WEBVTT - Trump’s Auto Tariffs, Threats on Allies Intensify Trade War 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.920 --> 0:00:13.240 This is Bloomberg business Week Daily reporting from the magazine 0:00:13.240 --> 0:00:17.840 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.880 --> 0:00:22.760 and trends shaping today's complex economy. Plus global business finance 0:00:22.800 --> 0:00:26.520 and tech news as it happens. The Bloomberg Business Weekdaily 0:00:26.640 --> 0:00:31.720 Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:33.400 --> 0:00:36.760 Let's get to the latest on trade. Certainly those trade 0:00:36.800 --> 0:00:39.879 tariffs that we keep seeing coming from the White House, 0:00:39.920 --> 0:00:43.199 the latest US trade salvo continuing to be dissected today 0:00:43.440 --> 0:00:46.560 President Trump signing a proclamation that happened Wednesday at the 0:00:46.600 --> 0:00:49.680 White House to implement a tariff on auto imports and 0:00:49.680 --> 0:00:52.839 pledged harsher punishment on the EU in Canada if they 0:00:52.960 --> 0:00:55.680 join forces against the United States, expanding a trade war 0:00:55.720 --> 0:00:58.160 and really triggering some threats of retaliation. 0:00:59.360 --> 0:00:59.840 Well, we're going. 0:00:59.840 --> 0:01:00.560 To be doing. 0:01:00.720 --> 0:01:03.560 Is a twenty five percent tariff on all cars that 0:01:03.600 --> 0:01:05.759 are not made in the United States, if they're made 0:01:05.760 --> 0:01:09.000 in the United States, is absolutely not terror. We start 0:01:09.040 --> 0:01:10.840 off with a two and a hared percent base, which 0:01:10.880 --> 0:01:14.080 is what we were at, and we go to twenty 0:01:14.120 --> 0:01:14.679 five percent. 0:01:14.800 --> 0:01:17.440 This is going to lead to the construction of a 0:01:17.480 --> 0:01:20.520 lot of a lot of plants, a lot of this case, 0:01:20.600 --> 0:01:24.240 auto plants, and you're gonna see numbers like you haven't 0:01:24.280 --> 0:01:25.800 seen all right. 0:01:25.720 --> 0:01:27.759 That, of course was President Trump yesterday at the White 0:01:27.760 --> 0:01:30.560 House with more. Let's head there and to Bloomberg new 0:01:30.600 --> 0:01:34.679 senior reporter Jennifer Delowey, who is at the White House 0:01:34.800 --> 0:01:38.160 at this hour. Jen, lay it all out for our 0:01:38.200 --> 0:01:42.160 Bloomberg audience. How the tariffs roll out, what's the latest 0:01:42.200 --> 0:01:43.880 and are there any exemptions? 0:01:44.720 --> 0:01:47.680 Right? So, the way these are constructed under the proclamation 0:01:47.760 --> 0:01:51.680 that the President signed yesterday, they will initially hit fully 0:01:51.720 --> 0:01:55.280 assembled vehicles and that will start essentially on April third. 0:01:55.280 --> 0:01:57.560 The tariffs will be collected starting at twelve oh one 0:01:57.600 --> 0:02:02.440 am that morning. They will eventually as soon as May third, 0:02:02.560 --> 0:02:06.280 or by May third, start covering imported parts as well. 0:02:06.320 --> 0:02:09.359 So you know your engines, your transmissions, your auto components. 0:02:09.480 --> 0:02:11.760 The idea of being there is that, you know, White 0:02:11.800 --> 0:02:16.560 House Trade advisors, the President believe that the US, you 0:02:16.560 --> 0:02:18.640 know it was doing a lot of assembly of foreign 0:02:18.680 --> 0:02:22.320 made components in its autoplants, and not enough a generation 0:02:22.440 --> 0:02:25.040 of those high value parts themselves. So the idea of 0:02:25.080 --> 0:02:28.520 extending to parts is a bid to reshore more of 0:02:28.560 --> 0:02:32.000 the entire value chain. And importantly, while there is a 0:02:32.000 --> 0:02:36.440 bit of a temporary safety net for us MCA compliant 0:02:36.440 --> 0:02:40.119 trade from Canada and Mexico, it is only a very 0:02:40.160 --> 0:02:45.000 temporary reprieve. After the government decides the US government decides 0:02:45.040 --> 0:02:49.160 how to assess the US components of imported cars from 0:02:49.280 --> 0:02:53.720 those countries, it will essentially assess the levy on everything 0:02:53.760 --> 0:02:57.320 that is foreign about them. Even though obviously Canada and 0:02:57.919 --> 0:03:00.000 Mexico are part of a trade deal that was negotia 0:03:01.160 --> 0:03:02.440 in the first Trump term. 0:03:02.760 --> 0:03:06.480 Right then the president then who's the president now, made 0:03:06.520 --> 0:03:09.440 a really big deal about that USMCA back during the 0:03:09.480 --> 0:03:13.959 first term. We've seen the president already though, jen roll 0:03:14.080 --> 0:03:17.160 back tariffs that have been announced, especially with regard to 0:03:17.880 --> 0:03:20.919 our neighbor's closest to US. Is there any chance that 0:03:21.200 --> 0:03:23.840 over the next month these could not be implemented or 0:03:23.840 --> 0:03:24.760 they could be rolled back? 0:03:26.080 --> 0:03:26.320 You know? 0:03:26.880 --> 0:03:30.960 With this president, I think there's always a chance. We 0:03:31.040 --> 0:03:36.040 have clearly seen his willingness to negotiate tariffs, especially with 0:03:36.680 --> 0:03:40.200 Canada and Mexico. To be sure, the President yesterday in 0:03:40.200 --> 0:03:42.800 the Oval Office said emphatically that these are permanent, These 0:03:42.840 --> 0:03:46.680 will last his entire term. Even so, we now know that, 0:03:46.840 --> 0:03:49.000 you know, it's been reported that there was a call 0:03:49.040 --> 0:03:53.880 between Commerce Secretary Howard Lutnik and Ontario's premier, and after 0:03:53.960 --> 0:03:56.760 that the Globe and Mail reported that, you know, the 0:03:56.800 --> 0:03:59.960 province now expects the US to lessen the impact on Canada. 0:04:00.120 --> 0:04:02.880 So there's there's certainly a lot of effort by countries 0:04:03.240 --> 0:04:05.640 and companies that are being affected by these or expect 0:04:05.640 --> 0:04:08.360 to be affected, to get some kind of exemption or 0:04:08.400 --> 0:04:09.040 a dial down. 0:04:09.520 --> 0:04:12.280 So what else is coming next week in the way 0:04:12.280 --> 0:04:14.400 of tariffs. It's really hard, Tim and I laugh. I 0:04:14.440 --> 0:04:16.720 know Bloomberg has done a great job of like trying 0:04:16.720 --> 0:04:17.479 to keep it true. 0:04:17.560 --> 0:04:19.400 Keep tr have the Trump tariff tracker, I have it 0:04:19.480 --> 0:04:22.400 pulled up. It's a Bloomberg dot Com story. Right, google it, 0:04:22.520 --> 0:04:24.200 you'll get right to it. It's really perfect. 0:04:24.320 --> 0:04:26.599 But to say that it is really great, but it's 0:04:26.680 --> 0:04:29.280 like stuff still kind of is coming, and maybe more 0:04:29.279 --> 0:04:32.000 stuff is coming. So tell us what we should expect 0:04:32.040 --> 0:04:33.320 for you know, next week. 0:04:33.960 --> 0:04:36.359 I mean next week is very very big on the 0:04:36.400 --> 0:04:39.279 tariff front. The President has been talking about April second 0:04:39.640 --> 0:04:44.279 for weeks as being what he calls Liberation Day for America. 0:04:45.040 --> 0:04:51.320 He has promised retaliatory I'm sorry, reciprocal apologies. He has 0:04:51.920 --> 0:04:56.520 promised these reciprocal tariffs that will essentially reflect the levies 0:04:56.520 --> 0:04:59.479 that other countries impose on the US, both in terms 0:04:59.520 --> 0:05:02.359 of direct tariffs, but also things like a value added 0:05:02.440 --> 0:05:05.880 tax or even you know, regulations that act to deter 0:05:06.360 --> 0:05:09.159 the import of US goods into their countries. So the 0:05:09.240 --> 0:05:11.600 idea is that those would be set to reflect kind 0:05:11.600 --> 0:05:14.200 of what, as he puts it, what they charge us 0:05:14.320 --> 0:05:18.200 will charge them. Yesterday he did signal some you know, 0:05:18.720 --> 0:05:21.680 willingness to be maybe more lenient. He actually said, you know, 0:05:21.720 --> 0:05:24.680 these will be more lenient than people are expecting, so 0:05:25.040 --> 0:05:28.120 we'll see, we'll stay tuned. He also indicated that they 0:05:28.160 --> 0:05:31.440 would hit all countries right away, as opposed to just 0:05:31.480 --> 0:05:34.240 focusing on what he has considered the worst defenders, the 0:05:34.279 --> 0:05:37.400 folks he calls the Dirty fifteen or also, by the way, 0:05:37.440 --> 0:05:42.800 expecting sectoral tariffs. He has threatened those on pharmaceutical imports, 0:05:42.839 --> 0:05:47.000 on imports of lumber, and on imports of semiconductors and chips. 