WEBVTT - The Outlook On Real Estate 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.640 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.640 at Bloomberg dot com Slash podcast. Commercial real Estate for 0:00:23.000 --> 0:00:24.880 just you know, walking down the streets of New York City, 0:00:25.200 --> 0:00:28.840 we need a lot of empty spots right across the 0:00:28.840 --> 0:00:30.960 street from where we are in next door, yep, and 0:00:31.080 --> 0:00:34.800 next door lots of commercial real estate empty. Um. But 0:00:35.280 --> 0:00:38.479 you know, on the residential side, it is extraordinarily hot 0:00:38.479 --> 0:00:40.800 and I can attest to that. Let's talk all things 0:00:40.880 --> 0:00:43.479 real estate. We do that with Hassan Naji, President and 0:00:43.560 --> 0:00:47.440 chief executive officer of Marcus and Millichap, and real estate 0:00:48.000 --> 0:00:52.480 firm based in Calabasas, California. I've been to Calabasas, California. 0:00:52.560 --> 0:00:55.040 Pretty cool place, all right, Hassan, thanks so much for 0:00:55.120 --> 0:00:57.440 joining us here. I know you guys reported some earnings 0:00:57.480 --> 0:01:00.200 this morning. Give us the lowdown of what you're were 0:01:00.440 --> 0:01:03.640 re reporting today. Good afternoon, Thanks for having me on 0:01:03.640 --> 0:01:08.400 the program. We were very proud to report the largest 0:01:08.440 --> 0:01:11.000 revenue and the income quarter in our fifty year history. 0:01:11.680 --> 0:01:14.640 The second quarter was a reflection of a lot of 0:01:14.680 --> 0:01:18.440 delayed and canceled transactions that we're still able to resurrect 0:01:18.480 --> 0:01:23.160 from last year, as well as incredible new demand from 0:01:23.280 --> 0:01:27.480 buyers that see commercial real estate as a great investment 0:01:27.560 --> 0:01:31.120 because the economy is recovering. We added almost a million 0:01:31.200 --> 0:01:36.000 jobs in July and we're back to UH sixteen and 0:01:36.080 --> 0:01:38.200 a half million jobs of the twenty two million that 0:01:38.240 --> 0:01:40.920 we've lost, So the recovery is bringing a lot of 0:01:40.920 --> 0:01:45.319 confidence into the fact that eventually those empty spaces you 0:01:45.319 --> 0:01:49.440 were talking about right there in Manhattan will get re occupied. 0:01:50.080 --> 0:01:53.760 And interest rates are so low, with so much liquidity 0:01:53.760 --> 0:01:57.600 in the marketplace, that the investment community is seeing real 0:01:57.680 --> 0:02:00.240 estate as a great play right now, given we're stocks 0:02:00.280 --> 0:02:02.400 are at, given when bronze are at and the fact 0:02:02.440 --> 0:02:04.320 that commercial real estate has proven to be a very 0:02:04.360 --> 0:02:08.760 good inflation hedge going into an economic expansion, So all 0:02:08.800 --> 0:02:12.040 those things are happening. We as a company have had 0:02:12.080 --> 0:02:16.440 a number of key execution strategies. We've acquired nine firms 0:02:16.440 --> 0:02:18.959 in the last three years. We have done a number 0:02:18.960 --> 0:02:22.320 of technology upgrades which were just in time for the pandemic, 0:02:22.760 --> 0:02:26.400 where we had no downturn in our operations or any 0:02:26.480 --> 0:02:30.920 kind of a disruption. Thankfully, technology investments have really paid 0:02:31.000 --> 0:02:35.160 off and that productivity that we brought to our salesforces 0:02:35.720 --> 0:02:38.360 is really showing up in the numbers. Breaking out the 0:02:38.440 --> 0:02:42.079 types of commercial real estate that are the most popular ones, 0:02:42.360 --> 0:02:44.680 where do you see that? I mean, it's hard to 0:02:44.680 --> 0:02:48.120 believe it's offices, But is it restaurants? Is it gym's 0:02:48.160 --> 0:02:53.440 What kind of commercial real estate is seeing the most success. Well, 0:02:53.520 --> 0:02:56.919 the beauty of commercial real estate is that there's something 0:02:57.120 --> 0:03:00.760 for everyone on the menu. For risk of our investors, 0:03:00.760 --> 0:03:03.880 a G baby movements that are very yield and cash 0:03:03.919 --> 