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Speaker 2: Tiffany wild joins US managing director and economist at Pimco.
Speaker 2: At Tiffany, I look at the Wilding Excel spreadsheet and
Speaker 2: I guess it needs readjustment. Do you have a vision
Speaker 2: out past Q four of what the American economy is
Speaker 2: gonna do?
Speaker 3: Or you just have to wait?
Speaker 4: Yeah, I mean it's been obviously very difficult or more
Speaker 4: difficult to get a sense on what's going on in
Speaker 4: the economy just with the data that hasn't been released,
Speaker 4: you know, but never the less, with private sector sources
Speaker 4: of data, you know, we can get some insight, you know,
Speaker 4: and it does look like things are pretty stable. We
Speaker 4: think the economy is kind of a story of winners
Speaker 4: and losers right now. Where you have, you know, obviously
Speaker 4: the big tech companies, the AI build out, that's that's
Speaker 4: very strong. But on the other side of that, you
Speaker 4: have various factors that have hit the labor market, you know,
Speaker 4: including the immigration story. We think lower demand is a
Speaker 4: result of tariffs and of course some AI related displacement
Speaker 4: that's resulting in you know, some loss of tech related
Speaker 4: jobs is the other piece of that that looks weaker,
Speaker 4: you know. I think in terms of monetary policy and
Speaker 4: the FED, the fact that we haven't gotten the labor
Speaker 4: market data, you know, is it makes it more difficult
Speaker 4: for monetary policy go ahead.
Speaker 2: Surprise that the UK today have a negative statistic on GDP.
Speaker 2: Are you like a sub one percent GDP? Could that
Speaker 2: be the shock of the shutdown we just lived?
Speaker 4: Yeah, I mean, okay, yeah, so the shutdown will absolutely
Speaker 4: impact fourth quarter growth. We think that one one to
Speaker 4: one and a half percent is what it could shave
Speaker 4: off of the fourth quarter. So we absolutely could see
Speaker 4: a negative fourth quarter GDP print. But nevertheless, as you know,
Speaker 4: as the government has already reopened, that activity will come
Speaker 4: back online and you'll see an offsetting pickup in the
Speaker 4: first quarter of next year. I think the other thing
Speaker 4: to keep in mind in the first quarter is that
Speaker 4: you're also going to get refund checks to households that
Speaker 4: are quite large this year, so that will provide also
Speaker 4: some support to the economy and to consumption in the
Speaker 4: first part of next year.
Speaker 5: Bet on the inflation front, tiffany A lot of folks
Speaker 5: in the beginning of this tariff discussion, we're warning against
Speaker 5: higher inflation, maybe materially higher inflation's resulting from terrorists.
Speaker 3: But we haven't seen it, have we.
Speaker 4: Yeah, we certainly haven't seen it to the extent that
Speaker 4: many thought we would earlier this year. And I think
Speaker 4: what we're learning as we are, as we have seen
Speaker 4: some data, you know, is that companies are dealing with
Speaker 4: the tariffs in different ways, and and one of those
Speaker 4: ways is trying to cut costs to you know, to
Speaker 4: defend margins as well as passing some of it along.
Speaker 4: But I think the big surprise for this year is
Speaker 4: the you know, is basically the management of labor costs
Speaker 4: that the companies appear to be doing associated with the tariffs.
Speaker 4: So we have seen the labor market really grind to
Speaker 4: a halt this year. Labor demand and labor supply decelerate,
Speaker 4: and we think that's directly related to companies trying to
Speaker 4: cut costs in the face of tariffs.
Speaker 5: And on the labor front, as you bring up here,
Speaker 5: the closing of the southern border has really been effective here,
Speaker 5: and there's also been some deportation has been reported. How's
Speaker 5: that impacted kind of the labor market here, particularly some
Speaker 5: of the areas that we've you know, we're led to
Speaker 5: believe would be really impacted, like agricultural, housing, construction, things
Speaker 5: like that.
Speaker 4: Yeah, I mean so so so far. I mean, I
Speaker 4: mean the way that we would would kind of think
Speaker 4: about it is is, you know, is supply the decline
Speaker 4: and labor supply is it sort of out stripping the
Speaker 4: decline in labor demand. And one way that we can
Speaker 4: get a sense for that is to look at wages
Speaker 4: and wage inflation. And when we look at wage inflation
Speaker 4: in those particular sectors, we're not really seeing them accelerate
Speaker 4: or reaccelerate, at least not yet. And the latest labor
Speaker 4: market official labor market data that we did get actually
Speaker 4: suggested that construction payrolls were contracting, and that was actually
Speaker 4: very much in line with the fact that structures investment
Speaker 4: in the United States, both residential and non residential structures investment,
Speaker 4: were also contracting. So, of course, on the horizon we
Speaker 4: have this data center build out, but it actually does
Speaker 4: look like the range of data suggests that that even
Speaker 4: in construction in other places like that, you're seeing demand
Speaker 4: that's declining just as much as a supply.
