1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:23,000 Speaker 1: at Bloomberg dot com slash podcast. Well, we had in Washington, 7 00:00:23,160 --> 00:00:27,319 Speaker 1: d C. Yesterday, you know, the whole discussion about game stock. 8 00:00:27,360 --> 00:00:29,160 Speaker 1: We had all the kinds of different players in the 9 00:00:29,200 --> 00:00:32,000 Speaker 1: market there, but it seems to be maybe more theater, 10 00:00:32,520 --> 00:00:36,159 Speaker 1: uh than real substance. Let's get some expert overview. We 11 00:00:36,159 --> 00:00:39,559 Speaker 1: can do that today with former E Trade CEO Karl Rossner. 12 00:00:39,600 --> 00:00:42,240 Speaker 1: He's now CEO of Left Terrorist Acquisition. Carl, thanks so 13 00:00:42,320 --> 00:00:46,480 Speaker 1: much for joining us here. Again, what was your takeaway 14 00:00:46,479 --> 00:00:49,760 Speaker 1: from the hearings yesterday? So so, I think I think 15 00:00:49,800 --> 00:00:51,200 Speaker 1: you hit it. Thanks for having me on the show, 16 00:00:51,200 --> 00:00:53,199 Speaker 1: And I think you hit it right on the right, 17 00:00:53,240 --> 00:00:55,120 Speaker 1: on the head right. There was a lot of political theater. 18 00:00:55,880 --> 00:00:58,960 Speaker 1: There was some you know, sort of political one one 19 00:00:59,040 --> 00:01:01,520 Speaker 1: upmanship and you know, making sure that each of them 20 00:01:01,520 --> 00:01:03,440 Speaker 1: had their you know, three four or five minutes of 21 00:01:03,760 --> 00:01:06,280 Speaker 1: fame as they call it. Um. But I do think 22 00:01:06,280 --> 00:01:08,600 Speaker 1: a couple of points came out of it that we're 23 00:01:08,720 --> 00:01:11,760 Speaker 1: very helpful. Right. One was around payment for order flow. Um. 24 00:01:11,800 --> 00:01:15,160 Speaker 1: I think maybe retail investors and some of the more 25 00:01:15,160 --> 00:01:19,400 Speaker 1: wider audience maybe can start to understand that payment forward 26 00:01:19,400 --> 00:01:21,319 Speaker 1: to flow does have a place when it comes for 27 00:01:21,480 --> 00:01:25,000 Speaker 1: retail trading, and that there are tradeoffs to just you know, 28 00:01:25,040 --> 00:01:27,000 Speaker 1: a knee jerk reaction of saying there is no no 29 00:01:27,080 --> 00:01:30,800 Speaker 1: more payment for order flow allowed. I think short selling, right, 30 00:01:30,800 --> 00:01:33,880 Speaker 1: we'll come under pressure and they'll definitely be some reviews 31 00:01:33,920 --> 00:01:37,240 Speaker 1: I think in additional rulemaking and lawmaking coming down the pipe, 32 00:01:37,520 --> 00:01:40,440 Speaker 1: and then there will be a push over the next 33 00:01:40,480 --> 00:01:42,240 Speaker 1: few years because I think it will take that long 34 00:01:42,520 --> 00:01:45,280 Speaker 1: to move you know, clearing and settlement to a T 35 00:01:45,440 --> 00:01:48,560 Speaker 1: plus one type arrangement, you know, agreeing with some of 36 00:01:48,560 --> 00:01:51,480 Speaker 1: the witnesses in terms of the the difficulty of moving 37 00:01:51,520 --> 00:01:54,520 Speaker 1: the entire securities clearing to you know intra day. Yeah, 38 00:01:54,560 --> 00:01:56,960 Speaker 1: I thought that was really interesting. Actually, Um, you know 39 00:01:57,080 --> 00:02:00,160 Speaker 1: a lot of the comments from senators maybe one or 40 00:02:00,240 --> 00:02:03,400 Speaker 1: how much their staffs had actually prepared them for this, 41 00:02:03,920 --> 00:02:07,000 Speaker 1: but um, it was worth it to hear ken Griffin 42 00:02:07,040 --> 00:02:10,359 Speaker 1: talk about because I thought Y T plus two, we're 43 00:02:10,400 --> 00:02:13,000 Speaker 1: not in the Stone ages, let's do it instantly, And 44 00:02:13,120 --> 00:02:16,520 Speaker 1: actually Ken Griffin explained that that would be really difficult 45 00:02:16,560 --> 00:02:20,680 Speaker 1: and even dangerous for a lot of market participants. So, um, 46 00:02:20,760 --> 00:02:25,560 Speaker 1: I really learned something. What about the short selling pushback? Carl? Why, 47 00:02:25,720 --> 00:02:29,960 Speaker 1: um wasn't there any? I mean, in an efficient market, 48 00:02:30,040 --> 00:02:35,760 Speaker 1: you need people to go long and um to to 49 00:02:35,760 --> 00:02:39,160 Speaker 1: to keep discipline in order, you need people to go short. Yeah, no, 50 00:02:39,240 --> 00:02:41,799 Speaker 1: I I agree. I think the short sellers are going 51 00:02:41,840 --> 00:02:44,240 Speaker 1: to come under pressure, right if there's any area that 52 00:02:44,680 --> 00:02:46,400 Speaker 1: and you've seen it from some of the senators who 53 00:02:46,400 --> 00:02:48,800 Speaker 1: have written letters and some of the congress men and 54 00:02:48,840 --> 00:02:51,600 Speaker 1: women who have you gotten involved, that they look at 55 00:02:51,639 --> 00:02:54,160 Speaker 1: that as hedge funds gaming the market, and they're going 56 00:02:54,200 --> 00:02:56,640 Speaker 1: to vilify hedge funds. So I do think you'll have 57 00:02:56,760 --> 00:02:59,760 Speaker 1: some focus from you know, the SEC and and other 58 00:02:59,800 --> 00:03:03,240 Speaker 1: relatry bodies to figure out what curbs and what pushback 59 00:03:03,280 --> 00:03:05,680 Speaker 1: can they put around shorts. I agree with you that 60 00:03:05,720 --> 00:03:08,720 Speaker 1: in an efficient market you need all order types, right. 61 00:03:08,760 --> 00:03:10,640 Speaker 1: You have to be able to to sort of look 62 00:03:10,680 --> 00:03:13,400 Speaker 1: at the market both ways and having you know, run 63 00:03:13,400 --> 00:03:16,560 Speaker 1: a public company when shorts get into your stock. You 64 00:03:16,760 --> 00:03:18,760 Speaker 1: open your eyes and say, what do we you know, 65 00:03:19,000 --> 00:03:20,840 Speaker 1: is something Are we doing something wrong? Right? Do we 66 00:03:20,840 --> 00:03:22,840 Speaker 1: need to do something better? Are we getting a little 67 00:03:22,840 --> 00:03:25,800 Speaker 1: bit behind? You know? It makes you think, and I 68 00:03:25,840 --> 00:03:28,520 Speaker 1: think that's there are good aspects to it as well. 69 00:03:28,560 --> 00:03:30,480 Speaker 1: So I do hope they don't just knee jerk and 70 00:03:30,560 --> 00:03:33,160 Speaker 1: you know, and start to try and move that out 71 00:03:33,160 --> 00:03:35,640 Speaker 1: of the system. I think that would be a mistake. Well, Carl, 72 00:03:35,680 --> 00:03:37,320 Speaker 1: one of the things, I mean, you know, we we've 73 00:03:37,320 --> 00:03:41,840 Speaker 1: all seen short squeezes before. We've all seen short selling 74 00:03:41,920 --> 00:03:45,600 Speaker 1: come under scrutiny. It happens seems like every four or 75 00:03:45,600 --> 00:03:49,360 Speaker 1: five years. What's different this time is the use of 76 00:03:49,480 --> 00:03:52,160 Speaker 1: social media and the ability of these short sellers to 77 00:03:52,240 --> 00:03:55,720 Speaker 1: really coordinate their actions. Do you expect there to be 78 00:03:55,760 --> 00:04:01,120 Speaker 1: any regulatory overlay on perhaps the use of social media? 