0:13:41.560
<v Speaker 1>you know, from eight to five every single day. Thanks

0:13:41.559 --> 0:13:44.560
<v Speaker 1>to technology, the hybrid work model is actually you know,

0:13:44.640 --> 0:13:48.040
<v Speaker 1>much more efficient. But from an office perspective, you have

0:13:48.120 --> 0:13:50.040
<v Speaker 1>to wait to see what's going to make up the

0:13:50.640 --> 0:13:52.679
<v Speaker 1>you know, that reduced demand. The good news is that

0:13:52.880 --> 0:13:56.480
<v Speaker 1>there's very little construction at a at a national level.

0:13:56.520 --> 0:13:59.640
<v Speaker 1>There are pockets where we had some buildings underway, and

0:13:59.679 --> 0:14:03.160
<v Speaker 1>so apply is going to be a short term problem

0:14:03.200 --> 0:14:05.840
<v Speaker 1>in light of the lower demand. But all in all,

0:14:06.080 --> 0:14:09.520
<v Speaker 1>the office market is out of the historical cycle of

0:14:09.720 --> 0:14:13.040
<v Speaker 1>overbuilding and then crashing that hasn't happened for the last

0:14:13.080 --> 0:14:17.760
<v Speaker 1>two cycles. Miami, what a story there? Maybe just because

0:14:17.760 --> 0:14:19.760
<v Speaker 1>I'm in New York and but I just hear so

0:14:19.800 --> 0:14:25.680
<v Speaker 1>many stories of people relocating businesses, relocating personally residences to Miami.

0:14:26.120 --> 0:14:28.040
<v Speaker 1>Is there any end in sight for the growth of

0:14:28.040 --> 0:14:33.480
<v Speaker 1>South Florida, well, South Florida, Texas, Arizona, Nevada, all these

0:14:33.640 --> 0:14:38.200
<v Speaker 1>U states that are benefiting from the outmigration from California

0:14:38.240 --> 0:14:40.480
<v Speaker 1>and New York and some of the other states are

0:14:40.520 --> 0:14:43.640
<v Speaker 1>actually seeing a surgeon office demand. To your point, We've

0:14:43.680 --> 0:14:48.760
<v Speaker 1>done some case studies for our office investor clients showing

0:14:48.880 --> 0:14:50.960
<v Speaker 1>that in some of these pockets there is a dearth

0:14:51.000 --> 0:14:53.840
<v Speaker 1>of office space and there's gonna be a development wave

0:14:53.960 --> 0:14:57.680
<v Speaker 1>because demand is the exceeding supply that migration was happening

0:14:57.720 --> 0:15:04.200
<v Speaker 1>pre COVID, but based we got significantly elevated after the

0:15:04.200 --> 0:15:07.800
<v Speaker 1>pandemic hit. We don't see it slowing down so much

0:15:07.920 --> 0:15:12.440
<v Speaker 1>this year by going into it'll level off, and urban

0:15:12.440 --> 0:15:16.600
<v Speaker 1>America in New York in particular, San Francisco, Chicago will

0:15:16.600 --> 0:15:19.120
<v Speaker 1>take time to recover. But three or five years from now,

0:15:19.120 --> 0:15:21.880
<v Speaker 1>I think we'll be talking about what a great investment

0:15:21.880 --> 0:15:26.400
<v Speaker 1>opportunity urban real estate was during this time. Alright, Hassam,

0:15:26.720 --> 0:15:29.440
<v Speaker 1>we really appreciate getting your thoughts. As Sam Nagy, president

0:15:29.440 --> 0:15:32.600
<v Speaker 1>and CEO of Marcus and Mill chap that is a

0:15:32.640 --> 0:15:36.240
<v Speaker 1>real estate development company. But you know, it's interesting you

0:15:36.360 --> 0:15:39.760
<v Speaker 1>cannot get an apartment in New York City. Um, but

0:15:39.800 --> 0:15:41.520
<v Speaker 1>I just don't know where all the people are. I

0:15:41.560 --> 0:15:43.080
<v Speaker 1>don't know where they're going, what are they doing. They're

0:15:43.080 --> 0:15:45.080
<v Speaker 1>not coming into the offices, So I'm not sure what

0:15:45.120 --> 0:15:52.440
<v Speaker 1>they're doing. I want to bring in Laura Moody. She

0:15:52.760 --> 0:15:56.760
<v Speaker 1>is CEO and co founder of Bobby, which is a

0:15:56.800 --> 0:16:00.000
<v Speaker 1>baby formula delivery startup. But she's also a board member

0:16:00.840 --> 0:16:04.160
<v Speaker 1>of some startups that have become big businesses that you know,

0:16:04.280 --> 0:16:08.520
<v Speaker 1>task Rabbit for example, um eat Reel a former product

0:16:08.560 --> 0:16:13.080
<v Speaker 1>operations exact at Google Finance, and we're glad to have

0:16:13.120 --> 0:16:16.440
<v Speaker 1>her on the program. Laura, thanks so much for your time. UM.

