WEBVTT - Dream Hotel Group CEO Optimistic On Travel 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 --> 0:00:11.480 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 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.479 at Bloomberg dot com slash podcast. Pandemic trends here in 0:00:22.480 --> 0:00:25.800 the United States are really trending in the right direction. 0:00:26.160 --> 0:00:30.800 Pandemic is on its back foot as vaccinations continue to rise. 0:00:30.840 --> 0:00:32.600 And then of course we have from the CDC yesterday 0:00:32.640 --> 0:00:35.839 relaxed mask requirements and that is good news for a 0:00:35.880 --> 0:00:38.159 lot of business. And Taylor, you're saying you can't even 0:00:38.200 --> 0:00:40.400 get a spot in a pilates class in the city, right, 0:00:40.479 --> 0:00:43.279 I know, you know, they're booked at full capacity and 0:00:43.400 --> 0:00:46.200 everyone is jammed back. I had to hurry and rush 0:00:46.240 --> 0:00:49.239 to get my spots, So, like everyone else, that is 0:00:49.280 --> 0:00:51.880 good to hear. So I'd say another group of businesses 0:00:51.880 --> 0:00:54.960 that need this economy to reopen is the hotel business. 0:00:55.040 --> 0:00:57.360 Let's talk about that. J Stein. He's the chief executive 0:00:57.400 --> 0:01:00.000 officer for the Dream Hotel Group. Jake, thanks so much 0:01:00.040 --> 0:01:02.240 for joining us here. I would love to get your 0:01:02.280 --> 0:01:05.600 thoughts as to where we are right now with your 0:01:05.640 --> 0:01:10.640 hotel business visa v maybe six months ago. Thanks Paul Tell, 0:01:10.760 --> 0:01:13.840 Thanks thanks for having me on. Yeah, so good progress 0:01:13.840 --> 0:01:17.039 for the last six months. Nationally, New York City just 0:01:17.160 --> 0:01:20.399 starting to make some progress. As you know. We're opening 0:01:20.440 --> 0:01:23.480 up a two new uh two new hotels this month 0:01:23.840 --> 0:01:27.039 or reopening i should say, the Dream Midtown and the 0:01:27.120 --> 0:01:30.880 Dream Downtown. Dream Midtown actually opens today. So we're thrilled 0:01:30.920 --> 0:01:34.240 to uh here with the with the staff and welcoming 0:01:34.280 --> 0:01:36.640 back employees that have been furloughed for over a year. 0:01:36.959 --> 0:01:39.360 It's just so nice to see their faces. And we'll 0:01:39.400 --> 0:01:41.240 do the same thing about ten days later for the 0:01:41.319 --> 0:01:43.679 Dream Downtown crew. And then we have two more hotels 0:01:43.680 --> 0:01:46.039 that are closed, the Chat Wall and the Time, which 0:01:46.319 --> 0:01:48.320 we hope to have open maybe in the next sixty 0:01:48.360 --> 0:01:50.440 days as well. So a lot of things moving to 0:01:50.440 --> 0:01:53.840 New York. UH. Still a long way to go to build. 0:01:53.840 --> 0:01:57.560 The occupancy is back up to reasonable levels, but certainly 0:01:57.600 --> 0:01:59.640 you're starting to see a little bit of light at 0:01:59.680 --> 0:02:01.200 the end of shun office point. You know, it was 0:02:01.240 --> 0:02:05.200 interesting we heard from Airbnb last night, UH and and 0:02:05.280 --> 0:02:10.000 really highlighting that the urban tourists has not quite come back. 0:02:10.080 --> 0:02:14.000 We're still doing a lot of vacation homes outside big cities. 0:02:14.280 --> 0:02:17.639 When are you hoping that that urban tourist really does 0:02:17.720 --> 0:02:21.119 come back? Yeah, I would disagree with that. I mean, 0:02:21.400 --> 0:02:23.960 I certainly not back to the sense where they're back 0:02:24.000 --> 0:02:26.280 all the way, but certainly it is moving in in 0:02:26.360 --> 0:02:29.160 other markets. New York is just starting, but Miami is 0:02:29.200 --> 0:02:32.400 I'm sure you've heard stories is very strong in our 0:02:32.520 --> 0:02:34.880 urban product of the dream of South Beach. The dream 0:02:34.880 --> 0:02:38.880 in Nashville really started to bounce back. UH pootain beverage 0:02:38.960 --> 0:02:41.480 very strong, but also on the room side, back over 0:02:42.720 --> 0:02:45.440 levels now UH and the dream in Hollywood as well. 0:02:45.440 --> 0:02:48.160 We're seeing good traction in l A starting to uh 0:02:48.200 --> 0:02:51.160 to move. So I think that you are starting to 0:02:51.200 --> 0:02:53.920 see people coming back to the urban centers. UH and 0:02:53.960 --> 0:02:58.600 as museum start to uh reopen and larger percentages, baseball 0:02:58.639 --> 0:03:00.760 games and and all those kinds of things. Certainly with 0:03:00.840 --> 0:03:03.600 restaurants and a lot of relaxation there on the amount 0:03:03.600 --> 0:03:06.000 of people, it's a big attraction to come to New 0:03:06.080 --> 0:03:09.280 York and certainly when we get Broadway open in September, UH, 0:03:09.360 --> 0:03:11.840 it's gonna be game changing. So, Jay, what is your 0:03:11.840 --> 0:03:14.240 expectation for New York New York. I'm sure those are 0:03:14.240 --> 0:03:16.640 obviously key key properties for you. How do you expect 0:03:16.680 --> 0:03:19.400 the occupancy to ramp up based only maybe some of 0:03:19.520 --> 0:03:23.200 your experience and some of your other markets. Yeah, it's 0:03:23.320 --> 0:03:27.800 a little tough to say. Nobody really knows. I'm optimistic. 0:03:27.840 --> 0:03:30.079 I think people want to come to New York one 0:03:30.200 --> 0:03:32.000 just you know, for the fun of it. But you know, 0:03:32.200 --> 0:03:34.480 there's eight million people that people need to come and 0:03:34.600 --> 0:03:37.280 visit Um that they haven't seen him a long time, 0:03:37.360 --> 0:03:40.120 family and friends, So I think we may be a 0:03:40.120 --> 0:03:44.160 little surprised. And beautiful weather, uh this was always one 0:03:44.160 --> 0:03:46.320 of the best times of the year to be in 0:03:46.360 --> 0:03:49.520 the city. I think we'll start to see the numbers 0:03:49.600 --> 0:03:53.640 rebound and hopefully by the fall we start creeping back 0:03:53.720 --> 0:03:57.240 up into those uh six. You know, we will normally 0:03:57.320 --> 0:04:00.520 run here in New York, which is twenty higher than 0:04:00.520 --> 0:04:02.640 the rest of the country. So it's just a very 0:04:02.680 --> 0:04:05.000 different in general. You know, we have to talk about 0:04:05.000 --> 0:04:07.920 the labor shortage going on right now. Are your employees 0:04:08.040 --> 0:04:10.600 coming back to work or do you have to incentivize 0:04:10.640 --> 0:04:14.880 them with higher pay? You know, we're just starting here 0:04:14.880 --> 0:04:17.680 in New York, so we haven't had too much difficulty, 0:04:17.920 --> 0:04:20.120 but we're bringing back from a very small staff where 0:04:20.240 --> 0:04:23.479 you know, we'll probably only be in the twenty occupancy 0:04:23.600 --> 0:04:26.440 range in the first month, so that's you know, a 0:04:26.520 --> 0:04:28.600 third of what we normally do, and so there'll be 0:04:28.640 --> 0:04:33.400 a much much, much fewer employees than normal. But nationally, Uh, 0:04:33.880 --> 0:04:36.440 it's very difficult getting employees. And I'm sure you're hearing 0:04:36.440 --> 0:04:39.240 that every day. Uh. And it was talking something about 0:04:39.279 --> 0:04:42.200 markets before COVID, you know, don't get me wrong, um, 0:04:42.240 --> 0:04:44.040 but now and I'm sure it has to do with 0:04:44.080 --> 0:04:47.760 the enhanced unemployment and stimulus and things like that certainly 0:04:47.760 --> 0:04:50.240 play a part of it. Um. So your labor is 0:04:50.279 --> 0:04:54.640 a very very uh difficult aspect for our industry right now. 0:04:55.279 --> 0:04:58.359 What is the business like in your Miami hotel? Is 0:04:58.360 --> 0:05:01.039 it back to normal? I see, I see watched the 0:05:01.040 --> 0:05:04.560 news every night for months and these people are parting 0:05:04.680 --> 0:05:08.360 like there is no pandemic. So how's your hotel doing 0:05:08.360 --> 0:05:11.440 down there? Yeah? So I wouldn't say it's like there's 0:05:11.480 --> 0:05:13.680 no pandemic. I mean you do see those that's what 0:05:13.720 --> 0:05:16.159 you see on TV because they interviewed certain people but 0:05:16.200 --> 0:05:18.479 I was there yesterday. I was at the dream In 0:05:18.240 --> 0:05:20.120 