79 00:04:01,320 --> 00:04:03,080 Speaker 1: How do you think that might play out? So so, 80 00:04:03,120 --> 00:04:05,760 Speaker 1: I look, I think you heard one of them, one 81 00:04:05,760 --> 00:04:08,000 Speaker 1: of the witnesses yesterday say that, you know, in looking 82 00:04:08,040 --> 00:04:11,560 Speaker 1: at their next sort of short selling campaign or other 83 00:04:11,640 --> 00:04:14,680 Speaker 1: entities that might be looking at going short against they 84 00:04:14,680 --> 00:04:18,280 Speaker 1: will employ sort of data scientists and data data experts 85 00:04:18,320 --> 00:04:20,520 Speaker 1: to take a look at the social media boards and 86 00:04:20,520 --> 00:04:23,080 Speaker 1: and see if there's a you know, and other way. 87 00:04:23,680 --> 00:04:25,080 Speaker 1: I thought that was kind of funny too. And they 88 00:04:25,120 --> 00:04:27,520 Speaker 1: said they're going to employ data scientists. I figured they 89 00:04:27,560 --> 00:04:30,479 Speaker 1: put their teenagers on Reddit, right, I mean, just just 90 00:04:30,600 --> 00:04:34,200 Speaker 1: read Wall Street bets they will employ more than teenagers. 91 00:04:34,240 --> 00:04:35,960 Speaker 1: That I can guarantee you, just given the amount of 92 00:04:35,960 --> 00:04:38,520 Speaker 1: money that's at stake. But I agree, I mean, it's 93 00:04:38,600 --> 00:04:41,360 Speaker 1: it's getting through that piece. I think social media is 94 00:04:41,400 --> 00:04:44,080 Speaker 1: here to stay. I think it's helpful and and by 95 00:04:44,080 --> 00:04:45,960 Speaker 1: that I mean, of course it's here to stay, but 96 00:04:46,000 --> 00:04:48,080 Speaker 1: I look at it in terms of, you know, for 97 00:04:48,160 --> 00:04:50,520 Speaker 1: retail trading and for others to use that as a 98 00:04:50,600 --> 00:04:54,000 Speaker 1: mode of communication and a mode for sharing ideas. I 99 00:04:54,000 --> 00:04:56,359 Speaker 1: think it's a great tool for you know, for retail 100 00:04:56,480 --> 00:04:58,640 Speaker 1: right to learn and to use it as an education tool. 101 00:04:59,240 --> 00:05:01,279 Speaker 1: When you start, you know, sort of getting down the 102 00:05:01,360 --> 00:05:03,520 Speaker 1: edge of manipulation or you start getting on that, then 103 00:05:03,560 --> 00:05:07,320 Speaker 1: then I look to regulators to say, there's a line, right, 104 00:05:07,360 --> 00:05:09,599 Speaker 1: and this is where we think we can start drawing 105 00:05:09,640 --> 00:05:12,600 Speaker 1: that line. But but again, you know, the knee jerk 106 00:05:12,680 --> 00:05:14,560 Speaker 1: red line in the sand, it's not going to work. 107 00:05:15,560 --> 00:05:18,320 Speaker 1: And Carl, if there is that red line to be drawn? 108 00:05:18,520 --> 00:05:22,440 Speaker 1: Is it not the SEC? Maybe the CFTC that does it? 109 00:05:22,680 --> 00:05:25,440 Speaker 1: Not are good friends down in the halls of Congress. 110 00:05:26,040 --> 00:05:29,320 Speaker 1: I don't. I don't believe that any rulemaking should come 111 00:05:29,520 --> 00:05:33,640 Speaker 1: from the folks who were on that committee yesterday. Um. 112 00:05:33,680 --> 00:05:36,360 Speaker 1: I think you need to go to deep market experts. 113 00:05:36,880 --> 00:05:39,680 Speaker 1: I think you saw very clearly the difference among the 114 00:05:39,680 --> 00:05:43,239 Speaker 1: witnesses in terms of their expertise, and you only hope 115 00:05:43,240 --> 00:05:46,920 Speaker 1: that certain individuals like that are involved in market structure 116 00:05:47,120 --> 00:05:50,240 Speaker 1: and putting things together that can work, because in my view, 117 00:05:50,279 --> 00:05:53,159 Speaker 1: it's always been a Jenga puzzle. But you can't just 118 00:05:53,200 --> 00:05:55,200 Speaker 1: pull out one piece without knowing what else is going 119 00:05:55,240 --> 00:05:58,000 Speaker 1: to fall. And that's that's what we need when people 120 00:05:58,000 --> 00:05:59,640 Speaker 1: look at this. So I do think it's it's SEC. 121 00:05:59,839 --> 00:06:02,760 Speaker 1: I I believe Gary Gensler. I believe you know, Secretary 122 00:06:02,839 --> 00:06:05,320 Speaker 1: yelling right. You put the right people in the room 123 00:06:05,400 --> 00:06:07,520 Speaker 1: with the right experience, and and maybe we can move 124 00:06:07,560 --> 00:06:12,120 Speaker 1: things forward in a productive way that doesn't box out retail. Hey, Carl, 125 00:06:12,160 --> 00:06:14,800 Speaker 1: thank you so much. We appreciate that. Carl Rossner, he's 126 00:06:14,800 --> 00:06:17,000 Speaker 1: a former e Trade CEO, is now the CEO of 127 00:06:17,279 --> 00:06:22,039 Speaker 1: Left Terrorists Group. UM. You know, really interesting, Matt. I mean, 128 00:06:22,279 --> 00:06:24,560 Speaker 1: you just feel like there are rules in place. The 129 00:06:24,680 --> 00:06:28,080 Speaker 1: SEC is they're looking at these things. Well you know, yeah, 130 00:06:28,120 --> 00:06:32,760 Speaker 1: well there's also you know, um age old rules of thumb. 