1
00:00:00,840 --> 00:00:04,000
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

2
00:00:04,040 --> 00:00:05,240
Speaker 1: my co host Matt Miller.

3
00:00:05,640 --> 00:00:09,600
Speaker 2: Every business day we bring you interviews from CEOs, market pros,

4
00:00:09,720 --> 00:00:13,640
Speaker 2: and Bloomberg experts, along with essential market moving news.

5
00:00:14,160 --> 00:00:17,279
Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

6
00:00:17,400 --> 00:00:20,480
Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

7
00:00:20,880 --> 00:00:23,400
Speaker 1: All right, let's break down this inflation print this morning

8
00:00:23,400 --> 00:00:26,079
Speaker 1: a little bit deeper, and along chief youos economists with

9
00:00:26,079 --> 00:00:31,159
Speaker 1: Bloomberg Economics. Anna, you got this one right again? What

10
00:00:31,240 --> 00:00:33,720
Speaker 1: did you take away from today's print?

11
00:00:34,000 --> 00:00:34,080
Speaker 3: You?

12
00:00:34,200 --> 00:00:35,760
Speaker 1: Anaalog, So we want to get your opinion. And then

13
00:00:35,800 --> 00:00:38,120
Speaker 1: number two, what do you think your feeder reserve will

14
00:00:38,159 --> 00:00:39,040
Speaker 1: take away from this print?

15
00:00:40,040 --> 00:00:40,280
Speaker 4: Yeah?

16
00:00:40,400 --> 00:00:44,199
Speaker 5: My takeaway is that this is one of the best

17
00:00:44,320 --> 00:00:49,879
Speaker 5: CPI report, probably in this high inflation two years with

18
00:00:49,920 --> 00:00:53,320
Speaker 5: that we had had. If you look at all the detail,

19
00:00:53,400 --> 00:00:59,080
Speaker 5: the details are pretty encouraging. There's some broader disinflation across

20
00:00:59,120 --> 00:01:01,960
Speaker 5: more goods. There are more goods who are undergoing deflation.

21
00:01:02,320 --> 00:01:05,560
Speaker 5: They're less goods that are growing at more than four

22
00:01:05,600 --> 00:01:11,080
Speaker 5: percent inflation. Shelter inflation is coming down, and that's not

23
00:01:11,240 --> 00:01:14,360
Speaker 5: just rent, but it's also hotels. You know that all

24
00:01:14,440 --> 00:01:18,840
Speaker 5: that Airbnb collapse weil, and I think that's that's translating

25
00:01:18,920 --> 00:01:25,200
Speaker 5: to domestic hotel fares coming down, and energy prices are

26
00:01:25,240 --> 00:01:28,959
Speaker 5: also subdued. So I think it truly is one of

27
00:01:28,959 --> 00:01:32,200
Speaker 5: those reports where you look at the you know, seams,

28
00:01:32,240 --> 00:01:35,400
Speaker 5: and everything looks good in terms of how the FED

29
00:01:35,600 --> 00:01:38,759
Speaker 5: look looks at it. So I always compare the FED

30
00:01:38,800 --> 00:01:41,759
Speaker 5: to like a big cruise ship and when they try

31
00:01:41,800 --> 00:01:46,640
Speaker 5: to turn, they can't turn sharply. And so so today

32
00:01:46,720 --> 00:01:51,280
Speaker 5: we have this pretty pivotal CPI report, right sharp slow down,

33
00:01:51,640 --> 00:01:54,720
Speaker 5: but the FED is not about to make a sharp turn.

34
00:01:55,200 --> 00:01:58,919
Speaker 5: I think they're still on track to hike in July.

35
00:01:59,480 --> 00:02:02,800
Speaker 5: I mean they still have time until the next The

36
00:02:02,840 --> 00:02:07,000
Speaker 5: meeting after July is September, and between July and September

37
00:02:07,000 --> 00:02:09,919
Speaker 5: there's still the Jackson Hole. There's still plenty of data.

38
00:02:10,240 --> 00:02:13,160
Speaker 5: So even though that they indicate it in the dot

39
00:02:13,200 --> 00:02:17,280
Speaker 5: plot in May that in June that they're going to

40
00:02:17,320 --> 00:02:19,760
Speaker 5: do another hike after July, I don't think they're going

41
00:02:19,800 --> 00:02:23,240
Speaker 5: to do it because by by September the evidence is

42
00:02:23,280 --> 00:02:25,840
Speaker 5: going to accumulate that I think we're going to see

43
00:02:25,880 --> 00:02:29,080
Speaker 5: more of this type of CPI reports. We see today

44
00:02:29,240 --> 00:02:32,720
Speaker 5: where the core CPI is growing at a monthly pace.

45
00:02:32,800 --> 00:02:36,880
Speaker 5: That's about where the Fed's inflation target of two percent is.

46
00:02:37,200 --> 00:02:39,000
Speaker 6: So if you had to put a percentage on it,

47
00:02:39,080 --> 00:02:42,440
Speaker 6: and what would you say for the likelihood of another

48
00:02:42,520 --> 00:02:44,639
Speaker 6: hike in September? If we look at the werp function

49
00:02:44,760 --> 00:02:47,680
Speaker 6: markets pricing in about a sixteen percent chance of a

50
00:02:47,720 --> 00:02:50,000
Speaker 6: September hike, what's your calculation on that?

51
00:02:51,040 --> 00:02:55,200
Speaker 5: Yeah, I think I think that's about where. I think

52
00:02:55,840 --> 00:02:58,840
Speaker 5: the bond market got it pretty fair this time around.

53
00:03:01,280 --> 00:03:05,600
Speaker 1: So and if we're economists like yourself, are we taking

54
00:03:05,600 --> 00:03:07,639
Speaker 1: the recession talk off the table?

55
00:03:09,400 --> 00:03:10,960
Speaker 5: No? You know, not for me?

56
00:03:12,000 --> 00:03:16,480
Speaker 7: WHOA no, no, no, So I you know a lot

57
00:03:16,480 --> 00:03:19,520
Speaker 7: of it. And this links to today's report, right. Why

58
00:03:19,639 --> 00:03:23,400
Speaker 7: is this today's cpr I report so beautiful? And I

59
00:03:23,400 --> 00:03:24,440
Speaker 7: think part of it is.

60
00:03:24,400 --> 00:03:28,760
Speaker 5: That the lacks of monetary policy from the five hundred

61
00:03:28,800 --> 00:03:32,400
Speaker 5: bits of rate hikes are starting to bite. And the

62
00:03:32,840 --> 00:03:35,560
Speaker 5: stuff that takes the longest time to show up in

63
00:03:35,600 --> 00:03:39,840
Speaker 5: the economy is unemployment rate rising. So typical economic models

64
00:03:39,840 --> 00:03:43,560
Speaker 5: would show that unemployment rate would only peak eighteen months

65
00:03:43,640 --> 00:03:48,200
Speaker 5: to twenty four months after a monetary policy shock. So

66
00:03:48,360 --> 00:03:53,880
Speaker 5: that means that unemployment rate should be rising and towards

67
00:03:53,960 --> 00:03:56,640
Speaker 5: the second half of this year, too early next year.

68
00:03:57,000 --> 00:03:59,040
Speaker 5: And on top of that, when I look at the

69
00:03:59,080 --> 00:04:03,080
Speaker 5: consumer household balance sheet, it's just it's going to be

70
00:04:03,160 --> 00:04:07,000
Speaker 5: very nasty in the second half, especially when student loan

71
00:04:07,040 --> 00:04:13,040
Speaker 5: payments resumed in October. So I think, just looking at

72
00:04:13,080 --> 00:04:16,920
Speaker 5: how the bills of a typical household, I calculated that

73
00:04:17,560 --> 00:04:19,919
Speaker 5: a person needs to earn at least twenty one dollars

74
00:04:20,000 --> 00:04:24,360
Speaker 5: per hour to be able to stay afloat on all

75
00:04:24,400 --> 00:04:26,880
Speaker 5: the payments. It's supposed that he has a car payment,

76
00:04:26,960 --> 00:04:31,159
Speaker 5: he has student loans, mortgage credit cards. So I think

77
00:04:31,279 --> 00:04:35,279
Speaker 5: a lot of people would be feeling the stress of

78
00:04:35,320 --> 00:04:38,599
Speaker 5: their finances starting in the second half of this year.

79
00:04:38,760 --> 00:04:40,880
Speaker 6: Well, continuing on some of the bad news that you

80
00:04:40,960 --> 00:04:44,320
Speaker 6: bring up, Anna, I wonder to what extent we're seeing

81
00:04:44,440 --> 00:04:47,520
Speaker 6: softness today just because the conditions were so bad a

82
00:04:47,640 --> 00:04:50,479
Speaker 6: year ago that's when we got that nine percent number.

83
00:04:50,680 --> 00:04:53,840
Speaker 6: Is this number that we got today about a genuine

84
00:04:53,920 --> 00:04:56,880
Speaker 6: cooling that we're seeing currently, or is it more about

85
00:04:57,360 --> 00:04:59,600
Speaker 6: less bad news than what we were seeing a year ago.

86
00:05:00,600 --> 00:05:05,120
Speaker 5: Both, So, the headline inflation at headline CPI beans three

87
00:05:05,200 --> 00:05:08,120
Speaker 5: percent is mostly due to the base effects that you

88
00:05:08,160 --> 00:05:12,880
Speaker 5: point out, but also the core CPI growing at zero

89
00:05:12,960 --> 00:05:15,479
Speaker 5: point two percent on a monthly pace that's free of

90
00:05:15,560 --> 00:05:20,960
Speaker 5: any base effects. That's genuine disinflation. And if you annualize

91
00:05:20,960 --> 00:05:23,960
Speaker 5: that zero point two percent, you get a low two

92
00:05:24,000 --> 00:05:28,080
Speaker 5: percent annual pace of inflation. And then I do expect

93
00:05:28,200 --> 00:05:30,600
Speaker 5: that the CPI print in the next couple of months,

94
00:05:30,720 --> 00:05:34,360
Speaker 5: the core CPI print to continue to be around zero

95
00:05:34,480 --> 00:05:38,200
Speaker 5: point two or even zero point three and most which

96
00:05:38,240 --> 00:05:41,040
Speaker 5: means that yeah, that annualized you about between two two

97
00:05:41,080 --> 00:05:42,920
Speaker 5: three percent inflation.

98
00:05:43,600 --> 00:05:46,599
Speaker 1: All right, So I guess then the question will be

99
00:05:46,680 --> 00:05:48,680
Speaker 1: for a lot of people as it relates to the Fed,

100
00:05:50,120 --> 00:05:52,880
Speaker 1: how long do they stay at this higher level of

101
00:05:53,279 --> 00:05:56,960
Speaker 1: rates before they really consider the opportunity to maybe move

102
00:05:57,040 --> 00:05:58,599
Speaker 1: rates down.

103
00:05:58,760 --> 00:06:02,679
Speaker 5: Right, So, you know, it depends on wage growth, and

104
00:06:03,040 --> 00:06:06,039
Speaker 5: Powell seems to be putting a lot of attention on

105
00:06:06,800 --> 00:06:12,440
Speaker 5: UH wage growth. The the inflation metric that the Fed

106
00:06:12,480 --> 00:06:16,320
Speaker 5: pays a lot of attention to is core PCE services

107
00:06:16,360 --> 00:06:20,000
Speaker 5: excluding housing, and half of that is supposed to be

108
00:06:20,160 --> 00:06:23,920
Speaker 5: related to labor intensive industry, which in turn is the

109
00:06:24,200 --> 00:06:28,880
Speaker 5: inflation there is driven by wages. So UH that is

110
00:06:29,480 --> 00:06:32,839
Speaker 5: that I think we're also seeing some progress. We're seeing

111
00:06:33,360 --> 00:06:36,840
Speaker 5: in the jobs market jobs report last Friday, we saw

112
00:06:36,920 --> 00:06:40,680
Speaker 5: that that that that effect private hiring was below two

113
00:06:40,800 --> 00:06:44,240
Speaker 5: hundred k and and so I think I think even

114
00:06:44,279 --> 00:06:50,800
Speaker 5: on that front, it's it's pretty uh, there's progress.

115
00:06:50,360 --> 00:06:51,239
Speaker 8: There, right, Yeah.

116
00:06:51,360 --> 00:06:54,200
Speaker 6: Well, and Paul brings up the great point about labor, which,

117
00:06:54,200 --> 00:06:57,000
Speaker 6: of course, as you've taught us very well, Anna, the

118
00:06:57,000 --> 00:06:59,960
Speaker 6: FED is really looking at when determining their next moves.

119
00:07:00,400 --> 00:07:04,880
Speaker 6: For my friends and folks listening in who are wondering

120
00:07:04,920 --> 00:07:07,440
Speaker 6: whether cooler inflation data is going to make it harder

121
00:07:07,440 --> 00:07:10,240
Speaker 6: for them to argue for a raise this year, talk

122
00:07:10,280 --> 00:07:13,120
Speaker 6: to me about how you can help them pitch their

123
00:07:13,160 --> 00:07:15,360
Speaker 6: bosses for a raise even though we are seeing some

124
00:07:15,520 --> 00:07:17,400
Speaker 6: cooling when it comes to the inflation picture.

125
00:07:18,640 --> 00:07:21,920
Speaker 5: Well, first of all, I think the best reason for

126
00:07:22,040 --> 00:07:26,600
Speaker 5: arguing for pay raise is that the real wage cumulative

127
00:07:27,400 --> 00:07:30,680
Speaker 5: real wage over the last two years has decreased. Many

128
00:07:30,680 --> 00:07:33,800
Speaker 5: people pointed out that real wage growth this year is

129
00:07:34,000 --> 00:07:38,720
Speaker 5: positive again because nominal wage is higher than inflation. But

130
00:07:38,960 --> 00:07:41,200
Speaker 5: on the whole of you added up over the last

131
00:07:41,200 --> 00:07:45,840
Speaker 5: two years, people are still worse off. Like that breakfast

132
00:07:45,880 --> 00:07:50,160
Speaker 5: sandwich in the airport is still costing more relative to

133
00:07:50,240 --> 00:07:52,840
Speaker 5: how much you can make, you know, in terms of level.

134
00:07:52,960 --> 00:07:56,720
Speaker 5: So even if inflation were to be zero percent tomorrow,

135
00:07:57,120 --> 00:08:00,840
Speaker 5: people will still feel worse off just because the level

136
00:08:00,880 --> 00:08:05,600
Speaker 5: of prices is permanently higher than relative to their income.

137
00:08:05,880 --> 00:08:08,120
Speaker 1: All right, and I thank you so much for joining us.

138
00:08:08,280 --> 00:08:12,000
Speaker 1: I always appreciate getting your analysis and insight had along

139
00:08:12,080 --> 00:08:14,760
Speaker 1: chief US economists for Bloomberg Economics and her team have

140
00:08:14,840 --> 00:08:17,800
Speaker 1: been really spot on kind of the inflation call, the

141
00:08:17,840 --> 00:08:20,760
Speaker 1: GDP call, and the most importantly, kind of where the

142
00:08:20,800 --> 00:08:22,560
Speaker 1: FED is going. She was, you know, about a year

143
00:08:22,560 --> 00:08:25,760
Speaker 1: ago she was saying this, you know, I mean, I

144
00:08:25,800 --> 00:08:26,040
Speaker 1: take it.

145
00:08:26,080 --> 00:08:26,760
Speaker 8: More than a year ago.

146
00:08:26,840 --> 00:08:28,040
Speaker 1: She was saying that FED is going to take this

147
00:08:28,160 --> 00:08:31,920
Speaker 1: rate to north of five percent, and that was not

148
00:08:32,080 --> 00:08:34,199
Speaker 1: the consensus call at all. And she's absolutely right.

