Latest / Bloomberg Intelligence / Office Leasing Won't Recover For Five Yrs: Cushman & Wakefield

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Office Leasing Won't Recover For Five Yrs: Cushman & Wakefield · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news kind the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. Well as more and more
• 0:21
  Speaker 1: people work from home for longer and longer period the
• 0:25
  Speaker 1: question is what does that mean for corporate real estate
• 0:29
  Speaker 1: office space in some major urban cities. To get a
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  Speaker 1: sense of kind of the future, here, uh, we welcome
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  Speaker 1: Rebecca Rocky, global head of forecasting for Cushman and Wakefield
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  Speaker 1: located in New York City. Rebecca, thanks so much for
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  Speaker 1: joining us. You know, I was in the city a
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  Speaker 1: couple of weeks ago, back in the office for day,
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  Speaker 1: and you know, I was, you know, kind of shocked
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  Speaker 1: to see the the fewer people on the street, and
• 0:52
  Speaker 1: that suggested to me fewer people, uh in the office buildings.
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  Speaker 1: Give us a sense of kind of where we are
• 0:58
  Speaker 1: kind of in the global work worse in the office space,
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  Speaker 1: and how you guys are thinking about it. Sure well,
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  Speaker 1: first of all, thank you so much for having me today. UM.
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  Speaker 1: You know, clearly we have a number of things going
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  Speaker 1: on in the office sector, in particular, not the least
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  Speaker 1: of which is dealing with the damage that's been done
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  Speaker 1: in the economy and the labor market. UM. As it
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  Speaker 1: relates to the return to the office, there are also
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  Speaker 1: a number of trends emerging and most offices are operating
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  Speaker 1: well below capacity right all over the country and really
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  Speaker 1: in most of the parts of the world. We're seeing
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  Speaker 1: that office utilization is below where it was and in
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  Speaker 1: some cases significantly. UM. And you know, fortunately office companies
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  Speaker 1: have been more resilient when you think about the damage
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  Speaker 1: that's been done to different industries. Office employment has fared
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  Speaker 1: disproportionately better, and there is somewhat of a an ability
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  Speaker 1: to work remotely, to get through the times, to continue
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  Speaker 1: to work, just not in the office right now. So
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  Speaker 1: that's really what we're seeing take place, and are some
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  Speaker 1: of the things that we talk about in this report. Yeah, Rebecca,
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  Speaker 1: you did a global office impact study and found that
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  Speaker 1: office leasing will stay below pre COVID levels until twenty five, which,
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  Speaker 1: when you think about it, sort of makes sense. What
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  Speaker 1: does that mean for the likes of Cashman and Wakefield
• 2:24
  Speaker 1: and others like you. Well, I think it was a
• 2:28
  Speaker 1: lot of opportunity to add value to our clients and
• 2:31
  Speaker 1: helping them think about this new world that we're facing. Right. So,
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  Speaker 1: we believe that the office is a critical part of
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  Speaker 1: how companies do business, how they create value in particular,
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  Speaker 1: and so we fundamentally think there's intrinsic value to the
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  Speaker 1: office place. Really, the question is what are the kinds
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  Speaker 1: of things we're doing in the office and how does
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  Speaker 1: behavior change from a leasing perspective as we go into
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  Speaker 1: this new normal. Um. The fact that we're finding that
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  Speaker 1: despite some of the structural changes we anticipate, such as
• 3:07
  Speaker 1: work from home to emerge, that the office sector does
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  Speaker 1: recover from a demand perspective, to me was a really
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  Speaker 1: strong finding and indicative of the fact that many companies
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  Speaker 1: view office as part of the broader ecosystem that will
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  Speaker 1: allow them to achieve the goals that they have as company.
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  Speaker 1: But it's interesting, you know, we've we've heard a lot
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  Speaker 1: of corporate leaders in New York City calling for companies
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  Speaker 1: that bring their employers back, open up the city again.
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  Speaker 1: Yet it just seems like, you know, just the people
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  Speaker 1: I talked to, they say Okay, maybe I'll go back
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  Speaker 1: into the city, but it ain't gonna be five days
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  Speaker 1: a week. This work at home from thing works just fine.
