Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
Speaker 1: news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Bloomberg Business Week reporters and editors,
Speaker 1: not to mention our hundred journalists and analysts more than
Speaker 1: a hundred and twenty countries. You can download Bloomberg Business
Speaker 1: Week on iTunes, SoundCloud, or Bloomberg dot com. You can
Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. Let's get into what is
Speaker 1: happening overseas and obviously is among the most read stories
Speaker 1: capturing a lot of attention moving markets, and it's those
Speaker 1: air strikes against Iran, the response both political and military.
Speaker 1: Nick Wadhams Joints, the State Department reporter for Bloomberg, joining
Speaker 1: us on the phone from Washington. He has been tracking
Speaker 1: this minute to minute. Nick, thanks so much for joining us,
Speaker 1: Thanks for having all right, so give us the latest here.
Speaker 1: We have a pretty good sense of what's happened over
Speaker 1: the last twenty four hours. What's happening now and where
Speaker 1: do we go? Well, what you're seeing now is the
Speaker 1: administration really now focusing on the messaging that follows what
Speaker 1: was an extremely bold and really unprecedented strike, an attack
Speaker 1: on a on a one of Iran's most prominent figures.
Speaker 1: One one official told me it was equivalent to killing
Speaker 1: the guy who was a combination of CIA director and
Speaker 1: Defense secretary rolled into one so and then to top
Speaker 1: it all off, it happened on Iraqi soil. Um. The
Speaker 1: US is saying that this was a defensive action, and
Speaker 1: they're really trying to put the emphasis on the fact
Speaker 1: that they believed that by killing customs Summani, they were
Speaker 1: saving American lives. Potentially hundreds of American lives were at risk.
Speaker 1: They're not telling us the details of that intelligence, but
Speaker 1: they are saying that there was an imminent threat to
Speaker 1: Americans in the region, um, and that that's why the
Speaker 1: strike was taken. So really trying to get away from
Speaker 1: the idea that this was an escalatory act on on
Speaker 1: the part of the president. Nick, I've read at least
Speaker 1: three articles today and um, you know, I'm in San
Speaker 1: Francisco and so we're all keeping our eyes on on technology.
Speaker 1: But I do hear from at least multiple articles that
Speaker 1: the way that Iran now retaliates is via a cyber attack.
Speaker 1: Are you hearing as well that if they do a
Speaker 1: measured response, would it be via cyber warfare. That's certainly
Speaker 1: one of the what's seen as being the most viable options.
Speaker 1: What's what's clear here is that if Iran chooses to respond,
Speaker 1: which the general consensus is that they will have to, um,
Speaker 1: the question is how and and the word that keeps
Speaker 1: coming up is asymmetry. So they obviously don't have the
Speaker 1: military might to take on the United States military head
Speaker 1: to head, but they can do other things. They can
Speaker 1: um attack American forces and officials who are in the region.
Speaker 1: They can attack American allies, they can attack oil infrastructure
Speaker 1: in countries like Saudi Arabia, as they've done before. And
Speaker 1: they also have a very advanced cyber warfare program, so
Speaker 1: that could be another way to do it. Uh, It's
Speaker 1: unlikely we would see the same sort of toe to
Speaker 1: toe m military action that the United States wage because
Speaker 1: they just don't really have that refined a capability to
Speaker 1: do that. So what we're looking for is in the
Speaker 1: days or months ahead, some sort of asymmetrical response, And
Speaker 1: indeed one of one of the ideas is that that
Speaker 1: would likely take the shape of a cyber attack, because
Speaker 1: that's one way they could be most disruptive. And so
Speaker 1: Nick and you alluded to this a bit a few
Speaker 1: minutes ago, but you know, sort of the messaging around
Speaker 1: this some sharp words from the other side of the aisle,
Speaker 1: the democratic side of the aisle, when it comes to Congress.
Speaker 1: What might we see upcoming in terms of the discussions
Speaker 1: in Washington about, you know, how the other branches of
Speaker 1: government and specifically the legislative branch need to get involved
Speaker 1: or should be involved going forward. Well, it really plays
Speaker 1: into this broader discussion or debate that's been going on
Speaker 1: for for years about you know, the quote unquote imperial presidency,
Speaker 1: the idea that the president himself just has an enormous
Speaker 1: amount of power to launch a military strike essentially at
Speaker 1: a time and place of his choosing, and regardless of
Speaker 1: whether it touches off a potential consulict or war, that
Speaker 1: doesn't have to consult Congress, even though it is um
Speaker 1: Congress's right to to be the one that declares war.
