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Speaker 4: Molly, A lot of movement here in a commodity's gold off,
Speaker 4: big Bitcoin.
Speaker 5: Ripping, absolutely ripping. So who do we eaty two thousand?
Speaker 3: Yes?
Speaker 6: So who do we talk to?
Speaker 4: We talked to Michael bloone Miami, Mike, Senior Commodity Strategies
Speaker 4: for Bloomberg Intelligence. Safely esconced in Miami. He was doing
Speaker 4: Miami before it was really chic. He was down there early.
Speaker 4: Mike talked to us first about Bitcoin eighty two. We're
Speaker 4: pushing up against eighty three thousand dollars per token.
Speaker 6: What's happening here?
Speaker 7: The world changed last Tuesday and it's almost a perfect
Speaker 7: storm for bitcoin. So think of all the anti bitcoin
Speaker 7: regulation and pushback from the pre Use Administration and Gary Gensler,
Speaker 7: that's completely flipped. It's delightful to see for some of
Speaker 7: us who wrote about this five years ago that any
Speaker 7: US representative or regulator that did not understand that the
Speaker 7: base layer of this place was actually organically went for
Speaker 7: the dollar most widely trading bitcoin cryptos not bitcoin. It's
Speaker 7: actually tether. The dollar token was Finally, it's delightful to
Speaker 7: see them figuring it out. What's really happening in this space.
Speaker 7: So it's nothing but good for bitcoin. The market's getting frothy,
Speaker 7: but it had a good period of six months which
Speaker 7: just hung out. Now it's just taking off and you're
Speaker 7: seeing massive inflows in ETFs. People can get exposed to
Speaker 7: it and it's kind of kicking into the little match.
Speaker 7: Is a digital goal or is leverage stock market? Right now,
Speaker 7: it's stock workers making new high bitcoins, making new high
Speaker 7: bitcoins back to it leadership role.
Speaker 8: Mike, tell me how much of this trade right now
Speaker 8: is dependent on Gary Gensler not being in the SEC
Speaker 8: and it can trump?
Speaker 5: Honestly do that?
Speaker 7: Oh sure, well he's going to be gone within months.
Speaker 7: It's just a question of when. He's very unfavorable SEC chairman.
Speaker 7: He made a lot of enemies on both sides of
Speaker 7: the aisle, but this is just part of what got
Speaker 7: him elected. It's the key thing I think the market's
Speaker 7: figuring out is let's not underestimate this. In Bolden next president.
Speaker 7: He has been re elected by completely decisive election, and
Speaker 7: his mantra everything he said in his campaign, I'd say
Speaker 7: be careful to disagree with. For instance, I'm reading the
Speaker 7: latest book for Robert Leiittheiser, who was his past trade representative,
Speaker 7: and it's called no trade is Free, and we shouldn't
Speaker 7: expect him to do what he says, partly because he
Speaker 7: has carte blanche at least to the midterms, and there's
Speaker 7: still pretty significant trade depthsits So from a commodity standpoint,
Speaker 7: it's very bearish. From a bitcoin standpoint, it's very bullish,
Speaker 7: partly because he tilted over and he got the bitcoin
Speaker 7: people on his side. I don't think he wants to
Speaker 7: upset them.
Speaker 4: Mike, I can't even remember the last time we talked
Speaker 4: about valuation and how you're supposed to value bitcoin. Just
Speaker 4: refresh our memory on how you think about that whole consent.
Speaker 7: Yeah, well, in pectical analysis, so I mean, I like
Speaker 7: to compare it versus gold right now I'm looking at it.
Speaker 7: It's as some hedge fund managers call it, the fastest
Speaker 7: horse in the race. I mean versus all risk acids.
Speaker 7: The risk right now is bitcoins making new record highst
Speaker 7: but it's correlation sixty day correlation to this SMB five
Speaker 7: hundred ato point seven or so is the highest ever
Speaker 7: on the way up, So it's a leading risk acid.
Speaker 7: It's rice for all this optimism about us, you know,
Speaker 7: the Trump election, but markets are so expensive ready versus
Speaker 7: when he was elected twenty sixteen, they were very low.
Speaker 7: Certainly bitcoin was. So there's so many ways, but stocks
Speaker 7: to use is one way to do it. The key
Speaker 7: thing that I like to say is there's definable diminishing
Speaker 7: supply and you can see that by just the code,
Speaker 7: and there's increasing demand and adoption, so over time the
Speaker 7: price must go up. And right now it had a
Speaker 7: major switch flip that this the unexpected election of mister
Speaker 7: Trump has just flipped it over to the bullish spirits
Speaker 7: at the moment.
Speaker 8: Now, this is something I was really surprised to read
Speaker 8: in one of our stories that bitcoin now ranks only
Speaker 8: second to the fossil fuel industry, or rather the crypto
Speaker 8: industry at large, and total money deployed since the twenty
Speaker 8: ten Supreme Court decision that limited funds on campaign political
Speaker 8: spending that's shocking anyone else to think that crypto is
Speaker 8: number two to fossil fuels. Where is all this cap
Speaker 8: campaign influence money coming from?
Speaker 7: Mike?
Speaker 5: Who are the big spenders here?
Speaker 7: So well, I don't know exactly who they are. I mean,
Speaker 7: last time we heard from the bidenminstration, Sam Bankman Freed
Speaker 7: was the number two donator. That didn't work out so well.
