1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma wits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penil podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: Podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:21,119 Speaker 1: at Bloomberg dot com. We have seen news across the 8 00:00:21,120 --> 00:00:24,160 Speaker 1: Bloomberg termoil seems for years now, but maybe maybe even 9 00:00:24,200 --> 00:00:27,040 Speaker 1: more so in twenty nineteen about big job cuts across 10 00:00:27,400 --> 00:00:31,480 Speaker 1: Wall Street and the city in London. But there's indications 11 00:00:31,480 --> 00:00:34,160 Speaker 1: that there might be pockets of growth actually and job 12 00:00:34,200 --> 00:00:36,760 Speaker 1: growth in the financial services industry. To help us put 13 00:00:36,800 --> 00:00:38,600 Speaker 1: it on perspective, we welcome a good Fred yeaman on 14 00:00:38,640 --> 00:00:41,320 Speaker 1: iran senior finance writer for Bloomberg News, joining us here 15 00:00:41,320 --> 00:00:44,239 Speaker 1: in our Bloomberg Interactor Brooker Studio. So yeah, m give 16 00:00:44,280 --> 00:00:45,960 Speaker 1: us a sense of Again, we've seen a ton of 17 00:00:46,000 --> 00:00:49,080 Speaker 1: reporting about job cuts. Morgan Stanley News out this week, 18 00:00:49,080 --> 00:00:52,440 Speaker 1: we heard city maybe doing some things. What's your reporting showing? 19 00:00:52,920 --> 00:00:57,120 Speaker 1: So you know, I I try to look at their 20 00:00:57,200 --> 00:00:59,560 Speaker 1: actual numbers at the end of every quarter. And I've 21 00:00:59,600 --> 00:01:02,280 Speaker 1: been tracked in this for about twelve years now, since 22 00:01:02,320 --> 00:01:07,080 Speaker 1: the crisis. I started the first job spreadsheets during the crisis, 23 00:01:07,120 --> 00:01:10,080 Speaker 1: because you know, during the crisis it was big. And 24 00:01:10,200 --> 00:01:13,080 Speaker 1: a few years after our crisis, Europe went to the crisis, 25 00:01:13,120 --> 00:01:15,440 Speaker 1: and then they were big. But then it kind of 26 00:01:15,480 --> 00:01:20,720 Speaker 1: started slowing down into the fourteen fifteen. UM started reversing 27 00:01:20,840 --> 00:01:23,760 Speaker 1: in sixteen um And and I still look at the 28 00:01:23,800 --> 00:01:27,160 Speaker 1: actual numbers of employees the banks higher and the last 29 00:01:27,200 --> 00:01:29,440 Speaker 1: time I took was what looked was the middle of 30 00:01:29,480 --> 00:01:33,759 Speaker 1: the year. And and actually several banks they're up from 31 00:01:34,240 --> 00:01:36,880 Speaker 1: where they were during the crisis. So in other words, 32 00:01:36,880 --> 00:01:41,440 Speaker 1: they cut a big chunk, then they started adding. JP 33 00:01:41,600 --> 00:01:44,920 Speaker 1: Morgan is pretty much even uh bamp Party, but pretty 34 00:01:45,000 --> 00:01:49,640 Speaker 1: much even UM And and many banks, after many years 35 00:01:49,640 --> 00:01:53,240 Speaker 1: of cutting, have stopped and started adding slowly, not not 36 00:01:53,320 --> 00:01:56,160 Speaker 1: too much. But there are still those that need to 37 00:01:56,240 --> 00:01:59,040 Speaker 1: keep cutting, like doa Bank. And if you look at 38 00:01:59,040 --> 00:02:03,720 Speaker 1: today's story, the top bank cutting is dotche Bank. It's 39 00:02:03,760 --> 00:02:06,520 Speaker 1: it wants to cut eighteen thou it also has a 40 00:02:06,640 --> 00:02:10,480 Speaker 1: terrible record of job cuts, has announced ten thousand job 41 00:02:10,560 --> 00:02:14,399 Speaker 1: cuts three years ago. How many cut three in three 42 00:02:14,480 --> 00:02:17,040 Speaker 1: years so so, and they kept talking about that ten 43 00:02:17,040 --> 00:02:19,919 Speaker 1: thousand and they managed to cut three. Now they say eighteen, 44 00:02:20,320 --> 00:02:24,480 Speaker 1: so with that same rate, maybe they'll cut five if 45 00:02:24,520 --> 00:02:27,760 Speaker 1: they can. They're they're really bad. Uning Credit, which is 46 00:02:27,800 --> 00:02:30,840 Speaker 1: the biggest Italian bank, is also on the list. They 47 00:02:30,919 --> 00:02:34,280 Speaker 1: said eight. They have a better record. They actually have 48 00:02:34,520 --> 00:02:37,880 Speaker 1: cut a lot since the crisis. A lot of it 49 00:02:37,919 --> 00:02:40,760 Speaker 1: is not necessarily Italy, but they un Credit has also 50 00:02:40,840 --> 00:02:44,040 Speaker 1: gotten out of countries where where they just don't think 51 00:02:44,080 --> 00:02:48,320 Speaker 1: they're core it's their core business anymore. So Italian and 52 00:02:48,360 --> 00:02:51,600 Speaker 1: French banks have done that, um, getting out of markets 53 00:02:51,639 --> 00:02:53,520 Speaker 1: that they don't think they really need to be in. 54 00:02:54,040 --> 00:02:56,240 Speaker 1: UH and that reduces the headcount when you're no longer 55 00:02:56,480 --> 00:02:59,239 Speaker 1: don't have a subsidiary there, but really has a terrible, 56 00:02:59,440 --> 00:03:03,280 Speaker 1: terrible It's hard. I mean, I understand it's harder for 57 00:03:03,360 --> 00:03:07,160 Speaker 1: European banks to cut people than it is for US banks. 58 00:03:07,160 --> 00:03:09,200 Speaker 1: Some of the laws over there is that a challenge. 59 00:03:10,360 --> 00:03:12,000 Speaker 1: It is anyway to get it. I know, like in 60 00:03:12,040 --> 00:03:14,320 Speaker 1: Germany when they're talking about maybe merging with the Torch 61 00:03:14,440 --> 00:03:16,919 Speaker 1: back with Commerce Bank, the big issue was how many 62 00:03:16,919 --> 00:03:19,160 Speaker 1: employees of the merged bank would be cut, and that 63 00:03:19,240 --> 00:03:20,960 Speaker 1: was one of the reasons I think that that, I 64 00:03:20,960 --> 00:03:23,480 Speaker 1: mean they have they have labor laws that are much tougher. 