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Speaker 3: While fetchair.
Speaker 4: J Powell, as you know up on Capitol Hill today,
Speaker 4: remarks before the House Financial Services Committee, saying it's too
Speaker 4: early to know the economic impact of the tensions in
Speaker 4: the Middle East, saying the Fed would look at the
Speaker 4: overall situations if oil price is surge. Also, the economy
Speaker 4: is slowing this year and immigration is one reason. And
Speaker 4: of course he talked about tariffs, Tariffs and inflation, and inflation.
Speaker 5: Policy changes continue to evolve and their effects on the
Speaker 5: economy remain uncertain. The effects of tariffs will depend, among
Speaker 5: other things, on their ultimate level. Expectations of that level
Speaker 5: and thus of the related economic effects reached a peak
Speaker 5: in April and have since declined. Even so, increases in
Speaker 5: tariffs this year are likely to push up price prices
Speaker 5: and way on economic activity.
Speaker 6: The FED chair, saying he expects meaningful tariff effects in June, July,
Speaker 6: and August. He also said that he doesn't think the
Speaker 6: FED needs to rush to interest rates with the economy strong.
Speaker 6: So a lot of ground covered, and we wanted to
Speaker 6: cover it all as well with two of Bloomberg's finest
Speaker 6: down in our Washington DC bureau Michael McKee, Bloomberg News
Speaker 6: International Economics and Policy correspondent. In here in our Bloomberg
Speaker 6: Business Week studio, we've got Alex Steele. She's going to
Speaker 6: talk oil in the energy markets and tie it into
Speaker 6: the macro environment. Mike, First question, do you, I think
Speaker 6: a lot of people remember just less than a week
Speaker 6: ago hearing from FED Chair j Powell in the press conference.
Speaker 6: How would you characterize any differences or distinctions between what
Speaker 6: we heard today versus what we heard from him last week.
Speaker 7: Oh? I think Tim, that basically what you were hearing
Speaker 7: is an echo chain. Today his prepared remarks were almost
Speaker 7: word for word the same as the statement he gave
Speaker 7: at the beginning of the press conference last week. It's
Speaker 7: the sort of hippocratic oath of the FED. First, do
Speaker 7: no harm to the markets, don't move anything, and that
Speaker 7: was his goal.
Speaker 8: Today.
Speaker 7: He just underlined what the FED has been saying all along,
Speaker 7: that they're going to have to wait for more information
Speaker 7: on the impact of tariffs and the impact of other
Speaker 7: fiscal policies from the administration before they know what they
Speaker 7: will have to do. He did say that if we
Speaker 7: see inflation go down continue to go down, and if
Speaker 7: we see unemployment go up, those could be two reasons
Speaker 7: to cut interest rates, but he didn't put a time
Speaker 7: frame on it and sort of leaned against the idea
Speaker 7: that they could do anything in July. So we walk
Speaker 7: away from this with pretty much the same view that
Speaker 7: we had going into it, that the FED is not
Speaker 7: in any hurry.
Speaker 4: All right, So let's talk about oil because p certainly
Speaker 4: asked about oil. Alex We've seen oil plunging what for
Speaker 4: a second straight day on what seems to be easing
Speaker 4: tensions in the Middle East. We just had a guest
Speaker 4: on not really guessed. She's family dina Esfandieri, and she said,
Speaker 4: you know, there's not a lot different that there is
Speaker 4: still a lot of risk out there in the Middle East.
Speaker 4: Why are oil markets just kind of backing off what
Speaker 4: you read on it?
Speaker 9: Yeah, Also, oil prices are now lower than they were
Speaker 9: before Israel's attack on Iran on the thirteenth of June.
Speaker 9: It just means that there's more supply than demand. I mean,
Speaker 9: that's the thing, is that the oil markets can be
Speaker 9: very different than the broader geopolitical risk market because it's
Speaker 9: pure supply and demand. In order to have a kind
Speaker 9: of supply shock, you also need strong demand. And if
Speaker 9: you don't have that kind of increasing rising demand, you're
Speaker 9: not going to have the same kind of supply shock.
Speaker 9: And two parts of that one is that China was
Speaker 9: stockpiling before this, so they got a lot of oil anyway,
Speaker 9: and China is the one that buys Moran, by the way,
Speaker 9: so they would feel the shock. Apparently this is riis
Speaker 9: Dad was reporting this earlier today that there are ships
Speaker 9: that with Iranian oil is waiting off of Chinese ports,
Speaker 9: So it's there product market maybe a little different. Supplies
Speaker 9: there are a little bit lower, but they have refineries
Speaker 9: if they can run, and it'll be okay.
Speaker 3: That's why.
Speaker 6: So Alex does the conversation now shift about the way
Speaker 6: that oil is an economic indicator in terms of how
Speaker 6: demand for it around the world is kind of indicating
Speaker 6: the health of the economy asking me.
Speaker 9: A macroarconomic question.
Speaker 10: Key, then, but it's about oil, So I go to
Speaker 10: alex oil.
Speaker 9: Does it reflect macroeconomics?
Speaker 6: Yeah, because you know, we when we think about the
Speaker 6: narrative with oil over the last week or twelve days,
Speaker 6: it's been about okay, tensions in the Middle East. This
Speaker 6: is why we've seen prices go up in more peaceful times.
Speaker 6: When we look at oil prices, we look at it
Speaker 6: for clues about demand outside of the United States, demand
Speaker 6: inside of the United States, and what that says about
Speaker 6: the macroeconomic environment.
Speaker 9: I'm laughing because when we're looking at demand concerns and
Speaker 9: lower oil prices, then we hibit and talk about the
Speaker 9: supply picture.
Speaker 3: So it's like you.
Speaker 11: Can't get one for one.
Speaker 9: So then if you're taking a look at the macroeconomic environment,
Speaker 9: I would also say, oh, but take a look at supply.
Speaker 3: We're still pretty well supplied OPAC plus.
Speaker 9: Really Saudi Arabia is trying to add oil back into
Speaker 9: the market. You could make an argument that are run
Speaker 9: any supply outage you may see would provide space for
Speaker 9: Saudi Arabia to do that. So if you have forty
Speaker 9: dollars oil is at telling you that the global economy
Speaker 9: is falling off a cliff. Not necessarily. There are other
Speaker 9: factors that are a play that are supplying.
Speaker 3: All right, So Mike, the volley goes to you.
