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Speaker 3: We have a great voice writ in studio with us
Speaker 3: to kind of get to all things the President and
Speaker 3: the White House with us is Bloomberg News White House
Speaker 3: and Washington correspondent Jeff Mason here in studio. In the meantime,
Speaker 3: we will monitor, of course, the President's comments and bring
Speaker 3: you anything of substance. Jeff, good to have you here
Speaker 3: with us. I do want to stay with you. I
Speaker 3: guess it's I think fair you've been listening to this
Speaker 3: press conference, anything of note here that you think we
Speaker 3: should bring attention to and.
Speaker 4: Full of thanks only. First on Iran, he is suggesting
Speaker 4: that talks are going on, even though Aron says talks
Speaker 4: are not going on, and that just becomes a situation
Speaker 4: of who do you believe? And it's hard to answer
Speaker 4: that question. But my understanding is there are at least
Speaker 4: some sort of context going on, but who that is
Speaker 4: or who it's with seems to be up in the air.
Speaker 4: It's also you know where they are, well, I'm not
Speaker 4: sure that they're physically like that everyone is in one place.
Speaker 4: There are a couple intermediaries who have been part of
Speaker 4: this process from the from the get go, Oman being
Speaker 4: one of them, and that Iran recognized or acknowledged that
Speaker 4: Oman was, that they were in touch with him Oman
Speaker 4: about this, But it's it's just hard. It's hard to
Speaker 4: know because the president says these things, and it's certainly
Speaker 4: very important to him to show that there's a pathway
Speaker 4: to peace because he doesn't want this to go on forever.
Speaker 4: But it's it's tricky.
Speaker 5: What is that pathway though?
Speaker 4: Yeah, it's it's unclear to me. I wish he were
Speaker 4: here so that we could we could ask him, I mean,
Speaker 4: and to go back to just some of the things
Speaker 4: that he said just now. He said that the Strait
Speaker 4: is going to open, the Straight of war moves is
Speaker 4: going to open tomorrow, and that there will and there
Speaker 4: will be no tolls or no fines. Well, that is
Speaker 4: the opposite of what Iran is saying, and it's also
Speaker 4: the opposite lesson, or it ignores the fact that Iran
Speaker 4: has learned the lesson over the last six months, that
Speaker 4: it has the control that it has. So it's it's
Speaker 4: pretty hard to imagine that they're just going to give
Speaker 4: that up, and the President is not acknowledging that at all.
Speaker 3: What about are they going to give up their access
Speaker 3: to have nuclear weapons?
Speaker 5: You know?
Speaker 4: Another piece of that is that the President will say
Speaker 4: and set over the weekend and and may have suggested
Speaker 4: it again today, that Iran is not going to have
Speaker 4: a nuclear weapon, and we can do this quickly. It
Speaker 4: took a year and a half for what was called
Speaker 4: the JCPOA, the Iranian Nuclear Agreement that was done during
Speaker 4: the Obama years, to be negotiated. They're nowhere near that
Speaker 4: kind of an agreement right now that I can say
Speaker 4: with full confidence.
Speaker 3: And the President did say that would be the second
Speaker 3: stage opening this straight would be the first phase.
Speaker 4: Right and because that first phase is probably more politically
Speaker 4: important to him to get that done, because that's the
Speaker 4: Pandora's box that was opened after the war started, the
Speaker 4: war started by Israel and the United States. That was
Speaker 4: not a problem before this war and is now for
Speaker 4: the world economy and certainly for the United States.
Speaker 6: Yeah, an important reminder, you know, as of February twenty
Speaker 6: seventh of this year, that the Strait was open. Yeah,
Speaker 6: so correct, it would be just going back to what
Speaker 6: it was before the war.
Speaker 4: Yeah, And it's just you know, certainly the president wants
Speaker 4: that status quo to be returned, but the Iranians have
Speaker 4: shown really no willingness to go back to the status quo.
Speaker 2: Jeff.
Speaker 3: There's been a lot of polling that has been done
Speaker 3: as of late in the last week or so, and people,
Speaker 3: the Americans, when it comes to the war, they say
Speaker 3: thirty one percent theyreon war is not worth it or
Speaker 3: worth it. Excuse me. Thirty one percent say it's worth it.
Speaker 3: Sixty six percent say it's not worth it. This is
Speaker 3: the Quiniapiac poll. In terms of job approval, thirty two
Speaker 3: percent approve of the president's job, fifty eight percent disapprove
Speaker 3: of it. Polls or polls post be wrong. I don't know,
Speaker 3: as someone who covers the White House and the President
Speaker 3: inside and out, does he look at these things, Does
Speaker 3: he care about these things?
Speaker 4: Yeah, for sure he does. And I think one reason
Speaker 4: or One example of how closely he's following it is
Speaker 4: he sent out some alternative polls today on his truth
Speaker 4: social account. So he wants people to think a that
Speaker 4: they're better than they are and b that he's not
Speaker 4: paying attention to these other public ones. He absolutely is.
Speaker 4: And I would say also as a longtime political reporter
Speaker 4: that speaking to people in all of these orbits, the democratics,
Speaker 4: the Republican side, regardless of who's in power in the
Speaker 4: White House, they keep a close eye on these polls
Speaker 4: because it translates into they've translated into votes, and if
Speaker 4: approval ratings are high, that would suggest that the midterms
Speaker 4: are going to go better for his party. The fact
Speaker 4: that his approval ratings are low is almost certainly going
Speaker 4: to hurt his party if it doesn't get a turnaround
Speaker 4: between now and November.
Speaker 6: I'm glad you brought up midterms because the President also
Speaker 6: made some comments about what he calls the Save America
Speaker 6: Act Yes, which is facing some challenges in Congress right now.
Speaker 6: If Congress doesn't vote on this before the midterms, is
Speaker 6: this bill dead?
Speaker 4: Probably, because I mean, they could start it up again
Speaker 4: next year, but a bill has to become has to
Speaker 4: be go through the legislative process within the two year
Speaker 4: legislative calendar, So that's going to reset in January. If
Speaker 4: they don't get it done now, and there's very little
Speaker 4: sign that it's going to get done now. They may
Speaker 4: or they are trying to bring in some of the
Speaker 4: aspects of the Same America Act into the budgetary process.
Speaker 4: But President Trump wants more and he just doesn't have
Speaker 4: the votes, certainly not from Democrats and also not from
Speaker 4: enough Republicans, and that's been a thorn in his side
Speaker 4: for weeks now.
Speaker 3: Maybe silly question, is he losing any of his power?
