Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.
Speaker 1: My name is Mike Reagan. I'm a senior editor at
Speaker 1: Bloomberg and I'm downa higher across acid reporter with Bloomberg
Speaker 1: at this week on the show, Well, that inflation just
Speaker 1: keeps going higher and higher, doesn't it. According to the
Speaker 1: latest data out this week, the consumer price index climbed
Speaker 1: nine point one percent in June, the most in almost
Speaker 1: forty one years, and not markets are pricing in an
Speaker 1: even more aggressive response from the Federal Reserve to team
Speaker 1: surging prices with interest rate hikes. But is triggering a
Speaker 1: recession the only way the Fed contained inflation? What we'll
Speaker 1: get into it with a very well known economist who,
Speaker 1: by the way, the don is from my hometown of Westchester,
Speaker 1: p A. I'm very excited, but I thought I also
Speaker 1: had to ask you. Um, I keep reading about these
Speaker 1: problems with airlines and and everyone's flight being delayed. I
Speaker 1: think it's all your fault. I was about to say,
Speaker 1: you're about to blame me. Every week you're off to
Speaker 1: another exotic location. I did go to Florida last week.
Speaker 1: Did you clog up the airlines? No? I flew from
Speaker 1: the Trenton Airport, the Trenton Trenton, New Jersey. It really
Speaker 1: shouldn't be publicizing this because I want to keep it
Speaker 1: a secret. It was so easy to get in and
Speaker 1: it literally took two minutes to get off the plane,
Speaker 1: Like no, there were no people there. It was the
Speaker 1: easiest process in the world from the Trenton, New Jersey airport,
Speaker 1: which I know well from my days in Trenton. Did
Speaker 1: they serve like pork roll on the on the flight, No,
Speaker 1: that's that actually would be mustard part of them. No,
Speaker 1: But it's like my parents lived really close to it.
Speaker 1: I went with my parents to Florida. It was the easiest,
Speaker 1: easiest process in the best flight, Like so so easy,
Speaker 1: you can not be advertising it. But possibly our guest,
Speaker 1: who actually I think lives close by to Trenton as well,
Speaker 1: he might be utilizing this airport, not them, talked it
Speaker 1: up so so much. But I want to welcome Mark Sandy.
Speaker 1: He's the chief economist for Moody's Analytics and he's the
Speaker 1: host of the Inside Economics podcast. Thank you so much
Speaker 1: for joining us. It's good to be with you. I
Speaker 1: had no idea you could fly from Trenton where in Flori.
Speaker 1: Did you fly to so you can fly to I
Speaker 1: flew to Fort Lauderdale. I hung out with our old
Speaker 1: colleague Sarah Ponzac actually Mike and who who she lives
Speaker 1: in Fort Lauderdale now, um, and it was just the
Speaker 1: easiest process. It was, honestly like, I'm never going to
Speaker 1: New York again. I was gonna say, you can only
Speaker 1: fly from Trenton to Camden is the Yeah, that's it,
Speaker 1: But but you can. It's it's very smooth flying. Yeah,
Speaker 1: it was. It was really Yeah to check that out.
Speaker 1: I have a home and vera Vera which is just
Speaker 1: up the coast from Fort Lauderdale, so oh, you gotta
Speaker 1: do it. It was, yeah, check that out. And sticks
Speaker 1: were okay priced. Oh they were so cheap. I don't
Speaker 1: even don't want to tell you. Yea very good. I'm
Speaker 1: really talking this up. You're gonna go and have a
Speaker 1: bad experience. Mike, I should ask you what high school
Speaker 1: did you go to? West Bishop Shanahan High School? When
Speaker 1: I was still in the borough Westchester. Now they well, yeah,
Speaker 1: you try, I try. You know tall. Did you play basketball?
Speaker 1: My reputation precedes me. I did indeed play best j
Speaker 1: V j V well, you know basketball. Yeah, and we
Speaker 1: had a good squad back then. We were state champions
Speaker 1: in I did not play on the stage. He wasn't
Speaker 1: on that. He was on the team in like the
Speaker 1: thirties or something. Yeah, I can make fun of Mike,
Speaker 1: but it sounds like she's abuse of me. I feel like, yeah,
Speaker 1: we've reached our limit on that. Yeah, No, I think
Speaker 1: there's more to go. So Mark, I want to start
Speaker 1: with the CPI print, which we got this week, and
Speaker 1: then I saw you actually tweet about it. You said
Speaker 1: it was predictably ugly, and then it might take eighteen
Speaker 1: to twenty four months for us to get back down
Speaker 1: to Another thing you said was that rent growth will
Speaker 1: be an impediment. There's a shortage of affordable homes. So
Speaker 1: can you can you talk to us about what we
Speaker 1: got this week and what you're forecasting? Yeah? Right, Uh,
Speaker 1: nine point one percent. You're over your CPI inflation through
Speaker 1: the month of June. Uh. Just here's a good here's
Speaker 1: an interesting fact, toy. I mean, I think it strikes
Speaker 1: the point home. The average or the typical American household
Speaker 1: who makes about this sixt k year, they need to
Speaker 1: spend almost five dollars more a month to buy the
Speaker 1: same goods and services that they were purchasing a year ago.
Speaker 1: So just think about that for a second. That's pretty painful.
Speaker 1: And you know there's no way around the high inflation.
Speaker 1: I mean you took at gasoline prices. I mean you
Speaker 1: gotta go to work, you gotta go grocery shopping, you
Speaker 1: gotta go to school, So no way around that. Rents
Speaker 1: are up a lot, uh, given the affordable housing shortage.
Speaker 1: Food prices are up. A lot of that goes back
Speaker 1: to energy because of diesel prices, you know, getting the
Speaker 1: things for the food from the the from the farm
Speaker 1: to the store. Sheelf. But everything's up a lot, very
Speaker 1: few in fact, is you know, I was looking through
Speaker 1: the report for things that had fallen in price, and
Speaker 1: I can count them on one hand. Really, like smartphones
Speaker 1: are down, and that's because of improvement in technological change
Speaker 1: and technology. Men's pants, believe it or not, they're selling
Speaker 1: for less today than a year ago. I you know,
Speaker 1: I'm in my short right now. Somebody's gonna say sweatpants
Speaker 1: are sweatpants now they think about it. How many pairs
Speaker 1: of pants have I bought in the last year? I can't.
