1 00:00:00,280 --> 00:00:13,119 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. 2 00:00:13,240 --> 00:00:17,440 Speaker 1: Always with Michael McKee. Daily we bring you insight from 3 00:00:17,480 --> 00:00:22,279 Speaker 1: the best in economics, finance, investment, and international relations. Find 4 00:00:22,280 --> 00:00:26,880 Speaker 1: Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com and of 5 00:00:26,920 --> 00:00:34,000 Speaker 1: course on the Bloomberg harm bundles with US UM with 6 00:00:34,159 --> 00:00:38,280 Speaker 1: UniCredit ARM. Let me start with the original paper that 7 00:00:38,360 --> 00:00:40,800 Speaker 1: I saw from you a million years ago, where you 8 00:00:40,840 --> 00:00:44,479 Speaker 1: looked at Saudi Arabia and the dynamics of oil. I 9 00:00:44,479 --> 00:00:47,480 Speaker 1: know it's off your remat now at UniCredit, but harm 10 00:00:47,479 --> 00:00:51,280 Speaker 1: boundles on oil. Is there a chance we could revisit 11 00:00:51,320 --> 00:00:55,240 Speaker 1: those shockingly low prices of a number of quarters ago. Well, 12 00:00:55,240 --> 00:00:57,120 Speaker 1: I think after the price movement that we have seen 13 00:00:57,160 --> 00:00:58,760 Speaker 1: over the past, I would say one and a half 14 00:00:58,840 --> 00:01:01,600 Speaker 1: years or so, we cannot roll out anything. I think 15 00:01:01,600 --> 00:01:03,920 Speaker 1: everybody who says was a very strong conviction to know 16 00:01:03,960 --> 00:01:07,959 Speaker 1: where oil prices six months ago, it's I would doubt that, UM, 17 00:01:08,000 --> 00:01:11,400 Speaker 1: But our baseline is that we don't go down there. 18 00:01:12,760 --> 00:01:16,640 Speaker 1: Also because UM, we have seen adjustments on the supply side, 19 00:01:16,680 --> 00:01:19,240 Speaker 1: also including in the US, but also on the on 20 00:01:19,240 --> 00:01:22,480 Speaker 1: the demand side. All the worries about globe kind of 21 00:01:22,480 --> 00:01:25,480 Speaker 1: a global growth rey session. They have faded, They are 22 00:01:25,480 --> 00:01:29,200 Speaker 1: not completely, have not gone away completely, but I think 23 00:01:29,200 --> 00:01:32,760 Speaker 1: there's a little bit more optimism that that gross global 24 00:01:32,760 --> 00:01:35,959 Speaker 1: growth is holding up, which would support demand. So I 25 00:01:35,959 --> 00:01:38,880 Speaker 1: think we're not going down as much to where we 26 00:01:38,920 --> 00:01:41,280 Speaker 1: have been a few months. And I really recommend, folks, 27 00:01:41,280 --> 00:01:43,479 Speaker 1: for those of you that care about oil. Phil Verliger's 28 00:01:43,480 --> 00:01:45,480 Speaker 1: interview a number of days ago look for that on 29 00:01:45,520 --> 00:01:49,400 Speaker 1: the iTunes podcasts we're doing was really an important interview. 30 00:01:49,680 --> 00:01:54,680 Speaker 1: Verliger was heated about the the overestimation of what demand 31 00:01:54,720 --> 00:01:57,680 Speaker 1: will be. He says demand growth will maybe come in 32 00:01:57,760 --> 00:02:00,880 Speaker 1: a little bit tepid, to say the least. Explained to us, 33 00:02:00,920 --> 00:02:04,280 Speaker 1: as George concovested earlier, why is b o J such 34 00:02:04,320 --> 00:02:09,079 Speaker 1: a big deal versus what is basically a dead FED meeting? Well, 35 00:02:09,080 --> 00:02:13,040 Speaker 1: the FED meeting is dead because we kind of think 36 00:02:13,080 --> 00:02:14,920 Speaker 1: we have a good idea what they do, namely nothing, 37 00:02:15,440 --> 00:02:17,920 Speaker 1: including not many changes in the statement. And on the 38 00:02:17,919 --> 00:02:20,519 Speaker 1: Bank of Japan side, there is well, there is a 39 00:02:20,600 --> 00:02:22,640 Speaker 1: lot of expectations that they try to do more, they 40 00:02:22,680 --> 00:02:24,520 Speaker 1: try to add stimulus. Has been talking about this hell 41 00:02:24,600 --> 00:02:26,480 Speaker 1: cop the money even though the interview. Now that we 42 00:02:26,520 --> 00:02:29,080 Speaker 1: know it's now pretty old, and then if they do something, 43 00:02:29,080 --> 00:02:31,040 Speaker 1: the question is how is the market reacting right, because 44 00:02:31,080 --> 00:02:32,799 Speaker 1: we have seen a couple of months ago the Bank 45 00:02:32,840 --> 00:02:35,400 Speaker 1: of Japan stimulated and the end still got stronger. So 46 00:02:35,440 --> 00:02:39,000 Speaker 1: that would then add to the view that central banks 47 00:02:39,000 --> 00:02:41,760 Speaker 1: are getting increasingly powerless when it comes to weaken the currency. 48 00:02:41,840 --> 00:02:45,200 Speaker 1: Are they increasingly powers I think they are. I think 49 00:02:45,240 --> 00:02:49,120 Speaker 1: they are increasingly powerless because if you try to to 50 00:02:49,200 --> 00:02:52,440 Speaker 1: weaken your currency, I think some central banks have now 51 00:02:52,560 --> 00:02:56,080 Speaker 1: basically hit the limit because rates are already so low, 52 00:02:56,200 --> 00:02:59,440 Speaker 1: so they cannot do much more to to week you're 53 00:02:59,480 --> 00:03:02,359 Speaker 1: in account, it's called un credit. With your colleague Eric Nielsen, 54 00:03:02,639 --> 00:03:06,359 Speaker 1: one of the great euro optimists, your have your wonderful 55 00:03:06,400 --> 00:03:09,919 Speaker 1: European and German heritage when you when you look at 56 00:03:09,960 --> 00:03:14,520 Speaker 1: how we've boxed ourselves into negative rates. First question, are 57 00:03:14,520 --> 00:03:18,440 Speaker 1: those negative rates transmitting into the economy or are they 58 00:03:18,480 --> 00:03:22,440 Speaker 1: just a fiction of institutional banking um So, certainly they 59 00:03:22,440 --> 00:03:26,840 Speaker 1: are not helpful for the banking sector. The transmission channel 60 00:03:27,520 --> 00:03:30,680 Speaker 1: through lower rates themselves, it's I think it's limited because 61 00:03:30,720 --> 00:03:33,520 Speaker 1: banks have problems to pass them on. That's why they 62 00:03:33,560 --> 00:03:36,680 Speaker 1: are hurting banks more than they help the economy. I 63 00:03:36,680 --> 00:03:39,520 Speaker 1: think what they did is um coming back to the 64 00:03:39,640 --> 00:03:42,840 Speaker 1: to the previous question, I think they help to further 65 00:03:42,880 --> 00:03:45,680 Speaker 1: weaken the euro to some extent. But that's you know, 66 00:03:45,800 --> 00:03:48,160 Speaker 1: because we are now at these negative rates. There's not 67 00:03:48,240 --> 00:03:50,200 Speaker 1: much more than the ECB E could for example too, 68 00:03:50,200 --> 00:03:52,160 Speaker 1: so we before we're talking about the Bank of Japan, 69 00:03:52,400 --> 00:03:53,760 Speaker 1: but I think it's true for the e c B 70 00:03:53,880 --> 00:03:56,520 Speaker 1: as well. So there's not much they could do further 71 00:03:56,560 --> 00:03:59,520 Speaker 1: to to weaken the end or the Euro. How do 72 00:03:59,600 --> 00:04:03,920 Speaker 1: you reason spawn to the assumption our bankers will buy 73 00:04:04,040 --> 00:04:09,160 Speaker 1: equity shares? I think it's not going to happen. Then 74 00:04:09,200 --> 00:04:12,640 Speaker 1: what will Mr Druggy do? This is a key question. No, 75 00:04:12,760 --> 00:04:18,120 Speaker 1: I think we're the previous broadening of these off the 76 00:04:18,120 --> 00:04:20,520 Speaker 1: the range of assets he can buy. I think there's 77 00:04:20,560 --> 00:04:22,200 Speaker 1: there's a lot of stuff, but it's all on the 78 00:04:22,279 --> 00:04:25,719 Speaker 1: bond side. It's all on the bond. The equity were Okay, 79 00:04:26,080 --> 00:04:28,200 Speaker 1: I'll go. Let's go back to the United States economy 80 00:04:28,680 --> 00:04:31,040 Speaker 1: right now? What is your call twelve wins forward on GDP. 81 00:04:31,200 --> 00:04:34,080 Speaker 1: Let's just frame here from the caution I think of 82 00:04:34,080 --> 00:04:37,680 Speaker 1: Ellen Zender, Morgan Stanley out to outright Optimus way three 83 00:04:37,720 --> 00:04:41,039 Speaker 1: plus economy words harm bundles. No, I think cruising speed 84 00:04:41,120 --> 00:04:42,680 Speaker 1: is two percent right now, So if you're a two 85 00:04:42,760 --> 00:04:46,720 Speaker 1: point zero zero not so much. No, that doesn't get 86 00:04:46,720 --> 00:04:49,080 Speaker 1: it done. I mean that's