Speaker 3: Like it does feel like he still holds so much
Speaker 3: sway when it comes to what gets done or doesn't
Speaker 3: get done. Jeff, But I think about, you know, I
Speaker 3: don't know, is he losing some of, you know, his
Speaker 3: ability to really get certain things done.
Speaker 4: I don't think that's a silly question. I think that's
Speaker 4: something we're all watching. And some of the signs of
Speaker 4: that or some of the signs of whether maybe his
Speaker 4: power is eroding have come from the senators who are
Speaker 4: willing to stand up to him. Pretty important to note
Speaker 4: that those are senators who are on their way out
Speaker 4: and the President has emphasized that that they're lawmakers who
Speaker 4: he did not endorse, and therefore he thinks that they're
Speaker 4: upset with him for that and they're going to have
Speaker 4: to retire in January. But even so, they have Corn
Speaker 4: and Tillis, for example, have have pushed this this issue
Speaker 4: of the fund as a as a key negotiating tool
Speaker 4: over Todd Blanche and clearly also a thorn in the
Speaker 4: President's side because he said just now that he wasn't
Speaker 4: involved in whatever Todd Blanche agreed.
Speaker 3: How can I throw in pirol like her like backing off?
Speaker 6: It seems to he just said she made a mistake.
Speaker 3: She made a mistake, but she did it. No, And
Speaker 3: I feel like if you'd gone six seven months ago,
Speaker 3: I don't know if that would have happened.
Speaker 2: I don't know.
Speaker 4: Yeah, I mean, that's that's such a great minor, but
Speaker 4: it's just it's minor, but it's it's sort of like
Speaker 4: destroying part of the well all of the East Wing
Speaker 4: without giving permission and then talking about it later. It's
Speaker 4: it's a metaphor for how things are going for him
Speaker 4: right now. And it's certainly got to be fascinating in
Speaker 4: her office because there is a difference between saying something
Speaker 4: that's not true and pushing that story on truth social
Speaker 4: or in the oval office or wherever the president and
Speaker 4: some of his cabinet members are talking about the reflecting pool.
Speaker 4: There's an entirely different setting when you have to say
Speaker 4: it in.
Speaker 3: Court and you know the President's going to react.
Speaker 4: No doubt, and he has. But she couldn't prove it.
Speaker 4: And in fact, what she could show is that there
Speaker 4: were problems with the installation, and that's the opposite of
Speaker 4: what he wants to hear. But that certainly appears to
Speaker 4: be the honest truth.
Speaker 5: Jeff.
Speaker 6: One thing that is I think of interest to our
Speaker 6: audience is President's comments about oil companies.
Speaker 5: Just in the last few minutes.
Speaker 6: He said that oil firms better cut the retail price.
Speaker 6: He said that Exon and Chevron are making too much money.
Speaker 6: Both of those companies actually extended their declines after the
Speaker 6: President made those comments. X On Mobiles down about four
Speaker 6: tens of one percent, Chevron down about one point nine percent.
Speaker 6: Can you just explain sort of the tension between a
Speaker 6: traditional and I don't want to say you use the
Speaker 6: word traditional, but like the idea of a free market
Speaker 6: and the close relationship that historically many Republican presidents have
Speaker 6: had with oil companies. Sure, indeed, the close relationship that
Speaker 6: we've seen all those CEOs at the White House, especially.
Speaker 5: In the wake of what happened in Venezuela.
Speaker 6: But the President now making comments like this, and what
Speaker 6: the repercussions of that could be.
Speaker 4: Sure, So a couple of things. Number one, him saying
Speaker 4: that puts him in almost in democratic territory, because I
Speaker 4: could certainly imagine hearing a President Joe Biden or a
Speaker 4: President Barack Obama going out and criticizing oil companies over prices.
Speaker 4: So there's a populist aspect to that. I also think
Speaker 4: it's you know, it's instructive to remember that President Trump
Speaker 4: sees the world politically, business wise, diplomatically through a lens
Speaker 4: of his own making. That's related to him. And right
Speaker 4: now it's bad for him politically that gasoline prices are
Speaker 4: so high, so he would like to see those come down,
Speaker 4: surely to help Americans, but also to help his political
Speaker 4: prospects and the political prospects of his party. But it
Speaker 4: is certainly not in line, as many other things are
Speaker 4: not with traditional Republican orthodoxy in terms of business and
Speaker 4: the relationship with business.
Speaker 3: Again, as we like to say, it's a shame nothing's
Speaker 3: going on when it comes to you can go on.
Speaker 3: I just want to point out CNN reporting that the
Speaker 3: President is weighing removing Janine Piro over the reflecting pool.
Speaker 3: So this is just setting some sources on the present
Speaker 3: thinking about it. So there we go.
Speaker 4: Thank you so much, my pleasure.
Speaker 3: We were looking forward to this. So great to have
Speaker 3: you here. I gotcha, all right, talk to you too.
Speaker 3: Jeff Mason, Bloomberg News, White House and Washington Correspondent, joining
Speaker 3: us right here in studio.
Speaker 5: Stay with us.
Speaker 6: More from Bloomberg Business Week Daily coming up after this.
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Speaker 3: Our next guest now with some research. Always a must read.
Speaker 3: It's always on the Bloomberg Everybody talking about it on
Speaker 3: Wall Street. We talk about it a lot in the newsroom.
Speaker 3: Torsten slock is with US, chief economist and partner to
Speaker 3: Apollo Global Management here in studio. Good to have you
Speaker 3: here with us, so many different places to start, and
Speaker 3: I do want to talk about the sixty to forty portfolio.
Speaker 3: President Trump we watched and what he's doing with policies.
Speaker 3: We talk about AI a lot. We're going to get
Speaker 3: into that. You know, the FED. Do you just look
Speaker 3: at it all or like first thing in the morning,
Speaker 3: what do you want? Do you want to check what's
Speaker 3: going on in Asia? Like is it everything that is
Speaker 3: a priority right now?
Speaker 5: Yeah?
Speaker 7: No, absolutely, I mean the agenda is certainly first. Ve
Speaker 7: Ryan is very important. Ship's going to sail through the
Speaker 7: straight up AMusA, not to how much all that is
Speaker 7: going to get to live. But that continues to be
Speaker 7: a very important risk because if we do run dry
Speaker 7: in tanks, especially in Europe, then we may run out
Speaker 7: of marine fuel, of jet fuel, of fertilized of helium,
Speaker 7: and obviously this creates a jump risk in prices, especially
Speaker 7: for energy, and they're still.
Speaker 3: A risk even though that like back and forth, I
Speaker 3: know it's markets look through it.