131 00:06:32,800 --> 00:06:34,839 Speaker 1: There's no such thing as a free lunch, right, And 132 00:06:35,120 --> 00:06:39,520 Speaker 1: when AOC was grilling Lad Tenev and saying, you know, 133 00:06:39,600 --> 00:06:41,920 Speaker 1: you've got these free products have to be as good 134 00:06:41,920 --> 00:06:44,480 Speaker 1: as the ones people pay for, you ask yourself if 135 00:06:44,480 --> 00:06:47,640 Speaker 1: anyone really believes that's the case. Yeah, And I think 136 00:06:47,680 --> 00:06:50,000 Speaker 1: it's just exposed not I guess, not surprisingly that the 137 00:06:50,400 --> 00:06:53,480 Speaker 1: you know, the plumbing, if you will, back office Wall 138 00:06:53,480 --> 00:06:56,240 Speaker 1: Street is not widely understood. So maybe maybe a little 139 00:06:56,279 --> 00:06:58,440 Speaker 1: bit of knowledge came to light yesterday. Maybe that's going 140 00:06:58,520 --> 00:07:04,120 Speaker 1: to be helpful. The housing market continues to be a 141 00:07:04,240 --> 00:07:08,400 Speaker 1: very pleasant surprise in a very difficult economic landscape here 142 00:07:08,400 --> 00:07:11,280 Speaker 1: in US. Just today, sales have previously owned US homes 143 00:07:11,800 --> 00:07:15,640 Speaker 1: unexpectedly rose to a three month high in January. That 144 00:07:15,760 --> 00:07:21,520 Speaker 1: there's pleasant, Yeah, absolutely, well, I think there's right because 145 00:07:21,840 --> 00:07:23,880 Speaker 1: what we've seen, Matt, is particularly here in the metro 146 00:07:23,920 --> 00:07:26,480 Speaker 1: New York area, but another urban areas people kind of 147 00:07:26,480 --> 00:07:29,240 Speaker 1: fleeing the city during the pandemic, trying to get some 148 00:07:29,240 --> 00:07:31,840 Speaker 1: more space going to suburbia, and that has created this 149 00:07:31,960 --> 00:07:35,760 Speaker 1: extraordinary demand in many, many markets around the country. And 150 00:07:35,800 --> 00:07:38,160 Speaker 1: we won't want to talk real estate, Matt. We talked 151 00:07:38,200 --> 00:07:42,240 Speaker 1: to Logan Mohachomy. He is the housing data analysts and 152 00:07:42,320 --> 00:07:45,240 Speaker 1: also lead analysts for the Housing Wire. Logan thanks so 153 00:07:45,320 --> 00:07:48,280 Speaker 1: much for joining us here. I mean, I know interest rates, 154 00:07:48,360 --> 00:07:51,520 Speaker 1: mortgage rates are at or near you know, all time lows, 155 00:07:51,520 --> 00:07:54,440 Speaker 1: despite a little move back in rates here, But are 156 00:07:54,440 --> 00:07:58,160 Speaker 1: you surprised at how strong housing is in this country 157 00:07:58,200 --> 00:08:02,280 Speaker 1: given what's going on with the pandemic. Absolutely not. This 158 00:08:02,320 --> 00:08:04,680 Speaker 1: has been my working thesis for many years that years 159 00:08:06,200 --> 00:08:08,920 Speaker 1: four would have the best housing demographics ever recorded in 160 00:08:09,040 --> 00:08:13,600 Speaker 1: US history. We have the biggest single uh demographic buying patch. 161 00:08:13,640 --> 00:08:15,920 Speaker 1: Ages twenty seven and thirty three are the biggest ever. 162 00:08:16,040 --> 00:08:18,640 Speaker 1: They're roughly about thirty two and a half million. And 163 00:08:18,680 --> 00:08:20,920 Speaker 1: mortgage rates have always been low. They've been lows since 164 00:08:21,000 --> 00:08:23,640 Speaker 1: two thousand and eight. But when you combine the biggest 165 00:08:23,680 --> 00:08:26,600 Speaker 1: demographic patch with the lowest mortgage rates ever and you're 166 00:08:26,640 --> 00:08:29,360 Speaker 1: not working from an overheating housing cycle like we had 167 00:08:29,360 --> 00:08:32,480 Speaker 1: in the previous expansion, home sales are gonna rise. And 168 00:08:32,520 --> 00:08:35,400 Speaker 1: this is exactly what's happening here. And I don't think 169 00:08:35,440 --> 00:08:38,400 Speaker 1: it's so much about COVID as it's more about simple 170 00:08:38,480 --> 00:08:40,679 Speaker 1: demographics here. I think a lot of people make that 171 00:08:40,679 --> 00:08:44,520 Speaker 1: that people are fleeing the cities and they need bigger homes. 172 00:08:44,880 --> 00:08:48,120 Speaker 1: This is just a continuation of a slowest steady cycle 173 00:08:48,280 --> 00:08:52,080 Speaker 1: running into this massive demographic patch, and mortgage rates are low, 174 00:08:52,160 --> 00:08:54,719 Speaker 1: and the problem with this is home prices are growing 175 00:08:54,760 --> 00:08:58,680 Speaker 1: to pass the interesting thing. The interesting thing Logan is 176 00:08:58,720 --> 00:09:03,880 Speaker 1: that the last for years has been pushing for more density. 177 00:09:03,920 --> 00:09:08,559 Speaker 1: And I've always thought, you know, if if if I'm 178 00:09:08,600 --> 00:09:11,000 Speaker 1: not wealthy, I don't want to be stuffed into a 179 00:09:11,120 --> 00:09:13,840 Speaker 1: box next to a whole bunch of other people like 180 00:09:13,880 --> 00:09:16,280 Speaker 1: I want to get out there. But the problem is, 181 00:09:16,360 --> 00:09:18,680 Speaker 1: of course the jobs are all in the city, right 182 00:09:19,360 --> 00:09:23,800 Speaker 1: Is this going to uh? Is this new working from 183 00:09:23,920 --> 00:09:28,040 Speaker 1: home UH era gonna stick? Are people going to be 184 00:09:28,040 --> 00:09:30,640 Speaker 1: continue to be able to continue to do that so 185 00:09:30,720 --> 00:09:32,720 Speaker 1: that you don't have to be stuck in a box 186 00:09:32,760 --> 00:09:34,880 Speaker 1: so you can get out there and have a backyard 187 00:09:34,920 --> 00:09:37,960 Speaker 1: and a garage of your own. You know, I if 188 00:09:38,280 --> 00:09:40,800 Speaker 1: even if the working from home thesis doesn't work out, 189 00:09:40,880 --> 00:09:43,920 Speaker 1: I just generally think people would have moved. I mean, naturally, 190 00:09:44,080 --> 00:09:48,680 Speaker 1: people buy bigger homes when they have families or bigger families, 191 00:09:48,720 --> 00:09:51,040 Speaker 1: so this would have been the case anyway. The work 192 00:09:51,080 --> 00:09:53,600 Speaker 1: from home model is like the most exciting thing get 193 00:09:53,640 --> 00:09:57,120 Speaker 1: housing ever because if you don't have to live near 194 00:09:57,200 --> 00:10:00,439 Speaker 1: your work, then if you wanted to, you can move 195 00:10:00,480 --> 00:10:02,600 Speaker 1: to areas that are cheaper. And we're not talking about 196 00:10:02,640 --> 00:10:04,560 Speaker 1: state the state moving. You know, you could just move 197 00:10:05,440 --> 00:10:08,520 Speaker 1: miles away from the city and things are more affordable. 198 00:10:09,080 --> 00:10:11,800 Speaker 1: Uh So that is a very exciting I just think 199 00:10:11,880 --> 00:10:14,680 Speaker 1: we have to wait until after the crisis is over 200 00:10:15,120 --> 00:10:17,320 Speaker 1: and then when people are starting to you know, go 201 00:10:17,400 --> 00:10:20,680 Speaker 1: back to work, and well, we'll see if this actually sticks. 