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Speaker 1: If you enjoy the Bloomberg Surveillance podcast, check out our

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Speaker 1: of this podcast.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Lisa A.

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Speaker 3: Bramwoids along with Tom Keene and Jonathan Ferrow. Join us

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Speaker 3: each day for insight from the best in economics, geopolitics,

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Speaker 3: finance and investment.

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Speaker 2: Subscribe to Bloomberg Surveillance.

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Speaker 3: On demand on Apple, Spotify and anywhere you get your podcasts,

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Speaker 3: and always on Bloomberg dot Com, the Bloomberg Terminal, and

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Speaker 3: the Bloomberg Business App. A real question around where we

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Speaker 3: are in terms of the rally and whether it has

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Speaker 3: legs and joining us to really get into that. As

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Speaker 3: Animaletti head of Active Equity, it all spring global investments

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Speaker 3: before we get into and welcome this question of do

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Speaker 3: we end up with just a stock picking market? Can

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Speaker 3: you pile in and get some sort of sense of

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Speaker 3: relief from the rally that seems to only be gaining steam.

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Speaker 4: It's a great question, Lisa, and I think the hardest

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Speaker 4: part for investors is do I stay on the sidelines

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Speaker 4: or not? And we were talking earlier. Is the market

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Speaker 4: really pulled and drawn by emotion? And it is, it

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Speaker 4: always has been, and so investors have to fight that

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Speaker 4: emotion every step of the way and remain disciplined. And

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Speaker 4: I think despite all of the kind of chaos that's

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Speaker 4: happening around us and outside of us, within the economy,

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Speaker 4: with the FED, with global global unrest, I think it's

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Speaker 4: brought a lot of focus to our investment teams, and

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Speaker 4: what they're looking at is the narrow focus on which

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Speaker 4: stocks you want to own. Investors, when you're out of

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Speaker 4: the market, you have to be really careful about when

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Speaker 4: you get in. What I tell people is, regardless if

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Speaker 4: you know overall there's negativity or positivity, you really want

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Speaker 4: to always have some allocation in equities.

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Speaker 3: So let's pick some stocks in Vidia, Meta, Tesla.

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Speaker 2: You like all the popular ones.

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Speaker 3: No, I'm just wondering, I mean, how do you basically

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Speaker 3: understand what valuation even means at a time when things

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Speaker 3: are going to the moon based on promise of future invention.

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Speaker 4: Yeah, you know, I mean, I think what's been really

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Speaker 4: interesting is the flow in that we're seeing into equities

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Speaker 4: is going into index funds, right most most importantly, and

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Speaker 4: when that happens, investors are buying more of the big

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Speaker 4: names and paying a lot more for those names. That's

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Speaker 4: just the way it works. And so in a way,

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Speaker 4: active managers are a little bit trying to not fight

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Speaker 4: that trend. We own some of those names too, but

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Speaker 4: we're also trying to find those names that haven't been recognized.

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Speaker 4: We're really you know, like mining for a gold right now.

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Speaker 4: There are opportunities that do exist out there.

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Speaker 5: In an emotional market. Where do value stocks come in?

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Speaker 4: Yeah, it's a great question, Eila. And you know, as

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Speaker 4: you saw in the beginning part actually last year, when

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Speaker 4: the markets really started to kind of pay attention to value,

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Speaker 4: there were good reasons for it. Multiples were compressing, and

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Speaker 4: that's when investors went to value. I like to think

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Speaker 4: about it, like, don't discriminate between value and growth, right,

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Speaker 4: you can buy high quality goods at a good price.

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Speaker 4: So I kind of like to say, I like to

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Speaker 4: shop at sax or Nemans just don't like to pay

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Speaker 4: full price. I kind of think our investment teams like

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Speaker 4: to do the same thing, right. They want to buy

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Speaker 4: quality companies, but they want to pay a good price

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Speaker 4: for them, and there's real opportunity to do that now.

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Speaker 4: So I would say, don't discriminate between value and growth.

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Speaker 3: I just wonder what does even value mean? Yeah, I mean, honestly, no,

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Speaker 3: I'm serious. I was talking to some people saying that

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Speaker 3: basically conservative stocks, defensive stocks, value stocks, everything's tech.

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Speaker 2: I mean, that's basically what everyone is saying.

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Speaker 3: So at what point do you start to say, well,

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Speaker 3: maybe we're just falling behind. And if you own the

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Speaker 3: broader index, well at least you'll catch the stories that

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Speaker 3: might come out of nowhere and blow up the index.

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Speaker 4: Yeah, it's a great point. And you know, over the years,

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Speaker 4: you know, people have categorized value and growth separately, but

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Speaker 4: as you know, we've had big industries change from you know,

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Speaker 4: we've seen energy via value industry and energy be a

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Speaker 4: growth industry, and so I think investors have to kind

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Speaker 4: of frame that up. And I think Lisa, you did

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Speaker 4: really well. Any category, any company can move from value

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Speaker 4: to growth at any time, which is why we kind

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Speaker 4: of face the individual stocks, individual companies and look at

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Speaker 4: what we're paying for them.

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Speaker 3: Just quickly the here going into the second half, we've

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Speaker 3: gotten a lot of reassessments, a lot of people are

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Speaker 3: just getting more bullish. That seems to be the theme

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Speaker 3: pretty much across the board, with the exception of Mike Wilson.

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Speaker 3: But I'm wondering from your van to point, how you're

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Speaker 3: shifting either the names or your thesis heading into December.

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Speaker 4: Yeah, it's a great question, Lisa, because clearly, I think

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Speaker 4: the last time I was on the show, I said

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Speaker 4: we expected the rally to kind of either spread down

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Speaker 4: market cap, which we have started to see a little bit.

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Speaker 4: We would expect that to continue. If the rally is

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Speaker 4: going to continue, investors are going to flow more broadly

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Speaker 4: into the market. But again, I think our investment team's

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Speaker 4: focus is looking for those unique opportunities, trimming names where

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Speaker 4: the valuation just doesn't make sense, because what we do

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Speaker 4: is all about risk versus reward and really trying to

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Speaker 4: set up our investors to protect them against big risk

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Speaker 4: and focus on reward over time, because again, the future's

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Speaker 4: pretty foggy.

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Speaker 3: All right, well, Ammelili, thank you so much in the

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Speaker 3: foggy future after the fog has luckily passed for us

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Speaker 3: in the New York City and Melardia of All Spring,

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Speaker 3: thank you so much.

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Speaker 2: Joining us now.

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Speaker 3: Jan Start Vague, founder and CEO of Exante Data and

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Speaker 3: market reader agains. What's your takeaway that we do have

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Speaker 3: these divergent central banks. Is it just a matter of

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Speaker 3: the US getting out front, having a cycle that it

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Speaker 3: had to deal with first, and everybody else catching up,

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Speaker 3: or is this truly a splintering of the biggest global

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Speaker 3: economies at a time of great transition.

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Speaker 6: I think there's an element of both, right. So, clearly

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Speaker 6: the US started to recover quicker, the stimulus was more

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Speaker 6: aggressive in the US, and therefore the US cycle has

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Speaker 6: been more front loaded, right. And then we have economies

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Speaker 6: such as the eurosone economy where the stimulus was slower

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Speaker 6: and more drawn out. And we are having a situation

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Speaker 6: now where inflation is actually having moral mentioned in the

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Speaker 6: Eurozone than in the US. And therefore the ECB cannot

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Speaker 6: do any pausing. The ECB has to sickle that that's

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Speaker 6: going to go every single meeting, right, and they are

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Speaker 6: highly likely to be hiking in July and probably September

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Speaker 6: and maybe even further than that. Right. So this is

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Speaker 6: the first time for a while where we've seen monetary

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Speaker 6: policy divergence in a way that's going to support the Euro.

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Speaker 6: We saw a big, big move yesterday, and then I

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Speaker 6: think if we scan the globe, right, then there's some

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Speaker 6: special issues around China.

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Speaker 3: Right.

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Speaker 6: So I think one data point that's very important this

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Speaker 6: year is that we've had a China reopening. We have

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Speaker 6: had some recovery in certain sectors in China, right, but

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Speaker 6: there's no inflation pressure in China.

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Speaker 7: Right.

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Speaker 6: If we compared to other countries that have reopened, we

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Speaker 6: are not seeing any inflation pressure in China that resembles

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Speaker 6: what we've seen in other reopening situations, and that's really important.

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Speaker 6: And this is also a sort of evidence that there's

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Speaker 6: something structurally different in the Chinese economy. And one thing

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Speaker 6: that I think investors are not paying enough attention to

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Speaker 6: is that there's been a massive structural shift in terms

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Speaker 6: of the capital flow that's coming into China.

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Speaker 8: Right.

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Speaker 6: It used to be the case that people just wanted

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Speaker 6: to invest in China, build manufacturing capacity in China, but

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Speaker 6: that foreign direct investment from companies has slowed very, very dramatically,

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Speaker 6: and that has not recovered after reopening. So that's a

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Speaker 6: structural shift that's very important for everything, including the Chinese currency.

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Speaker 8: Right.

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Speaker 9: What do you make of China's attempts to get more

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Speaker 9: and more trade occur in the one Are they attempting

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Speaker 9: to over time become a competitor the dollar in terms

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Speaker 9: of reserve currency. Is this just going to be a small,

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Speaker 9: tiny part of world trade or is it? Where do

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Speaker 9: you stand on that?