0:03:08.960 flow sensitive, apartments and single tenant at least those are 0:03:09.080 --> 0:03:13.840 your drug stores, your fast food restaurants, auto parts types 0:03:13.840 --> 0:03:16.280 of outlets where you have one tenant on a long 0:03:16.360 --> 0:03:19.919 term lease. The cash flow is very predictable there, they've 0:03:19.960 --> 0:03:24.200 been incredibly popular. Apartments have been very popular for many, 0:03:24.240 --> 0:03:28.840 many decades because they're stable regardless of the economic cycle 0:03:29.000 --> 0:03:32.680 for the most part, and uh, there's so much demand 0:03:32.760 --> 0:03:36.800 for affordable housing that apartment demand has been very very strong. 0:03:37.400 --> 0:03:40.200 On the other end of this spectrum. You have hotels 0:03:40.840 --> 0:03:43.840 and office buildings to it to a very large extent, 0:03:44.040 --> 0:03:48.080 and shopping centers that were hit incredibly hard by the pandemic, 0:03:48.120 --> 0:03:52.400 of course, and for those more higher risk, higher return 0:03:52.480 --> 0:03:56.560 types of investors, those asset classes are providing a phenomenal 0:03:57.280 --> 0:04:01.120 uh if you will acquire and fix it or acquire 0:04:01.200 --> 0:04:04.480 and ride the recovery play And we're seeing both ends 0:04:04.480 --> 0:04:08.080 of those safety and then more high risk, high return 0:04:08.600 --> 0:04:11.760 ends at the spectrum play out in the marketplace. You know, 0:04:12.360 --> 0:04:14.560 maybe just have my New York City bias here, but 0:04:14.600 --> 0:04:17.640 I am less cautious, much less cautious on the rebound 0:04:17.640 --> 0:04:20.599 of commercial real estate. You know, we're just seeing hassam. 0:04:20.680 --> 0:04:24.280 Some companies like Wells Fargo and black Rock announced some 0:04:24.440 --> 0:04:27.800 delays in bringing people back to the office. I think 0:04:27.800 --> 0:04:29.560 this is going to be folks just kind of feeling 0:04:29.560 --> 0:04:32.839 it out a little bit. I think you're right. In 0:04:32.880 --> 0:04:36.680 the urban markets, where we have so much dependency on 0:04:36.760 --> 0:04:41.440 public transportation, the new rounds of outbreaks have been a 0:04:41.480 --> 0:04:46.360 major concern. Even without frankly, the resurgence of new cases 0:04:46.520 --> 0:04:50.039 COVID cases, we knew that the urban markets would take 0:04:50.040 --> 0:04:52.840 time to recover. People are going to be cautious and 0:04:52.880 --> 0:04:54.800 there is going to be a kind of a dampening 0:04:54.800 --> 0:04:59.320 effect on office space usage and office space demand in 0:04:59.360 --> 0:05:02.719 the near term, probably the next twelve to eighteen months. 0:05:02.760 --> 0:05:04.880 But on the other end of the scale, if you 0:05:04.920 --> 0:05:07.599 look at the fact that new business formations in the 0:05:07.640 --> 0:05:11.320 United States are at a record high, we're seeing this 0:05:11.560 --> 0:05:14.839 job growth resurgence and changes in the economy where people 0:05:14.880 --> 0:05:18.679 have discovered you can have a hybrid work model. People 0:05:18.720 --> 0:05:21.159 can work from home some of the time at least 0:05:21.720 --> 0:05:25.479 and and commute much less and be more productive. On 0:05:25.600 --> 0:05:29.760 top of all that, you're seeing new generation of companies. 0:05:29.839 --> 0:05:32.840 Forming companies will eventually start to expand and there will 0:05:32.880 --> 0:05:37.360 be a backfill for demand, uh that is dampened by 0:05:37.440 --> 0:05:41.080 this new hybrid model and cautiousness. It's not a straight 0:05:41.160 --> 0:05:43.359 up recovery where it's a hockey stick for for the 0:05:43.400 --> 0:05:47.520 office market. We don't expect that, but we do believe 0:05:47.560 --> 0:05:50.680 that there will be a recovery. In Urban America has 0:05:50.760 --> 0:05:55.520 so many different benefits that were really thriving pre pandemic, 0:05:56.200 --> 0:05:58.120 and I think it's a matter of time before those 0:05:58.160 --> 0:06:00.839 come back, and I would a gin that that's part 0:06:00.839 --> 0:06:02.839 of the reason why some of the markets that were 0:06:02.839 --> 0:06:05.600 hardest hit by the pandemic are also poised for the 0:06:05.600 --> 0:06:10.680 biggest recovery. We're talking New York, San Francisco, Austin. Correct. Absolutely. 