WEBVTT - Supply Chain, Housing, Tesla, and WWE (Podcast) 0:00:00.760 --> 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 0:00:06.920 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 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 --> 0:00:22.680 at Bloomberg dot com slash podcast. It's a cloud supply chain. 0:00:22.840 --> 0:00:26.960 We haven't that was the thing in twenty twenty still 0:00:27.040 --> 0:00:29.960 twenty and I think part most of twenty twenty two. 0:00:29.960 --> 0:00:32.919 But I don't know if that's the thing anymore. I mean, 0:00:32.960 --> 0:00:36.040 our ships still sitting out there in the ports. I don't. 0:00:36.159 --> 0:00:38.760 Let's go to the Let's go to the absolute source. 0:00:39.080 --> 0:00:41.239 Gene Siroca. He's the executive director of the Port of 0:00:41.280 --> 0:00:44.680 Los Angeles. He is on our Bloomberg Interactive Broker Studio. 0:00:44.720 --> 0:00:46.760 We appreciate it making the trip just to see us. 0:00:46.760 --> 0:00:49.279 I'm sure maybe look at some ships that are off 0:00:49.280 --> 0:00:52.199 the coast of Bayo, New Jersey. Maybe Gene talked to 0:00:52.280 --> 0:00:55.480 us about LA. How are things there? How many ships 0:00:55.480 --> 0:00:57.480 are waiting off the coast? Are you getting stuff to 0:00:57.520 --> 0:01:01.200 the trains into the warehouses? How's it going? Yeah, good morning, 0:01:01.200 --> 0:01:05.080 Paul and Matt. Things that the port look relatively normal. 0:01:05.400 --> 0:01:08.039 That backlog of ships that started at one hundred and 0:01:08.120 --> 0:01:10.480 nine almost at this point last year was worked down 0:01:10.480 --> 0:01:13.800 to single digits by August, while breaking records in five 0:01:13.800 --> 0:01:17.319 of the first seven months, effectively worried about eighty percent 0:01:17.440 --> 0:01:20.679 of throughput capacity. Today the dwell times of how long 0:01:20.760 --> 0:01:23.479 cargo sits before it moves out by truck or rail 0:01:23.760 --> 0:01:28.760 back to pre pandemic points, not the whole supply chain though, right. 0:01:28.760 --> 0:01:32.399 I mean, Jean, you guys are doing your job and 0:01:32.440 --> 0:01:35.480 you've taken care of the mess. You've basically mocked it up. Nonetheless, 0:01:36.440 --> 0:01:38.600 that doesn't mean that the stuff coming in through your 0:01:38.640 --> 0:01:41.959 ports is still completely full of all the chips that 0:01:41.959 --> 0:01:44.520 that stuff needs to be full of. Yeah, chips usually 0:01:44.560 --> 0:01:46.840 take the air freight route. But to your point, Matt, 0:01:47.080 --> 0:01:50.760 the supply chain has still got dislocations globally and here 0:01:50.760 --> 0:01:54.520 in the US, for example, the inventory sales ratio for 0:01:54.680 --> 0:01:57.400 retailers is at about one point three seven from the 0:01:57.480 --> 0:02:00.400 last report of the Saint Louis FED. That's all all 0:02:00.440 --> 0:02:04.400 time highs, but still much of a higher level than 0:02:04.520 --> 0:02:06.160 a lot of folks would see. So if you're like me, 0:02:06.240 --> 0:02:09.160 you're getting email blasts and techs every day from retailers 0:02:09.400 --> 0:02:12.040 with deep discounts, And if you're like me, you're still 0:02:12.080 --> 0:02:15.519 buying right. How about China reopening? I mean, you guys, 0:02:16.360 --> 0:02:18.320 when the ships leave of China, they come right to 0:02:18.360 --> 0:02:21.040 your port. Geane, what do you guys, how are you 0:02:21.080 --> 0:02:23.799 thinking about the reopening of China? You know, it's been 0:02:23.840 --> 0:02:27.480 pretty steady, Paul. Even when there were so many ships 0:02:27.560 --> 0:02:30.640 outside of the port of Shanghai back last summertime and 0:02:30.639 --> 0:02:32.480 folks were saying it's going to be a deluge coming 0:02:32.520 --> 0:02:36.040 across the Pacific, the central government and the Young Shaan 0:02:36.120 --> 0:02:38.720 Deep Seaport in Shanghai, along with Ningbo and other ports, 0:02:38.760 --> 0:02:42.200 prioritized that long leg cargo. So while we may have 0:02:42.240 --> 0:02:43.720 seen a little bit of a dip, a little bit 0:02:43.760 --> 0:02:46.359 of a pickup, that was the extent of it, not 0:02:46.400 --> 0:02:49.160 so much this crush or wave of cargo that's coming 0:02:49.200 --> 0:02:52.600 across the Pacific, but it will ease pressures there domestically 0:02:52.639 --> 0:02:57.079 as well, whether it's land, transport, barge, factory subassembly units. 