202 00:10:20,760 --> 00:10:22,360 Speaker 1: I just don't believe it's going to be as big 203 00:10:22,400 --> 00:10:25,400 Speaker 1: as many people think it will be. But naturally, even 204 00:10:25,440 --> 00:10:28,440 Speaker 1: if COVID didn't happen, people would have been moving anyway, 205 00:10:28,440 --> 00:10:30,880 Speaker 1: because you don't live in apartments when you when you 206 00:10:30,920 --> 00:10:32,680 Speaker 1: when you when you're starting to create a family, you 207 00:10:32,760 --> 00:10:35,400 Speaker 1: have to buy something bigger or rent something bigger. So 208 00:10:35,720 --> 00:10:38,160 Speaker 1: this is just a natural progress of running into a 209 00:10:38,200 --> 00:10:40,160 Speaker 1: decade where we have a lot of people ages thirty 210 00:10:40,200 --> 00:10:43,760 Speaker 1: to thirty nine. So logan, let's talk about supply here. 211 00:10:43,840 --> 00:10:46,760 Speaker 1: I mean, there's been a concern that the supply that 212 00:10:46,760 --> 00:10:48,839 Speaker 1: we've seen come on the residential housing market over the 213 00:10:48,920 --> 00:10:51,880 Speaker 1: last decade or so has been more on the higher 214 00:10:52,000 --> 00:10:54,400 Speaker 1: end the mcmanchion's, if you will. We haven't seen enough 215 00:10:54,880 --> 00:10:59,400 Speaker 1: supply for the first time buyer, and that's been a problem. 216 00:10:59,440 --> 00:11:01,840 Speaker 1: What's the stat us now? This is this is a 217 00:11:01,920 --> 00:11:04,680 Speaker 1: long term issue. We've been building bigger and bigger homes 218 00:11:04,720 --> 00:11:09,760 Speaker 1: for many decades, and the builders are trying to bring 219 00:11:09,880 --> 00:11:12,199 Speaker 1: smaller homes into the mix. That's something that happened after 220 00:11:13,160 --> 00:11:16,319 Speaker 1: after the big sales miss they had back then. So naturally, 221 00:11:17,679 --> 00:11:19,959 Speaker 1: even if you bring smaller homes into the market, we're 222 00:11:19,960 --> 00:11:22,920 Speaker 1: still talking about homes that are over two thousand square foot. 223 00:11:23,040 --> 00:11:26,040 Speaker 1: So there is no more kind of a kind of 224 00:11:26,040 --> 00:11:29,960 Speaker 1: a small thousand square foot single family home anymore. Everything 225 00:11:30,080 --> 00:11:33,199 Speaker 1: is bigger here in America. And it's just as as 226 00:11:33,240 --> 00:11:35,880 Speaker 1: long as mortgage rates stay low, people will be able 227 00:11:35,880 --> 00:11:37,920 Speaker 1: to buy homes. You know, millions and millions of people 228 00:11:37,920 --> 00:11:40,880 Speaker 1: buy homes every year. It's just that now we just 229 00:11:40,960 --> 00:11:44,760 Speaker 1: have an extra push of uh demographics coming in with 230 00:11:44,800 --> 00:11:47,160 Speaker 1: lower mortgage rates. And now you see what's happening. The 231 00:11:47,160 --> 00:11:50,760 Speaker 1: prices are up year year fourteen percent. This is very 232 00:11:50,920 --> 00:11:53,920 Speaker 1: unhealthy and the only thing that changes is too hot. 233 00:11:54,040 --> 00:11:56,680 Speaker 1: Right the housing market is too hot, so you basically 234 00:11:56,720 --> 00:11:59,760 Speaker 1: need mortgage rates to rise to calm that. To cool 235 00:11:59,840 --> 00:12:04,040 Speaker 1: that down, we need a breather. Days from sales from 236 00:12:04,040 --> 00:12:06,199 Speaker 1: our days on the market went went from forty three 237 00:12:06,280 --> 00:12:09,160 Speaker 1: days last year to twenty one days. If this continues, 238 00:12:09,240 --> 00:12:13,320 Speaker 1: we could have another twelve percent home price growth year, 239 00:12:13,679 --> 00:12:17,200 Speaker 1: and that's not healthy. Because mortgage rates are abnormally low 240 00:12:17,280 --> 00:12:20,560 Speaker 1: because of COVID, it won't stay here that long. So 241 00:12:20,920 --> 00:12:24,560 Speaker 1: hopefully as rates rise, economy is getting better, it just 242 00:12:24,679 --> 00:12:26,720 Speaker 1: cools the market down a little bit to get a breathing. 243 00:12:26,760 --> 00:12:30,560 Speaker 1: There's way too many multiple dad offers right now generally 244 00:12:30,559 --> 00:12:33,520 Speaker 1: in the market, and unlike the previous expansion where we 245 00:12:33,559 --> 00:12:36,560 Speaker 1: didn't have the best demographics ever, we're running into a passionward. 246 00:12:36,679 --> 00:12:41,280 Speaker 1: Just a lot of people need shelter. Logan is Florida 247 00:12:41,320 --> 00:12:44,720 Speaker 1: at risk of becoming overcrowded. It just seems like every 248 00:12:44,840 --> 00:12:47,240 Speaker 1: day I read a story here, story, see a story 249 00:12:47,760 --> 00:12:51,920 Speaker 1: about this mass migration, companies relocating. It just seems like 250 00:12:52,000 --> 00:12:55,360 Speaker 1: they're all going upon beach. I guess exactly. So who 251 00:12:55,440 --> 00:12:59,439 Speaker 1: tells us about the Florida market. You know, Florida it 252 00:12:59,559 --> 00:13:02,040 Speaker 1: was always you know where that's where baby boomers actually 253 00:13:02,040 --> 00:13:05,640 Speaker 1: go to retire. Now there's this, you know, if tech moves. 254 00:13:05,679 --> 00:13:08,960 Speaker 1: I don't think that's too much of a story because 255 00:13:09,160 --> 00:13:12,160 Speaker 1: you know, if a few companies move, they don't really 256 00:13:12,160 --> 00:13:15,120 Speaker 1: bring all their workers in. So I these stories are 257 00:13:15,160 --> 00:13:17,559 Speaker 1: great for headlines. I just don't think it's going to 258 00:13:17,640 --> 00:13:21,679 Speaker 1: be the case where it's this this massive massive migration 259 00:13:21,800 --> 00:13:26,080 Speaker 1: from younger people, middle age people and boomers. It's it's 260 00:13:26,200 --> 00:13:29,920 Speaker 1: just things are cheaper in Florida, and if you can 261 00:13:30,000 --> 00:13:32,640 Speaker 1: work there and you want to raise your family, that's 262 00:13:32,640 --> 00:13:35,679 Speaker 1: what's gonna happen. And Okay, COVID wasn't here, that will 263 00:13:35,720 --> 00:13:38,600 Speaker 1: be there. Logan, thanks so much for joinings Logomota show 264 00:13:38,679 --> 00:13:43,679 Speaker 1: me Housing appreciated, Greg Jared, We really appreciate that update. 