WEBVTT - Day One, Part Two from Future Proof Festival 0:00:02.600 --> 0:00:07.680 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.240 --> 0:00:12.639 This is Bloomberg Business Week inside from the reporters and 0:00:12.800 --> 0:00:16.360 editors who bring you America's most trusted business magazine, plus 0:00:16.440 --> 0:00:20.360 global business, finance and tech news as it happens. Bloomberg 0:00:20.440 --> 0:00:25.520 Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio. 0:00:28.040 --> 0:00:30.480 Hi, everyone, this is Bloomberg Business Week of Carol Masser 0:00:30.480 --> 0:00:33.120 along with Barry Ridholts, who just said, did you smell that? 0:00:33.240 --> 0:00:33.920 What was that? 0:00:33.920 --> 0:00:37.080 That's hamburger, some sort of Meatia is grilling. It's delicious. 0:00:37.080 --> 0:00:38.560 Somebody has not had right. 0:00:38.960 --> 0:00:40.800 I'm late for my noon feeding. 0:00:41.400 --> 0:00:44.680 Barry Ridholts. He's chairman and chief investment officer Ridthelt's Wealth Management. 0:00:44.720 --> 0:00:47.840 I'm Carol Masser, of course of Bloomberg Business Week. Barry 0:00:47.840 --> 0:00:50.200 of course hosts of Masters in Business and at the Money. 0:00:50.680 --> 0:00:53.440 We're here at future Proof at Huntington Beach, California, and 0:00:53.479 --> 0:00:56.720 we've got an incredible sixty minutes coming up. Sarah Malik 0:00:57.720 --> 0:01:00.320 join us a little bit later on. Right now, we 0:01:00.360 --> 0:01:01.840 want to get to our first guest, and that is 0:01:01.880 --> 0:01:04.679 Pria Misra who's with us. She's a portfolio manager of 0:01:04.680 --> 0:01:07.919 global fixed income currency and Commodities at JP Morgan Asset 0:01:07.959 --> 0:01:10.800 Management joining us here at future Proof. How are you. 0:01:11.360 --> 0:01:13.959 I'm great, this is beautiful. Thanks for having me. 0:01:14.040 --> 0:01:16.120 Well, thanks for being here. I know, I just we 0:01:16.160 --> 0:01:18.120 always talk about taking the show outside, you know, when 0:01:18.160 --> 0:01:20.000 you're in college, You're like, let's take on this is 0:01:20.040 --> 0:01:20.559 what we are. 0:01:20.480 --> 0:01:22.399 Doing today from your outside. 0:01:23.319 --> 0:01:25.360 So I want to ask you about the elections because 0:01:25.400 --> 0:01:27.840 we have some reporting and it noted that a Kamala 0:01:27.880 --> 0:01:30.760 Harris victory in the elections is seen as better for 0:01:30.880 --> 0:01:34.240 treasuries worse for stocks than a win for Donald Trump. 0:01:34.240 --> 0:01:37.080 This was a Bloomberg Terminal subscriber survey. Are you thinking 0:01:37.080 --> 0:01:40.040 about the elections and what it means for the investment 0:01:40.120 --> 0:01:42.119 universe and what does it mean in your view? 0:01:42.640 --> 0:01:46.160 So we are all we're all definitely thinking about the elections. 0:01:46.160 --> 0:01:49.080 It's a big election. It's a very close election. But 0:01:49.120 --> 0:01:51.280 I'll make a couple of points. You know, the presidency 0:01:51.320 --> 0:01:54.640 is clearly extremely important, but Congress is very important to 0:01:54.640 --> 0:01:57.480 get a lot of things done, you know, or not done, 0:01:57.640 --> 0:02:01.920 because the twenty seventeen cuts are likely to expire if 0:02:01.960 --> 0:02:04.920 Congress doesn't do anything. So beyond the presidency, we're looking 0:02:04.920 --> 0:02:08.280 at the Senate races, the House races, so the entirety 0:02:08.480 --> 0:02:11.200 of the election is going to be important. Secondly, there's 0:02:11.200 --> 0:02:13.280 a lot of policies that are up in the air, 0:02:13.360 --> 0:02:19.160 right from tariff, immigration, you know, regulation, I talked about taxes, spending. 