an animal spirit phenomenal GDP 87 00:04:49,680 --> 00:04:51,919 Speaker 1: just doesn't get it done. Why are we seeing DuPont 88 00:04:52,400 --> 00:04:57,720 Speaker 1: ut x Eli Lily show good corporate earnings? Um? Well, 89 00:04:57,760 --> 00:05:01,159 Speaker 1: I think on a qualtity basis, earnings tend to be 90 00:05:01,880 --> 00:05:04,480 Speaker 1: heavily correlated with qualitly g d pegros. So you just 91 00:05:04,520 --> 00:05:06,440 Speaker 1: asked me about the cruise twelve months out. But we 92 00:05:06,640 --> 00:05:09,000 Speaker 1: I think that second quarter gdpegles was pretty decently. We 93 00:05:09,040 --> 00:05:11,239 Speaker 1: get it later this week, So I think that helped 94 00:05:11,320 --> 00:05:15,279 Speaker 1: quite a few companies to report pretty solid earnings in 95 00:05:15,320 --> 00:05:17,960 Speaker 1: the second quarter. Well, but then that is the idea, 96 00:05:18,040 --> 00:05:20,400 Speaker 1: and of course the fet is to look forward. If 97 00:05:20,400 --> 00:05:22,760 Speaker 1: they're looking into a hard bundles economy at two point 98 00:05:22,839 --> 00:05:27,800 Speaker 1: zero percent, if we call that the middle ground, and 99 00:05:27,880 --> 00:05:29,720 Speaker 1: if we fold in the belief that it's a new 100 00:05:29,880 --> 00:05:35,040 Speaker 1: terminal rate, they don't have much wiggle room. Given this 101 00:05:35,200 --> 00:05:38,880 Speaker 1: odd meeting, the next odd meeting, then the really odd 102 00:05:38,960 --> 00:05:42,440 Speaker 1: November second meeting, and then you get the year in yeah, 103 00:05:42,480 --> 00:05:45,400 Speaker 1: But let me just say that it's not about the 104 00:05:45,440 --> 00:05:49,200 Speaker 1: absolute GDP grows, it's about where g D pegros is 105 00:05:49,240 --> 00:05:52,680 Speaker 1: relative to potential. Because the FET is looking ok they 106 00:05:52,680 --> 00:05:55,960 Speaker 1: look at okay. So in that world, I think the 107 00:05:55,960 --> 00:06:00,080 Speaker 1: output gap is basically closed because in the past the 108 00:06:00,120 --> 00:06:03,520 Speaker 1: many institutions have vastly overstated the potential gend pugles for 109 00:06:03,520 --> 00:06:05,360 Speaker 1: the US, I think they are all revising down these 110 00:06:05,440 --> 00:06:07,960 Speaker 1: numbers with the result is with the result that the 111 00:06:08,000 --> 00:06:11,000 Speaker 1: output gap is basically closed for the US. Right, And 112 00:06:11,040 --> 00:06:13,400 Speaker 1: we see the parallel picture on the labor market with 113 00:06:13,600 --> 00:06:16,919 Speaker 1: the unemployment rate basically at its NIRO plus minus. You 114 00:06:16,960 --> 00:06:19,600 Speaker 1: know wherever the NIRO is, but it's somewhere around four 115 00:06:19,640 --> 00:06:21,400 Speaker 1: and a half to five, and that's where the actual 116 00:06:21,440 --> 00:06:25,000 Speaker 1: unemployment rate is. So in that world, the FATS target 117 00:06:25,080 --> 00:06:28,440 Speaker 1: rate should be at its neutral rate. Right, So that's 118 00:06:28,440 --> 00:06:30,440 Speaker 1: the big question. Now, where is the neutral rate really? 119 00:06:30,440 --> 00:06:32,799 Speaker 1: I mean we're opening The answer is it's a lot lower. 120 00:06:32,839 --> 00:06:35,719 Speaker 1: Michael McKee, Good morning, Mike. Is it a dead meeting 121 00:06:35,839 --> 00:06:39,040 Speaker 1: or a live meeting tomorrow? Oh, it's a dead meeting tomorrow. 122 00:06:39,120 --> 00:06:41,440 Speaker 1: You don't eat oysters in a month that doesn't have 123 00:06:41,480 --> 00:06:44,760 Speaker 1: an iron. It and the FAT doesn't raise rates without 124 00:06:44,760 --> 00:06:47,440 Speaker 1: a press conference. So I mean, those are the those 125 00:06:47,440 --> 00:06:51,480 Speaker 1: are the things that we know. Um, but harm RAI 126 00:06:51,520 --> 00:06:54,200 Speaker 1: is an interesting question about the output gap closing. But 127 00:06:54,279 --> 00:06:57,400 Speaker 1: then where is inflation? I mean it is not at 128 00:06:57,440 --> 00:07:00,359 Speaker 1: a level and it is not accelerating it a pace 129 00:07:00,960 --> 00:07:03,640 Speaker 1: where the flat is going to feel obligated to move 130 00:07:04,720 --> 00:07:07,599 Speaker 1: No agreed, So for so all, let me answer your question. 131 00:07:07,640 --> 00:07:09,920 Speaker 1: I think underlying inflation in the US is around two percent. 132 00:07:10,360 --> 00:07:13,400 Speaker 1: It is higher than what the core PC inflator tells us. 133 00:07:13,400 --> 00:07:16,120 Speaker 1: The core piece. I mean, there are so many measures 134 00:07:16,120 --> 00:07:18,640 Speaker 1: of underlying inflation out there, and they are all they 135 00:07:18,640 --> 00:07:22,880 Speaker 1: are not published by by somebody who wants a fat 136 00:07:22,880 --> 00:07:25,640 Speaker 1: to raise rates, but they are all published by regional 137 00:07:25,680 --> 00:07:29,040 Speaker 1: Fed banks who said that they are underlying inflation. Measure 138 00:07:29,160 --> 00:07:32,200 Speaker 1: is a better predictor of medium term inflation. So and 139 00:07:32,200 --> 00:07:35,320 Speaker 1: and most of these measures are around two percent. The 140 00:07:35,360 --> 00:07:38,240 Speaker 1: odd man out is the core PC inflator, which happens 141 00:07:38,280 --> 00:07:41,200 Speaker 1: to be the FATS preferred measure, and the FAT kind 142 00:07:41,200 --> 00:07:44,960 Speaker 1: of the Federal Reserve Board, let me say, um, kind 143 00:07:44,960 --> 00:07:47,320 Speaker 1: of ignores all the other measures and keeps telling us 144 00:07:47,320 --> 00:07:49,880 Speaker 1: that inflation is too low. Right, So, at one point 145 00:07:49,880 --> 00:07:52,920 Speaker 1: six one point seven percent, and that's why they say 146 00:07:52,960 --> 00:07:55,400 Speaker 1: we don't have to raise rates right now. But first 147 00:07:55,440 --> 00:07:58,400 Speaker 1: of all, the idea that the FAT only starts to 148 00:07:58,480 --> 00:08:00,800 Speaker 1: raise race when it's meeting when it has met all 149 00:08:00,800 --> 00:08:03,400 Speaker 1: its mandates is wrong, and it never did so in 150 00:08:03,440 --> 00:08:06,120 Speaker 1: the past. And because we all know monetary policy works 151 00:08:06,120 --> 00:08:08,160 Speaker 1: with a leg so you start a bit earlier, when 152 00:08:08,160 --> 00:08:11,760 Speaker 1: you're on your way to meet your mandates, you start 153 00:08:11,840 --> 00:08:13,840 Speaker 1: raising rates. And as I said, I think on the 154 00:08:13,920 --> 00:08:17,920 Speaker 1: on the unemployment rate side, the unemployment mandate is basically met, 155 00:08:18,240 --> 00:08:20,560 Speaker 1: and on the inflation mandate we are not far away. 156 00:08:20,760 --> 00:08:22,480 Speaker 1: And still the interest rate is that half a percent 157 00:08:22,560 --> 00:08:25,600 Speaker 1: and that's too low. Michael McKee and Tom Keane fired 158 00:08:25,680 --> 00:08:27,840 Speaker 1: up about the FED meeting tomorrow. What are we gonna 159 00:08:27,840 --> 00:08:30,760 Speaker 1: do there? Mike, it's a dead meeting, But actually there's 160 00:08:30,760 --> 00:08:34,360 Speaker 1: a lot to talk about. Discuss that oddity. Um, Tommy, 161 00:08:34,400 --> 00:08:36,040 Speaker 1: you do have to come to work tomorrow. I know 162 00:08:36,080 --> 00:08:39,280 Speaker 1: what you're really asking here. Uh, the the whole question 163 00:08:39,320 --> 00:08:41,960 Speaker 1: is is market pricing at this point because we know 164 00:08:42,000 --> 00:08:44,000 Speaker 1: the FED isn't going to do anything. We know they'll 165 00:08:44,000 --> 00:08:47,880 Speaker 1: probably acknowledge a little bit stronger economy, but how much 166 00:08:48,200 --> 00:08:50,280 Speaker 1: emphasis do they put on that and how much do 167 00:08:50,320 --> 00:08:52,680 Speaker 1: they want the markets to move. That's kind of the 168 00:08:52,679 --> 00:08:56,000 Speaker 1: bottom line. I would suspect given her history, Jannet Yellen 169 00:08:56,120 --> 00:08:59,600 Speaker 1: isn't in any hurry to push things around bad hold 170 00:08:59,600 --> 00:09:03,199 Speaker 1: since she FEUs economistic, Juno credit and harmon my full 171 00:09:03,240 --> 00:09:06,440 Speaker 1: of it? Or would you agree that Jenny likely to 172 00:09:06,480 --> 00:09:09,200 Speaker 1: come out