WEBVTT - Vaccine Cliff Looms As Numbers Begin To Drop 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.079 at Bloomberg dot com slash podcast. Well, Matt, I consider 0:00:22.160 --> 0:00:25.000 us very fortunate that every week we get to speak 0:00:25.000 --> 0:00:27.479 with Lauren Sour the Johns Hopkins University, because there's so 0:00:27.560 --> 0:00:30.640 much news that just breaks on a daily basis about um, 0:00:30.680 --> 0:00:34.760 you know, the pandemic, therapeutics as well as vaccines. So 0:00:34.760 --> 0:00:37.080 again today we're joined by Lauren Sauer, Social Professor of 0:00:37.120 --> 0:00:40.400 Emergency Medicine from the Johns Hopkins University. And I should 0:00:40.440 --> 0:00:42.879 know that the Bloomberg School of Public Health is supported 0:00:42.880 --> 0:00:46.200 by Michael Larre Bloomberg found their Bloomberg LP, Bloomberg Philanthropies 0:00:46.280 --> 0:00:49.240 and this radio and TV operation. Dr Soer, thanks so 0:00:49.320 --> 0:00:51.120 much for joining us. I'd love to go to the 0:00:51.200 --> 0:00:53.560 issue which I think is beginning to develop and we 0:00:53.640 --> 0:00:55.880 kind of knew it was gonna come, which is we're 0:00:55.880 --> 0:01:00.040 gonna have more supply this vaccine than demand. Is it 0:01:00.120 --> 0:01:04.399 now time for a big pr campaign to kind of 0:01:04.520 --> 0:01:07.320 get out the you know, the vote, if you will, 0:01:07.360 --> 0:01:11.320 to get people to get vaccinated. Yeah, absolutely, I think 0:01:11.360 --> 0:01:15.160 it is. I mean I think, um, those access issues 0:01:15.200 --> 0:01:18.039 that we've talked about, you know, several times on this show, uh, 0:01:18.080 --> 0:01:21.160 and that we've heard a lot about are still remaining 0:01:21.200 --> 0:01:24.000 for certain populations. But I think the push right now 0:01:24.080 --> 0:01:27.399 has to be convincing those people who have decided not 0:01:27.480 --> 0:01:30.520 to or haven't decided to get vaccinated that now is 0:01:30.560 --> 0:01:34.120 the time, um, and the vaccines available, you can get 0:01:34.120 --> 0:01:37.000 it in many different places. And if we facilitate the 0:01:37.040 --> 0:01:40.319 ability for people to get vaccine, um, that we can 0:01:40.520 --> 0:01:43.720 start to get those numbers up again. Well well, I 0:01:43.760 --> 0:01:47.720 mean in terms of access, President Biden said yesterday that 0:01:47.920 --> 0:01:51.520 every American is going to be at least five miles 0:01:51.560 --> 0:01:55.360 from a vaccine side. Is he off with those figures 0:01:55.480 --> 0:02:00.440 or people get Yeah? I think that he is. Not 0:02:00.600 --> 0:02:04.480 where necessarily the vaccine sites are, but how you access them. 0:02:04.520 --> 0:02:06.000 So I think now is the time where we can 0:02:06.000 --> 0:02:10.320 start to see creative options for getting vaccine into communities 0:02:10.440 --> 0:02:12.919 rather than asking communities to go to vaccine. Because even 0:02:12.960 --> 0:02:15.360 if it's only five miles away. That may mean that 0:02:15.400 --> 0:02:18.080 someone has to take some time off work, has to 0:02:18.080 --> 0:02:20.200 get childcare, may have to borrow a car or take 0:02:20.200 --> 0:02:23.760 public transportation, UM, and all those things. When you add 0:02:23.760 --> 0:02:26.040 barriers to someone who isn't sure if they're going to 0:02:26.120 --> 0:02:29.000 get a vaccine, UM, that that creates, you know, something 0:02:29.080 --> 0:02:30.840 that weighs on the side of I just won't get 0:02:30.880 --> 0:02:33.440 it right now. He also he also said that he 0:02:33.480 --> 0:02:37.720 wants UM employers to guarantee that workers are able to 0:02:37.760 --> 0:02:42.359 get out and get the vaccine with paid with paid time, 0:02:42.600 --> 0:02:45.400 and also are able to recover from anything paid. One 0:02:45.440 --> 0:02:48.680 thing that's a concern, I guess is the hesitancy. Right. Um, 0:02:48.880 --> 0:02:52.600 we know that America has a big crop of anti 0:02:52.680 --> 0:02:56.519 vax ER's UM and I saw a