Speaker 4: As Alex said, all right, macroeconomic when it comes to
Speaker 4: oil prices, pitch your Jpal definitely asked about it in
Speaker 4: terms of concerns if we've got higher oil prices, how
Speaker 4: that feeds into higher inflation, woes and worries. Jpeal seemed
Speaker 4: to be like, unless this sticks around for a while,
Speaker 4: it's not really an issue.
Speaker 8: Yeah, that's the way the FED looks at it now.
Speaker 7: They went through the original sin of Arthur Burns cutting
Speaker 7: interest rates when oil prices went up during the original
Speaker 7: oil crisis in nineteen seventy three, and at that time
Speaker 7: what ended up happening, of course, is the great inflation
Speaker 7: that we saw, and the FED doesn't want to do
Speaker 7: that again. They've learned that you don't cut rates to
Speaker 7: deal with a supply problem like that. Instead, they would
Speaker 7: wait and see what the impact on the overall economy is.
Speaker 7: And for it to have an impact on the overall economy,
Speaker 7: it would take some time. It would have to get
Speaker 7: into other things besides just the gasoline in your tank,
Speaker 7: get into petrochemicals, get into paint, get into pharmaceuticals, all
Speaker 7: the things that at some point use petroleum. So right
Speaker 7: now there doesn't seem to be any reason to worry
Speaker 7: about it, particularly now that prices are going down. But
Speaker 7: the FED chair made it clear that that's not something
Speaker 7: that's a major concern for them. And also, over the years,
Speaker 7: petroleum prices have become a much smaller impact on what
Speaker 7: the US spends because we've gotten so much more energy efficient,
Speaker 7: so it would even take low longer for to have
Speaker 7: some sort of effect than it did back in the seventies.
Speaker 4: I love that you went there because that was going
Speaker 4: to be my follow up, Alex come back in in
Speaker 4: terms of oil, are we going to ever see? Could
Speaker 4: we see one hundred dollars a barrel oil?
Speaker 12: Like?
Speaker 3: The way the.
Speaker 4: World is moving And even though we maybe have an
Speaker 4: administration that isn't so embracing evs and alternative energy like,
Speaker 4: has that kind of horse left the stable internally?
Speaker 13: Think?
Speaker 14: So?
Speaker 9: I mean, I think what the read through is that
Speaker 9: you're going to see more oil volatility, not necessarily oil
Speaker 9: price spikes that we may have seen in the last
Speaker 9: save fifteen twenty years, and a big part of that
Speaker 9: has to do with US shale. So we look at
Speaker 9: that as the reserve. Right, we had so much oil,
Speaker 9: it's all good. The problem though, is that a lot
Speaker 9: of the really good stuff has already been drilled. So
Speaker 9: the stuff you're getting is a little gas year, So
Speaker 9: less oil, more gas, and it's getting harder, maybe more
Speaker 9: expensive to drill.
Speaker 3: It doesn't mean that like shales toast.
Speaker 9: It just means that might not have the same kind
Speaker 9: of growth rate that we're used to. So you take,
Speaker 9: you know, you change the world for shale. You have
Speaker 9: says on Russian oil, ven A soil and oil TVD.
Speaker 9: What happens with iron? Yeah, sure, you could definitely get that.
Speaker 9: The question is do we stay there? And that, I
Speaker 9: think is the question that may not happen.
Speaker 6: So what are what are the economics of exploration here
Speaker 6: in the US right now? In an environment where the
Speaker 6: President wants to have so called energy independence in the
Speaker 6: United States and also wants to see companies drill, baby, drill.
Speaker 9: So I love that he tweeted to Secretary Right because
Speaker 9: when I have interviewed Secretary Right about oil, he's like dude,
Speaker 9: I'm not an oil guy and the energy guy. And
Speaker 9: then he's like not taking that mantle. Well, Mike McKee
Speaker 9: and I did a piece on this for Wall Street Week.
Speaker 9: It was a two fur and it was just about
Speaker 9: this very issue.
Speaker 13: What was the question?
Speaker 6: The economic I love it, the economics for oil exploration
Speaker 6: in an environment such as this. If oil prices aren't
Speaker 6: necessarily out one hundred dollars a barrow like Carrol's asking,
Speaker 6: then is the incentive actually there for American companies to
Speaker 6: do this expensive process?
Speaker 9: Forty they're definitely loose some money. They're shutting stuff in fifty.
Speaker 9: They're recalculating what they're spending, how they're spending it. Maybe
Speaker 9: on the margins, maybe they're drilling, but they're not completing
Speaker 9: their wealth. They're keeping that oil on the ground. Sixties
Speaker 9: they're fine. They can cover everything. Seventies their goal, and
Speaker 9: they're going going going.
Speaker 10: Get her a role on land man. That's what I'm
Speaker 10: going to say.
Speaker 3: You can forget the question. She can forget the question.
Speaker 4: Anytime she responds like that, I'm on back in because
Speaker 4: as we do talk about inflation, I mean, what's the
Speaker 4: bigger concerns when it comes to inflation remaining sticky here
Speaker 4: in the United States, What is it that we really
Speaker 4: have to worry about at this point If it's not
Speaker 4: really maybe higher oil prices or energy prices, what is it.
Speaker 8: Well, it's been changing, actually, Caro.
Speaker 7: All Over the time, we were watching housing as a
Speaker 7: very sticky point of inflation, but house prices are starting
Speaker 7: to come down now. We saw a decline in the
Speaker 7: case Shiller numbers today. Overall, the housing market weakening, in
Speaker 7: large part because Fed interest rates are keeping people from
Speaker 7: taking out mortgages. So we look beyond that, and what
Speaker 7: you're really going to be looking at is the kind
Speaker 7: of things that the President is talking about tariffing consumer
Speaker 7: goods like clothing, which actually fell in price the last
Speaker 7: couple of months. So we're still looking for the things
Speaker 7: that are going to be sticky in inflation, but they
Speaker 7: seem to be changing even as we speak.
Speaker 8: So that's another reason for the.
Speaker 7: Fed to step back and try to figure out which
Speaker 7: categories and why prices are staying up or going up.
Speaker 6: Mike Any addressing from the Federal Reserve Chair about the
Speaker 6: potential for a rate cut in July. Given since he
Speaker 6: spoke last week, we've heard a couple different FED officials
Speaker 6: come out and say that's a possibility.
Speaker 8: No, he stayed away from that.
Speaker 7: He was asked about it, and he said, when we
Speaker 7: get the right information about what we need, we can
Speaker 7: consider cutting rates.
Speaker 8: Did not put a time frame on it.