Speaker 3: It's shifting.
Speaker 2: Welding was us with Pimcot. We continue here. We welcome
Speaker 2: all of you across the nation. After the early morning
Speaker 2: of Newport Beach, California. Good morning on YouTube. Subscribe to
Speaker 2: Bloomberg Podcast. It's our new digital expression. As they say,
Speaker 2: Neil data from Renaissance. It features out on LinkedIn a
Speaker 2: Bloomberg News article, Paul the combine out of Detroit, Tiffany,
Speaker 2: I want to fold this in. Bloomberg publishes that distressed
Speaker 2: auto loans are up to a record level. What indications
Speaker 2: do you see of a better part of half of
Speaker 2: the American economy under great stress? As simple as something
Speaker 2: like they can't pay their auto loans.
Speaker 4: Yeah, you know, there's like you know, like you mentioned,
Speaker 4: there is certainly winners and losers in this economy, and
Speaker 4: you know, it seems like the you know, lower income
Speaker 4: folks increasingly are are struggling more here the auto delinquency increase,
Speaker 4: I think as part of that story, there's been data
Speaker 4: on actual repossessions as well, which will increase use car supply,
Speaker 4: so that feeds into you know, some of the distantallyationary
Speaker 4: parts of the economy. So yeah, I mean there is
Speaker 4: certainly an effect here. You know. I think the story
Speaker 4: as well is for smaller and mid sized businesses that
Speaker 4: are more directly impacted by the tariffs. You know, those
Speaker 4: businesses will will struggle here. So there will be parts
Speaker 4: of the economy that, as the economy goes through a
Speaker 4: transition to these new policies and new technology, that will
Speaker 4: struggle to keep up.
Speaker 5: So how do you think this FED is going to
Speaker 5: proceed here with its presumably rate cutting policy here, is
Speaker 5: the cadence going to be kind of you know, steady
Speaker 5: eddy for the next two, three, four meetings or do
Speaker 5: you think they're going to be really stop and take
Speaker 5: a look at the data.
Speaker 4: Yeah, I mean, I ultimately think that they probably will pause.
Speaker 4: And the reason for that is that you are going
Speaker 4: to see additional fiscal related stimulus offsetting some of the
Speaker 4: tariff related drag in the form of household tax credits refunds,
Speaker 4: you know, and lower taxes for corporations as well, and
Speaker 4: that will provide some offsetting support for the tariffs. Now,
Speaker 4: as I mentioned, not everybody will will be able to
Speaker 4: capture all of that. There will be winners and losers.
Speaker 4: But nevertheless, we think in the first you know, first
Speaker 4: half of next year, you will see that hit the
Speaker 4: economy and that will provide some support. I think the
Speaker 4: Federal Reserve is certainly looking to that, and it's probably
Speaker 4: why they are, you know, somewhat more cautious about cutting
Speaker 4: interest rates. You know, we think when we look at
Speaker 4: the labor market, you know, the data does suggest to us, however,
Speaker 4: that there has been you know, some additional deceleration over
Speaker 4: the last couple of months, you know, and I think
Speaker 4: the risks in the labor market do suggest it maybe
Speaker 4: one more cut, either in December or maybe January. But
Speaker 4: then after that you see how the tax stimulus hits
Speaker 4: the economy, and you wait, and there could be more
Speaker 4: of a pause.
Speaker 2: Tiffany, thank you, always, thank you, thank you, thank you.
Speaker 2: Tivity Welding with us, going to go here.
Speaker 3: Stay with us.
Speaker 2: More from Blue Imberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 3: Joining us now, the new slow is so intense.
Speaker 2: They have one of our experts on American civics, Professor
Speaker 2: Schiller at Brown University, Wendy Schiller, joins us right now. Wendy,
Speaker 2: it's eighty days I think, or even seventy nine days
Speaker 2: to the end of January. I believe all we did
Speaker 2: was kick the can down the road to January thirtieth.
Speaker 3: Am.
Speaker 2: I right on that.
Speaker 6: Well, good morning Tom and Paul.