0:05:47.640 --> 0:05:50.520 It isn't clear how those and when those will all 0:05:50.520 --> 0:05:53.560 be rolled out, but yesterday the President indicated that lumber 0:05:53.680 --> 0:05:55.480 is likely next week. 0:05:55.600 --> 0:05:59.920 Well, perhaps to throw another I don't know, another variable 0:06:00.080 --> 0:06:03.480 in here. China and TikTok and the way that there 0:06:03.680 --> 0:06:06.880 could be a rollback in tariffs are partly as a 0:06:06.880 --> 0:06:10.920 result of a negotiation strategy with TikTok. President Trumps that 0:06:10.960 --> 0:06:14.120 he would consider lowering tariff rates imposed on China secure 0:06:14.120 --> 0:06:16.680 Beijing support for that sale of TikTok's US operations to 0:06:16.680 --> 0:06:19.080 an American company. What do we know about that? How 0:06:19.120 --> 0:06:22.320 would that work? Is this just a negotiating strategy? 0:06:23.160 --> 0:06:26.599 You know, I think Trump clearly has shown that he 0:06:26.760 --> 0:06:30.680 sees tariffs as not just an economic tool and not 0:06:30.920 --> 0:06:33.160 just a tool of US geo political might, but really, 0:06:33.400 --> 0:06:37.080 you know, an opportunity to exact concessions from other countries 0:06:37.360 --> 0:06:39.840 and on China. Of course, you know, he is trying 0:06:39.839 --> 0:06:42.479 the US government is trying to you know, shepherd a 0:06:42.560 --> 0:06:45.839 deal that would allow for the sale of TikTok to 0:06:45.920 --> 0:06:49.359 a US company. That deadline under a law that Trump 0:06:49.400 --> 0:06:52.080 extended the deadline for. You know, he hits April fifth. 0:06:52.160 --> 0:06:55.360 Yesterday he said, look, I'm willing to maybe I'd be 0:06:55.400 --> 0:06:58.640 willing to shave some of their levies a little bit 0:06:58.680 --> 0:07:01.480 shave the tariffs on China if they agree to the deal, 0:07:01.520 --> 0:07:04.320 because there is some kind of China approval component here. 0:07:05.000 --> 0:07:07.520 You know, how that actually works, we'd have to see, 0:07:07.560 --> 0:07:09.800 but I think it's quite clear. You know, there are 0:07:09.880 --> 0:07:12.600 concessions he wants from China on an array of fronts, 0:07:12.600 --> 0:07:16.720 including drug trade and TikTok. Maybe something he's willing to 0:07:16.760 --> 0:07:17.400 negotiate on. 0:07:17.800 --> 0:07:20.480 Is it just kind of always live In other words, 0:07:20.720 --> 0:07:22.720 there could be more, there could be less. We just 0:07:22.800 --> 0:07:24.800 that's kind of the environment, at least right now that 0:07:24.800 --> 0:07:25.160 we're in. 0:07:26.280 --> 0:07:28.520 It's very fluid. I mean, even yesterday there was a 0:07:28.520 --> 0:07:31.840 lot of fluidity around the scope of the autotiffs. Before 0:07:31.880 --> 0:07:33.960 it was signed. We didn't know if it was going 0:07:34.040 --> 0:07:35.200 to be parts. We didn't know if it was going 0:07:35.240 --> 0:07:37.680 to be fully assimbled vehicles. And you know, even after 0:07:37.720 --> 0:07:40.760 these things are put in place, they can be changed 0:07:40.840 --> 0:07:44.960 many many times over. Fluid, unpredictable. That's where we. 0:07:44.920 --> 0:07:47.960 Are, fast moving river. That's what it feels like. All right, Jed, 0:07:48.040 --> 0:07:50.080 thank you as always. We know you are super busy 0:07:50.120 --> 0:07:53.960 as well. Bloomberg New senior reporter Jennifer Delowey joining us 0:07:54.000 --> 0:07:56.960 certainly from the White House all right, latest on tariffs. 0:07:56.960 --> 0:07:58.440 Now we want to kind of get to so what 0:07:58.480 --> 0:08:01.120 does this mean potentially for the US economy? 0:08:01.280 --> 0:08:02.800 This on a day when we got another read on 0:08:02.840 --> 0:08:05.480 the US economy for the final quarter of twenty twenty four. 0:08:05.520 --> 0:08:08.160 For more, let's go to Bloomberg Economics US economist Stort 0:08:08.160 --> 0:08:10.960 Paul he joins us here in the Bloomberg BusinessWeek studio 0:08:11.000 --> 0:08:13.080 a lot of places to start. We could start with 0:08:13.360 --> 0:08:17.760 fourth quarter GDP Weekly Jobless core PCE. We got an 0:08:17.800 --> 0:08:20.080 important inflation print tomorrow, the one that the FED really 0:08:20.080 --> 0:08:23.640 cares about. Does any of this matter when we continue 0:08:23.680 --> 0:08:28.240 to see a president change his mind on tariffs or 0:08:28.280 --> 0:08:31.560 impose more tariffs and really appear not to be done 0:08:31.680 --> 0:08:32.480 with that process. 0:08:33.320 --> 0:08:36.520 GDP doesn't matter as much, The unemployment insurance claims don't 0:08:36.559 --> 0:08:40.000 matter as much. I do think that the core inflation 0:08:40.200 --> 0:08:42.920 and spending items do matter a lot. So tomorrow we're 0:08:42.960 --> 0:08:45.560 going to get the February core PC inflation report, the 0:08:45.559 --> 0:08:47.319 Fed's preferred measure of prices. 0:08:47.640 --> 0:08:48.480 We're expecting to. 0:08:48.400 --> 0:08:51.280 See zero point three five percent month on month core inflation. 0:08:51.360 --> 0:08:53.800 That's about double the pace the FED needs to run 0:08:53.840 --> 0:08:56.199 to get back to its two percent inflation target, and 0:08:56.240 --> 0:08:58.520 we're also going to see a major surgeon spending, in 0:08:58.600 --> 0:09:02.400 part on the back of audit which were auto sales 0:09:02.400 --> 0:09:06.120 were terrible in January, major rebound in February. Why does 0:09:06.160 --> 0:09:08.360 it matter? Folks are looking out in the world and 0:09:08.400 --> 0:09:11.280 they're expecting to see tariffs hit, and they're pulling forward 0:09:11.280 --> 0:09:15.240 their buying plans, so in anticipation of future prices tomorrow, 0:09:15.559 --> 0:09:19.920 they're spending more today, which actually generates the inflation that 0:09:19.960 --> 0:09:23.600 they're expecting to see tomorrow. Separate and apart from the separate, 0:09:23.640 --> 0:09:27.760 apart from the cost push effects of higher tariffs. So yeah, 0:09:27.800 --> 0:09:30.000 if you're the Fed, if you're consumers, if you're looking 0:09:30.000 --> 0:09:33.120 at the broad macro data, things like inflation and spending 0:09:33.240 --> 0:09:35.880 still do matter, separate apart from what's going on in 0:09:35.920 --> 0:09:36.200 the West. 0:09:36.280 --> 0:09:37.800 You were telling me you're going to go buy six 0:09:37.880 --> 0:09:41.960 cars this weekend. Yeah, so then you get before something 0:09:42.200 --> 0:09:44.319 Saturday is going to beautiful data walk a lot. 0:09:44.640 --> 0:09:46.439 Well, you know, I've been thinking about this, like, how 0:09:46.480 --> 0:09:49.640 do you as economists and you look at the US economy, 0:09:50.160 --> 0:09:52.200 you know, what's the rule of thumb when it comes 0:09:52.240 --> 0:09:55.480 to tariff'scope this much? This is what happens to the 0:09:55.600 --> 0:09:58.040 US economy, or this is what happens to inflation? Do 0:09:58.120 --> 0:09:59.080 you how do you play sure? 0:09:59.120 --> 0:10:01.439 So we have a broader models, We use a whole 0:10:01.440 --> 0:10:03.760 host of different methodologies, but what it really comes down 0:10:03.800 --> 0:10:06.320 to is looking at the size of the market that's 0:10:06.360 --> 0:10:09.520 being tariffed, the size of the industry that's being tariff 0:10:09.800 --> 0:10:13.240 the effective tariff rate, how much our effective tariff rate 0:10:13.320 --> 0:10:17.000 across all imported goods moves, and then we map that 0:10:17.120 --> 0:10:19.320 to GDP growth into inflation. So if we look at 0:10:19.320 --> 0:10:22.400 what happened with autos yesterday, our effective tariff rate is 0:10:22.440 --> 0:10:25.640 going to go up about two percentage points. Not huge. 0:10:25.679 --> 0:10:27.480 We're still going to be running at an effective tarif 0:10:27.520 --> 0:10:30.200 rate of just about five percent, not a big deal. 0:10:31.040 --> 0:10:34.840 What it does do is take about two percentage points, sorry, 0:10:35.160 --> 0:10:38.480 zero point two percentage points off a full year of growth, 0:10:38.520 --> 0:10:41.120 and it boosts core inflation by about zero point one 0:10:41.160 --> 0:10:44.800 percentage points. If we think about reciprocal tariffs and what 0:10:44.840 --> 0:10:48.360 it could mean in the extreme, if we're looking at 0:10:48.679 --> 0:10:51.960 value added taxes, if we're looking at non tariff measures, 0:10:52.000 --> 0:10:55.360 and we're matching tariff rates with our major our top 0:10:55.400 --> 0:10:59.760 fifteen trading partners, that's an effective tarifyrate of about thirty 0:10:59.760 --> 0:11:03.600 five five percent, not five percent, thirty five percent, which 0:11:03.640 --> 0:11:06.520 will shave off about four percentage points from growth over 0:11:06.559 --> 0:11:10.600 about three years. So when you start mapping into the aggregate, 0:11:10.640 --> 0:11:12.160 it could get to be some pretty big numbers. 