tweet from Joe 0:02:56.520 --> 0:02:59.760 Wisenthal today that maybe what will help PR and the 0:02:59.840 --> 0:03:03.919 other their direction. He says Lauren, I'll quote Joe wasn't 0:03:03.919 --> 0:03:06.800 all directly. So I actually feel like a kind of 0:03:06.840 --> 0:03:10.280 weird high after my second fiser, like I just took 0:03:10.360 --> 0:03:14.320 some coding or tramadal or something. Um. It makes me 0:03:14.400 --> 0:03:17.640 excited to get out there and get my shots because 0:03:17.680 --> 0:03:20.240 he has something to make it feel better, right, but 0:03:21.040 --> 0:03:23.800 is this something that Paul didn't really feel it. He 0:03:23.840 --> 0:03:26.919 got his second shot and said, yes, no signs. So 0:03:27.680 --> 0:03:30.400 is there anything that people are reporting that they, you know, 0:03:30.560 --> 0:03:35.080 feel in the positive sense after these um there were 0:03:35.360 --> 0:03:37.520 here hearing a lot of reports of that sort of 0:03:37.520 --> 0:03:40.440 euphoria of just like, oh my gosh, I can take 0:03:40.480 --> 0:03:44.200 a breath, like it feels good and it was exciting, 0:03:44.240 --> 0:03:47.080 and we've made an incredible amount of progress to get here, 0:03:47.080 --> 0:03:49.320 and it does feel like, you know, you can see 0:03:49.320 --> 0:03:51.400 the light at the end of the tunnel. And I 0:03:51.440 --> 0:03:53.680 think that is not to be discounted. I mean, I 0:03:53.720 --> 0:03:56.760 know when I got my vaccine, I felt I also 0:03:56.840 --> 0:03:59.440 felt a sense of before you like, holy moly, the 0:03:59.440 --> 0:04:01.480 weight has been lifted off a little bit. I'm I'm 0:04:01.480 --> 0:04:04.360 headed towards protection. We're headed, you know, towards the other 0:04:04.400 --> 0:04:07.880 side of this, and and it's exciting, um and it's incredible, 0:04:07.960 --> 0:04:10.160 and the work that went to get us there is 0:04:10.240 --> 0:04:13.120 unbelievable and shouldn't be discounted. And I think if people 0:04:13.120 --> 0:04:15.560 are going out and feeling that, that's amazing and they 0:04:15.600 --> 0:04:19.200 deserve that. Lauren, what do you expect to hear? I 0:04:19.200 --> 0:04:22.560 guess we're waiting here today about that Johnson and Johnson vaccine. 0:04:23.160 --> 0:04:25.599 What do you think is we're going to hear? I 0:04:25.640 --> 0:04:28.000 have about feeling what we're going to hear is UM 0:04:28.040 --> 0:04:30.720 that it'll be you know, made available again, and there 0:04:30.800 --> 0:04:33.160 might be some caveats to who can get it, UM, 0:04:33.200 --> 0:04:36.240 so they may slightly restrict the population. I think we're 0:04:36.240 --> 0:04:38.400 all sort of waiting, just like you too, to hear 0:04:38.440 --> 0:04:40.600 what they decide. They look through a ton of data, 0:04:40.640 --> 0:04:42.960 they've done all of their due diligence. I think it's 0:04:42.960 --> 0:04:45.400 great to see that this system, um, this adverse event 0:04:45.440 --> 0:04:49.600 system reporting is working and reporting is happening, and so 0:04:49.720 --> 0:04:53.400 I think we will probably see it, you know, available again, um, 0:04:53.440 --> 0:04:57.920 but with a modified allowance for who gets it. Hopefully 0:04:57.960 --> 0:05:00.960 men in their authorities with a solid dad get the 0:05:01.040 --> 0:05:03.520 first shot at it, because I think I saw that 0:05:03.560 --> 0:05:08.640 in the preliminary material. I'm definitely excited if, if, and 0:05:08.640 --> 0:05:10.640 when that's cleared again, I'm headed back to New York 0:05:10.680 --> 0:05:12.719 to get my shot and then we can all play 0:05:12.800 --> 0:05:16.000 bridge together sans mask. That would be fantastic. Lauren, thanks 0:05:16.040 --> 0:05:18.359 so much for joining us. Laurence sour there from the 0:05:18.440 --> 0:05:21.719 Johns Hopkins UH School of Medicine, The Bloomberg School of 0:05:21.720 --> 0:05:24.480 Public Health, of course, is supported by Michael R. Bloomberg, 0:05:24.839 --> 0:05:27.039 and you may have guess he's the founder as well 