WEBVTT - Bloomberg Wall Street Week - November 25, 2022 0:00:00.520 --> 0:00:03.760 This is Bloomberg Wall Street Week. We turn our attention 0:00:03.880 --> 0:00:07.120 to the markets this week. U s CPIM members reinforcing 0:00:07.160 --> 0:00:10.639 concerns about inflation. The financial stories that chief are worth 0:00:10.720 --> 0:00:13.480 a really different reaction to Mark. It's more indications of 0:00:13.640 --> 0:00:16.239 just how hot the U. S. Economy really is. Through 0:00:16.239 --> 0:00:19.520 the eyes of the most influential voices Larry Summers, the 0:00:19.560 --> 0:00:22.880 former Treachery Secretary, Katherine Keating, CEO of v n Y Moms, 0:00:22.960 --> 0:00:26.160 Sam's l Sharmon and founder of a creating group Investment 0:00:26.200 --> 0:00:30.280 in Bloomberg Wall Street Week with David Weston from Bloomberg Radio, 0:00:31.120 --> 0:00:34.519 giving thanks for what we've been through, for downs as 0:00:34.560 --> 0:00:37.599 well as ups, and for the opportunities yet ahead of us. 0:00:38.040 --> 0:00:41.240 This is a special Thanksgiving edition of Bloomberg Wall Street Week. 0:00:41.600 --> 0:00:58.280 I'm David Weston. This week, America celebrates that holiday known 0:00:58.320 --> 0:01:02.200 as Thanksgiving, when we gather with family and friends, remembering 0:01:02.240 --> 0:01:05.560 a time nearly four hundred years ago when British settlers 0:01:05.600 --> 0:01:08.560 feasted to celebrate their survival and to give thanks to 0:01:08.600 --> 0:01:12.119 the American Indians who made it possible. This year, most 0:01:12.160 --> 0:01:14.120 of us can be thankful that we haven't had to 0:01:14.160 --> 0:01:18.520 survive scenarios anything like those early Massachusetts colonists. Though we 0:01:18.600 --> 0:01:21.319 are mindful of all those who have lost loved ones 0:01:21.360 --> 0:01:24.880 to the pandemic over the last three years. We all 0:01:25.040 --> 0:01:31.080 lost something, a collective suffrage, a collective sacrifice, a year 0:01:31.400 --> 0:01:35.440 filled with the loss of life, the loss of livy, 0:01:35.600 --> 0:01:38.399 and to Ukrainians who have spent most of the year 0:01:38.560 --> 0:01:41.680 valiantly fighting off Russian invaders at a great cost of 0:01:41.720 --> 0:01:45.360 blood and treasure. We will not give up, We will 0:01:45.400 --> 0:01:48.600 not lose. We will fight till the end, at sea, 0:01:49.000 --> 0:01:51.800 in the air. We will continue fighting for our land, 0:01:52.320 --> 0:01:54.960 whatever the cost. But for the rest of us, it 0:01:55.000 --> 0:01:57.880 has been a year of great uncertainty as the economy 0:01:57.880 --> 0:02:00.960 has come back, but at the cost of mounting inflation. 0:02:01.400 --> 0:02:05.600 Inflation is extremely high. The levels were at we're unimaginable 0:02:05.800 --> 0:02:08.480 eighteen months ago, and so we have to get that 0:02:08.560 --> 0:02:11.919 under control and the beginning of belt tightening that has 0:02:11.919 --> 0:02:14.760 played havoc with the plans of so many, as reflected 0:02:14.800 --> 0:02:17.880 in markets that have struggled week to week. One of 0:02:17.880 --> 0:02:20.560 the places on global Wall Street, particularly hard hit by 0:02:20.560 --> 0:02:24.480 the higher rates and greater uncertainty has been mergers and acquisitions, 0:02:25.280 --> 0:02:27.880 And we sat down with one of the consummate dealmakers. 0:02:28.000 --> 0:02:30.919 Sam Zell to talk about the climate and how it's 0:02:30.960 --> 0:02:35.560 affected his business. Let's talk about what investor does in 0:02:35.600 --> 0:02:39.440 this new environment of increased inflation and increased interest rates. 0:02:39.520 --> 0:02:42.040 First of all, tell me what's going on with your company. 0:02:42.200 --> 0:02:45.600 Are you seeing less deal flow? Now just the opposite. 