149
00:08:35,880 --> 00:08:39,319
Speaker 9: You're listening to the team Ken's are Live program Bloomberg

150
00:08:39,360 --> 00:08:42,720
Speaker 9: Markets weekdays at ten am Eastern on Bloomberg dot com,

151
00:08:42,800 --> 00:08:45,960
Speaker 9: the iHeartRadio app and the Bloomberg Business app, or listen

152
00:08:46,000 --> 00:08:48,160
Speaker 9: on demand wherever you get your podcasts.

153
00:08:49,920 --> 00:08:52,400
Speaker 1: The futsy this year up about about eight percent this

154
00:08:52,640 --> 00:08:56,280
Speaker 1: I'm sorry, the footsy is flat. The stocks index, the

155
00:08:56,280 --> 00:08:59,160
Speaker 1: European indext stock six hundreds up about eight percent, so

156
00:08:59,520 --> 00:09:02,600
Speaker 1: lagging they outperformed last year. But let's get an overview

157
00:09:02,600 --> 00:09:04,800
Speaker 1: what's happening in the European markets. We can do that

158
00:09:05,360 --> 00:09:07,520
Speaker 1: because we got that kind of person here. Tim Craig

159
00:09:07,559 --> 00:09:11,640
Speaker 1: had director research for Bloomberg Intelligence. He's a senior European strategist.

160
00:09:11,800 --> 00:09:13,760
Speaker 1: He's based in London. We got him here in New

161
00:09:13,840 --> 00:09:15,640
Speaker 1: York this week. A couple of you guys are here

162
00:09:15,640 --> 00:09:18,280
Speaker 1: in New York this week. I mean, everybody's traveling, all right,

163
00:09:18,360 --> 00:09:20,760
Speaker 1: So Tim, thanks for coming in here today. Give us

164
00:09:20,800 --> 00:09:23,960
Speaker 1: an overview of kind of year to date, how are

165
00:09:24,000 --> 00:09:26,160
Speaker 1: the markets in Europe and kind of what's the outlook.

166
00:09:26,640 --> 00:09:30,040
Speaker 10: So there's been a tuggle war going on in Europe

167
00:09:30,240 --> 00:09:34,880
Speaker 10: between earnings and valuation depending on the mood of the

168
00:09:34,960 --> 00:09:37,960
Speaker 10: market as it relates to what's going on with inflation

169
00:09:38,040 --> 00:09:41,800
Speaker 10: and interest rates. So it is not dissimilar here from

170
00:09:41,800 --> 00:09:44,600
Speaker 10: the standpoint of some of the drivers. With one big

171
00:09:44,640 --> 00:09:49,840
Speaker 10: exception we can get to tech. But in Europe, essentially

172
00:09:49,880 --> 00:09:53,559
Speaker 10: we've had, as you said, a pretty decent market, and

173
00:09:53,600 --> 00:09:56,959
Speaker 10: you talked about the eurostocks being up eight percent or

174
00:09:57,000 --> 00:09:59,120
Speaker 10: I should say the stock six hundred. That's the broader

175
00:09:59,120 --> 00:10:02,600
Speaker 10: market that include D's a big chunk of the UK, which,

176
00:10:02,800 --> 00:10:05,520
Speaker 10: as you said, was flat. If you take out that,

177
00:10:05,880 --> 00:10:08,480
Speaker 10: you look at say the eurostocks fifty, whichould be sort

178
00:10:08,520 --> 00:10:13,280
Speaker 10: of the Dow Jones equivalent, that's now up fourteen percent.

179
00:10:13,400 --> 00:10:17,800
Speaker 10: I mean, it's been a decent year. The key has

180
00:10:17,880 --> 00:10:22,760
Speaker 10: been positive earnings revisions that started as we got out

181
00:10:22,840 --> 00:10:27,439
Speaker 10: or we got into one Q earnings off setting and

182
00:10:27,920 --> 00:10:34,600
Speaker 10: overwhelming valuation contraction that's occurred with the idea that interest

183
00:10:34,679 --> 00:10:37,360
Speaker 10: rates are going to be elevated for longer because inflation

184
00:10:37,559 --> 00:10:42,760
Speaker 10: is still very sticky in Europe, in particular services and wages.

185
00:10:43,080 --> 00:10:45,160
Speaker 10: So I just threw a lot of stuff at you,

186
00:10:45,720 --> 00:10:50,440
Speaker 10: but markets are behaving. Key now as we look into

187
00:10:50,800 --> 00:10:54,360
Speaker 10: second quarter earnings that are getting ready to hit the tape,

188
00:10:54,920 --> 00:10:59,880
Speaker 10: is can margins really maintain where they are, which are

189
00:11:00,200 --> 00:11:05,400
Speaker 10: record levels. They've been very sticky in Europe, unlike here

190
00:11:05,800 --> 00:11:09,800
Speaker 10: where they had rolled over. So it's a very very

191
00:11:09,800 --> 00:11:12,120
Speaker 10: interesting dynamics as we go into mid year earnings.

192
00:11:12,400 --> 00:11:16,360
Speaker 6: So things are good, but it's still relatively cheap when

193
00:11:16,360 --> 00:11:18,679
Speaker 6: it comes to an American investor to get in on

194
00:11:18,720 --> 00:11:21,160
Speaker 6: the UK. Right, So is it an argument of the

195
00:11:21,280 --> 00:11:23,120
Speaker 6: UK is so cheap that you have to own.

196
00:11:22,920 --> 00:11:23,640
Speaker 11: It at this point.

197
00:11:25,240 --> 00:11:27,280
Speaker 10: Quick answer on that is absolutely no.

198
00:11:27,679 --> 00:11:29,439
Speaker 6: Ye tell me why, Tell me why?

199
00:11:29,840 --> 00:11:32,600
Speaker 10: And you could you could look at that more broadly

200
00:11:32,640 --> 00:11:36,360
Speaker 10: within Europe. I mean, our work in terms of global

201
00:11:37,640 --> 00:11:44,040
Speaker 10: equity strategy within Bloomberg Intelligence leans towards emerging markets, then Europe,

202
00:11:44,400 --> 00:11:49,680
Speaker 10: then US. So you know, we do like Europe in concept.

203
00:11:49,760 --> 00:11:53,839
Speaker 10: And within Europe itself, the market overall is trading it

204
00:11:53,880 --> 00:11:58,560
Speaker 10: about thirteen times forward earnings. You know clearly that's very

205
00:11:58,720 --> 00:12:02,920
Speaker 10: low relative to the US, where you're at eighteen and

206
00:12:02,960 --> 00:12:07,880
Speaker 10: a half nineteen times takeout tech if you look at

207
00:12:07,880 --> 00:12:12,440
Speaker 10: the equal weighted S and P several multiple points lower,

208
00:12:13,080 --> 00:12:17,360
Speaker 10: so it's not such a start contrast. And Europe just

209
00:12:17,400 --> 00:12:21,000
Speaker 10: doesn't have technology. You know, we don't have the Internet element.

210
00:12:21,320 --> 00:12:23,880
Speaker 10: We do have some semiconductors, but we don't have the

211
00:12:23,920 --> 00:12:26,360
Speaker 10: rest of it, and that's a big difference. So you

212
00:12:26,400 --> 00:12:29,120
Speaker 10: can't just say it's cheap you should buy it. It's

213
00:12:29,240 --> 00:12:33,000
Speaker 10: cheap because of composition and the UK specifically not to

214
00:12:33,080 --> 00:12:38,760
Speaker 10: overegg this, but big on some big consumer staples, but

215
00:12:38,800 --> 00:12:41,840
Speaker 10: a chunk of that's tobacco. Tobacco trades at a lower multiple.

216
00:12:42,080 --> 00:12:44,440
Speaker 10: It's big on financials, but a chunk of that is

217
00:12:45,360 --> 00:12:48,560
Speaker 10: commercial banks, which trade on lower multiples. And it's big

218
00:12:48,600 --> 00:12:52,439
Speaker 10: on energy and materials. And given that we're still close

219
00:12:52,520 --> 00:12:57,079
Speaker 10: to cyclical peak commodity earnings, they're trading in a low multiples.

220
00:12:57,160 --> 00:13:00,480
Speaker 10: So it's not cheap in a comparable basis because of

221
00:13:00,520 --> 00:13:02,240
Speaker 10: composition China.

222
00:13:02,679 --> 00:13:04,360
Speaker 1: It feels like to me when I think about some

223
00:13:04,360 --> 00:13:06,760
Speaker 1: of these European companies as semens just for example, but

224
00:13:06,800 --> 00:13:09,920
Speaker 1: some of the big manufacturing companies in Europe, they depend

225
00:13:10,000 --> 00:13:13,240
Speaker 1: more or they do more business with China. What does

226
00:13:13,280 --> 00:13:17,120
Speaker 1: the China reopening mean? What does the China I don't know,

227
00:13:17,120 --> 00:13:19,240
Speaker 1: a little bit of a cold war building between China

228
00:13:19,320 --> 00:13:19,760
Speaker 1: and the West.

229
00:13:19,800 --> 00:13:20,160
Speaker 12: What is that?

230
00:13:20,440 --> 00:13:23,199
Speaker 1: What are the companies in Europe saying about China as

231
00:13:23,240 --> 00:13:25,280
Speaker 1: a I guess as a supply chain issue and as

232
00:13:25,320 --> 00:13:26,560
Speaker 1: obviously an end market.

233
00:13:26,720 --> 00:13:33,200
Speaker 10: And I think China is a more relevant opportunity for

234
00:13:33,360 --> 00:13:36,360
Speaker 10: the average European company than it is for the average

235
00:13:36,559 --> 00:13:40,760
Speaker 10: US company. The US market itself has a lot more

236
00:13:40,760 --> 00:13:43,560
Speaker 10: of a domestic focus than the European market, which has

237
00:13:43,920 --> 00:13:47,000
Speaker 10: both US and Asia. You know, if you look out

238
00:13:47,040 --> 00:13:51,280
Speaker 10: on a revenue exposure basis, you know, Europe is more

239
00:13:51,320 --> 00:13:57,400
Speaker 10: globalized and from that perspective, part of the hope early

240
00:13:57,520 --> 00:14:02,560
Speaker 10: this year January was a good month specifically for the

241
00:14:02,600 --> 00:14:06,960
Speaker 10: European markets, as was December was the China reopening trade right,

242
00:14:07,320 --> 00:14:10,400
Speaker 10: and you know the issue with that has been as

243
00:14:10,440 --> 00:14:12,680
Speaker 10: of late, I'm sure you're aware, you know, the more

244
00:14:12,720 --> 00:14:16,199
Speaker 10: recent statistics have faltered and it seems like that's sputtering.

245
00:14:17,880 --> 00:14:20,640
Speaker 10: That's not great for the second half outlook, all else

246
00:14:20,680 --> 00:14:27,800
Speaker 10: being equal, for the European markets, our China's strategist is

247
00:14:27,840 --> 00:14:33,600
Speaker 10: still relatively sanguine that more stimulus is coming, more policy

248
00:14:33,720 --> 00:14:37,360
Speaker 10: measures will come, and there are opportunities and as said said,

249
00:14:37,440 --> 00:14:39,800
Speaker 10: you know, the emerging markets are an area all else

250
00:14:39,840 --> 00:14:43,960
Speaker 10: being equal, that we do find intriguing. But China is

251
00:14:43,960 --> 00:14:44,480
Speaker 10: a big deal.

252
00:14:45,120 --> 00:14:47,400
Speaker 6: Yeah, well, of course, and hopefully this earning season we're

253
00:14:47,400 --> 00:14:49,000
Speaker 6: going to get a little bit more of an indication

254
00:14:49,120 --> 00:14:52,240
Speaker 6: as to how the strength of the Chinese consumer is

255
00:14:52,280 --> 00:14:55,800
Speaker 6: going to potentially impact some of these profit margins. Having

256
00:14:55,840 --> 00:14:58,320
Speaker 6: said that, we are hitting seeing that the dollar is

257
00:14:58,400 --> 00:15:01,520
Speaker 6: hitting near fifteen month, Now, how does that play into

258
00:15:01,520 --> 00:15:02,040
Speaker 6: your county?

259
00:15:02,320 --> 00:15:05,960
Speaker 10: This is another one of those elements for the second

260
00:15:05,960 --> 00:15:09,720
Speaker 10: half outlook in Europe. And by the way, if I

261
00:15:09,760 --> 00:15:12,200
Speaker 10: were to use a word technical as it is, it

262
00:15:12,200 --> 00:15:14,840
Speaker 10: would be sloppy. You know, that's kind of what we

263
00:15:15,160 --> 00:15:16,120
Speaker 10: going to steal that from you.

264
00:15:16,120 --> 00:15:18,040
Speaker 6: When I'm trying to sound really smart there.

265
00:15:18,400 --> 00:15:23,600
Speaker 10: Exactly, currency is a big deal. If you look at

266
00:15:23,720 --> 00:15:27,440
Speaker 10: the third quarter specifically, by the time we get into

267
00:15:28,240 --> 00:15:32,320
Speaker 10: that as a reporting period in a few months, whether

268
00:15:32,400 --> 00:15:37,280
Speaker 10: you're British, whether you're Euro based, or whether you're Swiss

269
00:15:37,320 --> 00:15:41,600
Speaker 10: Frank based, currency is going to be somewhere between a

270
00:15:41,680 --> 00:15:44,640
Speaker 10: ten and fourteen percent headwind for you on a year

271
00:15:44,680 --> 00:15:49,080
Speaker 10: over year basis. It's a huge hit. And you know,

272
00:15:49,240 --> 00:15:53,560
Speaker 10: some companies will hedge that away. Some companies are producing

273
00:15:54,040 --> 00:15:58,040
Speaker 10: in the local market, and so there's you know, different accounting,

274
00:15:58,480 --> 00:16:02,360
Speaker 10: you know, sort of opportunity needs to minimize the impact.

275
00:16:02,840 --> 00:16:06,560
Speaker 10: But just overtly, if I'm a Swedish company and I

276
00:16:06,640 --> 00:16:09,840
Speaker 10: generate one hundred percent, you know, the Swedish industrials are

277
00:16:09,840 --> 00:16:14,280
Speaker 10: a big deal. I generate all of my sales abroad,

278
00:16:14,960 --> 00:16:18,200
Speaker 10: it's you know, it's it'll be an interesting element from

279
00:16:18,200 --> 00:16:20,640
Speaker 10: the standpoint of currency impact.

280
00:16:20,280 --> 00:16:23,000
Speaker 6: But maybe a tailwind for some of the consumer stables

281
00:16:23,040 --> 00:16:24,120
Speaker 6: that you mentioned.

282
00:16:23,880 --> 00:16:28,840
Speaker 10: Well, but again, if I'm if I'm Unilever, if I'm Diagio,

283
00:16:30,440 --> 00:16:33,480
Speaker 10: I'm based in what is a strong currency, right, And

284
00:16:34,000 --> 00:16:36,640
Speaker 10: so you know it may be you know, it's more

285
00:16:36,880 --> 00:16:41,840
Speaker 10: a combination of what's going on from the local economic

286
00:16:41,960 --> 00:16:45,960
Speaker 10: the local consumer spending perspective for those consumer based companies.

287
00:16:47,000 --> 00:16:50,720
Speaker 10: But the issue with the defensives in ways they've got

288
00:16:50,800 --> 00:16:56,080
Speaker 10: more currency exposure for a euro of revenue because they

289
00:16:56,080 --> 00:16:59,000
Speaker 10: don't have a cyclical element to offset. You know, it

290
00:16:59,200 --> 00:17:03,960
Speaker 10: makes it more dependent on the currency being a swing factor.

