WEBVTT - Exploring Industry City, Copper Trends, and the Markets 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 0:00:09.160 --> 0:00:13.280 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:16.360 Eastern on Apple card playing Android Auto with the Bloomberg 0:00:16.400 --> 0:00:19.759 Business App. Listen on demand wherever you get your podcasts, 0:00:19.960 --> 0:00:22.800 or watch us live on YouTube. 0:00:23.440 --> 0:00:27.080 Malex you alongside Paulsweenian. Finally back John Tucker. This is 0:00:27.120 --> 0:00:30.240 Bloomberg Intelligence Radio. We're broadcasting to live from the Interactive 0:00:30.240 --> 0:00:33.360 Brooker Studio right here in midtown Manhattan. But maybe one 0:00:33.400 --> 0:00:36.879 day we should actually broadcast from Industry City in Brooklyn. 0:00:36.920 --> 0:00:37.840 Paul's never been there. 0:00:38.040 --> 0:00:38.879 I don't do Brooklyn. 0:00:38.920 --> 0:00:41.920 He doesn't do He's going to do Brooklyn. So I 0:00:41.960 --> 0:00:44.640 live in Park Slow. Industry City is a go to place. 0:00:44.760 --> 0:00:47.800 It's good for adults, it's good for kids. They have games, 0:00:47.840 --> 0:00:51.479 they have free things on the weekends. They got salsa classes, 0:00:51.520 --> 0:00:54.360 they got concerts, they have ice skating in the winter. 0:00:54.560 --> 0:00:56.720 They have a lot of stuff. It is a very 0:00:56.760 --> 0:01:00.520 popular place to go when you have kids. Joining us 0:01:00.520 --> 0:01:04.000 now is Jim Simosa. He's managing director of Industry City 0:01:04.000 --> 0:01:06.920 and he joined us there right now. Hey, Jim, are 0:01:06.959 --> 0:01:11.200 you are you surprised? It just how successful industry city 0:01:11.240 --> 0:01:11.680 has become. 0:01:13.400 --> 0:01:14.320 I'm not surprised. 0:01:14.840 --> 0:01:17.600 I think that, you know, we have a lot of 0:01:17.680 --> 0:01:22.080 history doing adaptive reuse projects like this, like Insery City, 0:01:22.160 --> 0:01:25.800 like Chelsea Market, which at one time, just like this project, 0:01:25.959 --> 0:01:29.400 was you know a number of older buildings that were 0:01:29.640 --> 0:01:34.120 past their prime. But people really like classic old buildings 0:01:34.120 --> 0:01:38.959 that you take and redevelop into offices and retail and 0:01:39.000 --> 0:01:41.520 things that are fun. So we've seen this before, and 0:01:41.560 --> 0:01:45.560 we've done it other locations. So look, I'm surprised we 0:01:45.880 --> 0:01:48.160 took on something as large if you really want to know, 0:01:48.320 --> 0:01:50.280 that's six million square feet. But we've been able to 0:01:50.280 --> 0:01:53.160 do it so as far. But from a success standpoint, 0:01:53.200 --> 0:01:53.960 I'm not surprised. 0:01:54.640 --> 0:01:57.400 Jim talked to us about how you're thinking about real estate, 0:01:58.200 --> 0:02:01.400 mixed use, real estate, office, real state in the context 0:02:01.400 --> 0:02:03.760 of what appears to be a post pandemic, you know, 0:02:04.000 --> 0:02:06.400 different way people work and live and go to the 0:02:06.440 --> 0:02:07.559 office and all that kind of stuff. 0:02:08.520 --> 0:02:13.079 Sure, you know we've been doing We've been at this 0:02:13.560 --> 0:02:16.840 since doing exactly what we do, which is adaptive reuse 0:02:16.960 --> 0:02:22.240 and activation and fun place, you know, creating a fun 0:02:22.240 --> 0:02:22.920 place to work. 0:02:22.960 --> 0:02:27.120 For a long time, we didn't know a pandemic was coming. 0:02:27.240 --> 0:02:30.320 It just so happens that it came and what we 0:02:30.400 --> 0:02:34.320 do was more attractive to people. So what we do 0:02:34.360 --> 0:02:37.080 here is create a place that people like to come 0:02:37.240 --> 0:02:40.880 and work. And so we've actually been at eighty percent 0:02:41.960 --> 0:02:45.280 of the employees that work I see have been back 0:02:45.400 --> 0:02:48.800 in the office regularly for several years now, and so 0:02:50.040 --> 0:02:53.160 you know, that's kind of what we do is create 0:02:53.240 --> 0:02:57.480 fun places to work that are not commodity real estate. 