WEBVTT - Mortgage Rates, Markets, COP27, and World Cup (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.000 at Bloomberg dot com slash podcast. Let's round table this 0:00:23.040 --> 0:00:24.720 thing because I don't know where these markets are going. 0:00:24.720 --> 0:00:26.599 I don't know where the economy is going. I don't 0:00:26.640 --> 0:00:28.120 know where the Fund of Reserve is going. So I 0:00:28.160 --> 0:00:31.080 need some smart people to kind of kind of bring 0:00:31.080 --> 0:00:34.199 it together. Vince Signarella, global macro strategist at Bloomberg News, 0:00:34.280 --> 0:00:37.120 joins us uh and Jennifer Lee, senior economist the managing 0:00:37.159 --> 0:00:40.080 director at BEMO Capital Markets, joins us as well. Jennifer, 0:00:40.080 --> 0:00:43.800 I'm gonna start with you here. Um, I guess Mike 0:00:44.440 --> 0:00:46.320 have many questions. One of my questions is, all right, 0:00:46.440 --> 0:00:48.440 I get it where you are either in or we're 0:00:48.479 --> 0:00:51.680 going into recession. Like a lot of people, just tell 0:00:51.680 --> 0:00:53.559 me how long it's going to be, how deep it's 0:00:53.560 --> 0:00:55.600 gonna be. Is there any way to kind of gauge 0:00:55.600 --> 0:00:59.200 that at this point? Oh, good morning. You know what, UM, 0:00:59.240 --> 0:01:02.680 I think that's still the million. The other question, UM, 0:01:02.720 --> 0:01:06.000 we continue to stand by our mild recession call. UM 0:01:06.040 --> 0:01:08.000 for now. Of course we're going to take it, and 0:01:08.040 --> 0:01:10.440 I'll quote all the different central bankers out there, especially 0:01:10.640 --> 0:01:14.240 GUARD on a day to day meeting by meeting basis. UM. 0:01:14.280 --> 0:01:16.040 But we're still looking for, you know, the downturn to 0:01:16.160 --> 0:01:19.679 hit in the first half of UM and then a 0:01:19.720 --> 0:01:22.839 mild rebound in the second half, averaging zero point zero 0:01:22.880 --> 0:01:25.800 percent growth for all. This is for the US and 0:01:25.880 --> 0:01:29.640 for Canada as well. UM. I've been pretty surprised actually 0:01:29.640 --> 0:01:32.160 that after like what three and fifty basis points or 0:01:32.160 --> 0:01:36.440 whatever of remix, the US economy is still moving forward. UM. 0:01:36.640 --> 0:01:39.839 And it shows how resilience everything is. And it looks 0:01:39.840 --> 0:01:42.160 like they're gonna keep hiking. I mean, they keep telling 0:01:42.280 --> 0:01:45.479 us they're not going to pause, they're not going to pivot. Vince, 0:01:45.760 --> 0:01:47.880 what do you think about the latest UM, you know 0:01:47.960 --> 0:01:50.800 Bowlard charts showing that we need to be between five 0:01:50.840 --> 0:01:55.760 and seven percent for a restrictive economy, sorry, restrictive rates. 0:01:56.920 --> 0:01:58.440 I just don't doubt it. To be honest with you, 0:01:58.520 --> 0:02:03.000 I remember many years ago, I I was speaking with silly, 0:02:03.000 --> 0:02:05.720 said President Closter, And I asked, I was starting to 0:02:05.720 --> 0:02:08.160 ask him a question about whether or not he goes 0:02:08.200 --> 0:02:11.760 into a supermarket, and he abruptly interrupted and said, I do. 0:02:11.840 --> 0:02:14.600 When I've seen the price of cereal. I wonder if 0:02:14.639 --> 0:02:18.560 that's the case with Bullard, because we're seeing in commodity prices. Well, 0:02:18.560 --> 0:02:21.320 he famously, um, you know, ordered a bicycle that he 0:02:21.360 --> 0:02:23.520 then couldn't get because the supply chain issues, and when 0:02:23.560 --> 0:02:28.640 it was finally delivered, he was given a two up charge. Um, 0:02:28.680 --> 0:02:32.120 So he's worried about that. Maybe maybe that's paint at 0:02:32.120 --> 0:02:35.799 his point of view, because when I look at energy prices, uh, 0:02:35.840 --> 0:02:40.400 in particular, they're telling me, uh that exactly what Jennifer 0:02:40.440 --> 0:02:43.760 said that in a procession is coming U probably for 0:02:43.800 --> 0:02:46.720 the first quarter at least, perhaps the first two quarters 0:02:46.720 --> 0:02:48.600 of next year. But