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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business

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Speaker 1: Wait inside from the reporters and editors who bring you

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Speaker 1: America's most trusted business magazine, plus global business, finance and

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Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer

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Speaker 1: and Tim Stenebeck from Bloomberg Radio.

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Speaker 2: If you make any attention today, you know exactly the

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Speaker 2: economic data that pip this morning. US retail sales broadly

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Speaker 2: declining in January, indicating that consumers took a little breather

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Speaker 2: after a strong holiday shopping season. So here's some numbers here.

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Speaker 2: The value of retail purchases, unadjusted for inflation, decreased eight

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Speaker 2: tenths of one percent from December, this after a downward

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Speaker 2: revision to the prior month. This according to Commerce Department

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Speaker 2: data earlier today, that drop the biggest in nearly a year.

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Speaker 2: Separate data showed US factory production fell for the first

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Speaker 2: time in three months in January. Following all of this,

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Speaker 2: of course, is Michael Mckehe's international economics and policy correspondent

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Speaker 2: for Blueberg News. He joins us right now from Washington, DC,

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Speaker 2: where he's at the National Association for Business Economics conference.

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Speaker 2: We're going to have more on that in just a minute,

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Speaker 2: But first, Mike, I want to get to this data.

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Speaker 2: The two reports that we got today, they pointed to

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Speaker 2: a loss of momentum, But are they a sign that

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Speaker 2: the economy is deteriorating.

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Speaker 3: I wouldn't use the word deteriorating. The economy is slowing,

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Speaker 3: and we know, of course that in January Shanalli went

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Speaker 3: on vacation, so a lot of shopping didn't get done.

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Speaker 3: A lot of it is probably weather related. When you

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Speaker 3: look at what happened across the country in January, a

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Speaker 3: lot of snow, a lot of people stayed home, and

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Speaker 3: car sales really suffered. That was about half of what

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Speaker 3: we saw in the decline. Another major part was building

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Speaker 3: materials and outdoor stores, things that would be affected by

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Speaker 3: the weather. Now there is some loss of momentum, there's

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Speaker 3: no question about that. What we have to see is

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Speaker 3: whether it comes back in this month in February, and

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Speaker 3: that's what the FED will be looking for. But it

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Speaker 3: kind of offsets the CPI numbers, which is why I

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Speaker 3: think you're seeing some rallying inequities today. Because when the

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Speaker 3: CPI came out, everybody wrote off the FED cutting rates

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Speaker 3: anytime sooner. But if the economy's slowing down, maybe they will.

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Speaker 3: So the psychology, the psychological game continues.

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Speaker 4: But let's draw the connection between the inflation data we

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Speaker 4: got and the retail sales number. If inflation is indeed

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Speaker 4: hotter then you expect, Mike, then wouldn't consumers start to

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Speaker 4: slow down more into the year.

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Speaker 3: Well, there's two ways to consider this. One is that

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Speaker 3: inflation is built into the prices. These are nominal numbers

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Speaker 3: for retail sales. So if inflation is higher and you

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Speaker 3: subtract it out to get the real figures, they're even

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Speaker 3: worse than they looked. But I think the kind of

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Speaker 3: inflation that we saw in many service industries it was

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Speaker 3: the primary reason that we saw the CPI go up,

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Speaker 3: so it may not have had as much of an

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Speaker 3: effect on retail sales, which are largely good.

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Speaker 2: Okay, Mike, Anything else in these two reports that we

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Speaker 2: got earlier today that we need to make sure we

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Speaker 2: understand here.

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Speaker 3: Well, one thing I would point out is that for

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Speaker 3: the first time in about nine months, we saw import

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Speaker 3: prices rise, and that's even ex petroleum. Petroleum prices push

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Speaker 3: them up. But we also saw some goods prices go

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Speaker 3: up in import prices. The Philadelphia surveyed reported that their

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Speaker 3: prices paid index went up, not much, it's still low,

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Speaker 3: but it went up. So with CPI and those two things,

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Speaker 3: it may be a bit worrying that inflation might be

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Speaker 3: picking up. And again we just have to look at

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Speaker 3: the retail sales numbers and say, maybe that's offsetting it somewhat.

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Speaker 3: If the economy is slowing, then inflation should slow.

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Speaker 4: The question yet becomes to there's a lot of economic

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Speaker 4: data still ahead, Mike. Tomorrow we get producer prices as well.

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Speaker 3: What's the expectation, Well, the expectations we get a little

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Speaker 3: bit of inflation. Producer prices have run below the CPI

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Speaker 3: significant for quite some time. They're in the one percent

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Speaker 3: range one to two percent range on a year over

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Speaker 3: year basis, so there's no reason to really think that

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Speaker 3: they're going to go up significantly. If they do, we'll

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Speaker 3: want to see what categories where might some inflation pressure come.

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Speaker 3: Also tomorrow we get the University of Michigan's consumer sentiment numbers,

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Speaker 3: and that's always important to the FED because they want

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Speaker 3: to see what people's inflation expectations are. They've been moving down,

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Speaker 3: they were significantly lower last month, and so if that continues,

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Speaker 3: then the FED is a little less worried about what

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Speaker 3: the CPI might mean.

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Speaker 2: We got news Mike just in about the last hour

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Speaker 2: that Fed Jo J. Powell is going to be testifying

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Speaker 2: before the House Financial Services Committee come March sixth, this

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Speaker 2: from punch Bowl. Is this a surprise at all? What

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Speaker 2: do we need to understand about him testifying? And wow,

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Speaker 2: less than a month.

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Speaker 3: This is his regularly scheduled what we used to call

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Speaker 3: Humphrey Hawkins testimony. He'll talk to the House Financial Service

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Speaker 3: this is a committee one day, and then he'll talk

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Speaker 3: to the Senate Banking Committee the next day. So it's

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Speaker 3: not a surprise. It's a little bit later than usual,

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Speaker 3: but we had been warned off the record that it

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Speaker 3: wasn't probably going to come until March. What will be

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Speaker 3: interesting is that that gets us very close to the

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Speaker 3: next FED meeting on March twentieth, So we have a

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Speaker 3: lot of Fed speak between now and then. That may

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Speaker 3: not matter because Wall Street's going to wait and see

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Speaker 3: what Jay Powell has to say those days, and I

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Speaker 3: bet you we get on Bloomberg Radio and television big

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Speaker 3: ratings on March sixth, at least when he first starts

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Speaker 3: to give his view of the economy and what policy

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Speaker 3: might be going forward.

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Speaker 2: Yes, people want to watch him, and people want to

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Speaker 2: see him and hear what he has to say, of course,

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Speaker 2: but we want to hear what's going on at the

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Speaker 2: conference that you're at, Mike, I didn't know this thing

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Speaker 2: started on Valentine's Day. What happened yesterday? What's going on

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Speaker 2: today and tomorrow? Down in DC, yesterday was quite interesting.

