Latest / Bloomberg Intelligence / Rates and Real Estate, the BOE, AI, and Global Outlook (Podcast)

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Rates and Real Estate, the BOE, AI, and Global Outlook (Podcast) · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moving news.
• 0:14
  Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. Well,
• 0:21
  Speaker 1: central banks around the world are just you know, they're
• 0:25
  Speaker 1: making no bones about it. They are remain in a
• 0:27
  Speaker 1: very hawkish stance here and that includes are good friends
• 0:31
  Speaker 1: over in the UK, the Bank of England earlier this week,
• 0:33
  Speaker 1: you know, raising their benchmark RAAK fifty basis points. I
• 0:37
  Speaker 1: mean they are focused very much on higher inflation. Wanted
• 0:40
  Speaker 1: to check out with Marcus Ashworth, Bloomberg Opinion calumnists. Marcus,
• 0:44
  Speaker 1: you know, talk to us about inflation in the UK.
• 0:49
  Speaker 1: Where do people see it, where do they feel it
• 0:51
  Speaker 1: and how pervasive is it?
• 0:53
  Speaker 3: What inflation it's in the spine of it head.
• 0:56
  Speaker 4: I dont believe the price we have what's done in
• 1:00
  Speaker 4: is second round effects coming through. We've yet to have
• 1:04
  Speaker 4: our goods inflation, particularly energy and food price inflation really
• 1:09
  Speaker 4: show up in the way that has in the States
• 1:11
  Speaker 4: and in Europe, where it's fallen off quite sharply. We
• 1:14
  Speaker 4: are seeing producer prices falling. We've start to see food
• 1:17
  Speaker 4: just about start rolling over, and we know again in
• 1:20
  Speaker 4: July and then in October we'll get further fall offs
• 1:23
  Speaker 4: in the energy price. We have this string system where
• 1:26
  Speaker 4: we capped it and then it didn't show up in
• 1:28
  Speaker 4: our official stats.
• 1:29
  Speaker 3: So it's inflation in the UK is just.
• 1:33
  Speaker 4: Definitely calculated the rest of the world at the moment,
• 1:35
  Speaker 4: and we should read too much into it. However, the
• 1:39
  Speaker 4: core inflation and indeed the service sector inflation is accelerating still,
• 1:45
  Speaker 4: and that means the Bank of Angel was forced to
• 1:47
  Speaker 4: having slowed down a bit, like Canada and a couple
• 1:51
  Speaker 4: other places, they've had to reaccelerate, and having gone from
• 1:54
  Speaker 4: fifty down to twenty five and twenty five, they're back
• 1:57
  Speaker 4: up to fifty bass one hikes and now at five
• 2:00
  Speaker 4: sent they've caught back up with the FED. Having started
• 2:03
  Speaker 4: first they let the FED overtake them, and now they're
• 2:05
  Speaker 4: having forced to possibly even go above.
• 2:08
  Speaker 3: The FED at some point.
• 2:11
  Speaker 4: It's just showed you the perils of doing too little,
• 2:13
  Speaker 4: too late, and dilly dallying and we have got ourselves.
• 2:17
  Speaker 3: In a bit of a mess.
• 2:19
  Speaker 4: However, you know, sterling has not risen on this surprise
• 2:23
  Speaker 4: fifty based one hight. The yield cuve is inverted now
• 2:27
  Speaker 4: much more than it was for It's nearly one hundred
• 2:29
  Speaker 4: basis points inverted, so not to similar to the pictures
• 2:31
  Speaker 4: seeing in the US.
• 2:33
  Speaker 3: And what happened is that long end anything.
• 2:36
  Speaker 4: I'm beyond two you is really yields have fallen in
• 2:38
  Speaker 4: the last day, not risen as you would expect. That's
• 2:41
  Speaker 4: because some bad numbers out of Europe and also some
• 2:43
  Speaker 4: scene signs that we might get recession fears again back
• 2:47
  Speaker 4: in the UK by the end of the year.
• 2:49
  Speaker 5: I mean, this is really tough for UK households and consumers. Right,
• 2:53
  Speaker 5: what would you say is the percentage chance of the
• 2:57
  Speaker 5: UK being able to experience a soft landing without a
• 3:00
  Speaker 5: ton more paying for consumers.
• 3:03
  Speaker 4: I think there's a reasonable chance of the Bank of
• 3:05
  Speaker 4: England realize it's looking a lot of backward inflation, a
• 3:08
  Speaker 4: lot a lot of our stats on showing up things
• 3:11
  Speaker 4: that they had either modeled or are now complete surprise,
• 3:14
  Speaker 4: and I see it. We have a lot of people
• 3:16
  Speaker 4: out of work. It's confusing the statistician. They don't know
• 3:19
  Speaker 4: how many people are in the country. They don't know
• 3:22
  Speaker 4: why so many people are out of work or on benefits,
• 3:24
  Speaker 4: and yet we have quite a large amount of immigration.
• 3:28
  Speaker 3: So a lot of these things aren't making sense.
• 3:30
  Speaker 4: I think the Bank of England is looking at its
• 3:32
  Speaker 4: stats and its models and wondering why you know, it
• 3:34
  Speaker 4: keeps on tapping a box and giving up boot, why
• 3:37
  Speaker 4: would it work? So in some senses, I think we
• 3:41
  Speaker 4: have a big quarterly Monetary Policy Report review in August third,
• 3:47
  Speaker 4: the next meeting, I think they may have a chance
• 3:49
  Speaker 4: to see whether, really where there are these food prices,
• 3:51
  Speaker 4: energy prices and a number of other things are coming off.
• 3:54
  Speaker 3: Maybe the labor market finally shows some weakness.
• 3:57
  Speaker 4: We've got very unemployment here, but like the US, down
• 4:00
  Speaker 4: at three point eight percent.
• 4:02
  Speaker 3: Wage rise is the real reason why we're not having
• 4:04
  Speaker 3: perhaps the.
• 4:05
  Speaker 4: Feg through We've got seven point six percent wage growth
• 4:07
  Speaker 4: here that is making the you know, the so called
• 4:10
  Speaker 4: cost of living crisis isn't really being felt as bad
• 4:12
  Speaker 4: as you might think. It's wages, particularly in the service
• 4:16
  Speaker 4: sector and lawyers and financial services, all these sort of
• 4:19
  Speaker 4: things are doing very well.
• 4:20
  Speaker 3: We have had a rise in the minimum wage.
• 4:22
  Speaker 4: But you know, there are some signs that things aren't
• 4:25
  Speaker 4: getting or getting a little bit better. But unfortunately, with
• 4:28
  Speaker 4: mortgages going up very mind only one in three or
• 4:31
  Speaker 4: less than one in three households in the UK actually
• 4:33
  Speaker 4: has a mortgage, and a lot of those people are
• 4:36
  Speaker 4: only talking about it. Again, a relatively small percent of
• 4:38
  Speaker 4: the people with a mortgage that are going to be
• 4:40
  Speaker 4: feeling the pain this year. But nonetheless it's going to
• 4:43
  Speaker 4: be very painful for those who feel it. For the
• 4:46
  Speaker 4: rest of the country, it's it's not great, but it's survivable,
• 4:50
  Speaker 4: all right.
• 4:50
  Speaker 1: So Marcus Queen, Victoria Street, Bloomberg European Headquarters, I go
• 4:55
  Speaker 1: out for a pint at my favorite bidder or logger.
• 4:58
  Speaker 1: What's that cost me today? Maybe? What was that a
• 5:02
  Speaker 1: few years ago?
• 5:03
  Speaker 3: What a question? Well, I thankfully I've done some research
• 5:07
  Speaker 3: for you. I've a very poor part of my job.
• 5:10
  Speaker 4: About six pounds, six to seven pounds something like that.
• 5:16
  Speaker 4: Call that not quite ten dollars, but certainly you can
• 5:19
  Speaker 4: go to some places, the smarter places, it will be
• 5:21
  Speaker 4: ten dollars and indeed more. I mean, I think you
• 5:25
  Speaker 4: see reports of eight or nine pounds a pint. Some
• 5:28
  Speaker 4: prices in language ten bucks.
• 5:31
  Speaker 3: That's that's just too much, okay.
• 5:34
  Speaker 5: Well, also this reminds me that we have a story
• 5:36
  Speaker 5: on the terminal this week about how the traditional English
• 5:39
  Speaker 5: breakfast has never been more expensive. The price is five
• 5:43
  Speaker 5: pounds higher than it was in May of last year.
• 5:45
  Speaker 6: And I know you're.
• 5:46
  Speaker 5: Saying that the data is not necessarily great in the UK,
• 5:49
  Speaker 5: but you can't argue with this chart about the price
• 5:52
  Speaker 5: of the English word.
• 5:53
  Speaker 3: I just think it's an outrage. They have tomatoes in it.
• 5:56
  Speaker 4: Who had a grilled tomato on it and they're just
• 5:59
  Speaker 4: saving straight away.
• 6:00
  Speaker 5: So your beef is with the tomato, not necessarily the
• 6:04
  Speaker 5: price of the plate with the tomato.
• 6:07
  Speaker 4: So yeah, it's very much something which, yeah, we've seen
• 6:11
  Speaker 4: a lot of the reason why food prices in the
• 6:14
  Speaker 4: UK are higher. We have incredibly competitive supermarket sector. In fact,
• 6:19
  Speaker 4: we have very true food, probably too cheap food in
• 6:21
  Speaker 4: the UK, and we have a lot of imports on
• 6:24
  Speaker 4: a lot of fixed contracts. Those are the ones that
• 6:26
  Speaker 4: are still still too high. They will drop off, It's
• 6:30
  Speaker 4: going to take a few months before they feed through into.