dude, when you look at c P, 0:02:48.760 --> 0:02:51.400 I what in the hell like you got to do 0:02:51.520 --> 0:02:55.160 something right? Seven point seven or cent. Yeah, but it 0:02:55.200 --> 0:02:58.600 takes time for inflation to come down, and inflation expectations 0:02:58.639 --> 0:03:01.359 are starting to drop if you if you look at 0:03:01.360 --> 0:03:06.480 what crew futures versus inflation expectations for one year out 0:03:06.520 --> 0:03:09.160 in the University of Michigan. They're tied at the hip. 0:03:09.560 --> 0:03:12.000 And when with these crew futures coming down, I'm going 0:03:12.080 --> 0:03:13.680 to suggest to you that when we see the next 0:03:13.680 --> 0:03:17.239 few mission one year inflation expectations, they're gonna come down. Also, 0:03:17.440 --> 0:03:19.919 we're going into a holiday driving season and guess only 0:03:19.960 --> 0:03:23.040 in futures dropping, we're going into the winter and all 0:03:23.160 --> 0:03:27.320 the entire energy complex is dropping precipitously. At w t 0:03:27.440 --> 0:03:30.720 I down four percent this morning. That doesn't strike me 0:03:30.760 --> 0:03:34.160 as there's real strong demand out there for the consumer. 0:03:34.200 --> 0:03:37.400 Monket And and Jennifer, you know, we were just kind 0:03:37.400 --> 0:03:40.920 of getting through the bulk of the earnings releases from 0:03:40.920 --> 0:03:43.680 a lot of the big retailers, and again my takeaway, 0:03:43.840 --> 0:03:46.440 it seems like maybe with the exception of Target, pretty 0:03:46.480 --> 0:03:49.680 strong out there, the consumer seems in pretty decent position. 0:03:49.960 --> 0:03:54.000 How do you think about the consumer um? It's you're right, 0:03:54.080 --> 0:03:57.200 And I was actually a little bit heartened by something 0:03:57.280 --> 0:04:00.120 that that James Bullard said earlier this week that who 0:04:00.200 --> 0:04:02.200 is mentioning the bullish factors for the economy, And he 0:04:02.240 --> 0:04:05.800 said he started like state flush, state government savings and 0:04:06.080 --> 0:04:09.720 he's still constituent continued to sit excess household savings and 0:04:09.760 --> 0:04:12.360 still high household wealth, and that's I think this is 0:04:12.360 --> 0:04:14.320 where it's all coming from. And you know, you're still 0:04:14.400 --> 0:04:16.920 seeing wage increases that we're trying to avoid that whole 0:04:16.920 --> 0:04:20.160 wage price spiral thing. But I think that's the plus side, 0:04:20.200 --> 0:04:23.120 even though yes, that's insulationary. But on the plus side, 0:04:23.120 --> 0:04:25.360 you know, at least consumers are making money, at least 0:04:25.360 --> 0:04:27.360 they have a job and they're making a city income 0:04:27.400 --> 0:04:29.480 and be you know a hundred times where resibu is 0:04:29.560 --> 0:04:33.480 going the other way. But so, why do we see 0:04:33.520 --> 0:04:36.600 crude prices coming down? Is the concern that consumers are 0:04:36.600 --> 0:04:40.600 gonna stop spending on oil next year? Is it more 0:04:40.600 --> 0:04:43.039 of a global story? Obviously it's a fungible commodity and 0:04:43.040 --> 0:04:45.840 it trades around the world. I mean, I don't think 0:04:45.839 --> 0:04:48.400 we're doing any less driving. I think I've heard people 0:04:48.440 --> 0:04:51.080 say this is gonna be a very busy Thanksgiving season. 0:04:51.120 --> 0:04:55.600 I'm taking my brand new Chevy Silverado z R two 0:04:55.960 --> 0:05:01.840 back to Ohio with a six point two leader V eight. 0:05:01.839 --> 0:05:04.280 It's naturally aspirated. I get thirteen point four miles a gallon, 0:05:04.320 --> 0:05:08.039 and I'm excited for that trip. So, so why is energy? 