WEBVTT - We're Going To See An Implosion In High-End Condos: Guterman 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.440 Along with my co host Lisa A. Brahmowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg p m 0:00:20.680 --> 0:00:30.720 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 0:00:30.760 --> 0:00:33.199 It is my pleasure to introduce Gerald Government. He is 0:00:33.240 --> 0:00:37.720 the senior principal partner and chief Investment Officer of Government Partners. 0:00:38.040 --> 0:00:40.240 He joins us here as an expert in all things 0:00:40.440 --> 0:00:43.199 real estate and Gerald Government. I wonder if you could 0:00:43.240 --> 0:00:45.120 just describe a little bit for people that may not 0:00:45.200 --> 0:00:49.680 be familiar with your history and your company, what achievements 0:00:49.680 --> 0:00:53.159 and accomplishments, because they are many, What you can just 0:00:53.240 --> 0:00:56.080 describe to give people a little idea of your background. Sure, 0:00:56.280 --> 0:00:59.120 we're in business now a little over forty nine years. 0:00:59.120 --> 0:01:02.240 Our year will be in a few months as a 0:01:02.280 --> 0:01:04.440 matter of fact, that we have the same partners we 0:01:04.520 --> 0:01:08.480 started in nineteen nine. Next year we're going to celebrate 0:01:08.520 --> 0:01:11.160 the fiftieth year. We're actually going to sign our agreement. 0:01:11.760 --> 0:01:14.279 We never got around to signing it. Because we simply 0:01:14.280 --> 0:01:17.319 couldn't afford the legal fee for an attorney to do it. 0:01:17.360 --> 0:01:21.560 But we are all each other's lifetime friends, and I'm 0:01:21.640 --> 0:01:25.240 very lucky to have this kind of relationship with five 0:01:25.280 --> 0:01:29.920 other guys. UM to know what we do, we are 0:01:30.000 --> 0:01:34.240 in the real estate business. Obviously, we are developers, builders, 0:01:34.520 --> 0:01:40.399 owner operators. On the development side, my company was the 0:01:40.440 --> 0:01:45.360 original owners and developers of the residential portion of Roosevelt 0:01:45.400 --> 0:01:51.160 Dialect called Island House, and we owned it, we operated it. Uh. 0:01:51.680 --> 0:01:54.840 We owned the Glen Oaks Village, which was three thousand 0:01:54.920 --> 0:01:59.480 apartments and queens. We owned a number of properties around Manhattan, 0:01:59.640 --> 0:02:06.720 the Park Vendome to seven Street, fifty Sutton Place South 0:02:07.520 --> 0:02:12.600 for twift Street. UM and the numbers. He's got a list, 0:02:13.320 --> 0:02:18.440 and it adds up to condiment apartments and rental and 0:02:18.520 --> 0:02:24.040 rental apartments owned and managed. The largest condo owner and 0:02:24.160 --> 0:02:26.200 operator at least in New York, if not in the 0:02:26.280 --> 0:02:29.520 in the country. We finished now sixteen thousand and eight 0:02:29.560 --> 0:02:33.720 departments through last year, which they tell me is about 0:02:33.840 --> 0:02:38.280 three and a half times the next largest in the 0:02:38.320 --> 0:02:40.720 New York area. So let's talk about the New York 0:02:40.760 --> 0:02:44.960 area because we've seen cranes still up and bringing up 0:02:45.080 --> 0:02:48.640 more buildings and more buildings. Uh. We were just talking 0:02:48.960 --> 0:02:53.800 ahead of time about how the biggest problem for local 0:02:53.960 --> 0:02:57.120 or residential real estate markets is overbuilding. Are we overbuilt 0:02:57.120 --> 0:02:59.560 in New York? And what is the consequence if we are, 0:03:00.040 --> 0:03:04.560 we're overbuilt to the price level that we're trying to 0:03:04.680 --> 0:03:09.359 sell or rent to. Uh. New York now has a 0:03:09.400 --> 0:03:16.720 reputation that's shared by Miami and Houston, Texas. The reputation is, 0:03:16.720 --> 0:03:19.919 if you give a builder in New York a mortgage, 0:03:19.919 --> 0:03:22.639 you will build in the desert. There's just no limit 0:03:23.200 --> 0:03:25.520 to the amount that will be built as long as 0:03:25.520 --> 0:03:28.480 they can borrow the money. You know, it's a funny 0:03:28.520 --> 0:03:32.519 