• 6:32
  Speaker 3: The inflation data.
• 6:33
  Speaker 4: So optically it looks like food prices are still very high.
• 6:35
  Speaker 3: In the UK they are, but they will be coming
• 6:38
  Speaker 3: off and they'll all start feed.
• 6:40
  Speaker 4: Through perhaps by the back end of this year, and
• 6:42
  Speaker 4: I think we'll see inflation fall very sharp in the UK.
• 6:45
  Speaker 4: It's just a good six months after and people had
• 6:47
  Speaker 4: hoped it would it would really start moving, and that's
• 6:49
  Speaker 4: why we look like we're lagging behind US and particularly
• 6:53
  Speaker 4: and also in Europe.
• 6:54
  Speaker 1: All right, Marcus, I'm just in shock over the cost
• 6:57
  Speaker 1: of a pint. I used to remember they put one
• 6:59
  Speaker 1: of those pound coins on the bar and get a
• 7:02
  Speaker 1: pint for those days are long gone, Marcus Ashtra, Thank
• 7:04
  Speaker 1: you so much. Marcus covers all the economics Bloomberg Opinion.
• 7:09
  Speaker 7: You're listening to the team Ken's are Live program Bloomberg
• 7:12
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• 7:16
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• 7:19
  Speaker 7: on demand wherever you get your podcasts.
• 7:23
  Speaker 1: Madison Mills Paul Sween here in a Bloomberg Interactive Broker Studio.
• 7:26
  Speaker 1: I love, love, love the big take stories that we
• 7:29
  Speaker 1: get out of Bloomberg News every day. Great great stories.
• 7:32
  Speaker 1: They focus on some big issues, They do some serious
• 7:35
  Speaker 1: in depth reporting and the one I really love. This
• 7:38
  Speaker 1: week was about commercial real estate. The world's empty office
• 7:41
  Speaker 1: buildings become a debt time bomb. That gets your attention.
• 7:45
  Speaker 1: Natalie Wong joins us here. She's a real estate reporter
• 7:47
  Speaker 1: for Bloomberg News. She also joins us here in our
• 7:49
  Speaker 1: Bloomberg Interactive Brokers studios, so she gets a gold star
• 7:52
  Speaker 1: for being in the office. Natalie, thanks so much for
• 7:54
  Speaker 1: joining us here. All right, I'm just thinking Midtown Manhattan,
• 7:57
  Speaker 1: and this speaks to a lot of major cities around
• 8:00
  Speaker 1: the world. But Midtown Manhattan, fortieth Street to sixtieth Street,
• 8:03
  Speaker 1: you walk across the island, there's a lot of empty
• 8:07
  Speaker 1: office space. How bad is this going to get for
• 8:11
  Speaker 1: the people who own the buildings, people who finance the buildings,
• 8:13
  Speaker 1: the people who have space least in the building. Talk
• 8:15
  Speaker 1: to us about what you found, right, I.
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  Speaker 8: Mean, just zooming into Midtown Manhattan alone, it's a great example.
• 8:21
  Speaker 8: The biggest office market in the world. You have only
• 8:23
  Speaker 8: roughly fifty percent of workers back at their desks. And
• 8:27
  Speaker 8: that's on average, so that's largely Tuesday, so Thursdays usually
• 8:31
  Speaker 8: on Fridays. I mean, buildings are empty and it's looking
• 8:33
  Speaker 8: bad because this is a situation that's played out for
• 8:36
  Speaker 8: more than three years. People have been waiting for it
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  Speaker 8: to get better. They thought it was initially just a
• 8:40
  Speaker 8: health scare COVID thing. Clearly behaviors have changed. Clearly companies
• 8:45
  Speaker 8: are pivoting, and they're at a time where they had
• 8:47
  Speaker 8: to cut costs.
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  Speaker 6: So you have even the biggest tech.
• 8:50
  Speaker 8: Companies that were driving growth in the market, like Meta,
• 8:53
  Speaker 8: like Amazon, like Microsoft, all pulling back and scaling back
• 8:56
  Speaker 8: or putting their space up for subleas, which adds even
• 8:59
  Speaker 8: more space on the market for landlords.
• 9:00
  Speaker 6: To compete with.
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  Speaker 8: So it's a bad look for landlords who now have
• 9:03
  Speaker 8: to deal with less income coming in from rents and demand,
• 9:08
  Speaker 8: and higher costs from increased boring weights, debt costs, and
• 9:13
  Speaker 8: pressure from the lenders.
• 9:14
  Speaker 5: Yeah, and we heard from j Powell yesterday. He said
• 9:16
  Speaker 5: what he always says, that commercial real estate is a concern.
• 9:21
  Speaker 5: To what extent do your sources talk about the potential
• 9:24
  Speaker 5: contagion of the commercial real estate space into our overall economy.
• 9:28
  Speaker 6: It's a bit concern.
• 9:29
  Speaker 8: I mean, you know, like over the past fifteen years,
• 9:32
  Speaker 8: with near zero interest rates, people have been pouring money
• 9:35
  Speaker 8: into real estate as sort of a safe environment that
• 9:38
  Speaker 8: would yield relatively stable returns and they could get good debt,
• 9:42
  Speaker 8: good leverage on it. And so you have major banks
• 9:45
  Speaker 8: that have huge amounts of loans out that are backed
• 9:48
  Speaker 8: by these real estate You have some of the biggest
• 9:50
  Speaker 8: institutions that have giant.
• 9:52
  Speaker 6: Real estate portfolios.
• 9:54
  Speaker 8: A lot of it was concentrated in offices because that
• 9:56
  Speaker 8: was led that was viewed as relatively stable prior to
• 10:00
  Speaker 8: the pandemic and prior to remote work. And so now
• 10:04
  Speaker 8: you have one point four trillion dollars of commercial real
• 10:07
  Speaker 8: estate loans that are set to expire this year and
• 10:10
  Speaker 8: the next. A lot of it is being backed by offices,
• 10:13
  Speaker 8: a lot of it is being backed by expensive debt
• 10:15
  Speaker 8: that people can no longer afford to pay, and some
• 10:16
  Speaker 8: are even just thinking it might not even be worth
• 10:18
  Speaker 8: it to try to negotiate or put in more money
• 10:20
  Speaker 8: into this property.
• 10:21
  Speaker 6: So they're cutting their losses and that can have.
• 10:23
  Speaker 8: Rippling effects for property owners, investors, lenders, the major banks,
• 10:28
  Speaker 8: and then cities, you know, retailers, city revenues, taxes.
• 10:33
  Speaker 1: Talk to us about San Francisco because that's probably, pound
• 10:37
  Speaker 1: for pound, the hardest hit city certainly in the United States.
• 10:41
  Speaker 1: How bad is it there?
• 10:42
  Speaker 8: It's pretty bad there. I mean, the office market is
• 10:44
  Speaker 8: doing the worst in San Francisco. It really saw the
• 10:46
  Speaker 8: major boom that followed from the growth of these tech
• 10:49
  Speaker 8: companies over the past decade. And you've seen that these
• 10:53
  Speaker 8: tech companies really led the remote work environment, and a
• 10:56
  Speaker 8: lot of people living in San Francisco they have to
• 10:58
  Speaker 8: commute the farthest community back to downtown. They're dealing with
• 11:02
  Speaker 8: a crisis in downtown where people are, you know, feel
• 11:07
  Speaker 8: unsafe going into the city. And then you also have
• 11:09
  Speaker 8: a lot of major landlords that are just giving back
• 11:13
  Speaker 8: the keys on office buildings, hotels, and even apartments there
• 11:17
  Speaker 8: because it's all kind of fuel about this tech ecosystem
• 11:19
  Speaker 8: which is being pulled back.
• 11:21
  Speaker 5: So even the apartments then, because I always hope and
• 11:24
  Speaker 5: Eric Adams in New York is pushing for the return
• 11:27
  Speaker 5: to office still, but selfishly, I always hope that these
• 11:30
  Speaker 5: buildings can just get converted into apartments overnight so that
• 11:33
  Speaker 5: I can afford an apartment in New York City. But
• 11:36
  Speaker 5: that sounds like that's not going to happen, and everyone yeah, yeah, yeah.
• 11:40
  Speaker 8: I mean, you know, apartments are a different issue from offices. Obviously,
• 11:43
  Speaker 8: offices are suffering from a complete fundamental, you know, return
• 11:48
  Speaker 8: to work crisis. But apartments are also suffering from the
• 11:52
  Speaker 8: pullback of these companies. And especially in San Francisco, you
• 11:55
  Speaker 8: have a major local landlord that defaults it on a
• 11:57
  Speaker 8: debt portfolio. Apartments that were valued more than a billion
• 12:00
  Speaker 8: dollars just three years ago. And you're seeing in New York,
• 12:04
  Speaker 8: you know, a lot of people are pitching conversions of
• 12:07
  Speaker 8: offices into apartments. It's just not that easy, right, even
• 12:10
  Speaker 8: around Midtown Manhattan, a lot of buildings are big floor plates,
• 12:13
  Speaker 8: they're dark in the interior, and it costs a lot
• 12:16
  Speaker 8: of money. Even if you even if everything works at
• 12:18
  Speaker 8: engineering and architecture wise, to convert an office building, it
• 12:22
  Speaker 8: costs a lot of money and it requires financing, which
• 12:25
  Speaker 8: there is no availability today.
