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Speaker 1: Right now, what we're gonna do is do what Bloomberg
Speaker 1: Surveillance does best, which give you an informed debate on
Speaker 1: the issues at hand. Lisa Bramwinson, Tom King, John Pharaoh
Speaker 1: and Assignment and joining us now is Adam Posen. He's
Speaker 1: president of the Peterson Institute for International economics. He's one
Speaker 1: of our great American scholars on Germany, and far more
Speaker 1: than that, had a tour of duty as Megan Green
Speaker 1: trots over across the Atlantic here in the coming weeks.
Speaker 1: Adam Posen at the Bank of England years ago, two
Speaker 1: days ago, Adam Posen, you made clear that we would
Speaker 1: see six percent plus interest rates by central banks, and
Speaker 1: particularly by the Bank of England. Will that level? Will
Speaker 1: that crush the United Kingdom economy?
Speaker 2: It's gonna hurt, There's no question, Tom, Thank you and
Speaker 2: Lisa for having me back. The issue is that from
Speaker 2: the start of this inflationary period in the UK, along
Speaker 2: with the Euro Area, the Bank of England MPCI majority
Speaker 2: the governor have kept talking as though they weren't going
Speaker 2: to have to raise rates that much, even though they
Speaker 2: had kept raising them. They kept talking as though they
Speaker 2: didn't need to go much further. They probably wouldn't need
Speaker 2: to go much further. Whereas from the start you had
Speaker 2: a UK from twenty twenty one onwards that had the
Speaker 2: worst aspects of US labor markets made words by Brexit
Speaker 2: and EU Euro Area exposure to energy shots from Russia
Speaker 2: had them both and have less credibility post Brexit and
Speaker 2: post all the political shenanigans, some five prime ministers in
Speaker 2: seven years, so ultimately it never made any sense that
Speaker 2: the UK was going to add up with a lower
Speaker 2: terminal rate for its central bank tightening than the Fed
Speaker 2: or the ECV.
Speaker 1: This is important, folks. I'm gonna get the theory out
Speaker 1: of the way here. There's a blistering essay this morning
Speaker 1: in the Telegraph from Ambrose Evans Pritchard, hugely controversial, but
Speaker 1: within it doctor Posen he alludes to Emery Lactose's idea
Speaker 1: half a country a go of a research program of
Speaker 1: where you get a set of beliefs going, and boy,
Speaker 1: you're gonna stick with your research program. Right or wrong?
Speaker 1: Does the Bank of England have a flawed research program?
Speaker 1: And do they need to amend it pronto?
Speaker 2: I fear that they have taken too seriously some of
Speaker 2: the some of their models. All central banks have investment
Speaker 2: in their models. But one of the good things that
Speaker 2: happened at the Bank of England when I was there
Speaker 2: during the global financial crisis, and then most of the
Speaker 2: other central banks, was you realized, under those circumstances you
Speaker 2: put the model aside, you don't use it if it's
Speaker 2: not realistic. Unfortunately, to me, the Bank has been relying
Speaker 2: on a couple mistaken assumptions or worldview. First that there
Speaker 2: was no erosion and credibility of the overall UK macro
Speaker 2: policy regime post brings in post politics, which clearly is
Speaker 2: not true. And second that if there was going to
Speaker 2: be a major real income shock, which they did rightly
Speaker 2: call that that would lead to a decline in nominal
Speaker 2: wage growth, and that was clearly mistaken. And I and
Speaker 2: others than other former NPC members like sister Widwani, we're
Speaker 2: pointing this out as an error at the end of
Speaker 2: twenty twenty one in their forecast, and they didn't come
Speaker 2: off that until very recently. I'm not conceptual like Ambrose.
Speaker 2: I'm not going to say is this a lot Ca
Speaker 2: toast moment or you change of para all that, But
Speaker 2: I think over the last year and a half two
Speaker 2: years they have stuck with some model assumptions that were
Speaker 2: publicly questioned and some of the members, the external members
Speaker 2: of the committee also questioned, Adam.
Speaker 3: Are there parallels with the UK and the US and
Speaker 3: the Federal Reserve which is currently at a precipice of
Speaker 3: a pretty key moment.
Speaker 2: At least, I think it's fair to draw the parallel.
Speaker 2: I think, just as with our markets with energy shocks,
Speaker 2: it's worse than the UK. Unfortunately in this instance, because
Speaker 2: it took the FED a while to change their view
Speaker 2: on inflation. A bunch of us were beating the drum
Speaker 2: for them to do that starting at the first quarter
Speaker 2: of twenty twenty one. But the bottom line is they
Speaker 2: did significantly change it by summer of twenty twenty two,
Speaker 2: and they clearly from the testimony, they don't have a
Speaker 2: full strategy, but they are aware inflation is job one.
Speaker 2: They are aware it's trend inflation. They are aware that
Speaker 2: it wasn't the transitory stuff. So I think the FED
Speaker 2: got out of its own way to some degree.
Speaker 3: We are discussing this concern about whether the FED can
Speaker 3: get down to a two percent inflation rate without causing pain,
Speaker 3: that perhaps people are unprepared for something that you raised
Speaker 3: a while ago, that perhaps it's just better to get
Speaker 3: to a three percent rate and be more comfortable with
Speaker 3: that higher rate. Where are you now in terms of
Speaker 3: what the FED has done and where it is heading
Speaker 3: in terms of inflation rate based on how much it's
Speaker 3: raised rates so far.
Speaker 2: I would love for Chris Waller and others to write,
Speaker 2: love to see vacancies continue to come down without unemployment
Speaker 2: rising and the pass through from all the previous shocks
Speaker 2: to be weeded out and therefore not have to have
Speaker 2: a much higher rate. I think that is a very
Speaker 2: bad gamble. I'm in fact more hawkish than even some
Speaker 2: of my colleagues on this, even though I'm known p
Speaker 2: obviously as an inflation dom because I see US as
Speaker 2: having such tight labor markets in the US and such
Speaker 2: trend inflation persisting even though it's coming off some that
Speaker 2: you're going to need real contraction in the credit markets
Speaker 2: to get where you need to go.
Speaker 3: This is really important, Adam. What's required in terms of
Speaker 3: how high rates to have to go in order to
Speaker 3: get real contraction in credit markets that are resilient.
Speaker 4: Well, I mean, one.
Speaker 2: Way to look at it is that we finally, over
Speaker 2: the last few months, have spreads on quality spreads between
Speaker 2: you know, different classes of bonds or government borrowers versus
Speaker 2: private sector borrowers that are consistent with the tightening cycle.
Speaker 2: We haven't seen spreads be that wide, very wide at all,
Speaker 2: until very recently. So similarly, if you, however, you want
Speaker 2: to compute what you think the real interest rate is.
Speaker 2: We are just now getting to positive really, and so
Speaker 2: to me it's we are only now getting to type policy.
Speaker 2: And especially since the residential construction and employment proved very
Speaker 2: resilient to interest rate rises in a way that we
Speaker 2: have not seen before. That to me is the biggest
Speaker 2: surprise in the US. It tells us that the amount
Speaker 2: of monetary tightening has been done so far as sufficient. Now,
Speaker 2: maybe what we're just now gotten over the last couple
Speaker 2: of months will prove sufficient, But I'd rather air on
Speaker 2: the side of tightening more and that the US economy
Speaker 2: he won't fall into recession.
Speaker 1: We've got some time for one more question here, Adam.
Speaker 1: We're going to bring you over to the next half hour, Folks,
Speaker 1: this conversation is so important without imposing the Peterson Institute.
Speaker 1: It's real simple, Adam. There's a whole school of thought
Speaker 1: out there with disinflationary vectors in place, and we're being successful.
Speaker 1: And I want to talk about the naval gazing of
Speaker 1: do we get back to two percent or whatever in
Speaker 1: the next section. But right now, are you suggesting that
Speaker 1: we completely misjudge how we will extend the X axis
Speaker 1: of these high interest rates, and we will see a
Speaker 1: five percent or dare I say six percent millu well
Speaker 1: out into twenty twenty four.
Speaker 2: My central call is that they're going to get above
Speaker 2: five point five before the end of the year, and
Speaker 2: it's going to remain there into at least second quarter
Speaker 2: of twenty twenty four. And unlike some other people, I
Speaker 2: think that the risk is more that they may have
Speaker 2: to do more than that, and not so much that
Speaker 2: they're going to have to do less than that.
Speaker 1: What we're doing, we're talking to a cross section of people,
Speaker 1: and we've certainly seen that in views on the equity markets,
Speaker 1: some huge caution, some optimism, blinding neutrality from US Wealth Bank,
Speaker 1: and we're also driving forward the conversation wrapped around theory
Speaker 1: under question for Global Wall Street. This has been a
Speaker 1: joy for the last fifteen minutes without im posing and
Speaker 1: we continue now and with me as well, is Michael McKee,
Speaker 1: our Bloomberg International Economics and Policy and Theory correspondent. When
Speaker 1: the theory's thrown out the window? Mike mckaty, you first
Speaker 1: question for you, and that is how bad has the
Speaker 1: theory been blown out the window? I mean, I mean
Speaker 1: a posin has to act posing like and you know,
Speaker 1: future central banker like you don't.
Speaker 5: Well, I was listening to Adam earlier and I think
Speaker 5: he's that it's not just the Bank of England, it's
Speaker 5: all economists basically work off of models that have worked
Speaker 5: for twenty twenty five thirty years that aren't working anymore now.
Speaker 5: Some discarded those faster than others, and certainly you could
Speaker 5: say the Fed did not, the Bank of England did not.
Speaker 5: But now they are to varying degrees adjusting. And that's
Speaker 5: the question, though, what do you do? Where do you go?
Speaker 1: If the model doesn't work?
