1 00:00:00,840 --> 00:00:04,000 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,080 --> 00:00:05,240 Speaker 1: my co host Matt Miller. 3 00:00:05,640 --> 00:00:09,600 Speaker 2: Every business day, we bring you interviews from CEOs, market pros, 4 00:00:09,720 --> 00:00:13,640 Speaker 2: and Bloomberg experts, along with essential market moven news. 5 00:00:14,160 --> 00:00:17,279 Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 6 00:00:17,400 --> 00:00:20,480 Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. 7 00:00:21,320 --> 00:00:24,840 Speaker 1: Nick Ackerman joins us. This is former Assistant Special Watergate 8 00:00:24,920 --> 00:00:29,040 Speaker 1: prosecutor Nick As one of our Bloomberg opinion columnists wrote 9 00:00:29,120 --> 00:00:33,200 Speaker 1: this morning, this is the big one for former President Trump. 10 00:00:33,760 --> 00:00:35,960 Speaker 1: How do you think this will play out? 11 00:00:37,240 --> 00:00:41,000 Speaker 3: Oh? I think it is absolutely a devastating indictment. You 12 00:00:41,120 --> 00:00:44,159 Speaker 3: just read through the facts. It tells the entire story 13 00:00:44,240 --> 00:00:47,800 Speaker 3: of what Donald Trump did after the election straight up 14 00:00:47,920 --> 00:00:52,160 Speaker 3: until January sixth, to try and stay in power illegally. 15 00:00:53,080 --> 00:00:56,320 Speaker 3: It is definitely a big one, but keep in mind 16 00:00:56,520 --> 00:01:00,440 Speaker 3: the other indictments are serious also. If you do look 17 00:01:00,480 --> 00:01:05,560 Speaker 3: at the District Attorney's indictment in Manhattan, even though it 18 00:01:05,680 --> 00:01:10,679 Speaker 3: has to do with falsifying business records, the indictment alleges 19 00:01:10,720 --> 00:01:14,800 Speaker 3: that he did so basically to defraud voters so that 20 00:01:14,880 --> 00:01:17,679 Speaker 3: they wouldn't know about his payments of hush money to 21 00:01:17,760 --> 00:01:23,679 Speaker 3: Stormy Daniels prior to the twenty sixteen election. This particular 22 00:01:23,720 --> 00:01:29,200 Speaker 3: indictment relates to his efforts to lie to voters in 23 00:01:29,360 --> 00:01:33,240 Speaker 3: order to keep himself in power after the twenty twenty elections. 24 00:01:33,240 --> 00:01:38,440 Speaker 3: So both of these indictments really make neat bookends. And 25 00:01:38,480 --> 00:01:43,200 Speaker 3: of course the whole indictment relating to classified documents is 26 00:01:43,319 --> 00:01:47,680 Speaker 3: really separate and apart from the voters and the elections. 27 00:01:48,240 --> 00:01:50,400 Speaker 4: Nick tell us about the timing of this and how 28 00:01:50,440 --> 00:01:53,880 Speaker 4: it relates to the twenty twenty four election and if 29 00:01:54,560 --> 00:01:57,920 Speaker 4: you know, winning the presidency again, if that's really Trump's 30 00:01:57,920 --> 00:02:00,320 Speaker 4: best possible defense here, it kind of seems like that 31 00:02:00,400 --> 00:02:01,600 Speaker 4: get out of jail free card. 32 00:02:02,440 --> 00:02:04,640 Speaker 3: Well, no question is to get out of jail card 33 00:02:04,880 --> 00:02:08,440 Speaker 3: free here, But you're going to look at a couple 34 00:02:08,560 --> 00:02:12,160 Speaker 3: things on timing. The reason that Jack Smith brought this 35 00:02:12,360 --> 00:02:16,160 Speaker 3: case just against Donald Trump is to keep the case 36 00:02:16,800 --> 00:02:20,360 Speaker 3: lean and mean and simple so that he can get 37 00:02:20,360 --> 00:02:24,920 Speaker 3: this case to trial somewhere around the seventy day period 38 00:02:25,000 --> 00:02:29,720 Speaker 3: required by the Speedy Trial Act. I think realistically he 39 00:02:29,800 --> 00:02:33,600 Speaker 3: could get this case to trial in January or February, 40 00:02:34,080 --> 00:02:38,720 Speaker 3: prior to the DA investigation in the trial that's scheduled 41 00:02:38,880 --> 00:02:41,720 Speaker 3: for March, So I think that is part of what 42 00:02:41,840 --> 00:02:44,920 Speaker 3: he's looking to do to get a verdict, a guilty 43 00:02:45,000 --> 00:02:51,240 Speaker 3: verdict prior to March. Secondly, in terms of the politics 44 00:02:51,320 --> 00:02:55,800 Speaker 3: of this entire matter, one indictment coming down after another 45 00:02:55,880 --> 00:03:03,600 Speaker 3: indictment sooner or later, Republican Senator House members, people who 46 00:03:03,680 --> 00:03:06,720 Speaker 3: are running for governor and the Republican ticket have got 47 00:03:06,760 --> 00:03:10,120 Speaker 3: to ask themselves do they really want to expose themselves 48 00:03:10,480 --> 00:03:13,799 Speaker 3: to having the head of their ticket under indictment, which 49 00:03:13,840 --> 00:03:16,919 Speaker 3: will ultimately in the next ten to fifteen days will 50 00:03:17,000 --> 00:03:20,080 Speaker 3: be about four times And do they really want to 51 00:03:20,200 --> 00:03:24,079 Speaker 3: answer questions that are going to be based on specific 52 00:03:24,240 --> 00:03:29,959 Speaker 3: facts in all of these indictments that are absolutely devastating 53 00:03:30,120 --> 00:03:33,840 Speaker 3: for Donald Trump and will be devastating for the Republican 54 00:03:33,919 --> 00:03:36,800 Speaker 3: Party members to try to deal with over the course 55 00:03:36,840 --> 00:03:38,000 Speaker 3: of the next election. 56 00:03:39,040 --> 00:03:40,960 Speaker 1: Not that he doesn't have enough on his plate already 57 00:03:40,960 --> 00:03:43,400 Speaker 1: from a legal perspective, but what do we know about 58 00:03:43,480 --> 00:03:47,160 Speaker 1: what may happen from the Georgia Court in terms of timing, 59 00:03:47,160 --> 00:03:51,680 Speaker 1: because that's also another big election issue for him. 60 00:03:52,040 --> 00:03:55,240 Speaker 3: Well exactly, and that one, unlike the one that was 61 00:03:55,320 --> 00:03:58,960 Speaker 3: just just came down yesterday, is likely to include a 62 00:03:59,000 --> 00:04:04,400 Speaker 3: whole number of defendants. Fannie Willis, who is a expert 63 00:04:04,480 --> 00:04:08,880 Speaker 3: in the Georgia Rico Statute, which simply allows her to 64 00:04:08,960 --> 00:04:12,680 Speaker 3: bring in many crimes as one crime and be able 65 00:04:12,720 --> 00:04:16,560 Speaker 3: to tell the entire story of Trump's efforts to undermine 66 00:04:16,600 --> 00:04:19,400 Speaker 3: the vote in Georgia. I think is going to be 67 00:04:19,440 --> 00:04:22,640 Speaker 3: a real blockbuster in the sense that a lot of 68 00:04:22,680 --> 00:04:26,320 Speaker 3: the people that were named as unindicted co conspirators in 69 00:04:26,400 --> 00:04:29,800 Speaker 3: this most recent indictment are going to be named as 70 00:04:29,839 --> 00:04:35,719 Speaker 3: defendants in the Fulton County indictment. It's kind of interesting 71 00:04:35,800 --> 00:04:38,920 Speaker 3: because I know that I think that Fannie Willis has 72 00:04:38,920 --> 00:04:43,040 Speaker 3: said that she has not communicated with doj or Jack 73 00:04:43,080 --> 00:04:47,080 Speaker 3: Smith on this indictment. But this is not a typical 74 00:04:47,160 --> 00:04:51,800 Speaker 3: of what happens sometimes where certain defendants in certain matters 75 00:04:51,839 --> 00:04:54,160 Speaker 3: are divided up. And I think what you're going to 76 00:04:54,240 --> 00:04:57,440 Speaker 3: have here is this federal indictment that goes after Donald 77 00:04:57,480 --> 00:05:01,400 Speaker 3: Trump himself. Maybe there'll be other federal indictment, but certainly 78 00:05:01,760 --> 00:05:04,680 Speaker 3: the Georgia indictment is going to include a lot of 79 00:05:04,720 --> 00:05:09,800 Speaker 3: these same unindicted co conspirators and more and cover more 80 00:05:09,880 --> 00:05:12,960 Speaker 3: Georgia centric types of activities. 81 00:05:13,640 --> 00:05:15,800 Speaker 1: Hey, Nick, you know, when I look at the legal 82 00:05:16,279 --> 00:05:18,800 Speaker 1: representation for former President Trump, I don't see a lot 83 00:05:18,800 --> 00:05:21,960 Speaker 1: of white shoe law firms that names that I recognize. 84 00:05:22,800 --> 00:05:26,800 Speaker 1: Who are his attorneys? Are they any good? What do 85 00:05:26,839 --> 00:05:29,120 Speaker 1: we know about them? Can he mount in all of 86 00:05:29,160 --> 00:05:32,479 Speaker 1: these various cases? Can he mount the reasonable defense? 87 00:05:33,240 --> 00:05:35,240 Speaker 3: Well? I mean that's a real problem for him. I mean, 88 00:05:35,279 --> 00:05:39,520 Speaker 3: his big problem is that attorneys don't like to sign 89 00:05:39,560 --> 00:05:42,120 Speaker 3: on with Donald Trump, especially big law firms, don't want 90 00:05:42,160 --> 00:05:46,520 Speaker 3: their names besmirched. Every attorney that's been connected with Donald 91 00:05:46,520 --> 00:05:49,680 Speaker 3: Trump in some way has fallen into the mud with 92 00:05:49,720 --> 00:05:55,000 Speaker 3: Donald Trump. Secondly, he doesn't pay his billsop, And that 93 00:05:55,160 --> 00:05:57,360 Speaker 3: is a huge problem. If you're a lawyer and you've 94 00:05:57,360 --> 00:06:00,080 Speaker 3: got to devote the amount of time you need to 95 00:06:00,160 --> 00:06:02,360 Speaker 3: vote to a case like this, you don't want to 96 00:06:02,400 --> 00:06:03,599 Speaker 3: do it as a charity case. 97 00:06:04,720 --> 00:06:06,800 Speaker 4: You know, you had mentioned, Nick about the idea of 98 00:06:06,880 --> 00:06:09,640 Speaker 4: keeping this lean and mean and just focused on Trump. 99 00:06:10,400 --> 00:06:13,320 Speaker 4: I was poking around on I guess we'll call it 100 00:06:13,560 --> 00:06:17,680 Speaker 4: X now not Twitter, and saw that Ginny Thomas was 101 00:06:17,760 --> 00:06:22,320 Speaker 4: trending this morning as possibly one of the unnamed co conspirators. 102 00:06:22,360 --> 00:06:25,920 Speaker 4: Wonder if you would venture to, you know, think out 103 00:06:25,960 --> 00:06:28,120 Speaker 4: loud here of who the others might be, or if 104 00:06:28,160 --> 00:06:30,159 Speaker 4: she could, if there's a case that she could be 105 00:06:30,160 --> 00:06:30,599 Speaker 4: one of them. 106 00:06:31,400 --> 00:06:33,760 Speaker 3: I don't think so. I mean I went through the 107 00:06:33,880 --> 00:06:36,839 Speaker 3: list in pretty much. I mean, Rudy Giuliani is clearly 108 00:06:36,920 --> 00:06:44,080 Speaker 3: co conspirator one, the Sydney Powell is I think co 109 00:06:44,080 --> 00:06:48,920 Speaker 3: conspirator three. You've got John Eastman, who I think is 110 00:06:49,000 --> 00:06:53,839 Speaker 3: co conspirator number two. I don't see Ginny Thomas being 111 00:06:54,000 --> 00:06:57,280 Speaker 3: in the list there of people that are part of this. 112 00:06:58,440 --> 00:07:00,560 Speaker 3: I mean, she was on the pariah free of this. 113 00:07:00,720 --> 00:07:03,800 Speaker 3: I don't think she was a major player. She had 114 00:07:04,080 --> 00:07:08,760 Speaker 3: put in her two cents with Mike Mark Meadows, Donald 115 00:07:08,760 --> 00:07:12,920 Speaker 3: Trump's chief of staff, but no, I would be surprised 116 00:07:12,960 --> 00:07:15,400 Speaker 3: if she turns out to be a big player in 117 00:07:15,440 --> 00:07:16,120 Speaker 3: this indictment. 118 00:07:16,400 --> 00:07:18,000 Speaker 4: Anything about Clarence. 119 00:07:19,440 --> 00:07:21,560 Speaker 3: I don't think so. I mean, there is a reference 120 00:07:21,640 --> 00:07:25,280 Speaker 3: there where they tried to get One of their plans 121 00:07:25,360 --> 00:07:27,640 Speaker 3: was to try and get an order from the Supreme 122 00:07:27,760 --> 00:07:31,760 Speaker 3: Court at some point, and we know that what they 123 00:07:31,760 --> 00:07:34,080 Speaker 3: were trying to do was set this up so Clarence 124 00:07:34,160 --> 00:07:37,400 Speaker 3: Thomas I would issue an order that would give them 125 00:07:37,440 --> 00:07:40,320 Speaker 3: some kind of credibility in terms of what they were doing. 126 00:07:40,880 --> 00:07:43,160 Speaker 3: So I think that's going to come into play here. 127 00:07:43,200 --> 00:07:46,800 Speaker 3: But again I don't think Clarence Thomas is going to 128 00:07:46,800 --> 00:07:49,440 Speaker 3: be a big player and somebody to be watching it 129 00:07:49,520 --> 00:07:50,200 Speaker 3: in this case. 130 00:07:50,680 --> 00:07:52,960 Speaker 1: Now people to watch are really. 