0:02:57.520 --> 0:02:59.360 I worked and by the way, I worked in many 0:02:59.480 --> 0:03:03.600 classes steal office buildings in my career, and these are 0:03:03.720 --> 0:03:05.320 just more fun places to work. 0:03:05.360 --> 0:03:08.760 And people like coming to work and when they come 0:03:08.800 --> 0:03:09.799 to places like this. 0:03:10.760 --> 0:03:13.799 So how do you keep how do you know when 0:03:13.800 --> 0:03:14.920 a project's going to work? 0:03:15.040 --> 0:03:17.960 Right? Like you mentioned Chelsea Market and then Entry City, Like, 0:03:18.000 --> 0:03:19.440 what's the secret, Sauce. 0:03:21.400 --> 0:03:23.919 I will tell you the secret, Sauce is. 0:03:24.040 --> 0:03:26.280 So what you first do is you start with the 0:03:26.320 --> 0:03:31.040 ground floor and the place making. And for us, when 0:03:31.080 --> 0:03:33.760 you do something like this, when you have a project, 0:03:33.800 --> 0:03:38.120 you need retail, you need food and beverage, you need shopping, 0:03:38.200 --> 0:03:40.240 you need things like that. But how do you do 0:03:40.320 --> 0:03:42.480 that without any foot traffic? Nobody wants to come and 0:03:42.520 --> 0:03:45.080 do retail with you when you do that. So what 0:03:45.200 --> 0:03:48.120 we did at Chelsea Market and the same thing here 0:03:48.240 --> 0:03:52.320 is we went to wholesalers and commissaries and bakeries and 0:03:52.360 --> 0:03:55.400 things like that, people that really were interested in the 0:03:55.920 --> 0:03:58.040 production space more than retail. 0:03:59.000 --> 0:04:01.200 But they had to retail with us. 0:04:01.280 --> 0:04:02.880 That was part of the deal, you know, and we 0:04:03.280 --> 0:04:06.240 gave them a favorable rate in the beginning to do that. 0:04:06.280 --> 0:04:09.480 But they needed ground floor space. They needed space that 0:04:09.560 --> 0:04:13.280 had plenty of loading. Getting priced out of New York 0:04:13.320 --> 0:04:15.120 City was something that they didn't want. They wanted to 0:04:15.120 --> 0:04:17.560 be near their customers. So we would go to those 0:04:17.600 --> 0:04:22.040 and you go back to Chelsea Market. Lobster Place was 0:04:22.080 --> 0:04:26.000 a classic example wholesale fish a seafood place for us. 0:04:26.000 --> 0:04:31.800 It was other bakeries such as Colson's and Lilac Chocolates 0:04:31.800 --> 0:04:34.479 and things like that, companies that really were interested in 0:04:34.520 --> 0:04:37.480 production space, but we wanted them to do retail. 0:04:37.560 --> 0:04:40.000 So that way there are two businesses. 0:04:40.160 --> 0:04:42.560 You don't have to worry about the foot traffic in 0:04:42.640 --> 0:04:46.159 the beginning while you're getting this going. But you're starting, 0:04:46.320 --> 0:04:49.760 what you do is you start to get retail and 0:04:50.200 --> 0:04:53.240 amenity type tenants on the ground floor and placemaking, and 0:04:53.279 --> 0:04:55.839 that's how you start to lease the upper floors. Once 0:04:55.880 --> 0:04:58.279 you start to do that, then you have tenants in 0:04:58.320 --> 0:05:01.440 the building that are just happy to be right next 0:05:01.480 --> 0:05:04.800 door to those retailers, and then the retail takes off. 0:05:05.000 --> 0:05:08.400 And if you're to answer your specific question, how. 0:05:08.240 --> 0:05:08.800 Do you know? 0:05:09.560 --> 0:05:12.560 You know when those folks who, by the way, didn't 0:05:12.600 --> 0:05:14.400 really want to do retail with you in the beginning 0:05:14.480 --> 0:05:16.800 because you didn't have foot traffic. You know, when those 0:05:16.800 --> 0:05:19.920 folks come to you and say, can you do more 0:05:19.960 --> 0:05:23.000 marketing for me? And can you get me more foot traffic? 