1 00:00:00,120 --> 00:00:04,360 Speaker 1: Bloomberg is now on your dashboard with Apple CarPlay and 2 00:00:04,360 --> 00:00:08,160 Speaker 1: Android Auto. It gives you access to every Bloomberg podcast, 3 00:00:08,280 --> 00:00:11,560 Speaker 1: live audio feeds from Bloomberg Radio, print stories from Bloomberg 4 00:00:11,640 --> 00:00:14,920 Speaker 1: News in audio form, and the latest headlines of the 5 00:00:14,920 --> 00:00:18,600 Speaker 1: click of a button with Bloomberg News. Now it's free 6 00:00:18,680 --> 00:00:21,439 Speaker 1: with the latest version of the Bloomberg Business App. That's 7 00:00:21,680 --> 00:00:24,400 Speaker 1: the Bloomberg Business App. Get it on your phone in 8 00:00:24,440 --> 00:00:27,760 Speaker 1: the Apple App Store or on Google Play. Just download 9 00:00:27,800 --> 00:00:30,560 Speaker 1: the app, connect your phone to your car and get started. 10 00:00:30,960 --> 00:00:34,400 Speaker 1: And it's all presented by our sponsor, Interactive Brokers. 11 00:00:35,400 --> 00:00:38,600 Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 12 00:00:38,640 --> 00:00:39,720 Speaker 2: my co host Matt Miller. 13 00:00:40,200 --> 00:00:44,279 Speaker 1: Every business day we bring you interviews from CEOs, market pros, 14 00:00:44,320 --> 00:00:48,160 Speaker 1: and Bloomberg experts, along with essential market movin news. 15 00:00:48,720 --> 00:00:51,839 Speaker 2: Find the Bloomberg Markets podcast called Apple Podcasts or wherever 16 00:00:51,960 --> 00:00:55,080 Speaker 2: you listen to podcasts, and at Bloomberg dot com Slash podcast. 17 00:00:55,360 --> 00:00:56,360 Speaker 3: All right, let's get down. 18 00:00:56,240 --> 00:01:00,560 Speaker 2: To Washington, DC, only because we have to where it's 19 00:01:00,600 --> 00:01:01,120 Speaker 2: all happening. 20 00:01:01,160 --> 00:01:02,120 Speaker 3: Nathan Dean joins us. 21 00:01:02,120 --> 00:01:05,160 Speaker 2: He's a senior policy onis with Bloomberg Intelligence, and Jordan 22 00:01:05,240 --> 00:01:09,600 Speaker 2: Fabian White House reporter with Bloomberg News, Nathan, I just 23 00:01:09,640 --> 00:01:11,640 Speaker 2: want to start with you, are you going to shut 24 00:01:11,640 --> 00:01:12,600 Speaker 2: down our government again? 25 00:01:12,640 --> 00:01:13,880 Speaker 3: What's going on down down there? 26 00:01:14,480 --> 00:01:16,320 Speaker 4: So you know, I may be a little bit out 27 00:01:16,360 --> 00:01:19,120 Speaker 4: of consensus on this, we're still telling folks forty percent 28 00:01:19,200 --> 00:01:22,240 Speaker 4: chance of a shutdown unless you have this like temporary 29 00:01:22,240 --> 00:01:24,800 Speaker 4: shutdown that bleeds over to the weekend. The reason being 30 00:01:24,920 --> 00:01:27,279 Speaker 4: is is that you know, there are so many different 31 00:01:27,319 --> 00:01:30,520 Speaker 4: ideas that being thrown around by House Republicans, by the Senate, 32 00:01:30,600 --> 00:01:33,000 Speaker 4: by Ukraine and Israel and so forth, and none of 33 00:01:33,000 --> 00:01:36,520 Speaker 4: these political cakes are baked. And you know, there's really 34 00:01:36,600 --> 00:01:39,160 Speaker 4: no strategy of why you would have a shutdown at 35 00:01:39,200 --> 00:01:41,560 Speaker 4: this point other than just we want to shut it down. 36 00:01:41,600 --> 00:01:44,320 Speaker 4: And so we Speaker Johnson still and you know what 37 00:01:44,319 --> 00:01:47,360 Speaker 4: you would call the the infancy of his speakership. And 38 00:01:47,640 --> 00:01:49,920 Speaker 4: obviously he made some statements over the weekend that he's 39 00:01:49,920 --> 00:01:51,960 Speaker 4: seeking for more time as he does his letter at 40 00:01:52,000 --> 00:01:54,480 Speaker 4: see our idea and so forth. We're telling folks, you know, 41 00:01:54,560 --> 00:01:56,000 Speaker 4: he may be able to get that, So don't be 42 00:01:56,040 --> 00:01:58,720 Speaker 4: surprised that this goes in the December fifteenth or even 43 00:01:58,800 --> 00:02:02,040 Speaker 4: January February. But ultimately what people should know as they 44 00:02:02,080 --> 00:02:05,000 Speaker 4: approach it from the market perspective is that there really 45 00:02:05,040 --> 00:02:07,520 Speaker 4: isn't all that impact outside of just trying to just 46 00:02:07,600 --> 00:02:10,160 Speaker 4: keep your eye on it. Even the defense contractors aren't 47 00:02:10,720 --> 00:02:12,880 Speaker 4: all that exposed. I mean, we really would have to 48 00:02:12,880 --> 00:02:15,480 Speaker 4: see a two months shutdown, if not longer, for those 49 00:02:15,520 --> 00:02:18,799 Speaker 4: economic impacts to be leading into the market. So unfortunately 50 00:02:18,800 --> 00:02:21,079 Speaker 4: for a lot of the folks just watching, it's one 51 00:02:21,080 --> 00:02:23,640 Speaker 4: of those political popcorn watch events again. 52 00:02:24,520 --> 00:02:29,080 Speaker 1: All right, So the White House has said that Johnson's 53 00:02:29,120 --> 00:02:32,760 Speaker 1: plan would only lead to future shutdowns, and President Biden 54 00:02:32,800 --> 00:02:37,120 Speaker 1: could issue a formal veto threat today. Jordan Fabian, you 55 00:02:37,160 --> 00:02:39,480 Speaker 1: cover the White House for us. What do we expect 56 00:02:40,280 --> 00:02:42,560 Speaker 1: from President Biden and what's the what are their problems 57 00:02:42,600 --> 00:02:43,160 Speaker 1: with this plan? 58 00:02:44,800 --> 00:02:46,560 Speaker 5: I think we could see a veto threat today or 59 00:02:46,600 --> 00:02:49,440 Speaker 5: something a little short of that, which is basically an 60 00:02:49,440 --> 00:02:53,760 Speaker 5: advisor's recommendation that he not signed. It's these Washington terms 61 00:02:53,760 --> 00:02:56,480 Speaker 5: of craft. But we'll be watching closer to see what 62 00:02:56,520 --> 00:02:59,919 Speaker 5: they say. Look, the White House is frustrated with this 63 00:03:00,560 --> 00:03:03,520 Speaker 5: dragged out process that you know, they thought should have 64 00:03:03,520 --> 00:03:06,240 Speaker 5: been resolved with the debt ceiling agreement back in the spring, 65 00:03:06,320 --> 00:03:09,639 Speaker 5: which sets spending levels. Republicans through that out the window, 66 00:03:09,960 --> 00:03:12,240 Speaker 5: and so they're frustrated over that and the fact that 67 00:03:12,520 --> 00:03:15,560 Speaker 5: there's no Ukraine aid in this package, and the White 68 00:03:15,600 --> 00:03:18,480 Speaker 5: House is getting anxious that maybe this is the last 69 00:03:18,480 --> 00:03:20,520 Speaker 5: bite of the apple, and so they want to exert 70 00:03:20,520 --> 00:03:23,239 Speaker 5: whatever leverage they can to try to get that included. 71 00:03:23,280 --> 00:03:26,840 Speaker 5: And thus you're seeing these statements that are highly critical 72 00:03:27,040 --> 00:03:28,720 Speaker 5: of Speaker Johnson's approach. 73 00:03:28,440 --> 00:03:29,120 Speaker 3: But they would be. 74 00:03:29,720 --> 00:03:33,840 Speaker 1: I mean, if if Biden veto's it shutting down the government, 75 00:03:34,400 --> 00:03:36,720 Speaker 1: then the Democrats get the blame for something that the 76 00:03:36,720 --> 00:03:39,360 Speaker 1: whole country is angry with the Republicans for right now. 77 00:03:39,840 --> 00:03:42,640 Speaker 1: You know, they're in a great situation because the country 78 00:03:42,800 --> 00:03:46,360 Speaker 1: blames all of this on the other party. 79 00:03:45,440 --> 00:03:47,080 Speaker 3: Do they risk that? 80 00:03:48,360 --> 00:03:48,600 Speaker 6: Yeah? 81 00:03:48,600 --> 00:03:50,720 Speaker 5: That's why I think Nathan raises a good point, which 82 00:03:50,760 --> 00:03:53,160 Speaker 5: is that you know, I think you may and you 83 00:03:53,280 --> 00:03:56,600 Speaker 5: raise valid points too, which is Democrats absolutely don't want 84 00:03:56,600 --> 00:03:59,320 Speaker 5: any share of the blame for a government shutdown. So 85 00:03:59,840 --> 00:04:03,000 Speaker 5: my suspicion is if a cr were to reach the 86 00:04:03,040 --> 00:04:05,240 Speaker 5: President's desk, he would sign it and you know, kick 87 00:04:05,240 --> 00:04:06,640 Speaker 5: the can down the road for a couple of months 88 00:04:06,680 --> 00:04:10,000 Speaker 5: and try again in January to get his priorities funded. 89 00:04:10,480 --> 00:04:14,000 Speaker 5: But it's still an open question of whether this laddered 90 00:04:14,000 --> 00:04:17,360 Speaker 5: CR gets through the House. There's still this faction of 91 00:04:17,560 --> 00:04:22,560 Speaker 5: hell no fiscal hawk House Republicans who you don't want 92 00:04:22,600 --> 00:04:25,160 Speaker 5: to take guess for an answer, and Johnson can only 93 00:04:25,160 --> 00:04:26,200 Speaker 5: afford to lose three votes. 94 00:04:26,240 --> 00:04:26,839 Speaker 3: That's not a lot. 95 00:04:26,920 --> 00:04:30,039 Speaker 5: So we'll be watching closely. There's some test votes coming 96 00:04:30,080 --> 00:04:32,680 Speaker 5: up in the next twenty four hours to see what 97 00:04:32,800 --> 00:04:34,720 Speaker 5: level of support there is for this package. 98 00:04:35,040 --> 00:04:38,600 Speaker 2: So Nathan and I guess in the interim, what legislation 99 00:04:39,080 --> 00:04:41,400 Speaker 2: is not getting worked on, it's not getting passed. 100 00:04:41,680 --> 00:04:42,599 Speaker 3: What are we missing here? 101 00:04:43,120 --> 00:04:44,720 Speaker 4: Well, I mean there's a lot of stuff that are 102 00:04:44,800 --> 00:04:46,960 Speaker 4: it's more of the sector level. I mean, obviously we've 103 00:04:46,960 --> 00:04:48,840 Speaker 4: talked about pot banking before. You know, there are a 104 00:04:48,880 --> 00:04:50,799 Speaker 4: lot of people would love to see that move forward. 