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Speaker 6: So China is a huge part of global trade in

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Speaker 6: terms of the goods moving around, right, But they've been

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Speaker 6: attempting to get that stuff invoiced in local currency and

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Speaker 6: try to create competition to the dollar. But look at

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Speaker 6: how the yuan has been trading this year, Right, were

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Speaker 6: up over the last two days, But the big trend

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Speaker 6: has been the Chinese currency has underperformed very dramatically, consistent

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Speaker 6: with monetary policy being one of the easiest in the world. Right,

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Speaker 6: they have not been any tightening related to the inflation

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Speaker 6: dynamic that I spoke about, Right, So we have a

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Speaker 6: situation where from a trade perspective, China is in a

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Speaker 6: very strong position and could argue Okay, we dominate many many.

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Speaker 10: Types of trade.

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Speaker 6: We should have a reserve currency aspect, right, But when

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Speaker 6: you look at the acid side, nobody wants to buy

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Speaker 6: the Chinese bonds. That literally outflows from Chinese bonds almost

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Speaker 6: every single month. Even central banks around the world are

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Speaker 6: starting to reduce CNY holdings, right, So it doesn't have

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Speaker 6: the reserve currency aspect on the acid side. It's only

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Speaker 6: on the trade that you can make the argument. And

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Speaker 6: that's why that goal that the Chinese have is not

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Speaker 6: so easy to achieve.

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Speaker 9: Yeah, that makes a lot of sense. And where do

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Speaker 9: you see Japan playing out? I think that's the country

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Speaker 9: we're seeing actually get a lot of benefit from people

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Speaker 9: moving away from China and their power in the regions

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Speaker 9: important and clearly their stock market's done very well. Where

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Speaker 9: do you see Japan playing out in terms of the

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Speaker 9: global economy?

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Speaker 6: Yes, so I think if you sort of look at

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Speaker 6: a situation where global multi nationals are getting more cautious

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Speaker 6: about investing aggressively in China, where are they going to

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Speaker 6: build capacity?

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Speaker 8: Right?

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Speaker 6: So, there's a number of countries in Asia that have

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Speaker 6: manufacturing histories. Japan is one of them, Koreas another one

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Speaker 6: of them. There's new work countries like Taiwan and obviously

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Speaker 6: Thailand and Vietnam too, and closer to the US, Mexico

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Speaker 6: is benefiting from that. Right, So we do have a

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Speaker 6: number of emergent markets that are going to stand to

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Speaker 6: benefit from that. Japan has a bit of a special case.

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Speaker 6: They have their own demographications and so forth. But clearly

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Speaker 6: the NICK is now moving in a way that's very interesting,

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Speaker 6: and it's a very ironic situation. You have inflation in

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Speaker 6: Japan that is running around five percent. In terms of

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Speaker 6: the momentum we're seeing on core and financial conditions are easy, right,

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Speaker 6: bandiels are pecked at zero effectively, right, and equity and

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Speaker 6: this is going higher, the end is going weaker, right,

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Speaker 6: So eventually this to create a problem with the Bank

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Speaker 6: of Japan that they have to deal with.

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Speaker 3: Given all of this, does it make sense that people

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Speaker 3: are just looking at the divergences and saying, I guess

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Speaker 3: there's only one thing to do, go into big tech.

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Speaker 3: I mean that basically was the theme of the week.

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Speaker 3: Go into big tech, go into the euro. Those were

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Speaker 3: the two trades of the week. Do they have lasting power?

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Speaker 6: So I get to ask, if not every day. Certainly

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Speaker 6: every week we get asked about, Okay, is the AI

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Speaker 6: trend the bubble?

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Speaker 8: Right?

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Speaker 6: Is it overdone? There are certain companies where the evaluations

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Speaker 6: look pretty crazy, right, But I have to say, take

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Speaker 6: a step back. We think about this technology, what kind

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Speaker 6: of incredible changes it's going to create in the economy, right,

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Speaker 6: and then we think about how relatively young this excitement

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Speaker 6: about this trend is likely only really a couple of

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Speaker 6: months in so given how big the structural shift these

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Speaker 6: technologies are going to create, I don't think we've run

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Speaker 6: for very long in terms of investors really getting involved

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Speaker 6: in these trends. Like I track global capital flows very carefully.

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Speaker 6: Like one thing I track is, Okay, what is the

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Speaker 6: foreign money that's come into you as tech in the

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Speaker 6: last couple of months. It's actually very limited, right, So

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Speaker 6: it seems like foreign investors have kind of missed the

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Speaker 6: AI the terbo charge rally, and I wouldn't rule out

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Speaker 6: that they're going to come in later. So I think

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Speaker 6: it's tour to fade it. And then I was saying,

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Speaker 6: in terms of other themes, emergent markets had a very

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Speaker 6: good run, right, So there are other asset classes that

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Speaker 6: are on the move that have perhaps been forgotten about

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Speaker 6: for many, many years. So it's not just tech. I

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Speaker 6: would say the emergent market trends are pretty interesting and

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Speaker 6: certainly something we've been watching.

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Speaker 3: Yeahzonoid Veig of Exante Data and Market Reader, thank you

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Speaker 3: so much for.

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Speaker 2: Being with us.

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Speaker 3: Set joining us now, especially at a moment of huge debate,

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Speaker 3: is Congressman French Hill, Republican from Arkansas, and I want

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Speaker 3: to start there, especially welcome by the way to New York.

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Speaker 3: I want to start there, especially because there is this

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Speaker 3: increasing fight among House Republicans right now about whether to

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Speaker 3: cut spending much more substantially, maybe raising a question around

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Speaker 3: whether we have to discuss the faulting again in a

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Speaker 3: couple of months. Where do you weigh in on this?

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Speaker 3: How concerned are you?

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Speaker 7: Well, we have our fiscal constraint deal that we struck

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Speaker 7: between House Republicans and President Trump, I mean President Biden,

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Speaker 7: and that's put in place and that governs the top

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Speaker 7: line for appropriations, and now both the House and Center

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Speaker 7: are working to pass those twelve appropriations bills and that'll

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Speaker 7: be what tees up, as you say, a spending fight

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Speaker 7: this fall, potentially as we attempt to pass all twelve

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Speaker 7: of those bills at the agreed upon a level in

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Speaker 7: the Fiscal Restraint Measure or below, and so that's the issue.

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Speaker 7: But let's be clear, discretionary spending is forty percent higher

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Speaker 7: than it was just before the pandemic. So we're spending

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Speaker 7: two trillion dollars more per year on spending in this

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Speaker 7: country than we were before the pandemic. And so there's

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Speaker 7: an effort, and I think we've made that clear that

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Speaker 7: we should lower that rate of spending growth and cap

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Speaker 7: it and that's what we did in this bill.

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Speaker 3: Although Greg Valiere, who is on earlier of AGF, was

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Speaker 3: saying that he's been in this business a long time

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Speaker 3: and he's ever seen anything like this, to agree on

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Speaker 3: spending a certain amount and then retracting it to essentially say, Okay,

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Speaker 3: well maybe not.

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Speaker 7: That's not what the deal is, that's not what the do.

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Speaker 7: I think this has gotten exaggerated in the press. These

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Speaker 7: are spending caps, these are ceilings, and so the appropriators

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Speaker 7: now take those numbers and write the spending bills in

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Speaker 7: each department of cabinet government and they can spend up

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Speaker 7: to that amount. That's the goal, and we've set the

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Speaker 7: goal of if we're going to spend this spending curve down.

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Speaker 7: We don't want to do supplemental appropriations. We want to

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Speaker 7: make the government live within this enormous budget that we have.

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Speaker 3: Do you think that it's worth threatening another default?

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Speaker 7: Potentially, think anybody's threatening another default. I think what you

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Speaker 7: see is if you don't pass those appropriations bills, then

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Speaker 7: you're confronted with an f y twenty four fiscal twenty

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Speaker 7: four continuing resolution, which I don't think anybody in Congress wants,

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Speaker 7: because you freeze spending at the current level, but you

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Speaker 7: get all the policies that are frozen too, and members

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Speaker 7: of Congress like to debate in the appropriations process, both

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Speaker 7: those spending levels and the policies that go with them.

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Speaker 7: And you can't do any new starts when you have

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Speaker 7: a continuing resolution. So you can't start construction on a

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Speaker 7: new nuclear submarine if you have a continuing resolution. So

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Speaker 7: it's not in the best interests of the government to

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Speaker 7: have a continuing resolution. But that's why I don't see

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Speaker 7: it as a default debate at all. It's more of

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Speaker 7: a typical government shut down type debate, if you want

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Speaker 7: to use that term, on whether we're going to have

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Speaker 7: appropriated funds approved across both Houses of Congress, or if

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Speaker 7: we're going to be confronted with a continuing resolution?

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Speaker 3: Have you ever seen the Republican Party as split as

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Speaker 3: it is right now. We've been talking about this for

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Speaker 3: a while, but perhaps the prosecution former President Trump has

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Speaker 3: brought this into even colder relief, just because you have

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Speaker 3: people lining up behind him and other people saying, wait

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Speaker 3: for some information to come out.

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Speaker 2: Where do you stand on this?

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Speaker 7: On are you talking about still talking about spending?

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Speaker 11: You're talking about.

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Speaker 12: President talking about President Yeah, President Trump, Well.

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Speaker 7: Look, I think he made this situation a lot worse

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Speaker 7: by the way he handled the interactions with the government

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Speaker 7: regarding the Presidential Records Act. So I think he's made

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Speaker 7: the situation a lot more challenging. I do believe that

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Speaker 7: we need complete reform on how we handled classified informations.

