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Speaker 1: and Tim Stenebeck from Bloomberg Radio, we gotta.
Speaker 2: Talk a bit more about Intel.
Speaker 3: I'm looking at a two day game because we've got
Speaker 3: a headline late Friday before the close. But you're looking
Speaker 3: at Intel shares now up about seven percent in the
Speaker 3: past to trading days, and so we're trying to figure
Speaker 3: out what comes next for Intel.
Speaker 4: Yeah.
Speaker 5: I mean, look, we're talking about this Bloomberg exclusive on
Speaker 5: Apollo Global Manager that's throwing it's it's hat and a
Speaker 5: potential financial investment into the Intel ring as well. So
Speaker 5: lots of just scotts, let's bring in Leanna Baker is
Speaker 5: Managing editor of the Bloomberg News Deals team here in
Speaker 5: the studio. Great to see you, and from our San
Speaker 5: Francisco bureau, Ian King, Bloomberg News US Semiconductor and Networking
Speaker 5: reporter Ian I want to start with you in tell
Speaker 5: very popular all of a sudden among all these entities
Speaker 5: let's talk about Qualcom and it's interest what you find out.
Speaker 6: Yeah, I mean we have to sort of point out
Speaker 6: that neither company is confirmed or said anything publicly about this,
Speaker 6: So at this point we're relying upon our own reporting
Speaker 6: and everybody else is reporting. Our understanding is that there
Speaker 6: has been some conversation at some kind of level about
Speaker 6: the possibility of acquiring Intel, and you know, to sort
Speaker 6: of flip it back to what you guys were saying,
Speaker 6: Intel is kind of at a historically sort of vulnerable
Speaker 6: point in terms of obviously share price, in terms of
Speaker 6: where its operations are. Its management believe that it's at
Speaker 6: kind of a low point before a big upswing that
Speaker 6: it's had to spend really heavily. Others are less sanguine
Speaker 6: about this, are sorry, are more worried about where it
Speaker 6: is and worried that perhaps it would be better it
Speaker 6: would be better off in other hands.
Speaker 3: Yeah, it's kind of fascinating to figure out what's the
Speaker 3: right way forward, as you have reported on so well,
Speaker 3: in that this has been long and coming. When it
Speaker 3: comes to Intel, Leanna, I want to bring you back
Speaker 3: into this. There's the Apollo story that you guys.
Speaker 2: Have put out there. At Bloombery Exclusive.
Speaker 3: What do we know about a possible deal where Apollo
Speaker 3: makes a pretty substantial investment.
Speaker 7: Apollo is already a partner of Intel. Remember they have
Speaker 7: a joint venture with Intel in their factory in Ireland,
Speaker 7: So it's not surprising that Apollo would put their hat
Speaker 7: in the ring. That said, we don't know if Intel's
Speaker 7: going to accept this investment. We heard it's up to
Speaker 7: five billion. We don't have any terms. We said it's
Speaker 7: an equity like investment. We don't know if it comes
Speaker 7: with a board seat or what Apollo would ask for
Speaker 7: to make this cash infusion. But it does show that
Speaker 7: Intel's board has some tough decisions to make on which
Speaker 7: path forward. Does it go with Qualcomm, does it go
Speaker 7: with Apollo, Could it go with Apollo and then still
Speaker 7: you know, go with Qualcom. One thing we know for sure, Broadcom,
Speaker 7: which is another name in the space which analysts have tipped,
Speaker 7: is another potential acquirir of Intel. We've reported that currently
Speaker 7: they're not evaluating an offer.
Speaker 2: For I'm curious about Apollo.
Speaker 3: Is this about protecting its investment already in Intel, or
Speaker 3: is it because they're really interested and they see something here?
Speaker 7: Further Paulo is definitely opportunistic and they love to get
Speaker 7: their hands in really complicated situations. They're also turnaround specialists
Speaker 7: and they have some experience in semiconductors. Last year they
Speaker 7: put in about nine hundred million into Western Digital, which
Speaker 7: is another sort of struggling chip maker right now, Apollo
Speaker 7: though it has you know, it's work cut out for
Speaker 7: them if they do take this investment. How much influence
Speaker 7: will they have an Intel, which has its own management team,
Speaker 7: and Apollo might have its own interest too on making
Speaker 7: sure their investment, you know, makes money.
Speaker 5: Yeah, I mean, look, it's also an indication of obviously
Speaker 5: how excited Apollo are about chip makers as well. I mean,
Speaker 5: is there are their prospects they're going to want to
Speaker 5: go further in other places.
Speaker 7: For now, all we know is that they're an investor
Speaker 7: in Western Digital, and they're an investor and joint venture
Speaker 7: partner and Intel, and they're looking to to do more
Speaker 7: with Intel. But we should also consider that they're an
Speaker 7: American investor, and that's something that's really important here. We
Speaker 7: didn't talk about the US government angle, so I'm sure
Speaker 7: the US government would like to see some sort of
Speaker 7: US solution to this without a foreign investor. And another
Speaker 7: thing to mention is that any investment from Apollo or
Speaker 7: someone similar would close a lot faster than a long
Speaker 7: drawn out merger with a rival like Qualcott. That's something
Speaker 7: that's going to take a long time to play out,
Speaker 7: even if they do get to the finish line.
Speaker 2: All right, So Ian, come on back in here.
Speaker 3: This is something we've talked about a lot with you
Speaker 3: about the national security concerns and why this is such
Speaker 3: an important company, certainly to the US government. How are
Speaker 3: you You've covered this company for so long and it's
Speaker 3: kind of amazing to see where we are with this
Speaker 3: company right now. How are you thinking about the different
Speaker 3: parties that are interested about Intel's future and what happens
Speaker 3: from here and what you are hearing internally from the company.
Speaker 6: Yeah, I mean it's a very complicated situation. As Honor
Speaker 6: has just alluded to. It's not just a case of
Speaker 6: two companies looking at each other and sort of deciding
Speaker 6: whether it makes sense for them to do this, even Intel,
Speaker 6: there are multiple parts to Intel. Whether perhaps qualt Com
Speaker 6: would just be interested in Intel's design efforts, which would
Speaker 6: get it into the PC market, which would get it
Speaker 6: into the server market. Qualcomm historically has said absolutely no
Speaker 6: way do we want to become a manufacturing company. So
Speaker 6: if that's still the case, then what happens to Intel's
Speaker 6: manufacturing operations? And that's where the US government has a
Speaker 6: massive interest in bringing back manufacturing to this country, revitalizing
Speaker 6: manufacturing in this country. And then guess what, There's a
Speaker 6: country called China out there which has a massive say
Speaker 6: in this as well. China is the largest market for
Speaker 6: so may conductors. Both Intel and Qualcomm do a huge
Speaker 6: amount of business there. China is going to have an
Speaker 6: absolute say when it comes to approving this kind of
Speaker 6: a deal.