291
00:17:04,040 --> 00:17:06,960
Speaker 10: So if you look at a correlation analysis of who

292
00:17:07,040 --> 00:17:13,320
Speaker 10: has the most negative correlation with currency, it's healthcare and

293
00:17:13,359 --> 00:17:14,080
Speaker 10: its staples.

294
00:17:14,320 --> 00:17:18,960
Speaker 1: Real quick, twenty seconds. A pint in bell sized favorite,

295
00:17:19,080 --> 00:17:21,200
Speaker 1: well sized park. It's a suburb of London. What's not

296
00:17:21,240 --> 00:17:22,159
Speaker 1: going to run me today?

297
00:17:24,119 --> 00:17:24,920
Speaker 10: Seven pounds?

298
00:17:24,960 --> 00:17:25,280
Speaker 8: Really?

299
00:17:25,640 --> 00:17:28,160
Speaker 10: Yeah, but that's inflation. But that's a big beer.

300
00:17:28,960 --> 00:17:29,960
Speaker 8: Is a big relation.

301
00:17:30,280 --> 00:17:34,119
Speaker 10: That said, dude, I had breakfast this morning. Yea, yeah,

302
00:17:34,119 --> 00:17:37,040
Speaker 10: you're talking ridiculous. My wife is over here. Had a

303
00:17:37,080 --> 00:17:40,439
Speaker 10: pizza yesterday for lunch. Twenty six pounds for a pizza

304
00:17:40,480 --> 00:17:43,920
Speaker 10: that was the size of a plate, I mean dollars.

305
00:17:44,760 --> 00:17:45,879
Speaker 8: All right, Tim, Thanks so much for that.

306
00:17:45,920 --> 00:17:49,600
Speaker 1: Tim Craig had Director Research, Senior European strategist, Bloomberg Intelligence.

307
00:17:49,880 --> 00:17:52,960
Speaker 9: You're listening to the tape Cat's are live program Bloomberg

308
00:17:53,000 --> 00:17:56,639
Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the

309
00:17:56,680 --> 00:17:58,760
Speaker 9: tune in app, Bloomberg dot Com.

310
00:17:58,480 --> 00:17:59,880
Speaker 13: And the Bloomberg Business App.

311
00:17:59,880 --> 00:18:02,760
Speaker 9: You can also listen live on Amazon Alexa from our

312
00:18:02,760 --> 00:18:07,840
Speaker 9: flagship New York station, Just say Alexa playing Bloomberg eleven thirty.

313
00:18:08,800 --> 00:18:11,600
Speaker 1: Looking at the fields space here, big move into two

314
00:18:11,640 --> 00:18:14,560
Speaker 1: year treasury down fourteen basis points four point seventy three percent.

315
00:18:15,160 --> 00:18:17,359
Speaker 1: That kind of gets your attention here and looking at

316
00:18:17,400 --> 00:18:21,480
Speaker 1: the Bloomberg Index browser, I go on the terminal the

317
00:18:22,200 --> 00:18:27,120
Speaker 1: Bloomberg aggregate total return unheedged return here for the bond

318
00:18:27,200 --> 00:18:29,680
Speaker 1: market up one point three percent a year to date.

319
00:18:29,680 --> 00:18:32,280
Speaker 1: It's that's a lot better than last year. Let's do

320
00:18:32,359 --> 00:18:35,560
Speaker 1: some more work on the investment grade business out there

321
00:18:35,600 --> 00:18:37,800
Speaker 1: in a fixed income space. Natalie Trevortik joins us, head

322
00:18:37,800 --> 00:18:41,040
Speaker 1: of investment grade credit Strategy. It paid in rego. Natalie,

323
00:18:41,080 --> 00:18:43,160
Speaker 1: thanks so much for joining us here. What's your takeaway

324
00:18:43,160 --> 00:18:45,639
Speaker 1: from this inflation print that we saw this morning.

325
00:18:46,560 --> 00:18:48,679
Speaker 3: Well, it was a very good print, but being a

326
00:18:48,680 --> 00:18:50,520
Speaker 3: bond person, I always have to look for the bear

327
00:18:50,600 --> 00:18:53,960
Speaker 3: scenario and like, maybe it's too good. Why can't we

328
00:18:54,080 --> 00:18:56,520
Speaker 3: just get that point three percent month over month encore

329
00:18:56,640 --> 00:18:58,760
Speaker 3: that we were hoping for, Because now you see the

330
00:18:58,800 --> 00:19:01,520
Speaker 3: stock markets up again. We got really good news in

331
00:19:01,560 --> 00:19:05,200
Speaker 3: terms of airfares and hotels moderating. But maybe it makes

332
00:19:05,240 --> 00:19:08,720
Speaker 3: corporate America think that, hey, we can go about raising

333
00:19:08,800 --> 00:19:11,560
Speaker 3: prices again. And because the economy is doing so well,

334
00:19:11,600 --> 00:19:14,360
Speaker 3: we still have that strong wage growth and the employment

335
00:19:14,400 --> 00:19:17,119
Speaker 3: picture is still very strong. So it seems like the

336
00:19:17,160 --> 00:19:19,600
Speaker 3: economy is firing on all cylinders. Are we in the

337
00:19:19,600 --> 00:19:22,600
Speaker 3: Schooldilock scenario and avoid the recession altogether?

338
00:19:23,359 --> 00:19:26,199
Speaker 6: Okay, so you think that the CPI print from today

339
00:19:26,480 --> 00:19:31,760
Speaker 6: could lead to price increases, because why not. The economy's

340
00:19:31,800 --> 00:19:34,040
Speaker 6: cooling a little bit, so let's just try it out.

341
00:19:35,400 --> 00:19:38,080
Speaker 3: Yeah, Like, maybe not right away, but it also shows

342
00:19:38,080 --> 00:19:41,080
Speaker 3: that there's still strong underlying growth in the economy, from

343
00:19:41,119 --> 00:19:44,120
Speaker 3: the employment picture, the spending that we're seeing in services.

344
00:19:44,160 --> 00:19:46,359
Speaker 3: It was great to see that moderation and goods and

345
00:19:46,400 --> 00:19:49,120
Speaker 3: that's definitely come down, but there's parts of the economy

346
00:19:49,119 --> 00:19:52,040
Speaker 3: which are still running a little bit hot. So maybe

347
00:19:52,040 --> 00:19:54,840
Speaker 3: companies don't have to do the layoffs they were possibly

348
00:19:54,880 --> 00:19:57,119
Speaker 3: thinking they had to do earlier in the year, and

349
00:19:57,200 --> 00:20:00,720
Speaker 3: it is a very nice scenario. Doesn't mean the Fed's

350
00:20:00,720 --> 00:20:03,120
Speaker 3: probably going to have to cut anytime soon, even if

351
00:20:03,160 --> 00:20:05,840
Speaker 3: the second right hike for this year is maybe more

352
00:20:05,880 --> 00:20:07,119
Speaker 3: in doubt at this time.

353
00:20:07,720 --> 00:20:10,040
Speaker 1: So Natalie, of you and the good folks have paid

354
00:20:10,080 --> 00:20:13,440
Speaker 1: in regal, have you taken the recession risk off the table?

355
00:20:13,480 --> 00:20:13,640
Speaker 5: Here?

356
00:20:14,640 --> 00:20:16,880
Speaker 3: Not off the table, but we've definitely pushed it out

357
00:20:16,920 --> 00:20:19,119
Speaker 3: further down the road, So it's not a time to

358
00:20:19,119 --> 00:20:21,920
Speaker 3: be cautious. Yield, even though they've come off the peaks

359
00:20:22,240 --> 00:20:24,800
Speaker 3: from last week, they're still pretty high. So as you

360
00:20:24,800 --> 00:20:27,200
Speaker 3: were saying, you know, the ad return one point three

361
00:20:27,240 --> 00:20:29,800
Speaker 3: percent year to date, ID corps are above two percent,

362
00:20:29,840 --> 00:20:33,160
Speaker 3: but Hi, you bonder have returned five percent year to date,

363
00:20:33,400 --> 00:20:35,680
Speaker 3: so we still think it's a nice cupon clipping year

364
00:20:35,680 --> 00:20:38,440
Speaker 3: for credit and so you can still expect some good

365
00:20:38,440 --> 00:20:40,439
Speaker 3: returns in the second half of the year, and we

366
00:20:40,480 --> 00:20:43,160
Speaker 3: don't want to be too defensive and lose out on those.

367
00:20:44,000 --> 00:20:47,400
Speaker 6: And what about corporate spreads in particular looking a little

368
00:20:47,400 --> 00:20:50,000
Speaker 6: bit tighter in the month of June. What do you

369
00:20:50,400 --> 00:20:52,800
Speaker 6: anticipate that looking like in the second half of the year.

370
00:20:53,560 --> 00:20:56,600
Speaker 3: Yeah, they really rallied after the debt ceiling resolution, and

371
00:20:56,640 --> 00:21:00,439
Speaker 3: they're continuing to do pretty well in July through the

372
00:21:00,520 --> 00:21:03,080
Speaker 3: types of where they started the year at the beginning

373
00:21:03,080 --> 00:21:06,160
Speaker 3: of the year, despite the banking crisis. So we think

374
00:21:06,200 --> 00:21:08,000
Speaker 3: there may be a little bit on the hot side

375
00:21:08,080 --> 00:21:09,760
Speaker 3: right now, but we don't really see a case for

376
00:21:09,840 --> 00:21:12,440
Speaker 3: them to blow out if the recession is pushed out

377
00:21:12,480 --> 00:21:15,800
Speaker 3: to say late twenty twenty four or twenty twenty five.

378
00:21:15,920 --> 00:21:19,000
Speaker 3: So we think you have to definitely pick your spots now.

379
00:21:19,200 --> 00:21:21,040
Speaker 3: We saw a little bit of a beta rally in

380
00:21:21,119 --> 00:21:23,280
Speaker 3: June and maybe that went too far, But there's a

381
00:21:23,280 --> 00:21:25,080
Speaker 3: lot of good names out there which we think can

382
00:21:25,119 --> 00:21:28,960
Speaker 3: perform well. But we wouldn't expect too much further spread

383
00:21:28,960 --> 00:21:31,439
Speaker 3: tightening from here, So the bulk of your return is

384
00:21:31,440 --> 00:21:34,040
Speaker 3: going to come from that carry and coupon clipping.

385
00:21:34,880 --> 00:21:38,440
Speaker 1: Natalie hels the credit quality out there in the mark

386
00:21:38,480 --> 00:21:41,520
Speaker 1: as you look across your portfolio, we've heard people say, boy,

387
00:21:41,520 --> 00:21:43,600
Speaker 1: it's pretty darn good. We don't really have any big

388
00:21:43,680 --> 00:21:44,879
Speaker 1: issues here at the moment.

389
00:21:45,880 --> 00:21:48,600
Speaker 3: We really don't, because companies that are on the cusps

390
00:21:48,600 --> 00:21:50,919
Speaker 3: maybe of low triple B going to high yield have

391
00:21:51,000 --> 00:21:54,639
Speaker 3: already taken steps to either reduce cap X or cut dividends,

392
00:21:54,800 --> 00:21:57,679
Speaker 3: so they're really focused on maintaining their ID ratings. And

393
00:21:57,720 --> 00:22:00,439
Speaker 3: if anything, we're seeing more upgrades, particularly out of the

394
00:22:00,640 --> 00:22:05,240
Speaker 3: energy space. So if anything, we're expecting more rising stars

395
00:22:05,280 --> 00:22:07,120
Speaker 3: than fallen angels in the coming year.

396
00:22:08,000 --> 00:22:09,560
Speaker 6: And when you look at the second half of the

397
00:22:09,640 --> 00:22:13,000
Speaker 6: year two, I'm curious if you think that we're maybe

398
00:22:13,080 --> 00:22:17,480
Speaker 6: underpricing the idea that the market will always give us

399
00:22:17,520 --> 00:22:20,840
Speaker 6: the most painful possible scenario. Do you think that there's

400
00:22:20,880 --> 00:22:23,840
Speaker 6: a potential outcome here of you know, big tech dropping

401
00:22:23,960 --> 00:22:28,160
Speaker 6: and volatility going to the upside in the second half

402
00:22:28,160 --> 00:22:28,560
Speaker 6: of the year.

403
00:22:29,560 --> 00:22:31,480
Speaker 3: I think there's potential. I feel like we're going to

404
00:22:31,640 --> 00:22:34,600
Speaker 3: cruise through the summer, but there's definitely potential in the

405
00:22:34,640 --> 00:22:37,240
Speaker 3: second half of the year. It seems like tech is

406
00:22:37,280 --> 00:22:41,720
Speaker 3: you know, really celebrating the CPI print today, but it

407
00:22:41,760 --> 00:22:43,639
Speaker 3: does seem like it may have gotten a little bit

408
00:22:43,680 --> 00:22:46,399
Speaker 3: ahead of itself. But still the magic words AI just

409
00:22:46,440 --> 00:22:47,200
Speaker 3: propels them for.

410
00:22:47,760 --> 00:22:50,639
Speaker 1: All right, Natalie, Given where we are here in this cycle,

411
00:22:50,680 --> 00:22:52,840
Speaker 1: given where we are with kind of I think most

412
00:22:52,880 --> 00:22:54,320
Speaker 1: people feel like that where the FED is going to

413
00:22:54,359 --> 00:22:56,679
Speaker 1: go over the next meeting or two, if not the

414
00:22:56,680 --> 00:22:58,800
Speaker 1: next six months. What are some of the sectors that

415
00:22:58,840 --> 00:23:01,120
Speaker 1: you guys are finding attractive right now.

416
00:23:02,080 --> 00:23:04,520
Speaker 3: Yeah, we like some of the defensive sectors like consumer,

417
00:23:04,560 --> 00:23:07,720
Speaker 3: non cyclical and utilities because we think they're well positioned

418
00:23:07,760 --> 00:23:10,440
Speaker 3: to do well if we do get that volatility. We

419
00:23:10,560 --> 00:23:13,000
Speaker 3: become a little bit more cautious on the banking sector,

420
00:23:13,000 --> 00:23:14,919
Speaker 3: even though we think we're out of the crisis. We

421
00:23:15,000 --> 00:23:17,399
Speaker 3: think banks have a lot of funding to do, especially

422
00:23:17,400 --> 00:23:20,520
Speaker 3: if there's increased regulation and capital requirements. So just a

423
00:23:20,560 --> 00:23:22,960
Speaker 3: little bit more cautious here from more of a relative

424
00:23:23,080 --> 00:23:26,440
Speaker 3: value perspective, and then it really comes down to individual

425
00:23:26,520 --> 00:23:28,520
Speaker 3: name selection where we think, you know, we rely on

426
00:23:28,520 --> 00:23:30,560
Speaker 3: our credit analysts team to find value there.

427
00:23:31,560 --> 00:23:34,119
Speaker 6: And longer dated bonds, would you say that they're becoming

428
00:23:34,119 --> 00:23:37,920
Speaker 6: more attractive given some of the potential FED moves we're anticipating.

429
00:23:38,920 --> 00:23:41,080
Speaker 3: Yeah, they've kind of been the sweet spot all year,

430
00:23:41,119 --> 00:23:43,320
Speaker 3: ten and thirty year. Demand in the new issue market

431
00:23:43,359 --> 00:23:46,159
Speaker 3: is always the strongest, and at these higher all and

432
00:23:46,280 --> 00:23:48,800
Speaker 3: yields closer to six percent or above six percent in

433
00:23:48,840 --> 00:23:51,600
Speaker 3: some names, it's attracting a lot of buyer interest, even

434
00:23:51,640 --> 00:23:53,359
Speaker 3: though you can get higher yields in the front end

435
00:23:53,400 --> 00:23:55,240
Speaker 3: of the curve, but people want to lock in these

436
00:23:55,280 --> 00:23:56,080
Speaker 3: rates for longer.