0:02:46.400 --> 0:02:51.919 We're seeing more deal flow. We're seeing more situations where 0:02:52.440 --> 0:02:58.040 companies are having difficulty figuring out what to do. Uh. 0:02:58.200 --> 0:03:04.399 We're seeing situations where nine months ago, financing a transaction 0:03:04.720 --> 0:03:08.720 of X y Z size was nothing. You know, it 0:03:08.840 --> 0:03:12.640 was you know, as you said, money was free. What's 0:03:12.840 --> 0:03:17.160 changed dramatically? I mean, think about the impact of the 0:03:17.280 --> 0:03:20.880 doubling of interest rates in eight weeks double you know, 0:03:20.919 --> 0:03:24.720 it's just eight weeks earlier, interest rates were you know, 0:03:24.800 --> 0:03:26.839 two and a half to three, and now they're five 0:03:26.880 --> 0:03:30.840 and a half to six. That's an enormous change, and 0:03:30.919 --> 0:03:35.360 it's gonna slow down everybody's activity. It's gonna for sure 0:03:35.960 --> 0:03:41.240 impact getting deals done. But in our particular case, because 0:03:41.880 --> 0:03:46.120 I've oftentime told the world that when I'm liquid, the 0:03:46.160 --> 0:03:49.040 stock market can't go down. It only goes down when 0:03:49.040 --> 0:03:52.280 I'm ill liquid. And here I am sitting there with 0:03:52.360 --> 0:03:55.520 a level of liquidity I've never experienced in my life 0:03:56.040 --> 0:03:59.640 because my focus for the last three and a half 0:03:59.720 --> 0:04:04.520 here has been nothing more important than loquality. So you've 0:04:04.520 --> 0:04:06.920 got a significant deal flow, if anything is bigger than 0:04:06.920 --> 0:04:09.200 it was before. What about the quality of deals? Are 0:04:09.240 --> 0:04:11.760 they different from what they were? For example, preach a prandemic. 0:04:12.080 --> 0:04:15.080 I think they are because they think they're a little 0:04:15.160 --> 0:04:22.440 more realistic. I think in prepaymandemic, when money was free, 0:04:22.880 --> 0:04:26.640 we did as back and chose not to take it 0:04:26.680 --> 0:04:29.680 to the next level. Because when we did this back 0:04:30.480 --> 0:04:34.440 spac seemed like a very interesting way to in effect 0:04:34.560 --> 0:04:40.800 monetize opportunity. Uh. It very quickly became a highly speculative 0:04:41.440 --> 0:04:47.560 scenario dependent on preposterous valuations that ultimately led to the 0:04:47.600 --> 0:04:51.440 crash of the whole spack market. World has changed a 0:04:51.440 --> 0:04:57.240 lot since then, and and the change is basically modifying 0:04:57.320 --> 0:05:00.599 what you can do. On the other hand, is always 0:05:00.640 --> 0:05:04.720 demand for capital, uh, And there's always that demand is 0:05:04.760 --> 0:05:07.599 always on the on the the shoulders of those that 0:05:07.680 --> 0:05:11.240 have preserved the couidity. So let's talk about some specific 0:05:11.279 --> 0:05:14.479 investment of serious energy. I mean, you know energy terribly well. 0:05:15.040 --> 0:05:16.800 You see opportunities of energy ight. Now, there's been a 0:05:16.800 --> 0:05:19.719 lot of tumult in the marketplace because of Russia and 0:05:19.839 --> 0:05:23.080 Ukraine and all sorts of versions. Yeah. I I mean 0:05:23.120 --> 0:05:28.120 we continue to do something in the energy space, not 0:05:28.279 --> 0:05:30.800 as much as I would have thought when we when 0:05:30.839 --> 0:05:36.360 this period began. The volatility and the energy space has 0:05:36.400 --> 0:05:40.000 been so extreme. Uh. I mean you just think about it. 0:05:40.040 --> 0:05:43.880 Within a twelve month period, the price of oil. Uh 0:05:44.000 --> 0:05:49.560 you know, you know, vascillated between thirty and twenty. Uh. 0:05:49.600 --> 0:05:55.839 That's an incredible level of volatility. Makes making investments extraordinarily 0:05:55.839 --> 0:05:58.680 difficult and challenging. Do you see a prospect of a 0:05:58.680 --> 0:06:00.679 little less volatil because you up on the one plus 0:06:00.680 --> 0:06:03.080 o pl plus trying to live with things. Now you've 0:06:03.080 --> 0:06:05.039 got the U. S. Government, which it was not trying 0:06:05.080 --> 0:06:06.800 to regulate the price of oil. It looks kind of 0:06:06.839 --> 0:06:08.800 like it is because it says when it's gonna selone's 0:06:08.800 --> 0:06:11.120 gonna buy. So it looks like it's got a bid 0:06:11.120 --> 0:06:14.560 and ass price. Yeah. But we also have a allegedly 0:06:14.640 --> 0:06:19.880 we also have an administration it's very anti oil and 0:06:19.880 --> 0:06:24.240 and and too. In my judgment, that anti oil provision 0:06:24.600 --> 0:06:27.080 is only going to hurt the United States. I mean, 0:06:27.440 --> 0:06:31.560 we were producing eleven million barrels a day of oil. UH. 0:06:31.600 --> 0:06:33.400 I don't know what we're doing now, but I think 0:06:33.440 --> 0:06:37.000 it's down two or three million barrels a day. UH 0:06:37.080 --> 0:06:40.640 as we've cut back on uh, capital for the for 0:06:40.640 --> 0:06:44.920 for fracking, etcetera. Uh. Not a healthy set of circumstances. 