Speaker 7: You're right, Carol, because this hasn't been an issue for
Speaker 7: a while because we've been so busy with the FIT
Speaker 7: and with AI. But in the background, this continues unfoltunately
Speaker 7: to still be very very important because the literally is
Speaker 7: the case that we could have some tanks catch to
Speaker 7: critical levels. Yes, there's still, of course fuel running in
Speaker 7: the pipes and the systems have to function, but we
Speaker 7: don't know what that level of critical level of inventory is.
Speaker 7: And the risk is when we don't have twenty percent
Speaker 7: of oil that's supposed to be delivered every day coming
Speaker 7: through the strait up a moose of Babel Mante. The
Speaker 7: consequence is that we still have this in the background
Speaker 7: as again jump risk and oil prices in particular and
Speaker 7: ultofi agricultural prices. So yes, this just adds to the
Speaker 7: other things about WASH's press conference and AI and all
Speaker 7: the other things we can talk about.
Speaker 6: But one more on one of oil and iron before
Speaker 6: we get there. It does seem like the oil market
Speaker 6: and we just heard from Jeff Mason who said, we
Speaker 6: have no idea what the talks are happening between the
Speaker 6: US and Iran right now, and this inflict oil prices
Speaker 6: there are down five percent of whether we're talking or
Speaker 6: brand or WTI. Is the oil market getting this right
Speaker 6: or is it getting it wrong?
Speaker 7: Well, this is quite remarkable that oil prices have been
Speaker 7: through this roller coaster of going up and down and
Speaker 7: seem to have a much stronger opinion about whether a
Speaker 7: deal is having or not, whereas people in raids and
Speaker 7: in the economics and in the region they have a
Speaker 7: much more nuanced view of Hey, if there is no
Speaker 7: sign of a deal, and if we have a deal,
Speaker 7: then there is a bigger risk that we could eventually
Speaker 7: run dry. So that's why the clock is truly ticking
Speaker 7: on oil inventories, and the more that ticks, the high
Speaker 7: is the risk. Remember there is now two months ago
Speaker 7: that the head of the EIA said that we were
Speaker 7: six weeks away.
Speaker 5: From Europe running out of jet fuel.
Speaker 7: Now we thankfully have not reached that point quite yet,
Speaker 7: but it's very clear that we literally have zero ships.
Speaker 7: If I look at my bloombergy screen e Ken Homos,
Speaker 7: zero ships coming through the strait up Homusa and Bubble Montep.
Speaker 7: At the moment, that is still a very significant risk
Speaker 7: in the background. It's difficult to quantify. Who knows if
Speaker 7: this is tomorrow, next week, or next month. But if
Speaker 7: the Iranians continue with this onto the midterm election, I
Speaker 7: feel very confident that then we will have the risk
Speaker 7: that we could see inventory and remember Nice Airport ran
Speaker 7: out of jet fuel three weeks ago, so this is
Speaker 7: also not just an academic exercise. This is something that's
Speaker 7: really truly happening, not only for jet fuel, also for
Speaker 7: marine fuel, other types of fuel, and of course also
Speaker 7: agricultural products such as fertilized on helium.
Speaker 3: Maybe this is why fed cheer Kevin Worsh was so
Speaker 3: general broad Macro and I want to play something for
Speaker 3: you because Double one Capito's Jeff Gunlock called out Michael
Speaker 3: McKee on X, noting that Mike's question out last week's
Speaker 3: FOMC press conference. He wrote, the greatest financial media moment
Speaker 3: year to date was Michael McKee teeing up and then
Speaker 3: delivering what are you waiting for? To fed cheer Worsh.
Speaker 3: Listen up, everybody. Here's what Mike had to say at
Speaker 3: the FOMC press conference last week.
Speaker 8: What vetting did you do of the people that you
Speaker 8: appointed to the task forces? In particular, given Mark Andresen's
Speaker 8: substantial political spending twenty five million dollars in just the
Speaker 8: past year to back candidates who oppose stricter IAI regulation,
Speaker 8: how can the public be confident that a committee he
Speaker 8: co chairs will provide an independent assessment of AI's economic
Speaker 8: effects rather than one aligned with the interests of the
Speaker 8: AI industry.
Speaker 9: Yeah, so I selected fifteen incredible subject market subject matter
Speaker 9: experts to tackle five of the most important questions that
Speaker 9: if we get the answers right, we're going to do
Speaker 9: a far better job in delivering. And if we get
Speaker 9: the answers wrong, we have a problem. The comfort that
Speaker 9: I can give you and your listeners is all right.
Speaker 3: We're going to get out of that. That was actually
Speaker 3: not the SoundBite we wanted to play, but that was
Speaker 3: Kevin Warsh with Michael McKee. But Mike was basically saying
Speaker 3: what are you waiting for? And Torsten, you obviously watched it.
Speaker 3: He just was so general, Macro, What did you take
Speaker 3: away from Kevin Walsh last week?
Speaker 7: Well, I think the market reaction speaks to Mike's question
Speaker 7: naming what are we waiting for? Why didn't you just
Speaker 7: hig rates the fact that they didn't do that. Yeah,
Speaker 7: and the market reaction with a very very steep curve.
Speaker 7: Of course you should have high rates at least. Now
Speaker 7: we're beginning to ask questions in markets about well, do
Speaker 7: you have the commitment to raise rates. Do you really
Speaker 7: think inflation will be two percent? And if you think so,
Speaker 7: what is the road to getting to two percent? Are
Speaker 7: you going to use the balance sheet? Are you going
Speaker 7: to use the fit funds rate? Are you going to
Speaker 7: use tiger financial conditions? He should be able to answer,
Speaker 7: shouldn't He did talk about tighter financial conditions, which may
Speaker 7: have added a bit to the confusion, because it becomes
Speaker 7: really really important for the yeal curve whether you pick
Speaker 7: to do this through a stronger balance sheet meaning lower
Speaker 7: balance sheet, whether you do this through higher rates, or
Speaker 7: whether you do this through tide of financial conditions, Because
Speaker 7: if you trade rates, you of course will have a
Speaker 7: strong view on how is it that the fate is
Speaker 7: going to achieve the two percent goal? And you could
Speaker 7: say in theory that we want to do this through
Speaker 7: a smaller balance sheet, but we didn't even get an
Speaker 7: answer to that. So that's why people are not beginning
Speaker 7: to wonder, Okay, there's more volatility in markets. We have
Speaker 7: a steeper curve, more questions being asked. So therefore, if
Speaker 7: they don't hike in September, of course, then the market
Speaker 7: will just ask given more questions about what what is now?
Speaker 5: The plan. Can you do it through a fewer meetings
Speaker 5: a year?