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Speaker 7: We just saw the news this morning with this young

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Speaker 7: man National guardsman out on Cape cod Is facing sixty

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Speaker 7: years in prison for releasing and distributing classified information. I

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Speaker 7: think this sends a lot of confusing messages to the

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Speaker 7: American people. We didn't make sure those rules are fair

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Speaker 7: clear and that presidents abide by them and everybody else

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Speaker 7: in the government abides by them.

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Speaker 13: So if I think about the if I think about

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Speaker 13: that issue specifically, it's clear that there have been more

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Speaker 13: than several people who have had issues with documents. So

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Speaker 13: whether or not that's more egregious for him than other

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Speaker 13: people led is yet to be determined, But clearly we

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Speaker 13: need to do something with that. Is that just because

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Speaker 13: we're so far behind in what we're doing with our

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Speaker 13: paper versus digital? Is that just because we just don't

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Speaker 13: have a clear view on what really is classified and

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Speaker 13: how classified it needs to be.

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Speaker 7: It's such a good question. In fact, we declassified in

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Speaker 7: the House Intelligence Committee the other day the instances of this.

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Speaker 7: The National Archives reported to us in a hearing that

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Speaker 7: they have found classified material in over eighty eighty different

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Speaker 7: former members of Congress records at their local university or

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Speaker 7: wherever their store, and that they've found classified information in

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Speaker 7: unclassified file boxes from every president from President Reagan on.

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Speaker 7: So this tells me as a former White House staffer,

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Speaker 7: I can remember vigorously the pack up process on leaving

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Speaker 7: the administration in January nineteen ninety three. What was in

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Speaker 7: a classified box and what wasn't out of my office?

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Speaker 7: So we have rules, but I think we need to

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Speaker 7: improve training. And you raise a point of do we

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Speaker 7: classify too much information? Do we declassify information effectively and

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Speaker 7: communicate that and the difference between digital as in the

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Speaker 7: case of Missus Clinton and paper. So I think there's

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Speaker 7: work to be done here. It doesn't excuse anyone's behavior

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Speaker 7: on this topic, though, Well.

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Speaker 3: To that point, are you concerned about the rhetoric around this,

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Speaker 3: that this is an issue of prosecuting the people and

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Speaker 3: going after someone just in terms of political interference? Are

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Speaker 3: you concerned about how this is raising questions about the

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Speaker 3: deep state and reigniting those discussions rather than the discussion

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Speaker 3: around how to keep classified document secret?

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Speaker 11: You bet, Lisa.

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Speaker 7: I mean, when you indict a former president by officials

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Speaker 7: of the Justice Department of his opposition party, you're going

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Speaker 7: to invite political speculation that it's a political activity, and

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Speaker 7: it will absolutely take us off the substance and back

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Speaker 7: to that. But I simply I think that everybody ought

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Speaker 7: to have clear understanding about how to handle this and

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Speaker 7: do it right. And the weaponization of the federal government,

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Speaker 7: which you're implying, is the subject of a select committee

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Speaker 7: in Congress this year. Because of the top at the

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Speaker 7: FBI during the end of the Obama administration. In Trump

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Speaker 7: administration has disappointed a lot of people in Congress, it's

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Speaker 7: under a tremendous scrutiny. Director Ray is on the hill

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Speaker 7: routinely trying to defend that we have fired the people

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Speaker 7: who brought you Russia, Russia, Russia. We fired the people

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Speaker 7: who we think did wrong in that whole issue around

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Speaker 7: Missus Clinton or around mister Trump, and we're trying to

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Speaker 7: clean up our act and do the right thing. But

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Speaker 7: there is skepticism among the citizens and people in Congress,

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Speaker 7: and I think it's a heavy lift. It's as heavy

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Speaker 7: a lift as the Church Commission back in the nineteen seventies.

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Speaker 7: And it's not hyperbole. So Director Ray has to make

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Speaker 7: the reputation of the FBI the one that we all

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Speaker 7: know and love over history.

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Speaker 3: So you see the onus on the FBI rather than

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Speaker 3: on the former president. Change the rhetoric.

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Speaker 7: Well, I think the onus is on your point about

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Speaker 7: is the deep state potentially in trouble and creating mischief?

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Speaker 7: I think it was clear in the Russia investigation and

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Speaker 7: Crossfire Hurricane that they were involved, and it was very

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Speaker 7: political at the top of the FBI. That's hurt the

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Speaker 7: FBI's reputation. I think it's up to Director Way to

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Speaker 7: help work with Congress and rebuild that reputation, which then

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Speaker 7: I think rebuilds trust through the American people.

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Speaker 3: French Hell, thank you so much, Congressman. I really appreciate

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Speaker 3: you taking the time with us. The SMP, Homebuilders ETF.

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Speaker 3: I'm just looking at this is up twenty seven percent

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Speaker 3: so far this year, surging into what the Fed said

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Speaker 3: was weakness, surging into a downturn that was going to

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Speaker 3: disinflate this economy right now, joining us to answer why

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Speaker 3: and who is right.

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Speaker 2: And who is wrong?

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Speaker 3: John Lavallo, US homebuilders analyst at UBS. So I want

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Speaker 3: to start John with a question that I keep asking people,

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Speaker 3: is anybody are these homebuilders selling to anybody who's paying

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Speaker 3: a seven percent mortgage for that home?

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Speaker 14: That's the beauty of what's going on right now. No,

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Speaker 14: the simple answer is no, if you're buying a home

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Speaker 14: from one of these public homebuilders, you're paying six percent.

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Speaker 14: You may be paying five and a half percent. And

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Speaker 14: so it's a completely game changing dynamic that's going on

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Speaker 14: right now.

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Speaker 3: So as we look toward forward, about whether that demand

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Speaker 3: can continue. Do you see this momentum or do you

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Speaker 3: think that it's been overplayed, that perhaps people are not

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Speaker 3: seeing what the FED is seeing, which is people aren't

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Speaker 3: going to be able to afford it. All of the

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Speaker 3: cash buyers came in, those millennials have moved out of

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Speaker 3: the basement, and now it's just getting too expensive.

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Speaker 14: Lisa, It's a fascinating dynamic that's going on in the

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Speaker 14: market right now. What is really occurring is that there

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Speaker 14: is zero existing home supply out there, and the homes

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Speaker 14: that are out there are old and they are not

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Speaker 14: at the right price points, so there's no competition from

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Speaker 14: that side of the market. Go to the other side

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Speaker 14: of the market, where you have the private homebuilders, which

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Speaker 14: are sixty percent of the market. They can't get land,

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Speaker 14: they can't get labor, they can't get financing now, and

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Speaker 14: so the demand that's out there, and albeit it's less

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Speaker 14: demand than it has been over the past couple of years,

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Speaker 14: it's all being channeled towards this group of public homebuilders,

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Speaker 14: and that's where we're seeing these massive market market share gains.

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Speaker 5: Such an important point about the aging of the housing stock,

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Speaker 5: the number of units it takes just to replace deteriorated

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Speaker 5: homes underappreciated story for sure. You know, I think the

439
00:22:16,400 --> 00:22:19,440
Speaker 5: real question to me is so much about how interest

440
00:22:19,520 --> 00:22:22,080
Speaker 5: rates are crimping demand, but no one talks about how

441
00:22:22,119 --> 00:22:25,640
Speaker 5: interest rates affect supply. And I think the medium mortgage

442
00:22:25,720 --> 00:22:28,040
Speaker 5: rate in the US right now is around three percent.

443
00:22:28,119 --> 00:22:31,120
Speaker 5: Homeowners have about a three percent mortgage rate. So how

444
00:22:31,160 --> 00:22:34,959
Speaker 5: do you deal with those supply shortages? How as a

445
00:22:34,960 --> 00:22:37,240
Speaker 5: home builder, where do you target?

446
00:22:37,600 --> 00:22:38,000
Speaker 2: Is it the.

447
00:22:38,000 --> 00:22:41,160
Speaker 5: Affordable priced homes, is it the expensive high end homes?

448
00:22:41,359 --> 00:22:45,000
Speaker 5: How do you deal with such a big demand and

449
00:22:45,040 --> 00:22:45,919
Speaker 5: such a short supply.

450
00:22:46,040 --> 00:22:47,960
Speaker 14: Well, Melie, you're spot on. I mean the fact that

451
00:22:48,200 --> 00:22:50,440
Speaker 14: most folks have mortgages that are struck at a much

452
00:22:50,480 --> 00:22:53,919
Speaker 14: lower rate than prevailing seven percent rate today. Making that

453
00:22:54,000 --> 00:22:56,520
Speaker 14: swap out into another home, the math gets tricky and

454
00:22:56,640 --> 00:22:58,600
Speaker 14: some more people are sort of locked in place, so

455
00:22:58,640 --> 00:23:00,680
Speaker 14: that supply is not going to loosen up. So as

456
00:23:00,680 --> 00:23:03,440
Speaker 14: a public homebuilder, what we believe is the main place

457
00:23:03,480 --> 00:23:06,639
Speaker 14: to target is this entry level first time buyer where

458
00:23:06,680 --> 00:23:09,800
Speaker 14: really it's a nee based purchase. You're maybe getting married,

459
00:23:09,880 --> 00:23:13,439
Speaker 14: having children, things and life events that necessitate more space,

460
00:23:13,760 --> 00:23:16,000
Speaker 14: and that is where we believe well, that's where the demand,

461
00:23:16,080 --> 00:23:18,400
Speaker 14: the demand currently is, and that's where we believe the

462
00:23:18,440 --> 00:23:19,680
Speaker 14: real kind of tail to this.

463
00:23:19,640 --> 00:23:20,200
Speaker 11: Will be as well.