0:06:10.720 --> 0:06:14.800 If you look at the twelve months job creation, New 0:06:14.880 --> 0:06:18.000 York is number one over the last twelve months at 0:06:18.000 --> 0:06:22.120 eight point three percent employment growth with over three thousand 0:06:22.640 --> 0:06:26.120 jobs created. It's the number one metro on this list 0:06:26.120 --> 0:06:28.440 that I'm looking at produced by a research department, followed 0:06:28.440 --> 0:06:33.240 by Boston, Chicago, Dallas, Los Angeles, Philadelphia, DC, Atlanta, Detroit, 0:06:34.279 --> 0:06:38.240 and Northern New Jersey. From a percentage perspective, those metors, 0:06:38.240 --> 0:06:40.400 a lot of those metros were hit very, very hard, 0:06:40.520 --> 0:06:43.120 and they're making a big comeback. To your point, all right, 0:06:43.120 --> 0:06:46.800 talk to us about interest rates here. We're obviously historically 0:06:46.800 --> 0:06:49.080 low interest rates, although do have the rates popping up 0:06:49.080 --> 0:06:51.159 today of the tenure up to about one point nine 0:06:51.880 --> 0:06:55.239 On that strong jobs gain, people are betting that rates 0:06:55.279 --> 0:06:58.479 are in fact going to rise again from historically low levels. 0:06:58.480 --> 0:07:01.440 How sensitive is kind of the commercial side of the 0:07:01.440 --> 0:07:05.760 real estate business to interest rates. It's very sensitive because 0:07:05.880 --> 0:07:08.440 the cost of debt plays a big part in the 0:07:08.480 --> 0:07:11.480 way you value commercial real estate. Most commercial real estate 0:07:11.520 --> 0:07:16.080 of vast majority of the transactions do rely on financing 0:07:16.240 --> 0:07:20.680 from banks and credit unions and other forms of of lenders, 0:07:20.680 --> 0:07:24.680 life insurance companies, UH, the commercial mortgage backed securities the 0:07:24.760 --> 0:07:28.680 MBS marketplace, and therefore interest rates play a big part. 0:07:28.760 --> 0:07:33.320 On average, we see loan to value ratios of somewhere 0:07:33.360 --> 0:07:38.200 between depending on the property type. So where interest rates go, 0:07:38.960 --> 0:07:43.880 valuations UH follow, and we are expecting interest rates to rise. 0:07:43.920 --> 0:07:46.240 They have to. We can't stay at these record low 0:07:46.320 --> 0:07:49.680 levels forever. But the beauty of the balance in the 0:07:49.720 --> 0:07:52.800 marketplace for commercial real estate is that if inflation is 0:07:52.800 --> 0:07:56.680 coming back, if interest rates are rising and those are 0:07:56.680 --> 0:08:00.440 being accompanied by job growth, by new occupancies, by some 0:08:00.520 --> 0:08:03.360 new demand of stilling those empty spaces you are commenting 0:08:03.360 --> 0:08:07.360 on in Manhattan and other places, then the rents should 0:08:07.400 --> 0:08:09.640 be going up and the income levels of the properties 0:08:09.640 --> 0:08:12.160 should be going up along with inflation and along with 0:08:12.520 --> 0:08:14.960 interest rates. That's why commercial rules it is viewed as 0:08:14.960 --> 0:08:19.600 an inflation hedge, especially property types like hotels which are 0:08:19.640 --> 0:08:22.320 marked to market on a daily basis depending on demand 0:08:22.720 --> 0:08:25.760 for their room rates, and apartments which typically have a 0:08:25.760 --> 0:08:30.440 twelve month lease. And UH, we're we don't get concerned 0:08:30.440 --> 0:08:32.920 about interest rates rising as long as it's rising for 0:08:32.960 --> 0:08:37.800 the right reasons, economic growth and and new demand being created. 0:08:38.000 --> 0:08:41.360 If we get variations and interest rates because of some 0:08:41.440 --> 0:08:43.880 shock or because of some credit freeze, that's a whole 0:08:43.920 --> 0:08:46.080 different story. All right, Son, thank you so much for 0:08:46.160 --> 0:08:49.480 joining us. We really appreciate your perspective and experience. As Nagi, 0:08:49.840 --> 0:08:53.679 CEO of real estate firm Marcus and Millichap m m 0:08:53.679 --> 0:08:57.000 I is the stock symbol ticker to put into your Bloomberg. 