Speaker 7: And I might point out that we heard from Atlanta's
Speaker 7: raphae Al Bostik this morning in a Reuter's interview. We
Speaker 7: heard from Beth Hammock of Cleveland today, we heard from
Speaker 7: John Williams, the New York FED president, and all of
Speaker 7: them have said no to July, that they think rates
Speaker 7: are going to stay higher for a little bit longer,
Speaker 7: maybe September, but July doesn't seem to be the majorities view.
Speaker 3: Those FED creatures are such shy individuals.
Speaker 4: We never we never hear from them. It's a quiet
Speaker 4: rate environment on the energy world. Does it make a
Speaker 4: difference the cost of money for them like it does
Speaker 4: for a lot of.
Speaker 9: Business Thinking about that a little bit less it did
Speaker 9: back in like twenty fourteen, because you had a lot
Speaker 9: of companies that had negative cash flow and had to
Speaker 9: borrow a lot, and those rates were high and that's
Speaker 9: why you got to wash out. But there's been so
Speaker 9: much consolidation that maybe not in the same kind of way.
Speaker 4: One last question because it plays into the geopolitics. I mean,
Speaker 4: you see Saudi Arabia and the Middle East really kind
Speaker 4: of looking to diversify in terms of their exposure. I mean,
Speaker 4: they certainly see the energy markets as not going to
Speaker 4: be you know, the money machine that it's been, you know,
Speaker 4: for such a long time. Are they right to like, well,
Speaker 4: this will oil ultimately change maybe geo politics going forward.
Speaker 3: Just kind of about thirty seconds.
Speaker 9: Yeah, it's going to be oil and everything else at
Speaker 9: the same time, and that will be a different kind
Speaker 9: of fight than when it comes to energy. It's going
Speaker 9: to be energy security and energy nationalization. But it's not
Speaker 9: necessarily going to mean oil. It can mean other forms
Speaker 9: as well.
Speaker 10: All Right, I got ten seconds twenty.
Speaker 6: I don't know, Mike, you did so great that we
Speaker 6: get ten seconds more from Mike Jay Powell tomorrow. Any
Speaker 6: indication that the senators could ask different questions than the
Speaker 6: members of the House or.
Speaker 3: Is it rinse repeat, wash rints repeat.
Speaker 7: Probably wash rints repeat. Although we might get a little
Speaker 7: more on banking. There was very little talk of banking
Speaker 7: regulations today.
Speaker 3: All right, Like we said, truly, truly.
Speaker 4: Two of Bloomberg's finest are Michael McKee out there in DC,
Speaker 4: international Economics and Policy correspondent, and of course our Alex Steele,
Speaker 4: anchor for Bloomberg Television Radio.
Speaker 3: We love you both. This is Bloomberg Business Weekdaily.
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Speaker 4: Certainly, the conflict between Israel Iran, that Middle East conflict
Speaker 4: is top of mind among NATO allies, and this is
Speaker 4: happening as Israel and Iran appeared to be honoring that
Speaker 4: ceasefire agreement unexpectedly announced by President Donald Trump overnight after
Speaker 4: earlier this morning, on his way to that NATO summit,
Speaker 4: he reacted rather angrily to early breaches of the deal
Speaker 4: by both sides.
Speaker 12: I'm really unhappy if Israel is going out this morning
Speaker 12: because the one rocket that didn't land, that was shot
Speaker 12: perhaps by mistake, that didn't land, I'm not happy about that.
Speaker 12: You know what we have, We basically have twoth countries
Speaker 12: that have been fighting so long. And so hard that
Speaker 12: they don't know what the they're doing. You understand that,
Speaker 12: all right?
Speaker 3: Pretty?
Speaker 4: He did President Trump earlier this morning in DC on
Speaker 4: his way to that NATO summit. He of course is
Speaker 4: there on the ground, as you heard from our Anne Marie.
Speaker 4: Let's head to Geneva, Switzerland and to Bloomberg News Middle
Speaker 4: East JUNI Economics reporter Dina as Fondiari. She has worked
Speaker 4: at the International Crisis Group, the Harvard Kennedy School at
Speaker 4: King's College, London, and the International Institute for Strategic Studies.
Speaker 4: We have been dying to talk to you, Diana, and
Speaker 4: I know it's been a busy couple of weeks for you.
Speaker 4: We had a headline a little more than an hour
Speaker 4: ago Iran's president, the Saudi Crown Prince discussing the US
Speaker 4: and Israel in a call.
Speaker 3: It feels like.
Speaker 4: New relationships maybe being for maybe new alliances.
Speaker 3: You are the author of new order in the golf.
Speaker 4: The rise of the UAE is the order of the
Speaker 4: golf being rewritten as we speak.
Speaker 11: I don't know if it's being rewritten, but it's certainly changing.
Speaker 11: A lot of things are changing at the moment. I
Speaker 11: think the Gulf Arab States were quite confident of their
Speaker 11: position in the region, of their relationship with Trump, of
Speaker 11: their new relationship with Iran a few weeks ago when
Speaker 11: Trump was visiting the region, and now things really do
Speaker 11: seem to be up in the air. They're absolutely terrified
Speaker 11: by what happens last night when Iran targeted US bases
Speaker 11: in Qatar in a first. I think it caught them
Speaker 11: off guards. It is one of their biggest fears to
Speaker 11: be caught in the middle of an escalation between the
Speaker 11: US and Iran, and it happened, And so I think
Speaker 11: everybody is just trying to grapple with what just happened
Speaker 11: and where we go from here.
Speaker 6: Well, it certainly seems like markets here in the US
Speaker 6: are sending the signal that they're confident that this crisis
Speaker 6: has been de escalated, and perhaps it appears that this
Speaker 6: truce between the two countries may actually hold. Is that
Speaker 6: view in your opinion? Is that shortsighted?
Speaker 11: No, I do think that the truce will hold, But
Speaker 11: I think we're going to find ourselves in a new normal.
Speaker 11: I don't think things are going to escalate like they
Speaker 11: have over the course of the last twelve days. I'm
Speaker 11: hopeful that that has been put behind us, because I
Speaker 11: do think that President Trump is now going to wield
Speaker 11: the hammer and try to make sure that both Israel
Speaker 11: and Iran stick to this ceasefire. And also Israel and
Speaker 11: Iran don't want this war to extend beyond these twelve days.
Speaker 11: I think both have been badly hit and so they
Speaker 11: are more than willing to move on. But that doesn't
Speaker 11: mean the tensions between Israel and Iran are going to
Speaker 11: dissipate overnight. These two countries are long standing rivals that
Speaker 11: will continue. So I anticipate that we find ourselves in
Speaker 11: a situation where we were a few months ago, or
Speaker 11: even before October seventh, where the two sides are trading blows,
Speaker 11: but at a lower level, at a more manageable level.
