WEBVTT - Markets, SCOTUS, Crypto, And Real Estate (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.439 called Apple Podcast or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.000 at Bloomberg dot com slash podcast. Let's bring an Anastasia. 0:00:22.000 --> 0:00:26.040 I'm rosso chief's chief investment strategist for I Capital. Anastasia. 0:00:26.239 --> 0:00:30.200 What the first half of the year plus declining SMP. 0:00:30.840 --> 0:00:34.120 We've got double digit declines and the Bloomberg's corporate bond 0:00:34.120 --> 0:00:37.879 indext treasury bond indext, the sixty forty portfolio is dead. 0:00:38.200 --> 0:00:42.240 What do we do in the second half? Yeah, well, 0:00:42.240 --> 0:00:46.560 it has been a very very dell difficult and challenging start. 0:00:46.600 --> 0:00:51.159 You write, it's sixty forty portfolios down almost se year today, 0:00:51.280 --> 0:00:54.880 so it's really been um a tough start. But I 0:00:54.920 --> 0:00:57.480 do think as a result of that, a lot of 0:00:57.520 --> 0:00:59.920 things that it needed to correct did correct in the 0:01:00.080 --> 0:01:02.200 first half of the year. And when you think about it, 0:01:02.240 --> 0:01:04.800 we did a lot of heavy lifting. We came into 0:01:04.800 --> 0:01:06.920 the year thinking we might get three rate hikes from 0:01:06.920 --> 0:01:09.240 the FED and instead we're gonna get to three percent 0:01:09.440 --> 0:01:11.840 or higher on the FED funt rate by the end 0:01:11.880 --> 0:01:14.320 of the year. So that's a huge pivot that needed 0:01:14.360 --> 0:01:16.960 to happen, and as a result, we needed to see 0:01:17.000 --> 0:01:19.480 the reset and valuations. But we have seen that. If 0:01:19.520 --> 0:01:21.880 you look at the NASTAC evaluation, the p went from 0:01:21.880 --> 0:01:25.160 thirty five times to two times or so today, so 0:01:25.520 --> 0:01:29.399 that's a significant correction. We've seen the crypto craze that 0:01:29.680 --> 0:01:31.480 you know it was alive, and while at the tail 0:01:31.520 --> 0:01:35.839 end of UM take take a big leg lower and 0:01:35.880 --> 0:01:37.880 I think some of that needed to happen as well, 0:01:37.880 --> 0:01:41.000 that froth needed to come out. So as a result, 0:01:41.120 --> 0:01:43.039 as I think about the second half of the year, 0:01:43.480 --> 0:01:45.800 I do still think we're not out of the woods 0:01:45.840 --> 0:01:47.920 yet and there's gonna be challenges and we could talk 0:01:47.960 --> 0:01:50.520 about some of this. I think something's may break. But 0:01:50.680 --> 0:01:53.240 having said that, we're not a forty seven hundred anymore. 0:01:53.320 --> 0:01:55.800 We're thirty seven on the SMP and if we would 0:01:56.040 --> 0:01:59.920 go down to thirty so that might be justified by 0:02:00.040 --> 0:02:03.440 multiples and earnings, that's still a lot less down to 0:02:03.480 --> 0:02:05.480 go that where we started the year, well, that's still 0:02:05.560 --> 0:02:10.680 higher than where we were when the COVID crisis forced 0:02:10.720 --> 0:02:14.840 governments around the world to shut down completely their economies. 0:02:14.880 --> 0:02:19.880 I mean, let's not forget how serious that was. Right, Um, 0:02:19.919 --> 0:02:22.960 it's it's been a bad quarter for the sixty portfolio, 0:02:23.160 --> 0:02:29.079 but last year was aces We went from the end 0:02:29.120 --> 0:02:31.959 at the end of one after a global pandemic. I mean, 0:02:32.120 --> 0:02:37.639 was that justified? Well, I think it was at the time, perhaps, right. 