Speaker 7: Well, that's one way of doing it, but that doesn't
Speaker 7: change the facts that the.
Speaker 5: Market frame is.
Speaker 6: The New York Times reporting on Friday night that I
Speaker 6: saw that that the FED could have fewer meetings.
Speaker 3: Yeah.
Speaker 7: Absolutely, And I think that that, of course would change
Speaker 7: the game quite significantly if they were to go to
Speaker 7: the legally manded only four meetings a year. But it's
Speaker 7: very clear still that even that debate, the market will
Speaker 7: still try to price the FED at every single moment
Speaker 7: in time.
Speaker 5: And that basically means that.
Speaker 7: We have a situation where the market constantly needs to
Speaker 7: think about how might the FIT interpret the incoming data? Right?
Speaker 5: Got, Well, I guess what it does?
Speaker 6: It mean that we hear more from the FED speakers
Speaker 6: and their sort of job owning between meetings. I'm just
Speaker 6: trying to understand a world we live in with less communication.
Speaker 6: If you want the market to serve as sort of
Speaker 6: the benchmark for the.
Speaker 5: FED, I don't know.
Speaker 7: I think the toothpaste will come out one way or
Speaker 7: the other other. IFMC members will begin to have speeches
Speaker 7: where they say is what I think, and normally some
Speaker 7: of these I FMC members. They don't get a lot
Speaker 7: of weight as such from financial markets, but today they
Speaker 7: are given a lot of weight because if the chair
Speaker 7: I decided to say I'm not giving not even forward
Speaker 7: guidance but also not framework guidance, then of course others
Speaker 7: who are willing to talk about not even framework guidance
Speaker 7: and forward guidance, but just give a description of the
Speaker 7: data and talk about how do they think the data
Speaker 7: could be evolving? I think that is going to get
Speaker 7: a lot more weight. Which is why when Beth Hammer
Speaker 7: puts something on LinkedIn on a Sunday afternoon, this suddenly
Speaker 7: gets people sent this to me all Sunday evening and
Speaker 7: say what do you think? How should we think about this?
Speaker 7: And this suddenly becomes really really important because the market
Speaker 7: is constantly trying to figure out what is the trajectory
Speaker 7: of where rates are going?
Speaker 3: Right exactly, I want to get to the sixty forty
Speaker 3: portfolio that we've talked about forever right being broken? Why so?
Speaker 3: And you have an AI aspect.
Speaker 7: To this, Yeah, So the really important aspect of this
Speaker 7: discussion is the following. The sixty to forty portfolio was
Speaker 7: really truly a stroke of genius when he was invented
Speaker 7: because remember, if my stocks go up normally my bunt
Speaker 7: prices go down.
Speaker 5: That means insist rates go.
Speaker 7: Down, and that means I make money on stocks and
Speaker 7: I may lose something on my bonds vice versa. And
Speaker 7: when the stock market goes down, then punt prices go up.
Speaker 7: In other yelds go down, and that means of course
Speaker 7: that I make money either on bunds or made money
Speaker 7: and equities somewhat somewhat randomly, then pick sixty forty. This
Speaker 7: was the weights, and it made sense in an environment
Speaker 7: where the business cycle goes up and down, sometimes I
Speaker 7: should have in stocks. Sometimes we're having a rate. So
Speaker 7: if that's the case, this was a very good way
Speaker 7: to balance your portfolio. The problem today is the following, namely,
Speaker 7: today's stocks i've really is driven by AI, is not
Speaker 7: driven so much by the business cycle, and it's highly concentrated,
Speaker 7: with the ten biggest stocks making up forty percent of
Speaker 7: the basket. So that means that the AI story has
Speaker 7: become absolutely critical as a driver of the stock market,
Speaker 7: and the fiscal situation has become a very important driver
Speaker 7: of the BoNT market because now we have significant fiscal
Speaker 7: problems we have the fact that rates have been going up,
Speaker 7: the term premium has been going up, and therefore that's
Speaker 7: also not necessarily a function of what the business cycle
Speaker 7: is doing. So suddenly have two new factors that have
Speaker 7: been a key driver of equity named the AI and
Speaker 7: a key driver of bond markets, namely fiscal which are
Speaker 7: not a function of whether the economy goes up and down.
Speaker 7: And therefore we may no longer have the property that
Speaker 7: you make money on one side and lose on the other,
Speaker 7: but you may actually lose on both.
Speaker 3: We've often said, and we've said that when you see
Speaker 3: the markets like both stocks and bonds going up in tandem,
Speaker 3: which is just unusual, right to see that in any
Speaker 3: given trade. Having said that, big tech Torsten has been
Speaker 3: disproportionately moving the market even before we start talking a
Speaker 3: lot about AI. Is there something different as AI though
Speaker 3: that trade on steroids and even further disconnecting us from
Speaker 3: the business side.
Speaker 7: Yeah, let's think about that exactly at this moment in
Speaker 7: the sixty forty context, because AI, of course is highly
Speaker 7: concentrated in equity, so AI better work out otherwise equities
Speaker 7: will not go up. So if at the same time,
Speaker 7: AI companies are issuing a lot of debt that takes
Speaker 7: money out of treasury markets into buy a hyperscale at debt.
Speaker 7: So in that sense, even the bond side of my
Speaker 7: portfolio is also being impacted. And by the way, is
Speaker 7: also now AI. So certainly I had AI everyone in equities.
Speaker 7: I also have AI in investment, great credit, and by
Speaker 7: the way, venture capitalist eighty seven percent is also AI.
Speaker 7: So now my whole pie shot is actually all AI.
Speaker 7: So certainly there's one facts of driving everything I'm doing.
Speaker 7: And if there's one thing we'll learn in finance is
Speaker 7: facts on investing, and one factor is driving all returns
Speaker 7: at the moment. Name the AI is inequities, AI is
Speaker 7: in everyone in public credit, and AI is also in
Speaker 7: ventor capsule. So the best recommendation today is to be
Speaker 7: not in AI, because that gets you away from this
Speaker 7: one factor that is driving markets at the moment.
Speaker 3: You did say in your note, if the real risk
Speaker 3: emerges that the AI trade reverses or markets become more
Speaker 3: worried about government deficits in either snario, both stocks and
Speaker 3: bonds with face pressure simultaneously leaving investors with no hedge,
Speaker 3: which is what you basically said what happened with situational
Speaker 3: awareness the hedge fund? Is that a sign to you
Speaker 3: of the AI trade reversing? Like, what's your read on that?
Speaker 3: And I have no idea if Apollo is interested in
Speaker 3: the assets, share what you'd like? Yeah, but is that
Speaker 3: the beginning of a little canary in the colma.
