Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Farrell and Lisa Brownwitz Jay Ley. We bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg
Speaker 1: dot com, and of course on the Bloomberg Terminal. Gary Gunsler,
Speaker 1: SEC Chairman and someone of uncommon academic acuity, someone even
Speaker 1: the Republicans have said, boy, does this seem to be
Speaker 1: the right guy at the right time. Interviewed by the
Speaker 1: Gentleman from Baltimore, David Rubinstein peer to peer interview and
Speaker 1: the gentleman from Baltimore joins us, sound did you guys
Speaker 1: know each other? Did you know the families years ago?
Speaker 1: We grew up in the same part of northwest Baltimore,
Speaker 1: but he's younger than me and so I really didn't
Speaker 1: know him. It's uh, it's interesting to see the path
Speaker 1: of Gary Gensler now to this point, David of an
Speaker 1: SEC facing absolutely stunning innovation. It is just mind boggling
Speaker 1: to me, the challenges ahead. What did you learn about
Speaker 1: Gensler's approach to these innovative challenges? Gary Gensler for those
Speaker 1: who don't know him, is a really really smart person,
Speaker 1: an academic superstar at at Penn, but also professor at
Speaker 1: M I T and also a very young partner at Goldman.
Speaker 1: Sachs previously headed the CFTC, now the SEC. The real
Speaker 1: challenge he has is does he need to go to
Speaker 1: Congress to get additional authority to regulate things like cryptocurrencies
Speaker 1: or can he do it with the existing authority? And
Speaker 1: I suspect he will use existing authorities because trying to
Speaker 1: get legislative approval for some of the things he wants
Speaker 1: is going to take forever, and the markets may move
Speaker 1: well past what Congress already decides to do. So I
Speaker 1: think he's going to do things administratively and see what
Speaker 1: the impact is. David tom was framing innovation as a positive.
Speaker 1: Does Gary Gensler view it as largely a positive that
Speaker 1: you do have so much money going into crypto assets? Well,
Speaker 1: I think he thinks that innovation is good. But you
Speaker 1: have to make certain that the SEC's job is to
Speaker 1: make make it clear to everybody what the facts are.
Speaker 1: They're not saying this is a good investment or this
Speaker 1: is a bad investment. They're saying here's all the facts
Speaker 1: you should have before you make a decision. But sometimes
Speaker 1: now people are not being quite accurate in his view
Speaker 1: about what the facts are, or technology is pushing people
Speaker 1: to make certain investment decisions they might not otherwise make
Speaker 1: if they really knew all the facts. So that's what
Speaker 1: his concern is. How do you police this at a
Speaker 1: time when the technology is moving more quickly than often
Speaker 1: regulators can keep up, and frankly, when the brightest minds
Speaker 1: are attracted to the biggest paychecks, seeing more in Silicon
Speaker 1: Valley or Wall Street than in Washington, d C. That's
Speaker 1: a real good question. There's no great answer for it,
Speaker 1: because the truth is you can make staggering sums on
Speaker 1: the outside out winning the regulators, and the regulators are
Speaker 1: playing catch up. So I think all you can really
Speaker 1: do is make a couple of examples of people who
Speaker 1: have made some mistakes and hope that will trickle down
Speaker 1: to other people. But it's impossible to catch all the
Speaker 1: innovations that are going on that probably the SEC isn't
Speaker 1: happy with. David an overarching question, and I say this
Speaker 1: with immense affection for say a Screenberg Bear Sterns with
Speaker 1: the buy tickets in one pocket in the cell tickets
Speaker 1: in the other pocket were now to robin hood and
Speaker 1: all have we gone too far? Have we gone too
Speaker 1: far in a search for depth of market and very
Speaker 1: narrow spreads. It maybe benefits some, but our mothers too
Speaker 1: early to say. There's no doubt that younger people are
Speaker 1: coming into the market and trading day traders, our traders