0:02:37.720 --> 0:02:39.680 I mean, there was nothing to stop it because the 0:02:39.720 --> 0:02:43.880 FED was incredibly easy. We've had zero percent interest rate 0:02:43.960 --> 0:02:46.880 and people feel comfortable taken on risk. The beta trade 0:02:47.040 --> 0:02:49.600 was very much alive and well, and you know, justified 0:02:49.680 --> 0:02:53.000 by where the FED was and the risk appetite that 0:02:53.120 --> 0:02:56.400 was there. But it's certainly not justified today. But I 0:02:56.400 --> 0:02:58.919 would make the point is I don't think we need 0:02:58.960 --> 0:03:01.800 to go to where we were just during the pandemic 0:03:01.880 --> 0:03:04.440 or just coming out of the pandemic. Because the reason 0:03:04.520 --> 0:03:07.080 I sort of circle this thirty five hundred level on 0:03:07.160 --> 0:03:10.520 the SMP is because earnings estimates are higher what they 0:03:10.560 --> 0:03:13.480 were before, but they probably need to come down some 0:03:13.840 --> 0:03:16.120 And if we have a base case scenario that it's 0:03:16.200 --> 0:03:19.480 not a recession but a slowdown consumer, let's slow down 0:03:19.480 --> 0:03:21.880 that earnings revisions need to come through to the two 0:03:22.120 --> 0:03:24.359 six or seven percent, And so you do the math 0:03:24.400 --> 0:03:26.440 on that, and you apply a multiple of fifteen or 0:03:26.440 --> 0:03:29.519 sixteen times, then that gets to two about thirty five 0:03:29.639 --> 0:03:32.720 hundred on the SMP, maybe a little bit lower so 0:03:33.160 --> 0:03:36.880 UM so yes, I think probably a little bit lower still, 0:03:37.120 --> 0:03:39.800 but not to the levels that we saw just coming 0:03:39.840 --> 0:03:42.800 out of So that's pretty conservative for earnings estimates. We 0:03:42.800 --> 0:03:46.280 we've been talking um here in the newsroom about a 0:03:46.360 --> 0:03:50.280 story that Jess Mett and Lou Wang wrote. Peloton analysts 0:03:50.280 --> 0:03:54.400 still see Peloton tripling in price. UM analysts still see 0:03:54.520 --> 0:03:59.360 Uber more than doubling. Analysts still see Carbona, Carvana doubling. 0:04:00.200 --> 0:04:04.280 Um don't earnings estimates need to come down pretty significantly? 0:04:04.480 --> 0:04:08.080 Why our cell side arnalists analysts so slow to bring 0:04:08.080 --> 0:04:12.440 these earnings estimates down? Well, I think for some of 0:04:12.440 --> 0:04:14.840 the companies, perhaps some of which you mentioned, they probably 0:04:15.040 --> 0:04:18.359 do have some some further room to go. But the 0:04:18.400 --> 0:04:20.559 reason I was referring to the six or seven percent 0:04:20.600 --> 0:04:24.520 for the broad indusease the median earnings revision in a 0:04:24.560 --> 0:04:27.839 recession and environment is about thirteen percent if you assume 0:04:27.839 --> 0:04:30.960 they were not going to a full fledged several consecutive 0:04:31.000 --> 0:04:33.960 quarters of negative GDP recession that I don't think thirteen 0:04:34.000 --> 0:04:37.000 percent at the index level is justified. I think half 0:04:37.000 --> 0:04:40.160 of that is the most likely scenario. And if you 0:04:40.160 --> 0:04:43.080 look at two dollars on next twelve month earnings, you 0:04:43.120 --> 0:04:45.560 apply that six or seven percent haircut to that and 0:04:45.600 --> 0:04:48.960 that's what gets you to about two. So that's at 0:04:49.000 --> 0:04:51.800 the index level. But I do think there may need 0:04:51.880 --> 0:04:55.360 to be more Froth Moore exuberants that need to come 0:04:55.360 --> 0:04:58.120 out of some of the sec long term secular growth trates. 0:04:58.560 --> 0:05:01.960 And it's not universal. What's happened for the last two years. 0:05:02.000 --> 0:05:05.120 You've seen massive acceleration and things like e commerce and 0:05:05.400 --> 0:05:07.320 you know, perhaps the Pelicans of the world, but that's 0:05:07.360 --> 0:05:11.479 not repeatable and those growth rates cannot possibly compare to 0:05:11.520 --> 0:05:13.360 what they've seen in the last couple of years, so 0:05:13.640 --> 0:05:16.080 perhaps there's more to go there, all right, Anastasia, thanks 0:05:16.120 --> 0:05:19.160 so much for joining us. Really appreciate getting your perspective here. 0:05:19.160 --> 0:05:23.040 A brutal first half of the year for investors. Um 0:05:23.120 --> 0:05:25.159 you know, hopefully a little bit better in the second half, 0:05:25.160 --> 0:05:28.960 but who knows. Anastasia amar Rosso, chief investment strategist for 0:05:29.040 --> 0:05:33.080 I Capital and also a proud graduate of the University 0:05:33.080 --> 0:05:36.640 of New Mexico, Los Lobos. That's very very cool there. 