0:05:23.040 --> 0:05:25.839 This is fantastic because they're doing you know, retail margins 0:05:26.480 --> 0:05:28.560 instead of wholesale margins in their space. 0:05:28.600 --> 0:05:31.520 As soon as that happens, that's when you know you 0:05:31.640 --> 0:05:32.200 got something. 0:05:32.960 --> 0:05:34.960 So, Jim, how about on the on like the corporate 0:05:35.000 --> 0:05:37.479 tenant side, what type of companies want to be in 0:05:37.520 --> 0:05:39.279 a space like yours? 0:05:40.200 --> 0:05:45.719 So we tend to have more creative type companies, lots 0:05:45.760 --> 0:05:52.440 of designers, architects, marketing firms, things like that. You know 0:05:52.520 --> 0:05:57.120 that that's kind of very consistent with the Brooklyn market. 0:05:57.360 --> 0:05:59.000 And Paul, we're going to have to get you out here. 0:05:59.200 --> 0:06:01.800 So I grew up By the way, I grew up 0:06:01.800 --> 0:06:03.600 in Manhattan and I now live in Brooklyn, and if 0:06:03.600 --> 0:06:05.799 you told me back when I was in high school, 0:06:05.800 --> 0:06:06.080 I'd be. 0:06:06.120 --> 0:06:07.839 Living you see me. 0:06:08.040 --> 0:06:13.880 Okay, okay, But so anyway, but we have a lot 0:06:13.920 --> 0:06:14.160 of that. 0:06:14.480 --> 0:06:18.120 We are starting to see some more traditional type of 0:06:18.720 --> 0:06:21.600 companies like finance firms and law firms and things like that, 0:06:21.640 --> 0:06:24.239 which we we we did not see in the beginning, 0:06:24.560 --> 0:06:26.120 but we have a lot of that. We have a 0:06:26.120 --> 0:06:28.800 lot of industrial. We're six million square feet first of all, 0:06:28.839 --> 0:06:31.080 so that's a lot of space to fill up with, 0:06:31.560 --> 0:06:34.159 you know, with just one or two types of industries. 0:06:34.200 --> 0:06:37.120 So we have a lot of distribution and warehouse still. 0:06:37.920 --> 0:06:42.480 But but our office itself focuses more on creative companies. 0:06:42.560 --> 0:06:45.080 And then we have people like the Brooklyn Nets, you know, 0:06:45.200 --> 0:06:49.560 so the Brooklyn Nets there headquarters and players, players, player personnel, 0:06:49.600 --> 0:06:54.200 and back office are all here. So it's really it's 0:06:54.200 --> 0:06:56.560 a much wider range of types of companies than you 0:06:56.560 --> 0:06:59.599 would normally see in a project, partially because we are 0:06:59.760 --> 0:07:02.480 sick million square feet and sixteen buildings, so we have 0:07:02.560 --> 0:07:06.520 the ability to do things differently building by building that 0:07:06.600 --> 0:07:08.280 you may not be able to do if you were 0:07:08.320 --> 0:07:09.560 one or two buildings. 0:07:09.920 --> 0:07:12.800 Okay, so what are you going to do next? Like 0:07:12.840 --> 0:07:14.960 what's on the gym's list of. 0:07:14.920 --> 0:07:15.440 Things to do? 0:07:17.560 --> 0:07:23.480 We are looking at a lot more retail. We One 0:07:23.520 --> 0:07:25.680 of the things that we've been very successful with is 0:07:25.680 --> 0:07:29.400 our home furnishings. So we've got ABC Carpet and Design 0:07:29.480 --> 0:07:34.840 within reach and restoration hardware and places like that, and 0:07:34.840 --> 0:07:38.480 we have city foundry or antiquelace, so we've we've really 0:07:38.560 --> 0:07:41.440 done very in West Elm, we've done very well. And 0:07:41.520 --> 0:07:43.480 Cohler see I keep I keep I'm going to keep 0:07:43.520 --> 0:07:46.920 remembering as we keep going along. But we've done very 0:07:46.920 --> 0:07:51.200 well with the home furnishings and and home goods sector. 