Speaker 6: Will the tensions exist between Israel and Iran until there is,
Speaker 6: or unless there is regime change in Iran?
Speaker 11: You know, it's the regime change question is the million
Speaker 11: dollar question. At the moment. What is for sure is
Speaker 11: that regime change isn't going to happen at the hands
Speaker 11: of Israelian American bombs. There is discontent in Iran, but
Speaker 11: the more Iran faces external attacks, the more you have
Speaker 11: a bit of a rally around the flag effect and
Speaker 11: a sense of nationalism that infuses the country, which we're
Speaker 11: kind of in the middle of right now, and so
Speaker 11: people put aside their discontent and come together in the
Speaker 11: face of this external enemy. The enmity with Israel is
Speaker 11: really from government's official to government official. It doesn't really
Speaker 11: trickle down to the people. But what happens is when
Speaker 11: you have these cycles of escalation, then that's when it
Speaker 11: trickles down to the people. That's when they start to
Speaker 11: feel it personally. So the faster these wars are dealt with,
Speaker 11: the better it is.
Speaker 3: Hey, you know on that.
Speaker 4: And I'm curious in terms of tensions continuing certainly between
Speaker 4: Iran and Israel. Let me just go back to something
Speaker 4: that came out former US Secretary of State under President Biden,
Speaker 4: Anthony Blincoln, in an op ed in The New York
Speaker 4: Times critical of President Trump's strikes in Iran, he does
Speaker 4: hope it works, though he noted that Iran will essentially
Speaker 4: build back their nuclear enrichment capabilities, and he said, finally, well,
Speaker 4: there's no doubt the Americans strikes set back Iran's nuclear ambitions.
Speaker 4: Iran could rebuild quickly in locations and adepts virtually immune
Speaker 4: to airstrikes while pursuing weaponization at the same time. So
Speaker 4: he goes on to say, while their program has been
Speaker 4: significantly disrupted and buying time is a good thing, it
Speaker 4: underscores that sticking with the JCPOA was the better option.
Speaker 4: It bought US at least fifteen years ago instead of
Speaker 4: just a few, or bought US at least fifteen years
Speaker 4: instead of just a few. And that was, of course
Speaker 4: the Joint Comprehensive Plan of Action, that twenty fifteen agreement
Speaker 4: between Iran and several world powers.
Speaker 3: So is he right that?
Speaker 4: I mean, will these tensions continue because Iran will continue
Speaker 4: to want to have those nuclear enrichment capabilities or do
Speaker 4: you think there is a truce where they say I'm out,
Speaker 4: I'm done.
Speaker 11: Realistically, Look, I think it's really hard to imagine that
Speaker 11: Iran is going to put its hands up after facing
Speaker 11: twelve days of attacks plus a round of US attacks,
Speaker 11: and say, you know what, that program that we in
Speaker 11: all that money, all that energy, all that time into,
Speaker 11: We're going to give it up just because of twelve
Speaker 11: days of air stripes. I just don't foresee that happening.
Speaker 11: I do foresee, however, that Iran will be willing to talk,
Speaker 11: will be willing to negotiate, But it was already willing
Speaker 11: to do that, and it was already at the negotiating
Speaker 11: table before this escalation round began twelve days ago, so
Speaker 11: I don't think that will have changed that much. But
Speaker 11: Iran does have one red line, and that red line
Speaker 11: is the ability to continue enriching on its soil. I
Speaker 11: think Iran is going to be wetted to keeping that.
Speaker 11: It will be willing to lower the enrichment level or
Speaker 11: the amounts of stockpiles that it keeps, but I do
Speaker 11: think that symbolically it has to keep some enrichment on
Speaker 11: its soil.
Speaker 6: There's still that question now of where that enriched uranium went,
Speaker 6: and there are also questions about the battle assessment report
Speaker 6: of what exactly those bunker busting bombs accomplished over the weekend.
Speaker 6: Unknown still here, and I'm wondering what your view is
Speaker 6: given the unknowns here and just the view of the
Speaker 6: based on the folks you've talked to, the reporting out
Speaker 6: of the region, if folks feel like that region is
Speaker 6: safer than it was twelve days ago now, as a
Speaker 6: result of what's happened.
Speaker 11: If you're asking me if we're better off now than
Speaker 11: we were twelve days ago, then I think my answer
Speaker 11: is going to have to be no. What we've achieved
Speaker 11: with these air strikes, I think is very little. Satellite
Speaker 11: imagery appears to indicate that the only thing that really
Speaker 11: has been affected is the entrances to some of Iran's
Speaker 11: nuclear facilities, the three that were targeted, but not much more.
Speaker 11: Prior to that, as you mentioned, Iran had already moved
Speaker 11: some of that highly enriched uranium out of the facilities.
Speaker 11: And what you've effectively done is bolstered that Iranian desire
Speaker 11: that had been kept under a lid for a long
Speaker 11: time to really make a dash for the bomb, And
Speaker 11: on top of that, you will have driven the program
Speaker 11: further underground, further hidden behind closed doors, buried further underground,
Speaker 11: especially now that we know that the bunker busters don't
Speaker 11: appear to be that effective, and so to me it
Speaker 11: looks frightening. We find ourselves in a situation where perhaps
Speaker 11: you've gained a couple of months or maybe a year,
Speaker 11: but ultimately you've reinjected Iran with a desire to go
Speaker 11: for a nuclear weapon, something which it hadn't done up
Speaker 11: until now.
Speaker 4: Dina, What about Iran's proxy militant groups Hesblah and Hamas
Speaker 4: they were refusing, are unable to enter the fight in
Speaker 4: support of Iran and its golf neighbors are were urging restraint.
Speaker 4: Will they continue to be present in whatever is the
Speaker 4: next chapter of Iran?
Speaker 14: So?
Speaker 11: I think Iran's partnerships with these groups in the region,
Speaker 11: those partnerships will endure, but the groups themselves have been weakened.
Speaker 11: It's undeniable. After over eighteen months of war with Israel.
Speaker 11: Has Bolah has been decapitated, much of its capabilities has
Speaker 11: been affected. Even though who these and the fighting facing
Speaker 11: US strikes were weakened. Now all of these groups will
Speaker 11: retain some of their capabilities, but they're going through a
Speaker 11: bit of a reckoning right now and figuring out what
Speaker 11: it is that they want, what that relationship with Iran
Speaker 11: will look like in the future, how they're going.
Speaker 3: To work together.