0:05:40.480 --> 0:05:43.200 All right, we have yet another Supreme Court ruling. This 0:05:43.240 --> 0:05:45.400 could be the last um we're gonna go to June 0:05:45.400 --> 0:05:48.680 Grasso are legally analysts to talk about. The Remain in 0:05:48.760 --> 0:05:52.280 Mexico ruling kind of fell in the direction that the 0:05:52.320 --> 0:05:55.239 Biden Court, that the Biden administration wanted it to. Although 0:05:55.279 --> 0:05:58.720 they lost the e p A a um uh case, 0:05:58.800 --> 0:06:01.719 let's start with remaining Mexico. Okay, Okay, I was gonna 0:06:01.760 --> 0:06:04.919 say that the blow to the Biden administration on the 0:06:04.960 --> 0:06:07.560 e p A case is far greater than the wind 0:06:07.720 --> 0:06:10.640 here on remain in Mexico. Okay, So there's it's not like, oh, 0:06:10.680 --> 0:06:13.120 they won one and they lost one. They won one 0:06:13.200 --> 0:06:15.120 and then they won a half of one, and then 0:06:15.160 --> 0:06:17.920 they won and then they lost a big one. So anyway, 0:06:17.960 --> 0:06:20.960 remain in Mexico. That's the policy that the Trump administration 0:06:21.400 --> 0:06:24.360 put into a fact that because there's not enough room 0:06:24.560 --> 0:06:27.600 for the immigrants crossing the border, that if they don't 0:06:27.600 --> 0:06:29.840 have room, they would get them, they would return them 0:06:29.880 --> 0:06:32.080 to Mexico where they would stay. And then these ten 0:06:32.240 --> 0:06:36.680 cities that were while their asylum bid was processed, which 0:06:36.720 --> 0:06:41.320 can take forever. So and then the ten cities grew up. 0:06:41.360 --> 0:06:45.360 It was very dangerous. Biden administration wanted to stop that, 0:06:45.600 --> 0:06:49.440 and two of the two of the Republican led states sued. 0:06:49.720 --> 0:06:51.640 So here the Supreme Court said, and it was a 0:06:51.680 --> 0:06:55.160 five to four vote because Chief Justice Roberts who and 0:06:55.600 --> 0:06:58.760 uh Justice Brett Kavanaugh agreed with the liberals, So it 0:06:58.839 --> 0:07:03.320 was it was those five against the four Conservatives that um, 0:07:03.400 --> 0:07:06.200 it didn't violate the rules for him to have this 0:07:06.680 --> 0:07:10.040 remain in Mexico to rescind the policy because he had 0:07:10.160 --> 0:07:13.120 they had given a good explanation, unlike the DACA case 0:07:13.160 --> 0:07:15.480 a few years ago, they had given a good explanation 0:07:15.520 --> 0:07:19.160 and they could rescind it. Now this goes back to 0:07:19.360 --> 0:07:22.880 the district court judge in Texas, who is who has 0:07:22.920 --> 0:07:26.120 been really hostile to the Biden administration. So it doesn't 0:07:26.160 --> 0:07:28.480 really end here. I mean, this could come back up again. 0:07:28.520 --> 0:07:30.880 No one's talking about this. This could possibly come back 0:07:31.000 --> 0:07:36.440 up again because if if the district court says that 0:07:36.520 --> 0:07:39.000 they're sending it back to the district court for details 0:07:39.040 --> 0:07:41.520 to be worked out. So I suppose the district court says, 0:07:41.560 --> 0:07:44.840 you know, just still doesn't work according to the guidelines 0:07:44.880 --> 0:07:47.120 you gave me Supreme Court. Then it could come up again. 0:07:47.160 --> 0:07:49.920 I mean it probably won't, but it's just a possibility. 0:07:50.360 --> 0:07:53.520 So but in this case, what was what was difficult 0:07:53.560 --> 0:07:56.960 about this case for the states who oppose it is 0:07:57.000 --> 0:08:00.560 that they're basically would have to tell the Biden admin allustration, 0:08:00.880 --> 0:08:04.280 you have to engage with a foreign state, with Mexico 0:08:04.640 --> 0:08:07.720 and get an agreement with Mexico to allow this to happen. 