131 00:07:53,240 --> 00:07:57,840 Speaker 3: Mark Meadows and others, the lawyers who were the in 132 00:07:57,920 --> 00:08:02,080 Speaker 3: house counsel, Mike Penn. I mean, keep in mind, the 133 00:08:02,160 --> 00:08:05,080 Speaker 3: witnesses in this case are all going to be Donald 134 00:08:05,160 --> 00:08:10,360 Speaker 3: Trump employees and people that work for Donald Trump. These 135 00:08:10,400 --> 00:08:15,440 Speaker 3: are not left wing crazy ATIFA people. This is Donald 136 00:08:15,520 --> 00:08:19,400 Speaker 3: Trump's own courtrey of people. I mean, these are his 137 00:08:19,640 --> 00:08:21,800 Speaker 3: pals that are testifying against him. 138 00:08:22,520 --> 00:08:24,880 Speaker 1: Nick, great stuff. As always, I'm not sure there's a 139 00:08:24,920 --> 00:08:30,000 Speaker 1: better voice on this than Nick Ackerman, former assistant Special 140 00:08:30,040 --> 00:08:32,960 Speaker 1: Watergate prosecutor. Nick Ackerman, Thank you so much for your 141 00:08:33,040 --> 00:08:35,560 Speaker 1: time for this unfolding issue, and it just seems like 142 00:08:35,600 --> 00:08:37,920 Speaker 1: it's a never ending There are so many layers it's 143 00:08:37,920 --> 00:08:40,400 Speaker 1: hard to keep track of. I find some of the 144 00:08:40,840 --> 00:08:43,080 Speaker 1: helpful reporting, at least for me, when I kind of 145 00:08:43,280 --> 00:08:45,960 Speaker 1: spend my time looking at this stuff, it's just reminding 146 00:08:46,120 --> 00:08:48,440 Speaker 1: kind of what's out there, where are we what stage 147 00:08:48,440 --> 00:08:49,760 Speaker 1: are we at in these various things? 148 00:08:49,840 --> 00:08:51,720 Speaker 4: It's so hard to keep track of and to think 149 00:08:51,760 --> 00:08:54,920 Speaker 4: that this is somebody who might be elected president in 150 00:08:54,960 --> 00:08:57,480 Speaker 4: a little over a year from now, and try to 151 00:08:57,520 --> 00:09:00,360 Speaker 4: keep track of all the charges against him. I'm just 152 00:09:00,400 --> 00:09:01,240 Speaker 4: as lost as you are. 153 00:09:01,360 --> 00:09:03,640 Speaker 1: I will keep up with it. This is Bloomberg. 154 00:09:05,320 --> 00:09:09,199 Speaker 5: You're listening to the Team Kenshar Live program Bloomberg Markets 155 00:09:09,200 --> 00:09:12,320 Speaker 5: weekdays at ten am Eastern on Bloomberg dot Com, the 156 00:09:12,400 --> 00:09:15,520 Speaker 5: iHeartRadio app, and the Bloomberg Business App, or listen on 157 00:09:15,600 --> 00:09:17,559 Speaker 5: demand wherever you get your podcasts. 158 00:09:20,160 --> 00:09:22,559 Speaker 1: When I saw the news that Fitch downgraded the US government, 159 00:09:22,760 --> 00:09:25,440 Speaker 1: I was surprised. It just didn't seem very patriotic to me. 160 00:09:26,160 --> 00:09:28,480 Speaker 1: But I'll tell you who was not surprised, and that's 161 00:09:28,520 --> 00:09:33,319 Speaker 1: Ira Jersey and his team. IRA's the chief rate strategist 162 00:09:33,320 --> 00:09:36,720 Speaker 1: at Bloomberg Intelligence. He wrote back on May twenty fifth 163 00:09:37,000 --> 00:09:41,320 Speaker 1: that quote political partisanship causing a rolling debt ceiling crisis 164 00:09:41,360 --> 00:09:45,040 Speaker 1: and continued deficits well over three percent of GDP doesn't 165 00:09:45,200 --> 00:09:48,880 Speaker 1: suggest that a triple A rating is warranted. Iraight, you 166 00:09:48,920 --> 00:09:51,840 Speaker 1: were so right here. I mean, what's fitched. I mean 167 00:09:51,840 --> 00:09:54,400 Speaker 1: they're joining some other rating ahgs that have already done it. 168 00:09:54,440 --> 00:09:57,319 Speaker 1: But that doesn't seem very patriotic. What's going on out there? 169 00:09:58,320 --> 00:10:01,920 Speaker 6: Yeah, well, so it's been to years since SMP downgraded 170 00:10:01,920 --> 00:10:04,280 Speaker 6: the US from Triple A to double A plus and 171 00:10:04,520 --> 00:10:07,200 Speaker 6: almost of the week actually because that was Honor about 172 00:10:07,200 --> 00:10:10,800 Speaker 6: August sixth that that SMP did it. So I think 173 00:10:10,840 --> 00:10:14,960 Speaker 6: they just they saw the Treasury borrowing estimate from Monday 174 00:10:15,040 --> 00:10:17,360 Speaker 6: night that came out at three o'clock, where the Treasury 175 00:10:17,360 --> 00:10:19,800 Speaker 6: Department said, hey, we're going to borrow over a trillion 176 00:10:19,880 --> 00:10:23,920 Speaker 6: dollars just this quarter, just this current quarter, and uh, 177 00:10:24,080 --> 00:10:25,800 Speaker 6: and we expect to have to borrow a lot more 178 00:10:25,880 --> 00:10:30,280 Speaker 6: later so and Fitch between that and between the you know, 179 00:10:30,320 --> 00:10:33,080 Speaker 6: another debt sealing crisis that you know was averted again 180 00:10:33,120 --> 00:10:36,160 Speaker 6: at the last minute back in June, you know, they 181 00:10:36,280 --> 00:10:38,480 Speaker 6: just felt that the US is not yet is not 182 00:10:38,559 --> 00:10:41,680 Speaker 6: triple A anymore. And quite frankly, I can't blame them 183 00:10:42,080 --> 00:10:44,400 Speaker 6: because under you know, when you look at all of 184 00:10:44,440 --> 00:10:46,720 Speaker 6: the triple A rated countries around the world, there's not 185 00:10:46,840 --> 00:10:49,800 Speaker 6: that many, and you know, the US debt burden doesn't 186 00:10:49,800 --> 00:10:52,360 Speaker 6: look anything like Germany's, for example, which is one of 187 00:10:52,400 --> 00:10:55,760 Speaker 6: the one of the only triple A rated sovereigns left 188 00:10:55,800 --> 00:10:58,720 Speaker 6: in the in the world. So you know, maybe if 189 00:10:58,760 --> 00:11:01,920 Speaker 6: if we were willing to get rid of this debt 190 00:11:01,920 --> 00:11:04,160 Speaker 6: ceiling problem that that we keep on having to do 191 00:11:04,200 --> 00:11:07,079 Speaker 6: every two years, maybe Fitch would have had a different opinion. 192 00:11:07,160 --> 00:11:10,160 Speaker 6: But you know, I can't say that it's a huge 193 00:11:10,200 --> 00:11:12,160 Speaker 6: surprise that had happened. You know, maybe the timing a 194 00:11:12,160 --> 00:11:14,800 Speaker 6: little bit we expected it to happen, maybe after this 195 00:11:14,880 --> 00:11:17,800 Speaker 6: morning's announcement, but you know, it's still not a huge 196 00:11:18,320 --> 00:11:20,240 Speaker 6: not a huge surprise. I don't think markets care very 197 00:11:20,320 --> 00:11:23,160 Speaker 6: much about that. I think there the market, the treasury 198 00:11:23,200 --> 00:11:25,960 Speaker 6: market is reacting a lot more to the higher supply 199 00:11:26,520 --> 00:11:28,319 Speaker 6: that was announced just this morning. 200 00:11:28,720 --> 00:11:28,880 Speaker 3: Right. 201 00:11:28,960 --> 00:11:31,600 Speaker 4: That seems like the timing is really the biggest question 202 00:11:31,640 --> 00:11:33,760 Speaker 4: mark around all this on the in terms of the 203 00:11:33,800 --> 00:11:36,920 Speaker 4: market reaction that we're seeing. And so you had flagged 204 00:11:36,920 --> 00:11:38,600 Speaker 4: in your note I or that just came out that 205 00:11:39,360 --> 00:11:42,600 Speaker 4: the treasury coupons being a bit of a factor in this. 206 00:11:43,320 --> 00:11:47,160 Speaker 4: I was even wondering too, when when credit agencies issue 207 00:11:47,480 --> 00:11:51,120 Speaker 4: of ratings watch those are typically resolved in what three 208 00:11:51,120 --> 00:11:53,280 Speaker 4: to six months, So I guess we're kind of coming 209 00:11:53,400 --> 00:11:55,120 Speaker 4: up on that period. So what do you think was 210 00:11:55,120 --> 00:11:57,360 Speaker 4: really the principal driver in the timing here. 211 00:11:58,160 --> 00:12:01,280 Speaker 6: Yeah, so sixty ish ninety. I think it was really 212 00:12:01,360 --> 00:12:04,520 Speaker 6: the fiscal outlook that kind of drove Fitch over the edge. 213 00:12:05,120 --> 00:12:07,680 Speaker 6: Obviously they were thinking about it for a while, and 214 00:12:07,760 --> 00:12:10,719 Speaker 6: it's not unusual for the rating agencies to come out 215 00:12:10,760 --> 00:12:14,040 Speaker 6: with their new sovereign ratings over the summer, you know. Again, 216 00:12:14,120 --> 00:12:17,040 Speaker 6: like SMP downgraded the US right around the debt ceiling 217 00:12:17,120 --> 00:12:20,040 Speaker 6: issue that we had in twenty eleven, but this is 218 00:12:20,080 --> 00:12:22,000 Speaker 6: also the time when they were fresh their rating, so 219 00:12:22,040 --> 00:12:25,880 Speaker 6: their annual review of sovereign debt ratings. So again, like, 220 00:12:25,960 --> 00:12:28,560 Speaker 6: I don't think the precise timing was a little bit 221 00:12:28,600 --> 00:12:30,440 Speaker 6: of a surprise, but I think the general timing not 222 00:12:30,559 --> 00:12:33,040 Speaker 6: quite as much. Right, So sixty days ish after they 223 00:12:34,160 --> 00:12:38,520 Speaker 6: initiated their watches, isn't that that surprising? The market reaction 224 00:12:38,600 --> 00:12:41,840 Speaker 6: to your issue about talking about coupons, you know, the 225 00:12:42,000 --> 00:12:44,960 Speaker 6: ten year started to sell off and a lot of 226 00:12:44,960 --> 00:12:47,480 Speaker 6: the treasury started to sell off after the stronger than 227 00:12:47,520 --> 00:12:50,560 Speaker 6: expected ADP report. But some of the details of the 228 00:12:50,600 --> 00:12:54,439 Speaker 6: treasury refunding announcement were interesting in that the government decided 229 00:12:54,480 --> 00:12:56,640 Speaker 6: that it was going to increase the amount of ten 230 00:12:56,720 --> 00:12:58,880 Speaker 6: yere bombs ten year notes that it's going to issue 231 00:12:59,080 --> 00:13:03,680 Speaker 6: by three billion dollars this month, just next week. That 232 00:13:03,840 --> 00:13:05,440 Speaker 6: was a little bit more than I think most people 233 00:13:05,520 --> 00:13:08,360 Speaker 6: were expecting. We were all expecting increases everywhere. We knew 234 00:13:08,360 --> 00:13:09,920 Speaker 6: that the government was going to have to do that, 235 00:13:10,280 --> 00:13:13,440 Speaker 6: but they chose specifically to increase the ten year more 236 00:13:13,480 --> 00:13:16,160 Speaker 6: than they did the thirty year, for example. And I 237 00:13:16,160 --> 00:13:17,920 Speaker 6: think that's one of the reasons why you're seeing ten 238 00:13:18,000 --> 00:13:21,360 Speaker 6: year yields sell off a little bit more than other 239 00:13:21,400 --> 00:13:22,600 Speaker 6: places along the yield curve. 240 00:13:23,000 --> 00:13:26,400 Speaker 1: So Ira Liz McCormick a Bloomberg News is reporting this 241 00:13:26,440 --> 00:13:28,559 Speaker 1: morning that the Treasury said it will sell one hundred 242 00:13:28,600 --> 00:13:30,960 Speaker 1: and three billion dollars of longer term securities that it's 243 00:13:30,960 --> 00:13:33,960 Speaker 1: so called quarterly refunding auctions next week. And I got 244 00:13:33,960 --> 00:13:35,600 Speaker 1: to tell you, Ira, if I get a phone call 245 00:13:35,640 --> 00:13:37,640 Speaker 1: from the Treasury asking me to pony up, I'm going 246 00:13:37,679 --> 00:13:39,959 Speaker 1: to pass. I gotta tell you a little tapped out here. 247 00:13:40,000 --> 00:13:42,880 Speaker 1: But my question to you is, given this downgrade, will 248 00:13:42,880 --> 00:13:44,960 Speaker 1: that change who shows up next week to bid on 249 00:13:45,000 --> 00:13:46,520 Speaker 1: these government bonds? 250 00:13:47,120 --> 00:13:51,040 Speaker 6: Yeah, it probably won't, you know. I think that the 251 00:13:51,080 --> 00:13:53,439 Speaker 6: single one of the biggest fallacies that I've been talking 252 00:13:53,480 --> 00:13:56,199 Speaker 6: with customers about this morning is that there's this idea 253 00:13:56,280 --> 00:13:59,080 Speaker 6: that there's a lot of mandates and people who own 254 00:13:59,160 --> 00:14:03,600 Speaker 6: treasuries because their triple A. So most mandates say US 255 00:14:03,760 --> 00:14:08,120 Speaker 6: government securities, securities of agency of US government agencies, so 256 00:14:08,200 --> 00:14:11,000 Speaker 6: Fanny May, Freddie Mack, and the home loan banks, and 257 00:14:11,360 --> 00:14:14,880 Speaker 6: investment grade corporate bonds. So even the triple A that 258 00:14:15,000 --> 00:14:18,040 Speaker 6: can only own triple A or double A mandates, they 259 00:14:18,080 --> 00:14:22,680 Speaker 6: still specify treasuries and agency mortgages as their own asset class. 