WEBVTT - US Weighs Google Breakup in Historic Big Tech Antitrust Case 0:00:02.920 --> 0:00:10.680 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.720 --> 0:00:13.880 Wait inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.200 America's most trusted business magazine, plus gloom Wall Business finance 0:00:18.239 --> 0:00:22.280 and tech news. The Bloomberg Business Week Podcast with Carol 0:00:22.320 --> 0:00:25.800 Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.120 --> 0:00:30.160 Let's transition to another story. Matt, And you know we 0:00:30.240 --> 0:00:31.000 talked about this. 0:00:31.440 --> 0:00:34.640 We've talked about it so many times. We continue to 0:00:34.640 --> 0:00:37.360 get this story on the Bloomberg terminal. The US government 0:00:37.479 --> 0:00:41.400 is considering asking a federal judge to force Google to 0:00:41.479 --> 0:00:43.720 sell off parts of its business. 0:00:43.960 --> 0:00:45.000 The last time. 0:00:44.760 --> 0:00:47.720 We had this story, it was people familiar. Now the 0:00:47.800 --> 0:00:50.800 company or sorry, the department. We've got a filing has 0:00:50.880 --> 0:00:54.040 confirmed it. Of course, there are other options as well, 0:00:54.080 --> 0:00:56.640 and we're not going to get even the beginning of 0:00:56.680 --> 0:00:58.760 this part of the trial until spring of next year. 0:00:58.800 --> 0:01:01.400 But I want to bring a Nyland as well as 0:01:01.840 --> 0:01:05.319 Man Deep Sing from Bloomberg Intelligence here to talk about this. Leah, 0:01:05.400 --> 0:01:07.400 We've got you know, there's a lot of time between 0:01:07.440 --> 0:01:13.360 now and when uh this, I guess sentencing maybe not 0:01:13.400 --> 0:01:15.600 the right word, but this part of the trial is 0:01:15.600 --> 0:01:20.520 gonna is gonna start. What kind of breakup is the 0:01:20.560 --> 0:01:21.679 federal government. 0:01:21.400 --> 0:01:22.080 Gonna go for. 0:01:23.120 --> 0:01:27.520 Yeah, so that remains a question. We'll find out next month. 0:01:27.920 --> 0:01:30.800 So what they filed yesterday was what they called sort 0:01:30.800 --> 0:01:33.440 of the menu of options that are on the table 0:01:33.560 --> 0:01:36.240 for the judge, And so at the one end is 0:01:36.360 --> 0:01:39.360 a breakup, and they have said that they may consider 0:01:39.640 --> 0:01:44.160 asking for forcing Google to sell off either Chrome, Android 0:01:44.319 --> 0:01:46.400 or Play, And probably if it was Android, it would 0:01:46.400 --> 0:01:49.440 be Android and Play because Android is the operating system 0:01:49.480 --> 0:01:52.840 and Play is the you know, the app store that 0:01:52.880 --> 0:01:56.240 goes with Android, And that's sort of like the extreme 0:01:56.680 --> 0:01:59.840 end in the middle. They sort of had these options 0:01:59.880 --> 0:02:02.040 to sort of force Google to share a lot of 0:02:02.040 --> 0:02:05.080 the information it scrapes from the web to make its 0:02:05.200 --> 0:02:08.480 underlying search results. And the government said that if they 0:02:08.520 --> 0:02:10.359 do that, you know, that could be used by other 0:02:10.360 --> 0:02:12.880 search engines. It could also be used by AI startups 0:02:12.960 --> 0:02:15.600 who sort of need this data to sort of create 0:02:15.639 --> 0:02:18.480 their models. And then the sort of like wimpiest one 0:02:18.800 --> 0:02:21.440 is you know, just sort of ending the contracts that 0:02:21.520 --> 0:02:24.320 the judge found to be illegal. These are the ones 0:02:24.360 --> 0:02:27.359 in which they paid other companies like Samsung and Apple 0:02:27.440 --> 0:02:29.840 billions of dollars to make their search engine the default. 