Speaker 1: So I think what you're going to see in the
Speaker 1: next couple of days is a real effort by this
Speaker 1: administration UH to present what it found or what it
Speaker 1: concluded was the intelligence that led it to act, UM
Speaker 1: to persuade Congress that um, it did so in a
Speaker 1: way that was justified and urgent and had to be
Speaker 1: done now, and that there was no time to go
Speaker 1: through other processes. Though of course, this administration, like others,
Speaker 1: has has shown that it's not particularly wedded to doing
Speaker 1: things UH in how in a way that we would
Speaker 1: define as being sort of according to proper procedures. So um,
Speaker 1: certainly a lot of demands from from Democrats in Congress
Speaker 1: that uh they be keyed in on on what that
Speaker 1: intelligence was. And then I think as that happens, we
Speaker 1: should start to see better and have a better sense
Speaker 1: of what exactly it was that made the President feel
Speaker 1: this was such an need. And Nick, what are you
Speaker 1: hearing about how else US officials the Trump administration is
Speaker 1: preparing for any sort of retaliation That you said is
Speaker 1: the consensus from Iran. Well, the big thing is that
Speaker 1: the US is is bolstering its military presence in the
Speaker 1: Middle East now, and they plan to send about three
Speaker 1: thousand more troops from the eighty second Airborne UH into Kuwait. Um.
Speaker 1: They had already deployed about seven troops to Quate earlier
Speaker 1: this week. Um, after the after an attack on the U. S.
Speaker 1: Embassy there. Um, So what what you're seeing here really
Speaker 1: is putting those forces in the region. Uh. The administration
Speaker 1: says this is to protect Americans, that they will be
Speaker 1: taking a defensive posture. Again, the insist this is not
Speaker 1: meant to be an escalatory action. Um, but there is
Speaker 1: really no one else who sees it that way. But UM,
Speaker 1: clearly there's a feeling even among American allies that this
Speaker 1: was a vastly escalatory action. All Right, Nick Wadams, thank
Speaker 1: you so much. Part of a global team that is
Speaker 1: keeping a close eye on this story, the implications, as
Speaker 1: we say, both military, politically, and financially and economically as
Speaker 1: this plays out in the coming days and weeks. We
Speaker 1: really appreciate your time, Nick, our State Department reporter joining
Speaker 1: us from Washington, d C. All Right, So drug pricing
Speaker 1: continues to be one of the hottest issues when it
Speaker 1: comes to consumers, when it comes to the markets, and
Speaker 1: when it comes to politics as well. Michael Ray joins us.
Speaker 1: He is founder and chief executive officer of r X
Speaker 1: Savings Solutions, joining us on the phone from Overland Park, Kansas. Michael,
Speaker 1: nice to have you with us. Likewise, good to be here,
Speaker 1: all right, So give us a sense of where we
Speaker 1: are when it comes to drug pricing. As the beginning
Speaker 1: of the year and the beginning of the year, I
Speaker 1: have to think, given that it's an election, your presidential
Speaker 1: election here, we're gonna be hearing a lot about drug
Speaker 1: pricing in that realm. It's also something that affects just
Speaker 1: about all of us. So where are we? Ah? Yeah,
Speaker 1: So I think you know, when we look back in
Speaker 1: the last decade, this has been a consistent theman issue
Speaker 1: really highlighted when when Trump won back in the end
Speaker 1: of sixteen and in the seventeen where you know, you
Speaker 1: had pharma companies coming in and taking social pledges to
Speaker 1: kind of do things a bit differently. In the subsequent
Speaker 1: years since we haven't really seen too much different. There
Speaker 1: have been some kind of tamped down percentage prices, but
Speaker 1: the number of increases is actually outpacing uh this year
Speaker 1: when you look at first three days in versus by
Speaker 1: over Michael, more drug price increases. Yeah, tell us why
Speaker 1: I understand the need to raise drug prices to invest
Speaker 1: in R and D find new cures. These drug trials
Speaker 1: are expensive. But why are we seeing what sounds like
Speaker 1: more drug pricing. It's higher than inflation, higher than last year.
