Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business Week,
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Speaker 1: today's complex economy. Plus global business finance and tech news
Speaker 1: as it happens. The Bloomberg Business Week Daily Podcast with
Speaker 1: Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2: Hey, we want to stay though on the markets and
Speaker 2: the ALEC. We've got a great guest to do that,
Speaker 2: and also to get into some new research that they
Speaker 2: had out late last month, six for twenty six Essential
Speaker 2: questions for investors. Investors probably have a lot of questions
Speaker 2: going into the new year. Back with us is Jason Grannitt.
Speaker 2: He's chief investment officer of B and Y. Right here
Speaker 2: in studio. How are you?
Speaker 3: I'm great?
Speaker 4: How are you love the new studio?
Speaker 5: Thank you?
Speaker 4: Thank you cool?
Speaker 2: We're kind of loving it too. How are you loving
Speaker 2: kind of the market environment right now? And how are
Speaker 2: you thinking about the new year?
Speaker 3: Yeah, So if I go back and think about this
Speaker 3: year and we're at the beginning, you think about all
Speaker 3: the wild things that happened. We went through the new administration, liberation.
Speaker 3: People forget that the US military was engaged in a
Speaker 3: war back in the spring, the One Big Beautiful Bill,
Speaker 3: in negotiations, the long government shutdown, these MEGAAI deals that
Speaker 3: happened over the course of the year, and what happened
Speaker 3: kind of what everyone thought would happen. Policy rates are
Speaker 3: a little bit lower, risk assets are higher, but it
Speaker 3: was very nonlinear, and so if I think about twenty six,
Speaker 3: I think it's probably going to feel somewhat similar. Is
Speaker 3: going to be weeks maybe months that don't feel that
Speaker 3: warm and fuzzy, but pretty strong backdrop. You have the
Speaker 3: stimulus coming from the One Big Beautiful Bill.
Speaker 2: Will that be inflationary though, and cause some problems perhaps
Speaker 2: for the FED and the next feduer, whoever that may
Speaker 2: be he or she.
Speaker 3: So, I mean, look, we're talking a lot about the
Speaker 3: inflation data today in questions around it. Obviously the headline
Speaker 3: was softer, but markets are not reacting believing that the
Speaker 3: underbelly of that data is as clean as it could
Speaker 3: be from a hangover from the shutdown. I'm not convinced
Speaker 3: that it's going to be super inflationary. It could be
Speaker 3: a little, it could put a little pressure against it
Speaker 3: and I think, but if you look at where policy
Speaker 3: rates have been trading for the end of twenty twenty six,
Speaker 3: no matter what we've talked about, all those things that happened,
Speaker 3: all the questions about all these different FED people, they've
Speaker 3: been right between two ninety and three ten, and so
Speaker 3: the market kind of has this credibility around where it's heading,
Speaker 3: no matter all these kind of balls that are thrown
Speaker 3: at it.
Speaker 6: Well, I wanted to just talk about the FED a
Speaker 6: little bit because the President did say speaking to three
Speaker 6: or four different candidates. If you look at polymarket, for example,
Speaker 6: the money's still on Kevin Hasset, but Kevin worsh is
Speaker 6: a close second favorite. Christopher Waller's on there too. Michelle Bowman,
Speaker 6: who he mentioned, is still only at one percent at
Speaker 6: this point. Does it matter to you of those four
Speaker 6: who gets picked. Yeah, so we've had a lot of names.
Speaker 6: I think there were five and there were one. Now
Speaker 6: there's four.
Speaker 3: Back to my point, it seemed to be anchored at
Speaker 3: a certain point, no matter where the winds swing on
Speaker 3: these choices. What I would say is, we're still talking
Speaker 3: about a committee. We're still talking about consensus on a committee.
Speaker 3: If you look at the dots that come. It looks
Speaker 3: like a scatterplot. There's a lot of work to do
Speaker 3: to bring people together. So while I think that it
Speaker 3: does matter ultimately over a long period of time, obviously
Speaker 3: who the chair is. We're talking about the New York term.
Speaker 3: This is about building consensus, getting the views, and quite frankly,
Speaker 3: this is a tricky environment, you know, Carol, you raise
Speaker 3: the underbelly of inflation. We have the labor market that's
Speaker 3: a little weak. These are tricky times for both the
Speaker 3: Fed and global central banks.
Speaker 1: Question.
Speaker 2: All right, so you guys have whittled it down to
Speaker 2: six for twenty six is all we tried.
Speaker 4: We tried.
Speaker 2: Was it hard whittling it down to six? Yeah?
Speaker 3: Look, I mean we tried to catch the big themes
Speaker 3: that are out there, right, you know, obviously central bank,
Speaker 3: obviously the dollar, obviously AI.
Speaker 4: We try to capture all those different things.
Speaker 2: Let's go through a couple global economy maintain its delicate
Speaker 2: balance through twenty twenty six, and you just talk about
Speaker 2: forces balancing toward growth acceleration, and I guess those that
Speaker 2: might not be towards that.
Speaker 4: Yeah, Look, it's it's fragile. This is what we're talking about.
Speaker 3: I mean, we think that it can maintain our conviction
Speaker 3: when we went through and did the work to put
Speaker 3: that out as we think that the tailwinds continue to
Speaker 3: aweigh the headwinds.
Speaker 4: But there's some fragility.
Speaker 3: Yeah, the labor report showed you that it's kind of
Speaker 3: not every sector with strength. Obviously, the questions about the
Speaker 3: inflation data are where things are happening. You know, we
Speaker 3: think it does.
Speaker 4: Have the support behind, but it's.
Speaker 6: More closer call than not. Jason, We're going to jump
Speaker 6: around a little bit in the report. The question that
Speaker 6: you have posed, I think a lot of people have
Speaker 6: right now and they look at the US equity market.
Speaker 6: Are US equities overvalued? Yes?
Speaker 7: Or no?
Speaker 8: Yeah?
Speaker 6: I mean obviously this is are some overvalued?
Speaker 3: And what I would say is there's always some that
Speaker 3: are overvalued, and there's always some that doesn't are valued.