0:05:08.080 --> 0:05:11.520 Why are oil prices dropping? I think it's still looking forward, 0:05:11.560 --> 0:05:15.359 I mean because yours are still spending, um obviously, but 0:05:15.600 --> 0:05:17.840 just looking at the data, but obviously the pace has 0:05:17.880 --> 0:05:20.479 slowed and they're not going to continue spending at this 0:05:20.600 --> 0:05:22.240 current rate. And hence this is why you know we're 0:05:22.240 --> 0:05:24.839 looking for that downtren in the first half. UM. And 0:05:24.880 --> 0:05:26.840 with all prices. I mean that's this morning. But you 0:05:26.880 --> 0:05:29.680 know we've seen this week that it can be extremely 0:05:29.760 --> 0:05:32.880 volatile and you can't just scout Russia obviously ever from 0:05:32.880 --> 0:05:34.719 the mix, so they can just say one thing and 0:05:34.720 --> 0:05:37.360 boom you can see what oil prices heading higher again. UM. 0:05:37.520 --> 0:05:40.039 So I think it's more you know, looking ahead, UM, 0:05:40.320 --> 0:05:42.640 the coming slow down and things have started to slow, 0:05:42.680 --> 0:05:46.000 but they're gonna slow more meaningfully in the new year. UM. 0:05:46.040 --> 0:05:49.280 Just given that we've seen such high prices, still high inflation, 0:05:49.480 --> 0:05:51.640 not even though it's coming off the peak, still too 0:05:51.720 --> 0:05:54.360 high for any for anyone's liking. And that's what's going 0:05:54.400 --> 0:05:57.120 to that's what's prompting. I think energy prices, the weaker 0:05:57.560 --> 0:06:00.720 weight on energy prices even thirty seconds have we seen 0:06:00.839 --> 0:06:05.320 peak US dollar? I think? So, I think when you 0:06:05.320 --> 0:06:09.039 see a bit in risk in the spud correlating UM 0:06:09.080 --> 0:06:12.640 within inverse. Uh. Dollar. I like stocks higher going into 0:06:12.720 --> 0:06:14.920 next year and into the end of this year. Uh 0:06:14.920 --> 0:06:17.039 and I think that will that'll see the dollar all 0:06:17.120 --> 0:06:20.960 over all. Right, Vin's good stuff. We appreciated Vin Signarella, 0:06:21.240 --> 0:06:25.120 macro strategist for Bloomberg News, and Jennifer Lee, senior economist 0:06:25.160 --> 0:06:28.279 and managing director BEMO. That's Bank of Montreal all for 0:06:28.320 --> 0:06:30.000 the folks. I've been in this game a while BMO 0:06:30.120 --> 0:06:34.320 Capital Markets. We appreciate that good stuff. Here and again, Matt, 0:06:34.680 --> 0:06:37.120 here's my gasoline chart. You know, it's my Paul Sweeney 0:06:37.160 --> 0:06:43.160 Personal Inflation gauge daily national average gasoline prices for regular 0:06:43.240 --> 0:06:46.159 unleaded three dollars and seventy cents. We're getting down to 0:06:46.200 --> 0:06:49.200 almost the low that we touched, you know, back in September. 0:06:49.279 --> 0:06:52.040 So gasoline rolling over. You called out the w t 0:06:52.080 --> 0:06:54.120 I crude. We've got a seven handle in their seventy 0:06:54.120 --> 0:06:56.839 eight dollars fifty five cents. Uh. So that's your energy 0:06:56.880 --> 0:07:03.279 complex prices coming into the mortgage markets, interest rates, you know, 0:07:03.520 --> 0:07:05.760 coming down, and I'm looking at that, you know, the 0:07:05.839 --> 0:07:09.400 ten year you know Treasury it's three point seven nine percent. 0:07:09.440 --> 0:07:11.600 We were well over four percent, four and a half percent. 0:07:11.680 --> 0:07:13.840 So what does it mean for the mortgage markets? Am 0:07:13.880 --> 0:07:15.640 I gonna get a better deal in the mortgage biz 0:07:15.920 --> 0:07:19.119 Erica Heidelberg. She's a mortgage backed security see strategist for 0:07:19.560 --> 0:07:22.280 Bloomberg Intelligence and she joins us live here on the 0:07:22.280 --> 0:07:24.640 Bloomberg in Active Broker Studio. So Erica just talked to 0:07:24.680 --> 0:07:28.560 us about the state of the mortgage market today. Well, 0:07:28.560 --> 0:07:31.960 in terms of mortgage rates. Uh, last Thursday, after the 0:07:31.960 --> 0:07:34.800 CPI print, we saw the biggest one day fall in 0:07:34.920 --> 0:07:38.920 secondary mortgage market rates in history, fifty four basis points. 