Speaker 11: And that's part of the reason why you've seen them
Speaker 11: be so quiet in response to this direct war between
Speaker 11: Israel and Iran. They haven't offered themselves up to help,
Speaker 11: and Iran hasn't asked them to help because I think
Speaker 11: both sides are trying to figure out where we go
Speaker 11: from here after being weakened.
Speaker 3: One thing I'm going to ask you.
Speaker 4: China also, in a very sucsc statement, criticize the US
Speaker 4: strike in Iran and the nuclear facilities, reiterated that's willing
Speaker 4: to join international efforts to restore peace in the Middle East.
Speaker 4: You've co authored the book Triple Access, Iron's relations with
Speaker 4: Russia and China. Where is China and Russia on all
Speaker 4: of this and where will they be in the future.
Speaker 11: Well, I think that relationship between Iran, Russia, and China
Speaker 11: is going to endure, it's going to continue to grow.
Speaker 11: But they have a really weird sense of what working
Speaker 11: together as partners is like. It's very different to the
Speaker 11: way that in the West we would view alliances. Their
Speaker 11: relationship is very compartmentalized. They're distrustful of each other. They
Speaker 11: only work together when they see ida eye and they
Speaker 11: ignore issues that they don't see ida eye on, and
Speaker 11: that's likely to continue. It also makes Russia and China
Speaker 11: unreliable partners in times like this, because while they will
Speaker 11: step up and condemn the attacks and pretend to side
Speaker 11: with Iran and maybe even help Iran in the UN,
Speaker 11: for example, they won't really take more concrete steps to
Speaker 11: assist Iran in a space off with Israel in the US.
Speaker 6: My last question for you is the status of the
Speaker 6: relationship between the US and the Gulf States, specifically the
Speaker 6: ones that the President visited in recent weeks and touted
Speaker 6: the business and economic ties between the countries. Is that
Speaker 6: are those relationships intact?
Speaker 11: Well, I think from the perspective of those Golf are
Speaker 11: of states, they saw President Trump's visit as a big
Speaker 11: moment for them. It was kind of their reacceptance amongst
Speaker 11: the rest of the international community and especially in the
Speaker 11: US's arms. So it was a very important moment for them,
Speaker 11: and they felt as though they had the President's ear
Speaker 11: and they could talk to him about issues, whether bilateral
Speaker 11: or regional. And I think today they're a little bit
Speaker 11: disappointed because during that visit they had set some red lines,
Speaker 11: they had expressed their support for the US Iran negotiations,
Speaker 11: and they had really impressed upon President Trump how critical
Speaker 11: it was that this doesn't escalate into a regional war,
Speaker 11: and that's exactly what happened.
Speaker 3: So appreciate it.
Speaker 4: I can't tell you, we know you're busy and this
Speaker 4: was super helpful to us, and we know the Bloomberg audience.
Speaker 3: Diina, thank you so much. Dina Sfondieri.
Speaker 4: She's Bloomberg News Middle East Geoeconomics reporter, joining us there
Speaker 4: from Geneva, Switzerland.
Speaker 1: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 6: Hey, we really wanted to do a deep dive on
Speaker 6: driver list cars, and we've got the perfect deal. The
Speaker 6: reason why we wanted to talk about this is because
Speaker 6: Uber shares among the best performing in the S and
Speaker 6: P five hundred right now, fourth best performer, up eight percent.
Speaker 6: The company said in a press release that it'll be
Speaker 6: partnering with Waimo to offer ride sharing through autonomous vehicles
Speaker 6: in Atlanta. On the other side, you've got a company
Speaker 6: like Tesla on a points basis, the worst performing stock
Speaker 6: in the S and P five hundred, Carol down one
Speaker 6: point seven percent, kind of giving back some of the
Speaker 6: gains that it got yesterday right on the successful or
Speaker 6: what was purported to be sick successful demonstration of its
Speaker 6: driverless car tech in Austin.
Speaker 1: Yeah.
Speaker 6: Now, there are concerns that regulators are looking into incidents
Speaker 6: where the self driving robotaxes appeared to violate traffic laws
Speaker 6: during that day offering paid rides in Austin.
Speaker 4: Yeah, I mean there's some concerns, some questions. We've got
Speaker 4: the perfect duo to talk about all of this. Max
Speaker 4: Chaptain is Bloomberg Business we communist, co host of the
Speaker 4: elon Ink podcast. Craig Trudell is Bloomberg News Global Autos
Speaker 4: Editor and the editor of the Hyperdrive newsletter. Max right
Speaker 4: here in our Bloomberg Interactive Broker studio, Craig out there
Speaker 4: in London. Craig, let's start with you. All right, So
Speaker 4: there's a lot going on in this sector. What do
Speaker 4: we know about how things have been going down in
Speaker 4: Atlanta in Austin, Like, how it's all progressing and full disclosure,
Speaker 4: Tim and I both have done Waymos on the West Coast.
Speaker 4: I've also done them in Arizona and we kind.
Speaker 3: Of love them. So how's it all going down?
Speaker 4: Because all of a sudden, it feels like everybody's all
Speaker 4: in on these driverless cars.
Speaker 13: Yeah, I have to say, I mean, just to start
Speaker 13: your experience of Waymos, you know, being sort of surprised
Speaker 13: and delighted from the sounds of it is consistent with
Speaker 13: you know, basically everything I hear at this point. You
Speaker 13: occasionally do hear people sort of to the extent that
Speaker 13: they denigrate you know, Waymos at all. It's just oh gosh,
Speaker 13: you know, I would be too scared to get into
Speaker 13: one of those. But you know, almost universally when you
Speaker 13: talk with people who experience it, you know, they get
Speaker 13: a kick out of it. You don't see you know,
Speaker 13: a ton of sort of negative takes on sort of
Speaker 13: how they performed. They've held up quite well. The company's
Speaker 13: been forthcoming about its safety record and is pretty transparent
Speaker 13: about if and when it does have issues. I think
Speaker 13: things are sort of night and day in terms of
Speaker 13: how you know, the company has approached things with you know,
Speaker 13: in comparison to Tesla, where you have Musk you know,
Speaker 13: for years sort of hyping up what is driver assistance,
Speaker 13: you know, software that that he offers as something more
Speaker 13: than that and calling it full self driving. You know,
Speaker 13: not delivering it and until you know, this past weekend
Speaker 13: and once he has taken people out from behind the wheel.
Speaker 13: You know, on day one, we see these incidents that
Speaker 13: are that are pretty troubling and getting the attention of
Speaker 13: the National Highway Traffic Safety Administration.