• 12:27
  Speaker 1: Wow, all right, So is there when you talk to
• 12:29
  Speaker 1: the folks in the real estate business, is there any solution?
• 12:33
  Speaker 1: I mean, I'm looking at a chart you got you
• 12:34
  Speaker 1: having your story here. We're talking about office availability rate
• 12:37
  Speaker 1: and select the US downtowns. I mean San Francisco thirty
• 12:40
  Speaker 1: two point seven percent office of I mean it's Houston
• 12:43
  Speaker 1: thirty two percent, and land To thirty one percent, LA
• 12:45
  Speaker 1: thirty percent. I mean, is there when you talk to
• 12:48
  Speaker 1: the real estate people, is there any solution here or
• 12:51
  Speaker 1: do you just wait it out and hope for a turnback,
• 12:55
  Speaker 1: because it seems like some of the work from home
• 12:58
  Speaker 1: hybrid is here to say, yeah.
• 13:01
  Speaker 8: I mean, I think the big I think people have
• 13:03
  Speaker 8: been waiting for three years, and some of them have
• 13:06
  Speaker 8: been extending their loans, and I think the environment today
• 13:09
  Speaker 8: that's different from previous crisis was that not only are
• 13:12
  Speaker 8: we dealing with this existential crisis of work habits changing,
• 13:17
  Speaker 8: you're also dealing with all the fastest interest rate increases
• 13:23
  Speaker 8: in a long time, and so they really can't extend
• 13:26
  Speaker 8: for that much longer, and so you're starting to have
• 13:28
  Speaker 8: people cut their losses. You have the black Stones, a
• 13:31
  Speaker 8: brook Fields. So these are some of the biggest institutions
• 13:34
  Speaker 8: that are walking away from their portfolios, walking away from
• 13:36
  Speaker 8: hundreds and millions dollars of investments, and that sets a
• 13:39
  Speaker 8: signal for the rest of the market. Right If that's
• 13:41
  Speaker 8: a signal to say, if even the most well capitalized
• 13:44
  Speaker 8: institutions are just giving up on these nice office buildings
• 13:47
  Speaker 8: that have financial and tech tenants inside them, then how
• 13:51
  Speaker 8: does that fare for the rest of them?
• 13:52
  Speaker 6: Market.
• 13:53
  Speaker 8: How does that fear for the older buildings that like
• 13:55
  Speaker 8: nobody even wants to be in. And so I think
• 13:57
  Speaker 8: people are my sources, are really waiting for this to
• 14:02
  Speaker 8: unravel over the next maybe six to ten years, just
• 14:06
  Speaker 8: as you're seeing with shopping malls, that's something that evolved
• 14:12
  Speaker 8: more than a decade ago, and it's still evolving. You
• 14:13
  Speaker 8: still have dead zombie malls that are kind of sitting empty.
• 14:17
  Speaker 8: People don't know what to do with them, and they're
• 14:18
  Speaker 8: kind of just limping along until someone's willing to come
• 14:21
  Speaker 8: in and take it.
• 14:22
  Speaker 6: For less and dirt value.
• 14:24
  Speaker 5: Who are the winners then, of the downfall of commercial
• 14:27
  Speaker 5: real estate?
• 14:28
  Speaker 8: I think the winners are people that have a lot
• 14:30
  Speaker 8: of cash on hand, have the flexibility to move, and
• 14:32
  Speaker 8: maybe have the expertise to be able to make some
• 14:37
  Speaker 8: of these investments work. You know, we're talking with some
• 14:42
  Speaker 8: buyers out there. I mean I did a previous story
• 14:45
  Speaker 8: on New York wealthy buyers that was interested in looking
• 14:48
  Speaker 8: at offices, and you have these family offices. These really
• 14:51
  Speaker 8: wealthy individuals that see a really good opportunity to snatch
• 14:54
  Speaker 8: up offices at a major discount from some they wouldn't
• 14:59
  Speaker 8: have been able to access.
• 15:00
  Speaker 1: You know, yeah, have we seen, like I'm just saying
• 15:02
  Speaker 1: here in New York City, have we seen any major
• 15:05
  Speaker 1: transactions in terms of a building being bought or sold
• 15:08
  Speaker 1: that you could get a sense of, Oh boy, the
• 15:10
  Speaker 1: market is off ten percent, fifty percent from pre pandemic levels.
• 15:15
  Speaker 1: Do we have a feel for even what the market
• 15:17
  Speaker 1: is now for office space in the city.
• 15:20
  Speaker 8: That's the biggest question is people don't know where values
• 15:23
  Speaker 8: are at, which is why there's so few transactions. I mean, essentially,
• 15:26
  Speaker 8: if you don't have to sell a building right now,
• 15:27
  Speaker 8: you shouldn't be selling it because people are waiting for
• 15:30
  Speaker 8: big discounts. But one example we have in our story
• 15:32
  Speaker 8: is Wells Fargo recently sold a pretty trophy tower in
• 15:36
  Speaker 8: the middle of you know, downtown San Francisco for two
• 15:40
  Speaker 8: hundred dollars per square foot, which is down from the
• 15:43
  Speaker 8: market peak justin twenty nineteen, right before the pandemic, of
• 15:47
  Speaker 8: more than one thousand dollars wowwarefoot.
• 15:49
  Speaker 6: Okay, so that's a big discount.
• 15:51
  Speaker 8: Right in New York you're not necessarily seeing those massive
• 15:54
  Speaker 8: deals yet, but people are waiting for it. I mean,
• 15:57
  Speaker 8: some of the smaller one off office buildings that we've
• 16:01
  Speaker 8: covered took like maybe a forty percent discount from previous prices,
• 16:05
  Speaker 8: maybe one hundred million dollars.
• 16:06
  Speaker 6: Less than a decade ago.
• 16:09
  Speaker 8: But it's not looking crave, especially for the older office buildings,
• 16:13
  Speaker 8: especially that aren't getting attention.
• 16:15
  Speaker 1: Yeah, I agree. I think one of my takeaways from
• 16:17
  Speaker 1: your story is this is going to be a multime
• 16:19
  Speaker 1: multi multi year story playing out over the deterioration and
• 16:23
  Speaker 1: the value of commercial real estate and a lot of
• 16:25
  Speaker 1: major markets at Natalie Wog she's a real estate reporter
• 16:28
  Speaker 1: for Bloomberg News, joining us here in the Bloomberg Interactive
• 16:31
  Speaker 1: Broker Studio with her Big Take story World's empty office
• 16:34
  Speaker 1: buildings become debt time bomb. You can find those big
• 16:38
  Speaker 1: take stories and they're absolutely worth the reads across the
• 16:42
  Speaker 1: board at Bloomberg dot Com, Slash Big Take can go
• 16:44
  Speaker 1: on the Bloomberg terminal, NI Space Big Take will get
• 16:47
  Speaker 1: you to those stories. You appreciate getting some time from
• 16:50
  Speaker 1: Natalie Wang.
• 16:51
  Speaker 7: You're listening to the tape cans Are Live program Bloomberg
• 16:54
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio. Tune
• 16:58
  Speaker 7: in up Bloomberg dot Com and the Bloomberg Business app.
• 17:01
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• 17:04
  Speaker 7: flagship New York station, Just say Alexa playing Bloomberg eleven thirty.
• 17:10
  Speaker 1: Artificial intelligence it seems to be on the tip of
• 17:13
  Speaker 1: the tongue of every CEO out there as a you know,
• 17:17
  Speaker 1: kind of something that will really impact their business and
• 17:19
  Speaker 1: maybe efficiency, operational efficiency. We want to talk to somebody
• 17:23
  Speaker 1: who's kind of actually in that business. Matt Calkins joins us.
• 17:26
  Speaker 1: He's a CEO and founder of Apian. It is a
• 17:29
  Speaker 1: publicly traded application software company. Appn is a ticker to
• 17:34
  Speaker 1: load into your Bloomberg professional service. The stock is up
• 17:37
  Speaker 1: forty six percent year today. It's got a market cap
• 17:40
  Speaker 1: about three point five billion dollars. Matt, thanks so much
• 17:43
  Speaker 1: for joining us here. First of all, tell us what
• 17:45
  Speaker 1: you guys that do at Apien. How do you fit
• 17:48
  Speaker 1: into the tech stack?
• 17:54
  Speaker 9: Yeah, well, it's great to be here. We're a platform
• 17:57
  Speaker 9: for building and running new processes and we've been selling
• 18:01
  Speaker 9: AI as part of those processes for years to major corporations.
• 18:06
  Speaker 1: So in particular processes. So just you know, what are
• 18:10
  Speaker 1: the products, what are the services that you guys offer
• 18:13
  Speaker 1: your clients.
• 18:18
  Speaker 9: Yeah, process is like a workflow, it's a series of
• 18:20
  Speaker 9: logical actions that a corporation does in order to execute
• 18:23
  Speaker 9: its own identity or its relationship with customers, and often
• 18:26
  Speaker 9: that means delegating some of that work to digital workers
• 18:29
  Speaker 9: like AI or business rules or robotic process automation. And
• 18:32
  Speaker 9: Appian ships with a full suite of digital workers, including
• 18:36
  Speaker 9: many different forms of AI.