0:07:39.560 --> 0:07:42.400 About half of that was because rates fell, about half 0:07:42.400 --> 0:07:45.160 of that was because spreads tightened, both of them kind 0:07:45.200 --> 0:07:47.640 of a relief rally, you know, thinking that the Fed 0:07:47.680 --> 0:07:51.720 probably will slow down their rate of increases. So, um, 0:07:51.760 --> 0:07:55.239 you know, good news for homeowners. Uh, you know, still 0:07:55.320 --> 0:07:57.640 at six sixty according to the Friday Max survey rate 0:07:57.720 --> 0:08:01.440 this week. So it's not like buyer if you're already 0:08:01.480 --> 0:08:04.600 locked in, right, home own buyers specifically, yeah, or if 0:08:04.600 --> 0:08:06.000 you want to sell us, good news right, because a 0:08:06.000 --> 0:08:08.840 lot of people have been having difficulty selling since the 0:08:08.880 --> 0:08:12.480 buyers can't get good rates locked in. Yeah, I mean 0:08:12.640 --> 0:08:14.360 that the point that I'm kind of trying to make 0:08:14.360 --> 0:08:16.720 It's definitely good for you know, the housing market some degree, 0:08:16.800 --> 0:08:21.400 but we're so far above where you know, homeowners, home buyers, 0:08:21.400 --> 0:08:24.280 anybody's used to having to take out a mortgage that 0:08:24.400 --> 0:08:26.240 I don't think it's at this point going to move 0:08:26.240 --> 0:08:30.080 the needle at all for very many people. Um, even 0:08:30.120 --> 0:08:32.960 that huge drop, even that huge drop. At some point, 0:08:32.960 --> 0:08:35.280 people get used to these rates, right. All of our parents, 0:08:35.400 --> 0:08:38.719 I'm sure have told us I used to pay for 0:08:38.720 --> 0:08:42.080 a mortgage right, um, which seems unbelievable now, but there 0:08:42.160 --> 0:08:45.240 was a generation of people that locked in those rates. Yeah. 0:08:45.280 --> 0:08:48.280 For for those who are able to afford to take 0:08:48.320 --> 0:08:52.040 out mortgages at these levels, it's probably not even that 0:08:52.080 --> 0:08:55.880 big a deal because they can actually refinance of rates 0:08:55.960 --> 0:08:58.360 do fall, and you know, who knows where we's are going. 0:08:58.360 --> 0:09:00.520 But I think a lot of people don't necessarily expect 0:09:00.559 --> 0:09:03.320 us to stay quite this high. But for other homeowners 0:09:03.400 --> 0:09:07.000 or home buyers, sorry getting that confused. For other home buyers, 0:09:07.040 --> 0:09:09.160 they can no longer afford the type of house they 0:09:09.160 --> 0:09:12.040 were looking for at all, especially first time home buyers. 0:09:12.080 --> 0:09:14.040 So one of the interests you right off, by the way, 0:09:14.040 --> 0:09:17.360 because you can deduct your interest payments, right, but only 0:09:17.480 --> 0:09:22.720 up to a certain amount. Right, It's limited at this point. Um, yeah, 0:09:22.840 --> 0:09:24.840 that the salt tax you're trying to No, not the salt. 0:09:25.760 --> 0:09:28.839 We're still praying every night. I kneel down next to 0:09:28.920 --> 0:09:31.199 my bed praying for the salt deduction. But that's a 0:09:31.240 --> 0:09:33.720 different You can still deduct, and I can even deduct 0:09:33.720 --> 0:09:37.000 my mortgage interest. But I think there is a limit. Um, 0:09:37.040 --> 0:09:39.880 you can only deduct mortgage interest. I believe up to 0:09:39.920 --> 0:09:46.920 seven yeah, seven on a loan of yeah, and I 0:09:46.960 --> 0:09:49.280 think even there it's capped. I know, you know, personally, 0:09:49.360 --> 0:09:51.400 I think at this point we're limited to the standard 0:09:51.400 --> 0:09:54.760 deduction between the but the salt tax, you know, getting 0:09:54.760 --> 0:09:56.959 taken away, and you know we don't owe that much 0:09:56.960 --> 0:10:00.520 interest left on the mortgage. Is the Federal Reserve buy mortgages, 0:10:00.559 --> 0:10:02.520 selling mortgages? Doing nothing? What are they doing in a 0:10:02.520 --> 0:10:06.120 mortgage market? Right? So the Federal Reserve almost exactly a 0:10:06.200 --> 0:10:08.920 year ago declared that they were going to taper their 0:10:09.000 --> 0:10:12.400 buying of mortgage backed securities. They then we invested paydowns 0:10:12.559 --> 0:10:16.400 uh through June, um and even some through the summer, 0:10:16.400 --> 0:10:18.559 even though they technically were letting the portfolio start to 0:10:18.640 --> 0:10:22.880 run off. Ironically, even though they announced that they were 0:10:22.880 --> 0:10:25.680 going to start withdrawing from the mortgage market