of a cautious and tomorrow you know, I 173 00:09:09,240 --> 00:09:12,520 Speaker 1: think I think you are right yelling. Yelling has been 174 00:09:12,600 --> 00:09:16,240 Speaker 1: very cautious in the latest speech, highlighting all the uncertainties 175 00:09:16,240 --> 00:09:19,319 Speaker 1: around the outlook. So a month of good data is 176 00:09:19,360 --> 00:09:23,040 Speaker 1: not enough to um to change that Janet Allen's mind. 177 00:09:23,080 --> 00:09:26,160 Speaker 1: So I think they the statement will indeed emphasize the 178 00:09:26,160 --> 00:09:30,319 Speaker 1: better data, but leave all the policy relevant paragraphs unchanged, 179 00:09:30,440 --> 00:09:32,520 Speaker 1: which means the FAT does not want to send any 180 00:09:32,520 --> 00:09:35,679 Speaker 1: strong signals about September rate high or something. So I 181 00:09:35,720 --> 00:09:37,559 Speaker 1: think they are if they look at the future, the 182 00:09:37,600 --> 00:09:39,439 Speaker 1: futures have moved quite a bit, particularly if you look 183 00:09:39,440 --> 00:09:42,360 Speaker 1: at the December rate high arts. They're basically I think 184 00:09:42,360 --> 00:09:44,360 Speaker 1: the FAT is okay with that. I think that is 185 00:09:44,400 --> 00:09:47,400 Speaker 1: their baseline right now, that's also our baseline, and then 186 00:09:47,640 --> 00:09:50,199 Speaker 1: they will keep emphasizing that it is a data dependence. 187 00:09:50,240 --> 00:09:54,440 Speaker 1: If the numbers are coming in, okaysh Um, and the 188 00:09:54,440 --> 00:09:57,040 Speaker 1: Brexit fallout is manageable and all that, then I think 189 00:09:57,080 --> 00:09:59,360 Speaker 1: we see the rate hike in in December. And but 190 00:09:59,440 --> 00:10:01,600 Speaker 1: the FAT doesn't have to do anything to change market 191 00:10:01,640 --> 00:10:04,520 Speaker 1: expectations at this point, they're okay with them. Tom mentioned 192 00:10:04,559 --> 00:10:07,840 Speaker 1: earlier that the Novembers of table coasts right before the 193 00:10:07,880 --> 00:10:13,280 Speaker 1: election November, we've been we've been, We've been asking everybody 194 00:10:13,280 --> 00:10:16,880 Speaker 1: that comes in, when did the markets start pricing in 195 00:10:16,920 --> 00:10:21,040 Speaker 1: one way or another the results of the election. Paul's 196 00:10:21,080 --> 00:10:23,640 Speaker 1: out show Donald Trump got a bounce out of his campaign. 197 00:10:23,640 --> 00:10:26,840 Speaker 1: There's nothing more unreliable than a convention time period, Paul. 198 00:10:26,960 --> 00:10:32,360 Speaker 1: But um, it has started to worry some people. Uh yeah, Um, 199 00:10:32,440 --> 00:10:35,280 Speaker 1: And certainly most European observer was that, I can tell you. 200 00:10:35,360 --> 00:10:37,320 Speaker 1: So they still don't understand what's really going on, so 201 00:10:37,360 --> 00:10:41,360 Speaker 1: they just follow these the polls in disbelief. Um. I mean, 202 00:10:41,760 --> 00:10:43,400 Speaker 1: I think the first question we have to ask what 203 00:10:43,480 --> 00:10:46,679 Speaker 1: is what markets doing when? You know? When I think 204 00:10:46,679 --> 00:10:50,240 Speaker 1: when when Hillary Clinton is is maintaining the lead on 205 00:10:50,280 --> 00:10:52,320 Speaker 1: the electoral votes, so and she looks like to win 206 00:10:52,400 --> 00:10:55,440 Speaker 1: it then it will be more of the same, I 207 00:10:55,440 --> 00:10:57,760 Speaker 1: would say, and the market would probably be okay with that. 208 00:10:57,800 --> 00:10:59,719 Speaker 1: But then the question is what happens if if if 209 00:10:59,720 --> 00:11:02,439 Speaker 1: Don't Trump becomes president doesn't mean that all markets sell off, 210 00:11:02,440 --> 00:11:04,400 Speaker 1: that the dollar weekends or is it the other way around. 211 00:11:04,440 --> 00:11:07,160 Speaker 1: So it's still I think it is debatable because my 212 00:11:07,200 --> 00:11:09,840 Speaker 1: point is if Mr Trump still manages to pull it off, 213 00:11:10,520 --> 00:11:13,720 Speaker 1: he has to sound in my view European view, still 214 00:11:14,000 --> 00:11:16,800 Speaker 1: he has to sound a bit more presidential I think 215 00:11:16,800 --> 00:11:19,800 Speaker 1: than he did in the past. Um and maybe markets 216 00:11:19,800 --> 00:11:21,160 Speaker 1: then at the end of the day may not be 217 00:11:21,320 --> 00:11:24,880 Speaker 1: as scared as we would think at this point. Let 218 00:11:24,880 --> 00:11:26,880 Speaker 1: me ask you from the European point of view, did 219 00:11:27,040 --> 00:11:30,360 Speaker 1: um Marine Lepenn sound more presidential after she won the 220 00:11:30,360 --> 00:11:33,720 Speaker 1: first round in the last UH French election? Did Bepy 221 00:11:33,760 --> 00:11:37,640 Speaker 1: Grillo sound more presidential as the three start five start? 222 00:11:37,720 --> 00:11:44,559 Speaker 1: But he started? These people campaign on something and then 223 00:11:45,080 --> 00:11:47,200 Speaker 1: they tend to stick with it, don't day. But my 224 00:11:47,280 --> 00:11:49,680 Speaker 1: point is I don't think Mr Trump wins the election 225 00:11:49,720 --> 00:11:52,560 Speaker 1: if he sticks to what he said. Is I don't 226 00:11:52,559 --> 00:11:56,000 Speaker 1: think the he gets enough voters, so it was good 227 00:11:56,080 --> 00:11:57,640 Speaker 1: enough to win the primaries in my view, But it's 228 00:11:57,640 --> 00:11:59,480 Speaker 1: not enough to win the overall election. So so that's 229 00:11:59,520 --> 00:12:02,240 Speaker 1: why I said, if he wants to convince some of 230 00:12:02,280 --> 00:12:05,360 Speaker 1: the undecided voters, maybe even some independence, I think we 231 00:12:05,360 --> 00:12:06,920 Speaker 1: need to hear a little bit of a different tone. 232 00:12:07,800 --> 00:12:09,960 Speaker 1: Where are we and we talked earlier of two point 233 00:12:10,080 --> 00:12:13,840 Speaker 1: zero percent, the buoyancy of the consumer. Mike and I 234 00:12:13,880 --> 00:12:16,120 Speaker 1: have a vision of two zip codes in New York 235 00:12:16,160 --> 00:12:19,960 Speaker 1: City and Mike, our vision is basically a lot of 236 00:12:20,160 --> 00:12:23,959 Speaker 1: empty retail shops. Yeah, is the state I have to 237 00:12:24,040 --> 00:12:28,240 Speaker 1: point this pleasem just a short time ago. I'm looking 238 00:12:28,280 --> 00:12:31,120 Speaker 1: forward to my email here. I got a note from 239 00:12:31,120 --> 00:12:34,920 Speaker 1: the National Retail Federation upgrading. There are two thousand and 240 00:12:34,960 --> 00:12:38,920 Speaker 1: sixteen economic forecast expecting retail sales to grow three point 241 00:12:38,960 --> 00:12:42,679 Speaker 1: four percent. They had forecast earlier three point one. So 242 00:12:42,800 --> 00:12:45,520 Speaker 1: even they are starting to get more optimistic. And you 243 00:12:45,559 --> 00:12:48,959 Speaker 1: never see retailers optimistic. It's always bad weather. I think. 244 00:12:49,080 --> 00:12:52,000 Speaker 1: I think the what we have to keep in mind 245 00:12:52,080 --> 00:12:55,720 Speaker 1: is that the retail um landscape is changing. As you know, 246 00:12:56,040 --> 00:12:59,240 Speaker 1: like several decades ago, when when the Walmart and Target 247 00:12:59,280 --> 00:13:01,720 Speaker 1: came in, all the moment pop shops closed. And I 248 00:13:01,720 --> 00:13:04,559 Speaker 1: think the next step is right now, that's several retailers 249 00:13:04,600 --> 00:13:07,760 Speaker 1: close and it's all online business, all right. So that's 250 00:13:07,760 --> 00:13:13,080 Speaker 1: why we have this conundrum between strong overall data and 251 00:13:13,200 --> 00:13:17,120 Speaker 1: empty retail spaces. So the people are still shopping, but 252 00:13:17,200 --> 00:13:20,600 Speaker 1: not in the stores but online. So I don't think 253 00:13:20,679 --> 00:13:23,360 Speaker 1: that could explain. I really think the consumer is in 254 00:13:23,480 --> 00:13:25,720 Speaker 1: very good shape. And well it's it's basically the only 255 00:13:26,280 --> 00:13:29,480 Speaker 1: the only sector that has been pulling the economy in 256 00:13:29,520 --> 00:13:32,839 Speaker 1: the second quarter. Thank you so much. Our bundles with you, Uncredit. 