437
00:23:56,600 --> 00:23:58,439
Speaker 1: All right, Nattie, I can tell from your accent that

438
00:23:58,480 --> 00:24:02,080
Speaker 1: you're Canadian. Yeah, and I see you went to Queen's University,

439
00:24:02,119 --> 00:24:04,680
Speaker 1: So I have to ask, how did you find yourself

440
00:24:04,680 --> 00:24:06,760
Speaker 1: all the way down in Austin, Texas for your MBA.

441
00:24:08,080 --> 00:24:10,280
Speaker 3: Yeah, Austin. I just wanted to go somewhere hot, and

442
00:24:10,320 --> 00:24:12,520
Speaker 3: it was in two thousand during the energy boom, so

443
00:24:12,560 --> 00:24:14,119
Speaker 3: I thought I was going to go work for Enron,

444
00:24:14,119 --> 00:24:17,040
Speaker 3: and I interviewed with them. Fortunately I made the right

445
00:24:17,040 --> 00:24:19,720
Speaker 3: decision and ended up at Barkley's Capital and Wall Street

446
00:24:19,800 --> 00:24:22,760
Speaker 3: and from there down to Pimpco and now at Peydon.

447
00:24:23,280 --> 00:24:25,480
Speaker 8: Yeah, exactly. See dodged a bullet there with Enrons.

448
00:24:26,040 --> 00:24:26,879
Speaker 3: Yeah, definitely.

449
00:24:27,240 --> 00:24:27,440
Speaker 13: Yeah.

450
00:24:27,760 --> 00:24:30,000
Speaker 8: I bet your Texas sent a lot of kids to

451
00:24:30,160 --> 00:24:32,360
Speaker 8: Ron back in the day. Oh, they sure did.

452
00:24:32,920 --> 00:24:34,840
Speaker 1: Yeah, all right, Natalie, thanks so much for joining us there.

453
00:24:34,920 --> 00:24:38,440
Speaker 1: Natalie Trevor Thick, head of investment grade credit strategy at

454
00:24:38,440 --> 00:24:40,960
Speaker 1: Peydon and Reid talking to us about what's happening in

455
00:24:40,960 --> 00:24:41,719
Speaker 1: a credit space.

456
00:24:42,960 --> 00:24:46,320
Speaker 9: You're listening to the Team Ken's are live program Bloomberg

457
00:24:46,440 --> 00:24:49,800
Speaker 9: Markets weekdays at ten am Eastern on Bloomberg dot Com,

458
00:24:49,880 --> 00:24:53,040
Speaker 9: the iHeartRadio app and the Bloomberg Business App, or listen

459
00:24:53,080 --> 00:24:55,200
Speaker 9: on demand wherever you get your podcasts.

460
00:24:56,600 --> 00:24:59,600
Speaker 1: All right, let's go to Ira Jersey. You're talking old school,

461
00:24:59,640 --> 00:25:02,000
Speaker 1: I talk Iri Jersey. I mean this guy, he's got

462
00:25:02,000 --> 00:25:04,240
Speaker 1: a little sport. Cody keeps down a prince in case

463
00:25:04,240 --> 00:25:06,600
Speaker 1: he needs to get on TV because he becomes super casual.

464
00:25:07,040 --> 00:25:09,119
Speaker 8: But he joins us from Princeton, Ira Jersey.

465
00:25:09,160 --> 00:25:11,879
Speaker 1: Chief, you wish to interest rate strategist Ira heck of

466
00:25:11,920 --> 00:25:14,960
Speaker 1: a good print there for people that are like guest

467
00:25:15,040 --> 00:25:17,600
Speaker 1: calling for FED to kind of hold off a little bit.

468
00:25:17,640 --> 00:25:19,720
Speaker 1: What did you take away from the inflation data we

469
00:25:19,720 --> 00:25:20,359
Speaker 1: saw this morning.

470
00:25:20,960 --> 00:25:23,160
Speaker 12: Well, first, let me say Paul that I'm with you.

471
00:25:23,280 --> 00:25:25,320
Speaker 11: Let's go out and get our food and if we

472
00:25:25,359 --> 00:25:26,880
Speaker 11: want to bring it back for the family.

473
00:25:27,080 --> 00:25:29,880
Speaker 6: Because you guys don't live in walk ups. Okay, this

474
00:25:29,960 --> 00:25:31,600
Speaker 6: is this is the key indicator.

475
00:25:32,800 --> 00:25:33,960
Speaker 12: Gotcha. I guess that's true.

476
00:25:34,160 --> 00:25:38,040
Speaker 11: Ahead, So yeah, yeah, so the inflation print was obviously good.

477
00:25:38,240 --> 00:25:40,280
Speaker 11: Like members of the Federal Reserve are going to like it.

478
00:25:40,280 --> 00:25:42,960
Speaker 11: They're going to say, Okay, we're we're heading toward our goal.

479
00:25:43,000 --> 00:25:45,520
Speaker 11: We're not there yet. I think that's some of the

480
00:25:46,400 --> 00:25:48,640
Speaker 11: Fed speak that you'll that you'll hear is that we're

481
00:25:48,640 --> 00:25:49,080
Speaker 11: not out.

482
00:25:48,960 --> 00:25:49,439
Speaker 12: Of the woods.

483
00:25:49,480 --> 00:25:53,199
Speaker 11: But these this is a certainly decent data and the

484
00:25:53,240 --> 00:25:55,760
Speaker 11: market reaction to it, I think is pretty appropriate. You know,

485
00:25:55,920 --> 00:26:00,320
Speaker 11: very significant, very significant rallies in the front under the

486
00:26:00,359 --> 00:26:02,280
Speaker 11: yield curve. So you're looking at two year, three or

487
00:26:02,320 --> 00:26:05,720
Speaker 11: five year rates of you know, fifteen eighteen basis points

488
00:26:05,720 --> 00:26:09,440
Speaker 11: lower at some points during the morning, and that's basically

489
00:26:09,480 --> 00:26:12,960
Speaker 11: pricing out a second twenty five basis point hike late

490
00:26:13,040 --> 00:26:14,480
Speaker 11: after after July.

491
00:26:15,080 --> 00:26:19,440
Speaker 6: So what is the single most important data point for

492
00:26:19,560 --> 00:26:22,520
Speaker 6: the FED to make that September decision.

493
00:26:22,119 --> 00:26:26,000
Speaker 11: Based off of Yeah, there's not one, right, So, you know,

494
00:26:26,040 --> 00:26:28,000
Speaker 11: the Federal Reserve, like most of us, we look at

495
00:26:28,000 --> 00:26:31,880
Speaker 11: a mosaic of data that's coming in. But it certainly

496
00:26:31,920 --> 00:26:34,880
Speaker 11: is the different inflation prints and those things that affect

497
00:26:34,880 --> 00:26:39,199
Speaker 11: the inflation print. So last week's job's number obviously was

498
00:26:39,240 --> 00:26:42,040
Speaker 11: one of them. Because even though, like when you look

499
00:26:42,040 --> 00:26:45,240
Speaker 11: at the whole pantheon and of the data that we

500
00:26:45,320 --> 00:26:50,120
Speaker 11: receive today in terms of the CPI report, services growth,

501
00:26:50,560 --> 00:26:53,480
Speaker 11: even though it's slowing, is still reasonably high. And you

502
00:26:53,520 --> 00:26:58,600
Speaker 11: look at core services, so that's services excluding say shelter costs,

503
00:26:58,640 --> 00:27:01,199
Speaker 11: and you see that that actually is still growing at

504
00:27:01,240 --> 00:27:05,040
Speaker 11: a reasonably decent pace, and that's very impacted by how

505
00:27:05,040 --> 00:27:07,400
Speaker 11: many jobs there are, what wages are doing in.

506
00:27:07,320 --> 00:27:08,400
Speaker 12: Those services sectors.

507
00:27:08,760 --> 00:27:11,960
Speaker 11: So I think that there'll be a very meaningful, you know,

508
00:27:12,240 --> 00:27:14,440
Speaker 11: view of that when you get when we get both

509
00:27:14,480 --> 00:27:17,359
Speaker 11: the July and the August data, because remember before the

510
00:27:17,400 --> 00:27:21,000
Speaker 11: September meeting, we'll get both CPI and the Jobs Report

511
00:27:21,040 --> 00:27:24,320
Speaker 11: for two more months for both July and August, so

512
00:27:24,480 --> 00:27:26,840
Speaker 11: it's not any one of those prints's I think the

513
00:27:27,240 --> 00:27:30,040
Speaker 11: continuation and do we see a continuation of this moderation

514
00:27:30,280 --> 00:27:31,879
Speaker 11: in some of these data.

515
00:27:32,040 --> 00:27:34,040
Speaker 1: And of course I wrote looking at the world indust

516
00:27:34,080 --> 00:27:37,240
Speaker 1: rate probability function on the Bloomberg terminal, the work the

517
00:27:37,280 --> 00:27:40,840
Speaker 1: market is kind of taking down its expectations pretty dramatically

518
00:27:40,920 --> 00:27:44,520
Speaker 1: for a second rate hike after this potentially one in July.

519
00:27:45,119 --> 00:27:47,200
Speaker 1: Does that job with kind of what you're thinking.

520
00:27:48,119 --> 00:27:50,199
Speaker 11: Yeah, it is and it has been you know, one

521
00:27:50,240 --> 00:27:53,560
Speaker 11: of the things that Annawang and I had talked about

522
00:27:53,920 --> 00:27:56,800
Speaker 11: right after the Federal Reserve meeting in June was whether

523
00:27:56,920 --> 00:27:59,359
Speaker 11: or not the dot plot, which was suggesting that they

524
00:27:59,400 --> 00:28:01,480
Speaker 11: were going to be two more twenty five basis point

525
00:28:01,960 --> 00:28:04,920
Speaker 11: interest rate increases this year, whether or not that's second one,

526
00:28:04,920 --> 00:28:07,560
Speaker 11: in particular, was this jaw boning trying to get rid

527
00:28:07,600 --> 00:28:10,320
Speaker 11: of some of the cuts that were priced into the market.

528
00:28:10,359 --> 00:28:13,720
Speaker 11: And I think that that's I don't think it's clear

529
00:28:13,760 --> 00:28:15,199
Speaker 11: that that's what they were trying to do, but I

530
00:28:15,200 --> 00:28:17,760
Speaker 11: think that that certainly is what happened in the markets.

531
00:28:18,200 --> 00:28:20,600
Speaker 11: Was you not only priced in one more interest rate hike,

532
00:28:20,680 --> 00:28:24,520
Speaker 11: but you priced out the potential for cuts anytime this year.

533
00:28:24,560 --> 00:28:26,960
Speaker 11: And I think that that's really one of the policy

534
00:28:27,040 --> 00:28:28,600
Speaker 11: decisions at the FED needed to do.

535
00:28:28,680 --> 00:28:28,840
Speaker 14: Now.

536
00:28:28,840 --> 00:28:31,639
Speaker 11: I think there's other ways the Fed could have communicated that,

537
00:28:31,800 --> 00:28:33,760
Speaker 11: other than saying that they were going to hike more.

538
00:28:34,000 --> 00:28:35,879
Speaker 11: They could have just said, look, we're not going to

539
00:28:35,960 --> 00:28:38,800
Speaker 11: cut interest rates until the unemployment rate is above five

540
00:28:38,880 --> 00:28:41,600
Speaker 11: percent or something like that, and give some kind of

541
00:28:41,680 --> 00:28:46,000
Speaker 11: target for what the minimum what the minimum is for

542
00:28:46,080 --> 00:28:48,840
Speaker 11: the for different economic indicators for the Fed Reserve to

543
00:28:48,920 --> 00:28:51,040
Speaker 11: make a downward move in rates. And I think we're

544
00:28:51,040 --> 00:28:54,280
Speaker 11: nowhere near any of those trigger points at the.

545
00:28:54,200 --> 00:28:57,120
Speaker 6: Moment when we got the FED minutes, it became clear

546
00:28:57,160 --> 00:29:00,960
Speaker 6: that there was definitely some division months to the voting

547
00:29:01,040 --> 00:29:04,400
Speaker 6: members when it came to the last rate call there.

548
00:29:04,920 --> 00:29:07,120
Speaker 6: And we get the FED page book later this afternoon,

549
00:29:07,120 --> 00:29:09,040
Speaker 6: which might give us some more details on that. But

550
00:29:09,200 --> 00:29:11,440
Speaker 6: IIRA talk to me about whether a print like the

551
00:29:11,480 --> 00:29:14,760
Speaker 6: one we got today leads to more division amongst the

552
00:29:14,840 --> 00:29:16,200
Speaker 6: voting members or less.

553
00:29:17,720 --> 00:29:20,520
Speaker 11: Well, So I think if the FED does increase rates

554
00:29:20,520 --> 00:29:23,720
Speaker 11: twenty five basis points, that it's possible after this kind

555
00:29:23,720 --> 00:29:27,360
Speaker 11: of print, maybe you get one or two more dubvish

556
00:29:27,520 --> 00:29:30,400
Speaker 11: members say that, hey, we should be done.

557
00:29:30,520 --> 00:29:33,240
Speaker 12: But I suspect that July is basically a done deal.

558
00:29:33,320 --> 00:29:36,880
Speaker 11: You won't get any descents for July, at least based

559
00:29:36,920 --> 00:29:39,840
Speaker 11: on the data we have right now. I think it

560
00:29:40,240 --> 00:29:43,880
Speaker 11: can and can become more contentious going forward. So when

561
00:29:43,880 --> 00:29:48,160
Speaker 11: we reach September and November, if the inflation data comes

562
00:29:48,160 --> 00:29:50,280
Speaker 11: in closer to say, on a month a month basis

563
00:29:50,280 --> 00:29:53,760
Speaker 11: point three percent, do we end up with some members saying, well,

564
00:29:53,800 --> 00:29:56,600
Speaker 11: we still have to hike more because inflation is still

565
00:29:56,640 --> 00:29:59,520
Speaker 11: not near our target. It's still running at three and

566
00:29:59,560 --> 00:30:04,160
Speaker 11: a half or four percent year on year, So so you know,

567
00:30:04,240 --> 00:30:06,720
Speaker 11: do we need to we should be hiking more, whereas

568
00:30:06,760 --> 00:30:08,600
Speaker 11: you have other members saying, look, we've done a lot,

569
00:30:08,760 --> 00:30:11,800
Speaker 11: we have to give it some time, let's see, let's

570
00:30:11,840 --> 00:30:14,480
Speaker 11: wait and see for a little while. I think ultimately

571
00:30:14,520 --> 00:30:16,520
Speaker 11: those wait and see people will win out.

572
00:30:16,640 --> 00:30:18,760
Speaker 12: That's that's our call right now.

573
00:30:19,480 --> 00:30:21,560
Speaker 11: But obviously, like you mentioned, there is a lot of

574
00:30:21,640 --> 00:30:24,480
Speaker 11: data that we're going to get between now and September

575
00:30:24,480 --> 00:30:26,360
Speaker 11: and then certainly the November meetings.

576
00:30:26,840 --> 00:30:30,280
Speaker 1: So Ira, if the data stays roughly the same as

577
00:30:30,320 --> 00:30:32,560
Speaker 1: kind of what we're seeing right now, is a rate

578
00:30:32,760 --> 00:30:35,920
Speaker 1: cut a not to a twenty twenty four? Is that

579
00:30:35,960 --> 00:30:37,280
Speaker 1: the kind of an event we should be thinking better

580
00:30:37,400 --> 00:30:38,880
Speaker 1: timeframe we should be thinking about.

581
00:30:39,200 --> 00:30:40,840
Speaker 12: Yeah, And I even think late twenty four.