Speaker 7: That's why partly the bidenministration pushed back after the collapse
Speaker 7: at the FTX. The bottom line is, let's look at
Speaker 7: an ETPs now ETFs Bitcoin's about ninety two billion. Total
Speaker 7: gold ETPs are about two hundred and thirty billions, so
Speaker 7: let's catching up fast. And remember this Bitcoin's only been
Speaker 7: trading in exchange traded funds for a few years. Gold's
Speaker 7: been almost twenty years in exchange traded funds. So it's
Speaker 7: just the you know, the digital goal is taken on
Speaker 7: the old analog goal, and the question where it stops.
Speaker 7: The way I see it right now is yes, everything
Speaker 7: looks so bullish, it's just a little bit expensive. But
Speaker 7: I published today is bitcoin digital gold or is it
Speaker 7: leverage baiting? Right now? It's much more leveraged version the
Speaker 7: stock market and animal spirits are in full force.
Speaker 4: Uh you mentioned gold, Mike. Gold is down about two
Speaker 4: point three percent today. What's the trade here in gold?
Speaker 4: Is this just a taking some money off the table
Speaker 4: after a big.
Speaker 7: Run, potential lesson of geopolitical risks, the definitive election of
Speaker 7: Donald Trump. Gold was way overdue for a correction of
Speaker 7: already hearing of inklings of mister Putin and mister Trump
Speaker 7: talking this last weekend. And if there's any you know,
Speaker 7: Dayton coming in the world, that's going to be a
Speaker 7: major pressure factor for gold. But in the meantime, gold
Speaker 7: on the one year basis is still up about the
Speaker 7: same as S and P five hundred, around thirty five percent.
Speaker 7: It's way overdue for a correction. I'm looking at twenty
Speaker 7: four to twenty five hundred as good support level as
Speaker 7: it could come back to. It just got way too bensive.
Speaker 7: So at its peak I think that was early October,
Speaker 7: is up thirty nine percent of the year. That would
Speaker 7: have been the best year since nineteen seventy nine. So
Speaker 7: it's a bull market pulling back. But then looking forward,
Speaker 7: if there's much if there's a major shift in what's
Speaker 7: happening in China, I mean, mister Z kind of filtering
Speaker 7: away from President Putin maybe towards the US. That's bad
Speaker 7: for gold, But overall it's the key thing is there's
Speaker 7: still some major geopolitical factors supporting going to the bottom line,
Speaker 7: like say, for gold, is gold will be Gold's major catalyst.
Speaker 7: I think to go hires at some point when we
Speaker 7: see the next bear market in US stock market, maybe
Speaker 7: God help us if that ever happens again.
Speaker 6: All right, Mike, thanks so much for joining us. As always,
Speaker 6: Mike mclohan.
Speaker 4: He's a senior commodity strategist for Bloomberg Intelligence.
Speaker 6: B I go go check out all his research on
Speaker 6: all commodities.
Speaker 4: He covers everything from the sauce, you know, the grains,
Speaker 4: to the metals to the all kinds of stuff, including
Speaker 4: a bitcoin, so he kind of has it all covered there.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 4: Kim Farrest joins US founder and chief investment Officer, Boca
Speaker 4: Capital Partners on zoom from Pittsburgh, one of my favorite towns. So, Kim,
Speaker 4: you woke up with your team on Wednesday last week.
Speaker 4: What changed for you guys, if anything? And your outlook
Speaker 4: for markets if anything? If anything?
Speaker 9: If anything, yeah, well, really nothing, because our few is
Speaker 9: the long term. We believe strongly that if you have
Speaker 9: money in the market, it should be in there for
Speaker 9: a minimum of three to five years. You know, you
Speaker 9: can think about harvesting what we do today in three
Speaker 9: to five years, so that.
Speaker 7: Kind of.
Speaker 9: You know, time heals a lot of wounds, we'll just say,
Speaker 9: and makes things better in the long run, and you
Speaker 9: just have to work with what you have. So that's
Speaker 9: what we're doing. And actually nothing changed because we were
Speaker 9: believers in having that Barbell strategy of large cap and
Speaker 9: small cap together. Small cap has been suffering for a
Speaker 9: myriad of reasons, and we're looking at and by small cap,
Speaker 9: I mean companies that have a billion or more in
Speaker 9: market cap. The microcaps were not at all interested in.
Speaker 9: So we think that, you know, the large caps have
Speaker 9: had a great run over the last couple of years,
Speaker 9: and it looks like maybe small cap will have its
Speaker 9: moment in the sun coming up in the next couple
Speaker 9: of years.
Speaker 8: So are you saying him that, like, you're not really
Speaker 8: buying into the Trump trade. You're not out there, you know,
Speaker 8: buying it's on a bitcoin and silling treasuries right now.
Speaker 9: I'm sorry, I couldn't even let you get that out.
Speaker 9: Buying a lot of bitcoin. Well, you know, paint me
Speaker 9: as old fashioned. While I think bitcoin is interesting to watch,
Speaker 9: I don't really know how to value it.
Speaker 2: I don't.
Speaker 9: I heard your guest on the prior segment also kind
Speaker 9: of reflecting that. And my big thing whenever I talk
Speaker 9: to investors that we serve about bitcoin is whenever you
Speaker 9: can pay your taxes with it, I'll pay attention to
Speaker 9: it then because that means it's.
Speaker 6: A real currency.
Speaker 9: Right now, it is not a real currency.
Speaker 4: So Kim, when when you look at the small caps, boy,
Speaker 4: you've got to have a good call on management because
Speaker 4: they have such an outsized influence on kind of just
Speaker 4: kind of how the business develops.
Speaker 6: You how do you do that with some of these
Speaker 6: smaller cap companies?
Speaker 9: Sure, well, first thing, we have time on our side.