in Miami for the whole day. I was in the 0:05:20.560 --> 0:05:23.960 Durham unscripted yesterday a day before that. And I've been 0:05:23.960 --> 0:05:27.360 traveling all over all over to all about properties, but 0:05:27.480 --> 0:05:32.560 Miami is definitely the highest demand right now. UM. You know, 0:05:32.680 --> 0:05:35.719 people eating indoors without masks, That's the same thing you 0:05:35.760 --> 0:05:38.200 have in New York City. So it's not like it's 0:05:38.240 --> 0:05:40.600 you know, the wild wild West that day, the way 0:05:40.680 --> 0:05:42.919 people describe it, it's really not. What's it been like 0:05:42.920 --> 0:05:47.240 traveling on the planes and stuff. Um, for the most plot, 0:05:47.240 --> 0:05:49.200 I've been on a lot of flights, four flights in 0:05:49.240 --> 0:05:51.599 the last three days, UM. And last week I was 0:05:51.640 --> 0:05:53.839 on four flights as well. I was in Louisville, I 0:05:53.880 --> 0:05:58.120 was in Nashville, UM, went through Atlanta, went through Detroit. UM. 0:05:58.200 --> 0:06:00.679 So yeah, there's a lot of people. I was shocked. 0:06:00.720 --> 0:06:03.760 I had to go through Charlotte yesterday. It looked completely 0:06:03.800 --> 0:06:09.839 normal in the terminal, right, Okay, alright, busy, most people 0:06:10.440 --> 0:06:14.159 being very courteous and wearing the mask for people taking 0:06:14.160 --> 0:06:16.360 a little little little bit of liberties with that. All right, 0:06:17.120 --> 0:06:20.280 all right, well hopefully, well we can continue this reopening 0:06:20.320 --> 0:06:22.440 in a safe way and and get folks back out there. 0:06:22.520 --> 0:06:25.960 J Stein, chief executive officer of the Dream Hotel Group. 0:06:26.000 --> 0:06:28.960 They're opening one of the New York properties today and 0:06:29.040 --> 0:06:31.440 another one on the twenty six, So that's good to 0:06:31.440 --> 0:06:34.480 see properties here in New York City coming back. This 0:06:35.040 --> 0:06:41.280 is Bloomberg. It seems like the discussion has moved from 0:06:41.480 --> 0:06:45.960 the pandemic, two vaccinations, and now this week it seems 0:06:45.960 --> 0:06:48.720 to be mask or no mask. That seems to be 0:06:48.760 --> 0:06:51.360 where the conversation is going. Let's get the latest on 0:06:51.560 --> 0:06:54.160 all of these issues with Lawrence Soer. We always appreciate 0:06:54.160 --> 0:06:56.840 her giving us some time every week. Lawrence Sowers is 0:06:56.960 --> 0:07:00.279 socio Professor of Emergency Medicine that the Johns Hopkins School 0:07:00.320 --> 0:07:02.120 of Medicine. I should know that the Bloomberg School of 0:07:02.120 --> 0:07:05.120 Public Health at Johns Hopkins is supported by Michael Lare Bloomberg, 0:07:05.160 --> 0:07:08.839 founder of Bloomberg LP and Bloomberg Philanthropies, and this radio 0:07:08.920 --> 0:07:13.200 and TV operation. So, Lauren, we're having the CDC update there. 0:07:13.640 --> 0:07:16.720 I guess their mask mandate, so if you're fully vaccinated, 0:07:17.480 --> 0:07:20.040 you don't really have to wear mass in most situations. 0:07:20.080 --> 0:07:23.520 Do you think that's the right message? Yeah, I think, Um, 0:07:23.560 --> 0:07:26.560 you know, the CDC is continuing to get data and 0:07:26.560 --> 0:07:29.360 and that is in turn influencing their policies, and we're 0:07:29.400 --> 0:07:32.600 seeing it happened rapidly, right like in real time. I 0:07:32.600 --> 0:07:36.920 think for me, the message doesn't change much as as 0:07:36.960 --> 0:07:40.680 we think about how we are going to actually evaluate 0:07:40.680 --> 0:07:44.600 whether people are vaccinated or not. And so until we 0:07:44.720 --> 0:07:48.040 have a system in which we have higher coverage, we 0:07:48.080 --> 0:07:52.480 have lower incidents and we know who's vaccinated. I don't 0:07:52.560 --> 0:07:56.280 see this UM changing at least my personal behavior and 0:07:56.360 --> 0:08:00.600 probably many cities, states, and and and companies behaviors and 0:08:00.640 --> 0:08:05.240 policies on masking. Lauren, can you help me understand how 0:08:05.280 --> 