Speaker 5: You can try to figure out why and readjust a model,
Speaker 5: but they become more guidance than any kind of a
Speaker 5: real path forward.
Speaker 1: We continue with that, imposing the president of the Peterson
Speaker 1: Institute for International Economics, Adam, I'm going to get right
Speaker 1: to it and frame here the path down to three
Speaker 1: percent in a raging debate led by your work with
Speaker 1: your colleague Olivier Blanchard John Williams as an ur starts
Speaker 1: subdued and we will get back near twoish percent. You disagree,
Speaker 1: But what's the nuance? Now? What's changed in where we
Speaker 1: are heading within this new level for FED rate policy.
Speaker 2: I don't think much has changed in the spirit of
Speaker 2: the conversation you and Michael we're just having. I think
Speaker 2: more needs to change. So what we had was a
Speaker 2: series of central bankers repeatedly saying throughout the last couple
Speaker 2: of years, do means to and then saying sato voce
Speaker 2: but audibly, Look, it might be better to get that
Speaker 2: to stop at three or to be slow getting to two,
Speaker 2: but we can't admit it now. And my belief, which
Speaker 2: was part of my belief when we were advocating and
Speaker 2: designing inflation targets in the first place, was the point
Speaker 2: of inflation targets was to communicate an a credible way
Speaker 2: with the public. And so I think between a choice
Speaker 2: of saying you're going to tow but then taking your
Speaker 2: time about it, and then maybe in a FED review
Speaker 2: in two years time you sort of admit that you
Speaker 2: were not going to do is not preferable to saying
Speaker 2: we're only going to three and since and this is
Speaker 2: actually a virtue of how bad things are. If you
Speaker 2: get if you take us down from eight to three,
Speaker 2: you're still pretty credible disinflation and stuff.
Speaker 1: What's the Venn diagram look like of Adam Posen in
Speaker 1: a rules based John Taylor, can we be rules based
Speaker 1: if we get back to a Posin blenchard three percent?
Speaker 2: Well inflation targeting. The part of it I'd like to
Speaker 2: keep is always been what I called this discipline discretion
Speaker 2: co authorate to late Thomas Laubach, or what Bernanki and
Speaker 2: Michigan called constrained discretion, the idea that it's intermediate between
Speaker 2: rules and pure discretion. And I think Professor Taylor has
Speaker 2: been right about a lot over the last couple of years,
Speaker 2: But I still am not sold on the idea of
Speaker 2: the rule. What I am sold on is the idea
Speaker 2: that you can't deviate from the target without explaining yourself
Speaker 2: and adapting the target. And so I don't know about
Speaker 2: a ven diagram. I think we both agree, would agree
Speaker 2: you need a lot more inflation disinflation than we've had.
Speaker 2: That the FED was behind the curve and had a
Speaker 2: wrong idea, But ultimately it's not because they didn't never
Speaker 2: rules because they had a wrong idea.
Speaker 5: Well, Adam, if I can follow up on the idea
Speaker 5: of whether or not you want to raise the inflation target.
Speaker 5: Do you have a lot of confidence one way or
Speaker 5: another that two percent is wrong or three percent is
Speaker 5: going to fit the economy that comes out of this
Speaker 5: whole thing, because at this point it seems like we
Speaker 5: don't really know, We don't have a good grasp on
Speaker 5: where inflation is going and how fast.
Speaker 2: It's fair, it's a fair question. I want to go
Speaker 2: back to one one basic point, which was when we
Speaker 2: an Ancunisian lawback and I wrote the inflation targeting book.
Speaker 2: We wrote in it and assumed that inflation targets would
Speaker 2: be reset over time. As I started saying, and I'm
Speaker 2: only speaking for myself now, not my distinguished co authors,
Speaker 2: as I started saying around two thousand and four, two
Speaker 2: thousand and five, we made a mistake because people treated
Speaker 2: these inflation targets like exchange rate targets. They were scared
Speaker 2: to move them because they were worried it gave a
Speaker 2: bad message. And so and there was too much convergence
Speaker 2: among different central banks and different economies all on this
Speaker 2: two percent, and that just reinforced it. Whereas you should
Speaker 2: be adapting the inflation to target to the realities, not
Speaker 2: every minute to make excuses, but every several years to
Speaker 2: make it realistic, and so to me, there's no question
Speaker 2: that the higher inflation target would be better. We well,
Speaker 2: Blanchard used to talk with co authors about a four
Speaker 2: percent target. He's now publicly said he's in favor of
Speaker 2: a three rather two. I've always believed it should be
Speaker 2: higher than two. Not always sorry. When I wrote the book,
Speaker 2: I didn't, but I believed it should be moved as needed,
Speaker 2: and since fifteen years i've believed it should be moved up.
Speaker 2: So I think there's no harm in saying three, because
Speaker 2: you're still going to be credible disinflating from where we
Speaker 2: are now the three, and then you're not going to
Speaker 2: have to go through the major pain of squeezing out
Speaker 2: that last bit of inflation.
Speaker 5: Well, let me ask you about another communications issue, and
Speaker 5: that is forward guidance. The FED and other central banks
Speaker 5: really like the idea at various times, but now it
Speaker 5: seems like they're having trouble communicating with the markets since
Speaker 5: they're unable to say what they're going to do next.
Speaker 5: Is that a FED problem, a market problem? Or does
Speaker 5: forward guidance not work as well as they thought?
Speaker 2: Borer guits never worked as well as all? I mean
Speaker 2: back when my first speech after leaving the Bank of
Speaker 2: England at Jackson Hole in twenty twelve, I made a
Speaker 2: whole point arguing that forward guidance was never going to
Speaker 2: work well, and everything since then bears that out. But
Speaker 2: that doesn't mean you just wander around and randomly say, oh,
Speaker 2: here's today's data. So like I look at Bank of England.
Speaker 2: The issue for me, I know we can talk about
Speaker 2: the FED, but I mean the banking and the issue
Speaker 2: for me is not that they made the wrong interest
Speaker 2: rate hikes, because they did a lot of them pretty fast,
Speaker 2: but that they kept saying, well, this will be the
Speaker 2: last one and we probably don't need to do more.
Speaker 2: We're going to be able to stop at four percent.
Speaker 2: And so again it's not so much about for guidance,
Speaker 2: it's about they communicated the wrong forecast. And I think
Speaker 2: the FED or the Bank of England has to or
Speaker 2: other central banks have to say, our forecast was wrong,
Speaker 2: we are shifting to this forecast. This forecast may be
Speaker 2: wrong too, but this is the best guess and therefore
Speaker 2: you should expect ax. You're not going to be able
Speaker 2: to do forward guidance the way you did in the crisis,
Speaker 2: because that was meant as a substitute for policy anyways.
Speaker 2: It was never meant to be a standalone, useful tool
Speaker 2: in a normal situation.
Speaker 1: I want to get back to FED policy. Got two
Speaker 1: more questions Adam before you go. You've been very generous
Speaker 1: with your time, and the basic one is what Mike
Speaker 1: McKee's going to see in the press conference looking out
Speaker 1: for five, six seven meetings as well for our audience,
Speaker 1: what would you suggest will be the market the real
Speaker 1: estate reaction if we get to pose in rate levels.
Speaker 2: Thank you for generously giving me this much of surveillance time.
Speaker 2: I think the market's going to be negative, but I
Speaker 2: don't think in the US it's going to be disastrous,
Speaker 2: as you and Lisa and John have repeatedly talked about. Rightly,
Speaker 2: this has been an incredibly resilient market in equities. Even
Speaker 2: in real estate. The the loss is commercial estate's different,
Speaker 2: but in residential real estate the losses have not been
Speaker 2: that large given the past run up and construction continues. So,
Speaker 2: going back to someone who were saying earlier, Tom, I
Speaker 2: think you're going to need in market terms, some form
Speaker 2: of capitulation, because that's just the side effect of their
Speaker 2: being actual tightening of credit conditions, and I think we're
Speaker 2: just getting there. But it doesn't have to be disastrous
Speaker 2: because we don't have the same fragility I believe in
Speaker 2: our financial markets. We did past cycles.
Speaker 1: At the Peterson Institute, Chad Bona with a great segment
Speaker 1: on the historic collapse of Switzerland's watch industry. That's how
Speaker 1: esoteric Peterson Institute can get. One of the things percolating
Speaker 1: Adam in late June is a new bout of American exceptionalism.
Speaker 1: Were different than they are? Is America exceptional.
Speaker 2: In a lot of social ways, yes, and a lot
Speaker 2: of economic ways now, so our racial divisions, our regional divisions,
Speaker 2: our gun violence, our nativism. These are all things under
Speaker 2: debate and which are not under debate, and a lot
Speaker 2: of other high income economies, So we are exceptional in
Speaker 2: our economy. The Economist, as you know, had a great
Speaker 2: feature a little while back of great survey talking about
Speaker 2: the ways in which the US economy powers ahead. It
Speaker 2: remains to be seen how much of that was sustainable
Speaker 2: versus how much of that was brief fiscal. But ultimately
Speaker 2: there is some special sauce to the urban, innovative parts
Speaker 2: of the US economy. In services in tech that others
Speaker 2: have not been able to replicate, and we have to
Speaker 2: take that. That's a blessing.
Speaker 1: We got to leave it there, Doctor Posen, thank you
Speaker 1: so much for a substantial mid year conversation, Adam posing
Speaker 1: the Peterson Institute formerly is public service to the Bank
Speaker 1: of England. Michael Collins joins now for a brief senior
Speaker 1: portfolio manager of PGUM Fixed Income. Michael, what does this
Speaker 1: record curve and version mean to you? How does your
Speaker 1: world change when you see two tens one hundred and
Speaker 1: two basis points?