0:02:19.639 --> 0:02:21.480 I think it may be a little simplistic to say 0:02:21.520 --> 0:02:25.480 that one outcome is necessarily good for the economy or 0:02:25.520 --> 0:02:27.360 good for markets. I think we also have this deficit 0:02:27.400 --> 0:02:30.600 issue which is out there the other of them. For 0:02:30.720 --> 0:02:33.640 either of them exactly, whether it's spending or it's taxes 0:02:34.360 --> 0:02:37.840 or tariffs, they all have fiscal implications. I mean, what 0:02:37.880 --> 0:02:40.200 I'll say is, as I manage our portfolio, is one 0:02:40.240 --> 0:02:42.400 our position for one way or the other. It really 0:02:42.520 --> 0:02:44.920 from a risk awards standpoint, Given that the election is 0:02:44.919 --> 0:02:46.880 won by not a lot of forty thousand votes or 0:02:46.880 --> 0:02:50.680 one hundred thousand votes, we're talking not about, you know, 0:02:51.600 --> 0:02:53.960 a very clear dividea. So I would say it's best 0:02:54.000 --> 0:02:57.280 not to position before the election, to see the election 0:02:57.440 --> 0:03:01.519 outcome and then to see what, you know, what policies 0:03:01.520 --> 0:03:04.240 are prioritized. Is it going to be taxes first? Is 0:03:04.280 --> 0:03:06.400 it tariffs first, which is going to have a very 0:03:06.400 --> 0:03:09.000 different implication. There's also so I would say when we 0:03:09.040 --> 0:03:11.280 look at the election and the outcome on markets, I 0:03:11.280 --> 0:03:13.560 look at the impact on growth and inflation. I look 0:03:13.600 --> 0:03:16.080 at the impact on the deficit. And then what I 0:03:16.120 --> 0:03:19.400 really hope is FED independence, you know, remains, But that 0:03:19.520 --> 0:03:21.160 is I don't think we should take that for granted. 0:03:21.480 --> 0:03:22.919 Is there any impact there, because that's going to have 0:03:22.960 --> 0:03:25.680 an impact on treasuries as a safe haven, the dollar 0:03:25.760 --> 0:03:27.600 is a safe have and these are all things which 0:03:27.639 --> 0:03:30.640 require an independent center bank. So there's a lot. But 0:03:30.680 --> 0:03:32.000 I would say it's. 0:03:31.680 --> 0:03:34.399 Sad for independence. You really are concerned. 0:03:34.600 --> 0:03:37.640 I am a little concerned. I mean, we've seen this 0:03:37.760 --> 0:03:40.280 little bit before. And I think now with the fact 0:03:40.280 --> 0:03:42.880 that you know the FED was late in hiking rates, 0:03:43.280 --> 0:03:45.119 are they going to be late in cutting rates? They're 0:03:45.120 --> 0:03:47.280 about to embark on a cutting cycle. And if we 0:03:47.360 --> 0:03:50.600 have the President or Congress talk too much about what 0:03:50.800 --> 0:03:54.640 about FED policy, it's not great to inspire confidence in 0:03:54.680 --> 0:03:57.720 the US capital markets, and we need we need foreign investments. 0:03:57.760 --> 0:03:59.880 And as the FED cut rates, I actually think for 0:04:00.360 --> 0:04:02.600 will look at US fixed income, they'll look at the 0:04:02.680 --> 0:04:06.440 US equity market. So I do hope that that FED 0:04:06.480 --> 0:04:09.120 independence remains. I think it's something we should keep at 0:04:09.120 --> 0:04:10.720 the back of our mind as we think about market 0:04:10.760 --> 0:04:11.880 implications of the election. 0:04:12.360 --> 0:04:15.680 So the Fed has taken rates high enough that money 0:04:15.720 --> 0:04:19.440 market funds are yielding over five percent. They now stand 0:04:19.600 --> 0:04:23.120 over six trillion dollars. That's a lot of money. What 0:04:23.240 --> 0:04:26.320 happens as the FED begins to cut rates, where does 0:04:26.440 --> 0:04:28.920 that capital go looking for yield? 0:04:29.160 --> 0:04:31.880 Sure And that's the question I would say every asset 0:04:31.920 --> 0:04:34.960 management person, every wealth manager salivating at the thought of 0:04:35.000 --> 0:04:39.200 that six trillion. Historically, that money does move once the 0:04:39.240 --> 0:04:42.080 FED starts to cut rates, starts to move first into 0:04:42.080 --> 0:04:45.880 fixed income and then into risky assets. But here's the catch. 