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Markets, EMEA, Real Estate, and Work-from-Home · 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 moven 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.
• 0:21
  Speaker 1: I mean, today's tape basically unchanged. It kind of feels
• 0:25
  Speaker 1: kind of like where we are overall in these markets
• 0:27
  Speaker 1: here feels range bound, as we've heard from some guests
• 0:30
  Speaker 1: kind of to suggest, and the question is, you know,
• 0:33
  Speaker 1: kind of what moves you out of that range. Maybe
• 0:35
  Speaker 1: our next guest has some thoughts here. Joe Mazzola, he's
• 0:38
  Speaker 1: over at Schwab. He is the managing director of Trading
• 0:41
  Speaker 1: Education at Charles Schwab.
• 0:44
  Speaker 3: I mean, Joe, you're at Schwab.
• 0:46
  Speaker 1: You guys see everybody, You see everything out there because
• 0:50
  Speaker 1: you have so many clients out there. What do you
• 0:53
  Speaker 1: feel like investors are kind of the biggest issue for
• 0:57
  Speaker 1: investors right here.
• 1:00
  Speaker 4: I think there's probably three things that investors that are
• 1:03
  Speaker 4: really kind of keying on right now, you know, interest
• 1:05
  Speaker 4: rates being number one, you guys just kind of let
• 1:08
  Speaker 4: into that, you know, back around four and a half percent,
• 1:10
  Speaker 4: four point five to five and the tenure. I don't
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  Speaker 4: think it's it's the it's the move itself. It's the
• 1:15
  Speaker 4: magnitude and how quickly it moved. I think that's shaken
• 1:18
  Speaker 4: markets up quite a bit. I think the second thing
• 1:22
  Speaker 4: is the political landscape, and you know, there is more
• 1:25
  Speaker 4: risks around a government shutdown. We you know, I think
• 1:28
  Speaker 4: maybe we sit back and say, wow, you know this
• 1:31
  Speaker 4: this will work itself out, but there's real risk that
• 1:33
  Speaker 4: this could this could carry on for a while and
• 1:35
  Speaker 4: could have some economic impacts. I think the last thing,
• 1:38
  Speaker 4: and probably maybe front and center and investors' minds, is
• 1:41
  Speaker 4: inflation data.
• 1:43
  Speaker 5: It did seem like it was subdued over the summer.
• 1:45
  Speaker 4: It seemed like, you know, people were kind of able
• 1:47
  Speaker 4: to kind of get ahead of it and see the
• 1:50
  Speaker 4: end in sight.
• 1:50
  Speaker 5: But we started to see it kind of tick back up.
• 1:52
  Speaker 5: We get PC data.
• 1:53
  Speaker 4: On Friday, so it'll give us a little bit more
• 1:55
  Speaker 4: of an indication on where we're at. But that's absolutely
• 1:58
  Speaker 4: front and center for our investor's mind.
• 2:00
  Speaker 2: Gabagail do little, Abigail do a little looks at the
• 2:03
  Speaker 2: technical analysis and she thinks we could float down below
• 2:08
  Speaker 2: forty two hundred on the S and P five hundred.
• 2:11
  Speaker 2: I guess I would imagine that retail investors look at
• 2:15
  Speaker 2: these yields and find them attractive, especially versus stocks. Right now,
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  Speaker 2: how are your clients trading it?
• 2:23
  Speaker 4: So we look at a couple of things, right we
• 2:25
  Speaker 4: look at the S ANDP earnings yield versus the tenure yield.
• 2:29
  Speaker 4: Then you look at that spread, and we're back at
• 2:30
  Speaker 4: levels that we really haven't seen since prior to the
• 2:33
  Speaker 4: Great Financial Crisis. Meaning look that whole Tina talk that
• 2:36
  Speaker 4: we've had for what fifteen years? I mean, that's out
• 2:38
  Speaker 4: the window. There is an alternative, there's an alternative. And
• 2:40
  Speaker 4: fixed income, there's an alternative. In money markets. A lot
• 2:43
  Speaker 4: of investors are comfortable just kind of sitting in five
• 2:46
  Speaker 4: percent yield and waiting for the market to work itself out.
• 2:50
  Speaker 4: I agree one hundred percent. And looking at some of
• 2:52
  Speaker 4: these technical levels right now, it does seem like, you know,
• 2:55
  Speaker 4: we've moved into a bit of a lower range. And
• 2:58
  Speaker 4: the reason I say that is because you know, we
• 3:00
  Speaker 4: broke that forty three to fifty range. I think we
• 3:02
  Speaker 4: have some some room to potentially go maybe down to
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  Speaker 4: about forty two to ten, where you might see a
• 3:07
  Speaker 4: bit of a bounce. That's kind of that intersection of
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  Speaker 4: where the two hundre day moving average is sitting right
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  Speaker 4: around forty two hundred. But we also have a Fibinacci
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  Speaker 4: retracem the level from the one year highs right around
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  Speaker 4: that level as well.
• 3:19
  Speaker 6: Two.
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  Speaker 4: But a couple of things that I've been paying attention to,
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  Speaker 4: and you know a lot of our traders and investors
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  Speaker 4: been talking to us about, is this idea of the
• 3:26
  Speaker 4: market breadth and.
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  Speaker 5: How it's really weakening.
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  Speaker 4: We're just not seeing a bounce, and we're not seeing
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  Speaker 4: it across the whole spectrum, if anything. Really, the only
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  Speaker 4: sector that's held up well is energy, with about ninety
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  Speaker 4: percent of its components in the S and P five
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  Speaker 4: hundred up above its fifty day moving average. But when
• 3:45
  Speaker 4: you look at the S and P five hundred as
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  Speaker 4: a whole, we're around twenty five percent of the S
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  Speaker 4: and P five hundred up above its fifty day moving average.
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  Speaker 4: And that's just not it's not at a level that
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  Speaker 4: supports a bounds. Now, what I'd like to see is
• 3:59
  Speaker 4: I'd like to see a little bit more of a washout.
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  Speaker 4: I'd like to see us get down maybe around that
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  Speaker 4: ten or twelve percent level to see if we get
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  Speaker 4: a bounce from there. At that point, maybe you know,
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  Speaker 4: some of that polishness kind of fades from the market.
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  Speaker 4: You might start to see some you know, that that
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  Speaker 4: washout occur where buyers might start step back in.
• 4:19
  Speaker 1: Hey, Joe, you know when you when you talk to
• 4:22
  Speaker 1: the bloom the shrub customers, what are some of the
• 4:24
  Speaker 1: sectors that they like right here? I mean it was
• 4:26
  Speaker 1: if you just kind of look back at this year
• 4:28
  Speaker 1: to date, if you owned you know, the Magnificent seven, boy,
• 4:31
  Speaker 1: this has been a great year. What are they most
• 4:35
  Speaker 1: bullsh on at this point? Or maybe what are they
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  Speaker 1: most concerned about?
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  Speaker 4: Yeah, as rob customers for sure are looking at really
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  Speaker 4: two sectors right now, Energy and they've done well in
• 4:44
  Speaker 4: that over.
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  Speaker 5: The last couple of months.
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  Speaker 4: I think, you know, if you look at a sector
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  Speaker 4: as a whole over the last month, it's over double
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  Speaker 4: digits and then information technology. So it so they continue
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  Speaker 4: to be buyers there. They're looking for opportunities on selloffs
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  Speaker 4: to kind of step in and buy at those levels.
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  Speaker 4: But those are the two right now that they're really
• 5:00
  Speaker 4: looking at the ones that they are really shying away
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  Speaker 4: from our real estate utilities.