0:05:27.080 --> 0:05:30.839 of Bloomberg LP and Bloomberg Philanthropies, and he runs the 0:05:31.160 --> 0:05:38.000 TV and radio stations as well. All right, j T, 0:05:38.160 --> 0:05:40.640 thanks very much for that. Now you brought us the 0:05:40.640 --> 0:05:44.240 new home sales data at the top of this program, 0:05:44.360 --> 0:05:49.479 Um destroying the survey numbers. We saw one point zero 0:05:49.600 --> 0:05:53.919 to one million. We were looking for eighty five thousand 0:05:54.080 --> 0:05:57.120 new home sales month over month, a gain of twenty 0:05:57.240 --> 0:06:01.800 point seven percent compared to the survey estimated fourteen point 0:06:01.839 --> 0:06:07.960 two percent. So really strong numbers. And our next guest says, UM, 0:06:08.040 --> 0:06:11.040 the that's the new home sales. The existing home sales 0:06:11.080 --> 0:06:14.280 market is the un healthiest housing market in ten years. 0:06:14.279 --> 0:06:16.960 We'll find out why from logan motto Shami. He is 0:06:16.960 --> 0:06:21.080 a housing data analyst, UM also lead analysts for Housing 0:06:21.080 --> 0:06:24.920 Wire out of Irvine, California. Logan, let's talk first about 0:06:24.920 --> 0:06:32.080 the new home sales numbers. Amazing jumps. What what sales report? 0:06:32.200 --> 0:06:34.479 Yea best new home sales reported over ten years. I 0:06:34.480 --> 0:06:37.120 mean you had the trispector, you had headline numbers, which 0:06:37.160 --> 0:06:39.080 can be wild month to month. I think people get 0:06:39.120 --> 0:06:41.560 confused sometimes where you have these really big months and 0:06:41.600 --> 0:06:45.760 big declines, but headline was great, But the key is revisions. 0:06:46.040 --> 0:06:49.599 We had positive revisions, and monthly supply is below four 0:06:49.640 --> 0:06:52.120 point three months on the headline and on a three 0:06:52.120 --> 0:06:53.920 month average. You've got to keep it simple with a 0:06:53.960 --> 0:06:56.360 new home sales market because we we focus so much 0:06:56.360 --> 0:06:59.599 on lumber prices. But as long as monthly supply for 0:06:59.640 --> 0:07:02.359 new holmes is under four point three months, something that 0:07:02.680 --> 0:07:07.040 never happened from two thousand to two nine, the builders 0:07:07.040 --> 0:07:09.480 are happy. No matter what they complain about in any 0:07:09.480 --> 0:07:12.559 surveys or anything, that is all they care about because 0:07:12.640 --> 0:07:14.640 that means they could sell product and that will lead 0:07:14.680 --> 0:07:17.840 to higher housing starts. So as long as that continues, 0:07:17.920 --> 0:07:19.760 and I was I was just gonna ask Logan, does 0:07:19.800 --> 0:07:22.200 that mean they're gonna go out and keep building more? 0:07:22.440 --> 0:07:24.280 Is everybody who knows how to build a house going 0:07:24.320 --> 0:07:27.040 to go and do it right now? Yes? And as 0:07:27.080 --> 0:07:30.760 long as that supplies that low, we're okay. Now, this 0:07:30.880 --> 0:07:33.880 sector gets hit harder than the existing home sales market 0:07:34.000 --> 0:07:37.680 when rates go higher. So the backdrop of higher mortgage 0:07:37.760 --> 0:07:40.239 rates would be problematic because then you've ben the lumber 0:07:40.280 --> 0:07:43.640 prices really kicking. But for now things are good. Your 0:07:43.680 --> 0:07:46.400 home sales fine, excellent print, best print in ten years. 0:07:46.440 --> 0:07:49.400 Revision is good, monthly supply good great, great way to 0:07:49.400 --> 0:07:52.360 get into the weekend. Alright, logan. But on the existing 0:07:52.360 --> 0:07:54.080 home sales, you know, I just in the in the 0:07:54.120 --> 0:07:56.520 town where I live. As soon as anything goes on 0:07:56.560 --> 0:07:59.240 the market, it's snapped up it and there's just not 0:07:59.360 --> 0:08:01.680 that much apply, I guess. So give us a sense 0:08:01.680 --> 0:08:04.480 of existing snapped up at a price much higher than 0:08:05.120 --> 0:08:07.600 then you saw in the ad, right, because I know 0:08:07.680 --> 0:08:09.880 people have been looking for homes around that area and 0:08:09.880 --> 0:08:14.800 they just can't get anything because it jumps right away. 0:08:15.240 --> 0:08:18.440 This is the most unhealthiest market in the last ten years. 