Speaker 7: We've discussed on this show how the incredible shrinking shutdowns,
Speaker 7: meaning that you know, every time we go through this,
Speaker 7: the Congress carves out more area that's protected from the
Speaker 7: shell down.
Speaker 6: So what's key about this agreement?
Speaker 7: And I think this is really what sold the senators,
Speaker 7: the Democrat senators who decided to vote for it, was
Speaker 7: extending appropriations for a full year for snap for example,
Speaker 7: for legislative appropriations meaning LEDG staffers will get paid, and
Speaker 7: for veterans affairs.
Speaker 6: So they've taken more hot.
Speaker 7: Button really you know what we call valence kinds of
Speaker 7: programs off the table for a shutdown. So next time,
Speaker 7: maybe it'll just be air traffic controllers and that's a
Speaker 7: huge deal, but it's you know, it's less than it
Speaker 7: would be now. So I think that's the that's the
Speaker 7: sort of hidden gem, if you will, in the shutdown deal.
Speaker 2: Speak to our listeners and viewers who say, why did
Speaker 2: we do this? I mean, I mean, I'm baffled by
Speaker 2: the constructive outcome of this.
Speaker 3: What was constructive in this exercise?
Speaker 7: Well, the Democrats gambled that healthcare would be of concern.
Speaker 7: They knew that private insurance market premiums were going to
Speaker 7: go up.
Speaker 6: That you know, the carriers have been very clear about
Speaker 6: the cost of health care and that these premiums were going.
Speaker 1: To go up.
Speaker 7: So they drew attention to extending a subsidy for people
Speaker 7: who buy Obamacare insurance and try to get a tax
Speaker 7: break for the premium or some part of the premium.
Speaker 7: You know, that's a smaller subset than everybody that's on Obamacare,
Speaker 7: and that's kind of a bureaucratic issue. But now everybody
Speaker 7: knows what that issue is, and they are they basically.
Speaker 6: It's a simple fix, let's just extend it.
Speaker 7: And they've put the Republicans in somewhat of a box
Speaker 7: and they are counting on the Republicans to say no
Speaker 7: so that they can run on this issue and run
Speaker 7: on healthcare all in twenty eight twenty twenty six, just
Speaker 7: as they did, excuse me, in twenty eighteen, where they
Speaker 7: were very successful Senator Joe Manson, former Senator Joe Manchino
Speaker 7: was Virginia. So the thing that saved them in his
Speaker 7: reelection campaign at twenty eighteen was in fact healthcare because
Speaker 7: they probably to try to repeal Obamacare. So I think
Speaker 7: this is a setup that the Democrats have tried to
Speaker 7: set up the Republicans on this issue.
Speaker 2: Well, it's like being in a classroom at Brown University.
Speaker 2: The professor's blather on, and I'm looking at ai. The
Speaker 2: biggest number I have is fifteen percent are involved with
Speaker 2: some form of healthcare assistance. I think the math is
Speaker 2: eighty five percent of Americans aren't.
Speaker 3: Yeah, maybe that's the heart of the matter.
Speaker 5: Maybe it is, Wendy, But how does this shutdown affect
Speaker 5: the midterm elections if at all?
Speaker 3: Is this going to be something or not?
Speaker 5: Even can remember in twenty six Well, you.
Speaker 7: Know interesting patterns, right, So twenty thirteen, Ted Cruz led
Speaker 7: the shutdown in the Senate to get the Grand bargain,
Speaker 7: you know, to cut eighty billion from the budget over
Speaker 7: ten years, not that we've been noticing now since the
Speaker 7: budget is bigger than it's ever.
Speaker 6: Been the federal budget. But they won the Senate.
Speaker 7: The Republicans won the Senate in twenty fourteen for lots
Speaker 7: of reasons, but that may have been one of them.
Speaker 7: And then in twenty eighteen, twenty nineteen, the Democrats shut
Speaker 7: the government down, essentially fighting with President Trump. Also that
Speaker 7: shutdown ended after a traffic cancelations were too much to bear.
Speaker 7: And you know, for lots of reasons, Biden won the
Speaker 7: presidency and the Democrats won the Senate.
Speaker 6: So I don't know that they think it's guaranteed, but it's.