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  Speaker 1: So is it going to be a sense that there
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  Speaker 1: will be some permanent change. Absolutely absolutely. And you know,
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  Speaker 1: in the right now we're in what I call the
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  Speaker 1: adrenaline Russias COVID nineteen right, so we're dealing with competing
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  Speaker 1: forces of trying to figure out what's going on with
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  Speaker 1: schools and folks who need to maybe take care of
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  Speaker 1: their their parents. Right. A huge concern is I need
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  Speaker 1: to go take um groceries on the weekend and I
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  Speaker 1: don't want to be exposed and put purt risk. So
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  Speaker 1: we have a lot of that going on. And this
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  Speaker 1: report really looked at different scenarios where we do find
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  Speaker 1: ourselves in a post COVID world, defined as a world
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  Speaker 1: where we have a medical solution such that we can
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  Speaker 1: really subside in terms of the level of fear of
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  Speaker 1: the virus. But to your point, we absolutely believe there
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  Speaker 1: will be long term changes and a majority of those
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  Speaker 1: are in the evolution of what we call agile working
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  Speaker 1: or part time at home, part time in third places,
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  Speaker 1: and part time in the office. We we think a
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  Speaker 1: minority of the folks who work from home will ultimately
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  Speaker 1: be permanently there. Most people want to be in the office.
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  Speaker 1: Most people want to be in the office a few
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  Speaker 1: days a week. So it's really that evolution that we
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  Speaker 1: expect to be long lasting in nature, and which we
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  Speaker 1: tried to quantify in this report. Here are two statistics
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  Speaker 1: that really jumped out at me. Rebecca, US office vacancy
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  Speaker 1: is expected to rise steadily and peak at seventeen point
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  Speaker 1: six percent. But get this by mid twenty two, so
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  Speaker 1: not even next year, but presumably well after we already
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  Speaker 1: have a vaccine. And you also found that asking rents
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  Speaker 1: are expected to decline by nine point three peak to twelve. First,
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  Speaker 1: that doesn't seem like that big of a decline if
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  Speaker 1: we're looking at nearly a fifth of office space going
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  Speaker 1: away until mid two. Are these in the major urban
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  Speaker 1: centers and so on? Sure? Well, I think from the
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  Speaker 1: vacancy rate perspective, it's important to note that we were
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  Speaker 1: really at a low point for the cycle at just
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  Speaker 1: under thirteen percent, So the increase is really relative to
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  Speaker 1: that which was consistent with prior sort of peas of
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  Speaker 1: expansions in terms of the pre COVID level of vacancy.
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  Speaker 1: So we are expecting this shift upwards by about four
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  Speaker 1: hundred fifty four HERD sixty basis points. And that's really
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  Speaker 1: that is the increase that is putting the downward pressure
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  Speaker 1: on rental rates um so that that effect is something
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  Speaker 1: that we expect to play out differently across cities. One
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  Speaker 1: of the things we do find is that, and this
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  Speaker 1: is consistent with history as well, suburban market the rents
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  Speaker 1: there be less elastic, they tend to move less during
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  Speaker 1: down cycles, and our our city central city rents do
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  Speaker 1: tend to move by a little bit more in our
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  Speaker 1: findings were consistent with that as well. Rebecca, thank you.
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  Speaker 1: Presumably there'll be more studies like this and we will
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  Speaker 1: continue to keep in touch with you and here more.
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  Speaker 1: Rebecca Rocky is Global ahead of Forecasting for Kushman and Wakefield,
• 6:54
  Speaker 1: joining us today. As we approach the elections, there's in
• 7:00
  Speaker 1: the plomban discussion on the Wall Street don't what a
• 7:01
  Speaker 1: possible Joe Biden presidency would mean for economic policy for
• 7:07
  Speaker 1: financial markets. To get some answers to those questions, we
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  Speaker 1: welcome Edmund Phelps. Edmund is a Nobel laureate and director
• 7:13
  Speaker 1: of the Center on Capitalism in Society at Columbia University,
• 7:17
  Speaker 1: Professor Phelps, Thanks so much for joining us. What do
• 7:19
  Speaker 1: you What are your thoughts here? Should former Vice President
• 7:23
  Speaker 1: Joe Biden win the election, Well, certainly hope you will
• 7:26
  Speaker 1: win the election. I think the economy really depends on it.