0:02:30.200 --> 0:02:32.880 So these are our options, and they're going to officially, 0:02:33.040 --> 0:02:35.160 you know, set down what their request is in November, 0:02:35.639 --> 0:02:37.400 and then the judge is going to let them do 0:02:37.520 --> 0:02:40.640 some more discovery, asking Google some questions about how this 0:02:40.680 --> 0:02:44.160 would impact their business. And then we have our mini 0:02:44.200 --> 0:02:47.480 trial in April, and then the judge said that he 0:02:47.560 --> 0:02:50.440 will issue his decision by August of next year. So 0:02:50.440 --> 0:02:53.919 we still have how many months is that eight or 0:02:54.000 --> 0:02:55.920 nine months before we get to the end of just 0:02:56.000 --> 0:02:56.480 this part. 0:02:56.760 --> 0:02:59.480 But yeah, it's a busy. 0:03:00.160 --> 0:03:03.239 A lot to look forward there too. Man Deep Singh 0:03:03.600 --> 0:03:05.640 come into this conversation. You take a look at Google 0:03:05.639 --> 0:03:08.120 shares right now, currently off by about two point four percent. 0:03:08.200 --> 0:03:10.480 When we were looking at it in the morning, which 0:03:10.480 --> 0:03:13.040 feels like a long time ago, it was pretty much unchanged. 0:03:13.040 --> 0:03:15.280 But now taking a leg lower, let me put this 0:03:15.360 --> 0:03:17.320 into context for us. Of course, there's a lot of 0:03:17.360 --> 0:03:20.120 wood to chop before we get to any real action. 0:03:20.280 --> 0:03:23.000 But how much does this matter to Alphabet How much 0:03:23.000 --> 0:03:24.400 does this matter to Google? 0:03:25.280 --> 0:03:27.920 I mean, look some of the remedies that were suggested 0:03:27.960 --> 0:03:32.440 in terms of for sale of Android or you know, 0:03:32.480 --> 0:03:36.440 some of the businesses that they own, Chrome browser, I 0:03:36.480 --> 0:03:40.760 think is just so unlikely, simply because the way Google 0:03:40.880 --> 0:03:45.560 is run, it's all one shared infrastructure that's powering YouTube, 0:03:45.600 --> 0:03:49.560 that's powering the browser, that's powering the cloud business. How 0:03:49.560 --> 0:03:52.440 do you take an entity out? And so the one 0:03:52.920 --> 0:03:56.520 I guess area where there's another lawsuit, dog lawsuit on 0:03:56.560 --> 0:03:58.000 the ad has so many. 0:03:58.160 --> 0:04:02.560 There's lawsuits, dude, one on the ad tech marketplace. There's 0:04:02.560 --> 0:04:04.800 a bunch of states that are suing the ad tech 0:04:05.040 --> 0:04:06.800 for as your browser. 0:04:07.320 --> 0:04:08.760 There's the EU. 0:04:08.800 --> 0:04:11.120 Obviously, Margaret Vestiger is going to decide by the end 0:04:11.120 --> 0:04:13.240 of the year. She says breaking it up is the 0:04:13.280 --> 0:04:15.080 only solution she can imagine. 0:04:15.600 --> 0:04:17.640 I'm forgetting. There are other lawsuits, yes this year. 0:04:17.920 --> 0:04:21.479 Yeah, And the common thread I find across all those 0:04:21.480 --> 0:04:24.840 different lawsuits, the most commonly pointed issue is their ad 0:04:24.880 --> 0:04:27.919 tech stack, which is where I feel like you could 0:04:27.960 --> 0:04:31.560 make a case why does Google own you know, the 0:04:31.640 --> 0:04:36.800 supply side AD platforms, the demand ad platforms, the marketplace, 0:04:37.200 --> 0:04:39.840 and then it has a pricing advantage. Everyone can see that. 0:04:40.200 --> 0:04:43.279 And that was built on their Double Click acquisition back 0:04:43.279 --> 0:04:45.320 in two thousand and seven, so you could say they 0:04:45.320 --> 0:04:48.800 didn't build this organically. It is something they acquired and 0:04:48.800 --> 0:04:51.400 then over time they really had an advantage. 0:04:51.520 --> 0:04:52.920 But that's they've tuned it up. 0:04:53.120 --> 0:04:56.000 They did, and that you could say that even Android 0:04:56.080 --> 0:04:58.599 was an acquisition. YouTube was an acquisition for Google. So 0:04:58.600 --> 0:05:01.880 they've tuned all these things over time. But I think 0:05:02.000 --> 0:05:04.680 ad tech is the one that is the strongest or 0:05:04.720 --> 0:05:07.640 the most convincing, at least to me, out of all 0:05:07.720 --> 0:05:10.920 the things they are offering as remedies. I can't imagine 0:05:11.000 --> 0:05:14.840 you know, Google for sale of Android or you know, 0:05:14.880 --> 0:05:17.919 all these products that are integral to their LLLM strategy. 