0:08:18.440 --> 0:08:20.240 Where the new home sales market has a has a 0:08:20.280 --> 0:08:23.560 has a different economic backdrop. We just do not have 0:08:23.600 --> 0:08:27.360 a lot of homes. And that's the main issue. Mortgage 0:08:27.400 --> 0:08:31.120 purchase application demand. If when you do some COVID nineteen adjustments, 0:08:31.160 --> 0:08:34.240 it's not up that much year over year, but total 0:08:34.320 --> 0:08:39.040 inventory has been falling since as purchase application data has 0:08:39.080 --> 0:08:41.920 been rising. And now we have you know, we have 0:08:42.040 --> 0:08:44.600 the best housing demographics ever recorded history, and we have 0:08:44.679 --> 0:08:47.720 the lowest mortgage rates ever recorded history. So when you 0:08:47.800 --> 0:08:50.880 put that many people into this marketplace, which is always 0:08:50.880 --> 0:08:53.800 my biggest concern in this period, Uh, you're gonna get 0:08:54.280 --> 0:08:56.800 you need to fear about price escalation. But the but 0:08:56.880 --> 0:09:00.200 the problem is in the past, higher mortgage rates tend 0:09:00.240 --> 0:09:04.400 to balance this out. COVID nineteen has kept mortgage rates 0:09:04.520 --> 0:09:07.079 artificial love has kept the bond market artificially low with 0:09:07.200 --> 0:09:10.080 compared to our economic data, Like our economic data warrants 0:09:10.080 --> 0:09:13.280 a ten year yield north of two point But so 0:09:13.320 --> 0:09:16.880 we have we just have a very unhealthy marketplace because 0:09:16.920 --> 0:09:19.800 literally people are not losing their bids by one or 0:09:19.840 --> 0:09:22.480 two people, They're losing their bids by eleven and fifteen people. 0:09:22.880 --> 0:09:25.880 That is extremely unhealthy. And we're getting these home price 0:09:25.920 --> 0:09:29.400 growth without a credit expansion. And this is what concerns 0:09:29.400 --> 0:09:32.000 me about this period of time, is that price growth 0:09:32.080 --> 0:09:35.240 is really going up, but demand is not really falling 0:09:35.280 --> 0:09:37.319 through with it. And and that's what that's gonna be 0:09:37.360 --> 0:09:40.600 a problem down the line again when mortgage rates eventually 0:09:40.679 --> 0:09:42.760 rise and I'm not talking about like six or seven percent, 0:09:42.800 --> 0:09:46.360 I'm just talking about well, so logan, I mean, I'm 0:09:46.360 --> 0:09:49.640 looking I'm hoping to move back to the Tristiate area 0:09:49.720 --> 0:09:51.920 looking for a nice colonial on a couple of acres 0:09:51.920 --> 0:09:55.760 in Westchester County built I'm hoping the way I envision 0:09:55.840 --> 0:09:59.720 it built in the seventeen eighties, seventeen nineties. Um, what 0:09:59.760 --> 0:10:02.720 you're saying is I should just trash that idea and 0:10:02.800 --> 0:10:05.440 just buy a couple of acres and and build it myself. 0:10:07.160 --> 0:10:09.520 If you could find the lumber, then yeah, that'll be 0:10:09.559 --> 0:10:11.760 a good thing. You can do it. But yeah, it's 0:10:11.800 --> 0:10:14.400 just it's just an extremely unhealthy market. I mean, that's 0:10:14.480 --> 0:10:16.720 just we just and there's no there's nothing that could 0:10:16.720 --> 0:10:19.240 really solve this in a short term unless mortgage rates 0:10:19.240 --> 0:10:22.559 go higher, and COVID is impacting the world economy is 0:10:23.000 --> 0:10:25.840 much harder than ours. Our economic data it's much better, 0:10:26.440 --> 0:10:29.640 but it's keeping rates low, and it's just it's really 0:10:29.640 --> 0:10:33.160 frustrating for buyers. I mean, you're just you're not getting 0:10:33.160 --> 0:10:35.240 outbid by one or two people, You're just getting outbid 0:10:35.280 --> 0:10:37.240 by many. I mean, some homes are getting thirty or 0:10:37.280 --> 0:10:41.320 forty offers, and some of the price finals selling prices 