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  Speaker 1: I've just been um very disturbed over over these past
• 7:36
  Speaker 1: years to see uh Trump's attempts to to guide to
• 7:42
  Speaker 1: guide the economy, to intervene right and left. This creates
• 7:47
  Speaker 1: enormous uncertainty. That's very bad for investment, and it's very
• 7:53
  Speaker 1: bad for innovation. And innovation has already been suffering for
• 7:58
  Speaker 1: quite a few decades. But with innovators won't get a
• 8:03
  Speaker 1: chance to breathe. So I think I think it's very
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  Speaker 1: important that we vote out the Trump administration and give
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  Speaker 1: a new group a chance. So that I first saw
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  Speaker 1: your article in The Guardian, the editorial and the Guardian
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  Speaker 1: and then later on a sort of a paper almost
• 8:25
  Speaker 1: if you like, in Project to Syndicate, and you basically
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  Speaker 1: start off by excoriating President Trump's policy, you know, quote
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  Speaker 1: unquote economic policy, because, as you say, he practices Mussolini's
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  Speaker 1: doctrine of corporatism, the government as poppet master pulling the
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  Speaker 1: strings of poppet companies. You also go on to talk
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  Speaker 1: about as populist rhetoric not translating into better pay for
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  Speaker 1: less advantage workers or victims of discrimination. And you have
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  Speaker 1: a whole sort of takedown of President's Trump's economic plans
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  Speaker 1: or actions. But why aren't we hearing more from Biden
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  Speaker 1: about what he would do? So, yes, we know that
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  Speaker 1: he's offering pell grounds to everybody and so on, but
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  Speaker 1: we're not getting a really developed economic platform as far
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  Speaker 1: as I can see. Well, I think that Biden has
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  Speaker 1: h shown an interest in, um doing something about the
• 9:21
  Speaker 1: wages at the bottom in this country, which have been
• 9:25
  Speaker 1: a have continued to be a terrible problem for decades.
• 9:30
  Speaker 1: I think I think he has shown interest in addressing
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  Speaker 1: the poor, core rewards going to to the least advantage
• 9:41
  Speaker 1: in the country. And um, I think maybe your question
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  Speaker 1: is pointed to what do we hear from Biden about
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  Speaker 1: investment and innovation? Well, I think I think he's I
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  Speaker 1: think he's shown some definitely shown some awareness of the
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  Speaker 1: need for picking up innovation. And of course, in the
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  Speaker 1: long term, you can't have sustained high investment if you
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  Speaker 1: don't have underlying innovation going on. So I think it's
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  Speaker 1: fair to say that Biden grown up in his his
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  Speaker 1: seventy something years. He's grown up in the economy, and
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  Speaker 1: he understands what's going on. He understands the weakness of
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  Speaker 1: the economy, he understand slow growth, and uh, you know,
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  Speaker 1: there have been a hundred things that he's had to
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  Speaker 1: talk about, and maybe he's not not talked enough about
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  Speaker 1: investment innovation, but he has done some talking on economic justice,
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  Speaker 1: which is the other grand theme of mine. Yes, and
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  Speaker 1: I understand that, and I appreciate that you say that
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  Speaker 1: he displays an awareness. But the month has been a
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  Speaker 1: politician his entire life, and surely he has ideas for
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  Speaker 1: what he would do to redirect funds in the economy,
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  Speaker 1: and not just on the corporate innovation side, but also,
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  Speaker 1: as you say, to translate you know, current politics in
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  Speaker 1: the situation into better pay for less advantage workers, victims, discrimination,
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  Speaker 1: erase economic justice injustices and so on. He's not coming
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  Speaker 1: out with any of that. Is he too scared that
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  Speaker 1: that will alienate some of the demographics that he might need. Uh,
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  Speaker 1: I'm not a politician. I'm not even a political scientist.
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  Speaker 1: I really wouldn't venture. I wouldn't want to venture a
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  Speaker 1: guest on that at all. All right, So so Edmund,
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  Speaker 1: give us the thoughts just real quickly here. On trade,
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  Speaker 1: that's been a big issue for President Trump. How do
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  Speaker 1: you see a Biden prenency as it relates to economic trade? Oh? Well,
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  Speaker 1: I think it. The Trump's position towards trade has been
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  Speaker 1: another contributor to um poor economic performance. Being able to
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  Speaker 1: trade with the rest of the world is awfully helpful
• 12:05
  Speaker 1: in developing new products, in finding markets for new investment.
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  Speaker 1: It's hard to imagine high prosperity in the American economy
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  Speaker 1: without without very considerable amounts of international trade, foreign trade.