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  Speaker 5: Those are the ones that they're very pay or shoun
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  Speaker 5: right now.
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  Speaker 7: In terms of real estate.
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  Speaker 2: Is it a problem, you know, with these higher rates,
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  Speaker 2: with higher mortgages, with refinancings coming to I mean both
• 5:15
  Speaker 2: on the retail and sorry residential and on the commercial side,
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  Speaker 2: there are some big question marks there now.
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  Speaker 5: I think you hit a nail on the head.
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  Speaker 4: I think when you're starting to look at a thirty
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  Speaker 4: year fixed mortgage up above seven percent, you know, seven
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  Speaker 4: point one, seven point one five percent at this point
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  Speaker 4: right now, I mean, just look at look at what
• 5:33
  Speaker 4: we've seen in existing homes. I think ninety percent of
• 5:36
  Speaker 4: the US has a mortgage under five percent. What's the
• 5:39
  Speaker 4: impetus to move to a new home. I think they're
• 5:41
  Speaker 4: kind of sitting still, and that's cut down on supply,
• 5:44
  Speaker 4: which you know, to a certain extent, is held housing
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  Speaker 4: prices in check. It hasn't. We haven't really seen a
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  Speaker 4: big decrease in housing price. At the same time, it's
• 5:53
  Speaker 4: just not really providing the catalyst for people to move now,
• 5:56
  Speaker 4: until you start to see a real break there. I
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  Speaker 4: know there is some pent of demand and supply apply
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  Speaker 4: is starting to hit. We've seen that on the new
• 6:01
  Speaker 4: home sales exceeding existing home sales, and we've seen that
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  Speaker 4: spread continue now for basically a year. But until you
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  Speaker 4: start to see those mortgage rates kind of take back down,
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  Speaker 4: I don't think you're going to see a lot of
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  Speaker 4: buying momentum there.
• 6:16
  Speaker 1: So, Joe, the good folks at SCHWAP, are you, guys,
• 6:19
  Speaker 1: is it your base case that we're going to have
• 6:21
  Speaker 1: a recession and if so, when or what do you
• 6:23
  Speaker 1: think we can skatee past one?
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  Speaker 4: Well, I could tell you what our investors and what
• 6:28
  Speaker 4: our trade is telling us about sixty nine percent of
• 6:29
  Speaker 4: them do believe that a recession is coming.
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  Speaker 5: But they do believe that it'll last.
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  Speaker 4: Less than a year and it might not be as
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  Speaker 4: deep as as maybe some are predicting. I think that
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  Speaker 4: the belief is that, you know, it'll happen in twenty
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  Speaker 4: twenty four, and they're kind of they're constantly looking at
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  Speaker 4: this battle between the soft landing a scenario in a recession,
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  Speaker 4: and I think they're probably skewing a little bit more
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  Speaker 4: towards recession side at this point.
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  Speaker 2: So do people back up into these rates do you buy, uh,
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  Speaker 2: you know, treasuries and even maybe go along a little
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  Speaker 2: bit duration if you're if you're worried about a recession.
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  Speaker 5: Well, I'm not a fixed income guy, but I can
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  Speaker 5: tell you, you know what our traders are.
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  Speaker 4: Telling us, and they have been bearish on but they,
• 7:15
  Speaker 4: let me rephrase that, they've been a little bit more
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  Speaker 4: bearish on bonds and then than they were in Q two.
• 7:19
  Speaker 4: So the Q three survey, they pull back some of
• 7:22
  Speaker 4: that excitement towards bonds. But I think that what we're
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  Speaker 4: starting to see now is maybe a little bit movement
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  Speaker 4: back into that into that sector. And we're starting to
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  Speaker 4: see it, of course on the money market side as
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  Speaker 4: well too, as people are kind of waiting for a
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  Speaker 4: correction in the market. I think the thing that's frustrating
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  Speaker 4: for investors right now is it's kind of a slow
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  Speaker 4: grind down, right. I mean, we're not really seeing a
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  Speaker 4: big pop in the VIX. You know, we're still below twenty.
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  Speaker 4: We haven't really seen a big pop in the move
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  Speaker 4: index on the fixed income side, which is showing that
• 7:51
  Speaker 4: you know, investors and traders not they're not comfortable at
• 7:55
  Speaker 4: this level.
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  Speaker 5: But at the same time they're not panicking either. That's
• 7:58
  Speaker 5: why I talk about that wash out.
• 7:59
  Speaker 4: Until we see that wash out, I think we just
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  Speaker 4: can continue to see this grind down within this lower range.
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  Speaker 1: Hey, Joe, thanks so much for joining us. Really appreciate it.
• 8:08
  Speaker 1: Joe Mazzola. He's a managing director and trading education at
• 8:11
  Speaker 1: Charles Schwab.
• 8:14
  Speaker 8: You're listening to the team Ken's are Live program Bloomberg
• 8:17
  Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot com,
• 8:21
  Speaker 8: the iHeartRadio app, and the Bloomberg Business App, or listen
• 8:24
  Speaker 8: on demand wherever you get your podcasts.
• 8:28
  Speaker 3: Jackie Bowie joins us.
• 8:29
  Speaker 1: She's a managing partner and head of e m EA
• 8:32
  Speaker 1: at Chatham Financial. Jackie, you know investors here and folks
• 8:36
  Speaker 1: here in the States, we kind of feel like our
• 8:38
  Speaker 1: economy's okay. You know, inflation with like inflation to come
• 8:41
  Speaker 1: down a little bit more. Higher rates are hurting, like
• 8:44
  Speaker 1: if you want to go out and buy a house.
• 8:46
  Speaker 1: But generally things are okay.
• 8:48
  Speaker 5: Here.
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  Speaker 1: People feel like I think generally things are kind of
• 8:50
  Speaker 1: in a right direction, but Europe not so much. Talk
• 8:53
  Speaker 1: to us about kind of the the economic backdrop that
• 8:57
  Speaker 1: European investors and investors that invest in em mea over
• 9:01
  Speaker 1: in Europe and emerging markets, what are they dealing with?
• 9:04
  Speaker 9: Well, I guess the trends are very similar around you know,
• 9:07
  Speaker 9: higher inflation, higher interest rates, and a concern that those
• 9:12
  Speaker 9: interest rates are starting to impact the real economy. I
• 9:16
  Speaker 9: think the differences in Europe and in the UK is
• 9:19
  Speaker 9: that getting inflation under control has not been quite as successful,
• 9:23
  Speaker 9: you could say, as the Fed have managed to do.
• 9:26
  Speaker 9: And there's also a huge divergence within the economies. So
• 9:31
  Speaker 9: we think about the EU as a you know, one
• 9:34
  Speaker 9: geographic zone, but in fact, if you look at the
• 9:36
  Speaker 9: economic performance of Germany for example, in recession, very industrial
• 9:41
  Speaker 9: economy not doing well, versus like Spain and Ireland who
• 9:45
  Speaker 9: are showing decent growth. So it's hard to make a
• 9:47
  Speaker 9: uniform statement across the board, and certainly a lot of
• 9:51
  Speaker 9: divergence between the individual country performance.
• 9:55
  Speaker 2: How difficult are higher commodity prices? You know, last year
• 9:59
  Speaker 2: we were really worried about Germany and continental Europe as
• 10:03
  Speaker 2: gas prices rose up. They managed to avoid taking a
• 10:08
  Speaker 2: huge hit from that by storing enough.
• 10:10
  Speaker 7: But is it still a concern?
