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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Affo, Cardplay and Android

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Speaker 2: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 2: you get your podcasts, or watch us live on YouTube.

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Speaker 3: Get back to the markets here.

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Speaker 4: The big economic news of the day was the retail sales,

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Speaker 4: and they generally came out I think across the board

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Speaker 4: stronger than expected. The headline zero point four percent, consensus

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Speaker 4: was zero point three for growth and zero point one

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Speaker 4: percent last period, so big pick up there. When you

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Speaker 4: look at the control group, perhaps even more impressive zero

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Speaker 4: point seven percent gain versus zero point three percent forecast

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Speaker 4: and last month was zero point three percent, So again

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Speaker 4: pretty strong across the board. Let's see what it means

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Speaker 4: to some of the folks who really follow the retail

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Speaker 4: business closely, as does our next guest, Mary Shore, Senior

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Speaker 4: Equity anams A Columbia thread Needle, joining us from Boston

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Speaker 4: via Zoom. So, Mary, just to my untrained eye, these

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Speaker 4: retail sales numbers look pretty good. What do you think

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Speaker 4: and what are you seeing in the retail space these days?

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Speaker 5: Yes?

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Speaker 6: Thanks, for having me back. I think you're right.

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Speaker 7: The strong September retail sales print confirms that the consumer

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Speaker 7: is in good shape amidst a relatively strong jobs and

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Speaker 7: income backdrop. To your point, there may have been some

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Speaker 7: benefit this month from pre hurricane stock up behavior, but

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Speaker 7: overall the growth remains very healthy, as we've been talking

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Speaker 7: about for some time now.

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Speaker 6: However, when you.

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Speaker 7: Dig deeper, you continue to see pockets of strength and weakness.

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Speaker 6: So areas of strength.

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Speaker 7: That I would highlight would be food, health and wellness,

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Speaker 7: clothing and value, which I think is really incorporated in

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Speaker 7: that general merchandise category. And then some areas of weakness

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Speaker 7: to call out would be autos and some of the

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Speaker 7: bigger ticket categories that we're strong during the pandemic, like

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Speaker 7: furniture and electronics. So when I look at the data,

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Speaker 7: I think it shows the consumers in good shape, and

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Speaker 7: it really is a continuation of a lot of the

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Speaker 7: trends that we've discussed in prior episodes.

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Speaker 8: It's interesting. I mean, obviously this data does show that

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Speaker 8: the consumer is in a good spot, but of course

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Speaker 8: people are still complaining of this intensely high inflation. How

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Speaker 8: do you think that this really fits into the broader

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Speaker 8: economy and as we think about things moving forward, well,

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Speaker 8: I think.

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Speaker 7: It's exactly what we're seeing in the data. We're very

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Speaker 7: high level, we see low single digit growth, But then again,

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Speaker 7: when you dig a little deeper, you see services growing

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Speaker 7: faster than goods, and within goods, you see needs growing

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Speaker 7: faster than once. And so to your point, the inflation

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Speaker 7: that we've seen in food and housing in particular really

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Speaker 7: continues to weigh on consumer discretionary spend on goods, and

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Speaker 7: I think that is a real key reason for some

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Speaker 7: of the continued weakness in some of those bigger ticket

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Speaker 7: categories that I just highlighted.

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Speaker 3: Mary, what are the retailers that you cover?

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Speaker 4: What are they saying about the holiday Christmas season coming

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Speaker 4: up such a big part of their annual sales?

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Speaker 7: Yes, I think you know, as always they're cautiously optimistic.

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Speaker 7: You know, they're optimistic by nature, but given the macro backdrop,

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Speaker 7: I think everyone is planning their business very conservatively. They

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Speaker 7: were being disciplined on inventory. I expect promotions to be

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Speaker 7: very well controlled for that reason. But overall, I do

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Speaker 7: think it will be a strong holiday. What we've seen

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Speaker 7: this year is that during key events, the consumer does

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Speaker 7: come out and shop, so I think, you know, we

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Speaker 7: will see real strength over Black Friday and the week

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Speaker 7: before Christmas, and probably a lull in between those two

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Speaker 7: shopping periods as we've seen in the past. So overall,

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Speaker 7: I would expect a strong season, but still a little

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Speaker 7: lumpy when you're looking week by week.

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Speaker 8: So Mary, talk to me about the sentiment as we're

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Speaker 8: thinking about things heading into this election. Of course, we're

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Speaker 8: less than a month away. How are consumers thinking about

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Speaker 8: this and businesses as well?

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Speaker 7: Right well, I think whether it's the election or the

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Speaker 7: direction of gas prices, what most of the companies that

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Speaker 7: I talk to say is it's really the uncertainty which

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Speaker 7: is more paralyzing for the consumer. So I would definitely

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Speaker 7: expect some noise, you know, right heading into the election.

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Speaker 7: But either way, I think that the results of the

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Speaker 7: election will provide that certainty to the consumer and probably

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Speaker 7: boost consumer sentiment going forward. I think what it means

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Speaker 7: for the companies could be more mixed, Like if Trump

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Speaker 7: does continue talking about his tariff policy, then you know,

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Speaker 7: that could be an overhang on some of the retailers

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Speaker 7: that import from overseas.

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Speaker 6: But I think overall, just the results of the election.

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Speaker 7: In gaining that uncertainty will be a positive thing for

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Speaker 7: consumer sentiment going forward.

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Speaker 4: All right, this Christmas shopping season, how promotional will the

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Speaker 4: retailers be? I know that goes right to their profit margin,

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Speaker 4: but how do you think that's going to shake out?

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Speaker 7: Yeah, you know, we talk a lot about promotions versus markdowns.

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Speaker 7: You know, the retailers know they have to be promotional

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Speaker 7: to drive traffic, and so I think you should expect

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Speaker 7: to see controlled promotions. So what I mean by that is,

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Speaker 7: you know, promotions more in say the thirty percent range,

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Speaker 7: and given that inventory is well controlled, I think the

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Speaker 7: retailers will try to stick to that plan for as

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Speaker 7: long as possible. I would not expect to see promotions

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Speaker 7: in like the seventy percent range and markdowns, and that's

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Speaker 7: typically what you see when the sales are a lot

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Speaker 7: weaker than planned or the inventory is a lot heavier

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Speaker 7: than planned. And I don't really expect either of those

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Speaker 7: things this holiday. So you'll still see those headline promotions,

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Speaker 7: but you have to remember that the retailers have planned

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Speaker 7: for those they bought into them, and so there's really

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Speaker 7: no negative margin implication from some of those headlines.

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Speaker 8: Well, we think historically and then moving into this year,

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Speaker 8: how do consumers really think about the holidays when we're

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Speaker 8: thinking in this season, is it everyone's just going to

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Speaker 8: throw everything on their credit card because we have the

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Speaker 8: holiday cheer? Or do you think they're really going to

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Speaker 8: be targeting those companies that are those stores that are

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Speaker 8: offering promotions specifically.

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Speaker 6: It's a great question.

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Speaker 7: I mean, I think we do see the consumer come

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Speaker 7: out and spend around key events, and you know, especially

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Speaker 7: in a year that could be tough, you're feeling the

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Speaker 7: pinch of inflation, every consumer wants to bring a little

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Speaker 7: cheer around the holidays. So I do expect that they

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Speaker 7: will be out in the market. Having said that, I

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Speaker 7: think they're still going to be very discerning, very focused

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Speaker 7: on value, and I would expect a lot of the

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Speaker 7: value players, as I mentioned in that general merchandise category

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Speaker 7: to be the key beneficiary.

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Speaker 3: All Right, Mari, thank you so much for joining us.

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Speaker 4: Mary Sure Senior ecuadanams a Columbia Thread Needle Investments up

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Speaker 4: in Boston, always helping us out talking about retail sales.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Applecar Play and Android

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Speaker 2: Otto with the Bloomberg Business. You can also listen live

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Speaker 2: on Amazon Alexa from our flagship New York station. Just

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Speaker 2: say Alexa play Bloomberg eleven thirty.

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Speaker 3: Let's switch gears.

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Speaker 4: Let's get back to the markets here technology in the

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Speaker 4: play here yesterday, I think it was me who said

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Speaker 4: I think I've seen the top of AI.

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Speaker 3: I think some of these chip.

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Speaker 4: Companies are going to roll over and blah blah blah blah.

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Speaker 4: Well then Taiwan Semiconductor comes out with a better than

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Speaker 4: forecasted outlook. So once again I was proven wrong, particularly

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Speaker 4: it relates to technology.

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Speaker 3: I don't know what's going on.

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Speaker 4: How do you feel about that? How do I feel

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Speaker 4: about that? It lasted all of like twenty four hours?