0:06:45.160 --> 0:06:48.520 That was Sam's l founder and chairman of Equity Group Investments. 0:06:50.279 --> 0:06:52.640 Coming up, we'll turn to energy and the quest to 0:06:52.680 --> 0:06:56.160 get more of it with less emissions with Christine Todd Whitman, 0:06:56.240 --> 0:06:59.880 former EPA administrator and former governor of New Jersey. That 0:07:00.120 --> 0:07:02.920 next on this special Thanksgiving edition of Wall Street Week 0:07:03.160 --> 0:07:09.320 on Bloomberg. This is Bloomberg Wall Street Week with David 0:07:09.360 --> 0:07:13.440 Weston from Bloomberg Radio. This is a special Thanksgiving edition 0:07:13.520 --> 0:07:16.640 of Wall Street Week. I'm David Weston. Energy has been 0:07:16.720 --> 0:07:18.800 much on the minds of Wall Street this year as 0:07:18.880 --> 0:07:21.960 Russia's war in Ukraine made the price of natural gas 0:07:22.120 --> 0:07:25.120 spike up. The President gets it. He's been working to 0:07:25.440 --> 0:07:28.000 get prices gas prices down, so as a result, they've 0:07:28.040 --> 0:07:29.920 been coming down for the last three weeks or so. 0:07:30.360 --> 0:07:32.360 But we understand that that's partially due to the war 0:07:32.400 --> 0:07:34.000 in New Train and we need to keep oil on 0:07:34.040 --> 0:07:36.840 the market. And President Biden tried to keep the price 0:07:36.880 --> 0:07:40.679 of gasoline down by releases from the Strategic Petroleum Reserve 0:07:41.560 --> 0:07:45.920 additional fifteen million barrels four December out of the SPR. 0:07:46.160 --> 0:07:48.480 But the President was doing this even as he tried 0:07:48.520 --> 0:07:51.560 to continue his push for more investment in energy sources 0:07:51.600 --> 0:07:55.600 that didn't add to carbon emissions. We're proving a good 0:07:55.640 --> 0:08:00.720 climate pology is good economic policy. It's a strong foundation 0:08:02.400 --> 0:08:07.360 for durable, resilient, inclusive economic growth. Much of Mr Biden's 0:08:07.360 --> 0:08:10.920 effort was focused on renewables like wind and solar, but 0:08:11.040 --> 0:08:13.840 many of those who take the zero emissions goals seriously 0:08:13.880 --> 0:08:17.640 agree that we can't get there ultimately without nuclear energy. 0:08:18.120 --> 0:08:20.680 One of those who has been consistently advocating for the 0:08:20.800 --> 0:08:24.560 role of nuclear energy is Christine Todd Whitman, former Governor 0:08:24.600 --> 0:08:26.880 of New Jersey and former administrator of the e p 0:08:26.960 --> 0:08:29.520 A and Governor. Whitman joined us on Wall Street Week 0:08:29.600 --> 0:08:34.680 to explain how it could work. You've dealt with nuclear 0:08:34.760 --> 0:08:38.080 energy for years now, so give us your sense of 0:08:38.160 --> 0:08:42.520 the role of nuclear energy potentially in getting to net zero. Well. 0:08:42.520 --> 0:08:45.000 I think nuclear can play a huge role, at least 0:08:45.000 --> 0:08:49.839 in a transition from fossil fuels to renewables. Renewables are 0:08:49.880 --> 0:08:54.240 not yet base energy. They're peak shaving and we're seven society, 0:08:54.240 --> 0:08:57.280 as is the rest of the world the world, and 0:08:57.480 --> 0:09:00.839 nuclear is the only form of base power that releases 0:09:00.960 --> 0:09:06.440 no regulated pollutants or greenhouse gases, wireless producing power. And 0:09:06.720 --> 0:09:11.080 we have an incredible safety record here in this country 0:09:11.080 --> 0:09:15.080 on nuclear and actually with a few obviously very huge 0:09:15.120 --> 0:09:20.800 exceptions being Chernobyl and what happened in Fukushima, Daishi, overall 0:09:20.840 --> 0:09:23.680 worldwide it's been it's been safe and getting safe for 0:09:23.720 --> 0:09:26.360 all the time. I mean, the US Nuclear Regulatory Commission 0:09:26.559 --> 0:09:31.839 is considered the gold standard on regulatory oversight of nuclear reactors. 