105 00:04:51,000 --> 00:04:53,360 Speaker 4: There's really no work that's being done on it. Crypto 106 00:04:53,600 --> 00:04:56,320 Speaker 4: the NDAA. You know, there's a lot of legislation out 107 00:04:56,360 --> 00:04:59,040 Speaker 4: there that needs to get done and you know, we're 108 00:04:59,040 --> 00:05:02,120 Speaker 4: just talking about c and so ultimately there's still going 109 00:05:02,200 --> 00:05:04,840 Speaker 4: to be enough time to get that stuff done. But 110 00:05:05,080 --> 00:05:06,960 Speaker 4: you know, time's going to run out before we get 111 00:05:06,960 --> 00:05:08,960 Speaker 4: into this election cycle where folks are just going to 112 00:05:08,960 --> 00:05:11,880 Speaker 4: be more paying attention to their districts. I still think 113 00:05:11,920 --> 00:05:14,599 Speaker 4: that a shutdown is coming. I honestly do think that 114 00:05:14,640 --> 00:05:17,440 Speaker 4: we're going to have a multi week shutdown. I just 115 00:05:17,480 --> 00:05:19,560 Speaker 4: think it's going to be in the beginning of next year, 116 00:05:19,600 --> 00:05:22,800 Speaker 4: because there will come a point in which Speaker Johnson 117 00:05:23,000 --> 00:05:26,200 Speaker 4: and the Democrats just will not agree and both sides 118 00:05:26,240 --> 00:05:28,600 Speaker 4: will say, Okay, I think politically it's best for us 119 00:05:28,600 --> 00:05:30,880 Speaker 4: to just you know, have this fight out and let's 120 00:05:30,960 --> 00:05:33,920 Speaker 4: let the chips lie. But ultimately, for the Republicans right now, 121 00:05:33,920 --> 00:05:36,080 Speaker 4: as you recall, you know, last week, they had a 122 00:05:36,160 --> 00:05:39,400 Speaker 4: very bad week in Virginia where I am in Kentucky 123 00:05:39,400 --> 00:05:41,400 Speaker 4: and Ohio and so forth like that, they don't want 124 00:05:41,400 --> 00:05:44,040 Speaker 4: to have that happen twice in the span of two weeks. 125 00:05:44,400 --> 00:05:47,520 Speaker 4: So I think right now that all this uncertainty is 126 00:05:47,560 --> 00:05:49,680 Speaker 4: just going to get pushed into January and we'll be 127 00:05:49,720 --> 00:05:50,600 Speaker 4: talking about it then. 128 00:05:51,400 --> 00:05:51,679 Speaker 3: Jordan. 129 00:05:51,800 --> 00:05:54,640 Speaker 1: Let's talk about, you know, the the upcoming election. We're 130 00:05:54,640 --> 00:05:59,840 Speaker 1: already seeing ads from the Biden administration trying to convince 131 00:05:59,839 --> 00:06:05,160 Speaker 1: Americans that his age isn't a problem, although many people 132 00:06:05,240 --> 00:06:08,200 Speaker 1: polled are concerned about his ability to get through another 133 00:06:08,279 --> 00:06:11,560 Speaker 1: four years. You know, what's their tactic and what do 134 00:06:11,600 --> 00:06:14,479 Speaker 1: they say about I always wonder about Kamala Harris, because 135 00:06:14,480 --> 00:06:17,559 Speaker 1: if you're really worried about the president's age, you should 136 00:06:17,600 --> 00:06:21,239 Speaker 1: be doubly focused on the vice presidential candidate. 137 00:06:22,960 --> 00:06:25,560 Speaker 5: Right Well, the Biding campaign has a lot of money 138 00:06:25,600 --> 00:06:27,800 Speaker 5: right now. They have about ninety one million dollars in 139 00:06:27,880 --> 00:06:30,440 Speaker 5: cash in hand, So they're spending some money now to 140 00:06:30,560 --> 00:06:34,640 Speaker 5: try and get those concerns alaied and try to lay 141 00:06:34,680 --> 00:06:38,560 Speaker 5: the groundwork for a broader and more aggressive pitch later 142 00:06:38,600 --> 00:06:41,520 Speaker 5: next year for reelection. So they're trying to address the 143 00:06:41,560 --> 00:06:44,880 Speaker 5: age question. They're trying to address the Americans' concerns with 144 00:06:44,920 --> 00:06:47,200 Speaker 5: the cost of living. So if you look listen to 145 00:06:47,240 --> 00:06:50,960 Speaker 5: their messaging, there's ads showing Biden walking through Kiev with 146 00:06:51,000 --> 00:06:53,719 Speaker 5: the sunglasses on and talking about these things in the 147 00:06:53,720 --> 00:06:57,320 Speaker 5: Inflation Reduction Act that we're supposed to lower prices. But look, 148 00:06:57,520 --> 00:07:01,240 Speaker 5: it's I think their best hope is not necessarily convincing 149 00:07:01,560 --> 00:07:04,640 Speaker 5: Americans that you know, Biden is this spry young man, 150 00:07:04,720 --> 00:07:07,960 Speaker 5: but that they're going to be possibly running against Donald Trump, 151 00:07:08,040 --> 00:07:11,000 Speaker 5: someone who's very unpopular and someone you know who's also 152 00:07:11,080 --> 00:07:14,239 Speaker 5: up there in age and has shown some propensity for 153 00:07:14,640 --> 00:07:17,360 Speaker 5: gaffs and the like. So you know, it's like Biden 154 00:07:17,360 --> 00:07:19,560 Speaker 5: always says, don't compare me to the almighty, compare me 155 00:07:19,640 --> 00:07:20,400 Speaker 5: to the alternative. 156 00:07:21,360 --> 00:07:23,960 Speaker 2: Hey, Jordan, it's going to be a big week for 157 00:07:24,280 --> 00:07:26,960 Speaker 2: President Biden out in San Francisco, who'll be meeting with 158 00:07:27,320 --> 00:07:31,080 Speaker 2: Chinese President Jijiping. What's the White House? What's a kind 159 00:07:31,080 --> 00:07:34,840 Speaker 2: of the game plan? Here's what's the goal? What would 160 00:07:34,880 --> 00:07:35,560 Speaker 2: be a success? 161 00:07:35,640 --> 00:07:36,720 Speaker 3: What are you hearing. 162 00:07:38,400 --> 00:07:41,320 Speaker 5: They want to set a floor under this US China relationship. 163 00:07:41,320 --> 00:07:42,880 Speaker 5: I don't think you're going to see a bunch of 164 00:07:43,320 --> 00:07:46,000 Speaker 5: major deliverables coming out of this meeting, like some sort 165 00:07:46,040 --> 00:07:49,440 Speaker 5: of agreement on Taiwan or broader economic rules of the road. 166 00:07:49,440 --> 00:07:52,600 Speaker 5: Those are the two obviously main concerns in the relationship. 167 00:07:52,880 --> 00:07:55,920 Speaker 5: But you could see things like resumption of military to 168 00:07:55,960 --> 00:08:01,920 Speaker 5: military communication, some incremental things on climate, fentanyl trafficking cutting 169 00:08:01,960 --> 00:08:04,840 Speaker 5: out of this meeting. And I think that again, the 170 00:08:04,920 --> 00:08:07,920 Speaker 5: meaning itself is almost a deliverable for President Biden, who 171 00:08:08,400 --> 00:08:12,040 Speaker 5: wants to reset this relationship in a way that puts 172 00:08:12,120 --> 00:08:15,240 Speaker 5: up guardrails, make sure that tensions don't escalate out of 173 00:08:15,280 --> 00:08:18,200 Speaker 5: control like they did earlier. This year with a spibulin incident. 174 00:08:20,000 --> 00:08:24,560 Speaker 2: So perspective of just greater d C, I mean, what's 175 00:08:24,600 --> 00:08:27,240 Speaker 2: the concern level here just about US China relations? 176 00:08:27,680 --> 00:08:29,760 Speaker 4: Well, I mean, first I want my pandas back. I mean, 177 00:08:29,920 --> 00:08:34,120 Speaker 4: obviously we lost our pandas you know, I'm joking there, 178 00:08:34,160 --> 00:08:36,079 Speaker 4: but you know, obviously, you know, when it comes to 179 00:08:36,160 --> 00:08:38,240 Speaker 4: the US China relations, it comes down to clarity. That's 180 00:08:38,240 --> 00:08:40,120 Speaker 4: what investors want, is they want to know what the 181 00:08:40,120 --> 00:08:41,960 Speaker 4: clarity is and what's going to happen. I mean there's 182 00:08:42,240 --> 00:08:44,480 Speaker 4: you know, all these questions with Taiwan and so forth 183 00:08:44,559 --> 00:08:46,440 Speaker 4: like that, and so I think anytimes you get this 184 00:08:46,480 --> 00:08:49,439 Speaker 4: type of communication between the presidents in the premiere and 185 00:08:49,520 --> 00:08:51,880 Speaker 4: so forth like that, that you get this at least 186 00:08:51,880 --> 00:08:55,320 Speaker 4: get something that you can work with. So I don't 187 00:08:55,360 --> 00:08:58,800 Speaker 4: think Washington in particular, and you know, Jordan can correct 188 00:08:58,840 --> 00:09:00,880 Speaker 4: me if I'm wrong. You know, I don't think Washington 189 00:09:00,840 --> 00:09:03,080 Speaker 4: in particular has any real hopes for this meeting. But 190 00:09:03,559 --> 00:09:05,480 Speaker 4: it's just something that we'd like to see so that 191 00:09:05,520 --> 00:09:07,680 Speaker 4: we can see the communication, we can get information, we 192 00:09:07,720 --> 00:09:10,200 Speaker 4: can get transparency, and at least have a better idea 193 00:09:10,200 --> 00:09:12,360 Speaker 4: of what's happening down the road. Because if anytimes they're 194 00:09:12,400 --> 00:09:15,880 Speaker 4: not talking, then you just get what's happening. Nobody knows, right, all. 195 00:09:15,840 --> 00:09:17,960 Speaker 3: Right, Nathan Hagger, Nathan Dean, thank you so much. We 196 00:09:18,000 --> 00:09:18,439 Speaker 3: appreciate it. 197 00:09:18,480 --> 00:09:21,480 Speaker 2: Nathan Dean, He's a senior policy analyst with Bloomberg Intelligence, 198 00:09:21,679 --> 00:09:24,600 Speaker 2: and Jordan Famian, a White House reporter with Bloomberg News, 199 00:09:24,640 --> 00:09:26,319 Speaker 2: both of them down in DC. 200 00:09:27,920 --> 00:09:31,319 Speaker 7: You're listening to the team Ken's are Live program Bloomberg 201 00:09:31,360 --> 00:09:34,720 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot Com, 202 00:09:34,840 --> 00:09:37,960 Speaker 7: the iHeartRadio app, and the Bloomberg Business App, or listen 203 00:09:38,040 --> 00:09:40,280 Speaker 7: on demand wherever you get your podcasts. 