1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,520 Speaker 1: with essential market moving news. Find a Bloomberg Markets podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple podcast or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,680 Speaker 1: at Bloomberg dot com slash podcast. Overall, we are seeing 7 00:00:22,680 --> 00:00:25,599 Speaker 1: the continuing contrast contractions in the housing market. We know 8 00:00:25,640 --> 00:00:28,240 Speaker 1: why interest rates going up, mortgage rates therefore going up, 9 00:00:28,240 --> 00:00:30,560 Speaker 1: more expensive to be buying your homes. But really, this 10 00:00:30,640 --> 00:00:33,360 Speaker 1: is the sixth straight month and remember this is a 11 00:00:33,400 --> 00:00:35,400 Speaker 1: November number, so it is quite backward looking, but it's 12 00:00:35,400 --> 00:00:37,720 Speaker 1: a sixth straight month. The US penning home sales have 13 00:00:37,800 --> 00:00:40,400 Speaker 1: indeed fallen. And we've got a great guest to dig into, 14 00:00:40,479 --> 00:00:43,279 Speaker 1: really where the housing markets going overall, Paul, because one 15 00:00:43,320 --> 00:00:45,920 Speaker 1: of one, Rich Hill is with us, were pleased to 16 00:00:45,960 --> 00:00:48,440 Speaker 1: welcome of course, his head of real estate strategy and 17 00:00:48,520 --> 00:00:53,080 Speaker 1: research coming in stairs. Rich once again move music on 18 00:00:53,120 --> 00:00:55,520 Speaker 1: manufacturing actually looking a little bit bit better, it would 19 00:00:55,520 --> 00:00:58,560 Speaker 1: seem for the data, but the housing data once again 20 00:00:58,920 --> 00:01:02,600 Speaker 1: really painful. Where are we in the cycle? Yeah, sure, look, 21 00:01:02,720 --> 00:01:05,959 Speaker 1: um uh this was an undeniably challenging year for real 22 00:01:06,040 --> 00:01:09,240 Speaker 1: estate investment trust known as rates. They were down around 23 00:01:10,360 --> 00:01:12,560 Speaker 1: through the close of business at the end of last week. 24 00:01:13,040 --> 00:01:15,640 Speaker 1: Um Uh. Inflation is usually pretty good for real estate, 25 00:01:15,920 --> 00:01:18,280 Speaker 1: but what is challenging for real estate is stagflation. So 26 00:01:18,319 --> 00:01:21,080 Speaker 1: what is stagflation. It's it's an environment where interest rates 27 00:01:21,080 --> 00:01:24,120 Speaker 1: are rising and growth is slowing. That's exactly what played 28 00:01:24,120 --> 00:01:26,680 Speaker 1: out for most of two thousand and twenty two, where 29 00:01:26,680 --> 00:01:29,600 Speaker 1: the Fed had to raise interest rates to uh combat 30 00:01:29,640 --> 00:01:32,319 Speaker 1: inflation that was at its highest level since nineteen eighty. 31 00:01:32,720 --> 00:01:35,640 Speaker 1: Um So it was really a backdrop of higher interest rates, 32 00:01:35,680 --> 00:01:38,520 Speaker 1: widening credit spread, and exceling growth that is pressured up 33 00:01:38,560 --> 00:01:42,200 Speaker 1: the real estate backdrop. So rich, I mean, there's there's 34 00:01:42,880 --> 00:01:44,960 Speaker 1: folks out there that watched the Fed thinks that, you know, 35 00:01:45,840 --> 00:01:47,319 Speaker 1: we're gonna see a peak and rates, and we in 36 00:01:47,360 --> 00:01:49,800 Speaker 1: fact may see some rates come down toward the back 37 00:01:49,800 --> 00:01:53,600 Speaker 1: half of the year. What's the real outlook for three 38 00:01:53,720 --> 00:01:55,600 Speaker 1: after what was is you just mentioned was a really 39 00:01:55,680 --> 00:02:00,680 Speaker 1: challenging Yeah. Sure, Look, we believe that there is potential 40 00:02:00,680 --> 00:02:04,080 Speaker 1: for low double digit returns in the year ahead. Um Uh. 41 00:02:04,280 --> 00:02:07,080 Speaker 1: That's pretty good compared to the negative that we had 42 00:02:07,600 --> 00:02:10,120 Speaker 1: so far this year. What is driving that view? I 43 00:02:10,120 --> 00:02:12,239 Speaker 1: think there's really three things that we would point out. 44 00:02:12,560 --> 00:02:15,640 Speaker 1: First of all, growth will undeniably slow in our view 45 00:02:16,160 --> 00:02:19,359 Speaker 1: UM given recessionary pressures, but it will be well above 46 00:02:19,440 --> 00:02:23,600 Speaker 1: trend versus prior recessionary environments. So that's point number one. 47 00:02:23,919 --> 00:02:26,920 Speaker 1: Point number two is that we actually do see a 48 00:02:26,960 --> 00:02:30,600 Speaker 1: better inflationary backdrop. I mentioned that stagflation where interest rates 49 00:02:30,600 --> 00:02:33,040 Speaker 1: are rising and growth is slowing, is really challenging for 50 00:02:33,120 --> 00:02:35,680 Speaker 1: real estate. But we see a backdrop where growth is 51 00:02:35,720 --> 00:02:38,240 Speaker 1: slowing still in two thousand twenty three, but rates are 52 00:02:38,280 --> 00:02:40,440 Speaker 1: beginning to come down, So we would call that a 53 00:02:40,440 --> 00:02:44,680 Speaker 1: stagnationary backdrop. As you transition from stagflation to stagnation, that's 54 00:02:44,680 --> 00:02:47,680 Speaker 1: a much better backdrop for for for real estate in general. 55 00:02:47,960 --> 00:02:50,959 Speaker 1: The third point I would make UM is that when 56 00:02:50,960 --> 00:02:53,280 Speaker 1: the Fed stops raising interest rates, and and that will 57 00:02:53,840 --> 00:02:56,600 Speaker 1: likely occur at some point over the next up about 58 00:02:56,639 --> 00:03:00,120 Speaker 1: twelve to eighteen months UM, reeds usually do very well. 59 00:03:00,320 --> 00:03:02,560 Speaker 1: So to summarize all of that, we think growth is 60 00:03:02,560 --> 00:03:05,640 Speaker 1: on solid footing. It was slow, but still in solid footing. UM. 61 00:03:05,720 --> 00:03:08,720 Speaker 1: We think a backdrop of transitioning from stagflation to stagnation 62 00:03:08,800 --> 00:03:11,360 Speaker 1: is really good for real estate. And the number three 63 00:03:11,600 --> 00:03:15,040 Speaker 1: as the FED stops raising interstrates, that's historically environment where 64 00:03:15,040 --> 00:03:18,880 Speaker 1: red produce plus sixteen percent returns historically six months after 65 00:03:18,919 --> 00:03:21,600 Speaker 1: the FED stops raising interstrates. So altogether we see a 66 00:03:21,600 --> 00:03:24,919 Speaker 1: better backdrop, which not all real estate is created equal, 67 00:03:25,160 --> 00:03:27,480 Speaker 1: as I know you know more than anyone. Of course, 68 00:03:27,520 --> 00:03:30,400 Speaker 1: with your focus on rates, we were breaking, of course, 69 00:03:30,520 --> 00:03:33,440 Speaker 1: depending home sales. We're talking about a consumer about where 70 00:03:33,440 --> 00:03:36,320 Speaker 1: one wants to live. But from your perspective, talk to 71 00:03:36,360 --> 00:03:38,640 Speaker 1: us about the most appetizing parts of the markets that 72 00:03:38,640 --> 00:03:40,840 Speaker 1: have aren and re recovering the bits that you're still 73 00:03:40,880 --> 00:03:43,480 Speaker 1: not tempted to be going into at the moment. Yeah. Sure, 74 00:03:44,040 --> 00:03:45,800 Speaker 1: So what are the selectors of the market that we 75 00:03:45,840 --> 00:03:48,960 Speaker 1: do like? Um, we like multifamily, particularly in the stun Belt. 76 00:03:49,200 --> 00:03:51,560 Speaker 1: We like single family rental. I think your point about 77 00:03:51,840 --> 00:03:54,120 Speaker 1: what's happened to the housing market really speaks to the 78 00:03:54,120 --> 00:03:57,320 Speaker 1: strength of the single family rental market. It's, uh, buying 79 00:03:57,360 --> 00:03:59,680 Speaker 1: homes is really unaffordable right now. But if you can 80 00:03:59,680 --> 00:04:01,960 Speaker 1: sort of rent the American dream, so to speak, through 81 00:04:02,000 --> 00:04:05,480 Speaker 1: single family rentals, we think that's compelling population migrations to 82 00:04:05,560 --> 00:04:08,880 Speaker 1: the Sunbelt are continuing to support multi family trends. Again, 83 00:04:09,000 --> 00:04:10,920 Speaker 1: if you can't buy at home, you have to live somewhere. 84 00:04:11,440 --> 00:04:13,840 Speaker 1: We do like data centers, um uh. And we like 85 00:04:13,920 --> 00:04:16,799 Speaker 1: healthcare as well. On the other end of the spectrum, 86 00:04:17,200 --> 00:04:19,280 Speaker 1: maybe sectors that were a little bit more cautious on, 87 00:04:19,480 --> 00:04:21,760 Speaker 1: I would say, I would say first and foremost office sector. 