WEBVTT - Credit Suisse, Markets, Lobster, And Housing (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 --> 0:00:22.040 at Bloomberg dot com slash podcast. I'll tell you the 0:00:22.120 --> 0:00:24.440 big take story today is awesome. I used to work 0:00:24.440 --> 0:00:26.640 with Credit Swiss, so I had an interest in it. 0:00:27.120 --> 0:00:30.920 Um and the story is just fascinating. Um. You think 0:00:30.960 --> 0:00:35.519 about these Russian billionaire oligarchs and their super yachts and 0:00:35.880 --> 0:00:38.559 owning you know, football clubs in London and so on 0:00:38.600 --> 0:00:41.239 and so forth. There's gotta be some bankers to those folks, 0:00:41.560 --> 0:00:44.520 and sure enough, Credit Swiss found. Can you believe? There 0:00:44.520 --> 0:00:51.120 in Switzerland? Shock. Marion Hofftemeyer, also in Switzerland, she's a 0:00:51.120 --> 0:00:53.600 finance reporter for Bloomberg News, brings us this story. Mary 0:00:53.680 --> 0:00:56.840 talked to us about Credit Swiss and the business it 0:00:57.240 --> 0:01:01.240 had built has built in Russia and kind of where 0:01:01.240 --> 0:01:04.880 we are today with the sanctions and so on. Yes, 0:01:05.000 --> 0:01:08.080 sure so, Credits WECE actually is one of the earliest 0:01:08.120 --> 0:01:10.679 banks to have a big presence in Russia. They came 0:01:10.720 --> 0:01:14.919 in post you know, sore Week, Soviet Union UM, and 0:01:15.200 --> 0:01:17.560 they really started to connect with a lot of these 0:01:17.600 --> 0:01:22.360 individuals who are gaining UM access to privatization and gaining 0:01:22.360 --> 0:01:25.160 wealth from that. And so you know, a lot of 0:01:25.200 --> 0:01:27.200 the money started supporting and then the first place you 0:01:27.240 --> 0:01:29.760 think of when you're looking for with private banking or 0:01:29.760 --> 0:01:32.400 for private banking in Switzerland, it's it's got an expertise 0:01:32.440 --> 0:01:34.399 in it, so you know, you end up having this 0:01:34.600 --> 0:01:38.040 this man but like Desmalsci, who was in a position 0:01:38.200 --> 0:01:42.040 to really receive these individuals who needed, you know, advice 0:01:42.080 --> 0:01:44.320 on how to buy companies, where to invest their money, 0:01:44.880 --> 0:01:48.720 you know, how to how to structure different transactions they 0:01:48.720 --> 0:01:50.920 were trying to do. And so that's where Credits really 0:01:50.920 --> 0:01:53.120 played a NSI and of course other banks have also 0:01:53.200 --> 0:01:56.720 been present in this space, but Credit seems to have 0:01:56.920 --> 0:02:00.559 a little bit more UM exposure and connection to the Marion. 0:02:00.640 --> 0:02:02.520 I once heard a story and I don't know if 0:02:02.560 --> 0:02:04.400 it's true, so you can correct me if I'm off base, 0:02:04.480 --> 0:02:08.079 but I want to just share it to illustrate UM. 0:02:08.600 --> 0:02:12.359 The perception of Swiss bankers in the Second World war, 0:02:12.440 --> 0:02:16.280 the Nazis were killing Jews and taking the gold from 0:02:16.320 --> 0:02:18.600 their teeth and storing it in Swiss banks, and these 0:02:18.639 --> 0:02:22.520 bankers knew what they were taking, right, There's this perception 0:02:22.560 --> 0:02:25.560 that the Swiss are willing to be bankers to the 0:02:25.600 --> 0:02:32.000 most evil people on the planet. UM. Is that that 0:02:32.160 --> 0:02:35.360 is that is a perception. UM. It's a perception that 0:02:35.520 --> 0:02:38.960 stems from some truth, obviously, but but it's it's not 0:02:39.000 --> 0:02:41.280 that they're choosing to bank with the you know, the 0:02:41.320 --> 0:02:44.560 most horrible people of the world. It's just Swiss banking 0:02:44.680 --> 0:02:50.360 has traditionally UM welcomed money UM and hasn't asked as 0:02:50.400 --> 0:02:54.280 many questions as as other jurisdictions have. And they've they've 0:02:54.320 --> 0:02:57.840 been really entrenched in this idea of banking secrecy UM 0:02:57.919 --> 0:03:01.480 to protect wealth. And you know, with that you bring 0:03:01.520 --> 0:03:04.280 that example up, they were they were actually also protecting 0:03:04.360 --> 0:03:08.320 many Jewish families wealth UM, avoiding avoiding that wealth from 0:03:08.360 --> 0:03:12.440 being taken by the Nazis. So there's both sides to it, UM. 0:03:12.560 --> 0:03:14.480 And so there have been you know, long debates and 0:03:14.560 --> 0:03:17.560 court cases around this UM. But it's difficult, it is 0:03:17.600 --> 0:03:20.640 a difficult area to operate in. Now, of course, we 0:03:20.680 --> 0:03:22.799 have the fall of banking secrecy. So there's a lot 0:03:22.840 --> 0:03:26.000 of accordance with other countries and tax you know, agreements, 0:03:26.000 --> 0:03:28.120 and so there's a lot less secrecy around it than 0:03:28.160 --> 0:03:31.200 historically has been well, and there must be some reputational 0:03:31.960 --> 0:03:37.000 um concern on uh the executive level. Right. They don't 0:03:37.160 --> 0:03:41.440 want to be seen as the banker to Kim Jong un. 0:03:41.520 --> 0:03:43.720 They don't want to be seen as the banker to 0:03:43.760 --> 0:03:48.680 Vladimir Putin? Do they? No? No, I mean definitely not. 0:03:48.800 --> 0:03:51.080 And in banks in general, I mean especially so thanks 0:03:51.080 --> 0:03:53.640 for other banks as well. I have have in recent 0:03:53.760 --> 0:03:56.760 years with k y C anti money laundering or you know, 0:03:56.920 --> 0:04:01.160 the extra restrictions are being put in place have avoided 0:04:01.240 --> 0:04:04.760 some of these individuals, these politically exposed individuals, because precisely, 0:04:04.840 --> 0:04:07.360 you know, if the person, the person could be fine 0:04:07.360 --> 0:04:08.840 for now, but who knows, you know, in a couple 0:04:08.880 --> 0:04:11.600 of years from now, what that person might get involved 0:04:11.600 --> 0:04:13.640 with that might paint you know, the bank and then 0:04:14.000 --> 0:04:16.160 alienate their other clients who don't want to be associated 0:04:16.160 --> 0:04:19.000 with the bank, who you know is banking people you 0:04:19.000 --> 0:04:22.920 don't want to associate with. So it's a difficult lyne 0:04:22.920 --> 0:04:24.840 to walk. But at one point, I mean a lot 0:04:24.839 --> 0:04:28.039 of these clients were not sanctioned. They were just regular businessmen. Yes, 0:04:28.040 --> 0:04:30.039 they made their money in the post plutin opposed to 0:04:30.160 --> 0:04:34.479 Soviet era um privatization process, but they were, you know, 0:04:34.640 --> 0:04:37.400 not untouchable. These were regular clients, and now they'd be 0:04:37.560 --> 0:04:40.640 they've become untouchable. So it's with many banks, it's a 0:04:40.760 --> 0:04:43.960 it's a problem about assessing, you know, what what level 0:04:43.960 --> 0:04:46.680 of risk, what level of probability are these clients going 0:04:46.720 --> 0:04:49.400 to be untouchable? You know that you're reporting is just 0:04:49.600 --> 0:04:52.839 rich in detail here. I really love your news item 0:04:52.920 --> 0:04:55.800 here that you and Hugo Miller, your colleague put together. 0:04:56.480 --> 0:04:59.599 The numbers are just amazing. At one point, Credit Swiss 0:04:59.600 --> 0:05:03.360 managed more than sixty billion dollars belonging to rich Russians 0:05:03.400 --> 0:05:05.840 and that brought in to Credit Swiss five hundred six 0:05:06.240 --> 0:05:09.279 billion dollars in revenue per year. What's happened to that 0:05:09.360 --> 0:05:13.920 business with all these sanctions? Here? This business is gone, 0:05:14.040 --> 0:05:17.120 it's dead. It's dead. And and and those aren't necessarily 0:05:17.160 --> 0:05:19.200 my words, those are the words of the bank. Um. 0:05:19.600 --> 0:05:22.719 You know, it started when you have you know, the 0:05:22.760 --> 0:05:25.760 annexation of Crimea and some things just came out, Um 0:05:25.839 --> 0:05:28.000 that you know, it's started to show the bank you know, 0:05:28.080 --> 0:05:31.040 this might not be an area of growth for us anymore. Um, 0:05:31.080 --> 0:05:33.800 but that was sort of