Speaker 7: Case.
Speaker 9: I've been doing this for twenty four years and I
Speaker 9: started on the cell side, where my director of research
Speaker 9: encouraged me to have half small cap half large caps.
Speaker 9: So I'm kind of in the groove on this. But
Speaker 9: what I do is I look for several markers. First
Speaker 9: of all, growth is always important. I am not strictly
Speaker 9: a growth manager. I'm growth at a reasonable price, but
Speaker 9: growth has to be there. And how do you get growth, Well,
Speaker 9: you sell more product, and how do you do that
Speaker 9: product marketing? It sounds really boring, but what it really
Speaker 9: is is having a process to understand your client or
Speaker 9: customer and then having a repeatable process where you make
Speaker 9: your product and service to light your customer and they
Speaker 9: come back over and over and over again. And can
Speaker 9: it really be that easy? Yes, it is. It's hard
Speaker 9: to spot and you have to do a lot of
Speaker 9: fundamental research. But that's what we're doing, is looking for
Speaker 9: that kind of perpetual money machine where businesses know what
Speaker 9: clients they serve and every day get up and try
Speaker 9: to serve them the best they can.
Speaker 8: So it's like you've got you know, with earning season
Speaker 8: still going on, we've got the retailers coming up next.
Speaker 8: Just tell me about your view right now of the
Speaker 8: US consumer, the economy, at large. You know, there's been
Speaker 8: all these calls for slow down and it just hasn't
Speaker 8: really been all that noticeable yet, and so.
Speaker 5: Just wondering when you really think that tipping point's going
Speaker 5: to happen.
Speaker 9: Sure, well, I kind of have an unusual view of
Speaker 9: the economy. I think there's a lot of slowness out
Speaker 9: there if you go out and look for it, pretty
Speaker 9: much in people who are in the lower two thirds
Speaker 9: of the economic food chain, we'll just call it. There's
Speaker 9: a lot of stress. If you walk around stores like Walmart,
Speaker 9: you hear a lot of discussions about what we can
Speaker 9: and can't buy as a family, And I think that
Speaker 9: had a lot of influence.
Speaker 6: On the election, right.
Speaker 9: But more importantly, I'm not one of the people that
Speaker 9: are necessarily looking for the next recession either. I think
Speaker 9: we have these slowdowns now. And why do I think that, Well,
Speaker 9: companies have software in place like CRM Salesforce to be
Speaker 9: able to understand what their pipeline is, and then they
Speaker 9: have erp or exotic or very fancy accounting systems that
Speaker 9: let them match the supply and demand. So we have
Speaker 9: seen over the past twenty years very few or no
Speaker 9: recessions that were caused by too much capacity.
Speaker 10: Right.
Speaker 9: Companies are really good about being able to tailor that
Speaker 9: to the conditions. But we do have crisis, and nobody
Speaker 9: can really predict crises very well, or at least the
Speaker 9: timing of them. They may see them coming. So that's
Speaker 9: what I think the economy does.
Speaker 6: Now, right, all right, Kim, thanks so much for joining us.
Speaker 6: Really appreciated as always, Kim Farish.
Speaker 4: She's a founder and chief investment officer Boca Capital Partners
Speaker 4: in from Pittsburgh, PA, one of my favorite towns.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 2: weekdays at ten am Eastern.
Speaker 3: On Apple car Playing and Broun Auto with the Bloomberg
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Speaker 2: Listen on demand wherever you get your podcasts, or watch
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Speaker 4: Today, Signia Group said it won't pursue a combination with
Speaker 4: rival Ensure Humana after reports two companies had renewed discussions.
Speaker 4: Signa shares jump by eight point seven at the New
Speaker 4: York market open, while shares in Humanity dropped by six percent,
Speaker 4: So not so much here for this particular deal.
Speaker 6: Glenn Losev Joints is.
Speaker 4: He's a senior Equiano's covering a healthcare services space for
Speaker 4: Bloomberg Intelligency Joints was here in a New York Bloomberg
Speaker 4: Interactive Brokers studio in New York. So Glenn talk to
Speaker 4: us about this deal that did not happen between Signa
Speaker 4: and Humana.
Speaker 11: Yes, so this is the second try. If it wasn't
Speaker 11: the rumor the first time the companies tried to merge
Speaker 11: at the end of last year, it also didn't take
Speaker 11: long to sort of to fall apart. This was the
Speaker 11: last the second time, and you know, we don't exactly
Speaker 11: know what happened, but my view was that the the
Speaker 11: takeout price for Humana the companies will not agree upon,
Speaker 11: and that's probably the reason over the last eleven month
Speaker 11: Humana lost half of its market cap. You know, it's
Speaker 11: very difficult. Obviously Signa is a much better place to
Speaker 11: to sort of to pitch the merger, but also when
Speaker 11: you were trading it twice the market cap just a
Speaker 11: few months ago, you know, it's difficult to agree on
Speaker 11: price and they.
Speaker 8: Couldn't really adjust that at this stage, you know, with
Speaker 8: with Humanis stock now having dropped so much in the meantime, That's.
Speaker 11: What I'm thinking. This is it wasn't confirmed. The only
Speaker 11: thing that Signa said that they're not pursuing the merger,
Speaker 11: but price is probably the reason for it, the agreement
Speaker 11: and the price.
Speaker 3: All right, so.
Speaker 6: Is insurance company? Yes, Humana is a healthcare services provider.
Speaker 11: No, so, Signa and Humana are both health insurance insurance.