0:08:08.000 --> 0:08:11.480 So they would really have been interfering in, you know, 0:08:11.560 --> 0:08:14.240 foreign affairs, which during the Royal arguments they say, what 0:08:14.760 --> 0:08:16.480 I remember, I think Elena Kagan said, what are we 0:08:16.480 --> 0:08:18.960 going to tell Mexico to, you know, keep everybody here? 0:08:19.040 --> 0:08:23.000 And well they have indeed negotiated that with the Mexicans, 0:08:23.000 --> 0:08:25.240 which I think is crazy. But with the Trump administration, 0:08:27.000 --> 0:08:30.000 I had confused this earlier and I'll correct myself now 0:08:30.080 --> 0:08:34.000 with the title forty two, which that was a COVID 0:08:34.080 --> 0:08:36.280 driven thing, right, that's still in effect. So that is 0:08:36.280 --> 0:08:39.959 still in effect because Biden administration wanted to end that 0:08:39.960 --> 0:08:43.840 that COVID was used. The title forty two Public health 0:08:43.840 --> 0:08:46.360 emerge in a similar way, right to send asylum seekers 0:08:46.400 --> 0:08:48.800 back while they're because they were worried that those asylum 0:08:48.840 --> 0:08:51.760 seekers might spread COVID. Right, So the courts have told 0:08:51.760 --> 0:08:54.880 the Biden administration you can't end that. So they're still 0:08:55.000 --> 0:08:57.800 using Title forty two at the boarder and you know, secretly, 0:08:57.840 --> 0:09:00.600 I think they might have been relieved they had Title 0:09:00.679 --> 0:09:04.480 forty two because they are not prepared for the influx 0:09:04.720 --> 0:09:07.280 at the border in the summer months. You know, it 0:09:07.320 --> 0:09:12.240 starts to build up. We were given a tragic example 0:09:12.280 --> 0:09:15.400 of how dangerous that is the last couple of days. 0:09:15.480 --> 0:09:18.160 Let's get to the e p A. Uh decision, which 0:09:18.160 --> 0:09:21.160 you think is more important, was a big blow to 0:09:21.200 --> 0:09:24.480 the Biden administration. Well, you know, it's it's cutting back 0:09:24.720 --> 0:09:27.400 on the e p A, which is the agency that 0:09:27.520 --> 0:09:32.960 handles this, their ability to set rules to curb climate change. 0:09:33.320 --> 0:09:36.480 So it's a huge blow and you know, one wonders, 0:09:36.600 --> 0:09:38.719 now what's going to happen. And also, as I you 0:09:38.720 --> 0:09:42.319 know I mentioned before this, the conservatives on this court 0:09:42.559 --> 0:09:46.839 are against what is called the administrative state. They want 0:09:46.920 --> 0:09:50.559 to cut back on the agency's rules, on the agency's 0:09:50.559 --> 0:09:53.719 ability to you know, to put rules into effect all 0:09:53.760 --> 0:09:57.600 the different federal agencies. And you know, you know, if 0:09:57.640 --> 0:10:02.520 Congress were there to stay been and make rules, this 0:10:02.559 --> 0:10:06.920 wouldn't be quite as big of a loss. And conservatives 0:10:06.920 --> 0:10:09.840 who push this through, who pushed these through, know that 0:10:09.840 --> 0:10:12.280 that's the case that Congress is not going to start 0:10:12.320 --> 0:10:14.400 passing rules now. Do they want it to go back 0:10:14.440 --> 0:10:16.640 to the states, as this the state's rights issue from 0:10:16.679 --> 0:10:18.800 the conservatives on the Spreme Court, I think it's a 0:10:20.000 --> 0:10:21.800 I think I don't know if it's a state's rights 0:10:21.800 --> 0:10:24.800 issue as much as it's we don't want these administrative 0:10:24.800 --> 0:10:28.559 agencies to be making decisions their bureaucrats, and it should 0:10:28.600 --> 0:10:32.079 be the elected representatives of the people making these kinds 0:10:32.080 --> 0:10:34.520 of decisions. But you know, how is I don't know 0:10:34.520 --> 0:10:36.880 how other than people that are trained in this and 0:10:36.880 --> 0:10:40.400 do it for a living, you want them making decisions 0:10:40.440 --> 0:10:42.920 about it, you know, just the big government. I guess 0:10:42.920 --> 0:10:46.120 you just don't want the Washington big government. You know, 0:10:46.400 --> 0:10:48.920 it's sort of drained the swamp in a different in 0:10:48.960 --> 0:10:53.280 a different respect. So it's interesting how these uh, how 0:10:53.600 --> 0:10:55.760 people in this country looking at it from outside, because 0:10:55.760 --> 0:10:58.640 I lived in Germany for years, fall on different sides 0:10:58.679 --> 0:11:01.880 of the ideological For example, they want small government, but 0:11:01.920 --> 0:11:05.400 they want huge border control right. They don't want the 0:11:05.400 --> 0:11:08.320 government to be able to decide anything, but not not 0:11:08.360 --> 0:11:11.520 the important decisions, but the death penalty, right, because that's 0:11:11.520 --> 0:11:14.640 not a very important decision. No, it's um no one 0:11:14.720 --> 0:11:17.920 said it makes sense, right, but that that's our Supreme Court. 