257 00:13:41,120 --> 00:13:43,680 Speaker 1: We're talking about earnings this morning. We will be talking 258 00:13:43,720 --> 00:13:47,160 Speaker 1: about earnings again tomorrow morning when we get the numbers 259 00:13:47,160 --> 00:13:51,319 Speaker 1: from Apple. Everybody's favorite company. Some people love it, some 260 00:13:51,360 --> 00:13:55,400 Speaker 1: people hate it. Geene Monster covers it for Piper Jaffrey. Gean, 261 00:13:55,559 --> 00:13:59,120 Speaker 1: what are you expecting from Tim Cook and company when 262 00:13:59,160 --> 00:14:02,000 Speaker 1: they report after the belt today, Well, we're expecting that 263 00:14:02,040 --> 00:14:04,720 Speaker 1: the June results are essentially going to be in line. 264 00:14:04,840 --> 00:14:07,360 Speaker 1: The magical number there is how many iPhones are gonna sell, 265 00:14:07,400 --> 00:14:10,320 Speaker 1: and we're expecting forty million. And I can say that 266 00:14:10,360 --> 00:14:13,439 Speaker 1: the by side, which is more important than our expectations 267 00:14:13,520 --> 00:14:17,560 Speaker 1: for the September quarter, calls for numbers to be for 268 00:14:17,600 --> 00:14:21,000 Speaker 1: them to guide revenue about five percent below where the 269 00:14:21,040 --> 00:14:23,960 Speaker 1: streets at and this kind of continuation of the theme 270 00:14:24,040 --> 00:14:27,280 Speaker 1: that there's difficult camps. So that's the the setup for tonight. 271 00:14:27,360 --> 00:14:31,880 Speaker 1: Most eyes are focused on what's coming versus the September guy, 272 00:14:32,000 --> 00:14:34,640 Speaker 1: But that's the setup. Yeah, that's always a question with 273 00:14:34,680 --> 00:14:39,400 Speaker 1: apply you get the current quarter for them, Um, the 274 00:14:39,440 --> 00:14:42,840 Speaker 1: second quarter of the year. Does anybody pay a whole 275 00:14:42,840 --> 00:14:44,840 Speaker 1: lot of attention to it, given that you go into 276 00:14:44,840 --> 00:14:47,800 Speaker 1: the third and fourth quarters with generally a product refresh 277 00:14:47,880 --> 00:14:51,440 Speaker 1: that changes everything. Yeah, it's all about the product refresh. 278 00:14:51,520 --> 00:14:53,920 Speaker 1: It's all about the seven. This time you get essentially 279 00:14:53,920 --> 00:14:56,160 Speaker 1: two shots on goal with the seven, and then the 280 00:14:56,200 --> 00:14:59,160 Speaker 1: anniversary phone next year, and so the setup is a 281 00:14:59,200 --> 00:15:03,000 Speaker 1: little bit different than typically have a Yes, can you 282 00:15:03,040 --> 00:15:06,960 Speaker 1: believe it's been only ten years since this thing basically 283 00:15:07,200 --> 00:15:11,080 Speaker 1: changed everybody's life? Yeah, it's it's hard to look back 284 00:15:11,120 --> 00:15:14,320 Speaker 1: at the time. It was the first really touch screen 285 00:15:14,440 --> 00:15:17,320 Speaker 1: phone and people really lambasted it and said we've got 286 00:15:17,320 --> 00:15:20,240 Speaker 1: to bring the keyboards back. But obviously now the standard 287 00:15:20,320 --> 00:15:22,680 Speaker 1: is for the touch screen. And I think it makes 288 00:15:22,960 --> 00:15:26,400 Speaker 1: a question at the tenure mark, is what's the future 289 00:15:26,440 --> 00:15:30,920 Speaker 1: of the smartphone? And I would just uh, wager a 290 00:15:30,960 --> 00:15:33,880 Speaker 1: prediction that there's still some room left in terms of 291 00:15:33,880 --> 00:15:36,200 Speaker 1: the innovation of the phone, even after ten years. I 292 00:15:36,200 --> 00:15:38,800 Speaker 1: think a lot of people feel that that's played itself out. 293 00:15:39,200 --> 00:15:42,280 Speaker 1: But specifically, there's technology now that is going to allow 294 00:15:42,440 --> 00:15:46,680 Speaker 1: your smartphone to essentially flip over and become a small 295 00:15:46,720 --> 00:15:50,160 Speaker 1: tablet and then flip back and become a small a smartphone, 296 00:15:50,360 --> 00:15:53,880 Speaker 1: and that should be kind of another leg to the 297 00:15:53,920 --> 00:15:57,880 Speaker 1: smartphone growth over the next few years. Hard to say 298 00:15:57,880 --> 00:16:01,360 Speaker 1: when Apple's gonna enter into that, but I think that 299 00:16:01,400 --> 00:16:04,800 Speaker 1: there's still room for optimism around the category. Well for 300 00:16:04,960 --> 00:16:08,080 Speaker 1: the past year, well year to date. Put it that way, 301 00:16:08,400 --> 00:16:10,800 Speaker 1: Apple shares are down about eight percent, They're done about 302 00:16:10,800 --> 00:16:14,520 Speaker 1: fifteen percent over the last two years. Any of these 303 00:16:14,560 --> 00:16:17,600 Speaker 1: things that are coming to market, to any product refreshed, 304 00:16:17,680 --> 00:16:21,960 Speaker 1: going to change that trend, I think so. And it 305 00:16:22,080 --> 00:16:25,200 Speaker 1: gets back to this concept of having two shots on goal, 306 00:16:25,280 --> 00:16:28,240 Speaker 1: and basically what that means is that if you invest 307 00:16:28,320 --> 00:16:31,680 Speaker 1: in Apple today, you have an opportunity that the iPhone 308 00:16:31,720 --> 00:16:34,360 Speaker 1: seven that comes out this fall is a little bit 309 00:16:34,400 --> 00:16:37,520 Speaker 1: better than expected. If it's in line or slightly below, 310 00:16:37,920 --> 00:16:41,360 Speaker 1: that's essentially going to push demand to the phone that's 311 00:16:41,400 --> 00:16:43,320 Speaker 1: going to come out in seventeen, and that would be 312 00:16:43,360 --> 00:16:46,160 Speaker 1: your second shot on goal. And the reason why that 313 00:16:46,160 --> 00:16:48,400 Speaker 1: that's uh we think going to be impactful that the 314 00:16:48,400 --> 00:16:51,240 Speaker 1: stock is that typically when you go into product cycle, 315 00:16:51,320 --> 00:16:53,880 Speaker 1: you really have one product that you're you're playing for 316 00:16:53,920 --> 00:16:56,800 Speaker 1: as an investor. In this case, you really have two 317 00:16:56,840 --> 00:16:59,400 Speaker 1: products that you're playing for, because the phone that comes 318 00:16:59,400 --> 00:17:01,800 Speaker 1: out next year is probably gonna be a slightly different 319 00:17:01,840 --> 00:17:04,520 Speaker 1: look to it, and that tends to be good for 320 00:17:04,640 --> 00:17:06,720 Speaker 1: sales and investors tend to like it when they change 321 00:17:06,760 --> 00:17:09,560 Speaker 1: the form factory diamond and crusted or something like that 322 00:17:11,040 --> 00:17:13,919 Speaker 1: probably one version of it. But the other part is 323 00:17:13,960 --> 00:17:16,240 Speaker 1: that it's going to have a screen that wraps around 324 00:17:16,280 --> 00:17:18,280 Speaker 1: a little bit. There's some Android phones like this today 325 00:17:18,320 --> 00:17:21,359 Speaker 1: and and maybe the screen even though the form factor 326 00:17:21,440 --> 00:17:23,600 Speaker 1: is about the same, the screen side might be slightly 327 00:17:23,600 --> 00:17:26,120 Speaker 1: bearer because they'll make that home button smaller. So when 328 00:17:26,119 --> 00:17:28,560 Speaker 1: you put it up against the existing iPhones, who will 329 00:17:28,600 --> 00:17:31,320 Speaker 1: look more futuristic. Gene Muster, thank you very much from 330 00:17:31,320 --> 00:17:45,199 Speaker 1: Piper Jaffrey. Well, it's part of our continuing effort to 331 00:17:45,240 --> 00:17:49,639 Speaker 1: bring you the latest real estate born. Uh. We talked 332 00:17:50,200 --> 00:17:53,520 Speaker 1: single family housing with Mitt Rochelle just a short time ago, 333 00:17:53,600 --> 00:17:56,760 Speaker 1: Jonathan Miller comes in. Now from Miller Samuel Um, our 334 00:17:56,840 --> 00:17:59,280 Speaker 1: old friend and the man who keeps track of what 335 00:17:59,640 --> 00:18:01,480 Speaker 1: it us to live in New York City. And I 336 00:18:01,480 --> 00:18:03,359 Speaker 1: guess the answer is, if you have to ask, you 337 00:18:03,400 --> 00:18:07,160 Speaker 1: can't afford it. He's not an old friend. He didn't 338 00:18:07,280 --> 00:18:09,880 Speaker 1: you know the thing I've got in the sixties? Floor 339 00:18:10,040 --> 00:18:12,760 Speaker 1: one seven? Where was John Miller to tell me to 340 00:18:12,840 --> 00:18:20,879 Speaker 1: sell the dog? All this animosity? So how's how are 341 00:18:20,880 --> 00:18:24,680 Speaker 1: we