thing about borrowing money. It's tax free, and a lot 0:03:32.560 --> 0:03:37.040 of the building that goes on throughout the country has 0:03:37.080 --> 0:03:40.600 to do with something called the first draw. The first 0:03:40.680 --> 0:03:43.040 draw is exactly what it seems to be. It is 0:03:43.080 --> 0:03:46.800 the first amount you get from a lender. It is 0:03:46.920 --> 0:03:51.480 tax free because it's alone, but it's also unaccountable. Because 0:03:51.520 --> 0:03:54.920 it's unaccountable. Can you imagine all of the things you 0:03:55.000 --> 0:03:59.560 can cover, all of the mistakes you can cover. And consequently, 0:03:59.800 --> 0:04:05.000 the first draw forces builders to build more because they 0:04:05.040 --> 0:04:08.200 can't cover the course of what they built previously. So 0:04:08.240 --> 0:04:10.440 are we heading toward the crash here with respect to 0:04:10.640 --> 0:04:14.080 the high ends, the mid to high ends condominium markets 0:04:14.160 --> 0:04:18.800 or or or. I am convinced that UM, and a 0:04:18.839 --> 0:04:22.200 reason that I've brought my people back to New York 0:04:22.279 --> 0:04:25.279 because we work in a number of other states, UM, 0:04:25.720 --> 0:04:29.000 is that we are going to see an implosion of 0:04:29.040 --> 0:04:34.680 these ridiculously high priced condominiums that have no reason to 0:04:34.800 --> 0:04:37.200 have been built in the first place. They weren't based on, 0:04:37.720 --> 0:04:42.040 in my humble opinion, sound and reasonable thought. They were 0:04:42.080 --> 0:04:45.600 based on hopes and dreams of being able to attract 0:04:45.680 --> 0:04:50.479 folks from other countries who either had flight capital or 0:04:50.800 --> 0:04:53.719 were simply trying to establish something for ego in the 0:04:53.839 --> 0:04:56.560 United States. And I think you couldn't see from some 0:04:56.640 --> 0:04:59.600 of the prices that have been paid fifty million, seventy 0:04:59.640 --> 0:05:02.719 five hundred million dollars, what does that have to do 0:05:02.800 --> 0:05:06.000 with the time of day? That's simply an outsized ego 0:05:06.160 --> 0:05:10.520 trying to be self satisfied. You have written about something 0:05:10.560 --> 0:05:13.000 described as sleight of hand and magic, and it's not 0:05:13.120 --> 0:05:17.359 about Whodini tell us how slight of hand and magic 0:05:17.480 --> 0:05:21.080 factor into real estate investment. Oh yes, it's some of 0:05:21.120 --> 0:05:25.080 my favorite things. What I have found over the years 0:05:26.520 --> 0:05:31.719 is that when I noticed funds buying portfolios of properties, 0:05:32.600 --> 0:05:36.640 they were buying them for different reasons than what I 0:05:36.680 --> 0:05:39.919 originally thought. I thought they were properly investing the money 0:05:40.320 --> 0:05:43.400 and looking for a return. What I found was they 0:05:43.400 --> 0:05:46.600 were looking for magic. What they would do is they 0:05:46.640 --> 0:05:50.000 would buy a portfolio of maybe three, four, or five 0:05:50.120 --> 0:05:54.040 or more properties, and the seller would agree to take 0:05:54.320 --> 0:05:59.560 the funds in total as one number, without apportioning the 0:05:59.640 --> 0:06:03.560 sale price to each property. So what was happening is 0:06:04.160 --> 0:06:08.680 the buyer was now deciding on what the pro rata 0:06:08.800 --> 0:06:12.520 share of purchase price would be of this total each 0:06:12.520 --> 0:06:15.760 one of the properties. And when he did that, if 0:06:15.760 --> 0:06:17.760 you think of it this way, it's really what happened. 0:06:18.000 --> 0:06:21.600 He could take his best property he was buying and 0:06:21.760 --> 0:06:25.520 put the lowest basis, and he could take the worst 0:06:25.560 --> 0:06:29.039 property he was buying an increase that basis out of 0:06:29.080 --> 0:06:35.360 all reasonable thought. And consequently, when he went to sell first, 0:06:35.440 --> 0:06:39.120 his return on the on the best property became astronomical. 