0:08:09.160 do eight fully vaccinated members of the Yankees baseball team 0:08:09.360 --> 0:08:13.120 test positive for COVID? Yeah, it's a great question. I 0:08:13.120 --> 0:08:15.520 think what we're seeing is breakthrough cases. And so what 0:08:15.560 --> 0:08:18.040 we're going to look to hear from the Yankees or 0:08:18.120 --> 0:08:20.720 from um, you know, the health departments that's going to 0:08:20.800 --> 0:08:25.400 be managing those breakthrough cases, is was it a variant strain? UM? 0:08:25.480 --> 0:08:29.680 What vaccine did the Yankees use? UM? What were what 0:08:29.720 --> 0:08:32.560 were their contacts? Like? UM that contact tracing is going 0:08:32.600 --> 0:08:36.640 to become very important, and and did they become sick. Um, 0:08:36.679 --> 0:08:39.080 and that those are all going to be important questions 0:08:39.120 --> 0:08:41.960 that we as we continue to evaluate both our vaccine 0:08:41.960 --> 0:08:44.520 efficacy and how we strategize the use of these other 0:08:44.520 --> 0:08:49.080 public health activities like masking, like social distancing. Um, these 0:08:49.080 --> 0:08:52.360 breakthrough cases become important, you know, data points that we 0:08:52.440 --> 0:08:57.800 will continue to use to influence our policy. Lauren, do 0:08:57.840 --> 0:08:59.480 you think you know? I was just looking at a 0:08:59.559 --> 0:09:02.559 story talking about a story on air about wind Resorts, 0:09:02.559 --> 0:09:05.320 the casino company they're reopening and they're dropping their mask 0:09:05.440 --> 0:09:08.960 mandate and they're basically saying it's on the honor system. 0:09:09.000 --> 0:09:12.040 To me, I guess that's probably how it has to go, 0:09:12.520 --> 0:09:15.400 don't you think? And how do you think about the 0:09:15.480 --> 0:09:20.480 vaccinative folks versus non vaccinati folks and identifying one another. Yeah, 0:09:20.520 --> 0:09:23.960 I think it's a really hard question, um, And I 0:09:24.000 --> 0:09:26.360 think it ends up being where you, as the individual, 0:09:26.480 --> 0:09:28.319 have to make that choice about whether or not you're 0:09:28.360 --> 0:09:31.360 comfortable wearing your mask if you've been vaccinated, you know, 0:09:31.400 --> 0:09:33.320 taking off your mask if you've been vaccinated, and also 0:09:33.320 --> 0:09:35.640 if you're even comfortable being in places where masks aren't 0:09:35.640 --> 0:09:39.160 required anymore. Um, it's going to be a really hard 0:09:39.280 --> 0:09:42.720 and new space for the public and local governments and 0:09:42.760 --> 0:09:47.160 businesses to navigate. UM. I think the honor system is 0:09:47.200 --> 0:09:50.720 all we have right now, UM and until we find 0:09:50.760 --> 0:09:53.600 a sort of ethical and appropriate way to do this 0:09:53.679 --> 0:09:55.880 otherwise that's what we're going to be stuck with. But 0:09:55.960 --> 0:09:58.400 I do think that, UM, there are going to be 0:09:58.440 --> 0:10:01.439 people who just don't want to wear a mask ask anymore, UM, 0:10:01.480 --> 0:10:04.040 and we'll make that decision because they feel like they 0:10:04.080 --> 0:10:08.400 can independent of their vaccine status. And so people who 0:10:08.480 --> 0:10:12.559 feel less safe, UM, people like frontline health workers, people 0:10:12.679 --> 0:10:16.040 like other frontline workers, like restaurants, plantation, things like that, 0:10:16.120 --> 0:10:18.160 are going to be affected by this to a degree. 0:10:18.520 --> 0:10:22.120 And similar news Paul Las Vegas stands also saying that 0:10:22.200 --> 0:10:26.440 they are not requiring vaccinated guests to wear masks. So 0:10:26.600 --> 0:10:30.600 Vegas Vegas leading the way. Vegas is open, baby, That's 0:10:30.600 --> 0:10:35.040 all you have to to say. Lauren, just sort of 0:10:35.080 --> 0:10:38.000 square with me. Maybe some of the mixed messages. I 0:10:38.080 --> 0:10:40.160 was on an airplane and they said no up and 0:10:40.240 --> 0:10:42.800 through at least September. For now, you have to wear 0:10:42.800 --> 0:10:46.120 a mask. AM track some of the subways. So we're 0:10:46.120 --> 0:10:48.640 getting some of the CDC guidance. But then of course, 0:10:48.760 --> 0:10:51.040 if you're on an airplane, the rules are a little different. 