0:11:17.960 --> 0:11:20.079 And they have ruled. And so now they go on 0:11:20.520 --> 0:11:24.640 summer vacation and we'll see what they do. Twelve o'clock 0:11:24.679 --> 0:11:27.760 they're going to have Tom Brown Jackson sworn in. So 0:11:27.840 --> 0:11:31.320 I think they'll all have champagne and then split champion split. 0:11:31.679 --> 0:11:32.920 You know. It used to be there there was a 0:11:33.000 --> 0:11:36.000 story that one of the justices used to have have 0:11:36.040 --> 0:11:37.920 a limo waiting to take him to the airport right 0:11:37.920 --> 0:11:41.040 after the least is exactly all right, Joan Grasso, Bloombridge Legal, Anos, 0:11:41.040 --> 0:11:45.719 thank you so much, all R. Let's check out with 0:11:45.760 --> 0:11:50.240 Everett Millman here. Uh he does all that commodity stuff 0:11:50.320 --> 0:11:52.040 for hold on, hold on, hold on, hold on. It 0:11:52.080 --> 0:11:55.520 looks at all kinds of coins, but also Gainesville that's right, 0:11:55.559 --> 0:11:58.720 that's right, at Gainesville Coins chief market Strategies. But crypto, 0:11:58.880 --> 0:12:01.080 yah know, so let's start with crypt dough. All right, 0:12:01.120 --> 0:12:05.360 we got Everett Crypto print. We were below, we were 0:12:05.400 --> 0:12:09.199 down to eight. What's going on in the world that 0:12:09.240 --> 0:12:14.160 crypto here, right? I think it's worth noting that the crypto, 0:12:14.240 --> 0:12:17.079 entire crypto market as a whole has been falling dramatically, 0:12:17.120 --> 0:12:19.760 So it's not just Bitcoin, although that's obviously the one 0:12:19.800 --> 0:12:22.080 that we're all going to focus on. I think that 0:12:22.160 --> 0:12:24.600 this is a sign of crypt crypto winter being in 0:12:24.679 --> 0:12:27.400 full force, and a lot of what's caused Bitcoin to 0:12:27.440 --> 0:12:32.280 go down is really exogenous to the to the coin itself. Uh. 0:12:32.480 --> 0:12:35.679 We've seen that it has lately followed the stock market lower, 0:12:36.000 --> 0:12:38.280 and I think we can reason our way to why 0:12:38.320 --> 0:12:41.160 that is the case. That a lot of more institutional 0:12:41.320 --> 0:12:44.680 holders are now in the bitcoin space, and so as 0:12:44.720 --> 0:12:48.160 stocks fall, they liquidate their bitcoin UM. And the fact 0:12:48.160 --> 0:12:52.320 that other crypto projects, other crypto lenders starting to see 0:12:52.360 --> 0:12:55.839 some cracks and failing UM. They often use bitcoin as collateral, 0:12:56.320 --> 0:12:58.480 So we've seen a lot of selling of bitcoin to 0:12:58.520 --> 0:13:02.400 try and probably of other cryptos correct. So I think 0:13:02.440 --> 0:13:04.680 those are the main culprits here. UM. Yeah, there have 0:13:04.720 --> 0:13:07.640 been a number of failures or now we have heard 0:13:07.920 --> 0:13:11.400 uh it reported that Three Arrows is being forced to 0:13:11.559 --> 0:13:16.199 liquidate UM and I've also seen forecasts for bitcoin to 0:13:16.280 --> 0:13:20.560 fall down to twelve thousand. Still, to put it in perspective, Everett, 0:13:20.600 --> 0:13:23.319 I heard um someone say earlier is the worst quarter 0:13:23.400 --> 0:13:26.640 for bitcoin since Q three of eleven. So I looked 0:13:26.679 --> 0:13:30.000 back at the price action in Q three of twenty 0:13:30.080 --> 0:13:33.280 eleven bitcoin at that point. It wasn't that nineteen thousand 0:13:33.400 --> 0:13:36.319 or twelve thousand, or seven thousand or three thousand. It 0:13:36.360 --> 0:13:39.559 went from sixteen dollars to five dollars. So we've come 