• 18:38
  Speaker 5: So talk to me then about what your deals are
• 18:41
  Speaker 5: looking like these days and how that's changed, if at all,
• 18:44
  Speaker 5: since this AI boom began, or are you getting different calls
• 18:49
  Speaker 5: now than you got previously.
• 18:55
  Speaker 9: This AI boom has been great for us. Let me
• 18:57
  Speaker 9: say that Appian is a scrappy innovator in an industry
• 19:00
  Speaker 9: otherwise dominated by giant tech firms, and so when a
• 19:04
  Speaker 9: change comes along, we know that's our advantage. And so
• 19:08
  Speaker 9: the prominence of AI is a very good thing for us.
• 19:10
  Speaker 9: And it's absolutely getting us a higher profile because we
• 19:14
  Speaker 9: try to be a step ahead, and so we've maybe
• 19:16
  Speaker 9: got some insights into where AI is going and our
• 19:19
  Speaker 9: customers count on us for that.
• 19:21
  Speaker 1: So one of the things I think, you know, when
• 19:23
  Speaker 1: people talk about AI AI in the business context, they
• 19:26
  Speaker 1: think it will lead to efficiencies. Do you see that,
• 19:31
  Speaker 1: and if so, kind of whereabouts.
• 19:38
  Speaker 9: Absolutely, AI is going to lead to efficiency. It's not
• 19:40
  Speaker 9: going to replace people. It's going to accelerate people. We're
• 19:44
  Speaker 9: all going to become more productive as a result of
• 19:46
  Speaker 9: working side by side with AI. And the main change
• 19:48
  Speaker 9: over the next few years is how we all come
• 19:50
  Speaker 9: to accommodate having AI as a partner in our work.
• 19:56
  Speaker 9: It's going to enable us to do more things, to
• 19:58
  Speaker 9: skip ahead on the the dull parts, the repetitive parts,
• 20:02
  Speaker 9: to emphasize the use of our judgment and let the
• 20:06
  Speaker 9: machine do the rest. I think AI is going to
• 20:08
  Speaker 9: be an exceptionally empowering technology, a partner rather than a
• 20:12
  Speaker 9: replacement for workers.
• 20:14
  Speaker 5: And Matt just to say apologies to our audience, we've
• 20:17
  Speaker 5: got a little bit of a delay with you on
• 20:18
  Speaker 5: the line with us, But I do want to talk
• 20:21
  Speaker 5: about the clients that you work with a little bit more.
• 20:23
  Speaker 5: Because you advertise an eight week timeline to fulfill the
• 20:26
  Speaker 5: needs of the clients that come to you. How do
• 20:29
  Speaker 5: you accomplish that within kind of the different industries and
• 20:33
  Speaker 5: different clients that are coming your way?
• 20:35
  Speaker 6: How do you get that speed? Every time?
• 20:42
  Speaker 9: Happy and differentiates itself by being quick to implement a
• 20:45
  Speaker 9: working and value add product. We've always done that, and
• 20:49
  Speaker 9: it differentiates us because we're focused on the return on investment.
• 20:55
  Speaker 9: In a year like this, return on investment is doubly important.
• 20:58
  Speaker 9: Every company out there is trying to do more with less,
• 21:01
  Speaker 9: and so for us to be able to say that,
• 21:02
  Speaker 9: not only can we get you the value of artificial intelligence,
• 21:06
  Speaker 9: we can do it within eight weeks. We could do
• 21:07
  Speaker 9: it in a short period and you will see the benefit.
• 21:10
  Speaker 9: You're going to see it before the end of this year,
• 21:12
  Speaker 9: and it will be paying off by the end of
• 21:14
  Speaker 9: the year. That's a really essential pitch in a moment
• 21:17
  Speaker 9: of economic uncertainty. We've been making that pitch for years
• 21:21
  Speaker 9: and coming through on it, but I think it's never
• 21:23
  Speaker 9: been more important than it is today.
• 21:25
  Speaker 1: So, Matt, your stock's up forty six percent year today.
• 21:28
  Speaker 1: What is a market like?
• 21:34
  Speaker 9: Well, you know, the market bounces around a lot. I
• 21:36
  Speaker 9: tend not to take it too seriously. To be honest,
• 21:39
  Speaker 9: I don't watch the market. I watch our value add
• 21:42
  Speaker 9: I watch what we're doing for customers, and I watch
• 21:45
  Speaker 9: whether we're making investments that are going to pay big,
• 21:48
  Speaker 9: big benefits in the next year or the year after that.
• 21:53
  Speaker 9: A lot of what we're doing today, the customers we're serving,
• 21:55
  Speaker 9: the features we're writing, you won't see that in the
• 21:57
  Speaker 9: stock price, for better or worse, for a long time.
• 22:00
  Speaker 9: So I try not to get too caught up in it.
• 22:03
  Speaker 5: Okay, fair enough, but you got to look at it
• 22:06
  Speaker 5: a little bit here to be fair.
• 22:08
  Speaker 10: Right.
• 22:09
  Speaker 5: And you know, I'm sure that you, among many others
• 22:11
  Speaker 5: of your peers have benefited from this AI rally. What
• 22:16
  Speaker 5: would you say to the skeptics that say, hey, you
• 22:18
  Speaker 5: got to look at the fundamentals. Don't get too excited
• 22:21
  Speaker 5: about this AI rally. Don't just go in on any
• 22:23
  Speaker 5: company that mentions the word AI in their description.
• 22:27
  Speaker 9: Oh yeah, there's a lot of hype around AI. You're
• 22:29
  Speaker 9: right about that, But there's also going to be substance.
• 22:32
  Speaker 9: There will be real value, and you'll see it this year.
• 22:34
  Speaker 9: There'll be case studies publicly. I mean, that's the next
• 22:38
  Speaker 9: wave in the AI storyline. You're going to start seeing
• 22:41
  Speaker 9: a lot of case studies in which that organizations are
• 22:44
  Speaker 9: benefiting from using AI. Right now, for example, we're we're
• 22:49
  Speaker 9: working to take thirty percent off the time that it
• 22:52
  Speaker 9: takes to run a critical visa process, for example, thirty
• 22:57
  Speaker 9: percent just by introducing AI. It's extraordinary much productivity gain
• 23:01
  Speaker 9: we can implement and realize in a short period using
• 23:06
  Speaker 9: AI technology. So yes, it's hype, but it's also substance,
• 23:09
  Speaker 9: and the substance will will be clear this year.
• 23:13
  Speaker 1: Matt, when does your company become profitable?
• 23:18
  Speaker 9: Well, you know, we stated in our last quarterly announcement
• 23:21
  Speaker 9: that it was our expectation that we would break the
• 23:25
  Speaker 9: even barrier next year and that we would be profitable
• 23:29
  Speaker 9: in twenty twenty five, and that is my intention today.
• 23:33
  Speaker 1: All right, Matt, thanks so much for joining us. Really
• 23:34
  Speaker 1: appreciate getting a little bit of your time. Matt Calkins,
• 23:38
  Speaker 1: CEO and founder of Apien.
• 23:42
  Speaker 7: You're listening to the team Ken's are Live program Bloomberg
• 23:45
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot com,
• 23:49
  Speaker 7: the iHeartRadio app and the Bloomberg Business app, or listen
• 23:52
  Speaker 7: on demand wherever you get your podcasts.
• 23:56
  Speaker 1: Now, I'm paying attention to the more fact securities market
• 23:58
  Speaker 1: because my lender owned my mortgage for like fifteen seconds,
• 24:01
  Speaker 1: oh wow, and then I got to notice that it's
• 24:03
  Speaker 1: some bank on the West coast, and then I have
• 24:06
  Speaker 1: no idea where it is now, but I pay my
• 24:08
  Speaker 1: mortgage every month so it's a good MBS. So let's
• 24:10
  Speaker 1: talk about the mortgage backed securities market. Erica Adelberg. She
• 24:13
  Speaker 1: does this for a living. She's made a career out
• 24:15
  Speaker 1: of it. Somehow people do that stuff. Erica Aidlberg, NBS Strategist,
• 24:18
  Speaker 1: Bloomberg Intelligence. She joins us live here in our Bloomberg
• 24:21
  Speaker 1: Interactive Broker studio because she's a player. She doesn't phone
• 24:24
  Speaker 1: it in, she doesn't mail it in. She comes into
• 24:26
  Speaker 1: the studio. Erica, what's your market looking like? With rising
• 24:31
  Speaker 1: interest rates, with a federal Reserve that's talking about one,
• 24:34
  Speaker 1: maybe two more hikes this year, what's that due to
• 24:36
  Speaker 1: your market?
• 24:38
  Speaker 10: Very interesting environment right now for the mortgage market because
• 24:42
  Speaker 10: as high as mortgage rates seemed to the homeowner, mortgage
• 24:46
  Speaker 10: yields on secondary mortgages are actually below Fed funds right now.
• 24:51
  Speaker 1: Why would that be?
• 24:53
  Speaker 10: Well, for one thing, unlike you, unfortunately, most people did
• 24:56
  Speaker 10: take out mortgages in twenty and twenty twenty one, and
• 24:59
  Speaker 10: so they have coupons, you know, closer to two to
• 25:02
  Speaker 10: four percent that for being the high end, and while
• 25:05
  Speaker 10: you know, prices do adjust to that. At the same time,
• 25:08
  Speaker 10: in theory, there's a lot less risk to investors in
• 25:11
  Speaker 10: that lower coupon stuff because it's nobody's going to prepaid,
• 25:13
  Speaker 10: you know, it's basically it's a known quantity at this point.