Speaker 1: and minute traders, and I don't know that they're fully
Speaker 1: informed about what they're doing. But also there haven't been
Speaker 1: gigantic losses for many people yet because the markets have
Speaker 1: been very robust. Now if if all of a sudden
Speaker 1: the markets go down, we'll see as as Warren Buffett
Speaker 1: likes to say, who's swimming without a bathing suit on? Well,
Speaker 1: tell me again about what Ginstler's approach is just in
Speaker 1: the next twelve months to dool Is the immediacy for
Speaker 1: his slow Motion agency. He's asking his staff to come
Speaker 1: up with ideas and the words. The way he operates
Speaker 1: at the CFTC and that the SEC is he has
Speaker 1: a lot of smart staff people. He asked them to
Speaker 1: deal with the challenges he asked him to deal with
Speaker 1: and come back with the recommendations. So he's waiting for recommendations,
Speaker 1: but I suspect at some point he will deal with
Speaker 1: some of the challenges like cryptocurrency. Most recently, after my
Speaker 1: interview with him, he made a speech about private equity,
Speaker 1: indicating that he thought there were some issues that have
Speaker 1: to be dealt with with the disclosure of private equity
Speaker 1: fees and so forth, and we'll see whether he regulates
Speaker 1: in that area. There's no doubt that he has a
Speaker 1: lot of authority. There's no doubt he's very smart and
Speaker 1: determined to do something as you did at the CFCC,
Speaker 1: So I suspect his tenure at the SEC will be
Speaker 1: one of activism. And there's no doubt that he's highly
Speaker 1: respected in the White House and highly respected in Congress.
Speaker 1: I have to say, David tom was talking about younger
Speaker 1: traders going into crypto assets, and I got a text
Speaker 1: for my twelve year old son this morning saying, Mom,
Speaker 1: we should buy some ethereum. It's going up fast and
Speaker 1: we'll continue. I do wonder, David Rubinstein, in your tenure
Speaker 1: in the markets, in your decades, do you think that
Speaker 1: investing has gotten more or less treacherous for investors. Well,
Speaker 1: the example you just gave as an example of reminds
Speaker 1: one of Joe Kennedy when he was getting his shoes
Speaker 1: shine and the the person shining his shoes was talking
Speaker 1: about stock tips. That's when he realized too many people
Speaker 1: in the market and he sold everything. When you're twelve
Speaker 1: year old is dealing with stock market uh gyrations. You
Speaker 1: have to wonder whether that's the top of the market,
Speaker 1: but there's no doubt that, uh the market is much
Speaker 1: more complicated today than it ever was, and technology is
Speaker 1: giving people certain advantages over other people and when they trade,
Speaker 1: and what the SEC is trying to do is to
Speaker 1: make sure and everybody has an equal playing field. It's
Speaker 1: not easy to do because the technology is changing hour
Speaker 1: by hour. So I think people have to really know
Speaker 1: what they're doing when they trade in the markets and
Speaker 1: recognize that it's great time to make money recently. But
Speaker 1: at some point the markets do go down and then
Speaker 1: they're gonna be some losses, and I suspect at that
Speaker 1: point you'll see investigations. David, Thank you so much, David
Speaker 1: Rubinstein with us, of course, and it is a pure
Speaker 1: to pure conversation. They've been wonderfully eclectic this year. Jordan
Speaker 1: Rochester joins us here on G ten, G five, maybe
Speaker 1: even G three Foreign exchange, of course, and number Jordan,
Speaker 1: let me get the dollar out of the way, because
Speaker 1: Pharrell's focused on the sterling, because he's got to get
Speaker 1: on the golf stream and come home. Jordan, I want
Speaker 1: to on the dollar. There's a persistency here. Are we
Speaker 1: at key levels of dollars strength or do we need
Speaker 1: to go ever stronger to find a critical point? Well,
Speaker 1: the question is do you think more can be priced
Speaker 1: into the FED? Do you think US inflation keeps rising?