265 00:13:43,760 --> 00:13:45,679 Speaker 1: You know, looking at the ten year match again one 266 00:13:45,720 --> 00:13:49,040 Speaker 1: point three, pushing pushing higher. It was wasn't long ago. 267 00:13:49,120 --> 00:13:51,559 Speaker 1: We're down in the very very low ones. Let's get 268 00:13:51,559 --> 00:13:54,000 Speaker 1: a sense of what that means for the pros in 269 00:13:54,080 --> 00:13:56,720 Speaker 1: the fixed income market. And there's nobody better to chat 270 00:13:56,720 --> 00:13:59,400 Speaker 1: with an r J. Gallows, senior portfolio manager, head of 271 00:13:59,400 --> 00:14:03,720 Speaker 1: the group Federated her music got. He manages eleven point 272 00:14:03,800 --> 00:14:06,320 Speaker 1: nine billion out of a total firm wide assets under 273 00:14:06,320 --> 00:14:10,280 Speaker 1: management of five seventy six billion. They're located in beautiful Pittsburgh, 274 00:14:10,280 --> 00:14:12,440 Speaker 1: p A. When I was on the South side, Federate 275 00:14:12,640 --> 00:14:15,439 Speaker 1: was a must stop to talk to the smart people 276 00:14:15,440 --> 00:14:18,319 Speaker 1: out there in Pittsburgh. R J. Again, we've got the 277 00:14:18,440 --> 00:14:21,040 Speaker 1: ten yere at one point three two percent higher than 278 00:14:21,040 --> 00:14:25,400 Speaker 1: we've seen in a while. What does that tell you, Well, 279 00:14:25,600 --> 00:14:28,760 Speaker 1: it feels sort of good as a as a firm 280 00:14:28,480 --> 00:14:32,480 Speaker 1: um we've been short duration and expecting a steeper curve, 281 00:14:32,800 --> 00:14:35,120 Speaker 1: and on the year the ten years now up almost 282 00:14:35,160 --> 00:14:39,720 Speaker 1: forty BIPs, the thirty years up almost forty five, two tens, 283 00:14:39,800 --> 00:14:42,760 Speaker 1: two thirties up forty to forty five basis points as well. 284 00:14:42,840 --> 00:14:45,760 Speaker 1: So in a business like this where we're trying to 285 00:14:45,880 --> 00:14:48,680 Speaker 1: position for what we anticipate happening. When you're short duration 286 00:14:48,760 --> 00:14:50,440 Speaker 1: and expecting a curb to steep and then you get 287 00:14:50,440 --> 00:14:52,560 Speaker 1: it right, it's helped returns and a lot of our 288 00:14:52,600 --> 00:14:54,880 Speaker 1: bond portfolios, like the Total Return Blond pund I'm a 289 00:14:54,920 --> 00:14:57,240 Speaker 1: co manager on that a lot of our portfolios have 290 00:14:57,320 --> 00:15:00,880 Speaker 1: position wealth for the trade so far, We've got to 291 00:15:00,960 --> 00:15:05,280 Speaker 1: keep looking forward from here. All right, Well, that's uh, 292 00:15:05,320 --> 00:15:08,200 Speaker 1: I mean you deserve an iron city for that for sure. 293 00:15:08,600 --> 00:15:12,440 Speaker 1: Do you think that the yield curve will continue steepening? 294 00:15:12,480 --> 00:15:15,840 Speaker 1: I mean, um, it does look like when that happens 295 00:15:15,880 --> 00:15:18,840 Speaker 1: it causes a little bit of havoc in the equity markets. Yeah, 296 00:15:18,840 --> 00:15:21,840 Speaker 1: it's a it's a great point. I think looking forward, 297 00:15:21,920 --> 00:15:24,760 Speaker 1: we've remained short and still think the steepening has some 298 00:15:24,840 --> 00:15:27,800 Speaker 1: more legs to go. The bottom line is when you 299 00:15:27,920 --> 00:15:31,000 Speaker 1: get an entirely changeover in control in Washington, d C. 300 00:15:31,200 --> 00:15:33,680 Speaker 1: That will lead to a fiscal expansion, meaning more debt 301 00:15:33,800 --> 00:15:38,240 Speaker 1: and more spending with macroeconomic implications i e. Faster growth. Uh, 302 00:15:38,400 --> 00:15:42,080 Speaker 1: you shouldn't have inflation expectations rising. That's happened. You should 303 00:15:42,080 --> 00:15:44,800 Speaker 1: have curve steepening. That's happened too. We don't think we're 304 00:15:44,840 --> 00:15:47,360 Speaker 1: done with this dynamic. I mean, obviously we've had a 305 00:15:47,360 --> 00:15:51,560 Speaker 1: pretty good size move um. The vaccination push, despite its 306 00:15:51,640 --> 00:15:53,480 Speaker 1: hurdles and bumps in the road because we know it 307 00:15:53,480 --> 00:15:55,880 Speaker 1: hasn't been as smooth as many would have hoped, is 308 00:15:55,920 --> 00:16:00,360 Speaker 1: still leading towards more people getting vaccinated over time, months 309 00:16:00,440 --> 00:16:03,240 Speaker 1: roll forward, and that will also support in the economic 310 00:16:03,240 --> 00:16:07,120 Speaker 1: normalization and pent up demand for services, travel, hospitality, etcetera. 311 00:16:07,360 --> 00:16:09,160 Speaker 1: Are all wind at the back of the economy. So 312 00:16:09,200 --> 00:16:11,560 Speaker 1: we're pretty bullish on the economy, which means that we 313 00:16:11,760 --> 00:16:14,200 Speaker 1: think freights should still be heading somewhat higher. We had 314 00:16:14,240 --> 00:16:17,800 Speaker 1: the tenuere before the change in the Georgia Senate seats, 315 00:16:18,200 --> 00:16:19,960 Speaker 1: probably around one and a quarter by the end of 316 00:16:19,960 --> 00:16:22,000 Speaker 1: the year, and then once Georgia flipped control of the 317 00:16:22,000 --> 00:16:24,600 Speaker 1: Democrats with narrow margins, we felt the ten years probably 318 00:16:24,640 --> 00:16:27,320 Speaker 1: one fifty maybe with some upside beyond there. So we 319 00:16:27,360 --> 00:16:29,920 Speaker 1: still have some room to go as we look forward 320 00:16:29,960 --> 00:16:32,640 Speaker 1: into the rest. I'm here. I'm here to tell you, 321 00:16:32,680 --> 00:16:36,360 Speaker 1: by the way, UM, be happy about the vaccine situation 322 00:16:36,360 --> 00:16:39,040 Speaker 1: that you've got, because you're one of the world leaders 323 00:16:39,200 --> 00:16:42,600 Speaker 1: in terms of R and D, in terms of developing 324 00:16:42,640 --> 00:16:45,720 Speaker 1: the vaccine, in terms of acquiring the doses, and in 325 00:16:45,800 --> 00:16:49,160 Speaker 1: terms of giving them out. I know that when you're 326 00:16:49,200 --> 00:16:51,640 Speaker 1: there in the US doesn't feel great, but you're doing 327 00:16:51,680 --> 00:16:54,560 Speaker 1: better than almost any other country in the world. You're 328 00:16:54,640 --> 00:16:56,920 Speaker 1: up there with the UK and Israel. Here in Germany, 329 00:16:57,320 --> 00:17:02,680 Speaker 1: you know, we basically having started yet so because I 330 00:17:02,800 --> 00:17:05,399 Speaker 1: was so, we had a national sales conference recently, I 331 00:17:05,440 --> 00:17:07,440 Speaker 1: was saying that exact thing to all of our sales 332 00:17:07,440 --> 00:17:09,840 Speaker 1: people around the country. Even though you see it in 333 00:17:09,840 --> 00:17:13,560 Speaker 1: the media, this frustration and disappointment. We are vaccinating and 334 00:17:13,600 --> 00:17:15,280 Speaker 1: are more rapid pace than much of the rest of 335 00:17:15,280 --> 00:17:18,160 Speaker 1: the world. And we're vaccinating and much more rapid pace 336 00:17:18,320 --> 00:17:22,640 Speaker 1: than the well famous polio vaccine way back in the fifties. 