Speaker 6: But are there some more right now than usual that
Speaker 6: are overvalued?
Speaker 4: It looked there's a lot of price for perf action
Speaker 4: in the market in certain sectors.
Speaker 3: Right that being said, we are getting some stimulus that's
Speaker 3: coming into the market next year. We do have easier
Speaker 3: or not tighter monetary policy on the horizon. We do
Speaker 3: have fiscal stimulus, corporate tax benefits that are there. I
Speaker 3: think a lot of it's in the price, but we
Speaker 3: think there continue to be a little support on risk
Speaker 3: assets here into next year, for sure.
Speaker 2: Jason, what do you do? Who do you talk to?
Speaker 2: What is the research that you guys look at to
Speaker 2: figure out whether the AI trade, the AI spend, the
Speaker 2: AI build out is getting frothy. Is it just a
Speaker 2: case of looking at valuations or who do you talk to?
Speaker 2: You to kind of get an idea?
Speaker 3: So you can't just look at valuations. These are new
Speaker 3: technologies and new horizons where on some level the raw
Speaker 3: evaluation doesn't really matter as much as what are the fundamentals,
Speaker 3: what's the forward of the different projects, what partnerships you're
Speaker 3: seeing all these partnerships come out, So there's a whole
Speaker 3: series of strategic alliances that are going to be developed
Speaker 3: over time.
Speaker 2: Are you comfortable though, with the circular financing and complicated
Speaker 2: relationships and kind of coosy relationships.
Speaker 4: I'm a bond guy a little. I'm always a little nervous.
Speaker 4: That's how it works.
Speaker 2: So are you know those folks when they look at
Speaker 2: Oracle right and what's going on in their balance.
Speaker 3: Yeah, I think what you're seeing across the horizon is
Speaker 3: that we're starting to sift through and think about who
Speaker 3: some possible.
Speaker 4: Winners and losers are. But this is a long game.
Speaker 7: You know.
Speaker 3: If I think about back in the spring, people are
Speaker 3: questioning Google, what's going to happen to search? What's going
Speaker 3: to happen in that ecosystem? Now people see Google as
Speaker 3: you know, maybe the biggest winner. So these things can
Speaker 3: change very, very very quickly. And I think that we're
Speaker 3: early enough. And we have a little chart that shows
Speaker 3: how early we are kind of in the journey here,
Speaker 3: and that's what I think it's.
Speaker 4: Important for folks to remember.
Speaker 3: We're early days in whatever this AI adventure will be.
Speaker 3: It's not going to be all highs or all.
Speaker 4: Lowse but we're But you know, there's going to be
Speaker 4: some sorting that goes.
Speaker 6: Through what what's the risk, the main risk for twenty
Speaker 6: twenty six? What what gets the train off the rails?
Speaker 2: Ye?
Speaker 3: Look, like I said, there's a lot of fragility. I
Speaker 3: think obviously for the FED and for policy here in
Speaker 3: the US is clear.
Speaker 4: The labor market.
Speaker 3: You seeing a lot of unevenness across the labor market,
Speaker 3: you know, growth is strong, but probably slightly below potential.
Speaker 3: So is there a point where the late taking folks
Speaker 3: out of the labor market brings growth down and.
Speaker 4: That starts to fall further below potential?
Speaker 3: And then look, we've had rate cuts last fall, we've
Speaker 3: had rate cuts this fall, and we still have ten
Speaker 3: years that won't get all four percent. Yeah, and so
Speaker 3: to me, that's something that has to manifest itself through
Speaker 3: the economy still as well.
Speaker 2: Yeah, it's so funny because we dipped below for a moment,
Speaker 2: it felt like, and then we had some guests maybe
Speaker 2: even talking about moving, you know, closer to three, and
Speaker 2: yet here we are at four point one and we're
Speaker 2: sitting there for a while.
Speaker 4: Yeah, it's pretty stubborn there.
Speaker 2: Well, you said, you know, you're a bond guy. So
Speaker 2: the diverging one of the things that you guys are
Speaker 2: talking about the six essential questions for investors. How are
Speaker 2: diverging rate paths shaping fixed income of the US, Europe
Speaker 2: and emerging markets? And this is on a day where
Speaker 2: the BOE and ECB right rained in with rates. We
Speaker 2: get a decision from the Bank of Japan tomorrow. We
Speaker 2: had the FED recently. There are diverging policies amongst some
Speaker 2: central banks, and.
Speaker 3: Carol would say beyond diverging policies, the agreement is not there.
Speaker 3: The Bank of England had a five to four vote,
Speaker 3: very tight. Look as I said, look at the dots,
Speaker 3: it's all over the ECB.
Speaker 4: Look listen to what they're saying.
Speaker 3: It's not everyone is student body rights, student body left
Speaker 3: at all these different central banks. So not only do
Speaker 3: you have different speeds across these, but you also have
Speaker 3: inside there's still some sorting that happened. So when you
Speaker 3: ask about the risks and the things, you can see
Speaker 3: the confusion in the market and even from the experts
Speaker 3: you make these decisions.
Speaker 2: So it could go a lot of different ways into yeah.
Speaker 4: Let's have fun. That's what makes this a fun That's
Speaker 4: what it makes it fun to do.
Speaker 2: It does sound like there's a consensus that we got
Speaker 2: to keep our watch on Washington, whether it's policy out
Speaker 2: of the White House. In so many different ways, our
Speaker 2: policy over you know, monetary policy from the Fed. There's
Speaker 2: a lot that's going to be coming our way that way.
Speaker 3: Yeah, people or policy, and so you got to listen
Speaker 3: to what the people are saying. They push it through
Speaker 3: and that's what happened this year, right, They drove all
Speaker 3: these undulations. But if you talked about where we were
Speaker 3: at the beginning, I think we are where we thought
Speaker 3: we'd beat the end.
Speaker 4: But it wasn't that smooth.
Speaker 2: No, And there were points where you never thought it
Speaker 2: was going to it was going to end out this way, right, Jason,
Speaker 2: Happy holidays.
Speaker 4: Hay Holiday is great to see you. Enjoy your break.
Speaker 2: We'll see you in twenty twenty twenty six.