doing? As a former mayor used to say, here right? So, 342 00:18:24,680 --> 00:18:27,320 Speaker 1: So if you look at New York City metro, what 343 00:18:27,359 --> 00:18:30,600 Speaker 1: we're seeing now the last year is the housing market, 344 00:18:30,600 --> 00:18:33,840 Speaker 1: whether you're talking about rentals or purchases, UM has reached 345 00:18:33,880 --> 00:18:37,680 Speaker 1: some sort of affordability threshold. One of the most incredible 346 00:18:37,800 --> 00:18:41,359 Speaker 1: phenomenon in housing, at least in this metro area, is 347 00:18:41,400 --> 00:18:44,399 Speaker 1: that sales activity in the outlying suburbs are is a 348 00:18:44,560 --> 00:18:48,720 Speaker 1: multi decade highs So we're talking about the surrounding counties 349 00:18:49,280 --> 00:18:52,480 Speaker 1: and UH, A big part of that is people being 350 00:18:52,560 --> 00:18:56,840 Speaker 1: priced out of the city, UH and looking for and 351 00:18:56,960 --> 00:19:02,080 Speaker 1: actually transitioning from renters to buyer. Now, before you start 352 00:19:02,480 --> 00:19:06,320 Speaker 1: tweeting and emailing and complaining, I'm getting to your questions, 353 00:19:06,480 --> 00:19:09,160 Speaker 1: those of you in San Francisco and Boston and Washington, 354 00:19:09,200 --> 00:19:11,920 Speaker 1: d C. How does this compare to San Francisco and Washington, 355 00:19:11,960 --> 00:19:13,919 Speaker 1: Boston and Washington, d C. San Francisco has had this 356 00:19:13,960 --> 00:19:16,879 Speaker 1: problem for a while, right, So, so I think the 357 00:19:16,880 --> 00:19:20,480 Speaker 1: the universal pattern in most of the big urban markets 358 00:19:20,720 --> 00:19:25,680 Speaker 1: l A, Boston, New York, uh d C is this 359 00:19:26,400 --> 00:19:29,199 Speaker 1: soft at the top phenomenon. So what we're seeing is 360 00:19:29,320 --> 00:19:31,480 Speaker 1: over the last four or five years, it's all been 361 00:19:31,520 --> 00:19:36,440 Speaker 1: about luxury residential supertalls. Uh. Well maybe not in San Francisco, 362 00:19:36,600 --> 00:19:39,800 Speaker 1: but uh but a tremendous amount of focus on that, 363 00:19:40,359 --> 00:19:43,040 Speaker 1: almost a singular focus on that in terms of development, 364 00:19:43,040 --> 00:19:45,520 Speaker 1: whether it's rental or condo. And what we're seeing now 365 00:19:45,720 --> 00:19:48,760 Speaker 1: is that that those markets are largely I don't want 366 00:19:48,760 --> 00:19:51,800 Speaker 1: to say dormant, but very quiet in terms of transactions. 367 00:19:52,440 --> 00:19:56,760 Speaker 1: And what we're seeing is a huge surge in activity 368 00:19:56,960 --> 00:20:00,240 Speaker 1: in the entry and middle markets. So the spot light 369 00:20:00,280 --> 00:20:02,960 Speaker 1: is shifting off of the top and and towards the 370 00:20:03,359 --> 00:20:06,840 Speaker 1: building any entry level stuff. Well, that's that's part of 371 00:20:06,840 --> 00:20:12,200 Speaker 1: the problem. That the development community is re orientating um 372 00:20:12,280 --> 00:20:16,760 Speaker 1: as best they can, but land prices are still relatively high, 373 00:20:16,960 --> 00:20:19,640 Speaker 1: and construction costs are high, so it makes it very difficult. 374 00:20:20,040 --> 00:20:23,600 Speaker 1: Will it filter down? So it's this a mitro shell. 375 00:20:24,320 --> 00:20:27,160 Speaker 1: You've been brilliant on stuff, Mike McKee and I could 376 00:20:27,200 --> 00:20:31,719 Speaker 1: never dream of. Is it gonna filter down to the 377 00:20:31,800 --> 00:20:35,760 Speaker 1: sub and the sub sub and the subse sub luxury. 378 00:20:36,760 --> 00:20:40,320 Speaker 1: So I think the word contagion comes to mind. You know, 379 00:20:40,400 --> 00:20:43,879 Speaker 1: does does does the slow down and um in the 380 00:20:43,960 --> 00:20:48,879 Speaker 1: high end translate to weaker prices elsewhere? And at least 381 00:20:49,000 --> 00:20:53,560 Speaker 1: so far, that doesn't seem to be the case, uh, 382 00:20:53,640 --> 00:20:57,080 Speaker 1: in the rental market a tad But in the in 383 00:20:57,160 --> 00:21:00,440 Speaker 1: the high end new development market, condom marketed is not 384 00:21:00,560 --> 00:21:04,000 Speaker 1: the case only because, at least at this point, because 385 00:21:04,080 --> 00:21:08,119 Speaker 1: the distance between the existing market and the new product 386 00:21:08,200 --> 00:21:11,720 Speaker 1: came on that came on is much farther apart. So 387 00:21:12,760 --> 00:21:16,879 Speaker 1: a seven million dollar two bedroom doesn't uh. And and 388 00:21:16,920 --> 00:21:21,520 Speaker 1: if it drops, it doesn't affect a four million dollar 389 00:21:21,640 --> 00:21:24,080 Speaker 1: property or a three million or two million dollar propert 390 00:21:24,119 --> 00:21:27,280 Speaker 1: but to back up here, a three million dollar property, 391 00:21:27,800 --> 00:21:33,639 Speaker 1: who is buying that? This is? This is uh what 392 00:21:33,880 --> 00:21:36,360 Speaker 1: is driving the market? I mean in high end markets 393 00:21:36,440 --> 00:21:39,600 Speaker 1: like New York, that's the average sale price, uh, two 394 00:21:39,640 --> 00:21:42,320 Speaker 1: million bullion. But that's a good question that tom as. 395 00:21:42,560 --> 00:21:45,399 Speaker 1: I mean, if we start pricing people out, who's going 396 00:21:45,440 --> 00:21:47,320 Speaker 1: to be in the I mean, if if that's your 397 00:21:47,400 --> 00:21:50,840 Speaker 1: entry level, who's who's going to get in? Well, it's 398 00:21:50,840 --> 00:21:53,320 Speaker 1: not the entry level, but that's the focus. That's been 399 00:21:53,359 --> 00:21:57,119 Speaker 1: the primary primary focus on new development, and it's going 400 00:21:57,160 --> 00:21:59,600 Speaker 1: to take a while to shift. I don't I don't 401 00:21:59,640 --> 00:22:03,000 Speaker 1: see a contagion. I do see. Look, what's different now 402 00:22:03,119 --> 00:22:07,440 Speaker 1: is that the underlying economic conditions are pretty good, uh 403 00:22:08,040 --> 00:22:13,760 Speaker 1: job growth, low unemployment UM relative to say, UH in 404 00:22:13,840 --> 00:22:16,400 Speaker 1: the the outbreak of the financial crisis, so I think 405 00:22:16,440 --> 00:22:19,640 Speaker 1: things are in a better place. It's also a lot 406 00:22:19,680 --> 00:22:23,760 Speaker 1: not a lot of emphasis on high leverage and purchasing, 407 00:22:23,880 --> 00:22:27,160 Speaker 1: so so I just think this is a different scenario. 408 00:22:27,200 --> 00:22:29,920 Speaker 1: I don't see the contagion. I see this as much 409 00:22:29,960 --> 00:22:34,280 Speaker 1: more of a segmented market where we have weak parts 410 00:22:34,440 --> 00:22:38,120 Speaker 1: versus strong parts. Well, there's enough people left who can 411 00:22:38,520 --> 00:22:41,520 Speaker 1: who can and would buy a three million dollar apartment 412 00:22:41,560 --> 00:22:44,680 Speaker 1: in other words, for them, that's the best they can do, 413 00:22:45,040 --> 00:22:47,639 Speaker 1: because I would imagine that there's an awful lot of 414 00:22:47,640 --> 00:22:49,640 Speaker 1: people who can probably afford more, and then that may 415 00:22:49,680 --> 00:22:51,480 Speaker 1: not be good enough. But there may not be people 416 00:22:51,480 --> 00:22:54,320 Speaker 1: below that who are aiming higher. Well, this is the 417 00:22:54,320 --> 00:22:56,520 Speaker 1: whole process we're going through right now. Where people are 418 00:22:56,560 --> 00:23:00,080 Speaker 1: going farther from the central central business district, there moving 419 00:23:00,160 --> 00:23:03,360 Speaker 1: farther out. UM, and that's this phenomenon. And the suburbs 420 00:23:03,400 --> 00:23:06,120 Speaker 1: are seeing right now where you know, think of uh, 421 00:23:06,760 --> 00:23:09,760 Speaker 1: think of a city as a you know, a bucket 422 00:23:09,800 --> 00:23:12,000 Speaker 1: of water that's spelling over at the sides. It's not 423 00:23:12,080 --> 00:23:14,679 Speaker 1: a zero sum game. UM. You're seeing a lot of 424 00:23:14,760 --> 00:23:18,439 Speaker 1: urban growth since oh eight, and now the suburbs are 425 00:23:18,480 --> 00:23:21,280 Speaker 1: reaping the benefits. For talking with Jonathan Miller, head of 426 00:23:21,480 --> 00:23:26,000 Speaker 1: Miller Samuel