Speaker 7: Well, what was of course very unusual about this is
Speaker 7: that it didn't take much decline in the AI trade and.
Speaker 5: Cuttainly that was a blow up.
Speaker 7: It was a bit of a coincidence that this was
Speaker 7: the specific fund you mentioned, But it's very clear that
Speaker 7: the AI trade there's a lot of level ETFs at
Speaker 7: the moment, there's a lot of people that are having
Speaker 7: levered bets on AI can only go one way.
Speaker 5: Name you up.
Speaker 7: And we're now finding out where the underperformings of growth
Speaker 7: for the last four months is very very substantial. Value
Speaker 7: has been outperforming. That's exactly telling you that in a
Speaker 7: sixty to forty framework, growth is just becoming more risky,
Speaker 7: simply because the AI story is beginning to also become
Speaker 7: more vulnerable, especially with this debate about open source models
Speaker 7: relatives the closed source models. If the Chinese models come
Speaker 7: and dominate, that will then, of course take market share
Speaker 7: from the closed source models, and the question is how
Speaker 7: big is that eating into the market share going to be?
Speaker 3: The narrative has changed a lot from where we were
Speaker 3: three years ago. Tourist and Slot, thank you so much
Speaker 3: and thanks for hanging around. We really wanted to talk
Speaker 3: with you. His chief economist at Apollo Global Management joining
Speaker 3: us here in studio.
Speaker 2: If you were listening to the Bloomberg Business Weekdaily podcast,
Speaker 2: catch us live weekday afternoons from two to five pm
Speaker 2: Eastern Listen on Apple CarPlay and Android Auto with the
Speaker 2: Bloomberg Business app, or watch us live on YouTube.
Speaker 3: Let's get to the hospitality sector because Marriott International shares
Speaker 3: we've seen them under some pressure after the company said
Speaker 3: that room growth for twenty twenty six would likely come
Speaker 3: in at the lower end of earlier because driven by
Speaker 3: construction delays in the Middle East. Middle East.
Speaker 5: I mean, we'll talk about implications of this war and Iran.
Speaker 3: It keeps coming and making its way, right, all right.
Speaker 3: So we've got that stock down about six point four percent.
Speaker 3: Hyatt was out though last Thursday.
Speaker 6: Yeah, stock traded down. The company cut its net income
Speaker 6: guidance for the full year. The guidance missed. The average
Speaker 6: analyst estimates the S and P Composite Hotels, Resorts and
Speaker 6: Cruise Lines index. That's up about three percent here todate,
Speaker 6: so underperforming the broader sector.
Speaker 3: All right, so let's get to it. Let's talk about
Speaker 3: the group. Lizzie dev Is with US US Gaming, Lodging
Speaker 3: and Leisure research analyst over at gold mind SAX, joining
Speaker 3: us here in studio. Welcome, Welcome. We love this area.
Speaker 3: It tells you, yes, about the consumer, but it also
Speaker 3: tells you about business travel and so on and so forth.
Speaker 3: Walk us through, first of all the earnings that we've
Speaker 3: gotten and what it's telling us so far.
Speaker 10: Well, what's really interesting is as a by vacation, we
Speaker 10: are in one of actually the best travel environments for
Speaker 10: the US that we've seen in a long time. US
Speaker 10: RevPAR is up five percent now the prominent per room
Speaker 10: revenue per room that's basically they're the key matri pricing
Speaker 10: and occupancy. Now, what's the problem or the offset to
Speaker 10: that is two things. One unit growth is coming in
Speaker 10: a little bit lighter, so that's new hotel rooms. And two,
Speaker 10: as you said, the Middle East is an offset there.
Speaker 10: The pressure there has been higher than expected, and that's
Speaker 10: impacting not just overall pricing in that area, but also
Speaker 10: rooms growth of construction.
Speaker 6: Does it become does that become at a certain point
Speaker 6: if this conflict goes on for so long, Like I
Speaker 6: don't want to say permanent, because nothing is permanent, but
Speaker 6: something that like uh is the next thing to permanent.
Speaker 6: Like companies are saying, Okay, we're actually abandoning construction projects there.
Speaker 11: We're not there yet. I think we're a long way
Speaker 11: off from that.
Speaker 10: And the one thing that I think is good and
Speaker 10: maybe misunderstood by the market is take Marriott for example,
Speaker 10: the Middle East is only about seven percent of their pipeline,
Speaker 10: and that's all of the Middle East, and there's a
Speaker 10: bifurcation in the mid You see trends in Dubai that
Speaker 10: have been down fifty percent sixty percent on pricing, but
Speaker 10: areas like Saudi Arabia that are seeing thirty percent positive pricing.
Speaker 10: So there's a bification even in that Middle East. So
Speaker 10: even if we do see some structural erosion there, there's
Speaker 10: enough power within it and there's a small enough segment
Speaker 10: for the hotel's companies.
Speaker 3: That's a bigger share than I would have thought, really
Speaker 3: that's but I guess so is that where the growth
Speaker 3: is too.
Speaker 11: It is where a lot of the growth is.
Speaker 10: I think what the point is that we are now
Speaker 10: kind of in phase two of lodging growth. We've had
Speaker 10: a lot of growth in the US. There's still more
Speaker 10: to go in the US. But the real next big
Speaker 10: growth opportunity it's Asia, It's Middle East, it's Europe, it's
Speaker 10: last it's ex US.
Speaker 11: For the most part, there's a.
Speaker 3: Story on the Bloomberg Lizzie. The post pandemic travel boom
Speaker 3: is starting to lose stream as high fuel prices, the
Speaker 3: war in Iran, and persistent flying headaches deterred travelers from
Speaker 3: booking international trips for this year's peak summer season. Now
Speaker 3: everybody in the last two years was going to Italy
Speaker 3: or I feel like Japan. Are you seeing this.
Speaker 10: Also a little bit? A little bit, but it's at
Speaker 10: the margin. I think the bigger kind of question or
Speaker 10: debate that investors are having is it's almost the travel
Speaker 10: environment for the US and Europe, to be fair. So
Speaker 10: far has been so good. The World Cup, for example,
Speaker 10: that added about one hundred bases points to pricing just to.
Speaker 11: U US alone, and it's.
Speaker 10: What's so good today makes for a tough comp for tomorrow,
Speaker 10: and so investors are pre trading that deceleration now that
Speaker 10: some of these idiosyncratic tailwinds and now starting to fade,
Speaker 10: and some of the concerns that you mentioned as well
Speaker 10: come into the picture.