Speaker 6: Yeah, Tom and Lisa, good morning.
Speaker 7: The dilemma out there, and one of the reasons the
Speaker 7: Martins are so confused and everybody was confused about the
Speaker 7: economic trajectory is that the typical models, the traditional leading
Speaker 7: indicators like the slope of the yield curve, all of
Speaker 7: the empirical evidence, the surveys are all pointing to recession
Speaker 7: right pending recession doom. The problem is from the bottom up,
Speaker 7: the fundamental analysts in US and you know, as you
Speaker 7: know Peache and fixed income, we pride ourselves on that
Speaker 7: bottom up analysis. I always say, sometimes the economists tell
Speaker 7: the analysts what's.
Speaker 6: Going to happen.
Speaker 7: But our view is a lot of times the analysts
Speaker 7: tell the economists what's going to happen. And when you
Speaker 7: look at the world from the bottom up and you
Speaker 7: look at all these companies and all these industries, and
Speaker 7: you look at the housing market, the auto market, the
Speaker 7: mortgage market, the banking system, it's hard to find the
Speaker 7: areas where you're going to see a big collapse in activity,
Speaker 7: in demand, in lending in and a big surge in default.
Speaker 7: So we're kind of splitting the difference and just assuming
Speaker 7: that growth is going to slow, you have a moderation
Speaker 7: and growth, moderation and inflation, but there's really low risk
Speaker 7: of a deeper session.
Speaker 1: Here within that analysis, do you go load the boat
Speaker 1: on garbage corporate or dare I say high yield distress?
Speaker 1: Or do you take the middle ground of equality corporate
Speaker 1: versus full faith and credit.
Speaker 6: Yeah, it's the latter for sure.
Speaker 7: I mean, what happens at this point to cycle Tom
Speaker 7: with the Fed and all these other central banks having
Speaker 7: tightened policies.
Speaker 6: So aggressively, it does start to bite.
Speaker 7: And it is starting to bite the weakest credits, the
Speaker 7: weakest people, the weakest governments, and you're seeing the most
Speaker 7: levered credits, the ones that are exposed to floating rates,
Speaker 7: whether they're loan issuers or whether they're commercial real estate borrowers,
Speaker 7: they are starting to get hit, right. So those are
Speaker 7: the areas of the market you really want to be
Speaker 7: careful with and avoid. The good news is, as we've
Speaker 7: talked about with you many times, the higher quality parts
Speaker 7: of the market are still for sale. They're offering tremendous spreads,
Speaker 7: tremendous yields to kind of sit up in quality and
Speaker 7: print you know, six handle coupons while you wait.
Speaker 3: Michael, I have to be honest. A lot of people
Speaker 3: have come on this show and they say, you know,
Speaker 3: you've come up with a theory, and you hold it
Speaker 3: for a longer period of time. You try to ignore
Speaker 3: the noise of all the mood swings, and we come
Speaker 3: up here and we say, yeah, yeah, yeah, But our
Speaker 3: job every day is to gauge the mood swings and
Speaker 3: figure out how the shifts are happening. Today, there is
Speaker 3: a material shift after a week of hawkish speak from
Speaker 3: a lot of central bankers around the world. Does that
Speaker 3: shift your view at all, the sense that suddenly we're
Speaker 3: gaming out six and a quarter percent ECB rates that
Speaker 3: the FED possibly is going to go even two more
Speaker 3: times this year.
Speaker 7: Yeah, I mean this happens every FED cycle, Lisa. The
Speaker 7: markets kind of have these blow off tops. Maybe we've
Speaker 7: just seen that credit spreads rally. We've just seen that
Speaker 7: there's this enthusiasm right at the end of the FED
Speaker 7: hiking cycle that Wow, the economy is doing good. And
Speaker 7: the reason the Fed's able to continue hike and these
Speaker 7: other central banks are able to continue to hike is
Speaker 7: because the economy doing good and it does well until
Speaker 7: it doesn't, right, And so we're probably at one of
Speaker 7: those precipices right now where we're peaking in optimism, peaking
Speaker 7: in sentiment and growth, and you're going to start seeing
Speaker 7: the slide. You're going to start seeing those problems emerge,
Speaker 7: those cracks start to increase. Growth and inflation are going
Speaker 7: to be lower in six and twelve months from now
Speaker 7: than they are today. But again, the point is it's
Speaker 7: not going to be one of these existential credit crises
Speaker 7: that we've become so accustomed to experiencing. So you wait,
Speaker 7: you have to be patient, you wait for those cracks,
Speaker 7: and then you jump in. I mean, look at the
Speaker 7: regional banks. We've been underweight regional banks. A lot of
Speaker 7: them just issued the big super regionals and we covered
Speaker 7: and went to an overweight.
Speaker 6: Right, those are the types of things you have to
Speaker 6: be patient for.
Speaker 3: This is something we're not used to. It's not two
Speaker 3: thousand and eight. Everyone was looking for a two thousand
Speaker 3: and eight corollary, but there still will be pain. How
Speaker 3: do you game out what the right level is? What
Speaker 3: are you looking for in terms of a selloff to
Speaker 3: make say, hial bonds look attractive some of these other
Speaker 3: credit instruments that you're staying away from.
Speaker 6: Yeah, the mistake.
Speaker 7: A lot of folks are making leases. They're looking at
Speaker 7: all the historical relationships, right, They're looking at high yield spreads,
Speaker 7: and a typical recession go out to eight hundred basis
Speaker 7: points or one thousand basis points, and in today's world,
Speaker 7: that would be a fifteen percent yield, right, which is
Speaker 7: which is kind of armageddon. They expect high yield the
Speaker 7: faults to hit ten percent. That's because they're looking at
Speaker 7: the old models, looking at some of the past recessions
Speaker 7: where you had a lot of leverage, where you had
Speaker 7: a lot of excesses and credit build ups. You do
Speaker 7: not have that now, So ar Mantra is you know,
Speaker 7: six hundred spread on the high heeld market is the
Speaker 7: new eight hundred.
Speaker 8: Right.
Speaker 7: If you get into the fives, you're buying high yield
Speaker 7: in terms of spread, that's a you know, that's still
Speaker 7: a ten or low double digit coupon.
Speaker 1: Michael, let's go into quality right now. I just looked
Speaker 1: at the Apple of two thousand and thirty three. The
Speaker 1: Apple piece out ten years is half a percentage point
Speaker 1: fifty nine basis points over treasuries. You can look at those, folks.
Speaker 1: So you acclaim why a screen and the d d
Speaker 1: ice screen and the Bloomberg This is how we invented
Speaker 1: the company. But the company wasn't invented over Bloomberg surveillance.
Speaker 1: It was invented over bond analysis. In case there was
Speaker 1: any confusion there, Michael, is Apple debt, full faith and credit.
Speaker 7: You know, the amount of cash some of those big
Speaker 7: tech companies have tom is really amazing, and Apple's right
Speaker 7: at the top of the list. And all these big
Speaker 7: tech companies, you know, we look at their equities and
Speaker 7: they're volatile, and their high beta and fixed income land.
Speaker 7: A lot of those big you know, super megacap tech
Speaker 7: companies are the double a's and triple a's, you know,
Speaker 7: they're the old exxons and banks of yesteryear. They're like
Speaker 7: the utilities because they have so much cash. They print cash.
Speaker 7: They could pay off all their debt tomorrow if they want.
Speaker 7: Right though, the spreads you mentioned are really tight, there's
Speaker 7: no value there.
Speaker 6: We don't own those.
Speaker 7: We're typically underweight that whole sector in the bond market
Speaker 7: and focus on the areas where you get more spread.
Speaker 6: I mean, you could sell Apple.
Speaker 7: At fifty nine basis points tom and buy a triple
Speaker 7: A rated COLO. I know that's a dirty word for
Speaker 7: some people. At almost three or four times that spread
Speaker 7: or excess return, that is a home run. That's an
Speaker 7: easy trade, and we have that on in a big way.
Speaker 1: Michael Collins. You bring me to tears. Thank you so much,
Speaker 1: Michael Collins. With p Jim, we're going to drive forward
Speaker 1: here in a debate on the market, and as we
Speaker 1: talk to people really cautious this morning, let's talk to
Speaker 1: somebody fair and balanced. Linda doesilll decades of experience with
Speaker 1: Steve Authen the team it federated him. As she was
Speaker 1: lights out last time she was on, are you guys
Speaker 1: bullser bears, I mean, Federated has such a venerated steady
Speaker 1: as we go? Are you bullser bears?
Speaker 9: Linda, Well, you know, it's good morning and it's hard
Speaker 9: to say bullser bears. You talking about what kind of
Speaker 9: landing we were having. We've been saying for the past
Speaker 9: that's say, twelve months, we'll have a rocky land and
Speaker 9: that does include kind of the rolling recession that you
Speaker 9: were speaking about earlier on and so you know, it
Speaker 9: would have been a lot rockier in the stock market
Speaker 9: as we were expecting to maybe even test those lows
Speaker 9: if we didn't have that AI narrative that went on
Speaker 9: and then the run up and the big big stocks
Speaker 9: because as we all know, underneath the surface, the average
Speaker 9: stock is only up a couple percent.
Speaker 4: Year to date.
Speaker 3: Linda, do you think this is a tipping point in
Speaker 3: terms of an understanding of how far central bankers are
Speaker 3: willing to go and what that means for the revenues
Speaker 3: of a lot of stocks that have done pretty well
Speaker 3: this year?
Speaker 4: Well, no, I don't particularly think so.