Speaker 1: I can't tell you anyway. So prices are up a
Speaker 1: lot and it's really hurting. Um, I will, I'll just
Speaker 1: tease it and I'll stop, but I you know, I
Speaker 1: do think that will be the worst of it. I
Speaker 1: say that with intrepidation because I said that before in
Speaker 1: the last few months, because you know, pegging the peak
Speaker 1: and inflation is intrepid because it depends on oil prices
Speaker 1: and gasoline prices, which goes back the Russian invasion of
Speaker 1: Ukraine and sanctions and the timing and sanctions. Hard to
Speaker 1: get that right. But it feels like we're moving on
Speaker 1: the right side of the inflation picture. Now. A long
Speaker 1: way to get back, because I said eighteen twenty four
Speaker 1: months to something we all feel comfortable with. But I
Speaker 1: think we're on our way and it fingers crossed. You know.
Speaker 1: The one weird thing I've noticed mark with people trying
Speaker 1: to call the peak and inflation is that it's such
Speaker 1: a moving target as far as what's driving it. I mean,
Speaker 1: obviously energy, oil, gasoline prices, um. But you know last
Speaker 1: year everyone was looking at lumber when lumber prices peaked,
Speaker 1: they thought, oh, that's it, that's the sign that inflation
Speaker 1: is peaked. Now I have to wonder about rent owners
Speaker 1: equivalent rent in the CPI report UM. And I talked
Speaker 1: to Rob Barnett of a few months ago of Research Affiliates,
Speaker 1: and he was sort of very hawkish about inflation because
Speaker 1: he said, look, home prices have risen something like thirty
Speaker 1: some percent since the end of two thousand and nineteen,
Speaker 1: and and his in his thinking, that has to trickle
Speaker 1: into the owner's equivalent rent or the other shelter components
Speaker 1: of c p I. UM. So, even if energy comes
Speaker 1: off the boil, how how big of a deal is
Speaker 1: rent going to be going forward? Do you think? I mean,
Speaker 1: is there still some of that? How home price appreciation
Speaker 1: as are not predicts that that has to trickle into
Speaker 1: the rent UH component of CPI. Yeah. The reason well,
Speaker 1: I mean, just give give a set of numbers to
Speaker 1: make a concrete I mean, let's say inflation inflation we
Speaker 1: know now is nine point one. If oil prices simply
Speaker 1: go flat, and that means gasoline prices we'll start will
Speaker 1: come down a bit, diesel prices will come in a bit.
Speaker 1: Jet fuel because we've been paying a lot more for
Speaker 1: air fare, except if you fly from Trent and apparently,
Speaker 1: you know, you can pay more for air fare. Airfares,
Speaker 1: they'll take about half the inflation away. So you go
Speaker 1: from nine to you know, four and a half five,
Speaker 1: you know, something like that, and that getting from five
Speaker 1: to two and a half, which is kind of the
Speaker 1: upper end of the Vetch target for CPI inflation, that's
Speaker 1: going to be much more difficult because that goes to
Speaker 1: some supply chain, some product services, excuse me, products that
Speaker 1: have been disrupted by supply chain issues like the vehicle prices.
Speaker 1: But the big chunk of that is, in fact the
Speaker 1: higher rent rents that were now paying and they're in
Speaker 1: the very strong rent growth, which is actually the market
Speaker 1: rents have been rising now for more than a year
Speaker 1: double digit, but it's only now getting into the because
Speaker 1: of measurement methodologies by the er of labor statistics, only
Speaker 1: now getting into the c p I for rent in
Speaker 1: in in a full fulsome way. In a full way,
Speaker 1: I will say, though, uh that it feels like market
Speaker 1: rents growth is has topped out, that it is starting
Speaker 1: to roll over. And that goes to the fact I
Speaker 1: think a couple of things. One is, renters just can't
Speaker 1: afford these rents, you know, they're balking, and they're just
Speaker 1: they're gonna double up, the triple up, go back to
Speaker 1: their parents house. You're not gonna see households formed because
Speaker 1: you know, kids can't afford in households can't afford these rents.
Speaker 1: So that that's starting to I think, uh affect the
Speaker 1: ability of landlords to increase the rent growth and more
Speaker 1: supplies coming uh. You know, we're actually putting up a
Speaker 1: lot of multi family units by historical standards, and a
Speaker 1: lot more is in train. In fact, there's a record
Speaker 1: number of of units multi family units in the pipeline
Speaker 1: going towards completion. They've been delayed because of the pandemic
Speaker 1: and the supply chain issues, which have got back to
Speaker 1: your point about lumber. You know, it's disrupted all kinds
Speaker 1: of building materials and it's affected labor markets. So construction
Speaker 1: workers have been been they've been builders have been having
Speaker 1: troll finding construction workers in some parts of the country.
Speaker 1: But is that that gets ironed out, I think rent
Speaker 1: growth will roll over even further. It will remain high,
Speaker 1: you know, kind of high mid high single digit your
Speaker 1: over your growth, but it's gonna start to come in.
Speaker 1: And once that does, by this time next year, rank
Speaker 1: rint growth will become less additive to inflation. That will
Speaker 1: become still add but less additive. And I think it
Speaker 1: will allow inflation broadly to moderate back down close to
Speaker 1: the Fed Reserve's target. But but again, it's gonna take
Speaker 1: a while to get there. What about all the other
Speaker 1: pieces of inflation besides housing, Because you know you have
Speaker 1: this projection about the next eighteen to twenty four months.
Speaker 1: What else is going to be happening over the next
Speaker 1: eighteen to twenty four months. I know you have downgraded
Speaker 1: your GDP outlook for this year and next, right, I have, uh,
Speaker 1: still no recession. Obviously, recession risks or high and we
Speaker 1: could talk about that. I mean, clearly when inflation is
Speaker 1: so high and the Fed is on de con one
Speaker 1: and really rightfully focus on getting that inflation down by
Speaker 1: jacking up interest rates and and and sentiment is miserable, right,
Speaker 1: I mean I talked to CEO CFOs investors, you know, friends, family,
Speaker 1: to the person, they think we're going into recession. I've
Speaker 1: never seen anything like it. I mean, I you know,
Speaker 1: you can look at my hairline. I've seen a lot
Speaker 1: of business cycles now and no one predicts recessions. Uh.
Speaker 1: You know, but in this one, everyone is predicting a recession.
Speaker 1: So when sentiment is so fragile, it's not gonna take
Speaker 1: a whole lot to push us in. You know, I
Speaker 1: think with a little bit of luck, we can talk
Speaker 1: about what that means, and some reasonably good policy making
Speaker 1: by the FED, and we can talk about what that means,
Speaker 1: we're gonna be able to avoid recession. But I don't
Speaker 1: say that with a lot of confidence. I think that's
Speaker 1: you know, recession risks are are very high, but I
Speaker 1: don't think we need a recession to get you know,
Speaker 1: inflation back in. You know, all prices are gonna roll over.