Speaker 1: What's the balance? Yeah, it's a good question. I think
Speaker 1: that's the that's the you know, trillion dollar question that
Speaker 1: everyone's trying to answer. You know, there is um when
Speaker 1: when drug prices are expected in the market for public markets.
Speaker 1: Profitability certainly that's one driver. Um. You know, less profitability,
Speaker 1: uh doesn't mean less money for R and D or
Speaker 1: does it mean maybe less profits in the short term,
Speaker 1: but more in the long term. And what's really good
Speaker 1: for um, the pharma the pharma company long term? That's
Speaker 1: a question. I think we're very shortsighted um with what's
Speaker 1: going to up in next quarter, next year, and we're
Speaker 1: not looking five to ten years out in a lot
Speaker 1: of cases with the with the pharma company operation. Right,
Speaker 1: And have you seen sort of behavior markedly change in
Speaker 1: terms of economic financial decisions being made on the front
Speaker 1: lines by these companies in response to a lot more
Speaker 1: public and political pressure. Well, I think what we've seen
Speaker 1: from the large cap pharma companies is uh, you know,
Speaker 1: kind of consistently below ten price increases UM. There they're
Speaker 1: still quite a bit higher than inflation. And when you
Speaker 1: think about the compound effect of a nine nine increase
Speaker 1: over three years, you know, compounded that's much bigger than
Speaker 1: so you're still seeing um. You know, these high dollar
Speaker 1: products come to market with compounded rates of increase in
Speaker 1: pricing UM and and that ultimately just continues to strain
Speaker 1: the economy as a whole. Health plans, employers in and
Speaker 1: consumers certainly, who are the one that are carrying that burden? Michael.
Speaker 1: I'm based out here in San Francisco, and in about
Speaker 1: a week or two we will be heading over to
Speaker 1: the weston St. Francis where we're going to be at
Speaker 1: the JPMorgan Healthcare Conference. We have interviews with all of
Speaker 1: these big tech companies, Fiser, you name it, some of
Speaker 1: these big healthcare companies. What is the number one question,
Speaker 1: the number one theme we should be asking big drug
Speaker 1: companies when we're at that JP Morgan Healthcare conference. Well,
Speaker 1: I think that it's you know, it's a drug pricing
Speaker 1: is very complex. I mean, there's obviously the pharma company
Speaker 1: where things start, and there's a lot of intermediaries that
Speaker 1: go between production of a pharmaceutical and the end consumer, Um,
Speaker 1: who's who ends up taking it? So, you know, the
Speaker 1: big question is what is driving drug price increases? Is it,
Speaker 1: you know, the need to try to appease the public
Speaker 1: market from a profitability standpoint? Is it more money for
Speaker 1: R and D? Is it for other people in supply chain? Um?
Speaker 1: Those are all the questions that really need to be
Speaker 1: answered or didn't I think? UM? From a farmer perspective,
Speaker 1: they'll certainly have opinions on you know the at the
Speaker 1: end of the day, is it is it? Um? You know,
Speaker 1: what is the driver? Why would they take these increases consistently? Um?
Speaker 1: If they claim that there's no actual you know, net
Speaker 1: profitability by doing so, Um, then what would be the
Speaker 1: reason to to keep doing it? Where to leave it there?
Speaker 1: Michael Ree is founder and chief executive officer of our
Speaker 1: ex Savings Solutions. He joined us on the phone from
Speaker 1: Overland Park, Kansas. Next, Well, it's more connected world. For sure,
Speaker 1: We're more connected to our cars, but maybe less connected
Speaker 1: to each other by virtue of everything that's around us.
Speaker 1: Let's get into that and much more with the chief
Speaker 1: futurists over at Ford that Cheryl Connolly. She joins us
Speaker 1: on the phone from dearborn, Michigan. Cheryl, Happy New Year.
Speaker 1: Great to have you with us. Thanks, Happy New Year
Speaker 1: to you too. All Right, First of all, Taylor and
Speaker 1: I've been talking about this off air. You have a
Speaker 1: really cool job. I mean, that's fair to say. I
Speaker 1: do have a really really great job. I'm the chief
Speaker 1: teutist before I've done future work for the company for
Speaker 1: sixteen years and I've been with Forward for twenty four years.
