WEBVTT - Markets, Juneteenth, And Turks & Caicos (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.760 at Bloomberg dot com slash podcast. What is going on 0:00:23.880 --> 0:00:28.040 in markets? And I don't know how you play this? Fundamentally, 0:00:28.160 --> 0:00:29.800 I wonder how you play this if you're a quant, 0:00:29.840 --> 0:00:31.720 We'll to find out. Mak mood Arani joins us. He's 0:00:31.720 --> 0:00:36.040 a co founder of quant Insight UM and Mak mood 0:00:36.400 --> 0:00:39.960 I don't you know? The drivers have been, uh well, 0:00:40.320 --> 0:00:44.239 going in different directions. Right on Wednesday, the market rallied 0:00:44.360 --> 0:00:48.400 because the FED raised basis points, raised rates seventy five 0:00:48.440 --> 0:00:53.120 basis points. And then yesterday the markets tanked because the 0:00:53.120 --> 0:00:56.360 FED raised rates seventy five basis points. No idea, what's 0:00:56.360 --> 0:00:59.320 going on today? How do you? How do you play 0:00:59.360 --> 0:01:03.279 these markets? Okay, well I wouldn't focus too much on 0:01:03.360 --> 0:01:07.240 a single day, um, but you know what we do 0:01:07.360 --> 0:01:11.120 is we asked the data and we gather large amounts 0:01:11.160 --> 0:01:15.280 of data about what's going on with economic fundamentals, real 0:01:15.319 --> 0:01:20.520 GDP growth, inflation, financial conditions, which includes you know, real 0:01:20.560 --> 0:01:24.479 interest rates and across the corporate borrowing and how much 0:01:24.560 --> 0:01:26.880 is priced for the FED for the next twelve months, 0:01:26.920 --> 0:01:29.480 and the strength of the dollar and so on, and 0:01:29.560 --> 0:01:32.720 we connect to all that to what markets are doing. 0:01:33.600 --> 0:01:36.840 And what we've seen for several months now is that 0:01:37.360 --> 0:01:40.600 if we take the S and P five, the by 0:01:40.680 --> 0:01:45.200 far the most important driver is real interest rates and 0:01:45.800 --> 0:01:50.760 tightening of financial conditions is moving equities lower. And of 0:01:50.760 --> 0:01:54.880 course what's driving driving that tightening of financial conditions is 0:01:55.080 --> 0:02:00.840 inflation moving higher. And the FED of course move seventy five. 0:02:01.160 --> 0:02:07.840 I mean, you had almost seventy priced the day they moved, anyway, 0:02:08.040 --> 0:02:12.200 so it wasn't a massive news event to be honest. Um. 0:02:12.240 --> 0:02:15.600 And in terms of going forward, what we can see 0:02:15.919 --> 0:02:21.200 is that everything is really driven by this momentum of inflation, 0:02:21.919 --> 0:02:27.160 real interest rates, and credit spreads corporate high yield corporate 0:02:27.160 --> 0:02:30.560 credit spreads. Now the question then is what's going to 0:02:30.600 --> 0:02:33.680 shift that momentum. And I think if you put a 0:02:33.720 --> 0:02:37.280 forward looking hat on and you have this framework, that's 0:02:37.360 --> 0:02:39.239 kind of giving you a good sense for what's going 0:02:39.280 --> 0:02:43.839 on right now. Under the surface. The game that's ultimately 0:02:44.120 --> 0:02:48.320 going to be played here is markets need to get 0:02:48.400 --> 0:02:53.960 some sense that inflation has peaked. And what want yea 0:02:54.440 --> 0:02:57.320 so well exactly if inflation peaking, do you need to 0:02:57.560 --> 0:02:59.960 wait for their next read or is there other data 0:03:00.080 --> 0:03:04.480 that gets you there? Um. So, if we're looking at 0:03:04.560 --> 0:03:07.440 headline inflation, clearly you know one of one of the 0:03:07.760 --> 0:03:09.919 facts here is that if you look at long term 0:03:09.919 --> 0:03:12.600 inflation expectations, and we know the FED looks at this, 0:03:13.680 --> 0:03:18.800 those are quite closely correlated over many years to crude 0:03:18.800 --> 0:03:23.600 oil prices. So there is undoubtedly a dynamic at play 0:03:23.680 --> 0:03:27.280 that you know, if crude oil prices dropped sharply, you're 0:03:27.320 --> 0:03:31.560 going to get um inflation expectations going south, and that's 0:03:31.600 --> 0:03:35.800 going to be a comfort for the FED. Conversely, and 