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Speaker 3: We had a presentation from Charlie Cook, he's the guru

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Speaker 3: of political analysts here in why Washington, who suggested that

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Speaker 3: the Biden administration is in trouble, not because people think

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Speaker 3: that Donald Trump's a great guy, but because the economy's

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Speaker 3: improvements haven't registered with the average voter yet and that's

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Speaker 3: got to turn around or it could be an issue

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Speaker 3: for Joe Biden. That we heard from Michael Barr, who

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Speaker 3: is the Vice Chairman for Supervision at the FED, who

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Speaker 3: said that basically two things, He's with j Powell and

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Speaker 3: slowing down and waiting to see more data as far

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Speaker 3: as monetary policy is concerned. But he also addressed to

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Speaker 3: all the concerns on Wall Street about NYCB and regional

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Speaker 3: banks and their exposures to commercial real estate, suggesting that

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Speaker 3: this was maybe a one off because NYCB had bought

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Speaker 3: signature banks bad loans and that the system was under control,

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Speaker 3: there was no real systemic danger that the FED was

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Speaker 3: on top of it. That was kind of reinforced at

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Speaker 3: a seminar today on commercial real estate, where basically the

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Speaker 3: consensus was that we will see some some banks struggle

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Speaker 3: with commercial real estate loans, but in general the system

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Speaker 3: isn't as bad as it has been portrayed. So so far,

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Speaker 3: so good. We also had Mario Draghi here today talking

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Speaker 3: about globalization, and of course he's always a big favorite

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Speaker 3: of everyone.

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Speaker 2: Michael McKee gonna have to leave it there, don't have

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Speaker 2: too much fun in Washington. I hope you come back

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Speaker 2: tomorrow and we can see here in the office. That's

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Speaker 2: Michael McKee, International Economics and Policy correspondent, joining us from

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Speaker 2: the National Association for Business Economics conference in Washington.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 2: Well, here's some good news. At a mere one point

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Speaker 2: nine percent, the state of Maryland has the lowest unemployment

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Speaker 2: rate in the entire country, and at more than one

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Speaker 2: hundred and eight thousand dollars a year, got the highest

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Speaker 2: median household income in the US. And then there's the

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Speaker 2: not so good news. Maryland's economy is growing at a

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Speaker 2: slower rate than the US economy and its neighbors Pennsylvania

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Speaker 2: and Virginia, and labor force participation has not recovered to

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Speaker 2: pre pandemic levels. These figures are highlighted in a report

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Speaker 2: last month from the Maryland State Controller's Office, the first

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Speaker 2: report of its kind to be released. Let's get to

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Speaker 2: the interview we have with us this afternoon, Maryland's Comptroller

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Speaker 2: Brook Leerman. She joins us from our Washington DC Bureau Comptroller. Welcome,

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Speaker 2: It's good to have you on the program this afternoon.

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Speaker 2: As I mentioned, there are a lot of good numbers

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Speaker 2: in the report, but there's also a lot of challenges here.

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Speaker 2: Take your biggest challenge, give us your biggest challenge. What

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Speaker 2: in here concerns you the most?

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Speaker 5: Thank you so much. Tim, As you said, you know,

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Speaker 5: Maryland is doing so well in so many ways. But

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Speaker 5: what we saw in this report through our numbers and

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Speaker 5: analysis as well as roundtables around the state, is that

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Speaker 5: our labor force is constrained. You know, we have a

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Speaker 5: traditionally very high labor force participation rate in Maryland and

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Speaker 5: we still have a rate that is higher than the

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Speaker 5: national average, but we haven't quite recovered from COVID, and

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Speaker 5: so some of our economy is really constrained in the

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Speaker 5: private sector growth. We're seeing good federal sector growth, but

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Speaker 5: the private sector growth is constrained because of this, uh labor,

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Speaker 5: these labor force challenges. So you know, we were excited

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Speaker 5: to release this report so that our policy makers, our

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Speaker 5: governor and others can and can really start to tackle

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Speaker 5: these challenges and our economy can continue to grow.

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Speaker 4: Now, controller what are the biggest challenges in the workforce

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Speaker 4: and who is bearing the brunt of the pain here?

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Speaker 5: So it's a good question. You know, we are really

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Speaker 5: fortunate as a state to have a robust and unique

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Speaker 5: set of industries in the state. You know, from federal

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Speaker 5: to government to the port to unique biotech and cybersecurity

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Speaker 5: and more all across the state, as well as numerous universities.

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Speaker 5: What we saw in the data is that women have

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Speaker 5: left the workforce at a higher rate in Maryland then nationally,

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Speaker 5: So that's something that we're really focused on. We also

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Speaker 5: have seen some health challenges over the years because of

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Speaker 5: the opioid epidemic and so and continuing health concerns, and

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Speaker 5: so we want to make sure that we're focusing gotten

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Speaker 5: there as well. And then finally, I will say, you know,

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Speaker 5: our population growth is so important. You know, when you're

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Speaker 5: talking about labor force, it's about you know, the number

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Speaker 5: of people both who live in Maryland and are participating.

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Speaker 5: And we have seen lower numbers of growth in terms

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Speaker 5: of population in the past few years since COVID, and

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Speaker 5: so we want to make sure that there's a place

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Speaker 5: for everyone in Maryland that they can afford a home,

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Speaker 5: that they can send their kids to our great public schools.

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Speaker 5: And so that's where we're focusing as well.

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Speaker 2: Okay, Controller, I want to zero in on one issue

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Speaker 2: that you mentioned, it's women leaving the workforce. I was

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Speaker 2: really shocked to see the decline of childcare centers in

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Speaker 2: this report in the state of Maryland. We are seeing

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Speaker 2: that you predict by twenty twenty seven there will be

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Speaker 2: only twenty seven hundred child care providers in the state,

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Speaker 2: down from nearly six thousand in twenty eighteen. I've got

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Speaker 2: two little kids. Childcare is front and center for my

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Speaker 2: wife and I. How do you fix this in the state?

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Speaker 2: Can you do that? As Controller?

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Speaker 5: So, you know, one of the things about my job

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Speaker 5: that I love is that I can partner with our governor,

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Speaker 5: you know, with other our General Assembly or Speaker, Senate presidents.

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Speaker 5: So as the Controller, I really serve as the elected CFO.

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Speaker 6: Of the state of Maryland.

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Speaker 5: And this report is about identifying some of those challenges

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Speaker 5: so that our General Assembly and our governor have the

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Speaker 5: information and can then formulate policies to tackle some of

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Speaker 5: those challenges and seize opportunities. And this childcare one is

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Speaker 5: a huge one. I'm also a mom with two children.