Speaker 4: Best everybody.
Speaker 2: Yeah, same to you, Jason Granite, Chief Investment Officer, b
Speaker 2: and Y right here in studio.
Speaker 6: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 6: up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 2: Bloomberg has reported out, as many other news organizations, something
Speaker 2: you and I've talked about a lot tim about how.
Speaker 6: Some including you, just open up the app formerly known
Speaker 6: as Twitter. This is true.
Speaker 2: It's about how some that are wealthy and just some
Speaker 2: in general are concerned about some of the priorities of
Speaker 2: incoming New York City mayors or on Mumdannie on that
Speaker 2: we cut up with Kathy Wilde outgoing presidency of the
Speaker 2: Partnership for New York City. They represent a lot of
Speaker 2: the city's corporate leaderships that we're talking about, real estate developers,
Speaker 2: pe firms, banks, law firms. By the way, Bloomberg Elp
Speaker 2: is a member of the Partnership for New York City.
Speaker 2: Kathy Wilde also part of New York City Mayor Elect
Speaker 2: Zoron Mundani's transition team, and she addressed some of his
Speaker 2: policies that he campaigned on, including higher taxes. Check it out.
Speaker 8: You may raise the rates of taxes, but that may
Speaker 8: not result in more revenues if you scare people away,
Speaker 8: or if you scare companies away, or as we've seen lately,
Speaker 8: we're seeing a real threat to jobs in New York
Speaker 8: for the first time, first time in my experience over
Speaker 8: fifty years, are seeing a decline in the number of
Speaker 8: jobs in our financial services industry. Scary thing. That's forty
Speaker 8: percent of our state income. Text news. We don't I
Speaker 8: mean these are you know, we've got to pay attention
Speaker 8: and I think he gets that. But we've got to
Speaker 8: be at the table discussing these issues and helping figure
Speaker 8: out how to employers help solve the childcare problem.
Speaker 6: It's Kathy Wilde, outgoing president and CEO of the Partnership
Speaker 6: for New York City, also part of New York City
Speaker 6: Mayor like Zorah and Mam Donnie's transition team.
Speaker 7: Carol.
Speaker 6: Here's what our next guest has to say about all this.
Speaker 2: Yeah, great to have back in studio. Frank Sorrentino, chairman
Speaker 2: and CEO at the publicly held New Jersey based community
Speaker 2: bank connect One Bank Core there, the parent company of
Speaker 2: connect One Bank. Great. Great, great to have you here.
Speaker 5: How are you here?
Speaker 7: Great to be here, Great to be the new studio.
Speaker 7: It's fantastic, Thank.
Speaker 2: You, thank you. Yeah, we've been working on, you know,
Speaker 2: real estate around here.
Speaker 7: Huh.
Speaker 2: Tell us about the environment. You are kind of consistently
Speaker 2: optimistic and have been a lot over the past year.
Speaker 2: Is that still the case.
Speaker 7: I'm very very optimistic about where we are. Yeah, and
Speaker 7: especially the journey we've taken this year to get here.
Speaker 7: It's been a you know, quite the roller that are
Speaker 7: up and down, and we certainly didn't start the year
Speaker 7: in the same place. But I really felt the foundation
Speaker 7: was there for a very solid end to twenty twenty five,
Speaker 7: but that foundation now has really created, I believe, an
Speaker 7: unbelievable ramp into twenty six, and I think we're going
Speaker 7: to have a lot less of the noise that we
Speaker 7: heard during twenty five and more focus on how this
Speaker 7: economy is building strength as we move through twenty six.
Speaker 6: I want to go to what Kathy Wilde was saying
Speaker 6: about concern over New York City. She has a close
Speaker 6: relationship with many business leaders. She's also part of the
Speaker 6: mayor's transition team. Last time you're on with us, it
Speaker 6: was just after the election. We spent a lot of
Speaker 6: time talking about politics, specifically housing. Because of your construction background.
Speaker 2: It's a great conversation.
Speaker 6: But the New York City side of things, I mean,
Speaker 6: you've got locations in New Jersey and New York and
Speaker 6: Florida as well, but you've lot locations here in New
Speaker 6: York City, so you understand the economy. What are you
Speaker 6: hearing from your New York City based clients.
Speaker 7: Look, I think the economy in general is very strong,
Speaker 7: but we are, as you just heard, we are on
Speaker 7: the press of if there are changes that drive the
Speaker 7: sentiment to think that New York is not a friendly
Speaker 7: place to do business. We could see change, and so
Speaker 7: certainly that's a concern. We certainly know there's a concern
Speaker 7: about affordability in New York City. But overall, I think
Speaker 7: it's all going to work out. It always has before.
Speaker 6: Does it make you optimistic that somebody like Kathy Wilde,
Speaker 6: who has the year of so many in the business community,
Speaker 6: is involved with the incoming mayor.
Speaker 7: Yeah.
Speaker 4: Absolutely.
Speaker 7: And there's others who are joining the team who I
Speaker 7: think we would all say we're happy they're there. Look,
Speaker 7: at the end of the day, I don't think anybody
Speaker 7: can argue with some of why this mayor was elected. Right,
Speaker 7: the issue of affordability, trying to make a fair system
Speaker 7: for everyone, I think we could all get around that.
Speaker 7: How we go about doing that is a different story.
Speaker 2: How do we I know we talked about this with you,
Speaker 2: and but you know you're a builder, So that's why
Speaker 2: we talk about with you, because you understand these things.
Speaker 2: I'm trying to unpack this. I mean, a builder's not
Speaker 2: going to build a building if it's not going to
Speaker 2: be profitable.
Speaker 7: Right. There's been numerous studies across this country and across
Speaker 7: various time periods. It doesn't matter when, how or where
Speaker 7: you look at it. There's a really interesting story right
Speaker 7: now in the Twin Cities, where you know, one city
Speaker 7: is trying to maintain affordability by government control and then
Speaker 7: the other city is doing it by free market. Let's
Speaker 7: let the builders build because you know, to me, some
Speaker 7: of the laws of economics they like the laws of physics.