Speaker 11: Signa has a huge pharmaceutical benefit manager express Script. If
Speaker 11: you remember they are a few years ago, it's one
Speaker 11: of the top three human and and also seeing that
Speaker 11: focuses more on the commercial business, which is employer employer
Speaker 11: based UH insurance, while Humana is focusing on medicare people
Speaker 11: who are over sixty five?
Speaker 3: Got it?
Speaker 8: And you got to think now, like Signa's sack up
Speaker 8: a good bit today. They've done a lot of share buybacks.
Speaker 8: Would think that that's going to be now the strategy
Speaker 8: going forward back to those Yeah, again, what else do
Speaker 8: you do when you're not about to spend a couple
Speaker 8: billion dollars on another company?
Speaker 11: You you basically yeah, but you're basically they're they're they're
Speaker 11: expanding their UH sort of expanding their pharmacy business UH
Speaker 11: part of the express Script. That's where the tailwans are
Speaker 11: over the next few years, and just stugging along trying
Speaker 11: to you know, cut costs and improve revenue. That's basically
Speaker 11: the business model.
Speaker 10: All right.
Speaker 4: So healthcare investors, they woke up Wednesday morning last week,
Speaker 4: what did the election mean for the health care space?
Speaker 11: So for healthcare space, it's very broad. But for example,
Speaker 11: for health insurance, basically it's Trump's win is positive for
Speaker 11: Medicare advantage companies rule of time sort of like Humana,
Speaker 11: And there's an overhang of for Medicaid insurance companies like
Speaker 11: Stina and Malina because of the work requirements, possibilities and
Speaker 11: about my care, about my care subsidies expiring at the
Speaker 11: end of the end of the.
Speaker 5: Four His presidency is also obviously positive for m and A.
Speaker 8: Any chance that you know, this deal gets revisited again
Speaker 8: or SIGNA maybe has another target.
Speaker 11: There is always a chance for this deal to be
Speaker 11: revisited again.
Speaker 8: We got to give Paul a chance to live out
Speaker 8: his stream here being a healthcare of an a banker.
Speaker 3: Right.
Speaker 11: Over All, overall, managed care industry is facing headwinds. You know,
Speaker 11: costs are going up government that is through the roof,
Speaker 11: so they're not going to get paid as much as
Speaker 11: they did five years ago, so it's a marching contraction possibility,
Speaker 11: so you know, buying another health insurance companies always benefit
Speaker 11: for help for insurance business. Any insurance business. Scale is
Speaker 11: the king for any type of insurance business. So there's
Speaker 11: certainly possibility that they will revisit and maybe a gree
Speaker 11: on the price this time.
Speaker 6: All right, Glennlassa, thank you so much for joining us.
Speaker 4: Glenlaw so he's a senior ecoanas covering the healthcare services
Speaker 4: businesses for Bloomberg Intelligence. You can get his research by
Speaker 4: going b I go on the terminal and then you
Speaker 4: can go down to the healthcare stuff and we got
Speaker 4: it all covered on a global scale.
Speaker 6: So we appreciate gating a few minutes of this time.
Speaker 6: A deal, I guess not happening in.
Speaker 5: The healthcare space, so you'll have to look for another one.
Speaker 6: Yeah, exactly.
Speaker 4: But again it just seems like if a lot of
Speaker 4: these big farmer companies that they can't come up with
Speaker 4: whatever they need to come up with through their R
Speaker 4: and D, they just got to just go on.
Speaker 3: And buy it.
Speaker 5: Yeah, if it's not organic, you know exactly right.
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 4: All right, Molly Smith sitting in for Alex Steele Paul
Speaker 4: Swhen you were live here in our Bloomberg Interactive Brokers
Speaker 4: studio streaming live on YouTube as well, So go over
Speaker 4: there and check us out. You can search Bloomberg Podcast
Speaker 4: and that's where you will find it. A lot of
Speaker 4: questions being asked by market participants about some of the
Speaker 4: policies that we may see coming out of President like
Speaker 4: Trump's second stint in the White House. David Young joins us.
Speaker 4: He's a president the Public Policy Center at the Conference Board. David,
Speaker 4: thanks so much for joining us here. What are the
Speaker 4: key areas you're looking for or looking at with a
Speaker 4: Republican in the White House, a Republican Senate, and potentially
Speaker 4: a Republican House, how do you think we'll see policy
Speaker 4: ramifications stem from that?
Speaker 3: Yeah? Well, good morning, and thank you again for having
Speaker 3: me on.
Speaker 12: I found the conversation before very interesting and also just
Speaker 12: a side note, as a former division one tennis player
Speaker 12: unfortunately was not six foot one to six three. That
Speaker 12: profession was short lived. But yeah, when we're looking at
Speaker 12: top kind of you know, the initial priorities from a
Speaker 12: Trump two point zero administration, I think the one that
Speaker 12: is talked about most, and you guys were talking about
Speaker 12: it earlier is tariffs. Obviously you guys mentioned this. You know,
Speaker 12: there's this ten plus so ten to twenty percent universal
Speaker 12: tariff that Trump has talked about, but then also the
Speaker 12: sixty percent tariff on China. I think it's also important
Speaker 12: to just mention when we talk about tariffs here there
Speaker 12: is also a direct correlation towards trade, and when we
Speaker 12: start talking about trade, we start talking about trade agreements.
Speaker 12: So upcoming next year will be the renewal should any
Speaker 12: of the three countries, Canada, the US, or Mexico require it, a.
Speaker 3: Renewal or refresh of the US.
Speaker 12: MCA, which I think will have some pretty significant ramifications,
Speaker 12: especially given the role and relationship between Mexico and Canada.