Speaker 1: Natural gas prices are gonna fall. We're gonna see vehicle
Speaker 1: prices come down as supply chain issues airing themselves out,
Speaker 1: we get more vehicle production, UM, commodity prices, more goods prices,
Speaker 1: more broad they are going to come in. UM. So
Speaker 1: you know, I think, uh, again, with a little bit
Speaker 1: of luck and some reasonably deft policymaking by the FED,
Speaker 1: we should be able to navigate through. But you know,
Speaker 1: obviously it's gonna be a close call. Well It's it's funny, Mark,
Speaker 1: because there's once again, there's this debate about what exactly
Speaker 1: is the definition of a recession. You know, if you
Speaker 1: boil it down to the most simplest form, people tend
Speaker 1: to say, well, two quarters of negative GDP growth, which
Speaker 1: we might actually get for the first half of this year.
Speaker 1: But then everyone else says, well, now, the the National
Speaker 1: Bureau of Economic Researchers, Uh, they're the ones who decide
Speaker 1: if it's a recession, but they have a long list
Speaker 1: of other items. Are you pretty comfortable um in sort
Speaker 1: of wrapping your head around what it takes for the
Speaker 1: m b e R to declare recession or is there
Speaker 1: some wiggle room there? Is there some sort of qualitative
Speaker 1: elements with that that would allow them to say, yeah,
Speaker 1: this one doesn't count, you know, especially you know, especially Mark,
Speaker 1: when you think of this job market. We still have
Speaker 1: eleven million job openings in this country. You know, is
Speaker 1: it you know, two quarters of negative growth? Uh? Yeah, yeah,
Speaker 1: I mean it's worked in the past. It correlates very
Speaker 1: well with the decisions by the academics sitting on the
Speaker 1: Business Cycle Dating Committee of the National dar of Economic Research.
Speaker 1: But you know, GDP is like one thing they look
Speaker 1: at and I only even think at the top of
Speaker 1: the list of things that they look at, I mean,
Speaker 1: it's employment, it's income less transfer payments, it's manufacturing and
Speaker 1: trade sales. There's a lot, a lot of different indicators
Speaker 1: that they gave. They look at the gauge. What you know,
Speaker 1: whether this feels like saying, by the way, the way
Speaker 1: they define a recession, I think it's right now. I'm
Speaker 1: gonna paraphrase, so I don't got I don't know the
Speaker 1: wording exactly right, but don't get the get the gist
Speaker 1: of it. It's a broad based, persistent decline in economic activity.
Speaker 1: Lots of wiggle room there in that definition. No, I
Speaker 1: don't what we experienced the first half of the years
Speaker 1: that is not a recession. I mean, can't create were
Speaker 1: creating what we created four or five a dozen jobs
Speaker 1: on average per month in the first half the year.
Speaker 1: And I think the if you look at layoffs, you know,
Speaker 1: as measured by a claims round employment insurance, I think
Speaker 1: that's at a record law in the first half of
Speaker 1: the year. I mean, it's just that's not a recession.
Speaker 1: And I don't think they'll call not that, you know,
Speaker 1: a recession isn't dead ahead that you know, obviously there's
Speaker 1: a lot of risk, but that what we've experienced so far,
Speaker 1: that's a non recession. And here's a here's an intrepid
Speaker 1: forecast for you. You have to ask me back, you know,
Speaker 1: five years from now. But once we get all the
Speaker 1: GDP revisions in and GDP gets revised, you know, it's
Speaker 1: an imprecise representation of reality like most data. But once
Speaker 1: it gets you know, revised with all of the data
Speaker 1: that comes available, my guess is, uh, these declines could
Speaker 1: get completely Q one. That decline may not get completely
Speaker 1: borrowsed away, but Q two, if we get a small decline,
Speaker 1: I'm guessing that gets revised away. I just don't think
Speaker 1: it's it's accurately representing what's going on. And there's a
Speaker 1: lot of reasons to suspect that, given that the pandemic
Speaker 1: has created havoc with you know, all the different economic
Speaker 1: statistics that we look at. Yeah, I also wonder, Mark,
Speaker 1: does it really matter whether Recession Dating Committee says yes,
Speaker 1: it's a recession, No it's not. You know what, what
Speaker 1: difference does it really make? Well, obviously makes a political
Speaker 1: difference that I mean, besides that, I'm just trying to
Speaker 1: think because there's some bond covenant somewhere that's triggered. You know,
Speaker 1: anything like that. I'm at a loss for you know,
Speaker 1: if whether there's a material distinction between well it feels
Speaker 1: like a recession and someone you know, rubber stamping and saying, yes,
Speaker 1: this is technically a recession. You know what I mean? Yeah,
Speaker 1: I mean policy probably, you know, policy probably if they
Speaker 1: come out if the business cycle dating committees that came
Speaker 1: out and said recession started in January, Uh, you know,
Speaker 1: that might uh light of fire under policy makers and
Speaker 1: they say, oh, maybe we need to do X, Y
Speaker 1: and z, so it might have some impact there. There
Speaker 1: are some interesting line up that you bring it up.
Speaker 1: There's efforts uh to codify where we are in the
Speaker 1: business cycle for different types of economic policy. So you know,
Speaker 1: for example, of unemployment rises by a certain amount over
Speaker 1: a certain period of time, then you automatically trigger you know,
Speaker 1: supplemental unemployment ssurance benefits or some other form of benefit.
Speaker 1: You know, we have these automatic whether we call automatic
Speaker 1: stabilizers in the federal budget, things that help the economy
Speaker 1: out when it's not doing well. But you could you
Speaker 1: could reinforce those out of automatic stabilizers by you know,
Speaker 1: pegging two recession dates or something like that. But that's
Speaker 1: not the case now. But you're right. I mean, you're
Speaker 1: right whether the recession began in March or April or May,
Speaker 1: you're right. I don't, I don't. It matters a whole
Speaker 1: lot to the in the grand scheme of things. So Mark,
Speaker 1: when you downgraded your GDP growth outlook, I think you
Speaker 1: said odds remain that the economic expansion will continue. And
Speaker 1: I wanted to ask you what specifically you were thinking there.
Speaker 1: Was it the jobs figures we were just talking about,
Speaker 1: or what goes into that thought? Well, bunch of stuff,
Speaker 1: But I'll name one thing. The thing that that that
Speaker 1: I take the most soulless in is that, in my mind,
Speaker 1: the firewall between a continuing growing economy and a recession
Speaker 1: is the American consumer. American consumer hanks tough, just do
Speaker 1: their part, you know, spend like they've always been spending,
Speaker 1: will avoid a recession. And by the way, if the
Speaker 1: American consumers hanks tough, they'll they'll keep the global economy
Speaker 1: moving forward as well. You know, some parts of the
Speaker 1: global economy will go in but you know, the US
Speaker 1: consumers kind of driving the train, right now. And if
Speaker 1: you look at the American consumer and pretty good chick.