Speaker 7: You may like to agree or disagree, but they are
Speaker 7: what they are. And if we increase supply, we're going
Speaker 7: to have lower prices. And that's something I think politicians
Speaker 7: don't typically understand. I mean, if you look right now,
Speaker 7: even in the rent regulated portfolio, rent stabilized portfolio of
Speaker 7: New York City, there's fifty thousand units that are unoccupied
Speaker 7: because they're uneconomical to put back on the market. Based
Speaker 7: on what they're rent stabilized at and the investment needed
Speaker 7: to get them back in order, you would think that
Speaker 7: that would be a priority. We want to get those
Speaker 7: units back into the marketplace because that would help the
Speaker 7: that would help those who need the help.
Speaker 6: So if you were advising a politician, the incoming mayor
Speaker 6: perhaps or I'd love the opportunity to do that what
Speaker 6: would you what would you have to but.
Speaker 7: Not yet, what would we have our opportunity?
Speaker 6: So what would be the suggestion to actually fill those
Speaker 6: vacant apartments?
Speaker 7: Oh, there's there's a number of things we could do, right,
Speaker 7: we could mean test for the people that live in
Speaker 7: rent stabilized apartments. There there are incentives the city could
Speaker 7: provide to entice the builders to be able to invest
Speaker 7: the you know, make the investments they needed each one
Speaker 7: of those apartments to make them viable since they're vacant,
Speaker 7: allow for vacancy decontrol up to some level. I mean,
Speaker 7: there's there's a there's a so many common sense things
Speaker 7: that we could do, probably over at dinner, napkin, that
Speaker 7: would get those those apartments back online in ninety to
Speaker 7: one hundred and twenty days.
Speaker 2: So why is this so hard?
Speaker 7: You know, it's it's how politics works, I don't know.
Speaker 7: And it's a mindset, right, there's a mindset that government
Speaker 7: can do a better job than the market can do,
Speaker 7: when in fact, we've learned over and over and over
Speaker 7: again here in the United States, the market generally is
Speaker 7: able to solve these problems and in a very efficient way.
Speaker 2: Mind you all right, I want to broaden out. We
Speaker 2: always do like to talk to you because you have
Speaker 2: such great exposure to small business and construction generally. How
Speaker 2: are both of those areas doing. And I'm also curious
Speaker 2: about small business as we had a story this week
Speaker 2: about PayPal looking to apply to become a bank and
Speaker 2: really tap into the small business area. It doesn't happen overnight,
Speaker 2: so I'm just curious. You laugh, Do you think that's I.
Speaker 7: Think it's fine. You know what I find fascinating is
Speaker 7: all these companies that want to be banks because in
Speaker 7: the current regulatory environment it's fashionable, profitable and whatever to
Speaker 7: be a bank.
Speaker 4: They've done really well this' here there.
Speaker 7: You know, there are other times in history when being
Speaker 7: a bank is you know, is a little bit more
Speaker 7: difficult than that. And you know, the banking industry is
Speaker 7: not just one particular point in time. It's built the
Speaker 7: last for very very long periods of time, and so
Speaker 7: we'll see how they like the regulatory environment at other points.
Speaker 2: So small business, small.
Speaker 7: Business, I think is doing very very well today. Again,
Speaker 7: the noise is out of the marketplace. People are feeling good.
Speaker 7: I think one of the biggest things we're hearing, notwithstanding
Speaker 7: some of the employment or unemployment information is that small
Speaker 7: business is having a hard time hiring qualified people to
Speaker 7: fill positions. You know, I think they're getting their arms
Speaker 7: around what's happening with tariffs. I think they're getting their
Speaker 7: arms around whether or not there's real structural inflation in
Speaker 7: the economy, and it appears there really isn't. There's been,
Speaker 7: you know, some price setting that's been going on. But overall,
Speaker 7: the vast majority of the small to medium sized businesses
Speaker 7: that we represent a connect Water are doing quite well,
Speaker 7: and they're seeing what's more important, they're seeing pipelines and
Speaker 7: backlogs that are taking them into twenty six, which is
Speaker 7: one of the reasons I feel so optimistic about we're
Speaker 7: headed in twenty six.
Speaker 6: So let's get to We got the environment side of this,
Speaker 6: Let's get to the actual running of the banking business.
Speaker 6: We saw an uptick this year in M and A.
Speaker 6: You mentioned a favorable regulatory environment. We saw you guys
Speaker 6: actually close on first of Long Island. That deal was
Speaker 6: announced last year. Any more M and A for you
Speaker 6: in the new year.
Speaker 7: Listen, this is I think our fourth or fifth transaction
Speaker 7: we've done over the twenty years that we've been in business,
Speaker 7: and we always like to say we're very opportunistic based
Speaker 7: on where we are, where the market is, what opportunities
Speaker 7: are in the marketplace. We've gone through stretches of three,
Speaker 7: four or five years at a time without any M
Speaker 7: and A. That's okay. I do think there's going to
Speaker 7: be a robust organic growth engine for us as we
Speaker 7: continue to move forward. But there could be opportunities for
Speaker 7: M and A and right now. One of the things
Speaker 7: that I think would promote that is a regulatory environment
Speaker 7: that's a little bit more favorable towards it happening. We
Speaker 7: did not have well that's when we announced the last transaction.
Speaker 7: There are only a few that were done that year.
Speaker 2: That's what I wanted to like follow up on, is
Speaker 2: that you are in an environment that's much more favorable.
Speaker 2: So as someone who runs a bank and knows that
Speaker 2: you haven't done that many over the entire lifespan, but
Speaker 2: you're in an environment where it is much more you know,
Speaker 2: favorable because it doesn't make you.
Speaker 7: Say, you know, it's not so much that it makes
Speaker 7: us say it because it has to make financial sense.
Speaker 7: It has to be something that for us, you know,
Speaker 7: we can say this is a good opportunity for us
Speaker 7: to take advantage of the better regulatory environment, though, provides
Speaker 7: more opportunities because then there'll be other institutions that think
Speaker 7: they're better off if they partner with somebody, and you know,
Speaker 7: in the last three, four or five years, that hasn't
Speaker 7: been the case. Right, Many institutions to saying, hey, we
Speaker 7: don't want to take a risk here of trying to
Speaker 7: sell ourselves or partner with someone, and maybe that doesn't happen,
Speaker 7: or it takes too long to happen and they hurt
Speaker 7: the franchise.