• 10:13
  Speaker 9: Definitely, and I think it's a real concern right down
• 10:17
  Speaker 9: to the consumer level in terms of perception, because as
• 10:20
  Speaker 9: soon as the headlines start to come through, you particularly
• 10:23
  Speaker 9: about the oil price, everyone realizes how much that really
• 10:27
  Speaker 9: impacts what they payple for energy and also the cost
• 10:30
  Speaker 9: of fuel at the pump here in Europe in the UK,
• 10:32
  Speaker 9: which is much higher than it is in the US.
• 10:35
  Speaker 9: So I think there's a bit of a concern that
• 10:38
  Speaker 9: if consumers start to see that, they will then start
• 10:40
  Speaker 9: to renin spending as they prepare for perhaps another win
• 10:44
  Speaker 9: to significantly higher energy costs in Germany.
• 10:48
  Speaker 1: I mean, I guess there's such an I guess the
• 10:51
  Speaker 1: importance of China as a trading partner, and the China
• 10:55
  Speaker 1: reopening has been disappointing relative to I guess maybe the
• 10:58
  Speaker 1: beginning of the year expectation. How is Germany and its
• 11:02
  Speaker 1: economy dealing.
• 11:03
  Speaker 9: With that, well, if you look at the headline numbers
• 11:07
  Speaker 9: of the GDP levels, you could say not very well.
• 11:11
  Speaker 9: So as you imply, Germany is obviously a big expert
• 11:13
  Speaker 9: economy and pretty much reliant on a lot of those
• 11:17
  Speaker 9: overseas markets. China is being just one of them, you know.
• 11:21
  Speaker 9: And if we think what happened through the pandemic where
• 11:24
  Speaker 9: we had supply chain issues, which was then impacting growth,
• 11:28
  Speaker 9: and now we have it on the demand side. So
• 11:31
  Speaker 9: we've gone through a full cycle with none of the
• 11:34
  Speaker 9: upside of the upcycle because you've had a bit of
• 11:37
  Speaker 9: a double whammy on either side of that. I mean,
• 11:40
  Speaker 9: there are other things that are specific to the German economy,
• 11:43
  Speaker 9: a whole other topics around the green agenda and the
• 11:46
  Speaker 9: cost for businesses to try and comply with what Germany
• 11:51
  Speaker 9: are trying to do around sort of green and sustainable policies,
• 11:56
  Speaker 9: which is definitely impacting the economy as well.
• 11:59
  Speaker 2: Is that not Is the green transition not going to
• 12:01
  Speaker 2: be a driver of growth down the road? I mean,
• 12:03
  Speaker 2: I look at expectations for the German economy and their law.
• 12:07
  Speaker 2: Obviously we're looking for a contraction this year and only
• 12:12
  Speaker 2: zero point six percent GP growth next year. But is
• 12:17
  Speaker 2: the green transition going to be a driver there? Or
• 12:20
  Speaker 2: is Germany going to be penalized by its reliance on
• 12:26
  Speaker 2: the internal combustion engine industry.
• 12:29
  Speaker 9: Yeah. I think if we were to look ten years
• 12:31
  Speaker 9: ahead and then look retrospectively, you might be able to
• 12:34
  Speaker 9: say that the transition to green overall created jobs, created growth.
• 12:40
  Speaker 9: I think the pain comes in the transition period. If
• 12:43
  Speaker 9: you look at the number of people who are still
• 12:45
  Speaker 9: employed in industries around fossil fuels, around the automotive industry
• 12:50
  Speaker 9: as in you know, few powered cars, not electric cars.
• 12:53
  Speaker 9: It's huge and you don't just get an automatic replacement
• 12:57
  Speaker 9: of them, you get a displacement which impacts the economy
• 13:00
  Speaker 9: before call it the new green economy starts to take off.
• 13:04
  Speaker 9: And I think there are more concerns that the short
• 13:06
  Speaker 9: term pain of pushing towards sustainable policies. The same in
• 13:11
  Speaker 9: the UK, and you know, our prime ministers now starting
• 13:14
  Speaker 9: to rein that in a little because they realizes that
• 13:17
  Speaker 9: the transition period will be painful.
• 13:19
  Speaker 7: By the way, how's Brexit been twenty sixteen?
• 13:23
  Speaker 8: Right?
• 13:23
  Speaker 7: Was that twenty sixteen?
• 13:26
  Speaker 2: So seven years on are you are you just reveling
• 13:31
  Speaker 2: in the benefits of independence? I mean, has it been
• 13:34
  Speaker 2: just an amazing weight lifted from your shoulders, the freedom
• 13:39
  Speaker 2: of doing it on your own, all.
• 13:41
  Speaker 7: The incredible trade deals that you've made. I mean, what courage,
• 13:45
  Speaker 7: What courage that took.
• 13:47
  Speaker 5: Yeah.
• 13:48
  Speaker 9: So I think the idea of Brexit was had lots
• 13:52
  Speaker 9: of very positive components. The challenge for the UK government
• 13:56
  Speaker 9: was in the execution plan and circling through for prime
• 14:00
  Speaker 9: ministers in that time to try and execute the plan
• 14:02
  Speaker 9: in the middle of a global pandemic meant that getting
• 14:06
  Speaker 9: those big trade deals done was definitely more of a challenge.
• 14:10
  Speaker 2: And of course you're partying right, they shouldn't have partied
• 14:13
  Speaker 2: so much.
• 14:15
  Speaker 9: Got to let their hair down. And I think the
• 14:17
  Speaker 9: issue now, you know, just coming into the political cycle.
• 14:20
  Speaker 9: I know it's the same in the US as we
• 14:22
  Speaker 9: come into twenty twenty four that we're starting to see,
• 14:25
  Speaker 9: you know, really big shifts in the sort of left
• 14:28
  Speaker 9: to right movement or wherever way you want to look
• 14:31
  Speaker 9: at it, in the direction of travel. Where you know,
• 14:34
  Speaker 9: in the UK the leading party in the polls is
• 14:38
  Speaker 9: making very clear signs about a much closer relationship with
• 14:41
  Speaker 9: the EU Again, so just as businesses have got used
• 14:45
  Speaker 9: to the new operating environment, you start to sort of
• 14:48
  Speaker 9: inject more of that uncertainty back in. So we'll see
• 14:52
  Speaker 9: how the politics shape up next year.
• 14:54
  Speaker 1: Jackie, thanks so much for joining us. I really appreciate
• 14:57
  Speaker 1: it getting your views. Jackie Bowie, Managing Partner and head
• 15:00
  Speaker 1: of E M e A at Chatham Financial based in London.
• 15:05
  Speaker 8: You're listening to the tape Cat's are live program Bloomberg
• 15:08
  Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 15:12
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• 15:15
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• 15:18
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• 15:23
  Speaker 1: Former colleague device Callie Cox back in the studio, US
• 15:26
  Speaker 1: investment analyst with E.
• 15:28
  Speaker 7: Touro, So, Kelly, what do.
• 15:30
  Speaker 1: You make of this market? I mean there's people lass,
• 15:32
  Speaker 1: you know, four or five weeks, people have gotten very
• 15:34
  Speaker 1: nervous here about this whole interest rate environment and what
• 15:37
  Speaker 1: it may mean a how to risk assets perform in
• 15:40
  Speaker 1: a higher for longer environment. But does that really bring
• 15:43
  Speaker 1: back onto the table recession? How do you guys think
• 15:45
  Speaker 1: about that right here?