0:10:51.559 --> 0:10:55.439 But how is the coordination going. Yeah, I think we 0:10:55.520 --> 0:10:57.840 have some work to do in the coordination setting, exactly 0:10:57.880 --> 0:11:00.560 as you're suggesting, and a lot of it is about 0:11:00.559 --> 0:11:05.240 communication messaging, so UM, we don't really know the full 0:11:05.400 --> 0:11:08.200 data on airplanes and the risk of transmission. There's been 0:11:08.200 --> 0:11:09.720 a lot of work done in the Space team with 0:11:09.800 --> 0:11:13.840 other public transportation areas like subway, cars and trains, and 0:11:13.920 --> 0:11:17.200 so when you're in those close quarters, masking does still 0:11:17.240 --> 0:11:20.439 seem appropriate, and we're continuing to learn about those spaces 0:11:20.520 --> 0:11:25.000 as these sort of natural experiments happen. UM. But I 0:11:25.040 --> 0:11:28.120 think the reason you're still seeing that requirement UM and 0:11:28.160 --> 0:11:32.079 those policies is because we don't fully understand the transmission 0:11:32.160 --> 0:11:34.840 dynamics in that space, and because we know that they're 0:11:34.840 --> 0:11:37.559 that people can't really truly sit, you know, six ft 0:11:37.559 --> 0:11:42.560 apart that we we want to keep them masked and 0:11:42.640 --> 0:11:45.360 safe as safe as possible, and this is a relatively easy, 0:11:45.440 --> 0:11:49.040 relatively harmless way to do that. We appreciate you coming 0:11:49.080 --> 0:11:51.280 in every week, Lauren and helping us kind of really 0:11:51.360 --> 0:11:54.400 understand what's going on with this pandemic and with the vaccines. 0:11:54.559 --> 0:11:57.160 Laurence Soer, social Professor of Emergency Medicine at the Johns 0:11:57.200 --> 0:11:59.559 Hopkins School of Medicine. And I should know it again 0:11:59.600 --> 0:12:01.520 that the Blue School of Public Health is supported by 0:12:01.520 --> 0:12:06.680 Michael Bloomberg, founder Bloomberg LP, Bloomberg Philanthropies, and Bloomberg Radio 0:12:06.760 --> 0:12:12.040 and Television. Well, if you can flashback just you know, 0:12:12.120 --> 0:12:15.080 four or five days ago, the market was really concerned 0:12:15.120 --> 0:12:19.200 about inflation and not just the transitory kind as well. 0:12:19.320 --> 0:12:22.079 But uh, and that was some really weakness in the market. 0:12:22.120 --> 0:12:24.559 We've had a couple of days very strong rebounds here, 0:12:24.600 --> 0:12:26.240 kind of climbing back some of those losses from the 0:12:26.280 --> 0:12:27.760 earlier in the week. But the questions where do we 0:12:27.760 --> 0:12:29.880 go from here? Let's check in with Jeff Carbon and 0:12:29.880 --> 0:12:32.160 he's co founder and managing partner of Cornerstone. Well, if 0:12:32.200 --> 0:12:34.880 they have got one point two billion dollars in assets 0:12:34.920 --> 0:12:38.560 under management, so Jeff, kind of a seesaw type of 0:12:38.559 --> 0:12:41.160 week here. Started off very week, had some real concerns 0:12:41.200 --> 0:12:43.480 about maybe this economy is overheating. That might prompt the 0:12:43.480 --> 0:12:45.360 Fed to step in a little bit, but not so 0:12:45.440 --> 0:12:46.880 much of the past couple of days. What are your 0:12:46.880 --> 0:12:50.920 thoughts here? Yeah, no, good morningful. Yeah, we certainly the 0:12:51.040 --> 0:12:54.640 predominant risk of inflation. And uh, it certainly started the 0:12:54.640 --> 0:12:57.000 week off and kind of maybe we were going we 0:12:57.000 --> 0:12:59.280 were coming down that roller coaster and now we're moving 0:12:59.320 --> 0:13:01.800 back up. Right. Was still down probably two and a 0:13:01.880 --> 0:13:04.720 half percent for the week, but we've had a good 0:13:04.720 --> 0:13:08.199 recovery um from the early part. And yeah, like I think, 0:13:08.240 --> 0:13:11.160 as you mentioned, it was that fear of the market 0:13:11.280 --> 0:13:14.040 maybe was expecting transitory risk and we were not on 0:13:14.120 --> 0:13:19.080 that court. We think there's more concern of inflationary pressure. 