0:05:17.960 --> 0:05:20.279 I mean, that's the future. So Leo, what do you think. 0:05:20.320 --> 0:05:23.040 I mean, first of all, we haven't seen a big 0:05:23.080 --> 0:05:26.760 breakup in the US since like well none of us 0:05:26.839 --> 0:05:30.640 was born except for me, even when ma Bell got 0:05:30.680 --> 0:05:34.279 broken up. And then second of all, this is like 0:05:34.880 --> 0:05:39.000 a national security issue. Not only is Google dominant in search, 0:05:39.160 --> 0:05:43.400 but America's Google is dominant worldwide. Do you ever talk 0:05:43.480 --> 0:05:47.000 to anybody in your reporting who says, like Google is 0:05:47.040 --> 0:05:48.920 a champion, how could we break it up? 0:05:50.240 --> 0:05:52.839 That is a point that Google likes to make that 0:05:52.920 --> 0:05:55.960 by breaking it up it might make it less competitive, 0:05:55.960 --> 0:05:58.960 particularly against China. I will tell you the anti trust 0:05:59.000 --> 0:06:02.200 enforcers are not particularly persuaded by that. They don't like 0:06:02.279 --> 0:06:05.040 the idea of supporting a company simply because it's a 0:06:05.160 --> 0:06:09.520 national champion. I mean, America's competition policy is built on 0:06:09.960 --> 0:06:12.880 the idea that the more companies we have competing, the 0:06:12.920 --> 0:06:15.919 better products and services we have for consumers and for 0:06:16.000 --> 0:06:19.480 other businesses. So they would say, you know, maybe like, 0:06:20.200 --> 0:06:22.839 we don't really care that this makes Google a little 0:06:22.880 --> 0:06:26.520 bit less competitive globally. We want there to be other businesses. 0:06:27.480 --> 0:06:28.760 And I'm just curious. 0:06:28.800 --> 0:06:31.560 I mean, as a reporter, you cover anti trust, you cover, 0:06:31.600 --> 0:06:34.520 of course, the DOJ, you cover the FTC. It just 0:06:34.560 --> 0:06:37.800 feels like the anti trust landscape over the past few 0:06:37.880 --> 0:06:43.320 years has really gotten more aggressive, more emboldened. And I mean, 0:06:43.600 --> 0:06:46.239 just talk to us about that, about how your beat 0:06:46.520 --> 0:06:48.600 has changed before your eyes when you think about I 0:06:48.600 --> 0:06:50.480 don't know, just the last couple of years. 0:06:51.040 --> 0:06:51.280 Yeah. 0:06:51.320 --> 0:06:53.480 I have been on the anti trust beat for twelve years, 0:06:53.520 --> 0:06:54.960 and I have to say when I first started, I 0:06:55.040 --> 0:06:58.000 never expected that the stories I was covering would be 0:06:58.200 --> 0:07:01.360 like on the front page of the New York Times. Definitely, 0:07:01.400 --> 0:07:04.760 the Biden administration really took this as the thing that 0:07:04.800 --> 0:07:08.280 they was going to differentiate themselves from the Obama years. 0:07:08.320 --> 0:07:11.440 Because the Obama years were sort of seen as very 0:07:11.800 --> 0:07:14.800 beholden to business. They didn't do any of the things 0:07:14.840 --> 0:07:17.080 against the tech companies, and they feel that that was 0:07:17.120 --> 0:07:20.200 a big mistake. So Biden brought in a trio of 0:07:20.520 --> 0:07:24.480 very aggressive enforcers, Jonathan Canter at the Justice Department, Lena 0:07:24.560 --> 0:07:26.960 Kon at the FTC, and Tim Wu at the White House. 0:07:27.200 --> 0:07:29.560 Tim is now gone, but Lena and Jonathan are still 0:07:29.600 --> 0:07:32.840 there and they are still making moves. You know. The 0:07:33.320 --> 0:07:37.080 Google trial just ended a few weeks ago. They just 0:07:37.160 --> 0:07:40.120 sued Visa and the FTC, you know, just sued a 0:07:40.160 --> 0:07:43.040 bunch of the pharmaceutical benefit manufacturers. So they have been 0:07:43.360 --> 0:07:45.960 more aggressive in the past three years than people had 0:07:45.960 --> 0:07:49.640 been in the last four decades. It's very much a 0:07:49.800 --> 0:07:53.120 conscious decision on their part to sort of reject the 0:07:53.200 --> 0:07:56.320 more lays affair capitalism that they say was brought in 0:07:56.360 --> 0:07:59.040 by the Reagan years and they feel did not do 0:07:59.440 --> 0:08:01.640 very well for the average American consumer. 