Speaker 6: Okay, we're going to talk more about those in a second.
Speaker 6: I want to bring in Max Chafkin, who's been following
Speaker 6: the industry closely. In Max, you've been when we've spoken
Speaker 6: to you in the past about the driver list car technology,
Speaker 6: specifically WEIMO, you've been You've been a little skeptical about it.
Speaker 15: I think everything Craig is saying, everything you're saying is true.
Speaker 15: The questions around Waimo are business questions. Essentially, is this.
Speaker 10: More than a very very.
Speaker 15: Expensive, money losing attraction for tourists in a handful of cities,
Speaker 15: which it definitely is compelling in that sense, there are
Speaker 15: questions and these are questions that you know, even WEIMO
Speaker 15: has acknowledged, like they need to figure out they need
Speaker 15: to turn this into a money making business. They feel
Speaker 15: like they've gotten the technology to a point that's pretty
Speaker 15: pretty good, and now they're working on the business stuff
Speaker 15: and this uber deal of course is part of that.
Speaker 15: That's part of why you're seeing the stock go up.
Speaker 15: And then you know when you when you compare it
Speaker 15: to Tesla, the Uber stock go up when you compare
Speaker 15: it to Tesla. Tesla is I think technically, like a
Speaker 15: good way to think about this is they are years
Speaker 15: behind where Weimo is. Like Weaimo was doing some of
Speaker 15: the stuff that Tesla is doing, you know, years ago,
Speaker 15: like five years ago. There are ways in which Tesla, yes,
Speaker 15: is is impressive and ahead. There are a lot of
Speaker 15: Tesla is a lot of miles logged using its driver
Speaker 15: assistance technology, which it also confusingly calls full self driving.
Speaker 15: But Tesla is really at the beginning of this and
Speaker 15: like when we're like they have not even even this
Speaker 15: pilot program we're talking about very modest, it doesn't include
Speaker 15: members of the public, just a handful of influencers in
Speaker 15: a very small in a very small part of.
Speaker 10: Austin, so just very early.
Speaker 15: And everything that Weimo is doing, both in terms of
Speaker 15: customers and then in terms of on the business side
Speaker 15: kind of makes that point just shows you how wide
Speaker 15: the gap is and how far Tesla is, at least
Speaker 15: at this moment from actually operating you know, a money making.
Speaker 3: Robotexis all right, So it's came up with the news.
Speaker 4: We show that there's no So some folks in some
Speaker 4: emerging market country that aren't sitting.
Speaker 3: With a joystock joystick like actually driving the way most
Speaker 3: there are monitors.
Speaker 10: There are people monitoring the winows.
Speaker 15: I think the question they're not using joysticks, coordinate.
Speaker 3: Steering wheels, they're not using little steering wheels, but they
Speaker 3: are there watching the Waymo.
Speaker 15: That that's like part of the that's like part of
Speaker 15: the business problem for both of these companies, Like you
Speaker 15: potentially have like this very expensive piece of hardware and
Speaker 15: then a bunch of expensive engineers, engineers who cost more
Speaker 15: money than uber drivers, who are having to oversee these
Speaker 15: autonomous systems. So that's still a question with Waymo. It's
Speaker 15: a bigger question with Tesla.
Speaker 6: Hey, Greig, come on back in here, because you've covered
Speaker 6: the you cover more than just the tow companies and
Speaker 6: also more than just the sort of driverless element here.
Speaker 6: But a question that I have is where this where
Speaker 6: does this technology leave the traditional automakers Because there was
Speaker 6: this promise from Elon Musk years ago. I mean, I've
Speaker 6: lost count of how many years ago this was, but
Speaker 6: he basically said, your tesla will become more valuable because
Speaker 6: you will be able to essentially set this thing free
Speaker 6: as a ROBOTAXI when you're not riding around in it,
Speaker 6: and you'll be able to charge for that. Where Where
Speaker 6: does all of this lead to more traditional automakers?
Speaker 13: I mean, I think to your point, you know, there
Speaker 13: was a real sort of freak out in Detroit and
Speaker 13: Wolfsburg and in you know, Toyota City almost a decade
Speaker 13: ago now, because Musk started making these you know, pronouncements
Speaker 13: along along the lines of what you're describing, and everyone
Speaker 13: kind of panicked, right, and we saw, you know, sort
Speaker 13: of everybody you know, come put together plans to sort
Speaker 13: of answer what Tesla was up to. You saw GM
Speaker 13: acquire Cruise. You saw Ford, uh, you know invest in
Speaker 13: this company called Argo, and Volkswagen invested.
Speaker 8: In them as well.
Speaker 13: You saw Toyota stand up its own sort of self
Speaker 13: driving you know, outfit and you know, higher sort of
Speaker 13: top notch talent for it. And you know, here we are,
Speaker 13: you know, roughly a decade later, you know, Argos gone bust.
Speaker 13: Cruise has has been a sort of put out of
Speaker 13: its put out of business by GM. I think a
Speaker 13: lot of the established manufacturers are saying, you know what,
Speaker 13: we're going to try and make money off of these
Speaker 13: driver assistance systems that you know, kind of make the
Speaker 13: human driving safer or at least we hope, you know,
Speaker 13: can offer that benefit and this sort of safety and convenience.
Speaker 8: But you know, this is just not going to.
Speaker 13: Happen in in sort of a major way for quite
Speaker 13: some time, and we can't we may not be able
Speaker 13: to afford to invest in it to the extent that
Speaker 13: a company like Google can.
Speaker 8: Yeah, and waimo Google.
Speaker 15: You know, even there we're talking, I don't think we
Speaker 15: know the exact numbers because of the way that they report, report.
Speaker 10: Revenue and so on.
Speaker 15: But they they've they've dumped tens of billions of dollars
Speaker 15: into this. This has been an incredibly expensive endeavor, the
Speaker 15: kind of endeavor that really only a company like Google,
Speaker 15: a really handful of other companies can do. We even
Speaker 15: saw Apple Craig. Craig didn't mention Apple, but they also
Speaker 15: got to try to get into this business and gotten
Speaker 15: out of it for some of the same reasons.
Speaker 3: Having super deep pockets and.
Speaker 15: The challenge here for Tesla. Is that a lot of
Speaker 15: the investors who are betting on this thing, and even
Speaker 15: to some extent Elon Musk have sort of decided that
Speaker 15: this is the future that that you know, Musk has
Speaker 15: said this over and over. You shouldn't think of Tesla
Speaker 15: as a as a regular car maker. You should think
Speaker 15: of it as an AI company.
Speaker 8: And now here it is.