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Speaker 4: My great call there, Man Deep Sing he's the extra,

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Speaker 4: He's the one we go to. Man Deep Sying, he's

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Speaker 4: the tech ANAMST for Bloomberg Intelligence. So Mandy talks about

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Speaker 4: Taiwan Semi Contector. A lot of our listeners, a lot

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Speaker 4: of reviewers not really familiar with it. Tell us about

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Speaker 4: what this company does and kind of what they announced recently.

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Speaker 9: I mean, basically, they are the manufacturing factory for all

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Speaker 9: your AI chips, all the chips that go into smartphones,

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Speaker 9: and basically they are at the leading edge of manufacturing.

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Speaker 9: When people talk about you know chips, the most powerful

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Speaker 9: AI chips with the most transistors, they are the ones

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Speaker 9: who are manufacturing it. And look, I think it was

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Speaker 9: quite a contrast between the ASML print and the TSMC print,

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Speaker 9: and what it shows you is the AI side continues

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Speaker 9: to be strong. In fact, they called out smartphones being

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Speaker 9: as strong in market as well uh in the print.

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Speaker 9: So clearly the top two segments for them are working

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Speaker 9: quite well and they have more demand than they can manufacture.

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Speaker 9: These chips for Nvidia and Apple, those are their you know,

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Speaker 9: top customers, and they're raising their capex guide. So one

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Speaker 9: of the concerns was will TSMC raise their capex guide

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Speaker 9: given what we heard from a SML, Well, guess what,

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Speaker 9: they are raising their capex guide. So a SML's woes

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Speaker 9: were really driven by Intel pairing back and Samsung pairing back.

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Speaker 9: But when it comes to TSMC, they continue to be strong,

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Speaker 9: all right.

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Speaker 4: So Taimewan Semiconductor does a trade in US or eighty

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Speaker 4: rs in US.

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Speaker 3: The ADRs are the ADRs trade in.

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Speaker 4: US t SM as your tickle put InChI. Bloomberg Terminal

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Speaker 4: stock is up eleven percent today, up one hundred percent

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Speaker 4: year to date. This isn't a penny stock. This has

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Speaker 4: a market cap of over one trillion dollars. My ignorance

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Speaker 4: level on this is out of control. I mean, I

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Speaker 4: just didn't know they were that big.

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Speaker 8: I know, when we're compute, the number's two big.

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Speaker 3: No, it's too big.

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Speaker 4: That's why we need man deep sink. So anyway, big

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Speaker 4: company folks. Giving a positive outlook on the chip business

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Speaker 4: really important for overall tech discussion about AI.

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Speaker 8: So talk to us about the outlook right now? What

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Speaker 8: are expectations when we think about the tech sector more broadly?

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Speaker 8: I know earnings people have a pretty low bar, so

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Speaker 8: if companies are doing well, it'll be a really great,

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Speaker 8: you know, great news coming out of that. How is

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Speaker 8: the tech sector when we're looking at AI specifically, what

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Speaker 8: are expectations right now? I know the bar tends to

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Speaker 8: be relatively high.

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Speaker 9: I mean, I don't know if the bar is low

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Speaker 9: at this point, given what we saw with THEML ASML

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Speaker 9: was the case of expectations being too high and they

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Speaker 9: guide it to that. And now they come out, you know,

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Speaker 9: this quarter and say we are taking down bookings by

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Speaker 9: fifty percent. So clearly expectations were high. It was the

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Speaker 9: management who said it, and now they took back their guide.

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Speaker 9: In the case of if I think in Video or

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Speaker 9: some of the other bellveather for AI, look, we've been

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Speaker 9: hearing that the demand for their latest chip continues to

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Speaker 9: be strong. The TSMC print is another validation that you know,

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Speaker 9: they are ramping up the AI side. It's almost mid

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Speaker 9: teens of their revenue. This was almost a zero billion,

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Speaker 9: a zero a dollar revenue for TSMC a few quarters back.

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Speaker 9: So in just the span of three four quarters, it's

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Speaker 9: mid teens of their revenue. That just goes to show

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Speaker 9: along with the margin expansion, the gross margin growing to

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Speaker 9: fifty eight percent. I mean, all this is positive for

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Speaker 9: AI and you know for bell Weathers like Nvidia at

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Speaker 9: the same time, this will drive up the expectations even further.

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Speaker 9: So you know, the bar keeps getting higher, and at

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Speaker 9: some point I think you will have missus like what

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Speaker 9: we saw with the SML, but probably not that soon

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Speaker 9: for the likes of Invidia.

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Speaker 4: So thirty secondsleft, who are the top two or three

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Speaker 4: or four buyers of these chips. Is it the Microsoft's

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Speaker 4: and the Googles of the world.

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Speaker 9: I mean, in the case of TSMC, the top buyer

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Speaker 9: is still Apple. Okay, so that validates that smartphone to

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Speaker 9: refresh that everyone is waiting for that segment. Did well.

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Speaker 9: The inventory is building up, and then Nvidia and and

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Speaker 9: Nvidia continues to become a bigger buyer of tsmcs. And

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Speaker 9: then you have got AMD and some others. But pretty

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Speaker 9: much every fabulous design company, whether it's AMD, Qualcomm and VideA,

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Speaker 9: goes to TSMC for you know, manufacturing their chips because

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Speaker 9: they have a leading node monopoly. I mean, everyone else

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Speaker 9: is way behind when it comes to.

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Speaker 4: Son Go to Taiwan and see Taiwan and see them

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Speaker 4: make chips.

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Speaker 9: Yeah, you should visit one of their factories, the one

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Speaker 9: in Arizona though.

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Speaker 3: Yeah, they're gonna do one in Arizona. Yeah, okay, that's

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Speaker 3: cool too. All right, Mandy, thank you very much again.

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Speaker 4: As always, he is our absolute goat to persons for

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Speaker 4: all things technology. Senior Technology aannels. He runs all of

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Speaker 4: our tech practice at Bloomberg Intelligence, and we appreciate getting

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Speaker 4: his time because he's only a floor away.

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Speaker 3: It's not like a big ass. We love that, and

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Speaker 3: you walk.

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Speaker 4: Up the stairs and talk to us on Bloomberg Radio,

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Speaker 4: man Deep singing.

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Speaker 2: There, you're listening to the Bloomberg Intelligence Podcast. Catch us

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Speaker 2: live weekdays at ten am Eastern on Apple car Playing

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Speaker 2: and broud Otto with the Bloomberg Business app. Listen on

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Speaker 2: demand wherever you get your podcasts, or watch us live

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Speaker 2: on YouTube.

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Speaker 4: I don't know, did retail sales today nor better than expected?

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Speaker 4: Maybe maybe the FED doesn't have to cut in November.

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Speaker 4: And if they don't, is that okay? I don't know

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Speaker 4: the markets are creating car here. It looks like it's

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Speaker 4: kind of okay. Let's talk to somebody who's actually has

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Speaker 4: a professional here on this whole thing.

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Speaker 3: David Kodluck. He's a founder, he's a chief executive officer.

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Speaker 4: And he's a chief investment strategist. I think that means

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Speaker 4: he's the boss.

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Speaker 8: It sounds like it.

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Speaker 4: That's right, mainstay a capital management from one of my

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Speaker 4: favorite little towns out there in the Midwest, Troy, Michigan.

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Speaker 3: I've been to Troy, Michigan. Cool little town, David.

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Speaker 4: So you get a retail sales number today that's better

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Speaker 4: and expected, you get some still a pretty strong labor market.

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Speaker 4: Is this a FED that has to cut and if

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Speaker 4: they don't have to cut in November.

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Speaker 3: Is that okay?

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Speaker 10: Good morning, Paul and Nora. I think it's a FED

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Speaker 10: that will continue to cut. They'll continue to ease because

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Speaker 10: monetary policy is more restrictive than it needs to be.

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Speaker 11: Inflation has come down there.

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Speaker 10: I know there's fears that we could see a resurgence

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Speaker 10: of inflation here yet this year into next year, but

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Speaker 10: inflation has come down and is drifting towards target. Certainly

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Speaker 10: it is in Europe the ECB cut last night. The

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Speaker 10: key here is that when we look at the economy

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Speaker 10: and say, I think it's you know, what's interesting is

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Speaker 10: do they need to cut for a recession? No, those

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Speaker 10: that have been calling for a recession for the last

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Speaker 10: two years have been dead.

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Speaker 11: We're wrong.

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Speaker 10: We've kind of mocked this by my phrase the recession

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Speaker 10: is always six months away. That have actually been saying

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Speaker 10: for two and a half years now. And yeah, retail

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Speaker 10: sales came in above expectations, four tenths a month over

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Speaker 10: month versus three tenths.

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Speaker 11: We've got strong.