0:07:51.280 --> 0:07:53.920 So we've become known as the place where if you 0:07:53.920 --> 0:07:56.680 want to come and shop for furniture and things like 0:07:56.720 --> 0:07:58.800 that in Brooklyn, this is where you come because you 0:07:59.200 --> 0:08:01.360 can you can go to six different places. So we 0:08:01.400 --> 0:08:04.800 are continuing with that. That's very interesting to us. We 0:08:04.880 --> 0:08:09.000 are are very design centric type of property. If you 0:08:09.080 --> 0:08:14.680 walk around, you'll notice that we do specific design elements 0:08:14.760 --> 0:08:17.080 that you may not see elsewhere. So that's kind of 0:08:17.160 --> 0:08:19.720 who we are and it kind of makes us happy 0:08:19.720 --> 0:08:21.760 and we enjoy doing that. That's what gets us, you know, 0:08:21.880 --> 0:08:23.400 sort of out of the bed in the morning, So 0:08:23.440 --> 0:08:25.200 we're going to continue to do that. We're going to 0:08:25.280 --> 0:08:30.040 continue to do more retail food and beverage. We are 0:08:30.640 --> 0:08:33.679 continuing to grow japan Village, which everybody which is one 0:08:33.720 --> 0:08:35.760 of the things that we are known for, which is 0:08:36.080 --> 0:08:40.920 a large Japanese eating, drinking, but now hard goods and 0:08:41.000 --> 0:08:44.960 cultural center. We started with them at twenty thousand square feet. 0:08:45.040 --> 0:08:47.720 We've now gone to sixty thousand square feet. We've got 0:08:47.800 --> 0:08:54.320 karaoke and Japanese barbecue and Japanese cooking school, Japanese bakery coming, 0:08:54.679 --> 0:08:55.280 so we're. 0:08:55.080 --> 0:08:57.679 Going to continue to do that. We continue to. 0:08:57.720 --> 0:09:01.199 Use our courtyards, which is one of our best assets, 0:09:01.240 --> 0:09:04.120 and that is just large outdoor space to kind of 0:09:04.160 --> 0:09:07.440 function like city parks, but they are not city parks. 0:09:07.520 --> 0:09:09.839 We own and operate them, so we do a lot 0:09:09.880 --> 0:09:12.160 of concerts and things like that. So I think that. 0:09:14.080 --> 0:09:18.400 Nothing really that different than what we've been doing from 0:09:18.400 --> 0:09:22.720 an activation standpoint. We are also very much getting into 0:09:22.840 --> 0:09:26.560 renewable energy. We have Equinor as a major tenant and 0:09:26.760 --> 0:09:30.320 a large piece of property just adjacent to us, which 0:09:30.360 --> 0:09:33.680 is the staging area for a large wind farm. That's 0:09:33.720 --> 0:09:36.360 going on in the south coast of Long Island. So 0:09:36.440 --> 0:09:39.680 that is really sort of charged us up and made 0:09:39.760 --> 0:09:44.040 us attractive to other renewable energy companies and industries, and 0:09:44.320 --> 0:09:46.720 we're very interested in doing that as. 0:09:46.600 --> 0:09:47.920 Well as biotech. 0:09:48.000 --> 0:09:50.640 You know, biotech is something that we are very interested in, 0:09:50.880 --> 0:09:53.599 you know, I think, and we're hearing this from a 0:09:53.640 --> 0:09:55.839 lot of people. You know, some folks that when they 0:09:55.880 --> 0:09:58.480 get out of school, they're not that interested in working 0:09:58.600 --> 0:10:00.960 in an office park the middle of New Jersey. 0:10:01.040 --> 0:10:02.960 Nothing wrong with New Jersey. I go there a lot. 0:10:03.440 --> 0:10:05.880 But disclaimer, Jim, we appreciate. 0:10:05.559 --> 0:10:06.480 The disclaimer, right. 0:10:06.559 --> 0:10:08.440 I actually have a house there on the Jersey Shore, 0:10:08.559 --> 0:10:11.959 just to be clear. So, but but you know what 0:10:12.000 --> 0:10:15.040 we're hearing a lot of and we we knew this. 0:10:15.480 --> 0:10:18.240 This is how we started doing this years even before 0:10:18.240 --> 0:10:21.760 the pandemic. Is people want to work in places where 0:10:21.800 --> 0:10:24.480 they enjoy and they have fun and they meet people 0:10:24.520 --> 0:10:26.800 and there's a social life to it as well. And 0:10:26.840 --> 0:10:29.880 it turns out people, highly educated people coming out of 0:10:29.920 --> 0:10:32.920 school that are going into biotech want the same thing. 