Speaker 1: So it's a really really great uh gig. And it
Speaker 1: always surprises people when I tell them that my job
Speaker 1: is to look outside of the auto industry anything pertains
Speaker 1: specifically to automotive. Al Right, so you have recently put
Speaker 1: some thoughts out there. What was the thing that most
Speaker 1: intrigues you as you look ahead, especially as we think
Speaker 1: about twenty which feels like kind of a key year
Speaker 1: when it comes to our relationship with our cars. It is.
Speaker 1: It is a really big year. I mean, we're starting
Speaker 1: a new decade, and it's interesting because it causes me
Speaker 1: to reflect on the last decade. So I mentioned already,
Speaker 1: I've done this work for sixteen years, and we used
Speaker 1: to never talk about it publicly. It was considered top secret,
Speaker 1: prietory stuff. But eight years ago we decided to start
Speaker 1: publishing some of our thoughts, and the more we shared,
Speaker 1: the richer our insights became. So it's really great to
Speaker 1: have conversations like this with you and Taylor. But what
Speaker 1: I've seen over the last eight years is this constant
Speaker 1: theme surrounding trust and mistrust and business government media has
Speaker 1: never been higher. But what we see for is that
Speaker 1: the mistrust is starting to spill into our relationships. More specifically, loneliness.
Speaker 1: Loneliness is a global epidemic, and loneliness, you know, we'll
Speaker 1: think about loneliness kind of as a temporary state, but
Speaker 1: doctors actually say that loneliness doesn't just make you feel bad,
Speaker 1: it's bad for you. One surgeon general said that it
Speaker 1: is the equivalent of being obese or smoking fifteen cigarettes today. Wow,
Speaker 1: that is quite a statistic. You know. Another thing in
Speaker 1: your report, Cheryl, that really stood out to me is
Speaker 1: that fifty eight percent of adults say they feel like
Speaker 1: they want to fight climate change, yet less than half
Speaker 1: are actually taking action. We think green transportation methods like
Speaker 1: electric cars or public transportation. Where are we in, you know,
Speaker 1: at least starting to get more on board with some
Speaker 1: of the EAVY driving methods. So what you're talking about
Speaker 1: is a trend that we call the green paradox. You know,
Speaker 1: everyone says that they're actively changing or fighting climate change
Speaker 1: in big ways and small but what we see is
Speaker 1: that most Americans are only willing to what I should
Speaker 1: say both. It's of Americans that we survey are only
Speaker 1: willing to embrace sustainable initiatives if the inconvenience is small
Speaker 1: or nonexistent. So how do we close the gap between
Speaker 1: intention and action? And some of it is that people
Speaker 1: just don't want to make trade offs. They want things
Speaker 1: to be simplified and easy. And e VS is tricky
Speaker 1: because well fifty six percent of the people we spoke
Speaker 1: to said more people should drive evs, only seventeen of
Speaker 1: the respondents actually they do, so that percentages remain really low.
Speaker 1: And we know that people don't fully understand the benefits.
Speaker 1: All they think is about is this tradeoff or compromise.
Speaker 1: So it's exciting because Board will introduce this year for
Speaker 1: the very first time in all electric new forward Mustang
Speaker 1: Mache Support utility vehicle. The most people recognize Mustang as
Speaker 1: a performance vehicle like a pony car um paddles to
Speaker 1: the metal wind at your hair convertible. So to think
Speaker 1: about that brand legacy apply to a sport utility vehicle
Speaker 1: that happens to be an evy totally changed your notion
Speaker 1: of what you get. In other words, for our customers,
Speaker 1: that means you can't have milogion ruscle. You don't have
Speaker 1: to compromise right. Well, and it's I'm so glad you
Speaker 1: brought that up because I have this sense for me
Speaker 1: reading your report, you sort of validate some things that
Speaker 1: I think we suspect, which is people sort of say
Speaker 1: one thing and do another, right, you know, they expect
Speaker 1: so much of a brand, and yet if it's the
Speaker 1: affordable choice, sir, it's the convenient choice, maybe they're going
Speaker 1: to go ahead and do that. Am I miss? Am?
Speaker 1: I missreading that In my two cynical about that, I'm
Speaker 1: sad to say that I share in your cynicism. I mean,
Speaker 1: you know, some of it is is that climate change
Speaker 1: in general is difficult because it doesn't evoke the fight
Speaker 1: or flight instinct. It's abstract, it feels distant, so we
Speaker 1: don't always take it as urgently as we should. But
Speaker 1: I hadn't experienced the summer where I traveled to South
Speaker 1: Africa and the public restrooms of a number of the
Speaker 1: restaurants and beating places I went to had shut off
Speaker 1: their faucets and ask people to use hand sanitizer instead.