0:02:57.760 --> 0:03:00.799 All right, So in terms of we'res have you got 0:03:00.800 --> 0:03:03.400 everybody you need? And in terms of price pressures. Have 0:03:03.440 --> 0:03:05.679 you seen a lot of them? Do they continue? Yeah? 0:03:05.720 --> 0:03:08.320 On the worker front, three big segments. As we've talked 0:03:08.360 --> 0:03:11.360 about before, Matt, the dock workers average six days a 0:03:11.400 --> 0:03:14.560 week on the job during all of this import surge. 0:03:14.919 --> 0:03:17.880 They continue to work and the productivity is great. The 0:03:17.960 --> 0:03:22.200 dock worker contract with their employers, the Pacific Maritime Association, 0:03:22.320 --> 0:03:26.160 is now being negotiated for the tenth month. We're at 0:03:26.160 --> 0:03:29.959 the outer edge of where this usually reads some level 0:03:30.120 --> 0:03:33.240 of agreement, but it's not quite there yet. We've got 0:03:33.240 --> 0:03:35.760 to get this contract done because the people that control 0:03:35.800 --> 0:03:39.800 the cargo importers and exporters have shifted their goods to 0:03:40.000 --> 0:03:43.800 East and Gulf Coast ports. Some of that may stick 0:03:43.840 --> 0:03:47.520 permanently on the truck driver's side, pretty good shape, but again, 0:03:47.560 --> 0:03:50.680 you're only running at eighty percent of capacity. Warehouses are 0:03:50.680 --> 0:03:53.080 still pretty full, and that's where a little bit of 0:03:53.080 --> 0:03:55.640 the challenge comes in getting workers. How do you so, 0:03:55.960 --> 0:03:58.040 we did hear stories, and you told us stories over 0:03:58.080 --> 0:03:59.800 the last couple of years about some of that cargo 0:04:00.280 --> 0:04:05.120 to East coast ports. How do you compete for that? 0:04:05.320 --> 0:04:07.119 I presume part of the reason you're in New York 0:04:07.200 --> 0:04:10.840 is talking to some customers and things like that. How 0:04:10.880 --> 0:04:14.480 do you compete with the Norfolks, the Savannahs, the Baltimore 0:04:14.760 --> 0:04:16.920 and of course New York. Yeah, these ports have hired, 0:04:17.000 --> 0:04:19.599 switched on people, they've aligned with their policy makers, and 0:04:19.640 --> 0:04:23.440 they're doing huge investments. We've got to stay ahead of 0:04:23.440 --> 0:04:25.880 the curve. And they have a different union, and they've 0:04:25.880 --> 0:04:29.839 got a different union, that's correct. The International Longshore Association 0:04:29.880 --> 0:04:32.440 covering the East and Gulf Coast has their contract coming 0:04:32.520 --> 0:04:36.960 up for renegotiation next summertime. At this point right now, 0:04:37.000 --> 0:04:39.360 what we've got to do is continue to add value 0:04:39.640 --> 0:04:43.280 where people continue to tell me your costs are too high, 0:04:43.400 --> 0:04:47.680 you've got labor complications, and you're overly regulated in California. 0:04:47.760 --> 0:04:50.479 So we've got a band together and continue to push 0:04:50.520 --> 0:04:53.480 the envelope on these issues because we've got to compete. 0:04:53.920 --> 0:04:56.560 Before the pandemic, forty percent of the nation's imports came 0:04:56.600 --> 0:04:58.919 through this gateway. Now it's down to thirty three percent. 0:04:59.279 --> 0:05:01.880 And the big number for the listeners to remember is 0:05:01.920 --> 0:05:04.800 in two thousand and two, eighty percent of the Transpacific 0:05:04.839 --> 0:05:08.440 trade came through West Coast ports. Today that's fifty six percent. 0:05:08.880 --> 0:05:12.719 So what is the state government in California, for example. 