0:03:35.800 --> 0:03:39.119 we're starting to hear more and more about the physical 0:03:39.200 --> 0:03:44.120 energy market not working especially well, crude oil not getting 0:03:44.280 --> 0:03:47.840 to the places it needs to get to UM, and 0:03:48.040 --> 0:03:50.720 so there is this specter hanging over the market of 0:03:50.800 --> 0:03:53.840 a further increase in crude oil prices. And you can 0:03:53.840 --> 0:03:56.640 add to that the possibility of sort of China emerging 0:03:56.760 --> 0:04:01.040 from the latest kind of COVID lockdown. To add to 0:04:01.600 --> 0:04:05.080 global energy demand. And so if you do get inflation rising, 0:04:05.240 --> 0:04:08.120 that's going to move inflation expectations higher. That's going to 0:04:08.200 --> 0:04:10.240 keep the FED on edge. And you know, if you 0:04:10.320 --> 0:04:14.160 if you look at the last twenty years of hiking cycles, 0:04:14.960 --> 0:04:17.880 what the market needs to go up is essentially to 0:04:18.000 --> 0:04:21.920 get some idea of where the terminal rate is. Right now, 0:04:21.960 --> 0:04:24.719 we don't know. We're pricing sort of three and a half, 0:04:25.160 --> 0:04:28.000 but we don't really know all the FED to tell 0:04:28.080 --> 0:04:31.080 us that it's close to done. And again we're a 0:04:31.120 --> 0:04:34.600 long way from that, so markets hit on even has 0:04:34.640 --> 0:04:36.080 to be a long way from that, right, I mean, 0:04:37.839 --> 0:04:42.159 if we're looking at nine inflation um in order for 0:04:42.200 --> 0:04:45.120 the FED to get to neutral, doesn't it have to 0:04:45.160 --> 0:04:51.160 be much higher? Yes, you know, from a textbook perspective, 0:04:51.200 --> 0:04:53.000 it does have to be much higher. And that's one 0:04:53.040 --> 0:04:55.760 of the reasons the market is stratching instead and why 0:04:55.760 --> 0:04:59.200 equities couldn't really get out of bed after that, because 0:04:59.200 --> 0:05:00.840 at the end of the day, there are nowhere close 0:05:00.920 --> 0:05:04.479 to done. By the way, is it also is there 0:05:04.520 --> 0:05:08.839 also a difference this time compared to you know, the 0:05:08.960 --> 0:05:12.400 last twelve thirteen years in that there's no FED put 0:05:12.800 --> 0:05:15.720 I mean most most people are used to the FED 0:05:15.800 --> 0:05:17.360 coming in and saving the day, and they can't do 0:05:17.440 --> 0:05:20.760 that now. They can't do that because inflation is too high. 0:05:20.800 --> 0:05:23.600 You had a FED put in the past, because inflation 0:05:23.680 --> 0:05:26.280 was solo. In fact, that the underlying fear of all 0:05:26.360 --> 0:05:29.520 central banks in the decade after the financial crisis was 0:05:29.800 --> 0:05:33.479 deflation and disinflation. That was the problem. Uh. And so 0:05:33.520 --> 0:05:35.440 they were always willing to come in with the FED 0:05:35.480 --> 0:05:38.839 put because the inflation cost was very low. They weren't 0:05:38.880 --> 0:05:41.240 They didn't feel they were risking letting inflation out of 0:05:41.279 --> 0:05:44.080 the box. This time, inflation is already out of the box. 0:05:44.240 --> 0:05:46.880 The stripe on that put is a very long way down. 0:05:47.480 --> 0:05:50.960 So I don't think there's a FED put anywhere nearby. UM. 0:05:51.200 --> 0:05:54.200 And you know, the key driving here is inflation. I 0:05:54.240 --> 0:05:57.880 don't think though, that central banks, whether it's the FED 0:05:58.040 --> 0:06:01.040 or the ECB, are going to be putting too much 0:06:01.120 --> 0:06:05.360 weight on the idea of a neutral rate right now. 0:06:05.839 --> 0:06:08.479 And they're certainly not going to use spots inflation. So 0:06:08.560 --> 0:06:11.560 spot inflation might be nine percent, but you know, five 0:06:11.640 --> 0:06:16.760 year inflation expectations are more like four and a half. UM. 0:06:16.800 --> 0:06:19.320 So I don't think that, you know, the central banks 0:06:20.160 --> 0:06:25.039 know that their actions have lags and it takes time 0:06:25.080 --> 0:06:27.799 for those actions to feed through to the real economy. 