0:10:41.320 --> 0:10:44.520 are is insane. Well exactly because even if you do 0:10:44.600 --> 0:10:47.080 get the house, then you move in and you're going 0:10:47.120 --> 0:10:49.240 to bed knowing that you bought in at the top 0:10:49.280 --> 0:10:52.280 of the market. Well, here, here's here's here's one thing 0:10:52.280 --> 0:10:55.280 about that. The difference between now and then, let's say 0:10:55.280 --> 0:10:57.200 two thousand two to two thousand and five, that was 0:10:57.240 --> 0:11:00.880 more of a speculative credit bubble where these those weren't 0:11:00.920 --> 0:11:04.560 really homeowners. There a lot of our investors here. Anybody 0:11:04.600 --> 0:11:07.680 who buys this home is legit. And the concern is 0:11:07.720 --> 0:11:10.880 it's not about a housing crash or home prices peeking out. 0:11:10.920 --> 0:11:13.920 It's that these people all going to stay in their homes. 0:11:14.120 --> 0:11:16.440 They're not gonna lose their jobs or anything anytime soon. 0:11:16.600 --> 0:11:18.640 They're gonna stay here for a long time. It keeps 0:11:18.640 --> 0:11:23.000 housing stuck. Being stuck is the worst problem because there's 0:11:23.000 --> 0:11:26.800 no real there's no velocity quick fix to this. So 0:11:27.080 --> 0:11:29.360 uh And if you look at our home prices are 0:11:29.440 --> 0:11:33.079 real home prices, there's so much lower than what Canada, Australia, 0:11:33.160 --> 0:11:36.480 New Zealand, France, the UK has, Their real home price 0:11:36.520 --> 0:11:39.520 growth has been much stronger. So again, my fear for 0:11:39.559 --> 0:11:43.000 me as always that prices escalates out of control because 0:11:43.040 --> 0:11:46.520 these are all legit buyers, but sales really aren't growing 0:11:46.559 --> 0:11:50.160 that much and that's that's being stuck. That's the frustrating part. 0:11:50.200 --> 0:11:53.000 That's why I say this is a very unhealthy housing market. However, 0:11:53.320 --> 0:11:56.400 higher rates should cool this down right because there is 0:11:56.440 --> 0:11:59.240 no credit bubble this time. There's limits to housing. You're 0:11:59.280 --> 0:12:02.679 still bounded are the rules of numbers. So hopefully, and 0:12:02.840 --> 0:12:05.200 especially now that I think supplies some more supply come 0:12:05.240 --> 0:12:08.160 under market, it just cools this market, John, because guess 0:12:08.200 --> 0:12:11.800 what the demographic passion they're not going anywhere. They need shelter, 0:12:11.960 --> 0:12:14.520 they need somewhere to leven. Hey, look, thanks so much 0:12:14.520 --> 0:12:16.839 for joining us. Love getting your perspective on all things 0:12:16.960 --> 0:12:20.240 real estate. Logan Multi Shammi housing data analysts also lead 0:12:20.280 --> 0:12:23.760 analysts for Housing Wire based in Irvine, California. Matt House 0:12:23.800 --> 0:12:26.320 the housing market in Berlin, and I have to say, 0:12:26.360 --> 0:12:30.200 as he was saying that the actual prices aren't higher 0:12:30.240 --> 0:12:33.559 than they are in Canada the UK, um, the prices 0:12:33.600 --> 0:12:38.040 here are extremely high. I mean, if you want a 0:12:38.160 --> 0:12:41.160 nice house in the suburbs in the Summit or the 0:12:41.200 --> 0:12:44.520 Greenwich or the Bronxville of Berlin, you have to be 0:12:44.600 --> 0:12:48.240 prepared to pay um, you know, starting at two million 0:12:48.440 --> 0:12:51.280 and probably and probably higher. Frankly for what you could 0:12:51.280 --> 0:12:53.480 get in the US. It's incomparable. But what I was 0:12:53.520 --> 0:12:56.840 thinking is, Paul, if your kids are now going to college, 0:12:57.720 --> 0:13:01.960 you have empty bedrooms, maybe me and my wife could 0:13:02.000 --> 0:13:04.080 just move in with you. Yeah, a little, a little 0:13:04.080 --> 0:13:06.640 Airbnb action. We'll talk about that off the air man. 0:13:06.720 --> 0:13:11.719 That could be a good transaction. We all know the 0:13:11.760 --> 0:13:14.000 bull call on this equity market. It's driven by the 0:13:14.000 --> 0:13:18.280 Federal Reserve