464
00:23:20,200 --> 00:23:21,920
Speaker 3: Okay, hold on a second, not to push back, but

465
00:23:22,040 --> 00:23:24,120
Speaker 3: to push back. I mean, I'm thinking about people who

466
00:23:24,160 --> 00:23:26,560
Speaker 3: I know who are creating homes and having babies and

467
00:23:26,600 --> 00:23:29,320
Speaker 3: paying off student loans and dealing with jobs where they

468
00:23:29,359 --> 00:23:32,240
Speaker 3: haven't graduated into more senior levels where they're getting paid

469
00:23:32,240 --> 00:23:34,120
Speaker 3: and they cannot afford any of these houses. I don't

470
00:23:34,160 --> 00:23:36,720
Speaker 3: understand where that demand is going to come from unless

471
00:23:36,840 --> 00:23:37,720
Speaker 3: prices come down.

472
00:23:38,640 --> 00:23:41,800
Speaker 14: Well, that's again, what the public builders are doing, is

473
00:23:41,840 --> 00:23:43,920
Speaker 14: they're making that math work for people and how they're

474
00:23:43,920 --> 00:23:45,919
Speaker 14: doing it. We talked about the mortgage rates, right, but

475
00:23:45,960 --> 00:23:48,760
Speaker 14: they're also they're building smaller footprints, they're building a little

476
00:23:48,760 --> 00:23:52,400
Speaker 14: bit further away from city centers. They're offering fewer skews

477
00:23:52,400 --> 00:23:54,640
Speaker 14: for lack of a better term, so they're becoming much

478
00:23:54,680 --> 00:23:57,639
Speaker 14: more efficient where they can actually you know, incentivize folks

479
00:23:57,760 --> 00:23:59,200
Speaker 14: and help them get into homes.

480
00:23:59,320 --> 00:24:00,960
Speaker 2: But do any bank want to give them loans?

481
00:24:01,080 --> 00:24:04,199
Speaker 3: Like, does anyone want to actually extend credit to a

482
00:24:04,240 --> 00:24:06,760
Speaker 3: home builder at a time when people are worried about

483
00:24:07,160 --> 00:24:10,879
Speaker 3: city centers? Having a complete you know, see change with

484
00:24:11,000 --> 00:24:13,359
Speaker 3: office space not being used and given the fact that

485
00:24:13,359 --> 00:24:14,399
Speaker 3: prices are so high.

486
00:24:14,520 --> 00:24:16,240
Speaker 14: At least that's a great point. And that's the beauty

487
00:24:16,280 --> 00:24:19,359
Speaker 14: of it is that the public homebuilders have captive finance arms,

488
00:24:19,440 --> 00:24:23,679
Speaker 14: so they're offering their own their own you know, incentives

489
00:24:23,720 --> 00:24:26,040
Speaker 14: in house, and they have access to the capital markets

490
00:24:26,040 --> 00:24:27,320
Speaker 14: and that's where they're getting the funding.

491
00:24:27,760 --> 00:24:29,840
Speaker 5: Let's let's kind of turn to the labor market a

492
00:24:29,880 --> 00:24:33,159
Speaker 5: little bit. That supports all this housing construction and also

493
00:24:33,359 --> 00:24:36,280
Speaker 5: what we're seeing in terms of changes of work. My

494
00:24:36,320 --> 00:24:41,280
Speaker 5: first question is has remote work changed the geographical footprint

495
00:24:41,359 --> 00:24:42,600
Speaker 5: of homebuilders right now?

496
00:24:43,200 --> 00:24:45,680
Speaker 14: You know, I don't know that it's changed the geographical footprint,

497
00:24:45,720 --> 00:24:48,280
Speaker 14: but it's really played into the geographical footprint. So if

498
00:24:48,280 --> 00:24:50,240
Speaker 14: you think about the public homebuilders, they are all sort

499
00:24:50,240 --> 00:24:52,720
Speaker 14: of in the Sunshine States or the Golden Horseshoe however

500
00:24:52,720 --> 00:24:54,560
Speaker 14: you want to refer to it, and that's where the

501
00:24:54,640 --> 00:24:57,400
Speaker 14: job growth is, that's where migration is trending. And that's

502
00:24:57,400 --> 00:24:59,080
Speaker 14: been you know, that's been the case for a number

503
00:24:59,080 --> 00:25:02,679
Speaker 14: of years. But I think working remotely has sort of

504
00:25:02,680 --> 00:25:06,040
Speaker 14: exacerbated that shift, and we're seeing more folks move into

505
00:25:06,880 --> 00:25:08,879
Speaker 14: the kind of the sun belt, and so it's really

506
00:25:08,920 --> 00:25:11,200
Speaker 14: sort of playing into the hands of the public home.

507
00:25:11,119 --> 00:25:11,920
Speaker 7: Buildings, right.

508
00:25:12,119 --> 00:25:15,920
Speaker 5: And then just the labor shortages that you know, finding

509
00:25:16,000 --> 00:25:17,880
Speaker 5: people to do all this building.

510
00:25:18,200 --> 00:25:19,199
Speaker 2: How extreme is that?

511
00:25:19,320 --> 00:25:21,760
Speaker 5: Right now? What would you like to see in that

512
00:25:21,840 --> 00:25:25,479
Speaker 5: industry to help get more workers onto the work sites.

513
00:25:25,880 --> 00:25:27,240
Speaker 11: Yeah, it's tough.

514
00:25:27,400 --> 00:25:29,560
Speaker 14: It's really tough. Getting labor is one of the biggest

515
00:25:29,640 --> 00:25:32,480
Speaker 14: challenges out there for the home builders. I think that

516
00:25:32,480 --> 00:25:35,720
Speaker 14: that's where size and scale become increasingly important, and again

517
00:25:35,840 --> 00:25:38,239
Speaker 14: the public home builders are well positioned for that. I

518
00:25:38,320 --> 00:25:41,560
Speaker 14: think what is needed is that this is an industry,

519
00:25:41,560 --> 00:25:44,239
Speaker 14: if you think about it, that hasn't changed in one

520
00:25:44,280 --> 00:25:46,640
Speaker 14: hundred years. We're still building a house the same way

521
00:25:46,640 --> 00:25:48,040
Speaker 14: we did stick framing it on site.

522
00:25:48,160 --> 00:25:48,920
Speaker 5: Oh a, I hear.

523
00:25:50,400 --> 00:25:53,680
Speaker 2: It's a good point. Well not yet home they get built.

524
00:25:54,040 --> 00:25:55,080
Speaker 2: This is actually true, right.

525
00:25:55,119 --> 00:25:57,560
Speaker 3: This is the point is that some jobs you cannot

526
00:25:57,560 --> 00:25:59,600
Speaker 3: replace with artificial intelligence.

527
00:25:59,720 --> 00:26:00,800
Speaker 2: I just want to give you a.

528
00:26:00,880 --> 00:26:03,920
Speaker 3: Viewer rights in so, y'all think millennials went from living

529
00:26:03,960 --> 00:26:07,000
Speaker 3: at home with parents to paying for highly overvalued homes

530
00:26:07,000 --> 00:26:09,240
Speaker 3: with all cash real I mean, there is this element

531
00:26:09,359 --> 00:26:11,280
Speaker 3: of are you joking me that this is sort of

532
00:26:11,280 --> 00:26:14,640
Speaker 3: what's going to continue fueling demand, especially at a time

533
00:26:15,000 --> 00:26:18,320
Speaker 3: when in certain of these Sun Belt areas, insurance companies

534
00:26:18,359 --> 00:26:22,080
Speaker 3: are not covering the housing the housing insurance anymore simply

535
00:26:22,119 --> 00:26:25,320
Speaker 3: because of different weather threats and other things, and people

536
00:26:25,359 --> 00:26:26,040
Speaker 3: are starting.

537
00:26:25,800 --> 00:26:26,600
Speaker 2: To migrate back.

538
00:26:26,640 --> 00:26:28,200
Speaker 3: I mean, at what point do you start to see

539
00:26:28,240 --> 00:26:32,480
Speaker 3: a real softening and potentially housing supply coming back online.

540
00:26:32,920 --> 00:26:34,840
Speaker 14: Well, maybe to take the last part of the question first,

541
00:26:34,880 --> 00:26:36,800
Speaker 14: to get housing supply to come back online, I think

542
00:26:36,840 --> 00:26:38,320
Speaker 14: we're going to see interest rates need to come in

543
00:26:38,359 --> 00:26:41,679
Speaker 14: pretty meaningfully, and that you know, that's anyone's guess, you know,

544
00:26:41,680 --> 00:26:43,399
Speaker 14: I think in order to sort of loosen up if

545
00:26:43,440 --> 00:26:44,919
Speaker 14: you're a homeowner that has a four and a half

546
00:26:44,960 --> 00:26:47,840
Speaker 14: percent mortgage, making that swap into seven percents tough, if

547
00:26:47,960 --> 00:26:51,240
Speaker 14: rates come in, maybe that loosens that up. But I think,

548
00:26:51,320 --> 00:26:53,639
Speaker 14: you know, your question on the millennials is a good one.

549
00:26:54,480 --> 00:26:57,119
Speaker 14: What I would say is that millennials are again reaching

550
00:26:57,119 --> 00:26:59,800
Speaker 14: that prime home ownership age of called you know, thirty

551
00:26:59,840 --> 00:27:03,159
Speaker 14: thirty five years old, and they're having life events and

552
00:27:03,200 --> 00:27:06,440
Speaker 14: I know the math is tough, but to the extent

553
00:27:06,480 --> 00:27:08,920
Speaker 14: that they can make things work, and the public home

554
00:27:08,960 --> 00:27:11,320
Speaker 14: builders on their side trying to make it work. I

555
00:27:11,359 --> 00:27:12,680
Speaker 14: think we're still in for a good market.