0:09:32.320 --> 0:09:35.040 I don't think, given costs and time, that we're going 0:09:35.080 --> 0:09:37.800 to see any more large reactors built in this country. 0:09:37.840 --> 0:09:40.600 Certainly they are being built in China, They're being built 0:09:40.600 --> 0:09:42.560 around the world, and we can certainly play a part 0:09:42.760 --> 0:09:46.800 in developing the parts for those reactors. But I see 0:09:46.800 --> 0:09:49.400 the future for nuclear right now being in the small 0:09:49.480 --> 0:09:52.520 modular reactors. Well, let's get to that, and we first 0:09:52.520 --> 0:09:54.640 of all give us a sense of the scope of it. Already. 0:09:54.800 --> 0:09:57.000 One of the things that I have learned is nuclear 0:09:57.080 --> 0:09:59.360 is actually one of the few things that really don't 0:09:59.480 --> 0:10:01.480 have a mission that can be taken to scale. I 0:10:01.520 --> 0:10:04.000 think something like energy in the United States and generated 0:10:04.040 --> 0:10:07.520 but in France, right. And you know, you saw an 0:10:07.559 --> 0:10:10.320 example of what happens when you take nuclear offline when 0:10:10.400 --> 0:10:15.520 California took the Santino Frey nuclear reactor offline. Their missions 0:10:15.559 --> 0:10:17.679 went up and the cost of their energy went up. 0:10:17.920 --> 0:10:21.079 I mean, it was totally counter to everything that they 0:10:21.080 --> 0:10:24.400 were hoping to achieve in my mind, and so what 0:10:24.440 --> 0:10:27.080 I found over time is that if you have an 0:10:27.080 --> 0:10:30.240 opportunity to talk to people and answer they're very real questions. 0:10:30.240 --> 0:10:33.040 I mean, it's it's normal to have questions about the 0:10:33.040 --> 0:10:35.559 safety and you should ask them. But the answers are 0:10:35.600 --> 0:10:38.199 really good, and they're based on our history. You can 0:10:38.280 --> 0:10:41.240 prove that in fact, these things work, and once you 0:10:41.320 --> 0:10:43.520 do that with people, they get much more comfortable with 0:10:43.559 --> 0:10:45.880 the idea of nuclear It's just that for so long, 0:10:46.440 --> 0:10:49.480 um it's been used as frankly a fundraiser a lot 0:10:49.520 --> 0:10:52.280 of times for the environmental groups, and we need to 0:10:52.320 --> 0:10:55.600 get the public to understand. Particularly with the new small 0:10:55.679 --> 0:10:59.439 modular reactors that are built in a contained facility, they 0:10:59.440 --> 0:11:03.040 can be played east on site. They're much safer technology. 0:11:03.320 --> 0:11:06.800 They are a much safer way to produce the nuclear energy. 0:11:07.240 --> 0:11:11.920 So overall, there are really I believe, have the potential 0:11:12.040 --> 0:11:15.200 to make a huge difference, particularly if you think about 0:11:16.200 --> 0:11:19.640 the rural parts of America where you're not on the 0:11:19.679 --> 0:11:23.120 grid or you're not close to the grid. You can 0:11:23.200 --> 0:11:26.559 take a small modular reactor and provide power for an 0:11:26.679 --> 0:11:30.520 entire talent or an entire business. So they have a 0:11:30.520 --> 0:11:33.360 lot of potential there. So let's pursue that question of 0:11:33.360 --> 0:11:35.400 safety because that is on a lot of people's minds 0:11:35.440 --> 0:11:37.480 without a doubt, and as you've mentioned, we've had some 0:11:37.520 --> 0:11:41.200 horrific instances. Is the issue with safety that people don't 0:11:41.200 --> 0:11:43.760 realize that actually the tracker is quite good for nuclear 0:11:43.920 --> 0:11:47.320 or is it technological developments such as as you're referring 0:11:47.360 --> 0:11:50.160 to small module reactors now. I think it's because people 0:11:50.200 --> 0:11:52.800 just don't know, they don't understand. I mean, I get 0:11:52.800 --> 0:11:54.960 a lot of questions I used to in the past 0:11:54.960 --> 0:11:58.600 about well what about the spent rods, And first of all, 