Speaker 1: Broadcasting live to New York Bloomberg eleventh wo to Washington,
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Speaker 1: Surveillance and good morning. I'm Karen Moscow along with Tom
Speaker 1: Keene and Michael McKee. The opening dale brought to you
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Speaker 1: P five hundred down a tenth of upper center two
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Speaker 1: Industrial Average down a tenth of upper center seventeen points
Speaker 1: to seventeen thousand, seven hundred two. The nasdags down a
Speaker 1: tenth of upper center six points to forty seven thirty
Speaker 1: one tenure treasury of three thirty seconds. The YELD one
Speaker 1: point seven four percent yield done a two year point
Speaker 1: seven seven percent. Nine x s crude oil down one
Speaker 1: percent or sixty one cents to forty six O nine
Speaker 1: a barrel comex goal down to tens per cent or
Speaker 1: two dollar sixty cents to twelve sixty eight seventy. Announced
Speaker 1: the Euro at other thirteen twenty three the N one
Speaker 1: oh nine point one one, Tom and Mike Karen, thanks
Speaker 1: so much, Michael McKee, Um, this is a really important
Speaker 1: UM screen or let me get it up. You get
Speaker 1: all the research and j more like at FTN with
Speaker 1: Chris Lowe was channeling me. Later today, the Atlanta FEDS GDP,
Speaker 1: now cast already at two point two percent, is likely
Speaker 1: to be revised higher. And that's the import of this
Speaker 1: retail sales. We're gonna go into the weekend with, oh,
Speaker 1: it's really not that bad. Maybe this is the tipping point,
Speaker 1: and don't forget the previous The March number was revised higher,
Speaker 1: which will imply a higher first quarter GDP when the
Speaker 1: world was in theory coming to an end. One of
Speaker 1: the things that's been keeping the economy afloat has been
Speaker 1: home sales. UH. They've been relatively strong, UH and under
Speaker 1: the radar they have been volatible. But under the radar
Speaker 1: for a while. Dave Stevens is the CEO of the
Speaker 1: Mortgage Bankers Association, and if you want to get a
Speaker 1: handle on where mortgages are going and home sales are going,
Speaker 1: that's the guy to talk to. You Can I say
Speaker 1: that they're an industry group and he's always talking to
Speaker 1: the angle. But they have the clearest literature of these
Speaker 1: Beltway organism. They've got the numbers. They published The Mortgage
Speaker 1: Bankers Applications Index shows you mortgage applications, refinance applications, all
Speaker 1: kinds of things every week. So Dave, to quote the
Speaker 1: immortal Ed Cotch, former mayor of New York, how are
Speaker 1: we doing, hey, Tom and Mike. It's uh, you know,
Speaker 1: it's an interesting story. To your point, it is kind
Speaker 1: of the sleeper story. Um, I think what people just
Speaker 1: are the data. You can't deny demographics of what they are.
Speaker 1: And as you know, we went to a very sluggish
Speaker 1: period with household formation during the recession and we're now
Speaker 1: forming you know, about one point for million households annually.
Speaker 1: This millennial generation is a real deal. It's not a story.
Speaker 1: It's eight plus million young people who the oldest cohorts
Speaker 1: are now moving into homebuying and the demand for both
Speaker 1: rental units and owned units is a positive story across
Speaker 1: the boards. You're seeing demand for apartment units and single
Speaker 1: family rental extremely strong. But we're also seeing continued growth
Speaker 1: in the purchase sector of new homes up about on
Speaker 1: average over a year ago. UM. So this last month,
Speaker 1: it it dipped a little bit over March. UM. April's
Speaker 1: numbers were down a bit, but that's sort of seasonally typical.
Speaker 1: We usually peak for the year either March or April.
Speaker 1: It sort of shifted back and forth over previous year's.
Speaker 1: March was the stronger month of the two. Well, you
Speaker 1: you look at the mortgage applicate the amount of money
Speaker 1: people are borrowing and gives you a hint just to
Speaker 1: what size house they're borrowing. To try to get an
Speaker 1: idea of whether the starter home people are coming into
Speaker 1: the market. Yeah, if they buy, then other people are
Speaker 1: moving up. How's how's that going? Well, that's you know,
Speaker 1: that's the story of the disincentives, particularly in the housing
Speaker 1: market to build entry level units. UM. You know, the regulations,
Speaker 1: land costs and labor costs to bring a unit to market. UH,
Speaker 1: as well as concerns about whether credit availability or for
Speaker 1: first time homebuyers is going to be there for that
Speaker 1: marketplace has forced UM many of the new home builders
Speaker 1: to stay at the upper end of the market. So
Speaker 1: it's improven slightly. The average loan size dropped a few
Speaker 1: thousand dollars in April from the previous month, but it's
Speaker 1: still three dollars on average per unit that's been built.
Speaker 1: If you if you look at resale market, you well
Speaker 1: below three hundred thousand in terms of average sales price. So, um,
Speaker 1: we aren't building the kind of housing stock yet. I
Speaker 1: think that's going to appeal to the millennial generation and
Speaker 1: that's where we really need to be thinking about going.