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Speaker 5: I understand the challenge of finding childcare and it is

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Speaker 5: essential that we get it right right, that we make

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Speaker 5: sure that they're space in our economy for childcare providers

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Speaker 5: of all types, the private settings, but also the in

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Speaker 5: home care that many Marylanders and many folks who are

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Speaker 5: below meeting income really rely on. And so that is

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Speaker 5: certainly a focus of the General Assembly and the governor

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Speaker 5: in fact mentioned it in a State of the State

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Speaker 5: of the address this year.

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Speaker 2: Do you think it's something that the state can fix

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Speaker 2: on its own or do you need the federal government

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Speaker 2: to help.

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Speaker 5: I think it's going to have to be a partnership.

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Speaker 5: You know, we will work with the federal government in

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Speaker 5: terms of the childcare block grant program. You know, many

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Speaker 5: years ago we changed how we paid in Maryland to

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Speaker 5: pay more. In fact, in the Office of the Controller.

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Speaker 5: Just this past year, we completely changed how, working with

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Speaker 5: the Maryland State Department of Education, how we reimburse childcare

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Speaker 5: providers so that we could provide repayments and reimbursements in

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Speaker 5: a much more timely fashion. So we're very focused on

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Speaker 5: that childcare piece to ensure that women have the opportunities

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Speaker 5: that they want to work out of the home.

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Speaker 4: I want to switch gears a little bit here, and

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Speaker 4: I want to talk about something that's on the top

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Speaker 4: of a lot of people's minds right now. It is

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Speaker 4: tax season. I want to think about your posturing versus

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Speaker 4: some of the others around you. For example, vir Junior

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Speaker 4: Governor Glenn Youngkin has been of the side of saying

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Speaker 4: that taxes are too high yet at state and local levels,

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Speaker 4: and at the federal level, we're obviously facing a massive

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Speaker 4: constraints on budgets. How do you think about the tax

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Speaker 4: equation for the folks who live in Maryland.

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Speaker 5: I think we can never enter into a race to

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Speaker 5: the bottom. You know, Maryland and Maryland. We're proud of

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Speaker 5: our amazing public schools. I graduated from Maryland public schools.

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Speaker 5: My two children are in public schools. We have amazing

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Speaker 5: state parks, we have a robust healthcare system, and so

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Speaker 5: I would caution us against, you know, entering into any

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Speaker 5: sort of race to the bottom. As in terms of

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Speaker 5: tax policy, I think what we have to focus on

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Speaker 5: is making sure that Marylanders are getting the support that

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Speaker 5: they need, that our businesses are able to grow and

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Speaker 5: thrive here in the state of Maryland, and that we

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Speaker 5: have the labor force available, a well educated, a well

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Speaker 5: trained workforce available for employers so that they know that

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Speaker 5: they can grow here over the long term.

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Speaker 4: Curious about the race to the bottom a little more,

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Speaker 4: how do you compete with other states that are participating

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Speaker 4: in that race to the bottom, particularly if you're trying

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Speaker 4: to build a labor.

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Speaker 6: Force well over the long term.

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Speaker 5: What you see is you know, although Marylanders, if you

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Speaker 5: look at the age brackets, Marylanders may be moving out

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Speaker 5: of state when they're younger, when they're older, we actually

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Speaker 5: see you know, the prime work age workforce age Maryland

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Speaker 5: people moving into the States. And that's because of our schools,

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Speaker 5: it's because of our opportunities, it's because of our housing stock.

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Speaker 5: Those are those folks are finding their way to Maryland

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Speaker 5: because of its reputation for being such a family supporting state.

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Speaker 5: And so you know, that's where we have to focus

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Speaker 5: on making sure then that those Marylanders are can find

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Speaker 5: the housing that they need. Right, I think where I

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Speaker 5: would focus is on making sure that the housing is

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Speaker 5: available so that people can grow here, thrive here, and

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Speaker 5: then retire here as well.

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Speaker 2: I want to talk about federal government employment because a

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Speaker 2: relatively large portion of the state compared to other states,

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Speaker 2: works for the federal government five point seven percent of

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Speaker 2: Maryland total of total Maryland employment, compared to one point

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Speaker 2: nine percent of total employment nationally. Obviously, it's good for

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Speaker 2: stability because these government jobs are stable. But I'm wondering

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Speaker 2: what the downsides are of having so many government workers.

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Speaker 2: Since those jobs are so stable, doesn't mean the working

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Speaker 2: population doesn't necessarily have the same rate of people going

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Speaker 2: and starting their own businesses of entrepreneurship. Talk to us

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Speaker 2: a little bit about that.

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Speaker 5: Sure, you know, we haven't seen that in Maryland. We're

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Speaker 5: very fortunate to have I think this high federal employment,

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Speaker 5: although it sometimes says get a little dicey when the

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Speaker 5: federal government might shut down, but you know, for the

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Speaker 5: most part, it's a real boom to Maryland. And we're

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Speaker 5: really excited to be welcoming the FBI headquarters to Maryland

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Speaker 5: in the coming years. Because we have such a robust

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Speaker 5: series of research universities and the state as well well,

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Speaker 5: including of course JOHNS Hopkins, the University of Maryland System

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Speaker 5: and more Morgan State. We have a number of entrepreneurs

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Speaker 5: and ideas and sort of that's that are coming out

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Speaker 5: of those universities. We see enormous tech transfer possibilities. We

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Speaker 5: also are really fortunate to have, you know, a large

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Speaker 5: number of immigrants in the state of Maryland, and we

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Speaker 5: see a number of immigrants who are great entrepreneurs opening

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Speaker 5: businesses in the state as well.

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Speaker 4: Com Schuller with the type of fighting, if you hill,

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Speaker 4: that we've been seeing coming out of Congress. Do you

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Speaker 4: share a concern with so many federal workers being in

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Speaker 4: Maryland of a risk of a government shut down.

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Speaker 5: Absolutely, you know, it's for so many reasons. A government

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Speaker 5: shut down is irresponsible and challenging, you know, certainly globally,

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Speaker 5: but here in Maryland it is as well. You know,

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Speaker 5: those workers are having to go to work and they're

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Speaker 5: not getting paid, or they're not working and they're not

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Speaker 5: getting paid. It's incredibly challenging. Over the long term, they

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Speaker 5: do get paid, and so the revenue does come in

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Speaker 5: both to their household and to the state. The most challenging,

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Speaker 5: one of the most challenging times that our economy has

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Speaker 5: had relating to the federal government was actually was actually

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Speaker 5: after Seaquestration. We saw real challenges after that because of

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Speaker 5: the long term effect that sequestration had.

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Speaker 2: We only have about thirty seconds left. But you were

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Speaker 2: a Democratic delegate back in twenty sixteen. I got to

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Speaker 2: ask you a national question about the Democratic Party. Why

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Speaker 2: do you think there haven't been more competition from within

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Speaker 2: the Democratic Party against President Biden given the challenges that

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Speaker 2: he faces for reelection.