• 25:17
  Speaker 10: So the yields are actually around for seventy or something
• 25:21
  Speaker 10: for the four seventy seven I think for the mortgage
• 25:22
  Speaker 10: index as a whole, which is really skewed towards as
• 25:24
  Speaker 10: lower coupons, and then you have you know, so for
• 25:27
  Speaker 10: at five or five, you have FED funds up abound
• 25:29
  Speaker 10: at five twenty five, really interesting time. So it means
• 25:33
  Speaker 10: you're actually earning less yield on your mortgage backed security
• 25:36
  Speaker 10: for most people than you are for most investors than
• 25:38
  Speaker 10: you are in the funding market. And the other interesting
• 25:42
  Speaker 10: fact mortgages trade kind of current month forward month. It's
• 25:44
  Speaker 10: an interesting technical market. Mortgages actually are more expensive and
• 25:49
  Speaker 10: forward months now because effectively you're in container your your
• 25:52
  Speaker 10: storage costs are high for mortgages right.
• 25:54
  Speaker 11: Now, which is a really unusual situation.
• 25:57
  Speaker 5: So how does the potential FED hike in July impact.
• 26:01
  Speaker 10: That, Well, it depends on what goes on with mortgage
• 26:04
  Speaker 10: spreads and mortgage yields, but it could put even more
• 26:08
  Speaker 10: negative carry into the mortgage market. You know, from an
• 26:11
  Speaker 10: investment standpoint, right now, we're at five to twenty five overbound,
• 26:14
  Speaker 10: if we're five to seventy five overbound, depending on how
• 26:17
  Speaker 10: much mortgages mortgage yields go up in tandem, which you
• 26:21
  Speaker 10: know right now with the curve inversion, what's happening is
• 26:24
  Speaker 10: the long end is actually staying fairly pinned in the
• 26:26
  Speaker 10: short end's going up a lot. So as a result,
• 26:30
  Speaker 10: could make an even more negative carry for some investors
• 26:32
  Speaker 10: to hold mortgage backed securities.
• 26:34
  Speaker 1: So does anybody do institutional investors even pick up your
• 26:37
  Speaker 1: phone call Erica? I mean, do they want to talk
• 26:38
  Speaker 1: to you about the mortgage back securities market? Or is
• 26:41
  Speaker 1: this just something I've got other places I can go.
• 26:44
  Speaker 10: Well, we had our mortgage agency summit this week with
• 26:48
  Speaker 10: a lot of institutional investors.
• 26:50
  Speaker 1: And so you have people showed up.
• 26:51
  Speaker 11: It was sold out, really okay, standing room only.
• 26:55
  Speaker 1: Nice, all right, So what were some of the big
• 26:57
  Speaker 1: topics there?
• 26:58
  Speaker 10: You know, some of the big topics concerns around bank regulations,
• 27:02
  Speaker 10: because you know what that's going to do in terms
• 27:04
  Speaker 10: of whether or not. So some people feel like increased
• 27:06
  Speaker 10: bank regulations could actually help mortgage backed securities because they
• 27:10
  Speaker 10: may have to own more liquid assets. But at the
• 27:12
  Speaker 10: same time, and mortgages are considered liquid, there's a question
• 27:16
  Speaker 10: mark about what really should be considered liquid now because
• 27:20
  Speaker 10: SVB Bank, for instance, the problem was, yeah, mortgage back
• 27:23
  Speaker 10: securities are liquid, but you don't want to sell them
• 27:25
  Speaker 10: wherein they're at eighty cents on the dollar and you're
• 27:27
  Speaker 10: going to take a twenty point loss besides which they
• 27:30
  Speaker 10: held them in their health maturity accounts. So you know,
• 27:32
  Speaker 10: a lot of discussions about whether or not the banks
• 27:35
  Speaker 10: can get back involved, and that's really one of the
• 27:37
  Speaker 10: reasons that mortgages.
• 27:38
  Speaker 11: Are widened as much as they have.
• 27:40
  Speaker 10: But in general, a lot of discussion also just about
• 27:43
  Speaker 10: how wide mortgage spreads have gotten. At one hundred and
• 27:45
  Speaker 10: ninety basis points for the current coupon in the end
• 27:48
  Speaker 10: of May, that was the widest we've been since the
• 27:50
  Speaker 10: financial crisis. So a lot of institutional vesters, including a
• 27:53
  Speaker 10: lot of our panelists, you know, really felt like that
• 27:55
  Speaker 10: was a great time to buy. We've tightened twenty five
• 27:57
  Speaker 10: basis points thirty basis.
• 27:59
  Speaker 11: Points since then.
• 28:00
  Speaker 10: You know, maybe time for some people to reassess where
• 28:02
  Speaker 10: we are now relative to risks. But you know, general
• 28:05
  Speaker 10: consensus that spreads in general offer a lot of.
• 28:08
  Speaker 11: Value for triple A assets.
• 28:10
  Speaker 5: Is that spread an indication of an upcoming recession or
• 28:15
  Speaker 5: is it the opposite.
• 28:18
  Speaker 11: No, I think it's an indication of a few risks.
• 28:21
  Speaker 10: One is the debt ceiling, and that's one of the
• 28:23
  Speaker 10: reasons the fiasco. That's one of the reasons that spreads
• 28:25
  Speaker 10: did come in as much as they did.
• 28:27
  Speaker 4: You know.
• 28:28
  Speaker 10: Another risk is the possibility of a recession. But on
• 28:31
  Speaker 10: the flip side, I think there's you know, kind of
• 28:33
  Speaker 10: consensus along among a lot of investors and fixing of
• 28:37
  Speaker 10: investors that corporate spreads would do worse. But you know,
• 28:40
  Speaker 10: from my perspective, as I wrote in my outlook this week,
• 28:43
  Speaker 10: I think it also just makes volatility probably rises a
• 28:46
  Speaker 10: little bit, and mortgage is a very sensitive to volatility
• 28:49
  Speaker 10: because they have a lot of interest rate risk.
• 28:51
  Speaker 1: All right, the big take story out of Bloomberg News today,
• 28:54
  Speaker 1: world's empty office buildings become debt time bomb. A tipping
• 28:58
  Speaker 1: point is coming. In the US alone, about one point
• 29:02
  Speaker 1: four trillion dollars of commercial real estate loans are due
• 29:05
  Speaker 1: this year and next. That's according to the Mortgage Bankers Association.
• 29:09
  Speaker 1: What does that mean for your business?
• 29:11
  Speaker 10: I mean you know I tend to focus a little
• 29:13
  Speaker 10: more on residential mortgage backed securities. But at the same time,
• 29:17
  Speaker 10: I think that means that I, well, let me take
• 29:20
  Speaker 10: one step back. Green sput fed Powell god, I am
• 29:25
  Speaker 10: old fed fed. Powell mentioned this week that he thinks
• 29:28
  Speaker 10: housing prices may be put in a bottom, and there
• 29:32
  Speaker 10: are a lot of indications that in residential mortgages we
• 29:34
  Speaker 10: may be averting a real housing recession. Another note actually
• 29:38
  Speaker 10: article on Bloomberg today. But you know, while residential mortgages
• 29:42
  Speaker 10: and mortgage market may not bring down the economy this time,
• 29:46
  Speaker 10: I think there's a lot of risks in the commercial
• 29:47
  Speaker 10: real estate sector. You know, it's ironic because one of
• 29:51
  Speaker 10: the things that has helped the housing market is that
• 29:53
  Speaker 10: a lot of people are working from home. The opposite
• 29:55
  Speaker 10: for commercial real estate and office buildings in particular.
• 29:58
  Speaker 5: Would you agree with Power that we've already had the
• 30:01
  Speaker 5: bottom bottom might be an overstatement.
• 30:05
  Speaker 10: I think we never expected prices to fall dramatically. There's
• 30:08
  Speaker 10: a lot of seasonality to prices, but it does seem
• 30:12
  Speaker 10: like there's a lot of demand for homes even at
• 30:15
  Speaker 10: these mortgage rates, even give the fordability concerns, I think
• 30:19
  Speaker 10: new home prices may not have hit a bottom, but
• 30:21
  Speaker 10: the sales are doing great, and they had a lot
• 30:23
  Speaker 10: of margin there existing home prices. There is so little inventory,
• 30:27
  Speaker 10: so I think if you just look on a year
• 30:29
  Speaker 10: over year basis, you know, we may not be that
• 30:31
  Speaker 10: far from the worst year over year numbers that we've seen,
• 30:35
  Speaker 10: you know, maybe another couple percent. But it does seem
• 30:38
  Speaker 10: like nobody's going to have to walk away from their homes,
• 30:41
  Speaker 10: especially the people with two percent mortgages, as long as
• 30:45
  Speaker 10: they're employed. So barring a big recession, which I think
• 30:49
  Speaker 10: isn't most people's base case where a lot of people
• 30:52
  Speaker 10: lose jobs, I don't think the housing market itself is
• 30:55
  Speaker 10: a risk. And such small inventories available is going to
• 30:59
  Speaker 10: keep housing markets fairly firm.
• 31:01
  Speaker 1: All right, A year from now? Where am I going
• 31:03
  Speaker 1: to refinance my mortgage?
• 31:06
  Speaker 11: A year from now? So I only think it's six
• 31:08
  Speaker 11: months infrom it.
• 31:09
  Speaker 10: Six months, Yeah, I don't think you're going to see
• 31:11
  Speaker 10: your four percent mortgage rate.