0:04:46.200 --> 0:04:49.240 We're in a soft landing, and soft landing rate cuts 0:04:49.279 --> 0:04:52.400 are rare. So can we apply the Historically the Fed 0:04:52.440 --> 0:04:54.800 is cutting in a recession, so the money moves into 0:04:54.800 --> 0:04:57.640 fixed income because well, equities might look a little scary 0:04:58.040 --> 0:05:00.279 this time round. If the soft linding is maintain, and 0:05:00.320 --> 0:05:02.880 that's a that's an if. I think there's a case 0:05:03.240 --> 0:05:05.480 we're in a good spot. If the Fed was to 0:05:05.480 --> 0:05:08.440 cut rates quickly enough, we might stay in that soft landing. 0:05:08.480 --> 0:05:10.279 We have a chance. It's a narrow path, but I 0:05:10.279 --> 0:05:13.240 think there's a chance we stay there. I think that 0:05:13.320 --> 0:05:16.240 money moves into different asset classes, not all of it. 0:05:16.440 --> 0:05:19.960 There is a reason people own cash, liquidity, cash management, 0:05:20.279 --> 0:05:23.400 but a certain portion of it, especially as you realize 0:05:23.560 --> 0:05:26.159 that there's reinvestment risk. That money is not going to 0:05:26.160 --> 0:05:28.360 stay at five percent. As the Fed cut rates and 0:05:28.600 --> 0:05:32.000 forwards are arguing for a little below three percent, that 0:05:32.040 --> 0:05:34.520 cash is going to give you three percent. As people 0:05:34.560 --> 0:05:36.840 start to internalize that, and I think the FED cutting 0:05:36.920 --> 0:05:39.960 starts that, that money then in a soft landing, moves 0:05:39.960 --> 0:05:45.440 into equities, credit and government bonds. If the economy slows down, 0:05:45.480 --> 0:05:47.279 I think you're going to see more into fixed incomes. 0:05:47.320 --> 0:05:50.800 So there's a bit of a bifurcated outlook for that 0:05:50.920 --> 0:05:53.400 money depending on how the economy evolves from here. 0:05:53.680 --> 0:05:58.320 So it's interesting when the FED was raising so a 0:05:58.400 --> 0:06:01.760 longer duration bonds get a little with punished. Twenty twenty 0:06:01.760 --> 0:06:04.240 two is a tough year if the Fed is starting 0:06:04.279 --> 0:06:06.839 on a longer cycle of rate cuts, and some people 0:06:06.880 --> 0:06:09.680 have talked about high three low four percent is where 0:06:09.680 --> 0:06:12.040 they end up. What do you do with your duration? 0:06:12.160 --> 0:06:15.440 Where do you want to have your bonds? What sort 0:06:15.480 --> 0:06:17.640 of longevity you're looking for in the whole things. 0:06:17.760 --> 0:06:20.960 Sure, I think bonds finally give you income. So I 0:06:21.040 --> 0:06:23.640 joke that fixed income finally has income in it, which 0:06:23.720 --> 0:06:26.160 is good real income. You know, not only are you 0:06:26.200 --> 0:06:29.559 getting that nominal income, but net of inflation, you're actually 0:06:29.600 --> 0:06:34.480 earning real returns. The other thing bonds are giving us diversification, 0:06:34.839 --> 0:06:37.359 which you talked about twenty two, is the opposite of 0:06:37.400 --> 0:06:42.520 diversification because risk assets struggled and bond struggled. That's changed. 0:06:42.520 --> 0:06:44.120 And actually you don't have to take my word for it. 0:06:44.160 --> 0:06:46.279 Look at the last couple of months, just the last 0:06:46.360 --> 0:06:50.320 two payroll reports that come in a little weaker than before, 0:06:50.880 --> 0:06:53.240 and this fear of a hard landing or a recession 0:06:53.320 --> 0:06:57.480 starts to come up. Risk assets struggle and bonds do 0:06:57.560 --> 0:07:01.200 really well. So you talk about longer term perspective, I 0:07:01.200 --> 0:07:05.200 think there's a lot of TALC that has happened. That 0:07:05.240 --> 0:07:08.640 sixty forty is dead. No, sixty forty is back, because 0:07:08.680 --> 0:07:12.360 that fixed income component is giving you that diversification. So 0:07:12.840 --> 0:07:15.320 we've actually been adding to it. Because we're in a 0:07:15.360 --> 0:07:18.440 soft