a limited uh downfalls to 0:05:33.880 --> 0:05:38.400 speaker decrease in revenues. Now we've really seen basically businesses 0:05:38.600 --> 0:05:41.320 it's dead. It's it's all, there's nothing left. All they're 0:05:41.360 --> 0:05:44.240 doing is basically managing money that's in frozen accounts. But 0:05:44.320 --> 0:05:46.680 they can't do deals anymore. They can't transact, they can't 0:05:46.680 --> 0:05:48.880 trade for their clients, and that's really where they're making 0:05:48.920 --> 0:05:51.280 the most banks of their book. Yeah, there's a you 0:05:51.320 --> 0:05:53.560 have a quote from Gotstein in here, the CEO, saying 0:05:53.560 --> 0:05:57.279 you basically can't touch them. We don't have any business 0:05:57.320 --> 0:06:00.520 with Russian clients at all. Yep. It's interesting thing. So yeah, 0:06:00.560 --> 0:06:04.400 and you have some great photos in your uh in 0:06:04.520 --> 0:06:08.599 story as well. In terms of Alisher's MS super yacht 0:06:08.680 --> 0:06:11.880 named Bill Barr, it's undercovers at the Bloom and Voss 0:06:12.040 --> 0:06:15.280 dockyard in Hamburg in March, and so it seems like 0:06:15.320 --> 0:06:19.080 everybody's trying to get their hands on those Russian Allegar yachts. 0:06:19.080 --> 0:06:21.320 I don't think it's an exercise and excess though, I mean, 0:06:21.560 --> 0:06:25.279 you have to have at least two helicopters on your Yeah, yeah, no, 0:06:25.279 --> 0:06:27.600 no question. All right, Marian, thank you so much for that. 0:06:27.640 --> 0:06:31.720 Marion Hofmeyer, financial reporter for Bloomberg News. She is based 0:06:31.760 --> 0:06:35.040 in Switzerland. That's a great thing about Bloomberg News. We've 0:06:35.040 --> 0:06:37.640 got people all over the place. If there's news anyone 0:06:37.640 --> 0:06:43.560 who's planet, we're going to find it. Let's go right 0:06:43.600 --> 0:06:46.760 to our next guest, Kevin Nicholson, Global Fixed Income Co 0:06:47.000 --> 0:06:49.880 c i O, CO head of Investment Committee at Riverfront 0:06:50.279 --> 0:06:55.080 Investment Group. Kevin, I look at the corporate bond Total 0:06:55.120 --> 0:07:01.839 Return Index year to date down. What happened? Well, it's 0:07:01.839 --> 0:07:04.760 been a year had everything has gone down. I mean 0:07:05.000 --> 0:07:08.400 you look at the treasury market, treasuries, you know, senior 0:07:08.440 --> 0:07:11.360 treasuries up a hundred and twenty five basis points from 0:07:11.400 --> 0:07:14.600 where it started the year. And uh, you know, corporate 0:07:14.600 --> 0:07:17.880 spreads have widened. So that's where why you've seen these 0:07:17.920 --> 0:07:21.520 negative returns in the fixed income market. And you know 0:07:21.600 --> 0:07:26.200 corporations are not uh you know, are not immune um 0:07:26.360 --> 0:07:29.120 from football out and so uh, you know you're going 0:07:29.160 --> 0:07:33.440 to continue to see yields rise in my opinion, across 0:07:33.480 --> 0:07:38.680 the board as the FED continues. It's tightening cycle. Um. 0:07:38.720 --> 0:07:42.200 But if we expect the FED to go to three, um, 0:07:42.280 --> 0:07:46.320 they're almost there. It doesn't it become priced in at 0:07:46.360 --> 0:07:50.680 some point? I mean, uh, don't you start buying bonds 0:07:50.680 --> 0:07:53.560 for the yield? Oh? Yeah, I mean I think that 0:07:54.000 --> 0:07:57.600 bonds are attractive at this point in the cycle. Uh. 0:07:57.640 --> 0:07:59.520 You know, one of the things that I've been kind 0:07:59.560 --> 0:08:02.320 of preaching to our clients is that you know, you've 0:08:02.320 --> 0:08:05.600 taken the long term excuse me, the short term pain 0:08:06.040 --> 0:08:08.400 to get the long term gain. Uh. You know, when 0:08:08.720 --> 0:08:12.240 you're purchasing bonds, obviously the starting yield that you purchase 0:08:12.360 --> 0:08:15.800 them at is going to most likely be your return UM, 0:08:15.960 --> 0:08:18.680 And so you want to make sure that you know, 0:08:18.720 --> 0:08:22.280 at these current yields, you're going to actually have some 