• 15:46
  Speaker 10: Yeah, well, we see people building a wall of worry
• 15:49
  Speaker 10: and we think that's a good thing. And I'm not
• 15:50
  Speaker 10: trying to be overally optimistic here, but if you think
• 15:53
  Speaker 10: about this list of worries that we're going through, student
• 15:56
  Speaker 10: loan payments restarting, if you think about you know, higher oil,
• 15:59
  Speaker 10: higher yield's, potential government shut down, there's a reason why
• 16:03
  Speaker 10: people are nervous. But put them all together, and I
• 16:06
  Speaker 10: can only count a few of those as actual systemic
• 16:09
  Speaker 10: risks to the economy. So that's what we're telling customers.
• 16:12
  Speaker 10: Keep an eye on oil, keep an eye on yields,
• 16:14
  Speaker 10: even though yields are telling us a good thing. Still
• 16:16
  Speaker 10: pressure on the economy and markets, but everything else might
• 16:19
  Speaker 10: just be a distraction.
• 16:20
  Speaker 1: All right, So I'm sorry, but you sound still pretty
• 16:23
  Speaker 1: constructive on these markets here.
• 16:25
  Speaker 10: We're I hate this phrase, but cautiously optimistic. We're constructive,
• 16:30
  Speaker 10: but we're also asking people to really tread carefully and
• 16:33
  Speaker 10: pick up quality risk, don't go all out here. I mean,
• 16:37
  Speaker 10: we are in a bull market until proven otherwise, until
• 16:39
  Speaker 10: we see that recession or that crisis. Right now, there
• 16:43
  Speaker 10: are a few signs of that, but at the same time,
• 16:45
  Speaker 10: we don't know what cracks could be forming underneath the surface.
• 16:48
  Speaker 2: So how worried are you about the government shut down
• 16:53
  Speaker 2: which is very likely to come this weekend? The strikes,
• 16:57
  Speaker 2: the UAW strikes being prong I mean, is this a
• 17:01
  Speaker 2: factor in your analysis?
• 17:03
  Speaker 10: Yeah, So we think about the strikes and the shutdown
• 17:05
  Speaker 10: a bit differently. Even though the strike the shutdown is
• 17:08
  Speaker 10: kind of like a like a four strike from government employees, right,
• 17:12
  Speaker 10: So the UAW strike, of course, is front and center
• 17:14
  Speaker 10: of our minds, especially because we have a lot of
• 17:16
  Speaker 10: investors who own auto stocks, and this is a big
• 17:19
  Speaker 10: deal for the auto industry. I mean, luckily, we're talking
• 17:21
  Speaker 10: about US production here, and US production is just a
• 17:24
  Speaker 10: small share of global car production. I mean, US consumers
• 17:28
  Speaker 10: use a lot of cars, but they don't exactly produce
• 17:30
  Speaker 10: a lot of them, so we think global production could
• 17:33
  Speaker 10: fill the gap there. But at the same time, I mean,
• 17:35
  Speaker 10: this is another worry to lop on top of an
• 17:38
  Speaker 10: economy that's under a lot of pressure. Government shutdown again.
• 17:41
  Speaker 10: I mean, if you look historically, they haven't made much
• 17:44
  Speaker 10: of a dent in either the economy or markets. It's
• 17:47
  Speaker 10: usually just a distraction. But going back to systemic risk,
• 17:51
  Speaker 10: I mean, we don't know what's happening underneath the surface,
• 17:53
  Speaker 10: and you know, we're encouraging people to not freak out
• 17:56
  Speaker 10: too much, but understand that this is just another you know,
• 17:59
  Speaker 10: piece of pressure. Sure that you know investors have to
• 18:01
  Speaker 10: think about.
• 18:02
  Speaker 1: Well, why don't I just sit my two year treasury
• 18:04
  Speaker 1: at five point one percent? That's pretty good.
• 18:07
  Speaker 10: I mean a lot of people are doing that.
• 18:09
  Speaker 1: I mean, is that something you guys I mean, is
• 18:11
  Speaker 1: that something you guys are seeing from your clients or
• 18:13
  Speaker 1: hearing from your clients, and what are you telling them
• 18:15
  Speaker 1: about that?
• 18:15
  Speaker 7: Oh?
• 18:16
  Speaker 10: Yeah, we hear it all the time. We did a
• 18:17
  Speaker 10: webinar with clients yesterday and that was one of the
• 18:19
  Speaker 10: first questions that came up. And it's a very fair question.
• 18:22
  Speaker 10: I mean, that's the five percent is the most you've
• 18:24
  Speaker 10: been able to get on money in thirty years. So
• 18:27
  Speaker 10: we frame it like this. I mean, timeframes matter a
• 18:30
  Speaker 10: lot when it comes to considering whether to go into
• 18:33
  Speaker 10: cash or go into equities, or basically when you're determining
• 18:36
  Speaker 10: how much risk you're taking on here, because cash at
• 18:38
  Speaker 10: five percent is great for short term goals. But remember
• 18:41
  Speaker 10: that yields are probably not going to go much higher
• 18:43
  Speaker 10: from here. The economy is probably going to slow down
• 18:45
  Speaker 10: from this five percent annualized pace. People think we're growing
• 18:48
  Speaker 10: out in the third quarter. And if that's the case,
• 18:51
  Speaker 10: if the Fed starts cutting rates into next year, you know,
• 18:55
  Speaker 10: that's the rate that you're getting paid on your cash
• 18:57
  Speaker 10: and you know, on your bonds, unless you, of course
• 19:00
  Speaker 10: hold them to maturity. So you know, we have a
• 19:02
  Speaker 10: lot of longer term investors on the platform well.
• 19:04
  Speaker 2: If you get five percent, you know on a twenty
• 19:08
  Speaker 2: year you're getting that for the next two decades plus
• 19:10
  Speaker 2: the appreciation. If yields go down, your capital is then
• 19:15
  Speaker 2: worth more.
• 19:17
  Speaker 7: Yeah.
• 19:17
  Speaker 10: Yeah, and it's tempting, but you also have to remember
• 19:19
  Speaker 10: the S and P has a seven percent average annual
• 19:22
  Speaker 10: return and that compounds as well over the years. So,
• 19:25
  Speaker 10: you know, with younger investors, with a lot of millennials
• 19:28
  Speaker 10: and Gen zs on the platform, we tell them to
• 19:29
  Speaker 10: think about the fact that they have time on their side,
• 19:32
  Speaker 10: so cash is good, but you know, you really have
• 19:34
  Speaker 10: to think in the gray area as.
• 19:35
  Speaker 3: When who is a typically TURO client customer.
• 19:39
  Speaker 10: So we we skew towards the you know, older millennials
• 19:44
  Speaker 10: and the Gen x's, but we do have a younger
• 19:46
  Speaker 10: investor base when compared to other traditionals.
• 19:48
  Speaker 1: And did they invest differently, did they think differently or
• 19:51
  Speaker 1: do they just or is it just simply hey, you
• 19:53
  Speaker 1: guys are young. You need to think longer term, and
• 19:55
  Speaker 1: over the long term stocks outperform most other asset classes.
• 19:58
  Speaker 3: Is that kind of the base message, Well.
• 20:01
  Speaker 10: They're a little more complicated than that. A lot of
• 20:03
  Speaker 10: our customers are those long term investors, but they have
• 20:06
  Speaker 10: that active account on the side. They're interested in crypto,
• 20:08
  Speaker 10: they're interested in investing with a community.
• 20:10
  Speaker 1: Because we never talk about crypto anymore. It seems like
• 20:13
  Speaker 1: it was almost every day, and I used to quote
• 20:15
  Speaker 1: it all the time.