Speaker 7: Shown a big strobe light on healthcare and affordability. So
Speaker 7: tom only fifteen percent may be affected, but two things. One,
Speaker 7: they have relatives who are affected. You know, they may
Speaker 7: not be on a bombcare, but they know people and
Speaker 7: their family that are. And second, you know, it's just
Speaker 7: shone a light on the fact that the healthcare system
Speaker 7: is broken, and affordability then becomes the mantra that extends
Speaker 7: to housing, to food, to gasoline, and the pressure on
Speaker 7: the incombent government to address that. We saw that with
Speaker 7: Biden in twenty four That pressure is only going to grow.
Speaker 5: So what is on the to do list for Congress
Speaker 5: now that it's going to be back in session, the
Speaker 5: government's going to be open. What should we be looking
Speaker 5: for here?
Speaker 7: Well, we may have an Epstein vote, a vote in
Speaker 7: the House to release the Epstein files. You have two
Speaker 7: hundred and eighteen signatures on a discharge petition House rules.
Speaker 7: That means it gets to bypass all the barriers and
Speaker 7: come to the floor for a vote. That's a big
Speaker 7: deal for the Republicans in the House. They're gonna have
Speaker 7: to figure out in their own party what that sweet
Speaker 7: spot is in terms of that vote and Obamacare subsidies,
Speaker 7: because this will be the Democratic slogan, and the pressure
Speaker 7: will be do you let these expire by December thirty first,
Speaker 7: or do you reach a deal what you.
Speaker 6: Extend them for a year?
Speaker 7: The Republicans would be wise to extend them for a
Speaker 7: year and then make the argument we control the government
Speaker 7: will come up with a better plan.
Speaker 6: Trump really wants it renamed. He hates that it's called Obamacare.
Speaker 7: I think if you just renamed it and made some
Speaker 7: small changes, he would sign it, and this problem would
Speaker 7: be at least put off for another couple of years.
Speaker 7: But that's where I think the Republicans can buy themselves
Speaker 7: time and get off the hook. I don't know that
Speaker 7: there are the votes in the House to do that.
Speaker 7: Based on the content of the debate yesterday, I'm not
Speaker 7: sure there are the.
Speaker 2: Votes that can you do a Thursday audible Sure, Professor Schiller, well,
Speaker 2: you were talking. You is Google Gemini to try to
Speaker 2: be smarter to keep up with you at Brown University?
Speaker 2: I mean, folks, Wendy's show is definitive in textbooks of
Speaker 2: basic American Civics. Are your undergraduates and graduate students smarter
Speaker 2: because of AI?
Speaker 6: At the moment, I would have to say no. Will
Speaker 6: they learn to be more efficient? Probably?
Speaker 7: But we have software at Brown many universities do that
Speaker 7: not only check for plagiarism, but it also checks for AI.
Speaker 6: And I have a no AI rule on my paper.
Speaker 7: So if you get a score of twenty percent of AI,
Speaker 7: I ask you to rewrite that paper.
Speaker 6: So at the moment, that's my attitude. Will it change
Speaker 6: over the year.
Speaker 7: We'll have to have more in person tests in class
Speaker 7: with pen.
Speaker 6: And paper, Like I already do.
Speaker 7: But a lot of professors are going to that solution
Speaker 7: because we still think we have.
Speaker 6: Something to teach and they have something to learn.
Speaker 7: But I imagine AI will be used as a tool
Speaker 7: for efficiency. I'm not sure that's going to expand their brains.
Speaker 2: So people on my bias here, Professor Shower, come on,
Speaker 2: you can do perplexity and type in Andrew Jackson, or
Speaker 2: you can go read three volumes of the giant Roger Remedy,
Speaker 2: who was very very kind to me. Are you telling
Speaker 2: me AI someday is going to be a substitute for
Speaker 2: James McGregor Burns or Roger Remedy.
Speaker 7: You know, I think intellectually curious students want to learn,
Speaker 7: you know, And if AI has a limit, which I
Speaker 7: think at the moment it does, then I think they're
Speaker 7: going to Actually, they don't read full books anymore.
Speaker 6: Tom, I can tell you us.
Speaker 7: I assign pieces of books, or chapters of books, or
Speaker 7: sets of pages from books, but they don't read whole
Speaker 7: books anymore.
Speaker 6: That's life. You have to just sorverjust if you're a professor.
Speaker 7: But I think AI, in terms of these kids are
Speaker 7: worried about how they present the outside world job market
Speaker 7: got tighter. They're worried abou getting a job. They want
Speaker 7: to look better and present better. They're using it for
Speaker 7: that right now, not necessarily for entire intellectual content.
Speaker 3: Professor Sweety would like to wait in here.
Speaker 5: I'm glad I'm not in the educational process anymore.