0:11:12.200 --> 0:11:14.920 So how do you map that against this idea that 0:11:14.960 --> 0:11:18.240 the President has, which is, if we impose these tariffs, 0:11:18.440 --> 0:11:20.400 we will see a return of manufacturing back to the 0:11:20.520 --> 0:11:23.439 United States, We'll see more economic activity in the United 0:11:23.480 --> 0:11:25.480 States as a result. Do you map that out? 0:11:25.960 --> 0:11:30.959 We do the hit that consumers take and the consequences 0:11:30.960 --> 0:11:34.280 for consumption, it tends to matter more than the investment 0:11:34.320 --> 0:11:37.959 implications of trying to reshore additional manufacturing getting people back 0:11:37.960 --> 0:11:41.680 to work. This is part of the problem with tariffs 0:11:41.679 --> 0:11:44.520 in general, is that some of the benefits, like investments, 0:11:44.559 --> 0:11:47.280 some of the benefits to auto producers, for example, are 0:11:47.400 --> 0:11:50.920 very concentrated, but the costs are actually very diffuse, and 0:11:50.960 --> 0:11:54.040 when they start racking up across the entire economy, they 0:11:54.040 --> 0:11:55.520 get to be some pretty big numbers. 0:11:55.559 --> 0:11:57.360 One of the things I keep thinking about, Stuart, is 0:11:57.400 --> 0:11:59.920 that as we look to bring more manufacturing back to 0:12:00.120 --> 0:12:03.079 the United States, I mean, and I keep kind of asking, 0:12:03.120 --> 0:12:05.000 do we want to be a manufacturer of shirts. Not 0:12:05.080 --> 0:12:07.360 that there's anything wrong with being a manufacturer of shirts, 0:12:07.520 --> 0:12:11.239 but what is better for an economy, a developed economy. 0:12:11.320 --> 0:12:14.960 Is it better to be a service led economy high tech? Like, 0:12:15.040 --> 0:12:17.760 what is it that's better from an economic standpoint for 0:12:17.800 --> 0:12:18.760 a developed country? 0:12:18.760 --> 0:12:22.040 Being a services oriented economy and being a consumption oriented 0:12:22.040 --> 0:12:24.240 economy is really what matters. And when that's the case, 0:12:24.280 --> 0:12:26.640 you want to have a low You want to have 0:12:26.960 --> 0:12:29.840 low imported goods costs, right, you want costs to be 0:12:29.920 --> 0:12:33.320 relatively low. But there are four different factors I think 0:12:33.360 --> 0:12:37.520 at least that are in play when thinking about what 0:12:37.679 --> 0:12:41.319 could be motivating tariff policy. Right, you have typical vintage 0:12:41.360 --> 0:12:44.200 trump Ism, going back to the eighties where he's just 0:12:44.240 --> 0:12:46.560 looking at the trade balance and wants to win. You 0:12:46.679 --> 0:12:50.040 advance Midwesternism I'm calling it, which is he looks out 0:12:50.080 --> 0:12:52.440 to the Midwest, sees the rust belt totally hollowed out, 0:12:52.480 --> 0:12:55.920 and says, cheap imported goods are not the American dream. 0:12:56.320 --> 0:12:59.640 We need to bring hope and revitalize the hour manufacturing 0:12:59.640 --> 0:13:02.880 base to give people jobs. You also have defensive on 0:13:03.080 --> 0:13:07.920 shoring of major pharmaceuticals, for example, medical supplies and that's 0:13:07.920 --> 0:13:10.520 a reason to onshore. And then finally you have this 0:13:10.679 --> 0:13:15.840 negotiating tactic, this sort of monopsonist sort of you know, 0:13:15.920 --> 0:13:18.560 we're the big market that everybody wants to sell into, 0:13:18.720 --> 0:13:21.719 so we could extract rents from other folks. When all 0:13:21.760 --> 0:13:25.200 of those motivations are in play, we're still going to 0:13:25.280 --> 0:13:30.000 see tariff policy flying around. We're still going to see 0:13:30.040 --> 0:13:34.560 these proposals separate apart from any sort of actual growth 0:13:34.559 --> 0:13:36.640 that we could generate. That's a secondary effect. 0:13:36.760 --> 0:13:39.720 In your view as an economist, does this America First 0:13:39.800 --> 0:13:44.080 agenda when it comes to manufacturing in the US does 0:13:44.120 --> 0:13:44.600 that work? 0:13:45.400 --> 0:13:47.679 Will it work in terms of generating growth? 0:13:47.760 --> 0:13:47.960 Yes? 0:13:48.360 --> 0:13:51.400 Fundamentally no, because if we think about the things that 0:13:51.600 --> 0:13:53.600 so Carol, as you mentioned, do we really want to 0:13:53.600 --> 0:13:56.400 be manufacturing shirts? Not that there's anything wrong with that, 0:13:56.440 --> 0:13:58.920 it's a low value good. It's not going to do 0:13:59.080 --> 0:14:02.720 very much. The benefit to us of the additional manufacturing 0:14:02.840 --> 0:14:06.800 jobs in low value goods like shirts probably isn't there. 0:14:07.240 --> 0:14:09.840 If you want to do some of Erica First defensive 0:14:09.960 --> 0:14:13.480 on shoring of things like semiconductors, the amount of revenue 0:14:13.520 --> 0:14:16.800 that you generate per job created, or let's flip the 0:14:16.880 --> 0:14:20.040 ratio and say how many jobs are created per million 0:14:20.120 --> 0:14:24.120 dollars of revenue generated. You actually employ relatively few people. 0:14:24.320 --> 0:14:27.560 So we're not gonna end up rebuilding a manufacturing industry 0:14:27.560 --> 0:14:29.640 that captures a large share of our labor force. It's 0:14:29.640 --> 0:14:30.400 just not gonna happen. 0:14:30.560 --> 0:14:33.240 Just twenty seconds because two, that's like the question I 0:14:33.280 --> 0:14:35.240 feel like, because we talk about the gaps that are 0:14:35.240 --> 0:14:36.960 here in the economy of the haves and have not, 0:14:37.160 --> 0:14:40.000 So what is it from an economists perspective, really helps 0:14:40.160 --> 0:14:43.840 the US economy benefit more in our society and just 0:14:43.840 --> 0:14:45.760 really quickly productivity growth. 0:14:45.880 --> 0:14:50.240 It's all productivity growth, not reversing the de industrialization of 0:14:50.280 --> 0:14:53.960 the past century. It's productivity growth. It's capitalizing on new 0:14:54.000 --> 0:14:57.280 ideas and innovations. And that's why the US has outperformed 0:14:57.320 --> 0:14:59.360 everybody else. It's mostly because of Silicon Valley and the 0:14:59.360 --> 0:15:01.440 development of modern finance. 0:15:01.040 --> 0:15:01.680 In the US. 0:15:02.120 --> 0:15:05.400 Killer stuff, So appreciate it. Stuart Paul. Yeah, that was 0:15:05.400 --> 0:15:07.760 like a masterclass, folks, you missed it downloaded. 0:15:07.960 --> 0:15:10.480 Check out his research at Bloomberg Economics. Read all of 0:15:10.520 --> 0:15:12.560 the team's research. They know what they're doing. 0:15:13.800 --> 0:15:17.400 You're listening to the Bloomberg Business Week podcast catch US 0:15:17.440 --> 0:15:20.880 Live weekday afternoons from two to five pm Eastern. Listen 0:15:20.920 --> 0:15:24.480 on Apple CarPlay and Android Auto with the Bloomberg Business app, 0:15:24.640 --> 0:15:26.400 or watch US Live on YouTube. 0:15:27.280 --> 0:15:28.400 Well, US mortgage. 0:15:28.120 --> 0:15:29.800 Rates in the United States felt for the first time 0:15:29.840 --> 0:15:32.560 in three weeks. Pending sales of US homes rebounded two 0:15:32.600 --> 0:15:36.400 percent in February, So that be a economist's estimates due 0:15:36.400 --> 0:15:39.240 to commer weather and a greater selection of houses. And 0:15:39.240 --> 0:15:41.040 then you might recall earlier in the week sales of 0:15:41.080 --> 0:15:43.840 new homes in the US bouncing back slightly last month. 0:15:45.200 --> 0:15:47.560 That was kind of after a rocky start to twenty 0:15:47.560 --> 0:15:51.160 twenty five, home builders benefiting again from better weather while 0:15:51.160 --> 0:15:54.320 also leading on generous sales incentives to stoke demand. 0:15:54.400 --> 0:15:58.080 Him Despite the rebound, homebuilders are cautious due to increased 0:15:58.080 --> 0:16:00.960 home supply, high mortgage rates prices, all so which may 0:16:01.040 --> 0:16:03.240 limit support for the economy. We got a great voice 0:16:03.240 --> 0:16:05.600 on this back with us as Katie Hubbard, Executi Vice 0:16:05.640 --> 0:16:08.240 president of Capital Markets at Walton Global. It's the privately 0:16:08.280 --> 0:16:11.120 owned asset in real estate investment company. It's got nearly 0:16:11.120 --> 0:16:14.000 four point four billion dollars of land under management and 0:16:14.040 --> 0:16:16.400 nearly ninety thousand acres under management here in the US. 0:16:16.480 --> 0:16:20.760 Walton Global operates in the retail, industrial, and commercial sectors. Katie, 0:16:21.000 --> 0:16:23.360 welcome back. It's good to see you. Usually you join 0:16:23.440 --> 0:16:25.240 us from out West. It's good to have you here 0:16:25.720 --> 0:16:29.200 in New York. Tell us why you're here, who you're 0:16:29.240 --> 0:16:32.120 talking to, and what the temperature is of the folks 0:16:32.160 --> 0:16:32.920 that you've been meeting with. 0:16:33.120 --> 0:16:35.480 Yeah, so specifically meeting with some of our clients and 0:16:35.520 --> 0:16:38.600 also just attending a private equity real estate conference, meeting 0:16:38.600 --> 0:16:40.920 with some of the top national homebuilders as well, and 0:16:41.000 --> 0:16:43.360 just getting the sentiment that homebuilders are still feeling very 0:16:43.400 --> 0:16:44.160 bullish right now. 0:16:44.280 --> 0:16:45.760 Why are they feeling bullish? 