the appraisal company about prices. Uh, one interesting 427 00:23:26,040 --> 00:23:29,560 Speaker 1: thing John said to me, Tom, was the new urbanism 428 00:23:29,600 --> 00:23:32,040 Speaker 1: seems to be failing. What did you mean by that, Well, 429 00:23:32,119 --> 00:23:34,960 Speaker 1: it's not that new urbanism is failing it it actually 430 00:23:35,040 --> 00:23:39,480 Speaker 1: is wildly successful. But that makes it more expensive to 431 00:23:39,520 --> 00:23:43,600 Speaker 1: live in the city, and so the dynamic of suburbs 432 00:23:43,640 --> 00:23:48,560 Speaker 1: competing with um, the city is rekindled. And uh. But 433 00:23:48,640 --> 00:23:51,359 Speaker 1: when people are buying in the suburbs now, they're they're 434 00:23:51,400 --> 00:23:54,280 Speaker 1: looking for communities that are closer to the city, that 435 00:23:54,359 --> 00:23:58,399 Speaker 1: have a lot of walkability as opposed to, you know, 436 00:23:58,440 --> 00:24:01,680 Speaker 1: being sort of out in the excerbs, way out and 437 00:24:01,880 --> 00:24:03,840 Speaker 1: you know, in the middle of nowhere. So there's a 438 00:24:03,880 --> 00:24:05,320 Speaker 1: little bit of that. And the other thing we're seeing 439 00:24:05,359 --> 00:24:08,840 Speaker 1: in the region is we're seeing an uptick in condominium 440 00:24:08,840 --> 00:24:12,719 Speaker 1: development in the suburbs. Uh skewed a little bit higher 441 00:24:12,720 --> 00:24:15,119 Speaker 1: than the product that's been done. If you think about it, 442 00:24:15,160 --> 00:24:18,320 Speaker 1: people coming from the city are used to the condo 443 00:24:18,440 --> 00:24:21,199 Speaker 1: form of ownership and not mowing the lawn. You and 444 00:24:21,240 --> 00:24:22,679 Speaker 1: I were just talking about how we both lived in 445 00:24:22,680 --> 00:24:24,520 Speaker 1: the Washington D C. Area. You see a lot of 446 00:24:24,560 --> 00:24:27,440 Speaker 1: many cities, many urban areas around the Washington D C. 447 00:24:27,600 --> 00:24:29,320 Speaker 1: Metro area. We're gonna see that in a lot of 448 00:24:29,320 --> 00:24:32,800 Speaker 1: these other cities. Yeah, I think you probably will see 449 00:24:32,840 --> 00:24:36,880 Speaker 1: that pattern if it continues. Um, we're not writing off 450 00:24:36,920 --> 00:24:39,919 Speaker 1: New York. But but just don't go ahead, please. No, 451 00:24:39,960 --> 00:24:41,639 Speaker 1: I'm just saying I'm not writing off New York. I'm 452 00:24:41,680 --> 00:24:43,840 Speaker 1: not gloom and doom at all. I just it's not 453 00:24:43,920 --> 00:24:46,119 Speaker 1: a zero sum game that that what's happening in the 454 00:24:46,119 --> 00:24:49,080 Speaker 1: suburbs is a reaction to people being priced out in 455 00:24:49,080 --> 00:24:51,240 Speaker 1: the city. What do you see in cities is not 456 00:24:51,920 --> 00:24:55,880 Speaker 1: eighties story mega luxury twenty million and up ten million. 457 00:24:55,920 --> 00:25:00,000 Speaker 1: I forget about that. It's five and six and seven 458 00:25:00,240 --> 00:25:07,800 Speaker 1: story smaller skyscrapers, all residential. Yes, they're everywhere. They're going 459 00:25:07,880 --> 00:25:12,840 Speaker 1: up like mushrooms. That screams to me over capacity at 460 00:25:12,880 --> 00:25:15,879 Speaker 1: some point, Am I wrong? Well, you know that the 461 00:25:17,160 --> 00:25:20,040 Speaker 1: worst were some trend of of the sort of midrise 462 00:25:20,080 --> 00:25:23,480 Speaker 1: buildings that you're subscribed that you're talking about is that 463 00:25:23,520 --> 00:25:26,040 Speaker 1: they have the same pricing as the supertalls, but they 464 00:25:26,040 --> 00:25:29,440 Speaker 1: don't have the view. So the concern is that this 465 00:25:29,480 --> 00:25:33,240 Speaker 1: product is you know that we're seeing too much at 466 00:25:33,240 --> 00:25:35,960 Speaker 1: the high end. This is the recurring theme. It's not 467 00:25:36,000 --> 00:25:38,840 Speaker 1: that we're building too much or just building rescuing way 468 00:25:38,880 --> 00:25:43,479 Speaker 1: too high. Boston has a Queen's. San Francisco has a Queen's. 469 00:25:43,600 --> 00:25:45,439 Speaker 1: Nobody ever wants to talk about it doesn't make the 470 00:25:45,480 --> 00:25:49,360 Speaker 1: TV shows. We have a Queen's. Where's Queens in ten 471 00:25:49,480 --> 00:25:53,160 Speaker 1: years there's no place else to go. Well, Queens already 472 00:25:53,240 --> 00:25:59,320 Speaker 1: is seeing record housing prices and they're they're being impacted 473 00:25:59,320 --> 00:26:04,160 Speaker 1: directly from the spillover from Brooklyn, which benefited from this 474 00:26:04,400 --> 00:26:07,200 Speaker 1: development boom. So what we have this this continued outward 475 00:26:07,280 --> 00:26:11,600 Speaker 1: radial push in urban markets. Um. And I think you know, 476 00:26:11,640 --> 00:26:15,360 Speaker 1: everybody wrote off the suburban markets a little prematurely. Um. 477 00:26:15,400 --> 00:26:18,040 Speaker 1: And that was back to my comment about new urbans, 478 00:26:18,160 --> 00:26:22,360 Speaker 1: urbanism and the focus on walkable cities. It's fantastic, great phenomenon, 479 00:26:22,880 --> 00:26:28,320 Speaker 1: except for the part that housing supply is relatively inelastic, 480 00:26:28,600 --> 00:26:31,720 Speaker 1: and when you have people come into the city attract 481 00:26:31,720 --> 00:26:35,400 Speaker 1: to the city, prices rise. And that's that's where we're 482 00:26:35,440 --> 00:26:37,520 Speaker 1: at right now. We're supposed to see all kinds of 483 00:26:37,520 --> 00:26:40,560 Speaker 1: apartment of seeing all kinds of apartments being built to 484 00:26:41,200 --> 00:26:45,760 Speaker 1: absorb all the people who now wanted to be renters. Uh. Yes, 485 00:26:45,880 --> 00:26:49,600 Speaker 1: but the product being built doesn't match what the demand is. 486 00:26:49,640 --> 00:26:52,160 Speaker 1: The product being built is skewed towards the high end 487 00:26:52,800 --> 00:26:55,680 Speaker 1: and very little in the middle. As being that kind 488 00:26:55,680 --> 00:26:59,520 Speaker 1: of runs against the old economic view that markets clear, 489 00:26:59,560 --> 00:27:03,520 Speaker 1: that people recognize a demand and fill it. Yes. Um. 490 00:27:03,880 --> 00:27:05,320 Speaker 1: The thing you have to think about is that that 491 00:27:05,480 --> 00:27:08,320 Speaker 1: the high end product that came on the market wasn't 492 00:27:08,320 --> 00:27:10,600 Speaker 1: a product of a local economic condition. It was a 493 00:27:10,640 --> 00:27:14,919 Speaker 1: global phenomenon that we saw in every major city in 494 00:27:14,960 --> 00:27:18,119 Speaker 1: the world. Just about probably exaggerating, but it was a 495 00:27:18,160 --> 00:27:22,440 Speaker 1: global It wasn't born out of local economics, and that's 496 00:27:22,480 --> 00:27:26,760 Speaker 1: what's changing right now. Okay, I want to review this 497 00:27:26,920 --> 00:27:29,840 Speaker 1: three million dollar unit. You're telling me somebody puts down 498 00:27:29,840 --> 00:27:33,199 Speaker 1: eight hundred tho dollars in a big fat mortgage that 499 00:27:33,320 --> 00:27:37,200 Speaker 1: describes x percent of our audience like a small part. 500 00:27:37,720 --> 00:27:40,639 Speaker 1: Let's say it's a small part. Everybody else is going 501 00:27:40,680 --> 00:27:42,439 Speaker 1: to drive an hour and a half commute? Is that 502 00:27:42,480 --> 00:27:45,760 Speaker 1: what I'm hearing from you? Uh? You know, it certainly 503 00:27:46,000 --> 00:27:48,199 Speaker 1: is an option, but but I think the people that 504 00:27:48,240 --> 00:27:51,720 Speaker 1: are driving being driven outward are the people paying less 505 00:27:51,720 --> 00:27:55,160 Speaker 1: than that, because that's that's where the tightness is. So 506 00:27:55,200 --> 00:27:57,960 Speaker 1: I think, so what's the public policy to fix this? 507 00:27:58,040 --> 00:28:01,600 Speaker 1: I mean, mayor to Blasio or Walsh, every other mayor 508 00:28:01,640 --> 00:28:07,000 Speaker 1: in the city, including London. There's no other topic, right, 509 00:28:07,119 --> 00:28:09,600 Speaker 1: I mean to begin with Mike, it's appalling it's not 510 00:28:09,640 --> 00:28:13,760 Speaker 1: even discussed at the presidential level. You're