Speaker 9: I mean I realized that they made a big move
Speaker 9: over in the UK, and thank goodness, we're in the
Speaker 9: US as versus the UK, they have a bigger problem
Speaker 9: than we do on inflation. We have always said that
Speaker 9: they will continue to bring inflation down to a level,
Speaker 9: maybe it's three or maybe it's two. And if we
Speaker 9: take the FED at their word for two percent, it's
Speaker 9: going to be higher for longer. And we have said
Speaker 9: that in federated hetermis for a very long time. The
Speaker 9: question is, well they call victory at three percent, because
Speaker 9: if they do, we may get out of this with
Speaker 9: just the rocky landing. But if they don't, they will
Speaker 9: tighten into a real recession.
Speaker 3: So if you don't think that anything really has changed,
Speaker 3: and we're kind of in the same place we were
Speaker 3: two weeks ago, even though the narrative has shifted, is
Speaker 3: this a time to buy? Is this a time to
Speaker 3: look for some of the weakness and then say, all right,
Speaker 3: we can step back in.
Speaker 1: Yeah.
Speaker 9: You know, it's interesting about the narrative shifting because you know,
Speaker 9: get I get hundreds of emails a day from our
Speaker 9: Wall Street sources, and it seemed like everybody got a
Speaker 9: memo at a moment that said, okay, now we're over blocked.
Speaker 9: Now it's time to maybe take some money off the table,
Speaker 9: why you know, and the technicians are out there saying
Speaker 9: maybe forty two hundred, we test forty three hundred anyway.
Speaker 9: On the down side, July anyway is a week month.
Speaker 9: You can use all these statistics historically and say, fundamentally,
Speaker 9: what's going on in our economy. Fundamentally, actually the economy
Speaker 9: is very strong. And when I think people will failed
Speaker 9: to continue to appreciate, is still the amount of stimulus unbelievable.
Speaker 9: Outside stimulus, I just read a statistic that said that
Speaker 9: liquid assets for consumers are four zero point four trillion
Speaker 9: dollars greater than what they were at the end of
Speaker 9: twenty nineteen. And we were doing just fine at the
Speaker 9: end of twenty nineteen.
Speaker 1: I mean, this is really important. And I got eight
Speaker 1: ways to go here, Linda, and I'm going to go
Speaker 1: to what Lawrence McDonald did in a terrific essay this week.
Speaker 1: He outlined the wall of money and ETF's mutual funds
Speaker 1: and the rest of it that animals like Federated or
Speaker 1: mes are dealing with. Is all this market about is
Speaker 1: just a ginormous first order condition, which is a wall
Speaker 1: of money trying to find a warm spot.
Speaker 9: Well, it's very much a huge piece of it. And
Speaker 9: that wall of money is not just looking for a
Speaker 9: place to invest. That wall of money is out there
Speaker 9: spending and particularly on services. And it will be interesting
Speaker 9: to see what the PMI say. But whatever information we've
Speaker 9: got to buy, confidence, not just consumer confidence, but housing
Speaker 9: confidence has been very very strong here lately. Airline information
Speaker 9: that I just saw.
Speaker 4: This just I think the other two days ago.
Speaker 9: Airline information is very strong for this summer. So the
Speaker 9: recessions too early.
Speaker 1: Yeah, I don't want lind, I don't want you to
Speaker 1: talk about a specific portfolio. But if I'm looking at
Speaker 1: a federated portfolio and we're in the old days, you
Speaker 1: had two or three or four percent in Microsoft or Apple,
Speaker 1: let's say on a perspective s basis, it's elevated up
Speaker 1: by growth to eight percent or ten percent. Are you
Speaker 1: guys forced to sell these big tech companies when they
Speaker 1: become so big? How do you handle that?
Speaker 10: Well?
Speaker 9: Of course, we have portfolios that are stock bond portfolios
Speaker 9: that are all across the spectrum, and we have our objectives.
Speaker 9: There is no particular requirement, but each portfolio manager will
Speaker 9: have an objective that says, once a particular holding gets
Speaker 9: above a particular level, maybe five percent or so, then
Speaker 9: they'll they may want to trim some of that because
Speaker 9: it gets to be outsized. Of course, this is one
Speaker 9: of the reasons why portfolio manage managers have had a
Speaker 9: very difficult time beating the SMP this year, as you
Speaker 9: can't hold as much in the SMP as the S
Speaker 9: ANDP bolts in these big names.
Speaker 1: Linda, thank you, Linda Dussel, whether it's the Federated or
Speaker 1: me as there one time, ten, twelve, thirteen years ago,
Speaker 1: I really can't remember. I guess I had nothing to do.
Speaker 1: I follow how'd go over and get a free glass
Speaker 1: of wine from Richard hass at the Console on Foreign Relations.
Speaker 1: I walked up Park Avenue, I went into their wonderful building,
Speaker 1: and Ambassador Haas walked out and he did something was like, well, okay,
Speaker 1: so what he interviewed? He introduced rather a new website
Speaker 1: for the Console on Foreign Relations. He and his team
Speaker 1: were at least five, if not eight years ahead of
Speaker 1: everybody else in the digital media game. And I can't
Speaker 1: say enough about the value of the Council on Foreign
Speaker 1: Relations website right now. Roger Ferguson on a reset of
Speaker 1: where the Fed should head to on interest rates, and
Speaker 1: an introduction here of Ambassador has Alyssa Airs of Georgetown
Speaker 1: on what we don't know about India. Richard hasse wonderful
Speaker 1: to have you on today. Professor Ayers of Georgetown is
Speaker 1: blistering about how India wants to deal with the United States.
Speaker 1: We saw Modi at the White House. Was it a fiction?
Speaker 11: It wasn't a fiction, Tom, but his enormous height in
Speaker 11: terms of what India is going to do for and
Speaker 11: with the United States, let me think about it. Yes,
Speaker 11: it's fast growing economy, it's the most populous country in
Speaker 11: the world, but there are some important butts when it
Speaker 11: comes to India.
Speaker 12: It still gets most of its arms from Russia.
Speaker 11: It's buying copious amounts of Russian oil and gas.
Speaker 12: It hasn't supported US diplomatically there.
Speaker 11: It's a reminder that India always hedges it in its
Speaker 11: farm policy.
Speaker 12: And yes, there's growth in our economic relations.
Speaker 11: But as everyone who would come on your show would
Speaker 11: tell you, we does business there, it's still extraordinarily tough
Speaker 11: to gain access to the to the Indian marketing.
Speaker 12: So kind of a lot of happy talk about the
Speaker 12: United States in.
Speaker 1: India is it just too far away, is it, you know,
Speaker 1: like a Patrick O'Brien novel on the other side of
Speaker 1: the world.
Speaker 12: Look, we know, I.
Speaker 11: Don't think that's the U ship and I think again.
Speaker 11: But it's also driving in years domestic politics. It turns
Speaker 11: out the Indian American community time it's the wealthiest community
Speaker 11: of any other community in the United States. There's obviously
Speaker 11: powerful political reasons.
Speaker 12: No, it's just it's just difficult.
Speaker 11: We don't have a great tradition of cooperating with India,
Speaker 11: and people I think are hyping it, Which is not
Speaker 11: to say there's not something.
Speaker 12: There's not something there. There is.
Speaker 11: There is growing strategic cooperation, growing economic trade and investment.
Speaker 12: I just think people are exaggerating the upside.
Speaker 3: In the meantime, during the conversation and the President Biden
Speaker 3: had with Prime Minister Modi, he poo pooed some of
Speaker 3: the controversy around calling Jijinping a dictator, saying it's not
Speaker 3: a big deal. You know he is, and I'm going
Speaker 3: to head over there and meet him. Do you think
Speaker 3: that that was enough to quell some of the concerns
Speaker 3: about the renewed tensions that he ignited.
Speaker 11: It wasn't helpful first of all, saying that Shishaping didn't
Speaker 11: know about the Bologon incident. The president may have thought
Speaker 11: he was helping him, but if you're the guy who
Speaker 11: was really.
Speaker 12: In charge of China, you don't like being reminded that
Speaker 12: you may not be one hundred percent in charge. The
Speaker 12: dictator comment didn't help.
Speaker 11: But I think at the end of the day, China
Speaker 11: is worried most not about what Joe Biden said. He's
Speaker 11: worried about new economic restrictions, export controls, and so forth.
Speaker 11: So what they want to do is try to put
Speaker 11: a limit on well what's introduced in that realm, and
Speaker 11: come November, President Xieshin Pining wants to meet with President
Speaker 11: Biden here.
Speaker 12: So my guess is they're going to overlook this latest.
Speaker 3: Diplomaticans given that heading into this year, you are among
Speaker 3: the people saying it's one of the most fraught times
Speaker 3: we have ever seen on a geopolitical stance. Do you
Speaker 3: think that those tensions have abated, that we've moved away
Speaker 3: from the brink and it feels less perilous now, or
Speaker 3: do you think people are just taking a pause and
Speaker 3: focusing on things like the FED, like the Bank of England,
Speaker 3: and we'll be reminded of the geopolitical pressures later on.
Speaker 11: Yeah, at the risk of not giving you the answer
Speaker 11: you want, the tensions haven't gotten any less possibilities. You
Speaker 11: know what happens next with Russia in Europe and Ukraine.
Speaker 11: None of that's gone away, the dangers of continued war escalation.
Speaker 11: The United States Chinese relationship is still searching for a floor.
Speaker 11: We're tired of the Middle East, but the Middle East
Speaker 11: isn't tired of us.
Speaker 12: You've got a rond still on the brink of nuclear weapons.
Speaker 11: I'm actually even more worried in the short run that
Speaker 11: the Israeli Palestinian relationship could blow sky high. I think
Speaker 11: it is very close to the edge of extraor their
Speaker 11: eruptions of violence there. We're doing nothing on client really
Speaker 11: to speak up.
Speaker 12: So when I take a step back, I go no.