• 20:16
  Speaker 3: Is but now we don't talk about it.
• 20:18
  Speaker 2: Why bother it's just twenty six thousand without looking let
• 20:21
  Speaker 2: me see, I I haven't looked today, but you're probably
• 20:24
  Speaker 2: pretty close. And I mean twenty six I think it's
• 20:27
  Speaker 2: more interesting to talk about investing with the community.
• 20:30
  Speaker 7: So what exactly does that mean?
• 20:31
  Speaker 2: Somebody has a model portfolio, you might like it, and
• 20:34
  Speaker 2: you can then clone that portfolio like like tracking an index.
• 20:38
  Speaker 10: Yes, so we offer that for crypto, Matt. We call
• 20:41
  Speaker 10: that are not our smart portfolios. But you know, being
• 20:44
  Speaker 10: able to follow somebody and being able to invest if
• 20:46
  Speaker 10: you like the crypto, their crypto that they're investing in.
• 20:49
  Speaker 10: I mean, that's what we're trying to promote here. We're
• 20:51
  Speaker 10: trying to promote the transition of ideas. You know, the
• 20:55
  Speaker 10: ability to talk about what you're investing in and the
• 20:57
  Speaker 10: ability to see what other people are investing in as
• 21:00
  Speaker 10: a track record type thing. You know, these are my
• 21:02
  Speaker 10: returns this is what I have in my portfolio. You know,
• 21:05
  Speaker 10: if you see yourself as a similar investor, then you know.
• 21:09
  Speaker 7: Maybe is it only for crypto? I mean, can I not?
• 21:11
  Speaker 2: Like if Paul goes on there, can he put you know,
• 21:14
  Speaker 2: his munis and all of that sort of baby boomer
• 21:18
  Speaker 2: stuff on there, and I can say I want a
• 21:20
  Speaker 2: boomer account, so I just clone his account and do
• 21:23
  Speaker 2: the same thing.
• 21:24
  Speaker 10: Not in the US yet, but we're hopefully working toward that,
• 21:27
  Speaker 10: and Paul, if we get there, I would love to
• 21:29
  Speaker 10: create a baby boomer portfolio just for you.
• 21:31
  Speaker 3: There we go.
• 21:32
  Speaker 2: See he's the tail end, he's the last, he's the
• 21:34
  Speaker 2: last month of baby boomers.
• 21:36
  Speaker 3: Literally, he's set.
• 21:38
  Speaker 1: For sixty three, John Tucker, he's more firmly asconced.
• 21:41
  Speaker 3: Within the you're closer, would you reach over and just smash?
• 21:46
  Speaker 5: All right?
• 21:46
  Speaker 1: So if I can do that, Kelly, what's kind of
• 21:48
  Speaker 1: the big issues that are coming up from your clients
• 21:50
  Speaker 1: you had the webinar?
• 21:51
  Speaker 7: What are they worried about?
• 21:52
  Speaker 3: What are they excited about? Your your clients?
• 21:55
  Speaker 10: Yeah, well they're worried about a recession. But the funny
• 21:57
  Speaker 10: thing is they feel really good about their financial situation
• 22:00
  Speaker 10: right now. They say I don't have a reason to
• 22:03
  Speaker 10: really change up my portfolio, but I'm frozen, you know,
• 22:05
  Speaker 10: I'm not quite sure what to do here, especially because
• 22:08
  Speaker 10: things just don't feel good around me. So we're encouraging
• 22:11
  Speaker 10: them to again focus on their whys, understand what they're
• 22:14
  Speaker 10: different accounts are for. You know, if they want to
• 22:16
  Speaker 10: be active, there are plenty of opportunities in this environment.
• 22:19
  Speaker 10: You just have to be careful. And on the long
• 22:21
  Speaker 10: term side. I mean, we're you know, we're quite optimistic
• 22:24
  Speaker 10: on the US economy over ten twenty years. Everybody is,
• 22:27
  Speaker 10: but you know, when you look over the next year,
• 22:29
  Speaker 10: you might have some chances to, you know, jump back
• 22:32
  Speaker 10: into a strong room.
• 22:33
  Speaker 3: Our ETFs.
• 22:34
  Speaker 1: I mean, you guys even recommend mutual funds or talk
• 22:36
  Speaker 1: about mutual funds or it's just ETFs now.
• 22:38
  Speaker 10: So we have ETFs on our platform, and we're actually
• 22:41
  Speaker 10: noticing that ETFs as a share of volume is growing.
• 22:44
  Speaker 10: Investors are looking toward diversifying their portfolios or looking toward
• 22:48
  Speaker 10: broader market and sector trends. So that's a trend that
• 22:51
  Speaker 10: we're watching closely. I feel like everybody is, but it's
• 22:53
  Speaker 10: something that the average investor is picking up on.
• 22:56
  Speaker 1: I can't even imagine like the future of the mutual
• 22:58
  Speaker 1: fund business.
• 22:59
  Speaker 3: I mean, if you.
• 23:00
  Speaker 1: Nless it's in a retirement account, why wouldn't you just
• 23:03
  Speaker 1: I don't really well.
• 23:04
  Speaker 2: But we haven't seen the continuation, not at last year's
• 23:08
  Speaker 2: pace of conversions to ETF right, which I don't know
• 23:11
  Speaker 2: why that slowed down.
• 23:12
  Speaker 7: In fact, that's a real conversion.
• 23:13
  Speaker 3: Of a mutual fund into an ETF.
• 23:14
  Speaker 2: Yeah, last year that was huge, right, and the beginning
• 23:17
  Speaker 2: of this year as well, it's kind of slowed down
• 23:19
  Speaker 2: a bit. But I can't imagine why you would want
• 23:22
  Speaker 2: a mutual fund rather than an ETF, other than you know,
• 23:28
  Speaker 2: you're not allowed to have ETFs in certain investment cases.
• 23:31
  Speaker 7: So you have to use mutual funds for that.
• 23:33
  Speaker 10: Yeah, that's the only case I can think of too.
• 23:35
  Speaker 10: I mean, as an investor myself, it's I have no
• 23:38
  Speaker 10: reason to use mutual funds.
• 23:40
  Speaker 3: All right, Matt.
• 23:41
  Speaker 1: Yesterday was the beginning in basketball preseason practice. So my
• 23:44
  Speaker 1: question to Cali, being a proud alum of that trade
• 23:48
  Speaker 1: school in Chapel Hill, North knowing it, I knew it.
• 23:52
  Speaker 7: She's a tar heel.
• 23:54
  Speaker 10: How is basketball season when you're talking to a Duke fan?
• 23:56
  Speaker 3: Yes, So what's the outlook for Chapel Hill this year?
• 23:59
  Speaker 10: Oh man, We've had a lot of turnover on our roster.
• 24:02
  Speaker 10: We have bay Cod, he's a big guy. He's really good.
• 24:05
  Speaker 10: But quite honestly, I mean the turnover we've seen it.
• 24:08
  Speaker 10: I think it's going to be really hard to tell what's.
• 24:10
  Speaker 2: Just historically in these conversations though, Kalie, don't you say, like,
• 24:14
  Speaker 2: I guess what Jordan didn't play at Duke?
• 24:16
  Speaker 7: Right?
• 24:16
  Speaker 10: I mean, that's the thing we can hang over your head, right.
• 24:19
  Speaker 1: Well, we always say the only person that can guard
• 24:22
  Speaker 1: or keep Michael Jordan down is Dean Smith, the coach.