Speaker 1: Do you think US growth out performance keeps going? Does
Speaker 1: the consumer, does the services p M I is the
Speaker 1: I M S in U s keep going up and
Speaker 1: stay at these high levels. And so far all of
Speaker 1: those things keep happening, whilst the rest of the world,
Speaker 1: especially China, having a slowdown to and that feeds through
Speaker 1: to Europe, and that leads to a European manufacturing slowdown,
Speaker 1: which we're seeing as well. Until those things change, I
Speaker 1: don't see a reason why the dollars should weaken, and
Speaker 1: so that's why we're still along the dollars here, expecting
Speaker 1: more of this appreciation to go. So Jordan's help out
Speaker 1: a lot of people with this one. The Bank of
Speaker 1: England seems to be on track to hike before the
Speaker 1: Federal Reserve, yet sterling isn't doing much. In fact, you're
Speaker 1: short sterling. Can you make sense of that for our audience?
Speaker 1: Jordan's It depends who you're selling sterling against. So I'm
Speaker 1: doing against the dollar because I think it's a nice
Speaker 1: trade off between the US and the UK both kind
Speaker 1: of about performing with inflation rising, with both both have
Speaker 1: central banks looking to raise rates. But I think the
Speaker 1: FED could have a bit more priced in than the
Speaker 1: Bank of England in the medium to long run because
Speaker 1: the UK has got a few problems with Brexit ahead.
Speaker 1: When it comes to the Euro, because the European central Bank,
Speaker 1: they've had so pretty much ten years of low interest rates,
Speaker 1: quantitative easing, low yields, they're unlikely to move as fast
Speaker 1: with the ination that's going on right now, and so
Speaker 1: that's why the pound can strengthen against the Euro because
Speaker 1: that currency doesn't have a center bank willing to take
Speaker 1: action against this inflation, where against the dollar it's tip
Speaker 1: for tap. The US pricing for the two year on
Speaker 1: the FED is pretty much the same for the Bank
Speaker 1: of England and until that changes, until there's more priced
Speaker 1: in for medium to long term growth and higher interest
Speaker 1: rates in the UK, I don't see a reason why
Speaker 1: cable should material go higher, Jordan. This is what I
Speaker 1: struggle with. I talked about this at the top of
Speaker 1: the AD, the growth inflation mix in the UK. If
Speaker 1: you ask people about it. TV Securities wrote about it
Speaker 1: in their outlook. There's a feeling that it's worse than
Speaker 1: the UK than the U S. But I look at
Speaker 1: the year ahead calls for inflation, for growth for unemployment,
Speaker 1: John and they're very very similar. What do you make
Speaker 1: of the growth inflation mix in either country. Well, in
Speaker 1: the US you've got all of the excess savings. The
Speaker 1: UK also has those excess savings, so it is quite
Speaker 1: finely balanced. But if you look at the data for
Speaker 1: the UK, there are there are problems with the supply
Speaker 1: chain that are on top of the global situation. So
Speaker 1: getting around ten to fifteen percent less ships arriving at
Speaker 1: UK ports because of the checks involved with Brexit, you're
Speaker 1: having all of the damage done from that sort of side.
Speaker 1: And then when it comes to the UK, consumer retail
Speaker 1: cells in the UK haven't gone up anywhere, nothing like
Speaker 1: the U S. So US retail sales have been much
Speaker 1: much stronger than the pre pandemic trend. UK not so
Speaker 1: much so until that dynamic changes, until we see reasons
Speaker 1: for the UK consumer to go out and shop a bargain.
Speaker 1: I don't think you've got to see that change that
Speaker 1: narrative between the UK and the US. Jordan's this is
Speaker 1: a fascinating moment at a time when Steve Rattan and
Speaker 1: we were talking about his New York Times out ed.