a year ago, 0:10:26.679 --> 0:10:29.480 their portfolio is the exact same size it was a 0:10:29.559 --> 0:10:32.040 year ago, because they grew it again through you know, 0:10:32.160 --> 0:10:34.319 June basically, and then it began to shrink from then. 0:10:34.800 --> 0:10:37.640 So what's interesting though, is without even having to have 0:10:37.720 --> 0:10:41.440 changed the size of their portfolio, rates or of course, 0:10:41.440 --> 0:10:45.040 you know, tire, even with last week's sell off, I'm sorry, 0:10:45.080 --> 0:10:48.400 last week's rally and mortgage spreads are significantly wider, and 0:10:48.440 --> 0:10:51.800 the housing market is an entirely different place right now. 0:10:52.559 --> 0:10:55.959 We had existing home sales out this morning. Ninth straight 0:10:56.080 --> 0:10:59.559 month of decline in home sales, fourth straight month of 0:10:59.640 --> 0:11:03.160 decline in median home prices from the existing home sales, 0:11:03.559 --> 0:11:06.080 although part of that seasonals, but it's still um you know, 0:11:06.120 --> 0:11:08.480 we've gone from a twenty percent year of year change, 0:11:08.640 --> 0:11:10.760 we're now down to about a six percent year of 0:11:10.880 --> 0:11:14.080 year change. So obviously a lot of softening and again 0:11:14.160 --> 0:11:16.880 fourth straight month actually you know, a decrease in price 0:11:17.200 --> 0:11:20.440 in that in that index. What's building like right now 0:11:20.480 --> 0:11:24.880 in terms of putting up new uh UM stock, Well, 0:11:24.960 --> 0:11:28.520 home builders are pretty depressed at this point. Uh you know, 0:11:28.679 --> 0:11:30.400 I forget what the last number of I think it 0:11:30.440 --> 0:11:32.920 was like thirty three or something like that, where it's 0:11:32.920 --> 0:11:35.920 a diffusion index, and that means that two thirds of 0:11:35.960 --> 0:11:38.280 the home builders I got that right, whatever, more than 0:11:38.360 --> 0:11:41.400 more than half of the home builders are pessimistic about 0:11:41.440 --> 0:11:45.440 future building. That optimistic housing starts have been coming down 0:11:45.520 --> 0:11:50.559 consistently in single family housing. But the interesting counter trend 0:11:50.640 --> 0:11:54.840 there is that multi family housing starts are increasing. So 0:11:54.880 --> 0:11:58.400 I think that's a recognition that a lot of um 0:11:58.559 --> 0:12:00.760 potential home buyers are actally gonna have to go into 0:12:00.760 --> 0:12:03.760 the rental market, right because those people we were talking 0:12:03.800 --> 0:12:06.160 about who are going to have difficulties swinging and mortgage 0:12:06.160 --> 0:12:08.760 payments with rates at these levels, are gonna have to 0:12:09.200 --> 0:12:11.839 rent instead. And that's why I heard a read guy 0:12:11.840 --> 0:12:14.559 telling me the other day they're they're still building big 0:12:14.880 --> 0:12:18.840 multi family housing and and to your point to there 0:12:18.880 --> 0:12:21.160 are still a lot of homes under construction and a 0:12:21.160 --> 0:12:24.360 lot of new homes coming online which should help also 0:12:24.400 --> 0:12:28.320 at the supply. Didn't mad dynamic normalization? All right? Erica, 0:12:28.360 --> 0:12:31.160 thank you so much. We appreciate it as always. Erica Heidelberg, 0:12:31.400 --> 0:12:33.800 NBAS strategist, Bloomberg intelligent, just joining us live here in 0:12:33.840 --> 0:12:42.320 our Bloomberg Interactive Broker studio, two days away from the 0:12:42.320 --> 0:12:45.720 World Cup beginning in Doha. And they pulled and they 0:12:46.120 --> 0:12:48.320 from undreag pulled the beer rug right out from under 0:12:48.520 --> 0:12:51.080 all the folks that want to enjoy a cold one. Uh. 0:12:51.320 --> 0:12:53.200 We want to break this down. This is the World Cup, 0:12:53.240 --> 0:12:55.640 this is huge. We all know this is a global 0:12:56.080 --> 0:12:59.040 sporting event. We have some great assets to talk to here, 0:12:59.080 --> 0:13:01.560 some people that really know what's going on. Simone Foxman, 0:13:01.840 --> 0:13:04.200 she's a reporter for