0:08:02.080 --> 0:08:04.559 And uh, Leah, I think we're twenty six days away 0:08:04.560 --> 0:08:07.880 from the presidential election, if you can believe it. And 0:08:08.120 --> 0:08:11.880 it's I mean, especially among the Wall Street firms that 0:08:11.960 --> 0:08:14.560 we talked through the Wall Street guys and gals that 0:08:14.600 --> 0:08:16.320 we talked to, there's been a lot of frustration that 0:08:16.360 --> 0:08:18.280 it feels like you can't get a merger done that 0:08:19.040 --> 0:08:21.880 with this FTC, with Lena Khan in charge, it's been really, 0:08:21.920 --> 0:08:26.000 really difficult to get any deals done. At the same time, 0:08:26.200 --> 0:08:29.200 jd Vance, we know, has had nice things to say 0:08:29.200 --> 0:08:30.760 about Lena Khan in the past. 0:08:30.760 --> 0:08:32.079 When you think about what. 0:08:32.000 --> 0:08:33.760 Does that mean that jd Vance loves. 0:08:33.559 --> 0:08:34.840 Her, I don't know. 0:08:35.000 --> 0:08:37.360 I want Leah Away in here because you think about 0:08:37.360 --> 0:08:41.520 the change in administration, even if Trump wins the White House, 0:08:41.559 --> 0:08:44.440 I mean, are you expecting much much change when it 0:08:44.480 --> 0:08:47.720 comes to the anti trust beat. 0:08:48.040 --> 0:08:51.160 It's a little bit hard to say, but the answer 0:08:51.240 --> 0:08:53.880 is not on tech because you know, a lot of 0:08:53.920 --> 0:08:56.880 these cases, including the one that we're talking about right 0:08:56.920 --> 0:08:59.600 now Google, was actually brought during the first Trump administration. 0:09:00.120 --> 0:09:04.079 So the Trump administration and Republicans like jd Vance really 0:09:04.120 --> 0:09:06.600 don't like the big tech companies. So I can't really 0:09:06.600 --> 0:09:08.960 see them pulling back on any of the cases that 0:09:09.080 --> 0:09:12.400 the Biden administration brought against the tech giants. Where you 0:09:12.480 --> 0:09:17.080 might see changes definitely in the merger area, because you 0:09:17.120 --> 0:09:20.400 do hear a lot that while the Republican folks maybe 0:09:20.480 --> 0:09:22.560 like what Lena Khan has done on big tech, they're 0:09:22.600 --> 0:09:26.440 not as thrilled with what she has done in the 0:09:26.440 --> 0:09:29.200 merger area, sort of chilling mergers and making it more 0:09:29.240 --> 0:09:32.880 difficult for businesses to sort of go about their regular business. 0:09:33.840 --> 0:09:37.640 I want to also point out that being on the 0:09:37.679 --> 0:09:40.120 Bloomberg top page is just as good as the front 0:09:40.120 --> 0:09:43.240 page of the New York Times, Lea, so you should 0:09:43.280 --> 0:09:47.120 be proud of the entirety of your career here man, 0:09:47.160 --> 0:09:50.360 Deep want to ask you about the stock obviously at 0:09:50.360 --> 0:09:53.640 Bloomberg Intelligence. You know most people are going to follow 0:09:53.640 --> 0:09:57.120 your research to see how that does. On the equity side, 0:09:57.480 --> 0:09:59.800 it's up over the last five years. One hundred and 0:09:59.800 --> 0:10:02.680 six seventy percent. Hasn't done great this year compared to 0:10:02.720 --> 0:10:05.760 the S and P, but compared to the other Fang 0:10:05.960 --> 0:10:09.520 or mag seven stocks minus and video, it's holding with 0:10:09.559 --> 0:10:10.880 the pack well. 0:10:11.120 --> 0:10:13.559 I mean, I think there is a clear overhang when 0:10:13.600 --> 0:10:16.000 it comes to the anti trust side of things and 0:10:16.000 --> 0:10:19.840 the scrutiny that Alphabet gets. But when