0:06:39.480 --> 0:06:43.120 When he went to sell, he was selling at a 0:06:43.320 --> 0:06:47.000 full spasis. Yeah, well, there are a lot of people 0:06:47.040 --> 0:06:49.440 who are looking for magic, they might get something else. 0:06:49.720 --> 0:06:52.839 Gerald Gotterman, thank you so much. That was fantastic. Gerald 0:06:52.839 --> 0:06:57.960 Gotterman a senior principal partner at Government Partners, overseeing thousands 0:06:58.160 --> 0:07:11.680 and thousands of apartments. We get to speak to one 0:07:11.680 --> 0:07:14.360 of the fifty most powerful women in New York. She 0:07:14.480 --> 0:07:17.400 is sitting with us, Leslie Himmel. She is co managing 0:07:17.440 --> 0:07:21.360 partner of Himmel and Marrying Off Partners, private investor, private 0:07:21.400 --> 0:07:25.000 ut landlord in in New York City and with more 0:07:25.040 --> 0:07:27.520 than thirty years of experience. Leslie, thank you so much 0:07:27.560 --> 0:07:29.720 for being with us. Where are we right now with 0:07:29.800 --> 0:07:32.520 the New York commercial real estate market? We've heard a 0:07:32.520 --> 0:07:36.040 lot about cooling off and pricing. How far is this 0:07:36.080 --> 0:07:38.800 going to go? First of all, thank you for having 0:07:38.800 --> 0:07:41.920 me on your show. Just to Contexas UM. Steve Marongolf 0:07:41.960 --> 0:07:45.920 and I have been investors in Manhattan secondary office buildings 0:07:45.960 --> 0:07:48.680 for the last thirty four years. We've been through many cycles. 0:07:49.120 --> 0:07:51.080 We feel like we've been at a tipping point for 0:07:51.120 --> 0:07:53.679 actually a few years, waiting for interest rates to start 0:07:53.720 --> 0:07:56.280 to rise. I was just on a panel where there 0:07:56.360 --> 0:07:59.000 was a reference on oak Tree saying that there's a 0:07:59.000 --> 0:08:03.840 correlation to cap rates of about point eight to one. 0:08:04.640 --> 0:08:07.080 As interest rates go up, so as interest rates rise, 0:08:07.200 --> 0:08:10.760 pricing should come down. There's been way too much money 0:08:10.880 --> 0:08:13.920 chasing goods here. Cap rates were at three and four 0:08:14.080 --> 0:08:16.360 for a few years, three three and four percent, maybe 0:08:16.360 --> 0:08:19.640 even negative yields. And you've seen the bid ask spread 0:08:19.720 --> 0:08:21.560 changing a lot. So it feels like there's going to 0:08:21.680 --> 0:08:24.840 be repricing. Although New York City is still the best 0:08:25.240 --> 0:08:28.560 capital in the world and lots of international capital is 0:08:28.600 --> 0:08:31.040 still coming here. I wonder if you could just take 0:08:31.040 --> 0:08:34.720 a step back and tell us about Bernard Mendick and 0:08:34.760 --> 0:08:39.240 what influence Bernie Mendick had on your career. Well, that's 0:08:39.280 --> 0:08:43.640 a question I didn't expect. Bernie Mendick was the chair 0:08:43.720 --> 0:08:47.320 of Redney and I knew him in my first real 0:08:47.400 --> 0:08:49.280 estate board in New York. Yeah, yes, the real real 0:08:49.400 --> 0:08:52.400 Estate Board of New York. And UM, I had been 0:08:52.400 --> 0:08:56.160 integrated resources in my start after Harvard Business School, and 0:08:56.200 --> 0:08:57.920 he told me I was going to be nothing unless 0:08:57.960 --> 0:09:01.120 I started my own business. And and um that was 0:09:01.120 --> 0:09:03.800 pretty brave. That was thirty five years ago for a 0:09:03.840 --> 0:09:06.040 woman to try to start our own business as an 0:09:06.040 --> 0:09:09.679 owner and developer, and um I did it. Was the 0:09:09.760 --> 0:09:12.920 right advice. It was a great advice, and I've picked 0:09:12.920 --> 0:09:15.880 a great partner. We've been partners thirty four years. He 0:09:16.000 --> 0:09:18.440 made fun of me in a way because that was 0:09:18.440 --> 0:09:21.240 Bernie's style, and um, he was a great influence and 0:09:21.920 --> 0:09:24.520 I'm very grateful he passed away many years ago. But 0:09:24.559 --> 0:09:26.720 he was a real entrepreneur and I've been able to 0:09:26.720 --> 0:09:28.480 follow a little bit in his footsteps. You know. I 0:09:28.480 --> 0:09:29.760 want to pick up on a point that you were 0:09:29.760 --> 