landing. We have risk assets in the form of spread, 0:07:18.520 --> 0:07:22.600 high quality, investment grade, high yield spread, securitized spread. Owning 0:07:22.680 --> 0:07:25.320 some duration is a good hedge if the economy starts 0:07:25.360 --> 0:07:28.800 to slow down, our spread products will underperform. But then 0:07:28.840 --> 0:07:31.720 that treasury long and we're long intermediate. I think the 0:07:31.720 --> 0:07:33.800 two year doesn't give you that much. You start to 0:07:33.840 --> 0:07:36.440 go long fives and tens. We should not worry that 0:07:36.520 --> 0:07:38.480 much about whether they go twenty five or fifty. Let's 0:07:38.480 --> 0:07:41.840 look at the totality of cuts. Exactly where they end 0:07:41.920 --> 0:07:44.200 up is right around three percent. We're not pricing in 0:07:44.240 --> 0:07:46.640 a recession. So if we do get into a recession 0:07:46.880 --> 0:07:49.720 at that point the Fed's cutting to two percent one percent, 0:07:50.120 --> 0:07:52.400 there's a lot of room from in terms of price 0:07:52.440 --> 0:07:55.960 appreciation for that duration. So I like adding duration. We're 0:07:56.000 --> 0:07:59.640 buying any backups any election related You talked about elections, 0:07:59.680 --> 0:08:03.160 I bring up any election related volatility, supply and auction 0:08:03.280 --> 0:08:06.920 that doesn't go well. Anytime interstrates rise, I think it 0:08:06.920 --> 0:08:10.040 should be viewed as a buying opportunity to add that duration, 0:08:10.440 --> 0:08:12.560 especially if you've got risk assets on the other side 0:08:12.600 --> 0:08:13.320 of your portfolio. 0:08:13.400 --> 0:08:14.880 All right, we're going to leave it on that note. Pria, 0:08:14.920 --> 0:08:17.280 thank you so much. Really enjoyed having you. Pria Mizra 0:08:17.760 --> 0:08:20.960 joining us. Of course, Global fixed income, Currency and Commodities 0:08:21.160 --> 0:08:24.280 portfolio manager at JP Morgan Asset Management. Thank you so much. 0:08:24.320 --> 0:08:26.120 Prank you. Hey, folks, I just want to bring you 0:08:26.200 --> 0:08:29.480 some headlines from Intel. We do have just crossing the 0:08:29.520 --> 0:08:34.440 Bloomberg terminal. It looks like Intel, specifically the company CEO 0:08:34.559 --> 0:08:39.480 has landed Amazon as an AWS customer for the company's 0:08:39.480 --> 0:08:43.480 manufacturing business, potentially bringing work to new plants under construction 0:08:43.640 --> 0:08:46.440 in the United States, boosting his efforts to turn around 0:08:46.480 --> 0:08:50.320 the embattled chip maker. So we're seeing some headlines there. 0:08:50.360 --> 0:08:52.880 I thought I saw one other headline also to pause 0:08:52.920 --> 0:08:58.240 Poland Germany factory projects by about two years. So we 0:08:58.320 --> 0:09:00.400 know the woes. We've talked about it a lot. I 0:09:00.480 --> 0:09:03.280 highly recommend that you check out some of the reporting 0:09:03.280 --> 0:09:06.400 that's being done by Ian King that really talks about 0:09:06.720 --> 0:09:08.840 how this has been long and coming. Intel shares though 0:09:08.880 --> 0:09:11.599 on these headlines, folks, in the aftermarket, we're seeing the 0:09:11.640 --> 0:09:14.800 stock pop around eleven percent here, so we'll continue to 0:09:14.880 --> 0:09:16.760 watch that, all right. Want to get back to future 0:09:16.800 --> 0:09:20.000 Proof Carol Masser along with Barry Ridtholtz here and want 0:09:20.040 --> 0:09:22.319 to get to an interesting guest, Christian Phase. 0:09:22.440 --> 0:09:24.640 Hi, Kristin, Hi, thanks for having me. 0:09:24.640 --> 0:09:26.680 Well, thanks for being here. He's founder and CEO Faz 0:09:26.720 --> 0:09:29.360 and Company. I can describe the company, but I'm going 0:09:29.400 --> 0:09:31.120 to let you describe it. Tell us what you guys 0:09:31.120 --> 0:09:31.520 are up to. 0:09:31.600 --> 0:09:32.640 Absolutely, thank you very much. 0:09:32.640 --> 0:09:35.800 It's great to be here, great sort of venue to 0:09:35.800 --> 0:09:36.439 have a conference. 