0:06:28.200 --> 0:06:32.039 They don't like to overshoot their conservative institutions by their nature, 0:06:32.120 --> 0:06:34.680 and they're definitely not going to say, gee, inflation is 0:06:34.760 --> 0:06:36.799 nine percent. If I need real interest rates that there, 0:06:36.800 --> 0:06:39.000 I'm gonna I'm gonna have to put them at nine. No, 0:06:39.240 --> 0:06:41.920 they're not going to do that. Thanks so much, Thanks 0:06:41.920 --> 0:06:44.360 so much for joining us. Mak Mudnarani, their co founder 0:06:44.360 --> 0:06:47.080 of quant Insight, talking to us about UM what the 0:06:47.120 --> 0:06:52.920 market drivers is all right. Greg Jarrett there with the 0:06:52.920 --> 0:06:55.800 Bloomberg Business flash, Thanks very much for joining us. UM 0:06:55.920 --> 0:06:58.760 gas matters to some extent right now, because it's a 0:06:58.800 --> 0:07:04.880 long weekend most right, we've got Juneteenth coming up on Monday, UM, 0:07:04.920 --> 0:07:09.040 and it's a new holiday and important holiday, especially as 0:07:09.279 --> 0:07:14.560 we UH celebrate and value diversity, hopefully more UM than 0:07:14.600 --> 0:07:17.120 we have be before. Kim Crowder joins us right now, 0:07:17.120 --> 0:07:21.280 founder and see of Kim Crowder Consulting UM and Kim, 0:07:21.360 --> 0:07:26.080 let's talk first of all about what companies UM should 0:07:26.160 --> 0:07:30.560 do to avoid making a mistake. I mean, obviously you're 0:07:30.560 --> 0:07:34.720 giving employees the day off, but you're also sometimes holding 0:07:35.000 --> 0:07:38.120 um events, or allowing employees to celebrate in the way 0:07:38.120 --> 0:07:42.480 that they want. We had a really cool poetry reading 0:07:42.480 --> 0:07:44.880 in the in the cafeteria area here a couple of 0:07:44.920 --> 0:07:49.080 days ago. What what are you hearing about? Yeah? I 0:07:49.120 --> 0:07:51.960 think the biggest thing that organizations can think about when 0:07:52.240 --> 0:07:54.800 figuring out how to celebrate Juneteenth is how are they 0:07:54.840 --> 0:07:58.120 doing this beyond just the day? Right? Letting folks off 0:07:58.240 --> 0:08:02.200 is great, um all, so you know, providing information around 0:08:02.280 --> 0:08:05.320 what June tenth was that education pieces always great, but 0:08:05.360 --> 0:08:07.880 also what are they looking at around things like pay equity, 0:08:08.400 --> 0:08:10.960 What does that look like? Around leadership? Are they providing 0:08:10.960 --> 0:08:14.880 opportunities for leadership and mentorship for team members? What does 0:08:15.000 --> 0:08:19.960 visibility look like around celebration for visibility around certain projects, 0:08:19.960 --> 0:08:24.840 but also visibility around wins for team members? So how 0:08:24.880 --> 0:08:27.160 are they looking at this three and sixty five days 0:08:27.160 --> 0:08:30.560 of the year instead of just sort of this one holiday, 0:08:30.880 --> 0:08:35.480 one time, you know, in all the twelve months. One 0:08:35.480 --> 0:08:37.600 thing that's really interesting is, you know, we look very 0:08:37.640 --> 0:08:40.240 closely here at the e O one data. That's the 0:08:40.320 --> 0:08:43.760 data that really disclosures how companies are doing on diversity 0:08:43.840 --> 0:08:46.640 and inclusion goals when it comes to their own ranks 0:08:47.080 --> 0:08:50.160 and it's choppy. It's really choppy. There's some companies that 0:08:50.200 --> 0:08:53.360 have actually regressed. I'm wondering, you know, what's the push 0:08:53.440 --> 0:08:56.520 to for companies to really renew the promises they've made 0:08:56.920 --> 0:09:01.000 in terms of achieving equity. Yeah, I think the biggest 0:09:01.000 --> 0:09:03.440 thing is looking at retention internal rates. What we find 0:09:03.640 --> 0:09:07.840 is when we're working with the organization that retention rates are, 0:09:07.880 --> 0:09:10.120 it can be low, particularly when we start to look 0:09:10.160 --> 0:09:13.640 at folks wore from historically ignore backgrounds, whether they be 0:09:14.480 --> 0:09:17.959 you know, oftentimes their black employees are cycling out really quickly, 0:09:18.440 --> 0:09:23.080 and