Speaker 2: So that's probably a no for twenty twenty six.
Speaker 7: Well, it's hard to say.
Speaker 6: Well, just geographically, just in twenty seconds, geographically the most
Speaker 6: appealing area where you want to be where you're not
Speaker 6: right now.
Speaker 7: Look, we're in New York Metro, you know, based institution,
Speaker 7: So that's a big market.
Speaker 4: Is awful?
Speaker 6: You want to grow here?
Speaker 7: Yeah, we want to go And as I always joke here,
Speaker 7: you know Florida is part of that market. So I
Speaker 7: like the growth prospects here in the New York metro market.
Speaker 7: I like what's going on in Florida.
Speaker 2: Okay, we'd be remiss in terms of FED policy and
Speaker 2: what we get in terms of a new FED chair.
Speaker 2: And also we did get that additional rate cut last week. Frank,
Speaker 2: you know the bank.
Speaker 7: We said, we said we were going to have a
Speaker 7: rape cut last time we were here.
Speaker 2: Just real quickly, thirty second, how's the bank managing the
Speaker 2: rate backdrop in the steeper yeal curve that we're seeing?
Speaker 4: Just quickly listen.
Speaker 7: I think it's great for banks, and I think you
Speaker 7: see it, you know, in the market reaction to banks
Speaker 7: over the last thirty forty five days, right, bank valuations
Speaker 7: are up pretty strongly. Banks are now you know, favored
Speaker 7: in portfolios today. I think part of it is the
Speaker 7: steepness of the Yeal curve, and I think part of
Speaker 7: it is the optimism around the economy.
Speaker 2: And it's twenty six it's still optimistic. Yeah, very kind
Speaker 2: of love that, right, We could do use some optimism.
Speaker 2: Frank Sorrentino. Thank you have a great holiday.
Speaker 6: Oh you heavy new year?
Speaker 2: Yeah, I really appreciate it. Founder chairman, founder chairman and
Speaker 2: chief executive officer of Connect One Bank right here in
Speaker 2: our studio.
Speaker 6: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 6: up after this.
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Speaker 6: I'm looking at shares a dgt US. It's Trump Media
Speaker 6: and Technology Group. It's the parent company True Social, THEYDA
Speaker 6: so Crypto financial Services. They're getting into nuclear fusion. It's
Speaker 6: surging today more than forty one percent. The company said
Speaker 6: today will merge with Tae Technologies. It's a closely held
Speaker 6: fusion developer founded in nineteen ninety eight. This is a
Speaker 6: transaction value at more than six billion dollars.
Speaker 2: It's it's kind of wild.
Speaker 6: Shareholders not on my business, my big go card. This
Speaker 6: was not on mine either.
Speaker 2: Shareholders of each company or are going to own about
Speaker 2: fifty percent of the combined business after the all stock
Speaker 2: deals completed. That according to Trump Media. They put that
Speaker 2: out in a statement. We have a ton of questions
Speaker 2: about this, and we knew right off the bat that
Speaker 2: we want to talk to Will Waite.
Speaker 6: He's Bloomberg News Energy reporter. He joins us here in
Speaker 6: the Bloomberg Interactive Brokers Studio. I got a full disclosure
Speaker 6: I had never heard of this company before six thirty
Speaker 6: am this morning. Had you ever heard of it? No,
Speaker 6: there were, Yeah, I've heard of Okay, so people in
Speaker 6: the energy people in the energy world know this company.
Speaker 9: Yeah, yeah, TA is one of the companies in fusion
Speaker 9: that we've been watching that's making solid progress.
Speaker 6: Solid progress. That's an important way to put it, because
Speaker 6: because this is unproven at this point.
Speaker 5: Yeah, because is hard.
Speaker 9: Fusion is really hard. I mean I write about nuclear fission,
Speaker 9: which moves really slow. Fusion is slower than that. It's
Speaker 9: you know, it's it's literally creating a little tiny star
Speaker 9: that you can find with super powerful magnets and somehow
Speaker 9: get energy out of that. So if that sounds hard, yeah,
Speaker 9: it is hard. But TA is a company that's been
Speaker 9: They've been at this for a long time. We've been
Speaker 9: watching them. But when I say solid progress, what that
Speaker 9: really means is nobody has done this yet. It's been
Speaker 9: demonstrated in a lab situation about and a couple times
Speaker 9: since then. It's Lawrence Livermore in California. But no one's
Speaker 9: got a commercial system working, no one's got demo systems working.
Speaker 9: We're we're waiting for it.
Speaker 2: Is it the kind of thing will that all of
Speaker 2: a sudden, like you know, Eureka, all of a sudden,
Speaker 2: they figure it out and it could happen tomorrow. No,
Speaker 2: it's more likely it's not going to happen for fill
Speaker 2: in the blank.
Speaker 9: How many years, maybe less than ten for a couple things.
Speaker 2: That's a long ways out.
Speaker 9: So, I mean, the company I've really been watching is
Speaker 9: called Commonwealth. They're already planning their first commercial system. They're
Speaker 9: working on it in Virginia, but they're doing all their
Speaker 9: research outside Boston because they came out of MIT. They
Speaker 9: don't have their demo system working yet. They've been talking
Speaker 9: about reaching like this critical milestone in twenty twenty seven,
Speaker 9: twenty twenty eight ish. So, like I said, no one
Speaker 9: can do this yet, but there's several companies that we
Speaker 9: think are getting close. So I put TAE on the
Speaker 9: list and they told us, you know that they're going
Speaker 9: to start construction next year on a commercial system. I'm like,
Speaker 9: you're going to start building what next year? I'd love
Speaker 9: to see it happen. It'd be great, but I have questions.
Speaker 6: Apart from the association with the president and the close
Speaker 6: ties to the president, that this gives the company. What
Speaker 6: else would be in this I don't want this combination
Speaker 6: of these two companies, Like, why would TAU do this money?