Speaker 1: I mean, obviously they're getting hammered by the high inflation
Speaker 1: right now, but you know they've got a lot of
Speaker 1: excess saving they built up during the pandemic, and just
Speaker 1: cross all income groups. For the typical American household, by
Speaker 1: my calculation, they as of June had seven eight thousand
Speaker 1: dollars and excess savings. So if I'm paying five more
Speaker 1: a month for the for the higher inflation, and I
Speaker 1: have seven eight thousand dollars in nextless saving, you can
Speaker 1: do the arithmetic. That buys me a little bit of time, right,
Speaker 1: I can use that excess saving to supplement my income
Speaker 1: to compensate to offset the ill effects of the high inflation.
Speaker 1: That is low, That service burdens are about as low
Speaker 1: as they've ever been. That services, what share people's income
Speaker 1: is going to servicing their debt, interest payments, principal payments.
Speaker 1: That's pretty close to a record low. People have locked
Speaker 1: in the previously low record interest rates through refinancing way,
Speaker 1: so they're very insulated from the higher rates. The stock
Speaker 1: prices are down, but house prices are up. People are
Speaker 1: wealthier today, particularly middle American households are more wealthy today
Speaker 1: than they were a year ago, and a lot more
Speaker 1: wealthy than they were three or five, ten years ago.
Speaker 1: So I can go on. But that just gives me
Speaker 1: a sense that the consumers are gonna they're gonna hang tough, uh,
Speaker 1: and they're gonna continue and just not They're not gonna
Speaker 1: They're not gonna spend with abandoned they haven't been doing that.
Speaker 1: But if they just simply spend at a rate that
Speaker 1: they have consistently done in recent history pre pandemic, uh
Speaker 1: and up and through the pandemic, I think we should
Speaker 1: be able to get through this without you know, going
Speaker 1: into a full blown recession. So number that's at the
Speaker 1: very top of the tippity top of reasons. Why you know,
Speaker 1: I'm still saying when I say that with intrepidation, I
Speaker 1: don't want to sound Pollyannish. Obviously, my recession odds are
Speaker 1: pretty high, uncomfortably high. But but nonetheless, I you know,
Speaker 1: that gives me some confidence that you know, again, with
Speaker 1: a little bit of luck on the pandemic and the
Speaker 1: Russian invasion and some death policymaking, we come make we
Speaker 1: can make our way through without an actual recession. Yeah,
Speaker 1: I think you're from the note I read, your recession
Speaker 1: probability is like in the next twelve months, in the
Speaker 1: next twenty four months. You know, if you look at
Speaker 1: like a recession probability index that is that's alarmingly high.
Speaker 1: You know, they get that. I mean, I'm very and
Speaker 1: I again I go back to the sentiment, it's just
Speaker 1: very very dark consumers. You saw the small business UH
Speaker 1: survey from the National feuure at Fish Independent Business. I
Speaker 1: think that did that hit a kind of all time lower,
Speaker 1: pretty close lower than even the teeth of the pandemic. Yeah,
Speaker 1: it's very low. I don't know if it hit the record,
Speaker 1: but yeah, yeah, it's say, are you guys feeling it's well,
Speaker 1: let's say the the vibes recession? I think I like that.
Speaker 1: Have you heard that vibes recently? Mark? I wanted to
Speaker 1: get back to that. You know, you you touched on
Speaker 1: the home price that this amazing acceleration in home prices
Speaker 1: we've seen over the last uh two years. Um. Obviously,
Speaker 1: everyone I've talked to UH says, well, housing cool off.
Speaker 1: The financial systems on much better footing than it was
Speaker 1: in the days of subprime liar loans and whatnot, and
Speaker 1: and this you know, structured finance that got out of
Speaker 1: control in the in the mortgage market. But I can't
Speaker 1: help but wonder if we are in for a pretty
Speaker 1: nasty cooling off of the housing market. Um. And given
Speaker 1: its importance to your point to sort of household net worth,
Speaker 1: to the labor market, when you're talking about uh, new
Speaker 1: home construction, to the retail market, when you're talking about
Speaker 1: people buying and selling homes and and doing uh home
Speaker 1: improvement projects, it should such an important component of the economy.
Speaker 1: What what does housing look like to you in the
Speaker 1: next year too, um? And sort of what are the
Speaker 1: potential ripple effects of it? Uh, potentially cooling off on
Speaker 1: the rest of the economy. Oh no, it might gets
Speaker 1: cooling off. It's going into deep freeze pretty fast here. Uh.
Speaker 1: You know, mortgage rates at just north of or just
Speaker 1: south of six percent, almost double what they were a
Speaker 1: year ago at their all time low. And you you know,
Speaker 1: you just take that higher interest rate, you multiplied by
Speaker 1: the higher house price, and you look at the monthly
Speaker 1: payment that the first time homebuyers facing, it's you know,
Speaker 1: five more now than it was a year ago. That's prohibitive.
Speaker 1: So first, some homebuyers are locked out of the market,
Speaker 1: and trade of buyers are kind of locked in, right,
Speaker 1: because the average rate on outstanding mortgage is given all
Speaker 1: the reefinancing I talked about earlier, is three and a
Speaker 1: half to four percent. So if you sell your home
Speaker 1: and buy another one and get a mortgage, you're going
Speaker 1: from three and a half four to six. That's a
Speaker 1: big increase in payment. So people just aren't going to
Speaker 1: do that. Uh. So you're seeing home sales come down dramatically,
Speaker 1: you know already, and listings are starting to I mean
Speaker 1: I follow different markets across the country and I can
Speaker 1: you know, I get listings email to me, and I
Speaker 1: can just feel it. I can just see the list
Speaker 1: of if I go back, you know, six months ago
Speaker 1: there was nothing, no no inventory. But now the lot
Speaker 1: the list is getting longer and longer and longer. And
Speaker 1: I expect house prices h to parts of the country
Speaker 1: to fall, and particularly the most the areas where prices
Speaker 1: have been duced the most. Uh you know, in the
Speaker 1: pandemic in the southeast in Florida. Um, you know, except
Speaker 1: my home in Verreau that should be problem. Um, it's
Speaker 1: always it's always Florida for some reason. The house it's
Speaker 1: always Florida. You know, the Mountain West. You can draw
Speaker 1: a line. I now know how to pronounce Boisey, Boisey,
Speaker 1: wondering Boisey down to Phoenix. You can draw a line
Speaker 1: and go few hundred miles on either side. Um, so
Speaker 1: I expect some price to clients are nationwide. We might
Speaker 1: be able to sneak through with prices just essentially going
Speaker 1: flat here for a couple of three years and let
Speaker 1: household incomes and rents and construction costs kind of catch up.