0:10:33.160 --> 0:10:35.920 And so we are looking into a lot of industries 0:10:35.960 --> 0:10:38.440 like that, which frankly was not originally something that we 0:10:38.520 --> 0:10:41.439 really thought about that much when we first started it. 0:10:41.640 --> 0:10:43.560 But that's how projects like this evolve. 0:10:43.800 --> 0:10:46.760 All right, Jim, great stuff really interesting. You have to 0:10:46.880 --> 0:10:47.360 head over. 0:10:47.200 --> 0:10:48.920 There, so you're never going to come. 0:10:49.120 --> 0:10:51.320 My daughter lives in Brooklyn, so I've been. 0:10:51.200 --> 0:10:53.920 There, but just begrudgingly coming out. 0:10:53.800 --> 0:10:54.480 In the eighties. 0:10:54.840 --> 0:10:58.960 Well, nobody very different stories. But the best part for 0:10:59.000 --> 0:10:59.839 those of you who like. 0:10:59.800 --> 0:11:03.160 To things in the design within reach the super expensive 0:11:03.160 --> 0:11:06.360 mid century Modern furniture as an outlet store there, and 0:11:06.400 --> 0:11:08.120 if you go on Friday Saturday, there's like an extra 0:11:08.160 --> 0:11:09.120 twenty percent discount. 0:11:09.120 --> 0:11:10.920 Like you can get an Eames chair for like six 0:11:11.040 --> 0:11:14.600 gram five grams for a chair, a cheer Eames chair, 0:11:14.760 --> 0:11:16.640 EMS chair? What's an EMS chair? 0:11:16.720 --> 0:11:17.200 Yeah? 0:11:17.559 --> 0:11:17.640 What? 0:11:17.920 --> 0:11:19.320 Look what I'm dealing with you guys? 0:11:20.840 --> 0:11:26.160 Eight twelve thousand dollars. Like they're right, they're really really comfortable. Anyway, 0:11:26.160 --> 0:11:26.760 it's super fun. 0:11:26.760 --> 0:11:27.280 You get to go. 0:11:27.360 --> 0:11:31.440 It's like a scavenger hunt, ABC car Fish. I'm like 0:11:31.480 --> 0:11:34.400 basically shilling for industry City Emes E A M. 0:11:34.559 --> 0:11:37.000 E S chair c h A. 0:11:37.240 --> 0:11:38.040 I R got it. 0:11:38.200 --> 0:11:41.080 Those chairs. Don't know what Eames chair is? Is this 0:11:41.120 --> 0:11:42.760 a Jersey thing? I don't understand? 0:11:43.280 --> 0:11:49.480 Okay, anyway, you're listening to the Bloomberg Intelligence podcast. 0:11:49.720 --> 0:11:52.760 Catch us live weekdays at ten am Eastern on Apple 0:11:52.800 --> 0:11:55.800 card Play and Android Auto with a Bloomberg Business app. 0:11:55.960 --> 0:11:58.800 You can also listen live on Amazon Alexa from our 0:11:58.840 --> 0:12:03.199 flagship New York State. Just say Alexa playing Bloomberg eleven thirty. 0:12:04.720 --> 0:12:06.520 All right, I've got interest rates coming down. I don't 0:12:06.520 --> 0:12:08.560 know if it's twenty five or fifty basis points this week, 0:12:08.559 --> 0:12:10.520 but I know they're going down. I got an earnings 0:12:10.559 --> 0:12:12.400 backed up. That seems pretty good to me. We had 0:12:12.400 --> 0:12:15.720 a good quarterly earnings. Geena Martin Adams from Bloomberg Intelligence 0:12:15.760 --> 0:12:18.880 tells me that, So isn't that constructive for stocks? Brian 0:12:18.920 --> 0:12:20.840 Levit joins is here. He's a professional. He does this 0:12:20.840 --> 0:12:24.440 stuff for a living, global market strategist for Investco. Dudes 0:12:24.480 --> 0:12:26.480 on the road all the time. We got him in 0:12:26.520 --> 0:12:28.800 our studio here today, so that's a good thing. Brian, 0:12:28.840 --> 0:12:31.120 What are you telling your clients these days about kind 0:12:31.120 --> 0:12:32.680 of where to be in this market? 