88 00:04:21,920 --> 00:04:24,159 Speaker 1: Maybe that doesn't come as too much of a surprise 89 00:04:24,240 --> 00:04:26,560 Speaker 1: from from anyone, but as we figure out work from 90 00:04:26,560 --> 00:04:29,200 Speaker 1: home trends and other trends, it is still a sector 91 00:04:29,279 --> 00:04:31,960 Speaker 1: that's pressured, umh. And then hotels were a little bit 92 00:04:31,960 --> 00:04:34,719 Speaker 1: more cautious on as well. So Rich, Caroline and I 93 00:04:34,800 --> 00:04:38,520 Speaker 1: were asconced here in Bloomberg's headquarters in Midtown Manhattan, and 94 00:04:38,520 --> 00:04:41,320 Speaker 1: as we yes in the office, thank you. And as 95 00:04:41,320 --> 00:04:44,080 Speaker 1: we look around we see a lot of empty office 96 00:04:44,080 --> 00:04:48,160 Speaker 1: buildings in midtown Manhattan. If I'm an office rate manager, 97 00:04:48,400 --> 00:04:51,479 Speaker 1: what do I do? I mean, it's not just New 98 00:04:51,560 --> 00:04:54,560 Speaker 1: York at San Francisco, it's other major markets. Is there 99 00:04:54,600 --> 00:04:58,200 Speaker 1: a solution? Yeah, So let me make a couple of comments. 100 00:04:58,240 --> 00:05:00,839 Speaker 1: First and foremost, I think we paint office with maybe 101 00:05:00,880 --> 00:05:03,640 Speaker 1: too big of a proof, too broad of a brush new, 102 00:05:03,680 --> 00:05:06,599 Speaker 1: clean and green office we think is very well positioned, 103 00:05:06,640 --> 00:05:08,720 Speaker 1: and I think you can probably look outside your headquarters 104 00:05:08,720 --> 00:05:10,800 Speaker 1: and see that some of the newer buildings are doing 105 00:05:10,880 --> 00:05:14,799 Speaker 1: quite well. We think, um uh it's called suburban office 106 00:05:15,160 --> 00:05:17,400 Speaker 1: is well positioned, particularly in the sun Belt. But where 107 00:05:17,440 --> 00:05:19,480 Speaker 1: there's really much more of a challenge is Class B 108 00:05:19,600 --> 00:05:22,240 Speaker 1: and C office properties. Those are properties that will built 109 00:05:22,240 --> 00:05:24,360 Speaker 1: in the nineteen seventies of the nineteen eighties, and there 110 00:05:24,360 --> 00:05:26,760 Speaker 1: hasn't been a lot of money put into them. So 111 00:05:26,800 --> 00:05:28,320 Speaker 1: what do you have to do. But you have to 112 00:05:28,560 --> 00:05:31,400 Speaker 1: find a way to reposition them, redevelop them. Uh, there's 113 00:05:31,440 --> 00:05:33,720 Speaker 1: not an easy, one fit all solution. We've started to 114 00:05:33,760 --> 00:05:37,000 Speaker 1: see some friends of redeveloping them into multi family properties, 115 00:05:37,200 --> 00:05:38,880 Speaker 1: but I think it's going to take down a little 116 00:05:38,880 --> 00:05:41,839 Speaker 1: bit of a combination for entrepreneurs coming in, existing owners 117 00:05:41,920 --> 00:05:44,680 Speaker 1: working together to find a solution. The easiest one that 118 00:05:44,720 --> 00:05:47,440 Speaker 1: people are talking about is redeveloping them in a multifamily 119 00:05:48,000 --> 00:05:53,200 Speaker 1: um like. That's that's not easy, very very very hard. 120 00:05:53,480 --> 00:05:56,760 Speaker 1: The good news is the land underneath most of these properties, 121 00:05:56,800 --> 00:05:59,720 Speaker 1: particularly in New York City San Francisco, is pretty valuable, 122 00:06:00,120 --> 00:06:02,120 Speaker 1: So I do think we'll find a solution, but it's 123 00:06:02,160 --> 00:06:04,800 Speaker 1: really a question of where's the net operating income growth growing? 124 00:06:04,839 --> 00:06:07,159 Speaker 1: How much capexs do you have to spend? Uh, And 125 00:06:07,279 --> 00:06:09,760 Speaker 1: that's why the sector continues to be under pressure. Rich, 126 00:06:10,160 --> 00:06:12,600 Speaker 1: I'm kind of interesting. Also, you didn't just mention offices 127 00:06:12,680 --> 00:06:14,800 Speaker 1: that we've prided you with, but also the hotel sector. 128 00:06:14,839 --> 00:06:18,960 Speaker 1: Why are you worried about the hotel sector? Yeah? Look, um, 129 00:06:19,040 --> 00:06:21,400 Speaker 1: I think there. I think the easy solution is that 130 00:06:22,040 --> 00:06:24,599 Speaker 1: maybe travel is coming down from peak levels that we 131 00:06:24,640 --> 00:06:28,600 Speaker 1: saw in two thousand and twenty one two two. Um. Yes, 132 00:06:28,600 --> 00:06:31,200 Speaker 1: business travels coming back up. But one of the major 133 00:06:31,320 --> 00:06:33,279 Speaker 1: issues that I don't think a lot of people maybe 134 00:06:33,880 --> 00:06:37,200 Speaker 1: unpack enough is how much labor costs are rising. Um uh. 135 00:06:37,279 --> 00:06:39,280 Speaker 1: And to run a hotel it is it does require 136 00:06:39,279 --> 00:06:41,040 Speaker 1: a lot of labor. So that's one of the things 137 00:06:41,120 --> 00:06:43,640 Speaker 1: that keeps us maybe a little bit more on the sidelines. 138 00:06:43,920 --> 00:06:47,000 Speaker 1: Growth is beginning to slow. That's pressuring revenue at a 139 00:06:47,080 --> 00:06:50,200 Speaker 1: time that expenses and labor costs are going up. Hey, Rich, 140 00:06:50,320 --> 00:06:52,640 Speaker 1: As I drive down to the Jersey Shore on the 141 00:06:52,680 --> 00:06:57,360 Speaker 1: Parkway or the term Pike, I see tons and tons 142 00:06:57,480 --> 00:07:00,000 Speaker 1: of you know, just kind of warehouse space. I'm guests 143 00:07:00,000 --> 00:07:01,880 Speaker 1: sing it's all Amazon dot Com and all that kind 144 00:07:01,880 --> 00:07:04,919 Speaker 1: of stuff. Is that business overbuilt? Is that still a 145 00:07:04,960 --> 00:07:10,040 Speaker 1: good growth story? Um Uh, Some aspects of of industrial 146 00:07:10,120 --> 00:07:12,200 Speaker 1: are still a very very good growth story. I think 147 00:07:12,200 --> 00:07:15,640 Speaker 1: if you can find infill locations, um that are new 148 00:07:15,680 --> 00:07:18,800 Speaker 1: properties that's very well positioned. But look, there has been 149 00:07:18,800 --> 00:07:21,040 Speaker 1: a significant amount of supply that has come in the 150 00:07:21,360 --> 00:07:24,520 Speaker 1: logistics space, the warehouse space over the past call it 151 00:07:24,560 --> 00:07:27,040 Speaker 1: five to ten years, and so if you own an 152 00:07:27,040 --> 00:07:30,679 Speaker 1: older property in a high supply market, that the growth 153 00:07:30,760 --> 00:07:32,720 Speaker 1: is probably going to slow. Um. So it is not 154 00:07:32,760 --> 00:07:35,920 Speaker 1: a one size fits all market anymore. We're still very 155 00:07:35,960 --> 00:07:39,920 Speaker 1: bullish on the call it the high growth, high barriers 156 00:07:39,920 --> 00:07:43,120 Speaker 1: to entry infil locations, and I think investors should be 157 00:07:43,160 --> 00:07:46,600 Speaker 1: aware that that maybe some of the older properties and 158 00:07:46,680 --> 00:07:49,160 Speaker 1: not well positioned markets with high supply, those could fit 159 00:07:49,280 --> 00:07:52,160 Speaker 1: based on growth type challengers. Rich, I'm looking at your 160 00:07:52,440 --> 00:07:55,480 Speaker 1: eight four billion dollars firm wide assets and management. That's 161 00:07:55,520 --> 00:07:57,960 Speaker 1: not just us, is it? Because we're a global network. 