that costs organizations money. Right. Um. Also you don't 0:09:23.240 --> 0:09:26.360 get you know, there's a benefit to having someone on 0:09:26.400 --> 0:09:29.440 the team with a different perspective but also different experiences 0:09:29.720 --> 0:09:32.920 and different approaches to the work. And so workplaces are 0:09:33.000 --> 0:09:35.320 losing out on that when they're not keeping those team 0:09:35.360 --> 0:09:38.359 members in place, but also not engaging those team members 0:09:38.480 --> 0:09:41.520 or providing opportunities for them to move up. Because despite 0:09:41.559 --> 0:09:45.920 what organizations think, folks have options. Especially right now, you know, 0:09:45.920 --> 0:09:48.600 we're still in the midst of the great resignation. Um. 0:09:48.640 --> 0:09:52.920 If you follow any HR facebook uh you know facebook page, 0:09:52.960 --> 0:09:56.400 you know that HR is still looking to keep people 0:09:56.480 --> 0:09:59.480 on or even to bring people on. And so it 0:09:59.600 --> 0:10:04.000 really is important that organizations realize that it is sort 0:10:04.000 --> 0:10:07.040 of you know, no longer sort of here's this job. 0:10:07.120 --> 0:10:09.440 You should be so grateful, But employees are really pushing 0:10:09.440 --> 0:10:12.200 back and saying, I wouldn't been a workplace where I'm valued. 0:10:12.440 --> 0:10:14.200 I want to be seen, but not only that, I 0:10:14.240 --> 0:10:16.200 want to be paid. Well, I'm gonna have the opportunity 0:10:16.240 --> 0:10:19.280 to move forward. And so that's that's the approach that 0:10:19.360 --> 0:10:21.600 organizations should be taken at this point. So that's what 0:10:21.760 --> 0:10:25.640 organizations should do in terms of hiring their employees, looking 0:10:26.080 --> 0:10:30.640 UH to diversify their workforce and treat those people right, 0:10:30.800 --> 0:10:34.400 treat them equally UM. But there's more right, especially for 0:10:34.440 --> 0:10:40.760 bigger companies that have UM vendors that have third party relationships, 0:10:40.800 --> 0:10:44.360 they can look to work with black owned businesses, for example, 0:10:44.440 --> 0:10:47.280 or they can look to give contracts to UM minority 0:10:47.360 --> 0:10:52.160 run businesses. Right, that's absolutely right. And also what I 0:10:52.520 --> 0:10:55.040 would love for organizations as they're doing that is to 0:10:55.200 --> 0:10:57.800 not just go with the same few that always get 0:10:57.800 --> 0:11:01.440 the opportunity to actively look for partners who they have 0:11:01.559 --> 0:11:05.640 not necessarily engaged with. Also actively look to make sure 0:11:05.679 --> 0:11:08.000 that they're paying them equitably. Are they paying them the 0:11:08.040 --> 0:11:12.400 same way that they would pay a non black owned business. UM, 0:11:12.520 --> 0:11:15.839 Are they making sure that in their expectations that they're fair. 0:11:16.280 --> 0:11:19.840 One of the things that we see, particularly with job descriptions, 0:11:19.840 --> 0:11:22.239 and so I'm gonna make a parallel here with job descriptions, 0:11:22.600 --> 0:11:27.720 uh that black women typically are more harshly UM give 0:11:27.840 --> 0:11:31.400 received harsher criticism and job performance reviews. And if that's 0:11:31.440 --> 0:11:33.840 the case, is that translating into the way that they 0:11:33.840 --> 0:11:37.120 are working with vendors where that that sort of um 0:11:37.400 --> 0:11:43.000 natural look is more Uh, it comes with more criticizing, UM, 0:11:43.080 --> 0:11:47.680 it comes with more expectations that wouldn't be necessarily UM 0:11:47.679 --> 0:11:51.360 looked for and non black owned businesses. And so this 0:11:51.520 --> 0:11:55.040 really is a holistic viewpoint in the way that organizations 0:11:55.080 --> 0:11:57.559 can really move this forward. But the goal is Black liberation, 0:11:57.880 --> 0:12:01.760 and so in that theations should be looking to say, 0:12:01.800 --> 0:12:05.920 how can we continuously create and create opportunities and to 0:12:06.200 --> 0:12:09.760 move forward black liberation, including the type of organizations that 