0:09:32.920 talking about with respect to foreign money coming into New York. 0:09:33.360 --> 0:09:37.839 Have you seen that slow with possible capital restrictions from 0:09:37.920 --> 0:09:41.960 China or just the slowing of the economy there. Canada 0:09:42.040 --> 0:09:46.280 has increased they're investing in New York particularly was my 0:09:46.360 --> 0:09:49.439 sub market that I focus on. Um, there's definitely been 0:09:49.440 --> 0:09:52.800 a slowing down in Asian money, but there's still enormous 0:09:52.800 --> 0:09:55.880 amount of capital coming here. UM also from Europe at 0:09:55.880 --> 0:09:57.880 this point. So it's really just an interest rate story 0:09:57.880 --> 0:10:02.080 from your perspective. The cooling it's there was interest rate 0:10:02.120 --> 0:10:05.880 and also alternative investments as one can invest again in bonds. 0:10:05.960 --> 0:10:08.920 You see, even like Black Rocky had three three billion 0:10:09.000 --> 0:10:12.760 dollars go out from their stocks in the last quarter, 0:10:13.040 --> 0:10:16.200 so you're seeing money flow from stocks into investing in 0:10:16.320 --> 0:10:19.960 bond investments again, and and therefore, you know, real estate 0:10:20.000 --> 0:10:23.559 we should catch up eventually with inflation. I think you 0:10:23.559 --> 0:10:26.079 you'll still have a steady flow. We're not going We're 0:10:26.120 --> 0:10:28.760 not going off a cliff this time. You've been quoted 0:10:28.760 --> 0:10:33.120 as saying that Midtown Manhattan will look really different, but 0:10:33.400 --> 0:10:36.240 it will take five years most likely ten. Tell us 0:10:36.280 --> 0:10:39.080 how it will look different. Okay, but Lisa and I 0:10:39.120 --> 0:10:42.440 were talking before the show about our strategy for thirty 0:10:42.480 --> 0:10:45.720 or four years has been buying in emerging neighborhoods. We 0:10:45.840 --> 0:10:49.400 bought in Harlem, we butt in uh Soho, we bought 0:10:49.520 --> 0:10:52.800 No Hoo, we bought a Longan City almost thirty years ago. 0:10:53.280 --> 0:10:56.719 Midtown East is the new emerging market, and it's so 0:10:56.840 --> 0:10:59.080 out right now. Tenants are paying more to be like 0:10:59.120 --> 0:11:01.440 Netflix paid hundred and twenty dollars a foot to be 0:11:01.480 --> 0:11:04.319 on Little Broadway in eighteen Street. Nobody wants to be 0:11:04.360 --> 0:11:08.040 in Midtown. The new zoning that we finally got after 0:11:08.080 --> 0:11:11.720 eight years of fighting is going to help kickstart the 0:11:11.800 --> 0:11:15.640 renovation and rebuilding of properties, and it's just going to reimagined. 0:11:15.720 --> 0:11:17.680 It's going to take at least five, maybe ten years 0:11:17.679 --> 0:11:19.920 for it to come back. It's still an epicenter of 0:11:20.000 --> 0:11:23.120 New York. Are you buying right now in Midtown East 0:11:23.280 --> 0:11:24.840 or are you sitting on the sidelines for a while. 0:11:25.200 --> 0:11:27.599 We're waiting for pricing to get a little bit more realistic. 0:11:27.640 --> 0:11:29.360 But we have a word chest of a few hundred 0:11:29.360 --> 0:11:32.440 million dollars ready to pounce with institutional partners to back 0:11:32.520 --> 0:11:34.360 us up. How much do prices have to come down 0:11:34.480 --> 0:11:37.280 to get in? They just have There has to be 0:11:37.280 --> 0:11:39.360 more volume on the market and I think about ten 0:11:39.400 --> 0:11:44.360 percent maybe fifteen rebuilding the rebuilding of Park Avenue. Do 0:11:44.440 --> 0:11:48.440 you see that calculus changing at all? Well, I think 0:11:48.520 --> 0:11:52.040 Fisher Brothers had this fabulous contest where they had everything 0:11:52.080 --> 0:11:55.120 being reimagined. Um, they're doing a great job in getting 0:11:55.120 --> 0:11:57.920 creative and I think there'll be something happening in the 0:11:57.920 --> 0:11:59.959 next five or ten years and it's necessary to make 0:12:00.000 --> 0:12:04.280 it cool again. The recent announcement that JP Morgan is 0:12:04.280 --> 0:12:07.199 going to tear down their building on Park Avenue build 0:12:07.240 --> 0:12:11.160 