0:13:39.600 --> 0:13:43.640 a long way, baby, Absolutely. I think when you zoom 0:13:43.640 --> 0:13:45.480 out like that, that is a great way to look 0:13:45.520 --> 0:13:48.800 at it. And most of the early adopters and some 0:13:48.960 --> 0:13:51.920 of the people who are old heads in bitcoin, they've 0:13:51.920 --> 0:13:54.640 seen this sort of cyclical pattern time and time again 0:13:54.679 --> 0:13:57.680 over the past ten years, so kind of retracing back 0:13:57.679 --> 0:14:00.760 to where our starting point was. Anyone who has been 0:14:00.800 --> 0:14:03.920 holding along the way is very happy with the performance 0:14:04.000 --> 0:14:07.600 of their cryptos um and particularly for bitcoin being the biggest, 0:14:07.760 --> 0:14:10.880 most recognizable one. At some point every nice seen me 0:14:11.000 --> 0:14:14.520 recall folks, you know, as we're all learning about crypto 0:14:14.559 --> 0:14:17.720 and bitcoin, uh talking about it. Maybe bitcoin is a 0:14:17.760 --> 0:14:21.000 hedge for inflation, but that doesn't appear to be the case, 0:14:21.040 --> 0:14:24.480 does it. Well, that has not played out thus far 0:14:24.680 --> 0:14:27.360 as I mentioned, I think it is those exogenous factors. 0:14:27.400 --> 0:14:31.160 But by its design, bitcoin is supposed to be a 0:14:31.240 --> 0:14:36.320 deflationary currency. The supply of bitcoin every four years UM. 0:14:36.480 --> 0:14:39.200 The pace of the supply growth gets cut in half, 0:14:39.480 --> 0:14:41.800 the so called happening UM. And so this is a 0:14:41.880 --> 0:14:46.920 deflationary design. And although that does solve the inflationary problem 0:14:46.960 --> 0:14:49.200 that we have with fiat money UM as far as 0:14:49.200 --> 0:14:52.280 I can tell, it introduces a second problem, which is 0:14:53.200 --> 0:14:56.200 relates back to one of the oldest principles in economics, 0:14:56.240 --> 0:15:00.880 known as Gresham's law that good or bad money drives good. Essentially, 0:15:00.920 --> 0:15:03.720 people want to spend cheap money that's losing its value 0:15:04.000 --> 0:15:06.600 and hold on to the money that is rising in value. 0:15:06.880 --> 0:15:10.800 So if indeed bitcoin is supposed to be deflationary over time, 0:15:11.360 --> 0:15:14.760 it begs the question why on earth would anyone spend 0:15:14.800 --> 0:15:17.240 bitcoin At a certain point, UM, you would want to 0:15:17.320 --> 0:15:20.960 keep bitcoin and spend everything else. So I think that's 0:15:21.080 --> 0:15:24.400 very many years of still out down the road. But 0:15:24.480 --> 0:15:28.360 it does bring up an interesting philosophical question about what 0:15:28.640 --> 0:15:32.800 is sound money and it is bitcoin actually money? UM. 0:15:32.840 --> 0:15:35.560 I think it's quite fair that the CFTC is going 0:15:35.600 --> 0:15:38.920 to be regarding it as a commodity because bitcoin does 0:15:39.040 --> 0:15:43.600 convert electricity into new coins, so it is sort of 0:15:43.600 --> 0:15:47.520 backed by a commodity. Okay, good stuff evert moment, appreciate it. 0:15:47.720 --> 0:15:51.120 Love getting your thoughts here. All things commodities and most 0:15:51.400 --> 0:15:56.320 notably crypto. Over the last we learned something new. Gresham's Law. 0:15:56.480 --> 0:16:00.880 We're going for it, named in eighteen sixty by economist 0:16:01.000 --> 0:16:05.920 Henry Dunning McLeod after Sir Thomas Gresham. Thank goodness for Google. 0:16:05.920 --> 0:16:12.920 Everett Millman, chief market analyst for Gainesville Coin, The building 0:16:13.160 --> 0:16:16.520 of real estate, construction and all that good stuff. John Fish, 0:16:17.200 --> 0:16:21.040 CEO and chairman of Suffer Construction Company, joins us here. John, 0:16:21.080 --> 0:16:22.720 thanks so much for joining us here. We'll get to 0:16:22.760 --> 0:16:25.760 the kind of the interest rate story angle in a bid, 0:16:25.800 --> 0:16:27.640 but I want to just talk to you about if 0:16:27.640 --> 0:16:29.560 you want to go out and build a building, whether 0:16:29.560 --> 0:16:33.000 it's a residential real estate or commercial real state as 0:16:33.000 --> 0:16:36.200 a construction guy, John, can you get the labor? Can 0:16:36.280 --> 0:16:38.600 you get the raw materials? If you do get the 0:16:38.680 --> 0:16:40.920 raw materials, do you have to pay through the nose? 0:16:40.960 --> 0:16:42.480 Give us a sense of what it's like to actually 0:16:42.560 --> 0:16:45.440 build something today, you know, Matt Paul, thank you very 0:16:45.480 --> 0:16:47.880 much for the opportunity. Again, it's probably one of both 0:16:47.920 --> 0:16:51.160 challenging times iron industry has had over the last five years. 