Speaker 3: I agree strongly. Yeah, I agree.
Speaker 2: You and I were just like shaking our heads, and
Speaker 2: Tucker over there's fulminating, Professor Schiller. They got to read books.
Speaker 2: I mean, we're going to be different if we're not
Speaker 2: reading books.
Speaker 7: But social media has just completely decimated our attention span.
Speaker 6: That's true of adults as well as you know. And
Speaker 6: even audiobooks. I believe in audiobooks.
Speaker 7: I think they're a really important tool for a lot
Speaker 7: of people who really but you know, it's a different
Speaker 7: cognitive process to listen than it is to read.
Speaker 6: But you know, I have to go where they are
Speaker 6: or I'm out of the chop. So in that sense,
Speaker 6: you know, we have to not be obsolete.
Speaker 7: We don't want to be turned into obsolete figures of professor,
Speaker 7: So you have to go where they are.
Speaker 6: So now I just shortened.
Speaker 7: The readings, but I am asking them to take exams
Speaker 7: in class.
Speaker 6: So we'll see how that comes there.
Speaker 3: You go, are you giving?
Speaker 2: I got twenty seconds, so you're given out qualities sees here.
Speaker 3: I don't see great inflation.
Speaker 6: And for tre Schiller, reading is private. I don't talk
Speaker 6: about unknown to me.
Speaker 7: If you google me, if you're a listener's google me,
Speaker 7: you'll see that I rate my professor. I don't always
Speaker 7: get all the stars.
Speaker 3: A star list.
Speaker 2: Wendy Schiller think absolutely brilliant, folks, A window there in
Speaker 2: the Brown University, the excellence at Wendy Schiller.
Speaker 3: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
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Speaker 2: Kimberly LaPoint out of Wealth from Acquire Asset Management. Here
Speaker 2: on other things to do besides buy Nvidia. How do
Speaker 2: you buy infrastructure? Is there like stocks you buy or
Speaker 2: do you buy alternative?
Speaker 3: Yeah? I'm seeing people talk a lot about infrastructure.
Speaker 2: But an acquarie on a global basis, how do you
Speaker 2: actually affect an infrastructure purchase?
Speaker 8: Well, first, great to be here, thanks for having me.
Speaker 8: When we think about infrastructure at mcquari, we're primarily talking
Speaker 8: about private infrastructure, so things like privatizing airports, toll roads,
Speaker 8: the data centers, and the way you buy those investments
Speaker 8: at firm. At a firm like Mcquarie, we have deep
Speaker 8: teams of on the ground asset specialists that work closely
Speaker 8: with local government, with local governments, with local operating partners.
Speaker 3: Well, I just how do I buy a piece of LaGuardia.
Speaker 6: So there's a number of ways that you could buy
Speaker 6: a piece of LaGuardia.
Speaker 8: One is through working with firms like mcquarie and some
Speaker 8: of our peers that offer access to more and more
Speaker 8: high net worth individuals as well as wealth investors around
Speaker 8: the globe through the sties that they're bringing to market. So,
Speaker 8: for example, at Macquarie, we have been working to bring
Speaker 8: to wealth investors the same quality of investments, working and
Speaker 8: investing alongside our institutional portfolios that invest in things like airports,
Speaker 8: where we just took an additional stake in investing in
Speaker 8: two airports in the UK Bristol and Birmingham.
Speaker 5: Interesting, So just broadly define alternatives, how did they fit
Speaker 5: into what was the traditional sixty forty portfolio? What do
Speaker 5: you think the allocation to alternatives can be should be?
Speaker 4: Maybe?
Speaker 8: Yeah, I think that is a question, particularly when you
Speaker 8: think about wealth investors that everyone is asking you think
Speaker 8: about the traditional sixty forty portfolio. Particularly in today's environment,
Speaker 8: you're not gaining the benefits of a lot of diversification,
Speaker 8: particularly when you look at the.
Speaker 6: Correlation of the largest drivers of the S and P.
Speaker 8: One of the benefits of alternatives and infrastructure, and particularly
Speaker 8: infrastructure is the low correlation to public equity. It's about
Speaker 8: one point five correlations, so you naturally get the diversification benefits.
Speaker 8: Will you currently see around ten percent of wealth client
Speaker 8: portfolios in alternatives? Many are calling that number to reach
Speaker 8: up to twenty or twenty five percent.
Speaker 2: Okay, I get it. But like you mentioned, what was
Speaker 2: the airport in England? You have two airports in England.