0:11:58.600 --> 0:12:00.880 I tell them from all but when the time when 0:12:00.880 --> 0:12:02.800 we had a hundred and two nuclear reactors in this 0:12:02.920 --> 0:12:05.560 country and you took all those spent rods and you 0:12:05.600 --> 0:12:08.240 put them in one place, you'd fill up one football 0:12:08.280 --> 0:12:10.040 field to the height of the goal posts. They may 0:12:10.080 --> 0:12:13.160 have gotten slightly above that now because this was data 0:12:13.240 --> 0:12:16.480 from several years ago, but the point being, it's not 0:12:16.640 --> 0:12:19.680 this massive thing the size of the state of Vermont 0:12:19.840 --> 0:12:22.480 that people kind of have in their minds. And the 0:12:22.559 --> 0:12:26.040 other thing is that what's in those spent rods is 0:12:26.720 --> 0:12:30.480 eight seven to ninety percent fishing noble material, meaning unused energy. 0:12:30.880 --> 0:12:33.080 And in France and Japan they figured out how to 0:12:33.120 --> 0:12:36.360 reprocess that and to get the energy out of those rods, 0:12:36.640 --> 0:12:40.080 rendering that what you have is the quote unquote bad 0:12:40.120 --> 0:12:45.679 stuff too down to let's say, and it can't be 0:12:45.760 --> 0:12:48.600 used in a nuclear weapon, so it's much easier to store, 0:12:48.720 --> 0:12:51.120 much less to store. You have a lot of unused 0:12:51.120 --> 0:12:54.280 power just sitting there. And they spent rods um and 0:12:54.320 --> 0:12:57.520 we should be using that technology as well. And people 0:12:57.600 --> 0:12:59.760 have to understand. And when you explain it to them, 0:12:59.760 --> 0:13:03.160 you take one of these rods from a nuclear reactor 0:13:03.200 --> 0:13:06.320 and put it in a missile, it's not the same technology. 0:13:06.400 --> 0:13:08.800 It won't work that way. And the other thing that 0:13:08.920 --> 0:13:13.280 explained to them because one of the most immediate issues 0:13:13.320 --> 0:13:16.320 that we had in this country was three Mile Island, 0:13:16.840 --> 0:13:21.800 and when that went down, the operators in the utility itself, 0:13:22.040 --> 0:13:25.960 in the reactor itself, were never exposed to high levels 0:13:25.960 --> 0:13:29.000 of radiation and they've been tracked ever since, and there 0:13:29.000 --> 0:13:32.800 were no releases into the community, and even those who 0:13:32.800 --> 0:13:36.880 were right there in the reactor had no adverse reaction 0:13:36.920 --> 0:13:39.360 to what happened. And in fact, it was because they 0:13:39.400 --> 0:13:42.320 overrode the system. Really that you had the partial meltdown 0:13:42.640 --> 0:13:47.160 fo Kushima Daishi. That wasn't because of the earthquake. It 0:13:47.200 --> 0:13:49.760 was because of the tsunami, and that was because they 0:13:49.800 --> 0:13:54.520 had their backup power, their generator located physically in the 0:13:54.600 --> 0:13:58.880 reactor building. After nine eleven, our Nuclear Regulatory Commission said 0:13:58.920 --> 0:14:01.520 to our nuclear industry, you've got to move those out 0:14:01.720 --> 0:14:04.880 that cannot be co located with the reactor itself, so 0:14:04.960 --> 0:14:08.320 we that kind of thing can't happen here anymore. Just 0:14:08.440 --> 0:14:10.960 this week we saw an announcement of a deal to 0:14:11.080 --> 0:14:15.160 acquire Westinghouse Electric basically on the premise, in effect, we're 0:14:15.160 --> 0:14:17.640 going to have more nuclear energy. Do you anticipate at 0:14:17.640 --> 0:14:20.360 that in the United States? Well, I certainly hope we do. 0:14:20.560 --> 0:14:23.520 But it was what not even ten years ago. I 0:14:23.560 --> 0:14:26.720 guess there were four proposed reactors to in Georgia and 0:14:26.760 --> 0:14:28.960 two in South Carolina, and we were very hopeful if 0:14:28.960 --> 0:14:32.240 those are going to come in on budget and on time, 0:14:32.280 --> 0:14:35.240 and they both ran over and the utilities decided in 0:14:35.280 --> 0:14:37.760 each case that it just wasn't worth going forward. So 0:14:38.160 --> 0:14:41.800 it is a question of cost and regulatory hurdles. But 0:14:41.840 --> 0:14:44.440 you want to have those regulations in place because that's 0:14:44.440 --> 0:14:46.760 what protects the community, to make sure that things are 0:14:46.800 --> 0:14:51.200 safe and streamline how you approach them. That was Christine 0:14:51.240 --> 0:14:53.880 Todd Whitman, former governor of New Jersey and e P 0:14:54.040 --> 0:14:59.080 A administrator, coming up. Higher interest rates this year have 0:14:59.360 --> 0:15:02.200 really at the real estate market hard. We get the 0:15:02.240 --> 0:15:05.040 overview from Tom Shapiro of G T I S Partners. 