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Speaker 10: GDP Atlanta gb GDP now forecast above three percent, uh,

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Speaker 10: labors hanging in there, and so we've I always I

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Speaker 10: always am careful to use the word goldilocks economy, but

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Speaker 10: we sure, you know, if there's if there's such a

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Speaker 10: thing as a Goldilocks economy, we're sure close to it

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Speaker 10: right now. And the Fed does have the ability to

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Speaker 10: continue to ease as other central banks are around the world,

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Speaker 10: just because you know, we we don't uh, we're in

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Speaker 10: that sweet spot where they can make monetary policy a

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Speaker 10: little less restrictive.

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Speaker 8: So tell me, David, which economic data is most paramount

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Speaker 8: right now. I know we've always had our eyes on inflation,

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Speaker 8: but it seems as though attention is really shifting toward

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Speaker 8: employment data as being more important right now. What's your

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Speaker 8: look your out look on that?

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Speaker 11: Yeah, that, Nora and I agree.

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Speaker 10: It's really it's this, when we look at employment or

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Speaker 10: labor versus inflation. You know, where are we and we

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Speaker 10: see inflation drifting down? We think that's becoming a more

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Speaker 10: non existent problem. We keep getting mixed data on labor.

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Speaker 10: You know, there was some screwy numbers in the back

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Speaker 10: months that had to be revised. But you know, if

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Speaker 10: we if we we want to keep an eye on labor.

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Speaker 10: We want to keep an eye on the consumer being

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Speaker 10: two thirds of our economy, so we need labor to

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Speaker 10: stay strong enough but not too strong and not get

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Speaker 10: weak enough that they're cutting, you know, for the reasons

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Speaker 10: we don't want, which is the fear of a recession.

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Speaker 10: And we think the you know that the fears of

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Speaker 10: a recession, you know, they're just there's anecdotal data there.

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Speaker 10: You know, what's happening with car loan delinquencies, personal debt,

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Speaker 10: credit card debt.

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Speaker 11: There's that anecdotal data.

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Speaker 10: But when we look at GDP, we look at labor,

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Speaker 10: we look at inflation, we look at retail salesman. You know,

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Speaker 10: we've we've got when we look at the macro numbers,

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Speaker 10: we've got an economy that keeps chugging along, and correspondingly,

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Speaker 10: a stock market that keeps chugging along.

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Speaker 11: Again.

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Speaker 10: The people that have called for a bear market anytime

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Speaker 10: over the last two years, they weren't early. They were

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Speaker 10: just wrong, dead wrong. And you know, we're still constructive

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Speaker 10: on stocks. It always looks prudent, right, It always looks

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Speaker 10: prudent or smart to say a recession is right around

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Speaker 10: the corner, or bear markets right around the corner. But

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Speaker 10: it's key to these people that have been saying this

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Speaker 10: for so long they're dead just been wrong.

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Speaker 8: So David, how are you advising your clients now versus

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Speaker 8: maybe this time last year?

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Speaker 10: We're you know, all that said, we're always concerned about

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Speaker 10: when when the next shoe will drop or you know,

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Speaker 10: when when the first shoe will drop or the next

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Speaker 10: shoe will drop.

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Speaker 11: We are concerned about that.

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Speaker 10: So that's why we're keeping an eye on the data

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Speaker 10: that were talking about here on does it is inflation

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Speaker 10: on a glide path down to the.

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Speaker 11: Fence target we believe it is.

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Speaker 10: Is you know, uh, do we still have though a

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Speaker 10: robust economy or we headed towards recession?

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Speaker 11: We don't think so. So Uh.

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Speaker 10: We continue to be very constructive on the markets. We're

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Speaker 10: over overweight equities. We've changed our term structure on our

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Speaker 10: bond holding somewhat. We were last year in the first

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Speaker 10: part of this year on the shortest end of the curve,

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Speaker 10: just capturing yield, uh, rather than any kind of interest

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Speaker 10: rate player anything else. Because duration has worked against you, uh,

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Speaker 10: we think there's an opportunity over the next year that

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Speaker 10: duration will help you. You can get that capital appreciation

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Speaker 10: combined with the yield on your stocks, clip the coupon

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Speaker 10: and enjoy some capital appreciation. But I think my strongest

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Speaker 10: recommendation is, uh, you know, these all the naysayers, all

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Speaker 10: the doomsayers, the pundits that are you know, collapses eminet. Look,

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Speaker 10: they've been wrong, and so we're very constructive on the markets.

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Speaker 10: We're bullish on the market's near term. We have an

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Speaker 10: election coming that we'll get out of the way, so

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Speaker 10: that removes some uncertainty. And we're heading into the seasonal

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Speaker 10: period that's strong for stocks from November through April. So

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Speaker 10: you know, there's a lot of economic seasonality and other

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Speaker 10: factors that are good tailwinds for equities right now.

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Speaker 4: David, you mentioned the election nineteen days I think coming

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Speaker 4: up or very close here.

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Speaker 3: What do you tell your clients about it?

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Speaker 4: I mean, is there any way to election proof of

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Speaker 4: portfolio or don't worry about it?

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Speaker 10: Well, unfortunately, and not our clients, because we educate our

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Speaker 10: clients about this a lot every election cycle. Don't election

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Speaker 10: proof it by going to cash. That's the worst mistake

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Speaker 10: that investors make because look at this, look at this

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Speaker 10: election like others, how polarizing, you know, between the two candidates.

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Speaker 10: You know, if so and so gets elected, we're going

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Speaker 10: to heck in a handbasket in the same thing for

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Speaker 10: the other candidate.

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Speaker 11: And there's all this.

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Speaker 10: The reality of it is is the biggest factor for

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Speaker 10: the market is uncertainty. Markets had uncertainty that will be

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Speaker 10: determined here in three weeks. So the key is don't

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Speaker 10: go to cash, stay invested in the market and as

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Speaker 10: we see who it looks like will be what administration

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Speaker 10: will be in office here in a few months, that's

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Speaker 10: where that's where we want to be tactically moving our

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Speaker 10: portfolios to worst mistake is to go to cash. And look,

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Speaker 10: this year is a perfect example. We have the best

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Speaker 10: election year through today for the markets that we've had

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Speaker 10: since the nineteen thirties. That's how good this year is.

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Speaker 10: It is not the time to be to go to cash,

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Speaker 10: to wait on the sidelines until you see how it

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Speaker 10: comes out. Right, So it's looking at where what do

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Speaker 10: you expect with the candidate that will win, tactically allocating

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Speaker 10: your portfolio.

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Speaker 11: For that and stay invested.

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Speaker 4: Yep, excellent stuff as always David Coodley, he's a founder,

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Speaker 4: chief executive officer in Chief Investment strategist at Mainstay Capital Management,

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Speaker 4: and David and his team are ranked in the top

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Speaker 4: ten on Baron's Top one hundred Independent Financial Advisors in

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Speaker 4: twenty twenty four. So we appreciate getting a few minutes

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Speaker 4: at this time.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on applecar Play and Android

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Speaker 2: Auto with the Bloomberg Business App. You can also listen

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Speaker 2: live on Amazon Alexa from our flagship New York station,

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Speaker 2: Just Say Alexa playing Bloomberg eleven thirty.

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Speaker 3: Let's go to a really good story I today. I

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Speaker 3: mean Blackstone.

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Speaker 4: You know they got like aa jillion dollars under management

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Speaker 4: to Stock. They put up some good numbers recently, just today,

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Speaker 4: stock up five percent today, up twenty eight percent.

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Speaker 3: Year to date, fifty two week high.

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Speaker 4: Some phenomenal performance coming out of the good folks at Blackstone.

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Speaker 4: I want to break it down, and we do that

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Speaker 4: with Paul Goldberg. He's Bloomberg Intelligence senior equity analyst. Paul,

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Speaker 4: what is Blackstone and why and how are they executing

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Speaker 4: so well? Just tell us what Blackstone is in your mind,

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Speaker 4: and then what are they doing so well? Hi?

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Speaker 3: Paul?

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Speaker 12: Thank you for having me. Blackstone called themselves a juggernaut

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Speaker 12: this morning, and they called in a press release themselves

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Speaker 12: as sort of being a benchmark for the alternatives industry.

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Speaker 12: They are in private equity, private credit, really one of

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Speaker 12: the big private real estate investors. So all these businesses are,

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Speaker 12: some of them doing really well, some of them are

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Speaker 12: recovering from the kind of a lull in the last

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Speaker 12: two years, and it's growing. They reached to one point

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Speaker 12: one trillion dollars. So that's the largest alternative manager out there.