65 00:03:24,200 --> 00:03:27,000 Speaker 1: H France and Germany and Italy, they all have a 66 00:03:27,040 --> 00:03:31,119 Speaker 1: tougher labor laws. Politically, it's very challenging. Um. I mean, 67 00:03:31,560 --> 00:03:34,600 Speaker 1: Germany is the strongest economy in the world. How can 68 00:03:34,639 --> 00:03:38,480 Speaker 1: you then go say I'm cutting thousands of jobs when 69 00:03:38,560 --> 00:03:42,840 Speaker 1: you should be hiring thousands of people. Yet Germany is overbanked. 70 00:03:43,160 --> 00:03:46,280 Speaker 1: It has too many banks. Um of them should be 71 00:03:46,280 --> 00:03:48,360 Speaker 1: shut down. And I've been saying this, you know, for 72 00:03:48,400 --> 00:03:51,280 Speaker 1: about ten years now. The whole chapter in my book 73 00:03:51,640 --> 00:03:53,520 Speaker 1: that came out in two thousands eleven was about this, 74 00:03:53,920 --> 00:03:58,880 Speaker 1: and and German um advisors, analysts, professors have been saying 75 00:03:58,880 --> 00:04:00,960 Speaker 1: the same thing for twenty years, that they have too 76 00:04:01,000 --> 00:04:03,720 Speaker 1: many banks, they need to cut them down, and they 77 00:04:03,760 --> 00:04:08,680 Speaker 1: can't do it because politically it's a rich, economically doing 78 00:04:08,760 --> 00:04:11,840 Speaker 1: great country. So they can't do it. So they there's 79 00:04:11,840 --> 00:04:15,160 Speaker 1: always pressure not to. So Germany, not just labor laws, 80 00:04:15,440 --> 00:04:17,640 Speaker 1: but politics also works against it. How about some of 81 00:04:17,640 --> 00:04:20,480 Speaker 1: the big US investment banks, the JP Morgan's of the world, 82 00:04:20,880 --> 00:04:23,520 Speaker 1: the banks of America. You know, as you walk on 83 00:04:23,560 --> 00:04:25,599 Speaker 1: those trading floors, I grew up on a trading floor 84 00:04:25,720 --> 00:04:28,920 Speaker 1: from a generation ago, where they're just packed massive floors, 85 00:04:29,000 --> 00:04:32,159 Speaker 1: packed with people, people yelling, buying, selling all kinds of stuff. 86 00:04:32,160 --> 00:04:34,239 Speaker 1: You go on a trading floor, it's a lot different way. 87 00:04:34,480 --> 00:04:38,120 Speaker 1: Way fewer people, I guess, replaced with technology. So if 88 00:04:38,160 --> 00:04:40,799 Speaker 1: these US investment banks and you're reporting our adding jobs, 89 00:04:41,240 --> 00:04:45,560 Speaker 1: where are they? So they they are, You're right, trading 90 00:04:45,560 --> 00:04:47,800 Speaker 1: floors are very quiet. For one thing, even if there 91 00:04:47,800 --> 00:04:51,239 Speaker 1: are people, they're using instant chat programs instead of yelling 92 00:04:51,279 --> 00:04:53,479 Speaker 1: at each other. Right that there's a big difference. I 93 00:04:53,520 --> 00:04:56,159 Speaker 1: remember the days when you could go and people were yelling. 94 00:04:56,160 --> 00:04:58,000 Speaker 1: But it's it's not it's been gone for a while. 95 00:04:58,640 --> 00:05:01,640 Speaker 1: But they add they've been in many areas well. For 96 00:05:01,800 --> 00:05:06,040 Speaker 1: one thing, banks need to invest in in programmers, technology 97 00:05:06,080 --> 00:05:08,719 Speaker 1: people that's we can actually do the I mean. And 98 00:05:08,720 --> 00:05:12,440 Speaker 1: and technology has become so important to every industry, including 99 00:05:12,480 --> 00:05:17,600 Speaker 1: finance um and to compete with all these new fintech 100 00:05:17,640 --> 00:05:20,440 Speaker 1: companies that could be a threat to them, big banks 101 00:05:20,440 --> 00:05:24,560 Speaker 1: have been buying those some of those companies, really increasing 102 00:05:24,560 --> 00:05:26,760 Speaker 1: the number of people who do technology for them so 103 00:05:26,800 --> 00:05:29,680 Speaker 1: they can stay on top of the technology spectrum. And 104 00:05:30,080 --> 00:05:35,039 Speaker 1: compliance has been a big boon for employment at Wall 105 00:05:35,080 --> 00:05:38,240 Speaker 1: Street firms around the world, but especially as firms on 106 00:05:38,360 --> 00:05:41,880 Speaker 1: the pressure from the FED to comply with new regulations 107 00:05:41,920 --> 00:05:43,960 Speaker 1: which were even harsher than the rest of the world, 108 00:05:44,520 --> 00:05:47,920 Speaker 1: added thousands and thousands of people to make sure compliance 109 00:05:48,680 --> 00:05:51,920 Speaker 1: was really tip top. And now it is. But and 110 00:05:51,920 --> 00:05:56,440 Speaker 1: and maybe Dave's stopped hiring more, but that really compensated 111 00:05:56,480 --> 00:05:58,480 Speaker 1: for a lot of people who were leaving the trading 112 00:05:58,560 --> 00:06:01,760 Speaker 1: rooms and and other sale positions other things. So those 113 00:06:01,800 --> 00:06:06,040 Speaker 1: areas have have really made the difference interesting. Uh, yeaman 114 00:06:06,200 --> 00:06:08,640 Speaker 1: on An thank you so much for your reporting here. 115 00:06:09,000 --> 00:06:11,840 Speaker 1: Yamen is a senior finance writer for Bloomberg News. Joinings 116 00:06:11,839 --> 00:06:14,599 Speaker 1: here in our Bloomberg Interact. Their broker studio continues to 117 00:06:14,640 --> 00:06:17,520 Speaker 1: be a big story on Wall Street. The head count 118 00:06:17,560 --> 00:06:20,720 Speaker 1: issues when there's pressure on lower interest rates and on 119 00:06:20,839 --> 00:06:23,480 Speaker 1: fees um one of the areas, uh, you know, obviously 120 00:06:23,560 --> 00:06:26,320 Speaker 1: that banks can look at is their head count. That 121 00:06:26,400 --> 00:06:28,760 Speaker 1: is one of their biggest costs, and it walks in 122 00:06:28,760 --> 00:06:31,039 Speaker 1: and out of the door every day their biggest assets. 