337 00:17:22,640 --> 00:17:25,760 Speaker 1: People invoke that as being, you know, the gold standard. 338 00:17:25,960 --> 00:17:28,920 Speaker 1: We're actually vaccinating more people now over the same time 339 00:17:28,960 --> 00:17:33,679 Speaker 1: period than occurred in nineteen So this is a complicated process. 340 00:17:33,680 --> 00:17:36,639 Speaker 1: I'm with you. But yet in the media and you 341 00:17:36,640 --> 00:17:38,600 Speaker 1: know when you talk to your parents who still can't 342 00:17:38,600 --> 00:17:41,359 Speaker 1: get their shot. Yeah, there's a lot of frustration, but 343 00:17:41,560 --> 00:17:46,040 Speaker 1: in big picture perspectives I agree with. So now, what's 344 00:17:46,080 --> 00:17:48,160 Speaker 1: what's the pushback then? Because usually the Germans are known 345 00:17:48,160 --> 00:17:51,919 Speaker 1: as for efficiency, so all things is the government. I 346 00:17:51,920 --> 00:17:53,840 Speaker 1: will tell you what I what I have noticed. If 347 00:17:53,840 --> 00:17:56,520 Speaker 1: you go onto JOHNS Hopkins website and look at who 348 00:17:56,680 --> 00:18:00,720 Speaker 1: are the world leaders? Um, you see Israel, there, you 349 00:18:00,760 --> 00:18:04,280 Speaker 1: see the United States, there, you see the UK there, um. 350 00:18:04,320 --> 00:18:07,879 Speaker 1: And these are countries that had governments who think things 351 00:18:07,920 --> 00:18:11,399 Speaker 1: like America first, right, These are countries, um, who have 352 00:18:11,880 --> 00:18:15,040 Speaker 1: governments who think, you know, protect the homeland at all costs. 353 00:18:15,480 --> 00:18:18,520 Speaker 1: And because of you know, by the time Donald Trump 354 00:18:18,600 --> 00:18:21,920 Speaker 1: left office, the US was vaccinating a million people a day. 355 00:18:21,920 --> 00:18:24,800 Speaker 1: So whether you agree or disagree with his policies, um, 356 00:18:24,840 --> 00:18:27,159 Speaker 1: it doesn't matter. The point is he already had the 357 00:18:27,280 --> 00:18:31,000 Speaker 1: number up to Joe Biden's goal, right. And and then 358 00:18:31,080 --> 00:18:35,240 Speaker 1: here in Germany you've got a more liberal, multilateral approach 359 00:18:35,280 --> 00:18:38,760 Speaker 1: of things. They didn't want to grab the vaccines and 360 00:18:38,800 --> 00:18:41,600 Speaker 1: have them before the Italians. They didn't want to leave 361 00:18:41,640 --> 00:18:43,320 Speaker 1: the French in their dust, you know, they wanted to 362 00:18:43,400 --> 00:18:45,080 Speaker 1: bring everybody up at the same pace. So what they 363 00:18:45,080 --> 00:18:46,760 Speaker 1: did is they decided to give it to this huge 364 00:18:46,760 --> 00:18:50,560 Speaker 1: bureaucracy in Brussels and let them handle it. And then 365 00:18:50,600 --> 00:18:52,520 Speaker 1: Brussels was like, we'll wait and see if we can 366 00:18:52,560 --> 00:18:56,880 Speaker 1: get someone eBay later. All right. R J. Gallow, thank 367 00:18:56,880 --> 00:18:59,719 Speaker 1: you so much for joining us there. Archi Gallo, Senior 368 00:19:00,080 --> 00:19:04,200 Speaker 1: portfolio manager at Federated Hermes and Matt. That's an interesting 369 00:19:04,200 --> 00:19:07,359 Speaker 1: here because again the feeling is okay, it's going well, 370 00:19:07,400 --> 00:19:09,720 Speaker 1: but it should be going a lot better, Like here 371 00:19:09,720 --> 00:19:13,040 Speaker 1: in New Jersey, We've got these mega distribution centers set 372 00:19:13,119 --> 00:19:15,520 Speaker 1: up all around the state. But they're just sitting there, 373 00:19:15,560 --> 00:19:18,679 Speaker 1: you know, somewhat vacant and just waiting for supply. But 374 00:19:18,720 --> 00:19:21,520 Speaker 1: I guess the good news is, uh, they are set up. 375 00:19:21,640 --> 00:19:25,320 Speaker 1: We are ready to go. And once you according to 376 00:19:25,400 --> 00:19:29,879 Speaker 1: JOHNS Hopkins, you have administered fifty seven million doses, You've 377 00:19:29,920 --> 00:19:35,800 Speaker 1: gotten sixteen million people vaccinated. A conversation that you and 378 00:19:35,880 --> 00:19:38,159 Speaker 1: I had the other day reminded me of something that 379 00:19:38,200 --> 00:19:39,960 Speaker 1: I want to bring up with Tim O'Brien. He's a 380 00:19:40,000 --> 00:19:44,240 Speaker 1: Bloomberg opinion columnist, and he wrote, Texas shows what comes 381 00:19:44,240 --> 00:19:50,520 Speaker 1: from ignoring climate change. Um. Clearly, Tim, Texas has had 382 00:19:50,560 --> 00:19:53,680 Speaker 1: something happened for which it was not prepared. Um. You know, Greg, 383 00:19:53,760 --> 00:19:57,760 Speaker 1: Jared's family comes from down in San Antone, and uh, 384 00:19:58,080 --> 00:20:00,960 Speaker 1: it's unlikely that they thought when were building a house 385 00:20:01,040 --> 00:20:04,880 Speaker 1: that they should insulate their pipes. Right. Sort Of like, 386 00:20:05,080 --> 00:20:07,960 Speaker 1: as Greg mentioned the other day, if you're building something 387 00:20:07,960 --> 00:20:12,359 Speaker 1: in Chicago, you don't need to use San Francisco earthquake codes, right, 388 00:20:12,359 --> 00:20:14,679 Speaker 1: because it's terribly unlikely that you're going to have an 389 00:20:14,720 --> 00:20:20,960 Speaker 1: earthquake in Chicago. And yet that's basically what happened in Texas. Well. 390 00:20:21,000 --> 00:20:24,200 Speaker 1: Actually though Texas had the same problem in two thousand 391 00:20:24,240 --> 00:20:29,480 Speaker 1: and eleven. It's entire grid from and UM industry and 392 00:20:29,560 --> 00:20:32,880 Speaker 1: analysts said you should winter rise the grid. Uh. It's 393 00:20:32,880 --> 00:20:36,639 Speaker 1: a straight forward, uh risk practice