204 00:09:42,280 --> 00:09:45,000 Speaker 2: Looking at the stock of Boeing up four percent, looks 205 00:09:45,000 --> 00:09:48,600 Speaker 2: like they sold a bunch of aircraft to the Emirates Airlines. 206 00:09:48,600 --> 00:09:50,440 Speaker 3: That sounds like a good deal. Let's break that down 207 00:09:50,440 --> 00:09:51,480 Speaker 3: in Everything. 208 00:09:51,360 --> 00:09:56,360 Speaker 2: Aerospace with George Ferguson, senior aerospace, defense and airline analysts 209 00:09:56,400 --> 00:10:01,319 Speaker 2: for Bloomberg Intelligence. Former militi sorry intelligence officer in the 210 00:10:01,400 --> 00:10:05,720 Speaker 2: US Army. So we think mister Ferguson for his service here. George, 211 00:10:05,880 --> 00:10:09,360 Speaker 2: talk us first about this Emirates deal. The number got 212 00:10:09,360 --> 00:10:12,319 Speaker 2: my attention, like a lot of billions of dollars. 213 00:10:13,440 --> 00:10:16,560 Speaker 8: Yeah, no, it's a big order, right, So there's about 214 00:10:16,640 --> 00:10:21,520 Speaker 8: ninety five airplanes, nine of them Triple sevens. But that 215 00:10:21,559 --> 00:10:24,920 Speaker 8: triple seven, yeah, they already had the largest order. 216 00:10:24,720 --> 00:10:26,199 Speaker 6: In the book for that airplane. 217 00:10:27,000 --> 00:10:30,080 Speaker 8: Emirates likes to refresh their fleet sort of every fifteen years. 218 00:10:30,080 --> 00:10:32,319 Speaker 8: They don't like to go much further than a fifteen 219 00:10:32,400 --> 00:10:35,120 Speaker 8: year old airplane. They've been waiting for this Triple seven 220 00:10:35,160 --> 00:10:38,040 Speaker 8: to show up, so they're adding more to that backlog. 221 00:10:38,080 --> 00:10:38,960 Speaker 6: I don't know that that. 222 00:10:40,000 --> 00:10:44,240 Speaker 8: Significantly boosts Bowing profit because my guess is that airplane 223 00:10:44,280 --> 00:10:46,880 Speaker 8: comes out the door in the mid twenty twenties once 224 00:10:46,920 --> 00:10:51,240 Speaker 8: it gets certified at low rates, you know, at threes or. 225 00:10:51,240 --> 00:10:52,480 Speaker 6: Fives kind of per month. 226 00:10:53,160 --> 00:10:55,520 Speaker 8: So I mean, every order is a great order, but 227 00:10:56,559 --> 00:10:59,240 Speaker 8: that order probably takes a fair amount of time to fulfill. 228 00:11:00,800 --> 00:11:02,839 Speaker 8: Seventy eight seven was interesting to see them order as well. 229 00:11:02,840 --> 00:11:03,760 Speaker 6: They would have five. 230 00:11:03,600 --> 00:11:06,520 Speaker 8: More, not a lot. They already had an order on 231 00:11:06,559 --> 00:11:09,360 Speaker 8: the book for some seven eight sevens. They have orders 232 00:11:09,360 --> 00:11:11,840 Speaker 8: in the books for seventy sevens and eight three fifties, 233 00:11:12,400 --> 00:11:15,439 Speaker 8: which you know, I see is sort of two competing airplanes, 234 00:11:16,000 --> 00:11:19,000 Speaker 8: the Boeing and the Airbus version of that smaller long 235 00:11:19,040 --> 00:11:22,760 Speaker 8: haul airplane. Typically Emirates tries to run a cleaner fleet. 236 00:11:22,800 --> 00:11:26,240 Speaker 8: They run a fleet of usually two types, so I'm 237 00:11:26,240 --> 00:11:29,080 Speaker 8: a little surprised to see them keep that airplane on 238 00:11:29,120 --> 00:11:30,800 Speaker 8: the order books. I thought they might have placed an 239 00:11:30,840 --> 00:11:34,760 Speaker 8: order for triple seven and rationalized that because I think 240 00:11:34,800 --> 00:11:36,800 Speaker 8: that when they're done, they're going to want to go 241 00:11:36,880 --> 00:11:39,480 Speaker 8: back to again a sort of a two airplane fleet, 242 00:11:39,520 --> 00:11:40,679 Speaker 8: and I thought it was going to be a three 243 00:11:40,720 --> 00:11:43,520 Speaker 8: point fifty triple seven. So that was pretty interesting to 244 00:11:43,520 --> 00:11:46,319 Speaker 8: see them go back for five more seven eight sevens. 245 00:11:46,320 --> 00:11:50,079 Speaker 8: Not a lot splashy order long period of time before 246 00:11:50,080 --> 00:11:50,880 Speaker 8: we deliver all those. 247 00:11:50,800 --> 00:11:53,040 Speaker 1: Airport George walk us through. The difference is, you know, 248 00:11:53,080 --> 00:11:55,880 Speaker 1: people who don't cover Boeing for a living may not 249 00:11:56,400 --> 00:11:58,640 Speaker 1: and people don't fly as much as Paul Sweeney might 250 00:11:58,679 --> 00:12:03,920 Speaker 1: not know what all these aircraft are. We we know 251 00:12:04,000 --> 00:12:06,760 Speaker 1: the seven three seven and the A three twenties. They're 252 00:12:06,800 --> 00:12:12,600 Speaker 1: the narrow body single aisle aircraft that really blow to 253 00:12:12,679 --> 00:12:15,600 Speaker 1: actually be a passenger on because there's no room at all. 254 00:12:16,080 --> 00:12:21,719 Speaker 1: But is the seven seven seven Is that a bigger airplane? 255 00:12:23,000 --> 00:12:23,240 Speaker 6: Yeah? 256 00:12:23,280 --> 00:12:25,680 Speaker 8: So you know, since the pandemic, we saw the eight 257 00:12:25,679 --> 00:12:28,480 Speaker 8: three eighty and the seven four seven, the big four 258 00:12:28,520 --> 00:12:30,560 Speaker 8: engine airplanes. We see them, We got to see them 259 00:12:30,760 --> 00:12:33,560 Speaker 8: taken out of production. And so after those airplanes come 260 00:12:33,559 --> 00:12:36,199 Speaker 8: out of production, Triple seven will be the largest airplane 261 00:12:37,000 --> 00:12:40,120 Speaker 8: in the skies. Really, you know, the sizes of that 262 00:12:40,160 --> 00:12:43,000 Speaker 8: Triple seven are starting to actually not even starting. 263 00:12:43,000 --> 00:12:44,760 Speaker 6: They're rivaling the seven four to seven. 264 00:12:45,400 --> 00:12:48,080 Speaker 8: You can get four hundred mid four hundred kind of 265 00:12:48,440 --> 00:12:50,840 Speaker 8: numbers of people on that airplane, depending on how you 266 00:12:50,880 --> 00:12:51,559 Speaker 8: can figure it. 267 00:12:52,640 --> 00:12:53,880 Speaker 3: There is big is the Triple seven? 268 00:12:53,920 --> 00:12:55,600 Speaker 1: I'm sorry? Is the Triple seven as big as the 269 00:12:55,600 --> 00:12:57,800 Speaker 1: seven eighty seven? I thought the seven eighty seven, the 270 00:12:57,880 --> 00:13:00,120 Speaker 1: Dreamliner was like the biggest one. 271 00:13:00,600 --> 00:13:03,800 Speaker 8: No, sorry, seventy seven is smaller. Seventy seven and A 272 00:13:03,960 --> 00:13:07,600 Speaker 8: three fifty are both smaller. A three fifty nine hundred 273 00:13:07,880 --> 00:13:11,360 Speaker 8: are both smaller than Triple seven, and they fit between 274 00:13:11,400 --> 00:13:13,840 Speaker 8: that narrow body class that you seem to love so much, 275 00:13:14,200 --> 00:13:16,760 Speaker 8: you know, the three twenty and seven three seven and 276 00:13:16,800 --> 00:13:19,600 Speaker 8: that Triple seven. Really, those are the most in favor 277 00:13:19,679 --> 00:13:23,400 Speaker 8: airplanes right now. Right they're at three hundred ish seed 278 00:13:24,720 --> 00:13:27,679 Speaker 8: you know, kind of twin aisles, and the ranges are great. 279 00:13:27,720 --> 00:13:30,040 Speaker 8: On the three fifteen to seven eighty seven, they can 280 00:13:30,080 --> 00:13:33,600 Speaker 8: get you, you know, really far around the world, so 281 00:13:33,640 --> 00:13:35,400 Speaker 8: you could do a lot of non stops, try to 282 00:13:35,400 --> 00:13:38,040 Speaker 8: pull in the best kind of firs, you know, fairs 283 00:13:38,080 --> 00:13:41,280 Speaker 8: possible from those business travelers that don't want to connect anywhere. 284 00:13:41,720 --> 00:13:44,679 Speaker 8: Triple seven has pretty good range as well, But that's 285 00:13:44,720 --> 00:13:46,520 Speaker 8: going to be the largest airplane in the sky when 286 00:13:46,800 --> 00:13:48,920 Speaker 8: seven four seven and eight three eighty are gone. 287 00:13:49,000 --> 00:13:51,480 Speaker 1: Nice, I want to fly that Triple seven. Where are 288 00:13:51,480 --> 00:13:53,480 Speaker 1: the routes? Where can I get on one of those things? 289 00:13:54,440 --> 00:13:56,040 Speaker 6: I think if you go to Dubai, they got a 290 00:13:56,080 --> 00:13:57,920 Speaker 6: lot of them in the fleet. If you go to 291 00:13:58,000 --> 00:14:00,480 Speaker 6: kat Tar you find a lot of them too. United 292 00:14:00,480 --> 00:14:00,960 Speaker 6: flies them. 293 00:14:01,000 --> 00:14:03,720 Speaker 8: I mean they're really you know, they're a component of 294 00:14:03,800 --> 00:14:06,640 Speaker 8: most of the major, big full service airlines around the world. 295 00:14:07,040 --> 00:14:09,640 Speaker 2: All Right, the seven three seven Max, it was so 296 00:14:09,840 --> 00:14:11,520 Speaker 2: in the news for the bad. 297 00:14:11,320 --> 00:14:12,720 Speaker 1: Reasons, patches all the time. 298 00:14:13,080 --> 00:14:14,719 Speaker 3: They fixed that. Now I feel like it's the same 299 00:14:14,760 --> 00:14:17,800 Speaker 3: as plane on the planet. Sure they did. They fixed it, 300 00:14:17,880 --> 00:14:19,400 Speaker 3: so just a little software fixed. 