Speaker 1: But there is no recession. If we get into recession,
Speaker 1: then I think that's gonna put real downward weight on house.
Speaker 1: Person will see some national house persus claims. But but
Speaker 1: I'll but I'll say two other things about this one.
Speaker 1: This is by design, right, The Federals is raising interest
Speaker 1: rates to slow growth, and that happens through the most
Speaker 1: rate sensitive sectors of the economy. Housing is the single
Speaker 1: most interest rate sensitive sector of the economy. So this
Speaker 1: is not, you know, a big surprise, that's exactly what
Speaker 1: you would expect. And second, I don't expect the prices
Speaker 1: to crash because the lending the mortgage lending that's been
Speaker 1: done since the financial crisis and the collapse in housing
Speaker 1: back over a decade ago has been fat I'm on
Speaker 1: the board of directors of I should disclose this of
Speaker 1: m g I C and nationwide publicly traded mortgage insurer,
Speaker 1: and UM on the chair of the Risk Committee. So
Speaker 1: I look underwriting very carefully, and you know, it's been
Speaker 1: pristine since the collapse. And the other thing is it's
Speaker 1: all plain vanilla. You know, thirty year, fifteen year fixed
Speaker 1: rate pre paigal mortgage is nothing fancy, no no adjustable
Speaker 1: rate to your subprime. And just so, I just don't
Speaker 1: see the stresses here to result in a big sharp
Speaker 1: decline in prices. But you know, prices going flat nationwide
Speaker 1: and down in fair share markets. Yeah, I would. I
Speaker 1: would anticipate that, and I would say that's that's that's
Speaker 1: that's exactly what the FED wants to see. Well, actually, Mark,
Speaker 1: I wanted to ask you to speak a little bit
Speaker 1: more about that, like which areas are the most at
Speaker 1: risk across the country. I know you had said recently
Speaker 1: that from coast to coast will be seeing housing prices
Speaker 1: coming down overall. What is the downside risk for housing.
Speaker 1: How bad can things get and where specifically? Yeah, no
Speaker 1: more session Again, I think national prices HASH prices expectively
Speaker 1: go flat here over the next two, three, maybe four years.
Speaker 1: That means big parts of the country you're gonna experience
Speaker 1: meaningful price declines. So in the most uh juice markets
Speaker 1: where I expect the biggest price corrections because of affordability,
Speaker 1: primarily because of affordability, that would be in the southeast
Speaker 1: and in the West. So the poster child would probably be,
Speaker 1: you know, like a Charlotte, North Carolina, a Tampa, Florida. Uh,
Speaker 1: you know, a Phoenix, Arizona, a Boise, Idaho. And it's there.
Speaker 1: You know, it fundamentally goes to affordability, right, because prices
Speaker 1: have risen so far, so fast in these markets, and
Speaker 1: you you add in these higher mortgage rates and you
Speaker 1: just simply people just simply can't afford to buy the home.
Speaker 1: Doesn't make you know, they just can't come up with
Speaker 1: a monthly payment that they need, and so that means
Speaker 1: prices have to come in. Now, I will say it
Speaker 1: may take a bit of time for prices to come
Speaker 1: in because people have in their minds what they think
Speaker 1: their home is worth. You know, the in real estate
Speaker 1: at turning points like this, seller's and buyers go into
Speaker 1: kind of like a kabuki dance trying to figure out
Speaker 1: what real value is, and that takes a little bit
Speaker 1: of time transaction stop. That's why I think home sales
Speaker 1: are gonna be getting crushed on while they're gonna be weak,
Speaker 1: But it takes a little bit of time for them
Speaker 1: to figure out value price transact and for that to
Speaker 1: show up in the data. So it may take you know, six, twelve,
Speaker 1: eighteen months before this all shows up. The other thing
Speaker 1: I throw into the mix is and some of these
Speaker 1: most juiced markets we have seen uh more flipping going on,
Speaker 1: which is not surprising. Something meaning uh investors that come
Speaker 1: in and buy a property with the intent of selling
Speaker 1: it rapidly. You know, the ie buyer, for example, will
Speaker 1: be kind of an institutional flipper, and they have infected
Speaker 1: some markets like a Phoenix is the best example. That Raleigh, Charlotte, Atlanta,
Speaker 1: those Florida markets again and as a result, you know,
Speaker 1: they'll get wrong out and that means they'll you'll see
Speaker 1: bigger price declines in those in those parts of the country.
Speaker 1: But you know, I know you're you're primarily focused on
Speaker 1: the US, so this might be a little bit of
Speaker 1: a curve ball. But now, Mike, I my remits you know,
Speaker 1: pretty wide, not that I you know, I'll give you
Speaker 1: my three cents about almost anything so far away, all right, good, good,
Speaker 1: well three euro cents, which is is parody's parody these days.
Speaker 1: So but I you know, I can't help but think
Speaker 1: about temperatures getting cooler, and Europe and the Russia tension escalating,
Speaker 1: and the possibility of the gas getting turned off or
Speaker 1: at least threatened to be turned off. A lot of
Speaker 1: people are talking about that these days, I know, for
Speaker 1: for someone like you, who you know, is based in
Speaker 1: data and and history and all that, it's it's got
Speaker 1: to be tough to sort of all of a sudden
Speaker 1: incorporate of Vladimir Putin type of character into your you
Speaker 1: know how you're thinking about the future. But um, how
Speaker 1: big of a risk is that some sort of you know,
Speaker 1: es relation of tensions between Russia and Europe that causes
Speaker 1: an even bigger energy crisis there? And and what is
Speaker 1: what are the sort of global spillover risks of that?
Speaker 1: I mean, obviously I'm guessing they're pretty bad. All around.
Speaker 1: But but how are you thinking about, um, sort of
Speaker 1: the fall and winter, uh, and Europe and and and
Speaker 1: this conflict really showing no signs of abating. Yeah, good point.