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  Speaker 1: And of course another thing is that Trump has gotten
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  Speaker 1: in the way of bringing in highly qualified people to
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  Speaker 1: engage in uh innovation in the American economy. Silicon Valley
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  Speaker 1: is being starved of of the of of much of
• 12:45
  Speaker 1: the talent that it needs. UM. I saw the other
• 12:50
  Speaker 1: day that about trade and immigration, I saw that three
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  Speaker 1: thousand companies are now suing the White House over the
• 13:01
  Speaker 1: tariffs that have been instituted by the Trump administration. So
• 13:07
  Speaker 1: that just that just is an indication of how oppressive
• 13:13
  Speaker 1: and how retarding uh Trump's influence has been on the economy. Well, professor,
• 13:20
  Speaker 1: thank you for that. We definitely hope to hear more
• 13:22
  Speaker 1: from Joe Biden. Of course, the first debate is next Tuesday,
• 13:25
  Speaker 1: and I imagine that there will be a portion on
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  Speaker 1: economic plans and for anybody who's interested in this, the
• 13:32
  Speaker 1: economic case for Biden by Professor edmund S. Phelps, Nobel
• 13:36
  Speaker 1: Laureate and of course from Columbia University as well, Legended
• 13:40
  Speaker 1: Our Lifetimes really is both on Project Syndicate and in
• 13:45
  Speaker 1: the Guardian and Paul, I think it's important. I think
• 13:47
  Speaker 1: we need some details. Were fewer than fourty days away
• 13:50
  Speaker 1: from the selection, and both candidates need to step it
• 13:52
  Speaker 1: up with the actual concrete proposals. Well, Vonnie, we are
• 13:57
  Speaker 1: so fortunate to have on a regular basis of good
• 13:59
  Speaker 1: folks of Johns Hopkins University come on and help us
• 14:02
  Speaker 1: get a little bit smarter about this virus and potential therapy,
• 14:07
  Speaker 1: potential vaccines. Today we're joined by Lauren Sauer at the
• 14:10
  Speaker 1: Assistant Professor of Emergency Medicine at Johns Hopkins University. H Lauren,
• 14:14
  Speaker 1: thanks so much for joining us here. You know, the
• 14:17
  Speaker 1: new story I guess I heard today is something called
• 14:20
  Speaker 1: interfere on as a possible new treatment. To educate us
• 14:24
  Speaker 1: on kind of what you think this might mean. Yeah,
• 14:28
  Speaker 1: the two studies that came out recently on interfere on,
• 14:30
  Speaker 1: we're really exciting to see. And I think, um, what
• 14:34
  Speaker 1: I had seen, what I've seen briefly is that this
• 14:37
  Speaker 1: may The scientists who did the studies feel that this
• 14:40
  Speaker 1: may um account for nearly fifteen fourteen or fifteen percent
• 14:44
  Speaker 1: of the severe COVID cases. Um. What they're seeing is
• 14:49
  Speaker 1: that this sort of lack of interfere on and the
• 14:52
  Speaker 1: body is helping to facilitate severe disease. So people are
• 14:55
  Speaker 1: getting sicker. Um. The good thing about it is that
• 14:59
  Speaker 1: we have used interference, especially synthetic interference, for a long
• 15:04
  Speaker 1: time for other diseases, and so UM, if we can
• 15:07
  Speaker 1: target these at risk patients and use some of this
• 15:09
  Speaker 1: research to identify them early, um, we may be able
• 15:12
  Speaker 1: to treat them quickly with therapies that we already have
• 15:15
  Speaker 1: in our tool kit for other diseases. And it's particularly
• 15:19
  Speaker 1: amazing if it ends up being all true and the
• 15:22
  Speaker 1: research proves itself out, because it's the type of thing
• 15:25
  Speaker 1: that hits young people. And also it means that it
• 15:28
  Speaker 1: might save you from going on respirator, which we all know.