0:15:05.200 --> 0:15:08.280 That's next on this special Thanksgiving edition of Wall Street 0:15:08.320 --> 0:15:13.240 Week on Bloomberg. This is Bloomberg Wall Street Week with 0:15:13.440 --> 0:15:17.680 David Weston from Bloomberg Radio. This is a special Thanksgiving 0:15:17.840 --> 0:15:20.640 edition of Wall Street Week. I'm David Weston. Real estate 0:15:20.720 --> 0:15:23.240 is never far from the mind of Global Wall Street. 0:15:23.320 --> 0:15:26.240 In the United States, construction accounts for three point nine 0:15:26.240 --> 0:15:28.800 percent of all g d P and one point three 0:15:28.840 --> 0:15:31.800 percent of the jobs so when you start the year 0:15:31.880 --> 0:15:34.920 with mortgage rates around three point three percent and they 0:15:34.960 --> 0:15:37.320 reach seven by the end of the year, it can 0:15:37.400 --> 0:15:39.680 make for a bit of a rough ride. One of 0:15:39.720 --> 0:15:42.720 those feeling the ride most directly is Tom Shapiro. He's 0:15:42.760 --> 0:15:46.000 co founder and chief investment officer of GTS Partners, and 0:15:46.040 --> 0:15:47.960 he joined us on Wall Street Week to take us 0:15:47.960 --> 0:15:51.560 through some of the struggles but also some high points 0:15:51.600 --> 0:15:56.720 for real estate adjusting to higher interest rates. First of all, 0:15:56.800 --> 0:15:58.600 I want to start with your take on where the 0:15:58.600 --> 0:16:01.360 housing market is right now. We've seen some slowing even 0:16:01.400 --> 0:16:03.920 this week, with some new housing sales as well as 0:16:03.920 --> 0:16:07.400 existing housing sales. Sure that first, thank you so much 0:16:07.440 --> 0:16:09.880 for having me on the show. Why don't I just 0:16:09.920 --> 0:16:12.640 give you a little anecdotal evidence of what we're seeing 0:16:12.640 --> 0:16:15.680 in the field right now. Our home sales are down 0:16:15.720 --> 0:16:19.960 about fifteen but that's a headline number, and you know, 0:16:20.000 --> 0:16:22.080 I think it would be helpful to kind of dig 0:16:22.240 --> 0:16:25.120 a little bit deeper into that number. The reason, for 0:16:25.160 --> 0:16:28.440 the most part it's down is because we can't deliver homes. 0:16:28.480 --> 0:16:32.720 We're still having tremendous supply chain issues. Also, we find 0:16:32.720 --> 0:16:35.120 that a lot of home builders are actually holding back 0:16:35.400 --> 0:16:38.120 on the number of homes they want to deliver, and 0:16:38.160 --> 0:16:41.120 that is for a couple of reasons. One inflation because 0:16:41.160 --> 0:16:42.800 costs keep going up and they don't know what it's 0:16:42.840 --> 0:16:46.320 gonna actually cost to finish the house. And and too 0:16:46.840 --> 0:16:49.680 they want to ride up the home price appreciation. So 0:16:50.000 --> 0:16:52.080 I would say for the most part, right now, while 0:16:52.080 --> 0:16:55.920 we see a fifteen slow down in sales, you're over year. 0:16:56.280 --> 0:16:59.920 A lot of that is because of other extraneis issue. 0:17:00.200 --> 0:17:03.280 It's more of a delivery issue than is a demand issue. 0:17:03.360 --> 0:17:06.640 With that said, we're definitely starting to see a pullback. 0:17:07.200 --> 0:17:10.359 We're starting to have to go deeper into our wait lists. 0:17:10.680 --> 0:17:12.919 But every house at this point that we deliver in 0:17:12.920 --> 0:17:16.120 the markets were in, we are selling. But I think 0:17:16.200 --> 0:17:18.800 we have to be careful about what we see, you know, 0:17:18.840 --> 0:17:20.920 on a going forward basis, because definitely we're starting to 0:17:20.960 --> 0:17:23.200 see things slowing down. That's a really helpful way of 0:17:23.200 --> 0:17:25.920 putting up because we're having those discussions about the overall economy. 