Speaker 1: And it was just this reality. But like we talk
Speaker 1: about climate change as this distant thing um irregular weather patterns,
Speaker 1: but in a place like South Africa, they see it
Speaker 1: as a meaningful threat, in emminent threat to their food
Speaker 1: and water supply. Cheryl, I, I wanna get some of
Speaker 1: your thoughts because you mentioned, you know, Ford specifics push
Speaker 1: into the electric vehicle market to help combat some of
Speaker 1: the climate issues that you just addressed, you know, the
Speaker 1: Mustang or even hearing the F one fifty trying to
Speaker 1: revamp it's e V lineup as well. How do you
Speaker 1: view forward in the midst of the e V push.
Speaker 1: You know, we got numbers out of Tesla this morning.
Speaker 1: They just continue to dominate the e V space. Where
Speaker 1: do you see Ford sort of all in the EV
Speaker 1: pictures as playing a role. We actually really excited about
Speaker 1: our investment in this space. I mean Ford has um
Speaker 1: a long legacy of playing in the sustainability space, and
Speaker 1: that has everything to do with Bill Ford, who is
Speaker 1: the great grandson of Henry Ford and still actively involved
Speaker 1: with the company as the executive chair of our board.
Speaker 1: And he has said, I have two passions in my
Speaker 1: life their automobiles and their environment, and he has spent
Speaker 1: his forty year career trying to reconcile the conflict between
Speaker 1: the two, and so he was pushing us to start.
Speaker 1: You know, he was actually pushed for the EV program
Speaker 1: long before you could actually make a solid business case
Speaker 1: for it. But what you said, you know, is that
Speaker 1: not everyone wants to pay for it. There are those
Speaker 1: those people who see themselves as being like a deep
Speaker 1: green consumer, and then there are those who are less
Speaker 1: likely to jump on the bandwagon. But we have invested
Speaker 1: extraordinarily into our um EV program. We plan to develop
Speaker 1: develop new electric vehicles UM and we're working with partners
Speaker 1: new partners on this like rivian um to create new
Speaker 1: evs and Rivan is actually we've made a five million
Speaker 1: dollar investment with Rivan and rivian is bordered with Amazon
Speaker 1: to help deliver packages in the future. So we think
Speaker 1: that there's really big opportunity here right all right, Thank
Speaker 1: you so much. Haryl Connolly, Chief futurists over at Ford,
Speaker 1: she joins on the phone from dearborn, Michigan. All right, well,
Speaker 1: here in New York City, we care about a spit
Speaker 1: relatively small number of things. Real estate is a very
Speaker 1: important one of them, Let's be honest. Oh, Shrek Garmiel
Speaker 1: is real estate reporter for Bloomberg. She joins us on
Speaker 1: the phone from right here in New York City, O, Shrett,
Speaker 1: Happy new year. Great have you with us? Happy New year?
Speaker 1: Al Right, So what happened with Manhattan home sales? This
Speaker 1: has been quite something to watch over the past few years,
Speaker 1: because after that sky is the limit mentality for so long,
Speaker 1: it hasn't been quite that way, No, it hasn't. And
Speaker 1: I guess the top line number is Manhattan sales fell again.
Speaker 1: And you know they've been falling for almost every quarter
Speaker 1: for the last two years except for one. Um and
Speaker 1: so they felt but they fell by the smallest amount,
Speaker 1: you know, And so it feels like the new reality.
Speaker 1: It takes usually eighteen months to take and it's just
Speaker 1: that finally sellers are kind of realizing that they can't
Speaker 1: just name any price and expect to have people outbid them. Um,
Speaker 1: that you may have to actually lower your price, and
Speaker 1: so it was just reflects that deals are getting done, um,
Speaker 1: but the market is still flow Yeah. And what I
Speaker 1: liked about that is that if you're a seller and
Speaker 1: you're willing to acknowledge you have to come down a
Speaker 1: little bit in price, you're actually making buyers a little
Speaker 1: bit more encouraged and then they are coming to the table,
Speaker 1: right they are. And I think the tale of the
Speaker 1: tail for the last two years is that sales have
Speaker 1: been falling. They were falling like ten, eleven, twelve, very
Speaker 1: significant numbers, and that's because the buyers were just staying away.