Speaker 11: I see no evidence that the world is becoming a
Speaker 11: more safe place in this era of what.
Speaker 12: You might call geopolitical revival.
Speaker 1: Richard has summer reading at Congress in the House of Representatives,
Speaker 1: in a fractious Senate is everybody has to read your
Speaker 1: Bill of obligations. It's a superb short effort folks, this
Speaker 1: is the book to throw at the offspring this summer
Speaker 1: when they're mouthing off all their political verbiage, either right
Speaker 1: or left, just say shut up and read it has
Speaker 1: the Bill of Obligations. How are we doing on Capitol Hill, Ambassador?
Speaker 1: Has is anybody reading your book?
Speaker 11: Well?
Speaker 13: First of all, Tom, I say, that's truly the most
Speaker 13: interesting book.
Speaker 12: Drsement I've ever seen in my life. I want to
Speaker 12: put that on the cover of something.
Speaker 11: Look, I think a lot of peopleeople in Congress and
Speaker 11: beyond know there's something wrong here, that American democracy is
Speaker 11: off the rails. There's obviously not a consensus someone to
Speaker 11: do about it.
Speaker 12: But as I go around the country.
Speaker 11: Talking about the Bill of Obligations, people know it. It
Speaker 11: resonates more interested in putting civics in our schools, much
Speaker 11: more interested in reviving public service since that again we
Speaker 11: somehow lost our way in.
Speaker 12: As a price that we could well pay. So I'm
Speaker 12: actually somewhat encouraged.
Speaker 11: Again, We're not there to consent what to do, but
Speaker 11: I think this greater acceptance that we really do have
Speaker 11: a serious problem on our hands, and it's a problem
Speaker 11: that transcends any single individual.
Speaker 1: Enough politics or shureus. Thank you so much for the
Speaker 1: concept foreign relations. One time, ten, twelve, thirteen years ago,
Speaker 1: I really can't remember. I had nothing to do. I
Speaker 1: follow how to go over and get a free glass
Speaker 1: of wine from Richard Hass at the Consul on Foreign Relations.
Speaker 1: I walked up Park Avenue, I went into their wonderful building,
Speaker 1: and Ambassador House walked out and he did something was like, well, okay,
Speaker 1: so what he interviewed? He introduced rather a new website
Speaker 1: for the Council on Foreign Relations. He and his team
Speaker 1: were at least five, if not eight, years ahead of
Speaker 1: everybody else in the digital media game. And I can't
Speaker 1: say enough about the value of the Console on Foreign
Speaker 1: Relations website Right now. Roger Ferguson on a reset of
Speaker 1: where the FED should head to on interest rates and
Speaker 1: an introduction here of Ambassador hasse Alissa Ayers of Georgetown
Speaker 1: on what we don't know about India. Richard Hass wonderful
Speaker 1: to have you on today. Professor Ayers of Georgetown is
Speaker 1: blistering about how India wants to deal with the United Dates.
Speaker 1: We saw Mody at the White House. Was it a fiction?
Speaker 11: It wasn't a fiction, Tom, But this enormous height in
Speaker 11: terms of what India is going to do for and
Speaker 11: with the United States.
Speaker 12: I mean, think about it.
Speaker 11: Yes, it's fast growing economy, it's the most populous country
Speaker 11: in the world. But there are some important butts when
Speaker 11: it comes to India.
Speaker 12: It still gets most of its arms from Russia.
Speaker 11: It's buying copious amounts of Russian oil and gas.
Speaker 12: It hasn't supported US diplomatically there.
Speaker 11: It's a reminder that India always hedges in its farm policy.
Speaker 11: And yes, there's growth in our economic relations. But is
Speaker 11: everyone who would come on your.
Speaker 12: Show would tell you he does business there.
Speaker 11: It's still extraordinarily tough to gain access to the Indian marketing.
Speaker 11: So kind of a lot of happy talk about the
Speaker 11: United States in India.
Speaker 1: Is it just too far away?
Speaker 14: Is it?
Speaker 1: You know, like a Patrick O'Brien novel on the other
Speaker 1: side of the world.
Speaker 11: Look, we know, I don't think that's the yuship, and
Speaker 11: I think again. But it's also driving in years domestic politics.
Speaker 11: It turns out the Indian American community time it's the
Speaker 11: wealthiest community of any other community in the United States.
Speaker 12: But there's obviously powerful political reasons. No, it's just it's
Speaker 12: just difficult.
Speaker 11: We don't have a great tradition of cooperating with India,
Speaker 11: and people I think are hyping it, Which is not
Speaker 11: to say there's not something there.
Speaker 12: There is.
Speaker 11: There is growing strategic cooperation, growing economic trade and investment.
Speaker 12: I just think people are exaggerating the upside.
Speaker 3: In the meantime, during the conversation and the President Biden
Speaker 3: had with Prime Minister Modi, he poo pooed some of
Speaker 3: the controversy around calling Jijinping a dictator, saying it's not
Speaker 3: a big deal. You know he is, and I'm going
Speaker 3: to head over there and meet him. Do you think
Speaker 3: that that was enough to quell some of the concerns
Speaker 3: about the renewed tensions that he ignited.
Speaker 12: What it wasn't helpful?
Speaker 11: First of all, saying that Shisha Pig didn't know about
Speaker 11: the Bologna to the President may have thought he was
Speaker 11: helping him, but if you're the guy who was really.
Speaker 12: In charge of China, you don't like being reminded that
Speaker 12: you may not be one hundred percent in charge.
Speaker 15: The dictator comment didn't help, But I think at the
Speaker 15: end of the day, China is worried most not about
Speaker 15: what Joe Biden said he's worried about new economic restrictions,
Speaker 15: export controls and so forth.
Speaker 11: So what they want to do is try to put
Speaker 11: a limit on what's introduced in that realm, and come November,
Speaker 11: President Shieshan thing wants to meet with President Biden here.
Speaker 12: So my guess is they're going to overlook this latest.
Speaker 3: Diplomaticus given that heading into this year, you were among
Speaker 3: the people saying it's one of the most fraught times
Speaker 3: we have ever seen on a geopolitical stance. Do you
Speaker 3: think that those tensions have abated, that we've moved away
Speaker 3: from the brink and it feels less perilous now, or
Speaker 3: do you think people are just taking a pause and
Speaker 3: focusing on things like the FED, like the Bank of
Speaker 3: England and we'll be reminded of the geopolitical pressures later on.
Speaker 11: Yeah, at the risk of not giving you the answer
Speaker 11: you want, the tensions haven't gotten any less possibilities. You
Speaker 11: know what happens next with Russia in Europe and Ukraine.
Speaker 11: None of that's gone away, the dangers of continued war escalation,
Speaker 11: the United States Chinese relationship, it's still searching for a floor.
Speaker 12: We're tired of the middle East. But the Middle East
Speaker 12: isn't tired of us. You've got a rond still on
Speaker 12: the brink of nuclear weapons.
Speaker 11: I'm actually even more worried in the short run that
Speaker 11: the Israeli Palestinian relationship could blow sky high. I think
Speaker 11: it is very close to the edge of extraordinary eruptions
Speaker 11: of violence there.
Speaker 12: We're doing nothing on climate really to speak up.
Speaker 11: So when I take a step back, I go no,
Speaker 11: I see no evidence that the world is becoming a
Speaker 11: more stake place in this era of what you might
Speaker 11: call geopolitical revival.
Speaker 1: Richard has summer reading at Congress in the House of Representatives,
Speaker 1: in a fractious Senate as everybody has to read your
Speaker 1: Bill of Obligations. It's a superb short effort, folks. This
Speaker 1: is the book to throw at the offspring this summer
Speaker 1: when they're mouthing off all their political verbiage, either right
Speaker 1: or left, just say shut up and read it has
Speaker 1: the Bill of Obligations. How are we doing on Capitol Hill,
Speaker 1: Ambassador Oz, is anybody reading your book?
Speaker 13: Well, first of all, Tom, let me say that's the
Speaker 13: That's truly the most interesting book endorsement I've ever seen
Speaker 13: in my life.
Speaker 12: I'm want to put that on the cover of something.
Speaker 11: Look, I think a lot of people in Congress and
Speaker 11: beyond know there's something wrong here, that American democracy is
Speaker 11: off the rails. There's obviously not a consensus somewhat to
Speaker 11: do about it. But as I go around the country
Speaker 11: talking about the Bill of Obligations, people know it. It
Speaker 11: resonates more interest in putting civics in our schools, much
Speaker 11: more interested in reviving public service. Since then again we
Speaker 11: somehow lost our way in as a price that we
Speaker 11: could we could well pay.
Speaker 12: So I'm actually somewhat encouraged.
Speaker 11: Again, We're not there that can send what to do,
Speaker 11: but I think this greater acceptance that we really do
Speaker 11: have a serious problem on our hands, and it's a
Speaker 11: problem that transcends any single individual and.
Speaker 1: A politics Shureaus, thank you so much for the consult
Speaker 1: foreign relations. We're going to take a different track tacked
Speaker 1: right now. And for those of you renting, for those
Speaker 1: of you looking at investment where you're scared stiff of
Speaker 1: the six months to come. Someone expert on this is
Speaker 1: Brad Dillman. He's chief economist of Cortland in Atlanta. They
Speaker 1: do all sorts of sun Belt multifamily stuff, but far
Speaker 1: far mortally importantly, this is a guy out of Washington
Speaker 1: and LSE in the economics of geography, in spatial economics.
Speaker 1: This is a cottage industry of the London School of Economics,
Speaker 1: and Dilman is one of their esteemed graduates. How bad
Speaker 1: is the geography of our multifamily investment right now? We
Speaker 1: use the inflammatory phrase this is Gidtleson's fault. We use
Speaker 1: the phrase time bomb? Is your world? Brad Dillman a
Speaker 1: time bomb?