0:05:13.640 --> 0:05:17.280 How do they respond because that's such a natural advantage 0:05:17.279 --> 0:05:21.359 for West Coast ports with this, the Transpacific sounds like 0:05:21.360 --> 0:05:24.320 they respond with way too much regulation as usual. I 0:05:24.320 --> 0:05:26.680 mean you've been there for how many years as now 0:05:26.720 --> 0:05:30.640 on the West Coast. I mean that's part of living 0:05:30.640 --> 0:05:34.120 in California, isn't it? You accept that bad if you 0:05:34.160 --> 0:05:36.719 want to put it that way with the good, which 0:05:36.800 --> 0:05:39.440 is living in such a fantastic place, right. We've got 0:05:39.440 --> 0:05:41.640 to capture the moment here. Never in a generation have 0:05:41.720 --> 0:05:44.360 we seen a linement between the federal, state and local governments. 0:05:44.720 --> 0:05:48.120 The Infrastructure Investment in Jobs Act, the Inflation Reduction Act, 0:05:48.200 --> 0:05:53.200 and the California Governor's budget all have investment ready for 0:05:53.360 --> 0:05:56.600 us at the ports. On the regulatory side, we want 0:05:56.600 --> 0:05:59.680 to get to zero carbon or zero emissions. The technology 0:05:59.760 --> 0:06:01.599 is just not there yet, So we've got to keep 0:06:01.600 --> 0:06:04.920 working with regulators and private sector industry to make these 0:06:04.960 --> 0:06:08.560 investments and encourage create a market maker concept that gets 0:06:08.640 --> 0:06:12.279 manufacturers enticed to us as a customer. Are the carbon 0:06:12.440 --> 0:06:14.960 costs at your level or is that on a shippers level? 0:06:15.160 --> 0:06:17.919 We asked today we saw carbon in Europe go to 0:06:17.920 --> 0:06:20.360 one hundred euros, which is the highest price we've seen 0:06:20.400 --> 0:06:23.200 so far. Right, combination of all three things. So we've 0:06:23.200 --> 0:06:25.640 got a pretty big bucket of money out of Washington, 0:06:25.960 --> 0:06:30.479 another one out of Sacramento. We've put attacks on containers 0:06:30.480 --> 0:06:34.239 coming through to incent cleaner trucks. Yet we can't spend 0:06:34.240 --> 0:06:36.279 the money because the technology is not there yet. We've 0:06:36.279 --> 0:06:40.000 collected about thirty five million dollars on that new container fee, 0:06:40.080 --> 0:06:43.159 and we've only spent about one million. We've got a 0:06:43.160 --> 0:06:45.880 long way to go, both on hydrogen fuel cell electric 0:06:45.960 --> 0:06:49.080 as well as battery electric trucks. They've got to be affordable. 0:06:49.120 --> 0:06:51.720 Today the prices on those rigs are eight to ten 0:06:51.800 --> 0:06:54.640 times more than what the average trucker pays for a 0:06:54.800 --> 0:06:57.279 used diesel. But you've got a fantastic use case for 0:06:57.279 --> 0:06:59.200 those kind of I mean, you've got a ship stuff 0:07:00.040 --> 0:07:03.320 ruck stuff, I should say, rather from the port to 0:07:03.400 --> 0:07:06.400 the warehouses. That's the first place you need to use trucks, right, 0:07:06.440 --> 0:07:10.720 and so you don't need to worry about nationwide electric trucks. 0:07:10.760 --> 0:07:13.480 You can use a number of other alternative sources. That's right. 0:07:13.480 --> 0:07:16.240 About two thirds of the trucks mat that move the 0:07:16.280 --> 0:07:17.920 car will come in and out of the port by 0:07:18.000 --> 0:07:20.360 the third of the cargo goes by rail. But you've 0:07:20.360 --> 0:07:22.760 got to have duty cycle, you got to have torque, 0:07:22.880 --> 0:07:25.040 and you've got to run these trucks. You've got to 0:07:25.080 --> 0:07:28.760 sweat the assets. You cannot waste time charging. The biggest 0:07:28.800 --> 0:07:31.320 bugaboo that we have is that a battery right now 0:07:31.320 --> 0:07:33.920 weighs about sixteen thousand pounds, So you either haul the 0:07:33.920 --> 0:07:36.600 battery or you haul the fright, you can't haul both. 0:07:37.160 --> 0:07:40.880 And the hydrogen fuel cell electric, while really good performance wise, 0:07:41.120 --> 0:07:44.880 still very elevated in pre production stage pricing. So we've 0:07:44.920 --> 0:07:46.960 got to work all this down to the middle. It's 0:07:47.000 --> 0:07:48.960 not going to happen overnight. Wow. And do the East 0:07:48.960 --> 0:07:51.720 Coast ports have the similar challenges. No, they're asking for 0:07:51.760 --> 0:07:54.960 the trucks that we no longer use, wow, as we 0:07:55.080 --> 0:07:58.160 implement cleaner near zero and zero