you look at 0:10:19.840 --> 0:10:22.640 the sum of the parts, even in a worst case 0:10:22.720 --> 0:10:25.960 breakup scenario, you could argue the sum of the parts 0:10:25.960 --> 0:10:29.600 for Alphabet is way more than you know its current valuation, 0:10:29.800 --> 0:10:32.920 and it's just driven by the fundamentals of the cloud business, 0:10:33.000 --> 0:10:36.240 the YouTube business, the fact that they have a native 0:10:36.400 --> 0:10:40.199 LM advantage that even Microsoft doesn't have. Microsoft is reliant 0:10:40.200 --> 0:10:43.960 on open AI for the LLLM. So I think given 0:10:44.040 --> 0:10:47.240 everyone is so fixated on generative AI and LLLM, that's 0:10:47.320 --> 0:10:51.520 why all these products are core to Alphabet as a franchise, 0:10:51.559 --> 0:10:54.400 you know, when it comes to them deploying their LLM 0:10:54.440 --> 0:10:57.000 on the cloud or on Android, and I think it's 0:10:57.000 --> 0:10:58.600 a huge comparative mode. 0:10:59.400 --> 0:11:02.920 All right, Okay, thank you very much. Man Deep Singh. 0:11:03.240 --> 0:11:07.120 Coming to some Bloomberg Intelligence and leehon Island. Sometimes on 0:11:07.160 --> 0:11:09.640 the front page of New York Times maybe, but definitely 0:11:09.720 --> 0:11:12.280 on top Go Bloomberg News. 0:11:14.400 --> 0:11:17.959 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:18.000 --> 0:11:21.240 live weekday afternoons from two to five pm Eastern Listen 0:11:21.280 --> 0:11:23.440 on Apple, car Play and and brou Otto with a 0:11:23.440 --> 0:11:27.560 Bloomberg Business app, or watch us live on YouTube. 0:11:28.000 --> 0:11:30.280 Now, we've been talking about commercial real estate as if 0:11:30.280 --> 0:11:31.400 it's the next year to drop for. 0:11:31.320 --> 0:11:32.200 A couple of years. 0:11:32.200 --> 0:11:38.120 Oh yeah, and even lately we've gotten sort of warnings 0:11:38.160 --> 0:11:41.240 from people involved in the industry. 0:11:41.360 --> 0:11:44.480 I think exactly exactly. 0:11:45.520 --> 0:11:48.840 Victor Koschlaw, the founder of credit investor Strategic Value Partners, 0:11:48.880 --> 0:11:51.080 recently said their problems galore. 0:11:51.200 --> 0:11:51.959 He says there's. 0:11:51.840 --> 0:11:56.800 Tsunami coming, but he's talking specifically about office and there's 0:11:57.360 --> 0:12:01.080 not only big regional differences, but also you know, if 0:12:01.080 --> 0:12:03.960 you are investing in student housing, you're doing fine right now. 0:12:04.040 --> 0:12:07.360 Medical is you know, still obviously a thriving business. So 0:12:07.559 --> 0:12:09.960 let's bring in an expert right now. Mark Gibson joins 0:12:10.040 --> 0:12:13.280 us in the Interactive Broker studio here at seven thirty 0:12:13.280 --> 0:12:15.600 one Lex. He is the America SEO of Capital Markets 0:12:15.600 --> 0:12:18.719 for JLLL. I know them as Jones langlessal. Have you 0:12:18.760 --> 0:12:20.800 gone through an official name change? Is it just JL 0:12:21.040 --> 0:12:27.120 now JLL? Okay, So, but you have really an incredible 0:12:27.160 --> 0:12:30.920 seat from which to watch all of this that's going on. 0:12:31.160 --> 0:12:32.960 Where would you say we are, say, if it were 0:12:33.000 --> 0:12:35.840 a baseball game, right and you know the fall of 0:12:36.160 --> 0:12:39.520 commercial real estate was in which inning would you say? 0:12:40.880 --> 0:12:44.840 That is a hard question to sound bite, Matt. But 0:12:45.160 --> 0:12:47.040 let me let me back up for a minute, because 0:12:47.040 --> 0:12:50.360 you started out with a tsunami of issues and you 0:12:50.520 --> 0:12:54.440 limited it to commercial office. But in reality, when you 0:12:54.480 --> 0:12:57.320 step back a minute and you look at in general 0:12:57.360 --> 0:12:59.520 what has occurred in commercial real estate, and there has 0:12:59.559 --> 0:13:05.600 been some centicism around, you know, any kind of risk 0:13:05.880 --> 0:13:08.520 that might be out there for a financial institution, systemic 0:13:08.600 --> 0:13:10.720 risk or things like that, But in reality, what has 0:13:10.760 --> 0:13:16.160 caused this is a fast increasing cost of capital. So 0:13:16.200 --> 0:13:22.199 when the demand has largely been there, including ironically in office. 