Speaker 1: Basically he was saying, nobody should be surprised that modern
Speaker 1: monetary theory essentially ended up with inflation. However, is what
Speaker 1: you're saying, that perhaps some of the stimulus in the
Speaker 1: United States actually gave consumers the spending power to keep
Speaker 1: the dollars strong, to basically keep the currency underpinned by
Speaker 1: economic momentum at a time when other nations, particularly the
Speaker 1: United Kingdom, is not seeing that well. To begin with,
Speaker 1: the plan was for FX markets all that all that
Speaker 1: stimulus was debt induced, so lots of issuance from the U. S. Treasury.
Speaker 1: The world had way more dollars, and we saw massive
Speaker 1: dollar weakness last year. Remember going to queue four your
Speaker 1: a dollar really went higher, but that was on the
Speaker 1: idea from all the U S economists that the FED
Speaker 1: wouldn't consider raising rates aggressively. That's changing, and I think
Speaker 1: once you introduce rate hikes into the equation in the
Speaker 1: future pricing of the curve, that sort of balance of
Speaker 1: payments argument for dollar weakness just fell through because investors
Speaker 1: seek yield, and the yields rising US much faster than Europe,
Speaker 1: So that's been part of that driver. And with monetary theory,
Speaker 1: if you get taxes, sorry, if you get inflation, the
Speaker 1: way to do it is taxes. And because of Congress,
Speaker 1: because of the sort of type line with mention of cinema,
Speaker 1: the idea of big tax rising in the US have
Speaker 1: really softened as well. So that's why we're seeing more
Speaker 1: being priced in for inflation, more being priced in for
Speaker 1: rate hikes. Jordan's what do you make of Terry Wiseman's
Speaker 1: an argument that a perceived politicization of the Federal Reserve
Speaker 1: chair nominee will actually weaken the dollar potentially lose credibility
Speaker 1: in the US Central Bank. The Fed's not gonna lose credibility,
Speaker 1: but it's kind of been political all along. So the
Speaker 1: US president has always had a choice of the FED chair,
Speaker 1: so that is that element. And remember President Trump used
Speaker 1: to tweet about Janet Ellen, so that there's always been
Speaker 1: that element of politics involved all central banks that we're
Speaker 1: talking about here. The FED included our independence, so it
Speaker 1: doesn't erode their credibility. They are trying to do the
Speaker 1: job right. But yeah, there is an element of politics
Speaker 1: when it comes to the choice of FED chair, and
Speaker 1: we can't ignore that it's chosen by a politician. Jordan
Speaker 1: found a question. What's more likely Askton Fella avoids relegation
Speaker 1: or the Bank of englond heights interest rates next month?
Speaker 1: They're both, They're both likely. Come on, that's really unfair
Speaker 1: the villa. The villa is going to survive and you
Speaker 1: think we get it hi next month. To Jordan's we
Speaker 1: definitely get a hike. I think they mean it's pretty
Speaker 1: much priced, so that's not really a big call. The
Speaker 1: question is do we see more rate hikes than what's
Speaker 1: priced him for the rest of the year, And that's
Speaker 1: getting tough. That's why we're short sterling because there's a
Speaker 1: hundred and fifteen basis points of rate hikes pretty much
Speaker 1: every quarter. You get a twenty five basis point rate
Speaker 1: hike in that FX curve. That's kind of that's kind
Speaker 1: of okay, but any anything more I doubt it. So
Speaker 1: that's why the risk reward is the bank thing might
Speaker 1: do less. Later on, Jordan, thank you sir as always.
Speaker 1: Jordan Rochester joining us now to kick off the equity
Speaker 1: conversation is Ben Laidler, global market strategist. That eat out
Speaker 1: of London, Ben, Santa came early this year? Is that
Speaker 1: your take? Absolutely? November December generally the strongest months of
Speaker 1: the year, but so called sort of Santa rally, we've
Speaker 1: been here. We are the middle of November. We're up
Speaker 1: from or nearly from the sell off in in September.
Speaker 1: So I think this has been very frontloaded U And
Speaker 1: you know, we the year and we never thought we
Speaker 1: were going to get here, was sitting on our card already,
Speaker 1: So you know, I I think markets are very well supported.