162 00:07:57,960 --> 00:08:00,200 Speaker 1: We've got European audience with us at the moment as 163 00:08:00,200 --> 00:08:02,120 Speaker 1: well as or maybe some Asian few are staying up 164 00:08:02,120 --> 00:08:04,640 Speaker 1: pretty late. Talk to us about why you're thinking globally 165 00:08:05,040 --> 00:08:09,280 Speaker 1: is attractive in rates. Yeah, yeah, Well, look, I would 166 00:08:09,280 --> 00:08:11,920 Speaker 1: say we think the best opportunities are certainly in the 167 00:08:11,960 --> 00:08:14,320 Speaker 1: United States right now. But as you start to think 168 00:08:14,360 --> 00:08:16,800 Speaker 1: about other opportunities, whether it be uh and some of 169 00:08:16,840 --> 00:08:18,920 Speaker 1: the Chinese locations that are beginning to open up, I 170 00:08:18,920 --> 00:08:21,360 Speaker 1: think that's interesting. Some of the major markets in Europe 171 00:08:21,360 --> 00:08:23,560 Speaker 1: are interesting, but I think we do see the best 172 00:08:23,600 --> 00:08:26,240 Speaker 1: value in the United States right now. Hey, rich, Let's 173 00:08:26,240 --> 00:08:28,680 Speaker 1: say I'm an entrepreneur in the real estate business. I 174 00:08:28,680 --> 00:08:30,600 Speaker 1: want to go buy one of those empty office towers 175 00:08:30,600 --> 00:08:33,120 Speaker 1: in Midtown Manhattan. Where do I get the money? Do 176 00:08:33,200 --> 00:08:38,439 Speaker 1: I go over to JP Morgan and borrow some money? Yeah? Uh, 177 00:08:38,600 --> 00:08:41,600 Speaker 1: So you're you're asking a really interesting question. The debt 178 00:08:41,679 --> 00:08:45,440 Speaker 1: markets are I would say, um, not frozen by any 179 00:08:45,440 --> 00:08:48,400 Speaker 1: means um, but they're not. They're not wide open. I 180 00:08:48,720 --> 00:08:51,600 Speaker 1: do think there is capital debt capital available for a 181 00:08:51,679 --> 00:08:56,080 Speaker 1: high for a high quality property with a well, well, uh, well, 182 00:08:56,520 --> 00:08:59,600 Speaker 1: a good sponsor. But there's also a tremendous amount of 183 00:08:59,600 --> 00:09:02,079 Speaker 1: money on sidelines that's been raised not yet deployed in 184 00:09:02,120 --> 00:09:05,600 Speaker 1: commercial real estate. Around three hundred billion maybe that's about 185 00:09:05,600 --> 00:09:08,440 Speaker 1: a call it nine hundred billion, A trillion dollars of 186 00:09:08,440 --> 00:09:10,760 Speaker 1: buying power once you put some leverage on it. Um. 187 00:09:10,800 --> 00:09:13,839 Speaker 1: So the debt markets are there. Um, they're not wide open. 188 00:09:14,000 --> 00:09:16,200 Speaker 1: Easy money has been gone. But I think it's a 189 00:09:16,240 --> 00:09:19,880 Speaker 1: combination of U finding a cheap debt capital where you 190 00:09:19,960 --> 00:09:21,720 Speaker 1: can find it, and cheap is all on a relative 191 00:09:21,760 --> 00:09:24,280 Speaker 1: basis at this point, plus some additional equity from the 192 00:09:24,320 --> 00:09:26,880 Speaker 1: amount of money on the sidelines. So UM. I think 193 00:09:26,960 --> 00:09:28,960 Speaker 1: lenders are being much more selective right now than they 194 00:09:28,960 --> 00:09:31,360 Speaker 1: have been in the past. They're being very focused on 195 00:09:31,360 --> 00:09:34,200 Speaker 1: what property types they lend to, but more importantly making 196 00:09:34,240 --> 00:09:36,599 Speaker 1: sure that the sponsor is well capitalized. All right, So 197 00:09:36,720 --> 00:09:41,400 Speaker 1: my lunch break, I'll walk over to the local, yeah, 198 00:09:41,520 --> 00:09:42,960 Speaker 1: private bank, or see if I can raise some money 199 00:09:42,960 --> 00:09:45,559 Speaker 1: here and go buy a midten Manhattan skyscraper. Rich Hill 200 00:09:45,559 --> 00:09:48,199 Speaker 1: ahead of real Estate Strategy and Research at Cohen and 201 00:09:48,240 --> 00:09:51,319 Speaker 1: Steers again eighty four billion with a B assets under management. 202 00:09:51,320 --> 00:09:53,080 Speaker 1: They know what they're doing in the in the reach space, 203 00:09:53,080 --> 00:09:57,880 Speaker 1: so we love to check in with them. A lot 204 00:09:57,880 --> 00:10:00,600 Speaker 1: of people are just saying I'm looking for I cannot 205 00:10:00,640 --> 00:10:02,760 Speaker 1: afford to look back. It was an ugly year. I 206 00:10:02,800 --> 00:10:05,479 Speaker 1: want to look forward to and see what the opportunities 207 00:10:05,559 --> 00:10:09,880 Speaker 1: might be bringing Kim Forest Boca Capital Partners, uh founder 208 00:10:09,960 --> 00:10:13,560 Speaker 1: and c I O Kim again. I think a lot 209 00:10:13,600 --> 00:10:15,560 Speaker 1: of investors are like me when they just say, uh, 210 00:10:16,720 --> 00:10:19,719 Speaker 1: in my rearview mirror, I'm looking ahead here. How are 211 00:10:19,760 --> 00:10:23,240 Speaker 1: you viewing here? After what was just a brutal year 212 00:10:23,280 --> 00:10:27,199 Speaker 1: in stocks and bonds? Sure? Well, I mean it was 213 00:10:27,240 --> 00:10:31,319 Speaker 1: a remarkable year, We'll give you that, right, And especially 214 00:10:31,520 --> 00:10:36,400 Speaker 1: if you had any of the former Fang stocks they 215 00:10:36,400 --> 00:10:40,319 Speaker 1: did not do well, or if you were into technology, 216 00:10:40,440 --> 00:10:45,000 Speaker 1: especially semiconductors. These are areas that just have gotten hit. 217 00:10:45,400 --> 00:10:48,480 Speaker 1: And that's for many reasons, but mostly at least here 218 00:10:48,480 --> 00:10:50,920 Speaker 1: in the US, it's because of the FEDS quick rais 219 00:10:51,600 --> 00:10:54,280 Speaker 1: So I guess COVID makes you do things quickly. Your 220 00:10:54,400 --> 00:10:58,040 Speaker 1: last segment talked about China opening quickly when we tried 221 00:10:58,120 --> 00:11:01,720 Speaker 1: to get a handle on inflation, and any kind of 222 00:11:01,760 --> 00:11:06,520 Speaker 1: growth oriented stocks just got killed. But should you care? 223 00:11:06,880 --> 00:11:10,439 Speaker 1: Should you care if you need the money this year? Yeah, 224 00:11:10,440 --> 00:11:12,760 Speaker 1: and you had to and you were forced to sell. Yeah, 225 00:11:12,760 --> 00:11:15,559 Speaker 1: you probably do care, but you really shouldn't if you're 226 00:11:15,600 --> 00:11:19,800 Speaker 1: a long term investor, because we know growth will come 227 00:11:19,840 --> 00:11:23,160 Speaker 1: back at some point, and computers really aren't a fad, 228 00:11:23,200 --> 00:11:27,360 Speaker 1: and semiconductors are going to be something that companies turn 229 00:11:27,440 --> 00:11:31,040 Speaker 1: to in the future to give them enhanced productivity. And 230 00:11:31,080 --> 00:11:37,240 Speaker 1: people find UM computers entertaining too, so it's not end 231 00:11:37,360 --> 00:11:42,280 Speaker 1: game for technology. Kim though, dovetailing those two ideas the FED, 232 00:11:42,320 --> 00:11:44,679 Speaker 1: but also China. An awful lot of what hit the 233 00:11:44,679 --> 00:11:48,120 Speaker 1: semiconductor industry was geopolitics. Was the tension between China and 234 00:11:48,160 --> 00:11:49,920 Speaker 1: the US. The fact that you know, an awful lot 235 00:11:49,920 --> 00:11:52,080 Speaker 1: of business colpi downe between the two. Now, how are 236 00:11:52,080 --> 00:11:56,160 Speaker 1: you looking towards that as well? Well? I think it 237 00:11:56,280 --> 00:11:59,959 Speaker 1: was the natural outcome, not necessarily the disagreement between China 238 00:12:00,520 --> 00:12:03,640 Speaker 1: and UH, the US. But I think a lot of 239 00:12:03,840 --> 00:12:08,000 Speaker 1: companies are rethinking their supply chain, and I don't know 240 00:12:08,120 --> 00:12:10,720 Speaker 1: that everything's going to end up in the US. I 241 00:12:10,760 --> 00:12:15,520 Speaker 1: think it's really smart to make a more distributed supply 242 00:12:15,679 --> 00:12:20,360 Speaker 1: chain because what happens if a continent does UM get 243 00:12:20,400 --> 00:12:26,679 Speaker 1: shut down for whatever reason geopolitical disagreement, UM, you know, UH, 244 00:12:27,040 --> 00:12:29,880 Speaker 1: I don't know, a large earthquake. I mean, it just 245 00:12:29,920 --> 00:12:33,600 Speaker 1: seems crazy to have a whole lot of manufacturing in 246 00:12:33,679 --> 00:12:37,160 Speaker 1: one and only one spot in the world. Hey, Kim, 247 00:12:37,160 --> 00:12:41,560 Speaker 1: you know, really since the Great Financial Crisis, technology has 248 00:12:41,679 --> 00:12:45,040 Speaker 1: really led the market Fang stocks, for example, but just 249 00:12:45,120 --> 00:12:48,360 Speaker 1: big tech in general has led the market both up 250 00:12:48,400 --> 00:12:52,360 Speaker 1: and down since a you know, two nine. There's a 251 00:12:52,440 --> 00:12:55,439 Speaker 1: concern here that as maybe this market begins to take off, 252 00:12:55,440 --> 00:12:58,439 Speaker 1: maybe in the back calf of that that might not 253 00:12:58,520 --> 00:13:01,199 Speaker 1: be the case. How do you think about big tech 254 00:13:01,280 --> 00:13:05,880 Speaker 1: and its leadership role? Sure, well, I think a couple 255 00:13:05,920 --> 00:13:10,240 Speaker 1: of things. First of all, UM, the low interest rate 256 00:13:10,320 --> 00:13:12,880 Speaker 1: environment that we find ourselves in the world, not just 257 00:13:12,920 --> 00:13:15,920 Speaker 1: in the US, but in the world, really has driven 258 00:13:16,360 --> 00:13:20,160 Speaker 1: growth companies. And by that I mean companies that traditionally 259 00:13:20,200 --> 00:13:22,880 Speaker 1: didn't have to have a super strong balance sheet, were 260 00:13:22,960 --> 00:13:26,480 Speaker 1: newer in the marketplace, and people were buying them on 261 00:13:26,559 --> 00:13:29,600 Speaker 1: the prospect that they would one day grow into their 262 00:13:30,040 --> 00:13:33,320 Speaker 1: valuation right that the cash flow would keep catch up. 263 00:13:33,920 --> 00:13:36,920 Speaker 1: But a lot of these companies now are big enough 264 00:13:36,960 --> 00:13:41,640 Speaker 1: to actually have profitable cash flow UM, and I think 265 00:13:41,760 --> 00:13:45,520 Speaker 1: some of them will come back because they've done great 266 00:13:45,559 --> 00:13:49,600 Speaker 1: convincing customers to use them, like I don't know, Amazon, 267 00:13:50,200 --> 00:13:54,679 Speaker 1: But others will probably never reach that peak because people 268 00:13:54,720 --> 00:13:58,760 Speaker 1: have moved on. UM. Technology is best looked at, in 269 00:13:58,800 --> 00:14:03,000 Speaker 1: my opinion, as a product of item, right, that increases productivity. 