Speaker 16: I wouldn't call it a time bomb, no, And to
Speaker 16: the degree that it might be, it's a very slow
Speaker 16: moving one.
Speaker 4: There's a number of factors at play here.
Speaker 16: I've interpreted a lot of the policies coming out of
Speaker 16: the pandemic as being a de facto housing supply stimulus,
Speaker 16: not just on the single family side. But we had
Speaker 16: low interest rates leading the home price appreciation and single
Speaker 16: family supply, but the eviction moratoria distorting occupancy rates markets,
Speaker 16: increasing rent growth, and then in the context of zero
Speaker 16: industrates allowing a lot of multifamily supply to kick off
Speaker 16: in a country that's been under built for quite some time.
Speaker 4: That's not really an issue, but could it compound into
Speaker 4: one eventually.
Speaker 1: Yes, right, I'm fascinated what you see and don't kid
Speaker 1: your sales guys. Cortland is looking at this like on
Speaker 1: a five minute basis, Are you actually seeing rents level
Speaker 1: out or rent disinflation? Could that be possible? Asking for
Speaker 1: twenty million people in tri state New York. They don't
Speaker 1: believe it.
Speaker 16: Yeah, No, the data is very clear that we've been
Speaker 16: in a disinflationary rent growth environment. So annual rent growth
Speaker 16: peak in general terms, you know, in the summer of
Speaker 16: last year. It's been slowing since then. One thing we
Speaker 16: have seen has been that new leases, so we're always
Speaker 16: looking at you know, new leases and then also existing
Speaker 16: leases that are going to renew right new leases or
Speaker 16: a vacant unit have started to increase again just at
Speaker 16: the same time that looks like occupancies may start to trough.
Speaker 16: So what has been called like a six to eight
Speaker 16: month disinflationary environment in rent growth looks like it could
Speaker 16: actually start to re expand again.
Speaker 1: Help me with a not in my backyard. I mean,
Speaker 1: what's a typical multifamily size? How many units is a
Speaker 1: typical Courtland property.
Speaker 4: About two hundred and fifty two hundred and fifty to
Speaker 4: three hundred units.
Speaker 16: These is you know, for Courtland, it's suburban mid rise
Speaker 16: product generally in the sun Belt.
Speaker 4: But obviously there's all sorts of different types of housing
Speaker 4: out there.
Speaker 1: What's the not in my backyard level right now? Is
Speaker 1: it tough to build this stuff like it is up
Speaker 1: in the North Feast?
Speaker 11: You know?
Speaker 16: The reality is that the suburbs have never been more
Speaker 16: accommodated when it comes to multi family housing. It's a
Speaker 16: it's a narrative that we hear a lot. If you
Speaker 16: look at the construction as a percentage of inventory in
Speaker 16: the suburbs, it's really caught up to the Earthport.
Speaker 1: I see. Got you. The problem here, folks, is Brad
Speaker 1: answers short questions. He thinks he's on TV. You're on
Speaker 1: radio tube, Brad worldwide. So you're allowed to expand on that.
Speaker 1: I want you to expand right now on your optimism
Speaker 1: on multifamily housing over the next two years, because all
Speaker 1: we get up here in New York, all we get
Speaker 1: is gloom on real estate. I'm not hearing that love
Speaker 1: from you. Are you optimistic about multifamily development?
Speaker 4: Am I optimist about development?
Speaker 9: No?
Speaker 2: I'm not.
Speaker 4: And the reason for that is the interest rate environment.
Speaker 16: If we look at the cost to get a construction
Speaker 16: loan for the larger kind of product that say Courtland
Speaker 16: would develop, this's two hundred and fifty to three hundred
Speaker 16: unit product. It's too stiff right now as far as
Speaker 16: we can tell, that area of the multi failing market
Speaker 16: has shut down. But if you look at multi family
Speaker 16: starts in the five unit in upspace, right, so this
Speaker 16: is going to be smaller product, maybe ten units, maybe
Speaker 16: forty units, maybe in places like Knoxville, maybe even rural America.
Speaker 16: This kind of product is still starting and is still underway.
Speaker 1: So July twenty six and September twenty or FED meetings
Speaker 1: if they act, and it's I'm not going to say
Speaker 1: highly likely, but it is probable that they'll find a
Speaker 1: new rate regime at a higher level. What does that
Speaker 1: do to multifamily real estate and for that matter, commercial
Speaker 1: real estate that you study across America?
Speaker 16: Right, So, obviously, just by keeping financing costs high, it's
Speaker 16: going to have an impact on values. We've already seen
Speaker 16: an impact on liquidity in the space, meaning we haven't
Speaker 16: seen too many transactions. It's going to make further construction
Speaker 16: a little bit more difficult, and we'll certainly lead to
Speaker 16: some distress. Right now, it would appear that the distress
Speaker 16: is really going to be in that construction and transitional
Speaker 16: financing space maturities in the twenty twenty three through twenty
Speaker 16: twenty five range if rates do say high like that,
Speaker 16: and let's say we do hit a new regime of
Speaker 16: you know, okay, the FED fund rate is going to
Speaker 16: be at you know, three to four percent, you know,
Speaker 16: in perpetuity, you know, with.
Speaker 4: Bouts up and down. We would need to see an
Speaker 4: inflationial environment that corresponds with that. So we need to
Speaker 4: see rent growth or cheaper.
Speaker 16: Inputs into the development process in order to see development
Speaker 16: continue a pace.
Speaker 1: On Bloomberg Surveillance, I'm radio on television. We're talking with
Speaker 1: Brad Dillman of Atlanta, of Courtland where they do multifamily
Speaker 1: housing and something. And I'm really remiss of as folks
Speaker 1: we ignore this and it's completely a New York City
Speaker 1: conceit and we should not. It's a huge part of
Speaker 1: a discussion in America. I want to go demographic on
Speaker 1: you right now, Brad Dillman. I'm going to be the
Speaker 1: only one left on the island of Manhattan. Everybody else
Speaker 1: is moving to Florida. Is that a cliche or is
Speaker 1: there something actually true that we all got to move
Speaker 1: down to Atlanta Braves baseball.
Speaker 4: It certainly seems like everybody's moving to Florida.
Speaker 16: Sometimes the reality is too when we look at some
Speaker 16: of this information that we're saying that the migration to
Speaker 16: the sunbell has actually slowed a little bit. We look
Speaker 16: at cell phone data, we look at the census is
Speaker 16: my you know, population and components of change tables. It's
Speaker 16: still there. People are still moving, but it has slowed
Speaker 16: down a bit. Something that we don't talk about, that
Speaker 16: we don't hear a lot about is immigration.
Speaker 6: Now.
Speaker 16: Immigration has actually kicked off very strongly over the last
Speaker 16: few years, only coming out of the pandemic. If you
Speaker 16: look at the foreign born adult population, it's increasing nearly
Speaker 16: five million people in three years.
Speaker 14: Right.
Speaker 16: That's bigger in the population of New Zealand. It's bigger
Speaker 16: in the population of whole states like Oregon in twenty twenty.
Speaker 16: This is a story for gateway markets, and what are
Speaker 16: new gateway markets places like Atlanta and Front Range, which
Speaker 16: are probably seeing as best we can tell more immigration,
Speaker 16: fortunately than they would have historically, but.
Speaker 1: This is a cret. I mean, everyone Brad in New
Speaker 1: York City, of every walker life is talking about this,
Speaker 1: the extraordinary expense of some of our major urban areas,
Speaker 1: and there's other issues crime in that. I get it,
Speaker 1: But there's this huge study of what our kids are doing.
Speaker 1: Does Cortland have research that with the vengeance the younger crew,
Speaker 1: they just simply can't have forward it and they're moving
Speaker 1: down to a Courtland multifamily to rebuild their lives.
Speaker 4: I don't know about that.
Speaker 16: As far as people moving interstate, one thing that we
Speaker 16: have seen in our own data has been that we
Speaker 16: have been a beneficiary of people moving interstate. But whether
Speaker 16: or not these are people are choosing to do that
Speaker 16: in the sense that they have to do it right
Speaker 16: because of their own personal form of situations not something
Speaker 16: we have clarity on. We do know that the general
Speaker 16: narratives that people are kind of bumping down the urban
Speaker 16: hierarchy because of cost of living reasons.
Speaker 1: BRED Thank you so much, generous of your time, Brat
Speaker 1: Diliman of Courtland. Subscribe to the Bloomberg Surveillance podcast on Apple,
Speaker 1: Spotify and anywhere else you get your podcasts. Listen live
Speaker 1: every weekday starting at seven am Eastern on Bloomberg dot Com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business App.
Speaker 1: You can watch us live on Bloomberg Television and always.
Speaker 1: I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen,
Speaker 1: and this is Bloomberg. Thanks for listening to the Bloomberg
Speaker 1: Surveillance podcast. Now, stay tuned for today's edition of Bloomberg Daybreak.
Speaker 1: It's your daily news podcast, delivering today's top stories to
Speaker 1: your podcast feed by six am Eastern. It's all the
Speaker 1: news you need in just fifteen minutes. The Bloomberg Daybreak Podcast.
Speaker 1: It starts right now.
Speaker 17: From the Bloomberg Interactive Burgers Studios. This is Bloomberg Daybreak
Speaker 17: for Friday, June twenty third.
Speaker 18: Coming up today, the search for the missing Titanic sub
Speaker 18: comes to a tragic end.
Speaker 17: Global stocks are on track for their biggest weekly decline
Speaker 17: in three months.
Speaker 18: Janet Yellen says the risk of a US recession is receding.
Speaker 17: And Citygroup has a warning for employees on office attendance.