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Speaker 5: President Biden and the Democrats in Congress have passed more

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Speaker 5: important legislation in the past two years than I can

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Speaker 5: remember in decades. I mean, from the IRA to the

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Speaker 5: Chips Act to the Infrastructure Bill. I mean, the legislation

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Speaker 5: that has come out is in phenomenal and it is

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Speaker 5: game changing for not just the state of Maryland in

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Speaker 5: the coming years, but really for our country. And so,

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Speaker 5: you know, I just think the progress that has been

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Speaker 5: made under the Democrats, it can't be denied. And our

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Speaker 5: economy has grown as well, and so I'm excited about

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Speaker 5: what's happening.

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Speaker 2: Controller, thank you so much for joining us. That's Brooklearman,

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Speaker 2: Maryland's controller, joining us from Washington.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live

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Speaker 1: each weekday starting at two pm Eastern on applecar Play

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Speaker 1: York station, just Say Alexa playing Bloomberg eleven thirty.

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Speaker 2: Well. US retail sales broadly declined in January, indicating consumers

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Speaker 2: took a breather after a strong holiday shopping season. The

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Speaker 2: value of retail purchases, unadjusted for inflation, decreased eight tens

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Speaker 2: of one percent from December. This after a downward revision

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Speaker 2: to the prior month. This according to Commerce Department data

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Speaker 2: that we got earlier today, that drop was the biggest

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Speaker 2: in nearly a year. For more on this and more

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Speaker 2: when it comes to retail, let's bring in Angie Solanki,

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Speaker 2: National director of US Retail at Colliers. She joins us

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Speaker 2: from San Francisco. Good to have you back on the program.

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Speaker 2: I want to start with today's data, but then I

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Speaker 2: want to move beyond that and get to what you're

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Speaker 2: seeing in your work in terms of AI, in terms

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Speaker 2: of efficiencies, and really what we're seeing in the future

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Speaker 2: of retail. But were these numbers at all a surprise

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Speaker 2: to you that we got a little earlier today. What

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Speaker 2: are you seeing in your work?

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Speaker 7: Yeah, I mean, if we look at the numbers, you know,

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Speaker 7: it's a reasonable start to twenty twenty four. It's just

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Speaker 7: you know, our January numbers, it's not fatal. If we

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Speaker 7: really look at core retail in terms of increase, it

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Speaker 7: was about two point eight percent, so that's pretty healthy.

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Speaker 7: And if we really look at you know, back two

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Speaker 7: to three years, you know what we've seen from retailers

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Speaker 7: is really that operational efficiency and how they're looking forward

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Speaker 7: in terms of utilizing different tools and platforms to increase

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Speaker 7: their EFFICI season margins going for.

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Speaker 4: A big question that a lot of investors have too

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Speaker 4: is if they're using money to invest in things like

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Speaker 4: AI to increase operational efficiency, how much of that money

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Speaker 4: is turned around and used to pay employees? For example,

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Speaker 4: do you need to raise prices for consumers in order

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Speaker 4: to invest more? How does the equation work at the

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Speaker 4: end of the day.

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Speaker 7: Yeah, you know, it's really dependent upon each of the retailers.

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Speaker 7: So each retailer will have a slightly different business model.

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Speaker 7: But what we have seen or are monitoring, I should

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Speaker 7: say closely, is using AI from an operational efficiency perspective

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Speaker 7: can be a savings of sixty to seventy percent.

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Speaker 6: Then what happens is we start.

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Speaker 7: To layer on and I'll use grocery as the category

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Speaker 7: or segment as the example, is that you then can

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Speaker 7: offer additional products through a private label system. So when

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Speaker 7: you do that, you're actually seeing a better margin increase.

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Speaker 7: So operational efficiencies margin increases allows that retailer to actually provide,

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Speaker 7: to your point earlier better wages.

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Speaker 2: What's the what are the inputs that that give them

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Speaker 2: the data that allow them to make these decisions to

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Speaker 2: have these efficiencies.

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Speaker 7: I mean, if you stop and thinking about AI right,

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Speaker 7: we're we're kind of in its you know, infancy as

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Speaker 7: it relates to retail. There's a lot of discussion around it.

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Speaker 7: There's you know, still adoption around this. We're seeing AI

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Speaker 7: used definitely from a distribution perspective, so in the supply chain,

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Speaker 7: but also where we're able to take AI step further

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Speaker 7: because we've been harvesting or I should say retailers have

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Speaker 7: been harvesting pos or point of sale data through transactions,

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Speaker 7: whether it's online or offline in the store.

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Speaker 6: So when they're.

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Speaker 7: Collecting that data, they have the ability to start utilizing

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Speaker 7: the AI overlay to start to find kind of you know,

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Speaker 7: themes around personal customization areas of where there's seems from

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Speaker 7: product so far faster than a different product. So that

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Speaker 7: is helping from an efficiency perspective.

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Speaker 4: How do you think that the year is going to

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Speaker 4: play out? You know, the thing that's really top of

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Speaker 4: mind right now for investors is that data we saw

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Speaker 4: from retail sales just this morning being worse than expected.

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Speaker 4: If the consumer starts to become more strapped this year,

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Speaker 4: what are the things that many retailers are not really

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Speaker 4: thinking about at this moment to prepare for that.

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Speaker 6: That's a great question.

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Speaker 7: So there is a little bit of what I'm calling

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Speaker 7: the you know, credit card hangover from December. There was

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Speaker 7: quite a bit of spend in December, so people are

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Speaker 7: being much more cautious. We have definitely seen big ticket items,

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Speaker 7: you know, look at it, you know, a bit of

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Speaker 7: a decrease in terms of sales and spend. But where

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Speaker 7: we have seen a shift an increase in spend has

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Speaker 7: been actually in the restaurant and bar scene. So it's

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Speaker 7: the allocation of funds. Now, looking forward into twenty twenty four,

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Speaker 7: we're going to be very you know, called it optimistically cautious.

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Speaker 7: I know we've used that word quite a bit, but

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Speaker 7: I think last year was one where we were really

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00:23:00,080 --> 00:23:04,560
Speaker 7: focused and monitoring every single movement within retail. This year,

439
00:23:04,640 --> 00:23:08,800
Speaker 7: I think there's more of a consciousness around how people

440
00:23:08,800 --> 00:23:10,720
Speaker 7: are spending where they're spending, but it's going to be

441
00:23:10,840 --> 00:23:13,640
Speaker 7: very value driven and I don't see that changing through

442
00:23:13,760 --> 00:23:14,359
Speaker 7: throughout the year.

443
00:23:14,640 --> 00:23:16,919
Speaker 2: Where where specifically are you seeing weakness and dare I

444
00:23:16,960 --> 00:23:19,440
Speaker 2: ask if you're seeing any recession right now?