0:09:37.440 --> 0:09:39.600 So we were a private credit fund. 0:09:39.640 --> 0:09:42.199 We run a private credit fund that gives accredited investors 0:09:42.600 --> 0:09:44.760 the opportunity to get exposure to what we think is 0:09:44.760 --> 0:09:48.199 a really interesting asset class, and that's real estate bridging 0:09:48.280 --> 0:09:50.240 finance against residential. 0:09:49.679 --> 0:09:51.600 Property, something you know a little bit about. 0:09:51.800 --> 0:09:52.840 I do know a little bit about. 0:09:52.920 --> 0:09:55.280 Yeah, So I've been involved in the sector for almost 0:09:55.320 --> 0:09:58.640 twenty years. Originally was a lawyer. Grew up in Australia, 0:09:58.679 --> 0:10:00.360 which you might be able to tell from my accent. 0:10:01.120 --> 0:10:02.200 Spend time over in London. 0:10:02.360 --> 0:10:04.600 Spend time in London. Yeah, so recovering lawyer as well, 0:10:04.600 --> 0:10:08.280 Barry so happy to be a lawyer. 0:10:08.320 --> 0:10:12.679 That's half of the lawyers aren't practicing seven years after graduation. 0:10:12.960 --> 0:10:15.760 Why is it that? Because another podcast that's. 0:10:15.679 --> 0:10:18.240 A whole nother conversation. So what sort of real estate 0:10:18.320 --> 0:10:21.040 you guys focus on? Is it just residential or is 0:10:21.040 --> 0:10:22.360 it a variety of sectors? 0:10:22.360 --> 0:10:25.679 No, it's residential. So we're very careful to explain that 0:10:25.679 --> 0:10:28.760 to to investors. Obviously, there's parts of the real estate 0:10:28.800 --> 0:10:31.280 market that are quite troubled and instead of making headlines 0:10:31.320 --> 0:10:35.720 like commercial and different parts. But we're small, balanced, single 0:10:35.760 --> 0:10:38.480 family residential. Our average loan size is four hundred and 0:10:38.520 --> 0:10:41.280 fifty thousand dollars, So it is kind of really targeting 0:10:41.280 --> 0:10:45.200 what we describe as property entrepreneurs buying the worst house 0:10:45.240 --> 0:10:48.880 on a nice street, replacing the bathrooms, kitchen, and then 0:10:48.960 --> 0:10:51.559 selling for the flip. Right, Yeah, it's fix and flip. 0:10:51.559 --> 0:10:54.080 It is fix and flip finance, and you know, it's 0:10:54.120 --> 0:10:55.880 a big market in the US. It's a big opportunity. 0:10:55.960 --> 0:10:58.599 Like you're saying, I've done it, built a business in 0:10:58.640 --> 0:11:01.000 the UK, there was very active in the fixed and 0:11:01.040 --> 0:11:04.000 flip market. That's now the largest non bank mortgage lender 0:11:04.000 --> 0:11:06.560 in the UK and now being active in the US 0:11:06.640 --> 0:11:07.480 for the last two years. 0:11:07.520 --> 0:11:08.880 And it's a huge market here. 0:11:09.000 --> 0:11:10.920 I did the investors who are like constantly sending me 0:11:11.000 --> 0:11:12.520 texts and saying I want to buy your house? Are 0:11:12.559 --> 0:11:14.360 these the people that you like are dealing no. 0:11:15.200 --> 0:11:15.600 All the time? 0:11:15.679 --> 0:11:17.840 Right, I get those on houses I don't even know them. 0:11:17.880 --> 0:11:20.440 I'm like, yes, send me, you definitely want to sell 0:11:20.440 --> 0:11:22.119 that one, right, here's. 0:11:21.880 --> 0:11:24.240 My price, and it's like you know some crazy number, 0:11:24.360 --> 0:11:27.040 you want it, it's yours, but no, tell me, like 0:11:27.040 --> 0:11:27.840 like we're dealing with. 0:11:27.960 --> 0:11:29.920 We describe them as property entrepreneurs. I mean, I think 0:11:29.960 --> 0:11:31.880 that it's a bit of a misnomer because a lot 0:11:31.880 --> 0:11:34.120 of people turn on the TV and see the glamorous couple, 0:11:34.160 --> 0:11:36.400 you know, flipping houses making lots of money, and it 0:11:36.440 --> 0:11:39.439 all looks quite easy. It's not that. In reality, it 0:11:39.440 --> 0:11:42.240 is kind of they're real hustlers. They have to work hard, 0:11:42.720 --> 0:11:46.200 and we target property professionals. They're they're doing this full time, 0:11:47.240 --> 0:11:49.880 and they do it multiple times a year, so five, 0:11:50.000 --> 0:11:52.600 ten times a year, and so they're good customers for us. 0:11:52.600 --> 0:11:54.800 Once we acquire them, we can be their funding partner 0:11:54.840 --> 0:11:58.360 of choice. They keep coming back to us and so yeah, 0:11:58.400 --> 0:12:02.720 so it's a very entrepreneurial boro but product. 