582
00:30:41,040 --> 00:30:43,360
Speaker 11: I think that I think the Federal Reserve might not,

583
00:30:43,640 --> 00:30:45,680
Speaker 11: you know, be thinking about really cutting until the third

584
00:30:45,760 --> 00:30:49,760
Speaker 11: or fourth quarter of next year unless something significantly changes.

585
00:30:49,440 --> 00:30:50,240
Speaker 12: In the job market.

586
00:30:50,320 --> 00:30:53,400
Speaker 11: Remember, the Federal Reserve, unlike some other central banks, is

587
00:30:53,440 --> 00:30:57,040
Speaker 11: really only concerned right now, is only concerned about inflation.

588
00:30:57,560 --> 00:31:00,240
Speaker 12: But it would would be concerned.

589
00:31:00,120 --> 00:31:03,440
Speaker 11: About the job market if you saw the unemployment rate

590
00:31:03,480 --> 00:31:07,080
Speaker 11: go up significantly and if you saw certainly job losses

591
00:31:07,120 --> 00:31:10,240
Speaker 11: and we still don't have job losses right, So until

592
00:31:10,280 --> 00:31:14,440
Speaker 11: you start to see nonfarm payroll be negative, I don't

593
00:31:14,440 --> 00:31:17,040
Speaker 11: see a reason why the Federal Reserve would necessarily be

594
00:31:17,080 --> 00:31:21,040
Speaker 11: thinking about cutting at this point. Because in a situation

595
00:31:21,120 --> 00:31:24,640
Speaker 11: where interest rates are at five percent, in the FED

596
00:31:24,680 --> 00:31:27,520
Speaker 11: funds rate inflations two and a half percent, and the

597
00:31:27,600 --> 00:31:30,320
Speaker 11: unemployment rate is right where it is now, that's a

598
00:31:30,360 --> 00:31:32,400
Speaker 11: great situation for the Fed. I think the Fed would

599
00:31:32,400 --> 00:31:34,600
Speaker 11: be very happy with that situation quite frankly.

600
00:31:35,040 --> 00:31:36,400
Speaker 8: All right, important stuff.

601
00:31:36,680 --> 00:31:39,600
Speaker 1: When and where can I see Lionel Messi play for

602
00:31:39,760 --> 00:31:42,600
Speaker 1: inter Miami.

603
00:31:43,520 --> 00:31:46,000
Speaker 11: You know that's a good question. I have not kept track.

604
00:31:46,040 --> 00:31:49,120
Speaker 11: I'm not a messy tracker like that. We're in the middle.

605
00:31:49,400 --> 00:31:51,920
Speaker 11: We're just at the very end of our USL League

606
00:31:51,960 --> 00:31:54,760
Speaker 11: two season here at Real Central and Jay So.

607
00:31:55,360 --> 00:31:58,160
Speaker 12: We have our last home match tonight. So that's been my.

608
00:31:58,120 --> 00:32:00,520
Speaker 10: Oh really okay us playing.

609
00:32:01,280 --> 00:32:04,920
Speaker 11: We play Westchester United from Westchester, Pennsylvania. We had a

610
00:32:04,960 --> 00:32:08,040
Speaker 11: game against Philadelphia lone Star on Monday which ended up

611
00:32:08,040 --> 00:32:11,280
Speaker 11: pretty well for US. With an Olympico and you can

612
00:32:11,320 --> 00:32:14,840
Speaker 11: look that up and you're interested in Seawoydal Olympico is.

613
00:32:15,280 --> 00:32:18,440
Speaker 1: Real Central, New Jersey. Good stuff there. That is minor

614
00:32:18,520 --> 00:32:21,840
Speaker 1: league soccer. Ira Jerseys all over that he's our soccer guru,

615
00:32:22,080 --> 00:32:23,880
Speaker 1: and he also does this interest rate thing on the

616
00:32:23,920 --> 00:32:26,480
Speaker 1: side as well. Ira Jersey, Chief US interest rate strategist

617
00:32:26,960 --> 00:32:31,840
Speaker 1: for Bloomberg Intelligence, joining us from the bi HQ down

618
00:32:31,880 --> 00:32:33,000
Speaker 1: there in Princeton.

619
00:32:33,120 --> 00:32:36,240
Speaker 9: You're listening to the tape cats are Live program Bloomberg

620
00:32:36,280 --> 00:32:39,880
Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the

621
00:32:39,920 --> 00:32:43,160
Speaker 9: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

622
00:32:43,200 --> 00:32:46,000
Speaker 9: You can also listen live on Amazon Alexa from our

623
00:32:46,040 --> 00:32:51,000
Speaker 9: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

624
00:32:51,920 --> 00:32:54,920
Speaker 1: Greg Friedman joins us. He's to see of Peachtree Group.

625
00:32:55,320 --> 00:32:56,920
Speaker 1: They own a lot of commercial real estate, including a

626
00:32:56,960 --> 00:32:59,880
Speaker 1: lot of hotels. Greg, so put me my place here.

627
00:33:00,240 --> 00:33:03,040
Speaker 1: Talk to us about the health of the commercial or

628
00:33:03,040 --> 00:33:05,560
Speaker 1: the status of the commercial real estate business today, because

629
00:33:05,600 --> 00:33:07,680
Speaker 1: it just seems like every commercial building I go in

630
00:33:07,800 --> 00:33:10,560
Speaker 1: around the country, I see the sign out front saying,

631
00:33:10,600 --> 00:33:12,800
Speaker 1: you know, three thousand, ten thousand.

632
00:33:12,520 --> 00:33:14,480
Speaker 8: Square feet available. Talk to us about the state of

633
00:33:14,480 --> 00:33:14,880
Speaker 8: the market.

634
00:33:14,960 --> 00:33:15,160
Speaker 13: Yeah.

635
00:33:15,280 --> 00:33:18,160
Speaker 4: Sure, it's a great question. And there's definitely a bifurcation

636
00:33:18,240 --> 00:33:21,960
Speaker 4: across commercial real estate today. So you know, not all assets,

637
00:33:22,000 --> 00:33:24,360
Speaker 4: you know, asset classes within commercial real state are equal.

638
00:33:24,400 --> 00:33:26,600
Speaker 4: So you have office that's going through a lot of

639
00:33:26,640 --> 00:33:29,040
Speaker 4: secular distress. You know, the return of office has been

640
00:33:29,080 --> 00:33:31,440
Speaker 4: slower on the recovery. And then you look at the

641
00:33:31,440 --> 00:33:35,000
Speaker 4: hospitality industry. You're going through the pandemic. You know, had

642
00:33:35,040 --> 00:33:37,800
Speaker 4: its worse, you know, from an occurancy perspective, it was

643
00:33:37,800 --> 00:33:40,480
Speaker 4: at the worst level of all time, and now it's

644
00:33:40,520 --> 00:33:43,840
Speaker 4: recovered extremely well. So, I mean there's been a robust

645
00:33:43,960 --> 00:33:46,840
Speaker 4: recovery across the hospitality space. And then you look at

646
00:33:46,880 --> 00:33:50,800
Speaker 4: you know, multifamily, industrial, self storage, those asset classes continue

647
00:33:50,840 --> 00:33:53,560
Speaker 4: to do really well across commercial real estate at the

648
00:33:53,600 --> 00:33:55,880
Speaker 4: asset level. Now, with that said, there's a lot of

649
00:33:55,920 --> 00:33:58,600
Speaker 4: balance sheet to stress that's you know, taking place across

650
00:33:58,640 --> 00:34:01,640
Speaker 4: all commercial real state assets. That's today just given how

651
00:34:01,680 --> 00:34:04,840
Speaker 4: fast the FED has increased interest rates, so you've seen

652
00:34:05,160 --> 00:34:07,120
Speaker 4: you know, rates have gone up a good five hundred

653
00:34:07,160 --> 00:34:09,799
Speaker 4: basis points and that's putting a lot of pressure on

654
00:34:09,880 --> 00:34:13,600
Speaker 4: the underlying you know, valuations across commercial real estate assets

655
00:34:13,600 --> 00:34:16,919
Speaker 4: because ultimately typically you know, about two hundred and seventy

656
00:34:16,920 --> 00:34:19,719
Speaker 4: ten or eighty basis points above the risk free rate

657
00:34:19,840 --> 00:34:22,920
Speaker 4: is where cap rates for traditional commercial real state assets,

658
00:34:22,960 --> 00:34:26,239
Speaker 4: that's where they trade. And right now, you know, the

659
00:34:26,680 --> 00:34:29,439
Speaker 4: risk free rates around the ten yere treasure rate, which

660
00:34:29,480 --> 00:34:31,799
Speaker 4: is four percent, So when you look at you know,

661
00:34:31,800 --> 00:34:33,839
Speaker 4: I think it came down a little bit with with

662
00:34:34,000 --> 00:34:36,839
Speaker 4: inflation moderating today, but still it's around four percent. So

663
00:34:37,200 --> 00:34:40,360
Speaker 4: ultimately a lot of commercial real estate assets had experienced

664
00:34:40,400 --> 00:34:44,600
Speaker 4: this just robust increase in valuations during the pandemic when

665
00:34:44,640 --> 00:34:46,839
Speaker 4: interest rates went to zero. Now we're on the other

666
00:34:46,920 --> 00:34:49,200
Speaker 4: side of that trade, and so I would argue that

667
00:34:49,239 --> 00:34:52,640
Speaker 4: there's more balance sheet distress right now across commercial real

668
00:34:52,719 --> 00:34:55,320
Speaker 4: estate with loans that are maturing, because there's a huge

669
00:34:55,360 --> 00:34:58,200
Speaker 4: wall of debt maturities that are taking place, and that's

670
00:34:58,200 --> 00:35:02,200
Speaker 4: a bigger impact than just what's happening just across you know, again,

671
00:35:02,280 --> 00:35:05,040
Speaker 4: you have some secular distress in office, but outside of that,

672
00:35:05,080 --> 00:35:06,919
Speaker 4: most of the other asset classes are doing well.

673
00:35:07,360 --> 00:35:09,840
Speaker 6: So, Greg, you mentioned that there's some opportunities still in

674
00:35:09,880 --> 00:35:11,560
Speaker 6: the hotel space, and I have to talk to you

675
00:35:11,600 --> 00:35:14,399
Speaker 6: then about a story that Paul and I love so much,

676
00:35:14,400 --> 00:35:18,360
Speaker 6: which is the bankruptcy filing of Jimmy Buffett's Margeritaville hotel.

677
00:35:18,800 --> 00:35:21,279
Speaker 6: In Times Square. Okay, they had a refinance about three

678
00:35:21,360 --> 00:35:24,000
Speaker 6: hundred million dollars of debt that was tied to the project.

679
00:35:24,480 --> 00:35:28,080
Speaker 6: If a hotel like Margaritaville in Times Square can't make

680
00:35:28,120 --> 00:35:30,359
Speaker 6: it these days, who can, right?

681
00:35:30,719 --> 00:35:32,600
Speaker 4: And I think that's you know, that's a classic case

682
00:35:32,600 --> 00:35:35,200
Speaker 4: where there's a lot of debt on that property that's

683
00:35:35,200 --> 00:35:38,920
Speaker 4: facing that balance sheet distress with loan maturities, higher interest

684
00:35:39,400 --> 00:35:42,319
Speaker 4: costs at floating rate debt, and so you know, that's

685
00:35:42,440 --> 00:35:44,719
Speaker 4: more of a balance sheet issue per se. I don't

686
00:35:44,719 --> 00:35:47,719
Speaker 4: think it necessarily represents what's happening at the asset level

687
00:35:47,719 --> 00:35:50,200
Speaker 4: and the performance. And that's a I would say it's

688
00:35:50,200 --> 00:35:52,279
Speaker 4: more of a one off, you know, scenario than what's

689
00:35:52,320 --> 00:35:55,760
Speaker 4: happening across on a macro scale, what's happening across the

690
00:35:55,760 --> 00:35:58,640
Speaker 4: hospitality space. So there's you know, there's definitely that balance

691
00:35:58,680 --> 00:36:01,239
Speaker 4: sheet distress. But ultimately, the way I look at the

692
00:36:01,239 --> 00:36:03,320
Speaker 4: real estate space today, to me, the better place to

693
00:36:03,360 --> 00:36:05,400
Speaker 4: be investing is in the credit side of the business

694
00:36:05,719 --> 00:36:08,120
Speaker 4: because there's a huge trade there where you can go

695
00:36:08,160 --> 00:36:10,640
Speaker 4: out and directly lend to groups. Because you know, the

696
00:36:10,640 --> 00:36:13,080
Speaker 4: banking market's pulled back and a lot of cases you

697
00:36:13,080 --> 00:36:16,160
Speaker 4: can lend and be getting equity like returns where you're

698
00:36:16,200 --> 00:36:18,239
Speaker 4: you know, leveraging, you know, closer to you know, call

699
00:36:18,280 --> 00:36:21,040
Speaker 4: it fifty to seventy percent of the acquisition costs.

700
00:36:21,520 --> 00:36:24,600
Speaker 1: Talk to us about your hotel holdings, your businesses there.

701
00:36:24,920 --> 00:36:27,160
Speaker 1: What kind of hotels do you own, where are they

702
00:36:27,360 --> 00:36:28,240
Speaker 1: and how are they performing?

703
00:36:28,360 --> 00:36:28,560
Speaker 5: Yeah?

704
00:36:28,600 --> 00:36:30,560
Speaker 4: Sure, so you know our assets. You know, we own

705
00:36:30,600 --> 00:36:33,520
Speaker 4: a lot of hotels across the US, so it's pretty diversified.

706
00:36:33,840 --> 00:36:37,120
Speaker 4: We do have a heavy presence in the Southeast. We

707
00:36:37,200 --> 00:36:39,920
Speaker 4: have a lot of you know, hotels across the you know,

708
00:36:39,960 --> 00:36:42,560
Speaker 4: the Midwest, the you know, in Texas as well as

709
00:36:42,560 --> 00:36:44,640
Speaker 4: out in the West coast in Arizona and so forth.

710
00:36:44,680 --> 00:36:46,840
Speaker 4: But you know, most of our assets are in the Southeast,

711
00:36:47,200 --> 00:36:49,560
Speaker 4: as well as some in the mid Atlantic. But we

712
00:36:49,640 --> 00:36:50,719
Speaker 4: own a bunch of hotels on.

713
00:36:50,680 --> 00:36:51,319
Speaker 12: The equity side.

714
00:36:51,320 --> 00:36:54,400
Speaker 4: But we also have a huge portfolio of assets that

715
00:36:54,440 --> 00:36:56,640
Speaker 4: we have invested on the debt side, where we have

716
00:36:56,719 --> 00:36:59,319
Speaker 4: first mortgage loans where we've originated most of these loans,

717
00:36:59,320 --> 00:37:01,799
Speaker 4: where we bought loans during the pandemic. You know, we

718
00:37:01,800 --> 00:37:04,400
Speaker 4: were one of the biggest buyers of debt during the pandemic,

719
00:37:04,440 --> 00:37:06,319
Speaker 4: where we bought over one hundred and eighty loans from

720
00:37:06,360 --> 00:37:11,400
Speaker 4: different financial institutions, primarily banks, and we also did a

721
00:37:11,440 --> 00:37:13,839
Speaker 4: lot of direct lending obviously throughout the pandemic as well

722
00:37:13,840 --> 00:37:16,319
Speaker 4: as even today on hotels, and we also finance other

723
00:37:16,480 --> 00:37:19,200
Speaker 4: commercial real state assets on the debt side too today.

724
00:37:19,400 --> 00:37:22,319
Speaker 6: What is the customer demographic looking like for most of

725
00:37:22,360 --> 00:37:24,920
Speaker 6: your hotels? Would you say more middle to low income?