0:08:22.480 --> 0:08:25.960 room or yields to go higher without the price depreciation 0:08:26.360 --> 0:08:30.440 overwhelming the annual income generation. And so that's why we 0:08:30.480 --> 0:08:32.839 are focused at the front end of the curve, because 0:08:32.840 --> 0:08:35.960 you're getting more yield per unit of duration, and so 0:08:36.080 --> 0:08:39.360 that allows you to have a larger cushion for if 0:08:39.440 --> 0:08:43.319 yields wise, that you're not going to have that depreciation 0:08:43.400 --> 0:08:46.280 overwhelmed that income. Whereas if you go to the long 0:08:46.400 --> 0:08:48.040 end of the curve. You're not getting paid for that 0:08:48.120 --> 0:08:52.520 extra duration, and uh, you have a lot less cushion 0:08:52.760 --> 0:08:56.079 about half as much. Kevin, how concerned are you in 0:08:56.320 --> 0:08:59.520 your team there riverfront about this federal reserve and its 0:08:59.559 --> 0:09:02.800 ability too? I know, engineer kind of a soft landing 0:09:02.960 --> 0:09:06.640 visa the rising interest rates and having a policy risk 0:09:06.960 --> 0:09:09.280 maybe going too far, too fast and pushing us into 0:09:09.679 --> 0:09:12.400 a recession. How do you guys think about that? Well, 0:09:12.440 --> 0:09:15.320 you know, about a couple of weeks ago, we went 0:09:15.360 --> 0:09:18.000 through the exercise because we looked at the beds UM 0:09:18.120 --> 0:09:20.439 target for the end of the year of CORPC of 0:09:20.480 --> 0:09:22.800 four point one percent, and we were like, how did 0:09:22.840 --> 0:09:26.560 we get there by a year in um and have 0:09:26.760 --> 0:09:30.200 a soft landing? So they speak um and over the 0:09:30.240 --> 0:09:34.880 last twelve months, CORPC has averaged about UM forty two 0:09:34.920 --> 0:09:38.160 basis points per month, and so therefore, in order for 0:09:38.240 --> 0:09:41.480 the BED to hit their rates target by the end 0:09:41.520 --> 0:09:44.400 of the year, that means that corp c a PC 0:09:44.720 --> 0:09:47.600 must average about thirty three basis points. So you're gonna 0:09:47.640 --> 0:09:50.199 have per month, So you're gonna have a huge slowdown. 0:09:50.400 --> 0:09:53.880 We don't see the inflation cooling that fast, and so 0:09:54.160 --> 0:09:57.839 therefore we continue to believe that you know, yields are 0:09:57.880 --> 0:10:00.920 going to be materially higher by the end of the year. 0:10:01.200 --> 0:10:04.559 And so that's why we maintain um that you know, 0:10:04.640 --> 0:10:07.240 to have a shorter duration. And we don't think that 0:10:07.320 --> 0:10:10.120 the FED is going to have a soft landing. We 0:10:10.160 --> 0:10:12.960 think that they're going to overtighten and push us into 0:10:13.000 --> 0:10:16.920 recession ultimately. And uh, do they then turn around and 0:10:16.960 --> 0:10:19.679 cut I mean, I know, now we're going pretty far 0:10:19.760 --> 0:10:21.920 out and it's hard enough to forecast you know, the 0:10:21.920 --> 0:10:26.160 next twelve months, But do you expect the Fed to 0:10:26.400 --> 0:10:30.200 uh try and fix a mistake? Well? I think the 0:10:30.240 --> 0:10:32.280 big thing here is that the FED wants to get 0:10:32.400 --> 0:10:36.959 rates normalized UM, so that if they do over uh, 0:10:37.120 --> 0:10:40.120 if they overtighten, they have the ability to have some 0:10:40.320 --> 0:10:44.400 room to be able to lower rate um. You know, 0:10:44.440 --> 0:10:47.679 but at current you know, at current levels, even if 0:10:47.679 --> 0:10:50.200 we were to if they were to stop let's just 0:10:50.240 --> 0:10:55.200 say here or you know, a rate or two hikes more, UM, 0:10:55.280 --> 0:10:57.560 it's not going to be enough to give them dry 0:10:57.600 --> 0:10:59.800 powder going forward. So I think that that if they 0:10:59.840 --> 0:11:04.920 do overtighten the economy, um, they will they will make 0:11:04.960 --> 0:11:09.120 sure that a the inflation is under wraps at this 0:11:09.200 --> 0:11:12.960 point I think inflation is the most important thing for 0:11:13.000 --> 0:11:15.800 them to fight, and so for the FED, if they 0:11:15.840 --> 0:11:19.120 send us in the recession and inflation is still high, 0:11:19.640 --> 0:11:23.720 then I don't think that they're going to stop there. Um, 0:11:23.960 --> 0:11:26.240 you know, because the FED poot is gone, and so 0:11:26.360 --> 0:11:29.400 now it's really about trying to get inflation under control. 