Speaker 1: And by the way, just because you've made reference to
Speaker 1: this earlier, you know the reason why, in my view,
Speaker 1: economists got, including me, inflation wrong, because we got the
Speaker 1: pandemic wrong, and we got Russia wasn't even on the
Speaker 1: radar screen, you know, this time last year. Right. So
Speaker 1: and when I say the pandemic, we got the vaccines
Speaker 1: a little over a year ago. Remember President Biden say,
Speaker 1: go enjoy your families on July four. We thought the
Speaker 1: pandemic was behind us. But delta was literally already a
Speaker 1: problem and create all kinds of havoc, and particularly in
Speaker 1: Asia with the supply chains. Again, so the surprise isn't
Speaker 1: inflation per se, a price was just the pandemic. And
Speaker 1: and of course what Putin has done in Russia, which
Speaker 1: has been you know, incredibly debilitating, you know, to the
Speaker 1: global economy and really a problem for Europe because they
Speaker 1: depend so much Europeans, uh, continental Europeans in particular on
Speaker 1: Russian uh energy. Um, you know, there's a lot of
Speaker 1: other links agriculture and metals and and the technology and
Speaker 1: all kinds of things. But you know, the the energy
Speaker 1: has been very very secondvance, not just oil, but even
Speaker 1: more importantly is natural gas for some of these countries.
Speaker 1: And I think, I think, I think if I think
Speaker 1: like this, right, Germany gets its natural gas from from Russia,
Speaker 1: and they really rely on the natural gas for not
Speaker 1: only home heating, but for their industry. And you know,
Speaker 1: for Germany that's less a locomotive for the EU economy,
Speaker 1: and they a lot of it is industry's it's a
Speaker 1: vehicle industry for example, that really relies on on uh,
Speaker 1: it really drives the train and and uh and you
Speaker 1: know Obvio really struggling with this. So I do worry
Speaker 1: about that. And there's a lot of script to be
Speaker 1: written here, right. I mean, the EU, the European Union
Speaker 1: sanctioned Russian oil back in early June. By the way,
Speaker 1: that's why gas prices prices with skyward and gas prices
Speaker 1: at their record high in June. And that's what we're
Speaker 1: seeing in today in this week's CPI report, you know,
Speaker 1: this week's CPI report. Uh. But but I do worry that, uh,
Speaker 1: you know, going forward that they actually implement the sanctions
Speaker 1: and stop buying. Right now, they said they're gonna sanction,
Speaker 1: but they're still buying the oil. So it's oil still
Speaker 1: getting into the marketplace. But what happens if they actually
Speaker 1: stopped buying or the Russians turn it off, all prices
Speaker 1: will go right back up again. And that, don't, you know,
Speaker 1: obviously create a lot of part or what are the
Speaker 1: Russians turn off that natural gas? You know that they
Speaker 1: don't just stop pumping the natural gassion shipping it through
Speaker 1: the pipelines to Germany, and that would send the European economy,
Speaker 1: you know, deeply in recession. So yeah, I think that's
Speaker 1: a real Obviously Europe is if our recession risks are high,
Speaker 1: there's our I'd be surprised if they're able to avoid recession.
Speaker 1: It's gonna be very, very difficult, and that does reverb
Speaker 1: rate back on us. Now. Fortunately, the US economy remains
Speaker 1: uh quite uh insulated. You know, we're were we have globalized,
Speaker 1: uh but we when we do the arithmetic, we still
Speaker 1: are mostly a domestically driven economy, consumers and US businesses
Speaker 1: driving growth. So we can navigate through to some degree.
Speaker 1: But you know, Europe and UM and emerging economies are
Speaker 1: in recession, and you know, the dollars going skyward, and
Speaker 1: our experts are weakening, and we're sucking in a lot
Speaker 1: of imports, which we've been doing. That makes it very
Speaker 1: difficult for us to avoid recession as well. Anything I
Speaker 1: just add to the mix. I don't know if I
Speaker 1: mentioned this, but you know, it's not only about oil
Speaker 1: and natural gas. You know, it's about refining capacity and
Speaker 1: gasoline and diesel and jet fuel, and refining capacity is
Speaker 1: paper thin. We just don't have. We're running out a
Speaker 1: hundred percent. So if anything that disrupts that, you know,
Speaker 1: all prices may not go up, but gas prices, jet
Speaker 1: fuel prices, diesel prices may and now that will do this,
Speaker 1: that will do the same damage to our economy. So
Speaker 1: something else to worry about. Oh good, something else to
Speaker 1: worry about. I did ask. We haven't even got through
Speaker 1: a hurricane season, so there's there's that to worry about. Three.
Speaker 1: Finding capacity I have. I have one more question about
Speaker 1: the housing market for you, because you focus on that
Speaker 1: quite a bit. I wanted to ask you how how
Speaker 1: you think rates can go. Well, I think we're seeing
Speaker 1: the high point in rates right now. Uh, in a
Speaker 1: well functioning economy in the When I said that, an
Speaker 1: economy that is it full employment, inflation at target, uh,
Speaker 1: growing at its potential. Fixed mortgage rates thirty year loan
Speaker 1: should be five and a half percent that you know,
Speaker 1: give or take. That's where we are today, five and
Speaker 1: a half percent. So I think we kind of race
Speaker 1: will go up and down and all around, depending on
Speaker 1: recession concerns, inflation worries, what the FETE is doing. But
Speaker 1: I think we're going to settle in about where we
Speaker 1: are today, give or take. And so I think the
Speaker 1: adjustment in the mortgage market in terms of rates has
Speaker 1: has happened very very quickly, and uh, you know obviously
Speaker 1: that's why the market's kind of seizing up here, is
Speaker 1: trying to adjust to these higher rates that came out
Speaker 1: of nowhere and rose very rapidly. But I think five
Speaker 1: and a half percent it's kind of i'd say, my
Speaker 1: kind of rule of some of where rates should be
Speaker 1: long run, and that's where we're going to settle in here.
Speaker 1: Going park again, it could go higher, you know, for
Speaker 1: lots of different reasons. It can go lower if we
Speaker 1: go into recession. But five and a half is roughly
Speaker 1: where we're going to settle in. Speaking of interest rates, smart,
Speaker 1: let me squeeze one more in before we get to
Speaker 1: to crazy things. But obviously the Bann and I and uh,
Speaker 1: honestly most of us here at Bloomberger obviously market nerds,
Speaker 1: as you know. And one thing everyone's fixated on these
Speaker 1: days is the yield curve inversion. We have rates on
Speaker 1: two year treasuries uh today on Wednesday, as we're recording
Speaker 1: something like twenty basis points higher than ten year rates. Um,
Speaker 1: many believe, uh that is sort of a slam dunk
Speaker 1: precursor of a recession. Do you pay much attention to
Speaker 1: the yield curve and it's predictive value as an economist,
Speaker 1: I didn't. I put a lot of weight on it.
Speaker 1: So you know, it's twenty basis points today in four
Speaker 1: or five days that ten two year has been inverted.