Speaker 8: The Birmingham and Bristol.
Speaker 3: Okay, so I want to go long Birmingham aviation.
Speaker 2: Am I buying a piece of the airport with a
Speaker 2: predictable cash flow or is it just buying the debt
Speaker 2: that built the airport.
Speaker 8: That is a great question and the answers you can
Speaker 8: do that both ways. And so at Macquarie we offer
Speaker 8: both infrastructure equity portfolios as well as infrastructure debt portfolios.
Speaker 8: And that's a decision that you would make based on
Speaker 8: the funds that you ultimately choose to invest in.
Speaker 2: Return to surveillance aviation correspondent Paul Sweening, would you go
Speaker 2: long Newark?
Speaker 3: Do you do a piece of terminal at.
Speaker 5: Wonders with terminal A making the uber experience infinitely better
Speaker 5: than was a terminal C. So Kimberly, where is we've
Speaker 5: got a lower interest rate environment presumably coming into us.
Speaker 5: What does that mean for your side of the business.
Speaker 8: Yeah, so when you think about infrastructure and where it
Speaker 8: fits in a portfolio. But I think that's interesting about
Speaker 8: the asset class is it has many of these. It
Speaker 8: has what I would like to consider sort of the
Speaker 8: characteristics of both an income and growth sort of stock
Speaker 8: on the public market side. And so in theory, what's
Speaker 8: great about the asset class is it provides ballast in
Speaker 8: a portfolio through all market cycles, periods of higher interest
Speaker 8: rates or lower lower interest rates because of the resiliency
Speaker 8: that is built into infrastructure essential assets. Thinking about your airport,
Speaker 8: regardless of the market environment, people are traveling, airports are
Speaker 8: essential and so you're getting that downside protection through full
Speaker 8: market cycles.
Speaker 2: So the build out a Heathrow just as one example
Speaker 2: where there's a Paul total cow out the fourth or
Speaker 2: fifth or sixth runway I can't remember right now. Are
Speaker 2: people like mcquarios are like a bidding war to finance
Speaker 2: the future.
Speaker 3: Of Heathrow or JFK or LAX?
Speaker 2: I mean, is it like a fever pitch to do
Speaker 2: financing of runways?
Speaker 6: So I think a couple of things.
Speaker 8: It is a very specialized skill set and there are
Speaker 8: only a few managers and firms out there that have
Speaker 8: that skill set. And that goes back to having local
Speaker 8: teams in these markets that partner with municipalities with governments
Speaker 8: to help them with their needs. As a firm like Macquarie,
Speaker 8: we get the benefit of having those local relationships. We're
Speaker 8: often a first call provider in guidance on how to
Speaker 8: think about those really important infrastructure projects to the future
Speaker 8: of you know, the economies that they're serving.
Speaker 5: How are we going to fund all these data centers
Speaker 5: that we keep hearing all these companies in their earnings
Speaker 5: conference calls and I'm spending billions here, I'm spending billions there.
Speaker 5: How do you think this is going to be finance
Speaker 5: public private? How's it going to be done?
Speaker 8: I think you're seeing it happening both ways. I think
Speaker 8: you're seeing the private markets have been incredibly important to
Speaker 8: the funding and building of data centers. You might have
Speaker 8: recently seen the sale of Aligned Data Centers, for which
Speaker 8: Macquarie led that sale, realizing a forty billion dollar enterprise
Speaker 8: value on behalf of our LPs. And the reality is
Speaker 8: you're going to see more and more of these types
Speaker 8: of deals where firms are coming in, buying them, developing them,
Speaker 8: and then looking to sell them, both on the public
Speaker 8: side as well as on the private side.
Speaker 2: So who are your clients then, is it high net
Speaker 2: worth or is it institutions where they say we want
Speaker 2: a piece of the burming.
Speaker 3: A of airport.
Speaker 6: It's both.
Speaker 8: So historically our clients were institutional and that was really
Speaker 8: the case for infrastructure in general. In recent years, due
Speaker 8: to a number of trends, more and more wealth investors
Speaker 8: want access to the same portfolio benefits that infrastructure brings
Speaker 8: as our institutional clients. So the answer today is both,
Speaker 8: and we are committed to continuing to create opportunities for
Speaker 8: the wealth's to access those same high quality portfolios.
Speaker 2: You have a modeled yield, I mean, is there like
Speaker 2: can you say infrastructure picks up two percentage points two
Speaker 2: hundred beeps over whatever?