Speaker 12: I describe Mexico increasingly as one of those connector economies,
Speaker 12: so goods come from China Mexico then up through the US.
Speaker 12: So it will be really interesting to see what Trump
Speaker 12: does with regards to that trade agreement and how he
Speaker 12: leverages tariffs beyond Teriff, a couple other areas to mention climate,
Speaker 12: and what he does with biden era of regulation with
Speaker 12: regards to climate, but also beyond just what Biden did
Speaker 12: international trade agreements. So Trump has said that in his
Speaker 12: initial days in office, taking a much closer look at
Speaker 12: the Paris Agreement and potentially leaving that agreement. In addition
Speaker 12: to Terriff's and climate. Obviously the regulatory environment and regulation reform,
Speaker 12: industrial policy, and electric vehicles. I know you guys were
Speaker 12: talking earlier about Tesla. Trump has said that he would
Speaker 12: repeal Biden's electric vehicle mandate. And also there have been
Speaker 12: conversations around the value of the Chipsacks Chips Act versus
Speaker 12: the role and impact of tariffs. Finally, the tax bill.
Speaker 3: And what that means in the year ahead.
Speaker 12: And those are some of the domestic issues I think
Speaker 12: from a foreign policy standpoint, the two that initially jump
Speaker 12: out obviously Russia and Ukraine, and also Israel, Gaza Lebanon,
Speaker 12: the future role of Iran and what Trump decides to
Speaker 12: do with regards to those two issues. I'm not forgetting
Speaker 12: China and Taiwan. I just have left that one to
Speaker 12: the third position because the other two kind of have
Speaker 12: dominated over the last twelve months. But with regards to
Speaker 12: China and Taiwan, it is clear of China's intentions, and
Speaker 12: so you can only anticipate that issue area from a
Speaker 12: foreign policy standpoint getting more and more traction in the
Speaker 12: years ahead.
Speaker 8: Thanks David, that was very comprehensive look at what we're
Speaker 8: going to expect. You know something that in my other
Speaker 8: day job here at Bloomberg, I cover the US economy
Speaker 8: and we take a look at that confidence index that
Speaker 8: your firm puts out every month, and we're going to
Speaker 8: get the latest look at that a little bit later
Speaker 8: this month for the November reading. Just tell me a
Speaker 8: little bit about what your expectations are ahead of that.
Speaker 8: We know it's an index that you know, tends to
Speaker 8: be a bit more tilted toward consumer views of the
Speaker 8: job market. But you know, curious to think, you know,
Speaker 8: especially based on the reactions from the exit polls and
Speaker 8: how consumers were obviously or voters rather were very concerned
Speaker 8: with the economy, how you think that the election results
Speaker 8: might be reflected in the next reading.
Speaker 12: Yeah, so it is interesting and if you look at confidence,
Speaker 12: it's definitely moving. The trend is moving in the right direction,
Speaker 12: but it's it's interesting when you look at the right
Speaker 12: direction and things improving, did that actually relate to how
Speaker 12: voters voted on the day. And there's definitely a degree
Speaker 12: of disconnect. And I think from from Harris's perspective, she
Speaker 12: was unable to convince voters that recent improvements in the economy,
Speaker 12: including the decline in the headline inflation, stronger than expected growth,
Speaker 12: have made a difference in them in kind of voters' lives.
Speaker 12: So number one, there is a disconnect, and I think
Speaker 12: there is also certainly a lag when you start looking
Speaker 12: at what people believe, how they feel, and how they
Speaker 12: actually went out on that day and voted. I think
Speaker 12: that also connects and has shown to you know, if
Speaker 12: it is not the top issue area that affected how
Speaker 12: people voted, it is one of the top two issues,
Speaker 12: which is just economic growth and the economy and in
Speaker 12: terms of how that's playing out on a daily basis.
Speaker 6: David, thank you so much for joining us.
Speaker 4: David Young, he's a president a public policy center at
Speaker 4: the Conference Board, joining us via zoom from Atlanta here.
Speaker 4: So I have to see again the early days of
Speaker 4: president like Donald Trump. His administration, like any administration, is
Speaker 4: first one hundred days or our key to really get
Speaker 4: things done. So we'll see how aggressive mister Trump's administrations
Speaker 4: will be coming out of the gate.
Speaker 2: There you're listening to the Bloomberg Intelligence Podcast. Catch us
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Speaker 2: flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Speaker 4: Well, Paul Sweeney were live here in our Bloomberg Interactive
Speaker 4: Broker studio. We're streaming live on YouTube, So go over
Speaker 4: to YouTube dot com search Bloomberg Podcast and that's where
Speaker 4: you'll find us. All Right, here's the mistake I make
Speaker 4: when thinking about commercial real estate.
Speaker 6: I just think offices.
Speaker 4: But there's so much fun, which I keep getting schooled
Speaker 4: on it brought in your I knew, I knew multi
Speaker 4: family housing, student housing, warehouses, all that kind of stuff.
Speaker 6: Our next guest can he can kind of help me
Speaker 6: out here?
Speaker 4: Jeff Brown, founder and CEO T two Capital Management, joining
Speaker 4: us from Chicago via that zoom thing.
Speaker 6: Hey, Jeff, talk to us.
Speaker 4: About where you guys at T two ten to traffic
Speaker 4: in commercial real estate?
Speaker 6: What's your area of expertise?
Speaker 10: Sure for starters PLA.
Speaker 13: I appreciate your delineating office from the broader commercial real
Speaker 13: estate mark.
Speaker 10: A lot of people do jump into that pool. Yeah.