• 15:31
  Speaker 1: Then you know, it is a whole other stage in
• 15:34
  Speaker 1: this illness. When might we know something about the effectiveness
• 15:38
  Speaker 1: of of an interfere on you know, rehabilitation scheme if
• 15:43
  Speaker 1: you like. Yeah, so, and the studies that came out
• 15:47
  Speaker 1: are already telling us that interfe treatment may be an
• 15:50
  Speaker 1: effective option. UM. The new arm of the NIH Adaptive
• 15:54
  Speaker 1: Trial Act is also an interfere on study. And I
• 15:57
  Speaker 1: would imagine that there's lots of interfere on UM studies
• 16:01
  Speaker 1: across the country and possibly across the globe. UM, there's
• 16:05
  Speaker 1: I'm just too doing interfere on specific studies, especially when
• 16:09
  Speaker 1: you're thinking these studies may target or only enroll people
• 16:12
  Speaker 1: with severe disease. UM. We are seeing more outpatients with
• 16:17
  Speaker 1: COVID and peer severe disease at least where I am UM,
• 16:21
  Speaker 1: and so focusing on enrolling those patients into the clinical
• 16:26
  Speaker 1: trials quickly and efficiently, both to hopefully save lives but
• 16:29
  Speaker 1: also to really better understand the mechanism is critical right now. So, Lauren,
• 16:34
  Speaker 1: it appears the data remains stupornly high in terms of
• 16:38
  Speaker 1: new cases. UM, yet perhaps the death rate is declining.
• 16:44
  Speaker 1: Is that kind of your understanding some of the data
• 16:47
  Speaker 1: we're starting to see more recently. Yeah. I think one
• 16:51
  Speaker 1: of the things we're seeing is that, UM, we're we
• 16:54
  Speaker 1: are getting patients out of the hospital quicker, which is great, UM,
• 16:58
  Speaker 1: and that may be I think we're gonna need a
• 17:02
  Speaker 1: lot of long term studies to understand why that's happening.
• 17:04
  Speaker 1: But a big piece of it maybe that we're getting
• 17:06
  Speaker 1: better at managing these patients because we're learning more about
• 17:09
  Speaker 1: the course of illness and the course of disease. So UM,
• 17:11
  Speaker 1: we're keeping people from entering into that severe disease state,
• 17:15
  Speaker 1: you know, off of ventilator, UM, off of those high
• 17:18
  Speaker 1: flow oxygen needs, because we're managing their earlier or or
• 17:23
  Speaker 1: we're identifying them earlier and we're managing them better in
• 17:26
  Speaker 1: the hospital and getting them not quicker. So, Lauren, we
• 17:30
  Speaker 1: were talking yesterday about people in the UK proactively getting
• 17:34
  Speaker 1: injected or or infected with coronavirus in order to try
• 17:38
  Speaker 1: and help studies these people, I mean, are they risking
• 17:41
  Speaker 1: long term consequences? I think they absolutely are. The challenge
• 17:47
  Speaker 1: study model that UM talking about that we're seeing in
• 17:50
  Speaker 1: the UK. UM is a model that we've used in
• 17:53
  Speaker 1: other diseases to better understand UM how vaccines work, so
• 17:57
  Speaker 1: that it's a controlled environment and we understand the exposure,
• 18:00
  Speaker 1: We understand the course of the disease and exactly where
• 18:03
  Speaker 1: in the disease process of patients or the participants get
• 18:07
  Speaker 1: the vaccine UM and what their exposure level is after
• 18:12
  Speaker 1: getting the vaccine. The hard part in this situation is
• 18:16
  Speaker 1: that we don't have a really good therapeutic toolkit, so
• 18:19
  Speaker 1: if something goes wrong with these patients UM, we don't
• 18:23
  Speaker 1: have a great a series of great options to treat them,
• 18:28
  Speaker 1: so that that is a higher risk than than you
• 18:31
  Speaker 1: would want in a challenge study. And there's a lot
• 18:35
  Speaker 1: of ongoing community transmission in many places across the globe,
• 18:39
  Speaker 1: so there are opportunities to do vaccine trials the right
• 18:43
  Speaker 1: way in a well controlled environment, understanding community transmission without
• 18:47
  Speaker 1: putting people deliberately at risk and exposing them to to
• 18:51
  Speaker 1: the coronavirus. So it's a risk that we're taking unnecessarily.
• 18:56
  Speaker 1: So Lauren, again I'm just going to ask us to
• 18:59
  Speaker 1: try to triangulate around timing. Is it still fair to
• 19:02
  Speaker 1: suspect that we will that some series of vaccines will
• 19:05
  Speaker 1: be available sometime early next year, maybe late this year,
• 19:08
  Speaker 1: but it will take time after that to kind of
• 19:10
  Speaker 1: figure out what's most effective. Is that's still the way
• 19:12
  Speaker 1: to think about it. Yeah, I think that early next
• 19:15
  Speaker 1: year is probably on target for a few of these vaccines. UM.