0:08:57.000 --> 0:09:00.360 They reported some earnings. Uh, so we appreciate getting his 0:09:00.400 --> 0:09:07.000 thoughts on the real estate market. Good news on the economy. 0:09:07.040 --> 0:09:10.200 To end the week here, all right, let's get some 0:09:10.880 --> 0:09:13.760 insight into some of that economic data. We welcome Sarah House. 0:09:13.800 --> 0:09:17.240 She's director and senior economist at Wells Fargoes Corporate and 0:09:17.360 --> 0:09:19.520 Investment Banks. Sarah, thanks so much for joining us here. 0:09:19.720 --> 0:09:23.280 I love to get your take on the job's number 0:09:23.320 --> 0:09:28.680 and kind of where we are in this economic reopening. Yeah. 0:09:28.720 --> 0:09:31.200 I think all around, it was a pretty strong report 0:09:31.280 --> 0:09:33.240 that was hard to find fault with, so, of course 0:09:33.280 --> 0:09:36.160 we saw perils come in better than expected. We saw 0:09:36.200 --> 0:09:39.000 a nice upward revision to the prior two months the 0:09:39.080 --> 0:09:42.280 unemployment rate self for all the right reasons, as we 0:09:42.320 --> 0:09:45.080 did see a drop in the number of people reported 0:09:45.160 --> 0:09:49.240 unemployed even as the labor force rose, and of course 0:09:49.280 --> 0:09:52.559 you saw another decent gain in earnings. UM. I think 0:09:52.600 --> 0:09:54.679 if you want to nitpick with with the report, you 0:09:54.720 --> 0:09:57.680 could probably look at the participation rate and maybe wonder 0:09:57.960 --> 0:10:00.520 why it's it's not rising further. But I think it 0:10:00.600 --> 0:10:03.240 comes down to the fact that there's still a lot 0:10:03.320 --> 0:10:06.400 of constraints on the labor supply right now, and I 0:10:06.400 --> 0:10:08.559 think given where we are with the delta variant, we're 0:10:08.760 --> 0:10:11.760 probably going to see those constraints get prolonged a little 0:10:11.760 --> 0:10:14.240 bit here in the upcoming months. Sarah, will we look 0:10:14.280 --> 0:10:17.319 at that increased cost of labor, like, why are the 0:10:17.400 --> 0:10:20.800 sharp jumping wages over the past few months, Um, What 0:10:20.880 --> 0:10:26.199 do you think maybe contributing to that? It just speaks 0:10:26.240 --> 0:10:28.960 to how reluctant I think a lot of workers are 0:10:29.040 --> 0:10:32.560 to come back, either because they are concerned about the 0:10:32.600 --> 0:10:37.120 coronavirus or they have childcare issues, and so I think 0:10:37.160 --> 0:10:39.880 what we're seeing is that employers have have really had 0:10:39.960 --> 0:10:42.280 to pony up to get workers back in the door, 0:10:42.520 --> 0:10:46.000 especially in those lower paced sectors where maybe those extra 0:10:46.080 --> 0:10:50.360 unemployment benefits are replacing a higher rate of income UM. 0:10:50.360 --> 0:10:53.160 But also those are the same sectors where you are 0:10:53.400 --> 0:10:55.840 doing a lot of in person contact and so there 0:10:55.840 --> 0:10:59.040 are greater health risks and so employees have have to 0:10:59.080 --> 0:11:01.880 be compensated it for that, and we've seen a pretty 0:11:01.880 --> 0:11:04.600 sharp jump in wages as a result. So, for example, 0:11:04.679 --> 0:11:07.360 just in the leisure and hospitality sector, wages are of 0:11:07.440 --> 0:11:10.040 about eight percent since the start of the year. Were 0:11:10.040 --> 0:11:14.800 there any other standout sectors that you saw, well, Transportation 0:11:14.920 --> 0:11:18.000 warehousing has been another, So this is an area that's 0:11:18.000 --> 0:11:21.720 obviously been in high demand given the strength in good 0:11:21.800 --> 0:11:24.959 spending that we've seen over the course of the pandemic. 