Speaker 1: I see, you know, got upside for next year. I
Speaker 1: would just you know, caution that, you know, maybe we're
Speaker 1: not just going to keep rallying h inexorably here. I
Speaker 1: mean we've we've I think we've already had the Saints
Speaker 1: rally and we're sitting on great gains and we I
Speaker 1: would take a little bit of consolidation the modest Ben Laidler,
Speaker 1: let me make clear, folks, No one and Global Wall
Speaker 1: Street called for three years of double digit return like
Speaker 1: Ben Laylor, He's not surprised we're up twenty five. Ben,
Speaker 1: what is the double digit call for two thousand twenty
Speaker 1: two or do we finally get to a single digit reality.
Speaker 1: I think we're gonna come pretty close to double digits.
Speaker 1: And just to put that in perspective, I mean, that
Speaker 1: would be your fourth straight year, and I think you've
Speaker 1: only ever seen that once in the last sort of
Speaker 1: fifty or sixty years, So it really we're heading into
Speaker 1: uncharted territory. But I think it's very very doable, and
Speaker 1: I think you know, the to drive us here, I
Speaker 1: think earning his expectations is just just still far too low.
Speaker 1: You know, in the US A globally there's seven eight
Speaker 1: cent for next year. I think you probably get double
Speaker 1: that when all is said and done. I think, m
Speaker 1: you know, GDP growth is nearly double long term averages.
Speaker 1: I think we're seeing the resilience of corporate margins. We
Speaker 1: have a lot of sectors, a lot of these reopening
Speaker 1: sectors that still have a long way to bounce back here,
Speaker 1: and and I think valuations are going to come down
Speaker 1: a bit, but I still think they're going to stay
Speaker 1: white higher than sort of long term averages. I think
Speaker 1: bond deals are going to go up a bit, but
Speaker 1: there's still a fraction of you know, previous some previous recoveries.
Speaker 1: And you've still got this huge text tech sector which
Speaker 1: just you know, deserves to have very high valuations. Then
Speaker 1: you said, take consolidation and a little bit around the edges.
Speaker 1: Given the fact that we've already front loaded this rally,
Speaker 1: where are you taking consolidation right now? You know, I
Speaker 1: think our you know, tech, I guess would be the
Speaker 1: obvious place. I mean when neutral tech X time sort
Speaker 1: of very well here. I mean, we had this sort
Speaker 1: of everything rally, which you know, I take a lot
Speaker 1: of comfort from, right because I think, you know, it's
Speaker 1: not the sort of one legged stool we had sort
Speaker 1: of last year. But you know, I've been sort of
Speaker 1: putting back a little bit on tech. I think that
Speaker 1: I think the near term story is this very strong
Speaker 1: growth reacceleration that that we're having. I mean, you've you've
Speaker 1: seen it in the payrolls numbers. You sat in the
Speaker 1: retail sales numbers yesterday, You've seen it in the I
Speaker 1: S M. I mean, you look at the FED now
Speaker 1: cast GENP now cast for the fourth quarter is nearly
Speaker 1: nine percent growth. We had two percent last quarter. Uh So,
Speaker 1: I think, you know, you need to be sort of
Speaker 1: pulling back on on sort of defensive things that aren't
Speaker 1: exposed to that and really focusing on the you know,
Speaker 1: the sort of cyclicals, the commodities, the industrials, the segments
Speaker 1: of the market, the reopeners that are really sensitive to
Speaker 1: this this very strong growth recovery that we're seeing. And
Speaker 1: I would also just say the markets past this huge
Speaker 1: stress test. I mean, we're all worried about inflation, we're