270 00:14:03,280 --> 00:14:07,920 Speaker 1: It's hard to understand what will catch anybody's imagination online. 271 00:14:08,120 --> 00:14:11,440 Speaker 1: It just is the metaverse, right yeah, I mean, well, 272 00:14:11,520 --> 00:14:13,720 Speaker 1: well we could go down the metaverse discussion for a 273 00:14:13,720 --> 00:14:16,000 Speaker 1: long time. I quickly want to really on the news 274 00:14:16,080 --> 00:14:19,120 Speaker 1: has been well, the pressure that's been felt by another 275 00:14:19,200 --> 00:14:21,200 Speaker 1: key celic and Valley leader and indeed want to move 276 00:14:21,200 --> 00:14:23,760 Speaker 1: to Austin and has perhaps been more distracted by social 277 00:14:23,760 --> 00:14:26,960 Speaker 1: media than perhaps his car company. Talked us about Tesla 278 00:14:27,040 --> 00:14:28,560 Speaker 1: and about whether you've been keeping an eye on that 279 00:14:28,600 --> 00:14:30,760 Speaker 1: stock at tool we actually finally get a reprieve after 280 00:14:30,800 --> 00:14:33,160 Speaker 1: seven days of selling, which was the longest dressing streak 281 00:14:33,200 --> 00:14:37,760 Speaker 1: since sure. I mean Elon Musk is one of the 282 00:14:37,800 --> 00:14:41,440 Speaker 1: most fascinating, fascinating people on Earth, right, Like, let's just 283 00:14:41,960 --> 00:14:45,000 Speaker 1: shortcut that he's in space, he's in the next wave 284 00:14:45,040 --> 00:14:48,760 Speaker 1: of cars, and now he is turning his attention towards Twitter. 285 00:14:49,320 --> 00:14:50,920 Speaker 1: And I don't think we're going to be able to 286 00:14:51,080 --> 00:14:54,800 Speaker 1: escape that. But it is a concern for Tesla. Are 287 00:14:54,840 --> 00:14:57,800 Speaker 1: they a car company or are they a technology company? 288 00:14:57,880 --> 00:15:00,160 Speaker 1: And I would say the valuation has to refer like 289 00:15:00,440 --> 00:15:05,440 Speaker 1: whatever it is that you believe, Um, I personally think 290 00:15:05,480 --> 00:15:09,480 Speaker 1: that it will come back that whatever he's doing politically 291 00:15:09,800 --> 00:15:13,440 Speaker 1: through Twitter is tarnishing his image and causing a lot 292 00:15:13,480 --> 00:15:16,200 Speaker 1: of people not to want to buyas cars. But also 293 00:15:16,320 --> 00:15:19,080 Speaker 1: the US, as you mentioned, is kind of in a 294 00:15:19,120 --> 00:15:22,760 Speaker 1: contentious space with China, and a lot of his revenue 295 00:15:22,920 --> 00:15:25,680 Speaker 1: has come from that, and it looks like that tiff 296 00:15:25,760 --> 00:15:30,240 Speaker 1: between the US is affecting um Tesla as well. I 297 00:15:30,280 --> 00:15:33,480 Speaker 1: wouldn't look for a quick rebound, but I wouldn't count 298 00:15:33,520 --> 00:15:36,600 Speaker 1: them out either. Always great to have some time if you, Kim, 299 00:15:36,640 --> 00:15:38,880 Speaker 1: you go back when you're looking at the software and 300 00:15:39,040 --> 00:15:41,360 Speaker 1: tech Stalks were number two software analysts back at the 301 00:15:41,360 --> 00:15:43,240 Speaker 1: Wall Street Journal's Best on the Street ranking back in 302 00:15:43,560 --> 00:15:46,280 Speaker 1: two too, So looking at the space a while good, 303 00:15:46,800 --> 00:15:49,040 Speaker 1: much the most history in the space, as you Paul, 304 00:15:49,120 --> 00:15:51,160 Speaker 1: thank you so much. Always great to have Kim Forest 305 00:15:51,680 --> 00:16:00,000 Speaker 1: Capital Partners founder and CIO talking about the record outputs 306 00:16:00,160 --> 00:16:01,960 Speaker 1: that we saw in the top Us gas basin, in 307 00:16:01,960 --> 00:16:04,400 Speaker 1: particular how that antagonized a lot of the power cat 308 00:16:04,800 --> 00:16:07,520 Speaker 1: chaos that we saw throughout the Christmas period deadly winter 309 00:16:07,560 --> 00:16:10,320 Speaker 1: storm as well, really perhaps exposing some of the flaws, 310 00:16:10,360 --> 00:16:12,480 Speaker 1: whether it be the infrastructure, whether it be the provision 311 00:16:12,520 --> 00:16:15,440 Speaker 1: of energy here in the United States. And well, one 312 00:16:15,440 --> 00:16:17,240 Speaker 1: man that might well have been exposed to an awful 313 00:16:17,280 --> 00:16:19,480 Speaker 1: lot of what's just been occurring is one at Toby 314 00:16:19,560 --> 00:16:22,600 Speaker 1: Rice's presidency of EQT, one of the largest natural gas 315 00:16:22,600 --> 00:16:25,600 Speaker 1: producers here in the country. And Toby, we know, and 316 00:16:25,640 --> 00:16:28,520 Speaker 1: you've come on Bloomberg TV and Radio before to really 317 00:16:28,560 --> 00:16:30,800 Speaker 1: discuss the fact that you feel more infrastructure is needed, 318 00:16:30,800 --> 00:16:33,240 Speaker 1: particularly the pipeline side of things. But let's just take 319 00:16:33,280 --> 00:16:36,560 Speaker 1: a step back. During this period, we've just seen wells freeze, 320 00:16:36,600 --> 00:16:40,720 Speaker 1: pipelines fail, we've seen gas pipe supplies therefore completely plunged, 321 00:16:40,760 --> 00:16:45,200 Speaker 1: and course this driving up prices. How was EQT hit 322 00:16:45,320 --> 00:16:48,760 Speaker 1: in the last few days. Well, what we've seen across 323 00:16:48,760 --> 00:16:54,560 Speaker 1: the country is natural gas production fell about ten due 324 00:16:54,600 --> 00:16:58,080 Speaker 1: to these freeze offs, which is which is normal. UM 325 00:16:58,080 --> 00:17:02,080 Speaker 1: in the industry responds very quickly. One thing I would note, though, 326 00:17:02,640 --> 00:17:05,280 Speaker 1: is that the reliability of natural gas and the share 327 00:17:05,280 --> 00:17:09,359 Speaker 1: of power generation natural gas performs in the cold weather 328 00:17:10,040 --> 00:17:13,760 Speaker 1: and specifically compared to renewables where they just don't show up. 329 00:17:13,800 --> 00:17:17,520 Speaker 1: So thank thank goodness that we've got UM natural gas 330 00:17:17,600 --> 00:17:20,680 Speaker 1: flowing and keeping the lights. It didn't but it didn't float. 331 00:17:20,760 --> 00:17:22,959 Speaker 1: I mean to be perfectly frank, it also frows their 332 00:17:23,000 --> 00:17:25,840 Speaker 1: work and can you know, freeze off how are common 333 00:17:25,840 --> 00:17:27,800 Speaker 1: as you say, they're normal, But I'm interested to be 334 00:17:27,840 --> 00:17:31,480 Speaker 1: how you particularly were affected, How was EQT particularly affected? 335 00:17:31,480 --> 00:17:34,200 Speaker 1: Were you benefiting this this situation, did you have wells 336 00:17:34,240 --> 00:17:38,800 Speaker 1: freeze what? What was your experience? Yeah, So in Appalachia, UM, 337 00:17:38,880 --> 00:17:42,800 Speaker 1: we saw about about four bcf a day, which is 338 00:17:42,840 --> 00:17:45,320 Speaker 1: a little bit over ten percent of our production for 339 00:17:45,359 --> 00:17:47,960 Speaker 1: the base on EQT specifically was around one to one 340 00:17:47,960 --> 00:17:50,920 Speaker 1: and a half bcf a day freasons. UM. Those issues 341 00:17:50,960 --> 00:17:53,240 Speaker 1: are going are scheduled to be resolved by you know, 342 00:17:53,280 --> 00:17:55,560 Speaker 1: the next couple of days. Uh. This is all part 343 00:17:55,600 --> 00:17:58,359 Speaker 1: of the winterization preparation plans that we were able to 344 00:17:58,359 --> 00:18:03,400 Speaker 1: put out. UM. But you know clearly the solution here 345 00:18:03,440 --> 00:18:06,320 Speaker 1: is to produce more natural gas and have a greater abundance. 