260 00:14:22,960 --> 00:14:27,680 Speaker 6: So the ratings are relevant for those for those particular instruments. Now, 261 00:14:27,800 --> 00:14:29,320 Speaker 6: you know, if the US were to be rated to 262 00:14:29,560 --> 00:14:32,680 Speaker 6: double B or something, maybe that would change the way 263 00:14:32,680 --> 00:14:35,080 Speaker 6: that people change their outlook. But when you look at 264 00:14:35,120 --> 00:14:37,640 Speaker 6: a country like Japan, for example, they have a much 265 00:14:37,720 --> 00:14:40,800 Speaker 6: higher debt to GDP ratio than the US, they are 266 00:14:40,880 --> 00:14:43,920 Speaker 6: slightly lower rated, and their yields on their bonds are 267 00:14:43,960 --> 00:14:46,480 Speaker 6: significantly lower. Now big part of that is because the 268 00:14:46,520 --> 00:14:48,400 Speaker 6: Bank of Japan has been buying a lot of bonds, 269 00:14:48,720 --> 00:14:51,440 Speaker 6: but they still probably even without the Bank of Japan 270 00:14:51,480 --> 00:14:54,480 Speaker 6: and the market probably wouldn't have yields at five percent 271 00:14:54,600 --> 00:14:57,160 Speaker 6: or four and a half percent. And you know, similar 272 00:14:57,200 --> 00:14:58,800 Speaker 6: to parts of the US curve. 273 00:14:59,040 --> 00:15:03,200 Speaker 4: So Ara, I know that when credit agencies are what 274 00:15:03,240 --> 00:15:06,240 Speaker 4: they're rating is the credit worthiness of the borrower. 275 00:15:06,360 --> 00:15:07,160 Speaker 1: And it's just. 276 00:15:07,240 --> 00:15:10,400 Speaker 4: Coming at an interesting time here, when the economy is 277 00:15:10,440 --> 00:15:13,080 Speaker 4: doing really well and you're hearing all these more calls 278 00:15:13,120 --> 00:15:15,720 Speaker 4: that more people are optimistic that we're going to avert 279 00:15:15,760 --> 00:15:18,360 Speaker 4: a recession. The soft landing case has never looked better. 280 00:15:18,680 --> 00:15:21,160 Speaker 4: You know, to someone who maybe is having a tough 281 00:15:21,160 --> 00:15:24,280 Speaker 4: time squaring the two, what would you say to them. 282 00:15:24,000 --> 00:15:25,920 Speaker 6: Well, I think there's two pieces to this. On the 283 00:15:25,920 --> 00:15:28,120 Speaker 6: fiscal side of things. I think one is we've seen 284 00:15:28,240 --> 00:15:32,360 Speaker 6: pretty massive wage gains by the household sector when you 285 00:15:32,400 --> 00:15:34,040 Speaker 6: go back and you look at what happened in twenty 286 00:15:34,080 --> 00:15:36,040 Speaker 6: twenty two and to so far in twenty twenty three, 287 00:15:36,400 --> 00:15:40,840 Speaker 6: but that has not really translated into significantly higher tax revenues. 288 00:15:40,960 --> 00:15:45,840 Speaker 6: And so, because you still have fiscal spending from the 289 00:15:46,400 --> 00:15:48,840 Speaker 6: Inflation Reduction Act as well, still a little bit of 290 00:15:48,880 --> 00:15:52,160 Speaker 6: the twenty twenty one stimulus still being pushed into the system, 291 00:15:52,560 --> 00:15:55,160 Speaker 6: you have still deficits that are over one and a 292 00:15:55,200 --> 00:15:57,440 Speaker 6: half trillion dollars a year and probably will be in 293 00:15:57,480 --> 00:16:01,400 Speaker 6: fiscal twenty twenty four as well. So unless you wind 294 00:16:01,480 --> 00:16:05,640 Speaker 6: up unless that good economy really winds up pushing up 295 00:16:05,680 --> 00:16:09,120 Speaker 6: tax revenue significantly, you're going to continue to have a 296 00:16:09,160 --> 00:16:12,600 Speaker 6: pretty not a good fiscal situation. On top of that, 297 00:16:12,640 --> 00:16:15,440 Speaker 6: you have more and more baby boomers retiring. That's forcing 298 00:16:15,760 --> 00:16:17,960 Speaker 6: more and more money out of the social security system. 299 00:16:18,280 --> 00:16:21,200 Speaker 6: The social security now has to be funded. So whereas 300 00:16:21,920 --> 00:16:24,160 Speaker 6: you know, just a couple of years ago, your social 301 00:16:24,160 --> 00:16:26,840 Speaker 6: Security taxes went to the people who were retired, that's 302 00:16:26,880 --> 00:16:29,080 Speaker 6: not the case anymore. It just doesn't cover it. The 303 00:16:29,160 --> 00:16:32,080 Speaker 6: soci security taxes that we're collecting today doesn't cover one 304 00:16:32,120 --> 00:16:34,800 Speaker 6: hundred percent of the outflows of that program. So we 305 00:16:34,920 --> 00:16:37,920 Speaker 6: have to figure out some way either to raise taxes 306 00:16:38,080 --> 00:16:40,320 Speaker 6: or to raise government debt. Those are the only two 307 00:16:40,360 --> 00:16:42,800 Speaker 6: ways to get those mandates fully funded. 308 00:16:43,000 --> 00:16:44,640 Speaker 1: Ye I'm starting to pay a little bit more attention 309 00:16:44,720 --> 00:16:48,120 Speaker 1: to that whole social security discussion than maybe I did 310 00:16:48,200 --> 00:16:50,200 Speaker 1: a few years ago. I don't know, Maybe it's just 311 00:16:50,240 --> 00:16:56,240 Speaker 1: me Ira. So when we have these auctions next week, 312 00:16:56,480 --> 00:16:58,640 Speaker 1: the government's gonna have to pay up more. Well, I 313 00:16:58,680 --> 00:17:00,320 Speaker 1: guess my question is will they have to pay more 314 00:17:00,320 --> 00:17:02,560 Speaker 1: than they did, say yesterday before the downgrade. 315 00:17:03,760 --> 00:17:06,240 Speaker 6: Well, assuming yield stay where they are right now, the 316 00:17:06,280 --> 00:17:07,879 Speaker 6: answer is yes, and I think that that's one of 317 00:17:07,880 --> 00:17:10,080 Speaker 6: the reasons you're seeing the sell off today is just 318 00:17:10,160 --> 00:17:12,239 Speaker 6: this idea that you know, yeah, maybe a little bit 319 00:17:12,240 --> 00:17:14,760 Speaker 6: on Fitch, but just the idea that we are going 320 00:17:14,840 --> 00:17:17,720 Speaker 6: to have more supply, you know, next year. Next week 321 00:17:17,720 --> 00:17:20,200 Speaker 6: we get the three year auction, ten year, and thirty year, 322 00:17:20,520 --> 00:17:22,560 Speaker 6: and that's a lot of duration. So that's a lot 323 00:17:22,600 --> 00:17:27,160 Speaker 6: of market risk that investors have to absorb. Now, we've 324 00:17:27,160 --> 00:17:30,600 Speaker 6: seen reasonably decent auctions. They've been you know, somewhat mixed, 325 00:17:30,600 --> 00:17:33,240 Speaker 6: but we saw a pretty good ten year auction last month. 326 00:17:33,280 --> 00:17:37,919 Speaker 6: So the question is will that relate today this week. 327 00:17:38,160 --> 00:17:40,280 Speaker 6: Keep in mind, too, is that you have old ten 328 00:17:40,320 --> 00:17:43,560 Speaker 6: year notes maturing on the fifteenth of the month that 329 00:17:43,600 --> 00:17:47,400 Speaker 6: were issued ten years ago, so those so people who 330 00:17:47,440 --> 00:17:50,000 Speaker 6: own some of those and held them to maturity might 331 00:17:50,000 --> 00:17:52,360 Speaker 6: think about reinvesting some of that into the current ten 332 00:17:52,400 --> 00:17:54,960 Speaker 6: year notes. So refunding auctions tend to be a somewhat 333 00:17:54,960 --> 00:17:58,560 Speaker 6: different animal than the auctions that you get in the 334 00:17:58,640 --> 00:18:02,320 Speaker 6: subsequent couple of months. And obviously this three billion dollar 335 00:18:02,440 --> 00:18:05,040 Speaker 6: larger size I think could have an effect. So I 336 00:18:05,800 --> 00:18:08,440 Speaker 6: think your risk, Paul, is that you wind up we'll 337 00:18:08,480 --> 00:18:11,240 Speaker 6: see some of higher yields at next week's auction because 338 00:18:11,240 --> 00:18:12,240 Speaker 6: of the excess supply. 339 00:18:12,520 --> 00:18:15,639 Speaker 1: All right, Ira, good stuff as always, Ira Jersey, chief 340 00:18:15,760 --> 00:18:19,960 Speaker 1: US Interest rates strategist for Bloomberg Intelligence, chief soccer strategist 341 00:18:20,080 --> 00:18:25,560 Speaker 1: for Bloomberg LP. Real Central, New Jersey is his club. 342 00:18:25,640 --> 00:18:27,919 Speaker 1: As they say, you're listening to the tape. 343 00:18:28,040 --> 00:18:31,320 Speaker 5: Catch our live program Bloomberg Markets weekdays at ten am 344 00:18:31,400 --> 00:18:35,200 Speaker 5: Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, 345 00:18:35,240 --> 00:18:38,000 Speaker 5: and the Bloomberg Business App. You can also listen live 346 00:18:38,080 --> 00:18:41,240 Speaker 5: on Amazon Alexa from our flagship New York station. Just 347 00:18:41,320 --> 00:18:45,240 Speaker 5: say Alexa, play Bloomberg eleven thirty, Mollie. 348 00:18:45,040 --> 00:18:47,520 Speaker 1: Smith, Paul Sweeney here in our Bloomberg Interactive Brookers Studio 349 00:18:48,320 --> 00:18:51,119 Speaker 1: also doing that YouTube thing, so just head over to YouTube. 350 00:18:51,160 --> 00:18:54,600 Speaker 1: And I've been in the search Bloomberg Global News in 351 00:18:54,600 --> 00:18:57,280 Speaker 1: that old Bloomberg Global Markets or bloom Bloomberg Global News. 352 00:18:57,280 --> 00:18:59,480 Speaker 1: I think gets it to you. That'll bring it to 353 00:18:59,520 --> 00:19:02,959 Speaker 1: the feed there. So you know, I recently closed on 354 00:19:03,320 --> 00:19:06,840 Speaker 1: the Jersey Shore estate the compound, if you will, and 355 00:19:06,920 --> 00:19:09,800 Speaker 1: my mortgage had a six handle and I was not happy. 356 00:19:10,200 --> 00:19:12,840 Speaker 1: Now I'm looking at the bank rate thirty year mortgage 357 00:19:12,920 --> 00:19:15,640 Speaker 1: rate seven point three one percent. 358 00:19:15,800 --> 00:19:16,440 Speaker 4: You got a deal. 359 00:19:16,520 --> 00:19:18,480 Speaker 1: I got a deal, I gotta deal. You got closed 360 00:19:18,680 --> 00:19:22,600 Speaker 1: a victory, Yes, exactly. Now, now what do we do? 361 00:19:22,680 --> 00:19:24,440 Speaker 1: I mean, what's this market doing. Nobody wants to get 362 00:19:24,440 --> 00:19:26,920 Speaker 1: out of their house here, some he chief economist of 363 00:19:26,960 --> 00:19:29,280 Speaker 1: core Logic, joins us. Some give us a lay of 364 00:19:29,320 --> 00:19:32,000 Speaker 1: the land, of the kind of the residential real estate 365 00:19:32,040 --> 00:19:35,199 Speaker 1: market today in a world where a thirty year fixes 366 00:19:35,240 --> 00:19:36,280 Speaker 1: seven point three percent. 367 00:19:37,800 --> 00:19:40,560 Speaker 7: Yeah, like you said, nobody wants to move at the moment. 368 00:19:40,680 --> 00:19:44,240 Speaker 7: And so residential housing market is really suffering, particularly the 369 00:19:44,280 --> 00:19:48,199 Speaker 7: existing market, because on the new home side, builders and 370 00:19:48,240 --> 00:19:51,720 Speaker 7: developers can they can step in and provide some mortgage 371 00:19:51,800 --> 00:19:55,359 Speaker 7: rate buydown offers. So there's sort of a story of 372 00:19:55,400 --> 00:19:59,000 Speaker 7: two markets still one where there is no inventory because 373 00:19:59,080 --> 00:20:02,320 Speaker 7: existing inventory is locked up, and the other one where 374 00:20:02,400 --> 00:20:05,480 Speaker 7: there is much more movement. And that's where where there's 375 00:20:06,000 --> 00:20:07,720 Speaker 7: more new home construction. 376 00:20:08,560 --> 00:20:10,680 Speaker 4: Yeah, so we had a story the other day. I 377 00:20:10,840 --> 00:20:15,400 Speaker 4: was taking a survey from Zillow and looking at kind 378 00:20:15,400 --> 00:20:18,199 Speaker 4: of pegging five percent as the mortgage rate. That's the 379 00:20:18,240 --> 00:20:22,639 Speaker 4: tipping point of if you're below five percent, you're twice 380 00:20:22,680 --> 00:20:25,000 Speaker 4: as likely to hold on to your home. But if 381 00:20:25,000 --> 00:20:28,200 Speaker 4: you're above five percent, that's more when you're likely to sell. 382 00:20:28,240 --> 00:20:30,199 Speaker 4: I mean, do you have you kind of drawn a 383 00:20:30,240 --> 00:20:32,720 Speaker 4: line in the sand of where you see people as 384 00:20:32,760 --> 00:20:34,920 Speaker 4: more likely to lean one way or the other? 