0:13:19.120 --> 0:13:21.760 But beyond that, you've got to look at you know, 0:13:21.760 --> 0:13:23.640 the FED and what the FED is gonna do. And 0:13:23.800 --> 0:13:26.439 it's almost that Goldilocks theory, right, because the FED is 0:13:26.520 --> 0:13:29.160 under the pressure of if they let the market overheat 0:13:29.200 --> 0:13:33.559 too much, we get too much inflation, inflation runs hot. Um, 0:13:33.640 --> 0:13:36.240 if they move too slow, we're a little bit behind 0:13:36.320 --> 0:13:38.280 and things fall, and you know, they gotta just do 0:13:38.320 --> 0:13:40.360 it just right, right. We needed to be perfect. And 0:13:40.400 --> 0:13:44.200 it's going to be that induced FED induced language. Right, 0:13:44.240 --> 0:13:46.079 we gotta see what they're gonna say. It's gonna as 0:13:46.080 --> 0:13:48.240 the importance that we're watching right now. You know, Jeff, 0:13:48.280 --> 0:13:50.240 you you're hitting on a point that I want to 0:13:50.280 --> 0:13:53.360 go next. I read a Bloomberg opinion article from Muhammad 0:13:53.400 --> 0:13:55.880 hillary In earlier this week, and he hinted that the 0:13:55.920 --> 0:13:58.800 FED is really doing us a disservice by insisting and 0:13:58.880 --> 0:14:02.120 insisting and insisting in that inflation is transitory and leaving 0:14:02.600 --> 0:14:05.640 no room for anything else. And he comes out and 0:14:05.679 --> 0:14:09.400 says that instead of looking at a single baseline, they 0:14:09.400 --> 0:14:11.480 should be looking at a range of scenarios and not 0:14:11.559 --> 0:14:14.680 be holding this single baseline to a degree of conviction 0:14:14.720 --> 0:14:17.640 that isn't supported right now in some of the data. 0:14:17.880 --> 0:14:20.000 Is the FED doing us a little bit of a disservice? 0:14:21.560 --> 0:14:24.760 I believe so. And I you know, watch Mohammed and 0:14:24.800 --> 0:14:27.240 talk to him and really keep a close eye on 0:14:27.240 --> 0:14:30.160 what he does, because he's brilliant. So in the FED 0:14:30.560 --> 0:14:34.760 and the FEDS forgetting that every major crash in history 0:14:34.920 --> 0:14:38.200 has been preceded by the FED tightening right and there. 0:14:38.280 --> 0:14:40.960 So the language is so going back to the messaging 0:14:41.000 --> 0:14:44.360 is so important. Um, you know, we've taped, we've continued 0:14:44.400 --> 0:14:47.040 to taper, what a undred and twenty billion dollars per month. 0:14:47.960 --> 0:14:50.240 We can probably start pulling off the I mean that 0:14:50.320 --> 0:14:52.920 the economy is heating, it's heated, up right, we've had 0:14:52.960 --> 0:14:56.000 that big recover. We can certainly lay off the put 0:14:56.040 --> 0:14:57.880 a little bit of the take off the gas a 0:14:57.920 --> 0:15:02.400 bit and maybe start by tapering little um. Maybe not immediately, 0:15:02.440 --> 0:15:04.000 but we need to have the plan to do so, 0:15:04.080 --> 0:15:07.280 because yeah, this is that trend and we don't transitory 0:15:07.320 --> 0:15:09.080 inflation is not there go you know, look at the 0:15:09.080 --> 0:15:11.840 gas pumps, look at food. We can see the you know, 0:15:12.280 --> 0:15:15.080 some of the with other commodities, whether it be corn 0:15:15.560 --> 0:15:18.840 et cetera. The prices are rising. So inflation is definitely 0:15:18.840 --> 0:15:21.120 out there a lot stronger than there that they may 0:15:21.200 --> 0:15:23.960 be seeing. So we definitely have a different different opinion 0:15:24.080 --> 0:15:29.200 between the Treasury Secretary Yelling and Jerome Powell UH on 0:15:29.240 --> 0:15:32.000 the FED. So we're we're we're seeing more inflationary pressure 0:15:32.000 --> 0:15:34.320 and we're starting to get concerned about it right now, 0:15:34.360 --> 0:15:37.360 and that's why we're backing off a bit. We're taking 0:15:37.400 --> 0:15:40.160 some of the UH high A BEATA positions and going 0:15:40.200 --> 0:15:42.640 a little bit more conservative right now. All right, talk 0:15:42.720 --> 0:15:45.280 to us, Jeff about where