346 00:18:06,680 --> 00:18:08,080 Speaker 1: And the key for us to be able to do 347 00:18:08,119 --> 00:18:10,399 Speaker 1: that so that we can have some cushion in the 348 00:18:10,440 --> 00:18:13,480 Speaker 1: systems when things do hit, like whether we know what's 349 00:18:13,480 --> 00:18:15,600 Speaker 1: going to show up every year. The key is to 350 00:18:15,880 --> 00:18:18,280 Speaker 1: is to get more natural gas production, and we need 351 00:18:18,320 --> 00:18:21,600 Speaker 1: more pipeline infrastructure so that we can create the industrial 352 00:18:21,640 --> 00:18:25,440 Speaker 1: capacity that this country needs to run, because what you're 353 00:18:25,440 --> 00:18:28,880 Speaker 1: seeing across the board is our industry is pretty much 354 00:18:28,920 --> 00:18:33,159 Speaker 1: redlining the limited infrastructure that we have right now, and 355 00:18:33,200 --> 00:18:37,560 Speaker 1: that's really making performance absolutely critical. It would be great 356 00:18:37,600 --> 00:18:39,879 Speaker 1: if we could have some some relief, and that relief 357 00:18:39,920 --> 00:18:43,000 Speaker 1: will come from building more pipeline infrastructure, all right, So, Toby, 358 00:18:43,040 --> 00:18:45,600 Speaker 1: in addition to building more capacity, there are a lot 359 00:18:45,640 --> 00:18:48,359 Speaker 1: of folks saying more investment needs to be done to 360 00:18:48,400 --> 00:18:52,960 Speaker 1: improve the weatherization of the existing infrastructure if we assume 361 00:18:53,040 --> 00:18:55,840 Speaker 1: that we're going to have more extreme weather events going forward, 362 00:18:55,880 --> 00:18:58,680 Speaker 1: so it's not just more production, but it's better more 363 00:18:58,840 --> 00:19:04,360 Speaker 1: robust suction and infrastructure. How do you respond to that, Well, 364 00:19:04,400 --> 00:19:06,719 Speaker 1: I think the I think you can look at places 365 00:19:06,760 --> 00:19:09,160 Speaker 1: like New England, which is a really great example of 366 00:19:09,640 --> 00:19:12,160 Speaker 1: the shortfalls that we have with our energy systems here 367 00:19:12,200 --> 00:19:15,920 Speaker 1: in America. You know, we have the biggest gas field 368 00:19:15,920 --> 00:19:19,040 Speaker 1: in the world, literally a couple hundred miles away from 369 00:19:19,040 --> 00:19:22,159 Speaker 1: New England. But they are burning, you know, oil to 370 00:19:22,280 --> 00:19:25,560 Speaker 1: generate their electricity. About thirty percent of their electricity past 371 00:19:25,600 --> 00:19:29,639 Speaker 1: few days has come from oil um and only of 372 00:19:29,640 --> 00:19:32,120 Speaker 1: that electricity is coming from natural gas. The solution there 373 00:19:32,520 --> 00:19:34,800 Speaker 1: is very simple. It's build more pipeline infrastructure so we 374 00:19:34,800 --> 00:19:38,840 Speaker 1: can connect you know, are low costs, very responsibly produced 375 00:19:38,920 --> 00:19:43,399 Speaker 1: natural gas with the demand centers, and you see the 376 00:19:43,480 --> 00:19:46,400 Speaker 1: lack of infrastructure is the reason why you have prices 377 00:19:46,720 --> 00:19:49,040 Speaker 1: in different parts of the country like New England, where 378 00:19:49,080 --> 00:19:51,840 Speaker 1: their energy prices are going to be over twenty dollars 379 00:19:51,840 --> 00:19:54,440 Speaker 1: this winter, and we'll be selling that same gas here 380 00:19:54,440 --> 00:19:57,800 Speaker 1: in Appalachia for a cost of five dollars um. These 381 00:19:57,840 --> 00:19:59,960 Speaker 1: are the really remarkable things. If you want to focus 382 00:20:00,040 --> 00:20:03,640 Speaker 1: on correcting the issue, it's getting more pipeline infrastructure, and 383 00:20:03,760 --> 00:20:06,120 Speaker 1: this industry will continue to find ways to make our 384 00:20:06,200 --> 00:20:09,680 Speaker 1: energy that we produce more reliable through the winterization efforts 385 00:20:09,720 --> 00:20:12,439 Speaker 1: that are largely already in place. All Right, Given the 386 00:20:12,480 --> 00:20:15,320 Speaker 1: pipeline issue is an ongoing issue we see with between 387 00:20:15,320 --> 00:20:19,120 Speaker 1: the government and industry and the marketplace in general, give 388 00:20:19,200 --> 00:20:21,760 Speaker 1: us a sense where we are now to be with 389 00:20:22,000 --> 00:20:25,080 Speaker 1: that argument. Here is there a better Do you have 390 00:20:25,119 --> 00:20:27,920 Speaker 1: a better platform to go to certain regulators in certain 391 00:20:27,960 --> 00:20:33,040 Speaker 1: states to say we really need more investment here. Here's 392 00:20:33,080 --> 00:20:37,080 Speaker 1: what's changed with the conversation in um you know, the 393 00:20:37,840 --> 00:20:41,720 Speaker 1: heading into two. The when people think about energy, the 394 00:20:41,800 --> 00:20:43,800 Speaker 1: number one thing that people are thinking about is the 395 00:20:43,840 --> 00:20:47,119 Speaker 1: impact on emissions UM. You know, EQT we put on 396 00:20:47,200 --> 00:20:50,280 Speaker 1: our plan to Unleash us Energy, which will be the 397 00:20:50,280 --> 00:20:54,200 Speaker 1: biggest green initiative on the planet. But what has really 398 00:20:54,240 --> 00:20:58,080 Speaker 1: shown us is that energy security is absolutely critical, just 399 00:20:58,280 --> 00:21:00,560 Speaker 1: as important. And you can look at what is happening 400 00:21:00,880 --> 00:21:03,280 Speaker 1: in Europe as an example of what happens when energy 401 00:21:03,320 --> 00:21:11,040 Speaker 1: security UM slips away and the conversation about energy transition UM. 402 00:21:11,080 --> 00:21:13,159 Speaker 1: It's really important for people to understand it's going to 403 00:21:13,200 --> 00:21:16,640 Speaker 1: be impossible to transition if you don't have energy security. 404 00:21:17,080 --> 00:21:20,159 Speaker 1: And that's what natural gas brings the table. It brings 405 00:21:20,160 --> 00:21:23,199 Speaker 1: both energy security and it also is the key to 406 00:21:23,240 --> 00:21:27,960 Speaker 1: lowering emissions around the world. And so with this new perspective, 407 00:21:28,640 --> 00:21:33,280 Speaker 1: coupled with the fact that now Americans are facing much 408 00:21:33,440 --> 00:21:36,760 Speaker 1: higher energy bills because of this lack of pipeline infrastructure, 409 00:21:37,080 --> 00:21:40,040 Speaker 1: you know, that's another thing that's changes. Americans are actually 410 00:21:40,080 --> 00:21:43,400 Speaker 1: feeling the brunt of this if these energy prices are unnecessary, 411 00:21:43,840 --> 00:21:45,720 Speaker 1: and there's things that we can do about it, and 412 00:21:45,720 --> 00:21:48,160 Speaker 1: it's as simple as building more pipeline infrastructure to your 413 00:21:48,160 --> 00:21:50,920 Speaker 1: point to be wholesale pipe prices social. The six thousand 414 00:21:50,960 --> 00:21:53,840 Speaker 1: percent and sent parts of the country over this crisis. 415 00:21:53,880 --> 00:21:57,400 Speaker 1: I'm interested in whether you whether did e QT benefit 416 00:21:57,560 --> 00:22:01,840 Speaker 1: from the high spot prices so we sell some of 417 00:22:01,840 --> 00:22:05,280 Speaker 1: our product on on spot. But you know, we've been saying, 418 00:22:05,359 --> 00:22:07,520 Speaker 1: we've been jumping up and down for the last year 419 00:22:07,600 --> 00:22:11,919 Speaker 1: saying these high energy prices are completely unnecessary and we 420 00:22:11,960 --> 00:22:14,879 Speaker 1: would like to see more pipeline infrastructure so we can 421 00:22:14,920 --> 00:22:18,600 Speaker 1: add supply um so that we can combat these high prices. Now, 422 00:22:18,680 --> 00:22:21,960 Speaker 1: it's absolutely amazing that we are sitting in the biggest 423 00:22:22,000 --> 00:22:24,800 Speaker 1: gas field in the world EQUT and we cannot grow 424 00:22:24,880 --> 00:22:29,960 Speaker 1: production because we do not have access to more pipeline capacity. 