0:11:30.200 --> 0:11:33.160 Where you where are you? You're off? You're off? Where 0:11:33.160 --> 0:11:35.920 are you putting money to work? Kevin? Given your backshop, 0:11:35.920 --> 0:11:39.520 which is pretty darn didn't I would say, you know, 0:11:39.600 --> 0:11:43.040 kind of kind of a dark outlook. Yeah, I mean, 0:11:43.440 --> 0:11:45.319 you know, it's only dark in the in the short term, 0:11:45.400 --> 0:11:48.840 to be quite honest. I mean we're looking at opportunities 0:11:48.960 --> 0:11:51.760 and you know, and from a fixed income standpoint, we're 0:11:51.800 --> 0:11:57.040 still looking at bank loans and UH and high yield UH. 0:11:57.280 --> 0:12:01.280 In the equity markets, UM, you are wanting to get 0:12:01.280 --> 0:12:05.439 paid to wait, so we're looking um for dividend paying stocks. 0:12:05.640 --> 0:12:11.120 We're looking at covered cost strategies UM. And combine that 0:12:11.240 --> 0:12:15.080 with our high yell UH and bank loan approach. That's 0:12:15.120 --> 0:12:18.240 the idea of you know, getting paid to weight. And 0:12:18.280 --> 0:12:20.920 so we think that we're going to you know, we're 0:12:20.920 --> 0:12:24.280 gonna be okay. It's just that the markets. As we 0:12:24.320 --> 0:12:27.360 all talk about all the time, uncertainty, and right now 0:12:27.400 --> 0:12:30.720 we're in an uncertain time and it just I just 0:12:30.760 --> 0:12:32.920 feel like markets are going to be ranged bound. I'm 0:12:32.920 --> 0:12:35.280 not saying that it's harm again, I don't believe that. 0:12:35.640 --> 0:12:39.560 Um I think that, you know, if we go into recession, 0:12:39.679 --> 0:12:42.560 it's not going to be until late twenty three into 0:12:43.240 --> 0:12:45.920 so we have some time on our side. It's just 0:12:45.960 --> 0:12:49.440 a matter of being selective, all right, Kevin, good, good stuff. 0:12:49.480 --> 0:12:52.640 We appreciate getting your thoughts and your perspective there. Kevin Nicholson. 0:12:53.000 --> 0:12:55.720 He's a global fixed income co c i O and 0:12:55.840 --> 0:12:59.200 co head of Investment Committee at Riverfront Investment Group in 0:12:59.240 --> 0:13:03.040 the lovely city of Richmond, Virginia, where I spent a 0:13:03.080 --> 0:13:08.280 lot of time back in the day. All Right, for 0:13:08.400 --> 0:13:11.200 my good friend Renny and I, we look at the 0:13:11.200 --> 0:13:14.319 summer as the Triple Crown, and this weekend is a 0:13:14.440 --> 0:13:16.560 first leg of the triple Crown. Memorial Day then of 0:13:16.559 --> 0:13:20.040 course you've got four and then Labor Day. So when 0:13:20.040 --> 0:13:21.560 we get to the first leg of the triple Crown, 0:13:21.640 --> 0:13:24.840 you start thinking about seafood and laps to Mark Morrell. 0:13:25.000 --> 0:13:27.679 He does he does this lobster thing full time. He's 0:13:27.679 --> 0:13:30.440 a founder and CEO of Get Main Lobster Mark. Thanks 0:13:30.440 --> 0:13:32.280 so much for joining us here. A lot of folks 0:13:32.280 --> 0:13:34.680 are starting to think more and more about getting those 0:13:34.840 --> 0:13:39.239 fresh lobsters. Talk to us about the lobster market today. 