Speaker 5: But does that mean then, in to that point that
Speaker 5: the Apollo deal looks much simpler if you're pack Elsinger
Speaker 5: and try to make you know a kind of a
Speaker 5: decision or think about where to go with this as well,
Speaker 5: does it make an Apollo move much clearer and simpler
Speaker 5: and less of the anti trust concerns and others that
Speaker 5: you've outlined.
Speaker 6: Yeah, I mean it's a much much smaller deal. And
Speaker 6: really all it essentially would be doing, if it's at
Speaker 6: the level that we understand it is, will be to
Speaker 6: sort of prop up the current plan. Basically, all of
Speaker 6: these investments and Intel has been bringing in into its
Speaker 6: factories from Apollo, from others are essentially bridge loans. Basically,
Speaker 6: it's saying, hey, we're going to build this factory. Help
Speaker 6: us out to build it out, and we'll pay you
Speaker 6: back with the profits we get from it later. Intel
Speaker 6: retains control in these kind of situations. Five billion dollars
Speaker 6: is a lot of money, but it's not in the
Speaker 6: chip business, right, plant cost twenty Yeah.
Speaker 2: It goes really quickly. Right, Hey, you know, I think
Speaker 2: it's kind of interesting.
Speaker 3: There's another story in the Bloomberg about TSMC, Taiwan Semiconductor
Speaker 3: and Samsung discussing building major new factories in the UAE.
Speaker 2: This is coming from the Wall Street Journal.
Speaker 3: So I think about this story. It's Intel specific, but
Speaker 3: there's so much going on globally in the semi space
Speaker 3: as other companies are kind of figuring out their path
Speaker 3: going forward. When it comes to Intel in what is
Speaker 3: the value beyond the national security concerns?
Speaker 2: Is it that.
Speaker 3: It's a maker of chips a designer of chips? Like,
Speaker 3: where is the real value going forward?
Speaker 2: Or both?
Speaker 6: Absolutely?
Speaker 4: Both?
Speaker 6: Right, it's diminished as a franchise in PCs, but it's
Speaker 6: still seventy five eighty five percent of the market. It's
Speaker 6: diminished in servers, but it's still eighty percent of the market.
Speaker 6: So those are incredible franchises with the right products. Maybe
Speaker 6: they revitalize, maybe then ever get back to ninety nine percent,
Speaker 6: which they've been at. But eighty percent of a market
Speaker 6: isn't a bad position to be in if you can
Speaker 6: do that in a profitable way. It's factories up until
Speaker 6: not too long ago were the best in the industry. Okay,
Speaker 6: if you can throw the capital at them, if you
Speaker 6: can get the volume the orders, maybe it becomes a
Speaker 6: valuable and absolutely essential asset again. So it's not dead yet, right,
Speaker 6: I mean, we're talking about picking over the bones, but
Speaker 6: it's not dead yet.
Speaker 5: How much should we be thinking about other players in
Speaker 5: this sector as well? I mean Broadcom sitting on the
Speaker 5: sidelines for now. Is there any chance anything is going
Speaker 5: to get exciting for Broadcom when we're thinking about this feature?
Speaker 6: I mean, the best person to ask will be hot Time,
Speaker 6: the CEO. He was asked out recently on his earnings
Speaker 6: and he said, look, I'm quite happy trying to you know,
Speaker 6: make VMware. The acquisition they made work a couple of
Speaker 6: years before I'll be the other side of that. And
Speaker 6: he had a big smile on his face figuratively when
Speaker 6: he was saying this, because they were asking him, Hey,
Speaker 6: are you interested, so he was basically saying, not right now.
Speaker 2: Yeah, come on back in here. I am curious.
Speaker 3: I'm sure you had a pretty busy weekend, which always
Speaker 3: happens with the M and A activity and the M
Speaker 3: and A world. What are you hearing from other bankers
Speaker 3: or other bankers kind of wait a minute, we've got
Speaker 3: to be talking to our clients like there's other things
Speaker 3: that might pop up.
Speaker 7: It's funny, there's two counts of bankers, it seems, around
Speaker 7: the situation. There's either the ones working on this deal
Speaker 7: who don't want to talk to us and aren't answering
Speaker 7: their phones, and then there's the ones that are chasing
Speaker 7: this trying to get hired. And then there's the ones
Speaker 7: we're sitting on the sidelines who are saying, Okay, this
Speaker 7: is a really you know, funky deal, Intel, I don't
Speaker 7: know if I want to spend the time on this.
Speaker 7: If you know, it doesn't happen. Qualcomm's other big M
Speaker 7: and A bets never panned out. You might recall they
Speaker 7: bought NX, They tried to buy NXP a few years
Speaker 7: ago and that died. They're going through their own a
Speaker 7: little bit of a transformation to M and A is
Speaker 7: just really hard for some inductor companies. Intel tried to
Speaker 7: buy a company called Tower, which also fell apart when
Speaker 7: the Chinese authorities kind of left it in limbo. So
Speaker 7: it's just a really tough space and you have to
Speaker 7: know where to invest your time if you're an investment banker,
Speaker 7: to see you know which bets are going to pay off,
Speaker 7: because in chips it's been really difficult.
Speaker 5: But it's interesting, isn't it, given that the movement we've
Speaker 5: seen in share prices in this sector as well, This
Speaker 5: is clearly very hot property and you kind of think
Speaker 5: that could spur further deals down the line. Or is
Speaker 5: it more of a case that we're looking at these
Speaker 5: individual big names defying their positions.
Speaker 7: Ian would know more about why Intel is a unique
Speaker 7: situation right now. I think their earnings report in the
Speaker 7: summer and what's been happening the past few years has
Speaker 7: made them has made them vulnerable. As he said to
Speaker 7: different you know, M and A overtures the other deals
Speaker 7: in the semiconductor space have been a lot smaller and
Speaker 7: video we've reported does acquisitions, but you know, not that large,
Speaker 7: and they usually do still attract scrutiny from regulators. So
Speaker 7: these companies are so big that whatever they do, even
Speaker 7: if it's a small tuck in acquisition, it's going to
Speaker 7: get some attention when.
Speaker 5: It comes to the regulatory concerns here, because it's something
Speaker 5: that comes up a lot on these conversations as well,
Speaker 5: is that regulators in Europe, Is it the US or
Speaker 5: is it you know, coming from side of those markets.