0:11:25.000 --> 0:11:27.760 And this is also another sector that you tended to 0:11:27.800 --> 0:11:30.720 have a lower pay rate to begin with, and so 0:11:30.800 --> 0:11:32.679 that that means that you're going to have to see 0:11:33.040 --> 0:11:35.840 UM stronger wages there, I think, to entice some workers 0:11:35.880 --> 0:11:38.920 back into the jobs market again given those health concerns 0:11:38.960 --> 0:11:43.319 and the offset provided by some of those unemployment benefits. Sarah, Okay, 0:11:43.360 --> 0:11:45.680 So now the discussion I think pivots a little bit 0:11:45.720 --> 0:11:49.560 to the FED. What does the FED takeaway from this 0:11:49.840 --> 0:11:52.120 job's report and maybe some of the other echo data 0:11:52.160 --> 0:11:55.520 we see out there. Yeah, I think overall this is 0:11:55.720 --> 0:11:58.960 a pretty strong report and what the Fed wants to 0:11:59.000 --> 0:12:02.440 see is as far as progress growth goes on the 0:12:02.520 --> 0:12:05.120 labor market. And then the big question though, is this 0:12:05.360 --> 0:12:08.720 enough to maybe move some of the more devish members 0:12:08.720 --> 0:12:12.560 of the Fed off their their taper timing. Um. I 0:12:12.600 --> 0:12:14.640 think you know, this certainly kicks the box if you're 0:12:14.720 --> 0:12:18.320 in the government Waller camp. But I think when you 0:12:18.480 --> 0:12:20.640 look at the clouds on the horizon with with the 0:12:20.679 --> 0:12:25.000 delta variant and how that might slow the timing of 0:12:25.000 --> 0:12:27.520 when we get clarity on on just how much the 0:12:27.600 --> 0:12:31.120 labor supply comes back, I think that might keep some 0:12:31.240 --> 0:12:34.760 folks wanting to see um that fall data, which would 0:12:35.080 --> 0:12:39.960 probably put the taper announcement more towards December, and it 0:12:40.080 --> 0:12:46.920 may or may not raise the case for raising rates. Right, So, 0:12:46.960 --> 0:12:49.400 I mean, I think the case for for raising rates 0:12:49.480 --> 0:12:52.560 is still pretty far off. But what we've seen, um, 0:12:52.600 --> 0:12:55.720 you know, particularly from Governor Wallers comments, but even from 0:12:56.320 --> 0:12:59.440 vice vice share claratives comments as well, is that they 0:12:59.440 --> 0:13:02.880 are thinking about the flexibility later on down the road. 0:13:02.960 --> 0:13:06.480 So if we continue to see upside surprises in inflation, 0:13:06.679 --> 0:13:09.880 if we continue to see some pretty strong jobs numbers 0:13:09.920 --> 0:13:14.120 and rapid improvement in the labor market. They want that optionality. 0:13:14.559 --> 0:13:16.920 But I think we we still see some some of 0:13:16.920 --> 0:13:19.240 your term risks on the horizon that we think they'll 0:13:19.320 --> 0:13:22.520 will probably stay patient a little longer yet. And Sarah, 0:13:22.480 --> 0:13:24.240 I just want to fall up on that inflation point 0:13:24.280 --> 0:13:26.120 you were making here. I mean, on those rare days 0:13:26.120 --> 0:13:29.080 when I was paying attention in economics class, I was 0:13:29.120 --> 0:13:31.960 taught you can't really have real inflation unless you're gonna 0:13:31.960 --> 0:13:34.920 have wage inflation. And I'm not sure this report kind 0:13:34.920 --> 0:13:37.720 of suggests that that's on the table here. How do 0:13:37.720 --> 0:13:42.680 you think about inflation and going forward? Well, I think 0:13:42.679 --> 0:13:45.480 we have some continued upward pressure that we're seeing. So 0:13:45.559 --> 0:13:47.680 you know, there's a couple of of the categories that 0:13:47.720 --> 0:13:50.120 have made a lot of headlines, like used autos that 0:13:50.240 --> 0:13:53.240 are probably do do for some payback here pretty soon. 0:13:53.280 --> 0:13:54.839 But we still have a lot of pressure in the 0:13:54.960 --> 0:13:57.920 system if we look at what's happening across supply chains 0:13:57.920 --> 0:14:00.360 and what that's doing to the goods picture. But I 0:14:00.400 --> 0:14:02.800 think what's really important is we look further down the road. 0:14:03.080 --> 0:14:05.960 Is this um pressure that we are seeing from from 0:14:06.000 --> 0:14:08.480 the labor side now part of this might be a 0:14:08.520 --> 0:14:11.640 little bit overstated of what the post COVID trend is, 0:14:11.679 --> 0:14:15.800 