• 24:25
  Speaker 1: He's the only one that could keep Jordan from doing
• 24:27
  Speaker 1: amazing things, Dean Smith by limiting, you know, the type
• 24:30
  Speaker 1: of playing that.
• 24:31
  Speaker 3: He could do.
• 24:31
  Speaker 10: But Jordan did amazing things. He's the greatest of all.
• 24:33
  Speaker 1: Time, of all time, and then he got that in
• 24:36
  Speaker 1: the pros. But anyway, so I'm a you know, it'll
• 24:38
  Speaker 1: be interesting because what's the feeling about your coach Hubert?
• 24:42
  Speaker 4: Oh?
• 24:42
  Speaker 10: I love Hubert now part of the family.
• 24:45
  Speaker 1: Now, but does that still hold within the alumni base?
• 24:48
  Speaker 1: And this is he still really well supported?
• 24:49
  Speaker 10: I think so he's on thinner ice than he was
• 24:52
  Speaker 10: you know, of course last year. And he's done a
• 24:54
  Speaker 10: really good job recruiting. But it's putting different pieces together
• 24:57
  Speaker 10: on a team that's not used to playing like the
• 24:59
  Speaker 10: three ball. Basically. Yeah, we're very big into getting into
• 25:02
  Speaker 10: the middle and you know, grinding in right below the basket.
• 25:05
  Speaker 5: All right.
• 25:06
  Speaker 1: Then chop Hill also has a good football team this year.
• 25:09
  Speaker 11: We do.
• 25:09
  Speaker 10: I would love to talk about football here. Yes, apparently
• 25:12
  Speaker 10: Duke is good, very good now a lot.
• 25:15
  Speaker 1: It doesn't happen almost any time. You know, they beat
• 25:18
  Speaker 1: Clemson this year at Duke. The last time they beat
• 25:21
  Speaker 1: Clemson was when I was a first year business school
• 25:23
  Speaker 1: student in nineteen eighty nine, beat Clemson. I was at
• 25:26
  Speaker 1: that game.
• 25:26
  Speaker 3: It was pouring rain.
• 25:28
  Speaker 1: I was the only one for my study section because
• 25:29
  Speaker 1: we had a big exam on that Monday. Everybody else
• 25:32
  Speaker 1: was doing a smart thing and studying for the exam.
• 25:34
  Speaker 1: I was out in the pouring rain watching Duke beat Clemson.
• 25:36
  Speaker 1: John So that's kind of how.
• 25:37
  Speaker 3: I put you through.
• 25:40
  Speaker 1: It was a long road to dig out of that
• 25:41
  Speaker 1: hole I started myself in, but you know it was
• 25:43
  Speaker 1: worth it.
• 25:44
  Speaker 3: Yeah, exactly, I passed. It's all good.
• 25:46
  Speaker 1: The historic moment it is, so it's all good. Kelly Cox,
• 25:48
  Speaker 1: thanks so much for joining us. Kelli Cox, us investment
• 25:50
  Speaker 1: analyst for e Toro and a proud graduate of the
• 25:53
  Speaker 1: University of North Carolina.
• 25:56
  Speaker 8: You're listening to the Team Canser Live Programloomberg Markets weekdays
• 26:01
  Speaker 8: at ten am Eastering on Bloomberg dot com, the iHeartRadio app,
• 26:05
  Speaker 8: and the Bloomberg Business App, or listen on demand wherever
• 26:08
  Speaker 8: you get your podcast.
• 26:10
  Speaker 1: Bank Great dot Com. Thirty year US fixed rate mortgage
• 26:15
  Speaker 1: seven point seven eight percent. I'm not going to complain
• 26:18
  Speaker 1: about my six percent mortgage anymore. And you've got the
• 26:21
  Speaker 1: three something.
• 26:21
  Speaker 7: Yeah, well three and a quarter.
• 26:22
  Speaker 3: Yeah, there you go.
• 26:23
  Speaker 1: So I mean, how can I know if you look
• 26:26
  Speaker 1: back like a gajillion years, that's pretty much in line
• 26:27
  Speaker 1: with the average. But still that that hurts. But let's
• 26:30
  Speaker 1: talk to somebody who does this stuff every day. Odetta Kushi,
• 26:32
  Speaker 1: Deputy Chief Economists at First American. Adetta, what's your thirty
• 26:37
  Speaker 1: thousand foot view of this residential real estate market? I mean,
• 26:40
  Speaker 1: nobody wants to get out of their house. Nobody wants
• 26:43
  Speaker 1: to sell. If I want to buy, I got to
• 26:44
  Speaker 1: pay this huge mortgage. It's kind of tough out there,
• 26:47
  Speaker 1: isn't it.
• 26:49
  Speaker 12: It is very tough out there, a lot of headwinds
• 26:51
  Speaker 12: in the housing market, but it's resulted in some really
• 26:53
  Speaker 12: interesting dynamics. The first of which is that we're seeing
• 26:57
  Speaker 12: a reacceleration in house price growth. You know, you've got
• 27:00
  Speaker 12: demands still surpassing supply and that's putting that's econ one
• 27:05
  Speaker 12: to one right for house price growth, and so we
• 27:07
  Speaker 12: saw the SMP case Shiller reaccelerate. We've seen it up
• 27:11
  Speaker 12: on a year over year basis after declining for three
• 27:14
  Speaker 12: months in a row. And that's pretty broad based across
• 27:17
  Speaker 12: most markets, of course, with some regional differences. And the
• 27:20
  Speaker 12: other dynamic here is because there are so few existing
• 27:24
  Speaker 12: homes on the market because of that rate lock and
• 27:26
  Speaker 12: effect that you alluded to. You know, people are going
• 27:29
  Speaker 12: to the new home market because builders are offering incentives,
• 27:33
  Speaker 12: they're buying down rates, and so the new home market
• 27:37
  Speaker 12: has actually fared better than the existing home market this year.
• 27:41
  Speaker 2: So what does that mean for affordability? I mean, prices
• 27:43
  Speaker 2: are up, you know, rates are up. Is this a
• 27:47
  Speaker 2: market that is just you know, deadly for first time buyers.
• 27:52
  Speaker 12: It's really tough out there for first time buyers. As
• 27:54
  Speaker 12: you mentioned, you know, affordability is a function of home prices,
• 27:58
  Speaker 12: interest rates, and incomes, and home prices are up again,
• 28:02
  Speaker 12: interest rates are moving higher, incomes are increasing, but it's
• 28:07
  Speaker 12: not enough to offset the impact of higher rates and prices.
• 28:10
  Speaker 12: So it's tough out there as a first time home buyer.
• 28:12
  Speaker 12: But we are seeing them look to the new home
• 28:15
  Speaker 12: market because again with rates at seven percent, builders are
• 28:19
  Speaker 12: buying down rates to six percent, sometimes even five percent,
• 28:23
  Speaker 12: and oftentimes also cutting prices on homes, and so the
• 28:26
  Speaker 12: new home market is actually more affordable than the existing
• 28:31
  Speaker 12: home market, which is not traditionally the case.
• 28:34
  Speaker 2: How are builders able to do that? I've been hearing
• 28:36
  Speaker 2: this too, and I find it fascinating. And how long
• 28:40
  Speaker 2: will they be able to hold to keep that up?
• 28:44
  Speaker 10: I think it'll be tough.
• 28:45
  Speaker 12: I mean, we saw the new home sales number come
• 28:46
  Speaker 12: down in August, rates at seven percent, over seven percent,
• 28:51
  Speaker 12: really biting into affordability and cutting down demand. And builders
• 28:55
  Speaker 12: have had the margins to be able to buy down
• 28:58
  Speaker 12: the rates. But the higher that moreage rates go, the
• 29:00
  Speaker 12: more difficult that.