• 31:13
  Speaker 11: IRA is calling for.
• 31:15
  Speaker 1: The that would be Ira Jersey Strategy, Brillian guy.
• 31:19
  Speaker 10: He's calling for end of year ten year rates right
• 31:23
  Speaker 10: now at about three percent. Let's say we add you know,
• 31:26
  Speaker 10: one hundred and fifty basis points onto that for well,
• 31:32
  Speaker 10: you ad about three hundred base points for primary rates,
• 31:34
  Speaker 10: that's the thing. So one hundred and fifty basis points
• 31:35
  Speaker 10: the secondary and then another one hundred and fifty basis
• 31:38
  Speaker 10: points between where lenders get. So that puts us still
• 31:41
  Speaker 10: close to five and a half six percent mortgages at
• 31:44
  Speaker 10: the end of the year. You know, may But on
• 31:49
  Speaker 10: the other hand, he also says, one of the things
• 31:51
  Speaker 10: that we agree on is that basically the FED is
• 31:55
  Speaker 10: being very cautious about raising rates further at this point.
• 31:58
  Speaker 11: But if we do begin to.
• 32:00
  Speaker 10: Recession, I think they prefer to have you know, if
• 32:03
  Speaker 10: we're close to two percent inflation, I think they prefer
• 32:05
  Speaker 10: to have FED funds quite a bit lower.
• 32:08
  Speaker 11: So escalator up, elevator down.
• 32:11
  Speaker 1: Right, But the housing market is still pretty is it strong?
• 32:15
  Speaker 1: What is the status of the housing market today?
• 32:17
  Speaker 11: I mean, like housing sales are very weak and existing, very.
• 32:20
  Speaker 1: Week existing because nobody's because nobody's.
• 32:23
  Speaker 10: Selling, right, nobody's selling. That's that's the thing. So it's
• 32:26
  Speaker 10: the supply demand and balance that's still pretty out of
• 32:29
  Speaker 10: whack because there's still just not enough supply even for
• 32:33
  Speaker 10: the amount of demand. Demand is diminished but there's not
• 32:36
  Speaker 10: enough supply. New home builders are jumping into that void,
• 32:40
  Speaker 10: and they're actually filling it pretty well. One of the
• 32:42
  Speaker 10: reasons they're able to do that is they're able to
• 32:44
  Speaker 10: buy down the mortgage rate for a lot of investors.
• 32:47
  Speaker 10: So some of these investors aren't paying anything near six
• 32:50
  Speaker 10: percent of the new homes.
• 32:51
  Speaker 1: Why did I pay six six and a half percent.
• 32:54
  Speaker 1: I don't know. I didn't do a very good job there.
• 32:55
  Speaker 1: I'm not good on that whole debt.
• 32:59
  Speaker 11: And that's the I can afford it.
• 33:01
  Speaker 10: That's the other part of the equation is, you know
• 33:03
  Speaker 10: a lot of people say that maybe it's not very PC,
• 33:05
  Speaker 10: but they say, marry the house, date the rate because
• 33:08
  Speaker 10: it's a you can you can probably refy that rate.
• 33:12
  Speaker 10: But if you love the house, don't give up an opportunity.
• 33:15
  Speaker 10: Not everybody's in a position where they can afford to.
• 33:17
  Speaker 11: Do that, right those that can.
• 33:19
  Speaker 10: That's one of the things that's keeping some of the
• 33:21
  Speaker 10: housing some segments of the housing markets strong.
• 33:23
  Speaker 1: Yeah, they're not making any more of the New Jersey sure,
• 33:25
  Speaker 1: so I'm happy where I am. Erica Adelberg, thank you
• 33:27
  Speaker 1: so much for joining us. Erica Aidelberg. She is a
• 33:30
  Speaker 1: mortgage backed security strategist for Bloomberg Intelligence, joining us live
• 33:34
  Speaker 1: here on Bloomberg Interactive Broker Studio.
• 33:35
  Speaker 7: You're listening to the tape. Cans are live program Bloomberg
• 33:39
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 33:42
  Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 33:46
  Speaker 7: You can also listen live on Amazon Alexa from our
• 33:48
  Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 33:54
  Speaker 1: Madison Mills, Paul Sweeney here in the Bloomberg Interactive Brokers
• 33:57
  Speaker 1: Studio looking at these markets definitely awaits the tape here.
• 34:00
  Speaker 1: We had FED Chairman jpal front and center this week,
• 34:04
  Speaker 1: Madison first at the House Wednesday, then the Senate yesterday,
• 34:07
  Speaker 1: and then I guess if you're could use one word
• 34:09
  Speaker 1: to characterize his testimony consistent. I mean they've been talking
• 34:13
  Speaker 1: about fighting inflation and raising rates and being aggressive, and
• 34:16
  Speaker 1: they certainly have been, and that continues to be the message.
• 34:19
  Speaker 1: The market not so sure if they're buying off on it,
• 34:21
  Speaker 1: but it's tough to go against the fedire Alfonso Peccatiello
• 34:26
  Speaker 1: joins us. He's the founder of the Macro accompass. Alfonso,
• 34:30
  Speaker 1: thank you so much for joining us here. What did
• 34:32
  Speaker 1: you take away from what we heard from FED Chairman
• 34:35
  Speaker 1: jpal this week in his testimony.
• 34:39
  Speaker 12: Well, I think it was relatively clear that the majority
• 34:41
  Speaker 12: of the FOMC Committee members want to see higher rates
• 34:46
  Speaker 12: between now any ear end. But if you ask me
• 34:49
  Speaker 12: what the FED wants right now, it's relatively irrelevant for
• 34:53
  Speaker 12: market pricing because the Federal Reserve and other central banks
• 34:56
  Speaker 12: will be able to control the very very short end
• 34:59
  Speaker 12: of the curve, but the back end of the bond
• 35:02
  Speaker 12: curve is instead rather influenced by other factors. So it's
• 35:06
  Speaker 12: actual growth and actual inflation that matter, and we're getting
• 35:10
  Speaker 12: more evident signs if you ask me that nominal growth
• 35:14
  Speaker 12: is trending now. We are in a disinflationary wave that
• 35:17
  Speaker 12: has started slowly but surely a few months ago. It
• 35:20
  Speaker 12: now seems to be even accelerating a bit on the downside.
• 35:23
  Speaker 12: And the PMIS for instance, released this morning, where another
• 35:26
  Speaker 12: sign that the US economy is weakening under the hood.
• 35:30
  Speaker 5: So how do you square that though with some of
• 35:33
  Speaker 5: the other data, right, I know, with the data that's
• 35:35
  Speaker 5: kind of pick your poison. You can find the data
• 35:37
  Speaker 5: that tells the story you want it to. But we
• 35:39
  Speaker 5: still have seen consumer strength, particularly in the jobs market
• 35:43
  Speaker 5: and with wages as well. So how do you square
• 35:46
  Speaker 5: that with a narrative that we are seeing a slowdown.
• 35:51
  Speaker 12: Well, I think one of the things that eluded most
• 35:53
  Speaker 12: analysts has been that the size of the fiscal stimulus
• 35:57
  Speaker 12: the US has done, even if two years ago now,
• 36:00
  Speaker 12: has been so large that to work through that stimulus
• 36:03
  Speaker 12: it sometimes take quite a lot of time. So monetary
• 36:07
  Speaker 12: and physical policy tightening works with lugs through the real economy,
• 36:11
  Speaker 12: and we're seeing let's say, the most sensitive parts of
• 36:14
  Speaker 12: the economy already showing some of the weakness. So the
• 36:16
  Speaker 12: housing market, although lightly rebounding, remains still pretty fragile, and
• 36:21
  Speaker 12: that's a highly sensitive sector. But if you move towards
• 36:25
  Speaker 12: the consumer side, so let's say, the part of the
• 36:27
  Speaker 12: economy that has received the direct benefits from fiscal stimulus,
• 36:31
  Speaker 12: it is understandable that it's going to take a little
• 36:33
  Speaker 12: bit longer for the lugs to reach these sectors. So
• 36:38
  Speaker 12: I think it's just literally a matter of time until
• 36:41
  Speaker 12: we see broader weakness, and even in Europe, just to
• 36:44
  Speaker 12: change a bit the picture, the pmis today reveal that
• 36:47
  Speaker 12: the manufacturing weakness is slowly but surely spreading into weakness
• 36:51
  Speaker 12: in services. In my opinion, it's just a matter of
• 36:53
  Speaker 12: time and respecting the lugs in the macrocycle.
• 36:58
  Speaker 1: So I foundswered, is that Does that suggest that you
• 37:01
  Speaker 1: prefer that or you would suggest that disped just wait
• 37:04
  Speaker 1: here and not raise rates further.
• 37:07
  Speaker 12: Yes, I think the risk management decision here from the
• 37:11
  Speaker 12: FED should be to weight rather than to keep tightening.
• 37:16
  Speaker 12: If again, I can move back to other central banks
• 37:18
  Speaker 12: that have been a bit more aggressive with their oakish
• 37:20
  Speaker 12: stands recently. So take Canada or take the ECB for insistance.
• 37:25
  Speaker 12: Back in July two thousand and eight or in July
• 37:28
  Speaker 12: twenty and eleven, the European Central Bank proceeded.
• 37:31
  Speaker 1: To high rates.