0:16:46.120 --> 0:16:49.200 People are really settling into that mid six percent mortgage 0:16:49.240 --> 0:16:49.720 rate and. 0:16:49.640 --> 0:16:52.280 Settling into mid six percent? Wow, didn't take I hear, 0:16:52.840 --> 0:16:54.680 I hear you say that could be worse. Yeah, it 0:16:54.680 --> 0:16:56.560 could be worse. It hasn't been worse, but it could 0:16:56.600 --> 0:16:57.920 get Okay, So why else? 0:16:58.600 --> 0:17:01.600 Yeah, just there's a there's also a land grab going 0:17:01.600 --> 0:17:04.800 on in most major markets because land is scarce, and 0:17:05.400 --> 0:17:08.440 home home purchasers are still out there looking to buy 0:17:08.480 --> 0:17:10.800 homes and people are really starting to come off of 0:17:10.840 --> 0:17:13.240 the sideline, so they want to be prepared to be 0:17:13.280 --> 0:17:15.520 able to control the land, to be able to build 0:17:15.560 --> 0:17:16.000 the homes. 0:17:16.400 --> 0:17:18.640 What makes home builders ultimately build. 0:17:19.320 --> 0:17:22.520 It's just it's a volume game. So the public homebuilders, 0:17:22.560 --> 0:17:25.160 they want to hit their numbers while protecting their margins. 0:17:25.400 --> 0:17:27.920 And as you mentioned, Carol earlier, you know, they are 0:17:28.000 --> 0:17:30.880 offering incentives still to keep those numbers going and so 0:17:30.920 --> 0:17:33.280 you can still you know, buy a brand new house 0:17:33.359 --> 0:17:37.720 and get a mortgage rate buydown. Sometimes they're offering appliance upgrades, 0:17:37.800 --> 0:17:40.639 you know, finishing kitchens with higher end granted, you know, 0:17:40.880 --> 0:17:43.720 offering incentives to keep the volume going. 0:17:44.000 --> 0:17:46.400 Because you know, I was thinking about you know, we were, 0:17:46.520 --> 0:17:49.360 you know, getting ready to talk with you. Earlier this year, 0:17:49.359 --> 0:17:51.280 Bloomberg put out a story and forgive, I'm just going 0:17:51.320 --> 0:17:54.719 to look at some notes here, and they said they 0:17:54.720 --> 0:17:57.080 were looking to the nation's current housing crisis, as I 0:17:57.080 --> 0:17:59.320 think was in January, and they talk about the lack 0:17:59.359 --> 0:18:02.120 of home building coming off of the Great Recession more 0:18:02.119 --> 0:18:05.399 than a decade ago, home construction never catching back up 0:18:05.400 --> 0:18:08.360 to the demand of a growing population. Zillow has put 0:18:08.400 --> 0:18:11.199 out some data, at least earlier this year, that the 0:18:11.280 --> 0:18:13.119 US has a shortage of about four and a half 0:18:13.320 --> 0:18:16.480 million homes. Is that still kind of where we are? 0:18:16.560 --> 0:18:19.479 And again I think about what really needs to happen 0:18:20.040 --> 0:18:25.240 for housing affordability and availability to kind of meet some 0:18:25.320 --> 0:18:26.400 of the demand that's out there. 0:18:26.560 --> 0:18:28.879 Absolutely, I mean there is a shortage. So depending on 0:18:28.880 --> 0:18:30.320 how you look at it could be you know, four 0:18:30.359 --> 0:18:33.159 to even six million homes short in the country. And 0:18:33.200 --> 0:18:35.639 so that's another thing that's keeping the builders going is 0:18:35.680 --> 0:18:38.720 that the demand is still there. The regulation makes it 0:18:38.760 --> 0:18:42.000 difficult for them to build. So that's something that administration can, 0:18:42.040 --> 0:18:43.320 the Trump administration can. 0:18:43.240 --> 0:18:44.600 Do remind us what that is. 0:18:44.720 --> 0:18:46.480 And so that means it's just there's a lot of 0:18:46.520 --> 0:18:48.919 bureaucracy and red tape when it comes to zoning and 0:18:49.000 --> 0:18:50.000 land development, so. 0:18:50.040 --> 0:18:51.159 That actually that's local. 0:18:52.040 --> 0:18:55.200 It is local. But what the Trump administration has talked 0:18:55.200 --> 0:19:00.000 about doing is incentivizing local jurisdictions to make it easier 0:19:00.160 --> 0:19:02.800 to build houses faster. And then if they can build 0:19:02.800 --> 0:19:05.760 them faster, they can ultimately build them cheaper. So they 0:19:05.800 --> 0:19:09.080 can offer federal funding and tax incentives to the local 0:19:09.119 --> 0:19:11.640 governments to bring to bring that down. So for example, 0:19:12.000 --> 0:19:14.840 in Portland, there was a developer who've got an infill 0:19:14.880 --> 0:19:19.000 lot and instead of rezoning it to build higher density. 0:19:19.160 --> 0:19:21.920 Just was able to build seven homes on one lot, 0:19:22.680 --> 0:19:26.080 and that's unique to Portland, but it's also an infill 0:19:26.200 --> 0:19:28.840 place where the land is expensive, and so just being 0:19:28.880 --> 0:19:31.560 able to offer that type of zoning where you can 0:19:31.560 --> 0:19:36.080 build more houses on smaller areas would bring down potentially 0:19:36.080 --> 0:19:38.600 bring down the cost. For example, in Houston, one of 0:19:38.640 --> 0:19:41.480 the largest home builders is building five hundred square foot 0:19:41.480 --> 0:19:45.480 homes detached, selling them for one hundred and eighty thousand dollars, 0:19:45.480 --> 0:19:47.399 and then you can do a two story version for 0:19:47.440 --> 0:19:49.600 you know, around two hundred thousand dollars, which works in 0:19:49.640 --> 0:19:52.080 Houston because there's really no zoning laws and the demand 0:19:52.080 --> 0:19:55.320 for that most exactly, it's just it's so affordable. People 0:19:55.359 --> 0:19:58.600 you know that want want a house there, they'll pay 0:19:58.720 --> 0:20:02.040 for that small a house. But in most cities the 0:20:02.080 --> 0:20:05.000 zoning laws would not allow for that type of development. 0:20:05.080 --> 0:20:07.240 Houston is just an anomaly. So we need to just 0:20:07.280 --> 0:20:08.680 make the zoning easier. 0:20:08.760 --> 0:20:11.320 What are you hearing from home builders about potential challenges 0:20:12.040 --> 0:20:15.920 labor given the crackdown on immigration, materials costs, given potentially 0:20:15.960 --> 0:20:18.760 a shortage, given that there's a lot of demand in 0:20:18.760 --> 0:20:21.840 Southern California post fires and rising costs you to tariffs. 0:20:21.920 --> 0:20:23.000 What are you hearing from them about that? 0:20:23.280 --> 0:20:25.560 Yeah, so the last two months we have seen home 0:20:25.600 --> 0:20:28.520 builder surveys and they're really not reporting any major changes 0:20:28.560 --> 0:20:32.440 in labor. So that is something that they're definitely keeping 0:20:32.480 --> 0:20:34.800 an eye on. But to date, nothing has really been 0:20:34.840 --> 0:20:37.560 affected on tariffs. I mean, we saw the first Trump 0:20:37.640 --> 0:20:41.359 administration have twenty percent tariffs on lumber, and actually lumber 0:20:41.359 --> 0:20:43.960 prices didn't spike until twenty twenty one under the Biden 0:20:43.960 --> 0:20:46.800 administration and then they settled back down into the mid 0:20:46.800 --> 0:20:50.359 six hundreds per thousand board foot. So home builders, you know, 0:20:50.400 --> 0:20:53.000 I was just talking to one of the luxury homebuilders, 0:20:53.240 --> 0:20:56.359 a national builder here, and they're protecting maybe five thousand 0:20:56.400 --> 0:20:59.320 dollars increase in overall home price for labor. But it's 0:20:59.359 --> 0:21:04.080 not They're cautiously watching but not really expecting home prices 0:21:04.119 --> 0:21:05.640 to go for the lumber. 0:21:05.560 --> 0:21:05.760 You know. 0:21:05.920 --> 0:21:07.640 I think, Katie, one of the things that we've talked 0:21:07.680 --> 0:21:09.320 with you about is that how do we make sure 0:21:09.359 --> 0:21:11.960 it's not just about building homes, but building homes where 0:21:12.000 --> 0:21:14.639 we need them. And we've often talked about this has 0:21:14.680 --> 0:21:17.960 gone on for decades of major cities where it's expensive 0:21:18.000 --> 0:21:19.840 to live. But a lot of people work there, but 0:21:19.880 --> 0:21:22.520 they can't afford to live there. So how do we 0:21:22.720 --> 0:21:23.800 solve that problem. 0:21:24.119 --> 0:21:27.080 Well, as we've discussed before, you know that the administration 0:21:27.200 --> 0:21:30.840 has said, well, we're going to give federal lands out 0:21:31.080 --> 0:21:33.600 for development, which just doesn't work because those are going 0:21:33.640 --> 0:21:35.960 to be lands that are in the middle of nowhere, 0:21:36.040 --> 0:21:38.320 not close to job centers, and then just to go 0:21:38.359 --> 0:21:42.880 through the political bureocracy of Congress getting appraisals and the environmentalists, 0:21:42.920 --> 0:21:45.159 and then the developer ultimately has to be able to 0:21:45.160 --> 0:21:47.120 make money on that. That's not going to be land 0:21:47.160 --> 0:21:49.800 that's you know, in the middle of Alaska or Nevada 0:21:49.840 --> 0:21:51.080 where there's no infrastructure. 