Speaker 14: A section of I ninety five that collapsed in Philadelphia
Speaker 14: reopens today. Plus Congressvin Santos slams a judge for revealing
Speaker 14: the names behind posting his bond. I'm Michael barr bo.
Speaker 6: Ahead, I'm Don stave Shower.
Speaker 19: Sports a lopsided loss to the Yankees. The Mets to
Speaker 19: night visit Philadelphia. They held the NBA Draft in Brooklyn.
Speaker 10: That's all straight ahead on Bloomberg day Break, the business
Speaker 10: news you need to start your day in just one
Speaker 10: fifteen minute podcast each morning on Apple Spotify. The Bloomberg
Speaker 10: Business Appen everywhere you get your podcasts.
Speaker 18: Good morning, I'm Nathan Hager.
Speaker 17: And I'm Karen Moscow. Here are the stories we're following today.
Speaker 18: First, we begin with a tragic end to the search
Speaker 18: for that submersible it was exploring the Titanic. Rescuers have
Speaker 18: found the nose cone and other debris from the vessel,
Speaker 18: known as the Titan. Coast Guard Rear Admiral John Monger
Speaker 18: says the five people on board are dead.
Speaker 20: In consultation with experts from within the Unified Command, the
Speaker 20: debris is consistent with the catastrophic loss of the pressure chain.
Speaker 18: Rear Admiral John Mauger says they're going to keep collecting
Speaker 18: information to determine the cause. Of that implosion. Bloomberg News
Speaker 18: has learned the US Navy detected the implosion on Sunday
Speaker 18: at the site where the Titan loss communications. A senior
Speaker 18: Navy official says a decision was made to continue the
Speaker 18: search and rescue, to make every effort to save lives.
Speaker 17: Well, Nathan, we turn now to the nation's capital, where
Speaker 17: geopolitics and foreign relations are in focus. It was a
Speaker 17: red carpet welcome for India's Prime Minister as Narendra Mody
Speaker 17: met with President Biden at the White House yesterday. A
Speaker 17: joint press conference was followed by Modi addressing Congress. Amy
Speaker 17: Morris has Moore from our Bloomberg ninety nine one newsroom
Speaker 17: in Washington.
Speaker 21: President Biden in Prime Minister Mody announced a series of
Speaker 21: defense and commercial deals designed to improve military and economic
Speaker 21: ties between the two nations during yesterday's state visit at
Speaker 21: the White House. Later, Mody made a rare address to
Speaker 21: a joint meeting of Congress, where he stressed the importance
Speaker 21: of democracy, the beauty of democracy in the constant connect
Speaker 21: with the people to listen to them. At least seventy
Speaker 21: lawmakers called on President Biden to address human rights violations
Speaker 21: in India. Still, Mody was met with applause on Capitol Hill.
Speaker 21: The evening ended with a state dinner at the White
Speaker 21: House in Washington. I'm Amy Morris Bloomberg Daybreak.
Speaker 18: Thank you Amy. At that joint news conference with Prime
Speaker 18: Minister Modi, President Biden also addressed relations with China, answering
Speaker 18: questions about this week's comment where he referred to Chinese
Speaker 18: President Shi Jinping as a dictator.
Speaker 22: We had an incident that caused some confusion, he might say,
Speaker 22: but President, but the Secretary of Blincoln had a great
Speaker 22: trip to China. I expect to be meeting with President
Speaker 22: she sometime in the future a near term, and I
Speaker 22: don't think it's had any real consequence.
Speaker 18: All those sentiments from President Biden do not appear to
Speaker 18: be shared by China. A spokesman for the Chinese embassy
Speaker 18: as the President's remarks were quote erroneous, absurd, and irresponsible.
Speaker 17: Well, we turned to the markets now, Nathan, and we're
Speaker 17: seeing global stocks had for their biggest weekly decline in
Speaker 17: more than three months. Concerns of our higher interest rates
Speaker 17: appear to be the catalyst. At the same time, are
Speaker 17: getting a positive outlook from the Treasury Secretary Jenet Yellen
Speaker 17: says the risk of a US recession is declining. We
Speaker 17: get more from Bloomberg's Dunk Prisner.
Speaker 23: In an interview with Bloomberg News, Yellen said the odds
Speaker 23: of recession, if anything, have gone down. That's because of
Speaker 23: a tight labor market and inflation coming down. When it
Speaker 23: comes to consumption, Yellen said we probably need to see
Speaker 23: some slow down in spending in order to get inflation
Speaker 23: under control. She said the core measure of price increases
Speaker 23: is quite high. Yellen also said we could have a
Speaker 23: lovely debate about what the inflation target would be, but
Speaker 23: this is not the time for that debate. Fedcher J.
Speaker 23: Powell has rejected the idea of entertaining a change in
Speaker 23: the two percent target sentiment. He reiterated before Congress this
Speaker 23: week in New York. I'm Doug Prisoner Bloomberg Daybreak.
Speaker 18: Thank you, Doug. Speaking of Jay Powell, the Fed chairs
Speaker 18: wrapped up his semi annual testimony to Congress, and yesterday
Speaker 18: saw Pale weighing in on the banking crisis. He says
Speaker 18: Wall Street's biggest lenders may have to increase capital requirements
Speaker 18: by twenty percent.
Speaker 24: The capital requirements will be very very skewed to the
Speaker 24: eight largest banks. The jesips there may be some capital
Speaker 24: increases for the other banks, and they won't.
Speaker 14: I'm not.
Speaker 24: I think none of this should affect banks under one
Speaker 24: hundred billion.
Speaker 18: Pal made those comments before the Senate Banking Committee as
Speaker 18: he wrapped up two days of congressional testimony.
Speaker 17: Sticking with the banking sector, plenty of other news to
Speaker 17: catch you up on this morning. Nathan Blackrock says it's
Speaker 17: cutting staff. The firm says it's shifting its budget to
Speaker 17: support critical priorities. Blackrock says the move will affect less
Speaker 17: than one percent of employees.
Speaker 18: And City Group's ramping up. It's pushed to get its
Speaker 18: workers back in the office. Karen, The firm's telling managers
Speaker 18: to let staff know they will face consequences if they
Speaker 18: don't comply with office attendance policies. We get the details
Speaker 18: from Bloomberg's Charlie Pellett.
Speaker 25: Sources tell Bloomberg. While the vast majority of staffers are
Speaker 25: following the firm's rules for hybrid work, the moves are
Speaker 25: focused on those employees with persistent, unexplained absences. A source
Speaker 25: as managers will consider compliance with the rules when rating
Speaker 25: performance and crafting pay packages. City Group is widely seen
Speaker 25: as to be among the most amenable financial firms when
Speaker 25: it comes to flexible work arrangements. Following the COVID nineteen
Speaker 25: pandemic in New York, Charlie Pellett Bloomberg Daybreak.
Speaker 17: All right, Charlie, thanks well. Another big bank has made
Speaker 17: a settlement involving litigation over Jeffrey Epstein. JP Morgan has
Speaker 17: agreed to pay two hundred and ninety million dollars to
Speaker 17: settle a lawsuit alleging it knowingly benefited from Epstein's sex trafficking.
Speaker 17: The deal has been okayed by the lead plaintiff, but
Speaker 17: must still be approved by a judge. Last month, Deutsche
Speaker 17: Bank agreed to pay seventy five million dollars to settle
Speaker 17: its Epstein related lawsuit.
Speaker 18: And the settlement's been reached. In the first US Zantac
Speaker 18: cancer law sup British drugmaker GSKS reached a deal with
Speaker 18: a man who claimed the drug maker's heart burnt medication
Speaker 18: caused his cancer. This is Bloomberg, and now it's time
Speaker 18: to take a look at some of the other stories
Speaker 18: making news in New York and around the world. Good Morning,
Speaker 18: Michael barn Good morning.
Speaker 14: Nathan pen Dot says the temporary lanes of I ninety
Speaker 14: five will reopen today in Philadelphia. Cruz have been working
Speaker 14: twenty four to seven since the portion of the interstate collapsed.
Speaker 14: On June eleventh, Transportation Secretary Mike Carroll reached out to
Speaker 14: Ricky Durst at the Pocono Raceway to see if the
Speaker 14: state could use its dryer to keep moisture off the road.
Speaker 1: It is a jet engine.
Speaker 22: It's gonna blow out about fourteen hundred at fourteen hundred
Speaker 22: three spahrenheit.
Speaker 2: It's about three pounds of forty, As the.
Speaker 22: Secretary says, it's buckled into a shabby Silverado, so it's
Speaker 22: a little bit of Frankenstein theme.
Speaker 14: Pen Dot says during the asphalt paving there were concerns
Speaker 14: that rain would hold up repair crews. A judge just
Speaker 14: blocked Wyomi first in the nation ban on abortion pills
Speaker 14: before it was set to be implemented July first. Several
Speaker 14: states have banned abortion outright or restricted access to abortion pills.
Speaker 14: The ruling comes just ahead of the one year anniversary
Speaker 14: of the Supreme Court, essentially overturning Roe v. Wade in
Speaker 14: battle Congressman George Santos is slamming a judge for revealing
Speaker 14: his father and aunts were the ones who co signed
Speaker 14: a bail bond to keep him out of jail.
Speaker 18: My whole thing around keeping the sureties secret.
Speaker 6: What's for their safety? Because of the death threats I.
Speaker 18: Get, I can handle that I ran for public office,
Speaker 18: stated not you're private citizens.
Speaker 2: Ones a United States Postal worker, the other ones a painter.