emissions because they don't 0:07:58.160 --> 0:08:01.840 have the same regulatory restraints. That's right. A federal standard 0:08:01.880 --> 0:08:04.360 would be great. California wants to lead the way, they 0:08:04.400 --> 0:08:06.600 want other states to follow. But we've got to bring 0:08:06.680 --> 0:08:08.760 all of these folks together. I want nothing more than 0:08:08.880 --> 0:08:11.360 zero emissions at the port, but we got about be 0:08:11.480 --> 0:08:14.840 smart about how our focus is on accelerating the technology 0:08:15.000 --> 0:08:17.560 and finding the funding streams. Do you have like the 0:08:17.560 --> 0:08:20.560 coolest job in the world. It's always it's always great 0:08:20.560 --> 0:08:23.000 coming to see you guys, and so many things. I 0:08:23.040 --> 0:08:24.680 couldn't keep all the balls in the year. I know 0:08:24.920 --> 0:08:27.240 this whole going green Wait, wait, wait a second. My 0:08:27.320 --> 0:08:29.400 jobs to get stuff off its ships and get it, 0:08:29.760 --> 0:08:31.160 but now I have to do it in a green way. 0:08:31.200 --> 0:08:33.559 But you clearly care about going green as well. I mean, 0:08:33.559 --> 0:08:35.839 it's obviously something that's top of mind for you, right 0:08:35.880 --> 0:08:38.800 and as you transition into this greener technology, that means 0:08:38.880 --> 0:08:42.080 upskilling and reskilling workers for those new jobs. The mechanic 0:08:42.400 --> 0:08:45.080 no longer works with a wrench sheer, he can work 0:08:45.120 --> 0:08:48.400 with a computer. Yeah, Geen Saroka, great stuff as always. 0:08:48.559 --> 0:08:50.920 Jean Stroka, he's the executive director of the Port of 0:08:50.960 --> 0:08:53.120 Los Angeles. He has our go to source for all 0:08:53.160 --> 0:08:55.800 things supply chain. He has been during the entire pandemic. 0:08:55.880 --> 0:08:57.840 We appreciate him taking a few minutes and joining us 0:08:57.840 --> 0:09:05.240 here in our Bloomberg Interactive Broker studio. Mixed day. Here, 0:09:05.280 --> 0:09:06.800 I thought we might get a little bit of a lift, 0:09:06.840 --> 0:09:09.160 but it's kind of mixed here. We got fed minutes 0:09:09.200 --> 0:09:13.000 coming up later today. Michael McKee from Bloomberg Television. He's 0:09:13.040 --> 0:09:15.920 down at DC. He'll have all the details. Let's check 0:09:15.960 --> 0:09:19.839 it with Efan Devitt, chief investment officer of Moneta Group. 0:09:20.559 --> 0:09:23.640 She joins us talk about these markets here. If we're 0:09:23.720 --> 0:09:25.720 kind of at the end of the earning season, which 0:09:25.760 --> 0:09:29.199 getting some of the retailers coming in here, let's kind 0:09:29.240 --> 0:09:32.480 of wrap it up here. What are your takeaways from earnings? 0:09:32.480 --> 0:09:34.400 I know the markets really focused on the FED, but 0:09:34.960 --> 0:09:37.120 let's put into context what we saw this earning season. 0:09:38.200 --> 0:09:41.000 The really interesting thing about this earning season was that 0:09:41.320 --> 0:09:45.160 markets were quite unwilling to punish disappointing earnings where they 0:09:45.160 --> 0:09:47.160 fell shorts. We saw that with the big tech stalks, 0:09:47.520 --> 0:09:50.240 with quite a bit of leniency in effect there, and 0:09:50.400 --> 0:09:54.000 that was surprising. It really reflects that overall, that sense 0:09:54.040 --> 0:09:57.120 of fomo, perhaps that sense of markets and participants were 0:09:57.160 --> 0:10:01.080 willing themselves into risk assets and really back to the races, 0:10:01.080 --> 0:10:03.400 which is where they were for most of twenty twenty one. 0:10:03.880 --> 0:10:06.679 So that's interesting. The other parallels that I think it's 0:10:06.679 --> 0:10:09.679 fascinating is that these warnings coming out of retail are 0:10:09.720 --> 0:10:12.720 almost exactly like the warnings we saw coming out at 0:10:12.720 --> 0:10:15.760 the first part of twenty twenty two. We remember Target 0:10:15.800 --> 0:10:18.600 and Walmart's coming out with some forecasts there where they 0:10:18.679 --> 0:10:21.959 talked about building inventory. This is back in the post 0:10:21.960 --> 0:10:24.680 COVID era when we just had