0:16:16.840 --> 0:16:19.680
<v Speaker 1>Talk to us first of all about what it's like

0:16:19.800 --> 0:16:25.480
<v Speaker 1>doing business in startups or younger UM firms during the pandemic.

0:16:25.520 --> 0:16:26.920
<v Speaker 1>I mean, do you have to just be able to

0:16:26.920 --> 0:16:28.720
<v Speaker 1>pivot a lot faster? Do you have to be a

0:16:28.720 --> 0:16:33.120
<v Speaker 1>lot more agile lovely to be here with you? I

0:16:33.120 --> 0:16:36.960
<v Speaker 1>mean absolutely, UM, I mean now more than ever, the

0:16:37.120 --> 0:16:40.119
<v Speaker 1>need to be agile to watch the change in consumer

0:16:40.200 --> 0:16:43.280
<v Speaker 1>trends is more important than ever. But I will say

0:16:43.320 --> 0:16:46.840
<v Speaker 1>I think as a startup, and especially one that predominantly

0:16:46.840 --> 0:16:51.360
<v Speaker 1>operates online, were given an opportunity to leave those consumer

0:16:51.440 --> 0:16:56.240
<v Speaker 1>trains a lot easier and better than most companies can. So, Laura,

0:16:56.280 --> 0:17:00.400
<v Speaker 1>talk to us about again. Your company, FOSS focuses primarily

0:17:00.400 --> 0:17:04.200
<v Speaker 1>in a baby formula delivery market. How is your business

0:17:04.320 --> 0:17:10.960
<v Speaker 1>changed during the pandemic? Well, um, so many people. You've

0:17:11.000 --> 0:17:14.840
<v Speaker 1>probably seen the news and the scarcity of instant formulate

0:17:14.920 --> 0:17:18.119
<v Speaker 1>today on retail shelves. So being a direct consumer instant

0:17:18.200 --> 0:17:21.720
<v Speaker 1>formula company, we've seen a huge trend of people coming

0:17:21.760 --> 0:17:24.760
<v Speaker 1>online over the last year. The instant formula category has

0:17:24.800 --> 0:17:29.000
<v Speaker 1>seen the increase alone in people coming to purchase online

0:17:29.720 --> 0:17:32.760
<v Speaker 1>in two four of last year. Bobby really saw that

0:17:32.880 --> 0:17:35.919
<v Speaker 1>impact with a hundred and eighty seven percent growth in

0:17:35.920 --> 0:17:40.320
<v Speaker 1>our sales. So we need to remove the anxiety of

0:17:40.440 --> 0:17:43.760
<v Speaker 1>someone showing up to retailer not being able to buy

0:17:43.760 --> 0:17:47.520
<v Speaker 1>the instant formula of choice and have peace of mind

0:17:47.640 --> 0:17:49.960
<v Speaker 1>that when they need their formula, they can get it

0:17:50.040 --> 0:17:54.120
<v Speaker 1>on time wherever they are. By the way, as someone

0:17:54.160 --> 0:17:55.879
<v Speaker 1>who recently had a baby, I've got a lot of

0:17:55.880 --> 0:17:58.600
<v Speaker 1>experience with this, and I got a couple of questions.

0:17:59.080 --> 0:18:02.360
<v Speaker 1>Number One, it does seem to me, although maybe this

0:18:02.440 --> 0:18:06.560
<v Speaker 1>is pure snobbery, that the European formula market is better

0:18:06.600 --> 0:18:09.080
<v Speaker 1>than the US formula market in terms of the end product.

0:18:09.119 --> 0:18:12.600
<v Speaker 1>Is that right? I love that you're calling this out,

0:18:13.119 --> 0:18:16.040
<v Speaker 1>you know, I know I always hate pointing fingers at

0:18:16.080 --> 0:18:19.960
<v Speaker 1>any one formula or a collective of formulas to say

0:18:19.960 --> 0:18:22.439
<v Speaker 1>one is better than another. But you're right, there is

0:18:22.480 --> 0:18:26.080
<v Speaker 1>a clamoring for EU formula across this country, and it

0:18:26.160 --> 0:18:28.960
<v Speaker 1>really comes down to the way the recipe is designed

0:18:29.160 --> 0:18:33.320
<v Speaker 1>and the standards. If you look at the EU market,

0:18:33.520 --> 0:18:37.000
<v Speaker 1>the last time that they have updated their standards it

0:18:37.359 --> 0:18:40.639
<v Speaker 1>was in two thousand nineteen. In comparison to here in

0:18:40.680 --> 0:18:43.560
<v Speaker 1>the US, the last time was in the nineteen eighties.