• 19:19
  Speaker 1: We're seeing the Phase three trials happen right now, We're
• 19:22
  Speaker 1: seeing good data come in. I think the challenges that
• 19:25
  Speaker 1: scale up piece so UM. Once a vaccine can it
• 19:28
  Speaker 1: goes through the process, we still have the regulatory environment
• 19:31
  Speaker 1: for getting that approval from the FDA. For example. UM.
• 19:34
  Speaker 1: There is discussion of you of using the Emergency used
• 19:37
  Speaker 1: authorization in the interim space between UM or preliminary data
• 19:42
  Speaker 1: from the Phase three trials and getting approval from the
• 19:46
  Speaker 1: UM for the vaccine to roll out more broadly. But
• 19:49
  Speaker 1: we also have to consider scale up of manufacturing, distribution plans,
• 19:53
  Speaker 1: prioritizing the people who will receive it, what are the
• 19:56
  Speaker 1: most important populations UM, And so there's a lot of
• 20:00
  Speaker 1: things that have to happen between now and a massive
• 20:02
  Speaker 1: rollout of the vaccine trial. And I think mid to
• 20:06
  Speaker 1: late and mid to the end of next year is
• 20:08
  Speaker 1: probably reasonable for large scale rollout. Lawrence, thank you as
• 20:12
  Speaker 1: always absolutely love getting your updates straight from you know,
• 20:15
  Speaker 1: the epicenter of where all the research is happening. Lawrence
• 20:18
  Speaker 1: Hower is the system Professor of Emergency Medicine at Johns
• 20:22
  Speaker 1: Hopkins School of Medicine and of course the Bloomberg School
• 20:25
  Speaker 1: of Public Health. Is supported by MICHAELAR Bloomberg, founder of
• 20:27
  Speaker 1: Bloomberg LP and Bloomberg Philanthropies and Bloomberg Markets. Is brought
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  Speaker 1: team by with him forward thinking advisory and accounting firm
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  Speaker 1: helping hiens to be in a position of strength and
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  Speaker 1: the new reality of business learn about their innovative solutions
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  Speaker 1: by visiting with them dot com. So it's time to
• 20:46
  Speaker 1: talk commodities. Some are seeing good news, some are not
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  Speaker 1: seeing so much good news. Let's bring in Mike McGlone,
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  Speaker 1: who knows all about the precious metals and also precious
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  Speaker 1: metals and every other commodity out there. He's commodity strategist
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  Speaker 1: for Bloomberg Intelligence. Mike, we haven't talked too much about
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  Speaker 1: China recently, mainly because apart from TikTok and ouricle and
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  Speaker 1: so on, there haven't been many trade developments. But at
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  Speaker 1: the same time, underlying commodities are moving still because of this.
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  Speaker 1: For example, China went on a buying spree and so
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  Speaker 1: that seems to have revived export profits for some top
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  Speaker 1: crop traders. So that's good news, right, Are we seeing
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  Speaker 1: prices reflect that? Oh? Certainly in soybeans tiganium, Yes, so
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  Speaker 1: I means that ten dollars a bush, so they're up
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  Speaker 1: about five percent in the year they got about ten thirty.
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  Speaker 1: That's been a good sign. It's almost completely on exports
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  Speaker 1: because it's a big crop this year, not really swabeans,
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  Speaker 1: but corn, so that's a big deal. And also the
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  Speaker 1: market's anticipating the potential peak in the dollar, and the
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  Speaker 1: US now exports about swabeans, so the value of the dollar,
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  Speaker 1: the value of the Brazilian real is a big thing.
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  Speaker 1: Just the fact that the China has been back in
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  Speaker 1: has been good in crops, it's really better take taking
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  Speaker 1: them off the bottom. But for new highs to really
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  Speaker 1: go up for more strength, eggs need a peak dollar,
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  Speaker 1: all right. So but also look at the dollar index
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  Speaker 1: here at ninety four. That's not peaked. Dollar isn't no
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  Speaker 1: hit all um, And it's really and from from the
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  Speaker 1: egg standpoint, we watched the trade weighted broad dollar because
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  Speaker 1: the dollar index is six almost two thirds Euro trade
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  Speaker 1: weighted broad is mostly China's China. It doesn't take every day,
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  Speaker 1: but gives you a good indication. The key thing is
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  Speaker 1: what's been really driving that strong dollar the last ten
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  Speaker 1: years ago, so is the out performance the US stock market.