Speaker 6: There were concerns in the last jobs report that we
Speaker 6: got about hospitality because there was an idea that the
Speaker 6: World Cup would actually bring workers into those jobs. Do
Speaker 6: we see on Friday that that actually came true?
Speaker 10: You know, yes and no, Yes and no. And I
Speaker 10: think what we're seeing in these reports, and not just
Speaker 10: from the Jobs report but also just generally across kind
Speaker 10: of consumer dashboards is again there's this bifurcation where you
Speaker 10: have this K shaped economy where the hiring keeps doing better.
Speaker 11: That hasn't gone away. I think people thought it would.
Speaker 10: Broaden out more this year to you know, the third
Speaker 10: and fourth quarter house.
Speaker 11: We haven't seen it.
Speaker 10: And that's why you do see people like Mario on
Speaker 10: the pricing side doing a little bit better than is.
Speaker 10: You know, some of the windows and choices of the world.
Speaker 3: What are we seeing business versus kind of we yeah,
Speaker 3: regular people, they.
Speaker 6: Probably I think we travel more for business regular people.
Speaker 3: Actually, that's a really good point.
Speaker 11: Yeah, well that's a blend.
Speaker 10: You know that the two have become very intermingled, as
Speaker 10: you mentioned, but both grown.
Speaker 3: There's no family coming along. They're pretty quick trip sometimes.
Speaker 11: Yeah, both are growing.
Speaker 10: Both are growing, and that's actually something that's interesting is
Speaker 10: but the first time we really have seen quite a nice,
Speaker 10: low single digit plus kind of growth in business.
Speaker 11: Travel this year.
Speaker 10: Yeah, so that's broadened out hotel demand a little bit
Speaker 10: more into that midweek, but leisure has really been the
Speaker 10: biggest leading indicator.
Speaker 6: You also cover the cruise lines, uh, Charlie Pellette, big
Speaker 6: cruise guy. Yeah, but those companies getting hit with higher
Speaker 6: fuel prices too, of course. What it's a good measure
Speaker 6: of the consumer and a certain type of consumer depending
Speaker 6: on which cruise line we're talking about broadly, How is
Speaker 6: that industry doing?
Speaker 11: You know, it's interesting.
Speaker 10: It's been a top twenty twenty six for sure.
Speaker 11: I think first time.
Speaker 3: I'm so surprised because you go back to last year
Speaker 3: and I feel like, yeah, everybody off.
Speaker 5: The charts, they're booking for summer already.
Speaker 3: Visibility booking's way out. What happened?
Speaker 10: Yeah, what happened? A couple of things. So firstly, fuel
Speaker 10: to your point, there's not much that they can do
Speaker 10: to offset that. They haven't done surcharges like the airlines have,
Speaker 10: so that's just the cost that they have to absorb. Secondly,
Speaker 10: there is a perceived safety impact for US travelers going.
Speaker 11: To Europe on a cruise.
Speaker 10: They just don't want to be on the water in
Speaker 10: the Mediterranean, even though it is far from the Middle East.
Speaker 10: So that's what we've seen here. But it's kind of
Speaker 10: the opposite of lodging, where you have kind of trough
Speaker 10: trends or weakening trends this year that now people are
Speaker 10: thinking could make for really great twenty twenty seven for cruise.
Speaker 10: We don't have a crystal ball on the Middle East conflict,
Speaker 10: but to the extent that we see some kind of
Speaker 10: resolution their long term, it could set up for really really.
Speaker 11: Strong recovery on cruise. And that's my view.
Speaker 3: People who like to cruise, they'll like to cruise and
Speaker 3: they go back absolutely, second, third, fourth time, Bring the family,
Speaker 3: bring the grandparents like they just do it. This was fine,
Speaker 3: come back, yeah, please, we would love it. She's US Gaming,
Speaker 3: Lodging and Leisure research analyst over at gold Minsec.
Speaker 5: Stay with us.
Speaker 6: More from Bloomberg Business Week Daily coming up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 6: All right, A five hundred and six million dollars bet
Speaker 6: on thousands of New York rent stabilized departments has already
Speaker 6: soured for bond investors. Mayor Mom Donnie's rent freeze threatens
Speaker 6: to make it even worse. The commercial property bond it's
Speaker 6: backed by the mortgage on fifty three buildings across Queens, Brooklyn, Manhattan,
Speaker 6: and the Bronx has piled up more than five point
Speaker 6: five million dollars in past due interest after payments to
Speaker 6: its riskiest tranches fell short. Analyst at KBRA Credit Profile
Speaker 6: valued the properties that around four and sixty million, compared
Speaker 6: with an appraisal about seven hundred and seventeen million when
Speaker 6: the bonds were sold five years ago, implying losses of
Speaker 6: more than eighty million dollars for bond holders.
Speaker 3: Yeah, that'll certainly get catch our attention. It did back
Speaker 3: with us to talk about this and more. Is ron
Speaker 3: Us Off. He is founder and managing director of north
Speaker 3: Wyn Group. It's an institutional real estate credit platform in Manhattan.
Speaker 3: Has transacted over ten billion dollars of real estate transactions,
Speaker 3: covering a portfolio of over four hundred properties. So he's
Speaker 3: seen a bunch of deals. He's back here in our
Speaker 3: Bloomberg Interactive Broker studio.
Speaker 12: How are you great? Thanks Carol, Thanks Tam, great having
Speaker 12: me You too, you too?
Speaker 6: You know, we had this great conversation with you. I
Speaker 6: couldn't remember if it was right after Mayor mom Donnie
Speaker 6: won the primary and it was clear that he was
Speaker 6: going to be a winner. It was after he won
Speaker 6: the election last year. But we always like to check
Speaker 6: in with you, not just about New York City, but
Speaker 6: how things look from your perch around the country. I
Speaker 6: want to start with New York because because here we are,
Speaker 6: let's go ahead and call it seven months into the
Speaker 6: mom Donnie administration. We can almost say eight months at
Speaker 6: this point. How is it going from commercial commercial real
Speaker 6: estate perspective?
Speaker 12: So I think it's it's a confusing situation. On the
Speaker 12: one hand, he's executed some things he said he's going
Speaker 12: to do. When we raised our latest fund, we actually
Speaker 12: mapped everything Mam Donny said he will do. Number one
Speaker 12: on the list was rent freeze. We put it as
Speaker 12: an extremely high probability, and it happened. It's not new
Speaker 12: in New York City. It happened under the Blossom administration.
Speaker 12: I don't think it was a surprise to anyone that
Speaker 12: rent freeze actually happened. And obviously there's now the consequences
Speaker 12: and some portfolios are being hit with, you know, not
Speaker 12: being able to meet the ability to pay debt or
Speaker 12: even to cover the costs of running the properties.