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Speaker 8: Let's talk a bit of real estate. Of course, I

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Speaker 8: view them as a bell whether I'm actually a US

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Speaker 8: real estate stocks reporter, I'm curious how are people viewing

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Speaker 8: Blackstone and a lot of its deals recently. Are we

440
00:22:44,200 --> 00:22:47,280
Speaker 8: seeing more activity happening in that sector specifically?

441
00:22:48,640 --> 00:22:51,640
Speaker 12: There it is, and they very specifically alluded to it.

442
00:22:51,680 --> 00:22:55,280
Speaker 12: They made a few very large ten billion plus deals

443
00:22:55,320 --> 00:22:58,080
Speaker 12: this year. They see in the bottom and the real

444
00:22:58,200 --> 00:23:01,439
Speaker 12: estate cycle. They also, I've seen private is being a

445
00:23:01,480 --> 00:23:05,520
Speaker 12: bit more aeriosyncratic than the public markets. So it doesn't

446
00:23:05,560 --> 00:23:07,639
Speaker 12: move necessarily in tend them. But as long as they

447
00:23:07,680 --> 00:23:10,399
Speaker 12: see the bottom, as long as they are seeing a

448
00:23:10,720 --> 00:23:13,840
Speaker 12: lower interest rate, trajectory that should be supportive in the

449
00:23:14,119 --> 00:23:17,320
Speaker 12: real estate space. The other thing is their real estate

450
00:23:17,400 --> 00:23:19,600
Speaker 12: is quite unique, right, So when we talk about real

451
00:23:19,720 --> 00:23:22,160
Speaker 12: estate and especially commercial, a lot of people think about

452
00:23:22,200 --> 00:23:25,240
Speaker 12: offices and these kinds of things. For them, it's mostly

453
00:23:25,560 --> 00:23:30,480
Speaker 12: data centers, infrastructure kind of real estate, multifamily, so different business.

454
00:23:30,560 --> 00:23:33,639
Speaker 12: And in the data centers they have over seventy billion

455
00:23:33,640 --> 00:23:36,280
Speaker 12: dollars of their one point one trillion just sitting in

456
00:23:36,320 --> 00:23:37,240
Speaker 12: those data centers.

457
00:23:38,160 --> 00:23:39,359
Speaker 4: And I like to just take a look when I

458
00:23:39,400 --> 00:23:43,680
Speaker 4: look at Blackstone. Stephen Schwartzman, the just the total Wall

459
00:23:43,720 --> 00:23:47,840
Speaker 4: Street mobilis seventy seven years of age, co founder of Blackstone.

460
00:23:47,840 --> 00:23:50,040
Speaker 4: He's got a net worth today fifty one point eight

461
00:23:50,080 --> 00:23:50,600
Speaker 4: billion dollars.

462
00:23:50,680 --> 00:23:51,560
Speaker 11: That's puts them on.

463
00:23:51,560 --> 00:23:55,720
Speaker 4: Number twenty four in the Bloomberg's Rich List. Credit to

464
00:23:55,760 --> 00:23:57,760
Speaker 4: talk to us about the credit business. Private credit business

465
00:23:57,800 --> 00:23:59,040
Speaker 4: got about thirty seconds in upon.

466
00:24:00,119 --> 00:24:02,640
Speaker 12: Us all about the credit. This quarter was led by

467
00:24:02,680 --> 00:24:06,359
Speaker 12: credit forty billion of inflows, twenty of them going into

468
00:24:06,400 --> 00:24:10,880
Speaker 12: the credit. All the upside in fees and performance it

469
00:24:10,920 --> 00:24:13,240
Speaker 12: was going through the credit and the growth of expectations

470
00:24:13,280 --> 00:24:15,240
Speaker 12: a lot of it just in the credit as well,

471
00:24:15,280 --> 00:24:18,120
Speaker 12: So very consistent with what we're hearing throughout the year

472
00:24:18,200 --> 00:24:19,560
Speaker 12: and other managers as well.

473
00:24:20,440 --> 00:24:22,159
Speaker 3: Paul, great stuff, Thank you so much for joining us.

474
00:24:22,160 --> 00:24:26,000
Speaker 4: Paul Goldberg, Senior equityannas Bloomberg Intelligence giving us the latest

475
00:24:26,280 --> 00:24:27,240
Speaker 4: on Blackstone.

476
00:24:27,320 --> 00:24:30,119
Speaker 3: B X is the ticker symbol, folks, so check it out.

477
00:24:30,200 --> 00:24:31,439
Speaker 3: Check out that chart. Just amazing.

478
00:24:32,080 --> 00:24:35,200
Speaker 4: Bloomberg News is out the reporting here. Blackstone's credit arm

479
00:24:35,320 --> 00:24:37,919
Speaker 4: is now its top business fueling profits.

480
00:24:37,960 --> 00:24:40,720
Speaker 3: They're in private equity, private credit, real estate.

481
00:24:40,760 --> 00:24:42,960
Speaker 4: So as Paul Goldberg was just saying, they are the

482
00:24:43,119 --> 00:24:48,840
Speaker 4: biggest alternative asset manager out there. Just extraordinary. That's Blackstone

483
00:24:48,920 --> 00:24:52,000
Speaker 4: and then there's black Rock. I mean, if these two

484
00:24:52,240 --> 00:24:54,840
Speaker 4: were together like they were back in the day, I

485
00:24:54,880 --> 00:24:59,399
Speaker 4: mean extraordinary. So just amazing. The private equity business continues,

486
00:24:59,480 --> 00:25:02,879
Speaker 4: an alternative asset management business continues to be just one of,

487
00:25:03,400 --> 00:25:06,240
Speaker 4: if not the best business on global Wall Street, and

488
00:25:06,840 --> 00:25:08,359
Speaker 4: the Black Zone folks are at the top of that.

489
00:25:10,000 --> 00:25:13,880
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

490
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Speaker 2: weekdays at ten am Eastern on applecar Play and Android

491
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Speaker 2: Auto with the Bloomberg Business app. You can also listen

492
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Speaker 2: live on Amazon Alexa from our flagship New York station.

493
00:25:23,880 --> 00:25:26,919
Speaker 2: Just say, Alexa playing Bloomberg eleven thirty.

494
00:25:27,640 --> 00:25:29,639
Speaker 4: Bloma Limits sitting and for Alex steel on Paul Swiney

495
00:25:29,720 --> 00:25:31,760
Speaker 4: live here in our Bloomberg Interrectied Brooker Studio, and we're

496
00:25:31,760 --> 00:25:35,000
Speaker 4: streaming the video thing live on YouTube YouTube dot Com

497
00:25:35,000 --> 00:25:38,280
Speaker 4: search Bloomberg Podcast. One of the topics that Alex and

498
00:25:38,320 --> 00:25:40,199
Speaker 4: I and the folks here a Bloomberg intelligence like to

499
00:25:40,200 --> 00:25:43,080
Speaker 4: really keep a close eye on is commercial real estate

500
00:25:43,119 --> 00:25:45,680
Speaker 4: and its recovery from the pandemic. And our good friend

501
00:25:45,720 --> 00:25:48,440
Speaker 4: Abigail Duottle, she's been very good at helping us hook

502
00:25:48,520 --> 00:25:50,640
Speaker 4: up with some really smart people industry. Abigail doo Little

503
00:25:50,680 --> 00:25:53,680
Speaker 4: joints us here today, chief market correspondent for Bloomberg News,

504
00:25:54,000 --> 00:25:57,159
Speaker 4: and today she brings us Josh Ziegan, managing Princil, co

505
00:25:57,280 --> 00:26:00,399
Speaker 4: founder at Madison Realty Capital. They're on BLO and Briginner

506
00:26:00,400 --> 00:26:03,080
Speaker 4: Act the Broker Studio. Josh, we appreciate you coming in here. Abigail,

507
00:26:03,080 --> 00:26:04,960
Speaker 4: Thanks once again, Josh.

508
00:26:05,400 --> 00:26:06,240
Speaker 3: Commercial real estate.

509
00:26:06,280 --> 00:26:07,960
Speaker 4: I think what I've learned is I don't ask the

510
00:26:08,000 --> 00:26:10,199
Speaker 4: dumb question which I usually do, which hey, how's commercial

511
00:26:10,200 --> 00:26:13,320
Speaker 4: real estate doing? Because there are so many different pieces

512
00:26:13,359 --> 00:26:15,800
Speaker 4: of it. Where do you guys at Madison Real team

513
00:26:15,840 --> 00:26:17,520
Speaker 4: focus and then how's your business?

514
00:26:17,960 --> 00:26:20,919
Speaker 5: So we're focused on the real estate credit space. We

515
00:26:20,960 --> 00:26:23,080
Speaker 5: started the company about twenty years ago. We've about twenty

516
00:26:23,080 --> 00:26:25,879
Speaker 5: one billion of AUM and all ends of real estate credit.