Speaker 15: We're seeing the AI and and you know, it's just
Speaker 15: a long way from being you know, a fully fleshed
Speaker 15: out uh, you know, robo taxi service and and that's
Speaker 15: and whether or not they can somehow get there in
Speaker 15: this like in the crazy timelines that Elon has offered,
Speaker 15: he said they're going to have something like one hundred
Speaker 15: thousand cars on the roadbt end of this year. You know,
Speaker 15: just huge numbers, numbers that would blow Weimo out of
Speaker 15: the water if they delivered.
Speaker 8: I mean, he's created a huge challenge for himself.
Speaker 4: Well, I do also wonder about the value and Craig
Speaker 4: come on back in here, in terms of having whether
Speaker 4: it's Weimo for Alphabet and obviously the self driving for Tesla,
Speaker 4: the amount of data that they get and what they
Speaker 4: learn in terms of technologically creating these We've talked with
Speaker 4: our Steve Mann of Bloomberg Intelligence, who's talked about the
Speaker 4: robotics and the manufacturing that has been going on in
Speaker 4: China and what technological capabilities that has given them. So
Speaker 4: I do wonder by these companies doing these kinds of things,
Speaker 4: what they ultimately get out of it. Is it's still
Speaker 4: a plus?
Speaker 13: Yeah, I mean I think that's been the sort of
Speaker 13: go to messaging on Musk's part, right, is that you
Speaker 13: know my approach, you know, my being elon Musk is
Speaker 13: you know, to put this hardware on every vehicle I sell.
Speaker 13: Uh it's a much cheaper and less robust uh you know,
Speaker 13: hardware set than Weymo puts on its car. Sure, but
Speaker 13: people can afford to actually buy it. I can ingest
Speaker 13: all of this data and uh, you know, I can
Speaker 13: put more cars out on the road, bring in more data.
Speaker 13: Therefore I will eventually win. I think that stood to
Speaker 13: reason to a lot of people. And yet we we've
Speaker 13: it is all sort of theoretical, right, we don't know whether,
Speaker 13: uh you know, that data advantage will mean anything in
Speaker 13: the long run. And we've also sort of you know,
Speaker 13: heard from Musk, you know, sort of conflicting messaging in
Speaker 13: the years since he was you know, making that argument
Speaker 13: of uh, well, we're we're you know, not going to
Speaker 13: sort of hardcode our cars. Uh, you know, based on
Speaker 13: all of the data that we bring in, We're going
Speaker 13: to just you know, sort of build a robust system
Speaker 13: that can sort of make decisions on the fly, and
Speaker 13: we're not going to try and you know, hode into
Speaker 13: our cars what they should or shouldn't do. And so
Speaker 13: you know, there's sort of speaking out of both sides
Speaker 13: of his mouth and a lot of you know, sort
Speaker 13: of theoretical messaging on his part that makes you sort
Speaker 13: of question whether or not, you know, he actually has
Speaker 13: the advantage that was sort of believed, you know, half
Speaker 13: a decade ago.
Speaker 6: Max just want to bring you in for the last
Speaker 6: thirty seconds, had given Elon Musks recently tumultuous relationship with
Speaker 6: President Trump. Does that put the regulatory elements around self
Speaker 6: driving technology for his company?
Speaker 10: Does that put it at risk?
Speaker 15: I mean, I think they're real regulatory questions also some
Speaker 15: maybe some securities questions like people have made claims about
Speaker 15: Musks sort of seeming to exaggerate at times that said,
Speaker 15: I don't think the challenge.
Speaker 3: Here is a regulatory challenge.
Speaker 15: It's a technical challenge. It's on one hand, Elon Musk saying,
Speaker 15: these cars can operate totally autonomously, and you watch in
Speaker 15: the videos and they have somebody in the passenger seat
Speaker 15: with an emergency break, probably somebody sitting in a control center,
Speaker 15: and they're still struggling, you know, And so that's the question,
Speaker 15: how to make the tech work?
Speaker 4: All right, Gotta leave it. They are a great discussion.
Speaker 4: Max Chafkin, of course, and our Craig Truell.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 4: In the meantime we continue, of course, just coming off
Speaker 4: of Fetch your J. Powell a bunch of testimony this
Speaker 4: morning up on Capitol Hill, talking about everything, including the
Speaker 4: need for affordable housing. That comes to against a backdrop
Speaker 4: of National Gauge of US home prices moving up two
Speaker 4: point seven percent from a year earlier in April. That's
Speaker 4: the smallest gain since the summer of twenty twenty three.
Speaker 4: The housing market as we know tim such an important indicator,
Speaker 4: certainly when it comes to the US economy.
Speaker 6: Guest is all over it. She watches all aspects of
Speaker 6: the housing market. It's great to have back with us.
Speaker 6: Katie Hubbard. She's executive vice president of Capital Markets at
Speaker 6: Walton Global. It's the privately owned asset and real estate
Speaker 6: investment company. It's got close to four point five billion
Speaker 6: dollars of land owner management nearly eighty thousand acres under
Speaker 6: management in the US. They operate in the retail, industrial,
Speaker 6: and commercial sectors. Katie joins us from Chicago on this Tuesday. Katie,
Speaker 6: I want to remind everybody Walton Global serves as this
Speaker 6: middle entity between the land owners and then the developers
Speaker 6: of that land, the folks who go out and build
Speaker 6: housing across the United States and indeed now other parts
Speaker 6: of the world. So you have a good idea of
Speaker 6: the supplied demand environment right now. We check in with
Speaker 6: you every few months. How would you describe the demand environment,
Speaker 6: or rather the supply environment when it comes to housing,
Speaker 6: and how that's shifted just in a couple months.
Speaker 14: Yeah, So it's great to be here, Thanks for having me,
Speaker 14: And it's definitely a buyer's market. Right now, we're seeing
Speaker 14: sellers or out numbering buyers by thirty four percent across
Speaker 14: existing inventory, and main members came in for existing home
Speaker 14: sales and they were the lowest we've seen in sixteen years.
Speaker 14: So you're starting to see inventory increase on existing home sales.
Speaker 14: Sitting at one point five million homes for sale. That's
Speaker 14: a twenty percent increase this time over last year on
Speaker 14: existing home sales. So I mean it's definitely a buyer's market.
Speaker 14: And then on new home sales, the builders are really
Speaker 14: just they're doing a great job of being resilient in
Speaker 14: spite of the uncertainty tariff that they're paying right now
Speaker 14: with just people on the sidelines. So they're continuing to
Speaker 14: just build through the cycle and they're dipping into their
Speaker 14: margins to keep the home the home sold and to
Speaker 14: keep the volume going.