Speaker 1: all worried about the FED tapering, We're all worried about
Speaker 1: interest rates, and we've just had tapering an ouse when
Speaker 1: we've had a big repricing of the FED, and markets
Speaker 1: are you know, markets are yawning and many Your position
Speaker 1: for a repeat of Q one this year is that
Speaker 1: it is that the playbook. I think so, yes, I mean,
Speaker 1: I think you know, it's small cap, it's it's the
Speaker 1: reopening stocks, it's the sort of more cyclical side of
Speaker 1: the economy. You know, who's got the most sensitivity to
Speaker 1: this growth rebound that we're seeing. And I, you know,
Speaker 1: I still don't think it's priced. I mean, just more broadly,
Speaker 1: I mean the earning ex numbers are just far, far
Speaker 1: too low. You know, even after what is it the
Speaker 1: fourth quarter of you know, very strong earning speaks. We've
Speaker 1: just had the optimism of Ben Laidler of et O. Ben,
Speaker 1: thank you, sir. Right now, Sarah House joins us for
Speaker 1: senior economist at Wells ferg and we're going to rip
Speaker 1: up the script and get her in trouble. Sarah is
Speaker 1: family formation a dominant changer within the American economy. So
Speaker 1: I think the demographics are absolutely important to the overall
Speaker 1: housing outlook. So we see millennials are just entering their
Speaker 1: prime home buying years. You couple it with the pandemic
Speaker 1: and it sets us up for a strong demand to
Speaker 1: remain in train for years, especially just given the state
Speaker 1: of overall household balance sheets. You know, the excess saving
Speaker 1: that we've seen over the past year, that that helps
Speaker 1: a lot of millennials pay down debt, getting a better
Speaker 1: position for home buying. So it's absolutely important to the
Speaker 1: housing now look going forward, nicely done, but if they
Speaker 1: can't afford the damn house because of down payment, is
Speaker 1: more money than that? God, what do they do? How
Speaker 1: do you perceive house prices reacting that most of America
Speaker 1: can't find an entry point? So I think what we're
Speaker 1: seeing is is that this that the onslaught of activity
Speaker 1: that we're seeing. Okay, so maybe we didn't see a
Speaker 1: jump and starts this particular month, but you do have
Speaker 1: more homes under construction than at any time we've seen
Speaker 1: since nineteen four. You still have more permits coming down
Speaker 1: the pike, and so yes, we're seeing construction activity can
Speaker 1: change right right now by supply, but there is supply
Speaker 1: coming down the pipeline in in subsequent years, and so
Speaker 1: I think that's going to help the affordability pictures for
Speaker 1: for home buyers in the coming year. So, yes, the
Speaker 1: prices recently have gotten I think, away from many households,
Speaker 1: but I do think that we'll see some some greater
Speaker 1: balance over over the next year or two that should
Speaker 1: help that household formation and help that home buy an activity.
Speaker 1: On the flip side, Sarah, it's been really cheap to
Speaker 1: get a mortgage. It's been really cheap to borrow money
Speaker 1: for consumers, especially with longer term rate expectations as low
Speaker 1: as they are. You pointed to this, and you think
Speaker 1: that this is an aberration, that this is wrong, the
Speaker 1: market is getting this incorrectly. Are you seeing a material
Speaker 1: increase in the policy rate? The end policy rate akin
Speaker 1: to what we heard from Bill Dudley of three to
Speaker 1: four percent. So that's not our base case right now.
Speaker 1: So we do think that the Fed will begin raising
Speaker 1: the Fed funds rate by the third quarter of next year.