accommodative money, it's driven by a fiscal stimulus, 0:13:18.520 --> 0:13:22.160 the reopening trade. Lots of bullish underpinnings to this market, 0:13:22.160 --> 0:13:24.520 but a lot of investors are questioning is that all 0:13:24.600 --> 0:13:26.520 priced into the markets. Let's get a sense of what 0:13:26.600 --> 0:13:29.680 traders are really thinking about that. We to do that, 0:13:29.720 --> 0:13:32.200 we check in with Randy Frederick. He's vice president of 0:13:32.280 --> 0:13:36.480 Trading and Derivatives for the Schwab Center for Financial Research. Randy, 0:13:36.480 --> 0:13:38.000 thanks so much for joining us here. I know you 0:13:38.000 --> 0:13:41.560 guys have your Trader Pulse survey. We really you know, 0:13:41.720 --> 0:13:44.880 talk to traders and ask traders what they're thinking. What 0:13:44.920 --> 0:13:48.280 are the thoughts here of these markets as we are 0:13:48.360 --> 0:13:50.160 hitting kind of you know, kind of all time highs 0:13:50.160 --> 0:13:53.200 almost on a daily basis. Well, let's go back to 0:13:53.240 --> 0:13:55.640 what you mentioned right off the bat, which is that. Um. 0:13:55.840 --> 0:13:57.400 You know, many of our traders told us that they 0:13:57.440 --> 0:13:59.600 thought that the easy games, if you will, in the 0:13:59.640 --> 0:14:02.359 market may have already been built in, not too surprising 0:14:02.360 --> 0:14:05.920 with the SMP five eighty six percent since it bottom 0:14:06.000 --> 0:14:08.480 back in March of last year. But they also still 0:14:08.520 --> 0:14:11.000 have a fairly optimistic views. So in other words, while 0:14:11.120 --> 0:14:13.120 we may not see another eight percent over the next 0:14:13.160 --> 0:14:17.800 twelve months, they still think there's upside available. So when 0:14:17.840 --> 0:14:22.040 are we gonna know that it's time to sell? Well, 0:14:22.040 --> 0:14:23.800 I don't think we ever really know when it's time 0:14:23.840 --> 0:14:27.480 to sell UM, And we don't think selling in the 0:14:27.640 --> 0:14:30.040 broad sense of like get out of everything, is ever 0:14:30.080 --> 0:14:33.560 a good idea. UM. What we often tell our clients 0:14:33.600 --> 0:14:36.720 to do is to take advantage of market volatility. When 0:14:36.760 --> 0:14:39.480 you have little of down dips um, as we were 0:14:39.560 --> 0:14:41.240 kind of in until to day, we're getting a little 0:14:41.240 --> 0:14:43.520 bit of a bounce back. UM, those may be opportunities 0:14:43.520 --> 0:14:45.720 to pick up a few extra shares. And when you 0:14:45.800 --> 0:14:48.640 have markets hitting all time highs like they did just 0:14:48.760 --> 0:14:50.960 last Friday, maybe you take a little bit of profit 0:14:51.000 --> 0:14:53.720 off the table. But wholesale selling is just never a 0:14:53.760 --> 0:14:55.960 really good idea. So nobody rings the bell at the top, 0:14:56.000 --> 0:14:58.240 as they say, all right, Randy, just give us a 0:14:58.240 --> 0:15:02.840 sense of kind of when you again survey the traders, UM, 0:15:02.880 --> 0:15:05.160 what are their thoughts towards volatility here? We've seen the 0:15:05.280 --> 0:15:08.760 VIX pull back pretty significantly here to the seventeen eighteen 0:15:08.800 --> 0:15:15.480 dollar seventeen eighteen range. Here, what did they think about volatility? Well, 0:15:15.520 --> 0:15:18.280 what they think about volatility is that they think volatility 0:15:18.360 --> 0:15:20.640 might actually be a little bit worse in Q two 0:15:20.680 --> 0:15:23.640 than in Q one, which is kind of interesting because, um, 0:15:23.680 --> 0:15:26.480 it's actually been a lot lower. Q one volatility was 0:15:26.560 --> 0:15:29.120 quite a bit higher UM than what we've seen. In fact, 0:15:29.160 --> 0:15:31.640 we've seen the VIX hit twelve month lows here just 0:15:31.680 --> 0:15:34.080 in the last couple of weeks. So UM, But I 0:15:34.120 --> 0:15:36.720 think that's more of a sort of a response to 0:15:36.760 --> 0:15:39.040 what's going on at the moment that they received the 0:15:39.080 --> 0:15:41.560 survey