123 00:06:31,080 --> 00:06:34,279 Speaker 1: So when there is fee pressure, we certainly see time 124 00:06:34,320 --> 00:06:36,280 Speaker 1: and time again the big investment banks and big financial 125 00:06:36,320 --> 00:06:39,599 Speaker 1: institutions look to the head count none, you know, more 126 00:06:39,680 --> 00:06:42,520 Speaker 1: so than in Europe, as you Yeaman was just reporting 127 00:06:42,720 --> 00:06:45,960 Speaker 1: Deutsche Bank. You know, clearly it's been reported that they 128 00:06:45,960 --> 00:06:47,440 Speaker 1: have a lot of cost cutting to do there and 129 00:06:47,440 --> 00:06:49,640 Speaker 1: again they have to take a very hard look at 130 00:06:50,000 --> 00:07:07,240 Speaker 1: headcount and we'll see how that plays out in Well, 131 00:07:07,279 --> 00:07:09,479 Speaker 1: what a difference a year makes. You think back to 132 00:07:09,520 --> 00:07:12,240 Speaker 1: a year ago, almost to the day markets were in 133 00:07:12,280 --> 00:07:15,720 Speaker 1: a free fall, setting many setting lows on Christmas Eve. 134 00:07:15,960 --> 00:07:18,320 Speaker 1: Compared that to this year where most asset classes, certainly 135 00:07:18,320 --> 00:07:21,960 Speaker 1: on the risky side, have put up some stellar, stellar performance. 136 00:07:22,120 --> 00:07:23,840 Speaker 1: Let's get a sense trying to put all of that 137 00:07:23,920 --> 00:07:26,320 Speaker 1: in perspective. We welcome my next guest, Jim Vogel. He's 138 00:07:26,320 --> 00:07:29,960 Speaker 1: an interest rate strategist for FT and Financial based in Memphis, Tennessee. 139 00:07:30,000 --> 00:07:32,080 Speaker 1: Joining us on the phone. Jim, thanks so much for 140 00:07:32,160 --> 00:07:35,680 Speaker 1: joining us, help us, you know, put into perspective what 141 00:07:35,880 --> 00:07:38,480 Speaker 1: really the last twelve months have meant to the markets, 142 00:07:38,520 --> 00:07:40,760 Speaker 1: starting with that free fall we saw back in you know, 143 00:07:40,800 --> 00:07:42,560 Speaker 1: almost a little more than a year ago, to where 144 00:07:42,600 --> 00:07:45,240 Speaker 1: we are today. How do you put that in perspective? Well, 145 00:07:45,280 --> 00:07:47,520 Speaker 1: that was an enormous wake up call, not only for 146 00:07:47,560 --> 00:07:50,760 Speaker 1: investors but also for the Federal Reserve, and so they 147 00:07:50,800 --> 00:07:54,320 Speaker 1: responded almost immediately, and it really set the tone for 148 00:07:54,400 --> 00:07:57,240 Speaker 1: all of two thousand and nineteen where the FED no 149 00:07:57,360 --> 00:08:01,000 Speaker 1: longer was wed to a particular forecast, was prepared to 150 00:08:01,080 --> 00:08:04,600 Speaker 1: react throughout the year. It's interesting, so as we think 151 00:08:04,640 --> 00:08:06,920 Speaker 1: about it here today, how would your characterize kind of 152 00:08:06,920 --> 00:08:09,960 Speaker 1: where we are in terms of the economy, in terms 153 00:08:10,040 --> 00:08:13,000 Speaker 1: of the interest rate environment. How constructive are you kind 154 00:08:13,000 --> 00:08:15,320 Speaker 1: of on the markets here? Given kind of this performance 155 00:08:15,320 --> 00:08:20,120 Speaker 1: we've seen, we're looking for more of the same. In particular, 156 00:08:20,360 --> 00:08:24,520 Speaker 1: um the um increases that we've seen in stocks should 157 00:08:24,520 --> 00:08:28,240 Speaker 1: start moving to emerging market classes as well as the 158 00:08:28,320 --> 00:08:31,240 Speaker 1: FED and the other sent large central banks stay on hold. 159 00:08:31,520 --> 00:08:36,160 Speaker 1: That's very important. Meantime, we've got the possibility that that 160 00:08:36,320 --> 00:08:40,360 Speaker 1: long term interest rates also stay within a band and 161 00:08:40,400 --> 00:08:42,280 Speaker 1: that we don't get the kind of increase you would 162 00:08:42,320 --> 00:08:46,640 Speaker 1: typically see as other risk assets begin to recover and 163 00:08:46,679 --> 00:08:49,560 Speaker 1: continue to set new highs. It's interesting you think you 164 00:08:49,600 --> 00:08:52,280 Speaker 1: talk about emerging markets as you know it's still I 165 00:08:52,280 --> 00:08:55,040 Speaker 1: would say, kind of an a sector and asset class 166 00:08:55,120 --> 00:08:56,679 Speaker 1: that a lot of folks are kind of split on. 167 00:08:56,679 --> 00:08:59,839 Speaker 1: What makes you think about going that far out on 168 00:09:00,080 --> 00:09:02,360 Speaker 1: the risk parameter, the risk curve, if you will, and 169 00:09:02,520 --> 00:09:07,959 Speaker 1: think about emerging markets. The reason to consider is that 170 00:09:09,080 --> 00:09:13,880 Speaker 1: UM investors are too focused on difficulties and individual markets 171 00:09:13,920 --> 00:09:17,520 Speaker 1: and individual regions when they should be thinking about a 172 00:09:17,640 --> 00:09:22,200 Speaker 1: five to six year horizon that allows a look for 173 00:09:22,480 --> 00:09:25,960 Speaker 1: those to begin to catch up, become less commodity dependent, 174 00:09:26,400 --> 00:09:32,160 Speaker 1: become more uh in terms of putting into work their workforce. 175 00:09:32,960 --> 00:09:37,040 Speaker 1: That's going to be prized as developed markets continue to 176 00:09:37,120 --> 00:09:42,319 Speaker 1: see a particular tight labor pool. How about it. It's 177 00:09:42,360 --> 00:09:46,280 Speaker 1: interesting we think about the bond market again, another asset 178 00:09:46,320 --> 00:09:51,439 Speaker 1: class had just a fantastic year. When we think about 179 00:09:51,440 --> 00:09:54,760 Speaker 1: the credit markets, how do you think about allocation between 180 00:09:54,760 --> 00:09:58,599 Speaker 1: perhaps investment grade, high yield, maybe even going out that 181 00:09:58,679 --> 00:10:01,120 Speaker 1: you know, kind of the leverage loans side of the business. 182 00:10:02,320 --> 00:10:04,400 Speaker 1: We've got an awful lot of forecasts by people on 183 00:10:04,400 --> 00:10:07,120 Speaker 1: Wall Street that the leverage loan market is going to 184 00:10:07,200 --> 00:10:09,720 Speaker 1: get a little thinner in terms of performance this year 185 00:10:09,720 --> 00:10:14,200 Speaker 1: as they again focus on specific assets. But overall, there's 186 00:10:14,200 --> 00:10:16,959 Speaker 1: an awful lot of money still waiting to go into 187 00:10:17,000 --> 00:10:19,520 Speaker 1: that market and find bargains as they can, and we 188 00:10:19,559 --> 00:10:23,360 Speaker 1: think that provides support both for leverage loans and for 189 00:10:23,600 --> 00:10:27,480 Speaker 1: high yield debt as well. Then investment grade is all 190 00:10:27,559 --> 00:10:30,520 Speaker 1: going to be a question of supply, and right now 191 00:10:30,559 --> 00:10:33,800 Speaker 1: our forecasts are for modest growth and supply. But if 192 00:10:33,880 --> 00:10:38,880 Speaker 1: we see large um corporations tapping the market consistently, you'll 193 00:10:38,920 --> 00:10:42,040 Speaker 1: see investment grade begin to widen. How about the menus 194 00:10:42,080 --> 00:10:44,240 Speaker 1: of a bond market, just to take it one step further, 195 00:10:44,320 --> 00:10:48,800 Speaker 1: that there's a market where we've seen tremendous inflows of capital. 