that will keep you 394 00:20:36,680 --> 00:20:39,879 Speaker 1: in good stead. And at that point, Texas was beginning 395 00:20:39,880 --> 00:20:43,199 Speaker 1: to diversify the energy sources that uses it used to 396 00:20:43,200 --> 00:20:45,760 Speaker 1: power the grid, uh, and it made sense to winter 397 00:20:45,880 --> 00:20:49,640 Speaker 1: rise all of it. There are wind turbines and natural 398 00:20:49,680 --> 00:20:55,359 Speaker 1: gas powered turbines in northern climates such as Sweden for example, 399 00:20:55,720 --> 00:20:58,320 Speaker 1: that don't freeze up in the winter, and they didn't 400 00:20:58,320 --> 00:21:01,879 Speaker 1: do it, and then low and beholds around and the 401 00:21:01,920 --> 00:21:05,800 Speaker 1: grid freezes. The second piece of information is, uh, yeah, 402 00:21:05,920 --> 00:21:08,560 Speaker 1: you wouldn't have to protect your home against earthquakes if 403 00:21:08,640 --> 00:21:11,960 Speaker 1: earthquakes were a we're a rarity in your area. But 404 00:21:12,040 --> 00:21:14,960 Speaker 1: the reality of climate change and what you're seeing now 405 00:21:15,000 --> 00:21:18,320 Speaker 1: with meteorology predictions is that it's likely Texas is going 406 00:21:18,359 --> 00:21:20,719 Speaker 1: to have colder winters for some time now. Well, this 407 00:21:20,800 --> 00:21:22,919 Speaker 1: is exactly why I love your column. You mentioned the 408 00:21:22,920 --> 00:21:25,960 Speaker 1: two thousand eleven freezing in Texas. Back in two thousand four, 409 00:21:26,480 --> 00:21:29,440 Speaker 1: Dennis Quaid and Jake Jillenhall made a movie called The 410 00:21:29,520 --> 00:21:33,720 Speaker 1: Day After Tomorrow and it's pretty awesome. I highly recommended, 411 00:21:33,760 --> 00:21:37,440 Speaker 1: big budget popcorn flick. But the idea is global warming, 412 00:21:37,960 --> 00:21:39,639 Speaker 1: as I knew when we were a kid, when I 413 00:21:39,680 --> 00:21:42,920 Speaker 1: was a kid, or climate change can actually cause these 414 00:21:43,000 --> 00:21:47,800 Speaker 1: huge cooling phases that roll down over North America and 415 00:21:47,880 --> 00:21:51,040 Speaker 1: other parts of the globe. And that's what we're seeing now, right, 416 00:21:51,880 --> 00:21:54,359 Speaker 1: that is what we're seeing now, and I think we should. 417 00:21:54,520 --> 00:21:57,440 Speaker 1: You know, it's it's obviously as an issue to political football, 418 00:21:57,800 --> 00:22:01,080 Speaker 1: it's charged with a lot of ideological Asian but people 419 00:22:01,080 --> 00:22:03,000 Speaker 1: should step away from that and just look at the 420 00:22:03,000 --> 00:22:06,040 Speaker 1: facts of the matter and be practical about how to 421 00:22:06,080 --> 00:22:09,040 Speaker 1: deal with it. I think, uh, you know, the energy 422 00:22:09,080 --> 00:22:13,920 Speaker 1: companies in Texas have had you know, long track records 423 00:22:13,960 --> 00:22:17,439 Speaker 1: of of lush profitability. I think reinforcing their grid by 424 00:22:17,480 --> 00:22:21,919 Speaker 1: winterizing it is not a profit killer and to protect 425 00:22:22,000 --> 00:22:23,800 Speaker 1: him in the long run, but they haven't done that, 426 00:22:24,640 --> 00:22:26,439 Speaker 1: so Tim, I guess, you know, it shouldn't be that 427 00:22:26,560 --> 00:22:29,160 Speaker 1: much of a surprise to see some people in Texas 428 00:22:29,160 --> 00:22:33,119 Speaker 1: come out and kind of point figures at the you know, 429 00:22:33,200 --> 00:22:37,280 Speaker 1: the eco energy, the more efficient energy sources as a 430 00:22:37,280 --> 00:22:40,520 Speaker 1: as a source of the issue here. But it's your colleague. 431 00:22:40,560 --> 00:22:44,040 Speaker 1: Matthew Winkler was out with a fascinating calm today saying, Hey, 432 00:22:44,040 --> 00:22:48,000 Speaker 1: if you look at just job growth in Texas, it's 433 00:22:48,040 --> 00:22:51,679 Speaker 1: coming from renewables. It's not coming from you know, uh, 434 00:22:51,760 --> 00:22:54,679 Speaker 1: you know, fossil fuels, which is one of the reasons 435 00:22:54,720 --> 00:22:58,200 Speaker 1: Texas embraced it. And and you know this whole topic 436 00:22:58,359 --> 00:23:01,200 Speaker 1: that a lot of misinformation around it from from both 437 00:23:01,240 --> 00:23:04,800 Speaker 1: sides of the aisle. Um. You know, the Texas grid 438 00:23:04,960 --> 00:23:08,040 Speaker 1: they've actually done a good job of trying to diversify 439 00:23:08,160 --> 00:23:11,720 Speaker 1: and and and make their sources of energy um more 440 00:23:11,760 --> 00:23:15,240 Speaker 1: diverse as sources of power I should say more diverse 441 00:23:15,520 --> 00:23:19,879 Speaker 1: um uh than than other grids and uh. And it 442 00:23:20,040 --> 00:23:25,240 Speaker 1: it took job positive development and and again it's useful 443 00:23:25,240 --> 00:23:27,840 Speaker 1: in moments like this arise to look at the fact 444 00:23:27,840 --> 00:23:31,280 Speaker 1: pat rather than saying windmills are coming to clean out 445 00:23:31,320 --> 00:23:33,960 Speaker 1: your town, which is how I think the right jumped 446 00:23:34,000 --> 00:23:37,719 Speaker 1: on this when we first happened. Yeah, I love Winkler's column. 447 00:23:37,760 --> 00:23:41,679 Speaker 1: He said, points out that Tesla employed nine people a 448 00:23:41,680 --> 00:23:44,439 Speaker 1: decade ago. Now they employed forty eight thousand. That's just 449 00:23:44,560 --> 00:23:47,280 Speaker 1: at their own company, not you know at suppliers and 450 00:23:47,760 --> 00:23:52,000 Speaker 1: that there are three moved to Austin by the way. Yeah, yeah, totally. 