• 29:01
  Speaker 9: That will be.
• 29:03
  Speaker 1: Oh, I'll just you know again on that bank rate
• 29:05
  Speaker 1: thirty or mortgage seven point seven percent. That's the highest
• 29:09
  Speaker 1: sense two thousand, just extraordinary. So I guess the question is,
• 29:14
  Speaker 1: is there a rate out there that you think is
• 29:16
  Speaker 1: a clearing rate for lack of a better word, where
• 29:19
  Speaker 1: it might kind of loosen things up in buyers will
• 29:22
  Speaker 1: be willing to take that mortgage sellers, we'll bring.
• 29:24
  Speaker 2: About the great reset a lot, as a lot of
• 29:26
  Speaker 2: people have called it the expected event.
• 29:30
  Speaker 12: Well, you know, more than ninety percent of existing homeowners
• 29:34
  Speaker 12: are locked into rates below six percent, So I think,
• 29:37
  Speaker 12: certainly if we could start approaching six percent, we'll start
• 29:40
  Speaker 12: to see a lot of activity. There's a lot of
• 29:42
  Speaker 12: buyers on the sidelines. There's a whole generation of millennials
• 29:48
  Speaker 12: that that are out there looking for that first home
• 29:51
  Speaker 12: and you know, on the sidelines waiting for that mortgage
• 29:54
  Speaker 12: math to work for them. So I think if we
• 29:56
  Speaker 12: can start to get rates heading lower, you know, approaching
• 29:59
  Speaker 12: that six percent, certainly that that would bring some folks
• 30:02
  Speaker 12: off the sidelines.
• 30:03
  Speaker 2: What about adjustable rate mortgage is how popular had they become?
• 30:07
  Speaker 12: We start to see adjustable rate mortgages, you know, the
• 30:11
  Speaker 12: use of those increase as rates increase, So we've seen
• 30:15
  Speaker 12: them come up a little bit over the last year
• 30:17
  Speaker 12: as mortgage rates have increased, but there's still a smaller
• 30:20
  Speaker 12: share of the market.
• 30:21
  Speaker 3: If I want to go get a mortgage, can I
• 30:23
  Speaker 3: even get one here? And how is the mortgage origination market?
• 30:28
  Speaker 12: Mortgage standards have been tight, right, so not even just
• 30:32
  Speaker 12: this year, but generally speaking, and certainly compared to you know,
• 30:35
  Speaker 12: the early in mid two thousands, lending standards have been
• 30:38
  Speaker 12: significantly tighter, and so it's probably tough route there to
• 30:42
  Speaker 12: get a mortgage, certainly tougher to get a jumbo mortgage
• 30:45
  Speaker 12: if that's what you're in the market for. And so
• 30:49
  Speaker 12: that's that's sort of another headwind to the housing market.
• 30:53
  Speaker 1: What's the regional factor here? I mean, it just seems
• 30:56
  Speaker 1: like we just heard so many stories during the pandemic
• 30:58
  Speaker 1: of everybody you know, owing to the Sun Belt going
• 31:01
  Speaker 1: to Texas, Florida, Tennessee for crying out loud. I mean,
• 31:05
  Speaker 1: is it I don't even know where there's where they're
• 31:08
  Speaker 1: putting those people. But are those markets appreciably stronger? Are
• 31:10
  Speaker 1: we seeing more activity there than maybe other parts of
• 31:13
  Speaker 1: the country.
• 31:14
  Speaker 7: That's right.
• 31:14
  Speaker 12: In the latest SMPK shild report, the markets that experienced
• 31:18
  Speaker 12: the strongest growth were in the rest belt, and then
• 31:20
  Speaker 12: you also had New York. So it was really the
• 31:23
  Speaker 12: Midwest the Northeast that are outperforming, and then the West
• 31:26
  Speaker 12: Coast traditionally more expensive markets that really have experienced the
• 31:32
  Speaker 12: strongest price declines. So you know, you've got your San Jose,
• 31:36
  Speaker 12: San Francisco, you know, have had a tougher go in
• 31:40
  Speaker 12: a rising mortgage rate environment.
• 31:41
  Speaker 2: So I imagine you know, workers there are still in
• 31:45
  Speaker 2: strong demand.
• 31:46
  Speaker 7: Construction workers.
• 31:48
  Speaker 2: Are builders able to get everything they need, land, permits, labor.
• 31:53
  Speaker 10: It's still tough.
• 31:54
  Speaker 12: The supply chain headwinds, the supply side headwinds for builders.
• 31:58
  Speaker 12: You know, some have eased, some of the material supply
• 32:00
  Speaker 12: side challenges have eased, but there is still a chronic
• 32:04
  Speaker 12: shortage of a skilled construction workers. And so you know,
• 32:08
  Speaker 12: the construction industry is still contending with some of these headwinds.
• 32:12
  Speaker 1: So do you guys at your shop, do you have
• 32:14
  Speaker 1: a view on mortgage rates kind of where you think
• 32:17
  Speaker 1: they're going to be six months from now, twelve months
• 32:19
  Speaker 1: from now.
• 32:20
  Speaker 12: Mortgage rates are notoriously difficult to forecast because they're tied
• 32:25
  Speaker 12: to you know, the ten year treasury, which can be
• 32:28
  Speaker 12: influenced by everything from you know, geopolitical tensions to your recession,
• 32:33
  Speaker 12: to of course inflation. But I will say that the
• 32:36
  Speaker 12: Fed has maintained its hawkish stance. They've made it very
• 32:39
  Speaker 12: clear that they intend to stay keep rates higher for longer,
• 32:42
  Speaker 12: and that means continued upward pressure on mortgage rates. I'm
• 32:46
  Speaker 12: certainly not seeing mortgage rates, you know, getting back to
• 32:49
  Speaker 12: I think one of you said you have a three
• 32:50
  Speaker 12: percent mortgage, and I'm not seeing that happen anytime soon.
• 32:53
  Speaker 7: Thank goodness, that was me.
• 32:56
  Speaker 2: So if you have I guess slower household formation because
• 33:01
  Speaker 2: affordability is off the charts, does that also mean consumers
• 33:06
  Speaker 2: are spending less money, you know at I don't know
• 33:11
  Speaker 2: where people go these days, you know, restoration, hardware, create
• 33:16
  Speaker 2: and barrel, you know, furnishing places, putting things together.
• 33:21
  Speaker 12: I mean there is a multiplier effect on the economy,
• 33:24
  Speaker 12: certainly from from from demand sort of subsiding for housing,
• 33:29
  Speaker 12: you know, and of course if construction slows further, that
• 33:33
  Speaker 12: will have a multiplier effect on you know, durable goods,
• 33:36
  Speaker 12: housing services. So certainly reduced demand for housing due to
• 33:42
  Speaker 12: the affordability environment can impact demand for furnishings and all
• 33:46
  Speaker 12: of those.
• 33:48
  Speaker 7: All right, Odedda.
• 33:48
  Speaker 1: Thanks so much for joining us at Debtakushy, Deputy Chief
• 33:51
  Speaker 1: Economists for First American.
• 33:54
  Speaker 8: You're listening to the tape cans are live program Bloomberg
• 33:58
  Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 34:01
  Speaker 8: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 34:04
  Speaker 8: You can also listen live on Amazon Alexa from our
• 34:07
  Speaker 8: flagship New York station. Just say Alexa play Bloomberg eleven.