Speaker 7: It's all of the above. Actually, when you announce the
Speaker 7: je tekature. Yeah, these companies, as Ian mentioned, are global,
Speaker 7: but definitely China the regulator their sammer. They weigh in
Speaker 7: on these deals or sometimes they don't weigh in at
Speaker 7: all and they're left in limbo, and that leads to
Speaker 7: deals dying that EU obviously will have a say, and
Speaker 7: then we have US market and then any country where
Speaker 7: these companies do business we'll have a say.
Speaker 3: Hey, you know one thing I wanted to ask you Ian,
Speaker 3: is I think about you know, AMD wasn't always as
Speaker 3: big a threat to Intel, right, Intel was really the
Speaker 3: big player and then I think about and video was
Speaker 3: not always a household name. Uh, And wasn't that you
Speaker 3: know when we bring up the semi space, wasn't the
Speaker 3: company we always kind of is a go to companies
Speaker 3: can reboot companies, consumer company can shift strategies, that can
Speaker 3: do acquisitions. So I mean so can Intel likewise, Right
Speaker 3: there is another chapter.
Speaker 6: That's that's what the management is saying. That's what the
Speaker 6: management believe up until now that that you know they're maintaining. Look, hey,
Speaker 6: it's tough. It's tougher than we thought. Maybe we don't
Speaker 6: have the right AI chips out there right now, but
Speaker 6: you know, come on, we have so much inherent value.
Speaker 6: We can we can do this. We can get back
Speaker 6: to what we were, is their pitch. But the flip
Speaker 6: side of that is this is a brutal business. This
Speaker 6: is a really really difficult business, particular manufacturing. You build
Speaker 6: these plants, you don't fill them. They drag you down.
Speaker 6: And that is a situation that Intel is facing, and
Speaker 6: that is why there's so much churn around. It is like,
Speaker 6: is this the opportunity of a lifetime, Is it ever
Speaker 6: going to be this cheap again? Or maybe this is
Speaker 6: Intel on a downward spiral, and there are lots and
Speaker 6: lots of opinions. And that explains what Leander just said, Well,
Speaker 6: how the bankers are viewing it, how Wall Street is
Speaker 6: viewing it. They can't nobody can make their mind up
Speaker 6: right now. All they know is the road that Intel
Speaker 6: is on is a tough one right now. A lot
Speaker 6: has to go right.
Speaker 5: I mean, to that point, does that tell us that
Speaker 5: the AWS deal wasn't as important potentially to investors as
Speaker 5: we thought it was.
Speaker 6: It was a brief shot in the arm. But you know,
Speaker 6: we've seen this happen since Pat Gelsinger came back to
Speaker 6: the company a few short years ago. We have these
Speaker 6: brief moments of hope and then it becomes clear because
Speaker 6: it is clear because it's such a tough business that yes,
Speaker 6: it's a good sign, but the payoff is down the road,
Speaker 6: and the payoff isn't one hundred percent certain at this point.
Speaker 6: And that's I think this constant tension that we're seeing,
Speaker 6: which is maybe they are doing the right thing, but
Speaker 6: good grief, so many things have to go right. And
Speaker 6: on the flip side, if you want to do a
Speaker 6: deal for Intel, so many things have to go right.
Speaker 6: There regulatory approval, financing everything that there's so much at
Speaker 6: stake here. It is such a complicated situation, so difficult
Speaker 6: for management and difficult for bankers, and difficult for regulators
Speaker 6: who are taking a look at this.
Speaker 2: Right we talked about checking boxes.
Speaker 3: There's a lot that has to be checked in order
Speaker 3: for this to something to happen, whether it's a deal
Speaker 3: or some kind of investment. Having said that, I just
Speaker 3: want to ask both of you, So, Leanna, what's is
Speaker 3: there a time frame you're thinking about? You know, these
Speaker 3: are stories that according to sources. I always feel like
Speaker 3: with these things they may or may not happen. So
Speaker 3: what are you thinking in terms of a time frame.
Speaker 7: There's lots to consider about what's next. But I will
Speaker 7: say that time is the enemy of deals, So the
Speaker 7: longer things take you or less likely they are to
Speaker 7: get announced. But that said, there's still so much more
Speaker 7: to report on. So we know Qualcom's made a soft approach,
Speaker 7: but there's no official offer, So there's still maybe in
Speaker 7: the next week or so, we'll find out more about
Speaker 7: how receptive Intel is, what was actually offered and similar
Speaker 7: with the Apollo offer, and are there other names on
Speaker 7: the sidelines? Intel also has a partnership with Brookfield and
Speaker 7: other private equity infrastructure player. We haven't heard that they're
Speaker 7: around this, but certainly now that the Apollo name is
Speaker 7: out there, will other names come out of the woodwork
Speaker 7: real quickly.
Speaker 3: And so you fifteen seconds in terms of a time
Speaker 3: frame you're thinking about for Intel, Yeah.
Speaker 6: I mean some of these deals need to minifese quickly,
Speaker 6: as Leanna just said, But Intel in terms of time
Speaker 6: frame can't afford too many more, if any of the
Speaker 6: kind of disastrous innings reports that we just saw, that's
Speaker 6: going to be a hard stop for them.
Speaker 2: All right, so appreciate it.
Speaker 3: A very big company story and certainly a big story
Speaker 3: on the Bloomberg Today in king US semiconductor and networking
Speaker 3: reporter at Bloomberg News out there in San Francisco, Leanna
Speaker 3: Baker right here in studio.
Speaker 2: She is managing editor of the Deals team, and you
Speaker 2: can read more at Bloomberg dot com.
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Speaker 3: Well, we highlight and on a lot about everybody moving
Speaker 3: down south.
Speaker 2: I've had a lot of family members move down south.
Speaker 2: It is it's nice and warm and toasty.
Speaker 3: But in particular, we see a lot of people going
Speaker 3: to South Florida, financial types and more. And as a
Speaker 3: result of that move, how that has led to soaring
Speaker 3: prices of homes, especially among the super rich, which brings
Speaker 3: us to a new record perhaps for the most expensive
Speaker 3: residents in the Miami area. Let's get to it with
Speaker 3: Danny Hertzberg Wilt at the jills Zer Group. It's a
Speaker 3: team within the Coldwell Banker community. It has been ranked
Speaker 3: by Real Trends in the Wall Street Journal as the
Speaker 3: number one real estate team in the nation, Florida and
Speaker 3: Miami for several years.
Speaker 2: Including twenty twenty four.