0:12:33.040 --> 0:12:36.400 It's interesting because the leading indicators of the economy are 0:12:36.760 --> 0:12:40.680 pointing lower, so they're pointing towards below trend weaker growth, 0:12:40.920 --> 0:12:42.800 which is when, of course, you then need to follow 0:12:42.880 --> 0:12:45.440 through on the policy side. So in the short term, 0:12:45.760 --> 0:12:48.720 you're getting more of a signal to be a little 0:12:48.760 --> 0:12:52.199 bit more defensive, a little bit more higher quality in 0:12:52.240 --> 0:12:55.720 your investments. And you've seen that in government bonds, not 0:12:55.760 --> 0:12:59.520 necessarily as much in stocks, given how overvalued some of 0:12:59.559 --> 0:13:02.760 the biggest high quality names were. But we are getting 0:13:02.800 --> 0:13:05.920 more of a defensive signal in here. What you hope 0:13:06.000 --> 0:13:08.280 for and what you're alluding to is as the FED 0:13:08.320 --> 0:13:12.280 starts to normalize rates, do you get the proverbial soft 0:13:12.400 --> 0:13:14.800 landing and markets doing well over the next couple of years. 0:13:14.800 --> 0:13:16.680 And I'm in that camp. I think the markets will 0:13:16.720 --> 0:13:22.079 do well over the next year's intermediate term, given that 0:13:22.120 --> 0:13:24.760 we're past peak inflation and peak tightening. 0:13:25.400 --> 0:13:27.960 So there's a great chart on Bloomberg that showed if 0:13:27.960 --> 0:13:29.760 you go back to the top that we saw I 0:13:29.760 --> 0:13:33.800 think in June, what's led since then has been anything 0:13:33.840 --> 0:13:36.719 but tech. Yeah, and which is quite interesting, And I'm 0:13:36.760 --> 0:13:40.720 just wondering which area of anything but tech can continue 0:13:40.760 --> 0:13:41.200 to lead. 0:13:42.120 --> 0:13:44.079 Yeah, it's nice to see the equo weight. It's nice 0:13:44.080 --> 0:13:47.360 to see some broadening out in these markets. Look, if 0:13:47.400 --> 0:13:50.120 you're defensive in the short term like we are, than 0:13:50.160 --> 0:13:52.280 the type of sectors that tend to do well, or 0:13:52.520 --> 0:13:55.080 things that are a bit more rate sensitive, like real estate, 0:13:55.559 --> 0:13:58.960 healthcare has done well, staples when you start to think 0:13:59.000 --> 0:14:01.600 about the recovery. So I want to be clear here, 0:14:02.040 --> 0:14:06.120 our tactical indicator says more defensive. We would expect as 0:14:06.120 --> 0:14:08.839 you move into twenty twenty five to see more of 0:14:08.880 --> 0:14:11.520 a recovery feel, meaning that growth is below trend but 0:14:11.600 --> 0:14:14.680 starting to pick up on the back of easing. That's 0:14:14.760 --> 0:14:17.640 when you want to be more exposed to cyclical sectors. 0:14:17.720 --> 0:14:20.560 That's when you want to be more exposed to you know, 0:14:20.600 --> 0:14:23.600 international markets, full risk on in the portfolios. I think 0:14:23.600 --> 0:14:27.480 we're going to get there right now. Though again our 0:14:27.680 --> 0:14:30.440 tactical indicators suggesting to be a little bit cautious here. 0:14:31.600 --> 0:14:35.240 Well, when you take cautious, how then do you manage that, 0:14:35.360 --> 0:14:37.160 Like what's the best kind of allocation? 0:14:38.120 --> 0:14:41.400 Well, we would we would increase duration in the portfolio, 0:14:41.440 --> 0:14:44.120 which has certainly worked. Right, So we've seen rates come 0:14:44.160 --> 0:14:49.000 down pretty significantly higher quality bonds and within equities. Not 0:14:49.080 --> 0:14:52.320 that we're saying you need to eliminate your equity exposure, 0:14:52.400 --> 0:14:55.360 not at all. It's just where inequities do you position 0:14:55.560 --> 0:14:59.600 and typically in a growth slowdown, you will see more 0:14:59.640 --> 0:15:05.080 defense sectors outperform. You'll see higher quality, low volatility tends 0:15:05.120 --> 0:15:10.000 to win. It's more recovery phase again, as we either 0:15:10.200 --> 0:15:13.359 get this soft landing or come out of an economic downturn, 0:15:13.760 --> 0:15:16.920 where you tend to see more cyclical parts of the 0:15:16.920 --> 0:15:17.800 market outperform. 