0:12:09.800 --> 0:12:11.400 we partner with. Where we put our money is what 0:12:11.520 --> 0:12:14.040 communities are we celebrating on a regular basis. If we 0:12:14.080 --> 0:12:16.000 have lobbyists, what are we asking them to look for 0:12:16.080 --> 0:12:19.120 and watching and so all of those ways the organizations 0:12:19.120 --> 0:12:24.040 can really make this tactful. But I feel like we 0:12:24.120 --> 0:12:26.280 may have lost him there. Did the line drop? I 0:12:26.280 --> 0:12:28.760 think the line may have dropped, you know, Nally. I 0:12:28.800 --> 0:12:31.640 think the interesting thing is, of course, for June tenth, 0:12:31.760 --> 0:12:37.160 we're celebrating, um, the freedom of of black people in America, 0:12:37.360 --> 0:12:40.520 that the end of slavery, UM, and of course black 0:12:40.559 --> 0:12:46.360 liberation and equality should be goals. But when you practice uh, 0:12:46.559 --> 0:12:50.439 you know, these kind of diversity and inclusion UM ethics, 0:12:50.600 --> 0:12:55.360 you also raise your own organization financially. You also increase 0:12:55.640 --> 0:12:58.920 your revenue growth. You also can increase profitability. Do we 0:12:58.960 --> 0:13:02.880 have him back? Can you know? For for selfish business 0:13:02.960 --> 0:13:07.160 leaders out there, UM, this is about more than just 0:13:07.280 --> 0:13:12.160 doing the right thing right you You become a better business. 0:13:12.800 --> 0:13:15.280 You make more money for yourself and for your shareholders, 0:13:15.280 --> 0:13:18.959 your stakeholders if you if you practice these diversity and 0:13:19.240 --> 0:13:24.840 inclusion techniques correctly, you do One thing that I really 0:13:24.920 --> 0:13:27.240 try hard not to do is to focus on that 0:13:27.280 --> 0:13:29.600 revenue piece. And I'm going to tell you why. When 0:13:29.640 --> 0:13:32.480 we think about why June tenth was in place, it 0:13:32.559 --> 0:13:34.960 was because of black labor being used in ways that 0:13:35.000 --> 0:13:39.760 were um inequitable, being used in ways that were unfair 0:13:39.920 --> 0:13:43.640 and basically with prossibility right, it was based on capitalism, 0:13:43.960 --> 0:13:46.760 and so I tried to move away from seeing it's 0:13:46.840 --> 0:13:50.240 from providing that viewpoint for organizations as to why this 0:13:50.280 --> 0:13:51.680 is the right thing to do, to say, hey, you 0:13:51.720 --> 0:13:54.559 can make more money if you just use black people 0:13:54.600 --> 0:13:57.679 this certain way. I really like to focus on, you know, 0:13:57.960 --> 0:14:00.040 what are the things that go beyond that again and 0:14:00.160 --> 0:14:02.840 the innovation piece, what are ways that you should be 0:14:02.840 --> 0:14:07.400 looking at that the moral of your organization in totality, 0:14:07.720 --> 0:14:09.839 what are some ways where you might be missing out 0:14:09.920 --> 0:14:12.600 on having a great leader in place that could really 0:14:12.600 --> 0:14:15.440 turn the organization around, but because they're not given that opportunity, 0:14:15.480 --> 0:14:18.280 they can't do So, how do you keep employees in place? 0:14:18.320 --> 0:14:20.800 Because now that does cost you money, right to make 0:14:20.840 --> 0:14:24.040 sure that employees are in place. And so that is 0:14:24.120 --> 0:14:26.680 where we really like to focus beyond this idea of 0:14:26.800 --> 0:14:29.880 you could make more money if you treated people people better. 0:14:30.160 --> 0:14:32.560 That could be a byproduct, but it's bigger than that, 0:14:33.000 --> 0:14:34.440 all right, Kim, great to have you and thanks so 0:14:34.480 --> 0:14:37.200 much for joining us. Kim Crowder their founder and CEO 0:14:37.480 --> 0:14:41.120 of Kim Crowder Consulting certified d e I and six 0:14:41.400 --> 0:14:47.800 Sigma Leadership CEO Lyle Honba joins us right now a 0:14:47.840 --> 0:14:51.840 partner with Granted Group Advisers, to talk about what we 0:14:51.920 --> 0:14:57.120 should be um doing in terms of um our investments. 