445
00:23:21,040 --> 00:23:21,560
Speaker 6: Recession.

446
00:23:21,680 --> 00:23:26,360
Speaker 7: No, we're not definitely forecasting recession as of today. What

447
00:23:26,400 --> 00:23:28,760
Speaker 7: we will, what I would suggest is that we're really

448
00:23:28,800 --> 00:23:32,439
Speaker 7: seeing in terms of, you know, a decline in sales

449
00:23:32,520 --> 00:23:35,440
Speaker 7: as a you know, electronics. We're going to continue to

450
00:23:35,480 --> 00:23:38,240
Speaker 7: see some softness in you know, kind of that tech

451
00:23:38,480 --> 00:23:43,119
Speaker 7: device sector. But from a F and B perspective, I

452
00:23:43,119 --> 00:23:45,000
Speaker 7: think we're going to still be We're a little.

453
00:23:44,760 --> 00:23:46,240
Speaker 6: We're still bullish in that sector.

454
00:23:46,280 --> 00:23:50,520
Speaker 7: We actually survey over five hundred retail professionals within our

455
00:23:50,600 --> 00:23:54,359
Speaker 7: organization to say, where are you seeing across the US

456
00:23:54,400 --> 00:23:55,600
Speaker 7: and your respective.

457
00:23:55,200 --> 00:23:58,000
Speaker 6: Local markets the most movement from.

458
00:23:57,800 --> 00:24:01,560
Speaker 7: A least transaction perspective, and it's definitely in the restaurant space.

459
00:24:02,200 --> 00:24:04,679
Speaker 4: Now, another thing we talk about a lot over here

460
00:24:04,680 --> 00:24:08,240
Speaker 4: at Bloomberg is the cost of real estate right now

461
00:24:08,280 --> 00:24:10,800
Speaker 4: in retail space, and there are a lot of retailers

462
00:24:10,840 --> 00:24:15,080
Speaker 4: that really expect to expand a physical footprint. How costly

463
00:24:15,280 --> 00:24:16,400
Speaker 4: is that expansion plan?

464
00:24:18,119 --> 00:24:21,119
Speaker 7: You know, it is market driven. I think you know

465
00:24:21,160 --> 00:24:22,840
Speaker 7: what we're seeing, you know, some.

466
00:24:22,720 --> 00:24:25,800
Speaker 6: Of the challenges is it goes back.

467
00:24:25,600 --> 00:24:32,880
Speaker 7: To construction cost, workforce as well as when you look

468
00:24:32,960 --> 00:24:36,000
Speaker 7: at where we are from an occupancy perspective in the

469
00:24:36,320 --> 00:24:41,040
Speaker 7: more urban suburban markets and secondary markets. Rents have continued

470
00:24:41,080 --> 00:24:43,679
Speaker 7: to climb and those are going to be you know,

471
00:24:43,760 --> 00:24:46,920
Speaker 7: at some point, there's there has to be a tipping point,

472
00:24:47,000 --> 00:24:50,080
Speaker 7: right because there's only so much a store can generate

473
00:24:50,160 --> 00:24:53,919
Speaker 7: in terms of sales. So we have to work collectively

474
00:24:54,040 --> 00:24:58,359
Speaker 7: landlords and retailers to make it much more a partnership

475
00:24:58,600 --> 00:25:01,320
Speaker 7: so that it is the stainable and there isn't this

476
00:25:01,480 --> 00:25:05,639
Speaker 7: like you know, flip and we're starting to see some

477
00:25:05,680 --> 00:25:08,160
Speaker 7: struggle or challenges with high rents.

478
00:25:08,480 --> 00:25:10,800
Speaker 2: What about in terms of you know, we've talked a

479
00:25:10,800 --> 00:25:13,040
Speaker 2: lot about real estate on this program over the last

480
00:25:13,119 --> 00:25:15,880
Speaker 2: few weeks, and one thing we talked about earlier this

481
00:25:15,960 --> 00:25:19,719
Speaker 2: week with the co CEOs of the design and planning

482
00:25:19,720 --> 00:25:25,800
Speaker 2: firm Gensler, is repurposing office space that isn't being used

483
00:25:25,880 --> 00:25:29,439
Speaker 2: right now, repurposing that to housing. I'm wondering what you're

484
00:25:29,480 --> 00:25:31,440
Speaker 2: seeing on the retail side right now and the way

485
00:25:31,440 --> 00:25:35,400
Speaker 2: that you're seeing retail being repurposed. Can you offer any

486
00:25:35,960 --> 00:25:39,359
Speaker 2: thoughts there about what you're seeing and if you're starting

487
00:25:39,400 --> 00:25:42,280
Speaker 2: to see that being converted to different uses.

488
00:25:43,560 --> 00:25:45,960
Speaker 7: So what we're seeing in terms of retail converting to

489
00:25:46,920 --> 00:25:50,159
Speaker 7: you know, it's retail converting to other types of uses.

490
00:25:50,600 --> 00:25:53,120
Speaker 7: So you're seeing this a lot in the mall sector.

491
00:25:53,440 --> 00:25:56,080
Speaker 7: So you're starting to see some of the larger boxes

492
00:25:56,640 --> 00:26:00,720
Speaker 7: where you have an opportunity to upgrade in terms of

493
00:26:00,760 --> 00:26:05,119
Speaker 7: the overall mix of types of products or I should

494
00:26:05,119 --> 00:26:08,040
Speaker 7: say uses within the project. So you're starting to see

495
00:26:08,040 --> 00:26:11,720
Speaker 7: some concepts such as hotels coming in, So you're starting

496
00:26:11,760 --> 00:26:14,960
Speaker 7: to see hotel operators coming in. You're also starting to

497
00:26:15,000 --> 00:26:18,120
Speaker 7: see and these are one alike. Consider malls. These are

498
00:26:18,400 --> 00:26:22,720
Speaker 7: you know, malls that may have slightly higher vacancy maybe

499
00:26:22,960 --> 00:26:25,160
Speaker 7: you know they have a seventy five to eighty percent

500
00:26:25,280 --> 00:26:30,120
Speaker 7: vacancy versus the class triple A malls. And so we're

501
00:26:30,119 --> 00:26:34,760
Speaker 7: seeing hospitality. We're also seeing healthcare, so healthcare large healthcare

502
00:26:34,880 --> 00:26:39,000
Speaker 7: organizations seeing advantages and or benefits right as it relates

503
00:26:39,040 --> 00:26:43,320
Speaker 7: to if I can bring create a convenience to my

504
00:26:44,440 --> 00:26:48,320
Speaker 7: end user and patients in this situation, and even you know,

505
00:26:48,480 --> 00:26:51,439
Speaker 7: the doctors and the staff, et cetera. You're allowing these

506
00:26:51,480 --> 00:26:55,160
Speaker 7: people to come into a no because typically retail malls

507
00:26:55,160 --> 00:26:59,760
Speaker 7: are in accessible areas, they have great accessibility in an

508
00:27:00,720 --> 00:27:01,680
Speaker 7: ample parking.