Speaker 1: I think the fact that they get going a little
Speaker 1: earlier than they have sketched out, I think that will
Speaker 1: help prevent that terminal rate perhaps reaching as as high. So,
Speaker 1: of course, the sooner the Fed gets started, that has
Speaker 1: the potential where they won't have to ultimately raise policy
Speaker 1: to such a restrictive stance. So right now, in our
Speaker 1: forecast that goes out through three we have about a
Speaker 1: hundred basis points of tightening. Now, given what happens with inflation,
Speaker 1: how tight the labor market gets, that that could obviously change,
Speaker 1: But for right now, um, given the mix of demand
Speaker 1: and what we see happening with that mix of spending
Speaker 1: going forward and the path of inflation. We think that
Speaker 1: the FED still doesn't have to be too aggressive in
Speaker 1: this environment, or at least they won't be too aggressive
Speaker 1: Sarah if they don't raise rates. Though until the beginning
Speaker 1: of is Morgan Stanley and TV Securities has been saying,
Speaker 1: is that a policy error? It's hard to say, because
Speaker 1: you know, while we I think everyone's pretty familiar with
Speaker 1: the risks in terms of if inflation does stay at
Speaker 1: the current levels and we don't get the moderation that
Speaker 1: I think many people many people still expect. But again,
Speaker 1: we have this, uh, we have a great likelihood that
Speaker 1: you're going to see demand slow over next year, that
Speaker 1: the mix is going to shift more towards services. That's
Speaker 1: going to relieve a lot of the pressure that we're
Speaker 1: seeing in goods inflation, which has really been the aberration
Speaker 1: in this environment where goods inflation is out of forty
Speaker 1: year high, services inflation is still well within its its
Speaker 1: range of the past thirty years. And so I think
Speaker 1: that mix is going to help. So the FED to
Speaker 1: to the extent that they get going too soon, they
Speaker 1: might overcool demand which which is already set set to
Speaker 1: slow and help alleviate some of these inflation pressures. Sir,
Speaker 1: Maybe an unfair question, but I want to take a chance.
Speaker 1: With the dynamics of this economy. How do you model
Speaker 1: when we flip to actual inflation adjusted wage growth? Where
Speaker 1: is that? Where is that soon quarters years out? So
Speaker 1: it's probably going to be somewhere in the back half
Speaker 1: of two. So we have inflation saying pretty elevated through
Speaker 1: the first half of next year. So we actually have
Speaker 1: CPI hitting seven percent in the first quarter. So's eye
Speaker 1: popping as that six percent handle was. It's it's going
Speaker 1: to get worse before it gets better. But I think
Speaker 1: by the time you get to the second half of
Speaker 1: the year again, inflatian comes down. I think wage growth
Speaker 1: remains fairly strong. Given that on net we're going to
Speaker 1: see a tighter labor market than I think the FED
Speaker 1: and many others expected. That's going to keep wage growth
Speaker 1: fairly strong and help those real earnings turn positive again. Sarah,
Speaker 1: I want to end the conversation where we began it
Speaker 1: talking about the housing market and the incredible growth in
Speaker 1: the supply of homes that will be coming online, and
Speaker 1: it raises a question about I don't want to say bubbles,
Speaker 1: but this question of froth and whether perhaps this period
Speaker 1: has ignited not only supply in the pipeline, but also
Speaker 1: just elevation, elevated valuations that cannot be sustainable. Can we
Speaker 1: avoid a crash? Can we avoid a policy error? That
Speaker 1: is what a lot of people are worried about with
Speaker 1: the FED. So I think in terms of the housing markets,
Speaker 1: so the price the rate of price increases we've seen
Speaker 1: over the past year, or they're up nearly it certainly
Speaker 1: is concerning when we just look at it in a
Speaker 1: sure sheer price growth, you know, so it's it's surpassing
Speaker 1: the rate of growth that we saw in the bubble years.
Speaker 1: But I think the quality of buyers is very different
Speaker 1: when you look at the credit scores, and so I
Speaker 1: think that helps this picture. You mentioned the low rates.
Speaker 1: That helps in terms of raising the actual prices of
Speaker 1: these homes because it helps mitigate that the effect of
Speaker 1: that on on payments and so um, you know, I
Speaker 1: think there's there's definitely some some concerns out there in
Speaker 1: the housing market, but I think is um, you know,
Speaker 1: we're we're not at this point thinking that it's it's
Speaker 1: going to add and in the ugly way that we
Speaker 1: saw maybe in in the in the mid two thousand's
Speaker 1: Sarah tremendous as a white Senter house there of Wells Fargo.
Speaker 1: It could get worse before it gets bets out. This
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