0:15:18.080 --> 0:15:20.600 How do you feel about valuation broadly defined here, Doo, 0:15:20.600 --> 0:15:22.200 I have to pull out those MAC seven and then 0:15:22.400 --> 0:15:24.560 just the market for valuation. How do you think about it? 0:15:25.000 --> 0:15:27.040 The first thing I always say about valuations is they're 0:15:27.080 --> 0:15:29.560 not timing tools, and I think too many people get 0:15:29.600 --> 0:15:32.920 caught up thinking that markets can't do well because stocks 0:15:32.920 --> 0:15:35.480 are trading above average. So that would be point one. 0:15:35.480 --> 0:15:37.800 I don't view it as a timing tool. Point two. 0:15:37.920 --> 0:15:40.760 You're right the S and P five hundred and aggregate 0:15:40.840 --> 0:15:44.680 is trading above valuations, but the average stock is not 0:15:44.920 --> 0:15:48.200 all that excessive, and the valuations on the equal way 0:15:48.240 --> 0:15:51.360 compared to its average is about fair. So I wouldn't 0:15:51.400 --> 0:15:55.640 view this as an environment where stocks are particularly expensive. 0:15:55.680 --> 0:15:57.880 And I'm also looking at it from an environment where 0:15:57.960 --> 0:15:59.800 rates are going to come down, and as rates come 0:15:59.840 --> 0:16:02.640 down down, that should be supportive evaluations. 0:16:03.360 --> 0:16:05.200 What do you do with, Well. 0:16:05.080 --> 0:16:06.880 What do you think will be done with all the 0:16:06.880 --> 0:16:10.080 money and money market funds? As in like first cut, zoom, 0:16:10.160 --> 0:16:12.040 they come out and go to other things. Or is 0:16:12.080 --> 0:16:14.200 it like once we get the cycle going, is there 0:16:14.240 --> 0:16:17.440 a threshold rate where that money finally starts to move. 0:16:17.760 --> 0:16:20.920 Some of that money came out of bank deposits, so 0:16:20.960 --> 0:16:23.400 it was money down no one of them, right, yeah, 0:16:23.560 --> 0:16:26.840 So if you're getting zero in the big money center banks, 0:16:26.840 --> 0:16:29.160 going to money markets at you know, five and a 0:16:29.200 --> 0:16:32.120 quarter makes sense even at three, even at three, right, 0:16:32.160 --> 0:16:34.240 So does all of that find its way into the 0:16:34.240 --> 0:16:36.960 equity market or the high yeald bomb market? Probably not. 0:16:37.440 --> 0:16:40.400 Some of that is still going to be considered a 0:16:40.440 --> 0:16:45.240 cash like instrument. But I would advise investors to think 0:16:45.280 --> 0:16:47.880 about quickly, and we've been saying it for a while, 0:16:48.000 --> 0:16:49.920 how you're going to take advantage of the yields that 0:16:50.000 --> 0:16:52.840 presented themselves, you know as well as I knew as 0:16:52.880 --> 0:16:56.480 I do. In twenty nineteen, people were begging for four percent. 0:16:56.840 --> 0:16:58.560 They used to ask me, how do I get four percent? 0:16:58.600 --> 0:17:00.720 I would say, you either have to put it all 0:17:00.760 --> 0:17:02.480 in high yield or you have to lend money to 0:17:02.480 --> 0:17:06.200 the Russian government. So that was a difficult conversation. Today 0:17:06.240 --> 0:17:10.240 you could get close to four percent in or you 0:17:10.280 --> 0:17:14.360 can get four percent municipal bonds in high quality corporate bonds. 0:17:14.400 --> 0:17:18.120 So I would advise investors to take advantage of it. Unfortunately, 0:17:18.160 --> 0:17:20.640 I think a lot of that money still sitting there 0:17:20.680 --> 0:17:22.920 with the reinvestment risk that it's had for a while. 0:17:23.640 --> 0:17:27.159 Small and mid cap, what do you think about looking 0:17:27.240 --> 0:17:28.040 there for value? 