Speaker 10: T two.
Speaker 13: We are very focused on the student housing space, on
Speaker 13: the multi family space, and we also run a private
Speaker 13: credit fund as well.
Speaker 8: You know, I find a student housing story so fascinating
Speaker 8: because this is like, you know, we talk about in
Speaker 8: the US economy, this structural shortage of housing, like you know,
Speaker 8: just for like everyday people, single family homes. But it's
Speaker 8: really like in some places, no more evident than on
Speaker 8: a college campus. There's been so many stories about, you know,
Speaker 8: at UCLA, like kids renting out you know, RV's and
Speaker 8: like tryk well really renting out a private person's driveway
Speaker 8: to put the RV so because they can't find a
Speaker 8: place to live. And where I went to school, Syracuse,
Speaker 8: a hotel that was in the middle of campus is
Speaker 8: now fully a dorm and another apartment building bought back
Speaker 8: to be a dorm.
Speaker 5: Anyways, all that to say, where are all these students
Speaker 5: living and where are the opportunities for you guys to
Speaker 5: come in and help.
Speaker 13: Yeah, those are great anecdotes, smallite that are still pervasive today.
Speaker 13: So for us in the student housing space, we're active
Speaker 13: at schools like Purdue, Auburn University down in Alabama, University
Speaker 13: of Tennessee, Georgia Tech.
Speaker 10: So we tend to migrate toward where there's.
Speaker 13: Really explosive enrollment growth, where there's a stem focus, just
Speaker 13: a high demand for students to be there. Ironically, some
Speaker 13: of the anecdotes you just shared about students beingforced to
Speaker 13: live in hotels or just these makeshift apartments on campus
Speaker 13: because of the lack of supply. That has been our
Speaker 13: story at University of Tennessee as well as Purdue. So
Speaker 13: we're benefactors of those as landlords, but hate to be it,
Speaker 13: frankly for the students and those parents.
Speaker 4: You know, in my freshman year at the University of Richmond.
Speaker 6: It was a trailer where you lived.
Speaker 5: Yes, was there not a dorm.
Speaker 6: There was not a dorm. It was a trailer. My
Speaker 6: dad pulls up to unload music. You gotta be kidding
Speaker 6: me for the money turnaround. We had a heck of
Speaker 6: a good time in those trailers.
Speaker 11: We'll just leave it at that.
Speaker 6: The mods down to the University of Richmond.
Speaker 4: Hey, Jeff, if you want to go out and build
Speaker 4: some student housing and multi family housing, where are you
Speaker 4: going to get the money?
Speaker 6: Are banks lending?
Speaker 10: Yeah?
Speaker 13: Thankfully, I would say banks are lending. It's certainly much
Speaker 13: more conservative than probably historical standards. Interestingly, banks, I find
Speaker 13: them uniquely healthy right now. I think so many learn
Speaker 13: to their lessons from the two thousand and eight global
Speaker 13: financial crisis, and they have ratcheted back advanced levels, so
Speaker 13: they just have some decreased exposure. So maybe historically they
Speaker 13: would have been at sixty five or seventy percent of
Speaker 13: cost or value on a project. I think today it's
Speaker 13: pretty customary to be at fifty five or sixty percent
Speaker 13: advanced rates. A lot of buffer for them, but the
Speaker 13: margin for air. So I would say banks are actively lending.
Speaker 13: There the hard part, frankly, and I think I heard
Speaker 13: your prior guests even touch on this.
Speaker 10: The hard part is finding the equity. So if banks
Speaker 10: are at fifty five or sixty percent, where are you
Speaker 10: getting that.
Speaker 13: Other forty or forty five percent of the capital stack
Speaker 13: necessary to take on a project and that's been a
Speaker 13: bit of a Rubis cube, frankly for the past couple
Speaker 13: of years, as interest rates of spiked and capitals retreated
Speaker 13: to the sidelines.
Speaker 8: What do you do when you're looking though, at such
Speaker 8: a constrained labor supply right now in construction, and especially
Speaker 8: with the prospect of this new administration, really, you know,
Speaker 8: rolling back a lot of the immigrant workforce. Is that
Speaker 8: concerning to you of how much more building can really
Speaker 8: happen in the next four years?
Speaker 13: It is, And I'll tell you, going back to the
Speaker 13: student housing aspect of our business, we have bought far
Speaker 13: more existing student housing and did some cosmetic changes properties
Speaker 13: when we have done ground up development, simply because most
Speaker 13: construction costs are They really spiked during COVID and caught
Speaker 13: a lot of attention for supply chain.
Speaker 10: Issues, shortage of labor and other variables.
Speaker 13: Unfortunately, the cost of construction hasn't plausibly come down to
Speaker 13: where it's still viable to build ground up construction.
Speaker 10: Certainly, some folks can get away with it.
Speaker 13: They'll take on lower margin projects thinking that maybe down
Speaker 13: the road the margins will make some sense. But it's
Speaker 13: been very, very tricky to make numbers work in the
Speaker 13: ground up construction, whether it's student multi or any other
Speaker 13: asset class.
Speaker 4: How about you know we talked about student housing, how
Speaker 4: about senior housing? I mean, all we hear about is
Speaker 4: how this population is aging and there's going to need
Speaker 4: to be for more and more senior communities.
Speaker 3: Is that?
Speaker 6: How do you guys think about that business? Have you
Speaker 6: looked at that?