0:21:51.160 --> 0:21:52.480 So what do we need to do then. 0:21:52.480 --> 0:21:55.160 So again it goes back to you know, hopefully rates 0:21:55.160 --> 0:21:57.920 will come down, but rights. 0:21:57.680 --> 0:21:59.920 Have been lower and we still don't have enough afford 0:22:00.240 --> 0:22:02.280 housing and kind of some of the major cities where 0:22:02.320 --> 0:22:03.280 so many people work. 0:22:03.400 --> 0:22:05.439 Yes, and so really innovation is what's going to have 0:22:05.480 --> 0:22:07.560 to come in and home bolders are trying to find 0:22:07.600 --> 0:22:12.000 innovative ways to build. They're using modular using structural insulated panels, 0:22:12.359 --> 0:22:14.960 so building off site and bringing those materials on to 0:22:15.080 --> 0:22:18.800 reduce labor cost, but still it's it's it's not gonna 0:22:19.400 --> 0:22:20.679 there's really no silver bullet. 0:22:20.920 --> 0:22:23.840 I want to remind everybody Walting loisvill buys land, holds 0:22:23.880 --> 0:22:26.440 onto it, and then sells it to the big home builders. 0:22:26.800 --> 0:22:28.560 How's land acquisition going right now? 0:22:28.760 --> 0:22:30.880 Yeah, it's great. I mean, if you're we're going into 0:22:31.000 --> 0:22:33.800 tertiary markets for our clients, so places like you know, 0:22:33.880 --> 0:22:39.000 we're buying in Panama City, Savannah, Georgia, Augusta, Georgia, Tucson, Wilmington, 0:22:39.040 --> 0:22:42.000 North Carolina, so not those primary or secondary going to 0:22:42.040 --> 0:22:45.040 those next that next in line where land is still 0:22:45.040 --> 0:22:47.000 affordable and that does help bring down the cost. 0:22:47.160 --> 0:22:51.280 What's the most interesting trend in housing right now? Like 0:22:51.320 --> 0:22:55.280 it's the McMansion over they go. I'm just in those 0:22:55.359 --> 0:22:55.800 kinds of things. 0:22:55.840 --> 0:22:58.560 Yeah, I would just say the amenities really. Home bolders 0:22:58.600 --> 0:23:01.480 want to be able to build a home where you 0:23:01.480 --> 0:23:04.480 can have multi generation, so that entry level young family 0:23:04.560 --> 0:23:06.680 coming in and then you've got the move up house, 0:23:06.720 --> 0:23:08.760 and then you've got a place where mom and dad 0:23:08.800 --> 0:23:10.280 can you know, don't have to go to an assisted 0:23:10.359 --> 0:23:13.760 living facility, but they can have a single level home 0:23:13.840 --> 0:23:16.560 in the same neighborhood. So they want pickleball courts, they 0:23:16.560 --> 0:23:18.679 want swimming pools, they want all of the amenities to 0:23:18.720 --> 0:23:21.640 attract that generation. And from the land side, you need 0:23:21.640 --> 0:23:23.560 a big enough parcel of land to be able to 0:23:23.560 --> 0:23:25.560 build a master planned community like that, all. 0:23:25.560 --> 0:23:29.280 Right, master planning communities. Yeah, interesting, Katie, Thank you, thanks 0:23:29.280 --> 0:23:32.159 for coming back. Katiehubbard, Executive EP Capital Markets Ever at 0:23:32.200 --> 0:23:32.879 Walton Global. 0:23:34.640 --> 0:23:38.400 This is the Bloomberg Business Week Podcast. Listen live each 0:23:38.440 --> 0:23:41.400 weekday starting at two pm Eastern on Apple car Play 0:23:41.520 --> 0:23:44.159 and the Android Auto with the Bloomberg Business app. You 0:23:44.200 --> 0:23:47.400 can also listen live on Amazon Alexa from our flagship 0:23:47.440 --> 0:23:51.240 New York station Just Say Alexa played Bloomberg eleven thirty 0:23:52.720 --> 0:23:53.280 Well Move Out. 0:23:53.280 --> 0:23:55.800 The Trump administration to block a one point four billion 0:23:55.840 --> 0:23:59.439 dollar program for green building retrofits has left hundreds of 0:23:59.440 --> 0:24:03.480 in progress affordable housing projects in limbo. Renovations for aging 0:24:03.480 --> 0:24:07.240 affordable housing projects across the US have been halted as 0:24:07.280 --> 0:24:11.280 developers seek answers or alternatives now. The Green and Resilient 0:24:11.280 --> 0:24:13.720 Retrofit program is one of a number of federal energy 0:24:13.720 --> 0:24:18.480 efficiency initiatives that Elon Musk's Department of Government Efficiency DOGE 0:24:18.560 --> 0:24:21.840 is looking to zero out to the frustration of affordable 0:24:21.840 --> 0:24:23.720 housing developers across the country. 0:24:23.840 --> 0:24:26.960 Austin Walker's undoubtedly watching what happens out of Washington closely. 0:24:26.960 --> 0:24:30.240 He's founder, CEO, managing principle at a walker In Company. 0:24:30.600 --> 0:24:33.000 It's a New York based private equity fund manager and 0:24:33.040 --> 0:24:35.880 it works with local firms and real estate management and development. 0:24:35.920 --> 0:24:39.280 He joins us here in the Bloomberg Interactive Brokers studio. 0:24:39.760 --> 0:24:41.760 Austin Welcome. I want to get to what's happening in 0:24:41.840 --> 0:24:43.440 Washington in a minute, but first I just want to 0:24:43.480 --> 0:24:46.000 get an understanding of what exactly your firm does, because 0:24:46.000 --> 0:24:48.000 I think a lot of people would hear private equity 0:24:48.040 --> 0:24:50.120 and affordable housing and say, wait a second, these two 0:24:50.119 --> 0:24:53.280 things don't necessarily go hand in hand. Yeah, absolutely right. 0:24:53.680 --> 0:24:57.640 Affordable housing is developed and maintained and preserve through many 0:24:57.640 --> 0:25:01.639 different forms. You know, where there's many infacture housing, single 0:25:01.640 --> 0:25:06.879 family rentals, tax credit development, there's you know, firms like 0:25:07.000 --> 0:25:11.400 us that really find unique opportunities to deploy flexible capital 0:25:11.440 --> 0:25:16.359 to really develop and preserve these housing opportunities across the 0:25:16.520 --> 0:25:17.240 entire landscape. 0:25:17.240 --> 0:25:20.760 Affordabhouse which part of the landscape, deplan in all parts 0:25:20.760 --> 0:25:23.840 of it, all parts of it so even housing that 0:25:24.080 --> 0:25:27.400 is regulated by the government, Yes, how do you make 0:25:27.440 --> 0:25:27.959 money in that? 0:25:29.320 --> 0:25:32.480 A lot of it is feed generation. It's working through 0:25:32.880 --> 0:25:36.280 a lot of programming, working with local municipalities to program 0:25:36.320 --> 0:25:41.520 these opportunities. Right, it's part and parcel construction management, pricing 0:25:42.040 --> 0:25:44.640 and working with a number of different grants and set 0:25:44.640 --> 0:25:48.840 of programs. But it's largely driven really locally in terms 0:25:48.880 --> 0:25:51.919 of incentives and other programs available to basically you know, 0:25:51.960 --> 0:25:54.920 engineer capital stack to you know, create returns. 0:25:55.000 --> 0:25:56.800 How much of your business or investment is in that 0:25:56.840 --> 0:25:58.040 area specifically, I. 0:25:58.000 --> 0:26:02.000 Would say probably twenty thirty percent is allocated to that area. 0:26:02.080 --> 0:26:03.639 Is there any concern in terms of what's going on 0:26:03.680 --> 0:26:05.560 in government that some of that gets cut back? 0:26:06.359 --> 0:26:08.639 Yes, we got some favorable news. Last week was not 0:26:08.640 --> 0:26:12.359 so favorable. You saw the administration past executive orders cutting 0:26:12.520 --> 0:26:15.080 c d f I funds which are largely based on 0:26:15.240 --> 0:26:18.159 you know, grants made through that to fund Community development 0:26:18.200 --> 0:26:22.920 Finance institutions, which are a large cohort of financial liquidity 0:26:22.920 --> 0:26:25.400 to the affordable housing space and that in the form 0:26:25.400 --> 0:26:29.520 of loans, grants, other equity like subsidies. But they pass 0:26:29.560 --> 0:26:32.320 the continuing Resolution, which is you know, again fully funding 0:26:32.440 --> 0:26:35.800 you know HUD through which is the largest provider of 0:26:36.680 --> 0:26:40.120 you know, affordable housing through housing choice vouchers UH Section 0:26:40.200 --> 0:26:43.760 eight based you know, project based Section eight contracts supporting 0:26:43.920 --> 0:26:45.520 you know, rents and affordable rents. 0:26:45.800 --> 0:26:48.359 Have you already been affected by changing out to Washington 0:26:48.600 --> 0:26:49.480 in this administration? 0:26:49.560 --> 0:26:53.080 Absolutely? I mean we've had transactions that had to get 0:26:53.119 --> 0:26:56.159 repriced installed because you know, either are financing you know, 0:26:56.160 --> 0:26:58.760 opportunities our lenders where either cd f I lenders and 0:26:59.040 --> 0:27:02.280 programs are dramatic changing. If you were going in with 0:27:02.320 --> 0:27:05.440 a CDFI on pricing at an eight percent fixed rate loan, 0:27:05.520 --> 0:27:07.760 and now you have to be you know, going midway 0:27:07.760 --> 0:27:10.040 through a transaction at hard money to close it close 0:27:10.080 --> 0:27:12.280 the transaction because you have deposits down that are hard. 0:27:13.160 --> 0:27:15.280 You could be facing a four hundred basse points increase 0:27:15.320 --> 0:27:17.639 in your cost of capital. These are real time changes 0:27:17.680 --> 0:27:18.800 that are affecting the economics. 