Speaker 6: Yeah, I think you know in the US, a lot
Speaker 6: of people are concerned about affordability when it comes to homes.
Speaker 6: I mean, Carol, we're going to be talking about the
Speaker 6: mayor role, yes, race right here in New York. It's
Speaker 6: a New York centric story, but certainly housing affordability front
Speaker 6: center there. And it's not just in New York issue.
Speaker 6: A big question that a lot of people have is, Okay,
Speaker 6: how do you solve this? The federal government is working
Speaker 6: on it. There have been proposals in Congress to actually
Speaker 6: sell off certain federal lands in order to build housing
Speaker 6: on them. Their critics save, that's not necessarily the right
Speaker 6: thing to do because that doesn't increase density in areas
Speaker 6: where people want to live.
Speaker 10: Plus, then you lose some of that federal land, right of.
Speaker 4: Course, and you and I talk about this. It's not
Speaker 4: just about building affordable housing. It's building affordable housing where
Speaker 4: it's needed. Katie, tell us what's going on in terms
Speaker 4: of development work around the nation.
Speaker 3: You guys see that front and center.
Speaker 14: Yeah, so the builders are really adjusting to who can
Speaker 14: purchase the homes because affordability is such a critical factor
Speaker 14: right now. So they're really focusing on that fifty five plus.
Speaker 14: We've got twelve million people turning fifty five plus over
Speaker 14: the next eight years, and that group that demographic controls
Speaker 14: the wealth. They have eighty four trillion dollars of networth
Speaker 14: versus twenty five to thirty four year olds, who are
Speaker 14: those entry level home buyers, they only have eight trillion
Speaker 14: of networth so homebolders are really building communities that are
Speaker 14: having amenities that are going to attract those fifty five
Speaker 14: that fifty five plus cohort because they're not only wealthy,
Speaker 14: but they're also healthy. They want community, they want walkability,
Speaker 14: new urbanism within the communities that they're moving to. They
Speaker 14: want to own homes, but they want smaller homes that
Speaker 14: they don't really have to take care of as much.
Speaker 14: So homebolders are able to adjust build smaller homes, putting
Speaker 14: in wellness centers, things like Blue Zone, Colincier services, and
Speaker 14: just really adapting to the demographic who can purchase homes
Speaker 14: right now.
Speaker 4: Yeah, we've talked a lot about kind of that mature
Speaker 4: market in terms of housing or their needs, whether it's
Speaker 4: for health or living, that it seems to be when
Speaker 4: it comes to real estate. People are certainly willing to
Speaker 4: build to meet that demand because the demand is there.
Speaker 4: Having said that, though, I listened to you, Katie, and
Speaker 4: you know where I'm going to probably go and Jay
Speaker 4: Powell got a lot of questions about this today. You know,
Speaker 4: what about affordable housing? What do we need to kind
Speaker 4: of rack that nut because we've been.
Speaker 3: Wanting to be about it forever.
Speaker 14: The builders, they're doing what they can. They're you know,
Speaker 14: they're trying to build cheaper, smaller homes to to be
Speaker 14: able to get people into homes. But I mean, really
Speaker 14: it's interest rates. People are locked into their home, into
Speaker 14: their low mortgages, and then you know, you're close to
Speaker 14: a seven percent rate. It's now, for the first time,
Speaker 14: actually more affordable to buy a new home than it
Speaker 14: is an existing home. So the builders are adjusting and
Speaker 14: bringing down prices where they can.
Speaker 6: What about when it comes to the actual cost of
Speaker 6: building these things relative to how much it used to
Speaker 6: cost for an entry level home for a family. I
Speaker 6: think that's a big concern that a lot of Americans have,
Speaker 6: is that this stuff has just gotten so expensive compared
Speaker 6: to the wages and the money that people make out there.
Speaker 6: Right now, what's the measurement that we look at to
Speaker 6: sort of understand housing affordability in that context.
Speaker 14: Yeah, I mean, it's actually twice as expensive to own
Speaker 14: a home as it is to rent. And what is
Speaker 14: surprising though, is Lenar reported their public they're on their
Speaker 14: earnings called that they're they're cost of construction materials is
Speaker 14: actually the lowest it's been since twenty twenty one.
Speaker 10: So why do you see that even with tariffs?
Speaker 14: Why is that and they're reporting no impact on tariffs.
Speaker 14: It's because the public, the large public builders, they have
Speaker 14: just such an ability to secure capitals, scale operations, walk
Speaker 14: in the land and keep driving down prices where if
Speaker 14: you're Bob the builder and you're competing with lenaar you can't.
Speaker 14: You're not able to purchase at the at the scale
Speaker 14: that they are, You're not able to offer incentives buy
Speaker 14: down mortgage rates. And so those are the ones where
Speaker 14: home builder sentiment is really hitting rock bottom, and some
Speaker 14: of those homebolders are probably looking at turning in the keys.
Speaker 14: If you're competing across the street from a builder like
Speaker 14: a Lenaro, d R Horton.
Speaker 4: Wait, so did you say, wait, cheaper to buy than
Speaker 4: rent or rent to buy?
Speaker 14: It's cheap. It's cheaper to rent. It's twice is expensive
Speaker 14: to own as it is to rent. So it's and
Speaker 14: I'm sorry if I flip that around, but yes, twice
Speaker 14: as expensive to own a home as it is to rent.
Speaker 14: And that's why people are just it's not attainable right now.
Speaker 14: The demand is there, but it's unrealized demand that we
Speaker 14: have in the market because of the lack of affordability
Speaker 14: with interest rates.
Speaker 4: But we keep saying too though mortgage rates are much
Speaker 4: more normal. What was abnormal was when they were so low.
Speaker 4: So do you think this continues or do people adjust
Speaker 4: and get comfortable and things change And just got about
Speaker 4: twenty seconds here.
Speaker 14: Yeah, they are moderating. I mean that's why builders are
Speaker 14: targeting people that are moving down and they're selling houses
Speaker 14: in paying cash. They're not as affected, but it is
Speaker 14: becoming more normal that mid six range. But people are
Speaker 14: now uncertain with you the job market and just what's
Speaker 14: happening politically, so they're on the sidelines, but they're going
Speaker 14: to come back next year.
Speaker 4: You always are a great read on a very important market,
Speaker 4: certainly to our world, the economy here in the United
Speaker 4: States and more.
Speaker 3: Katie, Thanks so much.
Speaker 4: Katie Hobard, Executive EP of Capital Markets at Walton Global.
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