301 00:14:19,960 --> 00:14:21,760 Speaker 2: But the big thing is China. I mean, I got 302 00:14:21,760 --> 00:14:24,040 Speaker 2: to start selling some of these planes to China. 303 00:14:24,280 --> 00:14:25,000 Speaker 3: Where are we there? 304 00:14:26,360 --> 00:14:29,480 Speaker 8: Yeah, so nothing has been shipped into China. We keep 305 00:14:29,520 --> 00:14:32,920 Speaker 8: waiting eminently to see the Chinese take the airplanes that 306 00:14:32,960 --> 00:14:36,080 Speaker 8: have already been built for them and you know, are 307 00:14:36,080 --> 00:14:39,800 Speaker 8: awaiting sort of delivery. Going has been remarketing. 308 00:14:39,240 --> 00:14:41,480 Speaker 6: Some of those airplanes, So it kind of tells. 309 00:14:41,240 --> 00:14:43,520 Speaker 8: You that whatever discussions they're happening with the Chinese about 310 00:14:43,720 --> 00:14:47,440 Speaker 8: taking those airplanes was kind of stalling lately. It feels 311 00:14:47,480 --> 00:14:50,640 Speaker 8: like there might be a thawing up coming. I think 312 00:14:50,680 --> 00:14:55,080 Speaker 8: if you're China, China pre pandemic took almost three hundred 313 00:14:55,120 --> 00:14:57,600 Speaker 8: or about three hundred hour bodies a year, and it 314 00:14:57,680 --> 00:15:00,640 Speaker 8: was something not one company could do, not just Airbus, 315 00:15:00,760 --> 00:15:05,359 Speaker 8: not just Boeing. Now post pandemic, as they have reutilized 316 00:15:05,400 --> 00:15:08,400 Speaker 8: their fleets and such, they just haven't needed deliveries in 317 00:15:08,440 --> 00:15:09,680 Speaker 8: that of that size. 318 00:15:09,840 --> 00:15:11,720 Speaker 6: Last year. I think it was about one hundred narrow 319 00:15:11,720 --> 00:15:14,360 Speaker 6: bodies they took. But if the Chinese look down the 320 00:15:14,440 --> 00:15:18,200 Speaker 6: road and they think they're a three hundred plus narrow 321 00:15:18,240 --> 00:15:21,280 Speaker 6: body delivery kind of market in the future and their 322 00:15:21,280 --> 00:15:23,680 Speaker 6: COMACC nine one nine is not going to be ready 323 00:15:24,080 --> 00:15:29,120 Speaker 6: to backfill or to supplant some of that Airbus and 324 00:15:29,160 --> 00:15:32,960 Speaker 6: Boeing deliveries, they need to start thinking about having a 325 00:15:32,960 --> 00:15:36,320 Speaker 6: better relationship with Boeing because Airbus won't be able to 326 00:15:36,320 --> 00:15:38,840 Speaker 6: fill all of their needs. Plus, if you're going to 327 00:15:38,880 --> 00:15:43,200 Speaker 6: negotiate with Airbus and you're not buying Boeing airplanes, you're 328 00:15:43,200 --> 00:15:47,240 Speaker 6: not really in a very good negotiating space, right, and 329 00:15:47,320 --> 00:15:50,160 Speaker 6: so I think they need to start to thaw that relationship. 330 00:15:50,400 --> 00:15:52,720 Speaker 6: We'll see how big an order comes out. These order 331 00:15:52,760 --> 00:15:56,120 Speaker 6: books are long right now, They're six, seven, eight years long. 332 00:15:56,240 --> 00:15:57,480 Speaker 6: So they got to start to get in the back 333 00:15:57,520 --> 00:15:58,960 Speaker 6: of the queue if they want some airplanes. 334 00:15:59,000 --> 00:16:03,080 Speaker 2: I'm Boeing take to build a triple seven planes start 335 00:16:03,120 --> 00:16:05,560 Speaker 2: to finish, Like if I put my order in now, 336 00:16:05,680 --> 00:16:06,720 Speaker 2: when am I getting this plane? 337 00:16:08,400 --> 00:16:09,800 Speaker 8: Well, I mean the challenge, like I said, is this 338 00:16:09,840 --> 00:16:12,000 Speaker 8: airplane's not certified yet. We've got to get the FA 339 00:16:12,080 --> 00:16:15,520 Speaker 8: to certify it. We think it's sort of twenty twenty 340 00:16:15,560 --> 00:16:18,640 Speaker 8: five ish, right. I think there's two hundred and fifty 341 00:16:18,720 --> 00:16:22,240 Speaker 8: three hundred ish kind of orders on the books right now, 342 00:16:22,480 --> 00:16:24,680 Speaker 8: a bunch of them emirates. If they what if they 343 00:16:24,720 --> 00:16:28,120 Speaker 8: build five a month, you'd be getting sixty out the door, 344 00:16:28,320 --> 00:16:30,920 Speaker 8: you know, per year. We got five years of backlog. 345 00:16:31,280 --> 00:16:33,920 Speaker 8: Golling will want to increase that if they see orders 346 00:16:33,960 --> 00:16:36,480 Speaker 8: build and if you know, if they get enough of 347 00:16:36,640 --> 00:16:39,600 Speaker 8: a backlog, nobody wants to ramp up production and ramp 348 00:16:39,640 --> 00:16:40,600 Speaker 8: back down production. 349 00:16:41,040 --> 00:16:44,240 Speaker 6: So they like to see a couple of years or 350 00:16:44,280 --> 00:16:47,880 Speaker 6: more before they start thinking about increasing those rates. 351 00:16:47,920 --> 00:16:50,600 Speaker 8: But you're still talking, you know, four or five years 352 00:16:50,640 --> 00:16:51,960 Speaker 8: of backlog in the airplane. 353 00:16:52,000 --> 00:16:54,320 Speaker 2: And then here's my long held opinion, which I express 354 00:16:54,400 --> 00:16:56,320 Speaker 2: every time we talk about Boeing. They never should have 355 00:16:56,360 --> 00:16:59,880 Speaker 2: left Seattle. Yeah, lost their engineering chops and the left Seattle. 356 00:17:00,000 --> 00:17:00,960 Speaker 2: This is my personal opinion. 357 00:17:01,000 --> 00:17:02,120 Speaker 1: Sure, hurt the culture. 358 00:17:02,960 --> 00:17:06,040 Speaker 8: Yeah, you could argue though they're now in Virginia. I 359 00:17:06,080 --> 00:17:08,080 Speaker 8: know they're close to one of their biggest customers. 360 00:17:08,280 --> 00:17:11,160 Speaker 2: Yeah, I mean people come out to Seattle to see tech. 361 00:17:11,320 --> 00:17:13,000 Speaker 2: That's a great part of the world. And then go 362 00:17:13,080 --> 00:17:15,080 Speaker 2: down that highway that takes you back down to Seattle. 363 00:17:15,080 --> 00:17:17,680 Speaker 2: From the airport. On the left hand side of the highway, 364 00:17:17,680 --> 00:17:20,679 Speaker 2: it's all Boeing as far as I can see plane 365 00:17:20,760 --> 00:17:21,320 Speaker 2: stack up. 366 00:17:21,640 --> 00:17:24,760 Speaker 7: You're listening to the tape Cat's are live program Bloomberg 367 00:17:24,800 --> 00:17:28,399 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 368 00:17:28,480 --> 00:17:31,680 Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business app. 369 00:17:31,720 --> 00:17:34,560 Speaker 7: You can also listen live on Amazon Alexa from our 370 00:17:34,560 --> 00:17:39,800 Speaker 7: flagship New York station, Just Say Alexa playing Bloomberg eleven thirty. 371 00:17:40,720 --> 00:17:43,840 Speaker 2: Let's talk commercial real estate. Where are we in the 372 00:17:43,920 --> 00:17:47,560 Speaker 2: cycle here? Margaret McKnight joins us here. She's a partner 373 00:17:47,560 --> 00:17:50,600 Speaker 2: and head of real Estate Portfolio Solutions at Stepstone Group 374 00:17:50,920 --> 00:17:54,280 Speaker 2: and Nasdak created stock symbil step to put into your 375 00:17:54,280 --> 00:17:57,520 Speaker 2: Bloomberg terminal. She joins us live here in our New 376 00:17:57,600 --> 00:18:00,320 Speaker 2: York studio. So, Margaret, this is how I frame out 377 00:18:00,560 --> 00:18:04,639 Speaker 2: questions about our discussions about commercial real estate. The Lipstick Building, 378 00:18:05,200 --> 00:18:09,440 Speaker 2: Third Avenue, I'm gonna call it fifty fourth Street or something. 379 00:18:09,480 --> 00:18:12,280 Speaker 2: I don't know where it is iconic building, but it's 380 00:18:12,280 --> 00:18:15,919 Speaker 2: third Avenue. It's not Park Avenue, it's not Fifth Avenue. 381 00:18:16,680 --> 00:18:19,560 Speaker 2: When not Thing Trades, is it going to be a 382 00:18:19,600 --> 00:18:22,800 Speaker 2: twenty percent discount, a forty percent discount, a sixty percent 383 00:18:22,840 --> 00:18:24,439 Speaker 2: discount to pre pandemic levels? 384 00:18:24,920 --> 00:18:27,000 Speaker 3: How bad is it out there for commercial real estate? 385 00:18:27,280 --> 00:18:29,000 Speaker 9: So the first thing I want to do is say 386 00:18:29,040 --> 00:18:32,320 Speaker 9: that there's office and all other office is getting hit 387 00:18:32,359 --> 00:18:35,560 Speaker 9: by a cyclic pullback, especially the tech tenants pulling back 388 00:18:36,040 --> 00:18:38,919 Speaker 9: and bi secular problems because of work from home, so 389 00:18:39,000 --> 00:18:42,520 Speaker 9: it is materially worse than any other property type. The 390 00:18:42,600 --> 00:18:45,159 Speaker 9: other property types, while dealing with the cycle, also have 391 00:18:45,280 --> 00:18:49,080 Speaker 9: secular lift and we can talk about that, Okay. Right now, 392 00:18:49,200 --> 00:18:52,600 Speaker 9: office is really struggling and the capital markets have pulled back, 393 00:18:52,640 --> 00:18:54,600 Speaker 9: and most of what's going on in real estate is 394 00:18:54,600 --> 00:18:55,840 Speaker 9: a capital market pullback. 395 00:18:56,240 --> 00:19:01,960 Speaker 1: So but also retail, right, I mean, we've heard a 396 00:19:01,960 --> 00:19:05,400 Speaker 1: few cases of malls and you're from San Francisco, where 397 00:19:06,320 --> 00:19:09,399 Speaker 1: you know, the owner just says we're out, We're done, 398 00:19:09,840 --> 00:19:12,680 Speaker 1: like Westfield did out out at that retail center. 399 00:19:12,760 --> 00:19:12,960 Speaker 7: Right. 