385 00:20:36,200 --> 00:20:39,400 Speaker 7: Yeah, I mean I've seen surveys, a couple of surveys 386 00:20:39,800 --> 00:20:42,640 Speaker 7: to that extent showing that five and a half percent 387 00:20:42,760 --> 00:20:44,959 Speaker 7: is the magic rate at which you know, there's there 388 00:20:44,960 --> 00:20:48,320 Speaker 7: would be more people would be more willing to move. 389 00:20:48,520 --> 00:20:50,560 Speaker 7: So you know, I mean think about it this way. 390 00:20:50,680 --> 00:20:55,440 Speaker 7: You know, six ninety six percent of existing mortgages are 391 00:20:56,320 --> 00:20:59,960 Speaker 7: below six percent, So that's you know, such a special mark. 392 00:21:00,960 --> 00:21:04,680 Speaker 1: Excuse me, that makes me special being in that fort. 393 00:21:04,200 --> 00:21:08,680 Speaker 7: Yeah right, Well, I myself locked in at six point 394 00:21:08,680 --> 00:21:11,000 Speaker 7: three in March of this year, and I was very 395 00:21:11,080 --> 00:21:12,720 Speaker 7: unhappy about it. 396 00:21:13,440 --> 00:21:17,439 Speaker 1: So what does new construction need to do here? I mean, 397 00:21:17,480 --> 00:21:20,360 Speaker 1: it is just simply a situation where this is an 398 00:21:20,359 --> 00:21:23,760 Speaker 1: industry that requires more inventory. We need more housing. 399 00:21:25,320 --> 00:21:28,040 Speaker 7: Well, yes, that's definitely the case. I mean, when you 400 00:21:28,080 --> 00:21:31,320 Speaker 7: look at the you know, trend in terms of new 401 00:21:31,320 --> 00:21:35,280 Speaker 7: home construction over the last couple of decades, it peaked 402 00:21:35,359 --> 00:21:39,560 Speaker 7: right into going into the Great Recession, and then it dropped. 403 00:21:40,160 --> 00:21:43,880 Speaker 7: You know, some seventy percent, and there was trending very 404 00:21:44,000 --> 00:21:47,560 Speaker 7: very very gradually for the next decade, and it didn't 405 00:21:47,600 --> 00:21:49,840 Speaker 7: really pick up to the pace that it was pre 406 00:21:50,000 --> 00:21:54,280 Speaker 7: Great Recession until the pandemic started. So we have sort 407 00:21:54,320 --> 00:21:58,359 Speaker 7: of accumulated this almost two three four million. I mean, 408 00:21:58,320 --> 00:22:01,760 Speaker 7: it depends on what the estimate are looking at a 409 00:22:01,840 --> 00:22:06,520 Speaker 7: supply shortage until now that we're just trying to backfill 410 00:22:06,560 --> 00:22:07,520 Speaker 7: at this point. 411 00:22:07,720 --> 00:22:10,680 Speaker 4: And now we're seeing prices come back up again as well. 412 00:22:10,800 --> 00:22:14,119 Speaker 4: So even though people don't want to move home, prices 413 00:22:14,160 --> 00:22:15,200 Speaker 4: are still going up. 414 00:22:16,480 --> 00:22:18,439 Speaker 7: Yeah, I mean, so this is the thing. You know, 415 00:22:18,760 --> 00:22:21,960 Speaker 7: sellers are sitting still, but buyers are out there, you know, 416 00:22:22,119 --> 00:22:26,360 Speaker 7: and you know, we knew first time home buyers are 417 00:22:26,359 --> 00:22:29,560 Speaker 7: going to be active, particularly you know, those that are 418 00:22:30,080 --> 00:22:33,000 Speaker 7: the huge cohort that's coming on first time home buying age. 419 00:22:33,040 --> 00:22:35,119 Speaker 7: So they are out there, and we do still see 420 00:22:35,400 --> 00:22:39,520 Speaker 7: investor activity. We still see baby boomers wanting to migrate 421 00:22:39,560 --> 00:22:42,680 Speaker 7: at this point after they're retired. So the buyers are 422 00:22:42,720 --> 00:22:45,840 Speaker 7: out there and there is no inventory. So in our 423 00:22:46,000 --> 00:22:50,400 Speaker 7: latest Choo Logical Home Price Index, which was actually released yesterday, 424 00:22:50,800 --> 00:22:54,440 Speaker 7: it showed pivoting of that home price deceleration. So in 425 00:22:54,880 --> 00:22:57,320 Speaker 7: in February of last or the spring of last year, 426 00:22:57,359 --> 00:23:00,879 Speaker 7: home price growth peaked at over twenty percent, and it 427 00:23:01,080 --> 00:23:05,240 Speaker 7: dropped very quickly to one percent rate of growth a 428 00:23:05,320 --> 00:23:07,600 Speaker 7: couple of months ago. And now at this point it's 429 00:23:07,640 --> 00:23:11,080 Speaker 7: pivoting back up, and we're seeing home prices now for 430 00:23:11,240 --> 00:23:15,320 Speaker 7: four straight months accelerating on a monthly basis at a 431 00:23:15,320 --> 00:23:18,560 Speaker 7: faster pace than they usually do in spring home buying season. 432 00:23:18,920 --> 00:23:21,880 Speaker 7: So buyers are definitely putting pressure on home prices because 433 00:23:21,880 --> 00:23:24,080 Speaker 7: there's more of them out there than their sellers. 434 00:23:24,640 --> 00:23:26,600 Speaker 1: So I hate to ask this question because I've got 435 00:23:26,720 --> 00:23:29,640 Speaker 1: a bunch of them in my family. What did first 436 00:23:29,640 --> 00:23:31,760 Speaker 1: time home buyers do? What do the young folks do 437 00:23:31,800 --> 00:23:32,280 Speaker 1: these days? 438 00:23:33,119 --> 00:23:36,120 Speaker 7: Well, yeah, I mean it's very challenging for them. I think, 439 00:23:36,960 --> 00:23:40,480 Speaker 7: you know a lot of them are seeking places where 440 00:23:40,520 --> 00:23:44,200 Speaker 7: there is inventory. So hence we are seeing more home 441 00:23:44,240 --> 00:23:47,919 Speaker 7: sales activity in those markets with new home construction, and 442 00:23:47,960 --> 00:23:50,800 Speaker 7: those would be the markets in southeast and South. You know, 443 00:23:50,880 --> 00:23:53,800 Speaker 7: Texas always ranks among the top markets with in terms 444 00:23:53,800 --> 00:23:57,359 Speaker 7: of new construction. There is a lot of activity in Midwest, 445 00:23:57,400 --> 00:24:00,760 Speaker 7: for example, and now at this point northleast as well 446 00:24:00,800 --> 00:24:03,080 Speaker 7: as people are coming back into the office. But I 447 00:24:03,080 --> 00:24:06,200 Speaker 7: think what they're doing is they're buying, you know, wherever 448 00:24:06,240 --> 00:24:10,800 Speaker 7: they can. It may be further from the offices, further 449 00:24:10,880 --> 00:24:14,040 Speaker 7: from downtowns, but that's okay now because we can work 450 00:24:14,720 --> 00:24:16,239 Speaker 7: sort of, you know, we don't have to go in 451 00:24:16,320 --> 00:24:18,679 Speaker 7: every day, so we can work further from the office. So, 452 00:24:19,000 --> 00:24:21,800 Speaker 7: you know, I think people are buying wherever they can 453 00:24:21,880 --> 00:24:22,600 Speaker 7: at this point. 454 00:24:23,000 --> 00:24:25,239 Speaker 4: And Sama, where are you seeing the demand? Is it 455 00:24:25,280 --> 00:24:29,119 Speaker 4: more in the single family space or the apartments and 456 00:24:29,160 --> 00:24:30,640 Speaker 4: the multi family side? 457 00:24:31,560 --> 00:24:35,680 Speaker 7: Well, yes, so, I mean we always see more interest 458 00:24:35,800 --> 00:24:39,639 Speaker 7: in single family particular as people as households grow, you know, 459 00:24:39,680 --> 00:24:43,240 Speaker 7: there's more, there's kids, and you know, two persons or 460 00:24:43,240 --> 00:24:45,720 Speaker 7: three person households, so there's always more demand for single 461 00:24:45,800 --> 00:24:51,239 Speaker 7: family homes. But what's interesting is that attached housing, so 462 00:24:51,280 --> 00:24:55,120 Speaker 7: that would be condos, are now appreciating at the faster 463 00:24:55,800 --> 00:24:59,240 Speaker 7: pace than detached homes. And that's because during the pandemic, 464 00:24:59,280 --> 00:25:01,560 Speaker 7: there was not a lot of the demand for attached homes. 465 00:25:01,560 --> 00:25:04,440 Speaker 7: The people didn't want to be in density and close 466 00:25:04,480 --> 00:25:07,040 Speaker 7: to each other. So now a lot of the home 467 00:25:07,119 --> 00:25:11,359 Speaker 7: prices for condo type housing is appreciating at a faster pace. 468 00:25:11,400 --> 00:25:14,360 Speaker 7: It's catching up to all the growth that single families 469 00:25:14,400 --> 00:25:15,600 Speaker 7: saw during the pandemic. 470 00:25:15,920 --> 00:25:19,280 Speaker 1: In terms of new home construction, is anybody building starter 471 00:25:19,359 --> 00:25:21,280 Speaker 1: homes because it feels like when I drive around and 472 00:25:21,320 --> 00:25:23,840 Speaker 1: I do see homes being built, they're kind of the 473 00:25:23,920 --> 00:25:26,280 Speaker 1: McMansion and the builders tell me, well, that's where the 474 00:25:26,280 --> 00:25:28,680 Speaker 1: profit margin is, right. 475 00:25:28,840 --> 00:25:31,240 Speaker 7: Yeah, I mean that's a difficult one because you know, 476 00:25:31,320 --> 00:25:34,639 Speaker 7: we talked about this before. It's it's it's very costly 477 00:25:34,800 --> 00:25:37,520 Speaker 7: to build a home at this point. Land is more expensive, 478 00:25:38,080 --> 00:25:41,679 Speaker 7: materials are more expensive, labor is more expensive, so you know, 479 00:25:42,000 --> 00:25:45,359 Speaker 7: builders have to find profit margins where they can. But 480 00:25:45,440 --> 00:25:48,639 Speaker 7: I think there is a genuine effort and given that 481 00:25:49,080 --> 00:25:54,080 Speaker 7: the demand is concentrated in starter homes for you know, 482 00:25:54,119 --> 00:25:59,400 Speaker 7: for starter families, I think they're genuinely trying to create 483 00:25:59,440 --> 00:26:02,600 Speaker 7: that type of housing. And so now there is a 484 00:26:02,640 --> 00:26:07,080 Speaker 7: lot more interest in you know, duplexis two to four 485 00:26:07,200 --> 00:26:11,480 Speaker 7: units or you know, row housing and stuff like that. 486 00:26:11,600 --> 00:26:14,760 Speaker 7: So I do see effort happening in that for that 487 00:26:14,800 --> 00:26:15,479 Speaker 7: type of housing. 488 00:26:15,560 --> 00:26:15,919 Speaker 5: Yeah. 489 00:26:16,040 --> 00:26:18,280 Speaker 1: All right, Salma, thank you so much for joining us 490 00:26:18,280 --> 00:26:21,320 Speaker 1: once again. I always appreciate getting your thoughts and perspective 491 00:26:21,440 --> 00:26:24,120 Speaker 1: on the residential housing market. So I'm a HEP chief 492 00:26:24,119 --> 00:26:26,240 Speaker 1: economist for Core Logic. 493 00:26:28,119 --> 00:26:31,520 Speaker 5: You're listening to the Team Ken's Are Live program Bloomberg 494 00:26:31,560 --> 00:26:34,919 Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com, 495 00:26:35,000 --> 00:26:38,160 Speaker 5: the iHeartRadio app, and the Bloomberg Business App, or listen 496 00:26:38,240 --> 00:26:40,360 Speaker 5: on demand wherever you get your podcasts. 497 00:26:42,000 --> 00:26:44,359 Speaker 1: Want to head down to Joe Matthew here. He's Bloomberg's 498 00:26:44,359 --> 00:26:47,960 Speaker 1: host of Sound On on radio and Bloomberg's Balance of 499 00:26:48,000 --> 00:26:51,959 Speaker 1: Power on television. He's in DC. He talks to everybody 500 00:26:52,080 --> 00:26:53,960 Speaker 1: that's down in DC. He's got his finger on the 501 00:26:53,960 --> 00:26:56,840 Speaker 1: pulse here, Joe, Yesterday was a big day for former 502 00:26:56,880 --> 00:27:00,680 Speaker 1: President Trump. This is federal. This is why in DC. 503 00:27:01,200 --> 00:27:03,600 Speaker 1: Is there any kind of growing sense of how this 504 00:27:04,080 --> 00:27:04,800 Speaker 1: might play out? 505 00:27:06,000 --> 00:27:07,320 Speaker 8: It's really difficult to tell. 506 00:27:07,440 --> 00:27:09,640 Speaker 9: Tomorrow is going to be a big day when he 507 00:27:09,800 --> 00:27:13,439 Speaker 9: is expected to show up and face the magistrate. But 508 00:27:14,000 --> 00:27:16,240 Speaker 9: it's interesting, you know that there's a model for this 509 00:27:16,280 --> 00:27:19,080 Speaker 9: because since this is number three now, which is remarkable, 510 00:27:19,440 --> 00:27:22,159 Speaker 9: but there does seem to be a feeling here in 511 00:27:22,200 --> 00:27:24,600 Speaker 9: the Capitol and on the campaign trail when you talk 512 00:27:24,640 --> 00:27:27,439 Speaker 9: to people that this one just feels a little bit different. 513 00:27:27,480 --> 00:27:30,000 Speaker 9: You know, we've talked a lot about indictment fatigue, But 514 00:27:30,040 --> 00:27:34,400 Speaker 9: when you read through these charges obstruction of an official proceeding, 515 00:27:34,480 --> 00:27:39,720 Speaker 9: conspiracy to defraud the government, it's remarkable stuff. I've got 516 00:27:39,760 --> 00:27:42,120 Speaker 9: the indictment right in front of me here, and it's 517 00:27:42,160 --> 00:27:44,600 Speaker 9: worth actually reading the document. There's a lot of great 518 00:27:44,600 --> 00:27:47,000 Speaker 9: reporting on the terminal, and our reporters have been amazing 519 00:27:47,040 --> 00:27:49,920 Speaker 9: trying to decode everything and kind of unpack everything in here. 520 00:27:50,240 --> 00:27:52,000 Speaker 9: But the line that jumps out to me, as it 521 00:27:52,000 --> 00:27:55,720 Speaker 9: did when this first dropped yesterday, each of these conspiracies, 522 00:27:55,760 --> 00:27:59,080 Speaker 9: I'm reading directly from the text here targeted a bedrock 523 00:27:59,160 --> 00:28:03,800 Speaker 9: function of the US federal government, the nation's process of collecting, counting, 524 00:28:04,119 --> 00:28:08,159 Speaker 9: and certifying the results of the presidential election. That is 525 00:28:08,200 --> 00:28:11,720 Speaker 9: a remarkable thing to imagine that a former president of 526 00:28:11,760 --> 00:28:14,840 Speaker 9: the United States is facing this charge even as he 527 00:28:14,920 --> 00:28:16,680 Speaker 9: runs for reelection. 