0:14:57.280 --> 0:15:00.320 Have we gone far enough? Lyle, do you think at 0:15:00.320 --> 0:15:04.160 this point that, especially if you have a long enough window, 0:15:04.200 --> 0:15:07.480 you should start buying? You know, great question, Thanks for 0:15:07.520 --> 0:15:12.520 having me. Yeah, listen, I think you know everything's about valuation, valuation, valuations, 0:15:12.600 --> 0:15:14.640 So to your point, you know, just to give you 0:15:14.680 --> 0:15:17.880 a little history, U two thousand two, we traded in 0:15:17.920 --> 0:15:21.040 a recession at eleven times forward numbers, and then back 0:15:21.080 --> 0:15:25.080 in we were trading also at eleven times forward numbers. 0:15:25.480 --> 0:15:29.320 Right now we're trading at about fourteen times forward numbers, 0:15:29.360 --> 0:15:32.160 which is historically below the long term average of fifteen 0:15:32.440 --> 0:15:35.200 and well well below the seventeen and a half average 0:15:35.680 --> 0:15:38.040 of the last ten years. So I think it's a 0:15:38.080 --> 0:15:40.320 really it is a time to start looking and start 0:15:40.360 --> 0:15:42.920 taking things around. We personally don't believe that we're going 0:15:42.960 --> 0:15:46.040 to be in a recession. The valuations in the market 0:15:46.080 --> 0:15:49.920 are accurately predicted a slowdown the market. Since we're trading 0:15:49.920 --> 0:15:52.520 at fourteen times numbers, So I think it's time to 0:15:52.560 --> 0:15:55.000 start dipping the toe. And I wouldn't go full more, 0:15:55.480 --> 0:15:57.880 but I would definitely start looking at you know, like 0:15:57.920 --> 0:16:01.800 the financials and uh some of these other uh, you know, 0:16:01.840 --> 0:16:05.840 sectors that have been really just disserrated beyond where they 0:16:05.840 --> 0:16:08.480 should be. There's the valuations, some valuations in certain stocks. 0:16:09.320 --> 0:16:11.440 Talk more about that because you know, on one hand, 0:16:11.600 --> 0:16:13.720 if you got into the market now and the market 0:16:13.720 --> 0:16:17.040 faces for the decline, you face a loss. But if 0:16:17.080 --> 0:16:19.520 you don't start dipping your foot in, you know are 0:16:20.440 --> 0:16:23.360 also works very closely with Bloomberg for Masters of Business 0:16:23.600 --> 0:16:25.920 is Barry Riddholt, and he makes the point that a 0:16:25.960 --> 0:16:29.880 lot of investors don't get back in at the right 0:16:29.920 --> 0:16:32.440 time and therefore lose a lot of money that way, 0:16:32.440 --> 0:16:35.120 they get back in a too high a price. So 0:16:35.480 --> 0:16:38.600 talk about that kind of issue that investors face here. 0:16:39.040 --> 0:16:41.440 And you know, to what extent do you face a 0:16:41.520 --> 0:16:44.440 risk of not getting back in at this point? Yeah, 0:16:44.560 --> 0:16:46.280 I think if you have a long term view, and 0:16:46.280 --> 0:16:48.120 I wouldn't dip your you know, your foot and I 0:16:48.160 --> 0:16:51.320 would dip a toe in, right, So I think I would. 0:16:51.400 --> 0:16:54.840 I would absolutely if if investors don't go back in, 0:16:55.320 --> 0:16:58.280 it's a they will be very sorry a few years 0:16:58.280 --> 0:17:01.240 from now. Right, So those people who are just indiscriminated 0:17:01.280 --> 0:17:03.080 selling now, I think are going to be upset in 0:17:03.360 --> 0:17:05.560 in a couple of years. Now. Stock market is a 0:17:05.560 --> 0:17:09.240 long term gain. It's it's not not a short term price. 0:17:09.480 --> 0:17:13.000 You know. We we actually are fiduciaries to UH uh 0:17:13.119 --> 0:17:18.280 to four owing case, and we've noticed people are cutting 0:17:18.280 --> 0:17:21.680 back on their contributions to offset so they have the 0:17:21.720 --> 0:17:24.159 cash flow to pay for higher gas prices. And to 0:17:24.280 --> 0:17:28.160 your point, they're going to miss out on UH. They 0:17:28.160 --> 0:17:30.440 won't get back in right away, and they're gonna miss 0:17:30.440 --> 0:17:32.480 out on, I think on some pretty good prices. Yeah. 0:17:32.560 --> 0:17:35.280 John Author has had a piece today pointing out that UM, 0:17:35.400 --> 0:17:37.880 even if you'd gone back into the market just two 0:17:37.880 --> 0:17:42.200 weeks after the collapse of Lehman Brothers UM right now, 0:17:42.240 --> 0:17:45.280 you'd be looking at four hundred and forty games, right, 0:17:45.320 --> 0:17:47.520 because there was still a long way to go at 0:17:47.520 --> 0:17:49.679 that point. I think markets were only down twenty five 0:17:49.800 --> 0:17:52.680 or thirty percent, and we ended up down at the 0:17:52.720 --> 0:17:56.480 end of it all. But it's difficult to time the bottom. 