400 00:19:13,480 --> 00:19:17,000 Speaker 9: So, just like office is getting hit by technology change 401 00:19:17,040 --> 00:19:19,200 Speaker 9: because zoom and teams let us work from home a 402 00:19:19,280 --> 00:19:21,639 Speaker 9: ten or fifteen years ago, real estate got hit by 403 00:19:21,640 --> 00:19:24,520 Speaker 9: e commerce. That was a while ago. Since then, the 404 00:19:24,560 --> 00:19:26,840 Speaker 9: tenants have figured it out. We've all figured out what 405 00:19:26,960 --> 00:19:29,960 Speaker 9: formats work and don't work, and the formats that work 406 00:19:29,960 --> 00:19:33,040 Speaker 9: have repriced and are really interesting to investors. Some of 407 00:19:33,040 --> 00:19:35,240 Speaker 9: these malls are the ones that don't and are largely 408 00:19:35,280 --> 00:19:38,080 Speaker 9: pushed out of the institutional portfolios and not really where 409 00:19:38,080 --> 00:19:40,919 Speaker 9: the focus is. The focus is on things like industrial 410 00:19:40,960 --> 00:19:43,400 Speaker 9: and multifamily that have a lot of lyft right now 411 00:19:43,400 --> 00:19:46,119 Speaker 9: that are pretty interesting and you can use this period 412 00:19:46,119 --> 00:19:49,200 Speaker 9: of turmoil to find good entry points and opportunity. 413 00:19:49,359 --> 00:19:52,560 Speaker 2: All right, So for the areas are just broadly defined, 414 00:19:52,640 --> 00:19:55,720 Speaker 2: you know, commercial real estate, given where rates have moved 415 00:19:55,960 --> 00:19:59,800 Speaker 2: this year, how does that impact your businesses? Like on 416 00:19:59,840 --> 00:20:03,080 Speaker 2: a residential side, nothing's trading, Nobody wants to sell their house. 417 00:20:03,400 --> 00:20:05,040 Speaker 2: What's it like on the commercial side. 418 00:20:04,920 --> 00:20:07,280 Speaker 9: Homes are not trading. That means more people are pushed 419 00:20:07,320 --> 00:20:09,320 Speaker 9: and capped back in the rental market. So if you 420 00:20:09,400 --> 00:20:13,240 Speaker 9: own rental properties, it's actually a pretty good time. It's 421 00:20:13,280 --> 00:20:15,960 Speaker 9: slowing because it's vulnerable to the cycle, but the outlook 422 00:20:16,080 --> 00:20:19,680 Speaker 9: is good. And similarly for industrial, which is benefiting from 423 00:20:19,720 --> 00:20:22,719 Speaker 9: e commerce and it's benefiting from globalization. So what we 424 00:20:22,760 --> 00:20:25,320 Speaker 9: really have is a capital markets correction, so prices are 425 00:20:25,359 --> 00:20:29,520 Speaker 9: going down, balance sheets are restructuring. People New loans are 426 00:20:29,560 --> 00:20:32,600 Speaker 9: smaller than old loans, so people need recapitalization money. What 427 00:20:32,640 --> 00:20:34,800 Speaker 9: we call gp led secondaries is one way to do 428 00:20:34,880 --> 00:20:37,520 Speaker 9: it to actually keep their assets, and they're desperate for 429 00:20:37,560 --> 00:20:39,600 Speaker 9: that money because the difference is a goose egg. So 430 00:20:39,640 --> 00:20:41,879 Speaker 9: there's a really good time to deploy capital into some 431 00:20:41,920 --> 00:20:43,240 Speaker 9: of these interesting strategies. 432 00:20:43,440 --> 00:20:46,760 Speaker 1: Really, which puts Stepstone I guess in a good position, right, 433 00:20:46,880 --> 00:20:51,440 Speaker 1: Or what do you do at Stepstone? You offer private 434 00:20:51,440 --> 00:20:56,840 Speaker 1: investors access to markets that the public doesn't see or Yes. 435 00:20:56,920 --> 00:21:02,639 Speaker 9: We design portfolios for institutional, large institutional and high private 436 00:21:02,640 --> 00:21:06,800 Speaker 9: wealth clients that are designed to improve the odds of 437 00:21:06,800 --> 00:21:10,280 Speaker 9: meeting their specific portfolio goals. And that's what I focus 438 00:21:10,320 --> 00:21:14,000 Speaker 9: on particularly. And then that includes taking advantage of market opportunities, 439 00:21:14,280 --> 00:21:16,440 Speaker 9: and then we also execute we help them find in 440 00:21:16,560 --> 00:21:17,680 Speaker 9: that transactions. 441 00:21:17,960 --> 00:21:20,399 Speaker 3: So where are you guys putting capital to work these days? 442 00:21:20,520 --> 00:21:23,000 Speaker 9: Our favorite strategy right now is this gp LED this 443 00:21:23,119 --> 00:21:26,960 Speaker 9: recapitalization where you've got an owner who needs to buy 444 00:21:27,040 --> 00:21:29,440 Speaker 9: down his existing loan and is desperate for money to 445 00:21:29,520 --> 00:21:33,080 Speaker 9: keep his asset so that they will pay a lot 446 00:21:33,119 --> 00:21:37,160 Speaker 9: for that transitional money and not everything savable. So over 447 00:21:37,240 --> 00:21:39,800 Speaker 9: time a lot, there will be motivated sales and distress 448 00:21:39,840 --> 00:21:42,680 Speaker 9: sales that are also going to be a we're the 449 00:21:42,720 --> 00:21:46,000 Speaker 9: leading edge. We're definitely seeing in our book transactions that 450 00:21:46,080 --> 00:21:49,679 Speaker 9: look like the immediate post GFC period which ended up 451 00:21:49,760 --> 00:21:51,360 Speaker 9: yielding very attractive. 452 00:21:51,080 --> 00:21:54,000 Speaker 2: So what are some what are properties trading at today? Again, 453 00:21:54,040 --> 00:21:56,440 Speaker 2: if that lifstick building trades today, what discount do you 454 00:21:56,440 --> 00:21:59,159 Speaker 2: think that trade's at so Rules State on Third Avenue 455 00:21:59,160 --> 00:21:59,600 Speaker 2: in Midtown. 456 00:22:00,520 --> 00:22:02,720 Speaker 9: Every property is different. That's that's the tricky part of 457 00:22:02,720 --> 00:22:06,800 Speaker 9: commercial real estate. The property pricing indexes are down a 458 00:22:06,840 --> 00:22:10,320 Speaker 9: little over twenty percent and trading is down about forty percent, 459 00:22:10,440 --> 00:22:13,399 Speaker 9: so it's a little bit slower and not full price discovery. 460 00:22:13,560 --> 00:22:17,800 Speaker 9: Office is completely different though. Office is what's really not 461 00:22:17,920 --> 00:22:19,400 Speaker 9: trading and it's really broken. 462 00:22:20,240 --> 00:22:24,840 Speaker 1: So you like, where are you finding the distressed what 463 00:22:24,960 --> 00:22:27,960 Speaker 1: will look like distressed opportunities? I mean you're not looking 464 00:22:27,960 --> 00:22:30,239 Speaker 1: in office. I'm guessing or do or will you if 465 00:22:30,280 --> 00:22:32,960 Speaker 1: they say, hey, this is seventy percent off. 466 00:22:33,000 --> 00:22:35,520 Speaker 9: Right now, we're not seeing that. Pricing is interesting enough 467 00:22:35,560 --> 00:22:39,040 Speaker 9: because there's too much uncertainty. Employers and employees are in 468 00:22:39,080 --> 00:22:41,240 Speaker 9: a big experiment on hybrid work and we don't know 469 00:22:41,280 --> 00:22:43,400 Speaker 9: what that means for demand or for leases yet. 470 00:22:43,800 --> 00:22:45,920 Speaker 1: So it is so for office, it's just a falling 471 00:22:46,000 --> 00:22:48,320 Speaker 1: knife that no one almost no one's willing to catch 472 00:22:48,359 --> 00:22:48,760 Speaker 1: right now. 473 00:22:49,160 --> 00:22:51,560 Speaker 9: Institutional buyers are not going into office right now in 474 00:22:51,680 --> 00:22:52,320 Speaker 9: any numbers. 475 00:22:52,400 --> 00:22:54,400 Speaker 3: I can't wait to see that. At some point it's 476 00:22:54,440 --> 00:22:57,919 Speaker 3: going to be a just huge haircut. Yeah, But what 477 00:22:57,960 --> 00:22:58,679 Speaker 3: you're saying is go. 478 00:22:58,720 --> 00:23:01,080 Speaker 2: By the lipstick building it no idea, what like, at 479 00:23:01,119 --> 00:23:02,919 Speaker 2: thirty cents on a dollar, it's got to be a 480 00:23:02,920 --> 00:23:03,960 Speaker 2: great deal, right. 481 00:23:04,000 --> 00:23:06,399 Speaker 1: Yeah, I mean at some point, but what's that number. 482 00:23:06,520 --> 00:23:07,800 Speaker 3: That's why I'm not in that business. 483 00:23:07,800 --> 00:23:10,200 Speaker 1: It's the same as any asset when there are no buyers, right, 484 00:23:10,240 --> 00:23:12,040 Speaker 1: it's in free fall and you've got to have the 485 00:23:12,400 --> 00:23:15,080 Speaker 1: I guess, the courage or the stupidity to go in 486 00:23:15,119 --> 00:23:17,800 Speaker 1: there and try and catch it. But what you're saying, 487 00:23:18,200 --> 00:23:22,239 Speaker 1: Margaret is that you're there's a shift in capital interest, right, 488 00:23:22,280 --> 00:23:25,000 Speaker 1: They're more interested in multi family, they're more interested and 489 00:23:25,040 --> 00:23:28,280 Speaker 1: I'm guessing like server farms. 490 00:23:27,960 --> 00:23:30,840 Speaker 9: Industrial warehouse is a big part of it because there's 491 00:23:30,840 --> 00:23:33,920 Speaker 9: a huge shift in how people are using space right now. 492 00:23:34,200 --> 00:23:36,240 Speaker 9: Instead of working at the office, we're working from home, 493 00:23:36,280 --> 00:23:38,520 Speaker 9: We're shopping from home, we're playing at home. So that 494 00:23:38,560 --> 00:23:41,640 Speaker 9: creates more demand on the residential side. And then also 495 00:23:41,720 --> 00:23:44,000 Speaker 9: the warehouses you know, holds all the goods that come 496 00:23:44,040 --> 00:23:46,199 Speaker 9: in for the shopping and are really winning on the 497 00:23:46,200 --> 00:23:49,480 Speaker 9: deglobalization front, which, like you said, server farms, data centers 498 00:23:49,480 --> 00:23:52,240 Speaker 9: and whatnot are also big. So there's sectors in the 499 00:23:52,240 --> 00:23:54,560 Speaker 9: market that have really interesting fundamentals and if you could 500 00:23:54,640 --> 00:23:57,520 Speaker 9: use this moment to buy at a discount it. You know, 501 00:23:57,680 --> 00:23:58,800 Speaker 9: good opportunities have now. 502 00:23:59,040 --> 00:24:01,280 Speaker 2: But can I get a Can I get capital to 503 00:24:01,280 --> 00:24:03,720 Speaker 2: do that? Can I get a loan to do that? Well, 504 00:24:03,760 --> 00:24:04,480 Speaker 2: banks lend to. 505 00:24:04,440 --> 00:24:08,400 Speaker 9: Me, so yes, banks are lending to their best customers. 