196 00:10:48,840 --> 00:10:51,120 Speaker 1: We've seen you know, you know, all in returns of 197 00:10:51,280 --> 00:10:53,280 Speaker 1: you know, proximately seven percent this year, which for the 198 00:10:53,280 --> 00:10:58,320 Speaker 1: mini bond markets fantastic. Here is that a healthy move 199 00:10:58,440 --> 00:10:59,960 Speaker 1: for this market? You think that market may have got 200 00:11:00,000 --> 00:11:02,280 Speaker 1: in a little bit ahead of itself. It's a little 201 00:11:02,280 --> 00:11:05,160 Speaker 1: bit of head but it's also it benefits an awful 202 00:11:05,160 --> 00:11:09,800 Speaker 1: lot from uh tax policy, tax policy uncertainty in an 203 00:11:09,800 --> 00:11:12,200 Speaker 1: election year, and we'll see that, of course continue in 204 00:11:13,360 --> 00:11:17,320 Speaker 1: And also you've got an awful lot of domestic savings 205 00:11:17,360 --> 00:11:21,319 Speaker 1: that wants to stay in fixed income because they realize 206 00:11:21,360 --> 00:11:23,720 Speaker 1: that there's a after the last couple of years, there's 207 00:11:23,720 --> 00:11:26,600 Speaker 1: a possibility that some of their big equity gains could 208 00:11:26,600 --> 00:11:29,199 Speaker 1: pull back a little bit, and they want that core 209 00:11:29,320 --> 00:11:32,600 Speaker 1: holding and fixed income as something of an anchor on 210 00:11:32,640 --> 00:11:36,360 Speaker 1: the portfolio and that just hasn't changed for municipals at all, 211 00:11:36,600 --> 00:11:38,960 Speaker 1: and nor should it next year. So, Jim, you've been 212 00:11:38,960 --> 00:11:41,600 Speaker 1: in the markets a long time. You've seen these cycles, 213 00:11:41,840 --> 00:11:45,120 Speaker 1: whether they're economic cycles and also political cycles. As you mentioned, 214 00:11:45,280 --> 00:11:48,439 Speaker 1: this is a presidential election year we're coming into. How 215 00:11:48,480 --> 00:11:50,760 Speaker 1: are you kind of factoring that into kind of your 216 00:11:50,840 --> 00:11:53,080 Speaker 1: view about how much risk you may you want to 217 00:11:53,120 --> 00:11:55,240 Speaker 1: take or what sectors you may want to have exposure 218 00:11:55,240 --> 00:11:57,280 Speaker 1: to where you just kind of play that out and 219 00:11:57,320 --> 00:12:01,680 Speaker 1: really don't pay too much attention to the uh clitical aspect. Well, 220 00:12:01,720 --> 00:12:05,240 Speaker 1: the political aspect is important because right now the market's 221 00:12:05,280 --> 00:12:08,040 Speaker 1: not focused on it, and if you look at two 222 00:12:08,120 --> 00:12:11,160 Speaker 1: thousand and nineteen, it was a year when things sort 223 00:12:11,160 --> 00:12:14,600 Speaker 1: of did not things did definitely did not go to plan, 224 00:12:14,920 --> 00:12:18,719 Speaker 1: but then we recovered with moves by the Fed, by 225 00:12:18,760 --> 00:12:22,960 Speaker 1: the ECB, and then investors sort of recalibrated. One of 226 00:12:23,000 --> 00:12:27,520 Speaker 1: the things that's difficult to recalibrate for our political surprises 227 00:12:27,760 --> 00:12:32,520 Speaker 1: and could bring that and if it ends up where 228 00:12:32,559 --> 00:12:34,440 Speaker 1: you have a Democrat in the White House and a 229 00:12:34,480 --> 00:12:39,480 Speaker 1: democrat Um controlled Senate, then you've got the possibility for 230 00:12:39,520 --> 00:12:43,360 Speaker 1: a surprise that the markets simply not thinking about. And 231 00:12:43,440 --> 00:12:50,920 Speaker 1: although policies may move slowly, investor fears can develop quite quickly. Absolutely, Jim, Jim, 232 00:12:50,920 --> 00:12:53,280 Speaker 1: thanks so much for sharing us, sharing with us your 233 00:12:53,280 --> 00:12:55,480 Speaker 1: thoughts here. Jim is an interestrate strategist for f TN 234 00:12:55,720 --> 00:12:58,280 Speaker 1: Financial based in Memphis, Tennessee, joining us on the phone 235 00:12:58,280 --> 00:13:01,040 Speaker 1: today giving us his thoughts kind of us asset classes. 236 00:13:01,120 --> 00:13:04,920 Speaker 1: That sounds like Jim Vogel continues to be pretty constructive 237 00:13:05,120 --> 00:13:08,280 Speaker 1: on the markets here, uh, in terms of taking uh 238 00:13:08,400 --> 00:13:10,320 Speaker 1: you know, kind of being out there on the risk curve, 239 00:13:10,360 --> 00:13:13,400 Speaker 1: not pulling back, trying to get a sense across uh, 240 00:13:13,640 --> 00:13:17,120 Speaker 1: you know, strategist, fund managers, economist kind of their view. 241 00:13:17,200 --> 00:13:35,000 Speaker 1: For time to check in with Bloomberg Opinion, we're joined 242 00:13:35,040 --> 00:13:39,080 Speaker 1: by opinion columnist Tera La Chapelle. She covers entertainment and telecommunication. 