UM, and I think it also had a little 0:15:41.560 --> 0:15:43.600 bit to do with the fact that when this survey 0:15:43.640 --> 0:15:46.640 went out, we were seeing interest rates UM hitting a 0:15:46.720 --> 0:15:48.400 high level we haven't seen in quite a while, and 0:15:48.440 --> 0:15:50.600 the concerns about inflation, I think we're pretty high that 0:15:50.640 --> 0:15:53.240 has that has come down a bit UM in the 0:15:53.320 --> 0:15:56.120 last couple of weeks. As you know, since April began, 0:15:56.800 --> 0:15:58.800 we've seen the ten uere pull back a bit, the 0:15:58.840 --> 0:16:02.240 inflation worries of sub sided to some extent. And while 0:16:02.360 --> 0:16:06.960 it seemed earlier that many people were sort of, um, 0:16:07.000 --> 0:16:10.480 not necessarily trusting of J. Powell that he didn't plan 0:16:10.560 --> 0:16:13.560 to raise rates, and I think he's convinced the market. Now, 0:16:16.080 --> 0:16:20.160 what will the new tax laws if they're put into effect, 0:16:20.520 --> 0:16:22.760 this new tax plan, if it's put into into law. 0:16:23.480 --> 0:16:28.120 Due to the trading environment, well, you know, the sell 0:16:28.160 --> 0:16:30.760 off we got when this was first announced is not surprising. 0:16:30.760 --> 0:16:33.400 When you have the market near or at all time highs. 0:16:33.440 --> 0:16:35.720 We're about one percent below the all time highs, it 0:16:35.760 --> 0:16:38.280 becomes very sensitive to any sort of news that might 0:16:38.320 --> 0:16:42.280 be received as negative. Obviously, people believe if their taxes 0:16:42.320 --> 0:16:44.240 are going to go up that's not a good thing, 0:16:44.360 --> 0:16:46.880 and so the knee jerk reaction is to sell. But 0:16:47.000 --> 0:16:49.880 we're seeing a bounce back today, not too surprising. Generally, 0:16:49.960 --> 0:16:52.560 the sell officer are overdone. They tend to be a 0:16:52.560 --> 0:16:55.120 little bit too extreme. What we don't know is a 0:16:55.120 --> 0:16:56.880 lot of things. First of all, we don't know whether 0:16:56.880 --> 0:16:59.840 it would be retroactive back to the beginning of or 0:17:00.000 --> 0:17:03.320 wether it wouldn't kick in until two. We also don't 0:17:03.400 --> 0:17:05.919 know what the final bill might look like, if or 0:17:05.960 --> 0:17:09.360 when it ever becomes law. Most of the time, initial 0:17:09.400 --> 0:17:13.480 proposals are watered down substantially before they finally become law, 0:17:13.560 --> 0:17:16.320 if they ever do, so, it's really way too early 0:17:16.359 --> 0:17:19.479 to speculate how that might play out. The interesting thing is, 0:17:19.520 --> 0:17:21.800 I mean, it seems to be focused primarily on the 0:17:21.800 --> 0:17:24.199 top three tenths of one per cent, which is a 0:17:24.320 --> 0:17:26.840 very small portion of the population, but also a portion 0:17:27.040 --> 0:17:30.080 who owns an enormous amount of equities in the market. 0:17:30.720 --> 0:17:33.080 But there seems to be quite a bit of pushback. Um. 0:17:33.119 --> 0:17:36.120 I think it may be just sort of a launching 0:17:36.160 --> 0:17:38.880 point for negotiation that there's been a lot of pushback, 0:17:38.920 --> 0:17:42.280 as you know, about the potential for raising corporate tax rates. 0:17:42.640 --> 0:17:44.639 Uh so this is an alternative to that. If they 0:17:44.640 --> 0:17:46.960 don't like corporate tax rate hike, then maybe we should 0:17:47.000 --> 0:17:50.560 go at individuals. Um. You know. One thing that's interesting 0:17:50.600 --> 0:17:53.280 about this is that people always complain about how complex 0:17:53.320 --> 0:17:56.800 the tax laws are. If you eliminated the twelve months 0:17:56.800 --> 0:17:59.560 hold for long term capital gains and you taxed interest 0:17:59.640 --> 0:18:01.920 divin ends, and capital gains all at the same rate. 0:18:02.240 --> 0:18:04.879 It would greatly simplify taxes. Certainly it would go up 0:18:04.880 --> 0:18:06.960 for for some of the high earners, but it would 0:18:07.000 --> 0:18:09.640 simplify things