0:12:02.880 --> 0:12:06.240 So my brother has been doing this for years, right, 0:12:06.440 --> 0:12:08.520 sort of a side hustle, but he does four or 0:12:08.520 --> 0:12:12.760 five houses a year, and the conversation has always been, hey, 0:12:12.760 --> 0:12:16.160 I'm funding this primarily with my own money. I asked him, 0:12:16.160 --> 0:12:19.480 have you thought about getting venture funding or any sort 0:12:19.520 --> 0:12:22.120 of credit for this? Because you could turn this into 0:12:22.200 --> 0:12:25.080 eight or ten houses a year if you really want to. 0:12:25.120 --> 0:12:28.440 And it's some of these houses are fairly it's not 0:12:28.520 --> 0:12:32.040 always the worst house in a nice block. Sometimes it's 0:12:32.040 --> 0:12:33.800 a very nice house on a really nice block. 0:12:33.880 --> 0:12:35.360 Yeah. Yeah, well, I'll have to give you my number. 0:12:35.400 --> 0:12:36.840 You can give to your brother for afterwards. 0:12:37.000 --> 0:12:38.600 We see the ideal happening. 0:12:39.160 --> 0:12:41.720 I proved people that are not trying to sort of 0:12:41.720 --> 0:12:44.640 maximize leverage. So the average LTV across our books less 0:12:44.640 --> 0:12:47.360 than sixty percent, so they're pretty conservative. But with a 0:12:47.360 --> 0:12:49.280 bit of leverage, they can do a couple of projects 0:12:49.320 --> 0:12:51.400 as opposed to being exposed to just a few, you know, 0:12:51.480 --> 0:12:54.439 the lesser number, and there's a lot of tailwinds for 0:12:54.480 --> 0:12:57.160 the asset class. You know, there's just fundamentally not enough 0:12:57.200 --> 0:12:59.559 houses being built here in the US, the same as 0:12:59.559 --> 0:13:00.560 in many arts of the world. 0:13:00.640 --> 0:13:02.920 Yeah, but that's a whole other story because it's in 0:13:03.000 --> 0:13:05.120 terms of, you know, acquisition of land and you've got 0:13:05.120 --> 0:13:07.000 to get neighborhoods to sign on. It's not just a 0:13:07.040 --> 0:13:09.640 case of here's the money, and it's not. 0:13:09.559 --> 0:13:10.400 Just a funding issue. 0:13:10.400 --> 0:13:12.760 But then the other sort of addition to that is 0:13:12.800 --> 0:13:15.320 that over sixty percent of housing stock in the US 0:13:15.400 --> 0:13:17.480 is over forty years old, so you do have a 0:13:17.480 --> 0:13:20.199 lot of aging stock that does need to be referbed. 0:13:20.840 --> 0:13:22.679 And so with not enough housing stock and a lot 0:13:22.720 --> 0:13:25.720 of older stock in the market, you know, refirbing is 0:13:25.800 --> 0:13:27.720 kind of is something that's very much needed. 0:13:27.800 --> 0:13:29.240 Something I've got to ask you though, and I'm curious 0:13:29.240 --> 0:13:30.800 about what your brother says, is that you know, there 0:13:30.800 --> 0:13:33.240 are people who want to do projects. There aren't plumbers, 0:13:33.240 --> 0:13:37.160 there aren't electricians, there aren't contractors. There isn't a younger generation. 0:13:37.480 --> 0:13:39.920 I have two contractors in the family too, and but 0:13:39.960 --> 0:13:41.840 there is not a younger generation who wants to do 0:13:41.880 --> 0:13:42.600 this kind of stuff. 