Speaker 13: We've looked at it, We've participated in it, and we've
Speaker 13: kind of we've just paused on it. Frankly, it's a
Speaker 13: very operationally intensive business where you're so dependent on Like
Speaker 13: I said, it's a running business. So we have your
Speaker 13: operator who's handling all the day to day activities. Oftentimes
Speaker 13: there can be a bit of a misalignment between operations
Speaker 13: and ownership and the property. We try to stay away
Speaker 13: from those situations and just stick to what we know best,
Speaker 13: which is student and multi.
Speaker 8: I got to ask you, though, you know something that
Speaker 8: I wonder when I see all of these universities that
Speaker 8: are like busting at the seams with students and nowhere
Speaker 8: to put them, are enrollment rates that much higher?
Speaker 5: Acceptance rates rather that much higher?
Speaker 8: Like I mean, because right now, the sentiment about getting
Speaker 8: a college education has really never been worse. So I
Speaker 8: just wonder are the universities just letting in that many
Speaker 8: more kids?
Speaker 13: A great, great question, Mollie, and I'd say, just like
Speaker 13: Paul did a start off, this segment office doesn't define
Speaker 13: how the commercial real state market is doing. I think
Speaker 13: you really got to be careful with which student housing markets,
Speaker 13: which campuses you're at, before you say a broadbreast.
Speaker 10: Statement about student housing as a whole.
Speaker 13: There are some schools that are seeing our record applications
Speaker 13: and having the choice to make where how do we
Speaker 13: want to go with a record enrollment as well, and
Speaker 13: they got to be mindful of how much supply, how
Speaker 13: much infrastructure alone, classrooms and other space available on campus
Speaker 13: do they have to accommodate the student population.
Speaker 10: So it.
Speaker 13: Is it's very school specific from my perspective, and that's
Speaker 13: where I think Tennessee and produced schools that we're very
Speaker 13: close to. I've done a fantastic job at managing that
Speaker 13: and drawing demand at the schools. Others need to be
Speaker 13: careful and make sure they're not reenacting your experience calling
Speaker 13: and students are rolling up to a trailer show.
Speaker 10: Up on campus.
Speaker 6: Yep, the mods as we call them.
Speaker 4: Jeff Brown, founder and CEU of T two Capital Management,
Speaker 4: thanks so much for joining us there.
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Speaker 6: Every industry. I think everybody out there is trying to
Speaker 6: figure out what.
Speaker 4: Does the second Trump administration mean for my company, my industry,
Speaker 4: you know, and that's certainly true of the energy space.
Speaker 6: And my guess would be drill, baby, drill.
Speaker 5: Two fo words out of my mouth.
Speaker 7: There you go.
Speaker 4: Let's talk to somebody who really thinks about this and
Speaker 4: knows what he's talking about. Ty Lou Oil Market Specialists
Speaker 4: for b n EF joining us here in our.
Speaker 6: Bloomberg Interactive Broker Studio.
Speaker 4: So Ty I would think that a second Trump administration
Speaker 4: would be good for the energy space.
Speaker 6: Is that fair assumption? How do you guys think about it?
Speaker 1: Yeah, Hi Paul, thank you for having me. Yeah, definitely,
Speaker 1: I think the USOL industry and the guess industry can
Speaker 1: benefit from Trumpet administration in the number of ways. I
Speaker 1: think the first half the BED is like a lower
Speaker 1: corporate tax rate. So person see that Trump has mentioned
Speaker 1: has indicated he would like to lower corporate tax rates
Speaker 1: from the current twenty one percent to fifteen percent. So
Speaker 1: if the materializes, that's the way of the BED. That's
Speaker 1: like more money for the industry and for the shareholders.
Speaker 5: What are they going to do with that money?
Speaker 7: Then?
Speaker 5: Are you suggesting it would be share buybacks or whatever?
Speaker 1: Yeah, So there's definitely like a number of options these
Speaker 1: companies can do with this quote unquote extreme money. They can,
Speaker 1: like you said, they can do more buyback for the shares,
Speaker 1: they can issue more dibid and payouts, they can reduce
Speaker 1: the debt, and finally they can always they always have
Speaker 1: the option to funnel some of these money into capital expenditures,
Speaker 1: which ultimately retranslates into more production down the road.
Speaker 4: How about from I mean from the regulatory standpoint, I mean,
Speaker 4: can I go down there now and drill a well,
Speaker 4: can I make a pipeline to take my natural guess
Speaker 4: to corporate Christian wherever it needs to get to. Is
Speaker 4: it going to be easier under a second Trump administration
Speaker 4: to build energy stuff?
Speaker 1: Yeah, I would definitely think so. So under the Barton administration,
Speaker 1: that's the government has imposed a lot of regulations. There
Speaker 1: are team that's unfriendly to the on gas industry. The
Speaker 1: government is issued during rights moratorium they issued they placed
Speaker 1: the pause on energy exports permits, and they also increase
Speaker 1: royalties on federal land leases.
Speaker 6: Uh.
Speaker 1: And I would presume and all of these like we're
Speaker 1: pretty hostile and created a lot of uncertainty to the industry.
Speaker 1: So I would assume I would think that Trump administration
Speaker 1: would remove a lot of these regulations. There are team
Speaker 1: that's onwards to our gas producers. So definitely beneficial from
Speaker 1: that point.
Speaker 8: Of view you mentioned before, you know, increasing capex potentially
Speaker 8: and how that would mean more production.
Speaker 5: Gotta the worry about prices If.
Speaker 8: You are producing so much more, what happens to the
Speaker 8: supply demand equation? There is that already something that drillers
Speaker 8: are thinking about of how much more they might want
Speaker 8: to maybe not go in too much.