a new bigger, better, brighter, taller, is that what's going 0:12:11.200 --> 0:12:14.400 to happen. That's gonna be one example of many that 0:12:14.440 --> 0:12:17.319 you're going to say they're the air rights transfer that 0:12:17.360 --> 0:12:19.959 you can have from landmarks. That's happening in multiple buildings 0:12:20.040 --> 0:12:24.439 right now. Is there any neighborhood in New York City 0:12:24.480 --> 0:12:28.360 that you think could even see values appreciate going forward 0:12:28.600 --> 0:12:33.000 in the next say two years, The boroughs really even 0:12:33.000 --> 0:12:38.040 after Brooklyn already like well, the Opportunity Zone legislation is 0:12:38.080 --> 0:12:40.280 going to bring a lot of money to the to 0:12:40.400 --> 0:12:44.120 the Boroughs. All right, well done, Thank you very much 0:12:44.160 --> 0:12:46.480 for being here and having us here at the Eisner 0:12:46.520 --> 0:12:48.839 Amper Global Leaders in Real Estate a Summit, and want 0:12:48.840 --> 0:12:51.920 to thank you very much Leslie Himmel, co, Managing partner 0:12:51.960 --> 0:12:55.080 at Himmel Marong Golf Properties, telling us all about New 0:12:55.160 --> 0:12:58.120 York real estate. Well done at congratulations, Thank you so 0:12:58.200 --> 0:13:11.120 much for having me right now. I want to introduce 0:13:11.160 --> 0:13:13.200 a very special guest. We are privileged to be able 0:13:13.240 --> 0:13:15.520 to speak with Don People's, the chairman and chief executive 0:13:15.880 --> 0:13:19.920 of the People's Corporation, long time experience in the markets, 0:13:20.400 --> 0:13:22.720 a real good bird's eye view over what's going on. 0:13:22.800 --> 0:13:26.640 So let's start there. We got more disappointing housing data today. 0:13:26.960 --> 0:13:29.800 Where are we in the housing cycle? From your perspective, um, 0:13:29.840 --> 0:13:32.560 I think that we are in a more in the 0:13:32.600 --> 0:13:35.600 bottom half bottom of the cycle. Right now, I think 0:13:35.640 --> 0:13:38.680 that the markets catching his breath. I mean everything's healthy. 0:13:38.720 --> 0:13:43.040 I mean job growth, employment, everything's very healthy. I mean 0:13:43.240 --> 0:13:47.440 cost have um had a big impact on affordability, and 0:13:47.520 --> 0:13:50.040 so fewer people are able to buy right now because 0:13:50.280 --> 0:13:53.000 not because of income issues, but because of the rising 0:13:53.000 --> 0:13:55.200 and run up and cost and so the markets now 0:13:55.320 --> 0:13:57.920 got to find its way back down. I mean developers, 0:13:58.040 --> 0:14:01.920 you know, my company included, we were extremely optimistic that 0:14:02.000 --> 0:14:05.920 this big run um of price increases would continue. And 0:14:06.000 --> 0:14:08.120 it's it's not, and it shouldn't have. I mean what 0:14:08.240 --> 0:14:12.000 happened is that we had the Great Recession. Development came 0:14:12.040 --> 0:14:14.880 to a screeching halt up until say two thousand, late 0:14:14.880 --> 0:14:17.760 two thousand, two thousand twelve, and there was huge pent 0:14:17.840 --> 0:14:21.000 up demand. Well, the market has now satisfied that pent 0:14:21.080 --> 0:14:24.320 up demand and now we're back on a more equilibrium level. 0:14:24.400 --> 0:14:26.880 So we can't have these big run ups on prices 0:14:26.920 --> 0:14:29.360 I mean cast of materials and cost of run up 0:14:29.360 --> 0:14:32.560 significantly because of this big rush to develop. So now 0:14:32.600 --> 0:14:34.280 things gonna settle down a little bit, and I think 0:14:34.320 --> 0:14:39.160 we'll see a much more healthy market, barring some catastrophic event. 