517
00:26:26,560 --> 00:26:29,040
Speaker 5: A lot of our business is focused on where the

518
00:26:29,080 --> 00:26:32,280
Speaker 5: banks have not focused and we're dislocated post global financial

519
00:26:32,280 --> 00:26:35,199
Speaker 5: crisis and even more so today post banking crisis that

520
00:26:35,200 --> 00:26:38,679
Speaker 5: happened in twenty twenty three. So we've been providing capital,

521
00:26:38,720 --> 00:26:42,280
Speaker 5: whether it's construction lending, transitional lending. We buy performing non

522
00:26:42,280 --> 00:26:45,520
Speaker 5: performing loans, and today the market is a lot better

523
00:26:45,560 --> 00:26:48,399
Speaker 5: than when I was on in the spring. There's definitely

524
00:26:48,520 --> 00:26:52,000
Speaker 5: a sense of the want to do deals. The investment

525
00:26:52,040 --> 00:26:54,720
Speaker 5: sales market has picked up given the rate drop that

526
00:26:54,800 --> 00:26:57,560
Speaker 5: happened in September. A lot we're waiting on the sidelines

527
00:26:57,640 --> 00:27:00,359
Speaker 5: just to see that happen. So mentally, there's this sense

528
00:27:00,400 --> 00:27:03,439
Speaker 5: that things are starting to improve and capital markets are

529
00:27:03,440 --> 00:27:06,280
Speaker 5: in a better place, albeit the banking sector has not

530
00:27:06,320 --> 00:27:07,359
Speaker 5: come back in a big way.

531
00:27:08,119 --> 00:27:10,399
Speaker 13: So you joined us in May, and at that time,

532
00:27:10,800 --> 00:27:13,080
Speaker 13: I would say were one of the more bearish commercial

533
00:27:13,080 --> 00:27:17,000
Speaker 13: real estate. I guess that we've been fortunate enough to

534
00:27:17,040 --> 00:27:19,439
Speaker 13: interview and I view you relative to some of the

535
00:27:19,440 --> 00:27:22,040
Speaker 13: other folks as really close to the banks or really

536
00:27:22,040 --> 00:27:23,440
Speaker 13: close to the money. You were talking a lot about

537
00:27:23,440 --> 00:27:24,679
Speaker 13: the banks and you said that we were in the

538
00:27:24,720 --> 00:27:27,399
Speaker 13: early innings of this thing working out. How much has

539
00:27:27,400 --> 00:27:30,280
Speaker 13: it changed since then with the FED cutting by fifty

540
00:27:30,320 --> 00:27:30,959
Speaker 13: basis points.

541
00:27:31,200 --> 00:27:33,639
Speaker 5: Well, I think what we've seen is in the spring,

542
00:27:33,720 --> 00:27:36,840
Speaker 5: there was very very little activity investment sale market, and

543
00:27:37,000 --> 00:27:40,000
Speaker 5: one of the problems was money was not going back

544
00:27:40,040 --> 00:27:43,359
Speaker 5: to investors through that because no transactions were happening. So

545
00:27:43,480 --> 00:27:46,400
Speaker 5: with rates dropping, I think what happened was that created

546
00:27:46,440 --> 00:27:50,359
Speaker 5: some solutions for barwers who needed to delever, and that

547
00:27:50,480 --> 00:27:53,919
Speaker 5: is in the form of preferred equities, some structured equity

548
00:27:53,920 --> 00:27:56,800
Speaker 5: coming into deals. Today there's not only that solution available,

549
00:27:56,880 --> 00:27:59,320
Speaker 5: but there's also commonect equity and you're starting to see

550
00:27:59,359 --> 00:28:03,679
Speaker 5: more sales. Albeit the office sector is really struggling still.

551
00:28:03,880 --> 00:28:06,000
Speaker 5: There's no liquidity in the office sector, and when you

552
00:28:06,040 --> 00:28:09,320
Speaker 5: are seeing transaction that happen, capital is just tied up

553
00:28:09,320 --> 00:28:11,520
Speaker 5: in the system because a lot of the sellers are

554
00:28:11,520 --> 00:28:14,119
Speaker 5: holding financing banks are rolling over their debt. It's not

555
00:28:14,240 --> 00:28:16,320
Speaker 5: just money back to investors, so that's tying up a

556
00:28:16,359 --> 00:28:17,520
Speaker 5: lot of capital in the system.

557
00:28:18,240 --> 00:28:21,240
Speaker 8: I cover US real estate from the equity side, A

558
00:28:21,280 --> 00:28:24,280
Speaker 8: cover homebuilders and then also commercial real estate. I'm curious

559
00:28:24,320 --> 00:28:26,480
Speaker 8: you mentioned office. I was recently working on a story

560
00:28:26,520 --> 00:28:28,240
Speaker 8: that spoke about how we're seeing a bit of an

561
00:28:28,320 --> 00:28:30,600
Speaker 8: uptake on Park Avenue. It's not as bad as it

562
00:28:30,640 --> 00:28:33,800
Speaker 8: once was. As we think about vacancies, what areas are

563
00:28:33,880 --> 00:28:36,760
Speaker 8: you seeing flourishing or doing better than they were before

564
00:28:36,960 --> 00:28:38,160
Speaker 8: In the office space.

565
00:28:38,040 --> 00:28:40,280
Speaker 5: Well, I think you're seeing sort of the haves and

566
00:28:40,320 --> 00:28:43,520
Speaker 5: have nots in office. It's the best in a class

567
00:28:43,800 --> 00:28:46,680
Speaker 5: office and then there's everyone else. And unfortunately, that best

568
00:28:46,720 --> 00:28:49,720
Speaker 5: of a class office is very limited in New York City. Yeah,

569
00:28:49,760 --> 00:28:52,400
Speaker 5: there's more buildings than a place like Austin, Texas or

570
00:28:52,400 --> 00:28:54,720
Speaker 5: some other places, but it's limited. What I have seen

571
00:28:54,720 --> 00:28:57,239
Speaker 5: in the office sector is much more leasing demand. So

572
00:28:57,280 --> 00:28:59,920
Speaker 5: while the leasing demand and absorption is happening a much

573
00:29:00,080 --> 00:29:03,920
Speaker 5: greater way, it still is challenging from a cap rate perspective.

574
00:29:03,960 --> 00:29:06,280
Speaker 5: So you may have a one hundred percent office, one

575
00:29:06,360 --> 00:29:09,160
Speaker 5: hundred percent lease office building, or ninety percent lease office building,

576
00:29:09,360 --> 00:29:11,480
Speaker 5: but that cap rate as compared to twenty twenty one

577
00:29:11,680 --> 00:29:14,040
Speaker 5: is very, very different, and so that's a change in

578
00:29:14,120 --> 00:29:17,440
Speaker 5: valuation that investors are not able to stomach and in

579
00:29:17,480 --> 00:29:19,520
Speaker 5: many cases can't get out of these deals today.

580
00:29:20,080 --> 00:29:23,520
Speaker 4: Hey, Josh, just kind of before the pandemic. In mike

581
00:29:23,560 --> 00:29:27,400
Speaker 4: Town in Jersey, they constructed a multi very nice, high end,

582
00:29:27,480 --> 00:29:32,000
Speaker 4: multi multi unit residential thing and a big sign out front,

583
00:29:32,080 --> 00:29:36,520
Speaker 4: financed by the local bank. If I go to build

584
00:29:36,520 --> 00:29:38,160
Speaker 4: that same property today, is that look a bank going

585
00:29:38,200 --> 00:29:38,800
Speaker 4: to be there for me?

586
00:29:38,960 --> 00:29:41,360
Speaker 5: So it's a good question. So that bank generally is

587
00:29:41,440 --> 00:29:44,200
Speaker 5: not there, and why because banks have a liquidity mismatch.

588
00:29:44,400 --> 00:29:46,920
Speaker 5: They were committing long for a construction loan like that

589
00:29:47,280 --> 00:29:50,719
Speaker 5: and borrowing short with deposits. So banks have been scrutinized

590
00:29:50,760 --> 00:29:53,560
Speaker 5: even more so today from a regulatory standpoint. And so

591
00:29:53,840 --> 00:29:56,400
Speaker 5: it was really bad post global financial crisis and became

592
00:29:56,480 --> 00:30:01,440
Speaker 5: even greater from a regulatory standpoint post March twenty twenty three.