0:13:21.800 --> 0:13:23.720 Although it's shifted right, it's come out of the city 0:13:23.760 --> 0:13:25.400 centers and gone out to urban it's. 0:13:25.520 --> 0:13:29.000 Exactly re emerging and there's in it again. It is 0:13:29.200 --> 0:13:33.280 very different story geographically, so it's hard to sound by 0:13:33.320 --> 0:13:36.800 it and talking global discussions, but in general it hasn't 0:13:36.840 --> 0:13:40.680 been a demand issue from a commercial real estate standpoint. 0:13:40.679 --> 0:13:43.480 It's been a cost of capital issue. So when you 0:13:43.520 --> 0:13:47.439 think about the fed's recent actions and you're an investor 0:13:48.000 --> 0:13:51.400 and you're worried about inflation, because you're concerned if you 0:13:51.520 --> 0:13:54.520 invest today in the cost of capital increases, you might 0:13:54.600 --> 0:13:58.280 look somewhat early, so you want to wait and see 0:13:58.320 --> 0:14:02.079 if that's really going to be con The investor community 0:14:02.240 --> 0:14:06.960 today believes the FED is indeed going to conquer inflation, 0:14:07.520 --> 0:14:09.440 and it may take a little bit longer because we 0:14:09.480 --> 0:14:13.200 have government stimulus in terms of building back infrastructure and 0:14:13.240 --> 0:14:16.559 things like that. But generally speaking, monetary policy has worked 0:14:16.920 --> 0:14:19.840 and so then when you have a normalizing YO curve. 0:14:19.880 --> 0:14:23.640 So if the issues and they have been limited relative 0:14:23.720 --> 0:14:28.560 to what was discussed earlier in the year, problems in 0:14:28.600 --> 0:14:31.040 commercial real estate because demand is not waned it was 0:14:31.120 --> 0:14:33.800 due to the cost of capital. When that starts reversing, 0:14:34.600 --> 0:14:37.800 then real estate by and large, and it's different for 0:14:37.880 --> 0:14:39.680 different product types. Self corrects. 0:14:39.840 --> 0:14:42.520 Yeah, well, just focusing on US office, it's interesting to 0:14:42.560 --> 0:14:44.040 hear what you're saying that this is a cost of 0:14:44.080 --> 0:14:47.280 capital problem, because some people might make the argument that, no, 0:14:47.480 --> 0:14:50.840 this is structural. You know, life changed during the pandemic, 0:14:51.200 --> 0:14:54.840 and the US office market is different. Now there's people 0:14:54.880 --> 0:14:57.080 who you know, are doing hybrid work and that's a 0:14:57.120 --> 0:15:00.280 trend that's here to stay. It sounds like you're you're 0:15:00.320 --> 0:15:01.920 making a different argument. 0:15:02.040 --> 0:15:05.480 No, I think it's a valid point. I do think 0:15:05.640 --> 0:15:08.680 that what I was talking about is in general, commercial 0:15:08.720 --> 0:15:12.320 real estate was thrown, to Matt's point, into one basket 0:15:12.880 --> 0:15:15.200 and discuss globally, which you really can't do. You have 0:15:15.280 --> 0:15:19.680 to back it down by product type. But on office specifically, 0:15:20.000 --> 0:15:23.400 the data would suggest otherwise in terms of what is 0:15:23.520 --> 0:15:26.800 currently happening now. So when you look at occupancy by 0:15:26.840 --> 0:15:29.520 cards wipes, and you look at the vibrancy of New York, 0:15:29.560 --> 0:15:33.120 for instance, and you see what is happening in the marketplace, 0:15:33.560 --> 0:15:36.280 it's a very different story than what we have been 0:15:36.320 --> 0:15:40.520 talking about for some time. So we think that office. 