0:14:39.640 --> 0:14:42.240 The market is gonna level off. There'll be a normal 0:14:42.320 --> 0:14:46.000 growth as opposed to this extreme volatility UM in the 0:14:46.200 --> 0:14:48.920 in the real estate market. Just to step back for 0:14:48.960 --> 0:14:53.280 a moment, Uh, you left Rutgers pre med to go 0:14:53.360 --> 0:14:57.480 into real estate. Yeah, you did a major development in 0:14:57.600 --> 0:15:01.560 d C that was successful. Then something happened. You decided 0:15:01.600 --> 0:15:03.200 to go You want to go to Miami. Now you're 0:15:03.200 --> 0:15:07.600 based in Coral Gables. You've got properties all over the 0:15:07.720 --> 0:15:13.680 United States. But your tagline of the company is affirmative Development, 0:15:13.960 --> 0:15:18.120 and that's not by coincidence. Can you tell us about that? Well? 0:15:18.240 --> 0:15:20.920 Thank you, m'm and PIM. We like, you know, as 0:15:20.960 --> 0:15:24.240 a company, we like geographic and product type diversification. So 0:15:24.280 --> 0:15:28.600 I like to um do go into other markets, urban 0:15:28.600 --> 0:15:32.400 gateway markets with big barriers to entry. UM. But you know, 0:15:32.440 --> 0:15:35.000 I quit Rutgers to go work in real estate. And 0:15:35.040 --> 0:15:37.280 I was exposed to real estate by my mother. UM. 0:15:37.280 --> 0:15:40.360 My mother raised me and my parents were divorced when 0:15:40.400 --> 0:15:42.840 I was five, So she was a breadwinner in our household, 0:15:43.240 --> 0:15:46.440 and she was knocking down you know, um and confronting 0:15:46.480 --> 0:15:50.520 barriers throughout her career. Uh. And so I wanted to 0:15:50.560 --> 0:15:54.400 create an environment in my company that recognizes that we 0:15:54.440 --> 0:15:57.040 need to make this a more level playing field. And 0:15:57.160 --> 0:15:59.600 so how to do that is to make sure by 0:15:59.680 --> 0:16:03.080 my company that we provide access to equal opportunities for 0:16:03.240 --> 0:16:06.080 minority and women entrepreneurs. So as a whole, throughout our 0:16:06.080 --> 0:16:09.800 company UM, we since the history of our company, twenty 0:16:09.880 --> 0:16:13.120 five over of all of our contracts for our projects 0:16:13.120 --> 0:16:15.680 have gone to minority and women owned businesses. I mean, 0:16:15.840 --> 0:16:18.120 so think about this New York City six or seven 0:16:18.120 --> 0:16:22.040 percent minority and as we stand today and as fifty 0:16:22.080 --> 0:16:24.360 three percent female, and if we stand today, the city 0:16:24.400 --> 0:16:27.040 does less than three percent of its contract with minority 0:16:27.040 --> 0:16:29.040 and women own businesses. So I'm very proud of that. 0:16:29.280 --> 0:16:31.480 And so that's a big part of what our company 0:16:31.800 --> 0:16:35.080 UM does is we create environments of our opportunity. We 0:16:35.160 --> 0:16:40.400 are a capitalistic democracy. A capitalistic democracy means that businesses lead, 0:16:40.680 --> 0:16:44.160 entrepreneurs innovate and lead. And so we cannot advocate this 0:16:44.280 --> 0:16:48.680 responsibility of a of a of inclusiveness UM to the 0:16:48.720 --> 0:16:51.720 public sector, and the private sector has a key role 0:16:51.800 --> 0:16:54.400 to do that. Larry Thinks set that in his annual 0:16:54.480 --> 0:16:57.920 letter to shareholders that UM, you know, black Rock has 0:16:57.960 --> 0:17:01.120 to do more than just make profits, but invest UM 0:17:01.520 --> 0:17:04.359 in an impact investing and I think big part of 0:17:04.400 --> 0:17:08.240 that is that, you know, opportunities ought to be reflective 0:17:08.440 --> 0:17:12.160 of the demographics of our society and they're not, and 0:17:12.400 --> 0:17:15.720 especially in the business sector, and so businesses have to 0:17:15.760 --> 0:17:18.679 accept that responsibility. And so that's what why we do 0:17:18.720 --> 0:17:21.439 what we do. Businesses lead so to politicians, and the 0:17:21.480 --> 0:17:24.880 Washington Post reported that you're considering running for New York 0:17:24.920 --> 0:17:27.680 City mayor. Is that still in the carts? Yeah, I mean, look, 0:17:27.680 --> 0:17:30.600 I'm considering it, UM. I did before. UM. I don't 0:17:30.640 --> 0:17:34.520 have a personal ambition UH to be in politics or 0:17:35.040 --> 0:17:37.400 personal ambition to be a mayor of New York City. 0:17:37.400 --> 0:17:39.720 I never have had that kind of personal ambition, but 0:17:39.760 --> 0:17:44.480 I do UM have a personal commitment to UM balancing 0:17:44.480 --> 0:17:47.600 a system that you know