556
00:27:12,760 --> 00:27:14,679
Speaker 3: I love that having life events sort of, you know,

557
00:27:14,840 --> 00:27:17,280
Speaker 3: having a kid, get married, doing whatever, moving, getting a job.

558
00:27:17,920 --> 00:27:19,879
Speaker 3: Just quickly to follow up on what you said that

559
00:27:20,160 --> 00:27:23,280
Speaker 3: to get supply to come online, you have to see

560
00:27:23,320 --> 00:27:25,520
Speaker 3: interest rates come in meaningfully. You have to see mortgage

561
00:27:25,560 --> 00:27:28,119
Speaker 3: rates come in meaningfully. Does that mean you expect prices

562
00:27:28,119 --> 00:27:30,040
Speaker 3: to fall when interest rates come in?

563
00:27:30,920 --> 00:27:33,479
Speaker 14: There's just no supply out there, right, And so I

564
00:27:33,520 --> 00:27:36,679
Speaker 14: think that's what's really been booing home prices, and we

565
00:27:36,720 --> 00:27:38,760
Speaker 14: don't expect a big decline at home prices. I think

566
00:27:39,080 --> 00:27:40,840
Speaker 14: if you talk to the public home builders, they'll tell

567
00:27:40,840 --> 00:27:43,720
Speaker 14: you that their average selling prices come in about ten

568
00:27:43,760 --> 00:27:46,600
Speaker 14: percent from the peak, but the peak was high. And

569
00:27:46,640 --> 00:27:49,359
Speaker 14: so if you look nationally, home prices are pretty flat

570
00:27:49,440 --> 00:27:51,560
Speaker 14: on a year to date basis, and we don't see

571
00:27:51,800 --> 00:27:54,359
Speaker 14: a big change in that. So it is a tricky

572
00:27:54,400 --> 00:27:57,080
Speaker 14: scenario to make that sort of affordability equation work. And

573
00:27:57,080 --> 00:27:58,800
Speaker 14: again that's why it's so good to be a public

574
00:27:58,800 --> 00:28:00,720
Speaker 14: home builder today when you can offer that financing.

575
00:28:00,840 --> 00:28:04,040
Speaker 3: John the follow of ubs pitching home builders quite clearly,

576
00:28:04,359 --> 00:28:06,960
Speaker 3: thank you so much for being with us. Subscribe to

577
00:28:06,960 --> 00:28:10,400
Speaker 3: the Bloomberg Surveillance Podcast on Apple, Spotify, and anywhere else

578
00:28:10,440 --> 00:28:13,760
Speaker 3: you get your podcasts. Listen live every weekday starting at

579
00:28:13,760 --> 00:28:17,040
Speaker 3: seven am Eastern on Bloomberg dot Com, the iHeartRadio app,

580
00:28:17,240 --> 00:28:17,800
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581
00:28:17,840 --> 00:28:19,320
Speaker 2: And the Bloomberg Business App.

582
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583
00:28:23,000 --> 00:28:24,040
Speaker 3: on the Bloomberg Terminal.

584
00:28:24,240 --> 00:28:27,480
Speaker 2: Thanks for listening. I'm Lisa Abramowitz, and this is Bloomberg.

585
00:28:34,520 --> 00:28:37,200
Speaker 1: Thanks for listening to the Bloomberg Surveillance Podcast.

586
00:28:37,520 --> 00:28:37,720
Speaker 6: Now.

587
00:28:37,760 --> 00:28:41,040
Speaker 1: Stay tuned for today's edition of Bloomberg Daybreak. It's your

588
00:28:41,080 --> 00:28:45,320
Speaker 1: daily news podcast, delivering today's top stories to your podcast

589
00:28:45,360 --> 00:28:48,720
Speaker 1: feed by six am Eastern. It's all the news you

590
00:28:48,880 --> 00:28:53,320
Speaker 1: need in just fifteen minutes. The Bloomberg Daybreak podcast. It

591
00:28:53,480 --> 00:28:57,080
Speaker 1: starts right now from.

592
00:28:56,920 --> 00:29:00,239
Speaker 15: The Bloomberg Interactive Brokers Studios. This is Bloomberg Day Rank

593
00:29:00,320 --> 00:29:01,960
Speaker 15: for Friday, June sixteenth.

594
00:29:02,000 --> 00:29:04,880
Speaker 16: Coming up today, Stocks around the world are on track

595
00:29:04,960 --> 00:29:06,720
Speaker 16: for their best week since March.

596
00:29:07,200 --> 00:29:10,120
Speaker 15: The Bank of Japan skirts global trends and holds it

597
00:29:10,200 --> 00:29:11,280
Speaker 15: stimulus in place.

598
00:29:11,640 --> 00:29:15,440
Speaker 16: Chinese President she Jenping meets with Microsoft founder Bill.

599
00:29:15,320 --> 00:29:18,720
Speaker 15: Gates, and Adobe is the latest tech company to ride

600
00:29:18,800 --> 00:29:20,160
Speaker 15: the AI rally, the.

601
00:29:20,200 --> 00:29:22,680
Speaker 8: New York command charge, and the stabbing death of another

602
00:29:22,760 --> 00:29:28,160
Speaker 8: subway writer was released without bail, plus deadly tornadoes in Texas, Panandletown.

603
00:29:28,560 --> 00:29:29,320
Speaker 8: I'm Michael Barr.

604
00:29:29,440 --> 00:29:30,760
Speaker 11: Oh Ahead, I'm John.

605
00:29:30,560 --> 00:29:34,120
Speaker 17: Staff, Sharon Sports, Ricky Bawler and xandersshoftlish on sixty teens

606
00:29:34,160 --> 00:29:35,000
Speaker 17: at the US Open.

607
00:29:35,040 --> 00:29:36,400
Speaker 11: The metsos the Cardinals tonight.

608
00:29:36,480 --> 00:29:37,680
Speaker 8: The Yankees are in Boston.

609
00:29:38,800 --> 00:29:42,240
Speaker 18: That's all straight Ahead on Bloomberg Day Break, the business

610
00:29:42,240 --> 00:29:44,720
Speaker 18: news you need to starn your day in just one

611
00:29:44,840 --> 00:29:50,000
Speaker 18: fifteen minute podcast each morning on Apples, Spotify, the Bloomberg Business.

612
00:29:49,760 --> 00:29:55,719
Speaker 11: App, and everywhere you get your podcasts. Good morning, I'm

613
00:29:55,800 --> 00:29:56,840
Speaker 11: Nathan Hager.

614
00:29:56,720 --> 00:30:00,240
Speaker 15: And I'm Amy Morris. Here are the stories we're following today.

615
00:30:00,960 --> 00:30:02,800
Speaker 16: Stocks enter the final day of this week on a

616
00:30:02,840 --> 00:30:05,320
Speaker 16: winning streak. The S and P five hundred has risen

617
00:30:05,360 --> 00:30:07,720
Speaker 16: for six straight days, and it now tops the forty

618
00:30:07,720 --> 00:30:10,600
Speaker 16: four hundred level. The Dow is up almost twenty percent

619
00:30:10,600 --> 00:30:13,480
Speaker 16: from mid September low, while the Nasdaq one hundred hit

620
00:30:13,520 --> 00:30:16,840
Speaker 16: its highest level since March of twenty twenty two thanks

621
00:30:16,880 --> 00:30:20,560
Speaker 16: to Apple, Nvidia, and Microsoft and e Toro Global market

622
00:30:20,640 --> 00:30:23,440
Speaker 16: strategist Ben Laylor thinks this rally has legs.

623
00:30:23,760 --> 00:30:26,040
Speaker 19: I think the tech rally is completely justified. I mean

624
00:30:26,080 --> 00:30:28,920
Speaker 19: will see the earning value where the earnings growth thumbers

625
00:30:29,000 --> 00:30:32,000
Speaker 19: turning up, whether it's AI, whether it's cost cutting, whether

626
00:30:32,040 --> 00:30:36,040
Speaker 19: it's investors looking for defensive growth. I think this rally

627
00:30:36,080 --> 00:30:37,480
Speaker 19: is increasingly well balanced.

628
00:30:37,520 --> 00:30:39,840
Speaker 16: Ben Ledler and Etro notes global stocks are on track

629
00:30:39,880 --> 00:30:42,400
Speaker 16: for their best week since March, but trading today could

630
00:30:42,440 --> 00:30:44,800
Speaker 16: come with plenty of twists. In turns, we will see

631
00:30:44,840 --> 00:30:48,440
Speaker 16: a massive number of options contracts expire today in what

632
00:30:48,560 --> 00:30:50,240
Speaker 16: is known as quadruple witching.

633
00:30:50,680 --> 00:30:53,840
Speaker 15: And Nathan the Federal Reserve remains largely in focus on

634
00:30:53,880 --> 00:30:56,440
Speaker 15: the heels of this rally, bets that the Central Bank

635
00:30:56,480 --> 00:31:00,160
Speaker 15: will soon end its tightening cycle. Our fueling optimism, we

636
00:31:00,200 --> 00:31:03,160
Speaker 15: make it more clues Today, Saint Louis FED President Jim

637
00:31:03,200 --> 00:31:06,640
Speaker 15: Bullard and FED Governor Chris Wallers speak in Norway. Today,

638
00:31:06,960 --> 00:31:10,000
Speaker 15: Richmond FED President Tom Barkin speaks on inflation at an

639
00:31:10,000 --> 00:31:11,640
Speaker 15: event in Maryland this morning.