Speaker 1: They weren't even bothering to bid. They just assumed that,
Speaker 1: you know, this is overpriced. Sellers would just you know,
Speaker 1: laugh them off, and so they just didn't transact. And
Speaker 1: so the markets for the week seller buyers are still
Speaker 1: very wary of overpaying. They're incredibly wary overpaying. But the
Speaker 1: fact that the sales drop is so low suggests that
Speaker 1: there's a meeting of the minds. It's not that wide anymore.
Speaker 1: And so when you look at the numbers, sort of
Speaker 1: a level down, what is selling better? You know, give
Speaker 1: us some price ranges for what seems to be moving
Speaker 1: better than others. Well, I guess New York price ranges
Speaker 1: are relative to the rest of the country. But in
Speaker 1: New York it's the under three million market, which actually
Speaker 1: New York is kind of work course housing, um. But
Speaker 1: under three millions where most of the sales were about
Speaker 1: eight percent of the sales UM. Which sounds great, except
Speaker 1: for New York has a very very large glut of
Speaker 1: luxury properties that was really where all the construction was
Speaker 1: um in the last five years and and still happening.
Speaker 1: So there's a there's a real oversupply of of of
Speaker 1: properties above five million UM. Not a majority of the
Speaker 1: sales were not happening there um, but but yeah, under
Speaker 1: three million is probably where things were more brisk UM. So,
Speaker 1: you know, some of the headwinds that we have discussed
Speaker 1: over the past couple of years are foreign buyer is
Speaker 1: not showing up in the way that they did before,
Speaker 1: or some of the tax changes that were predicted to
Speaker 1: have an impact and seemingly did. And then as you said,
Speaker 1: sort of this overbuilding that we saw on the luxury end,
Speaker 1: especially on the first to the foreign buyers and the
Speaker 1: tax changes, had those sort of ameliorated or have they
Speaker 1: just worked their way through the system. Where do we
Speaker 1: stand on those factors? Oh, those are still very much
Speaker 1: weighing on on the market. So foreign buyers, um, they were,
Speaker 1: they were a very big source of virus for for
Speaker 1: some of this, really this luxury product. People would come
Speaker 1: in pay cast I mean for a decade plus, right, yeah,
Speaker 1: and so and and some might still be there, but
Speaker 1: there's really no urgency. There's so much to buy UM
Speaker 1: and I think you know some of some of it.
Speaker 1: I mean, you have capital controls in some countries, so
Speaker 1: that making it harder to buy UM. So for the
Speaker 1: most part, they they're gone. UM. And then people who
Speaker 1: are left who might be buying this even as a pianetterror,
Speaker 1: you know, domestic buyers or pane terrors, or people who
Speaker 1: might want to live there. You've got I mean, you've
Speaker 1: got thousands and thousands of units to choose from. You
Speaker 1: are in no rush, You're gonna be you know, you
Speaker 1: you want to you want to bargain and and obviously
Speaker 1: making a bargain when you're dealing, we're making a deal
Speaker 1: when you're talking about a property that's ten million, twelve million,
Speaker 1: thirteen million dollars that that might take longer than maybe
Speaker 1: if you're buying a two million dollar property. Um so,
Speaker 1: so it's a very slow moving market. That's a very
Speaker 1: big factor. Tax law as a factor, um, both on
Speaker 1: the federal and on the state level. Um. On July one,
Speaker 1: New York State raised the closing costs um so, Basically,
Speaker 1: if you're buying and they made them the closing costs
Speaker 1: more progressive. So essentially the starting at two million dollars,
Speaker 1: you're paying a higher share of the closing costs in
Speaker 1: the mansion tax levies now a higher rate based on
Speaker 1: how expensive your property is. Then there's a transfer tax
Speaker 1: that also is higher. So the more expensive your property is,
Speaker 1: the higher your closing costs are. Um. And then there's
Speaker 1: still talk right now in Albany when when the legislature
Speaker 1: reconvenes of imposing a Pieta tear tax, which would be
Speaker 1: an annual tax on second home properties five million and more.
Speaker 1: So there's probably some fear of that happening. Um So,
Speaker 1: there's still a lot of a lot of impact on
Speaker 1: the market. Right all right, a great summary. Thank you
Speaker 1: so much for your reporting. Keenly watch for sure. Oh
Speaker 1: Shrek Carmiel is real estate reporter for Blueberg join us
Speaker 1: on the phone from New York City, talking Manhattan real
Speaker 1: estate road a journal. Yeah but you let me drive?