makes our country great and 0:17:48.040 --> 0:17:51.639 entrepreneurship and business is what makes America a great nation 0:17:51.720 --> 0:17:55.399 amongst its people, and so we have a responsibility as 0:17:55.400 --> 0:17:58.119 a business UM to do that. So I'm interested in 0:17:58.119 --> 0:18:01.359 that regard. I'm curious as a business owner, do you 0:18:01.400 --> 0:18:03.359 think that the policy is currently in place at a 0:18:03.480 --> 0:18:08.600 national level are very supportive of business? Yes, but they 0:18:08.920 --> 0:18:15.760 create UM unfortunately, how how they're being presented unfortunately, UM 0:18:15.960 --> 0:18:19.399 are creating a great deal of divisiveness. And yeah, I 0:18:19.400 --> 0:18:24.040 think less regulations good for entrepreneurship. I think, uh you know, um, 0:18:24.240 --> 0:18:27.520 more free flowing capital is good for entrepreneurship. I mean, 0:18:27.600 --> 0:18:30.600 but there are I mean, there's a there's an their 0:18:30.640 --> 0:18:34.160 institutions also that are very important for our country as well, 0:18:34.240 --> 0:18:36.359 such as I mean the Federal Reserve. I mean that 0:18:36.400 --> 0:18:40.080 should be immune from politics. UM. So so it's a 0:18:40.080 --> 0:18:44.080 double edged store. Well, just to to amplify that, I mean, 0:18:44.119 --> 0:18:46.280 you are a congressional page, so you've seen it from 0:18:46.320 --> 0:18:48.240 the inside, and now you see it from the other 0:18:48.320 --> 0:18:51.000 side as well. Yes. In fact, I was a page 0:18:51.040 --> 0:18:53.280 my last and an intern um my last few years 0:18:53.320 --> 0:18:57.160 of high school. And so I have um watched UM 0:18:57.480 --> 0:19:01.920 multiple presidents, every president since Carter. I've actually met them, 0:19:02.000 --> 0:19:03.600 and I've seen them in action. And I've been a 0:19:03.600 --> 0:19:06.800 student of politics and and the ability to be transfer 0:19:07.000 --> 0:19:09.560 of politics be transformative, and also how the nation has 0:19:09.640 --> 0:19:13.480 changed and evolved. Civil rights movement happened in my lifetime, UM, 0:19:13.640 --> 0:19:17.840 Women's rights, Um, you know, happened in my lifetime early 0:19:17.880 --> 0:19:20.760 in my early in my adult life. UM. And so 0:19:20.800 --> 0:19:23.399 I've seen a lot happen. So in twenty seconds, are 0:19:23.440 --> 0:19:25.640 there any areas in the United States that you think 0:19:25.880 --> 0:19:28.480 still could see price gains? You see US opportunities? Yes, 0:19:28.520 --> 0:19:30.760 I think Los Angeles is gonna see price gains. I 0:19:30.800 --> 0:19:34.800 think uh, Charlotte UM is gonna see price games. Miami 0:19:34.960 --> 0:19:37.200 and South Florida as a whole is gonna get another run, 0:19:37.359 --> 0:19:39.960 and Central Florida is gonna get another run. Those will 0:19:40.000 --> 0:19:44.199 be in in Tennessee. UM. Those are where people are 0:19:44.240 --> 0:19:47.400 moving to in businesses are moving to UM for different reasons, 0:19:47.640 --> 0:19:50.520 mainly for taxes, and so we'll see some more growth 0:19:50.560 --> 0:19:53.960 in those markets. And of course you'll announce whether you're 0:19:53.960 --> 0:19:56.800 gonna run from mayor with us, right, I mean, if 0:19:57.000 --> 0:19:59.639 you decide to do that, if I decided to do that, 0:19:59.680 --> 0:20:02.200 I would certainly do that. All right, well done, Thanks 0:20:02.280 --> 0:20:05.080 very much for being with us. Don Peebles he is 0:20:05.119 --> 0:20:08.440 the chairman and the chief executive of the People's Corporation. 0:20:08.520 --> 0:20:22.280 They are based in Coral Gables, Florida. Joining us now 0:20:22.280 --> 0:20:25.359 that way, we have Jim Bianco. He is the president 0:20:25.400 --> 0:20:28.639 and founder of Bianco Research. He is also a Bloomberg 0:20:28.680 --> 0:20:33.320 Opinion columnist. Jim Bianco, let's begin with President Donald Trump 0:20:33.359 --> 0:20:36.320 and his attack on j Pal chairman of the Federal Reserve. 