506 00:24:09,359 --> 00:24:12,080 Speaker 9: You can also restructure your existing loans. And again that's 507 00:24:12,080 --> 00:24:14,560 Speaker 9: where this recap strategy comes in that we think is 508 00:24:14,640 --> 00:24:18,440 Speaker 9: so interesting. As I said, trading value is down forty percent, 509 00:24:18,440 --> 00:24:20,680 Speaker 9: it's not down one hundred percent, and it's way higher 510 00:24:20,680 --> 00:24:22,919 Speaker 9: than it was during the GFC period. So there is 511 00:24:22,920 --> 00:24:26,199 Speaker 9: still movement. There is a lot of especially if you're 512 00:24:26,200 --> 00:24:28,040 Speaker 9: trying to sell office, it needs to be seller finance 513 00:24:28,080 --> 00:24:29,720 Speaker 9: because there's no debt for office. 514 00:24:29,800 --> 00:24:30,760 Speaker 3: No debt for office. 515 00:24:31,400 --> 00:24:32,840 Speaker 1: Wow, seller finance. 516 00:24:32,960 --> 00:24:34,840 Speaker 3: Yeah, I don't like that. That's scary. 517 00:24:35,280 --> 00:24:37,520 Speaker 1: You know, I want to sell you this thing so 518 00:24:37,640 --> 00:24:39,240 Speaker 1: badly that I'm going to lend you the money to 519 00:24:39,240 --> 00:24:39,879 Speaker 1: buy it from me. 520 00:24:40,040 --> 00:24:42,800 Speaker 2: Yes, exactly, I've seen that before in other businesses. 521 00:24:43,480 --> 00:24:46,400 Speaker 3: So again, do you feel like where do you feel 522 00:24:46,400 --> 00:24:47,800 Speaker 3: like we are just in I. 523 00:24:47,800 --> 00:24:49,720 Speaker 2: Guess it's really by the asset class, right, I mean, 524 00:24:50,240 --> 00:24:51,920 Speaker 2: like I was gonna say, are we at the bottom here? 525 00:24:51,920 --> 00:24:55,480 Speaker 2: But in certain sectors we've already bottom dinner trading higher, 526 00:24:55,480 --> 00:24:57,240 Speaker 2: but for office maybe not there yet. 527 00:24:57,280 --> 00:24:59,440 Speaker 9: For non office where at the beginning, and probably a 528 00:24:59,480 --> 00:25:02,680 Speaker 9: two to three restructuring period that should yield some very interesting, 529 00:25:02,760 --> 00:25:06,639 Speaker 9: as I said, opportunities to help people restructure as we 530 00:25:06,720 --> 00:25:08,639 Speaker 9: move through the business cycle and we come out the 531 00:25:08,640 --> 00:25:11,680 Speaker 9: other side. You know, the motto now is stay alive 532 00:25:11,760 --> 00:25:12,680 Speaker 9: till twenty five. 533 00:25:12,720 --> 00:25:15,120 Speaker 3: Stay alive till twenty. 534 00:25:14,520 --> 00:25:17,280 Speaker 9: That's not true for office. And I think the office 535 00:25:17,440 --> 00:25:19,600 Speaker 9: is more like I alluded to retail was a ton 536 00:25:19,640 --> 00:25:21,760 Speaker 9: of fifteen year correction. I think office is more like 537 00:25:21,800 --> 00:25:24,680 Speaker 9: a ten year because tonants have to figure out their demands. 538 00:25:24,840 --> 00:25:27,440 Speaker 9: There's long term leases that need to roll off, and 539 00:25:27,520 --> 00:25:28,440 Speaker 9: it's going to take a while. 540 00:25:28,520 --> 00:25:28,760 Speaker 7: Wow. 541 00:25:29,119 --> 00:25:31,800 Speaker 1: Let's talk quickly about San Francisco. That's where you live, 542 00:25:32,440 --> 00:25:34,840 Speaker 1: Paul and I think both love the city. I think 543 00:25:34,840 --> 00:25:38,320 Speaker 1: it's beautiful. I love the Humphrey and Slocum ice cream place. 544 00:25:38,760 --> 00:25:41,000 Speaker 1: I'm a deadhead, so I like to go around hate Ashbury, 545 00:25:41,040 --> 00:25:44,040 Speaker 1: you know, and check out the scene there. I never 546 00:25:44,080 --> 00:25:47,360 Speaker 1: really hung out in the industrial commercial center very much, 547 00:25:47,400 --> 00:25:50,320 Speaker 1: but apparently it's dead. What do you think it is? 548 00:25:50,359 --> 00:25:57,919 Speaker 1: The you know, are the death stories about San Francisco overblown, overwritten. 549 00:25:58,600 --> 00:26:00,800 Speaker 9: The Bay area is a center to the Vegas and 550 00:26:00,840 --> 00:26:03,679 Speaker 9: most important tact ecosystems in the world. I am not 551 00:26:03,720 --> 00:26:06,040 Speaker 9: going to beat against San Francisco at all. And it's 552 00:26:06,080 --> 00:26:07,440 Speaker 9: a fabulous place to live. 553 00:26:07,800 --> 00:26:09,640 Speaker 1: Still, you still enjoy living there. 554 00:26:09,760 --> 00:26:12,120 Speaker 9: Yes, and remember we don't all live we don't live downtown. 555 00:26:12,160 --> 00:26:15,120 Speaker 9: That's part of the problem. Office key card use says 556 00:26:15,720 --> 00:26:18,239 Speaker 9: use office Houston, New York is fifty percent, office US 557 00:26:18,280 --> 00:26:20,760 Speaker 9: in San Francisco is forty five percent. You just feel 558 00:26:20,760 --> 00:26:24,639 Speaker 9: it because there's it's more concentrated, and the tourism is 559 00:26:24,640 --> 00:26:26,840 Speaker 9: not back there, and here you have integrated uses, so 560 00:26:26,880 --> 00:26:27,600 Speaker 9: it feels lively. 561 00:26:27,960 --> 00:26:30,040 Speaker 1: Yeap, when I hear tourism isn't back, that makes me 562 00:26:30,080 --> 00:26:30,960 Speaker 1: want to go to that place. 563 00:26:31,080 --> 00:26:34,280 Speaker 2: Yes, you know, I love it, and I just I 564 00:26:34,320 --> 00:26:36,359 Speaker 2: always tell people that are coming from Europe, Hey, I've 565 00:26:36,359 --> 00:26:37,920 Speaker 2: got I'm gonna be hearing the stage for three or 566 00:26:37,960 --> 00:26:38,440 Speaker 2: four weeks. 567 00:26:38,600 --> 00:26:39,440 Speaker 3: Where do I go to say? 568 00:26:39,640 --> 00:26:42,800 Speaker 2: One stop has to be San Francis. Yeah, do your Vegas, 569 00:26:42,800 --> 00:26:44,440 Speaker 2: do your New York, but one stop has to be 570 00:26:44,480 --> 00:26:46,600 Speaker 2: San Francisco. I'm just not sure if you can do 571 00:26:46,640 --> 00:26:48,880 Speaker 2: that say that anymore. But I still think that's the case, 572 00:26:48,920 --> 00:26:50,680 Speaker 2: so don't bet against the Bay Area. 573 00:26:50,680 --> 00:26:52,119 Speaker 3: Thank you very much. Margaret McKnight. 574 00:26:52,480 --> 00:26:55,760 Speaker 2: She's a partner and head of real estate Portfolio Solutions. 575 00:26:56,000 --> 00:26:58,640 Speaker 2: The company's name is Stepstone Group. It is a NASTAC 576 00:26:58,720 --> 00:26:59,520 Speaker 2: traded company. 577 00:26:59,640 --> 00:27:01,879 Speaker 3: St e EP is the ticker. 578 00:27:02,400 --> 00:27:05,520 Speaker 7: You're listening to the tape. Cat's are live program Bloomberg 579 00:27:05,600 --> 00:27:09,199 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 580 00:27:09,240 --> 00:27:12,480 Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 581 00:27:12,520 --> 00:27:15,320 Speaker 7: You can also listen live on Amazon Alexa from our 582 00:27:15,359 --> 00:27:19,720 Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 583 00:27:21,640 --> 00:27:23,760 Speaker 2: All right, Matt, I'm taking my year to day gains. 584 00:27:24,080 --> 00:27:25,479 Speaker 2: I'm going to the two year treasure. 585 00:27:25,480 --> 00:27:26,960 Speaker 3: I'm giving them my money at the window and we 586 00:27:27,080 --> 00:27:29,680 Speaker 3: get five point zero four percent. It's not bad. 587 00:27:29,920 --> 00:27:32,040 Speaker 1: You've got a lot of reinvestment risk ahead. 588 00:27:32,119 --> 00:27:33,960 Speaker 3: That's not good. Then all right, let's talk to somebodyho 589 00:27:33,960 --> 00:27:34,840 Speaker 3: does this stuff for a living. 590 00:27:35,040 --> 00:27:38,480 Speaker 2: Ted Oakley, founder and managing partner at Oxbow Advisors, joining 591 00:27:38,560 --> 00:27:41,119 Speaker 2: us live in our Bloomberg Interactive Brokers studio. 592 00:27:41,600 --> 00:27:43,920 Speaker 3: You shoot, you're based where are you based? Down in Texas? 593 00:27:44,080 --> 00:27:46,480 Speaker 3: Austin Austin. Okay, all right, so. 594 00:27:46,440 --> 00:27:48,680 Speaker 2: You didn't your school, you're a Texas tech. You didn't 595 00:27:48,720 --> 00:27:51,119 Speaker 2: fire your coach and guarantee the seventy six million dollars, 596 00:27:51,119 --> 00:27:51,520 Speaker 2: did you? 597 00:27:51,840 --> 00:27:53,920 Speaker 10: We did not. We don't have that kind of money. 598 00:27:54,000 --> 00:27:56,320 Speaker 2: Okay, very good. Want to see what's going on down 599 00:27:56,320 --> 00:27:58,480 Speaker 2: there in Texas. Everything's bigger in Texas. I know, I 600 00:27:58,520 --> 00:28:01,480 Speaker 2: get that, all right, Ted here again, I can be 601 00:28:01,600 --> 00:28:03,760 Speaker 2: just fine. In my two year treasury of five point 602 00:28:03,840 --> 00:28:06,480 Speaker 2: zero four percent, Matt says, I have reinvestment risk. 603 00:28:06,960 --> 00:28:08,359 Speaker 3: What do you guys do in these days? 604 00:28:09,320 --> 00:28:11,520 Speaker 10: Well, we own a lot of that. Actually, we have 605 00:28:11,600 --> 00:28:15,920 Speaker 10: probably the highest level of treasures we've had since two thousand. Really, yeah, 606 00:28:15,960 --> 00:28:18,040 Speaker 10: we're very high in the treasuries. We have a lot 607 00:28:18,080 --> 00:28:21,000 Speaker 10: of the floating rate treasury, which is even shorter. It's 608 00:28:21,040 --> 00:28:24,760 Speaker 10: based on a ninety day reset every Monday, and it's 609 00:28:24,800 --> 00:28:27,240 Speaker 10: about five and a half. And then you know, we 610 00:28:27,359 --> 00:28:29,320 Speaker 10: own some one year or two year and we own 611 00:28:29,600 --> 00:28:33,280 Speaker 10: some long paper. But right now, that's that's where we 612 00:28:33,359 --> 00:28:35,000 Speaker 10: have a lot of liquidity stashed. 