0:27:18.760 --> 0:27:21.600 So is that making you pivot in terms of different 0:27:21.800 --> 0:27:24.160 you know, parts of your business, maybe spending more time elsewhere. 0:27:24.400 --> 0:27:26.000 Yeah. I think for us, you know, one of the 0:27:26.000 --> 0:27:28.320 things we were born out of largely a market rate 0:27:28.520 --> 0:27:32.080 development shop that focused mostly on workforce housing and attainable 0:27:32.080 --> 0:27:34.800 housing so that's really just housing at large, but more 0:27:34.840 --> 0:27:38.760 so C and B class housing, existing housing stock, which 0:27:38.960 --> 0:27:40.879 you know, at the end of the day, most of 0:27:40.920 --> 0:27:44.479 these policies, whether it's tariffs, immigration, other things, are going 0:27:44.520 --> 0:27:48.200 to affect the supply demand imbalances, which are already extreme 0:27:48.280 --> 0:27:50.639 due to you know, low housing starts, you know, especially 0:27:50.680 --> 0:27:53.320 coming out of the GFC. You know, COVID interest rates 0:27:53.320 --> 0:27:54.920 are so low. You finally got a little bit of 0:27:54.960 --> 0:27:58.040 a pop in in development, you know pipeline, but that's 0:27:58.119 --> 0:28:00.320 largely stalled due to the whips on interest rates coming 0:28:00.320 --> 0:28:02.760 back up. So you know, we look at that being 0:28:02.800 --> 0:28:05.760 a sustained problem just given that you know, tariffs are 0:28:05.760 --> 0:28:09.080 going to increase lumber prices, other inputs for construction, so 0:28:09.160 --> 0:28:12.480 construction costs going up. Immigration is going to affect labor 0:28:12.520 --> 0:28:16.919 supply and you know labor wage rates. These are already 0:28:16.960 --> 0:28:20.439 under extreme price pressures affecting the industry, and so we 0:28:20.480 --> 0:28:23.480 see a very big problem with deliveries. But that's actually 0:28:23.560 --> 0:28:28.080 good for existing housing, right because the demand is largely unchanged, 0:28:28.080 --> 0:28:29.560 and so you know, we probably are going to see 0:28:29.600 --> 0:28:33.720 inflationary pressure on rents as well, exacerbating the affordable housing problem. 0:28:33.840 --> 0:28:37.359 So it's quite complicated and you know what's going on 0:28:37.480 --> 0:28:38.600 right now across the sector. 0:28:38.680 --> 0:28:40.880 Katie Hubbard from Walton Global was just sitting in your 0:28:40.880 --> 0:28:43.600 seat about an hour ago, and she is in the 0:28:43.600 --> 0:28:49.600 city for meetings with her customers, who are the large 0:28:49.640 --> 0:28:52.960 developers of the land that her company sells to them, 0:28:53.000 --> 0:28:56.160 so the big home builders. She said, they're not yet 0:28:56.200 --> 0:28:59.560 seeing increased cost due to materials. She says, they're not 0:28:59.600 --> 0:29:02.840 seeing shoes when it comes to labor. Why are they 0:29:02.840 --> 0:29:05.040 telling her that they're not seeing that, but you're seeing that. 0:29:05.600 --> 0:29:07.520 So you have to think about it. I guess from 0:29:07.560 --> 0:29:11.600 a larger industry perspective, her and buyers largely publicly traded 0:29:11.600 --> 0:29:16.720 companies Pulti, the likes right, they are not only mandated 0:29:16.720 --> 0:29:19.120 by their boards to use legal labor versus the public 0:29:19.320 --> 0:29:22.480 the private sector, which you know is able to tap 0:29:22.520 --> 0:29:26.440 into a good point non legal immigrants for labor. There's 0:29:26.440 --> 0:29:29.200 a big divergence between those and they're such a large scale. 0:29:29.480 --> 0:29:32.800 They largely wholesale, bulk purchase and warehouse their materials, whether 0:29:32.840 --> 0:29:36.440 it's overseas otherwise. They can navigate a large shift where 0:29:36.440 --> 0:29:39.520 you have tariffs on Canadian lumber versus you know, bringing 0:29:39.520 --> 0:29:42.840 in cabinets from China at bulk, and they basically forwardlock 0:29:42.880 --> 0:29:45.040 their pipelines and they're able to price that out. They're 0:29:45.080 --> 0:29:47.600 not feeling it yet, but if this is a sustained, 0:29:47.600 --> 0:29:51.360 protracted tariff war that is more global in scope, you know, 0:29:51.400 --> 0:29:53.560 it can make it very very same. 0:29:53.480 --> 0:29:57.840 Thing with labor. I'm assuming those you know who are 0:29:58.200 --> 0:30:00.640 I guess you just US citizens or whatever they're going, 0:30:00.760 --> 0:30:03.360 they're going to have a certain labor pool, and I'm 0:30:03.400 --> 0:30:07.080 assuming those workers too are going to want their contracts 0:30:07.400 --> 0:30:09.880 with the big publicly held Yeah. 0:30:09.920 --> 0:30:12.240 Absolutely, because there's there's certainty. But I think there's another 0:30:12.280 --> 0:30:18.840 element to it. Renters, rental developers versus for sale developers. 0:30:18.920 --> 0:30:22.280 A lot of the Pulti Homes, Toll Brothers, the larger publics, 0:30:22.320 --> 0:30:26.160 their home builders their for sale product, so they're not necessarily, 0:30:26.400 --> 0:30:30.120 you know, worried so much about the input they can 0:30:30.320 --> 0:30:32.880 Largely it's such a supply constrained market. From a for 0:30:33.040 --> 0:30:35.760 sale there's no inventory, so new deliveries are largely going 0:30:35.800 --> 0:30:37.479 to be able to bear the price inflation that's going 0:30:37.520 --> 0:30:40.240 to come out of increased cost of construction on a 0:30:40.280 --> 0:30:42.360 for sale product. But at the end of the day, 0:30:42.720 --> 0:30:48.120 financing everything else. As far as you know, multifamily rental 0:30:48.200 --> 0:30:51.880 product is largely driven by the confluence of interest rates 0:30:51.920 --> 0:30:54.440 and what you can charge on a nominal price per rent, 0:30:54.440 --> 0:30:57.800 plus inflating expenses across insurance and other things. So it's 0:30:57.880 --> 0:31:00.640 largely a cash flow problem, and inflation is going to 0:31:00.680 --> 0:31:03.160 really impact housing development because you're solving to a cash 0:31:03.200 --> 0:31:05.640 flow that at some point you can't inflate out of, 0:31:05.720 --> 0:31:07.280 so those starts get halted. 0:31:07.680 --> 0:31:09.520 Hey, what do you see the federal government doing as 0:31:09.560 --> 0:31:13.160 far as making land available for building? That was a 0:31:13.160 --> 0:31:18.200 big part of the Trump administration's campaign, especially Jdvance took 0:31:18.200 --> 0:31:20.800 that on and talked about federal land. What do you 0:31:20.840 --> 0:31:21.440 see them doing? 0:31:22.000 --> 0:31:25.680 You know, it's interesting. I think it's something certainly that 0:31:25.720 --> 0:31:29.080 they've been exploring. It is absolutely a big need. But 0:31:29.120 --> 0:31:30.800 I think the biggest issue that's going to come out 0:31:30.840 --> 0:31:33.400 of it is what are the local economies around federally 0:31:33.440 --> 0:31:36.720 owned land that are actually going to support the economic 0:31:36.800 --> 0:31:37.360 drivers that. 0:31:37.320 --> 0:31:40.440 Are There's a lot of federal land out west, but 0:31:40.640 --> 0:31:44.640 are there the but we're industries to support people moving 0:31:44.720 --> 0:31:46.400 to that part of the country. 0:31:46.640 --> 0:31:49.480 I think that's the biggest problem, you know, solver you know, 0:31:49.640 --> 0:31:51.560 I mean issue that's going to come up with federally 0:31:51.600 --> 0:31:54.920 owned land is how scalable is that for the capital markets? 0:31:55.240 --> 0:31:58.040 Where are the projects that you are involved in where 0:31:58.080 --> 0:31:59.040 they mostly located. 0:31:59.200 --> 0:32:03.080 Yeah, So you know, we largely identify opportunities and municipalities 0:32:03.080 --> 0:32:05.200 that are creative to you know, being you know, whether 0:32:05.200 --> 0:32:08.280 it's pilot you know, payment in lieu of taxes, tax abatements, 0:32:08.400 --> 0:32:13.000 other programs where you're getting property tax offsets in exchange 0:32:13.000 --> 0:32:15.440 for housing affordability on the rental side, so capping your 0:32:15.440 --> 0:32:18.720 rents on a certain percentage of our renolds. So we're 0:32:18.720 --> 0:32:21.920 in Los Angeles mayor Bass Past eighty one. We just 0:32:21.960 --> 0:32:25.680 got a site approved there for vertical construction. We have 0:32:25.840 --> 0:32:31.080 acquisition preservation deal that we did in outside of Chicago 0:32:31.520 --> 0:32:34.080 and that was a great transaction, you know, where we 0:32:34.160 --> 0:32:38.360 worked with Fanni May on that that loan and you know, 0:32:38.400 --> 0:32:40.400 got a twenty five percent tax abatement on that for 0:32:40.440 --> 0:32:42.680 a very small asset aside for for rents. But it's 0:32:42.760 --> 0:32:45.880 largely a workforce housing area serving an amazing school district. 