Speaker 3: What's the implications of that more broadly in the market
Speaker 3: about doing deals wanting to be in the city.
Speaker 12: The rent freeze, I don't think it has much implication
Speaker 12: on the broader New York City real estate market. It
Speaker 12: was known, it was predicted, and it happened. When you
Speaker 12: look at New York City right now, it still has
Speaker 12: a huge shortage of new housing supply, it's growing in demand,
Speaker 12: and there it's also a market that's flushed with liquidity.
Speaker 5: Right now, it is flushed with liquidity.
Speaker 12: Yes, there's a lot of capital flowing into New York City,
Speaker 12: both on the equity and on the credit site.
Speaker 6: But okay, so here's I have an anecdote, and I
Speaker 6: have no idea if this is if this is widespread.
Speaker 6: But there's a brand new home near us in Brooklyn
Speaker 6: and it's sat vacant for months. It's sold, the people
Speaker 6: are supposed to move into it are in an airbnb
Speaker 6: because they sold their previous place, and it's because they
Speaker 6: don't have a final COO from the city at this point.
Speaker 6: And it seems to me like, how can Yeah, this
Speaker 6: is displacing somebody who would use this long term airbnb,
Speaker 6: which I don't even know if those are legal.
Speaker 5: I don't know.
Speaker 6: Over over thirty days, okay, definitely over thirty days, okay,
Speaker 6: And it's just sitting there empty and it's like taking supply.
Speaker 6: Have you learned anything about the permitting process or the
Speaker 6: approvals process in the last few months that's changed from
Speaker 6: other administrations? Like is it typical for a home that's
Speaker 6: finished to sit vacant for this long? I don't know
Speaker 6: how the approval process goes. I'm not a real estate developer,
Speaker 6: but has something changed in this administration or is that typical?
Speaker 12: Well, he appointed pretty I think competent people, various positions
Speaker 12: in dub and I think dB take the Lettus occurrence
Speaker 12: in the Fires building where the lender on the on
Speaker 12: the ground underneath. dB has been all over it. Obviously.
Speaker 12: They just today released the stop recorder on one of
Speaker 12: the buildings on two nineteen, which is great news. I
Speaker 12: think they've been pretty efficient. There's limitations on staff that
Speaker 12: that's the reality. They should probably staff more on different levels,
Speaker 12: but they've been pretty efficient with the amount of volume
Speaker 12: they're dealing with.
Speaker 5: And know you're not seeing any difference between administration.
Speaker 12: No, not too better, not the worse, but pretty competent.
Speaker 12: Pretty competent people have been nominated to various positions, So
Speaker 12: that's that's that's As an investor, that was a good thing.
Speaker 3: So I'm curious about kind of the environment. My husband
Speaker 3: I were kicking around this great story this morning about
Speaker 3: the Flat Iron Building entering a new era with fifty
Speaker 3: eight point five million dollar apartments. So we were just wondering,
Speaker 3: which which.
Speaker 12: One are you selected one?
Speaker 3: Yet we're looking at it. We're trying.
Speaker 12: I heard the Penthalles that's still available.
Speaker 3: Yeah, that one. There's one I think on the third
Speaker 3: floor for about ten millions. So I mean the bifurcation.
Speaker 3: I feel like of these very expensive properties and people
Speaker 3: come in and people are buying, and so on and
Speaker 3: so forth. You know, we go back to that old
Speaker 3: problem of making sure there is affordable housing for the
Speaker 3: people who are living and working in this great city
Speaker 3: of something like New York City. So you know, as
Speaker 3: you are in and out of this, I mean, again,
Speaker 3: what's the problem here. Why can't we make this work?
Speaker 12: It's a problem every major city in the world is
Speaker 12: dealing with. From London, Paris, New York is no different.
Speaker 12: You need to create supply. Politicians are focusing on limiting demand,
Speaker 12: like for example, piety attacks, right, yeah, it's a holy
Speaker 12: shit that's happening right now. That's curtailing the demand, making
Speaker 12: people not to buy as much. But really, to deal
Speaker 12: with pricing, you need to fix supply. You need to
Speaker 12: build more. You need to release restrictions and allow to
Speaker 12: build more units. If you build enough units, prices will
Speaker 12: eventually go down. Happening in your city, very.
Speaker 3: Tough, multimillion dollar more units.
Speaker 12: Well, you don't have to build it on Central Park, right,
Speaker 12: you need to go to Queen's Pronx in Long Island City.
Speaker 12: In terms of construction, is happening. It's cheaper than Manhattan,
Speaker 12: It's not completely affordable.
Speaker 3: You know what I'm saying. Like, you know, there's a
Speaker 3: broad swath of folks who you know, live in work
Speaker 3: around New York City.
Speaker 12: So I'm going to say something very not popular, I think,
Speaker 12: at least to politicians. If you the city really needs
Speaker 12: to build half a million units, if you really want
Speaker 12: to meet the demand to do that, you need to
Speaker 12: give incentives, not the other way around. You need to
Speaker 12: give tax incentives. You need to think of subsidies that
Speaker 12: will make the projects profitable for the private sector to build.
Speaker 3: It's money. It's a money story. In other words, you
Speaker 3: look at the balance get and if this isn't going
Speaker 3: to add up for a developer, they're not going to
Speaker 3: build it.
Speaker 12: And by the way, you know what's going to happen now,
Speaker 12: they enacted the Piea tear attacks, So there's going to
Speaker 12: be actually maybe slightly less transactions on that higher section.
Speaker 12: There's going to be eventually less proper tax collected by
Speaker 12: the city. So I'm not sure what they're going to
Speaker 12: gain from the piatare tax will actually make up what
Speaker 12: they're going to lose eventually in property tax.
Speaker 6: What would be what's the right way to do this quickly?
Speaker 6: Because New York City is a different animal. You said,
Speaker 6: this is a problem throughout the country and.
Speaker 12: Throughout the world. Every major urban center is dealing with
Speaker 12: affordability issues.
Speaker 6: So how do you do that in a way where
Speaker 6: things don't get miired and environmental review and it takes
Speaker 6: forever to actually like build something big because there are
Speaker 6: people in the neighborhood who don't want it done.
Speaker 12: I wish there was an easy answer. There's a lot
Speaker 12: of smart people that understand the problem. It's hard to
Speaker 12: solve it because you have all these battlenecks of approval processes. Right,
Speaker 12: you can't just build half million units and you have
Speaker 12: to take all these under.
Speaker 5: Consideration in parts of taxes.