528 00:28:16,720 --> 00:28:18,560 Speaker 1: And Joe, I guess one of the big issues that 529 00:28:18,640 --> 00:28:20,880 Speaker 1: I think we probably all like to get some handle 530 00:28:20,920 --> 00:28:24,000 Speaker 1: on is timing. Is this something that can go to 531 00:28:24,200 --> 00:28:27,959 Speaker 1: trial before the election or after the election. You know, 532 00:28:28,840 --> 00:28:30,320 Speaker 1: there's some different opinions out there. 533 00:28:30,640 --> 00:28:32,240 Speaker 8: Yeah, we just don't know it. 534 00:28:32,320 --> 00:28:34,600 Speaker 9: Look, I'm sure the Special Council would like to see 535 00:28:34,600 --> 00:28:37,680 Speaker 9: this done before the election. But if there's one hallmark, 536 00:28:37,720 --> 00:28:41,720 Speaker 9: one strategy that is associated with Donald Trump's legal teams plural. 537 00:28:41,640 --> 00:28:43,120 Speaker 8: It's delay, delay, delay. 538 00:28:43,200 --> 00:28:45,760 Speaker 9: He's going to be approaching all of these indictments the 539 00:28:45,800 --> 00:28:48,680 Speaker 9: same way, knowing that we likely have another to come 540 00:28:48,720 --> 00:28:52,680 Speaker 9: from Fulton County, Georgia. So you know, it's really difficult 541 00:28:52,720 --> 00:28:54,880 Speaker 9: to tell what's going to happen as they still are 542 00:28:55,000 --> 00:28:57,800 Speaker 9: arguing over the trial date for the classified documents case, 543 00:28:57,920 --> 00:29:00,360 Speaker 9: now this and then another and also so how do 544 00:29:00,400 --> 00:29:03,600 Speaker 9: you run a presidential campaign when you're trying to manage 545 00:29:03,680 --> 00:29:05,880 Speaker 9: all of these legal angles. One thing we do know 546 00:29:05,960 --> 00:29:08,680 Speaker 9: is his campaign is helping to pay for those legal 547 00:29:08,720 --> 00:29:10,440 Speaker 9: teams who are awfully busy right now, and he's going 548 00:29:10,520 --> 00:29:11,800 Speaker 9: to have to hire a lot more lawyers. 549 00:29:12,440 --> 00:29:16,240 Speaker 4: Another thing about his campaign, Joe, it's polling very well, 550 00:29:16,880 --> 00:29:21,280 Speaker 4: like very much ahead of the fact here. So, I mean, 551 00:29:21,320 --> 00:29:23,560 Speaker 4: do you see that it seems like, you know, every 552 00:29:23,600 --> 00:29:26,360 Speaker 4: time that a new charge comes about, this really emboldens 553 00:29:26,400 --> 00:29:29,280 Speaker 4: the Trump base. You see that. Yeah, you think that 554 00:29:29,360 --> 00:29:30,640 Speaker 4: trend's going to continue. 555 00:29:30,320 --> 00:29:33,960 Speaker 9: Here probably, I mean, it's hard to see where this ends. 556 00:29:34,440 --> 00:29:37,000 Speaker 9: If history is any guide, You're right, he's going to 557 00:29:37,280 --> 00:29:40,240 Speaker 9: gain some polling points, and he's going to make money 558 00:29:40,240 --> 00:29:43,000 Speaker 9: on this. There are a couple of different ways to 559 00:29:43,000 --> 00:29:45,400 Speaker 9: look at it, though there's clearly a short term benefit 560 00:29:45,440 --> 00:29:47,080 Speaker 9: for him. I mean, the next in line would be 561 00:29:47,120 --> 00:29:50,560 Speaker 9: Ron DeSantis, and he's trailing Donald Trump by twenty to 562 00:29:50,600 --> 00:29:53,600 Speaker 9: thirty points depending on the poll here. So look, unless 563 00:29:53,640 --> 00:29:56,600 Speaker 9: something big happens, unless there really is a concern among 564 00:29:56,600 --> 00:29:59,120 Speaker 9: the MAGA base about this, and there's no reason for 565 00:29:59,200 --> 00:30:02,240 Speaker 9: us to believe that Donald Trump may well be the nominee. 566 00:30:02,360 --> 00:30:03,400 Speaker 8: The long term. 567 00:30:03,200 --> 00:30:06,200 Speaker 9: Implications, though, when you put him in a general election 568 00:30:06,360 --> 00:30:10,320 Speaker 9: matchup against Joe Biden, become a little bit different here, 569 00:30:10,360 --> 00:30:12,160 Speaker 9: and there are a lot of concerns about how the 570 00:30:13,120 --> 00:30:16,800 Speaker 9: four potential indictments and other legal action that he's facing 571 00:30:17,360 --> 00:30:19,400 Speaker 9: is going to fly here in a general election. It's 572 00:30:19,400 --> 00:30:21,400 Speaker 9: not a good way to pick up independent voters or 573 00:30:21,440 --> 00:30:23,760 Speaker 9: expand your own base. But I'll point you back to 574 00:30:23,800 --> 00:30:25,240 Speaker 9: the poll we got this week from the New York 575 00:30:25,280 --> 00:30:29,680 Speaker 9: Times in Siena College, twenty percent of those Republicans who 576 00:30:29,680 --> 00:30:33,080 Speaker 9: support Donald Trump, the real core of the MAGA base, 577 00:30:33,640 --> 00:30:35,960 Speaker 9: say they would still vote for him for president if 578 00:30:35,960 --> 00:30:37,920 Speaker 9: you were convicted of federal crimes. 579 00:30:38,200 --> 00:30:39,520 Speaker 8: So this is just another day. 580 00:30:39,720 --> 00:30:43,440 Speaker 1: Why not, Joe, How should or how do you think 581 00:30:44,720 --> 00:30:48,120 Speaker 1: the other plethora of Republican candidates are going to kind 582 00:30:48,160 --> 00:30:53,240 Speaker 1: of position these various legal issues for the president in 583 00:30:53,280 --> 00:30:55,840 Speaker 1: the months ahead. I mean, is this something that they 584 00:30:55,920 --> 00:30:58,600 Speaker 1: want to make front and center. We can't have this 585 00:30:58,640 --> 00:31:00,840 Speaker 1: as our candidate, this person's candidate. Are they going to 586 00:31:00,840 --> 00:31:02,280 Speaker 1: try to maybe stay with sidelines. 587 00:31:02,880 --> 00:31:04,760 Speaker 9: It's funny because you've got the people who are running 588 00:31:04,760 --> 00:31:07,400 Speaker 9: against him who are afraid to criticize him, even at 589 00:31:07,400 --> 00:31:11,360 Speaker 9: this incredible moment of what would be apparent weakness. And 590 00:31:11,440 --> 00:31:14,240 Speaker 9: you've got different shades. It depends on the Chris Christie's 591 00:31:14,280 --> 00:31:16,480 Speaker 9: and Will Hurd's of the worlds are going to demonize 592 00:31:16,520 --> 00:31:19,400 Speaker 9: him for this. Tim Scott, though I was kind of amazed. 593 00:31:19,400 --> 00:31:20,920 Speaker 9: I have all other statements in front of me. Here 594 00:31:20,960 --> 00:31:23,240 Speaker 9: what we see today are two different tracks of justice, 595 00:31:23,440 --> 00:31:25,360 Speaker 9: one for political opponents, another for the son of the 596 00:31:25,360 --> 00:31:28,120 Speaker 9: current president. He's going straight to Hunter Biden on that. 597 00:31:28,880 --> 00:31:31,560 Speaker 9: Look at Mike Pence, though, this was the most interesting 598 00:31:31,560 --> 00:31:33,280 Speaker 9: to me. And Mike Pence is not doing very well. 599 00:31:33,320 --> 00:31:35,000 Speaker 9: He can't even get on the debate stage yet as 600 00:31:35,000 --> 00:31:37,360 Speaker 9: far as we know. But look, Mike Pence has a 601 00:31:37,360 --> 00:31:39,360 Speaker 9: lot to do with this case, and he testified in it. 602 00:31:39,640 --> 00:31:42,160 Speaker 9: Today's indictment, he writes, serves as an important reminder anyone 603 00:31:42,200 --> 00:31:44,920 Speaker 9: who puts himself over the Constitution should. 604 00:31:44,680 --> 00:31:46,240 Speaker 8: Never be president of the United States. 605 00:31:46,640 --> 00:31:49,160 Speaker 9: Let's see how these evolve over time. If they smell 606 00:31:49,200 --> 00:31:50,720 Speaker 9: blood in the water, it'll get a lot. 607 00:31:50,600 --> 00:31:53,720 Speaker 4: More severe and anything Joe that you're expecting from mister 608 00:31:53,960 --> 00:31:57,480 Speaker 4: Joe Biden. He's also stayed pretty quiet on a lot 609 00:31:57,480 --> 00:31:58,360 Speaker 4: of these headlines. 610 00:31:59,520 --> 00:32:02,720 Speaker 9: Yeah, I think that he'll likely stay that way. They've 611 00:32:02,800 --> 00:32:06,920 Speaker 9: kept a real distance or certainly tried to build the 612 00:32:06,960 --> 00:32:10,200 Speaker 9: appearance of having distance between the Justice Department and then 613 00:32:10,240 --> 00:32:12,360 Speaker 9: even further distance between the Special Council. 614 00:32:12,720 --> 00:32:14,280 Speaker 8: So I would not suspect that he's going to weigh 615 00:32:14,320 --> 00:32:14,640 Speaker 8: in on this. 616 00:32:14,760 --> 00:32:16,600 Speaker 9: It is remarkable, though, when you consider the day that 617 00:32:16,640 --> 00:32:19,840 Speaker 9: Donald Trump had yesterday, knowing that Joe Biden was on 618 00:32:19,960 --> 00:32:22,680 Speaker 9: vacation at the beach and went to see Oppenheimer last night. 619 00:32:22,760 --> 00:32:25,040 Speaker 8: So it's kind of two different worlds exactly. 620 00:32:25,280 --> 00:32:28,040 Speaker 1: So one of the interesting aspects of this January sixth 621 00:32:28,080 --> 00:32:30,000 Speaker 1: indictment is it's in Washington, DC. 622 00:32:30,160 --> 00:32:30,320 Speaker 5: Joe. 623 00:32:30,680 --> 00:32:34,240 Speaker 1: Yes, that's a different animal than South Florida, who said, 624 00:32:34,360 --> 00:32:36,920 Speaker 1: what's the expectation here about how that will Will the 625 00:32:36,920 --> 00:32:38,600 Speaker 1: president be able to get a jury of his peers? 626 00:32:39,480 --> 00:32:42,280 Speaker 9: Ronda Santis doesn't think so, And that's another reaction that 627 00:32:42,320 --> 00:32:45,160 Speaker 9: we heard from the field. He says, Washington is a 628 00:32:45,200 --> 00:32:47,280 Speaker 9: swamp and it's unfair to have if anyone stand trial 629 00:32:47,320 --> 00:32:51,120 Speaker 9: before a jury, that's reflective of swamp mentality. But look, 630 00:32:51,200 --> 00:32:53,440 Speaker 9: you know, Washington's pretty good at this kind of stuff actually, 631 00:32:53,480 --> 00:32:56,240 Speaker 9: and I suspect that they're going to have this together 632 00:32:56,840 --> 00:33:00,600 Speaker 9: pretty quickly. It's the former present and it won't have 633 00:33:00,720 --> 00:33:02,880 Speaker 9: much say in that, although his legal team will try 634 00:33:02,920 --> 00:33:05,480 Speaker 9: to slow this down in terms of their strategy. We're 635 00:33:05,560 --> 00:33:07,400 Speaker 9: you know, we're hearing a lot about the first amendments today, 636 00:33:07,400 --> 00:33:10,520 Speaker 9: which is interesting, even though the indictment is clearly about 637 00:33:10,520 --> 00:33:13,160 Speaker 9: his actions more than the things. 