613 00:28:35,720 --> 00:28:36,960 Speaker 3: What do do you have? 614 00:28:37,440 --> 00:28:39,960 Speaker 2: What are you looking for to maybe get more exposure 615 00:28:40,000 --> 00:28:42,840 Speaker 2: to the equity markets? Is that evaluation thing is that 616 00:28:43,200 --> 00:28:45,280 Speaker 2: or an earning thing. Is it a federal reserve thing? 617 00:28:45,320 --> 00:28:47,280 Speaker 2: What is a catalyst that you guys are looking for? 618 00:28:47,880 --> 00:28:49,840 Speaker 10: You know, most of the companies we look at are 619 00:28:49,880 --> 00:28:53,720 Speaker 10: guiding somewhat lower, you know, in the in the coming quarters. 620 00:28:54,160 --> 00:28:56,520 Speaker 10: We don't look at whether they beat or not, because 621 00:28:56,520 --> 00:28:58,600 Speaker 10: that's a game they all play, but we look at 622 00:28:58,600 --> 00:29:01,880 Speaker 10: the guidance on it, and the guidance is going down 623 00:29:01,880 --> 00:29:03,440 Speaker 10: for a lot of companies, and a lot of companies 624 00:29:03,440 --> 00:29:05,520 Speaker 10: are just not cheap enough for us. We have companies 625 00:29:05,560 --> 00:29:09,360 Speaker 10: we like, we've been buying some of the consumer staples 626 00:29:09,640 --> 00:29:12,880 Speaker 10: because they've gone back down to a level that we liked. Okay, 627 00:29:12,960 --> 00:29:17,240 Speaker 10: but we've been you know, we still own legacy growth companies, 628 00:29:17,280 --> 00:29:18,960 Speaker 10: but we cut back on them quite a bit. 629 00:29:19,880 --> 00:29:22,120 Speaker 1: So does that mean you're out of the market for 630 00:29:22,200 --> 00:29:24,920 Speaker 1: the foreseeable future in terms of equities. 631 00:29:25,280 --> 00:29:28,280 Speaker 10: No, man, it means that we're about half in. You 632 00:29:28,280 --> 00:29:30,960 Speaker 10: can look at it that way, I suppose. But you know, 633 00:29:31,000 --> 00:29:34,479 Speaker 10: we really feel like that we'll have a better spot 634 00:29:34,560 --> 00:29:36,320 Speaker 10: here in the next two or three quarters than we 635 00:29:36,400 --> 00:29:40,400 Speaker 10: have right now. We really see weakness coming. We see 636 00:29:40,480 --> 00:29:43,840 Speaker 10: a lot in a lot of industries across the country. 637 00:29:43,960 --> 00:29:49,320 Speaker 10: We see transportation, retail, trucking. So many things are starting 638 00:29:49,360 --> 00:29:52,160 Speaker 10: to weaken now, and so for us, we just don't 639 00:29:52,160 --> 00:29:54,600 Speaker 10: think it's over yet. So that's why we're a bit cautious. 640 00:29:55,000 --> 00:29:59,640 Speaker 3: So do you have a recession built into your forecast here? Well, 641 00:29:59,680 --> 00:30:00,000 Speaker 3: you could. 642 00:30:00,000 --> 00:30:03,160 Speaker 10: I think it'll go so slow that it will feel 643 00:30:03,200 --> 00:30:04,800 Speaker 10: like one at least. You know, if you go to 644 00:30:04,920 --> 00:30:08,640 Speaker 10: zero growth, Paul or one, you know, that will probably 645 00:30:08,680 --> 00:30:11,280 Speaker 10: feel like a recession to some people because some industries 646 00:30:11,320 --> 00:30:13,880 Speaker 10: will be very, very slow. And then you have to 647 00:30:13,920 --> 00:30:16,280 Speaker 10: deal with this debt situation with the Fed too. I 648 00:30:16,280 --> 00:30:17,200 Speaker 10: think that's a problem. 649 00:30:17,280 --> 00:30:19,280 Speaker 3: Ah, that's your rid of your belly. 650 00:30:19,360 --> 00:30:24,200 Speaker 1: Yeah, absolutely, I mean do you see any kind of 651 00:30:24,200 --> 00:30:27,800 Speaker 1: fiscal discipline coming to this government anytime soon? 652 00:30:29,560 --> 00:30:32,400 Speaker 10: I don't. I haven't seen it before. Now maybe they 653 00:30:32,520 --> 00:30:34,680 Speaker 10: come around, but you know, it takes both sides of 654 00:30:34,720 --> 00:30:36,120 Speaker 10: the of the eyele to do it. 655 00:30:36,800 --> 00:30:38,120 Speaker 1: And does it matter to you? 656 00:30:38,160 --> 00:30:38,520 Speaker 6: Do you? 657 00:30:38,600 --> 00:30:40,120 Speaker 1: Are you concerned when you look at the debts and 658 00:30:40,120 --> 00:30:42,480 Speaker 1: deficit or some people say we've been doing this since Reagan, 659 00:30:42,520 --> 00:30:43,840 Speaker 1: we can keep doing it. 660 00:30:43,840 --> 00:30:46,000 Speaker 10: It matters to me in this respect. If you go 661 00:30:46,080 --> 00:30:48,680 Speaker 10: back and look at countries where they get to a 662 00:30:48,720 --> 00:30:53,360 Speaker 10: certain breaking point, and we're about three quarters there. And 663 00:30:53,440 --> 00:30:57,080 Speaker 10: people don't realize that the average debt that we're paying 664 00:30:57,120 --> 00:30:59,200 Speaker 10: right now is about two point six percent on all 665 00:30:59,240 --> 00:31:02,320 Speaker 10: the federal debts. Well, guess what fifty percent of it 666 00:31:02,400 --> 00:31:06,120 Speaker 10: rolls over in two years. At five you're gonna almost 667 00:31:06,200 --> 00:31:08,680 Speaker 10: double it. And people, I don't think people realize what 668 00:31:08,800 --> 00:31:11,320 Speaker 10: happens when you when you get so much debt and 669 00:31:11,360 --> 00:31:15,040 Speaker 10: then they monitor debation monetary system and I know it 670 00:31:15,080 --> 00:31:17,560 Speaker 10: hasn't happened in the past, but now it's getting to 671 00:31:17,600 --> 00:31:19,920 Speaker 10: a breaking point. You can follow it with countries over 672 00:31:19,960 --> 00:31:21,160 Speaker 10: time and see what happens. 673 00:31:22,040 --> 00:31:26,120 Speaker 2: On the equity side here, I know you mentioned look 674 00:31:26,160 --> 00:31:28,960 Speaker 2: looking for income, So oil and gas pipelines. 675 00:31:28,880 --> 00:31:32,080 Speaker 10: We still have those. We rarely sell the oil and 676 00:31:32,120 --> 00:31:37,440 Speaker 10: gas pipelines. They're steady producers. They usually increase the income 677 00:31:37,480 --> 00:31:40,080 Speaker 10: a little bit each year. If you wanted something to 678 00:31:41,040 --> 00:31:43,760 Speaker 10: compete with your real estate on a private basis, you 679 00:31:43,800 --> 00:31:46,520 Speaker 10: put on the oil and gas pipeline because half of 680 00:31:46,560 --> 00:31:48,760 Speaker 10: them file on a K one just like real estate, 681 00:31:49,280 --> 00:31:51,440 Speaker 10: so you don't have any current income tax on it. 682 00:31:51,520 --> 00:31:55,280 Speaker 10: And secondly, they all pay between seven and nine so 683 00:31:55,360 --> 00:31:55,720 Speaker 10: you get a. 684 00:31:57,240 --> 00:31:59,080 Speaker 3: Yeah, and you're not building pipelines anymore? 685 00:31:59,080 --> 00:32:01,720 Speaker 10: Are they You hit the nail on the head. It's 686 00:32:01,800 --> 00:32:04,040 Speaker 10: like it's like I tell people, be like trying to 687 00:32:04,040 --> 00:32:06,600 Speaker 10: get an easement for a for a railroad track, right, 688 00:32:06,800 --> 00:32:09,080 Speaker 10: you think about that today you can't do that, and 689 00:32:09,120 --> 00:32:11,840 Speaker 10: then you have environmental concerns and it's hard to get 690 00:32:12,040 --> 00:32:12,520 Speaker 10: these days. 691 00:32:12,680 --> 00:32:14,760 Speaker 2: I tell people, when I was pitching the billboard companies 692 00:32:14,760 --> 00:32:16,360 Speaker 2: back in the day, I say, they're not making any 693 00:32:16,360 --> 00:32:17,000 Speaker 2: more billboards. 694 00:32:17,120 --> 00:32:19,960 Speaker 3: Can't get them up. Yeah, you gotta by the ones 695 00:32:19,960 --> 00:32:20,520 Speaker 3: that are out. 696 00:32:20,400 --> 00:32:22,280 Speaker 1: There, and how's that business going? 697 00:32:22,560 --> 00:32:24,080 Speaker 3: Awesome? Yeah, awesome. 698 00:32:24,520 --> 00:32:27,400 Speaker 2: You can't You can't click through a billboard ad. You know, 699 00:32:27,840 --> 00:32:29,120 Speaker 2: that's true, can't block it? 700 00:32:29,360 --> 00:32:34,000 Speaker 1: That's true. What about other real estate plays? For example, 701 00:32:34,040 --> 00:32:36,400 Speaker 1: in Texas, I know there are a lot of big 702 00:32:36,520 --> 00:32:39,960 Speaker 1: data centers, there's a lot of big factory sorry, big 703 00:32:40,000 --> 00:32:44,320 Speaker 1: warehouse businesses. You got a lot of land down there, right, 704 00:32:44,400 --> 00:32:49,080 Speaker 1: So there's even green energy is a huge industry in Texas, 705 00:32:49,400 --> 00:32:53,400 Speaker 1: despite what we may all think about Texans attitudes towards that. 706 00:32:54,360 --> 00:32:56,400 Speaker 10: Well, that's true. But what we see and I'm I'm 707 00:32:56,440 --> 00:32:59,200 Speaker 10: involved quite a quite heavily in a community bank, and 708 00:32:59,240 --> 00:33:01,200 Speaker 10: so I see a lot what's going on on the 709 00:33:01,240 --> 00:33:04,320 Speaker 10: real estate side. What we're seeing, Matt is really we're 710 00:33:04,360 --> 00:33:08,520 Speaker 10: starting to see even some industrial properties come up for 711 00:33:08,640 --> 00:33:11,360 Speaker 10: least because they're not full. And now we're starting to 712 00:33:11,400 --> 00:33:14,520 Speaker 10: see some commercial buildings actually go back to the banks. 