0:17:56.520 --> 0:17:59.320 I mean, even the best investors get burned trying to 0:17:59.359 --> 0:18:02.800 do that, so, um, what what kind of valuations do 0:18:02.880 --> 0:18:05.840 you think we should be seeing longer term? Lyle? What's 0:18:05.880 --> 0:18:09.240 normal that's a great and what's normals fifteen into sixteen? 0:18:09.320 --> 0:18:12.240 I also know we also think that, uh, you knows, 0:18:12.520 --> 0:18:15.800 the ten year bond yield will is pretty much maxed 0:18:15.840 --> 0:18:18.760 out here for the short term. It's already actually anticipated everything. 0:18:19.040 --> 0:18:21.080 And the reason why that's important for your listeners is 0:18:21.119 --> 0:18:25.080 that it'll sort of helps dictate the valuation. Right, So 0:18:25.440 --> 0:18:27.160 if we think that this is sort of tapped out 0:18:27.200 --> 0:18:30.400 here for the short term, you know, a valuation of fifteen, 0:18:30.440 --> 0:18:33.280 sixteen or even sixteen and a half could be a 0:18:33.359 --> 0:18:37.720 good a good valuation point. But we're trading at fourteen, 0:18:37.800 --> 0:18:39.800 So I think there's some real upside here. You know, 0:18:39.880 --> 0:18:42.040 if my friend dropping go little bit cred swist says 0:18:42.040 --> 0:18:46.080 that we're gonna have seven point five percent predicted earnings growth, well, 0:18:46.080 --> 0:18:50.440 if we have seven point five predicted earnings uh increase 0:18:50.920 --> 0:18:53.640 for companies and we're trading at a real slow down level, 0:18:54.240 --> 0:18:55.880 you know, I think it's it's it's a good time 0:18:56.320 --> 0:18:58.679 all right, Lyle, thanks so much for joining us. Lyle Hamba, 0:18:58.800 --> 0:19:02.560 their partner at Grand Group Advisers, talking to us about UM, 0:19:02.600 --> 0:19:10.240 the point we are where we are in these markets now, UM, 0:19:10.320 --> 0:19:15.000 we are going to focus on uh, something that one 0:19:15.000 --> 0:19:18.800 of my producers put together, and I'm pretty impressed. Travel 0:19:19.000 --> 0:19:22.840 is finally bouncing back from the pandemic. Tourist destinations took 0:19:22.840 --> 0:19:25.200 a big hit over the past two years, but exclusive, 0:19:25.359 --> 0:19:29.679 upscale destinations are still doing fine. And when it comes 0:19:29.680 --> 0:19:33.040 to real estate, perhaps no destination has been as resilient 0:19:33.080 --> 0:19:36.560 as the Island of Turks and Caicos. Bloomberg's Eric Mallow 0:19:36.840 --> 0:19:41.040 tells us more in this report, there's a lot to 0:19:41.119 --> 0:19:43.320 like about the white sand beaches and clear waters of 0:19:43.320 --> 0:19:46.439 Turks and Caicos. The likes of Christie Brinkley, Keith Richards, 0:19:46.440 --> 0:19:49.520 and Bruce Willis have owned properties there, and now more 0:19:49.560 --> 0:19:51.960 people are getting in on the action. We've had fairly 0:19:52.000 --> 0:19:56.160 consistent growth and in en obviously that reached an apex 0:19:57.440 --> 0:19:59.879 kicked in and we virtually doubled the kind of numbers 0:19:59.880 --> 0:20:02.520 that we had. In twenty nineteen, after years of steady growth, 0:20:02.600 --> 0:20:05.600 the island's real estate sales increased one hundred and fifty 0:20:05.640 --> 0:20:10.520 eight percent and condominium sales nearly tripled, massive jumps that 0:20:10.600 --> 0:20:14.320 portend another strong year in two, So what's driving the growth. 0:20:14.440 --> 0:20:17.840 Grace Bay Resorts CEO Mark Durleyot points to a few things. 