0:16:51.360 --> 0:16:53.880 Again you pointed out the material cost are as high 0:16:53.880 --> 0:16:56.440 as I've ever been, and again the shortage of labor 0:16:56.440 --> 0:16:58.120 across the board and this is just not the East 0:16:58.120 --> 0:17:00.960 Coast but the entire country right now. And again because 0:17:00.960 --> 0:17:03.640 it's a demand for talent out there is one person 0:17:03.680 --> 0:17:05.679 for every two job openings. When you think about that, 0:17:05.760 --> 0:17:08.040 and that's detrimental lab business. What it does, it drives 0:17:08.080 --> 0:17:09.959 up wages. At the end of the day, wages over 0:17:10.000 --> 0:17:13.000 the last eighteen months have grown up substantially in the 0:17:13.040 --> 0:17:15.560 same thing with material costs. And then you introduced the 0:17:15.560 --> 0:17:18.720 concept of supply chain. I mean that also again creates 0:17:18.720 --> 0:17:20.919 a tremendous amount of disruption. What we've seen in the 0:17:20.920 --> 0:17:23.600 construction industry right now, in the realist industry is a 0:17:23.600 --> 0:17:26.480 tremendous amount of uncertainty in our industry as a whole 0:17:26.840 --> 0:17:29.400 doesn't feel well when when there's a deal of uncertainty, 0:17:30.119 --> 0:17:33.520 so um, you don't see or do you see inflation 0:17:33.680 --> 0:17:37.520 rolling over. We've noticed in some places, um, for example, 0:17:37.720 --> 0:17:41.280 goods that you would find at Walmart and target um, 0:17:41.280 --> 0:17:44.480 they've overstocked. Critty Gupta is just on talking to us 0:17:44.520 --> 0:17:48.120 about shipping costs which have rolled over slightly. UM still 0:17:48.160 --> 0:17:51.280 not cheap by any means UM. And we're watching for 0:17:51.480 --> 0:17:55.520 softening of other UH inflation or other metrics. Do you 0:17:55.560 --> 0:17:59.520 see any of that in construction? We not as of yet. 0:17:59.600 --> 0:18:01.080 I think it's gonna happen. I think in the next 0:18:01.119 --> 0:18:03.720 quarter we're probably gonna see things slowing itself down. We're 0:18:03.720 --> 0:18:06.720 still climbing from a cost perspective point of view across 0:18:06.720 --> 0:18:09.240 the country, and I do think as this negative news 0:18:09.320 --> 0:18:11.840 comes back into the marketplace, people gonna start putting the 0:18:11.880 --> 0:18:13.800 brakes on a little bit preen the day. But I 0:18:13.800 --> 0:18:15.400 would say this, Matt and Paul, We've been a long 0:18:15.400 --> 0:18:17.320 way to go. You're at eight point six percent inflation 0:18:17.400 --> 0:18:19.359 right now at this particular point time, we don't do 0:18:19.440 --> 0:18:21.560 well into it down to the three the two and 0:18:21.560 --> 0:18:23.399 a half percent levels. And so at the end of 0:18:23.440 --> 0:18:25.000 the day, I think we've got a ways to go, 0:18:25.080 --> 0:18:26.639 and I think the only way to do it is 0:18:26.640 --> 0:18:28.880 the FED continue to put the squeeze on, and that's 0:18:28.960 --> 0:18:31.800 raising interest rates. And again I will say this r 0:18:31.880 --> 0:18:35.000 very you know, defensively is I think we we we 0:18:35.080 --> 0:18:36.959 need a recession at this point in time. I think 0:18:37.000 --> 0:18:39.399 it's the only way to sort of choke off the 0:18:39.440 --> 0:18:42.639 inflationary pressures that are on the economy right now and 0:18:42.640 --> 0:18:44.560 get it over with quickly, because I do think because 0:18:44.600 --> 0:18:47.080 