Speaker 3: Danny joining us from South Florida along with Bloomberg News
Speaker 3: Markets correspondent Abigail Doolittle, who keeps an eye on the
Speaker 3: real estate world.
Speaker 2: She is joining us here in studio.
Speaker 3: Hey, Danny, my understanding is you guys might have some
Speaker 3: news for us about a big closing.
Speaker 2: What can you tell us.
Speaker 4: We do we have some very exciting news.
Speaker 8: First, Thank you so much, Carol, Steven, Abigail, and Bloomberg.
Speaker 4: For having me today.
Speaker 8: We have the record sale closing today and it's the
Speaker 8: highest sale in the history of.
Speaker 4: Miami Dade County.
Speaker 9: So Danny, something to ask about this sale. Not so
Speaker 9: long ago, I can remember Jeff Bezos making a big purchase.
Speaker 9: I feel like it was close to one hundred million,
Speaker 9: and then Ken Griffin was a more than one hundred million.
Speaker 9: So you're saying that this sale is more that it
Speaker 9: tops those well known billionaires.
Speaker 8: So there's only been one sale in the history of
Speaker 8: Miami Dade County that broke one hundred million, which our
Speaker 8: team worked on. I was very proud to see might
Speaker 8: Mom break that record at one hundred and six million,
Speaker 8: and this surpasses that record, So this will be the
Speaker 8: all time highest sale. It's a very significant market update.
Speaker 8: It tells you a lot about the story of Miami
Speaker 8: and the growth of the city and the number of
Speaker 8: billionaires and high net worth individuals moving to Miami and
Speaker 8: all the big companies that have been coming down here.
Speaker 9: Well, let's take into that just a little bit more, Danny,
Speaker 9: because I know that prior to this pandemic gold rush
Speaker 9: for real estate, the biggest sale in Miami if I
Speaker 9: have this correctly, I think that forty seven million and
Speaker 9: twenty fifteen, and then there was another forty seven million
Speaker 9: sale in twenty twelve. Now forty seven million seems like nothing.
Speaker 2: Yeah, yeah, it seems.
Speaker 9: Like packaging perspective context. So has the table really been
Speaker 9: reset here?
Speaker 4: Absolutely?
Speaker 8: So that forty seven million record back in twenty twelve,
Speaker 8: which we participated and was actually on Indian Creek. So
Speaker 8: it's very interesting that the story started there on Indian Creek,
Speaker 8: and then the markets spread throughout the city from Star
Speaker 8: Island to Gables of States North and South through Golden Beach,
Speaker 8: and then for many years, almost a decade, you didn't
Speaker 8: have a sale over fifty and since twenty twenty one,
Speaker 8: we now have had eight sales over fifty million, in
Speaker 8: sales over one hundred million, which is significant, right, and
Speaker 8: the runner up sales are seventy million, seventy five million,
Speaker 8: ninety three million, so very significant numbers for Miami, which
Speaker 8: puts us on par with La New York on Beach
Speaker 8: and all the major global markets.
Speaker 3: Danny step back, lay out this deal that you guys closed,
Speaker 3: What is this deal? Who did it tell us about
Speaker 3: because I believe it involved a couple of properties and
Speaker 3: what the amount was.
Speaker 8: So this was a significant assemblage on Laguarse Island. The
Speaker 8: sale is just over one hundred and twenty two million total.
Speaker 8: It was an assemblage put together by doctor Pierce over
Speaker 8: many years. It was four properties put together one by
Speaker 8: one and then assembled together. It took several years to
Speaker 8: sell this property. It was a very complicated transaction with
Speaker 8: many zoning elements, and we showed it some of the
Speaker 8: most high networth individuals in the world. It's the true
Speaker 8: trophy property of the city with downtown views and we
Speaker 8: have a growing downtown and you know, it's exciting the market.
Speaker 4: We're having a lot of buzz we had.
Speaker 8: What's interesting about the sale is not just breaking one
Speaker 8: hundred million, but to have multiple offers and backup buyers
Speaker 8: that kind of interest is just very telling the market
Speaker 8: we're in.
Speaker 5: Tell us a bit about the profile of who's getting
Speaker 5: into this market. Who's got the big and deep pockets
Speaker 5: to be able to look at properties like this. Is
Speaker 5: it American buyers? Are you getting overseas buyers in there
Speaker 5: as well?
Speaker 4: It's a great question.
Speaker 8: So in general, these type of properties which we focus
Speaker 8: on the overwhelming majority of buyers have been domestic, moving
Speaker 8: from New York, Chicago, California, New Jersey, high tax states,
Speaker 8: really moving to Florida with no state income tax, and
Speaker 8: that's been the trend. A very small percentage have been
Speaker 8: in international buyers. But when I look through the list
Speaker 8: of the largest, most significant purchases, the record breaking sales,
Speaker 8: they've really been domestic buyers.
Speaker 9: Okay, so Dana, you have all of these people who
Speaker 9: wanted to buy this property for more than one hundred
Speaker 9: and twenty two million dollars. And I should mention it's
Speaker 9: not for the properties, it's for the land. So these
Speaker 9: people buy these properties is knocked down the homes for
Speaker 9: the land, and then rebuild.
Speaker 2: This is a teardown. Yeah, this is a teardown.
Speaker 9: This is a teardown, one hundred and twenty two million
Speaker 9: dollar teardown.
Speaker 2: But where do all.
Speaker 9: Those other buyers go? Surely your pipeline is stuffed? What
Speaker 9: can you tell us about the next big sale?
Speaker 8: So we've been working on it. It's complicated because this
Speaker 8: is the true trophy property. So finding the next best
Speaker 8: alternative for people has been challenging. We've been making calls
Speaker 8: knocking on doors, calling in, you know, trying to convince
Speaker 8: people to move. And although this is the record, I'm
Speaker 8: confident by the end of the year, early next year,
Speaker 8: we're going to see other sales even breaking this record.
Speaker 8: It's not that there's not demand from the buyers. It's
Speaker 8: that we have few sellers at this point that are
Speaker 8: willing to move for these type of.
Speaker 4: Properties and the most sought after community.
Speaker 8: So you know, this was a land transaction, but many
Speaker 8: of the people looking at it wanted to finished home
Speaker 8: on a large parcel and that type of inventory just
Speaker 8: doesn't exist, so people are having to build it themselves.
Speaker 8: And land price is now for the best parcels of land,
Speaker 8: they're now one thousand foot for a land per foot basis.