509
00:27:02,240 --> 00:27:03,920
Speaker 6: And then you're also providing.

510
00:27:03,520 --> 00:27:07,680
Speaker 7: Other benefits where if there's you know, shopping opportunities, food opportunities.

511
00:27:07,680 --> 00:27:11,080
Speaker 6: So we are seeing that occur. You know, interesting thing.

512
00:27:11,000 --> 00:27:12,840
Speaker 7: That you said, and we just published this which is

513
00:27:13,440 --> 00:27:19,080
Speaker 7: kind of this retail office interdependency and that relationship more

514
00:27:19,080 --> 00:27:22,639
Speaker 7: in the urban markets. You know, what we're now seeing

515
00:27:22,720 --> 00:27:25,920
Speaker 7: is this new trend, and that trend is with small businesses.

516
00:27:26,080 --> 00:27:28,240
Speaker 6: I'm really excited about that because.

517
00:27:28,000 --> 00:27:30,720
Speaker 7: You're starting to see small businesses pop up more and more,

518
00:27:31,080 --> 00:27:34,520
Speaker 7: and I think landlords are giving them an opportunity to

519
00:27:34,680 --> 00:27:37,840
Speaker 7: take a vacant in space and really activate that and

520
00:27:37,880 --> 00:27:38,560
Speaker 7: warm and up for.

521
00:27:38,800 --> 00:27:41,560
Speaker 2: That's that's interesting to hear. Yeah, that's interesting to hear,

522
00:27:41,640 --> 00:27:44,400
Speaker 2: especially because in terms of new jobs that are created,

523
00:27:44,800 --> 00:27:48,879
Speaker 2: small businesses account for a huge portion of those. Hey, Angie,

524
00:27:48,920 --> 00:27:50,960
Speaker 2: we got to leave it there. Angie Solanki is National

525
00:27:50,960 --> 00:27:53,679
Speaker 2: director of US Retail at the real estate firm Callier.

526
00:27:53,760 --> 00:28:01,560
Speaker 2: She joins US from San Francisco, A journal.

527
00:28:02,520 --> 00:28:03,560
Speaker 3: Now about you let me drive?

528
00:28:03,800 --> 00:28:05,320
Speaker 2: Oh no, no, no, no, who's.

529
00:28:06,880 --> 00:28:07,200
Speaker 8: Alright?

530
00:28:07,400 --> 00:28:09,280
Speaker 1: Please, I'll do the travels.

531
00:28:09,520 --> 00:28:14,240
Speaker 6: Excuse wait, I don't want to drive. It's a good question.

532
00:28:15,000 --> 00:28:21,280
Speaker 1: Try this is the drive to the clothes do commer pick.

533
00:28:21,400 --> 00:28:22,480
Speaker 6: We'll buy around each.

534
00:28:22,359 --> 00:28:24,440
Speaker 1: Other dawn on Bloomberg Radio.

535
00:28:24,800 --> 00:28:27,360
Speaker 2: We'll just amount eighteen minutes to go until the close

536
00:28:27,600 --> 00:28:29,600
Speaker 2: of creating here. We just heard an update from Charlie

537
00:28:29,640 --> 00:28:32,560
Speaker 2: Pellett and Bill Maloney that we're seeing some late day buying.

538
00:28:32,600 --> 00:28:34,400
Speaker 2: The S and P five hundred off its session highs,

539
00:28:34,440 --> 00:28:37,119
Speaker 2: but still up half a percentage point. The NASDAC up

540
00:28:37,240 --> 00:28:38,920
Speaker 2: more than one tenth of one percent. Will the Dow

541
00:28:39,080 --> 00:28:42,200
Speaker 2: up eight tenths of one percent. Let's get our drive

542
00:28:42,280 --> 00:28:45,080
Speaker 2: to the clothes with Megan Horneman, chief investment officer at

543
00:28:45,240 --> 00:28:49,040
Speaker 2: Verde's Capital Advisors. She joins us from Hunt Valley, Maryland. Megan,

544
00:28:49,120 --> 00:28:50,040
Speaker 2: good to see you.

545
00:28:50,120 --> 00:28:50,520
Speaker 1: How are you.

546
00:28:51,360 --> 00:28:52,080
Speaker 8: I'm great? How are you?

547
00:28:52,360 --> 00:28:54,640
Speaker 2: We're doing well. Thanks. Trying to make sense of the

548
00:28:54,800 --> 00:28:56,960
Speaker 2: kind of conflicting data that we got this week and

549
00:28:57,320 --> 00:29:00,400
Speaker 2: last week that shows that inflation came out a little

550
00:29:00,600 --> 00:29:03,440
Speaker 2: hotter than expected, retail sales coming in a little lighter

551
00:29:03,960 --> 00:29:07,080
Speaker 2: than expected, all on the heels of that jobs report

552
00:29:07,160 --> 00:29:09,840
Speaker 2: that came out last Friday that showed that hiring in

553
00:29:10,120 --> 00:29:12,560
Speaker 2: January was robust. What's on your mind.

554
00:29:14,360 --> 00:29:16,680
Speaker 8: Right now. I'm a little bit concerned about the inflation.

555
00:29:16,920 --> 00:29:19,440
Speaker 8: I'm not so much concerned about what's going on with

556
00:29:19,520 --> 00:29:22,680
Speaker 8: the retail sales. Again, it was a disappointing January. Don't

557
00:29:22,680 --> 00:29:25,680
Speaker 8: forget we had a pretty big jump in December, so

558
00:29:25,800 --> 00:29:28,160
Speaker 8: this could be some give back. There's some nuances with

559
00:29:28,280 --> 00:29:31,600
Speaker 8: the seasonality as well, But the inflation is the bigger concern.

560
00:29:31,880 --> 00:29:35,320
Speaker 8: And the reason that's concerning me is we've warned for

561
00:29:35,440 --> 00:29:38,240
Speaker 8: a long time that inflation can be a bumpy road down.

562
00:29:38,520 --> 00:29:41,320
Speaker 8: It's not a straight line down. The Feds made it

563
00:29:41,360 --> 00:29:44,239
Speaker 8: pretty clear that they're more concerned about inflation than they

564
00:29:44,280 --> 00:29:47,040
Speaker 8: are about the economy. So there's a lot of people,

565
00:29:47,120 --> 00:29:50,520
Speaker 8: and you know, expectations for these rate cuts this year,

566
00:29:50,880 --> 00:29:53,360
Speaker 8: and I'm afraid that might be a little optimistic given

567
00:29:53,440 --> 00:29:54,400
Speaker 8: that inflation data that.

568
00:29:54,440 --> 00:29:57,920
Speaker 2: We saw, even still optimistic, Yeah.