Speaker 1: That's not enough if that's the end of the story
Speaker 1: to signal to me that the economy signaling definitely, economy
Speaker 1: is gonna slow, but it's you know, and really kind
Speaker 1: of stall come to stall speed at some point over
Speaker 1: the next year, six twelve months. But I don't I
Speaker 1: don't think it's signaling yet that we're going into recession before.
Speaker 1: If we stay down twenty basis points in twenty I thirty,
Speaker 1: and we stay there for a few weeks a month,
Speaker 1: then uh yeah, my forecast will probably change. I'll probably
Speaker 1: adopt a recession forecast from the baseline because I think
Speaker 1: that is a very prescient indicator of future economic downturns.
Speaker 1: It's it does a very good job of kind of
Speaker 1: pegging things. There's a lot of situation behind it which
Speaker 1: we can go into. But it's you know, it's it's
Speaker 1: not just a statistical result. There is there is there
Speaker 1: is actual intuition behind why that is such a good
Speaker 1: predictor of future future. Yeah, quickly, let's let's get into
Speaker 1: that real quickly. The sort of cause and effect of it.
Speaker 1: Is it just a tightening in credit conditions when you
Speaker 1: know the near term rates are higher than long term rates. Yeah,
Speaker 1: I mean that's the that's one way of thinking about it.
Speaker 1: I mean, the credit is the mother's milk of economic activity.
Speaker 1: Too much credit, you've got a problem. You get the
Speaker 1: financial crisis. Not enough credit you sees up kind of
Speaker 1: the period after the financial crisis. You need a you know,
Speaker 1: a steady flow of credit to businesses and households to
Speaker 1: keep the kind I mean moving forward. And if they
Speaker 1: curve inverts, that means the financial system can't make money
Speaker 1: or hard to make money. Right, because banks and other
Speaker 1: financial institutions fund themselves with short term money. They take that,
Speaker 1: they lend it long and get that higher interest rate
Speaker 1: they work. They benefit from that that net interest margin
Speaker 1: or that spread. So when the curve inverts, they can't
Speaker 1: do that. Their margin is gone, and therefore they're less
Speaker 1: likely to extend credit and that causes the economy, businesses,
Speaker 1: households to kind of slow up their activity and lays
Speaker 1: the foundation for recession. Is more of a signaling intuition,
Speaker 1: and that is just bond investors, right. So bond investors
Speaker 1: they see they have a view of what the Fed's
Speaker 1: gonna do, and in this environment, the Fed has been
Speaker 1: crystal clear what it's gonna do, so no no ambiguity.
Speaker 1: That is reflected in the two year yield. And right
Speaker 1: now they're saying I'm gonna jack up interest rates very aggressively.
Speaker 1: You can see that in the higher two year yield,
Speaker 1: and then the bond investors say, oh, well, that's definitely
Speaker 1: going to slow the economy. Put just intercession, bring inflation down. Therefore,
Speaker 1: I think I'm going to do well buying a longer
Speaker 1: term bond like a tenure bond, so that drives down
Speaker 1: the tenure heel. So if it gets inverted, that reflects
Speaker 1: both the bond investors expectation of what the FED is
Speaker 1: going to do and what they think is that's all
Speaker 1: going to do to the economy going forward. And that's
Speaker 1: that's bond investors are. You know, this is books that
Speaker 1: put their money where their mouth is, right, so they're
Speaker 1: really thinking about these things. And so I think, you know,
Speaker 1: we should pay attention to what they're saying. Great stuff,
Speaker 1: Mark really really appreciate it. And Uh, one thing we
Speaker 1: pay attention to around here, vildonna is do you know
Speaker 1: what we know where I'm going the craziest things in
Speaker 1: the market. I got predictable, craziest, craziest. I remember I
Speaker 1: used to call it weirdest for for such. You think
Speaker 1: after a hundred or so podcasts you'd get it right
Speaker 1: by now, But yeah, I still can't. Yeh can't affriendiate.
Speaker 1: I've got a good one. In honor of Mark Sandy
Speaker 1: of Moody's first will you guys come up with one
Speaker 1: every week? Oh my gosh, you must like a day
Speaker 1: trying to figure this out. Actually, this one was easy
Speaker 1: for me because it was just the most interesting story
Speaker 1: to me. It's not actually so much markets related, but
Speaker 1: close enough, so I'm going to give myself a pass.
Speaker 1: But it's a Boomark story story called Eat the Rich
Speaker 1: Popsicles draw NYC crowd opining on musk Twitter. So there's
Speaker 1: an ice cream truck in New York City and this
Speaker 1: guy is selling popsicles of faces of elon musk Jack, Ma,
Speaker 1: Bill Gates, like all these people. It's the whole stunt
Speaker 1: is called Eat the Rich, and I guess people gathered
Speaker 1: bought ice cream pops The only thing is each popsicle
Speaker 1: is ten dollars. I guess there's inflation and ice cream too.
Speaker 1: Ice cream truck driver is gonna I haven't musk face pop.
Speaker 1: I don't actually the faces. I maybe we can tweet
Speaker 1: tweet out a picture or something the face. Some of
Speaker 1: the faces were like spot on, you can tell it's
Speaker 1: Bill Gates has little glasses. Ten bucks for Bill Gates
Speaker 1: pops class. It have to be a hot day for
Speaker 1: me to chuck out ten bucks. How about you, Mark,
Speaker 1: you see anything crazy this week? Well, I'm gonna go
Speaker 1: back to my home and virea. Uh this is crazy
Speaker 1: to me. I don't know, And I think it's symptomatic
Speaker 1: of the craziness according to Zillo, And I think we
Speaker 1: all look at Zillo. I tend to look at Zillo
Speaker 1: when prices are going going down, but I have been
Speaker 1: looking a lot in the last couple of years because
Speaker 1: my according to Zillo, my home and bureau is literally
Speaker 1: doubled in price a few years in two years. Now
Speaker 1: crazy Now, how accurate to you think Zelo is these days?
Speaker 1: Back in the day, I feel like it was pretty off,
Speaker 1: but it's gotten better to you think, Uh, yeah, you know,
Speaker 1: I don't think that's what my home is gonna transact
Speaker 1: at that price, But I think it's in the ballpark,
Speaker 1: right because they can transaction level data you can do there.
Speaker 1: You can do a pretty good job with the transactions
Speaker 1: that I actually occurred. So I think it's it's reasonably accurate.
Speaker 1: But but nonetheless that's not I don't you know, I
Speaker 1: don't I'm not expecting that I can sell that house
Speaker 1: at that price. That is crazy. Sell now, Sell now?