Speaker 8: So we're getting creative. We're trying to put neighbors together
Speaker 8: in different communities. We're calling people. Maybe people are focused
Speaker 8: on at home. Now we're pivoting to a penthouse. So
Speaker 8: we have to get creative. But we're used to working
Speaker 8: in a tight inventory environment. Going back to this, really
Speaker 8: starting twenty twenty, if we go pre pandemic, the overwhelming
Speaker 8: majority of buyers looking at this type of property, bidding
Speaker 8: on this property would have been international buyers, so it's
Speaker 8: completely switched from majority international to majority domestic in a
Speaker 8: very short period of time.
Speaker 5: And what sort of incentives are you having to put
Speaker 5: up the incentives to get these neighbors to think about
Speaker 5: putting their properties on the market, because I mean, if
Speaker 5: you have all the buyers, how are you incentivizing them
Speaker 5: to think about selling.
Speaker 4: So that's been really challenging.
Speaker 8: So, you know, one thing that's been a great care
Speaker 8: at has been providing post occupancy agreements, particularly when people.
Speaker 4: Are building or they're going to renovate.
Speaker 8: So we work it into the deal where the seller
Speaker 8: can stay for six months, sometimes even a year rent
Speaker 8: free in the property. Then they have the proceeds from
Speaker 8: the sale to find their next you know, property to
Speaker 8: move to. We've had all sorts of sweeeners with you know,
Speaker 8: quick closings, long closings, all different sorts of accommodations, even
Speaker 8: people making arrangements, and many times we've had sellers say
Speaker 8: we'll take this deal, but only if you find me
Speaker 8: a property to go to. So it's contingent on me
Speaker 8: finding a property to move to. And that's really only
Speaker 8: happening in the highest end of the market. That's where
Speaker 8: the demand is the strongest in the Miami market, the
Speaker 8: very very ultra high end, because you have few sellers
Speaker 8: and you have a pretty significant pool of buyers, so
Speaker 8: the post occupancy is the lead. But really a lot
Speaker 8: of it comes down to the number.
Speaker 4: Is it right?
Speaker 2: Many?
Speaker 4: Well, go ahead, Oh no, I was just gonna say.
Speaker 8: You know, usually when we ask or would you consider selling,
Speaker 8: and the answers typically know for many of these you know,
Speaker 8: trophy high net worth individuals and awn these type of properties.
Speaker 8: But when we frame it as you know, is there
Speaker 8: a number that you consider selling at with certain terms,
Speaker 8: then it opens the conversation and sometimes people don't realize,
Speaker 8: you know, there's a real many people. Not everybody, but
Speaker 8: most people have a number that if it's big enough,
Speaker 8: they may move.
Speaker 4: They may you know, buy the property they were thinking.
Speaker 8: About, or make different arrangements, and we try to create
Speaker 8: a deal structure that works for everybody.
Speaker 9: And then in thirty seconds, Danny, I happen to know
Speaker 9: that there's one property in particular that you've called remarkable
Speaker 9: with a single buyer and a single seller, that you
Speaker 9: think could come to market by the end of the
Speaker 9: year early next year. Above this can you give us
Speaker 9: any more details on that?
Speaker 2: And more like twenty seconds. Unfortunately, so my.
Speaker 4: Lips are sealed.
Speaker 8: But there is a potential transaction in the works. A
Speaker 8: buyer wants a property and.
Speaker 4: We'll see if the seller will sell, but it will
Speaker 4: break this record.
Speaker 8: And there are other potential buyers out there looking right
Speaker 8: now in our market stay that are looking at prices
Speaker 8: above this record sale.
Speaker 2: Danny Herzberg Wheelter at the Jills Zeer Group.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 3: Banks docs have rallied nearly three percent since last Wednesday
Speaker 3: following the Fed's half a point rate cut, since dropping
Speaker 3: back more than one percent. Back with us, though, to
Speaker 3: talk about what's going on when it comes to rate
Speaker 3: cuts and the impact on the banking community, is once
Speaker 3: again welcome to have with us. Frank Sorrentino, He's chairman
Speaker 3: and CEO at Connect One Bank Corp. It is the
Speaker 3: publicly held New Jersey based community bank. They've got roughly
Speaker 3: a nine hundred and sixty two million dollar market cap.
Speaker 2: Since we talked, connect One.
Speaker 3: Expanded its reach into Long Island thanks to a merger
Speaker 3: with the First of Long Island Corporation. As for shares
Speaker 3: of connect One overall, they're up nearly ten.
Speaker 2: Percent year to date.
Speaker 3: They've rallied about forty five percent since mid June. Frank,
Speaker 3: so great to have you back with us here on
Speaker 3: Bloomberg Business Week.
Speaker 10: How are you, Thank you, Carol. We're doing quite well
Speaker 10: and thank you for having me back on the program.
Speaker 10: You bet you great times.
Speaker 2: You've been busy, you've been busy. Tell us about this deal,
Speaker 2: this tie up.
Speaker 3: You didn't actually give us a clue, but you were
Speaker 3: spending a fair amount of time in Long Island.
Speaker 10: But go ahead. Oh well, we've been working on Long
Speaker 10: Island for the last five years and this is a
Speaker 10: really great market adjacency with a company that has a
Speaker 10: very similar culture and an incredibly attractive client base. So
Speaker 10: we're really excited to merge together with these folks. It's
Speaker 10: a great team of people and we're looking forward to
Speaker 10: giving that you know, First of Long Island as well
Speaker 10: as all of their clients a great experience on Long
Speaker 10: Island with some more capabilities, some more products, and some
Speaker 10: more services.
Speaker 5: Hey, Frank, I'm sure the people of Long Island to
Speaker 5: be thrilled to hear you describe them as being incredibly
Speaker 5: attractive as well, So we'll take off for them too.
Speaker 5: But look are you Are you looking at any other
Speaker 5: incredibly attractive places for perhaps and more acquisitions.
Speaker 10: Well, I think we've always said that we're opportunistic as
Speaker 10: it relates to M and A that you know, it's
Speaker 10: been five years since the last transaction that we've done,
Speaker 10: and I think you know, our organic growth story is
Speaker 10: also something to talk about. You know, we've grown quite
Speaker 10: a bit organically, and when there are good opportunities in
Speaker 10: sound and really interesting markets like Long Island, and there's
Speaker 10: the opportunity to do something with a partner that we
Speaker 10: feel makes sense, we will seize that opportunity. So, you know,
Speaker 10: our growth has been a combination of both organic and
Speaker 10: M and A.
Speaker 5: Let's take a step back and look at the big
Speaker 5: picture here for a minute about where the kind of
Speaker 5: broader situation is. After we've seen the FED cutting rates
Speaker 5: last week as well how much do you feel like
Speaker 5: there is a clear path ahead for what happens next,
Speaker 5: and how are you thinking about it in terms of
Speaker 5: your business on the future race environment.