given that there is this timing mismatch between how soon 0:14:16.440 --> 0:14:19.880 employers want workers back and and how soon that labor 0:14:20.000 --> 0:14:22.560 is willing to return. And so we have seen some 0:14:23.000 --> 0:14:27.400 pretty remarkable increases, at least some within different industries over 0:14:27.640 --> 0:14:30.320 over the past few months. But I think this is 0:14:30.520 --> 0:14:35.120 a source of probably more durable inflation pressures over over 0:14:35.160 --> 0:14:37.400 the coming months. That's going to keep the overall pace 0:14:37.400 --> 0:14:40.760 of inflation elevated and and slow to return back towards 0:14:41.000 --> 0:14:44.040 the FEDS two percent target. And how much does this 0:14:44.200 --> 0:14:49.480 delta variant threaten this progress and any near term progress. 0:14:50.720 --> 0:14:53.480 I think it threatens to slow the progress. I don't 0:14:53.480 --> 0:14:57.440 think this is going to derail the expansion by any means. 0:14:57.520 --> 0:15:01.560 So we have tools to deal with the virus, so 0:15:01.760 --> 0:15:04.320 you know, as compared to the prior waves, we have 0:15:04.880 --> 0:15:09.200 access to really good vaccines. And then we have learned 0:15:09.240 --> 0:15:11.920 over the course of the past sixteen months or so, 0:15:12.240 --> 0:15:15.440 how did you business and how to still um have 0:15:16.400 --> 0:15:20.920 you know, economic activity within UM within this environment, so 0:15:21.040 --> 0:15:25.040 businesses have adjusted, UM we have we we know how 0:15:25.120 --> 0:15:28.240 to have better health hygiene and so I think that's 0:15:28.240 --> 0:15:31.120 going to limit the dent to activity, but it is 0:15:31.160 --> 0:15:33.080 going to to weigh on the margin. And so I 0:15:33.120 --> 0:15:36.600 think UM again, probably somewhat slower um than we would 0:15:36.600 --> 0:15:39.600 have expected maybe a month or six weeks ago. All Right, Sarah, 0:15:39.640 --> 0:15:41.560 thank you so much for joining us. We really appreciate 0:15:41.680 --> 0:15:45.000 your thoughts and insight. Sarah House, director and senior economist 0:15:45.360 --> 0:15:51.160 for Wells Fargo's corporate and investment bank. Right now, let's 0:15:51.160 --> 0:15:53.840 go talk about getting some of these Wall Street folks 0:15:53.920 --> 0:15:57.680 back into the office. We need an ire here back 0:15:57.800 --> 0:16:01.480 in the office of the Interactive Rovers studio. But we've seen, 0:16:02.080 --> 0:16:04.000 you know, some news come out of the last couple 0:16:04.000 --> 0:16:06.360 of days from the legs of Wells Fargo and in 0:16:06.440 --> 0:16:10.160 black Rock that perhaps perhaps they are going to delay 0:16:10.240 --> 0:16:13.080 this from September to October. Amazon came back and said 0:16:13.360 --> 0:16:15.200 all the way to January. But let's talk about the 0:16:15.200 --> 0:16:17.480 Wall Street folks. And to do that we welcome Hannah Levitt. 0:16:17.640 --> 0:16:20.000 She's a financi reporter for Bloomberg News. Joinings on the 0:16:20.000 --> 0:16:22.800 phone from New York. So, Hannah, it seems like we're 0:16:22.800 --> 0:16:25.360 seeing some of these big investment banks backtrack a little 0:16:25.400 --> 0:16:29.480 bit on their scheduling. Yeah, so it's it's really a 0:16:29.480 --> 0:16:32.160 confusing time, right because there's those rising cases, there's to 0:16:32.240 --> 0:16:36.240 dom CDC guidance and so well, different banks were already 0:16:36.280 --> 0:16:39.080 taking you know, for each bank there's their own approach, 0:16:39.200 --> 0:16:42.760 and that gulf has kind of gotten wider recently. And 0:16:42.880 --> 0:16:45.680 what you're seeing is you have two firms, really JP 0:16:45.840 --> 0:16:48.360 Morgan and Goldman Sacks, that are really leading the charge 0:16:48.360 --> 0:16:50.360 on return to office. You know, they called workers back 0:16:50.760 --> 0:16:53.640 at least on a part time basis earlier this summer. 0:16:54.000 --> 0:16:55.960 And then you have some other firms that are taking 0:16:55.960 --> 0:16:58.880 it slower. And so that's like Wells Fargo for example. 