Speaker 1: Oh no, no, no no, no, please, I'll do the rod reveal.
Speaker 1: I want to drive a ball. Just drive, baby, the question,
Speaker 1: drive the drive to the globe community. Things well dry up,
Speaker 1: Jadn on Bloomberg Radio, and it is time for the
Speaker 1: Drive to the close. One of our faiths back with us.
Speaker 1: David Dietz, President and chief investment Strategies for Point You
Speaker 1: Wealth Management, looking after about six point six billion dollars,
Speaker 1: He joins us on the phone from Summit, New Jersey.
Speaker 1: Happy New year, Mr Deeds, Same to you, Jason. All right, well,
Speaker 1: nice to catch up with you. You know, it's funny,
Speaker 1: and I don't know if it's funny. It's interesting maybe
Speaker 1: that we have talked for so long, you and I
Speaker 1: and you and others and me and others about this
Speaker 1: notion of well, there's some geopolitical risk out there. Looks
Speaker 1: like we've got some geopolitical risk at this point. How
Speaker 1: does this play through the markets in your estimation? Well,
Speaker 1: certainly it is a wake up call for our all
Speaker 1: market participants to not be complacent. We've saw one of
Speaker 1: the best markets since two thousand thirteen. Last year, there
Speaker 1: may have been a hint of complacency in the markets.
Speaker 1: But following the taking out of Iranian general last night,
Speaker 1: UM and what the implications that would that could ultimately
Speaker 1: have to the energy markets and peace in the world.
Speaker 1: UM Marcus reacted strongly, and I think people realize that
Speaker 1: if they were too far out on their skis, if
Speaker 1: they hadn't taken in consideration, what could happen. UH, they
Speaker 1: were under tremendous pressure today. And David is you take
Speaker 1: a look at the moves today, particularly the socks here
Speaker 1: down one point six percent? Is this a buying opportunities
Speaker 1: there's finally a little bit of a pullback. Given everyone
Speaker 1: consensus is stocks post another decent year, So it could
Speaker 1: be a buying opportunity. It really depends where your portfolio is.
Speaker 1: I'm afraid that awful lot of people are coming into
Speaker 1: this year very overweight stocks and underweight safer haven's, and
Speaker 1: for them it's probably not a buying opportunity because to
Speaker 1: the extent that UM the risk that they're taking is
Speaker 1: inconsistent with the type of shocks that periodically market experience
Speaker 1: like today, UM is a chance to perhaps to rethink
Speaker 1: where you are and take some chips off the table
Speaker 1: from the risk assets. On the other hand, if you've
Speaker 1: been sitting in cash or have been too conservative, this
Speaker 1: is probably an opportunity to take advantage of pullbacks and
Speaker 1: stocks because I think that this is not derailing some
Speaker 1: very solid fundamentals as we come into two thousand twenty,
Speaker 1: and so talk to us about those fundamentals, because obviously
Speaker 1: earnings is at the core of all of this, and
Speaker 1: you've you've mentioned that. But what do we expect, especially
Speaker 1: as we're getting into earning season in just a few
Speaker 1: in a matter of weeks and maybe even days. Yeah,
Speaker 1: absolutely so. Uh. You know, the backdrop, of course is
Speaker 1: a very dubbish fed and of course some positive what
Speaker 1: we believe to be resolutions to a number of trade
Speaker 1: dispeech worldwide. Um. You know what we have though, with
Speaker 1: the higher valuations, which I guess can be justified because
Speaker 1: the lower interest rates. UM, what we need here is
Speaker 1: strong corporate earnings to take the market to the next level. UM.
Speaker 1: This past year, earnings were close to However, analysts looking
Speaker 1: forward to see earnings up corrupt ten percent, so evaluations
Speaker 1: meeting multiple for those earning state constant earnings increase ten percent,
Speaker 1: the market go up ten percent. Having said that, we're
Speaker 1: more conservative than that. We see earnings actually coming down
Speaker 1: as the year progressive as people get more realistic. So
Speaker 1: we're advising our investors, gee, maybe six to eight percent
Speaker 1: earnings growth, which might give you a market at the
Speaker 1: end of the year up about six eight percent. And so, David,
Speaker 1: we love talking names with you, and I want to
Speaker 1: bring in one name that Taylor and now we're talking
Speaker 1: about just a few minutes ago, which is Wells Fargo.