0:20:36.440 --> 0:20:40.480 Your reaction, I don't have a problem with it. I 0:20:40.520 --> 0:20:43.359 know a lot of people do the Federal Reserve. I 0:20:43.440 --> 0:20:45.919 kind of put in this kind of a parallel with 0:20:46.040 --> 0:20:50.560 the Supreme Court. We always criticize the Supreme Court. Yes, 0:20:50.920 --> 0:20:53.760 the President could remove a Federal Reserve chairman for cause, 0:20:53.840 --> 0:20:57.399 but the hurdle is very, very high, and Trump has 0:20:57.440 --> 0:20:59.880 said to the point so far that he doesn't want 0:20:59.880 --> 0:21:02.639 to do that. But there's nothing wrong with the President 0:21:02.680 --> 0:21:07.119 of the United Space expressing his opinion about monetary policy 0:21:07.280 --> 0:21:11.280 in making the Federal Reserve explain themselves. If they believe 0:21:11.920 --> 0:21:15.480 his criticism of monetary policy will affect it, then we 0:21:15.480 --> 0:21:19.400 should frankly look for new Federal Reserve personnel that are 0:21:20.000 --> 0:21:24.120 able to stomach somebody questioning what they're due. They are 0:21:24.160 --> 0:21:27.080 not allowed to live in an ivy tower without criticism. 0:21:27.320 --> 0:21:29.480 And there's nothing wrong with what the President is doing. Now, 0:21:29.480 --> 0:21:32.399 maybe the words he's chosen, I would have chosen different words, 0:21:32.440 --> 0:21:35.000 but I don't have a problem with with what he's 0:21:35.000 --> 0:21:37.240 attempting to do here. Do you think that he's right? 0:21:37.640 --> 0:21:39.520 Do you think that the Federal Reserve is raising rates 0:21:39.560 --> 0:21:41.919 too quickly. I do think he's right, and I do 0:21:42.000 --> 0:21:44.200 think the Federal Reserve is raising races too quickly. But 0:21:44.240 --> 0:21:46.160 I also would have said, even if I didn't believe 0:21:46.200 --> 0:21:50.120 that it was okay for him to uh to do this. 0:21:50.400 --> 0:21:54.760 And I do think that the Federal Reserve should be asked, 0:21:55.680 --> 0:21:58.760 as J. Paul was in the first question of his 0:21:58.760 --> 0:22:01.679 press conference in September two, only six the history of 0:22:01.680 --> 0:22:05.840 the Federal Reserve is you raise rates too much, something breaks, 0:22:06.200 --> 0:22:08.000 and then it's too late, we have a recession. There 0:22:08.040 --> 0:22:10.840 is the leading cause of recessions over the last time 0:22:10.880 --> 0:22:13.960 of years. Hold on a second, Jim, there is a 0:22:14.000 --> 0:22:17.119 whole school of thought that at a certain point keeping 0:22:17.200 --> 0:22:19.560 rates too low is harmful for the economy. That if 0:22:19.560 --> 0:22:21.640 you raise rates and actually people can earn some money 0:22:21.680 --> 0:22:23.520 on their cash, they can actually use it to go 0:22:23.520 --> 0:22:26.679 out and spend and it actually boosts growth. What do 0:22:26.680 --> 0:22:30.000 you say to that. I absolutely agree with that that 0:22:30.520 --> 0:22:35.040 monetary policy in the extreme either way creates dislocations in 0:22:35.080 --> 0:22:38.600 the economy. Too low can create problems, too high can 0:22:38.600 --> 0:22:41.760 create problems. The question is whether or not they're going 0:22:41.800 --> 0:22:44.760 too high. One of the leading indicators that says the 0:22:44.800 --> 0:22:47.760 FETs move too much is an inverted deal curve. We 0:22:47.840 --> 0:22:50.359 don't have that now, but we are on our way 0:22:50.400 --> 0:22:54.280 towards one. Especially if the FETE intends on raising rates 0:22:54.280 --> 0:22:57.200 four more times between now in the end of next year, 0:22:57.560 --> 0:22:59.720 we could very well be at an inverted deal curve. 0:23:00.280 --> 0:23:02.560 And when the FETE is asked about this, they dismissed 0:23:02.560 --> 0:23:05.960 the yel curve. We've done that every cycle. They dismissed it, 0:23:05.960 --> 0:23:07.680 and it always turns out to be a good indicator. 0:23:08.280 --> 0:23:12.680 And um, when asked, yeah, just back to my thing. 0:23:13.119 --> 0:23:15.240 When I asked that, the first question of the presser 0:23:15.280 --> 0:23:19.440 in September, uh, are you gonna go till something breaks? 0:23:19.440 --> 0:23:22.520