0:13:42.679 --> 0:13:44.600 Yeah, definitely, and I think through COVID that's been a 0:13:44.600 --> 0:13:47.560 difficult time as well. You know, costs even crease, yeah 0:13:47.640 --> 0:13:50.000 even still, Yeah, it's tough. And also you don't have 0:13:50.040 --> 0:13:51.640 a lot of end borrowers that want to take a 0:13:51.679 --> 0:13:55.640 seven percent mortgage to buy the end product. So it's 0:13:55.760 --> 0:13:57.839 kind of a time of disruption. I kind of see 0:13:57.880 --> 0:14:00.160 that as a time of opportunity in many respects. You know, 0:14:00.480 --> 0:14:03.080 banks aren't active in this market. They're just not really 0:14:03.080 --> 0:14:06.400 equipped to provide the quick sort of streamline finance that 0:14:06.440 --> 0:14:09.080 we provide, and so you know, so I think it's 0:14:09.360 --> 0:14:12.079 a great opportunity for investors to get a superior risk 0:14:12.120 --> 0:14:15.800 adjusted return against what is a relatively liquid underlying asset class. 0:14:15.880 --> 0:14:18.560 So you're talking about the age of the housing stuff. 0:14:18.960 --> 0:14:21.000 Did I get this right? Sixty percent of the homes 0:14:21.000 --> 0:14:24.240 for forty years old or older. Yeah, So we're talking 0:14:24.280 --> 0:14:27.080 about referbs. I see a lot of knockdowns in some 0:14:27.160 --> 0:14:29.960 of the neighborhoods, either by my house or out by 0:14:29.960 --> 0:14:32.200 the beach or anywhere else. It seems like a lot 0:14:32.200 --> 0:14:34.680 of contractors are just, hey, let's not fix this, let's 0:14:34.720 --> 0:14:35.720 just build a bigger one. 0:14:35.960 --> 0:14:36.160 Yeah. 0:14:36.600 --> 0:14:37.760 Is that a space you work in? 0:14:37.800 --> 0:14:38.040 Also? 0:14:38.320 --> 0:14:38.920 So we don't. 0:14:38.960 --> 0:14:42.320 So we think that a ground up construction is quite 0:14:42.360 --> 0:14:46.400 a significantly higher risk proposition to be investing in. So 0:14:46.480 --> 0:14:48.720 we try and focus just on fix and flip where 0:14:48.720 --> 0:14:51.440 it's not sort of it's not sort of changing the 0:14:51.440 --> 0:14:54.440 construction of the bill. It's really just a tartup and 0:14:54.480 --> 0:14:56.480 then an opportunity to sell because we want it to 0:14:56.520 --> 0:14:58.480 be quick. You know, it's twelve months or less in 0:14:58.560 --> 0:14:59.560 duration our funding. 0:15:00.520 --> 0:15:01.240 Well, that's quick. 0:15:01.320 --> 0:15:03.200 It is quick. Yeah, but you know the typical borrow 0:15:06.200 --> 0:15:06.640 a little bit. 0:15:07.280 --> 0:15:09.760 Yeah, but it's it's quick, and that's that helps the 0:15:09.880 --> 0:15:13.480 underlying investors because it's it's there's a lot of volume 0:15:13.520 --> 0:15:14.720 of loans underlying. 0:15:14.880 --> 0:15:17.600 So what's the relationship between you and the fixer flipper? 0:15:18.120 --> 0:15:20.920 Is it just a credit relationship? Do you do anything 0:15:20.920 --> 0:15:22.840 with them? How do how does a participation work? 0:15:22.960 --> 0:15:24.960 So it's a direct relationship. So I think that's one 0:15:24.960 --> 0:15:26.880 of the advantages of our fund as well. We're not 0:15:26.920 --> 0:15:29.640 sort of buying loans originated by other originators. We have 0:15:29.720 --> 0:15:32.440 a direct borol relationship. That means we're very close to 0:15:32.440 --> 0:15:35.000 the underlying credit. You know, we can sort of understand 0:15:35.000 --> 0:15:37.480 what that borrow's true circumstances. 0:15:36.800 --> 0:15:38.720 Are, Like, you want to make sure this works. 0:15:38.840 --> 0:15:40.440 We want to make sure it works. Yeah, And it's 0:15:40.440 --> 0:15:43.200 a relationship lend. You know, we ideally want to be 0:15:43.840 --> 0:15:45.960 the preferred funding provider. They come to us, once they 0:15:45.960 --> 0:15:48.160 have a good experience, we get to know them. Once 0:15:48.160 --> 0:15:51.360 a borrow repays us, the risks around fraud and the 0:15:51.400 --> 0:15:53.320 things that sort of keep you up at night are 0:15:53.320 --> 0:15:56.200 significantly diminished. So we want to sort of be you know, 0:15:56.280 --> 0:15:58.560 finding good customers, lend to them again and again. 