243 00:13:39,160 --> 00:13:41,840 Speaker 1: She joins us here on a Bloomberg Interactive broker's studio, 244 00:13:41,880 --> 00:13:44,719 Speaker 1: and she is out with a stellar column today. It's 245 00:13:44,800 --> 00:13:46,439 Speaker 1: really awesome. If you want to get a sense and 246 00:13:46,559 --> 00:13:49,360 Speaker 1: really get a primer for the streaming business and what 247 00:13:49,400 --> 00:13:52,840 Speaker 1: it's done to Hollywood, I highly recommend you read Terrorist 248 00:13:52,840 --> 00:13:56,040 Speaker 1: Calm on the terminal end on Bloomberg dot com. So 249 00:13:56,400 --> 00:13:59,480 Speaker 1: Tera again. I followed the media industry for about thirty years, 250 00:13:59,480 --> 00:14:03,320 Speaker 1: and by far the biggest disruption that I've seen has 251 00:14:03,400 --> 00:14:07,160 Speaker 1: been Netflix and the whole streaming concept, because it really 252 00:14:07,240 --> 00:14:13,000 Speaker 1: changed the way people consume media, and Hollywood is trying 253 00:14:13,200 --> 00:14:15,760 Speaker 1: in the media industries trying to react. Tell us what 254 00:14:16,040 --> 00:14:18,760 Speaker 1: comes some of the key findings in your column. So 255 00:14:18,800 --> 00:14:21,560 Speaker 1: I think what you know consumers see is how it's 256 00:14:21,640 --> 00:14:24,720 Speaker 1: changed their own habits, how it's changed us some of 257 00:14:24,760 --> 00:14:28,000 Speaker 1: our entertainment, the way we watch TV, the way creative 258 00:14:28,040 --> 00:14:30,360 Speaker 1: decisions are made. But in the business world, what's been 259 00:14:30,360 --> 00:14:33,800 Speaker 1: really interesting is it's driven multi billions of dollars worth 260 00:14:33,840 --> 00:14:37,120 Speaker 1: of mergers. So you saw Disney and twenty one century 261 00:14:37,160 --> 00:14:39,760 Speaker 1: Fox combined. So now Disney owns those studios. A T 262 00:14:39,880 --> 00:14:43,200 Speaker 1: and T bought Time Warner and HBO via Common CBS 263 00:14:43,240 --> 00:14:47,080 Speaker 1: have gotten together Charter the cable company about Time Warner Cable. 264 00:14:47,160 --> 00:14:49,440 Speaker 1: So it just goes on and on and on, and 265 00:14:49,600 --> 00:14:51,440 Speaker 1: you know, little by little, when you see one of 266 00:14:51,480 --> 00:14:54,160 Speaker 1: those deals piece by piece, it doesn't really seem like 267 00:14:54,240 --> 00:14:56,040 Speaker 1: that much of a transformation. But I think when you 268 00:14:56,080 --> 00:14:57,960 Speaker 1: look at the long list of what's happened in the 269 00:14:58,040 --> 00:15:01,400 Speaker 1: last decade, you start to see how drastically it really 270 00:15:01,440 --> 00:15:03,320 Speaker 1: has changed, and how it's really because of kind of 271 00:15:03,360 --> 00:15:06,280 Speaker 1: like one company, Netflix causing all of this. Yeah, there's 272 00:15:06,320 --> 00:15:08,680 Speaker 1: a great graphic that you have in your column that 273 00:15:08,840 --> 00:15:12,000 Speaker 1: it's called Disappearing Act, and basically it just compares the 274 00:15:12,120 --> 00:15:14,240 Speaker 1: kind of the big media companies that were in the 275 00:15:14,280 --> 00:15:16,720 Speaker 1: marketplace in two verses today and the list is almost 276 00:15:16,720 --> 00:15:19,360 Speaker 1: half of what it was, you know, back in the day. 277 00:15:19,400 --> 00:15:23,400 Speaker 1: So is there any sense of whether any of these 278 00:15:23,440 --> 00:15:26,960 Speaker 1: media companies can really compete against Netflix? Well, it's funny 279 00:15:27,000 --> 00:15:29,400 Speaker 1: because I was looking at the market caps for I 280 00:15:29,440 --> 00:15:32,120 Speaker 1: think it was the ten biggest media giants right now, 281 00:15:32,440 --> 00:15:35,360 Speaker 1: and all of those combined are still smaller than Apple. 282 00:15:35,480 --> 00:15:37,840 Speaker 1: For example, Apple has got an over a trillion dollar 283 00:15:37,920 --> 00:15:40,240 Speaker 1: market cap. So I think that tells you right there 284 00:15:40,320 --> 00:15:42,720 Speaker 1: that the scale. It kind of puts it into perspective 285 00:15:42,760 --> 00:15:45,200 Speaker 1: that even Disney, after doing all these deals, is still 286 00:15:45,240 --> 00:15:47,760 Speaker 1: small compared to the tech giants. On the other hand, 287 00:15:47,800 --> 00:15:49,280 Speaker 1: I think Disney is one of the sort of the 288 00:15:49,280 --> 00:15:51,720 Speaker 1: best equipped to weather this, and maybe you feel the same. 289 00:15:51,800 --> 00:15:54,200 Speaker 1: You know, they have the Disney Plus app, which had 290 00:15:54,200 --> 00:15:56,440 Speaker 1: a really good launch. A lot of people seem to 291 00:15:56,480 --> 00:15:59,560 Speaker 1: like it. They're really investing in content for streaming, more 292 00:15:59,640 --> 00:16:01,520 Speaker 1: so than I would have expected for a company that 293 00:16:01,600 --> 00:16:04,760 Speaker 1: has its profits so tied to traditional television. So I 294 00:16:04,800 --> 00:16:06,360 Speaker 1: think some of these companies they do have a lot 295 00:16:06,480 --> 00:16:09,640 Speaker 1: to prove, But when it comes to content, you know, HBO, Disney, 296 00:16:09,840 --> 00:16:11,600 Speaker 1: they know great content and it's going to come down 297 00:16:11,680 --> 00:16:13,400 Speaker 1: to that. So I think we'll see, you know, what 298 00:16:13,480 --> 00:16:16,080 Speaker 1: happens over the next year. Maybe Netflix starts to feel 299 00:16:16,120 --> 00:16:19,280 Speaker 1: some pressure of that. You mentioned a big tech and 300 00:16:19,680 --> 00:16:22,600 Speaker 1: UM interested in what your sources are telling you, because 301 00:16:22,640 --> 00:16:25,840 Speaker 1: we we've seen big technology comanies, whether it's Amazon or 302 00:16:25,880 --> 00:16:28,480 Speaker 1: Apple or you know, Google with Facebook kind of I 303 00:16:28,480 --> 00:16:30,960 Speaker 1: would car, you know, argues just kind of dipping their 304 00:16:31,000 --> 00:16:33,960 Speaker 1: toe in the content business, in the video business. Is 305 00:16:34,000 --> 00:16:37,600 Speaker 1: there any sense that maybe will see them really jump 306 00:16:37,640 --> 00:16:40,360 Speaker 1: into the deep end of the pools relates to video programming. Yeah, 307 00:16:40,360 --> 00:16:43,080 Speaker 1: I'm really curious to see what Apple does specifically, because 308 00:16:43,280 --> 00:16:45,480 Speaker 1: I think right now it's been really vague. You know, 309 00:16:45,520 --> 00:16:48,600 Speaker 1: It's like they have the Apple TV Plus app. The 310 00:16:48,760 --> 00:16:51,800 Speaker 1: content didn't really get rave reviews, but they're spending a 311 00:16:51,840 --> 00:16:53,280 Speaker 1: lot of money, but on the other hand, there's not 312 00:16:53,320 --> 00:16:56,720 Speaker 1: really enough on there, you know, to replace television. For instance. 