638 00:33:12,880 --> 00:33:13,440 Speaker 5: That he said. 639 00:33:13,880 --> 00:33:16,360 Speaker 4: When you say, pretty quickly, is that before or after 640 00:33:16,600 --> 00:33:17,680 Speaker 4: the twenty twenty four. 641 00:33:17,560 --> 00:33:20,360 Speaker 8: Election, great question. We just don't know. 642 00:33:20,440 --> 00:33:22,840 Speaker 9: I mean, the Special Council, the Department of Justice, I 643 00:33:22,840 --> 00:33:25,560 Speaker 9: think will make every effort to get this done before then. 644 00:33:26,280 --> 00:33:29,640 Speaker 9: We'll hear a trial date soon. Whether that moves again 645 00:33:29,800 --> 00:33:32,200 Speaker 9: is another question. They've already moved the date on the 646 00:33:32,280 --> 00:33:35,720 Speaker 9: last indictment over the classified documents, so I suspect that'll 647 00:33:35,760 --> 00:33:36,880 Speaker 9: be a moving target for a bit. 648 00:33:37,480 --> 00:33:40,000 Speaker 1: Joe Sound On with Joe Matthew coming up at one 649 00:33:40,000 --> 00:33:42,200 Speaker 1: pm Wall Street Time. I got to think this is 650 00:33:42,200 --> 00:33:44,120 Speaker 1: still in flux for you guys here as we sit 651 00:33:44,160 --> 00:33:46,280 Speaker 1: here at eleven to fifteen. I mean, maybe how you 652 00:33:46,320 --> 00:33:47,480 Speaker 1: guys can try to approach this. 653 00:33:48,440 --> 00:33:50,400 Speaker 8: Well, you know, we're always building the plane in flight here. 654 00:33:50,760 --> 00:33:54,760 Speaker 9: Yeah, but well, one thing that's consistent unsound on is 655 00:33:54,760 --> 00:33:56,520 Speaker 9: our great panel or We're going to have Rick Davis 656 00:33:56,560 --> 00:34:00,400 Speaker 9: with us today and Matt Bennett, the Democrat from Third 657 00:34:00,440 --> 00:34:03,960 Speaker 9: Way to kind of get both sides of this to 658 00:34:04,080 --> 00:34:06,880 Speaker 9: help sort of flesh out what's going on in this case. 659 00:34:06,960 --> 00:34:09,160 Speaker 9: And we're gonna have some smart legal minds. In fact, 660 00:34:09,719 --> 00:34:11,759 Speaker 9: I heard just a short time ago that coming up 661 00:34:11,800 --> 00:34:14,040 Speaker 9: at two o'clock the second hour of sound On, we're 662 00:34:14,040 --> 00:34:17,160 Speaker 9: gonna be talking to John Dean of Watergate fame and 663 00:34:17,239 --> 00:34:19,759 Speaker 9: be curious to get his historical perspective on this too. 664 00:34:20,000 --> 00:34:22,520 Speaker 1: And Joe, this is the dumb question of the day, 665 00:34:23,080 --> 00:34:25,040 Speaker 1: but as we think about the twenty twenty four election, 666 00:34:25,120 --> 00:34:28,000 Speaker 1: on the other side, is the Democratic Party are they 667 00:34:28,600 --> 00:34:31,799 Speaker 1: okay with Joe Biden. Are they this is our guy 668 00:34:32,000 --> 00:34:34,440 Speaker 1: or is it just just be too ugly to try 669 00:34:34,480 --> 00:34:35,160 Speaker 1: to do anything else? 670 00:34:35,760 --> 00:34:39,160 Speaker 9: I think this is our guy is the idea right now. 671 00:34:39,160 --> 00:34:41,000 Speaker 9: He's got a thirty nine percent approval rating in that 672 00:34:41,040 --> 00:34:42,239 Speaker 9: New New York Times poll this week. 673 00:34:42,280 --> 00:34:44,160 Speaker 8: That's up from thirty three a year ago. It's still 674 00:34:44,200 --> 00:34:44,960 Speaker 8: way underwater. 675 00:34:45,080 --> 00:34:47,400 Speaker 9: Ye half of the Democrats in that poll say they 676 00:34:47,400 --> 00:34:49,719 Speaker 9: wish they had somebody else. There's a lot of talk 677 00:34:49,760 --> 00:34:52,160 Speaker 9: about his age, but let's see where those numbers are 678 00:34:52,160 --> 00:34:53,600 Speaker 9: when there's a real matchup. 679 00:34:53,640 --> 00:34:55,239 Speaker 8: Everything right now is hypothetical. 680 00:34:55,239 --> 00:34:58,440 Speaker 9: And look, Gavin Newsom's not coming to the rescue anytime soon. 681 00:34:58,400 --> 00:35:01,799 Speaker 1: Okay, Joe, Matthew Bloomberg sound on on radio. You can 682 00:35:01,840 --> 00:35:03,440 Speaker 1: get that at the one pm Wall Street time and 683 00:35:03,440 --> 00:35:07,080 Speaker 1: then Bloomberg's Balance of Power on Bloomberg Television. Lots to 684 00:35:07,120 --> 00:35:09,480 Speaker 1: talk about there always seems to be done in DC, 685 00:35:09,600 --> 00:35:11,959 Speaker 1: and now with all these various indictments against the former 686 00:35:12,000 --> 00:35:14,040 Speaker 1: president and o election next year. 687 00:35:14,400 --> 00:35:17,480 Speaker 5: You're listening to the tape Can's our live program Bloomberg 688 00:35:17,600 --> 00:35:21,200 Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the 689 00:35:21,239 --> 00:35:24,479 Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 690 00:35:24,520 --> 00:35:27,319 Speaker 5: You can also listen live on Amazon Alexa from our 691 00:35:27,360 --> 00:35:31,760 Speaker 5: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 692 00:35:34,080 --> 00:35:35,839 Speaker 1: Let's bring on a next guest here because we want 693 00:35:35,840 --> 00:35:38,560 Speaker 1: to get a sense of kind of what the economic situation. 694 00:35:38,719 --> 00:35:41,279 Speaker 1: We've got a lot of economic data coming out this 695 00:35:41,320 --> 00:35:44,600 Speaker 1: week and next week. Sonya Meskin joins us here. She's 696 00:35:44,600 --> 00:35:51,640 Speaker 1: an investment strategist, head of US macroeconomic Analysis at BNY Mellon. Sonia, 697 00:35:51,640 --> 00:35:53,960 Speaker 1: thanks so much for joining us here. I don't know. 698 00:35:54,000 --> 00:35:56,799 Speaker 1: I mean, let's start with Fitch. It's not every day 699 00:35:56,880 --> 00:35:59,200 Speaker 1: that you know your government and the finances of your 700 00:35:59,239 --> 00:36:03,680 Speaker 1: government get downgraded. As an economist, how do you feel 701 00:36:03,680 --> 00:36:04,040 Speaker 1: about this? 702 00:36:06,400 --> 00:36:09,520 Speaker 10: It's understandable Fisch had told us in advance they would 703 00:36:09,560 --> 00:36:11,640 Speaker 10: be doing this, and it is reminiscent of what the 704 00:36:11,800 --> 00:36:14,360 Speaker 10: SMP did in twenty eleven, and even in terms of 705 00:36:14,400 --> 00:36:18,279 Speaker 10: the timing, it's not that different now. Of course, it's 706 00:36:18,360 --> 00:36:20,920 Speaker 10: less of an event that I believe the SMP downgrade 707 00:36:20,960 --> 00:36:23,640 Speaker 10: was in twenty eleven, and the main reason being that 708 00:36:24,080 --> 00:36:29,000 Speaker 10: investment mandates have since then been adjusted to allow for 709 00:36:29,880 --> 00:36:33,880 Speaker 10: not only AA the ULTIPLA rated securities for majority at 710 00:36:33,960 --> 00:36:39,160 Speaker 10: least type of mandates, but for US government rating or 711 00:36:39,200 --> 00:36:42,239 Speaker 10: the equivalent, and so I think this will be less 712 00:36:42,280 --> 00:36:44,720 Speaker 10: of a have less of an impact on the market 713 00:36:45,160 --> 00:36:48,640 Speaker 10: than the twenty eleven development did. But that said, it's 714 00:36:48,640 --> 00:36:50,759 Speaker 10: important to keep in mind why Fitch is doing this 715 00:36:51,000 --> 00:36:54,080 Speaker 10: and all the ra reasons that they cited in their 716 00:36:54,120 --> 00:36:57,880 Speaker 10: downgrade are very valid and certainly a longer term concern 717 00:36:57,960 --> 00:36:58,680 Speaker 10: for investors. 718 00:36:59,200 --> 00:37:01,520 Speaker 4: And we're looking at right now sony and economy that's 719 00:37:01,560 --> 00:37:04,240 Speaker 4: doing pretty well here that a FED that might still 720 00:37:04,640 --> 00:37:06,919 Speaker 4: high rate, so you know, one more time, maybe even 721 00:37:06,960 --> 00:37:10,359 Speaker 4: more than that in this cycle. Does this play into 722 00:37:10,400 --> 00:37:12,040 Speaker 4: the Fed's calculus at all? You think? 723 00:37:13,880 --> 00:37:16,520 Speaker 10: I think that in the near term not so much, 724 00:37:16,560 --> 00:37:19,440 Speaker 10: because you haven't seen a strong impact in the markets. 725 00:37:19,560 --> 00:37:23,200 Speaker 10: I would say, I think maybe the refunding announcement, the 726 00:37:23,480 --> 00:37:28,839 Speaker 10: larger you know, auction sizes, that is probably more impactful 727 00:37:28,880 --> 00:37:31,560 Speaker 10: for the treasures near term. But for the FED, the 728 00:37:31,600 --> 00:37:36,440 Speaker 10: biggest concern is uh, you know, inflation, inflation outlook, price stability, 729 00:37:36,920 --> 00:37:40,120 Speaker 10: and employment. So they're going to be paying more attention 730 00:37:40,160 --> 00:37:41,080 Speaker 10: to those indicators. 731 00:37:41,120 --> 00:37:45,200 Speaker 1: I would say, Sonya, we're gonna get some important jobs 732 00:37:45,280 --> 00:37:47,600 Speaker 1: data from the government on Friday, but we're gonna have 733 00:37:47,640 --> 00:37:51,000 Speaker 1: ADP print today. ADP employment change came in well above 734 00:37:51,200 --> 00:37:56,000 Speaker 1: expectations yet again, what are your thoughts on this labor market? 735 00:37:56,000 --> 00:37:58,919 Speaker 1: For a lot of folks, it's showing surprising resiliency. 736 00:38:00,160 --> 00:38:00,919 Speaker 7: Yes, and I. 737 00:38:00,840 --> 00:38:02,520 Speaker 10: Agree, and I think a lot of this has to 738 00:38:02,560 --> 00:38:07,200 Speaker 10: do with the structural shortfall of supply relative to demand, 739 00:38:08,040 --> 00:38:12,160 Speaker 10: which may have been exacerbated with the COVID dynamics. It 740 00:38:12,239 --> 00:38:14,600 Speaker 10: also has to do with a very strong consumer. So, 741 00:38:14,640 --> 00:38:17,920 Speaker 10: for example, you can see that the consumer is really 742 00:38:18,000 --> 00:38:21,560 Speaker 10: resilient through and has been through the last couple of years. 743 00:38:22,400 --> 00:38:25,080 Speaker 10: So you know, ATP numbers are very very strong. I 744 00:38:25,080 --> 00:38:28,640 Speaker 10: wouldn't expect the Montauan cour pass through to excuse me 745 00:38:28,680 --> 00:38:31,200 Speaker 10: if they're not from pay rolls this Friday, but it 746 00:38:31,239 --> 00:38:32,360 Speaker 10: is indicative of the trend. 747 00:38:32,400 --> 00:38:35,279 Speaker 4: You're right, and you know, we're getting a lot of 748 00:38:35,280 --> 00:38:38,800 Speaker 4: more people saying here now, Sonia that the soft landing 749 00:38:38,880 --> 00:38:42,160 Speaker 4: argument is looking a lot better these days. Where are 750 00:38:42,160 --> 00:38:44,439 Speaker 4: you in that camp or do you think there's even 751 00:38:44,440 --> 00:38:48,080 Speaker 4: a risk here that potentially people are maybe declaring victory 752 00:38:48,080 --> 00:38:51,080 Speaker 4: a little too soon and that the economy could even reaccelerate. 753 00:38:52,200 --> 00:38:53,920 Speaker 10: I do think there's a risk of that that is 754 00:38:54,000 --> 00:38:58,279 Speaker 10: underappreciated by the markets today. I think that the probability 755 00:38:58,280 --> 00:39:00,600 Speaker 10: of a Selt landing may have resen since the last 756 00:39:00,680 --> 00:39:03,319 Speaker 10: few months, but it's not one hundred percent. And I 757 00:39:03,320 --> 00:39:07,080 Speaker 10: think that those scales of either reacceleration or a more 758 00:39:07,520 --> 00:39:11,560 Speaker 10: pronounced slowdown are underappreciated by the market today. 759 00:39:12,000 --> 00:39:15,239 Speaker 1: You know, you talked about the timing of the Fitch downgrade. 760 00:39:15,280 --> 00:39:18,600 Speaker 1: We also heard from the Treasury about some auctions coming 761 00:39:18,680 --> 00:39:23,120 Speaker 1: up to fund our government. And I mean, boy, interest 762 00:39:23,160 --> 00:39:26,560 Speaker 1: rates are so much higher and the deficit continues to climb, 763 00:39:28,160 --> 00:39:31,160 Speaker 1: When does that become a problem for I don't know, 764 00:39:31,880 --> 00:39:34,600 Speaker 1: I guess politicians. You know, we know, economics has been 765 00:39:34,600 --> 00:39:37,240 Speaker 1: calling out this risk here of the you know, the budget, 766 00:39:37,320 --> 00:39:39,640 Speaker 1: of the growing debt and the budget deficits every year. 767 00:39:39,880 --> 00:39:41,440 Speaker 1: But now interest rate a lot higher, so it's a 768 00:39:41,480 --> 00:39:43,120 Speaker 1: lot more expensive to fund that. 769 00:39:44,560 --> 00:39:46,880 Speaker 10: Sure, it's more expensive for the government to fund itself, 770 00:39:46,920 --> 00:39:50,200 Speaker 10: and it's going to be increasingly more expensive for the 771 00:39:50,239 --> 00:39:53,600 Speaker 10: private sector to fund itself, both because more corporates are 772 00:39:53,600 --> 00:39:56,080 Speaker 10: going to have to refinance into a high rate environment 773 00:39:56,360 --> 00:39:58,680 Speaker 10: and because there may be some crowding out effect from 774 00:39:58,719 --> 00:40:00,200 Speaker 10: larger government issues as well. 775 00:40:01,360 --> 00:40:03,480 Speaker 4: So, Sonya, I wanted to come back to this idea 776 00:40:03,520 --> 00:40:08,600 Speaker 4: of inflation and the economy potentially re accelerating and what 777 00:40:08,640 --> 00:40:10,600 Speaker 4: that means that, you know, for the FED, if they're 778 00:40:10,600 --> 00:40:14,239 Speaker 4: going to have to get more aggressive again, and how 779 00:40:14,239 --> 00:40:16,719 Speaker 4: that fits in with all these people now dropping their 780 00:40:16,840 --> 00:40:20,120 Speaker 4: recession calls. Do you think maybe more delaying the call 781 00:40:20,320 --> 00:40:21,120 Speaker 4: is the right move? 782 00:40:22,400 --> 00:40:25,040 Speaker 10: Yes, I would agree with that. Well, you know, it 783 00:40:25,120 --> 00:40:27,960 Speaker 10: kind of always goes through fluctuations. A recession at some 784 00:40:28,120 --> 00:40:31,879 Speaker 10: point in time is almost inevitable, but the timing may 785 00:40:31,920 --> 00:40:34,440 Speaker 10: have been pushed out relative. 