substantially. So I don't think we know how 0:18:09.640 --> 0:18:11.280 this plays out. We don't even know if any of 0:18:11.280 --> 0:18:14.640 it will come into becoming a law, and if it does, 0:18:14.680 --> 0:18:17.440 it will likely look a lot different. There any thirty 0:18:17.440 --> 0:18:19.919 seconds left. What are some of the sectors that the 0:18:19.960 --> 0:18:24.120 traders in your survey are liking right now? Well, one 0:18:24.160 --> 0:18:25.720 that I think is really one of the parts I 0:18:25.720 --> 0:18:28.400 thought was found very interesting was that last year when 0:18:28.400 --> 0:18:30.640 we did this survey, the top sector that they were 0:18:30.680 --> 0:18:33.320 optimistic about was financials, which I think turned out to 0:18:33.359 --> 0:18:36.520 be a very good call, because financials lost four percent 0:18:36.600 --> 0:18:39.120 last year. They're up seventeen percent year to date. So 0:18:39.480 --> 0:18:42.200 the two worst sectors last year were financials and energy. 0:18:42.240 --> 0:18:44.760 Those are the two best ones this year right now. 0:18:44.760 --> 0:18:48.120 Our investors that took this survey told us that they're 0:18:48.160 --> 0:18:51.040 still optimistic about energy. As much as we talk about 0:18:51.040 --> 0:18:53.960 green energy and battery powered cars and all these other things, 0:18:54.040 --> 0:18:56.320 that still makes up a very small portion of the 0:18:56.400 --> 0:19:00.400 overall economy. Old time fossil fuels and and tradition energy 0:19:00.480 --> 0:19:02.240 is going to be with us for a very long time. 0:19:02.440 --> 0:19:05.000 It's down like it was last year, but it certainly 0:19:05.080 --> 0:19:07.159 is not out. And I think this year's rebound is 0:19:07.200 --> 0:19:10.560 a um indicative of that. There are certain fossil fuel 0:19:10.840 --> 0:19:14.720 cars and motorcycles that I intend to keep forever. I'll 0:19:14.760 --> 0:19:16.440 have to rip them out of my cold day to 0:19:16.520 --> 0:19:18.639 be around for a while. Randy, thanks so much for 0:19:18.720 --> 0:19:21.679 joining us. Randy Frederick, their VP of trading at the 0:19:21.720 --> 0:19:28.560 Schwab Center. All right, now we're gonna focus in on 0:19:28.680 --> 0:19:32.360 the municipal bond market. Eric Kazaski, senior US Muni Strategies 0:19:32.400 --> 0:19:36.880 for Bloomberg Intelligence, joins us and Um, we had kind 0:19:36.880 --> 0:19:42.400 of a bombshell yesterday on uh, the tax side of things. Eric, 0:19:42.960 --> 0:19:47.600 how does this affect the muni market in your estimation? Hey, 0:19:47.640 --> 0:19:50.720 good morning guys. Um. Look, obviously, any time you have 0:19:50.800 --> 0:19:53.720 higher taxes on the margin, that's going to be good 0:19:53.800 --> 0:19:55.919 for municipal bonds. Right, people are going to look for 0:19:55.960 --> 0:19:58.960 ways to lower their tax bill. Um. But I think 0:19:59.000 --> 0:20:01.560 if you if you sort of up back before we 0:20:01.600 --> 0:20:04.439 had tax reform in two seventeen, right when we had 0:20:04.560 --> 0:20:07.680 higher taxes, we didn't see like a huge dupremental retail demand. 0:20:08.040 --> 0:20:09.960 I think the real play here is going to be 0:20:10.000 --> 0:20:12.959 what happens to evaluations in the higher tax states like 0:20:13.040 --> 0:20:16.680 New York and California, who are already talking about increasing 0:20:16.720 --> 0:20:19.080 their marginal tax rate in state, and then combined with 0:20:19.119 --> 0:20:21.000 the higher federal tax rate, you could be up in 0:20:21.040 --> 0:20:23.840 the fifties um, and we could see valuations on the 0:20:23.880 --> 0:20:27.320 debt and those states really take off. All right, So Eric, 0:20:27.359 --> 0:20:29.800 just give us a sense here. We've known for a while. 0:20:30.040 --> 0:20:33.080 You certainly since President Biden was elected he won the 0:20:33.080 --> 0:20:35.359 election that probably going to see some taxes go up. 0:20:36.720 --> 0:20:38.800 What does the you know, medicimal bond market, if you 0:20:38.840 --> 0:20:41.439