0:13:39.320 --> 0:13:43.360 I mean, we see inflation everywhere return. How is it 0:13:43.400 --> 0:13:48.520 with the lobster guys. Yeah, it's insane right because fuel, 0:13:49.120 --> 0:13:53.640 they labor, you know, everything is up. So the lobster 0:13:53.760 --> 0:13:57.480 men are feeling. It's the warf owners are feeling at 0:13:57.480 --> 0:14:01.960 the processors my company, so because then you have to 0:14:02.400 --> 0:14:07.800 calculate what was the market there, and the market understands 0:14:07.800 --> 0:14:10.280 what's going on, so they know they're paying a little 0:14:10.320 --> 0:14:13.960 bit more, and the die hard lobster lovers um you know, 0:14:13.960 --> 0:14:17.520 are still buying. So it's an interesting time for sure. Yeah, 0:14:17.559 --> 0:14:20.120 I was wondering about the demand. I mean for me. Also, 0:14:20.920 --> 0:14:24.840 the summer is marked in July and August by the 0:14:24.920 --> 0:14:27.400 Lobster Party, by the place I go to, the beach 0:14:27.400 --> 0:14:28.960 place I go in the summer. We have the Lobster 0:14:29.040 --> 0:14:32.080 Party one each month and it's like the party to 0:14:32.120 --> 0:14:36.080 go to um. But as we're all sort of tightening 0:14:36.080 --> 0:14:40.720 our belts here because of six dollar a gallon gas 0:14:40.840 --> 0:14:43.560 and you know, um groceries that are all of a 0:14:43.640 --> 0:14:48.840 sudden costing of our paychecks rather than ten to fifteen 0:14:49.160 --> 0:14:54.560 do we still reach for the lobster demands? Has not 0:14:54.720 --> 0:14:58.600 waned as much as I thought it would. Uh, really 0:14:58.640 --> 0:15:02.600 interesting and um, I mean one of the things lobster 0:15:02.680 --> 0:15:06.720 is very celebratory, so not something people eat every day, 0:15:06.760 --> 0:15:10.360 but if they want a special event to be that 0:15:10.440 --> 0:15:14.680 much more special than lobsters could go to. By the way, 0:15:14.680 --> 0:15:17.120 is lobster still the best? I mean I think of 0:15:18.040 --> 0:15:21.560 main lobster as the pinnacle right caught in some freezing 0:15:21.680 --> 0:15:25.120 cold waters by a guy with a sick accent in 0:15:25.200 --> 0:15:28.880 a sweet trawler like But um, is it still the 0:15:28.920 --> 0:15:33.440 only way? Are there lobster farms? Are their genetically engineered lobsters? 0:15:33.520 --> 0:15:40.040 What's the story? Yeah? I think lab lobsters are in 0:15:40.120 --> 0:15:43.680 the future. I haven't heard of anything now here and 0:15:43.760 --> 0:15:45.760 me and the only thing I fell was wild caught 0:15:45.800 --> 0:15:51.600 by hand by an individual typically generational lobsters man or woman. 0:15:52.440 --> 0:15:56.080 So it's pretty cool, big heritage here and the process 0:15:56.160 --> 0:16:00.160 really hasn't changed much. I mean, how have the the 0:16:00.280 --> 0:16:03.320 lobster people in Maine, in New England, how have they 0:16:03.360 --> 0:16:05.440 fared over the past few years with the pandemic, How's 0:16:05.480 --> 0:16:08.480 their business changed, how have they evolved? Because you know, 0:16:08.800 --> 0:16:11.080 whenever we talked to people that are in different parts 0:16:11.120 --> 0:16:12.760 of the economy, I was like to get a sense 0:16:12.800 --> 0:16:17.160 of kind of how their life, how their business has changed. Yeah, 0:16:17.520 --> 0:16:21.680 it was different for everyone during the pandemic, and a 0:16:21.720 --> 0:16:24.920 lot of people don't understand in the lobster industry itself, 0:16:25.600 --> 0:16:30.480 when the shutdown occurred, you got rid of casinos, cruise ships, 0:16:31.320 --> 0:16:34.800 in a bunch of restaurants. Those are big, big suppliers 0:16:34.800 --> 0:16:37.960 of lobster that people don't realize. So when you have 0:16:38.160 --> 0:16:42.840 large purveyors that have tanks and freezers filled with lobster 0:16:42.960 --> 0:16:46.320 and nowhere for it to go, they rely on businesses 0:16:46.360 --> 0:16:51.040 like mine, where are online direct consumer. We shipped the 0:16:51.040 --> 0:16:56.080 product so um. It was really interesting. Typically the price 0:16:56.160 --> 0:16:58.880 goes up and down throughout the year depending upon supply 0:16:58.920 --> 0:17:03.400 and demand. But demand was super duper high and supply 0:17:03.560 --> 0:17:07.200 was super duper high. Uh, and then supply started to 0:17:07.240 --> 0:17:11.600 get low um, and we had an entire year of 0:17:11.720 --> 0:17:16.680 not much price change. Um and then suddenly I've never 0:17:16.720 --> 0:17:20.680 seen lobster prices as high as they got recently it 