• 37:32
  Speaker 12: It hyped rates because they were looking at the wrong
• 37:35
  Speaker 12: set of coincident indicators rather than focusing or leading indicators,
• 37:39
  Speaker 12: and they were worried about certain things, might it be
• 37:42
  Speaker 12: inflationary pressures or wages or the labor market. They ended
• 37:46
  Speaker 12: up hiking and then in summer two thousand and eight
• 37:49
  Speaker 12: and later on in twenty twelve that revealed to be
• 37:52
  Speaker 12: a policy mistake. And I think right now, just from
• 37:55
  Speaker 12: a risk management perspective. Now, after you have had one
• 37:58
  Speaker 12: of the fastest hiking cycle ever in the United States,
• 38:02
  Speaker 12: it is fair enough for you to wait and take
• 38:04
  Speaker 12: a pause and assess our data comes in a past
• 38:07
  Speaker 12: should last minimum three months. So this stop and go strategy,
• 38:10
  Speaker 12: I think is not the correct risk management policy by
• 38:13
  Speaker 12: the Federal Reserve.
• 38:14
  Speaker 5: So you think July is live or.
• 38:16
  Speaker 12: No July is live. Doesn't matter what I want. It's
• 38:21
  Speaker 12: up to what the Central Bank will do, right. I mean,
• 38:23
  Speaker 12: we're all investors here, so one of the things I
• 38:26
  Speaker 12: learned managing money is it doesn't matter what you want,
• 38:29
  Speaker 12: is what the federalser will do in the end. So
• 38:31
  Speaker 12: I think we are live. But I also see the
• 38:33
  Speaker 12: jobless claims I've finally started to pick up. If you
• 38:36
  Speaker 12: look at continuing claims, we're eight percent up from the lows,
• 38:40
  Speaker 12: and generally when you are ten twelve percent up from
• 38:42
  Speaker 12: the lows, you are getting more recessionary signals from the
• 38:46
  Speaker 12: labor market. So I think if you get a couple
• 38:48
  Speaker 12: of weak data, especially when it comes to the labor market,
• 38:52
  Speaker 12: the FED might reflect once or twice, but it's definitely live.
• 38:56
  Speaker 1: So I find So where do you think inflation is
• 39:00
  Speaker 1: likely to settle out. I mean, we hear from the
• 39:02
  Speaker 1: Federal Reserve this two percent number, and quite frankly, I'm
• 39:05
  Speaker 1: not really sure where that came from. Why it's so important,
• 39:09
  Speaker 1: but where where do you think inflation is likely to
• 39:12
  Speaker 1: kind of settle out here in the next you know,
• 39:14
  Speaker 1: one to two years kind of time frame.
• 39:17
  Speaker 12: Look, I can try and answer the two percent question.
• 39:22
  Speaker 12: I had the opportunity in my previous job to talk
• 39:24
  Speaker 12: to a couple of central bankers and policymakers, and Look,
• 39:27
  Speaker 12: the reality is the two percent target really comes from
• 39:30
  Speaker 12: wanting to be a safely enough far away from deflation
• 39:34
  Speaker 12: as possible. I mean, we're in that base system, and
• 39:37
  Speaker 12: deflation is the enemy of a leverage system, right, But
• 39:40
  Speaker 12: also you want to have an acceptable and controllable level
• 39:43
  Speaker 12: of inflation. It's pretty arbitrary, but two percent sets you
• 39:46
  Speaker 12: at least reasonably far from the deflationary territory. Will inflation
• 39:52
  Speaker 12: settle at two percent? Look, I think people confuse cycles
• 39:56
  Speaker 12: with trends, and in this this inflationary cycle, as I factor,
• 40:00
  Speaker 12: recession still to hit in the US. Every recession has
• 40:04
  Speaker 12: caused inflation to come down pretty viciously, and it will
• 40:08
  Speaker 12: come down. In my opinion pretty viciously, and not only
• 40:10
  Speaker 12: to two percent, but even below that if you actually
• 40:13
  Speaker 12: get a recession, that is not to be confused with
• 40:16
  Speaker 12: structural inflation drivers. So for a long term trend, if
• 40:20
  Speaker 12: you look at the de globalization, if you look at
• 40:22
  Speaker 12: the offshoring change of heart from any CEOs, if you
• 40:28
  Speaker 12: look at the demographics changes for instance that they're about
• 40:30
  Speaker 12: to become, might you might want to make a case
• 40:33
  Speaker 12: that structurally inflation will settle maybe a three or four percent.
• 40:37
  Speaker 12: That doesn't mean in this cycle, especially if you get
• 40:40
  Speaker 12: a recession, you can't actually get inflation back to two percent.
• 40:43
  Speaker 12: You will get inflation back there if you get a recession.
• 40:46
  Speaker 1: Yep, got it, I fand so thanks so much for
• 40:49
  Speaker 1: joining us, as I always appreciated. Afonso Pecatiello. He's a
• 40:52
  Speaker 1: founder of the Macro Compass. He's a good buddy. Recommendation
• 40:57
  Speaker 1: from Danielle de Martino Booth and that's a good one, excellent.
• 41:01
  Speaker 1: You know, we love Danielle. So when she has a
• 41:02
  Speaker 1: recommendation for some of us, for somebody for us to
• 41:05
  Speaker 1: chat with and maybe get a little bit smarter, we
• 41:07
  Speaker 1: will take her up on that. Afonsi Pectillo, founder of
• 41:10
  Speaker 1: the Macrocamp compas joining us here on Bloomberg.
• 41:13
  Speaker 7: You're listening to the tape Can's are Live program Bloomberg
• 41:16
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 41:20
  Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 41:23
  Speaker 7: You can also listen live on Amazon Alexa from our
• 41:26
  Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty, one.
• 41:32
  Speaker 1: Of our stories out on the Bloomberg terminal that's been
• 41:34
  Speaker 1: getting a lot of reads. Today. A city group to
• 41:38
  Speaker 1: reprimand staff for flouting return to office rules. I wonder
• 41:42
  Speaker 1: what the kind of the legal issues are there. So
• 41:45
  Speaker 1: when I wondered that, our producer says, I've got a
• 41:48
  Speaker 1: guest that can answer that for you, Rania said. Home,
• 41:50
  Speaker 1: managing partner for Set Home Long Group joins us live
• 41:52
  Speaker 1: in the Bloomberg Interactive Brokers studio. We appreciate her coming in.
• 41:56
  Speaker 1: You get a gold star for that, Rania. So I mean,
• 41:59
  Speaker 1: if they want in three days a week, I go
• 42:01
  Speaker 1: to my boss. You know what, I can do this
• 42:02
  Speaker 1: from home? What are you gonna do? What is kind
• 42:06
  Speaker 1: of the legal ramifications for this? You can come in
• 42:09
  Speaker 1: some days you don't have to come in every day.
• 42:11
  Speaker 1: I mean, what are the legal ramifications.
• 42:14
  Speaker 13: Well, there are different legal ramifications for the employer and employee.
• 42:17
  Speaker 13: From the employer's side, there's a lot of administrative burdens
• 42:21
  Speaker 13: that come along with allowing people to work either hybrid
• 42:25
  Speaker 13: or remotely, particularly if those individuals are living in two
• 42:29
  Speaker 13: different states. It becomes an issue for unemployment benefits and
• 42:34
  Speaker 13: a slew of other things for the employee. You know,
• 42:37
  Speaker 13: policies are policies, and even though you know it's an
• 42:41
  Speaker 13: outwill state and many states are. Most employers don't just
• 42:45
  Speaker 13: fire people on a whim. They tend to fire people
• 42:48
  Speaker 13: because they've done something wrong. And this is just one
• 42:51
  Speaker 13: box that they can check off. They said, you refuse
• 42:54
  Speaker 13: to adhere to our policy, which is reasonable, sound, and
• 42:58
  Speaker 13: non discriminatory.
• 43:00
  Speaker 5: On that, have the circumstances that employees can cite to
• 43:06
  Speaker 5: allow themselves to work from home more frequently changed at all?
• 43:10
  Speaker 5: And how does that play out from a legal perspective?
• 43:12
  Speaker 5: For example, if an employee is saying that they're experiencing
• 43:15
  Speaker 5: a disability they can't fulfill the work in office requirement,
• 43:19
  Speaker 5: how is that looking now compared with pre COVID I.
• 43:23
  Speaker 13: Think the ADA hasn't Americans with Disabilities Act, it hasn't
• 43:26
  Speaker 13: changed much. And certainly, if a reasonable accommodation is to
• 43:30
  Speaker 13: allow someone to work from home, there's an obligation to
• 43:33
  Speaker 13: allow that person.
• 43:34
  Speaker 6: To do just that.
• 43:35
  Speaker 13: But it may be temporary. It depends on the nature
• 43:40
  Speaker 13: of the disability. Right, it has to be something that's
• 43:42
  Speaker 13: supposed to last at least one year, not necessarily perpetually.
• 43:48
  Speaker 1: Right, you know, I think what a lot of what
• 43:50
  Speaker 1: I hear from a lot of people is Listen, it's
• 43:52
  Speaker 1: been proven I can do my job as effectively from
• 43:56
  Speaker 1: home as I can in the office. Why do I
• 44:01
  Speaker 1: have to come in but they don't. That's fine from
• 44:03
  Speaker 1: a business perspective, But from a legal perspective, has anything changed,
• 44:07
  Speaker 1: Like if the employer doesn't like how you're performing, including
• 44:10
  Speaker 1: not coming to the office, they can fire you, right, sure.