Speaker 9: They want money. In fact, they had a call this
Speaker 9: morning and their CEO said that capital is becoming one
Speaker 9: of their big challenges. And I'm like, I thought the
Speaker 9: physics and the engineering was your big challenges. But you know,
Speaker 9: they said they get up to three hundred million cash
Speaker 9: out of this right away or when the deal closes,
Speaker 9: but you know, close to nowish to start working on
Speaker 9: their commercial system.
Speaker 5: So that's great.
Speaker 9: And they get you know, access to the Trump media backing,
Speaker 9: so that's good for them. So there's a lot of
Speaker 9: money happening here.
Speaker 2: I mean, if it was so promising, why aren't other
Speaker 2: investors rushing to give them money or others? Is it
Speaker 2: just because of how long this is taking?
Speaker 5: It could be.
Speaker 9: I don't know the answer to that question, but it's
Speaker 9: the right question to ask. They've already raised like I
Speaker 9: think a billion three to date, which is, you know,
Speaker 9: a lot of money. But fusion takes time and takes
Speaker 9: a lot of money. There's a lot of companies you know,
Speaker 9: working on it, and they've all raised billions of dollars
Speaker 9: as well.
Speaker 6: So let's say one of these companies, maybe TA, maybe
Speaker 6: another company, maybe Commonwealth, is able to pull this off.
Speaker 6: What is the ultimate promise and what does that look
Speaker 6: like in terms of facilities, in terms of what it
Speaker 6: does to the grid, in terms of what it does
Speaker 6: to our power bills.
Speaker 9: Okay, the ultimate promise is really something special. This fusion energy.
Speaker 9: It does not have the dangerous radioactive waste that you
Speaker 9: get from fission energy, so that's great. And some of
Speaker 9: the raw materials that they use for fuel and a
Speaker 9: lot of it just comes from hydrogen, so it's not
Speaker 9: as hard to get. So fusion companies will say we
Speaker 9: have the promise of abundant clean energy and like it sounds,
Speaker 9: you know, like a fantasy, but it's actually kind of
Speaker 9: what they're what they're working towards, so it would be great.
Speaker 6: It's called nuclear fusion. Yeah, where's the Where does the
Speaker 6: nuclear part come at?
Speaker 2: The process?
Speaker 6: The process? All right?
Speaker 9: So fission, which is what we have now, is when
Speaker 9: you have a big atom and you break it up
Speaker 9: and you get energy from splitting it. Fusion is the
Speaker 9: exact opposite. You take small atoms and you smush them
Speaker 9: together and you get energy when they fuse into something.
Speaker 2: Else and there's no byproduct.
Speaker 9: I wouldn't say there's no byproduct. So some of the
Speaker 9: processes have some radioactive waste, but it's not the dangerous
Speaker 9: toxic waste like from fuel rods, you know, the old
Speaker 9: spent uranium fuel rods. It's low level waste. It's not
Speaker 9: as bad, it's not nothing. It's easier to deal with it.
Speaker 2: Is it interesting? And forgive me, I was just looking
Speaker 2: for the specifics, but I believe the administration dropped some
Speaker 2: nuclear regulation regulations or regulatory framework this week. I mean,
Speaker 2: is it interesting? Kind of the.
Speaker 4: Timing on all of this.
Speaker 2: And I don't well to point fingers in anything, but
Speaker 2: it seems kind of coinky digg.
Speaker 9: It could be a coincidence. It could be not a coincidence.
Speaker 9: I'm not in a position to say, but I might
Speaker 9: say it would be.
Speaker 1: Yeah.
Speaker 9: But it's definitely true that the Trump administration is really
Speaker 9: supportive of nuclear energy. They've done a lot of executive
Speaker 9: orders and policy changes to make nuclear happen.
Speaker 2: Is that a good thing in your view? For someone
Speaker 2: who's been following this space. Has there been too much
Speaker 2: regulatory oversight to be fair?
Speaker 5: To be fair?
Speaker 9: I hear consistently that one of the challenges for getting
Speaker 9: a nuclear power plant built is the paperwork. It's getting
Speaker 9: all the approvals. Now. To be even more fair, I
Speaker 9: want a government that takes radiation seriously, but it has
Speaker 9: been something that slows the process, and especially in this country,
Speaker 9: nuclear is very, very expensive, and one of the reasons
Speaker 9: is because it takes so long to get things going.
Speaker 9: So having some of the processes streamlined, I'm in favor
Speaker 9: of that.
Speaker 6: Very briefly. Well, ten seconds. How many nuclear plants will
Speaker 6: be brought online next year?
Speaker 4: Next year?
Speaker 6: Yeah, one that I know of, Okay, more than's one?
Speaker 6: More than this year?
Speaker 7: Yeah.
Speaker 9: Then Palisades Plant Michigan should come back online January February.
Speaker 2: Five seconds. How many are China putting online next year?
Speaker 5: Way more than that?
Speaker 2: Okay. We will continue this conversation into the New York
Speaker 2: will wait. Thank you so much, Happy Holidays, Merry Christmas,
Speaker 2: all that good stuff. Bloomberg News Energy Reporter.
Speaker 6: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 6: up after this.
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Speaker 6: Darden Restaurants, the owner of Olive Garden and Longhorn Steakhouse,
Speaker 6: climbed after the company Race's comp sales forecast is cited
Speaker 6: better than expected growth fueled by affordable meal options and
Speaker 6: strong spending from higher income diners. Dartnet expects some economic
Speaker 6: pressure in the first half of next year, but Carol
Speaker 6: this could be offset by consumer spending from potential fiscal
Speaker 6: stimulus in early twenty twenty six, and beef prices are
Speaker 6: also expected to fall next year. Hallelujah as production increases.
Speaker 6: I mean, beef has been getting hit hard.
Speaker 2: In our home. Yeah. Michelle Coursmo is presidency of the
Speaker 2: National Restaurant Association. We're curious what she has to say.