0:32:45.960 --> 0:32:49.920 But we're also in Florida, Houston, Atlanta, and we have 0:32:50.080 --> 0:32:54.520 you know, projects that really are across the affordability stretch spectrum. 0:32:54.520 --> 0:32:56.200 So we hear a lot about how difficult it is 0:32:56.200 --> 0:32:59.000 to build in California. Yeah, is that your experience? 0:32:59.600 --> 0:32:59.920 Yes? 0:33:00.080 --> 0:33:02.000 Is the California project that much more difficult than the 0:33:02.040 --> 0:33:02.800 other projects will be? 0:33:03.440 --> 0:33:04.960 And we have another one in Long Island that we're 0:33:05.000 --> 0:33:07.440 looking at very similar. You know, there's there's not a 0:33:07.440 --> 0:33:11.160 lot of parcels for development, and then the environmental red tape, 0:33:11.200 --> 0:33:14.640 the other local regulatory red tape heavy heavy, you know, 0:33:14.720 --> 0:33:17.920 politics in terms of permitting. Getting through that process takes 0:33:17.960 --> 0:33:23.160 an extremely well capitalized developer who has very very localized 0:33:23.200 --> 0:33:26.680 expertise in working through the building departments to navigate that process. 0:33:27.160 --> 0:33:30.560 Even on a largely ministerial approval process such as eighty one, 0:33:30.920 --> 0:33:35.280 it still was very very difficult and largely contested project 0:33:35.360 --> 0:33:36.240 to get through Ahson. 0:33:36.320 --> 0:33:38.520 Just to wrap up, who are the people that you 0:33:38.520 --> 0:33:42.040 are housing? I think there's maybe not an understanding of, 0:33:42.440 --> 0:33:45.000 you know, who all accesses? You know, what we talk 0:33:45.040 --> 0:33:49.440 about access is access affordable housing. Like who are they? 0:33:50.000 --> 0:33:54.240 Yeah, I mean they're every They're everyday individuals. It's the 0:33:54.280 --> 0:33:58.560 folks serving you coffee. It's your waiters, your bus drivers, 0:33:58.600 --> 0:34:04.320 your teachers, firefighters. Every day folks right that are you know, 0:34:04.560 --> 0:34:06.960 really going to feel the effects of you know, when 0:34:07.640 --> 0:34:09.800 a cart and of eggs is thirteen bucks, in a 0:34:09.840 --> 0:34:11.680 gallon of milk is eight bucks. You know, these are 0:34:11.680 --> 0:34:14.600 people that are really you know, making it paycheck to paycheck. 0:34:14.880 --> 0:34:17.640 That's largely the cohort that we serve, and that's why 0:34:17.680 --> 0:34:22.880 these programs are really really necessary because you know, what 0:34:23.040 --> 0:34:28.120 creates housing affordability in terms of the extreme lack of 0:34:28.160 --> 0:34:33.200 supply is local zoning. Until there is a federal sweeping ability, 0:34:33.239 --> 0:34:36.279 which is likely not going to happen in terms of 0:34:36.360 --> 0:34:41.560 zoning approvals for multi family rezoning in commercial districts and everything, 0:34:41.760 --> 0:34:43.759 it's going to be really challenging to deliver the type 0:34:43.760 --> 0:34:47.279 of supply to actually naturally bring rents down. You have 0:34:47.320 --> 0:34:49.839 a small, you know, test case in Austin, Texas where 0:34:49.840 --> 0:34:53.200 they basically got rid of the permitting and zoning red tape. 0:34:53.280 --> 0:34:55.520 They delivered fifty five thousand units and rents came down 0:34:55.520 --> 0:34:57.839 by twenty five percent, and they will absolutely absorb those 0:34:57.920 --> 0:35:01.600 units because there's an extreme need test case where you could, 0:35:01.680 --> 0:35:03.600 you know, but doing that on a national level. 0:35:03.520 --> 0:35:06.279 Is going to be very great, super interesting. Thank you 0:35:06.320 --> 0:35:09.640 so much. Glad you stop by Austin Walker, founder ceomaging 0:35:09.640 --> 0:35:12.759 principle at a Walker and Company, joining us here on 0:35:12.920 --> 0:35:18.000 business suite, brother marcle, how about you let me drive? 0:35:18.239 --> 0:35:20.439 Oh no, no, no, no, this is not a toy, 0:35:21.480 --> 0:35:23.040 ug honey. 0:35:23.200 --> 0:35:25.240 Please, how do the riding gravels? 0:35:25.520 --> 0:35:30.040 Let's wake, I want to drive. It's a good question. 0:35:30.520 --> 0:35:30.680 Good. 0:35:33.920 --> 0:35:36.400 This is the drive to the clothes. 0:35:36.320 --> 0:35:37.080 Pongs for me a thing? 0:35:37.200 --> 0:35:40.320 Well, drill down on Bloomberg Radio. 0:35:40.640 --> 0:35:42.879 All right, everybody, we're just about eighteen minutes away from 0:35:42.880 --> 0:35:46.400 the closing bell on this Thursday. Bouncing around here, Charlie 0:35:46.400 --> 0:35:49.120 Bill Maloney just of course breaking down the trade for you. 0:35:49.239 --> 0:35:51.520 Just a reminder, just down about two points on the 0:35:51.600 --> 0:35:53.600 S and P five hundred. Call it flat on the day, 0:35:53.680 --> 0:35:56.440 Dad John's industrial average, a decline of sixty seven points. 0:35:56.440 --> 0:35:58.680 Good for a decline of about two tents of a percent, 0:35:58.800 --> 0:36:01.280 same percentage decline, tim when it comes to the Nasdaq 0:36:01.320 --> 0:36:04.120 one hundred, down about forty three points, but again off 0:36:04.160 --> 0:36:05.240 our highs and lows of the session. 0:36:05.320 --> 0:36:06.680 Yeah, I mean the S and P five hundred right 0:36:06.719 --> 0:36:08.840 now is not even down one tenth of one percent. 0:36:08.880 --> 0:36:09.080 I know. 0:36:09.200 --> 0:36:09.560 Flat. 0:36:09.680 --> 0:36:12.160 Yeah, it's like searching for direction despite the bunch of 0:36:12.200 --> 0:36:14.720 tariffs I think caught some companies off guard. 0:36:14.880 --> 0:36:16.800 Yeah, it's kind of interesting, right. 0:36:16.640 --> 0:36:18.839 Yeah, it's like, didn't this get telegraphed yesterday? I think 0:36:18.960 --> 0:36:21.279 the point that Jennifer Dellewey made earlier was there was 0:36:21.280 --> 0:36:23.640 a lot of confusion about whether or not would include 0:36:23.680 --> 0:36:26.680 auto parts companies, and it does. So you see those 0:36:26.680 --> 0:36:27.960 companies getting hit pretty hard. 0:36:28.040 --> 0:36:29.560 Yeah, and then there's more to come next week. So 0:36:29.719 --> 0:36:31.879 I think I don't know, I've got an inflation print tomorrow. 0:36:31.960 --> 0:36:33.640 Let's see what Katy Nixon has to say about all 0:36:33.640 --> 0:36:36.520 of it. She's chief investment officer at Northern Trust Wealth Management, 0:36:36.560 --> 0:36:41.000 joining us from Chicago. Katie, nice to check in with you. 0:36:42.000 --> 0:36:45.240 This environment, it's an interesting one and sometimes markets react, 0:36:45.280 --> 0:36:48.640 sometimes they don't, but they seem to move around a 0:36:48.680 --> 0:36:51.160 fair amount. How do you describe kind of where we 0:36:51.200 --> 0:36:53.680 are and what's top of mind for investors and maybe 0:36:53.680 --> 0:36:56.440 your clients, right, Carol. 0:36:56.160 --> 0:36:58.120 Well, thank you so much for having me, And I 0:36:58.160 --> 0:37:01.279 guess I would just echo this sentiment that's been sort 0:37:01.320 --> 0:37:05.000 of persistent through through your coverage, and that is just 0:37:05.160 --> 0:37:08.560 this period of uncertainty. I don't think investors really know 0:37:08.640 --> 0:37:11.400 which way to turn right now. The market today is 0:37:11.440 --> 0:37:14.000 a really interesting example where you sort of look at 0:37:14.040 --> 0:37:15.920 the at the averages, look at the bond in the 0:37:15.920 --> 0:37:18.000 stock markets, and you say, not much going on, But 0:37:18.040 --> 0:37:20.080 beneath the surface there certainly is a lot of churn. 0:37:20.239 --> 0:37:24.080 So I think investors are looking for a guiding life here. 0:37:24.120 --> 0:37:26.399 They're looking for some certainty. And I guess what we're 0:37:26.400 --> 0:37:27.800 telling our clients. 0:37:27.440 --> 0:37:29.920 Is we may be waiting for we may be waiting 0:37:29.920 --> 0:37:30.480 a bit longer. 0:37:30.600 --> 0:37:34.040 If if we're looking for that period of calm or 0:37:34.080 --> 0:37:35.840 more or more certainty, I think we're going to be 0:37:35.880 --> 0:37:41.080 living with more volatility and a lot more news and noise. Frankly, 0:37:41.280 --> 0:37:43.640 that's going to impact markets for the foreseeable future. 0:37:43.840 --> 0:37:47.319 What is the foreseeable future? How much longer? I'm getting 0:37:47.360 --> 0:37:49.280 a little tired. I'm getting a little tired. 