Speaker 14: A request granted to when seal court records revealed the
Speaker 14: Long Island Republican's father and on co signed the five
Speaker 14: hundred thousand dollars bond that enabled Santos's release as he
Speaker 14: awaits trial on federal charges of fraud, money laundering, and
Speaker 14: theft of public funds. Prosecutors in New Mexico filed a
Speaker 14: new charge against the armorer on the set of the
Speaker 14: movie rust Annagutierras Reed is now accused of evidence tampering
Speaker 14: related to narcotics in connection with the fatal shooting of
Speaker 14: cinematographer Helena Hutchins. The FDA is doubling down on banning
Speaker 14: e cigarettes. It's warning store owners stop selling fruit and
Speaker 14: candy flavored vapes, saying they pose a danger to young people,
Speaker 14: Global news twenty four hours a day, powered by more
Speaker 14: than twenty seven hundred journalists and analysts in over one
Speaker 14: hundred twenty countries. I'm Michael Barr, and this is Bloomberg. Nathan.
Speaker 1: All right, Michael, thank you.
Speaker 18: Time now for the Bloomberg Sports Update with John Stashauer.
Speaker 19: All right, Nathan, and the Yankee game pretty much over
Speaker 19: before the Yanks came to the plate. They were already
Speaker 19: chilling Seattle four nothie. Mariners then scored twice in each
Speaker 19: of the next three innings. It was ten to enough
Speaker 19: it until in Isaiah Connor Fillff at two run homer
Speaker 19: bottom of the ninth. Ikf had pitched a perfect top
Speaker 19: of the ninth. Mariners won ten to two. Of getting
Speaker 19: swept Yankees os Texas tonight. Mets are in Philadelphia. They
Speaker 19: had good success with the Phillis last season, and they
Speaker 19: swept them a few weeks ago. But since that sweep,
Speaker 19: the Phillies have gone thirteen and four and the Mets
Speaker 19: have gone four and thirteen. The Jets back in March
Speaker 19: acquired veteran safety Chuck Clark from Baltimore. He tore his
Speaker 19: acl an off season practice. He'll miss the season, can
Speaker 19: Victor wem ben Yama live up to a tremendous amount
Speaker 19: of five nineteen years old from France, seven foot four,
Speaker 19: best NBA prospects since Lebron James drafted first overall by
Speaker 19: San Antonio and focusing on team goals.
Speaker 8: Some prers have tried to win the championship, win a
Speaker 8: ring for years and haven't made it, And I want to.
Speaker 8: I don't want to be one of those, you know,
Speaker 8: so you know the this is gonna be. My goal
Speaker 8: is going to be to get closer and closer every
Speaker 8: time to the ring.
Speaker 19: Charlotte with the second Cook took Alabama's Brandon Millard. Portland
Speaker 19: followed with Stude Henderson who played in the G League,
Speaker 19: and then Houston and Detroit and consecutive picks took twin
Speaker 19: brothers a men in Astair Thompson. The Nets back to
Speaker 19: back first picks took Noah Clowney from Alabama, then Dukes
Speaker 19: Derek Whitehead another big NBA trade. Chris Paul now goes
Speaker 19: from Washington to Golden State for Jordan Poole. Travelers Golf
Speaker 19: near Hard for Jenny McCarthy leads by two. Rory McElroy
Speaker 19: trails by eight, when McElroy had the first hole in
Speaker 19: one of his pro career John stash that went Bloomberg Sports.
Speaker 10: From coast to coast, from New York to San Francisco,
Speaker 10: Boston to Washington, DC, nationwide on Syrias exam the Bloomberg
Speaker 10: Business app in Bloomberg dot Com. This is Bloomberg Day Break.
Speaker 18: Good morning, I'm Nathan Hager. With the explosion of chat
Speaker 18: GPT over the past year, companies are looking to implement
Speaker 18: artificial intelligence across their businesses. But what will the future
Speaker 18: look like with AI in it? Open AI CEO and
Speaker 18: co founder Sam Altman joined our Emily Chang at the
Speaker 18: Bloomberg Technology Summit. They discussed existential questions about AI and
Speaker 18: what should be done to regular this powerful technology. Let's
Speaker 18: listen in to part of that discussion.
Speaker 26: Now, there's many ways it could go wrong, but we
Speaker 26: work with powerful technology that can be used in dangerous
Speaker 26: ways very frequently in the world, and I think we've
Speaker 26: developed over the decades good safety system practices in many categories.
Speaker 26: It's not perfect, and this won't be perfect either. Things
Speaker 26: will go wrong, but I think we'll be able to
Speaker 26: mitigate some of the worst scenarios. You could imagine, you know,
Speaker 26: bioterror is like a common example, cybersecurities another like many
Speaker 26: more we could talk about. But the main thing that
Speaker 26: I feel is important about this technology is that we
Speaker 26: are on an exponential curve and a relatively steep one,
Speaker 26: and human intuition for exponential curves is like really bad
Speaker 26: in general. It clearly was not that important in our
Speaker 26: evolutionary history, and so I think we have to given
Speaker 26: that we all have that weakness. I think we have
Speaker 26: to like really push ourselves to say, okay, GPT four
Speaker 26: you know not at risk like you're talking about there,
Speaker 26: but how sure we the GPT nine won't be And
Speaker 26: if it might be, even if there's a small percentage
Speaker 26: chance of it being really bad, like that.
Speaker 2: Deserves great care.
Speaker 27: And if there is that small percentage chance, why keep.
Speaker 11: Doing this at all?
Speaker 26: Like why not stop a I think that the upsides
Speaker 26: here are tremendous, you know, opportunity for everyone on earth
Speaker 26: to have a better quality education than basically anyone can
Speaker 26: get today. That seems like really important, and that'd be
Speaker 26: a bad thing to stop medical care And what's I
Speaker 26: think going to happen there and making that available, like
Speaker 26: truly globally. That's going to be transformative, the scientific progress
Speaker 26: we're going to see. I'm a big believer that, like,
Speaker 26: real sustainable improvements in quality of life come from scientific
Speaker 26: and technological progress, and I think we're gonna have a
Speaker 26: lot more of that.
Speaker 6: So there are all the.
Speaker 26: Obvious benefits, and you know, like I think it'd be
Speaker 26: good to end poverty, Like maybe you think we should
Speaker 26: stop a technology that can do that. I personally don't,
Speaker 26: but we got to manage through the risk to get there.
Speaker 26: I also think at this point, given how much people
Speaker 26: see the economic benefits and potential, no company could stop it.
Speaker 26: But global regulation, which I only think should be on
Speaker 26: these like powerful existential risk level systems. Global regulation is hard,
Speaker 26: and you know you don't want to overdo it for sure,
Speaker 26: but I think global regulation can help make it safe,
Speaker 26: which is a better answer than stopping it. I also
Speaker 26: don't think stopping it would work.
Speaker 27: Let's talk about the global regulation. You've been around the
Speaker 27: world meeting with regulators, you met with President Biden and
Speaker 27: the CEOs of Microsoft and Google, and you're calling for regulation,
Speaker 27: but with some caveats. The critics say it sounds like
Speaker 27: you're saying regulate us but not really, or that you
Speaker 27: are calling for regulation in public but lobbying for something
Speaker 27: else in private.
Speaker 18: How would you respond.
Speaker 26: To that we're pushing for it in private too. I mean, obviously,
Speaker 26: like we have some opinions about the ways to do
Speaker 26: it that'll be effective and it'll be ineffective. We for example,
Speaker 26: don't think small startups and open source models below a
Speaker 26: certain very high capability threshold should be subject to a
Speaker 26: lot of regulation. But also we think it is super
Speaker 26: important that as we think about a system that could
Speaker 26: be at a risk level, like you were talking about, that,
Speaker 26: we have a global and as a coordinated response as possible.
Speaker 26: So we've been talking about that publicly privately I think
Speaker 26: it's really important. You know, you could like point out
Speaker 26: that it's we're like trying to do regulatory capture here
Speaker 26: or whatever, but I just don't. I think that's like
Speaker 26: so transparently intellectually dishonest. I don't even know how to respond.
Speaker 27: You have an incredible amount of power at this moment
Speaker 27: in time.
Speaker 26: Why should we trust you?
Speaker 1: You shouldn't?
Speaker 26: You know me for a long time public talking like
Speaker 26: I'd rather be in the office working, But I think
Speaker 26: at this moment in time, like people deserve basically as
Speaker 26: much time asking questions as they want. I'm trying to
Speaker 26: show up and do it. But more to that, like,
Speaker 26: no one person should be trusted here. I don't have
Speaker 26: super voting shares. I don't want them. The board can
Speaker 26: fire me. I think that's important. I think the board
Speaker 26: over time needs to get like democratized to all of humanity.
Speaker 26: There's many ways that could be implemented. But the reason
Speaker 26: for our structure, and the reason it's so weird, is
Speaker 26: we think this technology, the benefits, the access to it,
Speaker 26: the governance of it, belongs to humanity.
Speaker 2: As a whole.
Speaker 26: If this really works, it's like quite a powerful technology,
Speaker 26: and you should not trust one company and certainly not
Speaker 26: one person.
Speaker 18: This is Bloomberg Daybreak Today, your morning brief on the
Speaker 18: story's making news from Wall Street to Washington and beyond.
Speaker 17: Look for us on your podcast feed at six am
Speaker 17: Eastern each morning on Apple, Spotify, and anywhere else you
Speaker 17: get your podcasts.
Speaker 18: You can also listen live each morning starting at five
Speaker 18: am Wall Street time on Bloomberg eleven three to zero
Speaker 18: in New York, Bloomberg ninety nine to one in Washington,
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Speaker 18: dot com.
Speaker 1: I'm Nathan Hager and.
Speaker 17: I'm Karen Moscow. Join us again tomorrow morning for all
Speaker 17: the news you need to start your day right here
Speaker 17: on Bloomberg Daybreak