0:16:58.920 --> 0:17:01.440 You know, they were pointing to early September is when 0:17:01.440 --> 0:17:04.440 they were going to start that process of getting people 0:17:04.480 --> 0:17:07.000 back into the office, and they said yesterday that it 0:17:07.040 --> 0:17:11.080 would be um October instead, so and we saw Black 0:17:11.119 --> 0:17:14.000 Crock do the same thing. So it's yeah, there definitely 0:17:14.080 --> 0:17:17.040 is uh, you know, different approaches going on here, Kenna. 0:17:17.080 --> 0:17:19.520 Do you know what I wonder if this has more 0:17:19.560 --> 0:17:23.040 to do with the data for the delta variant or 0:17:23.119 --> 0:17:24.840 it has to do with the fact that a lot 0:17:24.840 --> 0:17:27.760 of people are resigning if their companies ask them to 0:17:27.840 --> 0:17:31.440 go into work. Yeah, you know, that's a really interesting question. 0:17:31.440 --> 0:17:35.280 And I also think that, um, something worth exploring here 0:17:35.680 --> 0:17:38.359 is just you know, for the firms that have already 0:17:38.600 --> 0:17:42.720 started doing this, I don't know how you unring that bell, um, 0:17:42.960 --> 0:17:44.960 so that you know you're dealing with kind of apples 0:17:44.960 --> 0:17:48.040 and orangers when you're talking about, um, you know, sending 0:17:48.040 --> 0:17:50.840 people back home versus when you start bringing people back. 0:17:51.840 --> 0:17:55.080 So follow up on Nita's line there, I mean, are 0:17:55.119 --> 0:17:58.159 we is there examples where we've had like major I 0:17:58.160 --> 0:18:02.280 don't know groups or trade eating deaths, or say or 0:18:02.400 --> 0:18:06.280 maybe a regional office in Florida or Texas saying we 0:18:06.320 --> 0:18:10.840 don't really need to come back. Um, you know, I mean, 0:18:10.840 --> 0:18:12.960 I think when you think about some of these big banks, 0:18:13.000 --> 0:18:15.439 you think about all all the locations that they have 0:18:15.520 --> 0:18:17.960 and them really being you know, a cross section of 0:18:18.000 --> 0:18:20.560 the country in that way, and especially when you are 0:18:21.040 --> 0:18:23.480 when you start looking at like their branch operations as well, 0:18:23.560 --> 0:18:25.480 which is kind of a different question because those people 0:18:25.480 --> 0:18:28.800 have been going in uh this whole time. But yeah, 0:18:28.800 --> 0:18:32.040 I think that that people's reactions, my senses at the 0:18:32.040 --> 0:18:35.879 banks kind of um, you get the diversity of reactions 0:18:35.920 --> 0:18:39.480 that you know, you're you're seeing and reading about, so 0:18:40.280 --> 0:18:42.320 you know what I see. Also, we know that Goldman, 0:18:42.359 --> 0:18:46.800 Sachs and JP Morgan there they are not forcing workers 0:18:46.800 --> 0:18:49.680 to get the shot. Um, but we found out last 0:18:49.760 --> 0:18:53.760 week I believe that it would be legal for employees 0:18:53.800 --> 0:18:56.560 to require shots. And so I wonder how much of 0:18:56.560 --> 0:19:01.320 that also played into the decision. Uh. Yeah, and we've 0:19:01.320 --> 0:19:04.640 we have seen them stop short. You know, a couple uh, 0:19:04.880 --> 0:19:06.960 a couple of banks have warned that this might be 0:19:07.000 --> 0:19:09.680 on the table, but no one uh of the big 0:19:09.720 --> 0:19:11.840 you know, of the giant lenders like JP Morgan and 0:19:11.920 --> 0:19:15.560 Goldman have not mandated that. We've seen Morgan Stanley say 0:19:15.640 --> 0:19:19.199 only vaccinated employees can return to our New York offices. 