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  Speaker 1: So we're seeing lately is a bit of a divergence.
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  Speaker 1: There's been flows into commanities. Commanies are outperforming during this
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  Speaker 1: last little sloon correction in the stock markets. The key
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  Speaker 1: is Greggs and Eggs aren't really going to really matter
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  Speaker 1: to the stock market so much. But in copper, that's
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  Speaker 1: been a key thing I've been watching. Copper is the
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  Speaker 1: highest correlation to the stock market ever in a fifty
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  Speaker 1: two weeks twelve one basis and it's really not and
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  Speaker 1: it's still hanging around three dollars a pound versus the
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  Speaker 1: ten percent correction in nansect. That's a good sign that
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  Speaker 1: maybe we're seeing some divergence. I think people are looking
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  Speaker 1: more for the physical assets, not just gold, silver, platinum plate,
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  Speaker 1: and not just sup precious but more the base metals
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  Speaker 1: like copper. Well, I was going to say, with the
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  Speaker 1: exception actually of gold, which seems to really have just
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  Speaker 1: gone and got its cold and left the room, right Mike.
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  Speaker 1: In the short term, gold still up in the year.
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  Speaker 1: In the unchanged Bitcoin is up in there. So my
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  Speaker 1: bias at the beginning here was the quasi currencies gold
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  Speaker 1: and bitcoin should continue to outperform. I don't see why
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  Speaker 1: I should change that. The gold just got a little
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  Speaker 1: bit extended. You know, it was fifty it was well
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  Speaker 1: above is fifty two eight me and the highest and
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  Speaker 1: a long time. It's it's it's consolidating the bull market
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  Speaker 1: that way I see it. Right now. It's going to
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  Speaker 1: back up in the good sport around eighteen hundred dollars
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  Speaker 1: and ounced. But if you look at the foundation for
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  Speaker 1: gold rapidly rise in US debt to the GDP and
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  Speaker 1: increase in CHEWI on a global SCS scale, it's unprecedented
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  Speaker 1: goal has a very solid foundation for the next five
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  Speaker 1: ten years. And just help us revisit the bull case
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  Speaker 1: for bitcoin. We can talk bitcoin. Vannie doesn't have a
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  Speaker 1: no bitcoin policy like Tom peen Um. So give us
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  Speaker 1: that bull case for bitcoin again, Mike. Bottom line very
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  Speaker 1: and supply actually less potentially less supply than gold. Higher
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  Speaker 1: prices will not bring on more supply, and then it's
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  Speaker 1: about demand. So all my indications for demand are higher,
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  Speaker 1: and bitcoin has been becoming adopted in the space. There's
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  Speaker 1: more and more people getting in there. The main indications
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  Speaker 1: are quite positive. Futures open, interest um, exchange traded products
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  Speaker 1: coming on for and and addresses used and things like that.
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  Speaker 1: So bitcoins is getting there. The cool thing about bitcoins
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  Speaker 1: has had a significant correction and it's had a period
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  Speaker 1: of disdain, and so that's us you a good foundation
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  Speaker 1: for higher prices. And the correlation between bitcoin and gold
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  Speaker 1: is the highest ever depending on how you measure it.
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  Speaker 1: So I see bitcoin is becoming a digital version of gold.
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  Speaker 1: It's just more of a kind of a baby and
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  Speaker 1: it's catching up. It's taking baby steps now at the moment. Well,
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  Speaker 1: I on that note, would like to compare Etherium with bitcoin,
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  Speaker 1: and so if you look at returns over the last year,
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  Speaker 1: ethereum is up on Bitcoin, up versus the US dollar.
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  Speaker 1: Does that just suggest that bitcoin is a little more
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  Speaker 1: mature as a cryptocurrency. It is, and there's a big difference.