0:17:28.280 --> 0:17:30.480 It's interesting, so I mean small So small cap has 0:17:30.480 --> 0:17:33.159 become four percent of total market cap. I think it 0:17:33.240 --> 0:17:36.520 used to be ten. So over the next number of years, 0:17:36.560 --> 0:17:41.720 small cap should see performance, should see good performance as 0:17:41.760 --> 0:17:45.280 that reverts to some type of mean. What's interesting is 0:17:45.320 --> 0:17:48.400 in a growth slowdown, which we're forecasting, small cap tends 0:17:48.480 --> 0:17:52.159 to not do well. Small cap has performed well on 0:17:52.240 --> 0:17:54.720 the expectation of lower rates, and you know, lower rates 0:17:54.760 --> 0:17:57.160 across the yeal curve. So I'd be a little bit 0:17:57.200 --> 0:18:01.159 cautious on small cap while we're maintaining a defe posture. 0:18:01.560 --> 0:18:05.240 But again, the recovery phase of this, the recovery phase 0:18:05.280 --> 0:18:07.040 of this should benefit small and I would think over 0:18:07.080 --> 0:18:10.919 the next few years benefits small again just because of 0:18:11.040 --> 0:18:14.640 how undervalued it is to the to the megacap names. 0:18:15.040 --> 0:18:17.919 This Saturday, USC comes into the Big House. How you're 0:18:17.920 --> 0:18:19.360 feeling about you Wolverines this year? 0:18:19.800 --> 0:18:21.680 Well, it's a little bit mixed. I think we're playing 0:18:21.680 --> 0:18:24.680 a little bit with house money. After winning a national 0:18:24.760 --> 0:18:29.720 championship last year, new coach, new quarterback, a nice win 0:18:29.760 --> 0:18:33.159 against Arkansas, but the Texas overhang is still there, so 0:18:33.720 --> 0:18:36.720 we'll see. I don't know if if my confidence is 0:18:36.760 --> 0:18:39.560 anywhere near what it was in the twenty twenty three seasons. 0:18:39.680 --> 0:18:40.880 USC. Are they in Big ten? 0:18:40.960 --> 0:18:42.320 Now they are in the Big ten. 0:18:42.600 --> 0:18:43.480 This is ridiculous. 0:18:43.560 --> 0:18:44.520 It's hard to follow it. 0:18:44.520 --> 0:18:45.600 It's silly. Okay, all right? 0:18:45.640 --> 0:18:47.479 Well I got Stanford coming in to play my dookies 0:18:47.480 --> 0:18:49.200 at some point this year, so we'll see how that goes. 0:18:49.720 --> 0:18:53.520 You're going to send you the field hockey team from Piscatowy, 0:18:53.600 --> 0:18:55.760 New Jersey, Rutgers all the way to like Los Angeles 0:18:55.760 --> 0:18:56.480 to play field hockey. 0:18:56.560 --> 0:18:57.320 It feels out long? 0:18:57.440 --> 0:19:01.399 Is that what we're doing? Brian had Brian Leviy, global 0:19:01.400 --> 0:19:03.960 market strategist for Invesco, joining us here in our studio today, 0:19:03.960 --> 0:19:04.800 given us his thoughts. 0:19:06.359 --> 0:19:10.240 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:19:10.320 --> 0:19:13.680 weekdays at ten am Eastern on Afocarplay and Android Auto 0:19:13.760 --> 0:19:16.679 with the Bloomberg Business app, Listen on demand wherever you 0:19:16.760 --> 0:19:20.440 get your podcasts, or watch us live on YouTube. 0:19:21.400 --> 0:19:23.920 All right within the markets, there was some really interesting 0:19:23.960 --> 0:19:26.320 commodity positioning. And I don't just say that because I'm 0:19:26.320 --> 0:19:29.600 a commodity's nerd, but oil has seen such a strong rerating, 0:19:29.680 --> 0:19:31.840 and it's so interesting because hedge funds are net short 0:19:31.880 --> 0:19:34.480 on oil for the first time since the data started 0:19:34.480 --> 0:19:38.000 being collected back in twenty eleven. Oils up by about 0:19:38.000 --> 0:19:41.160 two to three percent today. Joining us now is Mike mcgloon. 0:19:41.520 --> 0:19:45.080 He is Bloomberg Intelligence senior commodity strategist from London. 0:19:45.560 --> 0:19:46.720 This is a new background. 0:19:46.960 --> 0:19:49.600 I can't believe they took us passport. He got into 0:19:49.720 --> 0:19:53.000 London amazing after all the last they put him on 0:19:53.920 --> 0:19:55.520 where we're doing good. 0:19:55.520 --> 0:19:56.240