640
00:31:11,760 --> 00:31:14,320
Speaker 16: Well, so far, Amy every FED decision in this tightening

641
00:31:14,360 --> 00:31:18,080
Speaker 16: cycle's been unanimous, and now Larry Summers warns diverging views

642
00:31:18,080 --> 00:31:20,400
Speaker 16: that the central Bank could blow it off course. We

643
00:31:20,440 --> 00:31:23,400
Speaker 16: spoke with the former Treasury Secretary for the latest edition

644
00:31:23,400 --> 00:31:24,920
Speaker 16: of Bloomberg Wall Street Week.

645
00:31:25,000 --> 00:31:28,440
Speaker 20: I found the Fed's action a little bit confusing. This

646
00:31:28,640 --> 00:31:31,480
Speaker 20: meeting felt like it was driven as much by the

647
00:31:31,520 --> 00:31:35,800
Speaker 20: internal political dynamics of the FED as by any consistent

648
00:31:35,920 --> 00:31:41,320
Speaker 20: and coherent reading of the economic situation, and that was

649
00:31:41,360 --> 00:31:42,880
Speaker 20: a bit disturbing to me.

650
00:31:43,280 --> 00:31:46,080
Speaker 16: Those comments from Larry Summers come after the FED paused

651
00:31:46,120 --> 00:31:48,480
Speaker 16: rate hikes for the first time in fifteen months. Stay

652
00:31:48,520 --> 00:31:50,960
Speaker 16: tuned for more of that conversation coming up shortly on

653
00:31:51,000 --> 00:31:51,640
Speaker 16: the program.

654
00:31:52,120 --> 00:31:52,800
Speaker 2: Central banks.

655
00:31:52,840 --> 00:31:55,960
Speaker 15: Meanwhile, also in focus in Asia over night, the Bank

656
00:31:56,000 --> 00:31:59,200
Speaker 15: of Japan held its stimulus measures in place. As Bloomberg

657
00:31:59,280 --> 00:32:03,440
Speaker 15: Daybreak anchor Brian Curtis tells us, the BOJ is waiting

658
00:32:03,440 --> 00:32:05,080
Speaker 15: for more sustainable inflation.

659
00:32:05,480 --> 00:32:08,760
Speaker 21: Governor Kazuo, who waded A left, unchanged the boj's negative

660
00:32:08,800 --> 00:32:13,360
Speaker 21: interest rate and yield curve control program. Yen immediately weakened

661
00:32:13,400 --> 00:32:15,880
Speaker 21: against the dollar. Not that there was much doubt to

662
00:32:15,920 --> 00:32:18,320
Speaker 21: any of this, as it was predicted by forty four

663
00:32:18,360 --> 00:32:22,000
Speaker 21: of forty seven economists we surveyed. Governor Huwaita has said

664
00:32:22,000 --> 00:32:26,320
Speaker 21: the cost of prematurely tightening policy could damage Japan's nascent

665
00:32:26,400 --> 00:32:30,200
Speaker 21: inflation trend and he's not willing to risk it. Still,

666
00:32:30,280 --> 00:32:33,840
Speaker 21: speculation rumbles on that a tweak may be coming in July.

667
00:32:34,440 --> 00:32:36,520
Speaker 21: Brian Curtis, Bloomberg Daybreak.

668
00:32:36,120 --> 00:32:36,680
Speaker 18: Thank you, Brian.

669
00:32:36,720 --> 00:32:40,240
Speaker 16: Turning to geopolitics now, Secretary of State Anthony Blincoln remains

670
00:32:40,240 --> 00:32:42,760
Speaker 16: on track to travel to China this weekend. The nation's

671
00:32:42,760 --> 00:32:45,440
Speaker 16: top diplomat will be in Beijing Sunday. He'll speak with

672
00:32:45,480 --> 00:32:48,720
Speaker 16: several top Chinese officials during his two day visit, including

673
00:32:48,720 --> 00:32:51,160
Speaker 16: a possible meeting with China's President she Jinping.

674
00:32:51,960 --> 00:32:55,400
Speaker 15: Meantime, President she has already met with another big name.

675
00:32:55,480 --> 00:32:59,360
Speaker 15: Microsoft founder Bill Gates sat down with China's president in Beijing.

676
00:32:59,640 --> 00:33:02,640
Speaker 15: She told the billionaire that China is willing to work

677
00:33:02,680 --> 00:33:06,440
Speaker 15: with the world on technology innovation and pandemic prevention.

678
00:33:06,760 --> 00:33:10,600
Speaker 16: Loimi Henry Kissinger is weighing in on geopolitics tied to China,

679
00:33:10,640 --> 00:33:13,520
Speaker 16: The former Secretary of State says a military conflict over

680
00:33:13,600 --> 00:33:18,000
Speaker 16: Taiwan is probable. That's if the current trajectory remains unchanged.

681
00:33:18,280 --> 00:33:20,720
Speaker 16: The one hundred year old diplomat sat down for a

682
00:33:20,800 --> 00:33:25,080
Speaker 16: wide ranging conversation with Bloomberg's editor in chief John Micklfwaite on.

683
00:33:25,120 --> 00:33:30,160
Speaker 22: The current prajictary of religions. I think some military conflict

684
00:33:30,560 --> 00:33:34,240
Speaker 22: is probable, but I also think the current trajectory of

685
00:33:34,360 --> 00:33:36,640
Speaker 22: religion must be alded.

686
00:33:37,320 --> 00:33:39,720
Speaker 16: You can hear the full conversation with former Secretary of

687
00:33:39,760 --> 00:33:42,560
Speaker 16: State Henry Kissinger on Bloomberg Television. We'll have it for

688
00:33:42,600 --> 00:33:46,000
Speaker 16: you tonight at eight pm Eastern. Listen on demand on

689
00:33:46,040 --> 00:33:49,240
Speaker 16: the Bloomberg Talks podcast. You can find that at Apple, Spotify,

690
00:33:49,280 --> 00:33:51,200
Speaker 16: and anywhere else you get your podcasts.

691
00:33:51,600 --> 00:33:53,880
Speaker 15: Turning back to the markets, now, we're seeing shares of

692
00:33:53,880 --> 00:33:57,080
Speaker 15: Adobe gaining this morning. They're up more than three percent

693
00:33:57,200 --> 00:33:59,920
Speaker 15: in early trading. The company is raising its full year

694
00:34:00,040 --> 00:34:04,040
Speaker 15: outlook on optimism that artificial intelligence will spur software demand.

695
00:34:04,360 --> 00:34:06,640
Speaker 15: We get those details from Bloomberg's Charlie Pellett.

696
00:34:06,760 --> 00:34:11,239
Speaker 11: Adobe is the longtime top seller of software for creative professionals.

697
00:34:11,560 --> 00:34:16,080
Speaker 11: It is adding generative AI features throughout its products. Last week,

698
00:34:16,120 --> 00:34:20,080
Speaker 11: the company unveiled enterprise level subscriptions for the new tools,

699
00:34:20,320 --> 00:34:25,279
Speaker 11: which include legal assurance against copyright claims. In New York.

700
00:34:25,440 --> 00:34:27,080
Speaker 11: Charlie Pellett Bloomberg Daybreak.

701
00:34:27,120 --> 00:34:28,799
Speaker 16: All right, Charlie, thanks, we have news on Bank of

702
00:34:28,800 --> 00:34:31,600
Speaker 16: America this morning. We're told the firm's commercial banking unit

703
00:34:31,680 --> 00:34:33,480
Speaker 16: is seeing a surge in new clients.

704
00:34:33,480 --> 00:34:35,560
Speaker 11: In Bloomberg's Doug Krisner has that story.

705
00:34:35,880 --> 00:34:38,440
Speaker 12: It follows the failure of several regional banks in the

706
00:34:38,560 --> 00:34:42,120
Speaker 12: US during March. Biave says its commercial banking unit had

707
00:34:42,160 --> 00:34:44,840
Speaker 12: an increase of fifty five percent in new clients in

708
00:34:44,880 --> 00:34:47,200
Speaker 12: the month of May compared to last year, and the

709
00:34:47,280 --> 00:34:50,600
Speaker 12: momentum is expected to continue. Bank of America saying the

710
00:34:50,680 --> 00:34:53,759
Speaker 12: unit is on track to report fifty percent growth in

711
00:34:53,800 --> 00:34:57,000
Speaker 12: customer editions for all of twenty twenty three. That would

712
00:34:57,000 --> 00:35:00,680
Speaker 12: be up from thirty five percent in new relationships last year,

713
00:35:00,760 --> 00:35:03,400
Speaker 12: and as a result, Bank of America is planning to

714
00:35:03,480 --> 00:35:06,399
Speaker 12: bulk up staffing to keep up with demand. This will

715
00:35:06,400 --> 00:35:10,080
Speaker 12: include hiring senior bankers from outside firms in New York.

716
00:35:10,120 --> 00:35:12,160
Speaker 12: I'm Doug Prisner, Bloomberg Daybreak.

717
00:35:11,840 --> 00:35:12,640
Speaker 2: Thank you, Doug Walt.

718
00:35:12,680 --> 00:35:16,040
Speaker 15: Disney losing a top executive, the company's chief financial officer

719
00:35:16,120 --> 00:35:19,120
Speaker 15: taking a family medical leave of absence, stepping down from

720
00:35:19,120 --> 00:35:22,280
Speaker 15: a role as the war at the world's largest entertainment company.

721
00:35:22,560 --> 00:35:25,200
Speaker 15: Disney says Christine McCarthy will be replaced on an interim

722
00:35:25,239 --> 00:35:29,280
Speaker 15: basis by Kevin Lansbury, the CFO of Disney's Theme Parks Division.