0:15:58.880 --> 0:16:00.240 I don't know if I missed this, did you say, 0:16:00.240 --> 0:16:02.080 what a typical loan, like, what the rate is? And 0:16:02.160 --> 0:16:04.560 I'm just curious about the returns on these investments for 0:16:04.640 --> 0:16:05.000 you guys. 0:16:05.160 --> 0:16:08.040 Yeah, sure, So I'm not sure if I'm alowed to 0:16:08.040 --> 0:16:10.600 talk about our investment returns and our fund but we 0:16:10.640 --> 0:16:13.360 offer investors a fixed return of ten percent and we're 0:16:13.400 --> 0:16:15.960 lending out at about twelve percent per random so there's 0:16:16.000 --> 0:16:18.080 a bit of a margin there for us, but it's 0:16:18.080 --> 0:16:20.560 a good sort of risk adjusted return for our investors. 0:16:20.920 --> 0:16:23.160 We say to our investors it's one percent a month. 0:16:23.320 --> 0:16:25.240 So the typical borrow does come to say I only 0:16:25.240 --> 0:16:27.000 need it for three months. Maybe it ends up being 0:16:27.080 --> 0:16:29.400 six months, but it's six percent. Is the cost of 0:16:29.440 --> 0:16:31.480 the funding for them. And what we say to the 0:16:31.520 --> 0:16:33.840 borrow is if they're too tight on the margin, then 0:16:33.880 --> 0:16:36.240 they shouldn't be doing the project. You know, that's kind 0:16:36.280 --> 0:16:38.120 of just a cost of doing business for them. 0:16:38.200 --> 0:16:41.080 Traditionally in on the property the usual mortgage stuff. 0:16:41.160 --> 0:16:44.120 Firstly, in yeah, so we I mean, our head of 0:16:44.200 --> 0:16:45.280 underwriting comes from a bank. 0:16:45.480 --> 0:16:47.120 We sort of experienced team. 0:16:47.280 --> 0:16:49.200 We say, we do everything that a bank does, you know, 0:16:49.240 --> 0:16:50.720 we fi COO score the borrowers. 0:16:51.000 --> 0:16:52.800 We look to make sure that we're only. 0:16:52.640 --> 0:16:54.920 Lending to corporates, but we look through to the individuals 0:16:54.920 --> 0:16:57.480 and make sure that they're credit worthy individuals. It's full 0:16:57.520 --> 0:17:01.280 recourse against those individuals and it's firstly security against the property. 0:17:01.400 --> 0:17:03.400 Just fifteen seconds. Is there any area in the United 0:17:03.440 --> 0:17:05.800 States that's particularly hot that you're working in or is 0:17:05.840 --> 0:17:06.320 it all over? 0:17:06.520 --> 0:17:09.760 It's we're quite selective in the States. Florida is a 0:17:09.840 --> 0:17:12.040 very strong smack of frost. But it's been on the 0:17:12.040 --> 0:17:13.560 op so I guess you watch closely. 0:17:13.800 --> 0:17:13.960 You know. 0:17:14.000 --> 0:17:15.440 It's a great interview, and you still have like a 0:17:15.480 --> 0:17:17.640 million press rights, right, Christian, such great stay. 0:17:17.680 --> 0:17:18.680 I love you to match you. Thank you, Thank you. 0:17:18.840 --> 0:17:21.480 Christian Phase. He is founder in CEO Phase and Company. 0:17:21.600 --> 0:17:23.840 We're headed for a break, folks, for from future Proof 0:17:23.840 --> 0:17:25.480 with Barry and myself. This is Bloomberg. 0:17:28.720 --> 0:17:32.600 This is Bloomberg Business Week with Carol Messer and Tim 0:17:32.600 --> 0:17:34.919 Stenebeck on Bloomberg Radio. 0:17:35.280 --> 0:17:37.919 Carol Masser along with Barry Redholts, were live at future 0:17:37.960 --> 0:17:40.639 Proof having some fun Huntington Beach, California. How could you not? 0:17:41.160 --> 0:17:42.879 I want to set this up a little bit, Okay. 0:17:42.960 --> 0:17:45.400 Bloomberg news story that was recently out just last month 0:17:45.480 --> 0:17:48.400 talked about the one point seven trillion dollar private credit industry. 0:17:48.440 --> 0:17:50.240 You talk about it a lot. We talk about it 0:17:50.280 --> 0:17:53.040 a lot, how it's grown so much as higher rates 0:17:53.040 --> 0:17:55.760 are basically forced byout firms to look further afield for 0:17:55.800 --> 0:17:58.320