593
00:30:01,760 --> 00:30:03,680
Speaker 5: So we're filling that void. We are doing a lot

594
00:30:03,680 --> 00:30:07,400
Speaker 5: of construction lending, which is today a lot lower from

595
00:30:07,400 --> 00:30:09,880
Speaker 5: a loan to cost standpoint than we had to provide

596
00:30:09,880 --> 00:30:13,400
Speaker 5: in twenty twenty one before this banking crisis. So we're

597
00:30:13,440 --> 00:30:16,280
Speaker 5: providing whole loans to that same Jersey developer to build

598
00:30:16,280 --> 00:30:20,120
Speaker 5: a multifamily, and the good news for multifamily as specific

599
00:30:20,160 --> 00:30:22,000
Speaker 5: in New Jersey and across the country is we have

600
00:30:22,120 --> 00:30:25,080
Speaker 5: seen cap rates titan since the spring when I was

601
00:30:25,120 --> 00:30:27,280
Speaker 5: on the show, by fifty to one hundred basis points,

602
00:30:27,480 --> 00:30:29,280
Speaker 5: and a lot of that's a function of debt. I mean,

603
00:30:29,280 --> 00:30:31,920
Speaker 5: when you look at debt with rates down today, long

604
00:30:32,000 --> 00:30:34,280
Speaker 5: term rates are down and short term rates are down

605
00:30:34,320 --> 00:30:38,280
Speaker 5: to some extent. One of the problems with construction lending

606
00:30:38,400 --> 00:30:41,680
Speaker 5: and higher value add lending is you're borrowing short and

607
00:30:41,760 --> 00:30:44,680
Speaker 5: so that's an issue. There still is not necessarily the

608
00:30:44,720 --> 00:30:48,800
Speaker 5: appetite to build because of the cost of short term debt.

609
00:30:48,440 --> 00:30:48,680
Speaker 9: You know.

610
00:30:48,720 --> 00:30:51,160
Speaker 13: So picking up on Paul's question and picking up on

611
00:30:51,160 --> 00:30:53,080
Speaker 13: what you just talked about with regulation, some of my

612
00:30:53,160 --> 00:30:55,640
Speaker 13: sources have said that because it's an election, you're the

613
00:30:55,720 --> 00:31:00,720
Speaker 13: regulators have actually been relatively lax and trust what you

614
00:31:00,920 --> 00:31:03,000
Speaker 13: just said. But the idea, I guess my question is

615
00:31:03,200 --> 00:31:05,680
Speaker 13: do you think that the regulation could even become tighter

616
00:31:05,760 --> 00:31:07,520
Speaker 13: next year? And then at that point are we going

617
00:31:07,560 --> 00:31:09,400
Speaker 13: to see more svbs? In other words, are we going

618
00:31:09,440 --> 00:31:10,840
Speaker 13: to see some of these regional banks? Is they are

619
00:31:10,840 --> 00:31:13,680
Speaker 13: more pain there in terms of blowing up our consolidation.

620
00:31:13,800 --> 00:31:16,520
Speaker 5: I think it's a more politically oriented question in terms

621
00:31:16,560 --> 00:31:19,600
Speaker 5: of the election, really who wins here, But no matter what,

622
00:31:19,840 --> 00:31:20,400
Speaker 5: I so there's.

623
00:31:20,240 --> 00:31:21,480
Speaker 13: A difference who wins.

624
00:31:22,400 --> 00:31:26,080
Speaker 5: I think directionally you will see more consolidation, and a

625
00:31:26,080 --> 00:31:27,880
Speaker 5: lot of that has to do with banks are upside

626
00:31:27,880 --> 00:31:30,360
Speaker 5: down in terms of having long term loans that are

627
00:31:30,400 --> 00:31:33,640
Speaker 5: at very low rates, and those aren't rolling off so

628
00:31:33,760 --> 00:31:37,000
Speaker 5: quick and they're matched with liquidity that the bank has

629
00:31:37,080 --> 00:31:38,680
Speaker 5: to pay the positor a lot more than they did

630
00:31:38,680 --> 00:31:40,840
Speaker 5: in twenty twenty one when the loans were made. So

631
00:31:40,880 --> 00:31:43,360
Speaker 5: I think you will see more consolidation in the banking sector.

632
00:31:44,240 --> 00:31:48,800
Speaker 5: And oh so, I think you will see more consolidation.

633
00:31:48,960 --> 00:31:50,880
Speaker 5: You start to see more of that already in this year,

634
00:31:51,400 --> 00:31:52,880
Speaker 5: but you'll see more in years to come.

635
00:31:53,120 --> 00:31:54,640
Speaker 13: Well, I just really want to pick up on that

636
00:31:54,720 --> 00:31:57,400
Speaker 13: election thing though, because I haven't heard anybody say that

637
00:31:58,000 --> 00:32:00,360
Speaker 13: it matters who wins. So were you making the point

638
00:32:00,360 --> 00:32:03,640
Speaker 13: that if the former president Donald Trump wins, or if

639
00:32:03,680 --> 00:32:07,000
Speaker 13: for or the current VP Harris if she wins, there's

640
00:32:07,040 --> 00:32:09,120
Speaker 13: going to be a difference in regulation. And if there is,

641
00:32:09,200 --> 00:32:10,000
Speaker 13: what does it look like.

642
00:32:10,480 --> 00:32:12,720
Speaker 5: I mean, I can't speak to specifics, but there's a

643
00:32:12,760 --> 00:32:16,160
Speaker 5: view that will be well, there'll be more regulatory pressure

644
00:32:16,680 --> 00:32:21,400
Speaker 5: from regulators in a democratic significantly more can't comment really,

645
00:32:21,520 --> 00:32:24,080
Speaker 5: you know, I don't know, but more you'll be more,

646
00:32:24,360 --> 00:32:25,760
Speaker 5: all right, Josh, thanks so much for journey.

647
00:32:25,800 --> 00:32:26,480
Speaker 3: Us really appreciate it.

648
00:32:26,560 --> 00:32:30,120
Speaker 4: Jos Ziegen, Managing Principle, A co founder and Madison Realty

649
00:32:30,200 --> 00:32:34,360
Speaker 4: Capital in Abco Dolittle, Chief Markets correspondent for Bloomberg News

650
00:32:34,440 --> 00:32:36,280
Speaker 4: in our Bloomberg and aarct approp Pro studio, just kind

651
00:32:36,280 --> 00:32:39,040
Speaker 4: of get the laid down on the real estate business.

652
00:32:40,480 --> 00:32:44,400
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

653
00:32:44,440 --> 00:32:47,960
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654
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Speaker 2: Auto with the Bloomberg Business at You can also listen

655
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656
00:32:54,360 --> 00:32:59,400
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657
00:32:58,920 --> 00:33:01,000
Speaker 4: Normal, Linda sitting in front Alex deal on Paul Sweeney.

658
00:33:01,000 --> 00:33:02,520
Speaker 4: You're live here in our Bloomberg and an Actor Broker

659
00:33:02,560 --> 00:33:06,040
Speaker 4: studio or streaming live on YouTube as well, So go

660
00:33:06,160 --> 00:33:08,480
Speaker 4: check us out there. Just got back from a little

661
00:33:08,520 --> 00:33:11,520
Speaker 4: one day corporate travel gig. Alex and I went down

662
00:33:11,560 --> 00:33:14,160
Speaker 4: to the Hilton Head Island or down to Kiwa for

663
00:33:14,720 --> 00:33:15,640
Speaker 4: a client event.

664
00:33:16,160 --> 00:33:18,040
Speaker 3: Travel one. Fine, that's great.

665
00:33:18,080 --> 00:33:20,440
Speaker 8: You were in United, right, what's you were on United?

666
00:33:20,680 --> 00:33:23,240
Speaker 3: Down on Delta back on United? So both good?

667
00:33:23,280 --> 00:33:23,400
Speaker 2: Oh?

668
00:33:23,440 --> 00:33:23,640
Speaker 11: Good?

669
00:33:24,520 --> 00:33:24,800
Speaker 3: Packed?

670
00:33:24,880 --> 00:33:26,640
Speaker 4: I don't know the place was packed. I think people

671
00:33:26,640 --> 00:33:29,760
Speaker 4: are back out there traveling again. Here and my thing

672
00:33:29,800 --> 00:33:32,480
Speaker 4: on travel, I only travel. Somebody pays me to travel

673
00:33:32,560 --> 00:33:33,080
Speaker 4: as you should.

674
00:33:33,240 --> 00:33:35,840
Speaker 3: I'm just like I like that philosophy.

675
00:33:35,360 --> 00:33:38,160
Speaker 4: Exist anyway, I've been pretty much everywhere you need to go.

676
00:33:38,240 --> 00:33:40,400
Speaker 4: I think James Thornton joins us. He's a CEO of

677
00:33:40,480 --> 00:33:45,920
Speaker 4: Intrepid Travel, joining us from London via Zoom. James talk

678
00:33:45,960 --> 00:33:48,200
Speaker 4: to us about I love to get your perspective, just

679
00:33:48,280 --> 00:33:51,239
Speaker 4: kind of as you look at maybe business travel. What

680
00:33:51,320 --> 00:33:54,200
Speaker 4: are most companies doing in terms of business travel these

681
00:33:54,280 --> 00:33:55,720
Speaker 4: days versus pre pandemic?