the Russian invasion of Ukraine, 0:10:25.080 --> 0:10:28.760 also building inventories, a slacker consumer, and them having all 0:10:28.760 --> 0:10:31.640 this garden furniture that they needed to sell off, and 0:10:31.760 --> 0:10:35.920 this was a trigger of a market weakness in twenty 0:10:35.960 --> 0:10:39.680 twenty two. So we're seeing almost exactly the same pattern 0:10:39.760 --> 0:10:43.400 play out. Now. We're seeing that these retailers have actually 0:10:43.440 --> 0:10:46.040 had pretty good results. The results are core positive, but 0:10:46.120 --> 0:10:49.840 their forecast is negatives. Their expectations are more gloomy. I 0:10:49.960 --> 0:10:52.880 suspect that is them getting some of this bad news 0:10:52.880 --> 0:10:56.120 out of the way first, telegraphing this an advance so 0:10:56.160 --> 0:10:58.319 that they can surprise on the upside later in the year. 0:10:58.840 --> 0:11:02.200 Under promise over ever, always been a great strategy. Is 0:11:02.280 --> 0:11:06.480 this is the bad news, mostly inventory related. They're going 0:11:06.520 --> 0:11:09.760 to have to slash prices. We just heard from Gene Siroca, 0:11:09.880 --> 0:11:13.920 who runs the ports in Well, the biggest ports in 0:11:13.960 --> 0:11:17.080 the US and on the West Coast, saying that you 0:11:17.120 --> 0:11:20.559 know he's seeing dip deep discounts from retailers all over 0:11:20.600 --> 0:11:25.000 the place, or is the bad news that they want 0:11:25.000 --> 0:11:26.440 to get out of the way. We're going to see 0:11:26.520 --> 0:11:29.400 higher rates, business is going to slow down, the consumer 0:11:29.440 --> 0:11:32.199 is going to be hurt. I think it's the ladder. 0:11:32.240 --> 0:11:34.760 It's around the consumer being slackered. For the most part, 0:11:34.880 --> 0:11:38.280 any supply chain issues have been resolved now, their inventory 0:11:38.320 --> 0:11:40.560 was a little bit around the shifting pattern of demand 0:11:40.640 --> 0:11:43.720 around COVID, and certainly the home depot numbers may reflect 0:11:43.760 --> 0:11:46.240 a little bit of that less money being spent on 0:11:46.360 --> 0:11:51.080 home renovation because of maybe they're being simply more money 0:11:51.080 --> 0:11:53.040 to spend on services and getting out of the home. 0:11:53.320 --> 0:11:56.280 So it's around the consumer. We've seen a really stark 0:11:56.320 --> 0:11:59.680 disconnect between hard data and soft data in recent months. 0:12:00.000 --> 0:12:02.720 The hard data has actually been somewhat positive. We've seen 0:12:02.800 --> 0:12:05.840 positive direct direction of travel when it comes to inflation. 0:12:06.160 --> 0:12:10.480 We've also seen quite a positive story and continuing unemployment. 0:12:10.760 --> 0:12:13.439 But it's that soft data, that consumer sentiment that actually 0:12:13.480 --> 0:12:16.800 been depressed for some time. It just hasn't manifested in sales. 0:12:16.880 --> 0:12:19.880 And we saw January with positive retail tales much put 0:12:19.960 --> 0:12:23.760 more positive than November and December. So clearly the consumer 0:12:23.880 --> 0:12:26.280 is still standing, but they're not feeling great about it. 0:12:26.720 --> 0:12:28.760 So that's where the retailers are trying to get ahead 0:12:28.760 --> 0:12:31.880 of it, even just kind of broadly on these markets here. Obviously, 0:12:31.920 --> 0:12:34.440 twenty twenty two in hindsight just such a brutally year 0:12:34.480 --> 0:12:37.000 for both equity investors and maybe even more to the point, 0:12:37.040 --> 0:12:41.040 fixed income investors going into twenty twenty three. How did 0:12:41.040 --> 0:12:44.880 you kind of frame this year for your clients, maybe 0:12:44.920 --> 0:12:47.360 your portfolio managers or your analys and things like that, 0:12:47.640 --> 0:12:50.079 or do you see it differently now because it seems 0:12:50.120 --> 0:12:54.439 like the market changed its mind yesterday. Yeah, well, there's 0:12:54.440 --> 0:12:57.080 certainly a flip flopping of the narrative that we taught 0:12:57.120 --> 0:13:00.000 was the case. We were actually quite interested to see 0:13:00.160 --> 0:13:02.160 US market SIUs perform at the