Bloomberg Television and News and she 0:13:04.320 --> 0:13:07.839 is based in Cutter. That's how I pronounce it, um 0:13:07.880 --> 0:13:10.600 and I know you do. And we have Ira Jersey, 0:13:10.600 --> 0:13:12.880 he's Bloomberg Interstrate strategist. Why do we have him on 0:13:13.120 --> 0:13:16.079 because he actually owns a soccer team. He's actually into 0:13:16.120 --> 0:13:18.000 this whole thing of soccer. I don't get it, but 0:13:18.440 --> 0:13:21.480 he's all in. Simone, Let's start with you here. I 0:13:21.600 --> 0:13:24.640 guess the news on the last twenty four hours coming 0:13:24.640 --> 0:13:29.199 out of Cutter is no Budweiser beer in the stadiums. 0:13:30.040 --> 0:13:32.560 How's that playing over there? Especially since they promised it 0:13:32.679 --> 0:13:35.440 for so long people who bought tickets planned on drinking 0:13:35.480 --> 0:13:39.920 at the game, right, Yeah, well they were are always 0:13:40.000 --> 0:13:43.120 going to be curtailed, and if I may, it's technically 0:13:43.200 --> 0:13:46.880 cut um. But I know most folks can't. Uh it's 0:13:46.920 --> 0:13:50.280 hard to say for most English speakers. But yeah, so 0:13:50.280 --> 0:13:52.720 so we have these rules in place. They were announced 0:13:52.720 --> 0:13:57.200 in September. You can drink within the stadium perimeter, not 0:13:57.360 --> 0:13:59.920 the stance themselves. You can drink within the stadium perim 0:14:00.120 --> 0:14:03.120 or for three hours ahead of the game. Uh, then 0:14:03.160 --> 0:14:05.000 you go to the game, then you come back and 0:14:05.040 --> 0:14:07.520 you can drink for another hour and you'd only be 0:14:07.600 --> 0:14:10.240 able to drink buzz light. But yeah, this is a 0:14:10.280 --> 0:14:14.000 bit of uh well at the very last minute decision, 0:14:14.200 --> 0:14:18.360 certainly to ban alcohol entirely. I mean, alcohol is a 0:14:18.400 --> 0:14:23.240 flashpoint issue here. It is something that you know, taboo 0:14:23.480 --> 0:14:27.600 under in the conservative Muslim culture. I've caught the people 0:14:27.640 --> 0:14:30.840 do drink, but it's in limited spaces. Only certain people 0:14:30.880 --> 0:14:35.680 can actually um buy alcohol and and at specific places. 0:14:36.000 --> 0:14:38.120 So it's not surprising that this is an issue. What 0:14:38.160 --> 0:14:40.840 I think is surprising is the fact that this is 0:14:40.960 --> 0:14:43.120 forty eight hours ahead of the World Cup and we're 0:14:43.120 --> 0:14:49.280 still making these you and can I just jump in here, Um, Yeah, 0:14:49.360 --> 0:14:51.880 so you know, I was last month when I was 0:14:52.200 --> 0:14:53.960 on a trip to London to visit some of my 0:14:54.000 --> 0:14:56.280 team there. I did go to a Premier League game 0:14:56.320 --> 0:14:58.960 and I thought it was interesting that, Um, at Premier 0:14:59.040 --> 0:15:02.280 League venues you're not allowed to drink in the stands either. Um, 0:15:02.400 --> 0:15:05.840 so it's not completely on process because nobody trusts British 0:15:05.840 --> 0:15:08.440 people with alcohol. Well no, no, there was plenty of 0:15:08.520 --> 0:15:11.320 drinking going on before the game in the hallways outside. 0:15:11.400 --> 0:15:13.080 Don't get me wrong. I'm just saying, like in the 0:15:13.160 --> 0:15:16.560 stands they weren't allowed to have alcohol. So so I 0:15:16.800 --> 0:15:18.600 don't know, if you know. Part of that I think 0:15:18.760 --> 0:15:21.320 is just the the you know, over indulgence number one 0:15:21.320 --> 0:15:23.440 and number two, just you know, things like like maybe 0:15:23.480 --> 0:15:26.359 making a mess. So so I think for some Europeans 0:15:26.440 --> 0:15:31.240 it won't be particularly unusual to have to imbibe prior 0:15:31.280 --> 0:15:33.920 to the matches and then go into the stands. You know, UM, 0:15:33.920 --> 0:15:39.720 feeling pretty good? Can you smoke? Simone? Can you smoking? 