713 00:33:14,520 --> 00:33:17,000 Speaker 10: I mean they're giving the keys back, and so it's 714 00:33:17,040 --> 00:33:19,320 Speaker 10: starting to show. It's starting to show it's where and 715 00:33:19,360 --> 00:33:20,200 Speaker 10: tear there too. 716 00:33:20,360 --> 00:33:21,960 Speaker 2: So do you guys at the bank you're involved with, 717 00:33:22,000 --> 00:33:25,720 Speaker 2: you have commercial real estate exposure very very little fortunately, okay, 718 00:33:25,800 --> 00:33:30,120 Speaker 2: But so are your customers. I mean, what are you 719 00:33:30,120 --> 00:33:33,440 Speaker 2: seeing at that regional bank level. Is there loan demand 720 00:33:33,560 --> 00:33:34,880 Speaker 2: there at these interest rates? 721 00:33:35,280 --> 00:33:38,400 Speaker 10: You know, in most community banks, Paul, the loan aman 722 00:33:38,560 --> 00:33:42,320 Speaker 10: is about steady. It really is not going up or down. 723 00:33:42,880 --> 00:33:45,320 Speaker 10: All the banks are fighting to try to get the loans. 724 00:33:45,320 --> 00:33:47,640 Speaker 10: And so while you've got an eight and a half 725 00:33:47,640 --> 00:33:50,200 Speaker 10: percent prime, they're having to come in at six and 726 00:33:50,200 --> 00:33:52,640 Speaker 10: a half or six and three quarters and to get 727 00:33:52,680 --> 00:33:56,240 Speaker 10: that business. That's what we're seeing. I think they're really 728 00:33:56,560 --> 00:33:58,680 Speaker 10: the banks are really concerned about it because most of 729 00:33:58,720 --> 00:34:01,720 Speaker 10: them have a situation where they have bond portfolios that 730 00:34:01,720 --> 00:34:04,640 Speaker 10: are not all that great. And then the other problem 731 00:34:04,800 --> 00:34:07,040 Speaker 10: is they can get a lot of new you know 732 00:34:07,120 --> 00:34:08,960 Speaker 10: see and nine new business loans. 733 00:34:08,960 --> 00:34:09,799 Speaker 3: That's hard for them. 734 00:34:10,520 --> 00:34:12,960 Speaker 2: So broadly defined, I mean, Texas is so big you 735 00:34:12,960 --> 00:34:15,319 Speaker 2: can't talk about the state, But I mean, what are 736 00:34:15,400 --> 00:34:17,920 Speaker 2: some of the driving forces down there for the economy. 737 00:34:17,960 --> 00:34:20,279 Speaker 2: Is it still just people or people and businesses are 738 00:34:20,280 --> 00:34:23,920 Speaker 2: coming into the state because of maybe favorable tax situation, 739 00:34:24,600 --> 00:34:25,520 Speaker 2: good labor forces. 740 00:34:25,560 --> 00:34:26,680 Speaker 3: That's still the story there. 741 00:34:27,239 --> 00:34:29,799 Speaker 10: Well, that's what we see now at Oxbode. We do 742 00:34:29,880 --> 00:34:31,960 Speaker 10: business in forty states, so we do business all over 743 00:34:31,960 --> 00:34:34,759 Speaker 10: the country. But in Texas we have a lot of 744 00:34:34,800 --> 00:34:37,239 Speaker 10: new business that came in just from people that moved 745 00:34:37,239 --> 00:34:40,439 Speaker 10: from other states at high tax states. They just got 746 00:34:40,520 --> 00:34:42,880 Speaker 10: tired of what was going on in some of their states. 747 00:34:43,440 --> 00:34:45,799 Speaker 10: On the business side, portsol and gas is still a 748 00:34:45,800 --> 00:34:48,680 Speaker 10: big business in Texas, but we have a lot of manufacturing, 749 00:34:49,000 --> 00:34:50,879 Speaker 10: We have a lot of tech. We have a lot 750 00:34:50,880 --> 00:34:53,200 Speaker 10: of things that happen in the state. You know, the 751 00:34:53,239 --> 00:34:56,160 Speaker 10: state's it's still a place where you can go and 752 00:34:56,360 --> 00:34:59,080 Speaker 10: sort of be a bit of a maverick. And I 753 00:34:59,520 --> 00:35:01,080 Speaker 10: think why people come there. 754 00:35:01,760 --> 00:35:04,560 Speaker 3: Yeah, I'm telling you like freedom, I know exactly. 755 00:35:04,920 --> 00:35:08,759 Speaker 2: It's in short supply some taxes, man, Yeah, can crush here. 756 00:35:09,200 --> 00:35:10,960 Speaker 3: Tell me about telling you about it all right? So 757 00:35:11,280 --> 00:35:13,239 Speaker 3: what's your over the next twelve months? 758 00:35:13,280 --> 00:35:14,799 Speaker 2: Ted, what do you do you think you guys will 759 00:35:14,840 --> 00:35:17,360 Speaker 2: get more into the equity market, increase your exposure. What 760 00:35:17,360 --> 00:35:19,600 Speaker 2: do you think you'll be making some changes to your 761 00:35:19,640 --> 00:35:20,759 Speaker 2: portfolio of the next twelve months. 762 00:35:20,800 --> 00:35:21,560 Speaker 3: What do you anticipate? 763 00:35:23,000 --> 00:35:26,560 Speaker 10: It would not surprise me to see us at least 764 00:35:26,560 --> 00:35:28,400 Speaker 10: get a lot more if we have a break in 765 00:35:28,440 --> 00:35:30,479 Speaker 10: the market that we feel like things are cheap enough, 766 00:35:30,840 --> 00:35:33,760 Speaker 10: You'll see, let's get almost fully invested. We'll find companies 767 00:35:33,800 --> 00:35:38,319 Speaker 10: we usually will. We really run about two hundred hundred 768 00:35:38,320 --> 00:35:40,520 Speaker 10: and fifty companies that we would want to own that 769 00:35:40,600 --> 00:35:43,560 Speaker 10: we look at quite a bit. Most of those are 770 00:35:43,560 --> 00:35:46,160 Speaker 10: not hitting the screens we want to to buy right now. 771 00:35:46,400 --> 00:35:47,799 Speaker 3: And is that a valuation screen? 772 00:35:48,080 --> 00:35:51,200 Speaker 10: There's a valuation screen we like companies with. We find 773 00:35:51,400 --> 00:35:54,400 Speaker 10: in the long run you need own companies that don't 774 00:35:54,440 --> 00:35:57,359 Speaker 10: have a lot of debt. I mean, you know, debt 775 00:35:57,520 --> 00:36:00,600 Speaker 10: really for us is not working in the long run 776 00:36:00,640 --> 00:36:02,920 Speaker 10: for companies, and we just feel like we'll get a 777 00:36:02,920 --> 00:36:05,080 Speaker 10: shot at better valuations we have right now. 778 00:36:06,280 --> 00:36:09,239 Speaker 3: What's your latest book? Stay rich with a balance portfolio? 779 00:36:09,640 --> 00:36:09,879 Speaker 7: Right? 780 00:36:10,120 --> 00:36:10,920 Speaker 3: So what am I doing there? 781 00:36:10,960 --> 00:36:13,520 Speaker 2: Am I just rish reward, making sure I don't get 782 00:36:13,560 --> 00:36:15,200 Speaker 2: too far too skewed one way or the other. 783 00:36:15,719 --> 00:36:15,920 Speaker 7: You know. 784 00:36:16,000 --> 00:36:19,480 Speaker 10: One of the things I've noticed really since the pandemic particularly, 785 00:36:19,640 --> 00:36:24,520 Speaker 10: is that people are really they're all in one or 786 00:36:24,560 --> 00:36:28,560 Speaker 10: two things, like maybe they go all into crypt currency, 787 00:36:28,800 --> 00:36:33,239 Speaker 10: all into real estate, all into the Magnificent seven, all 788 00:36:33,320 --> 00:36:36,640 Speaker 10: in something, you know, and they don't have any balance. 789 00:36:36,640 --> 00:36:38,480 Speaker 10: And one of the things I've found, and I've really 790 00:36:38,640 --> 00:36:42,120 Speaker 10: interviewed in my life quite a few billionaires, and one 791 00:36:42,160 --> 00:36:44,160 Speaker 10: of the things I've noticed about them is they usually 792 00:36:44,160 --> 00:36:46,279 Speaker 10: have balance. May not think it, but they have quite 793 00:36:46,280 --> 00:36:48,040 Speaker 10: a bit of balance, have quite a bit of liquidity. 794 00:36:48,960 --> 00:36:52,719 Speaker 10: And I see people today that are sort of complacent 795 00:36:52,840 --> 00:36:56,480 Speaker 10: because nothing real bad has happened so far, and so 796 00:36:56,640 --> 00:36:59,200 Speaker 10: they're all chocked full of one thing. And I just 797 00:36:59,239 --> 00:37:00,840 Speaker 10: think that's not a good way to go. If you 798 00:37:00,880 --> 00:37:03,200 Speaker 10: want to, I'll just give you a note. If you 799 00:37:03,320 --> 00:37:05,799 Speaker 10: take a million dollar person nineteen hundred, they'd be a 800 00:37:05,800 --> 00:37:06,400 Speaker 10: billion a day. 801 00:37:06,520 --> 00:37:07,839 Speaker 3: Yep, there you go. I could do that. 802 00:37:07,920 --> 00:37:09,880 Speaker 2: Man, Ted Oakley, thank you so much for joining us 803 00:37:09,880 --> 00:37:11,840 Speaker 2: at Ted Oakley. He's a founder and managing partner in 804 00:37:11,920 --> 00:37:14,080 Speaker 2: Oxbow Advisors. You should get him on the phone, but 805 00:37:14,120 --> 00:37:15,480 Speaker 2: he's up here in the big Apple today, so we 806 00:37:15,520 --> 00:37:16,360 Speaker 2: got him in the studio. 807 00:37:18,480 --> 00:37:21,560 Speaker 1: Thanks for listening to the Bloomberg Markets podcasts. You can 808 00:37:21,600 --> 00:37:25,400 Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever 809 00:37:25,480 --> 00:37:29,200 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 810 00:37:29,400 --> 00:37:31,319 Speaker 1: at Matt Miller nineteen seventy three. 811 00:37:31,760 --> 00:37:34,120 Speaker 3: And I'm fall Sweeney. I'm on Twitter at pt Sweeney. 812 00:37:34,280 --> 00:37:36,920 Speaker 2: Before the podcast, you can always catch us worldwide at 813 00:37:36,960 --> 00:37:37,960 Speaker 2: Bloomberg Radio.