682
00:33:55,760 --> 00:33:57,560
Speaker 3: Are we back to those levels? Will we get back

683
00:33:57,560 --> 00:33:58,640
Speaker 3: to those levels? Where are we?

684
00:34:01,000 --> 00:34:02,920
Speaker 1: Yeah, we're definitely back to the levels, Paul. I think

685
00:34:02,920 --> 00:34:06,080
Speaker 1: there was a misconception during the pandemic that the business

686
00:34:06,120 --> 00:34:09,440
Speaker 1: travel environment wouldn't recover and we'd all be stuck on

687
00:34:09,560 --> 00:34:13,680
Speaker 1: zoom and be meeting remotely. But we're seeing that airplanes

688
00:34:13,680 --> 00:34:17,239
Speaker 1: are full. Business travel, corporate travel clients are up.

689
00:34:17,200 --> 00:34:17,839
Speaker 2: Year on year.

690
00:34:18,600 --> 00:34:21,360
Speaker 1: Nothing beats being together face to face. So yeah, business

691
00:34:21,400 --> 00:34:23,960
Speaker 1: travel is back and people are flying around a meeting again.

692
00:34:24,840 --> 00:34:26,880
Speaker 8: So of course everyone likes to keep in mind the

693
00:34:26,920 --> 00:34:30,880
Speaker 8: idea of limiting our carbon footprint. I'm curious, how are

694
00:34:31,080 --> 00:34:33,279
Speaker 8: business companies, How are they thinking about this when we

695
00:34:33,320 --> 00:34:37,719
Speaker 8: think about business travel, our companies being mindful or is

696
00:34:38,160 --> 00:34:40,319
Speaker 8: ESG a buzzword that's been left in the past. How

697
00:34:40,360 --> 00:34:42,080
Speaker 8: are we thinking about that now in twenty twenty four.

698
00:34:44,760 --> 00:34:48,640
Speaker 1: Yeah, look, I think companies are becoming increasingly mindful about

699
00:34:48,719 --> 00:34:53,360
Speaker 1: their carbon outputs, particularly when it comes to their staff travel,

700
00:34:53,800 --> 00:34:56,319
Speaker 1: but also in the sense of the way in which

701
00:34:56,360 --> 00:34:58,600
Speaker 1: customers are thinking about their right in theies too. At

702
00:34:58,600 --> 00:35:02,800
Speaker 1: Intrepid Travel, we've reached launched carbon and labeled carbon labeling

703
00:35:02,840 --> 00:35:05,840
Speaker 1: program on five hundred of our itineries around the world,

704
00:35:06,320 --> 00:35:09,400
Speaker 1: and we display a number about the CO two emissions

705
00:35:09,400 --> 00:35:10,799
Speaker 1: that come from our trips. Is a bit like a

706
00:35:10,840 --> 00:35:14,120
Speaker 1: food label if you like, so customers can calculate how

707
00:35:14,200 --> 00:35:18,960
Speaker 1: much carbon emissions per traveler come from their trip applications.

708
00:35:19,000 --> 00:35:22,480
Speaker 1: So customer things be more interested in the carbon outputs

709
00:35:22,480 --> 00:35:24,200
Speaker 1: of their traveling experiences.

710
00:35:24,840 --> 00:35:27,160
Speaker 4: You know you mentioned I just completed I did a

711
00:35:27,280 --> 00:35:30,520
Speaker 4: one on a tour of Ireland. Fantastic by the way,

712
00:35:30,560 --> 00:35:34,160
Speaker 4: and the Irish love me of course being from there.

713
00:35:35,000 --> 00:35:38,080
Speaker 4: But on the questionnaire afterwards, like how is the trip?

714
00:35:38,080 --> 00:35:40,440
Speaker 4: And it was awesome, off the charts, and then they

715
00:35:40,440 --> 00:35:42,720
Speaker 4: asked about the carbon footprint and I said, I could

716
00:35:42,760 --> 00:35:44,800
Speaker 4: not care less. Can you please just let me have

717
00:35:44,840 --> 00:35:47,520
Speaker 4: a vacation and just enjoy myself. But James, I think

718
00:35:47,520 --> 00:35:50,680
Speaker 4: I'm into my minority. I think travelers more and more

719
00:35:50,719 --> 00:35:54,680
Speaker 4: are thinking about the carbon footprint of the plane they take,

720
00:35:54,760 --> 00:35:58,960
Speaker 4: the cruise ship they take. How does the industry adapt

721
00:35:58,960 --> 00:35:59,279
Speaker 4: to that?

722
00:36:01,840 --> 00:36:02,040
Speaker 5: Yeah?

723
00:36:02,080 --> 00:36:04,920
Speaker 1: Absolutely, Paul. Look, I think there's two really important points here. One,

724
00:36:05,080 --> 00:36:09,400
Speaker 1: it's critically important that people have great holiday experiences. You know,

725
00:36:09,440 --> 00:36:11,600
Speaker 1: it's vitally important. We all go on holiday to relax,

726
00:36:11,680 --> 00:36:14,560
Speaker 1: to enjoy ourselves, to have fun, to try the local

727
00:36:14,600 --> 00:36:17,400
Speaker 1: food and enjoy a well aired break. But at the

728
00:36:17,400 --> 00:36:19,799
Speaker 1: same point, we also want, as much as possible make

729
00:36:19,800 --> 00:36:22,760
Speaker 1: sure that we're having a lighter impact upon the environment,

730
00:36:22,760 --> 00:36:25,359
Speaker 1: and we're trying to benefit local communities as much as

731
00:36:25,400 --> 00:36:28,160
Speaker 1: we possibly can. And that's why business is like in

732
00:36:28,200 --> 00:36:31,400
Speaker 1: Prepid are putting carbon labeling onto our itineries so that

733
00:36:31,480 --> 00:36:35,239
Speaker 1: customers can make more informed decision making choices. Absolutely, they

734
00:36:35,280 --> 00:36:37,040
Speaker 1: want to have a great trip, but they also want

735
00:36:37,080 --> 00:36:40,400
Speaker 1: to be aware about limiting the impact on the environment.

736
00:36:41,000 --> 00:36:43,560
Speaker 8: And how are we thinking about this on an international scale.

737
00:36:43,560 --> 00:36:46,080
Speaker 8: I'm thinking about Paul talking about this trip to Ireland,

738
00:36:46,360 --> 00:36:49,360
Speaker 8: and I wonder if the US are we behind in

739
00:36:49,400 --> 00:36:52,400
Speaker 8: some of these efforts to really limit that carbon footprint.

740
00:36:52,400 --> 00:36:54,400
Speaker 8: How are you seeing this internationally?

741
00:36:56,760 --> 00:36:59,000
Speaker 1: Yeah, look, I think Europe is certainly leading the way,

742
00:36:59,000 --> 00:37:01,839
Speaker 1: both from a legislate but also consumer points of view,

743
00:37:01,920 --> 00:37:04,160
Speaker 1: But I would say that the US is all stay

744
00:37:04,200 --> 00:37:07,400
Speaker 1: catching up, and we're certainly seeing demand from customers that

745
00:37:07,480 --> 00:37:11,120
Speaker 1: want to travel in a more sustainable, immersive way. Of course,

746
00:37:11,120 --> 00:37:12,359
Speaker 1: they want to get out and they want to see

747
00:37:12,360 --> 00:37:14,799
Speaker 1: the iconic sites, but they also want to try and

748
00:37:14,840 --> 00:37:17,840
Speaker 1: make sure that their tourism dollars are staying within the

749
00:37:17,880 --> 00:37:20,480
Speaker 1: local communities. And that's why we're seeing a real desire

750
00:37:20,560 --> 00:37:24,759
Speaker 1: for people to travel on intrepid style of sustainable experience

751
00:37:24,880 --> 00:37:28,000
Speaker 1: rich travel using different types of local transport, you staying

752
00:37:28,040 --> 00:37:31,000
Speaker 1: in different types of local accommodation and really getting under

753
00:37:31,040 --> 00:37:34,120
Speaker 1: the skin of a destination and hopefully having some amazing

754
00:37:34,120 --> 00:37:35,400
Speaker 1: holiday experiences.

755
00:37:35,680 --> 00:37:36,680
Speaker 3: So what are we seeing.