truly one of 511 00:28:13,800 --> 00:28:18,720 Speaker 1: the world's experts on this. What's the policy prescription for 512 00:28:18,800 --> 00:28:23,960 Speaker 1: the reality of the Bloomberg surveillance audience? Well, I think 513 00:28:24,480 --> 00:28:28,280 Speaker 1: the challenge is in and every administration is trying to 514 00:28:28,640 --> 00:28:32,720 Speaker 1: solve this. Around the country is creating affordable housing, and 515 00:28:33,040 --> 00:28:36,720 Speaker 1: the word affordable in my use is really middle class, 516 00:28:36,720 --> 00:28:40,160 Speaker 1: working class housing, not government subsidized UM. And that can 517 00:28:40,200 --> 00:28:43,840 Speaker 1: only be done through controls on land and land use. 518 00:28:44,440 --> 00:28:49,040 Speaker 1: And there's so many angles to this that I don't 519 00:28:49,040 --> 00:28:51,000 Speaker 1: know that there is a clear path, at least at 520 00:28:51,040 --> 00:28:53,600 Speaker 1: this point, no one has come up with one. Let 521 00:28:53,680 --> 00:28:57,480 Speaker 1: me ask a fifty foot question, uh, Jane Jacobs for 522 00:28:57,600 --> 00:29:01,480 Speaker 1: the famous book years ago, Are you you need diversity 523 00:29:01,520 --> 00:29:05,600 Speaker 1: in housing and in neighborhoods to keep a city vital? 524 00:29:06,720 --> 00:29:10,120 Speaker 1: Is New York City doomed? No? I I don't think so. 525 00:29:10,200 --> 00:29:15,400 Speaker 1: I what I see this right now in the current trajectory, Uh, 526 00:29:15,440 --> 00:29:17,840 Speaker 1: I think we were on the right path until about 527 00:29:17,920 --> 00:29:21,440 Speaker 1: five seven years ago. Um. What we what we're doing 528 00:29:21,520 --> 00:29:26,360 Speaker 1: now is where uh what do you were sterilizing? Um? 529 00:29:26,400 --> 00:29:30,800 Speaker 1: You know, making making the city less diverse um in 530 00:29:30,920 --> 00:29:33,320 Speaker 1: its housing stock and the people that can afford to 531 00:29:33,360 --> 00:29:37,720 Speaker 1: live here. And that's ultimately a long, slow transition. I 532 00:29:38,080 --> 00:29:40,040 Speaker 1: hope that we don't go that path because it took 533 00:29:40,120 --> 00:29:43,160 Speaker 1: us forever to get to where we were years ago. Well, 534 00:29:43,160 --> 00:29:45,120 Speaker 1: they were going to build a whole bunch of high 535 00:29:45,200 --> 00:29:49,520 Speaker 1: rises along West fifty seven Street here in New York. 536 00:29:49,560 --> 00:29:52,000 Speaker 1: We've got a couple up and then I read that 537 00:29:52,080 --> 00:29:55,520 Speaker 1: the rest are being kind of postponed. Right, you're probably 538 00:29:55,520 --> 00:29:58,840 Speaker 1: referring to one eleven West fifty seven, which was, Uh, 539 00:29:59,200 --> 00:30:01,680 Speaker 1: that's the one that it's very narrow. I think it's 540 00:30:01,720 --> 00:30:05,880 Speaker 1: the world's tallest thinnest building some designation like that. UM. 541 00:30:05,960 --> 00:30:07,920 Speaker 1: And so they said they're not going to be marketing 542 00:30:08,000 --> 00:30:11,560 Speaker 1: it for a year and wait to see what happens UM, 543 00:30:11,600 --> 00:30:15,120 Speaker 1: although they've as far as I've heard indirectly, they've already 544 00:30:15,120 --> 00:30:18,240 Speaker 1: sold a couple of units without any marketing. So so 545 00:30:18,280 --> 00:30:21,880 Speaker 1: I think the way to think of this is, at 546 00:30:21,960 --> 00:30:26,320 Speaker 1: least at the high end is um when buildings, when 547 00:30:26,400 --> 00:30:31,040 Speaker 1: developers negotiate price, units are selling. It isn't that there 548 00:30:31,080 --> 00:30:35,320 Speaker 1: isn't any demand. It's at the demand UM or the 549 00:30:35,400 --> 00:30:38,160 Speaker 1: pricing that was established in two thousand fourteen, which was 550 00:30:38,200 --> 00:30:44,520 Speaker 1: the peak pricing for this high end market. Uh, it's off, uh, 551 00:30:44,560 --> 00:30:49,280 Speaker 1: you know, somewhere in that range. And when you adjust 552 00:30:49,400 --> 00:30:52,640 Speaker 1: pricing to that, units do sell ten seconds. Where would 553 00:30:52,640 --> 00:30:55,120 Speaker 1: you buy right now in New York I'd still buy 554 00:30:55,160 --> 00:31:00,080 Speaker 1: downtown Soho Tribeca. I love the big space. Why you 555 00:31:00,120 --> 00:31:04,040 Speaker 1: can afford it, it's such a hitter. John Miller Speller 556 00:31:04,120 --> 00:31:18,200 Speaker 1: Samuel read Worldwide on real estate. Mike a d B 557 00:31:18,800 --> 00:31:22,320 Speaker 1: a dB all day breakfast, which means it's time to 558 00:31:22,360 --> 00:31:28,560 Speaker 1: talk to Sarah. Senator Sanford Bernstein on food, Sarah H. 559 00:31:28,800 --> 00:31:32,000 Speaker 1: Senator a dB. Sarah, have you ever had a dB? 560 00:31:33,320 --> 00:31:37,680 Speaker 1: Of course, what right thinking American has not had a 561 00:31:37,720 --> 00:31:39,840 Speaker 1: breakfast sandwich in the middle of the day. Did you 562 00:31:39,880 --> 00:31:42,960 Speaker 1: go for the sausage burrito at eight pm? I am 563 00:31:43,080 --> 00:31:45,920 Speaker 1: I'm not a sausage burrito. I'm I'm a person. I'm 564 00:31:46,160 --> 00:31:50,000 Speaker 1: a classicist. I like the McMuffin. I agree completely. Is 565 00:31:50,040 --> 00:31:55,480 Speaker 1: this generating operating income for McDonald's. You know, it has 566 00:31:55,520 --> 00:31:58,080 Speaker 1: been on I think it still is, but the momentum 567 00:31:58,160 --> 00:32:00,400 Speaker 1: seems to have slowed a bit. Yeah. Them when they 568 00:32:00,480 --> 00:32:04,400 Speaker 1: launched it, well, take apart the numbers for US same 569 00:32:04,440 --> 00:32:07,280 Speaker 1: store sales were down. They also complained of some currency 570 00:32:07,320 --> 00:32:12,160 Speaker 1: translation or is that related? Basically, Um, the same store 571 00:32:12,160 --> 00:32:14,800 Speaker 1: sales in the US had slowed um, and I think 572 00:32:14,840 --> 00:32:17,360 Speaker 1: that's that's always the big focus for investors as the 573 00:32:17,440 --> 00:32:20,800 Speaker 1: US because it's McDonald's business. Um, there was a bit 574 00:32:20,840 --> 00:32:24,240 Speaker 1: of a currency headwind, although I'll say not uh not 575 00:32:24,360 --> 00:32:26,400 Speaker 1: as uh. It wasn't as bad as it could have 576 00:32:26,440 --> 00:32:31,200 Speaker 1: been given their exposure to the pound in particular. Um. 577 00:32:31,280 --> 00:32:33,880 Speaker 1: So the real issue seems to just be that some 578 00:32:34,040 --> 00:32:37,480 Speaker 1: of the momentum that they've had again, particularly in the US, 579 00:32:37,720 --> 00:32:41,680 Speaker 1: has just dissipated a little bit. So we got basically 580 00:32:42,040 --> 00:32:47,160 Speaker 1: um okay numbers, but the froth is off, the extra 581 00:32:47,200 --> 00:32:50,800 Speaker 1: pickles have been left off. That's that's that's probably the 582 00:32:50,960 --> 00:32:54,880 Speaker 1: right analogy for McDonald So what do they do next. 583 00:32:55,320 --> 00:32:57,320 Speaker 1: In the past, when they did something like this, what 584 00:32:57,360 --> 00:33:01,960 Speaker 1: would happen is they'd introduce some new variation on a 585 00:33:02,000 --> 00:33:04,480 Speaker 1: food item to try to bump up sales. Is that 586 00:33:04,840 --> 00:33:08,520 Speaker 1: no longer part of the strategy? Well, I think it is. 587 00:33:09,000 --> 00:33:11,240 Speaker 1: You know, they're they're talking about in the second half 588 00:33:11,240 --> 00:33:13,960 Speaker 1: of the year focus on it, the focus on adding 589 00:33:13,960 --> 00:33:18,280 Speaker 1: more breakfast sandwich favorites. So until now, the menu in 590 00:33:18,320 --> 00:33:21,640 Speaker 1: different markets you would have, I believe you know, mcmuffins 591 00:33:21,800 --> 00:33:25,760 Speaker 1: or biscuits, but not both. Um. Now you'll have mcgriddles, mcmuffins, ambiscuits, 592 00:33:25,800 --> 00:33:29,000 Speaker 1: just a broader assortments. So adding more offerings and sir, 593 00:33:29,360 --> 00:33:32,840 Speaker 1: congratulations to your persistency on McDonald's. I mean, come on, 594 00:33:32,920 --> 00:33:36,840 Speaker 1: in the last ten years, sixteen eight four percent from 595 00:33:36,840 --> 00:33:38,520 Speaker 1: all the gloom