Speaker 10: Well, I think the FED has made it very clear
Speaker 10: that they have a series of targets ahead of them
Speaker 10: that they want to achieve. Whether they achieve them in
Speaker 10: a shorter time frame or slightly longer time frame, I
Speaker 10: don't really think matters all that much. So whether the
Speaker 10: next cut is twenty five or fifty, or whether they
Speaker 10: skip one, or you know, whatever they do. But the
Speaker 10: fact remains they're clearly on a track to get to
Speaker 10: lower rates, probably somewhat some another one hundred or one
Speaker 10: hundred and twenty five basis points lower probably by year end,
Speaker 10: and that they have a definite target in mind for
Speaker 10: where they want the economy to go based on the
Speaker 10: data that they see today. If that data changes, they
Speaker 10: may change those targets.
Speaker 3: How do you feel about the economy. You've been on
Speaker 3: with us a lot over the last year. You've often
Speaker 3: you know, I repeat myself, but when people were talking
Speaker 3: kind of dour about the economic outlook, talking recession, you
Speaker 3: were talking about robust was the word you often used
Speaker 3: when it comes to what's going on in the US economy.
Speaker 3: Tell us about what you are seeing and does it
Speaker 3: maybe mean the FED doesn't need to go one hundred
Speaker 3: and twenty five basis points because things are going really well.
Speaker 10: Look things. I think we are still in a robust economy,
Speaker 10: and I think the FED has gotten it right to
Speaker 10: lead us through to a soft landing. They've you know,
Speaker 10: this was a mission, and it was a mission that
Speaker 10: many people had in doubt that they could ever achieve.
Speaker 10: But yet here we are. The economy is doing well.
Speaker 10: Business formations are at all time high, no matter how
Speaker 10: you look at that data, and I think that boats
Speaker 10: very very well. Home construction is going gangbusters.
Speaker 2: And that's that's your work.
Speaker 3: You play into residential, right, and you play into the
Speaker 3: visit we talk about it.
Speaker 2: Is it still going gangbusters?
Speaker 1: It is?
Speaker 10: You know, well, again we're talking about the market areas
Speaker 10: that connect one bank serves, right. So the New York
Speaker 10: metro market is very constrained as it relates to housing.
Speaker 10: And so every construction project that we're involved with, when
Speaker 10: it's completed, whether it's homes, condos, town homes, they are sold,
Speaker 10: whether it's apartments they are being rented. And generally at
Speaker 10: higher than pro forma numbers. So that bodes well for
Speaker 10: the economy. And keep in mind, you know, I've always
Speaker 10: been a big proponent of home building, whether it's for
Speaker 10: apartments or for people to own houses. When people move
Speaker 10: in someplace, they buy stuff, right, they buy a lot
Speaker 10: of stuff. It is one of the greatest generators for,
Speaker 10: you know, in the economy that exists. And so when
Speaker 10: you see you know, home building going at a at
Speaker 10: a rapid pace, and you see people buying homes as
Speaker 10: fast as they can get them, they are bidding wars
Speaker 10: going on for existing home product day, there's just not enough.
Speaker 10: You speak to any realtor, they will tell you there's
Speaker 10: just not enough product on the marketplace. That tells me
Speaker 10: things are pretty good. People have jobs, people have the
Speaker 10: income to support, you know, their lifestyles, and those apartments
Speaker 10: and those homes. So again, the reason I say robust
Speaker 10: is because I feel people have great jobs and are
Speaker 10: continuing to spend, and that's what our economy is based on.
Speaker 5: We are seeing a very slight loosening happening in the
Speaker 5: labor market now, though, and I wonder how you're thinking
Speaker 5: about that in six months or a year's time, and
Speaker 5: as you'rerationing all these loans, these people right there enthusiastically
Speaker 5: buying homes in the area as well. How are you concerned?
Speaker 5: How are you testing with these these new borrowers also
Speaker 5: to see how much they would be able to withstand
Speaker 5: should the labor market take a bigger downturn.
Speaker 10: Yeah, I don't see the labor market taking a big downturn.
Speaker 10: You know, we have to keep things in relative perspective.
Speaker 10: Right when you think about the labor market with a
Speaker 10: three and a half percent on employment rate five years
Speaker 10: ago or seven years ago, you would have told me
Speaker 10: that's impossible. We can't get there. The neutral rate or
Speaker 10: the you know, the stable rate was four and a
Speaker 10: half or five percent. So I think we're coming off
Speaker 10: a very incredibly strong economy and maybe it's you know,
Speaker 10: maybe it's slowing a bit, but it's not faltering. Companies
Speaker 10: are still complaining that they can't find or source really
Speaker 10: good talent today, and so the opportunities are still there
Speaker 10: for folks and people who are in the you know,
Speaker 10: places in the economy where there's need for certain types
Speaker 10: of labor, certain types of services. They just can't find
Speaker 10: enough folks to fill those positions. So, you know, and
Speaker 10: I'm not sure that four percent the unemployment is something
Speaker 10: where we should be worried.
Speaker 3: Well, you know, and one of the things we just
Speaker 3: had a discussion with our connorson he found out a
Speaker 3: financial advisory firm, but he wrote a Bloomberg opinion column
Speaker 3: that basically saying Frank that we're gonna have to kind
Speaker 3: of make the decision between either having lower mortgage rates,
Speaker 3: which some would like in a big way, or we're
Speaker 3: gonna let We're gonna have to have let the FED
Speaker 3: kind of, you know, maybe allow for a stable labor market,
Speaker 3: like we just kind of can't have both. Like if
Speaker 3: you see the FED cutting rates even more, which would
Speaker 3: bring down mortgage rates even more, it probably means because
Speaker 3: the economy is coming undone and the and the labor
Speaker 3: market is coming undone.
Speaker 2: So how do you see it? Is the FED going
Speaker 2: to have to kind of make some choices?
Speaker 3: Are we going to have to make some choices about
Speaker 3: what we what we get with this US economy and want.
Speaker 10: I think the FED is making choices. And I've been
Speaker 10: a staunch proponent of the Fed's actions over the last
Speaker 10: number of years. I think they've gotten it right. Could
Speaker 10: they have been a little bit faster on the uptake?
Speaker 10: Could they be a little bit slower maybe here, or
Speaker 10: maybe they need to go a little faster. I don't know,
Speaker 10: But overall, I think they've been doing a good job.