313 00:16:56,720 --> 00:16:58,200 Speaker 1: You know, when you go onto Netflix, there's just a 314 00:16:58,240 --> 00:17:00,360 Speaker 1: load of an endless scroll of things you and watch, 315 00:17:00,360 --> 00:17:02,680 Speaker 1: whether you like all the content or not. Apple had 316 00:17:02,720 --> 00:17:05,320 Speaker 1: like a handful of shows you could watch. So I 317 00:17:05,320 --> 00:17:07,080 Speaker 1: think it'll be interesting to see, you know, if if 318 00:17:07,080 --> 00:17:09,679 Speaker 1: this is successful for them and getting more people to 319 00:17:09,760 --> 00:17:12,800 Speaker 1: buy Apple devices, maybe they go out and buy a studio. 320 00:17:12,840 --> 00:17:14,720 Speaker 1: I know some other people disagree and think this is 321 00:17:14,800 --> 00:17:16,879 Speaker 1: just sort of a loss leader for them, is a 322 00:17:16,920 --> 00:17:20,879 Speaker 1: way to get more iPhones and iPads into people's homes. 323 00:17:21,359 --> 00:17:24,040 Speaker 1: So I guess we'll see. But I always tend to 324 00:17:24,080 --> 00:17:26,239 Speaker 1: air on the side of these companies like to do 325 00:17:26,320 --> 00:17:28,119 Speaker 1: deals and it seems really important to them, and I 326 00:17:28,119 --> 00:17:30,600 Speaker 1: think we're going to see more of those, any idea. 327 00:17:30,800 --> 00:17:33,320 Speaker 1: One of the pet peeves that Tom Keene has is 328 00:17:33,440 --> 00:17:35,639 Speaker 1: he thinks he's subscribing to like ten or eleven different 329 00:17:35,640 --> 00:17:39,359 Speaker 1: streaming services. How many streaming services do you think the 330 00:17:39,400 --> 00:17:41,560 Speaker 1: market can bear? Maybe? Yeah, I think that's going to 331 00:17:41,640 --> 00:17:44,240 Speaker 1: have to change. I mean, most people can't afford to 332 00:17:44,320 --> 00:17:46,720 Speaker 1: subscribe to multiple apps, you know, more than a handful. 333 00:17:46,880 --> 00:17:49,760 Speaker 1: They get very expensive and especially with the cost of Internet, 334 00:17:50,000 --> 00:17:52,159 Speaker 1: and I think what we'll see happen as companies like 335 00:17:52,200 --> 00:17:54,840 Speaker 1: Comcast and Charter, for example, we'll try to bundle some 336 00:17:54,880 --> 00:17:57,159 Speaker 1: of these services. I think they see that this is 337 00:17:57,200 --> 00:17:59,399 Speaker 1: a big consumer pain point, and when there is something 338 00:17:59,480 --> 00:18:02,040 Speaker 1: like that, there's opportunity of business opportunities. So I think 339 00:18:02,760 --> 00:18:05,360 Speaker 1: some of these companies, including Amazon and Apple, will look 340 00:18:05,400 --> 00:18:08,240 Speaker 1: to try to bundle these you know, not just put 341 00:18:08,280 --> 00:18:10,480 Speaker 1: them all in one place where you can subscribe to them, 342 00:18:10,480 --> 00:18:12,960 Speaker 1: but also pay in one spot and maybe pay one 343 00:18:13,000 --> 00:18:14,760 Speaker 1: bill every month and not have to subscribe to them 344 00:18:14,800 --> 00:18:17,400 Speaker 1: individually to get all the content you need. That kind 345 00:18:17,400 --> 00:18:20,359 Speaker 1: of sounds like a cable company exactly. We're bringing that cable, 346 00:18:20,800 --> 00:18:23,000 Speaker 1: but we're still seeing court cutting. We had Craig moffatt 347 00:18:23,040 --> 00:18:24,600 Speaker 1: on from off at Nathanson on a couple of weeks 348 00:18:24,600 --> 00:18:26,680 Speaker 1: ago when he was out with his research showing the 349 00:18:26,720 --> 00:18:29,879 Speaker 1: court cutting is not only continuing, exection actually accelerating. So 350 00:18:30,080 --> 00:18:32,400 Speaker 1: kind of it goes to your point, Tara, the move 351 00:18:32,440 --> 00:18:35,040 Speaker 1: towards streaming it is in full force and probably accelerating. 352 00:18:35,040 --> 00:18:40,160 Speaker 1: In Tara La Chapelle Entertainment and Telecommunications columns for Bloomberg Opinion, 353 00:18:40,200 --> 00:18:42,720 Speaker 1: joining us here on a Bloomberg Interactive broker studio. You 354 00:18:42,760 --> 00:18:46,200 Speaker 1: can read more on this and other stories from Bloomberg Opinion. 355 00:18:46,280 --> 00:18:48,760 Speaker 1: They have great stuff every day. Really makes you think 356 00:18:48,960 --> 00:18:51,159 Speaker 1: you can go to Bloomberg dot com slash opinion, or 357 00:18:51,200 --> 00:18:52,879 Speaker 1: you can go to the terminal by typing in O, P, 358 00:18:53,119 --> 00:18:55,600 Speaker 1: I N GO. And I think the real issue is 359 00:18:55,640 --> 00:18:58,360 Speaker 1: Tara pointed out in her column, is streaming wars are 360 00:18:58,400 --> 00:19:01,720 Speaker 1: heating up. They really kind of art in earnest arguably 361 00:19:01,760 --> 00:19:04,359 Speaker 1: in twenty nineteen. But they're really going to accelerate here. Uh, 362 00:19:05,160 --> 00:19:07,040 Speaker 1: We're gonna see how Disney plays it out. We're gonna 363 00:19:07,040 --> 00:19:10,040 Speaker 1: see Time Warner, A T and T time Warner come 364 00:19:10,119 --> 00:19:13,720 Speaker 1: to the marketplace with a more robust product, Comcast with 365 00:19:13,720 --> 00:19:17,280 Speaker 1: their peacocks. So it's only going to get more aggressive 366 00:19:17,280 --> 00:19:33,720 Speaker 1: out there. So get ready. Take a look at the 367 00:19:33,760 --> 00:19:37,159 Speaker 1: housing market here is a really been fairly strong over 368 00:19:37,160 --> 00:19:39,399 Speaker 1: the years, and you would expect that with interest rates 369 00:19:39,600 --> 00:19:42,160 Speaker 1: so low. Get a sense of kind of how things 370 00:19:42,160 --> 00:19:44,200 Speaker 1: are playing out across the country in the housing market. 371 00:19:44,240 --> 00:19:47,760 Speaker 1: We welcome a good friend. Logan Mohatshami, senior loan officer 372 00:19:47,800 --> 00:19:51,000 Speaker 1: for AMC Lending Group based in Irvine, California. So Logan, 373 00:19:51,080 --> 00:19:52,920 Speaker 1: just give us a kind of a snapshot of kind 374 00:19:52,960 --> 00:19:55,959 Speaker 1: of what you're seeing in the housing market right here 375 00:19:55,960 --> 00:20:00,360 Speaker 1: as we end, well, lower mortgage rates did the or thing. 