• 44:14
  Speaker 13: They certainly can. There has been some talk about individuals
• 44:19
  Speaker 13: we're working from home still accomplishing the goals of the job,
• 44:23
  Speaker 13: but maybe not on a timely basis. So for example,
• 44:26
  Speaker 13: if you're in the office from nine to five, ten
• 44:28
  Speaker 13: to six, whatever the hours are, the employer sees you
• 44:32
  Speaker 13: there and you are supposedly doing the work for the company.
• 44:36
  Speaker 13: If you're home, you may take a two to three
• 44:39
  Speaker 13: hour break midday to do something unrelated to the job.
• 44:43
  Speaker 13: And so some employers now are talking to me about
• 44:47
  Speaker 13: why they are having problems with timely performance as opposed
• 44:53
  Speaker 13: to performance overall.
• 44:56
  Speaker 5: Well, that's interesting, but that's something that again would be
• 45:00
  Speaker 5: used as kind of part of a performance review.
• 45:03
  Speaker 13: Right, yes, correct, it would be part of a performance review.
• 45:06
  Speaker 13: It may affect someone's ability to get a raise for
• 45:09
  Speaker 13: the next year, or perhaps it'll affect their bonus.
• 45:13
  Speaker 1: All right, Let's say I took a job before the
• 45:16
  Speaker 1: pandemic based in New York City, and then the pandemic
• 45:19
  Speaker 1: hits and I relocate to I don't know, like sheboygan, Okay,
• 45:22
  Speaker 1: lower cost of living, but I keep Yeah, lower cost
• 45:26
  Speaker 1: of link, but I keep my New York you know, salary.
• 45:31
  Speaker 1: Can employer come back and say, you know what, like
• 45:33
  Speaker 1: I even heard some of tech companies like Facebook in
• 45:35
  Speaker 1: the beginning of the pandemic say yeah, you can work remotely,
• 45:38
  Speaker 1: but we're gonna cut your pay. Can they do that?
• 45:40
  Speaker 13: That's a very gray area. It's a tough question. There
• 45:44
  Speaker 13: is something in the law that states that you're constructively
• 45:49
  Speaker 13: discharged if your pay is affected negatively by twenty percent
• 45:53
  Speaker 13: or more. That being said, if the company has a
• 45:56
  Speaker 13: policy that pay changes according with the cost of living
• 46:01
  Speaker 13: if you move, then that's a different story.
• 46:05
  Speaker 5: What are the not that I know anyone who's ever
• 46:08
  Speaker 5: done this, but what are the legal ramifications of an employee,
• 46:12
  Speaker 5: you know, move into Hawaii and not saying anything.
• 46:15
  Speaker 13: Oh, actually, I experienced this with one of my clients,
• 46:18
  Speaker 13: not to do not to Hawaii, but to other places.
• 46:21
  Speaker 13: What happened to my client was they received a nasty
• 46:24
  Speaker 13: letter from the state where the employee had moved, telling them,
• 46:29
  Speaker 13: you did not register to do business here, you don't
• 46:32
  Speaker 13: have unemployment insurance, which is mandatory. You don't have workers'
• 46:36
  Speaker 13: comp insurance, which is mandatory. And so we scrambled and
• 46:39
  Speaker 13: obtained the insurance. And now we have a rule in
• 46:44
  Speaker 13: this company that number one, if you move, you have
• 46:47
  Speaker 13: to let us know. I think that's pretty reasonable, thirty
• 46:50
  Speaker 13: days advanced notice, and you can only move out of
• 46:53
  Speaker 13: the state once per year. They haven't yet said you
• 46:58
  Speaker 13: have to move to a state where they're already doing business.
• 47:01
  Speaker 13: But some companies, you know, may want to have a
• 47:04
  Speaker 13: rule like that to protect themselves.
• 47:06
  Speaker 1: All right, another issue kind of employee employer I kind
• 47:09
  Speaker 1: of think that's always got my attention. Non competes, Yes,
• 47:15
  Speaker 1: are they? I mean, like I worked on Wall Street
• 47:17
  Speaker 1: my entire career, we had this still think called garden leave,
• 47:20
  Speaker 1: which is a scam. But talk to us about the
• 47:24
  Speaker 1: world of non competes. Is that still a thing and
• 47:26
  Speaker 1: how enforceable are they?
• 47:28
  Speaker 13: It is still a thing. It does vary from state
• 47:30
  Speaker 13: to state. In New York, the non compete has to
• 47:33
  Speaker 13: be reasonable. That's in quotes. You know, lawyers love arguing
• 47:36
  Speaker 13: about what's reasonable and what's not reasonable. There are some
• 47:39
  Speaker 13: bright line rules that you can adhere to. The first
• 47:42
  Speaker 13: one is time right. Six months is considered reasonable unless
• 47:47
  Speaker 13: you're paying somebody to be on garden leave, which is
• 47:50
  Speaker 13: essentially do nothing and we'll pay you. That you know
• 47:54
  Speaker 13: is as reasonable as the two parties want because you're
• 47:56
  Speaker 13: getting paid. The other one is a geographical boundary. Right,
• 48:00
  Speaker 13: where is it that you're prohibited from working? That will
• 48:03
  Speaker 13: change depending on the nature of your job. Some people,
• 48:07
  Speaker 13: rather than have radius restrictions, will just delineate two, three,
• 48:12
  Speaker 13: five companies that they consider their top competitors and just
• 48:16
  Speaker 13: tell you you can't work with those five it has
• 48:19
  Speaker 13: to be reasonable in New York. Some states disallow them altogether.
• 48:24
  Speaker 13: But as we were speaking very briefly, there's a bill
• 48:28
  Speaker 13: right now awaiting local signature that may prohibit non competes
• 48:32
  Speaker 13: in New York entirely, so.
• 48:34
  Speaker 5: There would be no scenario where non compete.
• 48:36
  Speaker 13: Well, it's too early to know. There is the power
• 48:40
  Speaker 13: of the pen, and she may use it to strike
• 48:43
  Speaker 13: some of the language or modify it, but as currently written,
• 48:47
  Speaker 13: there is no exception.
• 48:48
  Speaker 1: Because I think about some of the big employers in
• 48:51
  Speaker 1: York City, law firms, investment banks, things like that, who
• 48:53
  Speaker 1: do use non competes. I would think they'd be able televisions.
• 48:58
  Speaker 1: I would think there would be some some pushback on
• 49:01
  Speaker 1: that from the business community.
• 49:03
  Speaker 13: I don't think the business community will be very happy,
• 49:05
  Speaker 13: and without an exception, it'll really hinder a lot of
• 49:10
  Speaker 13: deal making because technically I can sell you my business
• 49:15
  Speaker 13: if there's no non compete and then start another company
• 49:19
  Speaker 13: the next day. So we have to wait and see,
• 49:22
  Speaker 13: hopefully there's a penhandy.
• 49:24
  Speaker 5: Okay, really quickly here. I always like to monitor the
• 49:29
  Speaker 5: New York requirements when it comes to posting salaries next
• 49:33
  Speaker 5: to job offers. How would you rate how that's been going.
• 49:36
  Speaker 5: It was a rough initial turnout, yes, and now we've
• 49:40
  Speaker 5: had some time. How do you feel about it now?
• 49:43
  Speaker 13: I think that some of the job advertisements that I
• 49:46
  Speaker 13: see are comical when it gets to compensation.
• 49:49
  Speaker 11: Because the range is hilarious.
• 49:52
  Speaker 13: It is so vast, right, So I'll say a director
• 49:55
  Speaker 13: of something needed salary fifty to five hundred thousand, Wow,
• 49:59
  Speaker 13: thank you so much. That clarifies everything I'm that does
• 50:03
  Speaker 13: technically abide by the rules as written. I don't think
• 50:06
  Speaker 13: it's in the spirit of how the rules were intended,
• 50:09
  Speaker 13: and I think more time is needed to really iron
• 50:13
  Speaker 13: things out and figure out what should and shouldn't be included.
• 50:17
  Speaker 1: Employers. Are they allowed to ask a perspective candidate what
• 50:21
  Speaker 1: they want to make in this rule what they.
• 50:23
  Speaker 11: Want to make?
• 50:24
  Speaker 13: Yes? In New York you cannot ask what are you
• 50:26
  Speaker 13: currently making? But you can certainly ask what are your salaries?
• 50:31
  Speaker 1: What are you making? And then that'll give you some leverage.
• 50:34
  Speaker 13: Not in New York, not in New York, other states
• 50:37
  Speaker 13: is permitted, but you have to be careful because if
• 50:39
  Speaker 13: you're doing a zoom or telephone interview, you don't know
• 50:44
  Speaker 13: where that person necessarily is.
• 50:46
  Speaker 1: And.
• 50:47
  Speaker 13: You should just don't ask that question. Instead tell them
• 50:51
  Speaker 13: how much you want to pay or ask them what
• 50:55
  Speaker 13: they want to make.
• 50:55
  Speaker 1: Okay, all right, learn something every day and it's changing
• 50:58
  Speaker 1: the the I Guess Hybrid world. Ronnie set Home joins
• 51:02
  Speaker 1: us here in a Bloomberg Interactive Broker studio. She's a
• 51:04
  Speaker 1: managing partner in set Home Lall Group. Just kind of
• 51:06
  Speaker 1: get us some clarification on the employer employee relationship ever
• 51:10
  Speaker 1: evolving and evolving in different ways.
• 51:15
  Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can
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