beginning of the year. 0:13:02.440 --> 0:13:04.720 That was something we expected to reverse to some time. 0:13:05.080 --> 0:13:07.960 Now that narrative seems to have ever reversed again. We 0:13:08.000 --> 0:13:10.280 saw a week er dollar. Now it's firming up, so 0:13:10.440 --> 0:13:12.800 all of those things have certainly changed. So may coming 0:13:12.800 --> 0:13:15.440 off a year like twenty two, which is clearly somewhat 0:13:15.480 --> 0:13:18.880 unprecedented in terms of the poor performance of bonds and equities, 0:13:19.120 --> 0:13:21.640 that balanced portfolio was really on its knees at the 0:13:21.679 --> 0:13:24.439 end of twenty two. Clearly we don't see the same 0:13:24.800 --> 0:13:27.520 negativity in the bond market. We're actually quite keen on 0:13:27.520 --> 0:13:29.360 some of them where we can get those yields with 0:13:29.600 --> 0:13:33.440 interesting yields even net and inflation available in bonds where 0:13:33.520 --> 0:13:36.199 encourage our clients not to have their cash set and 0:13:36.240 --> 0:13:38.640 sweet accounts. You want to see that invested at a 0:13:38.720 --> 0:13:41.920 higher yield elsewhere, and because of that inverted yield curve, 0:13:42.120 --> 0:13:44.720 you can get that in pretty short dated paper. So 0:13:44.800 --> 0:13:47.880 we're certainly not seeing the same leg down lightly in bonds. 0:13:48.120 --> 0:13:50.360 As all in all, we're not going to see that 0:13:50.440 --> 0:13:52.760 kind of massive rate hike that we saw on twenty two. 0:13:53.120 --> 0:13:55.840 The bonds are looking interesting. When it comes to equities, 0:13:55.880 --> 0:13:59.240 we've always had a very balanced allocation to equities in 0:13:59.320 --> 0:14:01.960 core so not too much growth, not too much value, 0:14:02.000 --> 0:14:04.520 just to balance allocation. It's been tough. We would have 0:14:04.640 --> 0:14:08.440 underperformed when the growth was really strong in specially in 0:14:08.480 --> 0:14:11.559 twenty one and post COVID, But having that balanced allocation 0:14:12.040 --> 0:14:14.480 is really key today because when we see things like 0:14:14.520 --> 0:14:17.200 consumer safe will start to come through, we see those 0:14:17.360 --> 0:14:21.280 real assets that the some of the infrastructure holdings start 0:14:21.320 --> 0:14:24.520 to come through because they're more defensive names. That's where 0:14:24.520 --> 0:14:28.120 our balance comes in. So we're actually not making great changes. 0:14:28.720 --> 0:14:31.840 What we're thankful to see is fewer inquiries around some 0:14:31.960 --> 0:14:36.520 of the more sizzle type, more volatile perhaps areas, which 0:14:36.560 --> 0:14:39.280 is cryptocurrency. We're definitely not seeing the same level of 0:14:39.320 --> 0:14:42.040 interest in that today. Well, no volatility there. I mean 0:14:42.120 --> 0:14:45.280 yesterday the NASDAC tanked and bitcoin it's still twenty four 0:14:45.320 --> 0:14:49.920 thousand dollars. That correlation seems to have been broken. I 0:14:50.000 --> 0:14:52.920 don't know why, what's behind it, And maybe it's not 0:14:53.040 --> 0:14:54.920 as interesting to you just because it's not such a 0:14:55.000 --> 0:14:59.320 huge asset anymore. Even the whole universe isn't as big 0:14:59.320 --> 0:15:05.240 as it one was a lot of the traditional investors 0:15:05.280 --> 0:15:08.120 in stocks and bonds seem like they are in kind 0:15:08.120 --> 0:15:10.480 of a waiting game. They expected a dip in the 0:15:10.520 --> 0:15:13.160 first half. Now it looks like that's happening and then 0:15:13.160 --> 0:15:14.960 a recovery in the second half. Are you in that 0:15:15.160 --> 0:15:18.640 camp as well in terms of the recession on the 0:15:18.680 --> 0:15:24.040 economic athletes, in terms of in terms of asset prices, yeah, 0:15:24.120 --> 0:15:27.720 well we we actually were somewhat surprised by the resilience 0:15:27.760 --> 0:15:29.800 and markets and the strong performance in the first quarter. 