723
00:35:29,680 --> 00:35:31,880
Speaker 2: And this is Bloomberg.

724
00:35:36,680 --> 00:35:37,920
Speaker 16: Time now to take a look at some of the

725
00:35:37,960 --> 00:35:40,040
Speaker 16: other stories making news in New York and around the

726
00:35:40,040 --> 00:35:41,719
Speaker 16: world with Bloomberg's Michael Varr.

727
00:35:41,760 --> 00:35:43,120
Speaker 11: Good morning, Michael, Good Morning.

728
00:35:43,200 --> 00:35:46,280
Speaker 8: Nathan, a twenty year old man accused in Tuesday's deadly

729
00:35:46,360 --> 00:35:50,240
Speaker 8: subway stabbing of a passenger in Brooklyn, was released without bail.

730
00:35:50,760 --> 00:35:54,000
Speaker 8: Jordan Williams was charged with manslaughter and criminal possession of

731
00:35:54,040 --> 00:35:56,359
Speaker 8: a weapon and the death of a homeless man, thirty

732
00:35:56,400 --> 00:36:01,080
Speaker 8: six year old Victor Wade Rogo. Witnesses Rogo was harassing

733
00:36:01,120 --> 00:36:04,880
Speaker 8: subway riders and at one point punched William's girlfriend before

734
00:36:04,960 --> 00:36:09,160
Speaker 8: the deadly stabbing. William's attorney, Jason Goldman, told ABC seven,

735
00:36:09,560 --> 00:36:11,600
Speaker 8: it is a clear case of self defense.

736
00:36:12,000 --> 00:36:13,080
Speaker 11: You have two choices right now.

737
00:36:13,640 --> 00:36:16,520
Speaker 23: You can sit there and get assaulted and your friends

738
00:36:16,640 --> 00:36:19,520
Speaker 23: or family or loved ones can get assaulted and seriously injured.

739
00:36:20,200 --> 00:36:24,200
Speaker 23: Or you can fight back and get arrested and maybe

740
00:36:24,239 --> 00:36:26,840
Speaker 23: get charged, Maybe you go to rikers, maybe get released.

741
00:36:26,840 --> 00:36:28,480
Speaker 23: So you know, what are you supposed to do.

742
00:36:29,160 --> 00:36:32,279
Speaker 8: William's mother says that her son cares about life and

743
00:36:32,520 --> 00:36:36,279
Speaker 8: is extremely remorseful a deadly outbreak of severe weather. At

744
00:36:36,360 --> 00:36:38,560
Speaker 8: least three people are dead and more than one hundred

745
00:36:38,560 --> 00:36:42,320
Speaker 8: injured in the Texas panhandled town of Perryton, a mobile

746
00:36:42,360 --> 00:36:45,760
Speaker 8: home park took a direct hint. Perrington Fire Chief Paul.

747
00:36:45,680 --> 00:36:49,919
Speaker 23: Dutcher searching these areas, searching the briefield see making sure

748
00:36:49,960 --> 00:36:52,040
Speaker 23: we've got people gathered up.

749
00:36:52,400 --> 00:36:56,520
Speaker 8: Tornadoes were also reported from Oklahoma to Michigan. At least

750
00:36:56,560 --> 00:37:00,000
Speaker 8: fifteen people were killed and ten others were hurt after

751
00:37:00,120 --> 00:37:03,319
Speaker 8: a bus carrying more than two dozen people crashed into

752
00:37:03,400 --> 00:37:07,319
Speaker 8: a semi truck in Manitoba, Canada. Authorities say the bus

753
00:37:07,360 --> 00:37:11,000
Speaker 8: crossed the westbound lanes of Highway One and was crossing

754
00:37:11,040 --> 00:37:14,399
Speaker 8: the eastbound lanes when it collided with the semi. As

755
00:37:14,480 --> 00:37:17,880
Speaker 8: drama continues with Republicans in the House, the country is

756
00:37:17,920 --> 00:37:21,920
Speaker 8: potentially headed for another showdown on government funding in October.

757
00:37:22,160 --> 00:37:23,760
Speaker 8: Bloomberg's Aaed Baxter reports.

758
00:37:24,200 --> 00:37:27,240
Speaker 24: Even though a bi partisan bill raised the deat ceiling

759
00:37:27,239 --> 00:37:30,880
Speaker 24: while cutting spending passed earlier this month, this is another

760
00:37:31,000 --> 00:37:35,160
Speaker 24: battle of funding, another round. Senator Lindsey Graham says not

761
00:37:35,280 --> 00:37:36,200
Speaker 24: looking good.

762
00:37:36,040 --> 00:37:39,000
Speaker 11: The chance of passing all the appropriation bills.

763
00:37:40,400 --> 00:37:42,800
Speaker 12: For the House and centergree on numbers almost zero.

764
00:37:43,080 --> 00:37:46,120
Speaker 24: Graham says, there is a big divide between the two

765
00:37:46,200 --> 00:37:50,160
Speaker 24: chambers of the legislature in San Francisco. I'm at Baxter

766
00:37:50,200 --> 00:37:51,160
Speaker 24: Bloomberg Daybreak.

767
00:37:51,200 --> 00:37:54,680
Speaker 8: The Supreme Court, in a seven to two decision upheld

768
00:37:54,680 --> 00:37:58,520
Speaker 8: a landmark law giving Native American families priority in the

769
00:37:58,560 --> 00:38:02,280
Speaker 8: adoption of Native children. A white Texas couple had challenged

770
00:38:02,320 --> 00:38:05,600
Speaker 8: the law as discriminatory on the basis of race. Global

771
00:38:05,680 --> 00:38:08,600
Speaker 8: News twenty four hours a day, powered by more than

772
00:38:08,680 --> 00:38:12,840
Speaker 8: twenty seven hundred journalists nantilists in over one hundred twenty countries.

773
00:38:12,880 --> 00:38:16,080
Speaker 8: How Michael Barr, this is Bloomberg, Nathan.

774
00:38:15,840 --> 00:38:22,920
Speaker 16: Thank you, Michael. Time now for the Bloomberg Sports Update.

775
00:38:22,920 --> 00:38:26,160
Speaker 16: Bronte by Tri State out he Good morning, John Stashwer.

776
00:38:25,680 --> 00:38:26,399
Speaker 11: Good morning, Nathan.

777
00:38:26,560 --> 00:38:30,640
Speaker 17: US Open courses are traditionally known to be extremely challenging,

778
00:38:30,719 --> 00:38:32,399
Speaker 17: even for the best golfers of the world. Not really.

779
00:38:32,480 --> 00:38:35,080
Speaker 17: The case of the La Country Club, ideal conditions led

780
00:38:35,080 --> 00:38:39,279
Speaker 17: to two historic rounds of sixty two Ricky Fowler and

781
00:38:39,440 --> 00:38:42,320
Speaker 17: Xander Shoffley. There had only been one sixty two ever

782
00:38:42,400 --> 00:38:45,520
Speaker 17: in any major. Brandon Grace six years ago at the

783
00:38:45,520 --> 00:38:48,600
Speaker 17: PGA Shofley was bogey free. Fowler set a record with

784
00:38:48,719 --> 00:38:51,640
Speaker 17: ten verdies. He made five birdie putts of more than

785
00:38:51,640 --> 00:38:52,160
Speaker 17: ten feet.

786
00:38:52,320 --> 00:38:55,719
Speaker 25: I didn't really know or see any scores, and then

787
00:38:55,760 --> 00:38:58,320
Speaker 25: I saw that Xander was at seven at that point.

788
00:39:00,160 --> 00:39:01,920
Speaker 25: Sure if he even knew where I was or anything,

789
00:39:01,960 --> 00:39:03,799
Speaker 25: but it was kind of cool to to see if

790
00:39:03,840 --> 00:39:06,080
Speaker 25: he did see he you know, kind of latched on

791
00:39:06,120 --> 00:39:08,040
Speaker 25: and we were, you know, taking off of it.

792
00:39:08,280 --> 00:39:11,120
Speaker 17: Both Fowler and Shoffley have been chasing their first career

793
00:39:11,200 --> 00:39:14,360
Speaker 17: Major victory after numerous close calls. Although Fowler had been

794
00:39:14,400 --> 00:39:16,640
Speaker 17: in a deep slump the last two years, he had

795
00:39:16,640 --> 00:39:18,960
Speaker 17: not even qualified to play the Open. Dustin Johnson in

796
00:39:18,960 --> 00:39:21,920
Speaker 17: twenty sixteen Open winner only two shots behind the co

797
00:39:22,040 --> 00:39:24,840
Speaker 17: leaders and Rory McElroy, whose only Open victory was twelve

798
00:39:24,920 --> 00:39:28,440
Speaker 17: years ago, trails by three round two. Today, the public

799
00:39:28,560 --> 00:39:30,959
Speaker 17: money to help build a new stadium in Las Vegas

800
00:39:31,000 --> 00:39:33,160
Speaker 17: and the Oakland A's now a done deal. It still

801
00:39:33,160 --> 00:39:35,839
Speaker 17: needs the approval of the owners, but Baseball comventioner Rob

802
00:39:35,880 --> 00:39:38,759
Speaker 17: Manford said he feels sorry for A's fans whether there

803
00:39:38,760 --> 00:39:41,000
Speaker 17: was no community sports to keep the team in Oakland.