Speaker 2: It is the trade group for the restaurant industry, and
Speaker 2: she joins us from Washington, d C. Michelle tim just
Speaker 2: laid out really good news, or some good news, we
Speaker 2: should say, from Darden today. We've seen mixed results though
Speaker 2: from the restaurants. It's a great read on the business community,
Speaker 2: a great read on the consumer. Sweet Greens co founder
Speaker 2: also stepping down from the struggling salad chain after the
Speaker 2: share price has dropped about eighty percent so far this year,
Speaker 2: covs down sixty percent from this year's size to poutlet
Speaker 2: is down forty five percent from this year's high. It
Speaker 2: doesn't sound so great. These are your members, these are
Speaker 2: this is your community. What are you hearing from them?
Speaker 10: Well, exactly what you've said in terms of such a
Speaker 10: great industry and such a great bell weather for how
Speaker 10: the economy is doing. And it really is a mixed bag.
Speaker 10: So we've seen one point five trillion dollars in restaurant
Speaker 10: industry sales in twenty twenty five, which is up from
Speaker 10: last year, but not as strong as it needs to
Speaker 10: be and not as strong as we want it to
Speaker 10: be in these really tight margin businesses. And what we
Speaker 10: found is it kind of depends on is it kind
Speaker 10: of depends on how your it is and really how
Speaker 10: you're leaning into that price certainty for customers, value matters.
Speaker 10: Price certainty really matters. And so you see that making
Speaker 10: a difference as they're also navigating all of the tariff
Speaker 10: and supply chain and beef price problems that you've just
Speaker 10: talked about.
Speaker 6: Yeah, we're going to get to some of the challenges
Speaker 6: in just a minute. So that's how your members are doing.
Speaker 6: Your members depend on consumers. From your perch, how's the
Speaker 6: consumer doing? And it's not monolithic by any means, but
Speaker 6: how would you describe the US consumer right now?
Speaker 2: So?
Speaker 10: The US consumer right now, I would say is very deliberate.
Speaker 10: They want to be certain about what they are spending
Speaker 10: and how they're doing it. And that's really a place
Speaker 10: where restaurants have been able to lean into some of
Speaker 10: that certainty in the offerings they have in the pricing.
Speaker 10: But it's definitely been a situation where we're not seeing as.
Speaker 5: Much traffic as we normally would.
Speaker 10: We always want to see those guest count numbers going
Speaker 10: up in restaurants, and it hasn't been going up at
Speaker 10: the level that people want.
Speaker 6: Okay, So I just want to go through some of
Speaker 6: the challenges you mentioned. Some of the challenges you said,
Speaker 6: the tariff related challenges, the beef price challenges. What is
Speaker 6: the biggest challenge that restaurants are facing.
Speaker 5: Certainty.
Speaker 10: I think with every industry and with every business, what
Speaker 10: everyone is looking for is certainty. And we certainly know
Speaker 10: that the President has an aggressive agenda to try to
Speaker 10: make a strong economy for US consumers, but the lack
Speaker 10: of certainty actually creates.
Speaker 5: Something that feels quite the opposite.
Speaker 10: When restaurants are dealing with how to navigate different pricing,
Speaker 10: supply chain problems, tear iff price increases, changing from day
Speaker 10: to day. That definitely gets to be a bit of
Speaker 10: a challenge for restaurants trying to serve consumers that are
Speaker 10: looking for that certainty.
Speaker 6: You know, one thing that we're seeing certain about is immigration,
Speaker 6: And this note from Torsten Slock at Apollo this morning
Speaker 6: really caught my attention, he said. He writes, from twenty
Speaker 6: twenty two to twenty twenty four, net immigration was around
Speaker 6: three million people per year, the CBO forecasting that annual
Speaker 6: immigration at twenty twenty five and twenty twenty six will
Speaker 6: be around five hundred thousand people. Torston writing quote, this
Speaker 6: has important consequences for labor supply, wage growth, and housing demand.
Speaker 6: From a labor supply issue that affects your members, but
Speaker 6: also from a customer's perspective that affects your members. Which
Speaker 6: one is harder for the restaurants in the US right now.
Speaker 6: Is it the lack of workers from immigration? Yeah, that
Speaker 6: customers from immigration.
Speaker 5: That feels like a Hobson's choice.
Speaker 10: So, without a doubt, the restaurant industry really cares about
Speaker 10: ensuring that we've got enough workforce to help provide that
Speaker 10: great hospitality that makes people love restaurants. And there's nine
Speaker 10: hundred and eighty eight thousand open positions in restaurant and
Speaker 10: hospitality this month.
Speaker 5: So we need workers.
Speaker 10: And this is why it's been a significant issue for
Speaker 10: us to push for immigration reform. We need more legal
Speaker 10: pathways for guest worker programs, more opportunities.
Speaker 5: For people to come in and do this.
Speaker 10: Work even as a guest worker, in a legal, documented fashion.
Speaker 10: And so getting to that solution is something we're really
Speaker 10: pushing for for Congress because we need to get people
Speaker 10: in jobs in restaurants well, the constomers need it.
Speaker 2: Well. Big problem that's a lot of workers that aren't
Speaker 2: that the industry needs. Is the White House listening. Are
Speaker 2: members of Congress listening?
Speaker 5: We never feel like they're listening enough on immigration, so
Speaker 5: they're always seems.
Speaker 2: Are they listening less than maybe they were in years past,
Speaker 2: recent years.
Speaker 10: Past, this has been a difficult issue. In fact, some
Speaker 10: would call this the third rail in terms of issues
Speaker 10: that Congress deals with. For decades, frankly, and we get
Speaker 10: close often, but we need to get it across the
Speaker 10: finish line. And so that's really what we're pushing, is
Speaker 10: it's time for them to realize that it has to
Speaker 10: provide some legal pathways because we're seeing I mean, those
Speaker 10: numbers that you're talking about with immigration coming down, I
Speaker 10: think we're going to see in twenty twenty five in
Speaker 10: reports I've read that this will be the first year
Speaker 10: that the US population will not have increased. And that's
Speaker 10: a significant impact on our workforce. And so we care
Speaker 10: a lot about making sure that we've got enough workers
Speaker 10: in the restaurant industry. You know, there's certainly a lot
Speaker 10: of places for technology to take jobs, but hospitality is
Speaker 10: still built on people and personal interactions. So we want
Speaker 10: those people to work in restaurants, and we want obviously
Speaker 10: a robust economy with lots of consumers that are coming
Speaker 10: in to enjoy those restaurants.