756
00:37:36,480 --> 00:37:41,640
Speaker 4: Here, James about some of those experiential trips as you mentioned,

757
00:37:41,640 --> 00:37:43,560
Speaker 4: and we saw that coming out of the pandemic. People,

758
00:37:44,160 --> 00:37:46,800
Speaker 4: I guess during the pandemic they buy stuff and goods,

759
00:37:46,840 --> 00:37:50,000
Speaker 4: but coming out of it, they wanted experiences. So they're

760
00:37:50,000 --> 00:37:52,640
Speaker 4: not just going to the typical like what I would

761
00:37:52,640 --> 00:37:52,960
Speaker 4: do is.

762
00:37:52,920 --> 00:37:54,520
Speaker 3: Just go to a golf resort or beach resort.

763
00:37:54,520 --> 00:37:56,279
Speaker 4: They're doing different things. What are some of the more

764
00:37:56,320 --> 00:37:57,520
Speaker 4: popular tours that you guys do.

765
00:37:59,000 --> 00:37:59,239
Speaker 5: Yeah.

766
00:37:59,239 --> 00:38:01,920
Speaker 1: Absolutely, I think we're living in the experiences of economy. Well,

767
00:38:01,960 --> 00:38:04,560
Speaker 1: people are desperate to get out, having been caught up

768
00:38:04,560 --> 00:38:07,000
Speaker 1: at home during the course of the pandemic and travel

769
00:38:07,040 --> 00:38:09,480
Speaker 1: being taken away as a right for people. They want

770
00:38:09,520 --> 00:38:10,960
Speaker 1: to give back out and they want to see the

771
00:38:11,160 --> 00:38:15,000
Speaker 1: iconic destinations. So we're seeing really big demand for destinations

772
00:38:15,080 --> 00:38:18,600
Speaker 1: like a Japan for example. You know, great immersive destination

773
00:38:18,719 --> 00:38:20,200
Speaker 1: where you can get out and you can have great

774
00:38:20,200 --> 00:38:23,080
Speaker 1: food experiences, but it's a bit more challenging to travel

775
00:38:23,080 --> 00:38:26,239
Speaker 1: around independently by yourself, and that's why using reliable tour

776
00:38:26,280 --> 00:38:29,560
Speaker 1: operators like Intrepid is a great way to get out

777
00:38:29,600 --> 00:38:32,800
Speaker 1: and see a destination. We're seeing Europe boom, particularly in

778
00:38:32,840 --> 00:38:34,880
Speaker 1: the shoulder seasons, getting out of that kind of peak

779
00:38:35,120 --> 00:38:37,279
Speaker 1: travel period of July and August when it's hot and

780
00:38:37,280 --> 00:38:39,600
Speaker 1: it's stuffy and it's crowded. Seeing a lot of demand

781
00:38:39,640 --> 00:38:43,040
Speaker 1: into Europe, particularly around those shoulder seasons of April May

782
00:38:43,080 --> 00:38:45,440
Speaker 1: and also September October. It's a little bit cooler and

783
00:38:45,520 --> 00:38:46,480
Speaker 1: the crowds are a little.

784
00:38:46,320 --> 00:38:50,560
Speaker 8: Bit less, So James. From a legislative perspective, how are

785
00:38:50,600 --> 00:38:53,080
Speaker 8: companies being held accountable? Of course there's a lot of

786
00:38:53,080 --> 00:38:55,440
Speaker 8: business travel. We may fly out for one day and

787
00:38:55,560 --> 00:38:57,640
Speaker 8: come back. There's a lot of things that are going

788
00:38:57,680 --> 00:39:01,080
Speaker 8: on in that making that decision. All are businesses being

789
00:39:01,120 --> 00:39:02,040
Speaker 8: held accountable for this?

790
00:39:03,880 --> 00:39:07,160
Speaker 1: Yeah, at the moment they're not, Nora, I think businesses

791
00:39:07,239 --> 00:39:09,320
Speaker 1: are they going to start to be held accountable for

792
00:39:09,920 --> 00:39:13,000
Speaker 1: what they say. What we're not seeing quite yet is

793
00:39:13,080 --> 00:39:16,520
Speaker 1: businesses being accountable for what they do. And so we're

794
00:39:16,520 --> 00:39:20,760
Speaker 1: certainly seeing, particularly driven out of Europe legislation to ensure

795
00:39:20,800 --> 00:39:23,920
Speaker 1: that companies are not greenwashing and they're advertising, and we

796
00:39:24,000 --> 00:39:26,640
Speaker 1: think companies being picked up when they are making big,

797
00:39:26,640 --> 00:39:29,320
Speaker 1: bold claims around being good for the environment, but people

798
00:39:29,320 --> 00:39:32,360
Speaker 1: are jumping on planes. So not only is it about

799
00:39:32,360 --> 00:39:34,560
Speaker 1: what people say in their advertising. Soon, we're going to

800
00:39:34,560 --> 00:39:37,640
Speaker 1: see legislation come in terms of the actual actions of

801
00:39:37,640 --> 00:39:40,319
Speaker 1: which companies are taking. And that's why I think it's

802
00:39:40,360 --> 00:39:43,360
Speaker 1: important that all companies are trying to take proactive steps

803
00:39:43,400 --> 00:39:47,160
Speaker 1: in terms of measuring their emissions, ideally offsetting their emissions,

804
00:39:47,200 --> 00:39:51,839
Speaker 1: but ultimately moving towards trying to decarbonize their activities, no

805
00:39:51,880 --> 00:39:53,239
Speaker 1: matter what industry they might be in.

806
00:39:54,480 --> 00:39:55,759
Speaker 3: James, thanks so much for joining us.

807
00:39:55,840 --> 00:39:57,719
Speaker 4: I really appreciate getting some of your thoughts there. James

808
00:39:57,760 --> 00:40:01,040
Speaker 4: Thornton needs the CEO of Intrepid Travel, joining us via

809
00:40:01,040 --> 00:40:03,719
Speaker 4: that zoom thing from London. Yeah, it took this my

810
00:40:03,760 --> 00:40:06,160
Speaker 4: first when I went to Ireland. There's so many things

811
00:40:06,160 --> 00:40:08,640
Speaker 4: you want to see. I've never taken like a tour before.

812
00:40:10,200 --> 00:40:11,640
Speaker 4: Maybe I'm getting to an age or that's kind of

813
00:40:11,680 --> 00:40:13,080
Speaker 4: what you do. I don't know, but there's so many

814
00:40:13,080 --> 00:40:14,319
Speaker 4: things you want to see in like a place like

815
00:40:14,360 --> 00:40:16,520
Speaker 4: Ireland that you have to do it that way, and

816
00:40:16,560 --> 00:40:18,759
Speaker 4: we did. We saw everything, so I feel good about

817
00:40:18,760 --> 00:40:19,839
Speaker 4: it and I'd recommend it.

818
00:40:19,920 --> 00:40:22,200
Speaker 8: I was in Dublin back in April. Okay, first I'm

819
00:40:22,200 --> 00:40:24,759
Speaker 8: going to Ireland. Didn't get to do the massive tour

820
00:40:24,800 --> 00:40:26,480
Speaker 8: that I would have loved to do, but it's such

821
00:40:26,480 --> 00:40:27,719
Speaker 8: a beautiful place it is.

822
00:40:28,000 --> 00:40:28,520
Speaker 3: It was good.

823
00:40:28,840 --> 00:40:31,759
Speaker 4: So we did, like Dublin up the Belfast over to

824
00:40:31,840 --> 00:40:35,160
Speaker 4: darry so got the Northern Ireland experience too, and it

825
00:40:35,239 --> 00:40:38,000
Speaker 4: is different from the Republic of Ireland still today. Then

826
00:40:38,000 --> 00:40:40,360
Speaker 4: you come back down back into the Republic of Ireland

827
00:40:41,280 --> 00:40:44,239
Speaker 4: into Westport and then Limericks so very cool. So hold

828
00:40:44,239 --> 00:40:45,800
Speaker 4: the north half of the island. We'll do the southern

829
00:40:45,800 --> 00:40:48,480
Speaker 4: half and again saw a couple of Sweeney as a

830
00:40:48,480 --> 00:40:51,319
Speaker 4: matter of fact, went the mass at our family church

831
00:40:51,560 --> 00:40:53,480
Speaker 4: in Belfast back from back in the day.

832
00:40:53,520 --> 00:40:56,400
Speaker 3: So that was pretty cool. Ireland, good, good times.

833
00:40:56,840 --> 00:41:01,360
Speaker 2: This is the Bloomberg Intelligence Podcast bull on Apples, Spotify

834
00:41:01,560 --> 00:41:04,759
Speaker 2: and anywhere else you get your podcasts. Listen live each

835
00:41:04,760 --> 00:41:08,320
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836
00:41:08,440 --> 00:41:11,880
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837
00:41:11,920 --> 00:41:15,080
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838
00:41:15,239 --> 00:41:16,840
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