376 00:20:00,800 --> 00:20:02,760 Speaker 1: Um you know, last year, you know, we had a 377 00:20:02,800 --> 00:20:06,800 Speaker 1: monthly supply spike in new home UH, in new homesale sector. 378 00:20:06,880 --> 00:20:09,840 Speaker 1: People were thinking housing might have peaked. But as soon 379 00:20:09,880 --> 00:20:13,960 Speaker 1: as the tenure yield started going down, really by May 380 00:20:14,000 --> 00:20:16,960 Speaker 1: of this year, the housing market just got back to 381 00:20:17,040 --> 00:20:21,600 Speaker 1: its normal traditional cycle trend, very slow and steady. The 382 00:20:21,640 --> 00:20:23,720 Speaker 1: existing home sales market, even though it's going to be 383 00:20:23,800 --> 00:20:27,080 Speaker 1: slightly negative year to day, has been keeping sales above 384 00:20:27,119 --> 00:20:29,920 Speaker 1: five million for some time now. But really the most 385 00:20:29,920 --> 00:20:32,600 Speaker 1: important factor for twenty nineteen going into twenty is that 386 00:20:32,640 --> 00:20:35,040 Speaker 1: the monthly supply for new home sales have come back down. 387 00:20:35,280 --> 00:20:37,360 Speaker 1: New home sales are up. That's good for the economy. 388 00:20:37,400 --> 00:20:40,240 Speaker 1: That's good for housing. That means housing starts construction job. 389 00:20:40,720 --> 00:20:42,959 Speaker 1: That right there was really the story for twenty nine 390 00:20:43,200 --> 00:20:46,560 Speaker 1: and it should continue into as long as the ten 391 00:20:46,640 --> 00:20:50,879 Speaker 1: year yield doesn't get near two point six or higher. UH, 392 00:20:50,960 --> 00:20:53,200 Speaker 1: the new home sales sector and the and the existing 393 00:20:53,240 --> 00:20:56,280 Speaker 1: home sales sector should have legs for slow and steady growth, 394 00:20:56,640 --> 00:21:00,320 Speaker 1: look and give us a sense of new home struction. 395 00:21:00,359 --> 00:21:02,159 Speaker 1: And we've heard there's some some reports that it's just 396 00:21:02,240 --> 00:21:04,879 Speaker 1: not that much supply, uh, kind of at the lower 397 00:21:05,000 --> 00:21:06,800 Speaker 1: end of the market. Is that something that you're seeing. 398 00:21:07,800 --> 00:21:10,639 Speaker 1: Here's what I disagree with everybody in America. What is 399 00:21:10,680 --> 00:21:15,000 Speaker 1: an affordable house that a builder can build? Right? If 400 00:21:15,000 --> 00:21:18,800 Speaker 1: an affordable house is either a rental, multi family construction 401 00:21:18,960 --> 00:21:22,040 Speaker 1: or a condo. Because if you're asking for the builders 402 00:21:22,080 --> 00:21:25,600 Speaker 1: to build affordable housing, they'll never do it right because 403 00:21:25,600 --> 00:21:28,239 Speaker 1: they're a bigger, more expensive home. So I'm not a 404 00:21:28,280 --> 00:21:30,879 Speaker 1: big fan of this wall they have to build for 405 00:21:30,880 --> 00:21:34,240 Speaker 1: the lower end. Anything they build on the single family 406 00:21:34,320 --> 00:21:37,000 Speaker 1: sign is going to be more expensive. So the builders 407 00:21:37,040 --> 00:21:39,600 Speaker 1: have long term issues in terms of are they going 408 00:21:39,600 --> 00:21:42,720 Speaker 1: to be able to provide a product that the home 409 00:21:42,760 --> 00:21:45,639 Speaker 1: buyer can afford or is willing to pay for? And 410 00:21:45,680 --> 00:21:48,160 Speaker 1: I think that's a multi decade issue for them out here. 411 00:21:48,160 --> 00:21:50,320 Speaker 1: So I'm not a big fan of using the wall. 412 00:21:50,320 --> 00:21:53,359 Speaker 1: They're just don't build enough lower end. Anything they build 413 00:21:53,400 --> 00:21:55,520 Speaker 1: on an apple to apples basis is going to be 414 00:21:55,560 --> 00:21:59,280 Speaker 1: more expensive than this massive existing homesale market that just 415 00:21:59,359 --> 00:22:02,840 Speaker 1: has more. So why cheaper homes and more spread out geographically. 416 00:22:02,920 --> 00:22:05,920 Speaker 1: But as long as new home sales can grow because 417 00:22:05,920 --> 00:22:08,320 Speaker 1: housing starts are low, and new home sales so you 418 00:22:08,320 --> 00:22:10,600 Speaker 1: can get that slow and steady growth and that's good 419 00:22:10,600 --> 00:22:13,280 Speaker 1: for the economy because it just means more construction jobs, 420 00:22:13,600 --> 00:22:16,680 Speaker 1: means more domestic spending out here. But it all revolves 421 00:22:16,680 --> 00:22:19,119 Speaker 1: around can new home sales grow from this level on? 422 00:22:19,800 --> 00:22:24,040 Speaker 1: So give us a sense, logan, any regional changes are 423 00:22:24,080 --> 00:22:26,400 Speaker 1: areas that we should be concerned about because we think about, 424 00:22:26,520 --> 00:22:28,399 Speaker 1: you know, going back to the financial crisis and the 425 00:22:28,520 --> 00:22:31,399 Speaker 1: kind of the O seven period, O six oh seven period, 426 00:22:31,400 --> 00:22:34,199 Speaker 1: and we really saw some real estate markets that you know, 427 00:22:34,240 --> 00:22:36,400 Speaker 1: even you know obviously with hindsight, you know, whether it's 428 00:22:36,600 --> 00:22:40,439 Speaker 1: Miami or you know, Las Vegas really kind of feeling 429 00:22:41,000 --> 00:22:43,439 Speaker 1: seriously overheated. Do we have any of those issues in 430 00:22:43,480 --> 00:22:47,920 Speaker 1: the marketplace here? Here's the thing. Price doesn't necessarily mean 431 00:22:47,960 --> 00:22:51,360 Speaker 1: it overheated housing sector. I mean, you can look at California. 