451 00:23:52,080 --> 00:23:54,200 Speaker 1: That's that. That's kind of the point. And what I 452 00:23:54,240 --> 00:23:56,719 Speaker 1: don't get is why doesn't Greg Abbott embrace it. You know, 453 00:23:56,760 --> 00:23:59,680 Speaker 1: the governor of Texas was also one of the people 454 00:23:59,720 --> 00:24:04,040 Speaker 1: kind of blaming the green energy um industry, and they're 455 00:24:04,040 --> 00:24:06,639 Speaker 1: gonna supply him with the money that he needs to 456 00:24:06,680 --> 00:24:11,800 Speaker 1: get re elected if I think he was freaked out 457 00:24:11,880 --> 00:24:15,359 Speaker 1: about taking responsibility here. You know, he pointed a lot 458 00:24:15,440 --> 00:24:19,040 Speaker 1: of fingers at at air COT, which is the public 459 00:24:19,080 --> 00:24:21,919 Speaker 1: agency that oversees the grid, uh and saying that an 460 00:24:21,960 --> 00:24:25,520 Speaker 1: investigation needed to occur because they let down Texas consumers. Well, 461 00:24:25,680 --> 00:24:29,199 Speaker 1: who oversees air Cot? The governor does and the Texas 462 00:24:29,320 --> 00:24:33,479 Speaker 1: legislature does. And he then inside Texas said, you know, 463 00:24:33,680 --> 00:24:36,119 Speaker 1: the problem with all this was natural gas deliveries. We 464 00:24:36,160 --> 00:24:38,760 Speaker 1: couldn't get enough natural gas to keep powering the grid. 465 00:24:38,960 --> 00:24:41,680 Speaker 1: But anyone on National Tellerson pos and said, it's wind 466 00:24:42,119 --> 00:24:45,040 Speaker 1: And I think he's playing politics. It's he wants to 467 00:24:45,119 --> 00:24:47,720 Speaker 1: avoid culpability for it because this could be a potential 468 00:24:47,720 --> 00:24:50,720 Speaker 1: career killer. Ted Cruz learned that yesterday, right when he 469 00:24:50,760 --> 00:24:54,359 Speaker 1: flew off to cankon Um Greg Abbott could learn that 470 00:24:54,400 --> 00:24:56,360 Speaker 1: as well. There's gonna be a lot of backlash from 471 00:24:56,400 --> 00:24:59,560 Speaker 1: voters over this, So I think he took the low 472 00:24:59,640 --> 00:25:03,119 Speaker 1: road the high road and offering a public response to 473 00:25:03,119 --> 00:25:06,159 Speaker 1: what happened. So Tim Wawe've got on the line. You 474 00:25:06,160 --> 00:25:09,800 Speaker 1: mentioned Ted Cruz. I mean that Cancoon situation. It seems 475 00:25:09,880 --> 00:25:15,760 Speaker 1: like such a rookie public relations blunder. What happened. You know, 476 00:25:15,800 --> 00:25:18,480 Speaker 1: it's amazing like we saw this happening in in in 477 00:25:18,520 --> 00:25:20,879 Speaker 1: the UK right when when they had the lockdown and 478 00:25:21,440 --> 00:25:24,040 Speaker 1: members of Boris Johnson's government decided to take off on 479 00:25:24,119 --> 00:25:29,080 Speaker 1: weekends for personal trips and uh, you know, it's just 480 00:25:29,480 --> 00:25:34,879 Speaker 1: I think it's it's complete lack of empathy and indiscretion 481 00:25:35,240 --> 00:25:38,720 Speaker 1: and he should be penalized for it. It's completely bonkers 482 00:25:38,720 --> 00:25:41,280 Speaker 1: that that that he flies to Cancoon from his state 483 00:25:41,320 --> 00:25:44,719 Speaker 1: because the types are freezing, well was constituents are boiling 484 00:25:44,720 --> 00:25:49,080 Speaker 1: water to stay alive. Yeah, I think it's probably, if 485 00:25:49,119 --> 00:25:50,960 Speaker 1: I can speculate a little bit, he probably had the 486 00:25:50,960 --> 00:25:53,399 Speaker 1: trip planned and thought, you know, I've had this plant. 487 00:25:54,000 --> 00:25:55,879 Speaker 1: But you're right, I mean it didn't work well for 488 00:25:55,920 --> 00:25:58,639 Speaker 1: dominic rob who is the one who decided to drive 489 00:25:58,680 --> 00:26:03,080 Speaker 1: to Barnaby Castle. Um, and in fact, my favorite to 490 00:26:03,080 --> 00:26:05,159 Speaker 1: to sort of get away from the main topic. My 491 00:26:05,160 --> 00:26:08,639 Speaker 1: favorite brewery is called brew Dog Scottish Brewery. But they 492 00:26:08,680 --> 00:26:12,800 Speaker 1: have they gotten away from the topic. Well no, they 493 00:26:12,920 --> 00:26:15,879 Speaker 1: they actually brewed to be here for Dominic. Rob called 494 00:26:15,880 --> 00:26:19,840 Speaker 1: Barnaby Castle after he went it was quite good. So 495 00:26:19,840 --> 00:26:24,200 Speaker 1: so there'll be a beer coming after Ted Cruz, can 496 00:26:24,240 --> 00:26:28,840 Speaker 1: some delight or something some Texas whiskey? Hey, Tim, just 497 00:26:28,880 --> 00:26:30,880 Speaker 1: real quickly again while we have yet, are you surprised 498 00:26:30,920 --> 00:26:35,560 Speaker 1: that we haven't heard that much coming out of Palm Beach. Uh, 499 00:26:35,680 --> 00:26:38,119 Speaker 1: you know, I'm not surprised. I think I think Trump 500 00:26:38,200 --> 00:26:40,560 Speaker 1: is laying low right now to let some of the 501 00:26:40,680 --> 00:26:44,360 Speaker 1: fall out of the impeachment trial pass. I don't think 502 00:26:44,359 --> 00:26:47,480 Speaker 1: that will last very long. He obviously didn't waste much 503 00:26:47,560 --> 00:26:51,680 Speaker 1: time in going after Mitch McConnell after McConnell criticized him. Um, 504 00:26:51,720 --> 00:26:54,399 Speaker 1: you know we've got news that that the children aren't, 505 00:26:54,520 --> 00:26:58,360 Speaker 1: at least in the near term, gonna run for political office. Um. 506 00:26:58,400 --> 00:27:00,440 Speaker 1: I think you know, I think you're going to start 507 00:27:00,480 --> 00:27:03,520 Speaker 1: to see him incoming weeks be more visible. Uh. The 508 00:27:03,560 --> 00:27:06,560 Speaker 1: interesting thing will be how much traction does he continue 509 00:27:06,600 --> 00:27:09,880 Speaker 1: to maintain in the incoming months and years. Hey, Tim, 510 00:27:09,920 --> 00:27:12,240 Speaker 1: thanks so much for joining us. We appreciate it. As always, 511 00:27:12,240 --> 00:27:15,360 Speaker 1: Tim O'Brien, Senior columnists for Bloomberg Opinion. You can read 512 00:27:15,400 --> 00:27:17,080 Speaker 1: all of Tim's work and that of all of the 513 00:27:17,200 --> 00:27:22,359 Speaker 1: Bloomberg Opinion columnists at Bloomberg dot com, slash Opinion, or 514 00:27:22,480 --> 00:27:25,520 Speaker 1: on the Bloomberg terminal by typing O, P, I n go. 515 00:27:25,960 --> 00:27:28,960 Speaker 1: The good folks of Bloomberg Opinion. Lots of fantastic work 516 00:27:29,000 --> 00:27:33,679 Speaker 1: coming out every single day. It's must read. Thanks for 517 00:27:33,720 --> 00:27:37,240 Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and 518 00:27:37,280 --> 00:27:41,320 Speaker 1: listen to interviews of Apple Podcasts or whatever podcast platform 519 00:27:41,359 --> 00:27:44,680 Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt 520 00:27:44,720 --> 00:27:48,239 Speaker 1: Miller three. Pet On Ball Sweeney I'm on Twitter at 521 00:27:48,280 --> 00:27:51,119 Speaker 1: pt Sweeney. Before the podcast, you can always catch us 522 00:27:51,160 --> 00:27:52,560 Speaker 1: worldwide at Bloomberg Radio