569
00:29:57,920 --> 00:29:59,920
Speaker 8: You're still looking instead of seven rate cuts. I mean,

570
00:30:00,000 --> 00:30:01,920
Speaker 8: I don't even know where that came from seven rate

571
00:30:02,000 --> 00:30:04,880
Speaker 8: cuts to now maybe down to four rate cuts. But

572
00:30:05,000 --> 00:30:07,520
Speaker 8: if we get some more of this volatility and inflation,

573
00:30:07,920 --> 00:30:10,360
Speaker 8: the Fed could remain on hold this entire year.

574
00:30:10,560 --> 00:30:12,680
Speaker 4: Well that's what I was thinking a lot about. What

575
00:30:12,760 --> 00:30:16,040
Speaker 4: if we get no rate cuts and indeed, what would

576
00:30:16,040 --> 00:30:18,120
Speaker 4: it take to see another rate hike? I mean, how

577
00:30:18,200 --> 00:30:21,600
Speaker 4: much risk is there a reacceleration of inflation at this rate.

578
00:30:23,280 --> 00:30:25,480
Speaker 8: I think there's a risk. I'm not ready to say

579
00:30:25,520 --> 00:30:27,720
Speaker 8: that there's a chance that they could have to hike

580
00:30:27,800 --> 00:30:31,440
Speaker 8: again this year, but there is a risk. We haven't

581
00:30:31,480 --> 00:30:33,240
Speaker 8: seen the full effects of what's going on in the

582
00:30:33,320 --> 00:30:37,200
Speaker 8: Red Sea. We know that shipping costs, these are all skyrocketing.

583
00:30:37,480 --> 00:30:40,440
Speaker 8: Will get some more information from the producer side. If

584
00:30:40,480 --> 00:30:43,080
Speaker 8: you look at the ISM Services index that we got

585
00:30:43,200 --> 00:30:46,160
Speaker 8: for January, that price is pay component jumped up to

586
00:30:46,280 --> 00:30:49,240
Speaker 8: sixty five. That was a pretty big jump there. So

587
00:30:49,400 --> 00:30:52,040
Speaker 8: these are things that are showing us that that's sticky inflation.

588
00:30:52,280 --> 00:30:56,000
Speaker 8: The FED has warned us about the service side housing wages.

589
00:30:56,400 --> 00:30:58,600
Speaker 8: This is still a problem and we may not be

590
00:30:58,640 --> 00:31:00,640
Speaker 8: able to save. Were completely out of the wood there, And.

591
00:31:00,720 --> 00:31:02,280
Speaker 4: How lagged is a lot of this data If you

592
00:31:02,360 --> 00:31:04,560
Speaker 4: think about, for example, one thing that struck me this

593
00:31:04,680 --> 00:31:07,640
Speaker 4: week was the mortgage rate climbing the most you've seen

594
00:31:07,720 --> 00:31:12,200
Speaker 4: in two months here, and interestingly that came before we

595
00:31:12,320 --> 00:31:15,920
Speaker 4: saw the interest rate jumps this week. Right, we saw

596
00:31:15,960 --> 00:31:18,479
Speaker 4: the yield rise meaningfully this week in the two year

597
00:31:18,520 --> 00:31:21,400
Speaker 4: and the ten year. So how much more pain is

598
00:31:21,520 --> 00:31:24,240
Speaker 4: there in terms of the impact of higher rates and

599
00:31:24,720 --> 00:31:27,200
Speaker 4: kind of how cyclical is this problem at this point?

600
00:31:28,840 --> 00:31:32,120
Speaker 8: Yeah, it takes a while for the full effects of

601
00:31:32,280 --> 00:31:34,560
Speaker 8: the FED rate hikes to be felt in the economy.

602
00:31:35,160 --> 00:31:38,720
Speaker 8: And what you're seeing is this kind of this dispersion

603
00:31:38,920 --> 00:31:42,920
Speaker 8: where the FED has done such an aggressive rate hiking cycle.

604
00:31:43,120 --> 00:31:45,920
Speaker 8: But if you look at things like financial conditions because

605
00:31:45,920 --> 00:31:48,960
Speaker 8: of the rise and equities because of low volatility, because

606
00:31:49,040 --> 00:31:52,640
Speaker 8: credit spreads are so tight, you're actually seeing financial conditions.

607
00:31:52,720 --> 00:31:55,480
Speaker 8: Some of these indices that are out there, financial conditions

608
00:31:55,520 --> 00:31:58,200
Speaker 8: are the easiest they've been since before the FED started

609
00:31:58,280 --> 00:32:01,880
Speaker 8: raising rates. That's a problem the FED has said. I

610
00:32:01,960 --> 00:32:04,360
Speaker 8: think the problem the Fed did is they got dubbish

611
00:32:04,400 --> 00:32:07,760
Speaker 8: in December and that sparked kind of a resurgence in

612
00:32:07,840 --> 00:32:11,880
Speaker 8: from economic data. And that's very easy to reignite inflation.

613
00:32:12,120 --> 00:32:14,200
Speaker 8: And then you put on top of that the fact

614
00:32:14,200 --> 00:32:16,160
Speaker 8: that we have these issues in the red Sea. This

615
00:32:16,760 --> 00:32:19,560
Speaker 8: is a concern for inflation. Don't ever take one month

616
00:32:19,680 --> 00:32:22,200
Speaker 8: of anything for a trend. Here, Well, we're going to

617
00:32:22,320 --> 00:32:25,120
Speaker 8: look at some of the underlying data, some leading indicators,

618
00:32:25,240 --> 00:32:27,760
Speaker 8: and we'll take it. We'll see if this continues month

619
00:32:27,800 --> 00:32:30,240
Speaker 8: after month to get a better idea. But it is

620
00:32:30,320 --> 00:32:32,720
Speaker 8: a risk that we could see inflation kind of stall

621
00:32:32,840 --> 00:32:34,600
Speaker 8: here with the progress we've made.

622
00:32:34,880 --> 00:32:38,640
Speaker 2: So what are you seeing in terms of your own

623
00:32:38,680 --> 00:32:43,280
Speaker 2: predictions for the year, Megan, Are you thinking that, Okay,

624
00:32:43,400 --> 00:32:46,520
Speaker 2: this is just a blip, this CPI figure, or are

625
00:32:47,200 --> 00:32:49,760
Speaker 2: is the Fed on track to actually successfully bring inflation

626
00:32:49,840 --> 00:32:50,960
Speaker 2: to its two percent target.

627
00:32:52,680 --> 00:32:54,840
Speaker 8: I think that they're on track to get it to

628
00:32:54,920 --> 00:32:58,920
Speaker 8: their two percent target, but not as quickly as most anticipate.