you're going, where you think 0:15:45.360 --> 0:15:48.480 your clients should be going. If in fact, uh we 0:15:48.560 --> 0:15:51.680 are you know, kind of facing potentially some tapering, if 0:15:51.720 --> 0:15:56.240 not outright rate increases. Yeah. Uh yeah, so so Paul, 0:15:56.280 --> 0:15:58.760 we've been you know, I think when I sent some notes, 0:15:58.800 --> 0:16:00.520 you know, we've been moving a little little bit out 0:16:00.520 --> 0:16:05.560 of those uh uh reopening trades. Although Norwegian Cruise Line 0:16:05.560 --> 0:16:07.800 this morning is having a really good day and but 0:16:07.880 --> 0:16:10.720 at the same time you were seeing Disney not so good. Right, 0:16:10.800 --> 0:16:14.160 So we've really moved away from some of those reopening 0:16:14.840 --> 0:16:17.280 um and high data positions, trying to go a little 0:16:17.360 --> 0:16:20.840 higher quality. We're moving up, you know, quality, big names, 0:16:21.080 --> 0:16:24.800 higher market cap, and really important for us is cash flow, 0:16:24.960 --> 0:16:27.960 right we want to see really good cash flows. Where 0:16:27.960 --> 0:16:31.520 do you go What sectors we like? Continue to like industrials. 0:16:31.520 --> 0:16:35.680 We still like the financials, especially regionals and some brokerage. 0:16:36.080 --> 0:16:39.480 We do think that's a good space in this economy. Uh. Energy, 0:16:39.840 --> 0:16:42.400 and we're adding some healthcare back in at this point. 0:16:42.960 --> 0:16:48.320 Are you moving up in credit quality as well? Absolutely? Yeah, 0:16:48.400 --> 0:16:52.360 we're definitely better quality. I think it's high quality around 0:16:52.360 --> 0:16:56.040 the across the board, right, Um. The you know, you 0:16:56.040 --> 0:16:59.600 can move on from credit quality not just in our 0:17:00.200 --> 0:17:04.120 equity positions, but credit quality within the bonds that we're 0:17:04.160 --> 0:17:06.639 holding as well. And you know with the bond market, 0:17:06.680 --> 0:17:09.000 that's that's the toughest place to be right now with 0:17:09.920 --> 0:17:12.040 I think we got the aggregate bond index down what 0:17:12.119 --> 0:17:14.840 two and a half percent for the year. Um, we're 0:17:14.880 --> 0:17:18.600 losing money, and then um on our on the bond side, 0:17:18.640 --> 0:17:20.640 and then try to find some place in cash. It's 0:17:20.680 --> 0:17:24.600 that losing money safely positioned because inflation is somewhere you 0:17:24.720 --> 0:17:27.840 call it one seven to two, and we're getting into 0:17:27.880 --> 0:17:30.960 banks list than you know, if we're lucky ten basis points, 0:17:30.960 --> 0:17:33.640 if if we could find it somewhere, so it's it's 0:17:33.680 --> 0:17:36.400 definitely a fixed income market is a is a tough 0:17:36.640 --> 0:17:39.000 tough place to be right now. All right, Jeff, Hey, 0:17:39.000 --> 0:17:41.200 thanks so much for joining us. We really appreciate getting 0:17:41.280 --> 0:17:44.320 your thoughts on these markets here. Jeff Carbone he's co 0:17:44.359 --> 0:17:47.919 founder and managing partner for Cornerstone Wealth. Again, we started 0:17:47.920 --> 0:17:51.840 off this market on this week on a very down note, uh, 0:17:52.080 --> 0:17:54.200 retracing some of those losses here in the past couple 0:17:54.200 --> 0:17:55.520 of days. We'll keep you up to date on those 0:17:55.520 --> 0:18:01.080 markets right now that we want to talk crypto. What 0:18:01.200 --> 0:18:03.720 a wild week it's been for crypto. Taylor, It's almost 0:18:03.760 --> 0:18:06.399 been like the Elon Musk effect. Does he does Elon 0:18:06.520 --> 0:18:08.760 like crypto does Elon not like crypto? And I think 0:18:08.760 --> 0:18:11.920 we're back to Elon likes crypto, but certainly been a 0:18:12.000 --> 0:18:15.240 volatile week for the crypto space, and I suspect people 0:18:15.280 --> 0:18:17.960 that traffic there and trade there and invest there are 0:18:18.000 --> 0:18:19.879 are used to that. John Wu he's a president of 0:18:19.920 --> 0:18:22.680 Ava Labs. Uh. He joins us once again to kind 0:18:22.680 --> 0:18:25.119 of get us