Speaker 10: Here we are. We're sitting in economy with very, very
Speaker 10: low unemployment, and we're sitting in an economy that is
Speaker 10: growing where consumers continue to spend. So I think they're
Speaker 10: getting it right. If anyone is thinking we're going back
Speaker 10: to a time when we're going to have three percent mortgages, Okay,
Speaker 10: that's not going to happen. But the idea that we're
Speaker 10: going to have you know, four and a half, five percent,
Speaker 10: five and a half percent mortgages, that's nirvana if you
Speaker 10: think about any other time period in our history. So
Speaker 10: we're not that far away from that, and yet still
Speaker 10: have low and low unemployment and still have you know,
Speaker 10: a growing economy with all the opportunities we have. The
Speaker 10: US leads the world in so many different industries. What
Speaker 10: else could you be wishing for. This is a good
Speaker 10: place to be and I think the FED is getting
Speaker 10: it right, and I think we're going to land in
Speaker 10: the right place.
Speaker 5: Okay, I'm hearing all of the optimistic masters, and I
Speaker 5: appreciate them, and I hear you, but I do want
Speaker 5: to ask you if there's anything you're worried about, because
Speaker 5: you know, there are concerns out there, and I'm just
Speaker 5: a lot of.
Speaker 2: American voters they certainly feel that way.
Speaker 5: And I'm just curious as to what you're watching for
Speaker 5: the potential signs that maybe things might you know, there
Speaker 5: could be some bumps in the road in the way.
Speaker 10: There's always the potential for bumps in the road, and
Speaker 10: we cancel all of our clients to you know, be aware,
Speaker 10: have situational awareness. Could there be a spike in you know,
Speaker 10: various indicators that there could be a change in interest
Speaker 10: rate policy that was unexpected Right six months ago, everyone
Speaker 10: thought maybe rates were going to go up. So I
Speaker 10: think it's I think it's important for people to prepare
Speaker 10: for a number of different eventualities.
Speaker 2: That happens. You know, welcome to the world.
Speaker 10: People should and people should People should should not you know,
Speaker 10: necessarily make business decisions only based on headlines there in
Speaker 10: the news. We should take a look at what's going
Speaker 10: on on the ground. What I am speaking to is
Speaker 10: what our clients are telling us about their business prospects
Speaker 10: and where they're willing to invest their capital. And the
Speaker 10: things we're being told is that it looks like the
Speaker 10: economy is on a very solid footing as we sit
Speaker 10: here today, and we'll continue to grow moving forward.
Speaker 2: Hey thirty seconds.
Speaker 3: So when you look at your loan book or when
Speaker 3: you look at loan demand, you don't see any signs
Speaker 3: of stress.
Speaker 10: Look, there's always there's always signs of some sort of
Speaker 10: stress somewhere in the economy, and it moves from place
Speaker 10: to place. So yes, we always have to keep an
Speaker 10: eye on that. And you know, the lowering of interest
Speaker 10: rates is making some of those areas better off today
Speaker 10: than they were maybe six months ago, but it may
Speaker 10: create other issues in other places. Anyone who's lending money
Speaker 10: has to always, you know, be a into what parts
Speaker 10: of the economy are moving better than others. And that's
Speaker 10: a very very you know, fast moving environment. So I
Speaker 10: wouldn't say it's devoid of any stress whatsoever. We certainly
Speaker 10: that's our job is to look at where those things
Speaker 10: are occurring.
Speaker 3: Well, as you know, we always appreciate when we get
Speaker 3: some time with you, Frankie, Well, frank Sorrentino. He's chairman
Speaker 3: and at Connect one Bank Court joining us there from
Speaker 3: Long Island.
Speaker 4: Brother marcome.
Speaker 3: A journal now about you?
Speaker 11: Let me drive?
Speaker 5: Oh no, no, no no, he's gone to drive, honey, please,
Speaker 5: I'll do the riding gravels.
Speaker 3: Let's wat I want to drive.
Speaker 10: It's a good question that try.
Speaker 4: This is the drive to the Clothes dot Com.
Speaker 1: Think well, jo it on on Bluebird Radio.
Speaker 3: All right, everybody, just under twenty minutes left to end
Speaker 3: the Monday trading day. I heard Charlie breaking down the numbers,
Speaker 3: Bill Maloney as well, and we're definitely of our best
Speaker 3: life of the session. So I'm going to say Stephen
Speaker 3: just a little bit higher. But you know, it was
Speaker 3: a big week last week with the FED meeting. I
Speaker 3: feel like we're going to wait to see what FED
Speaker 3: speakers are saying, although a lot have been out in
Speaker 3: full force.
Speaker 5: Yeah, that's when we heard from Aston Gosby among others,
Speaker 5: talking about many more rake cuts so expected over the
Speaker 5: next year, two many more meet It was sufficiently nebulous,
Speaker 5: is what I enjoyed it. I think we probably needed
Speaker 5: to hear him say it to really understand what it meant.
Speaker 5: And we're thinking about the year ahead. Let's bring in
Speaker 5: Veronica Wellison's Global investment Strattus at Wells Fargo Investment Institute.
Speaker 5: He joins us from Saint Louis. Veronica, Great to have
Speaker 5: you with us on the program. So what's your reading
Speaker 5: on where markets are this week?
Speaker 4: Right?
Speaker 5: Are we in a sweet spot? We got the fifty
Speaker 5: basis points, we haven't gotten into earning season yet. Is
Speaker 5: this sort of a happy coasting moment or do we
Speaker 5: need to watch out for Iceberg's.
Speaker 11: I think we're in a bit of a sweet spot
Speaker 11: right now. A pretty quiet day that we've seen today
Speaker 11: after a very eventful week last week. But I think
Speaker 11: ahead we've got some important data this week. Most importantly,
Speaker 11: we've got that PC inflation expected all on Friday. And
Speaker 11: while you know, markets have shifted their focus a little
Speaker 11: bit to the labor market over inflation, I do think
Speaker 11: that those inflation updates are going to continue to be important.
Speaker 3: Yeah, I agree with you. We are so still data dependent.
Speaker 3: I mean, folks, if you thought we were over it,
Speaker 3: we are just so not. It's data dependent and inflation
Speaker 3: and even the Fed said right, Veronica made some point
Speaker 3: about that inflation is still not quite where they the
Speaker 3: FED would like it to be, so you know that
Speaker 3: they are watching as well.
Speaker 1: Yeah.
Speaker 11: Absolutely. You know a lot of people have taken the
Speaker 11: fifty basis point cut by the FED as a win
Speaker 11: over inflation. And I think what's going to be important
Speaker 11: for all of the various bet speakers we've got this
Speaker 11: week speaking or looking at what they're saying about inflation.