0:17:26.000 --> 0:17:28.200 Is it supply, is it demand? Is I understand you've 0:17:28.200 --> 0:17:30.960 got a supply problem because the supply change. People say 0:17:31.000 --> 0:17:32.760 that's going to go away? Is it going away? And 0:17:32.760 --> 0:17:37.000 how's it? Well, it's not I mean, we definitely have issues. 0:17:37.080 --> 0:17:41.520 We have problems getting trusses and windows and appliances. Um, 0:17:41.600 --> 0:17:45.400 we're delivering homes with plywood windows at times. Um, it's 0:17:45.200 --> 0:17:47.439 it's we're having all sorts of issues. And of course 0:17:47.840 --> 0:17:49.960 you know the war in Ukraine and what's going on 0:17:50.000 --> 0:17:54.080 in China, and the work stoppage is there. Um, the 0:17:54.119 --> 0:17:58.119 deliveries and transportation is an issue, and jobs are an issue, 0:17:58.160 --> 0:18:01.520 and trades are an issue. So it's gotten marginally better, 0:18:01.920 --> 0:18:05.480 but we still have tremendous supply chain issues. Uh. And 0:18:05.680 --> 0:18:09.080 look if you look at how many houses were delivering 0:18:09.400 --> 0:18:12.600 a year in total, this is all all forms, it's 0:18:12.640 --> 0:18:16.120 about one point two million housing units a year, which 0:18:16.200 --> 0:18:21.639 is sort of inequilibrium. So Tom, some of the issue 0:18:21.720 --> 0:18:23.640 can be on the demand side. At some point. We've 0:18:23.640 --> 0:18:26.040 heard about mortgage rates going up to what five point 0:18:26.080 --> 0:18:28.560 five percent something like that, so that must affect it 0:18:28.600 --> 0:18:30.840 to some extent. How are you seeing some effects with 0:18:30.920 --> 0:18:32.800 that because we also have the FED is going to 0:18:32.840 --> 0:18:36.800 start selling off some of those mortgeback securities. Yeah for sure. 0:18:36.800 --> 0:18:39.199 I mean, look, the consumer stretched, so why are they 0:18:39.200 --> 0:18:42.640 stretched a stretch because of inflation? So we have all 0:18:42.680 --> 0:18:45.679 sorts of issues. We have gas prices are more expensive, 0:18:45.880 --> 0:18:48.920 and we have the costs of food is more expensive, 0:18:48.960 --> 0:18:50.919 and of course, as you point out, mortgage rates are 0:18:51.200 --> 0:18:54.120 our own issues. So the consumer is stretch and that 0:18:54.280 --> 0:18:56.280 is certainly going to be an issue on a going 0:18:56.320 --> 0:18:59.000 forward basis on housing. But we are seeing, you know, 0:18:59.080 --> 0:19:02.440 people taking less options, they're going to slightly smaller unit 0:19:02.480 --> 0:19:06.120 types um and their renting. So we aren't necessarily seeing 0:19:06.160 --> 0:19:08.480 a slow down at this point because of Morgan traits. 0:19:08.520 --> 0:19:11.160 But again, I think we have to be careful. I think, 0:19:11.440 --> 0:19:13.280 you know, the crystal ball says it's going to get 0:19:13.280 --> 0:19:15.560 a lot worse. We're not seeing it today, but I 0:19:15.600 --> 0:19:17.000 think in the future where I'm going to see a 0:19:17.040 --> 0:19:19.160 slow down. When you say things are going to get worse, 0:19:19.280 --> 0:19:21.120 a lot of us go back to two thousand and eight, 0:19:21.480 --> 0:19:24.280 the last time we really thought hard about housing crisis 0:19:24.520 --> 0:19:28.240 in this country. And there are some anecdotal incidents where 0:19:28.280 --> 0:19:30.280 it sort of feels like two thousands six or seven 0:19:30.320 --> 0:19:33.400 where people are outbidding each other houses. They're going away 0:19:33.480 --> 0:19:36.199 but above the asking price. Are there parallels with what 0:19:36.240 --> 0:19:39.840 happened in two doesn't eight? It's an amazing it's really 0:19:39.840 --> 0:19:41.960 really good questions. So so why don't we go back 0:19:41.960 --> 0:19:44.119 in history because I think, you know, we really have 0:19:44.240 --> 0:19:48.040 to analyze where did we end up in a eight 0:19:48.119 --> 0:19:50.439 and why did we end up there? So if you 0:19:50.560 --> 0:19:52.600 if you look back to two thousand and