0:20:17.960 --> 0:20:21.200 All of our properties are residential resort hotels. We're able 0:20:21.240 --> 0:20:25.520 to sustain our tourism product year round and also brand 0:20:25.560 --> 0:20:28.760 these properties as stillbone hotels, and it makes the customer 0:20:28.760 --> 0:20:32.840 who's not a buyer of residential makes them comfortable on 0:20:32.840 --> 0:20:35.000 the tourism side. So there's two markets happening at the 0:20:35.040 --> 0:20:37.640 same time, ownership and those who are just coming as 0:20:37.640 --> 0:20:40.879 a tourist. Southby's Nina seegin Thaler was the listing agent 0:20:40.880 --> 0:20:43.480 when Bruce Willis sold his property on the island. She 0:20:43.560 --> 0:20:46.720 tells me the environments comfortable for visitors. In many ways, 0:20:46.760 --> 0:20:49.600 it is an extension of the US. On the other hand, 0:20:49.680 --> 0:20:52.439 it is a British overseas territory. So it's just a 0:20:52.520 --> 0:20:56.159 wonderful combination. We used the US dollar, English is the 0:20:56.200 --> 0:20:59.520 spoken language, the only correctives. We drive on the left 0:20:59.520 --> 0:21:01.919 side of the road. And the tax component opens up 0:21:01.920 --> 0:21:05.080 more opportunity for investment. We have a one time tax 0:21:05.480 --> 0:21:08.840 that table upon purchases. It's called a stamp duty. And 0:21:08.880 --> 0:21:12.359 then we have import duties and you know, their local 0:21:12.400 --> 0:21:16.359 business license fees and work permits, feeds and accommodations taxes, 0:21:16.400 --> 0:21:19.359 but on property on an ongoing basis, you do not 0:21:19.480 --> 0:21:21.840 have a property tax yet. Nina and Mark have high 0:21:21.880 --> 0:21:25.000 expectations for Turks and Caicos real estate market in two. 0:21:25.480 --> 0:21:27.919 But how might luxury real estate properties hold up in 0:21:27.920 --> 0:21:31.679 an inflationary environment where interest rates are rising the housing 0:21:31.720 --> 0:21:34.359 market shifting here in the US, US new home sales 0:21:34.400 --> 0:21:36.919 recently plunged to its lowest points since the start of 0:21:36.920 --> 0:21:40.000 the pandemic, and interest rates and inflation are slowing the 0:21:40.040 --> 0:21:42.560 economy and squeezing a lot of buyers out of homes. 0:21:42.640 --> 0:21:44.960 I think there's becoming a bay economic divide with the 0:21:45.040 --> 0:21:46.840 high and the low, and the high just keeps getting 0:21:46.920 --> 0:21:49.840 higher and the wealdy keeps getting wealthier. And I think 0:21:49.840 --> 0:21:52.520 that's what we're seeing that fall out in the luxury market. 0:21:52.640 --> 0:21:55.080 Correy sass Hour is an associate real estate agent in 0:21:55.119 --> 0:21:59.000 another top luxury market, Westchester County. She tells me buyers 0:21:59.000 --> 0:22:01.520 were moving quickly to start the year, but she noticed 0:22:01.560 --> 0:22:03.600 things started to slow a bit in April, one of 0:22:03.640 --> 0:22:05.960 the most popular times for showings in the area. I 0:22:05.960 --> 0:22:08.800 think people feel like they're getting hit from every direction, 0:22:08.880 --> 0:22:13.080 from gas to furniture to their kids classes. And at 0:22:13.119 --> 0:22:16.720 some point, if you're not making enough to subsidize the inflation, 0:22:17.200 --> 0:22:19.159 then that's going to prevent people from be able to 0:22:19.200 --> 0:22:21.119 afford the monthly that they need to pay. Even if 0:22:21.119 --> 0:22:23.560 buying word of slow In Turks and Caicos, property owners 0:22:23.560 --> 0:22:26.399 can supplement their income. Here's Mark Durley out in, the 0:22:26.400 --> 0:22:29.040 CEO of Grace Bay Resorts. Once again, we have this 0:22:29.200 --> 0:22:32.960 perpetual tourism market that helps to prop up all of 0:22:33.040 --> 0:22:36.159 these single family homes because if there is a void 0:22:36.359 --> 0:22:40.160 in the residential investment market, which we had in two 0:22:40.160 --> 0:22:43.240 thousand and eight to twelve, the reason it didn't freefall 0:22:43.440 --> 0:22:46.280 is those owners were able to rely on the tourism 0:22:46.440 --> 0:22:51.440 market to continue to help support economically the cost of ownership. 0:22:51.520 --> 0:22:55.080 Nina segn Thaller of Southebyes says that's pretty common. Most 0:22:55.119 --> 0:22:58.720