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  Speaker 1: Ethereum kind of part of the whole other crypto space,
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  Speaker 1: and there's seven thousand of them Ethereum is the number
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  Speaker 1: two cryptocurrency, but if you look at the current trends,
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  Speaker 1: a theorem will be surpassed next year by the stable
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  Speaker 1: coin tether. So ethereum has got good and things that
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  Speaker 1: has going for it is defied decentralized finances finance, and
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  Speaker 1: the dex is decentralized exchanges. Theorems like the first platform
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  Speaker 1: for that, but it has a lot of competition. Theorium
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  Speaker 1: got a little bit expensive around five hundred. It's meeting
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  Speaker 1: good support around three hundred. But I think their overall
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  Speaker 1: bias is towards and continued to increase. But Bitcoin should
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  Speaker 1: continue to outperform the overall broad market. And the problem
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  Speaker 1: is there's just too much supply in the broad crypto market.
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  Speaker 1: So Mike, we can't let you go without talking the
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  Speaker 1: soft commodities, agricultural. Do we have evidence? I mean, is
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  Speaker 1: this market now just completely driven by China on? China off?
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  Speaker 1: Is that kind of the only thing we need to
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  Speaker 1: focus on. It's right now, it is China has really
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  Speaker 1: helped bring it out of the dull drums, and we
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  Speaker 1: had multi year lows, lows and corns just a few
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  Speaker 1: months ago, and soybeans are getting pretty beat up. Yet
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  Speaker 1: we have a you know, have a pretty good crop.
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  Speaker 1: But this year, actually the revisions for the U s
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  Speaker 1: productions actually come down since that August report, so it's
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  Speaker 1: a good sign it's going that way. But I don't
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  Speaker 1: see US sauce i e. Corn soy means really having
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  Speaker 1: a good bullmark until the dollar peaks, because the US
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  Speaker 1: now exports more than of its soy it means and
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  Speaker 1: over its wheat. So the dollar really matters there. Well,
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  Speaker 1: I mean just on the US. You know, how can
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  Speaker 1: the dollar peak again or even get much stronger when
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  Speaker 1: the Chinese have the yuan trading around you know, six
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  Speaker 1: eight at this point and looking to go even lower
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  Speaker 1: i e. Stronger. Well, so the the un has actually
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  Speaker 1: been strengthening recently because it's six eight used to be
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  Speaker 1: seven recently. But the key thing you remember from the
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  Speaker 1: dollar standpoint is the dollars measured against other other other currencies,
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  Speaker 1: which are all paper currencies, and that's where you come
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  Speaker 1: to the physical assets like most notably the medals, the gold,
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  Speaker 1: the bitcoins of the world. They're rising versus all paper currencies.
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  Speaker 1: So it's that race for cheaper currencies. Everybody's queueing everybody's
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  Speaker 1: at zero rates, which means physical assets like copper and
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  Speaker 1: gold and bitcoin are gaining that value. And that's what
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  Speaker 1: I see going forward, and hopefully that'll trickle down to
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  Speaker 1: the other commodities. It's just probably not going to trickle
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  Speaker 1: up to crude oil because there's too much supply and
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  Speaker 1: we all know the trend in decarbonization. Really quick, I'm
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  Speaker 1: gonna slip in a discussion about cattle. What's going on?
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  Speaker 1: How's the herd look? Yes, sorry, that's one thing I
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  Speaker 1: don't watch much of cattle, Paul, I'm sorry about that one.
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  Speaker 1: Just the one thing I've never been able to figure
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  Speaker 1: out is a good high robust correlations to the price
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  Speaker 1: of cattle. Alright, I see it's possible to stump Mike mcgloan,
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  Speaker 1: Michael don't. Thanks so much for joining US commodity strategists
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  Speaker 1: for Bloomberg Intelligences all over the commodity complex. For ut Vonnie,
• 27:45
  Speaker 1: it's great to have my gun. Cattle features don't seem
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  Speaker 1: to be shifting around much Pole. Of course I looked
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  Speaker 1: it up. It's LC one. If you want the genericat
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  Speaker 1: I'm sure every farmer out there would say that no
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  Speaker 1: cattle is generic they're all individual. Thanks for listening to
• 27:58
  Speaker 1: Bloomberg Markets podcast asked. You can subscribe and listen to
• 28:02
  Speaker 1: interviews at Apple Podcasts or whatever podcast platform you prefer.
• 28:06
  Speaker 1: I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn. And
• 28:09
  Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before
• 28:11
  Speaker 1: the podcast, you can always catch us worldwide at Bloomberg
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  Speaker 1: Radio