of the fact that consumers still has almost five point 0:18:47.080 --> 0:18:49.679 four trillion dollars and savings in their pocket, once we 0:18:49.760 --> 0:18:52.080 sort of ring out this inflation and the consumers on 0:18:52.119 --> 0:18:54.320 the sidelines that comes back into the ballpark all of 0:18:54.320 --> 0:18:56.320 a sudden, we're going to see the economy moving back 0:18:56.359 --> 0:18:58.760 up again. So I'm bullish in the long term. I 0:18:58.760 --> 0:19:01.119 think we've got a period of time twelve to eighteen 0:19:01.119 --> 0:19:03.080 months that it's going to be challenging right now. And 0:19:03.119 --> 0:19:05.439 my attitude is, hey, let's let's put the brakes on, 0:19:05.680 --> 0:19:08.240 let's get this over with. Let's rebalance the labor market, 0:19:08.280 --> 0:19:11.760 let's rebalance the supply chain, uh, and get back to work. 0:19:12.600 --> 0:19:15.880 John on the commercial side, UM, you know, I think 0:19:15.920 --> 0:19:19.040 the work from home thing, getting back to the office thing, 0:19:19.119 --> 0:19:21.680 the how people are gonna be working going forward is 0:19:21.720 --> 0:19:24.960 still very much influx UH in the United States. As 0:19:25.000 --> 0:19:27.840 you talk to some of your bigger clients, how are 0:19:27.880 --> 0:19:32.080 they thinking about office space going forward. I think most 0:19:32.160 --> 0:19:35.439 companies right now are re engineering how they're using this space, 0:19:35.560 --> 0:19:37.800 which is which, which is smart. But at the end 0:19:37.840 --> 0:19:40.560 of the day, again, I think it's a short term phenomena. Okay, 0:19:40.600 --> 0:19:43.000 we might be talking about twelve, eighteen, twenty four months out, 0:19:43.200 --> 0:19:44.600 but at the end of the day, the only way 0:19:44.640 --> 0:19:47.159 to build culture, the only way to get promoted, is 0:19:47.200 --> 0:19:48.639 people to be back at work at the end of 0:19:48.640 --> 0:19:51.480 the day. And we are social animals as human beings, 0:19:51.520 --> 0:19:53.959 and what we need we we we thrive on that energy. 0:19:54.359 --> 0:19:57.240 And what happens is a company maintains a competitive vantage, 0:19:57.600 --> 0:20:01.280 I believe through their culture, and you can't build culture remotely. 0:20:02.880 --> 0:20:04.840 So how's it look then? How's it look in Boston? 0:20:05.200 --> 0:20:07.240 Can I tell something right now? I think overall you 0:20:07.280 --> 0:20:09.920 know people, I would say we probably have six people 0:20:09.960 --> 0:20:13.600 back to work generally speaking, our companies back at pcent 0:20:13.680 --> 0:20:15.720 back to work, which I'm proud of. But at the 0:20:15.800 --> 0:20:17.800 end of the day, I think Boston, like every other community, 0:20:17.840 --> 0:20:21.320 is grappling with this issue because right now labor is 0:20:22.280 --> 0:20:24.679 in demand. They have to say as to what's going 0:20:24.720 --> 0:20:26.359 to go on with the work rules. Right now we're 0:20:26.400 --> 0:20:29.240 seeing this with unionization at Apple, We're seeing this at 0:20:29.280 --> 0:20:32.359 Starbucks across the board. But my senses, as the market 0:20:32.400 --> 0:20:34.359 softens a little bit, all of a sudden, you'll have 0:20:34.400 --> 0:20:38.479 more of a balance in the environment. And I think 0:20:38.520 --> 0:20:40.359 that's what we need at this particular point in time, 0:20:40.560 --> 0:20:43.040 and that's why I am a strong advocate, you know, 0:20:43.119 --> 0:20:45.280 continue raising the rates, although I don't like it, and 0:20:45.600 --> 0:20:49.399 in the real estate is very, very uncomfortable with with 0:20:49.480 --> 0:20:51.800 interest rate rising because the real estate runs on credit 0:20:51.840 --> 0:20:54.159 as we all know, and doesn't like the uncertainty. But 0:20:54.200 --> 0:20:55.800 at the end of the day, my attitude, let's get 0:20:55.800 --> 0:20:58.399 this pain out of the system, okay, and let's move forward, 0:20:58.960 --> 0:21:00.639 all right. The way, I just want to say, for 0:21:00.720 --> 0:21:03.440