786 00:40:34,040 --> 00:40:35,959 Speaker 7: To you know, earlier this year. 787 00:40:36,880 --> 00:40:39,480 Speaker 10: But I do think we're certainly seeing the seeds of 788 00:40:39,520 --> 00:40:42,400 Speaker 10: all slow down, potentially just the delayed landing. 789 00:40:43,320 --> 00:40:45,600 Speaker 1: So Sonya, I mean, I'm probably in the camp like 790 00:40:45,640 --> 00:40:48,480 Speaker 1: I've in. So many people ask me my economic forecast, 791 00:40:48,480 --> 00:40:49,759 Speaker 1: so I feel like I have to give it. But 792 00:40:49,800 --> 00:40:51,080 Speaker 1: you know, like a couple of weeks ago, I said, 793 00:40:51,120 --> 00:40:55,719 Speaker 1: I'm taking recession off the table, but I recognize that 794 00:40:55,760 --> 00:40:58,600 Speaker 1: it's still out there. But inflation, you know, I'm just 795 00:40:58,600 --> 00:41:00,719 Speaker 1: looking at some of the inflation measures they were trend 796 00:41:00,880 --> 00:41:02,799 Speaker 1: They are trending in the right direction, but one that's 797 00:41:02,800 --> 00:41:05,879 Speaker 1: not is just kind of oil and energy and gasoline 798 00:41:05,920 --> 00:41:08,400 Speaker 1: and things like that. And I know that's something that 799 00:41:07,800 --> 00:41:11,879 Speaker 1: the Biden administration pays attention to because people feel that, 800 00:41:12,200 --> 00:41:14,799 Speaker 1: you know, immediately in their pocketbooks. Are you concerned that 801 00:41:14,840 --> 00:41:17,879 Speaker 1: inflation may have another leg up? 802 00:41:18,000 --> 00:41:23,919 Speaker 10: Perhaps, I'm concerned that it would stay sticky, especially core 803 00:41:24,000 --> 00:41:27,160 Speaker 10: pc versus CPI in the next towards the end of 804 00:41:27,200 --> 00:41:30,960 Speaker 10: the year, I would say, And that is because rents, 805 00:41:31,120 --> 00:41:35,680 Speaker 10: which are sort of rent metrics, feed through to the 806 00:41:35,760 --> 00:41:40,319 Speaker 10: CPI measure with the delay and rent you know, rent 807 00:41:40,320 --> 00:41:43,239 Speaker 10: prices started to accelerate last year and we're seeing the 808 00:41:43,280 --> 00:41:46,600 Speaker 10: effect this year. And I think that is a bigger 809 00:41:46,600 --> 00:41:49,759 Speaker 10: component of the CPI measure than the PCEE measure, which 810 00:41:49,880 --> 00:41:53,000 Speaker 10: the Fed pays traditionally more attention to the latter. And 811 00:41:53,040 --> 00:41:56,799 Speaker 10: I do think energy prices are structurally important because even 812 00:41:56,840 --> 00:41:59,759 Speaker 10: as though the Fed pays attention to core inflation, if 813 00:41:59,800 --> 00:42:03,000 Speaker 10: any prices stay elevated over time, that is an input 814 00:42:03,040 --> 00:42:05,479 Speaker 10: cost that is going to affect the prices of goods 815 00:42:05,520 --> 00:42:06,480 Speaker 10: and services. 816 00:42:07,200 --> 00:42:09,880 Speaker 1: Sonia, thanks so much for joining us. Appreciate getting your perspective. 817 00:42:09,920 --> 00:42:14,600 Speaker 1: Sonya Meskin, Investment Strategists, Head of US Macroeconomic Analysis at 818 00:42:15,000 --> 00:42:20,120 Speaker 1: BNY Mellon Bank of New York address of B and 819 00:42:20,239 --> 00:42:21,640 Speaker 1: Y Yes, Bank of New York. 820 00:42:22,080 --> 00:42:24,400 Speaker 4: Uh, it's down in the financial. 821 00:42:24,000 --> 00:42:26,640 Speaker 1: Number one Wall Street, the best address on Wall Street. 822 00:42:26,640 --> 00:42:28,000 Speaker 1: Look at that financial services. 823 00:42:28,120 --> 00:42:31,239 Speaker 5: You're listening to the tape. Can's are live program Bloomberg 824 00:42:31,280 --> 00:42:34,880 Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the 825 00:42:34,960 --> 00:42:38,160 Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business app. 826 00:42:38,200 --> 00:42:41,040 Speaker 5: You can also listen live on Amazon Alexa from our 827 00:42:41,040 --> 00:42:46,120 Speaker 5: flagship New York station. Just say Alexa playing Bloomberg eleven thirty. 828 00:42:46,920 --> 00:42:47,880 Speaker 1: Add it to the height of us. 829 00:42:47,920 --> 00:42:48,279 Speaker 8: It's so bad. 830 00:42:48,400 --> 00:42:50,319 Speaker 1: Gets some books A good times there, all right. Brian 831 00:42:50,360 --> 00:42:52,719 Speaker 1: Egger joins us here senior Gaming and Lodging analyst for 832 00:42:52,719 --> 00:42:56,480 Speaker 1: Bloomberg Intelligence. He has the career I wanted. But I 833 00:42:56,480 --> 00:42:58,000 Speaker 1: had media, which is pretty good. So I got to 834 00:42:58,040 --> 00:42:59,799 Speaker 1: go to a lot of movie premieres and theme parks. 835 00:43:00,120 --> 00:43:05,640 Speaker 1: But this guy goes to casinos, cruise ships, hotels. I mean, 836 00:43:05,680 --> 00:43:07,480 Speaker 1: it's a scam and he gets paid for it. 837 00:43:07,760 --> 00:43:08,480 Speaker 11: Unbelievable. 838 00:43:08,480 --> 00:43:10,359 Speaker 1: We're out of this thing, all right, Brian. We had 839 00:43:10,440 --> 00:43:14,400 Speaker 1: let's start with the theme the cruise business Norwegian. The 840 00:43:14,440 --> 00:43:19,080 Speaker 1: stock guy just crushed. Was it yesterday they had some results? 841 00:43:19,120 --> 00:43:21,439 Speaker 1: I thought people were still going crazy on the cruise ships. 842 00:43:21,480 --> 00:43:22,000 Speaker 1: What's going on? 843 00:43:22,320 --> 00:43:24,400 Speaker 11: I mean, they really are. I mean I think, if anything, 844 00:43:24,480 --> 00:43:26,080 Speaker 11: the words were a bit more on the cost side. 845 00:43:26,280 --> 00:43:30,440 Speaker 11: Bookings are strong, people are booking longer, cruises, longer in advance. 846 00:43:31,120 --> 00:43:34,120 Speaker 11: Basically two thirds of the imatur for this year's already sold, 847 00:43:34,200 --> 00:43:36,480 Speaker 11: so most of the bookings taken a place now are 848 00:43:36,480 --> 00:43:39,080 Speaker 11: for twenty four to twenty five. I think maybe there's 849 00:43:39,120 --> 00:43:41,880 Speaker 11: a little caution on fuel and operating expenses going forward. 850 00:43:42,320 --> 00:43:44,680 Speaker 11: There's going to be because most of the cruises are 851 00:43:45,080 --> 00:43:47,600 Speaker 11: sold out for this year. There may be more dependent 852 00:43:47,680 --> 00:43:50,359 Speaker 11: on what happens with on board spending. If anything, they 853 00:43:50,360 --> 00:43:53,080 Speaker 11: were too good with revenue management booking cruises up front. 854 00:43:53,440 --> 00:43:56,000 Speaker 11: So I think overall this just maybe hope they might 855 00:43:56,160 --> 00:43:58,640 Speaker 11: raise guidance, but you know, in terms of demand it's there. 856 00:43:58,840 --> 00:44:00,920 Speaker 1: So I mean, here's some of your research. More than 857 00:44:00,960 --> 00:44:04,120 Speaker 1: seventy percent of bookings in the last ninety days for 858 00:44:04,280 --> 00:44:08,040 Speaker 1: Norwegian are for twenty four, twenty twenty four and twenty 859 00:44:08,080 --> 00:44:11,680 Speaker 1: twenty five departures, pointing to a longer bookings league time 860 00:44:12,040 --> 00:44:15,440 Speaker 1: and four cores four Q fair gains of ten percent 861 00:44:15,520 --> 00:44:18,520 Speaker 1: versus twenty nineteen. Man, that's healthy, it seems like, right. 862 00:44:18,480 --> 00:44:20,440 Speaker 11: Yeah, I mean we're we're certainly back at a strong 863 00:44:20,480 --> 00:44:22,799 Speaker 11: point and they've booked most of this year, right so. 864 00:44:23,400 --> 00:44:25,839 Speaker 4: And what kind of I mean, how much do you 865 00:44:25,880 --> 00:44:28,680 Speaker 4: when you're booking that far out? Surely you've got to 866 00:44:28,680 --> 00:44:30,839 Speaker 4: put down some kind of a deposit first, like there, 867 00:44:31,239 --> 00:44:33,520 Speaker 4: But are people really even paying for these all the 868 00:44:33,560 --> 00:44:35,440 Speaker 4: way up front? Or how does that look from a 869 00:44:35,520 --> 00:44:36,600 Speaker 4: cash flow situation. 870 00:44:36,880 --> 00:44:39,319 Speaker 11: You can try advanced deposits and advance and those have 871 00:44:39,360 --> 00:44:41,600 Speaker 11: been really strong and healthy. I mean, the demand is 872 00:44:42,280 --> 00:44:45,319 Speaker 11: there with people booking both longer cruises and longer in 873 00:44:45,360 --> 00:44:48,239 Speaker 11: advance you know, Auckemens and peak out a little bit, 874 00:44:48,239 --> 00:44:52,000 Speaker 11: well the last peak because they're booking these longer immersive itineraries. 875 00:44:52,000 --> 00:44:53,680 Speaker 11: But you know, the demand is demonstrable. 876 00:44:54,160 --> 00:44:56,800 Speaker 1: Boy, I'm just looking at the FA function on the 877 00:44:56,840 --> 00:44:59,920 Speaker 1: Bloomberg terminal for just Norwegian Cruise lines and you can 878 00:45:00,000 --> 00:45:02,680 Speaker 1: I had to forget a little bit how hard hit 879 00:45:02,760 --> 00:45:05,440 Speaker 1: they were in the pandemic. And I know we talked 880 00:45:05,440 --> 00:45:06,920 Speaker 1: to you a lot during the beginning of the pandemic 881 00:45:06,960 --> 00:45:09,719 Speaker 1: because you know, cruise ships are like the last place 882 00:45:09,719 --> 00:45:11,440 Speaker 1: you want to be during the pandemic. But you know, 883 00:45:11,520 --> 00:45:14,200 Speaker 1: in twenty nineteen one point nine billion of Ebathad, a 884 00:45:14,280 --> 00:45:17,919 Speaker 1: nice healthy company. Right twenty twenty they lost one point 885 00:45:17,920 --> 00:45:20,120 Speaker 1: one billion dollars of cash. Twenty twenty one they lost 886 00:45:20,120 --> 00:45:23,080 Speaker 1: one point eight billion and started to come back last 887 00:45:23,120 --> 00:45:25,359 Speaker 1: year a loss of six hundred and eighty. This year 888 00:45:25,400 --> 00:45:28,160 Speaker 1: they're gonna make ibadad. You know, they're gonna have one 889 00:45:28,200 --> 00:45:30,120 Speaker 1: point nine billion, and then next year two point three 890 00:45:30,120 --> 00:45:33,439 Speaker 1: billion is consensus. So boy, there's an industry that really 891 00:45:33,440 --> 00:45:35,000 Speaker 1: got hit touch to us about the balance sheets of 892 00:45:35,040 --> 00:45:36,719 Speaker 1: this company, because one of the things I remember from 893 00:45:36,760 --> 00:45:39,320 Speaker 1: the pandemic, one of the first weeks or two weeks 894 00:45:39,360 --> 00:45:42,040 Speaker 1: of the pandemic, these guys hit the bond market, the industry. 895 00:45:42,160 --> 00:45:44,160 Speaker 11: I mean, the balance sheets are much stronger. What are 896 00:45:45,120 --> 00:45:46,800 Speaker 11: my credit account of our Jody Worrie to speak to 897 00:45:46,840 --> 00:45:49,440 Speaker 11: the specifics, but you know, they definitely are back in 898 00:45:49,520 --> 00:45:52,040 Speaker 11: much better shape. They certainly did tap the afpuity markets 899 00:45:52,120 --> 00:45:54,440 Speaker 11: during the downturn when they were not cruising at all, 900 00:45:54,840 --> 00:45:57,239 Speaker 11: but they're back too much healthier position, and all those 901 00:45:57,440 --> 00:46:00,560 Speaker 11: positive YEAL comparisons are versus twenty nineteen sort of kind 902 00:46:00,560 --> 00:46:03,839 Speaker 11: of above water where we were back pre pandemic, and. 903 00:46:03,800 --> 00:46:06,880 Speaker 4: I remember I was actually covering credit before I had 904 00:46:06,880 --> 00:46:10,319 Speaker 4: switched over to the economy team during the pandemic, talked 905 00:46:10,360 --> 00:46:12,880 Speaker 4: to Jody among others. And you know, it was amazing 906 00:46:12,920 --> 00:46:15,759 Speaker 4: because we saw companies like Carnival, like Norwegian come to 907 00:46:15,800 --> 00:46:19,000 Speaker 4: the bond market and had to always do secured issuance. 908 00:46:19,000 --> 00:46:22,000 Speaker 4: There's no way you were getting a deal done without collateral. 