0:37:50.239 --> 0:37:53.479 No, I know. Well, I mean we're all looking forward 0:37:53.520 --> 0:37:56.640 to Liberation Day, of course, but we're getting some pre 0:37:56.760 --> 0:37:59.200 news here that's certainly market moving, and I'm not sure 0:37:59.280 --> 0:38:04.439 we're going to get the clarity that we probably need 0:38:04.480 --> 0:38:06.680 on April second. And by that I mean I think 0:38:06.719 --> 0:38:09.879 it'll still be a work in process. I think we've 0:38:09.960 --> 0:38:12.839 learned through the last several weeks and months. Frankly that 0:38:13.560 --> 0:38:17.000 you know, news evolves over time, things can change, so 0:38:17.080 --> 0:38:19.759 it's very hard to have a lot of confidence and 0:38:20.840 --> 0:38:23.279 what you hear is eventually going to be what turns 0:38:23.360 --> 0:38:26.080 into persistent policy that won't. 0:38:25.920 --> 0:38:26.840 Change over time. 0:38:27.520 --> 0:38:29.360 So I think this is a time for investors to 0:38:29.440 --> 0:38:32.839 really sit back and recognize the one important thing, which 0:38:32.880 --> 0:38:37.520 is we're buying companies, right We're not buying politics, we're 0:38:37.520 --> 0:38:41.960 not buying even economies. We're buying companies, and companies have 0:38:42.160 --> 0:38:47.239 showed remarkably through time the ability to navigate and to 0:38:47.280 --> 0:38:49.759 be resilient in the face of a lot of uncertainty. 0:38:49.880 --> 0:38:51.280 So although it's. 0:38:51.120 --> 0:38:53.360 Hard when you're reading the news and you're hearing about 0:38:53.360 --> 0:38:57.200 these things on a regular basis, it's hard to remind yourself, 0:38:57.200 --> 0:38:59.239 but it's important to remind yourself that at the end 0:38:59.280 --> 0:39:03.040 of the day, it's all about fundamentals, how companies are 0:39:03.040 --> 0:39:06.120 able to navigate this period of uncertainty, what the picture 0:39:06.160 --> 0:39:08.920 looks like on the other side. We don't necessarily know 0:39:08.960 --> 0:39:10.480 when we're going to get there, but we know we'll 0:39:10.480 --> 0:39:13.759 get there at that point. As an investor, what you 0:39:13.840 --> 0:39:16.319 really want to focus on is just the stability of 0:39:16.360 --> 0:39:17.920 the fundamentals. 0:39:18.160 --> 0:39:22.480 Right, but the stability of the fundamentals can be whipsaw 0:39:22.640 --> 0:39:25.400 based on the headlines that come out of Washington. And 0:39:25.440 --> 0:39:28.760 so if we don't see things settle down sometime soon, 0:39:29.560 --> 0:39:32.759 you know, does that once again make it hard to 0:39:32.880 --> 0:39:34.200 invest on the fundamentals? 0:39:35.560 --> 0:39:37.680 You know, it does to a certain extent, Carol. 0:39:37.719 --> 0:39:40.440 But I think again, once once companies know the rules 0:39:40.440 --> 0:39:43.960 of the road, they'll be able to navigate more resiliently. 0:39:44.080 --> 0:39:45.840 Right now, I think. 0:39:45.680 --> 0:39:48.200 Nobody knows what the rules of the road are going 0:39:48.239 --> 0:39:51.040 to be. Again, I use the word persistently because we 0:39:51.120 --> 0:39:53.440 might hear some news that could change, you know, in 0:39:53.480 --> 0:39:55.480 a week or two. So I think we will be 0:39:55.560 --> 0:39:58.520 in this period of fog for a bit here. And 0:39:58.600 --> 0:40:00.480 I think we're actually going to hear more about that 0:40:00.600 --> 0:40:03.280 from companies as they start to talk about their first 0:40:03.360 --> 0:40:06.480 quarter earnings results. We're going to hear more about how 0:40:06.520 --> 0:40:11.000 they're thinking about the navigation process here they as they 0:40:11.080 --> 0:40:14.279 are also facing this period of uncertainty. 0:40:14.840 --> 0:40:15.040 Yeah. 0:40:15.160 --> 0:40:19.000 No, it's interesting. I feel like we just wrapped up earnings, 0:40:19.440 --> 0:40:22.719 right they were kind of just a few at the 0:40:22.719 --> 0:40:24.520 tail end. But I feel like we're already looking forward 0:40:24.560 --> 0:40:25.880 to earning because we want to hear what the C 0:40:25.960 --> 0:40:28.480 suite has to say about this environment. What are they 0:40:28.520 --> 0:40:30.840 doing or what are they not doing as a result 0:40:30.880 --> 0:40:35.040 of the volatility or the uncertainty going forward In the meantime, 0:40:35.160 --> 0:40:37.839 So an investor comes to you and says, I've got 0:40:38.040 --> 0:40:39.759 a portfolio or I've got some money I want to 0:40:39.800 --> 0:40:41.280 put to work. What do you do with it today? 0:40:43.040 --> 0:40:47.440 Well, again, they're always opportunities in markets. And what I 0:40:47.480 --> 0:40:51.120 would say is what we're seeing now is kind of 0:40:51.120 --> 0:40:55.239 a washout of sentiment. You know, we see bearishness, you 0:40:55.280 --> 0:40:58.480 know in the aai I survey staying you know, pretty 0:40:58.520 --> 0:41:00.759 bearish for an extended peer period of time, which is 0:41:00.840 --> 0:41:06.160 quite unusual and typically precedes decent periods of return for investors. 0:41:06.160 --> 0:41:08.160 So we would say to any investor that comes to 0:41:08.200 --> 0:41:11.880 us today, or frankly to our clients, get your strategic 0:41:11.920 --> 0:41:15.640 acid allocation in line and get yourself invested, recognizing that 0:41:15.640 --> 0:41:18.160 we're going to have a period of volatility, but also 0:41:18.320 --> 0:41:20.880 recognizing that as a long term investor, this is not 0:41:20.960 --> 0:41:22.640 a bad time to be putting money to work in 0:41:22.680 --> 0:41:23.240 the market. 0:41:23.560 --> 0:41:26.239 But we would say, in addition to that, Carol is 0:41:27.080 --> 0:41:29.840 start to think more globally. I think in the past 0:41:30.040 --> 0:41:34.760 several years, most investors have had this tremendous home country 0:41:34.800 --> 0:41:37.040 bias here in the US, and they've been right. The 0:41:37.160 --> 0:41:40.719 US has roundly outperformed everything, and it's really been on 0:41:40.760 --> 0:41:43.959 the backs of US large cap growth in a particular tech. 0:41:44.480 --> 0:41:46.640 We're telling our clients, and we would tell a new 0:41:46.680 --> 0:41:49.359 client to start. 0:41:48.960 --> 0:41:50.640 From a place of diversification. 0:41:50.800 --> 0:41:54.239 You want to have opportunities all across the world, and 0:41:54.280 --> 0:41:56.839 you also want to have opportunities away from just that 0:41:57.000 --> 0:42:02.239 super large cap US tech focus exposure and look at 0:42:02.239 --> 0:42:04.880 other areas of the US market. Look at value stocks, 0:42:04.880 --> 0:42:08.200 for example, as an interesting place to get some diversification. 0:42:08.320 --> 0:42:13.400 Right now, So, okay, US and value where do you? 0:42:13.440 --> 0:42:15.360 Where do you? I mean, look, nobody knows what's going 0:42:15.440 --> 0:42:19.160 to happen, but geographically, where do you see that performance 0:42:19.320 --> 0:42:19.799 this year? 0:42:21.840 --> 0:42:22.080 Well? 0:42:22.239 --> 0:42:26.200 Short term, you know, prognostications are incredibly difficult. But what 0:42:26.320 --> 0:42:29.640 I will say is we're more confident in the performance 0:42:29.640 --> 0:42:33.279 of non US markets today than we were four or 0:42:33.280 --> 0:42:36.880 five months ago. And that confidence comes from the combination 0:42:37.040 --> 0:42:40.359 of monetary and fiscal stimulus that we see coming really 0:42:40.400 --> 0:42:41.799 to the four overseas. 0:42:41.840 --> 0:42:44.280 Clearly, you guys have covered Europe really well. 0:42:44.400 --> 0:42:48.719 We see, you know, a really extraordinary amount of fiscal 0:42:48.760 --> 0:42:52.839 stimulus being injected into an economy, and more importantly, into 0:42:52.880 --> 0:42:56.319 a market that tends to be very sensitive to that, right, 0:42:56.400 --> 0:42:59.080 defense spending, in structure spending, forget. 0:42:59.280 --> 0:43:01.520 So, Katie forget, just got about thirty seconds left. So 0:43:01.560 --> 0:43:03.879 do you want to commit a fair amount of money 0:43:03.880 --> 0:43:06.040 into Europe or not? Necessarily? Would you still stay with 0:43:06.080 --> 0:43:07.759 the US and just quickly if you could. 0:43:07.680 --> 0:43:08.800 No, you do, Carol. 0:43:08.840 --> 0:43:11.200 Absolutely, you want to be as diversified as the global 0:43:11.239 --> 0:43:13.480 markets and get your fair share of what could be 0:43:13.600 --> 0:43:17.160 some outsize returns over the near term as investors start 0:43:17.160 --> 0:43:20.200 to reposition their portfolios towards that opportunity. 0:43:20.600 --> 0:43:22.160 All right, we're going to leave it there, Hey, Katie, 0:43:22.200 --> 0:43:24.640 thank you so much. Katie Nixon, chief investment Officer at 0:43:24.640 --> 0:43:28.480 Northern Trust Wealth Management, joining us from Chicago on this Thursday. 0:43:29.960 --> 0:43:34.799 This is the Bloomberg Business Week podcast, available on Apple, Spotify, 0:43:34.920 --> 0:43:38.640 and anywhere else you get your podcasts. 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