0:17:20.760 --> 0:17:23.960 was it was wild and because demand was still really 0:17:24.040 --> 0:17:26.760 high but supply was low. But it would the uncertainty 0:17:27.040 --> 0:17:29.320 what is this supply like, you know, is it a 0:17:29.920 --> 0:17:33.560 what is this lobsters? You know, natural lobsters? Is it? 0:17:33.720 --> 0:17:38.320 Is it on the rebound? Is it good? Is it endangered? Um? No, 0:17:38.520 --> 0:17:43.760 So main super sustainable and by designed by the lobster 0:17:43.800 --> 0:17:46.959 men and women themselves. So we're never going to have 0:17:47.040 --> 0:17:51.960 any supply issues from what is in the ocean. Um. 0:17:52.000 --> 0:17:55.720 So that's great news. Um. You know other markets from 0:17:55.720 --> 0:17:59.760 the overly privy too. I don't study the Canadian on 0:18:00.200 --> 0:18:03.119 sometimes I have to buy Canadian but I don't, you know, 0:18:03.200 --> 0:18:07.760 study elsewhere. But we don't catch anything below a pound 0:18:07.760 --> 0:18:11.160 and nothing above four pounds, so that we can let 0:18:11.200 --> 0:18:13.639 them grow. And then the big ones, you know, we 0:18:13.640 --> 0:18:16.280 want to keep them around because they're you know, they're breathing. 0:18:17.080 --> 0:18:20.000 I will point out there have been you know, during 0:18:20.000 --> 0:18:24.840 the lockdown, Maine started selling recreational weed. I don't know 0:18:24.840 --> 0:18:27.399 if that has anything to do with the demand. I 0:18:27.400 --> 0:18:30.720 don't know if that influences the demand picture or slows 0:18:30.760 --> 0:18:34.320 down supply a little bit. But um, but you're moving 0:18:34.320 --> 0:18:36.600 into a new era and I mean, like you said, 0:18:36.720 --> 0:18:40.239 everything's still done traditionally in sustainable ways and it's an 0:18:40.240 --> 0:18:43.280 incredible heritage. But now you're selling an n f T. 0:18:44.080 --> 0:18:46.840 What's that all about? What you got to tell us 0:18:46.840 --> 0:18:52.280 about it? It's crazy. So back in November, um, I 0:18:52.400 --> 0:18:58.959 discovered a beautiful one million rare lobster that lobs. I'm 0:18:58.960 --> 0:19:02.280 gonna work with Billy or Smith harvested and we have 0:19:02.320 --> 0:19:05.640 a relationship where I acquire a of his catch. So 0:19:06.680 --> 0:19:10.480 um it was. Her name is Hattie Cotton colored cotton 0:19:10.840 --> 0:19:14.320 candy colored lobsters. She's like blues and paints. If you 0:19:14.440 --> 0:19:17.399 google or Hattie cotton candy lobster. I'm on it, and 0:19:17.600 --> 0:19:20.639 I'm on it right now. Yeah, I mean, mother nature 0:19:20.720 --> 0:19:24.560 created something epic. Um So I was inspired by her, 0:19:24.760 --> 0:19:28.560 and I wanted to do some cool projects. One was 0:19:29.040 --> 0:19:32.040 created an I P A with shipyard called Hattie's Happy 0:19:32.119 --> 0:19:36.160 I p a UM And then the n f T project, 0:19:36.200 --> 0:19:40.440 which I'm super pumped about, is Hattie's Bay Club. And 0:19:40.640 --> 0:19:43.040 so it's this Web two or a Web two business 0:19:43.680 --> 0:19:48.840 jumping into Web three, and we're bringing what it's called 0:19:48.880 --> 0:19:52.880 in real life utility to the Web three world. Typically 0:19:53.080 --> 0:19:56.000 an n f T gives you access to an exclusive 0:19:56.520 --> 0:19:59.280 group of people. It may give you if you stake 0:19:59.359 --> 0:20:02.600 it and make you earned down the road. For us, 0:20:02.760 --> 0:20:05.879 we want to use lobster in the web three world 0:20:05.920 --> 0:20:08.080 and say hey, you get this n f T, and 0:20:08.119 --> 0:20:12.000 we're doing monthly giveaways. We're giving tempercent fact and marine conservation. 