Speaker 3: I mean, is there a structure to it? Is there
Speaker 3: every deal like custom made?
Speaker 8: So in our mind, every deal has each deal is
Speaker 8: structured on a deal by deal basis, and so in
Speaker 8: some of our more diversified portfolios, you're looking at a
Speaker 8: three to five percent yield, But it really depends on
Speaker 8: the objective of the portfolio and how yield plays into
Speaker 8: into how we structure the assets. But I would say
Speaker 8: that is more of a deal by deal question.
Speaker 3: Can you fix Uber.
Speaker 2: At JFKI or fix that?
Speaker 3: Just speaking for a.
Speaker 8: Friend, if we could, I would speaking for a friend
Speaker 8: as well.
Speaker 2: Though there was almost a fistfight on a bus at
Speaker 2: JFK like four or five months ago.
Speaker 3: Yeah, somebody was so many airports get it.
Speaker 5: Though they get it, it's so much better.
Speaker 2: And I think that no, no, if they forced me
Speaker 2: to go on a bus to get to Uber, because
Speaker 2: the Bellley was down, so I had to take.
Speaker 5: Uber and you know there there Francine had the Gulf Stream,
Speaker 5: so he had to fly commercial.
Speaker 8: I think you're hitting on one of the key themes right,
Speaker 8: there's there's an incessant need to improve our infrastructure in
Speaker 8: all areas, whether it is airports, whether it is to
Speaker 8: power on the data center side.
Speaker 2: I don't mean to be stay partway, but did Macquarie
Speaker 2: Infrastructure pave fifty ninth Street in Manhattan here in the
Speaker 2: last thirty days? Were you involved in that transaction? Is
Speaker 2: an alternative.
Speaker 6: Advestments not that I'm aware of.
Speaker 3: I never thought fifty ninth Street would be repaved. No ever. Kimberly,
Speaker 3: this is Kimberly LaPoint.
Speaker 2: Thank you so much at it Wealth and Potholes and
Speaker 2: mccays that management, Thank.
Speaker 3: You so much. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Blue Bomberg Surveillance Podcast. Listen live each
Speaker 1: weekday starting at seven am Eastern on Apple Coarplay and
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Speaker 1: listen live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa Play Bloomberg eleven thirty joining.
Speaker 2: Us right now, so I have joins a senior vice president,
Speaker 2: chief econdomist caitality with a shutdown ending like do you
Speaker 2: rechange the Excel spreadsheet in twenty four hours or how
Speaker 2: long out.
Speaker 3: Do you have to wait to get a cautality view.
Speaker 9: Well, I mean we have pretty much data daily, so
Speaker 9: we track mostly property property market and so we track
Speaker 9: home transaction data. So we've been having a finger on
Speaker 9: a pole. So we did see some slow down, particularly
Speaker 9: in areas of where you needed a government approval, you know,
Speaker 9: think about flood insurance and things like that. So you know,
Speaker 9: so we do have a finger on a pole in
Speaker 9: that sense.
Speaker 5: All right, I've got the Mortgage Bankers Association thirty year
Speaker 5: fixed mortgage six point three four percent higher than it's
Speaker 5: been over the last fifteen years, but it's.
Speaker 3: Much lower than it was earlier this year.
Speaker 5: What's the rate that would get John Tucker out of
Speaker 5: his house and say I'm going to sell my house
Speaker 5: and move to Floridaca is now the mortgage it's not
Speaker 5: so bad?
Speaker 9: Yeah, I mean that's been the magical question, the million
Speaker 9: dollar question. And I don't know that we have a
Speaker 9: true answer to that simply because you know, it's very
Speaker 9: unrealistic to expect something in low fives, you know, and
Speaker 9: I think that's what does change the market. But what
Speaker 9: we have seen over the course of last year, especially
Speaker 9: with this volatility in mortgage es, is that people react
Speaker 9: as soon as mortgage ms come down. So you had
Speaker 9: a couple periods in September or October when mortgage it's
Speaker 9: were down to six point one, and you definitely saw
Speaker 9: both in refy space and purchase space buyers coming off
Speaker 9: of the sidelines.
Speaker 2: I have a memory of Peter Lynch years ago going ballistic,
Speaker 2: and I'm sure it was this team that doing the
Speaker 2: math over the perceived return on real estate of eight
Speaker 2: nine percent per year, and the study I believe it
Speaker 2: was a fidelity at the time is no, it's.
Speaker 3: Low single digit. Are we reverting to that?