425 00:22:30,000 --> 00:22:32,080 Speaker 1: That is the root cause of the issue, and that's 426 00:22:32,119 --> 00:22:34,480 Speaker 1: where people need to focus is what can we do 427 00:22:34,520 --> 00:22:37,280 Speaker 1: to get more pipeline infrastructure so we can get the cheapest, 428 00:22:37,320 --> 00:22:40,639 Speaker 1: most reliable, cleanest produced energy in the world onto the 429 00:22:40,680 --> 00:22:44,399 Speaker 1: playing field. And that really is is the focus. Toby. 430 00:22:44,440 --> 00:22:47,439 Speaker 1: We're Texas last year had some issues talk to us 431 00:22:47,440 --> 00:22:50,880 Speaker 1: about the Texas grid and just had the Texas gas market, 432 00:22:51,440 --> 00:22:55,800 Speaker 1: uh their infrastructure there have they made some changes over 433 00:22:55,840 --> 00:22:58,520 Speaker 1: the last couple of years, some uh, some upgrades perhaps 434 00:22:58,520 --> 00:23:02,520 Speaker 1: in terms of the weatherization. Yeah, one of the biggest 435 00:23:02,560 --> 00:23:05,320 Speaker 1: issues that they faced during the winter storm jury was 436 00:23:05,400 --> 00:23:09,800 Speaker 1: that some of the compressor stations which rely on electricity. UM, 437 00:23:09,800 --> 00:23:13,679 Speaker 1: those compressors move natural gas to the actual power plants, 438 00:23:13,920 --> 00:23:17,200 Speaker 1: were not deemed as as critical, which is an oversight, 439 00:23:17,400 --> 00:23:20,600 Speaker 1: and UM that's what had electricity to get shut off. 440 00:23:20,960 --> 00:23:22,800 Speaker 1: That was something that was fixed. And I think you 441 00:23:22,800 --> 00:23:26,199 Speaker 1: can look at Texas performance of natural gas on the 442 00:23:26,240 --> 00:23:28,400 Speaker 1: grid these past week and you will see very strong 443 00:23:28,480 --> 00:23:33,040 Speaker 1: performance of natural gas down there in Texas, UM other 444 00:23:33,119 --> 00:23:36,240 Speaker 1: places that have really struggled to provide the reliability. You're 445 00:23:36,240 --> 00:23:39,360 Speaker 1: seeing this with utilities across the country, you know, warning 446 00:23:39,440 --> 00:23:42,280 Speaker 1: and telling people to pinch back their energy needs. It's 447 00:23:42,280 --> 00:23:45,320 Speaker 1: because we have lack of energy flowing into those areas, 448 00:23:45,359 --> 00:23:47,560 Speaker 1: and that energy can only flow if we have more 449 00:23:47,600 --> 00:23:50,639 Speaker 1: pipeline infrastructure. We've got the biggest gas field in the 450 00:23:50,680 --> 00:23:54,640 Speaker 1: world in Appalachia. We just need more infrastructure, more infrastructure 451 00:23:54,920 --> 00:23:57,879 Speaker 1: to connect this with the demands that we know is 452 00:23:57,880 --> 00:24:01,360 Speaker 1: going to continue and mean and clear, we hear your call. 453 00:24:01,640 --> 00:24:04,879 Speaker 1: You want more infrastructure in terms of pipelines, but just 454 00:24:05,040 --> 00:24:08,240 Speaker 1: we go back and we'll end where we started. The weatherization. 455 00:24:08,880 --> 00:24:10,760 Speaker 1: You said, of course there were elements that you know, 456 00:24:10,800 --> 00:24:12,960 Speaker 1: a lot of there is a lot of depleted. But 457 00:24:13,000 --> 00:24:16,320 Speaker 1: I did the well, why did so many wells freeze 458 00:24:16,359 --> 00:24:18,680 Speaker 1: in and of themselves? If you say that weatherization is 459 00:24:18,720 --> 00:24:24,440 Speaker 1: already sort of on its route and being invested in, well, 460 00:24:24,520 --> 00:24:27,160 Speaker 1: freeze us happened because when we produced this energy out 461 00:24:27,160 --> 00:24:30,399 Speaker 1: of the ground, it's a mixture of natural gas, water 462 00:24:30,720 --> 00:24:33,760 Speaker 1: and also water vapor. UM. You couple that with some 463 00:24:33,840 --> 00:24:37,960 Speaker 1: of the pressure changes and it creates freezing temperatures, and 464 00:24:37,960 --> 00:24:40,760 Speaker 1: that creates some ice blockages and the pipes. UM. These 465 00:24:40,760 --> 00:24:43,760 Speaker 1: are things that can be can be solved through drying 466 00:24:43,760 --> 00:24:47,040 Speaker 1: out some of the some of the equipment that we 467 00:24:47,160 --> 00:24:49,560 Speaker 1: the gas that we have flown through UM, and then 468 00:24:49,600 --> 00:24:51,520 Speaker 1: also making sure we have some lying heaters in place. 469 00:24:51,560 --> 00:24:53,280 Speaker 1: So these are all things that that we've been dealing 470 00:24:53,359 --> 00:24:57,080 Speaker 1: with for years. We have tools and techniques to combat that, 471 00:24:57,280 --> 00:24:59,480 Speaker 1: which is kind of nuts. Why why why therefore did 472 00:24:59,520 --> 00:25:02,359 Speaker 1: so many freeze? If it's been yeah, and and and 473 00:25:02,400 --> 00:25:04,679 Speaker 1: another thing is that that's that's important is when we 474 00:25:04,720 --> 00:25:07,400 Speaker 1: have winter storms, UM. You know, we need to get 475 00:25:07,440 --> 00:25:09,720 Speaker 1: water trucks to our location so that we can empty 476 00:25:09,760 --> 00:25:12,440 Speaker 1: to produce water tanks. And when the roads get icy 477 00:25:12,480 --> 00:25:14,720 Speaker 1: and shut down, it gets hard for us to get 478 00:25:14,760 --> 00:25:17,400 Speaker 1: water trucks out there to that location, and that means 479 00:25:17,400 --> 00:25:20,399 Speaker 1: we have to shut in production, not because of freezeroffs, 480 00:25:20,480 --> 00:25:23,119 Speaker 1: but because we don't have the ability to produce any 481 00:25:23,160 --> 00:25:25,679 Speaker 1: more water on location. So it's just a little bit 482 00:25:25,680 --> 00:25:27,800 Speaker 1: of time to get the dozers out and get the 483 00:25:27,840 --> 00:25:30,080 Speaker 1: roads taken care of. You know, safety is our number 484 00:25:30,119 --> 00:25:33,240 Speaker 1: one priority, and all of these things are are temporary, 485 00:25:33,640 --> 00:25:35,480 Speaker 1: and like I said, you know we're gonna have these 486 00:25:35,520 --> 00:25:37,320 Speaker 1: resolved in the next couple of days. All right, Toby, 487 00:25:37,320 --> 00:25:39,160 Speaker 1: great stuff, Really appreciate you taking the time to walk 488 00:25:39,240 --> 00:25:42,720 Speaker 1: us through that, Toby Rice e q T President and CEO. 489 00:25:46,000 --> 00:25:48,600 Speaker 1: If you march towards the close of trade in Europe, 490 00:25:48,600 --> 00:25:51,040 Speaker 1: we have thirty minutes left and looks as though we're 491 00:25:51,040 --> 00:25:54,359 Speaker 1: still seeing some little bit of bit into German debt markets, 492 00:25:54,400 --> 00:25:56,480 Speaker 1: but overall we are seeing a little bit of nervousness 493 00:25:56,520 --> 00:25:58,560 Speaker 1: when it comes to the overall equity market and the 494 00:25:58,640 --> 00:26:01,440 Speaker 1: stocks fifty is currently off by six tens percent. Let's 495 00:26:01,440 --> 00:26:04,240 Speaker 1: talk about the ECB, about some of the warriors in 496 00:26:04,280 --> 00:26:07,760 Speaker 1: the European economy, about the outlook for twenty three with 497 00:26:07,880 --> 00:26:11,320 Speaker 1: one yends eisen Schmidt, his chief European economist and Morgan Stanley. 498 00:26:11,480 --> 00:26:15,520 Speaker 1: He comes to us on vacation but very kindly turns 499 00:26:15,520 --> 00:26:18,159 Speaker 1: on his terminal, checks in on his emails and joins 500 00:26:18,280 --> 00:26:21,480 Speaker 1: us live. We thank you so much, ends happy in 501 00:26:21,560 --> 00:26:25,400 Speaker 1: between the Christmas festivities and New Year across Europe, and 502 00:26:25,480 --> 00:26:27,320 Speaker 1: just tell us a little bit about whether you are 503 00:26:27,359 --> 00:26:30,320 Speaker 1: gathering around your family tables and being peppered with questions 504 00:26:30,359 --> 00:26:34,480 Speaker 1: as to whether is going to be as bad as Yeah, 505 00:26:34,480 --> 00:26:36,680 Speaker 1: I thank thanks a lot for for the kind words. 506 00:26:36,680 --> 00:26:39,560 Speaker 1: And indeed, it's it's always the time, this time of 507 00:26:39,600 --> 00:26:42,720 Speaker 1: the year when when we economists and our families probably 508 00:26:42,720 --> 00:26:46,359 Speaker 1: are getting getting tough questions in terms of what's going 509 00:26:46,400 --> 00:26:49,160 Speaker 1: to be like next year. And now my other leg 510 00:26:49,240 --> 00:26:51,600 Speaker 1: of the family, my my wife is Spanish, so it's 511 00:26:51,640 --> 00:26:54,480 Speaker 1: in Spain. The typically I get a whole host of 512 00:26:54,560 --> 00:26:58,399 Speaker 1: questions also in Spain. You know, um, first time I 513 00:26:58,480 --> 00:27:01,520 Speaker 1: got tough questions goes around there the housing crisis here 514 00:27:01,520 --> 00:27:03,480 Speaker 1: in Spain or the banking crisis if you want, That 515 00:27:03,600 --> 00:27:05,440 Speaker 1: was over seven or eight and levels of the film 516 00:27:05,560 --> 00:27:08,880 Speaker 1: you that house prices are unsustainably high. That didn't get 517 00:27:08,880 --> 00:27:13,920 Speaker 1: me a lot of let's say, sympathy around the Christmas table, 518 00:27:13,960 --> 00:27:16,760 Speaker 1: but it turned out to be right. Now this year, 519 00:27:16,840 --> 00:27:20,560 Speaker 1: I'd say Spain, at least according to our forecasts, it 520 00:27:20,640 --> 00:27:24,040 Speaker 1: is probably doing relatively well within the set of countries 521 00:27:24,280 --> 00:27:27,760 Speaker 1: UM that that formed the R area where Germany is 522 00:27:27,760 --> 00:27:33,000 Speaker 1: probably the language. We're looking for a recession, a mild 523 00:27:33,040 --> 00:27:36,800 Speaker 1: one UM in terms of overall year and year growth numbers. 