0:15:30.200 --> 0:15:33.040 We wouldn't necessarily agree with JP Morgan that the best 0:15:33.160 --> 0:15:35.520 is in, that the highest levels are in. We think 0:15:35.520 --> 0:15:39.000 there will be ongoing strength throughout the year, particularly as 0:15:39.240 --> 0:15:41.800 some of the clarity emergence on the state of the 0:15:41.800 --> 0:15:44.560 consumer and on this recession, which you know, we said 0:15:44.600 --> 0:15:47.880 was widely forecast almost to the points where now it 0:15:48.000 --> 0:15:51.000 was so discounted in that positive news was well received, 0:15:51.320 --> 0:15:53.760 so we were not We were a little surprised. So 0:15:53.880 --> 0:15:55.720 there will be a bit of giveback in asset prices 0:15:55.760 --> 0:15:58.200 now as we moved to the end of the first quarter, 0:15:58.520 --> 0:16:01.440 but we're quite optimistic base something the year like twenty two. 0:16:01.760 --> 0:16:04.920 We've been building in higher expectations for return across the 0:16:04.960 --> 0:16:07.800 board and our asset class. Where do you go in 0:16:07.920 --> 0:16:12.720 fixed income here, even fixed income, as I've said, there 0:16:12.720 --> 0:16:14.800 are number of places you can go, and first of all, 0:16:14.960 --> 0:16:17.880 you don't have to go into the highest risk areas 0:16:17.920 --> 0:16:20.800 in order to get a decent yield. As far as cash, 0:16:21.080 --> 0:16:23.080 staying in cash makes sense today, as long as in 0:16:23.200 --> 0:16:26.120 the right kind of account and accounts that's actually earning 0:16:26.160 --> 0:16:28.960 something closer to a short term yields, even a six 0:16:29.040 --> 0:16:32.720 month treasury yield is interesting today, so that's you don't 0:16:32.760 --> 0:16:34.800 have to go into the highest end of the spectrum. 0:16:34.960 --> 0:16:38.080 High yield is interesting, and even high yields itself, higher 0:16:38.160 --> 0:16:42.440 quality within high yield is still yielding quite meaningful returns today. 0:16:42.720 --> 0:16:45.760 So we've been looking across the board. Investment grade itself 0:16:45.800 --> 0:16:48.360 has also had deals that are interesting for the first time. 0:16:48.840 --> 0:16:52.480 So we also in our clients accounts do advocate introducing 0:16:52.560 --> 0:16:56.280 some private credit in there besides the public fixed income, 0:16:56.560 --> 0:16:58.880 just to get that diversification. How do they get that? 0:16:59.000 --> 0:17:04.760 I mean that used to be the realm of sophisticated investors. 0:17:04.760 --> 0:17:07.680 Only can your average retail investor get that kind of 0:17:07.720 --> 0:17:12.240 exposure now if if they are accredited usually that would 0:17:12.280 --> 0:17:15.320 be that the key cutoff there. We are really enthused 0:17:15.400 --> 0:17:18.880 by the greater selection we're seeing that are now suitable 0:17:18.920 --> 0:17:21.400 for credit investors. Obviously, there has to be a full 0:17:21.480 --> 0:17:24.400 understanding of different liquidity terms that might be in place 0:17:24.440 --> 0:17:28.480 for something private. It might be quardally liquidity. Acquardally liquidity 0:17:28.560 --> 0:17:31.880 doesn't necessarily mean easy access in and out. We've seen 0:17:31.920 --> 0:17:33.800 that with some of the reafs at the moment. But 0:17:33.880 --> 0:17:35.359 at the same time, as long as there is an 0:17:35.440 --> 0:17:39.080 understanding and is appropriately sized. We're quite excited by the 0:17:39.240 --> 0:17:42.920 different level of credit investor offerings today. Then, of course, 0:17:42.920 --> 0:17:45.680 if the clients has qualified purchase or status, they can 0:17:45.760 --> 0:17:49.080 move up the spectrum. Again, what about non accredited investors 0:17:49.160 --> 0:17:52.399 just looking you mentioned to move cash. You know, if 0:17:52.960 --> 0:17:56.399 if Paul has one hundred grand of cash just sitting 0:17:56.400 --> 0:17:59.240 in his checking account, do you is there an easy 0:17:59.240 --> 0:18:01.280 way for him to get at you know, four and 0:18:01.320 --> 0:18:05.760 a half five percent from that. Certainly, even something like 0:18:05.800 --> 0:18:07.840 a high grade if we're looking to say and say 0:18:07.840 --> 0:18:10.200 a mutual funds and the index funds, we can look 0:18:10.200 --> 0:18:12.840 at something in the short term government bombs or short 0:18:12.960 --> 0:18:16.240 term investment grade credit, all of that and should be 0:18:16.320 --> 0:18:20.200 yielding something that's closer to four or five percent. It may, obviously, 0:18:20.200 --> 0:18:21.879 we have to be health in order to see that, 0:18:21.960 --> 0:18:24.480 and it doesn't mean that there won't be some volatility 0:18:24.560 --> 0:18:28.440 along that path, but any of those mutual sound options 0:18:28.520 --> 0:18:31.520 are quite suitable for that type of level. All right, Evan, 0:18:31.560 --> 0:18:33.720 thank you so much for joining us. Always appreciate getting 0:18:33.880 --> 0:18:37.560 your perspective, your thoughts there. Ifan Devitt, chief investment Officer 0:18:37.920 --> 0:18:44.440 for Manetta Group c Suite conversation today, let's talk commercial 0:18:44.960 --> 0:18:46.560 real estate, and we can do that today with the 0:18:46.600 --> 0:18:49.760 Hassam Naji. He is the president and CEO of Marcus 0:18:49.760 --> 0:18:54.359 and Millichap and a Hassam is in our Bloomberg Interactor 0:18:54.440 --> 0:18:57.080 Broker Studio Live, which is good stuff, so it gets 0:18:57.119 --> 0:18:59.960 the gold star. It's a publicly traded company New York 0:19:00.000 --> 0:19:03.320 Stock Change. MMI is the ticker to put into your 0:19:03.320 --> 0:19:06.720 Bloomberg terminal there. Sam, thanks so much for joining us here. 0:19:07.240 --> 0:19:09.399 You know, we were just talking about I know you 0:19:09.440 --> 0:19:13.640 guys are a real estate commercial real estate biz. Talk 0:19:13.680 --> 0:19:18.399 to us about kind of the commercial office real estate business. 0:19:18.480 --> 0:19:20.720 How do you think about it? Because boy, the world 0:19:20.720 --> 0:19:23.720 has changed and we have some seven thirty one lex 0:19:23.720 --> 0:19:26.640 where we're located here. Fantastic building, one of the best 0:19:26.680 --> 0:19:29.560 buildings in New York City, but it's tough to fill 0:19:29.600 --> 0:19:31.240 it up. And this used to be the hard of commerce, 0:19:31.320 --> 0:19:34.399 right We had the Gap downstairs and Jay Crew, and 0:19:34.480 --> 0:19:37.680 we had Victoria's Secret and H and M and all 0:19:37.680 --> 0:19:40.760 of that is gone. Well. First of all, it's great 0:19:40.840 --> 0:19:43.479 to be with you in person, yep at seven thirty one, 0:19:43.680 --> 0:19:46.879 even though those stores are not here. I love seeing 0:19:46.880 --> 0:19:49.359 you guys. I love being at Bloomberg it's great to 0:19:49.359 --> 0:19:52.000 be in person. There is no substitute for it. And 0:19:52.160 --> 0:19:55.120 that let me just jump start the conversation by saying, 0:19:55.200 --> 0:19:58.840 is the reason I think the situation with office usage 0:19:58.920 --> 0:20:02.119 will improve over time. People will come back in the 0:20:02.160 --> 0:20:04.879 office more than they are today. But I don't believe 0:20:05.040 --> 0:20:10.320 we are headed for pre pandemic full occupancy anytime in 0:20:10.359 --> 0:20:12.919 the future. No, you just gave me my stat of 0:20:12.920 --> 0:20:14.600 the day when you walked in. You said, we're just 0:20:14.640 --> 0:20:18.040 back to fifty percent, right, Yeah, Nationally, we just crossed 0:20:18.040 --> 0:20:22.280 the fifty percent daily occupancy rate across office space since 0:20:22.280 --> 0:20:26.000 the pandemic. That's a national index, if you will see 0:20:26.040 --> 0:20:29.280 in some markets it's twenty twenty three, right, Yes, so 0:20:29.359 --> 0:20:32.040 since the problem that erupted at the end of really 0:20:32.080 --> 0:20:36.240 twenty nineteen. It's named for that COVID nineteen. This is 0:20:36.280 --> 0:20:39.679 the first time we've gotten back to fifty percent office 0:20:39.720 --> 0:20:43.760 space occupas average. Correct. Now, let's let's take that apart 0:20:43.800 --> 0:20:48.760 for a moment. Places like Florida, Texas and other growth 0:20:48.800 --> 0:20:51.720 oriented markets have a much higher daily occupancy rate and 0:20:51.760 --> 0:20:54.840 didn't fall as much. The urban markets New York, Chicago, 0:20:54.920 --> 0:20:59.720 San Francisco, Seattle, Downtown, LA are really skewing an average 0:20:59.760 --> 0:21:03.120