0:20:12.760 --> 0:20:16.920 Those that collect and hold rare n f T get 0:20:16.960 --> 0:20:21.480 access to potentially lobster for a year and just a 0:20:21.520 --> 0:20:25.560 bunch of fun, uh fun things. And we're actually launching 0:20:25.680 --> 0:20:32.000 a merchandise website called b Hattie dot com and of 0:20:32.040 --> 0:20:35.000 the profits are going to token holders, So if you 0:20:35.040 --> 0:20:38.280 hold an n f T, you're gonna get the profits 0:20:38.320 --> 0:20:41.440 on this apparel website that was inspired by by the 0:20:41.480 --> 0:20:44.520 way I'm looking at pictures of this lobster and she 0:20:44.680 --> 0:20:47.280 is amazing. One of a million chances of finding she 0:20:47.400 --> 0:20:50.479 still alive? Is how he still alive? Yeah? Yes, right, 0:20:51.400 --> 0:20:55.639 Sea coastein Center in Ryan, New Hampshire, and she's alive 0:20:55.680 --> 0:20:58.639 and well, all right, Mark, awesome, awesome stuff. Best a 0:20:58.720 --> 0:21:02.440 lot to you and Hattie. Mark Morrell, founder and CEO 0:21:03.040 --> 0:21:09.520 of Get Main Lobster. All right, let's talk real estate, 0:21:09.600 --> 0:21:14.280 because I the peak of real estate when Matt bought 0:21:14.359 --> 0:21:16.520 his home. I'm going to call that the peak. We 0:21:16.600 --> 0:21:20.159 got interest rates rising here, so I'm just wondering what 0:21:20.200 --> 0:21:22.359 the impact is on not just residential, a commercial real 0:21:22.440 --> 0:21:25.600 estate as well. Has some Naji, President and CEO of 0:21:25.640 --> 0:21:29.040 Marcus and Millichap joins us Hassan, thanks so much for 0:21:29.160 --> 0:21:33.000 joining us here. Has real estate peaked here? I mean, 0:21:33.040 --> 0:21:35.640 it's been such a great asset class during the pandemic, 0:21:35.680 --> 0:21:39.000 but has it peaked? Good morning, Thanks for having me 0:21:39.040 --> 0:21:41.800 on the program. Their market is definitely going through a 0:21:41.840 --> 0:21:44.920 transition when you have interest rates at zero and now 0:21:44.960 --> 0:21:48.200 having to move up to what is really considered normal 0:21:48.240 --> 0:21:51.639 interest rates. Three year on the ten year treasury yield 0:21:51.720 --> 0:21:54.560 or even frankly three and a half or four yield 0:21:54.560 --> 0:21:57.400 on the pin your treasury is not high interest rate 0:21:57.960 --> 0:22:03.240 by historical standards. We're going from zero and going rapidly 0:22:03.359 --> 0:22:05.919 because the Fed now has to react to the inflation 0:22:06.440 --> 0:22:10.040 threat or these inflation reality. I should say it is 0:22:10.160 --> 0:22:13.000 causing a market transition, especially on the for sale housing 0:22:13.040 --> 0:22:16.160 side of the equation, because prices are up so much 0:22:16.520 --> 0:22:19.320 since the prior to the pandemic, and now you have 0:22:19.440 --> 0:22:23.159 higher interest rates moving people into apartment rentals. On the 0:22:23.160 --> 0:22:28.119 commercial side, the lack of overbuilding and really strong fundamentals 0:22:28.160 --> 0:22:31.919 prior to the pandemic and still today is really the 0:22:31.960 --> 0:22:35.000 safety net on top of renk Walks rank well for 0:22:35.080 --> 0:22:39.520 commercial real estate is coming back extremely strongly. And that's 0:22:39.520 --> 0:22:42.720 why commercial real state is an inflation well cause has 0:22:42.760 --> 0:22:46.040 some We have columnists here Cameron Cries who wrote a 0:22:46.040 --> 0:22:49.679 piece today about housing the housing market saying that's not pretty, 0:22:49.720 --> 0:22:54.200 but it isn't two thousand six. This isn't going to 0:22:54.280 --> 0:22:57.199 be a repeat of the bubble bursts that caused the 0:22:57.200 --> 0:23:02.240 Great Financial Recession, because a great financial crisis, because um, 0:23:02.280 --> 0:23:04.440 you don't have the rising supply that you did. We've 0:23:04.440 --> 0:23:09.560 seen these incredible UH price increases and in fact, if 0:23:09.560 --> 0:23:11.840 you look at the average median you know, on the 0:23:11.840 --> 0:23:15.280 residential side, the average median home, um, the mortgage payment 0:23:15.280 --> 0:23:20.399 has gone up more than fifty percent UM. But you 0:23:20.440 --> 0:23:23.800 don't have the overproduction that you had back then, and 0:23:23.840 --> 0:23:26.000 I wonder if it's the same on the commercial side. 0:23:27.240 --> 0:23:30.719