524 00:27:36,800 --> 00:27:39,080 Speaker 1: Twenty three. V think it's a point too, which is 525 00:27:39,320 --> 00:27:43,119 Speaker 1: slightly slightly it's had above consensus, it's it's it's slightly 526 00:27:43,160 --> 00:27:46,560 Speaker 1: below what the CD recently has been saying in their 527 00:27:46,600 --> 00:27:50,040 Speaker 1: expectation twenty three will look like UM. But you know, 528 00:27:50,200 --> 00:27:52,639 Speaker 1: I think that the main point here is that the 529 00:27:52,680 --> 00:27:55,639 Speaker 1: short term dynamic is pretty much well telegraphed. So we 530 00:27:55,720 --> 00:27:58,639 Speaker 1: are looking all of us, all professional forecasters, including the 531 00:27:58,680 --> 00:28:01,760 Speaker 1: should be, are looking for a contraction in Q four, 532 00:28:02,240 --> 00:28:04,480 Speaker 1: which is within the p M s and it's also 533 00:28:04,560 --> 00:28:07,360 Speaker 1: looking like the latest release of how data are confirming 534 00:28:07,400 --> 00:28:11,919 Speaker 1: that another contraction quarterly in Q one, And then the 535 00:28:12,000 --> 00:28:15,439 Speaker 1: debate starts. Is the recovery relatively strong or is it 536 00:28:15,560 --> 00:28:18,240 Speaker 1: more muted? We think it will be more muted. For instance, 537 00:28:18,280 --> 00:28:20,639 Speaker 1: the US to be things that will be much stronger, 538 00:28:21,280 --> 00:28:24,520 Speaker 1: and that has been probably one of the key ingredients 539 00:28:24,520 --> 00:28:29,119 Speaker 1: and their relatively strong rhetoric at their last meeting in 540 00:28:29,200 --> 00:28:32,880 Speaker 1: terms of where weights have to go. Ay, gents here 541 00:28:32,880 --> 00:28:35,600 Speaker 1: in the US, as people think about different scenarios for 542 00:28:35,680 --> 00:28:38,040 Speaker 1: a potential recession in twenty three, we do have to 543 00:28:38,080 --> 00:28:41,440 Speaker 1: backdrop that the consumers in pretty good shape. Unemployments at 544 00:28:41,440 --> 00:28:44,120 Speaker 1: a near historic lows, consumer retail sales continue to be 545 00:28:44,600 --> 00:28:47,360 Speaker 1: pretty decent. Here give us a sense in Europe how 546 00:28:47,400 --> 00:28:49,520 Speaker 1: that how the consumer is faring right now? What's the 547 00:28:49,520 --> 00:28:53,160 Speaker 1: outlook for the consumer as we head into twenty three? Yes, 548 00:28:53,400 --> 00:28:55,520 Speaker 1: so I think this is a key question also for 549 00:28:55,600 --> 00:28:57,959 Speaker 1: us here right. I mean, first of all, clearly, the 550 00:28:57,960 --> 00:29:01,000 Speaker 1: consumer side of the econ many it's not as strong 551 00:29:01,040 --> 00:29:03,160 Speaker 1: as in the US. That's historically always been the case, 552 00:29:03,200 --> 00:29:05,920 Speaker 1: So it's it's it's still a very important part of GDP, 553 00:29:06,400 --> 00:29:08,320 Speaker 1: but just not as high as in the US. That's 554 00:29:08,360 --> 00:29:12,880 Speaker 1: one second. We have seen lots of impact on things 555 00:29:12,920 --> 00:29:16,400 Speaker 1: like consumer confidence surveys already since the start of the 556 00:29:16,400 --> 00:29:20,160 Speaker 1: war in in February, but a lot of that hasn't 557 00:29:20,160 --> 00:29:23,680 Speaker 1: materialized so far. So for instance, the Q three growth numbers, 558 00:29:24,120 --> 00:29:26,720 Speaker 1: the last we have for the U area have been 559 00:29:26,760 --> 00:29:30,320 Speaker 1: particularly strong and driven by consumption. Now the debate is 560 00:29:30,320 --> 00:29:33,520 Speaker 1: on whether that is actually a reflection of the physical 561 00:29:33,600 --> 00:29:38,440 Speaker 1: spillovers um or whether this is still you know, COVID 562 00:29:38,520 --> 00:29:41,560 Speaker 1: reopening dynamics plus excess savings. I mean, there are elements 563 00:29:41,600 --> 00:29:45,120 Speaker 1: of all these in there. But it's clearly the case 564 00:29:45,160 --> 00:29:48,280 Speaker 1: that the consumer consumption on our and our expectation, and 565 00:29:48,280 --> 00:29:50,280 Speaker 1: you know, if you look at data, it's it's it's 566 00:29:50,360 --> 00:29:53,040 Speaker 1: very difficult to deny that there is weakness to come 567 00:29:53,080 --> 00:29:56,640 Speaker 1: and that is essentially the backdrop of our growth expectation, 568 00:29:56,680 --> 00:29:59,600 Speaker 1: of all weak growth expectation that essentially the hit to 569 00:29:59,720 --> 00:30:03,760 Speaker 1: real the supposably income is coming through inflation will be 570 00:30:03,800 --> 00:30:07,320 Speaker 1: such that consumption will take a big hit. Okay. It's 571 00:30:07,360 --> 00:30:09,520 Speaker 1: interesting because we had Charles to us this on from 572 00:30:09,560 --> 00:30:12,680 Speaker 1: Society General on yesterday talking about he thought maybe that 573 00:30:12,680 --> 00:30:16,000 Speaker 1: would be the wild card of the consumer would be 574 00:30:16,280 --> 00:30:21,959 Speaker 1: more strong, stronger than anticipated in for Europe. And interesting 575 00:30:21,960 --> 00:30:24,520 Speaker 1: to hear your counterpoint to that, and I wonder, therefore, 576 00:30:25,560 --> 00:30:28,480 Speaker 1: what what for you might be the upside risk here? 577 00:30:28,560 --> 00:30:31,480 Speaker 1: What might be something that comes in that's better. You know, 578 00:30:31,560 --> 00:30:33,600 Speaker 1: we hear about a slowing of inflation, we hear about 579 00:30:33,640 --> 00:30:37,200 Speaker 1: the ECB managing to understand the impact of that. But 580 00:30:38,120 --> 00:30:39,560 Speaker 1: is there any way that you think some of the 581 00:30:39,640 --> 00:30:42,040 Speaker 1: energy markets might be aimed better than expected with Russia 582 00:30:42,120 --> 00:30:44,520 Speaker 1: Ukraine being the ultimate world card for the entire year. 583 00:30:45,800 --> 00:30:47,440 Speaker 1: So I mean it's it's it's good to sort of 584 00:30:47,480 --> 00:30:50,239 Speaker 1: go back a little bit in time, say around the 585 00:30:50,280 --> 00:30:55,680 Speaker 1: middle of this year, when essentially, but it became increasingly 586 00:30:55,720 --> 00:31:00,000 Speaker 1: clear that Russia would turn off the gas supply um 587 00:31:00,080 --> 00:31:03,360 Speaker 1: in an increasively aggressive way than during summer, we have 588 00:31:03,440 --> 00:31:07,040 Speaker 1: seen huge increases in natural gas prices in the in 589 00:31:07,080 --> 00:31:11,560 Speaker 1: the area, and of course extrapolating that and associated with 590 00:31:11,640 --> 00:31:14,800 Speaker 1: that increases in electricity prices. And we have seen this 591 00:31:14,880 --> 00:31:17,560 Speaker 1: for the first time actually in years that for one 592 00:31:17,640 --> 00:31:20,560 Speaker 1: or two years out in the future space electricity and 593 00:31:20,680 --> 00:31:23,840 Speaker 1: natural gas grow trading really at very high prices. Lots 594 00:31:23,840 --> 00:31:26,720 Speaker 1: of clients raising the question whether that, you know, what 595 00:31:26,960 --> 00:31:30,520 Speaker 1: is the future of EU industrial base given these prices. 596 00:31:30,520 --> 00:31:32,400 Speaker 1: So this is the you know, the back drop in 597 00:31:32,440 --> 00:31:36,000 Speaker 1: the summer. Now, of course, against this or relative to 598 00:31:36,080 --> 00:31:39,360 Speaker 1: this back drop, things have improved marketly. So I think 599 00:31:39,400 --> 00:31:46,400 Speaker 1: this whole spectra of rationing of energy electricity that has vanished. 