0:15:39.760 --> 0:15:41.840 It says no, I don't think so. But you know, 0:15:41.920 --> 0:15:46.360 honestly I have I don't know the answer to that, Hey, Simone, 0:15:46.600 --> 0:15:49.760 you and your colleague ad faith Nayer. If I get 0:15:49.800 --> 0:15:54.280 there right, wrote a fantastic story today on the Bloomberg 0:15:54.360 --> 0:15:58.040 terminal about what guitar built for the most expensive World 0:15:58.080 --> 0:16:02.240 Cup ever. Just about some of the huge numbers associated 0:16:02.280 --> 0:16:06.680 with this. Well, the big number here, according to Bloomberg 0:16:06.720 --> 0:16:10.280 get Intelligence, is three hundred billion dollars. That's the amount 0:16:10.320 --> 0:16:13.400 of money that the government has spent, not just on stadiums. 0:16:13.400 --> 0:16:16.960 Actually stadiums are a pretty small piece of this overall, um, 0:16:17.000 --> 0:16:21.160 but spent on infrastructure in preparation for the World Cup. 0:16:21.520 --> 0:16:24.840 So things like a brand new metro system, an entire 0:16:24.840 --> 0:16:27.720 new metro system in the last twelve years at brand 0:16:27.880 --> 0:16:30.760 new city called Blue Sale that was underway a little bit, 0:16:30.800 --> 0:16:33.640 but it's something that's been continue to be built. UM. 0:16:33.720 --> 0:16:37.640 And newport and expansion of the airport. All of these things, 0:16:38.280 --> 0:16:41.560 um were things that Cutter wanted to do anyway, but 0:16:41.840 --> 0:16:45.880 the timeline was really sped up as preparation for the 0:16:45.920 --> 0:16:49.200 World Cup. Stadiums again small piece of that, about ten 0:16:49.280 --> 0:16:54.120 billion of that overall three billion dollar figure. Huge, huge, 0:16:54.160 --> 0:16:56.080 But how much money does the World Cup pull in? 0:16:56.440 --> 0:16:59.440 Do you? Do you have any of the figures here? 0:16:59.480 --> 0:17:02.920 I know you're too quickly just following the rates market, UM, 0:17:02.960 --> 0:17:06.600 but it's big business. Right. Obviously, um, if Qatar was 0:17:06.640 --> 0:17:09.120 willing to bribe FIFA with I don't know how much 0:17:09.119 --> 0:17:11.440 it costs them to to get to get the World Cup, 0:17:11.480 --> 0:17:14.320 but it must have been pretty pretty expensive. How much 0:17:14.359 --> 0:17:16.960 does the whole thing generate? Yeah, so I mean it's 0:17:17.000 --> 0:17:19.320 similar to something like the Olympics, where you're going to 0:17:19.640 --> 0:17:23.080 be driving significant amount of tourism revenue and um you know, 0:17:23.119 --> 0:17:27.159 things like like rental. And it's also an opportunity you 0:17:27.200 --> 0:17:29.000 go to think about a place like Brazil when they 0:17:29.000 --> 0:17:31.919 hosted a few years ago, a couple of tournaments ago. UM, 0:17:32.080 --> 0:17:34.639 it's an opportunity for you to highlight what you have 0:17:34.720 --> 0:17:37.679 in terms of tourism and it and it gives usually 0:17:37.680 --> 0:17:41.119 good vibes for UH for a particular countries. So so 0:17:41.160 --> 0:17:43.720 that's where this whole idea of sports washing comes in, 0:17:43.760 --> 0:17:46.760 where you know, countries host these big events that maybe 0:17:46.920 --> 0:17:50.440 don't have the um you know, don't necessarily have what 0:17:50.440 --> 0:17:53.040 what you know, Westerners would consider you know, good civil 0:17:53.119 --> 0:17:57.359 rights or or um UH or governments that are free 0:17:57.359 --> 0:18:01.359 and democratic, but it allows you to highlight what you 0:18:01.440 --> 0:18:04.080 do have in terms of tourism, infrastructure. You know, whether 0:18:04.200 --> 0:18:06.480 or not you know cutter is going to be one 0:18:06.520 --> 0:18:09.160 of the great places that's going to benefit from from 0:18:09.200 --> 0:18:11.439 that from having the World Cup. I'm not sure a 0:18:11.480 --> 0:18:13.560 lot of people that I've talked to about this, we're 0:18:13.880 --> 0:18:15.639 you know, pretty disappointed. It was going to be in 0:18:15.640 --> 0:18:17.800 the winter, right, This isn't a normal time. Usually it's 0:18:17.800 --> 0:18:21.359 a summer event, um somewhere, we're you know, May through 0:18:21.840 --> 0:18:24.760 um late May through through July event as opposed to 0:18:24.920 --> 0:18:26.600 you know, now in the middle of what is in 