726
00:37:25,080 --> 00:37:25,840
Speaker 12: What's the range?

727
00:37:26,239 --> 00:37:28,760
Speaker 4: Yes, So most of our hotels, you know, are really

728
00:37:28,760 --> 00:37:31,719
Speaker 4: catering towards you know, a balance of corporate travelers as

729
00:37:31,719 --> 00:37:33,920
Speaker 4: well as you know where we have a fair amount

730
00:37:33,960 --> 00:37:37,000
Speaker 4: of leisure travelers as well. It's mostly mid scale hotels,

731
00:37:37,600 --> 00:37:40,840
Speaker 4: so it's really, you know, really catering towards the I

732
00:37:40,880 --> 00:37:43,960
Speaker 4: would say more the you know, mid scale traveler that's

733
00:37:44,000 --> 00:37:45,160
Speaker 4: traveling across the US.

734
00:37:45,360 --> 00:37:48,440
Speaker 6: So, then, are you feeling any impact of the decline

735
00:37:48,480 --> 00:37:52,200
Speaker 6: and popularity of Airbnb in terms of occupancy or is

736
00:37:52,239 --> 00:37:55,000
Speaker 6: that something that you're not anticipating feeling just yet.

737
00:37:55,239 --> 00:37:58,239
Speaker 4: Yeah, it's a great question. So we've seen, you know,

738
00:37:58,360 --> 00:38:00,600
Speaker 4: just across because Airbnb has been a discussion over the

739
00:38:00,680 --> 00:38:03,120
Speaker 4: last you know, six seven years. Yeah, and it really

740
00:38:03,160 --> 00:38:07,000
Speaker 4: hasn't impacted our hotels as much, there's been an impact

741
00:38:07,080 --> 00:38:10,200
Speaker 4: on the ability to drive rates on these on these

742
00:38:10,239 --> 00:38:13,000
Speaker 4: sellout nights. So when there's you know, say there's the

743
00:38:13,040 --> 00:38:15,120
Speaker 4: super Bowl or there's some type of one time event

744
00:38:15,320 --> 00:38:17,960
Speaker 4: in a market, there's this phantom amount of supply that

745
00:38:18,000 --> 00:38:21,160
Speaker 4: comes in the market through Airbnb that ends up impacting

746
00:38:21,160 --> 00:38:23,440
Speaker 4: our ability to drive rates. But given the type of

747
00:38:23,440 --> 00:38:26,040
Speaker 4: hotels in our customer mix, you know, most of our

748
00:38:26,080 --> 00:38:28,799
Speaker 4: customers like staying at our hotels because they have you know,

749
00:38:28,840 --> 00:38:31,839
Speaker 4: they have a consistency of service, they know exactly the

750
00:38:31,880 --> 00:38:34,200
Speaker 4: products as well as you know, we own a lot

751
00:38:34,200 --> 00:38:36,479
Speaker 4: of Marriotte Hilton branded hotels and they like to get.

752
00:38:36,400 --> 00:38:40,080
Speaker 1: Their points all right, So what do you think or

753
00:38:40,120 --> 00:38:43,520
Speaker 1: how bad do you think the credit side.

754
00:38:43,360 --> 00:38:45,360
Speaker 8: Of commercial real estate is going to be?

755
00:38:45,400 --> 00:38:46,759
Speaker 1: We've heard a lot about it from It's going to

756
00:38:46,760 --> 00:38:48,680
Speaker 1: be a real problem for a lot of banks at

757
00:38:48,680 --> 00:38:50,839
Speaker 1: some point in time. You tend there be a bunch

758
00:38:50,880 --> 00:38:52,960
Speaker 1: of this debt coming do and sure it's gonna be

759
00:38:53,000 --> 00:38:55,000
Speaker 1: tough to refinance it at these higher rates, and and

760
00:38:55,040 --> 00:38:57,080
Speaker 1: the value of your underlying property is much lower than

761
00:38:57,120 --> 00:38:59,520
Speaker 1: it was. You have loan to value issues. How bad

762
00:38:59,560 --> 00:39:00,839
Speaker 1: is that going to and when do you think that's

763
00:39:00,840 --> 00:39:02,680
Speaker 1: going to really hit the system.

764
00:39:03,200 --> 00:39:06,000
Speaker 4: Yeah, I think it's it's going to be personally, I

765
00:39:06,040 --> 00:39:08,279
Speaker 4: think there's going to be this wave of you know,

766
00:39:08,400 --> 00:39:11,759
Speaker 4: debt maturities that are going to create a lot of challenges. So,

767
00:39:11,760 --> 00:39:13,600
Speaker 4: I mean, I think, you know how bad it's going

768
00:39:13,640 --> 00:39:15,279
Speaker 4: to be, It's hard to tell at this point. I

769
00:39:15,280 --> 00:39:18,360
Speaker 4: think there's there's no question forty percent of the liquidity

770
00:39:18,360 --> 00:39:21,520
Speaker 4: in the market for debt typically comes from you know,

771
00:39:21,680 --> 00:39:24,440
Speaker 4: national banks, the regional and the community banks. They're just

772
00:39:24,480 --> 00:39:25,759
Speaker 4: not able to lend because a lot of them are

773
00:39:25,760 --> 00:39:28,239
Speaker 4: trying to shore up their balance sheets. And so ultimately,

774
00:39:29,040 --> 00:39:31,160
Speaker 4: I think, you know, there is going to be you know,

775
00:39:31,200 --> 00:39:33,680
Speaker 4: I think there's a lot of opportunities for private lenders

776
00:39:33,719 --> 00:39:36,160
Speaker 4: like us to fill that void. I think that's gonna

777
00:39:36,160 --> 00:39:39,080
Speaker 4: put a lot of pressure on different real estate owners

778
00:39:39,960 --> 00:39:42,040
Speaker 4: because they're gonna have to pay higher spreads. They're gonna

779
00:39:42,040 --> 00:39:44,040
Speaker 4: have to pay higher there, you know, ultimate interest rate

780
00:39:44,040 --> 00:39:46,040
Speaker 4: costs because interest rates, you know, the index rates have

781
00:39:46,120 --> 00:39:48,160
Speaker 4: moved up so much, they're going to have to pay

782
00:39:48,239 --> 00:39:51,560
Speaker 4: higher expenses there as well. And so, you know, I

783
00:39:51,600 --> 00:39:53,239
Speaker 4: do think there's gonna be a lot of challenges. And

784
00:39:53,640 --> 00:39:55,840
Speaker 4: today you look at the market. There's like one point

785
00:39:55,880 --> 00:39:58,680
Speaker 4: five trillion dollars of loans that are maturing between now

786
00:39:58,719 --> 00:40:00,880
Speaker 4: and the end of twenty twenty five. And so I

787
00:40:00,880 --> 00:40:02,600
Speaker 4: think you're going to see you know, the you know,

788
00:40:02,719 --> 00:40:04,359
Speaker 4: over the next twelve months, you're going to start seeing

789
00:40:04,360 --> 00:40:06,799
Speaker 4: a lot, you know, a lot more situations like the

790
00:40:06,840 --> 00:40:09,440
Speaker 4: Margueritaville situation in Times Square.

791
00:40:09,239 --> 00:40:12,359
Speaker 1: All right, thirty seconds, how because you're lending business versus

792
00:40:12,440 --> 00:40:14,200
Speaker 1: your portfolio of really.

793
00:40:13,960 --> 00:40:16,120
Speaker 4: Sure, so right now our lending business, you know, so

794
00:40:16,160 --> 00:40:18,920
Speaker 4: our debt investments make up about sixty percent of our

795
00:40:19,440 --> 00:40:21,760
Speaker 4: au M, and so that's a big part of our

796
00:40:22,040 --> 00:40:23,080
Speaker 4: investment book today.

797
00:40:23,120 --> 00:40:24,880
Speaker 8: And you guys are private, right We are a private

798
00:40:24,920 --> 00:40:25,760
Speaker 8: when you go in public.

799
00:40:26,280 --> 00:40:28,960
Speaker 4: We have no desire to go public anytime soon. So

800
00:40:29,000 --> 00:40:32,160
Speaker 4: we are very much focused on staying a private, privately

801
00:40:32,160 --> 00:40:32,640
Speaker 4: held company.

802
00:40:32,680 --> 00:40:33,759
Speaker 8: How do you get funded? Where do you get your

803
00:40:33,760 --> 00:40:34,319
Speaker 8: funding from?

804
00:40:34,640 --> 00:40:37,480
Speaker 4: So we you know, we sponsor you know, different investment

805
00:40:37,600 --> 00:40:41,360
Speaker 4: vehicles and we typically have you know, just internal capital

806
00:40:41,440 --> 00:40:43,799
Speaker 4: along with a lot of you know capital that just

807
00:40:43,800 --> 00:40:46,719
Speaker 4: comes in from you know, different investors that invest in

808
00:40:46,719 --> 00:40:51,000
Speaker 4: these vehicles, which is.

809
00:40:50,560 --> 00:40:52,480
Speaker 1: Hard to go public. And I would have taken a

810
00:40:52,480 --> 00:40:56,040
Speaker 1: public all right, So appreciate it. Greg, really really helpful

811
00:40:56,040 --> 00:40:57,920
Speaker 1: to us today. We really appreciate getting your perspective here,

812
00:40:57,960 --> 00:41:00,920
Speaker 1: Greg Freeman. He's the CEO of peach Tree. It was

813
00:41:01,000 --> 00:41:04,560
Speaker 1: Peachtree Hotel Group, now it's Peachtree Peachtre Group.

814
00:41:04,560 --> 00:41:05,760
Speaker 8: We're just going Peachtree Group.

815
00:41:06,160 --> 00:41:09,280
Speaker 9: You're listening to the tape. Cat's are live program Bloomberg

816
00:41:09,360 --> 00:41:12,960
Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the

817
00:41:13,000 --> 00:41:14,960
Speaker 9: tune in app, Bloomberg dot Com, and.

818
00:41:14,920 --> 00:41:16,239
Speaker 13: The Bloomberg Business App.

819
00:41:16,280 --> 00:41:19,080
Speaker 9: You can also listen live on Amazon Alexa from our

820
00:41:19,120 --> 00:41:24,200
Speaker 9: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

821
00:41:24,800 --> 00:41:27,280
Speaker 8: All right, we had what the market's interpreting.

822
00:41:27,320 --> 00:41:31,160
Speaker 1: It's a pretty good inflation print today came in a

823
00:41:31,200 --> 00:41:33,480
Speaker 1: little bit tamer than expected, I guess as a way

824
00:41:33,520 --> 00:41:35,360
Speaker 1: to say, and we're seeing some risk assets kind of

825
00:41:35,400 --> 00:41:38,399
Speaker 1: move on the news, although stock market off.

826
00:41:38,520 --> 00:41:40,359
Speaker 8: It's high of the day. But what does it mean

827
00:41:40,400 --> 00:41:41,040
Speaker 8: going forward?

828
00:41:41,160 --> 00:41:43,319
Speaker 1: John Authors has got an opinion because we pay him

829
00:41:43,360 --> 00:41:45,880
Speaker 1: to have opinions. John Authurs is our senior editor for

830
00:41:45,960 --> 00:41:48,920
Speaker 1: Bloomberg Opinion. Joining us here in our Bloomberg Interactive Brokers studio.

831
00:41:50,400 --> 00:41:52,080
Speaker 8: What do you make of this John, I mean it

832
00:41:52,160 --> 00:41:53,000
Speaker 8: seemed pretty good to me.

833
00:41:53,120 --> 00:41:55,960
Speaker 15: Well, I would be stronger than that, so I feel

834
00:41:56,040 --> 00:41:59,600
Speaker 15: it was very good. And I say that having gone

835
00:41:59,600 --> 00:42:04,920
Speaker 15: on record or predicting that expectations for a low print

836
00:42:04,960 --> 00:42:08,279
Speaker 15: were dangerously strong and that people were running for a

837
00:42:08,360 --> 00:42:14,120
Speaker 15: hawkish surprise. So you know, I can only say that

838
00:42:14,320 --> 00:42:18,000
Speaker 15: I am very startled and impressed by how strong the

839
00:42:18,120 --> 00:42:23,080
Speaker 15: numbers are. As the morning has gone on. The more

840
00:42:23,120 --> 00:42:25,120
Speaker 15: you look at the numbers, the better from the point

841
00:42:25,160 --> 00:42:27,799
Speaker 15: of view of the Fed they get. So if you

842
00:42:27,800 --> 00:42:30,240
Speaker 15: look at if you break it down month by month,

843
00:42:32,120 --> 00:42:36,840
Speaker 15: energy prices actually contributed positively to inflation again. Last month,

844
00:42:38,080 --> 00:42:45,279
Speaker 15: food inflation and goods disappeared literally zero, and services.

845
00:42:44,800 --> 00:42:45,920
Speaker 14: Inflation came down a lot.

846
00:42:45,960 --> 00:42:50,640
Speaker 15: I mean, that's really fantastically exactly what the FED wanted

847
00:42:50,680 --> 00:42:55,160
Speaker 15: to see. If you look at the Cleveland Fed trim

848
00:42:55,320 --> 00:42:58,520
Speaker 15: to me all these cunning measures of inflation we all

849
00:42:58,960 --> 00:43:02,479
Speaker 15: now learned to to use. Over the last three months,

850
00:43:02,480 --> 00:43:06,040
Speaker 15: it's been running at less than two percent when you

851
00:43:06,840 --> 00:43:12,040
Speaker 15: trim out the outliers on either side. So there are

852
00:43:12,239 --> 00:43:18,480
Speaker 15: very few flies on this number. That it's a genuinely

853
00:43:18,800 --> 00:43:21,640
Speaker 15: very encouraging number. And I guess the other thing I

854
00:43:21,680 --> 00:43:24,560
Speaker 15: would I would say which personally surprises me a little.

855
00:43:24,600 --> 00:43:27,560
Speaker 15: I mean, you've seen the dollar seems to have taken

856
00:43:27,560 --> 00:43:31,239
Speaker 15: the decisive which is absolutely what you'd expect from a

857
00:43:31,320 --> 00:43:36,200
Speaker 15: really surprisingly good inflation report. Actual expectations for the fair

858
00:43:36,360 --> 00:43:40,800
Speaker 15: really haven't moved very much at all. Nobody seriously still

859
00:43:40,840 --> 00:43:45,359
Speaker 15: doubts that they're going to hike in July, and people

860
00:43:45,400 --> 00:43:49,000
Speaker 15: are still reckoning. I mean, if you look at contracts

861
00:43:49,040 --> 00:43:52,000
Speaker 15: going through to the beginning of twenty twenty five, yes

862
00:43:52,080 --> 00:43:54,400
Speaker 15: they've come down, but not even by twenty five basis

863
00:43:54,440 --> 00:44:01,840
Speaker 15: points from the spike last week, So it doesn't basically change.

864
00:44:01,960 --> 00:44:05,080
Speaker 15: People are delighted to have this confirmed, but in terms

865
00:44:05,080 --> 00:44:08,239
Speaker 15: of what they're expecting from the Fed, the notion that

866
00:44:08,520 --> 00:44:10,640
Speaker 15: they will have to stay higher for longer to make

867
00:44:10,680 --> 00:44:14,319
Speaker 15: sure this risk of inflation is thoroughly put to bed

868
00:44:15,640 --> 00:44:19,160
Speaker 15: lives on it. It hasn't changed things as much as

869
00:44:19,239 --> 00:44:21,560
Speaker 15: I thought a print like this might have done well.