600 00:31:46,920 --> 00:31:49,320 Speaker 1: So we have seen a significant drop in both oil 601 00:31:49,320 --> 00:31:55,480 Speaker 1: and gas prices. Um. Now, the consumer tends to be 602 00:31:55,560 --> 00:31:58,880 Speaker 1: at this stage protected depending on the country a little 603 00:31:58,880 --> 00:32:02,080 Speaker 1: bit by by by seeking AFFICN fiscal measures, and I 604 00:32:02,120 --> 00:32:04,840 Speaker 1: would say, I would characterize this is the biggest upset 605 00:32:04,920 --> 00:32:07,320 Speaker 1: risk in the short term, in the near term. Now, 606 00:32:07,360 --> 00:32:10,320 Speaker 1: in the medium term, we have this thing that of 607 00:32:10,360 --> 00:32:15,440 Speaker 1: course relative to summer, the energy backdrop looks better, um 608 00:32:15,600 --> 00:32:19,920 Speaker 1: but monitor policy for instance, looks decisively more aggressive. Um. 609 00:32:20,280 --> 00:32:23,400 Speaker 1: So in that sense, I would say, in the short term, 610 00:32:23,440 --> 00:32:27,200 Speaker 1: there's very little you can you can think of. I 611 00:32:27,240 --> 00:32:29,880 Speaker 1: mean take away from the dynamic that you have that 612 00:32:30,120 --> 00:32:33,040 Speaker 1: essentially consumers are hit by these huge inflation rates and 613 00:32:33,080 --> 00:32:35,600 Speaker 1: that that eats into disposable income and that must do 614 00:32:35,720 --> 00:32:38,760 Speaker 1: something to consumption. There is a little bit of an 615 00:32:38,760 --> 00:32:41,479 Speaker 1: element of if there's a fiscal spillow is more physical, 616 00:32:41,560 --> 00:32:44,240 Speaker 1: then maybe it's needed. Then you get a bit of 617 00:32:44,240 --> 00:32:47,960 Speaker 1: a boost consumption. But overall the outlook is relatively muted. 618 00:32:48,400 --> 00:32:50,920 Speaker 1: And then the discussion, as I said before, is really 619 00:32:50,960 --> 00:32:56,719 Speaker 1: focusing into is the energy side giving way having you know, 620 00:32:56,920 --> 00:33:00,560 Speaker 1: essentially a better better outlook and better prices. Is this, 621 00:33:00,800 --> 00:33:03,440 Speaker 1: you know, dominating or is really the fiscal Sorry, the 622 00:33:03,440 --> 00:33:06,640 Speaker 1: monitor policy of response dominating in here as in terms 623 00:33:06,640 --> 00:33:09,760 Speaker 1: of it'd like to growth. Just in the last few days, 624 00:33:10,120 --> 00:33:14,480 Speaker 1: a big, big change in China zero COVID dropped, UH 625 00:33:14,520 --> 00:33:18,360 Speaker 1: seemed to be reopening extraordinarily quickly. That's got to be 626 00:33:18,400 --> 00:33:20,800 Speaker 1: good news for that European industrial base. I'm thinking about, 627 00:33:20,840 --> 00:33:23,480 Speaker 1: you know, our good friends and Munich. It seemens they're 628 00:33:23,480 --> 00:33:25,320 Speaker 1: gonna be feeling pretty good this morning. Is in this 629 00:33:25,360 --> 00:33:27,560 Speaker 1: air for nooon as they think about their opportunities in China. 630 00:33:27,560 --> 00:33:31,600 Speaker 1: How does that factor into your outlook? So we have 631 00:33:31,720 --> 00:33:35,160 Speaker 1: been looking into this in terms of scenario analysis and 632 00:33:35,240 --> 00:33:38,840 Speaker 1: looking into elasticities there. Of course we've been in touch 633 00:33:38,920 --> 00:33:41,480 Speaker 1: with our China team on this one. So when people 634 00:33:41,520 --> 00:33:44,640 Speaker 1: producing amongst Stanley all the noble outlook, and you know, 635 00:33:44,720 --> 00:33:47,760 Speaker 1: Robbin was one of those that were relatively early and 636 00:33:47,800 --> 00:33:50,160 Speaker 1: actually they are now about consensus with their core in 637 00:33:50,240 --> 00:33:52,720 Speaker 1: terms of growth for twenty three and they were relatively 638 00:33:52,760 --> 00:33:56,840 Speaker 1: early in calling for reopening happening. Now what happened there 639 00:33:56,920 --> 00:33:59,920 Speaker 1: is that they I mean, if you were looking close 640 00:34:00,040 --> 00:34:02,000 Speaker 1: are in terms of a what would be the new 641 00:34:02,400 --> 00:34:04,640 Speaker 1: sources of growth in China? It's it's a bit more 642 00:34:04,760 --> 00:34:09,600 Speaker 1: domestically oriented affair A and B H elasticities are that 643 00:34:09,800 --> 00:34:12,200 Speaker 1: is near nowhere near as big that we would sort 644 00:34:12,239 --> 00:34:14,120 Speaker 1: of get a huge impact from that. Having said it, 645 00:34:14,200 --> 00:34:16,799 Speaker 1: of course it's a positive, but it's really not not 646 00:34:16,880 --> 00:34:20,279 Speaker 1: the game changer in the sort of generalized state of 647 00:34:20,360 --> 00:34:23,040 Speaker 1: affairs where we see a drag on growth coming from 648 00:34:23,080 --> 00:34:26,920 Speaker 1: these two sources, which is consumption and investment weakness. And 649 00:34:27,040 --> 00:34:29,200 Speaker 1: I've got some recentcy bias and you can hear it 650 00:34:29,320 --> 00:34:32,360 Speaker 1: my voice that I haven't been in Spain for my holidays, 651 00:34:32,360 --> 00:34:34,719 Speaker 1: but I was back in the UK talk to us 652 00:34:34,719 --> 00:34:38,560 Speaker 1: a little bit about the strikes. The For me, there 653 00:34:38,640 --> 00:34:43,080 Speaker 1: was a sense of just lack of hope coming from 654 00:34:43,200 --> 00:34:45,520 Speaker 1: various members of my family in the United Kingdom. What 655 00:34:45,560 --> 00:34:47,760 Speaker 1: do you see from an economic perspective at the moment, 656 00:34:49,520 --> 00:34:51,560 Speaker 1: So the UK for us, it's clearly if you sort 657 00:34:51,560 --> 00:34:54,759 Speaker 1: of look at the European specter of things, it is 658 00:34:54,880 --> 00:35:00,239 Speaker 1: clearly the country legging things most simply because you know, 659 00:35:00,360 --> 00:35:03,120 Speaker 1: it has essentially the worst of all worlds, and it combines, 660 00:35:03,160 --> 00:35:05,919 Speaker 1: of course the same sources of the growth if you want, 661 00:35:06,160 --> 00:35:09,960 Speaker 1: investment weakness and consumption weakness. And you know, again here 662 00:35:10,000 --> 00:35:12,880 Speaker 1: against sky high inflation rates um and and you know 663 00:35:13,200 --> 00:35:17,239 Speaker 1: very sort of you know, not not very significant or 664 00:35:17,280 --> 00:35:20,399 Speaker 1: not not very high wage gains that can can sort 665 00:35:20,400 --> 00:35:22,600 Speaker 1: of go against the class. Of course, you have this 666 00:35:23,000 --> 00:35:26,880 Speaker 1: additional titan in coming in through the bontom my kid, 667 00:35:27,000 --> 00:35:30,200 Speaker 1: and here the mortgage market. So all in all we 668 00:35:30,320 --> 00:35:34,520 Speaker 1: see this economy shrinking by more than your area economy um. 669 00:35:34,800 --> 00:35:37,440 Speaker 1: And you know, the recovery being even more lack luster 670 00:35:38,040 --> 00:35:40,320 Speaker 1: than than than here in the in the your area continent. 671 00:35:40,400 --> 00:35:42,680 Speaker 1: So yeah, in that sense, it's indeed a little bit 672 00:35:42,719 --> 00:35:47,120 Speaker 1: of a sign of lots of structure reforms needed um 673 00:35:47,280 --> 00:35:49,640 Speaker 1: and lots lots of more adjustment needs to come. And 674 00:35:49,680 --> 00:35:52,080 Speaker 1: of course the labor market here that doesn't really help, right, 675 00:35:52,080 --> 00:35:55,080 Speaker 1: I mean, and I guess it's also a question of migration. 676 00:35:55,120 --> 00:35:57,440 Speaker 1: How much migration can you get into your labor market. 677 00:35:57,480 --> 00:36:00,760 Speaker 1: And I think here continental European labor markets are better 678 00:36:01,719 --> 00:36:04,640 Speaker 1: better place to to to sort of get get through 679 00:36:04,719 --> 00:36:09,319 Speaker 1: tight tight moments or moments of tightens all r. Yeah, 680 00:36:09,320 --> 00:36:11,600 Speaker 1: it's great stuff. Really appreciate you taking the time, particularly 681 00:36:11,680 --> 00:36:14,560 Speaker 1: on your holiday. You get a gold gold star for that, 682 00:36:14,640 --> 00:36:18,880 Speaker 1: y I can smit Chief European Economist for Morgan Stanley. 683 00:36:22,400 --> 00:36:25,520 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 684 00:36:25,560 --> 00:36:29,320 Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever 685 00:36:29,400 --> 00:36:33,080 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 686 00:36:33,360 --> 00:36:36,840 Speaker 1: at Matt Miller three. Pet On Ball Sweeney I'm on 687 00:36:36,840 --> 00:36:39,800 Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always 688 00:36:39,800 --> 00:36:41,640 Speaker 1: catch us worldwide at Bloomberg Radio