Speaker 1: Percolating in London, in New York and other major cities,
Speaker 1: is this hopelessness about housing. The summary seems to be
Speaker 1: we've got to build up. There's got to be a
Speaker 1: vertical rise. Where do we stand in this country on
Speaker 1: the dichotomy between the numbers you're giving, which are a
Speaker 1: fantasy to anybody living in New York and San Francisco,
Speaker 1: and the need to build vertically. Are we gonna build vertically? Well,
Speaker 1: vertical units are You'll see that development going right now? Um, Tom,
Speaker 1: the the you know, going to Washington, d C. And
Speaker 1: you're seeing you know, all of this new uh, multi
Speaker 1: family construction occurring, both with condos that are for ownership
Speaker 1: as well as rental. It is more higher end. So
Speaker 1: we sort of break down the market based on luxury
Speaker 1: market and affordable, and clearly the lean is towards the
Speaker 1: upper end of the market rents and purchase price range
Speaker 1: as well as the luxury and we're not we're still
Speaker 1: not at the point right now where we're building affordable
Speaker 1: entry level units, particularly in the high employment markets, because
Speaker 1: it's these urban communities and their suburbs where you really
Speaker 1: need to create the housing stocks you can recruit a
Speaker 1: workforce and especially if you want to retain them. And
Speaker 1: that's that's where the shortages right now. What's happening with
Speaker 1: the suburbs, I mean in in big cities, certainly there's
Speaker 1: a cross trend to urbanization, but I've I've read from
Speaker 1: other people that people are starting to the younger generation
Speaker 1: doesn't want to live in the suburbs. They don't want
Speaker 1: the long commute, the traffic jams. Uh. Is that true
Speaker 1: outside of the big cities like New York, Well, we
Speaker 1: you know, there's been a there's been a significant policy focus,
Speaker 1: particularly in this administration as well as you know, planners
Speaker 1: to think about building residential housing units are places of
Speaker 1: work or near mass transit um. And yeah, there's absolutely
Speaker 1: no doubt that. Uh, you know, this younger generation is
Speaker 1: more urbanized. We're not certain how that's going to stick
Speaker 1: long term. I mean, let's be real, as as you
Speaker 1: once you get married, you have children, you start making
Speaker 1: your location decisions based on other factors that I don't
Speaker 1: think are being considered right now. School quality of schools,
Speaker 1: other activities for your kids, size of home you can
Speaker 1: have to house your family. And so when people often
Speaker 1: tell me, well, this generation is different than the last one,
Speaker 1: the only thing we're seeing different about this generation is
Speaker 1: there delaying the decision to buy till later. But other
Speaker 1: than that, we see the trend line of you know,
Speaker 1: the initial home might be a condo or small home
Speaker 1: near near an urban location, but as they expand their families,
Speaker 1: they're certainly going to venture into some of the more
Speaker 1: suburban markets, which is Tom moved to the suburbs. Oh,
Speaker 1: there is a good question get a dog defense. Hey,
Speaker 1: you know that the reality is, well, we are seeing
Speaker 1: the baby boomers who are retiring. There there's an trend
Speaker 1: coming back into cities. Um, but that's a whole another discussion.
Speaker 1: Yes it is, and we'll have that with you, Sird
Speaker 1: another time. David Stephens, thank you. Mike Rachel from Brazil, Indiana.
Speaker 1: This is out I seld I fort Rachel from Brazil, Indiana.
Speaker 1: It's south, it's southwest, sort of west southwest of Indianapolis.
Speaker 1: Notes that Mr Strayhan is at his final day with
Speaker 1: Ms Rippa. I'm not dying. I'm not gone. Mr Strayhan suggests.
Speaker 1: Rachel from Brazil, Indiana says, you know there's a slot
Speaker 1: there to for the thanking. Tom Keen, thank you Rachel
Speaker 1: for that email. Greatly appreciate it. It was it was valuable. Yeah,
Speaker 1: we say you got congratulations. Good morning America. Mr Rippa,
Speaker 1: no doubt will endure and carry forward with her excellence.
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Speaker 1: Bernie insist that he will stay in the race for
Speaker 1: the Democratic presidential nomination, and that as some party leaders concerned,
Speaker 1: if you hear that that will hurt Democratic front runner
Speaker 1: Hillary Clinton, especially since Donald Trump has been meeting with
Speaker 1: Republican leaders who are leary of him. Trump on Fox
Speaker 1: News talked about yesterday's meeting without speaker Paul Ryan. I
Speaker 1: thought it was a great meeting. We had a we
Speaker 1: discussed a lot of things, a lot of very important things,
Speaker 1: and I thought it was really a very very good meeting.
Speaker 1: I think Paul felt the same way, and everybody else did. Also.
Speaker 1: A New York politician convicted of using his position as
Speaker 1: sentim majority of leader to help his stunt extort hundreds
Speaker 1: of thousands of dollars was sentenced to five years. Former
Speaker 1: Senate Majority to leader Dan Skelos and his son Adam
Speaker 1: were convicted last year of extortion, conspiracy, and bribery. Adam
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Speaker 1: Greatly appreciate that. We're gonna try to get the last
Speaker 1: nineteen minutes of the show accurate and correct as we wander.
Speaker 1: So this Friday, we're thrilled here with us what a
Speaker 1: week it has been. We'll do that, we'll wrap it up.
Speaker 1: Is best weekend to get you moving into the weekend
Speaker 1: and on to Monday. Bloomberg surveillance, lots going on around
Speaker 1: the world, and of course a lot of news out
Speaker 1: of Brazil. Gabrielle Santos from JPMorgan Asset Management joins us
Speaker 1: next to talk about how you can play it