0:15:40.400 --> 0:15:43.160 Is not bad going to have issues, well, it is. 0:15:43.480 --> 0:15:46.160 Of all the product types, it will have issues for 0:15:46.200 --> 0:15:48.600 a host of reasons. We don't have time today to 0:15:48.680 --> 0:15:51.840 really go through it, but it will have more issues 0:15:51.920 --> 0:15:56.320 than other sectors in commercial real estate. But nonetheless, it's 0:15:56.400 --> 0:16:01.680 not where people believe it is from a from a 0:16:01.720 --> 0:16:03.760 distress standpoint. There's going to be quite a bit of 0:16:03.800 --> 0:16:06.880 distress in the space, but it will be a have 0:16:07.000 --> 0:16:09.880 and have not scenario. The better buildings are doing quite well. 0:16:10.000 --> 0:16:11.920 In fact, some of them are doing better than they 0:16:12.000 --> 0:16:15.320 have ever done in US history, and then others aren't. 0:16:15.880 --> 0:16:19.560 So of all the real estate classes, it's the largest divide. 0:16:19.120 --> 0:16:21.280 Of At the same time, it seems like there's a 0:16:21.320 --> 0:16:23.600 flood of capital that wants to get in. We talk 0:16:23.600 --> 0:16:27.240 about private credit more often than we talk about commercial 0:16:27.280 --> 0:16:31.160 real estate. Is it is there so much money there 0:16:31.200 --> 0:16:34.320 looking for a home that it helps ease the blow 0:16:34.360 --> 0:16:34.640 a bit. 0:16:34.840 --> 0:16:38.640 Yeah, it's good. It's a good view, Matt. What really 0:16:38.840 --> 0:16:41.920 is happening is there's no lack of liquidity for commercial 0:16:41.920 --> 0:16:44.240 real estate. And the fact of the matter is if 0:16:44.280 --> 0:16:46.720 you buy good real estate and you don't overleverage so 0:16:46.800 --> 0:16:50.480 you can survive cycles, it goes up and it's a 0:16:50.520 --> 0:16:54.320 good long term store of value. So people are looking 0:16:54.360 --> 0:16:56.960 at the right entry point to get into commercial real estate. 0:16:57.000 --> 0:16:59.520 Across the board, there's no lack of liquidity. It's been 0:16:59.560 --> 0:17:02.600 the cost of that liquidity that has been the issue 0:17:02.600 --> 0:17:06.080 of late. But now we're having a you said a 0:17:06.160 --> 0:17:08.879 light switch went on. It almost is a light switch 0:17:09.400 --> 0:17:11.840 in terms of what has occurred. So the amount of 0:17:11.920 --> 0:17:15.639 capital that wants to invest in commercial real estate is 0:17:15.640 --> 0:17:18.840 substantially higher than it was, and at the same time, 0:17:19.040 --> 0:17:23.480 you have people that are looking to absorb that capital 0:17:23.480 --> 0:17:26.719 and are willing to accept the cost of it and 0:17:26.760 --> 0:17:29.119 the various risks. So we're seeing a bit ass gap 0:17:29.320 --> 0:17:33.879 narrow which is why transactional volumes have been muted some 0:17:34.040 --> 0:17:36.520 wat and commercial real estate we're getting to see that. 0:17:36.480 --> 0:17:39.200 Tick up and we have only about a minute left 0:17:39.240 --> 0:17:39.399 with you. 0:17:39.480 --> 0:17:42.120 Mark, we have to have you back for a longer conversation, 0:17:42.240 --> 0:17:45.480 but talk to us about magnitude when it comes to 0:17:45.560 --> 0:17:47.920 the cost of capital coming down. Of course, the FED 0:17:47.920 --> 0:17:49.520 has started on the rate cutting cycle. 0:17:50.240 --> 0:17:51.400 A lot of questions about. 0:17:51.160 --> 0:17:54.399 The trajectory's trajectory though, I mean, how much do rates 0:17:54.440 --> 0:17:56.880 have to come down before you know you. 0:17:56.920 --> 0:17:59.520 Really see activity accelerate? Broadly? 0:18:00.560 --> 0:18:03.560 I don't think much, Okatie, it's a good question. Real 0:18:03.640 --> 0:18:06.520 estate investors tend to look longer term, so they're looking 0:18:06.560 --> 0:18:09.480 at the ten year bond versus necessarily the short end 0:18:09.480 --> 0:18:13.080 of the Yell curve. But nevertheless, as you see in 0:18:13.160 --> 0:18:16.760 normalizing yll curve, you will have more transactional activity. We're 0:18:16.800 --> 0:18:19.520 already beginning to see it, but no one is betting 0:18:19.680 --> 0:18:25.120 on that to have any significant impact across the commercial 0:18:25.119 --> 0:18:25.919 real estate industry. 