Speaker 2: Well, you know, and I just want to go back
Speaker 2: to the speech that President Trump gave last night, the
Speaker 2: primetime speech, and he talked a lot about immigrants and immigration,
Speaker 2: but he said a lot of the immigrants and forgive
Speaker 2: me and I should have the exact quote in front
Speaker 2: of me, but basically that a lot of the immigrants
Speaker 2: that are coming in are criminals, and so on, what's
Speaker 2: the restaurant industry's experience with immigrants who come into the
Speaker 2: United States? And I realized, there's legal, there's illegal. So
Speaker 2: I'm just but there's a lot of folks that maybe
Speaker 2: aren't legal that are in the restaurant industry that you
Speaker 2: might hear that kind of on the side. So I'm
Speaker 2: just curious about that commentary from the President and the
Speaker 2: reality of of what it really is all about.
Speaker 10: We don't think that that commentary tells the full story.
Speaker 10: And I think we want to start with a complete
Speaker 10: agreement that people that are breaking laws, especially those laws
Speaker 10: that are hurting Americans, really aren't as illegal immigrants certainly
Speaker 10: not a place for them here, and so creating a
Speaker 10: safe environment for Americans is really important. But there's a
Speaker 10: lot of people who are showing up every day, working hard,
Speaker 10: being reliable, taking care of their families, doing the right thing,
Speaker 10: mowing their law, all of those things that make your
Speaker 10: neighbor somebody that is friendly and reliable that.
Speaker 5: You want to see.
Speaker 10: And so this is why it's important to us that
Speaker 10: we push for more legal pathways to guestworker programs because
Speaker 10: those people need to be in our communities contributing. And
Speaker 10: obviously we need.
Speaker 5: To deal with the people that are breaking the laws.
Speaker 10: But for those people that want to work hard and
Speaker 10: show up and contribute to our economy, let's find a
Speaker 10: place for them to do that.
Speaker 6: Beef price is still up thirteen percent so far this year,
Speaker 6: though they're down from the highs that we saw in
Speaker 6: August and September of this year. We've spoken to you
Speaker 6: in the past and we've talked about inflationary concerns, but
Speaker 6: it hits restaurants different because the margins are so tight.
Speaker 6: What are the biggest costs right now for your members?
Speaker 10: So beef costs for sure. We're seeing a lot of
Speaker 10: fluctuation on seafood. One of the things that we're seeing
Speaker 10: in the data that we're trying to figure out is
Speaker 10: a lot of data is showing seafood as a protein
Speaker 10: price going down. But what our members are telling us
Speaker 10: from our survey work is that they're seeing increase seafood prices,
Speaker 10: and so there's a lot more we've got to figure
Speaker 10: out there. And I think this is a place where
Speaker 10: tariffs or the threat of tariffs is really hurting that
Speaker 10: supply chain, especially as whatever happened to be in the
Speaker 10: warehouse under a pre tariff price really starts to deplete.
Speaker 10: And so I think anytime you're looking at ros, that's
Speaker 10: going to be a place where people are concerned. And
Speaker 10: then anytime you're.
Speaker 5: Looking at any kind of vegetable.
Speaker 10: Or produce, we want to make sure that those tariffs
Speaker 10: stay off as well, because we can't produce in the
Speaker 10: United States the amount of produce that can we consume
Speaker 10: on a regular basis, and we certainly can't produce it year.
Speaker 5: Round, Michelle, not in DC in.
Speaker 6: The wind that is that is true, and even in California,
Speaker 6: doesn't you know, satisfy the entire country or provide for
Speaker 6: the entire country. Hey, before we let you go, we
Speaker 6: got to talk about cold hard cash, specifically the penny.
Speaker 6: I was surprised on our editorial call when our producer
Speaker 6: already said that this is a big issue for you guys.
Speaker 6: Costing your restaurants thirteen to fourteen million dollars monthly enforced
Speaker 6: rounding losses will explain what's going on with the penny.
Speaker 10: Well, it is certainly interesting and nobody really had on
Speaker 10: our BINGO card for twenty twenty five that we would
Speaker 10: be talking about penny shortages. But for some reason that
Speaker 10: we can't quite figure out, the FED has stopped c
Speaker 10: sculating pennies. So the Federal Reserve does a really important
Speaker 10: thing by keeping money and coins circulating around the country
Speaker 10: so that we've got the right level of those coins
Speaker 10: and bills in the right areas and regions, And right
Speaker 10: now they're not doing that with pennies, and so we're
Speaker 10: seeing pennage shortages, and so often consumers are coming in
Speaker 10: and paying cash. In fact, I think people would be
Speaker 10: surprised to know that one in four transactions and restaurants
Speaker 10: is a cash transaction. So people are coming in paying
Speaker 10: cash and often they can't get exact change. So that's
Speaker 10: creating a difficult situation for consumers. But also that difficult
Speaker 10: situation that you cited in the thirteen to fourteen million
Speaker 10: dollars a year in lost revenue for restaurants.
Speaker 2: Wow, that's a real number. It's interesting. My understanding is
Speaker 2: they stop mining them because I think it costs more.
Speaker 6: But this is different. This is the Federal Reserve in
Speaker 6: circulation versus the US not producing them.
Speaker 2: New ones, so they're amount of circulation.
Speaker 10: Yeah, there are three hundred million pennies that are in
Speaker 10: circulation right now in the US, and so there should
Speaker 10: be enough pennies rolling around that we can keep using
Speaker 10: pennies even though they are not mint.
Speaker 4: They check the couch cushions, that's right.
Speaker 6: My husband's for the washing machine. That's usually where they end.
Speaker 2: U TU bring up those pennies, It matters, and those
Speaker 2: single socks. Michelle, Thanks so much. Michelle Cosmo, President and
Speaker 2: CEO of the National Restaurant Association trade group for the
Speaker 2: restaurant industries.
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