870
00:44:21,560 --> 00:44:24,480
Speaker 6: Even if we've hit peak inflation. If we're past that

871
00:44:24,640 --> 00:44:28,600
Speaker 6: point and you've written so beautifully about this, John, when

872
00:44:28,719 --> 00:44:33,080
Speaker 6: does the consumers start to feel that and when will companies, restaurants,

873
00:44:33,080 --> 00:44:37,520
Speaker 6: small businesses start to decrease their prices in a way

874
00:44:37,560 --> 00:44:41,279
Speaker 6: that is tangible for customers like us.

875
00:44:40,000 --> 00:44:45,040
Speaker 15: That's interesting if you looked if you looked at the

876
00:44:45,120 --> 00:44:50,000
Speaker 15: NFIBAL Federation of Independent Business numbers earlier this week, the

877
00:44:50,080 --> 00:44:53,400
Speaker 15: proportion that is complaining that they're finding it hard to

878
00:44:53,440 --> 00:44:57,520
Speaker 15: find people. So you know, obviously with restaurants, some of

879
00:44:57,560 --> 00:45:00,200
Speaker 15: the waiting service I remember getting in twenty twenty one

880
00:45:00,239 --> 00:45:04,520
Speaker 15: when they reopened was almost hilariously bad. It's your faulty towers.

881
00:45:05,719 --> 00:45:12,080
Speaker 15: They are much less concerned about the difficulty of hiring

882
00:45:12,120 --> 00:45:17,160
Speaker 15: people than they were, and their complaints about prices paid

883
00:45:17,920 --> 00:45:22,480
Speaker 15: have absolutely you know, shot down in exactly the way

884
00:45:22,480 --> 00:45:25,560
Speaker 15: that you see some of the lines on course CPI.

885
00:45:27,360 --> 00:45:30,400
Speaker 15: It looks to me as though you should expect some

886
00:45:30,520 --> 00:45:35,640
Speaker 15: of that to start to show through in the prices

887
00:45:35,680 --> 00:45:41,200
Speaker 15: that they actually charged people. So, you know, the politically,

888
00:45:42,360 --> 00:45:48,040
Speaker 15: this is a point I've I think some people haven't

889
00:45:48,120 --> 00:45:52,120
Speaker 15: quite taken on board, and which I haven't really taken

890
00:45:52,440 --> 00:45:56,000
Speaker 15: terribly seriously because I've been a hawk thinking inflation is

891
00:45:56,000 --> 00:46:00,440
Speaker 15: worse than people think it is for a while. If

892
00:46:00,480 --> 00:46:04,600
Speaker 15: we're really heading for a soft landing and inflation is

893
00:46:04,640 --> 00:46:08,799
Speaker 15: going to come to heal without any more pain. That

894
00:46:08,840 --> 00:46:12,239
Speaker 15: would probably mean Joe Biden gets back in a landslide

895
00:46:12,360 --> 00:46:16,799
Speaker 15: next year. It's very, very, very difficult to beat an

896
00:46:16,840 --> 00:46:21,160
Speaker 15: incumbent who has a good and economic record, as markets

897
00:46:21,200 --> 00:46:26,280
Speaker 15: implicitly expect. I don't think anybody is actually braced for

898
00:46:26,719 --> 00:46:31,160
Speaker 15: the Democrats to get back in a landslide. It does

899
00:46:31,560 --> 00:46:35,200
Speaker 15: have and I can't quite believe it. I say it

900
00:46:35,719 --> 00:46:38,360
Speaker 15: in the same way I still can't quite believe that

901
00:46:38,120 --> 00:46:41,200
Speaker 15: that the economy is going to work out as positively as.

902
00:46:41,239 --> 00:46:44,799
Speaker 6: Some of these You think November or yeah, let's say

903
00:46:45,200 --> 00:46:47,920
Speaker 6: months leading into November twenty twenty four, the economy is

904
00:46:47,920 --> 00:46:50,160
Speaker 6: going to be total soft landing mode for Biden.

905
00:46:50,560 --> 00:46:52,040
Speaker 15: I find that hard to imagine.

906
00:46:52,120 --> 00:46:52,800
Speaker 6: That's what I'm saying.

907
00:46:52,800 --> 00:46:57,360
Speaker 15: But the implicit market forecasts at the moment are that

908
00:46:58,640 --> 00:47:03,040
Speaker 15: he will get to November twenty twenty four having brought

909
00:47:03,239 --> 00:47:07,880
Speaker 15: down slaid the inflation created by his breed decessor, and

910
00:47:08,120 --> 00:47:09,480
Speaker 15: it created all these jobs.

911
00:47:09,560 --> 00:47:12,080
Speaker 6: I mean, good luck getting Walmart to decrease the prices.

912
00:47:12,239 --> 00:47:13,960
Speaker 8: Well, well, you know what I'm saying.

913
00:47:14,560 --> 00:47:19,560
Speaker 14: Sure, but it's one of the messages they give you

914
00:47:20,040 --> 00:47:23,719
Speaker 14: a business school once you've finished your DCF or what

915
00:47:23,800 --> 00:47:26,880
Speaker 14: if once you've done your spreadsheet, then look at what

916
00:47:27,000 --> 00:47:27,640
Speaker 14: it implies.

917
00:47:28,280 --> 00:47:31,360
Speaker 15: I did an MBA back in two thousand. We valued

918
00:47:31,360 --> 00:47:35,120
Speaker 15: a storage company. We reverse engineered it to try to

919
00:47:35,200 --> 00:47:38,120
Speaker 15: make it worth what the market said at the time

920
00:47:38,120 --> 00:47:40,839
Speaker 15: it was worth. This is two thousands. And then you're

921
00:47:40,880 --> 00:47:43,919
Speaker 15: supposed to work out what does that imply. What does

922
00:47:43,960 --> 00:47:47,000
Speaker 15: your valuation imply about the future. And it implied that

923
00:47:47,040 --> 00:47:48,560
Speaker 15: it was going to make a return on equity of

924
00:47:48,560 --> 00:47:53,879
Speaker 15: one hundred percent in perpetuity. And I think that's that's

925
00:47:53,920 --> 00:47:57,080
Speaker 15: the kind of exercise that people need to do here, Like,

926
00:47:58,600 --> 00:48:02,440
Speaker 15: if the market is right, then j Powell and Joe

927
00:48:02,480 --> 00:48:04,640
Speaker 15: Biden will go down in history for one of the

928
00:48:04,680 --> 00:48:07,799
Speaker 15: most brilliant pieces of economic management ever. All Right, that's

929
00:48:07,880 --> 00:48:10,920
Speaker 15: not if the market is right, which I still obviously

930
00:48:11,600 --> 00:48:16,440
Speaker 15: don't believe, but that's I think that's an important thing

931
00:48:16,480 --> 00:48:20,640
Speaker 15: to start to start thinking now that if it is,

932
00:48:20,680 --> 00:48:24,520
Speaker 15: the economy stupid politics is going to be quite different

933
00:48:24,520 --> 00:48:26,600
Speaker 15: over the next eighteen months than people have been expecting.

934
00:48:26,640 --> 00:48:29,520
Speaker 1: All right, John, you and your colleague Isabelle Lee out

935
00:48:29,520 --> 00:48:32,440
Speaker 1: of the column yesterday and in it you say the

936
00:48:32,520 --> 00:48:35,400
Speaker 1: FED is staying a course on its two percent inflation target.

937
00:48:35,600 --> 00:48:37,720
Speaker 1: Yes but wage earners will pay the price.

938
00:48:38,000 --> 00:48:41,200
Speaker 8: What do you mean there at this point.

939
00:48:40,960 --> 00:48:44,600
Speaker 15: The single biggest contributor to wage inflation. We were just

940
00:48:44,640 --> 00:48:47,839
Speaker 15: discussing it with sorry to inflation overall, so we were

941
00:48:47,840 --> 00:48:54,160
Speaker 15: just discussing his services and services businesses obviously are absolutely

942
00:48:54,160 --> 00:49:02,560
Speaker 15: preponderantly about wage races yep. So I think I mean,

943
00:49:02,560 --> 00:49:05,800
Speaker 15: if you look at what FED governors and mostly controversially

944
00:49:05,880 --> 00:49:07,560
Speaker 15: the Bank of England back home have been saying, They've

945
00:49:07,560 --> 00:49:10,080
Speaker 15: been very careful to say companies need to take tighter

946
00:49:10,080 --> 00:49:16,560
Speaker 15: profit margins and workers need to accept sub inflation pay rises,

947
00:49:17,600 --> 00:49:20,439
Speaker 15: which both of them in isolation will help inflation come down.

948
00:49:20,440 --> 00:49:22,719
Speaker 15: Whether they're sacrifices that are work it or another matter,

949
00:49:22,760 --> 00:49:29,880
Speaker 15: but at this point wage inflation, it's what Another positive

950
00:49:29,920 --> 00:49:32,759
Speaker 15: point if you're if you're a strategist for Biden, is

951
00:49:32,760 --> 00:49:37,719
Speaker 15: that real wages are now increasing very nicely thanks to

952
00:49:37,760 --> 00:49:43,520
Speaker 15: this sudden drop in there in CPI. That is good

953
00:49:43,960 --> 00:49:47,160
Speaker 15: for everybody, apart from those those at the fair who

954
00:49:47,200 --> 00:49:51,000
Speaker 15: are particularly concerned to get inflation down. So that becomes

955
00:49:51,680 --> 00:49:56,320
Speaker 15: a critical issue, and we still need to see whether

956
00:49:57,200 --> 00:50:00,680
Speaker 15: the kind of expectations that have been jol by two

957
00:50:00,840 --> 00:50:04,520
Speaker 15: years of very real inflation that really does affect people's lives.

958
00:50:05,480 --> 00:50:08,960
Speaker 15: Whether that is going to create the kind of extra

959
00:50:11,440 --> 00:50:15,920
Speaker 15: extra motivation to push for higher wages. I expect Bloomberg

960
00:50:15,920 --> 00:50:17,799
Speaker 15: to pay me. Well, I'm not. There's nothing wrong with

961
00:50:17,880 --> 00:50:23,120
Speaker 15: people asking for more money. They've got families to look after, etcetera, etcetera.

962
00:50:24,160 --> 00:50:29,200
Speaker 15: The key point is if our baseline expectations, our psychology

963
00:50:29,280 --> 00:50:31,480
Speaker 15: is now that inflation is something we need to worry about,

964
00:50:31,520 --> 00:50:34,400
Speaker 15: that we need to protect against, does that mean that

965
00:50:34,600 --> 00:50:37,399
Speaker 15: there will be a bigger baseline And if the FED

966
00:50:37,480 --> 00:50:39,160
Speaker 15: is worried about that, which I think they are, that

967
00:50:39,239 --> 00:50:41,560
Speaker 15: implies being nastier than you, I would hope.

968
00:50:41,640 --> 00:50:43,960
Speaker 1: All right, John, thank you so much. We appreciated John Author,

969
00:50:44,040 --> 00:50:47,280
Speaker 1: senior editor for Bloomberg Opinion. And somehow he's a diehard

970
00:50:47,320 --> 00:50:48,719
Speaker 1: Red Sox fan and I don't get it because his

971
00:50:48,800 --> 00:50:51,320
Speaker 1: accent is unique, but it is not a boss and accent.

972
00:50:52,280 --> 00:50:53,839
Speaker 8: We'll have to say that for I have to say

973
00:50:53,840 --> 00:50:54,719
Speaker 8: that for another day.

974
00:50:55,000 --> 00:50:58,640
Speaker 9: You're listening to the tape Can't Live program Bloomberg Markets

975
00:50:58,680 --> 00:51:02,399
Speaker 9: weekdays at ten ams on Bloomberg Radio, the tune in app,

976
00:51:02,480 --> 00:51:03,799
Speaker 9: Bloomberg dot Com, and.

977
00:51:03,760 --> 00:51:05,080
Speaker 13: The Bloomberg Business app.

978
00:51:05,120 --> 00:51:07,920
Speaker 9: You can also listen live on Amazon Alexa from our

979
00:51:07,960 --> 00:51:13,040
Speaker 9: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

980
00:51:13,440 --> 00:51:17,200
Speaker 1: I'm looking at the bankbreak dot com US bloom mortgage

981
00:51:17,360 --> 00:51:22,680
Speaker 1: thirty year fixed national average seven point three two percent.

982
00:51:23,719 --> 00:51:27,080
Speaker 1: It reached a low of sub three percent back in

983
00:51:27,200 --> 00:51:28,399
Speaker 1: early twenty twenty one.

984
00:51:28,480 --> 00:51:29,560
Speaker 8: So what a move.

985
00:51:29,600 --> 00:51:32,480
Speaker 1: I think Matt Miller scored his mortgage then, so good

986
00:51:32,480 --> 00:51:35,680
Speaker 1: for him. He's always targeting this market. So just an amazing,

987
00:51:35,760 --> 00:51:38,680
Speaker 1: amazing move high. What does that mean for the housing market,

988
00:51:38,800 --> 00:51:42,439
Speaker 1: residential housing market? Well, Salma HEP's canna help us there.

989
00:51:42,480 --> 00:51:46,520
Speaker 1: Somea is chief economist for core Logic and she joins

990
00:51:46,560 --> 00:51:49,440
Speaker 1: us here, SOMEA. I see that big leap and mortgage rates.

991
00:51:49,600 --> 00:51:52,080
Speaker 1: What's that doing to the residential real estate market in

992
00:51:52,280 --> 00:51:52,800
Speaker 1: the US.

993
00:51:54,480 --> 00:51:58,440
Speaker 16: Well, it's definitely putting a significant damper on home sales activity.

994
00:51:58,520 --> 00:52:01,839
Speaker 16: Home sales activity start off on a pretty good note

995
00:52:01,880 --> 00:52:04,439
Speaker 16: earlier this year. We talked about that a few months back,

996
00:52:04,480 --> 00:52:09,480
Speaker 16: and since mortgage rates started declining, increasing back to seven percent,

997
00:52:09,560 --> 00:52:13,400
Speaker 16: we've seen slowing, significant slowing, and home sales activities. So

998
00:52:13,760 --> 00:52:17,160
Speaker 16: at this point we're looking at about thirty percent lower

999
00:52:17,640 --> 00:52:20,640
Speaker 16: total year to date a number of home sales than

1000
00:52:20,640 --> 00:52:26,759
Speaker 16: we did at this time in totality for twenty twenty two.

1001
00:52:28,000 --> 00:52:30,080
Speaker 6: And when you look at the housing market in particular,

1002
00:52:30,120 --> 00:52:32,200
Speaker 6: I'm looking at some data from our friends over at

1003
00:52:32,200 --> 00:52:35,960
Speaker 6: Bloomberg Intelligence, which Paul knows very well, housing becoming so

1004
00:52:36,080 --> 00:52:39,239
Speaker 6: unaffordable that over seventy five percent of homes on the

1005
00:52:39,280 --> 00:52:43,120
Speaker 6: market are two expensive for middle income buyers. What do

1006
00:52:43,160 --> 00:52:45,479
Speaker 6: you make of that in terms of the impact that's

1007
00:52:45,520 --> 00:52:47,799
Speaker 6: going to have over the next the course of the

1008
00:52:47,800 --> 00:52:48,479
Speaker 6: rest of the year.