909 00:46:22,040 --> 00:46:24,960 Speaker 4: And I think Norwegian even put up an island at 910 00:46:24,960 --> 00:46:28,080 Speaker 4: the time to secure his collateral. And I see Carnival 911 00:46:28,080 --> 00:46:32,200 Speaker 4: now is doing secured debt issuance. Is that still really 912 00:46:32,280 --> 00:46:35,200 Speaker 4: necessary that they can't go unsecured at this point? 913 00:46:35,440 --> 00:46:37,359 Speaker 11: So again, all they're fur Jody and a lot of that, 914 00:46:37,400 --> 00:46:40,600 Speaker 11: But you know, they've got attractive forms of financing. Generally, 915 00:46:40,680 --> 00:46:44,720 Speaker 11: they have access to export credit financing. They generally are 916 00:46:44,880 --> 00:46:47,399 Speaker 11: in a good free casual position now that they're back 917 00:46:47,400 --> 00:46:50,520 Speaker 11: and cruising. And so we've gotten past that point wherehere 918 00:46:50,520 --> 00:46:52,920 Speaker 11: they were negative EBITDA, we're now we're now in a 919 00:46:53,000 --> 00:46:54,080 Speaker 11: much better course. 920 00:46:54,560 --> 00:46:59,959 Speaker 1: All right, let's talk my favorite business, casino's baby MGM Resorts, which, 921 00:47:00,040 --> 00:47:02,040 Speaker 1: by the way, I remember that when MGYM Resorts opened 922 00:47:02,080 --> 00:47:05,840 Speaker 1: up in Atlantic City back in the seventies, wasn't eighty 923 00:47:05,920 --> 00:47:08,680 Speaker 1: I don't know way back in the day anyway, that 924 00:47:08,960 --> 00:47:11,279 Speaker 1: I was up forty eight or forty six percent year 925 00:47:11,320 --> 00:47:15,880 Speaker 1: to date? Did MGM. Did they sell the Mirage? 926 00:47:16,480 --> 00:47:19,200 Speaker 11: Yeah, so they sold the Mirage. They bought the Cosmopolitan. 927 00:47:19,320 --> 00:47:20,280 Speaker 11: Was on our next. 928 00:47:20,120 --> 00:47:23,640 Speaker 1: Door the Mirage. When I started really going to Vegas 929 00:47:23,800 --> 00:47:27,520 Speaker 1: for business back in the early nineties, the Mirage was 930 00:47:27,560 --> 00:47:30,480 Speaker 1: the bomb. That was the place to go. They sold it. 931 00:47:30,680 --> 00:47:32,680 Speaker 11: Built in eighty nine, it's now, you know, not the 932 00:47:32,719 --> 00:47:34,520 Speaker 11: newest kid on the block anymore. But you know, they 933 00:47:34,560 --> 00:47:37,080 Speaker 11: also sold Treasure out at one point. But you know, 934 00:47:37,080 --> 00:47:40,439 Speaker 11: they bought the Cosmopolitan, So really they're kind of integrating. Yeah, 935 00:47:40,480 --> 00:47:44,320 Speaker 11: I think I think they're assembly a more maybe slightly younger. 936 00:47:45,000 --> 00:47:48,120 Speaker 1: Is the Cosmopolitan part of the new place? 937 00:47:48,360 --> 00:47:50,560 Speaker 11: Yeah, it's it's adjacent to the city center, and it 938 00:47:50,600 --> 00:47:52,840 Speaker 11: almost feels like it's part of that complex anyway, So 939 00:47:52,880 --> 00:47:55,640 Speaker 11: that made a lot of sense as a as a transaction. 940 00:47:55,920 --> 00:47:56,279 Speaker 10: All right. 941 00:47:56,640 --> 00:47:58,120 Speaker 1: I haven't been to Vegas in a while. I don't 942 00:47:58,120 --> 00:48:00,759 Speaker 1: know how the Strip is surviving without me, But how 943 00:48:00,800 --> 00:48:04,000 Speaker 1: are things in Vegas? Is that the business of Vegas? 944 00:48:04,040 --> 00:48:04,719 Speaker 1: How is it these days. 945 00:48:04,760 --> 00:48:06,880 Speaker 11: Yeah, if you'll get like the second quarter, which we 946 00:48:06,960 --> 00:48:09,799 Speaker 11: just got some numbers for recently, those gaming revenues are 947 00:48:09,880 --> 00:48:13,480 Speaker 11: up overall twenty eight percent versus the comparable period of 948 00:48:13,480 --> 00:48:16,919 Speaker 11: twenty nineteen, so we're you know, we're flat year over year, 949 00:48:16,960 --> 00:48:19,319 Speaker 11: but last year was a big year of recovery. 950 00:48:19,520 --> 00:48:20,760 Speaker 8: So Vegas is really. 951 00:48:20,560 --> 00:48:24,160 Speaker 11: Back in a significant way. Convention bookings are strong, you know, 952 00:48:24,640 --> 00:48:25,680 Speaker 11: a long way off the bottom. 953 00:48:25,800 --> 00:48:25,920 Speaker 9: You know. 954 00:48:25,960 --> 00:48:29,360 Speaker 4: It's so interesting we're looking into this on the economy 955 00:48:29,440 --> 00:48:32,239 Speaker 4: side that apparently the Las Vegas has one of the 956 00:48:32,320 --> 00:48:35,719 Speaker 4: highest employment rate unemployment rates of any metro area in 957 00:48:35,760 --> 00:48:39,040 Speaker 4: the US right now six percent national average. It's like 958 00:48:39,360 --> 00:48:42,240 Speaker 4: three five three six right now. We'll see on Friday 959 00:48:42,239 --> 00:48:44,239 Speaker 4: with the latest look at that, is you have any 960 00:48:44,400 --> 00:48:45,080 Speaker 4: insight into that. 961 00:48:45,760 --> 00:48:49,200 Speaker 11: Generally speaking, in particular the Vegas local markets where Boyd 962 00:48:49,200 --> 00:48:52,279 Speaker 11: and Red Rock operate, they benefit from a lot of 963 00:48:52,280 --> 00:48:56,640 Speaker 11: the resort adjacent economy, whether it's resorts themselves or construction activity. 964 00:48:57,400 --> 00:48:59,960 Speaker 11: So a lot of things I think will be constructed 965 00:49:00,120 --> 00:49:02,880 Speaker 11: for that economy going forward, whether it's new resort construction 966 00:49:02,920 --> 00:49:05,440 Speaker 11: although that's at a solar pace, or the building or 967 00:49:05,480 --> 00:49:09,680 Speaker 11: the a's the a's moving to Vegas at the former 968 00:49:10,440 --> 00:49:12,840 Speaker 11: Tropic Caana site. I think all those things like the 969 00:49:12,880 --> 00:49:16,359 Speaker 11: Allegiant Stadium where the Raiders play, the A's moving there, 970 00:49:16,520 --> 00:49:18,759 Speaker 11: you know, the sports new constructional. 971 00:49:18,200 --> 00:49:22,040 Speaker 1: Help, what's sports betting done too? And I can pull 972 00:49:22,080 --> 00:49:24,719 Speaker 1: up an app anytime and lately down a bet. How 973 00:49:24,760 --> 00:49:28,480 Speaker 1: has that impacted kind of the casino companies said that 974 00:49:28,520 --> 00:49:29,920 Speaker 1: the gaming companies say that you follow. 975 00:49:30,000 --> 00:49:32,759 Speaker 11: I mean historically, for well, the brick and mortar part 976 00:49:32,800 --> 00:49:36,160 Speaker 11: of the business, historically, sports betting is only two percent 977 00:49:36,200 --> 00:49:38,840 Speaker 11: of that business. It's it's principally Don Barney by casinos. 978 00:49:39,040 --> 00:49:42,720 Speaker 11: The online business, although Nevada is certainly not the biggest 979 00:49:42,719 --> 00:49:45,480 Speaker 11: state in that regard, it's it's been I don't think 980 00:49:45,480 --> 00:49:48,920 Speaker 11: it's really taken share away from brick and mortar gaming 981 00:49:48,960 --> 00:49:53,160 Speaker 11: per se, although the vast majority of sports betting revenue 982 00:49:53,560 --> 00:49:56,440 Speaker 11: that's generated in states with both brick and mortar and 983 00:49:56,480 --> 00:49:58,280 Speaker 11: online is coming from online. 984 00:49:58,960 --> 00:50:01,439 Speaker 4: Can you give us over here, Brian, just a quick 985 00:50:01,440 --> 00:50:04,520 Speaker 4: outlook on the hotel space, and that's also in your purview. 986 00:50:05,160 --> 00:50:07,480 Speaker 11: Yeah, So we had Marriott earlier this week, We'll have 987 00:50:07,960 --> 00:50:09,959 Speaker 11: Hygatt tomorrow. I mean, what we're really kind of seeing 988 00:50:10,000 --> 00:50:13,800 Speaker 11: here is domestic leisure travel still strong, but you know, 989 00:50:14,000 --> 00:50:16,160 Speaker 11: China is coming back in a big way. If anything, 990 00:50:16,320 --> 00:50:20,000 Speaker 11: international revenue prevailable room is now growing more quickly than 991 00:50:20,040 --> 00:50:22,600 Speaker 11: the US, and even within the US, we're seeing some 992 00:50:22,640 --> 00:50:26,280 Speaker 11: shift away from domestic leisure travel, which has been monstrously strong, 993 00:50:26,760 --> 00:50:28,760 Speaker 11: to a little bit of a tilt towards people traveling 994 00:50:29,000 --> 00:50:33,400 Speaker 11: overseas Europe and Asia and within China in country travels back. 995 00:50:33,800 --> 00:50:36,560 Speaker 11: So we're kind of seeing the leadership maybe perhaps in 996 00:50:36,800 --> 00:50:40,360 Speaker 11: pricing and revenue shift to a little more towards the 997 00:50:40,440 --> 00:50:43,880 Speaker 11: upscale luctory side and more towards non US and China. 998 00:50:44,440 --> 00:50:46,520 Speaker 11: US still strong, but you know, I think with the 999 00:50:46,600 --> 00:50:51,600 Speaker 11: travel restrictions being relieved in China, that's coming back to. 1000 00:50:51,640 --> 00:50:53,120 Speaker 1: And one of the areas to see that, I know 1001 00:50:53,160 --> 00:50:55,800 Speaker 1: it is also in your purview, which is the Macau 1002 00:50:56,120 --> 00:51:00,680 Speaker 1: and that is the gaming driver glow believe what's going 1003 00:51:00,680 --> 00:51:01,360 Speaker 1: on in mccau. 1004 00:51:01,480 --> 00:51:03,440 Speaker 11: You know, So Macau you look at like the second 1005 00:51:03,520 --> 00:51:06,719 Speaker 11: quarter also, you know, it's down still pretty sharply versus 1006 00:51:06,760 --> 00:51:09,800 Speaker 11: pre pandemic, like thirty eight percent in the second quarter. 1007 00:51:10,200 --> 00:51:14,040 Speaker 11: That's that's largely because we're the travel restrictions in Macau 1008 00:51:14,400 --> 00:51:17,840 Speaker 11: China eased more slowly than North America, and the vip 1009 00:51:18,160 --> 00:51:21,359 Speaker 11: junk at credit business was pretty much banned, if you will. 1010 00:51:21,400 --> 00:51:23,200 Speaker 11: So now we're relying more on the mass business. It 1011 00:51:23,280 --> 00:51:27,360 Speaker 11: is coming back. Mass is down a lot less than before, 1012 00:51:27,880 --> 00:51:30,120 Speaker 11: and the business there was getting stronger. It's just going 1013 00:51:30,200 --> 00:51:33,600 Speaker 11: to take longer because the travel restrictions were in place 1014 00:51:33,880 --> 00:51:34,239 Speaker 11: for a while. 1015 00:51:34,280 --> 00:51:35,880 Speaker 1: What's the play there if I want to get a 1016 00:51:35,920 --> 00:51:38,280 Speaker 1: play on macaw as the Las Vegas Sands. 1017 00:51:39,120 --> 00:51:42,319 Speaker 11: So you know, there's the companies that are traded in 1018 00:51:42,480 --> 00:51:45,440 Speaker 11: and purely exposed there, and then within the North American 1019 00:51:45,440 --> 00:51:49,239 Speaker 11: companies that I cover, among degrees of exposure, you know, 1020 00:51:49,320 --> 00:51:51,399 Speaker 11: Sands has got like the most properties and the most 1021 00:51:51,400 --> 00:51:55,640 Speaker 11: exposure one with when MGM is a slightly smaller percentage 1022 00:51:55,640 --> 00:51:57,960 Speaker 11: of his casual but all the big three MGM stands 1023 00:51:58,000 --> 00:51:59,440 Speaker 11: and when I have exposure there. 1024 00:51:59,560 --> 00:52:01,120 Speaker 1: Look at this stocks for those I mean they're all 1025 00:52:01,120 --> 00:52:02,879 Speaker 1: for trailing twelve months, they're all up kind of fifty 1026 00:52:02,960 --> 00:52:07,600 Speaker 1: sixty percent Las Vegas Sands win. Yeah, So interesting stuff, 1027 00:52:08,320 --> 00:52:10,600 Speaker 1: all right, Brian Eger, thank you so much. We can 1028 00:52:10,760 --> 00:52:13,240 Speaker 1: talk about anything with this guy. I mean, hotels, crews, 1029 00:52:13,320 --> 00:52:15,040 Speaker 1: the whole nine yards. He's got to cover all the 1030 00:52:15,120 --> 00:52:18,799 Speaker 1: fun stuff Brian Nagger covers, and he's not really a 1031 00:52:18,800 --> 00:52:21,759 Speaker 1: gambler either. That's what's really fun. Even we've gone through 1032 00:52:21,800 --> 00:52:23,919 Speaker 1: all to Vegas, they know I'm coming. 1033 00:52:27,200 --> 00:52:30,279 Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can 1034 00:52:30,320 --> 00:52:34,120 Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever 1035 00:52:34,200 --> 00:52:37,920 Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 1036 00:52:38,120 --> 00:52:40,040 Speaker 2: at Matt Miller nineteen seventy three. 1037 00:52:40,480 --> 00:52:41,320 Speaker 8: And I'm Faul Sweeney. 1038 00:52:41,400 --> 00:52:44,000 Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you 1039 00:52:44,040 --> 00:52:47,399 Speaker 1: can always catch us worldwide at Bloomberg Radio