of a year and a half ago, 596 00:33:38,560 --> 00:33:42,480 Speaker 1: it's had a pop. I'm looking at free cash flow 597 00:33:43,160 --> 00:33:49,160 Speaker 1: that's frankly remarkably stable and even growing. Isn't this? Is 598 00:33:49,200 --> 00:33:52,200 Speaker 1: this a great turnaround? I mean, do you look at 599 00:33:52,240 --> 00:33:54,480 Speaker 1: what the new management's done with a dB and the 600 00:33:54,520 --> 00:33:56,880 Speaker 1: rest of it. Is this one of the great success 601 00:33:56,920 --> 00:34:01,680 Speaker 1: stories of modern corporate history? Well? I think, um, it's 602 00:34:01,720 --> 00:34:04,800 Speaker 1: clearly that it's clear that the last turnaround was one 603 00:34:04,880 --> 00:34:07,400 Speaker 1: of the great success stories of modern corporate history, the 604 00:34:07,400 --> 00:34:09,480 Speaker 1: one that took over in two thousand and three. And 605 00:34:09,520 --> 00:34:11,520 Speaker 1: I think you know, what we would say is that 606 00:34:11,600 --> 00:34:14,120 Speaker 1: the business was in worse shape than than it was 607 00:34:14,480 --> 00:34:18,640 Speaker 1: okay now, and they turned it around harder. Um. I 608 00:34:18,680 --> 00:34:22,120 Speaker 1: think it's certainly credit where credit is due. Stevie Strbrook 609 00:34:22,200 --> 00:34:24,440 Speaker 1: has done a remarkable job. To your point, the stock 610 00:34:24,760 --> 00:34:27,560 Speaker 1: has moved for a company of this size quite a bit. 611 00:34:27,880 --> 00:34:31,480 Speaker 1: His expectations went from being very dour to the view 612 00:34:31,480 --> 00:34:34,560 Speaker 1: that you know, they can compete. Um. Now this quarter 613 00:34:34,680 --> 00:34:38,319 Speaker 1: suggests that yes, they can compete. Can they consistently, um 614 00:34:38,440 --> 00:34:41,080 Speaker 1: dramatically exceed what's going on in the industry? That I 615 00:34:41,120 --> 00:34:43,600 Speaker 1: think is a little more of an open question. What 616 00:34:43,640 --> 00:34:45,520 Speaker 1: will they do with their balance sheet? I had somebody 617 00:34:45,560 --> 00:34:49,239 Speaker 1: email me in a sophisticated cf A type and he said, look, 618 00:34:49,280 --> 00:34:51,719 Speaker 1: why does an Apple just do more debt? Apples? Like 619 00:34:52,600 --> 00:34:55,759 Speaker 1: whatever the number is McDonald's, I see with seventeen point 620 00:34:55,840 --> 00:35:01,359 Speaker 1: five debt, money's dirt cheap. I would suggests McDonald's as 621 00:35:01,360 --> 00:35:04,279 Speaker 1: the greatest credit rating going. Do they have a use 622 00:35:04,320 --> 00:35:06,360 Speaker 1: of cash player where they take on more debt and 623 00:35:06,400 --> 00:35:10,279 Speaker 1: deploy cash? Yeah, they they they've done some of that 624 00:35:10,440 --> 00:35:13,759 Speaker 1: so um, you know, returning thirty billion dollars to shareholders 625 00:35:13,800 --> 00:35:17,480 Speaker 1: between dividends and UH and repurchase you know, and so 626 00:35:17,960 --> 00:35:21,200 Speaker 1: they certainly have gone in that direction. But I don't 627 00:35:21,200 --> 00:35:22,799 Speaker 1: think we're going to see a whole lot more. I mean, 628 00:35:22,920 --> 00:35:25,319 Speaker 1: what one thing to worth noting they do have a 629 00:35:25,360 --> 00:35:27,480 Speaker 1: lot of rental expense, so so they're a little bit 630 00:35:27,520 --> 00:35:30,480 Speaker 1: more levered than than you might look optically at the 631 00:35:30,520 --> 00:35:33,120 Speaker 1: balance sheet and just see that. But I think in 632 00:35:33,160 --> 00:35:38,000 Speaker 1: general they've been pretty um, pretty cautious about maintaining that 633 00:35:38,239 --> 00:35:41,880 Speaker 1: very high investment grade UM rating, and they view that 634 00:35:41,920 --> 00:35:44,120 Speaker 1: as something that is a boon to them and also 635 00:35:44,120 --> 00:35:46,480 Speaker 1: boon in their franchise. Let's go to the train record 636 00:35:46,520 --> 00:35:50,000 Speaker 1: the industry's Chipotle, give us an update here. The sales 637 00:35:50,000 --> 00:35:52,520 Speaker 1: deal leveraging, as you state in your report, is shocking. 638 00:35:53,960 --> 00:35:57,360 Speaker 1: I assume they're not turned around. Now, what's it going 639 00:35:57,400 --> 00:36:00,320 Speaker 1: to take to right the ship? They are kind of 640 00:36:00,320 --> 00:36:03,120 Speaker 1: the opposite of McDonald's. They are on the other side though, 641 00:36:03,280 --> 00:36:06,520 Speaker 1: of their of the sort of trough of their performance. 642 00:36:06,560 --> 00:36:10,320 Speaker 1: So McDonald's appears to be just post peak and Chipole 643 00:36:10,400 --> 00:36:13,080 Speaker 1: appears to be post trough. And do the market likes 644 00:36:13,080 --> 00:36:15,200 Speaker 1: things that are getting better, not things that are getting worse, 645 00:36:15,200 --> 00:36:17,919 Speaker 1: which is why the stock was actually up. Chipotle stock 646 00:36:18,040 --> 00:36:20,800 Speaker 1: was up, you know, on the last quarterly report because 647 00:36:21,000 --> 00:36:24,720 Speaker 1: things are improving slowly and maybe more slowly than certainly 648 00:36:24,719 --> 00:36:27,560 Speaker 1: anybody would have expected seven months ago. But they are 649 00:36:27,600 --> 00:36:31,560 Speaker 1: getting better and the chip Toopia loyalty program appears to 650 00:36:31,600 --> 00:36:35,840 Speaker 1: be working. There's a sort of an economic indicator aspect 651 00:36:35,840 --> 00:36:40,480 Speaker 1: to some of these restaurants results, because as the economy improves, 652 00:36:40,520 --> 00:36:43,680 Speaker 1: people move upscale and vice versa. Do we have any 653 00:36:43,760 --> 00:36:46,759 Speaker 1: kind of movement underway that would suggest, one way or 654 00:36:46,800 --> 00:36:49,880 Speaker 1: the other how the economy is doing overall? You know, 655 00:36:50,000 --> 00:36:53,160 Speaker 1: we're not seeing, uh, you know, we're not seeing anybody 656 00:36:53,280 --> 00:36:56,000 Speaker 1: really do particularly well. You know, if they were trade down, 657 00:36:56,040 --> 00:36:58,560 Speaker 1: you might expect McDonald's to do a little bit better 658 00:36:58,600 --> 00:37:01,279 Speaker 1: than than this quarter with the just um you know, 659 00:37:01,360 --> 00:37:03,720 Speaker 1: chacol Bell had a pretty soft comp in the quarter 660 00:37:03,800 --> 00:37:07,239 Speaker 1: as well. They're they're typically you know, values right right 661 00:37:07,280 --> 00:37:10,360 Speaker 1: down there, fairway so to speak. Um, you know, nobody's 662 00:37:10,400 --> 00:37:13,720 Speaker 1: really seems to be holding up all that well, although 663 00:37:14,000 --> 00:37:16,600 Speaker 1: you know, you could look at the pizza guys, they 664 00:37:16,640 --> 00:37:18,839 Speaker 1: actually seem to be the best. Um. So I think 665 00:37:18,840 --> 00:37:22,000 Speaker 1: it's more about, you know, whether people are really you know, 666 00:37:22,200 --> 00:37:25,560 Speaker 1: going out to eat. I think they are looking for value. 667 00:37:25,640 --> 00:37:28,280 Speaker 1: Pizza is a good value. So I just think everybody's 668 00:37:28,360 --> 00:37:31,160 Speaker 1: hunkered down a little bit. Whether it's because of uncertainty 669 00:37:31,200 --> 00:37:34,120 Speaker 1: around the political situation, um, it's the fact that your 670 00:37:34,120 --> 00:37:37,600 Speaker 1: grocery store pricing is so low now because food prices 671 00:37:37,600 --> 00:37:39,560 Speaker 1: have come down, so people are dining in a little 672 00:37:39,600 --> 00:37:43,320 Speaker 1: bit more. I think there are a lot of factors. Sarah, 673 00:37:43,320 --> 00:37:45,400 Speaker 1: thanks so much. You and I have sausage burrito a 674 00:37:45,520 --> 00:37:51,360 Speaker 1: dB soon. Sarah Senator with Bird Steak. Thanks for listening 675 00:37:51,440 --> 00:37:55,960 Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews 676 00:37:55,960 --> 00:38:01,359 Speaker 1: on iTunes, SoundCloud, or whichever podcast platform you prefer. I'm 677 00:38:01,400 --> 00:38:05,760 Speaker 1: on Twitter at Tom Keane. Michael McKee is at Economy 678 00:38:05,760 --> 00:38:09,520 Speaker 1: Before the Podcast. You can always catch us worldwide. I'm 679 00:38:09,560 --> 00:38:10,440 Speaker 1: Bloomberg Radio