Speaker 1: Yeah, that's for sure. So if you look at the
Speaker 1: past ten years, use oil producers have on server occasions
Speaker 1: crashed the AILL process when it decided to turn on
Speaker 1: the production tabs. So they're very cognizange of the risks
Speaker 1: this time around. On top of that, there's like a
Speaker 1: lot of shareholder pressures on these oil and gas companies
Speaker 1: to maintain capital discipline and to increase capital payback. So
Speaker 1: from that sense, I think even though if there's like
Speaker 1: more money to grow around in the industry, it would
Speaker 1: be more much harder for the oil producers to grow
Speaker 1: production the way they did in the past ten years.
Speaker 4: So when did the US become a net exporter like
Speaker 4: twenty sixteen or something like that, I think so, okay,
Speaker 4: so we were a net importer forever, then we became
Speaker 4: thanks to the shell finds, we became.
Speaker 6: A net exporter.
Speaker 4: How does the US oil industry, I'm not sure if
Speaker 4: you can even characterize it or is it just individual companies.
Speaker 4: How does the US oil industry interact with OPEK if
Speaker 4: at all?
Speaker 7: Yeah.
Speaker 1: Yeah, So the way I think about that very competitive,
Speaker 1: like natural competitors against each other. So if if lower
Speaker 1: taxes in the Trump administration materializes, it would definitely make
Speaker 1: the us O patch a lot more competitive. It will
Speaker 1: also the brick given calculations there, and there would be
Speaker 1: more money to grow around. So it would be it
Speaker 1: will make it much harder for OPEC to increase the output,
Speaker 1: so it's going to place OPACK on a more difficult grant.
Speaker 8: You know, something that in part got Donald Trump reelected
Speaker 8: to the White House was the idea of bringing prices down.
Speaker 8: And you know, gas prices obviously a big sticking point
Speaker 8: for a lot of Americans. Gas prices have been coming
Speaker 8: down pretty consistently over the past you know, six months
Speaker 8: or so, down to now like about roughly three dollars
Speaker 8: a gallon on average nationwide.
Speaker 5: What can Trump really do for gas prices?
Speaker 1: Well, when I think about gas prin just there are
Speaker 1: two pieces to it. That's the clude oil price part
Speaker 1: and then the that's the refinery margin part. Now, on
Speaker 1: the refinery margin, there's probably not much a person can
Speaker 1: do to it because you basically have to increase refining
Speaker 1: capacity and that takes years to build out. If you
Speaker 1: want to pray for their part, the outer part would
Speaker 1: be the all price part. Now, if you redo regulations
Speaker 1: make it easier for companies to drew, you can pre rent. Theoretically,
Speaker 1: you can prevent some of the possible price spikes in
Speaker 1: all price in all prices, just because it's less onerous
Speaker 1: for these jurists to put more capital into the ground.
Speaker 1: So in this sense, you can help prices from seeing
Speaker 1: more spikes. But however, I don't think these companies will
Speaker 1: really go out and go all and endure again the
Speaker 1: way they did before for the reasons we talked about before.
Speaker 6: So what's happened to the Russian oil?
Speaker 4: It's been a couple of years now, and if it's
Speaker 4: not going to Germany, where's it going.
Speaker 1: Yeah, so it's not going to the Western European nations,
Speaker 1: and Western nations has placed sanctions on Russian oil. So
Speaker 1: a lot of that has been brought up by unconstries
Speaker 1: like India and China, so they're pretty really benefiting from
Speaker 1: these sanctions.
Speaker 6: So these sanctions aren't really working, are they.
Speaker 1: They will be directing trade flow, the redirecting trade flow,
Speaker 1: and they're making it harder for Russia to ship the
Speaker 1: oils around the world. So it does increase the costs
Speaker 1: on the Russian oil producers. So that's an impact, but
Speaker 1: the impact I feel like it's probably more limited.
Speaker 8: We do import some oil though, right it's not all
Speaker 8: domestically produced, I mean, is that subject to tariffs?
Speaker 1: I well, I think this morning Trump has indicated he
Speaker 1: will accept where we do accept input out of oil
Speaker 1: from Canada just because of the crewe grate that we
Speaker 1: need in the golf coades. It's more fitting for Canadian
Speaker 1: heavier crew dogs. And I think this morning he did
Speaker 1: mention that he's going to exempt some of these crude
Speaker 1: and natural gas US from Canada so he can really
Speaker 1: like doing the very spigical race ways, even though if
Speaker 1: he does in prokes on tariff's all right.
Speaker 4: So I think the takeaway from this conversation is that
Speaker 4: oil companies are going to make more money through lower.
Speaker 5: Tax drill baby Trull.
Speaker 4: Tyler, thank you so much for joining us, TYLERU oil
Speaker 4: market Specialist bn EF.
Speaker 6: I guess our friends down in like Houston, Texas, they're happy.
Speaker 5: About this, Oh, I would think so yeah.
Speaker 8: I mean, we did just have that big take the
Speaker 8: other day about oil and gas being the most productive
Speaker 8: US industry. How to think of like, you know, what
Speaker 8: happens now you're just gonna ramp up the drills even more.
Speaker 4: But they I mean, as you know, Tyler was mentioning
Speaker 4: and other analysts have mentioned that these companies they have
Speaker 4: financial discipline.
Speaker 6: Now they don't just drill, that's right.
Speaker 4: They return cash the shareholders and bond holders, unlike past
Speaker 4: cycles were.
Speaker 5: I was going to say, the twenty sixteen to eighteen years.
Speaker 4: Yeah, so they've I guess they've learned their lesson more
Speaker 4: helpful to their equity holders and their bondholders.
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