432 00:22:51,400 --> 00:22:54,320 Speaker 1: California is always considered a hot housing market. Sales have 433 00:22:54,440 --> 00:22:56,399 Speaker 1: gone nowhere for ten years. Really if you look at 434 00:22:56,400 --> 00:23:01,280 Speaker 1: the data when interest rates rise, those areas, the coastal areas, 435 00:23:01,320 --> 00:23:04,280 Speaker 1: the high cost metros, those are the areas that only 436 00:23:04,280 --> 00:23:07,439 Speaker 1: get hit. We saw this in We saw this in 437 00:23:08,480 --> 00:23:11,399 Speaker 1: nineteen except every single time the ten year old has 438 00:23:11,440 --> 00:23:14,640 Speaker 1: gone lower, lower mortgage rates bring those demand back up 439 00:23:14,680 --> 00:23:17,159 Speaker 1: to par. So you always want to be careful of 440 00:23:17,200 --> 00:23:20,200 Speaker 1: hot coastal priced areas out here. But if you look 441 00:23:20,200 --> 00:23:22,920 Speaker 1: at the housing bubble, existing home sales was at five 442 00:23:22,960 --> 00:23:26,120 Speaker 1: point seven two million, or excuse me, seven point two 443 00:23:26,160 --> 00:23:29,000 Speaker 1: six million, and then new home sales were over a 444 00:23:29,040 --> 00:23:32,440 Speaker 1: million back then. So we have no overheated demand markets 445 00:23:32,480 --> 00:23:35,480 Speaker 1: out there in America right now. Purchase application data is 446 00:23:35,520 --> 00:23:39,399 Speaker 1: only a levels here. But we're always gonna have an 447 00:23:39,440 --> 00:23:42,080 Speaker 1: issue that when mortgage rates get the four point seven, 448 00:23:42,119 --> 00:23:45,479 Speaker 1: five or five percent, the high cost areas do get hit, 449 00:23:45,720 --> 00:23:49,080 Speaker 1: supply increases and the market slows down a little bit. 450 00:23:49,119 --> 00:23:52,359 Speaker 1: It's just not enough velocity to be a crash. Nothing, 451 00:23:52,720 --> 00:23:55,600 Speaker 1: nothing like that should happen in so Loogan. Give us 452 00:23:55,600 --> 00:23:58,440 Speaker 1: a sense of what's going on in the residential mortgage 453 00:23:58,640 --> 00:24:02,199 Speaker 1: market in terms of quality. Are we seeing, you know, 454 00:24:02,280 --> 00:24:05,000 Speaker 1: still a focus on quality, because again, another concern coming 455 00:24:05,000 --> 00:24:07,520 Speaker 1: out of the financial crisis was, you know, the lenders 456 00:24:07,520 --> 00:24:10,159 Speaker 1: had a role to play in kind of the overheating 457 00:24:10,440 --> 00:24:13,920 Speaker 1: housing market. Where are we in kind of underwriting standards 458 00:24:14,000 --> 00:24:17,000 Speaker 1: right now? In credit quality? Would you say the best 459 00:24:17,000 --> 00:24:21,000 Speaker 1: home loan profile ever in US history? You know, that's 460 00:24:20,520 --> 00:24:23,600 Speaker 1: that's that's the one benefit that we got from the 461 00:24:23,640 --> 00:24:27,320 Speaker 1: financial crisis that we just lend to the capacity for 462 00:24:27,440 --> 00:24:29,680 Speaker 1: people to own the debt. It's not a tight people 463 00:24:29,760 --> 00:24:31,880 Speaker 1: think a lending is tight. Americans, absolutely not. It's still 464 00:24:31,960 --> 00:24:36,240 Speaker 1: very liberal. But the people that get homes actually make money, 465 00:24:36,000 --> 00:24:38,679 Speaker 1: they can handle the debt payments. All it is is 466 00:24:39,000 --> 00:24:41,439 Speaker 1: late cycle lending will happen at some point. Just means that, 467 00:24:41,480 --> 00:24:43,160 Speaker 1: you know, people that buy homes late in the year 468 00:24:43,200 --> 00:24:45,160 Speaker 1: for a very low down payment, when they go into 469 00:24:45,240 --> 00:24:47,520 Speaker 1: a recession and they lose their jobs, those are the 470 00:24:47,560 --> 00:24:51,760 Speaker 1: only at risk homeowners when the next recession happens. But 471 00:24:51,800 --> 00:24:55,760 Speaker 1: everything else looks excellent, fixed flow debt payments, a lot 472 00:24:55,800 --> 00:24:59,760 Speaker 1: of nested equity, and there's no exotic debt structures left 473 00:25:00,600 --> 00:25:02,679 Speaker 1: in the system, not once they all kind of went 474 00:25:02,720 --> 00:25:06,080 Speaker 1: away in So we have a decade as absolute decade 475 00:25:06,080 --> 00:25:09,680 Speaker 1: of quality homeowners. And now we're going into the biggest 476 00:25:09,680 --> 00:25:12,960 Speaker 1: and most prominent demographic patch ever recorded in US history. 477 00:25:12,960 --> 00:25:16,520 Speaker 1: Ages thirty two are the biggest right now in America, 478 00:25:16,960 --> 00:25:19,040 Speaker 1: first time median home buyer age at thirty three, So 479 00:25:19,119 --> 00:25:22,480 Speaker 1: you have replacement buyers in this decade where we were 480 00:25:22,560 --> 00:25:25,600 Speaker 1: just working through that level from two thousand to two 481 00:25:25,600 --> 00:25:29,920 Speaker 1: thousand nineteen. So the fundamentals of housing look solid. It's 482 00:25:29,960 --> 00:25:32,240 Speaker 1: just not going to be a record breaking booming hot 483 00:25:32,280 --> 00:25:34,760 Speaker 1: cycle that some people might forecast. But you've got the 484 00:25:34,800 --> 00:25:37,600 Speaker 1: demographics and you've got the quality homeowners this time, two 485 00:25:37,640 --> 00:25:41,440 Speaker 1: things that weren't with us in two thousand. Hey, Logan, 486 00:25:41,440 --> 00:25:44,439 Speaker 1: thanks so much for journeys. We appreciate it. Logan Logan 487 00:25:44,680 --> 00:25:47,760 Speaker 1: Multi Shami, Senior loan Officer for AMC Lennon Group based 488 00:25:47,800 --> 00:25:50,880 Speaker 1: in Irvine, California, giving us a a very constructive view 489 00:25:51,040 --> 00:25:54,520 Speaker 1: of the US housing market. Thanks for listening to the 490 00:25:54,560 --> 00:25:57,720 Speaker 1: Bloomberg pl podcast. You can subscribe and listen to interviews 491 00:25:57,760 --> 00:26:00,560 Speaker 1: at Apple Podcasts or whatever podcast platform them you prefer. 492 00:26:00,760 --> 00:26:03,400 Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. I'm 493 00:26:03,440 --> 00:26:06,200 Speaker 1: Lisa Abram Wohits. I'm on Twitter at Lisa abram Woits. 494 00:26:06,200 --> 00:26:09,040 Speaker 1: One Before the podcast, you can always catch us worldwide. 495 00:26:09,040 --> 00:26:10,040 Speaker 1: I'm Bloomberg Radio