0:19:19.280 --> 0:19:21.879 But then you know, we we wrote about yesterday to 0:19:22.000 --> 0:19:25.520 vaccine employees then got uh COVID at their office. So 0:19:25.600 --> 0:19:30.040 this really just shows again like the the different approaches 0:19:30.040 --> 0:19:33.720 that are being taken, and also the reality that, um, 0:19:33.760 --> 0:19:36.639 this pandemic is still very much going on. Yeah, and Hannah, 0:19:36.640 --> 0:19:38.680 we had I remember we made a pretty big deal 0:19:38.680 --> 0:19:41.080 when JP Morgan brought their people back. I know Snali 0:19:41.359 --> 0:19:44.080 Bassik from Bloomberg News is actually reporting on site there 0:19:44.160 --> 0:19:46.280 in New York City, at their headquarters. Have we had 0:19:46.280 --> 0:19:48.960 any feedback from the JP Morgan folks about how things 0:19:49.040 --> 0:19:52.800 might be going. I mean, I think so they were 0:19:53.040 --> 0:19:58.240 people at JP Morgan, we're going back into the office, um. 0:19:58.400 --> 0:20:00.359 For they've been doing that for a while, so that 0:20:00.480 --> 0:20:04.119 there was, um, you know, at the time, which I 0:20:04.160 --> 0:20:06.440 believe they put out a memo in mayor June saying 0:20:06.520 --> 0:20:09.920 by July people should be in you know, at least 0:20:09.920 --> 0:20:13.080 part time, UM. But a lot of people were already 0:20:13.480 --> 0:20:16.720 going in UM. And so I think that that stayed 0:20:16.720 --> 0:20:21.960 pretty consistent. And lastly, do you think that um just 0:20:22.200 --> 0:20:25.760 going forward, this might be a thing that companies may do. 0:20:26.000 --> 0:20:30.359 They may require workers to get the shot or or else. 0:20:32.280 --> 0:20:34.920 I think that's a great question. And uh, I mean 0:20:34.920 --> 0:20:37.520 we've seen we've seen firms and other industries do it. 0:20:37.600 --> 0:20:40.480 So I guess the question really is, are are these 0:20:40.520 --> 0:20:42.960 banking giants going to take the plunge and do that? 0:20:43.040 --> 0:20:45.720 And I guess that remains to be seen. All right. Hannah, 0:20:45.720 --> 0:20:47.399 thank you so much for joining us. We appreciate it. 0:20:47.440 --> 0:20:49.919 Hannah Levitt, financial reporter for Bloomberg News, joining us on 0:20:49.960 --> 0:20:55.439 the phone from New York. Now let's get over to 0:20:55.720 --> 0:20:58.760 Ethan devit. She is the c i O at Monetta. 0:20:58.800 --> 0:21:02.200 They've got twenty seven points four billion dollars in assets 0:21:02.280 --> 0:21:05.639 under management. And first off, well, first off, good morning, 0:21:05.800 --> 0:21:09.320 thanks for joining us. Let me ask what you your 0:21:09.320 --> 0:21:13.359 reaction is to this job's number. Well, obviously, I would 0:21:13.400 --> 0:21:16.600 consider this quite a lagging indicator here in that this 0:21:16.680 --> 0:21:19.280 was the job sport which came out in advance of 0:21:19.320 --> 0:21:22.240 the delta variants, leading to increase mass mandates across the 0:21:22.280 --> 0:21:25.800 country and just ongoing uncertainty to saw today the Auto 0:21:25.840 --> 0:21:28.760 Show and New York was counceled, and this is that 0:21:28.800 --> 0:21:31.439 we're in a climate up great uncertainty, and if we 0:21:31.520 --> 0:21:34.560 have renewed mass mandates, will this mean certain indoor vince 0:21:34.600 --> 0:21:37.520 venues will close? And what's going to happen to to 0:21:37.520 --> 0:21:40.200 to the employment in that case? So I'd say it's 0:21:40.200 --> 0:21:42.480 really it's it's interesting, and it is certainly consoling to 0:21:42.560 --> 0:21:45.520 markets that markets have reacted accordingly. But I see this 0:21:45.600 --> 0:21:49.400 is actually more looking to pass, not really an indicator 0:21:49.440 --> 0:21:50.960 of what the rest of the summer and the fall 0:21:50.960 --> 0:21:53.440 will hold. All Right, it's a very good point, and 0:21:53.560 --> 0:21:57.480 the uptick in the delta variant has been disturbing, to 0:21:57.520 --> 0:22:00.320 say the least, we've seen it effect the real omy, 0:22:00.400 --> 0:22:05.159 with a number of Wall Street firms and mega cap 0:22:05.240 --> 0:22:11.040 tech firms pushing back their return to work. Um, how 0:22:12.280 --> 0:22:14.720 you know, how how difficult is it to work with 0:22:14.760 --> 0:22:18.080 this kind of uncertainty. It's extremely difficult. And I've said 0:22:18.080 --> 0:22:20.880 before that markets really are sort of fishing for answers 0:22:20.960 --> 0:22:23.680 right now. They're sort of playing around in areas such 0:22:23.720 --> 0:22:25.840 as the is it going to be good for the 0:22:26.000 --> 0:22:28.399