804
00:39:41,160 --> 00:39:42,919
Speaker 17: Yankees and the Red Sox s Night at Fenway, Yanks

805
00:39:42,960 --> 00:39:45,359
Speaker 17: first visit to Boston, Mets host the Cardinals, who are

806
00:39:45,400 --> 00:39:49,000
Speaker 17: fifteen games under five hundred. Homer Jones has passed away

807
00:39:49,040 --> 00:39:51,960
Speaker 17: a speedy Giants receiver in the late nineteen sixties, and

808
00:39:52,000 --> 00:39:55,040
Speaker 17: after a touchdown, Jones made history becoming the first to

809
00:39:55,120 --> 00:39:58,680
Speaker 17: then spike the ball. Homer Jones was eighty two. John

810
00:39:58,719 --> 00:40:00,320
Speaker 17: Stashedward Bloomberg's.

811
00:39:59,840 --> 00:40:06,360
Speaker 10: Wort from coast to coast, from New York to San Francisco,

812
00:40:06,680 --> 00:40:12,000
Speaker 10: Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business app,

813
00:40:12,000 --> 00:40:17,120
Speaker 10: and Bloomberg dot Com. This is Bloomberg Daybreak. Good morning,

814
00:40:17,160 --> 00:40:19,520
Speaker 10: I'm Nathan Hager. It has been quite the week on

815
00:40:19,600 --> 00:40:22,520
Speaker 10: Wall Street. We are coming off six straight winning sessions

816
00:40:22,520 --> 00:40:26,400
Speaker 10: for stocks. We saw mixed US inflation report. Headline prices

817
00:40:26,440 --> 00:40:30,000
Speaker 10: cooled while core inflation rose. Traders saw that as dubvish,

818
00:40:30,480 --> 00:40:32,799
Speaker 10: and finally we got a pause in rate hikes from

819
00:40:32,840 --> 00:40:35,279
Speaker 10: the Federal Reserve, the first time they did not raise

820
00:40:35,360 --> 00:40:38,680
Speaker 10: rates in fifteen months. Let's take stock of it all

821
00:40:38,680 --> 00:40:42,240
Speaker 10: now with Larry Summers, the Bloomberg News contributor and former

822
00:40:42,360 --> 00:40:45,719
Speaker 10: US Treasury Secretary, sat down for a conversation with Bloomberg's

823
00:40:45,760 --> 00:40:48,359
Speaker 10: Romain Bomstick. Let's listen in to part of that right.

824
00:40:48,280 --> 00:40:51,280
Speaker 26: Now, Larry, let's talk about the FED meeting more importantly.

825
00:40:51,320 --> 00:40:55,520
Speaker 26: That FED pause not necessarily a surprise, but do you

826
00:40:55,560 --> 00:40:56,560
Speaker 26: think it was appropriate?

827
00:40:57,000 --> 00:40:57,880
Speaker 11: I'm not sure.

828
00:40:58,160 --> 00:41:02,960
Speaker 20: I found the Fed's action a little bit confusing. I

829
00:41:03,080 --> 00:41:09,120
Speaker 20: understand the arguments for not hiking at this meeting, but

830
00:41:09,239 --> 00:41:14,560
Speaker 20: those arguments wouldn't point towards signaling to further rate increases.

831
00:41:15,080 --> 00:41:19,560
Speaker 20: They wouldn't point towards significantly revising the forecast towards a

832
00:41:19,600 --> 00:41:26,400
Speaker 20: stronger economy and more inflation. I understand the arguments for

833
00:41:26,680 --> 00:41:30,720
Speaker 20: having gone the other way, but I don't really understand

834
00:41:31,200 --> 00:41:36,600
Speaker 20: the internal consistency of an approach of pausing at this

835
00:41:36,760 --> 00:41:42,840
Speaker 20: meeting but then signaling to further rate hikes down the road,

836
00:41:43,360 --> 00:41:47,360
Speaker 20: and signaling that they no longer expect unemployment to increase

837
00:41:47,560 --> 00:41:51,279
Speaker 20: nearly as much as they used to expect it. So

838
00:41:51,640 --> 00:41:54,600
Speaker 20: this meeting felt like it was driven as much by

839
00:41:54,640 --> 00:41:58,640
Speaker 20: the internal political dynamics of the FED as by any

840
00:41:58,800 --> 00:42:04,920
Speaker 20: consistency and cohar and reading of the economic situation, and

841
00:42:04,960 --> 00:42:06,319
Speaker 20: that was a bit disturbing.

842
00:42:06,719 --> 00:42:09,080
Speaker 26: They raised some of their economic projections or at least

843
00:42:09,080 --> 00:42:11,319
Speaker 26: they improved a little bit here, but you still have

844
00:42:11,360 --> 00:42:13,440
Speaker 26: a market that seems to be betting on this idea

845
00:42:13,920 --> 00:42:17,040
Speaker 26: of a recession, the idea that the FED itself may

846
00:42:17,080 --> 00:42:19,200
Speaker 26: have actually overtightened, or at least is on its way

847
00:42:19,239 --> 00:42:19,760
Speaker 26: to doing.

848
00:42:19,600 --> 00:42:23,480
Speaker 20: That, That would not be my best guess. I think

849
00:42:23,520 --> 00:42:27,360
Speaker 20: it's very hard to read. But my best guess is

850
00:42:27,400 --> 00:42:31,879
Speaker 20: that the consumer, which is seventy percent of the economy,

851
00:42:32,360 --> 00:42:38,160
Speaker 20: appears to be running really quite strong at this point.

852
00:42:38,600 --> 00:42:42,719
Speaker 20: We've got very strong employment data, much faster.

853
00:42:42,560 --> 00:42:44,880
Speaker 11: Than population growth.

854
00:42:45,440 --> 00:42:49,040
Speaker 20: The indicators on wages are a bit mixed, but the

855
00:42:49,040 --> 00:42:53,480
Speaker 20: ones that seem most reliable to me that adjusts for

856
00:42:53,640 --> 00:42:57,200
Speaker 20: changes in the composition of the labor force, are showing

857
00:42:57,760 --> 00:43:04,000
Speaker 20: substantial strength. So I don't see the idea that we've

858
00:43:04,040 --> 00:43:10,400
Speaker 20: got a durable reduction in inflation clearly established, nor do

859
00:43:10,520 --> 00:43:16,560
Speaker 20: I see clear evidence of a slowing coming. So in

860
00:43:16,600 --> 00:43:21,360
Speaker 20: that context, I think the Fed has probably got to

861
00:43:21,480 --> 00:43:27,520
Speaker 20: maintain a posture of moving towards restraint. But I think

862
00:43:27,600 --> 00:43:32,680
Speaker 20: that they ought to decide what their balancing of risks is,

863
00:43:33,360 --> 00:43:38,080
Speaker 20: and I was struck that the balancing of risks that

864
00:43:38,239 --> 00:43:43,000
Speaker 20: was implicit in not moving this time was kind of

865
00:43:43,040 --> 00:43:48,000
Speaker 20: inconsistent with the balancing of risks that was signaled by

866
00:43:48,080 --> 00:43:53,759
Speaker 20: the two tightenings and by the forecast revisions.

867
00:43:54,120 --> 00:43:57,160
Speaker 26: I want to go overseas to China. They had a

868
00:43:57,239 --> 00:43:59,480
Speaker 26: much different policy meeting coming out of the People's Bank

869
00:43:59,520 --> 00:44:02,040
Speaker 26: of China cut And there's been a lot of discussion

870
00:44:02,040 --> 00:44:04,880
Speaker 26: here Larry about the health of the Chinese economy and

871
00:44:04,960 --> 00:44:06,920
Speaker 26: light of the data we've gotten and a lot of

872
00:44:06,920 --> 00:44:09,400
Speaker 26: some of the reports by Bloomberg and others that they

873
00:44:09,440 --> 00:44:12,560
Speaker 26: are considering fiscal or at least some sort of economic

874
00:44:12,600 --> 00:44:15,480
Speaker 26: stimulus measures to get that economy going back again.

875
00:44:16,360 --> 00:44:21,560
Speaker 20: I think the Chinese have a very difficult set of

876
00:44:21,800 --> 00:44:28,240
Speaker 20: challenges ahead of them. They're very serious financial overhangs coming

877
00:44:28,280 --> 00:44:33,000
Speaker 20: out of what's happening in real estate. I take a

878
00:44:33,080 --> 00:44:36,520
Speaker 20: somewhat more medium term view of it. And what's an

879
00:44:36,520 --> 00:44:42,000
Speaker 20: economy about. Economy is about people and it's about capital.

880
00:44:42,560 --> 00:44:45,240
Speaker 20: And what we know is that the number of births

881
00:44:45,239 --> 00:44:49,319
Speaker 20: in China has fallen by almost fifty percent in the

882
00:44:49,360 --> 00:44:54,920
Speaker 20: last six years, and we know that Bloomberg reported that

883
00:44:55,760 --> 00:45:00,480
Speaker 20: the number of millionaires leaving China was kind of high,

884
00:45:00,760 --> 00:45:05,279
Speaker 20: high by historical standards and high by global standards. So

885
00:45:05,320 --> 00:45:11,880
Speaker 20: whether it's a supply of people investment in new capital,

886
00:45:12,280 --> 00:45:16,400
Speaker 20: I think you've got some fundamental bets that aren't running

887
00:45:16,440 --> 00:45:17,480
Speaker 20: that positive.

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00:45:20,120 --> 00:45:23,160
Speaker 27: This is Bloomberg Daybreak Today, your morning brief on the

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00:45:23,200 --> 00:45:26,600
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00:45:43,600 --> 00:45:46,480
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Speaker 11: Bloomberg dot Com. I'm Nathan Hager and I'm Amy Morris.

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00:46:11,480 --> 00:46:14,880
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