five, we 0:19:52.760 --> 0:19:57.840 produced two million housing units, So in general, we produce 0:19:58.040 --> 0:20:01.520 one point two million households or what's a household? Your 0:20:01.560 --> 0:20:04.680 kid graduates college and moves into an apartment. Uh, A 0:20:05.160 --> 0:20:07.800 couple moves out of their parents house and they and 0:20:08.080 --> 0:20:11.040 they've taken apartment, there's a divorce, etcetera. And that creates 0:20:11.240 --> 0:20:14.800 a need for housing units. So against a total need 0:20:14.880 --> 0:20:17.879 of one point two million units, we produced to and 0:20:17.920 --> 0:20:20.240 then it did slow down because remember after five even 0:20:20.280 --> 0:20:22.840 before the GFC we started to have a housing slow down, 0:20:22.920 --> 0:20:25.320 we still produced one point five million housing units, so 0:20:25.359 --> 0:20:31.399 we had a massive oversupply going into then a demand shock. 0:20:31.920 --> 0:20:35.000 So it was really the perfect storm and that is 0:20:35.080 --> 0:20:39.399 why we end up with the global financial crisis. That 0:20:39.480 --> 0:20:41.720 was Tom Shapiro, president and co founder of G T 0:20:41.840 --> 0:20:46.840 I S Partners, coming up. The tight labor market has 0:20:46.880 --> 0:20:50.000 continued throughout the year. We talked about the causes, including 0:20:50.040 --> 0:20:52.720 some that may not be going away anytime soon with 0:20:52.800 --> 0:20:55.800 special Wall Street we contributed larryus Summers of Harvard and 0:20:55.880 --> 0:20:59.720 with economist Melissa Carney of the University of Maryland. That's 0:20:59.760 --> 0:21:02.400 next on this special Thanksgiving addition of Wall Street Reek 0:21:02.640 --> 0:21:08.879 on Bloomberg. This is Bloomberg Will Street Week with David 0:21:08.920 --> 0:21:13.359 Weston from Bloomberg Radio. This is water Rag. I'm David Weston. 0:21:13.760 --> 0:21:16.480 Even as the markets and investors have struggled to come 0:21:16.520 --> 0:21:19.240 to grips with higher interest rates and less fiscal stimulus 0:21:19.320 --> 0:21:22.040 coming from the government, even as inflation is cut into 0:21:22.080 --> 0:21:25.480 wages and profits, the labor market this year has continued 0:21:25.520 --> 0:21:29.240 to be robust. The labor market is still strong, but 0:21:29.480 --> 0:21:33.000 it requires a fed that has a lot more skill 0:21:33.359 --> 0:21:36.280 and a lot more luck. Some of that maybe, as 0:21:36.280 --> 0:21:40.080 they say, transitory, they continued, aftermath of the pandemic and 0:21:40.119 --> 0:21:43.160 a dramatic snap back in the economy. There are also 0:21:43.280 --> 0:21:46.720 more structural, longer forces at play, and we turn to 0:21:46.760 --> 0:21:49.439 our special comtinuter Larry Summers of Harvard and his fellow 0:21:49.440 --> 0:21:52.520 economists from Maryland Melissa Carney, to take us through some 0:21:52.680 --> 0:21:55.960 of those longer term labor market issues. They joined us 0:21:56.000 --> 0:22:00.880 from the Aspen Economic Strategy Groups meeting in Colorado. Let's 0:22:00.920 --> 0:22:03.240 start with the question of where growth will come on 0:22:03.280 --> 0:22:05.040 the other side of whatever it is we're going through, 0:22:05.040 --> 0:22:07.439 because that's ultimately going to be the question here, I 0:22:07.520 --> 0:22:09.600 understand from what conness like you, it comes from one 0:22:09.600 --> 0:22:12.560 of two sources, either more workers or more productivity. Are 0:22:12.600 --> 0:22:14.800 we going to get more workers. We're looking to at 0:22:14.880 --> 0:22:18.040 both fewer workers and lower productivity, as you know, So 0:22:18.240 --> 0:22:21.600 let me focus on the fewer workers aspect for a moment. 0:22:22.200 --> 0:22:25.479 The real issue demographic issue facing the US is we 0:22:25.520 --> 0:22:29.280 have a plummeting birth rate, and so total fertility in 0:22:29.320 --> 0:22:33.240 the US is now below the level required to keep 0:22:33.320 --> 0:22:37.000 population growth constant. And so the issue here is that 0:22:37.080 --> 0:22:40.280 on average now a woman in the US is expected 0:22:40.320 --> 0:22:44.000