Speaker 2: Are we going from I'm going to make a fortune
Speaker 2: in Coral Gables, Florida to the reality of a slow crawl?
Speaker 3: Absolutely?
Speaker 9: I mean really, historically it's been four to five percent
Speaker 9: average return, And it really depends when you buy. You know,
Speaker 9: are you buying in two thousand and four, are you
Speaker 9: buying in twenty twenty three? It depends when you buy,
Speaker 9: and so your return obviously is going to really depend
Speaker 9: on that.
Speaker 3: Joining us now, Paul Sweeney, were the one percent mortgage exactly?
Speaker 5: Or if you sell all your real estate during a pandemic,
Speaker 5: that's also a good time to sell.
Speaker 3: Talk to us about new home buyers.
Speaker 5: It seems like home affordability is just it's just brutal
Speaker 5: for the young folks. I mean that cost of housing
Speaker 5: is up fifty percent or since the beginning of the
Speaker 5: since before the pandemic.
Speaker 3: Mortgage rates are higher.
Speaker 5: It seems like affordability is just out of reach for
Speaker 5: a lot of folks.
Speaker 3: Does that change over time? Is that just the new normal?
Speaker 9: I think it does change, but it's a very slow
Speaker 9: moving process. It's been painfully slow. We have seen some improvements.
Speaker 9: You talked about mortgage it's being slightly lower, you know.
Speaker 9: We see a slower rate of home press appreciation. Home
Speaker 9: press isn't only up about one percent over the course
Speaker 9: of last year, and when you adjust for inflation, they've
Speaker 9: actually declined, right, and wages are up at a higher pace.
Speaker 9: So you are slowly, painfully gaining some of that affordability
Speaker 9: over time.
Speaker 2: Okay, Can I editorialize here. Paul, sure, I think that
Speaker 2: I talked to my kids about this. We went into homes.
Speaker 2: Can I remember my grandmother's home and had water in
Speaker 2: the kitchen, But we had homes that were relatively simple.
Speaker 2: The kids now when they're out looking for homes, you know,
Speaker 2: forget about granite countertops. They're looking for they want to
Speaker 2: they want a kitchen like John Tucker exactly.
Speaker 3: I mean, the the home.
Speaker 2: That we desire now is not the same as the
Speaker 2: home that we desired in nineteen seventy five or nineteen
Speaker 2: ninety five.
Speaker 9: Right, absolutely, And construction costs has gone up a lot,
Speaker 9: you know, because of that similar situation. When you think
Speaker 9: about it, what's happening in auto market? Why are autos
Speaker 9: so much more expensive now? Because everything is digitized? You know,
Speaker 9: you have a little computer you're writing, and people want
Speaker 9: to walk into a computer home, computerized home where everything
Speaker 9: is taken care of.
Speaker 2: I have the Nash Rambler out and Paul, they laugh
Speaker 2: at me, Yeah, because it's.
Speaker 3: Completely non digital, which you know, so they laugh at
Speaker 3: you for a number of reasons.
Speaker 5: Talk to us about just kind of are the markets
Speaker 5: in this country where it's actually a decline, because it
Speaker 5: just seems like when we the pandemic, everybody kind of
Speaker 5: left some of the urban areas and we're going to
Speaker 5: Florida and Texas and some of these Tennessee and some
Speaker 5: of these lower cost states, maybe more Land More. Is
Speaker 5: that still a story or is that those markets turned around?
Speaker 6: Yeah, it is.
Speaker 9: I mean it's a story of k shipped economy basically,
Speaker 9: you know. I mean we see that in the housing
Speaker 9: market as well. When you look at the map of
Speaker 9: the US markets that are going up, or markets in Northeast,
Speaker 9: markets that are going down, or markets in southeast and
Speaker 9: then you have a mixed picture sort of on the
Speaker 9: West coast, but a lot of it is slowed down
Speaker 9: in in migration to those markets at Florida. You know,
Speaker 9: WI is Florida. It's gone up the most and now
Speaker 9: has seen the highest slowdown and so obviously, you know,
Speaker 9: you have some resetting going on.
Speaker 3: I mean, Paul, this is great, almost lived this.
Speaker 2: She went to school at the University of Buffalow and
Speaker 2: follow New York and.
Speaker 3: You're in California now, right.
Speaker 2: I am which which snowstorm in April made the decision
Speaker 2: to go.
Speaker 3: To California, all of them?
Speaker 2: That's the right answer, Selah thank you, so I sell
Speaker 2: I help with the senior vice president catality.
Speaker 3: Here with the snap.
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