0:18:26.240 --> 0:18:29.360 All right, Mark, great conversation. Really appreciate your time. Of course, 0:18:29.440 --> 0:18:31.720 joining us in studio. That is Mark Gibson. He is 0:18:31.760 --> 0:18:36.359 America's CEO of Capital Markets talking to us about real estate, 0:18:36.400 --> 0:18:39.000 the commercial real estate market, the cost of capital. That 0:18:39.080 --> 0:18:43.760 ten year treasury bond currently camped out at about four percent. 0:18:45.520 --> 0:18:49.399 You're listening to the Bloomberg Business Week Podcast. Listen live 0:18:49.480 --> 0:18:52.640 each weekdays starting at two pm Eastern Dot applecar Play 0:18:52.720 --> 0:18:55.560 and androyd Auto with the Bloomberg Business And you can 0:18:55.600 --> 0:18:58.840 also listen live on Amazon Alexa from our flagship New 0:18:58.920 --> 0:19:02.119 York station. Hey Alexa, playing Bloomberg eleven. 0:19:03.880 --> 0:19:06.880 Let's talk about nuclear. We're talking about a lot more 0:19:06.920 --> 0:19:09.640 these past couple weeks. Of course, you think about Microsoft's 0:19:09.640 --> 0:19:14.440 announcement to partner with Constellation Energy reopen Three Mile Island, 0:19:14.480 --> 0:19:16.800 and of course has breathed a lot of life and 0:19:16.840 --> 0:19:20.399 excitement back into nuclear, back into uranium. Let's break it 0:19:20.440 --> 0:19:22.800 all down now with John Kotech. He is senior vice 0:19:22.840 --> 0:19:25.879 president of Policy Development and public Affairs over at the 0:19:25.960 --> 0:19:28.000 Nuclear Energy Institute. 0:19:28.119 --> 0:19:29.359 John, it's great to have you with us. 0:19:29.440 --> 0:19:31.560 Matt and I have spoken to the CEOs of a 0:19:31.600 --> 0:19:34.520 couple of different uranium miners in the past week or so, 0:19:34.680 --> 0:19:37.560 and the question I keep asking them is what does 0:19:37.600 --> 0:19:40.200 this moment feel like? Of course, it feels like there's 0:19:40.240 --> 0:19:45.119 been broad support for nuclear for a while now, but 0:19:45.200 --> 0:19:46.960 we were looking for a catalyst. 0:19:47.520 --> 0:19:50.280 Now we have one. How would you describe this moment? 0:19:51.119 --> 0:19:54.240 Yeah, well, first, thanks for having me. I described this 0:19:54.280 --> 0:19:58.280 moment as a long overdue recognition of the value of 0:19:58.359 --> 0:20:02.920 nuclear energy is part of a clean, reliable, and affordable 0:20:03.080 --> 0:20:04.000 energy system. 0:20:04.440 --> 0:20:05.280 What's happened in the. 0:20:05.240 --> 0:20:08.919 Last few years is as companies focus more and more 0:20:09.040 --> 0:20:13.119 on reducing the carbon intensity of their energy production or 0:20:13.200 --> 0:20:16.560 their energy use, to come to recognize that having something 0:20:16.600 --> 0:20:20.040 like nuclear power that's available twenty four to seven, that 0:20:20.119 --> 0:20:22.240 can run eighteen to twenty four months at a time 0:20:22.880 --> 0:20:28.400 while producing carbon free power is enormously valuable in addition 0:20:28.480 --> 0:20:31.879 to things like the job creation, the tax base, the 0:20:32.240 --> 0:20:35.800 other economic benefits that come from nuclear power. So we're 0:20:35.800 --> 0:20:38.360 seeing a moment where people are recognizing that it's really 0:20:38.400 --> 0:20:41.400 important to both keep the nuclear we have and get 0:20:41.440 --> 0:20:41.720 on a. 0:20:41.680 --> 0:20:42.560 Path to build more. 0:20:43.560 --> 0:20:45.639 I wonder about the affordable part of that. I mean, 0:20:45.800 --> 0:20:50.600 nuclear is clearly, you know, we don't there's no carbon emissions, right, 0:20:50.640 --> 0:20:53.280 you only have to deal with the waste, and we 0:20:53.320 --> 0:20:56.640 can talk in a bit about ways to deal with that. 0:20:57.280 --> 0:21:00.640