Speaker 11: They certainly haven't told us, you know, we have a
Speaker 11: victory over inflation. They still want to see that inflation
Speaker 11: number come.
Speaker 5: Down some more on the south landing question, and we
Speaker 5: were speaking to the CEO of Bincorp there a moment ago,
Speaker 5: thank you, super optimistic about where things are going for
Speaker 5: the US economy, but this question of soft landing and
Speaker 5: the risks of that landing still in question. I mean,
Speaker 5: what's the market perception on that From your point of view, I.
Speaker 11: Think the market is becoming a little bit more concerned
Speaker 11: that maybe there will be a recession. But I think
Speaker 11: soft landing is what's priced in and that's what the
Speaker 11: most likely scenario is. We're seeing economic.
Speaker 2: Rights based on what you guys look at.
Speaker 11: Yeah, I think we're seeing slowing economic growth, but not
Speaker 11: enough to put us into a recession. And I think
Speaker 11: by the time we get to that low in the growth,
Speaker 11: we'll start to see that acceleration and really avoid a recession.
Speaker 5: At this point, what we're thinking about next year, you know,
Speaker 5: the idea of there being a better economic picture in
Speaker 5: play there as well. How do you position now to
Speaker 5: be ready for that next year?
Speaker 11: I think for now we are a little bit cautious
Speaker 11: thinking of US large caps over small caps, and then
Speaker 11: in the fixed income space, we like investment grade over
Speaker 11: high yield, waiting for a little bit of a better
Speaker 11: entry point to making a shift to those risk on
Speaker 11: So once we start to feel a little bit more
Speaker 11: comfortable that the economy is starting to accelerate, that's when
Speaker 11: we want to make more of a shift to those
Speaker 11: more risk on areas of the market that tend to
Speaker 11: do well as the economy starts to reaccelerate.
Speaker 3: All right, So, for people are putting new money to
Speaker 3: work right now, what's your advice for people who have
Speaker 3: existing portfolios? What's the tinkering you suggest right now?
Speaker 11: I think right now a focus on the US large
Speaker 11: cap space. We've seen a bit of a rally year,
Speaker 11: so I'd focus on some of those sectors that have
Speaker 11: the best valuations right now that we're expecting to do
Speaker 11: well over the next twelve to eighteen months or so.
Speaker 11: So we like communications services, financials, energy, materials, and industrials.
Speaker 11: We think that those sectors are, you know, a little
Speaker 11: bit better evaluation than tech, which has gotten a little
Speaker 11: bit overextended over the past couple of years, but should
Speaker 11: also benefit from the long term type of AI trends
Speaker 11: that has really boosted tech. I think sometimes people forget
Speaker 11: that other sectors will really benefit from that AI trade,
Speaker 11: and that's what I would really encourage investors to do
Speaker 11: right now.
Speaker 3: Communication services as a whole, certainly a group that we
Speaker 3: talk about a lot.
Speaker 2: It's a little bit lower in today's trade.
Speaker 3: If I bring up the year to date numbers, let
Speaker 3: me just go there on the Bloomberg you see communication
Speaker 3: services up almost twenty six percent so.
Speaker 2: Far this year. It's an interesting group though.
Speaker 3: You know, you've got your media names, your traditional media companies,
Speaker 3: but you have something like Meta in there, you have
Speaker 3: Google in there. So when I know you can't necessarily
Speaker 3: talk specific names when you drill down into various sectors
Speaker 3: within communications services, is it some of the megacap tech
Speaker 3: names that you guys still find interesting or.
Speaker 2: Is it some of the traditional is it the streamers?
Speaker 4: Like?
Speaker 2: What is it?
Speaker 11: I think overall as a sector, we really like the
Speaker 11: opportunities there. We do think some of thecaps can still
Speaker 11: perform well as long as their earnings still deliver what
Speaker 11: the market is expecting. We've seen a little bit of
Speaker 11: market broadening this year with other names participating in the
Speaker 11: rally and not just that heavy concentration on those you know,
Speaker 11: top seven stocks or so. And I think that's what
Speaker 11: we're expecting to continue for the rest of this year
Speaker 11: into twenty twenty five. So I still think that there's
Speaker 11: room for communication services to improve and adding that exposure
Speaker 11: on days when you see pullbacks is a really good idea.
Speaker 5: What a big companies that are consumer focused. I wonder
Speaker 5: what's you're reading on the US consumer right now. We've
Speaker 5: had we've had the first rate cut. You know, that's
Speaker 5: going to help those that have mortgages to pay, but
Speaker 5: you know, more broadly, there have been signs of weakness
Speaker 5: in some of the data.
Speaker 11: Yeah, and we're really seeing that consumer confidence also wane
Speaker 11: a little bit. As you know, consumers are just really
Speaker 11: they're really worried about inflation. They're really worried about where
Speaker 11: prices are now, and we haven't necessarily seen that flow
Speaker 11: through to retail sales, which have held up. Okay, it's
Speaker 11: softening a little bit, but it hasn't gotten to a
Speaker 11: concerning point, which is part of the reason why we're
Speaker 11: in that soft landing camp. We'll think the consumer will
Speaker 11: be able to hold up. Okay, not as strong as
Speaker 11: they have been previously, but that's that's a big portion
Speaker 11: of why we're expecting economic growth to slow but not
Speaker 11: pull us into our recession, is just that the consumer
Speaker 11: should hold up. Okay.
Speaker 2: Is the AI trade still a good one in your view?
Speaker 11: I think it's important to think of the AI trade
Speaker 11: as more more than just a near term type of play.
Speaker 11: It's a it's a longer term theme which I think
Speaker 11: will play play out in the markets over you know,
Speaker 11: years to come, and so I do think it's important
Speaker 11: to think outside of the tech sector when you're when
Speaker 11: you're thinking of that AI play, That's not the only
Speaker 11: place where you'll really be able to see the benefits there.
Speaker 11: In particular, the energy, material industrial sectors will also benefit
Speaker 11: in the AI because they're all part of you know,
Speaker 11: getting up to those AI solutions and right now they
Speaker 11: have a little bit better valuations and what we're seeing
Speaker 11: in the tech sector. So that's a really great way
Speaker 11: to play that longer term AI trend.
Speaker 2: All right, Gonna leave it on that note. Listen Veronica.
Speaker 3: We really appreciate your time today, by the way, and
Speaker 3: video is up about four tens of a percent in
Speaker 3: case you were I feel like we say AI, we
Speaker 3: have to talk about Nvidia.
Speaker 5: That's Ronica at a stark level of investment Stratus at
Speaker 5: well Wells Fargo Investment Tendsity with us from Saint Louis.
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