0:18:26.760 --> 0:18:29.600 most most countries, this is the middle of their soccer 0:18:29.640 --> 0:18:32.439 seasons for their their club sports. So um, so this 0:18:32.520 --> 0:18:34.720 is really not a particularly good time to be having this. 0:18:34.800 --> 0:18:38.680 From a it's not a particularly good place obviously, right, 0:18:38.840 --> 0:18:42.000 I mean, who would have chosen Qatar for the World 0:18:42.080 --> 0:18:46.159 Cup had it not been for massive injections of liquidity 0:18:46.160 --> 0:18:52.359 into his bank account? Someone? Are they playing? Just let 0:18:52.359 --> 0:18:54.080 me take a little bit of issue with that though. 0:18:54.080 --> 0:18:56.800 I mean, this is a development story for this country 0:18:57.000 --> 0:19:01.080 for sure, and from a FISA's perspective, and in corruption 0:19:01.080 --> 0:19:05.280 allegations aside. You know, their desire is to expand football 0:19:05.760 --> 0:19:08.200 into new parts of the world. That's why we're going 0:19:08.280 --> 0:19:13.680 to see a mainly US focused the World Cup come six. 0:19:14.160 --> 0:19:17.160 But also you know where else and Mina is actually 0:19:17.200 --> 0:19:20.640 going to be able to cobble together that kind of funds, 0:19:20.680 --> 0:19:23.840 the kind of infrastructure that you need in order to 0:19:23.840 --> 0:19:26.080 be able to host a World Cup. You're really looking 0:19:26.200 --> 0:19:28.480 at the Gulf. Yes, the Gulf has its own ambitions, 0:19:28.480 --> 0:19:31.440 but here the ambition is to build a non oil economy, 0:19:31.520 --> 0:19:35.160 to move away um from hydro carbon. And so for them, 0:19:35.200 --> 0:19:37.400 that's why this three billion dollars, this makes a lot 0:19:37.400 --> 0:19:39.880 of sense. So are they going to host the Winter 0:19:39.960 --> 0:19:46.800 Olympics next? Saudi Arabia is actually gonna host the Asian 0:19:46.880 --> 0:19:50.600 Winter Games. I've I've forgotten the year here. I believe 0:19:50.640 --> 0:19:53.159 it's tight, but someone's gonna call me and tell me 0:19:53.200 --> 0:19:56.840 I'm wrong. But believe it or not, Yes, I believe 0:19:56.880 --> 0:20:00.240 it Saudi Arabia. Believe it all right some And thank 0:20:00.280 --> 0:20:03.480 you so much for joining us. Really appreciate getting uh 0:20:03.520 --> 0:20:07.280 your time here. Simone Foxman, she's in Doha. She covers 0:20:08.000 --> 0:20:11.280 that part of the world for Bloomberg News and Bloomberg Television, 0:20:11.320 --> 0:20:13.320 so it's great to get her on feats on the 0:20:13.359 --> 0:20:16.760 ground type of reporting there. And we got our Jersey. 0:20:16.760 --> 0:20:19.800 He's Bloomberg Interest Rate strategist but he is our expert 0:20:20.359 --> 0:20:24.480 for all things football slash soccer, and uh, please take 0:20:24.520 --> 0:20:26.800 a look at Simone's article on the Bloomberg trompins from 0:20:26.800 --> 0:20:29.520 shirts on Bloomberg dot com. It gives you anything if 0:20:29.560 --> 0:20:31.000 you have a terminal in front of you and I 0:20:31.040 --> 0:20:32.959 big take, and I big take. It's good stuff and 0:20:33.080 --> 0:20:35.240 great reporting. So check it out on Bloomberg dot com 0:20:35.240 --> 0:20:41.080 slash A big take. All right, let's check in and 0:20:41.119 --> 0:20:43.159 get a real, real overview what's going on in the 0:20:43.200 --> 0:20:46.159 retail space. We've had a lot of retailers report earnings 0:20:46.160 --> 0:20:47.760 over the last several days. We want to bring in 0:20:47.800 --> 0:20:50.600 Punham Goyle. She's a senior analyst at Bloomberg Intelligence that 0:20:50.600 --> 0:20:53.199 covers all things retail. So, Punham, what are some of 0:20:53.200 --> 0:20:55.200 your takeaways? And look like some decent numbers out of 0:20:55.320 --> 0:20:57.320 you know, the likes of the Gap and foot locker 0:20:57.440 --> 0:21:02.000 and raw stores. Consumers pretty good? Uh, consumer is not 0:21:02.080 --> 0:21:04.040 pretty good. I think they're okay. I think I think 0:21:04.040 --> 0:21:08.280 our expectations had been muted, so compared to muted expectations 0:21:08.280 --> 0:21:11.480