0:18:44.080 --> 0:18:47.639
<v Speaker 1>So to put simply, maybe there is some truth to

0:18:47.720 --> 0:18:51.560
<v Speaker 1>people turning to EU formula. I also have noticed that,

0:18:52.560 --> 0:18:54.119
<v Speaker 1>and this may be worse than the EU than in

0:18:54.160 --> 0:18:59.879
<v Speaker 1>the US, there was a huge push from UM for

0:19:00.280 --> 0:19:03.919
<v Speaker 1>hospitals and doctors towards breastfeeding, which is great. We all

0:19:03.920 --> 0:19:06.359
<v Speaker 1>know it's very healthy way to raise kids, but I

0:19:06.400 --> 0:19:08.919
<v Speaker 1>don't know that everyone understands how difficult it can be

0:19:09.000 --> 0:19:12.680
<v Speaker 1>for a lot of people, and there is a m

0:19:13.119 --> 0:19:17.400
<v Speaker 1>a stigma on, at least in the EU mothers who

0:19:18.000 --> 0:19:21.080
<v Speaker 1>can't do it and go straight to formula. Is that

0:19:21.359 --> 0:19:23.280
<v Speaker 1>you think going to change as we come up with

0:19:23.359 --> 0:19:27.800
<v Speaker 1>healthier UM formulas and more nutritious ways to feed babies.

0:19:28.920 --> 0:19:32.080
<v Speaker 1>I mean, I mean, first off, it's amazing to hear

0:19:32.119 --> 0:19:34.720
<v Speaker 1>you as a new dad. Even just highlighting this, we

0:19:34.800 --> 0:19:36.720
<v Speaker 1>need to have the conversation and we need to be

0:19:36.760 --> 0:19:39.960
<v Speaker 1>more open about it. The reality is the world that

0:19:40.040 --> 0:19:43.359
<v Speaker 1>we're living in today does not match the world that

0:19:43.440 --> 0:19:45.639
<v Speaker 1>we used to live in, and there's a lot of

0:19:45.680 --> 0:19:48.760
<v Speaker 1>reasons that we need to be open to accepting formula

0:19:48.800 --> 0:19:51.159
<v Speaker 1>as an alternative. You look at what it means to

0:19:51.200 --> 0:19:54.200
<v Speaker 1>become a parent or even to preparent in today's world.

0:19:54.600 --> 0:19:59.439
<v Speaker 1>There's more adoption, surrogacy, same sex couples, moms who have

0:19:59.440 --> 0:20:02.880
<v Speaker 1>a doubleness sectively underlying health conditions. I mean, you finish

0:20:03.840 --> 0:20:07.199
<v Speaker 1>so many as Titus. I mean that is that was

0:20:07.240 --> 0:20:09.320
<v Speaker 1>my issue. I don't think a lot of men understand

0:20:09.359 --> 0:20:12.960
<v Speaker 1>how serious it is and how uh and how widespread

0:20:12.960 --> 0:20:14.760
<v Speaker 1>it is. In any case, it's been great talking to you,

0:20:14.840 --> 0:20:16.920
<v Speaker 1>and I hope we can talk to you again. Laura. UM.

0:20:17.640 --> 0:20:20.240
<v Speaker 1>I'm obviously interested in the subject, and we are all

0:20:20.280 --> 0:20:23.399
<v Speaker 1>all interested in um starting these businesses and helping our

0:20:23.440 --> 0:20:25.800
<v Speaker 1>society grow in a faster and healthier way. Laura Modi

0:20:25.880 --> 0:20:30.359
<v Speaker 1>is the CEO and co founder of Bobby. Thanks for

0:20:30.400 --> 0:20:33.920
<v Speaker 1>listening to the Bloomberg Markets podcast. You can subscribe and

0:20:33.960 --> 0:20:38.000
<v Speaker 1>listen to interviews of Apple Podcasts or whatever podcast platform

0:20:38.080 --> 0:20:41.359
<v Speaker 1>you prefer. I'm Matt Miller. I'm on Twitter at Matt

0:20:41.440 --> 0:20:45.760
<v Speaker 1>Miller three. On False Sweeney, I'm on Twitter at pt Sweeney.

0:20:45.800 --> 0:20:48.479
<v Speaker 1>Before the podcast, you can always catch us worldwide at

0:20:48.480 --> 0:20:49.240
<v Speaker 1>Bloomberg Radio