1009
00:52:49,880 --> 00:52:53,040
Speaker 16: Well, I think really that is the biggest problem. Affordability

1010
00:52:53,160 --> 00:52:56,240
Speaker 16: is a huge, huge problem, and we had this problem

1011
00:52:56,280 --> 00:52:59,760
Speaker 16: even going into the pandemic, but now with home prices

1012
00:53:00,200 --> 00:53:03,200
Speaker 16: forty percent higher than they were at the onset of

1013
00:53:03,239 --> 00:53:07,160
Speaker 16: the pandemic, typical mortgage payment is now at the highest

1014
00:53:07,239 --> 00:53:10,359
Speaker 16: level on record, and so a lot of folks are

1015
00:53:10,400 --> 00:53:15,640
Speaker 16: spending significant portion of their household income on mortgage payment,

1016
00:53:15,719 --> 00:53:19,640
Speaker 16: and it's up to about thirty six percent of households

1017
00:53:19,640 --> 00:53:22,160
Speaker 16: median income being spent on a mortgage payment. I mean,

1018
00:53:22,200 --> 00:53:25,360
Speaker 16: this is really huge, and this is the in terms

1019
00:53:25,360 --> 00:53:29,680
Speaker 16: of historically looking at lowest level affordability, we're at the

1020
00:53:29,719 --> 00:53:32,760
Speaker 16: lowest we've been in almost forty years now.

1021
00:53:32,840 --> 00:53:36,040
Speaker 1: So how does this historically play out? You just have

1022
00:53:36,120 --> 00:53:40,319
Speaker 1: to wait for interest rates to come down. How does

1023
00:53:40,360 --> 00:53:41,520
Speaker 1: this work in the housing market?

1024
00:53:41,520 --> 00:53:42,120
Speaker 12: Do they do?

1025
00:53:42,160 --> 00:53:43,160
Speaker 8: You see home.

1026
00:53:42,960 --> 00:53:46,319
Speaker 1: Builders, you know, giving breaks on maybe buying down some

1027
00:53:46,400 --> 00:53:48,960
Speaker 1: of the mortgage payment for buyers.

1028
00:53:48,960 --> 00:53:49,680
Speaker 10: How does this work?

1029
00:53:50,880 --> 00:53:51,120
Speaker 5: Right?

1030
00:53:51,360 --> 00:53:54,080
Speaker 16: Yeah, on one hand, you know, home prices are playing

1031
00:53:54,120 --> 00:53:59,759
Speaker 16: a role. The other contributor is income growth. So many

1032
00:53:59,840 --> 00:54:02,680
Speaker 16: times you need income growth to catch up to that

1033
00:54:02,840 --> 00:54:07,680
Speaker 16: home price appreciation. And so at this point, unfortunately, we're

1034
00:54:07,719 --> 00:54:12,040
Speaker 16: seeing home prices reigniting again. They're they're gaining speed again.

1035
00:54:12,200 --> 00:54:15,680
Speaker 16: And in looking at our most recent home price index

1036
00:54:16,280 --> 00:54:18,200
Speaker 16: that was just released a couple of days ago, it

1037
00:54:18,400 --> 00:54:21,200
Speaker 16: showed that in the first four months of this year,

1038
00:54:21,280 --> 00:54:24,879
Speaker 16: or basically from February to May, home prices are up

1039
00:54:25,320 --> 00:54:29,600
Speaker 16: over four percent cumulatively. I mean, that's almost as much

1040
00:54:29,640 --> 00:54:32,799
Speaker 16: as we've see in an entire year. So we are

1041
00:54:32,840 --> 00:54:36,719
Speaker 16: now seeing home prices just really really gaining speed again,

1042
00:54:36,920 --> 00:54:39,800
Speaker 16: meaning that that that affordability is going to be further

1043
00:54:40,239 --> 00:54:45,480
Speaker 16: declining and a further constraining people's ability to buy a home. So,

1044
00:54:45,760 --> 00:54:48,320
Speaker 16: you know, you mentioned what can we do one again

1045
00:54:48,480 --> 00:54:53,520
Speaker 16: is rise in home price in households incomes. The other

1046
00:54:53,600 --> 00:54:58,000
Speaker 16: one is adjustment in home prices. And you know, while

1047
00:54:58,040 --> 00:55:01,080
Speaker 16: overall I was talking about nationally, we might see in

1048
00:55:01,120 --> 00:55:04,319
Speaker 16: some particularly some smaller markets where you don't have a

1049
00:55:04,320 --> 00:55:07,440
Speaker 16: lot of folks coming moving in with higher incomes. You know,

1050
00:55:07,480 --> 00:55:11,520
Speaker 16: we talk a lot about out migration from more expensive

1051
00:55:11,600 --> 00:55:13,880
Speaker 16: coastal areas where people have a lot of income, to

1052
00:55:14,000 --> 00:55:17,239
Speaker 16: more affordable areas. That's what's been driving home prices in

1053
00:55:17,280 --> 00:55:20,440
Speaker 16: many of those areas. But when you look at smaller markets,

1054
00:55:20,760 --> 00:55:24,080
Speaker 16: that level of home price appreciation is not sustainable. So

1055
00:55:24,160 --> 00:55:27,800
Speaker 16: we'll definitely see more significant slow down and even potentially

1056
00:55:27,880 --> 00:55:29,960
Speaker 16: some declines in those smaller markets.

1057
00:55:30,200 --> 00:55:32,200
Speaker 6: All Right, So I got to ask my favorite question,

1058
00:55:32,320 --> 00:55:34,840
Speaker 6: how is this playing through to the rental market.

1059
00:55:34,960 --> 00:55:35,920
Speaker 12: What is that looking like?

1060
00:55:37,400 --> 00:55:40,320
Speaker 16: Yeah, well, rental market is slow in too, in terms

1061
00:55:40,320 --> 00:55:43,680
Speaker 16: of home price or in terms of rent prices. We

1062
00:55:43,760 --> 00:55:47,280
Speaker 16: do have a single family rent index that we report

1063
00:55:47,320 --> 00:55:50,800
Speaker 16: on every month, and the rate of growth has continued

1064
00:55:50,800 --> 00:55:54,160
Speaker 16: to slow considerably from where it was last year. I mean,

1065
00:55:54,200 --> 00:55:57,200
Speaker 16: it's very very much in line with what's happening with

1066
00:55:57,239 --> 00:56:01,080
Speaker 16: home prices, but for both on both home prices and rents.

1067
00:56:01,080 --> 00:56:06,800
Speaker 16: What's interesting is that the lower price tiers are actually

1068
00:56:06,800 --> 00:56:10,600
Speaker 16: continuing to see stronger gains than higher price theres. It's

1069
00:56:10,640 --> 00:56:14,520
Speaker 16: higher price theers that have slowed down more considerably since

1070
00:56:14,640 --> 00:56:17,239
Speaker 16: you know, people start started going back to the offices

1071
00:56:17,280 --> 00:56:22,480
Speaker 16: and sort of that pressure in these amenities markets has slowed.

1072
00:56:22,920 --> 00:56:26,600
Speaker 16: But the lower really the types of homes that are

1073
00:56:26,640 --> 00:56:30,839
Speaker 16: in need where people are not doing it out of luxury, right,

1074
00:56:31,239 --> 00:56:34,680
Speaker 16: That's those are the prices and rents where we do

1075
00:56:34,760 --> 00:56:36,480
Speaker 16: see continued pressure.

1076
00:56:37,719 --> 00:56:41,040
Speaker 1: Some how About in terms of new home construction, where

1077
00:56:41,080 --> 00:56:44,239
Speaker 1: are we in building new homes and what kind of

1078
00:56:44,239 --> 00:56:46,200
Speaker 1: homes are getting built, because it seems like we talk

1079
00:56:46,239 --> 00:56:50,240
Speaker 1: about the affordability issue. You know, the average town America

1080
00:56:50,239 --> 00:56:52,759
Speaker 1: doesn't need another McMansion. What they need is, you know,

1081
00:56:53,120 --> 00:56:54,600
Speaker 1: more affordable.

1082
00:56:54,400 --> 00:56:57,360
Speaker 8: Kind of single family homes. Is that being built?

1083
00:56:58,840 --> 00:57:01,480
Speaker 16: Well, yeah, we do see. You know, we are seeing

1084
00:57:01,719 --> 00:57:05,840
Speaker 16: overall an increase in home building activity. Unfortunately it is

1085
00:57:06,000 --> 00:57:11,640
Speaker 16: kewed towards more multifamily type housing, but nevertheless it's adding

1086
00:57:11,640 --> 00:57:13,759
Speaker 16: to the housing inventory at this point. I mean, we

1087
00:57:14,000 --> 00:57:18,040
Speaker 16: just need overall more inventory, any type of inventory that

1088
00:57:18,120 --> 00:57:20,520
Speaker 16: we can get. But we are seeing an increase in

1089
00:57:20,560 --> 00:57:23,440
Speaker 16: single family as well, and we are seeing a tilt

1090
00:57:23,560 --> 00:57:27,960
Speaker 16: towards smaller sized home which are generally priced more favorably.

1091
00:57:28,280 --> 00:57:31,160
Speaker 16: So you know, I think builders are moving in that direction.

1092
00:57:31,280 --> 00:57:34,480
Speaker 16: They are responding to market needs at the moment, and

1093
00:57:34,560 --> 00:57:39,160
Speaker 16: particularly given how much affordability has been constrained at this

1094
00:57:39,200 --> 00:57:40,840
Speaker 16: point with higher mortgage rates.

1095
00:57:40,920 --> 00:57:44,960
Speaker 6: So it's more inventory good regardless of what that inventory

1096
00:57:45,000 --> 00:57:48,200
Speaker 6: looks like right now, I think so.

1097
00:57:48,440 --> 00:57:51,320
Speaker 16: I mean, when you look at the you know CPI,

1098
00:57:51,360 --> 00:57:54,280
Speaker 16: when you look at the work FED is thinking about going.

1099
00:57:55,160 --> 00:57:58,800
Speaker 16: Housing component is a huge component of our inflation measure,

1100
00:57:58,840 --> 00:58:01,919
Speaker 16: right thirty percent is is housing and and a lot

1101
00:58:01,960 --> 00:58:05,120
Speaker 16: of that comes from rents, rents and and you know

1102
00:58:05,200 --> 00:58:11,000
Speaker 16: household how owners equivalent rents, so the homeownership type component.

1103
00:58:11,400 --> 00:58:15,560
Speaker 16: But in both of those we do need less increases

1104
00:58:15,800 --> 00:58:19,000
Speaker 16: so in conscious that we we're currently seeing in the

1105
00:58:19,040 --> 00:58:22,760
Speaker 16: housing market. So with more inventory out there, whether that's

1106
00:58:22,880 --> 00:58:27,200
Speaker 16: a high density multi family housing or single family housing,

1107
00:58:27,240 --> 00:58:31,360
Speaker 16: I think all of those will help UH slow inflation

1108
00:58:31,880 --> 00:58:36,320
Speaker 16: or UH the lead to the celeration of that inflation,

1109
00:58:36,440 --> 00:58:40,919
Speaker 16: which will help with federal reserves action and hopefully bring

1110
00:58:41,000 --> 00:58:44,320
Speaker 16: mortgage rates lower, which again that in the end helps

1111
00:58:44,320 --> 00:58:45,240
Speaker 16: with affordability.

1112
00:58:45,920 --> 00:58:48,080
Speaker 1: All right, So some at core logic, What are you

1113
00:58:48,120 --> 00:58:51,080
Speaker 1: guys forecasting for mortgage rates going forward?

1114
00:58:52,760 --> 00:58:57,000
Speaker 16: Well, unfortunately, the mortgage rates forecasts have gone up, particularly

1115
00:58:57,040 --> 00:58:59,800
Speaker 16: given what we just saw today with mortgage it's going

1116
00:58:59,800 --> 00:59:01,960
Speaker 16: over seven percent. So at this point I think we

1117
00:59:02,000 --> 00:59:08,040
Speaker 16: are more well this declining, but not declining as much

1118
00:59:08,200 --> 00:59:10,760
Speaker 16: as we hoped to less than six percent. I think

1119
00:59:10,760 --> 00:59:14,920
Speaker 16: we are now looking at slightly over six percent mortgage

1120
00:59:15,000 --> 00:59:16,080
Speaker 16: rates by the end of this year.

1121
00:59:16,960 --> 00:59:20,320
Speaker 6: Okay, So what should someone who wants to buy a

1122
00:59:20,320 --> 00:59:23,280
Speaker 6: home eventually be thinking right now? Should they be holding

1123
00:59:23,320 --> 00:59:25,600
Speaker 6: off for a long time or is it just that

1124
00:59:25,680 --> 00:59:28,400
Speaker 6: they always get more expensive? So if you're gonna do it,

1125
00:59:28,440 --> 00:59:29,439
Speaker 6: you might as well do it now.

1126
00:59:31,120 --> 00:59:33,520
Speaker 16: Well, the truth is, yeah, historically when you look at

1127
00:59:33,520 --> 00:59:35,840
Speaker 16: home prices in the US that they have been going

1128
00:59:35,960 --> 00:59:40,240
Speaker 16: up pretty steadily, you know, if you take out the

1129
00:59:40,320 --> 00:59:48,480
Speaker 16: Great Recession period. But you know, one action that people

1130
00:59:48,520 --> 00:59:52,240
Speaker 16: have been relying on is doing locking in a mortgage

1131
00:59:52,560 --> 00:59:54,600
Speaker 16: right now, buying a home right now because there's much

1132
00:59:54,680 --> 00:59:58,640
Speaker 16: less competition out there, and then hoping to refight down

1133
00:59:58,640 --> 01:00:01,920
Speaker 16: the road. So, you know, I think that is not

1134
01:00:02,080 --> 01:00:06,120
Speaker 16: a bad way to go about it, especially given that

1135
01:00:06,680 --> 01:00:10,200
Speaker 16: inventory is a concern and it's going to remain concerned.

1136
01:00:10,200 --> 01:00:12,840
Speaker 16: I mean, it will take a few years, more than

1137
01:00:12,880 --> 01:00:15,160
Speaker 16: a handful of years for us to catch up if

1138
01:00:15,200 --> 01:00:17,520
Speaker 16: we continue to build at the rate that we're building

1139
01:00:17,600 --> 01:00:22,640
Speaker 16: right now for inventory to sort of balance with the demand.

1140
01:00:23,520 --> 01:00:28,720
Speaker 16: But so you know, whenever we have mortgage it's coming

1141
01:00:28,760 --> 01:00:31,840
Speaker 16: down and all the folks that didn't buy during the pandemic,

1142
01:00:32,080 --> 01:00:33,560
Speaker 16: and there is a lot of them, because there is

1143
01:00:33,600 --> 01:00:36,960
Speaker 16: this huge millennial group that is coming off for some

1144
01:00:37,000 --> 01:00:41,800
Speaker 16: home buying age, competition intensifies and that leads to more

1145
01:00:41,920 --> 01:00:45,360
Speaker 16: bidding wars, that leads to home selling over the asking

1146
01:00:45,440 --> 01:00:50,400
Speaker 16: price and spedier home price appreciation. So I think now,

1147
01:00:50,440 --> 01:00:53,240
Speaker 16: given that it's not as a competitive in the market,

1148
01:00:53,600 --> 01:00:54,479
Speaker 16: is not a bad time.

1149
01:00:54,720 --> 01:00:56,560
Speaker 1: All right, Sama, thank you so much for joining us

1150
01:00:56,600 --> 01:00:58,760
Speaker 1: yet again some a hep chief economists for Core Logic.

1151
01:01:01,920 --> 01:01:05,040
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1152
01:01:05,080 --> 01:01:08,840
Speaker 2: subscribe and listen to interviews on Apple Podcasts or whatever

1153
01:01:08,920 --> 01:01:12,640
Speaker 2: podcast platform you prefer. I'm Matt Miller, I'm on Twitter

1154
01:01:12,840 --> 01:01:16,080
Speaker 2: at Matt Miller nineteen seventy three, and I'm fall Sweeney.

1155
01:01:16,120 --> 01:01:17,600
Speaker 8: I'm on Twitter at pt Sweeney.

1156
01:01:17,720 --> 01:01:20,400
Speaker 1: Before the podcast, you can always catch us worldwide at

1157
01:01:20,400 --> 01:01:22,120
Speaker 1: Bloomberg Radio,