Speaker 1: I said, that's why I love that home. I'm not
Speaker 1: selling but yeah, well all right. My crazy thing is actually, uh,
Speaker 1: someone someone's famous home, someone famous, someone who's famous is
Speaker 1: how don't you know how to say that? I'm tongue
Speaker 1: twisted famous person, famous person's home. First of all, Donna,
Speaker 1: I have to ask you, do you know the name
Speaker 1: of Elvis Presley's home in Tennessee? Mark? I know you
Speaker 1: know it? What is it? Oh? Wait? Shoot, I should
Speaker 1: have watched to give you a hand. Is also a
Speaker 1: great Paul Simon album in the eighties? Yeah right, I
Speaker 1: know you guys are both this Graceland right now. What
Speaker 1: I did not know about grace Land and Mark? Maybe
Speaker 1: you knew this set at Moody's. I know you guys
Speaker 1: are heavy into the municipal bond market. There are MUNI
Speaker 1: bonds attached to Graceland. The City of Memphis and the
Speaker 1: County of Shelby, Tennessee have issued Moody bonds to sort
Speaker 1: of restore and make improvements to it. Um Unfortunately, they defaulted.
Speaker 1: The MUNI bonds on Elvis's homes defaulted. So I talk
Speaker 1: about rock and roll being dead, I think that's you know,
Speaker 1: that's your biggest sign right now, did rate those bonds?
Speaker 1: I'm sure they did. I'm sure they did. I would
Speaker 1: imagine they did. I don't know. I'll have to I'll
Speaker 1: have to look at that. I'm very, very curious. This
Speaker 1: is all based on a calm by our own MUNI expert,
Speaker 1: Joe Mysak, who is, uh, you know, one of the
Speaker 1: best columnists on this space around. Uh. I don't think
Speaker 1: he got into uh any of the ratings on him.
Speaker 1: But Mark, as you may or may not know, I
Speaker 1: like to turn this part into a game of prices, right.
Speaker 1: So my Sack in his column says he uses the
Speaker 1: yearly attend in dance at of Graceland as sort of
Speaker 1: a benchmark for other MUNI bonds around the country that
Speaker 1: are based on some sort of attraction like this, whether
Speaker 1: you know, a county wants to open a museum or
Speaker 1: something like that, and they're they're selling mooney bonds to
Speaker 1: to purchase it. I think I can't imagine Dolly has
Speaker 1: a MUNI attached. Maybe I don't know. Maybe I think
Speaker 1: that's all Dolly's money that went into that um. But
Speaker 1: so his line of thinking is if some county somewhere
Speaker 1: is floating a Muni bond based on the prospect of
Speaker 1: attendance at museum or whatever the attraction is. Grace Lands
Speaker 1: his his sort of benchmark. Okay, if they're expecting to
Speaker 1: do better than grace Land and it's yearly attendance, he's skeptical.
Speaker 1: U if they're somewhere below it, he sort of hears
Speaker 1: them out. So the game show today is what do
Speaker 1: you think the yearly attendance at Graceland was in nineteen
Speaker 1: part of me not last year before the pandemic. We
Speaker 1: can ask my wife. She's lurking in the shadow. I
Speaker 1: have no idea. Why an Elvis fan? Are you an
Speaker 1: Elvis fan? Her dad was? Her dad was all right,
Speaker 1: have her guest for you. Will spousal guests grace Land
Speaker 1: attendance in twenty nineteen, Yeah, full your attendance. Should I
Speaker 1: go first? Or Mark? Would you like to go first?
Speaker 1: I'm very bad at guessing this, so I'm going to
Speaker 1: go with I'm guessing this number is much higher than
Speaker 1: I would ever imagine. I'm keeping a poker face. I'm
Speaker 1: not going to tell I'll go with fifteen million, fifteen million,
Speaker 1: fifteen millions. Oh my gosh, is that too high? Can
Speaker 1: I revise. Thats like a lot of people. True already, Okay, Mark,
Speaker 1: Mark could be playing you here, could be if you
Speaker 1: playing with you, Yeah, he could. He could be one revision,
Speaker 1: one revision. Okay, two million, two million? Mark, what's your guests?
Speaker 1: Remember prices, right, rules are in effect. What's your guests
Speaker 1: for the yearly attendance at Graceland in two thousand prices? Right? Thing?
Speaker 1: But I'll take a guess. I'll say three hundred thousand,
Speaker 1: five hundred and thirty four thousand, four for the year
Speaker 1: of nine. So wins? Okay? Yeah, Well I just multiplied
Speaker 1: a thousand times the number of days in the year.
Speaker 1: Take a few vacation days, because how many people can
Speaker 1: actually go through a home in one day? Fifteen million,
Speaker 1: I think is I'm not going to see the foot
Speaker 1: traffic at Aldona's place sometimes looking back there, I just
Speaker 1: figured it's some absurd number because the stakes are so high.
Speaker 1: If this is the benchmark, all right, But his point
Speaker 1: is that, you know, if you think you can beat
Speaker 1: Graceland numbers of half million a year, you know six
Speaker 1: what is your action to, uh well, six flags? You know,
Speaker 1: I don't. I don't think the ship of Jackson New
Speaker 1: Jersey has Ammuni bond to touch. No, no, but I
Speaker 1: was just thinking. I was just thinking about visitors. Yeah, okay, yeah,
Speaker 1: I think he's donna just give it up. You're never
Speaker 1: gonna get one. I didn't really want to the last
Speaker 1: a couple of weeks though. That's if it had been
Speaker 1: fifteen million, I think they wouldn't have defaulted on their bonds. Maybe, yeah,
Speaker 1: you never know, all right, I'll give it up. I'll
Speaker 1: look up Moody's writing on that one. Mark. I don't know.
Speaker 1: I think Joe would have made some hay out of
Speaker 1: it if you guys got that one wrong. So I'm
Speaker 1: guessing that you uh, maybe it went unrated. I don't know.
Speaker 1: I was a good one though, the King Elvis. But
Speaker 1: I am disappointed you couldn't remember Graceland. Oh yeah, well
Speaker 1: you know, I've forgotten more important things. I'm a millennial.
Speaker 1: Yeah you get a pass. I guess you get a pass.
Speaker 1: All right. With that said, I think that is all
Speaker 1: the time we have, uh marksany of Moody. Such a
Speaker 1: pleasure to hear your thoughts, um, especially with this important
Speaker 1: week of cp I and uh whatever comes next. Uh,
Speaker 1: We're sure you'll be right with all your predictions today
Speaker 1: and it's my goal. Mike h Yeah, I appreciate it.
Speaker 1: I really thank you so much for the opportunity. It
Speaker 1: was very, very enjoyable. Thank you. Thanks for joining us
Speaker 1: What Goes Up. We'll be back next week and so
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