Speaker 1: I asked you about it every time and and the
Speaker 1: context I want to ask it in today is you've
Speaker 1: got a record number of are a a high number,
Speaker 1: the highest in quite some time of cell ratings for
Speaker 1: Wells Fargo. Maybe not the enthusiasm that Charlie Scharff is
Speaker 1: looking for. What's your case for Wells Fargo at this moment? Well, um, so,
Speaker 1: we actually are Bollosh and Wells Fargo and it's one
Speaker 1: of our top ten stocks for two thousand twenty. I'll
Speaker 1: put that out there. Now. Why are we bullish? First
Speaker 1: of all, it's one of the best franchises UH in
Speaker 1: the country coast to coast, which gets in the most
Speaker 1: efficiencies for advertising and marketing and so forth. Um. Second,
Speaker 1: they have traditionally been conservative underwriters of debt and so
Speaker 1: therefore to the extent that we're getting near the end
Speaker 1: of the economic cycle and you need to pay attention
Speaker 1: to credit quality there right there with you. Um. They
Speaker 1: also have a low exposure to investment banking and bond
Speaker 1: trading activities, which have often gotten other financial institutions cross
Speaker 1: wise when things got volatile. Um. And so you know, uh,
Speaker 1: you've also got a decent dividend of about four percent.
Speaker 1: What is the key issue? The key issue now is
Speaker 1: they've got a new leader who from the Bank of
Speaker 1: New York, but not quite as proven as some of
Speaker 1: the legacy leaders. Um. And Second, of course, you still
Speaker 1: have the Federal Reserve which has ring fence the growth
Speaker 1: of Wells Fargo until they show some changing cultures. But
Speaker 1: that ultimately Jason could be one of the catalysts for
Speaker 1: a better Wells Fargo if the Federal Reserve lifts. At Finally,
Speaker 1: I think interest rates could be moving higher. That means
Speaker 1: net interest spreads expand. In this manna from heaven for financials.
Speaker 1: David another stock they caught my eyes Fiser. I'm heading
Speaker 1: over to the JP Morgan Healthcare Conference in a few
Speaker 1: weeks right over here at the uh St Francis in
Speaker 1: San Francisco. What do you like about FISER given they've
Speaker 1: had what's been relatively anemic recent sales growth. Well, so, Taylor,
Speaker 1: there's there's there's a number of problems for the whole
Speaker 1: healthcare sector. You know. Right at the top, of course
Speaker 1: is the political scene where politicians and both sides that
Speaker 1: are are very concerned about the rapid rise in healthcare costs.
Speaker 1: But nevertheless, when the time gets tough, go with the
Speaker 1: biggest player. And I think um Fiser has two key
Speaker 1: advantages that UM puts them, has to put them in
Speaker 1: your portfolio. One, of course, is they spend more than
Speaker 1: anyone else on research and development, and is the type
Speaker 1: of business where the more shots on goal, the more
Speaker 1: you're doing, the more likely you're going to find that
Speaker 1: blackbuster drug for cancer or whatever. Second, you know, they
Speaker 1: have the largest salesforce not just in this country, but worldwide.
Speaker 1: And of course a lot of the increase in spending
Speaker 1: is going to come from outside this country which want
Speaker 1: to enjoy some of the great health care that we
Speaker 1: have in this country, I'll be not inexpensive. Um, so
Speaker 1: I think they are very well positioned. Of course, Why
Speaker 1: you're waiting for things to get better, for new discoveries
Speaker 1: to be out there. You have a different end that's
Speaker 1: approaching four percent. It is a so called dog of
Speaker 1: the down this year, one of the top ten yielders.
Speaker 1: So I think you are well paid to wait and
Speaker 1: be patient here, all right, David did is always good
Speaker 1: to catch up with you, President and chief investment Strategies.
Speaker 1: For a point, you Wealth Management looking after about six
Speaker 1: point six billion dollars there in Summit, New Jersey. That's
Speaker 1: where he joined us. Thanks for listening to Bloomberg Business Week.
Speaker 1: You can subscribe to the podcast on iTunes, SoundCloud, or
Speaker 1: Bloomberg dot com. You can also listen to our radio
Speaker 1: show every weekday at two pm Eastern only on Bloomberg
Speaker 1: Radio m