629
00:32:59,040 --> 00:33:01,080
Speaker 8: I think that it's going to be really difficult to

630
00:33:01,120 --> 00:33:03,840
Speaker 8: get to where we are now down to that two percent.

631
00:33:04,280 --> 00:33:06,280
Speaker 8: I don't I'm not as optimistic that we'll see that

632
00:33:06,400 --> 00:33:09,320
Speaker 8: this year. I think that maybe a twenty twenty five story.

633
00:33:09,880 --> 00:33:11,840
Speaker 8: One of our themes for this year was that the

634
00:33:11,880 --> 00:33:15,000
Speaker 8: Fed was walking a very fine line and that reinflation

635
00:33:15,240 --> 00:33:17,960
Speaker 8: was a risk. We saw that coming into the year

636
00:33:18,120 --> 00:33:21,080
Speaker 8: they were so dubbish. In December, equity markets took off,

637
00:33:21,920 --> 00:33:25,440
Speaker 8: you saw spending from consumers take off, you saw consumer

638
00:33:25,560 --> 00:33:28,800
Speaker 8: confidence pick up again. Those were things that concerned us

639
00:33:28,840 --> 00:33:32,360
Speaker 8: about reinflation being an issue, And then you have to

640
00:33:32,360 --> 00:33:34,480
Speaker 8: look at how the what are the markets pricing in

641
00:33:34,640 --> 00:33:37,080
Speaker 8: If the markets weren't sitting at record highs, then we

642
00:33:37,200 --> 00:33:38,960
Speaker 8: might say, hey, they're not you know, they're being a

643
00:33:39,000 --> 00:33:41,040
Speaker 8: little bit more realistic of where we are and what

644
00:33:41,160 --> 00:33:43,760
Speaker 8: the Fed Kenny can't do. But the market just continues

645
00:33:43,800 --> 00:33:47,600
Speaker 8: to notch these record highs this year, and it's disregarding

646
00:33:47,640 --> 00:33:49,480
Speaker 8: a lot of these signs in the economy.

647
00:33:50,000 --> 00:33:53,040
Speaker 4: So what do you think investors are ignoring now as

648
00:33:53,080 --> 00:33:54,760
Speaker 4: the engage in markets. You look at a lot of

649
00:33:54,840 --> 00:33:58,440
Speaker 4: these industries near all time highs and a lot of

650
00:33:58,560 --> 00:34:02,720
Speaker 4: exuberance in certain parts the market. After everything you've said

651
00:34:02,880 --> 00:34:05,680
Speaker 4: about kind of the miscalculation and the market about rate

652
00:34:05,760 --> 00:34:10,400
Speaker 4: cuts and some concerning economic data that we're seeing, how

653
00:34:10,440 --> 00:34:12,520
Speaker 4: should investors be thinking about positioning.

654
00:34:14,520 --> 00:34:18,120
Speaker 8: So what we're doing is, first thing is holds extra cash.

655
00:34:18,880 --> 00:34:21,040
Speaker 8: We are, as I mentioned, the Fed may be on

656
00:34:21,640 --> 00:34:24,360
Speaker 8: hold for longer than most are pricing in the market.

657
00:34:24,640 --> 00:34:27,200
Speaker 8: So holding extra cash isn't at the end of the world.

658
00:34:27,280 --> 00:34:29,839
Speaker 8: At this point, you're getting five percent on your cash level.

659
00:34:29,960 --> 00:34:33,200
Speaker 8: So holding extra cash and being able to take chances

660
00:34:33,239 --> 00:34:35,600
Speaker 8: when there's when the volatility in the market arises, which

661
00:34:35,640 --> 00:34:38,600
Speaker 8: we expect. The other thing is we just did this

662
00:34:38,800 --> 00:34:42,120
Speaker 8: in the beginning of the year. Look at your portfolios,

663
00:34:42,320 --> 00:34:44,920
Speaker 8: look at where you should be your asset allocation is

664
00:34:45,120 --> 00:34:48,200
Speaker 8: has it deviated? It definitely has deviated in some of

665
00:34:48,239 --> 00:34:51,799
Speaker 8: those areas like growth when you're looking at your portfolios,

666
00:34:51,880 --> 00:34:55,800
Speaker 8: so rebalance, rebalance where is necessary. That's something that is

667
00:34:55,840 --> 00:35:00,000
Speaker 8: important to do. We're being patient, We're waiting for opportunity

668
00:35:00,200 --> 00:35:02,719
Speaker 8: in the market. There will be opportunities. I just think

669
00:35:02,840 --> 00:35:05,240
Speaker 8: right now the market is looking a little bit frothy,

670
00:35:05,400 --> 00:35:09,280
Speaker 8: a little bit too optimistic and pricing in this perfect landing,

671
00:35:09,400 --> 00:35:12,440
Speaker 8: perfect inflation story for twenty twenty four.

672
00:35:12,640 --> 00:35:14,960
Speaker 2: Hey, just forty seconds left. What kind of opportunities are

673
00:35:15,000 --> 00:35:16,880
Speaker 2: you talking about here? Are you talking about opportunities of

674
00:35:16,920 --> 00:35:18,839
Speaker 2: like a one and a half percent pullback or something

675
00:35:18,880 --> 00:35:19,680
Speaker 2: more significant?

676
00:35:20,560 --> 00:35:23,279
Speaker 8: Something more significant on the large cap space for sure,

677
00:35:23,920 --> 00:35:26,239
Speaker 8: But there is opportunities, we think in the small and

678
00:35:26,360 --> 00:35:29,480
Speaker 8: MidCap space because they're pricing in. I think of a

679
00:35:29,520 --> 00:35:31,760
Speaker 8: lot of the downside risks. So if you can withstand

680
00:35:31,840 --> 00:35:35,360
Speaker 8: the volatility that can arise as the economy continues to weaken,

681
00:35:35,680 --> 00:35:37,840
Speaker 8: I think that over the long run, you'll be rewarded

682
00:35:38,280 --> 00:35:39,680
Speaker 8: in that small and MidCap space.

683
00:35:40,040 --> 00:35:42,160
Speaker 2: Hey, Megan, love it when you join us. Really do

684
00:35:42,280 --> 00:35:45,000
Speaker 2: appreciate you taking the time this afternoon. That's Megan Horneman,

685
00:35:45,080 --> 00:35:49,000
Speaker 2: chief investment Officer at Verdant's Capital Advisors, joining us from

686
00:35:49,080 --> 00:35:50,320
Speaker 2: Hunt Valley, Maryland.

687
00:35:50,880 --> 00:35:54,120
Speaker 1: This is the Bloomberg Business Week podcast of a Little

688
00:35:54,160 --> 00:35:57,640
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689
00:35:58,200 --> 00:36:01,399
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690
00:36:01,680 --> 00:36:05,040
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691
00:36:05,160 --> 00:36:07,839
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00:36:07,960 --> 00:36:11,600
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