Speaker 12: Yeah, but you know, people that want to live in
Speaker 12: a major urban market like New York, you need to
Speaker 12: do those processes. You need to create some sort of
Speaker 12: fast track solutions.
Speaker 5: Right.
Speaker 12: You need to say, okay, we need to cut down
Speaker 12: the approval process to a year, right, and you need
Speaker 12: to create the right subsidies and taxing centerves, property tax
Speaker 12: abatements so people will build it on condition that you
Speaker 12: will build also affordable twenty five to thirty five. The
Speaker 12: four twenty one A program was good, It actually succeeded it.
Speaker 3: Can you help me understand tax abatements? I live in
Speaker 3: an area where there has been so much building and
Speaker 3: lots of tax abatements, and I understand when a city
Speaker 3: is changing. But there's a point where, okay, people want
Speaker 3: to live there the market has changed. Why why will
Speaker 3: people not build without tax abatements?
Speaker 12: If you take the price of land and the price
Speaker 12: it takes to build and time, which creates additional costs,
Speaker 12: it's not making economical sense to build if you don't
Speaker 12: have some and biggest expense after you build something and
Speaker 12: rented there is property tax.
Speaker 3: So are you telling me all developers are only in
Speaker 3: the business because they get tax abatements.
Speaker 12: No, But for multifamily at the price of the reason
Speaker 12: people have built, the reason people in Manhattan mostly built
Speaker 12: brand new condos because those made sense economically. You buy
Speaker 12: the land at the high price, you cellventually at a premium,
Speaker 12: and you make a distant return to build that on
Speaker 12: the same land. Multifamily doesn't make sense for most projects
Speaker 12: without a tax abatement program. That's the reason.
Speaker 6: Is there is there a way to do this at
Speaker 6: scale for smaller developers, Because smaller developers who maybe go
Speaker 6: around parts of Brooklyn or Queens and say, okay, well
Speaker 6: we can I can take this home. I can I
Speaker 6: can essentially rebuild it using the same foundation, sell it
Speaker 6: for more, get another, get a you know, and sell.
Speaker 5: It very quickly. But they don't necessarily have the scale
Speaker 5: of building.
Speaker 12: There's ability to do it on smaller scale. And the
Speaker 12: city is doing it with all the various programs for
Speaker 12: affordable housing.
Speaker 5: Right is it working?
Speaker 12: It's working, but most of it, if you look at
Speaker 12: the budget, they're maxed out. They can there's no more
Speaker 12: room in the budget to do more. That's why these
Speaker 12: public private partnerships in the form of what used to
Speaker 12: be four twenty one a program works because then the
Speaker 12: city is saying you, you're a private developer, I understand
Speaker 12: you need to make money, we want to solve the
Speaker 12: housing issue. We want to create affordable unit. Will give
Speaker 12: you a tax abatement, build more, and it's a win
Speaker 12: win sort of. Those tend to work on a larger scale.
Speaker 3: So what's going on on the credit side in terms
Speaker 3: of what kind of deals are being done. What are
Speaker 3: you seeing what's opportunistic for you guys, and how is
Speaker 3: the rate environment kind of changing any of it.
Speaker 12: So currently we have the most loans on the term
Speaker 12: sheet we had in a single month. We currently have
Speaker 12: almost one point five billion in signed term sheets. It's
Speaker 12: I think it's indicative of the market. The market, as
Speaker 12: I said, is very active right now. There's certainty to
Speaker 12: your question on interest rates, so that gives clarity to
Speaker 12: what project valuation and pricing are high or lower or
Speaker 12: there's kind of flat ish. There's no big expectation to
Speaker 12: a huge drop or a huge increase, which is good
Speaker 12: because what investors are looking for is kind of continuity
Speaker 12: exactly and predictability. We're seeing a lot of transactions happen.
Speaker 12: I would say people that bought five to seven years
Speaker 12: ago and hope for a better market what used to
Speaker 12: be called pretend and extend or survive till now it's
Speaker 12: not twenty five anymore, are kind of facing reality. So
Speaker 12: we're seeing buildings trade at the lower pricing, new barers
Speaker 12: stepping in. We typically finance new acquisition, bridge loans, construction financing,
Speaker 12: office to RESI conversions.
Speaker 3: Is that still happening. I'm still I was thinking about.
Speaker 12: That it's still but I think we're kind of the
Speaker 12: big part is behind us. It's in the rear view
Speaker 12: seen the bulk and mount has happened the last two years.
Speaker 12: Now it's kind of the remaining buildings that didn't trade
Speaker 12: that are happening now. There's about sixteen thousand units that
Speaker 12: are going to be delivered in New York City as
Speaker 12: part of office to RESI conversions. That's a big number,
Speaker 12: but I don't think we're going to see sixteen thousand
Speaker 12: more in the pipeline. We're probably going to see five thousand,
Speaker 12: six thousand.
Speaker 5: More and then no more.
Speaker 12: Probably because office is back relatively you're seeing the buildings
Speaker 12: leads up again. So then it doesn't really make sense
Speaker 12: to go to the conversion, right you need the mostly
Speaker 12: vacant building to do a conversion.
Speaker 3: You did say you're on the land under the Ffiser building, right,
Speaker 3: I do, yes, So was what happened there, Fortunately for
Speaker 3: a future. Unfortunately it's a construction version.
Speaker 12: An accident that should not have occurred but did happen.
Speaker 12: Thank God, nobody was hurt. The building is structurally sound.
Speaker 12: I think the headlines in the news were way blown
Speaker 12: out of proportion. I think the developer is highly skilled. Again,
Speaker 12: where the lender just colapse? No, nothing collapsed. There was
Speaker 12: two only two columns that kind of buckled and the
Speaker 12: building sagged about four inches.
Speaker 3: Do you want to live in a building where.
Speaker 12: Well, they're they're going to fix everything.
Speaker 3: Okay, So just it was an error or in your like, it's.
Speaker 12: A constructions construction error. They basically two struck two columns
Speaker 12: that were supposed to be reinforced I think have not
Speaker 12: been reinforced.
Speaker 3: So you'll see more. We'll continue to see more more.
Speaker 12: It's going to happen. This, this happens is in construction again,
Speaker 12: it shouldn't, but it happens. I think because of the
Speaker 12: size of the building. It got so much attention.
Speaker 3: Okay, good stuff. Sorry, I just had to go back there.
Speaker 5: I'm glady dead. Ron. We love it when you joined
Speaker 5: us a stranger.
Speaker 12: Thank you for having me.
Speaker 6: We can talk about this stuff forever. Ron Elliot's office
Speaker 6: and managing partner of north Wind Group. He joined us
Speaker 6: here in the Bloomberg Interactive Brokers studio.
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