the latest on what is going on 0:18:25.240 --> 0:18:27.679 with crypto. And I guess one of the interesting stories 0:18:27.800 --> 0:18:31.520 John was, you know, Ellen initially saying maybe I'm not 0:18:31.600 --> 0:18:34.920 really supporting crypto because the whole E s G issue, 0:18:34.920 --> 0:18:38.320 it takes too much power to mind crypto. What's your 0:18:38.400 --> 0:18:42.760 view of that whole storyline, Hey, Paul, Hey Taylor. So 0:18:43.960 --> 0:18:47.280 you know, Elon has a flair for the dramatic, obviously, 0:18:47.400 --> 0:18:50.280 but that statement where he said he's no longer accepting 0:18:51.040 --> 0:18:55.639 bitcoin for transactions in terms of buying Tesla actually was 0:18:56.040 --> 0:18:58.120 killing three birds with one stone, and it was quite 0:18:58.119 --> 0:19:02.160 brilliant on his part, because there's no one buying Tesla's 0:19:02.320 --> 0:19:07.080 right now using bitcoin. There's tax implications and and obviously 0:19:07.119 --> 0:19:11.199 when there are transactions happening, you do need to you know, 0:19:11.400 --> 0:19:14.880 mind and validate and secure all of this, and that 0:19:14.960 --> 0:19:17.920 does require a lot of energy. So in one statement, 0:19:17.960 --> 0:19:21.480 he basically kept his green initiative. He also did not 0:19:21.640 --> 0:19:24.639 hurt his testla sales and he really, like you know, 0:19:25.040 --> 0:19:27.280 was actually kind of a brilliant statement, and he's got 0:19:27.320 --> 0:19:30.560 that flare for the dramatic, so good for him. Um, 0:19:30.600 --> 0:19:33.760 But his point is correct. There is a lot of 0:19:33.760 --> 0:19:37.840 wasteful spend when you have bitcoing and mining, and that's 0:19:37.880 --> 0:19:42.560 because you basically for every transaction you ultimately need to secure, validating, 0:19:42.840 --> 0:19:46.320 create a next block. Right now, the energy consumption in 0:19:46.400 --> 0:19:51.040 the bitcoin ecosystem is roughly one thirty terot watts an 0:19:51.040 --> 0:19:54.200 hour per year, and people have said that's the equosal 0:19:54.240 --> 0:19:58.000 of the consumption of countries like Argentina or Norway, So 0:19:58.400 --> 0:20:01.520 that's a lot of consumption, and a lot of that 0:20:01.800 --> 0:20:05.879 is carbon footprints that are just you know, not very green. 0:20:06.119 --> 0:20:09.440 So he has a lot of good points. What's even 0:20:09.440 --> 0:20:12.800 worse is the way this works is it's not necessary. 0:20:13.160 --> 0:20:15.879 You know, the proof of work concept for mining and 0:20:15.960 --> 0:20:19.919 bitcoin is you have to solve math problems in order 0:20:19.960 --> 0:20:22.600 to have the right to create the next block. But 0:20:23.440 --> 0:20:26.480 the way it's set up, it's almost like a lottery system. 0:20:26.520 --> 0:20:29.920 So the more chances you have, the more likely you're 0:20:30.080 --> 0:20:33.639 rewarded bitcoin and given the right to create the next block. 0:20:34.080 --> 0:20:36.760 Now that means you need more computing power, you need 0:20:36.800 --> 0:20:39.880 more hardware, and you need to consume more energy. This 0:20:39.960 --> 0:20:43.199 is all useless work. There is no reason for this 0:20:43.320 --> 0:20:46.280 is just mining companies competing against each other. It doesn't 0:20:46.320 --> 0:20:49.720 make the securing and the validating and transactions and creating 0:20:49.880 --> 0:20:53.800 a next block more efficient. Unfortunately, a lot of this 0:20:53.960 --> 0:20:57.560 just useless work. John Though there was some pushback after 0:20:57.640 --> 0:21:00.960 the Elon Musk tweet, many people who are bullish on crypto. 0:21:01.320 --> 0:21:03.879 I believe Mike Novograps Right of Galaxy, someone that we 0:21:03.920 --> 0:21:06.440 speak with frequently, a lot of other millionaires and billionaires 0:21:06.480 --> 0:21:10.680 and investors said that, yeah, it might use some carbon now, 0:21:10.720 --> 0:21:13.560 but the future is renewable energy and we're working on 0:21:13.600 --> 0:21:17.480 getting there. Does that have any validation to it that 0:21:17.560 --> 0:21:22.680