• 34:11
  Speaker 1: Thirty glco go the global commodity prices. That's the function
• 34:19
  Speaker 1: for that. I look at the medals here you're to date.
• 34:22
  Speaker 1: Pretty much everything is down on a year to date basis.
• 34:25
  Speaker 1: A couple exceptions, most notable being gold that's up three percent.
• 34:29
  Speaker 1: Let's see what's happening in the world of metals right now.
• 34:32
  Speaker 1: We talk commodities, we talk crypto. We talked to Everett Millen.
• 34:35
  Speaker 1: He's a chief markets analyst at Gainesville Coins. So, Everett,
• 34:40
  Speaker 1: what is happening with gold here? What's the cause? Seems
• 34:42
  Speaker 1: to be bucking the trend where I've got aluminum down,
• 34:44
  Speaker 1: copper down, gold down on a silver down on your
• 34:48
  Speaker 1: today basis, but I've got gold higher.
• 34:51
  Speaker 6: Yeah, thanks for having me on I think it's really
• 34:54
  Speaker 6: interesting that gold has been fairly resilient, hanging out around
• 34:58
  Speaker 6: that nineteen hundred mar even with so many headwinds working
• 35:02
  Speaker 6: against it. You have the dollar climbing to its highest
• 35:05
  Speaker 6: and six months rates being higher. Real rates being higher
• 35:09
  Speaker 6: is usually negative for gold. And we've also just come
• 35:13
  Speaker 6: out of the summer months, which are typically they see
• 35:16
  Speaker 6: poor seasonality for the gold market. And in spite of
• 35:19
  Speaker 6: all that, you're right, gold has held up relatively well.
• 35:23
  Speaker 6: And I think a lot of it has to do
• 35:25
  Speaker 6: with the fact that central banks continue to purchase gold
• 35:28
  Speaker 6: and kind of place a floor beneath the price. And
• 35:31
  Speaker 6: in many cases, sure this is done to stave off
• 35:35
  Speaker 6: currency appreciation, but it's also a sign that central banks
• 35:38
  Speaker 6: are probably hedging against the potential for a policy error
• 35:42
  Speaker 6: or an economic downturn in the near future.
• 35:45
  Speaker 2: So which central banks had the most gold and who's
• 35:49
  Speaker 2: doing the buying.
• 35:51
  Speaker 6: So as of now, the Federal Reserve still holds the
• 35:55
  Speaker 6: most gold in the world, but the big buyers we
• 35:57
  Speaker 6: see are mostly in the East, especially as we've seen
• 36:01
  Speaker 6: outflows from gold ETFs in North America and Europe. Typically
• 36:06
  Speaker 6: most of that gold ends up flowing into China and India,
• 36:09
  Speaker 6: and so the People's Bank of China is certainly continuing
• 36:12
  Speaker 6: to buy gold. And what's interesting is there's been this
• 36:16
  Speaker 6: persistent premium on gold in Shanghai relative to London. Now
• 36:20
  Speaker 6: there is some speculation that that's perhaps due to policies
• 36:24
  Speaker 6: followed by the PBOC, but really what it says to
• 36:28
  Speaker 6: me is it's just a sign of robust demand for
• 36:30
  Speaker 6: gold in China, and that's important because China is always
• 36:33
  Speaker 6: the number one consumer of gold in the world.
• 36:37
  Speaker 7: By the way, how do you play that arbitrage?
• 36:40
  Speaker 2: I mean, it's not like you're going to load up
• 36:43
  Speaker 2: a plane full of gold bars in Shanghai and fly
• 36:46
  Speaker 2: them into Heathrow, right, is there any way to play
• 36:49
  Speaker 2: the difference?
• 36:50
  Speaker 11: Well, that's a great question.
• 36:52
  Speaker 6: There's there's been some suggestions that perhaps that could be
• 36:55
  Speaker 6: done through Hong Kong, given that it is still under
• 36:59
  Speaker 6: Chinese rule but is somewhat of a separate special financial zone.
• 37:03
  Speaker 11: I don't think that there's any practical way to play
• 37:06
  Speaker 11: that arbitrage.
• 37:08
  Speaker 6: But again, outside of the East, sentiment in the pressures
• 37:12
  Speaker 6: and precious metals market it's still rather pessimistic.
• 37:15
  Speaker 11: So even if there was a way to play that.
• 37:17
  Speaker 6: I don't think a lot of investors are really tuned
• 37:20
  Speaker 6: into that or paying attention.
• 37:21
  Speaker 7: To that evert how closely do you watch the dollar?
• 37:24
  Speaker 2: I always have the Bloomberg Dollar Index on my screen.
• 37:28
  Speaker 2: A lot of people watch just DXY. But right now
• 37:31
  Speaker 2: we're trading at twelve seventy. It's the highest level we've
• 37:34
  Speaker 2: seen in about a year, showing some real strength against
• 37:39
  Speaker 2: our trading partners, but also obviously strength in gold term
• 37:44
  Speaker 2: strength and oil terms, et cetera.
• 37:47
  Speaker 11: Right, it's always important to watch the dollar.
• 37:50
  Speaker 6: The fact that it has strengthened so much against its
• 37:53
  Speaker 6: pure currencies around the world shows up in the gold price.
• 37:56
  Speaker 6: Especially this week we've seen gold drifting lower, but when
• 38:00
  Speaker 6: you look outside of the US, in most other currencies,
• 38:04
  Speaker 6: gold is at or near all time highs. So it
• 38:08
  Speaker 6: sort of is just a relative, a relative comparison that
• 38:11
  Speaker 6: the strength of the dollar in the West, it tends
• 38:13
  Speaker 6: to damp in interest in gold, but there's not.
• 38:17
  Speaker 11: Always a direct line.
• 38:18
  Speaker 6: So about a year ago we saw the last time
• 38:21
  Speaker 6: that the DXY was at these levels, we saw that
• 38:24
  Speaker 6: both the dollar and gold rallied in tandem. And sometimes
• 38:27
  Speaker 6: when there are safe haven concerns, you can see that
• 38:30
  Speaker 6: kind of paradoxical relationship happening.
• 38:32
  Speaker 2: And Paul and I were just talking about how boring
• 38:34
  Speaker 2: it's been to quote bitcoin lately. It's just holding it
• 38:37
  Speaker 2: twenty six thousand. But actually when you look at the
• 38:40
  Speaker 2: strength and the dollar, it's pretty interesting that bitcoin's been
• 38:43
  Speaker 2: able to hold this level.
• 38:45
  Speaker 6: That's right, it has been somewhat ranged down, and I
• 38:48
  Speaker 6: think clearly we're going to have to get some more
• 38:50
  Speaker 6: clarity on the regulatory end. We still have not gotten
• 38:54
  Speaker 6: a bitcoin ETF approval. And to kind of make a
• 38:57
  Speaker 6: comparison to gold, the gold market about a decade or
• 39:01
  Speaker 6: two ago experienced much greater liquidity and much greater demand
• 39:06
  Speaker 6: once a gold ETF was launched. So I believe a
• 39:09
  Speaker 6: lot of bitcoiners are looking at that experience and hoping
• 39:12
  Speaker 6: if there is a bitcoin ETF, it's going to ease
• 39:15
  Speaker 6: access for kind of lowering that barrier of entry for
• 39:20
  Speaker 6: people to get invested into bitcoin. And it's also important
• 39:23
  Speaker 6: to keep in mind that anyone who has been in
• 39:25
  Speaker 6: the crypto market for a few years, they've experienced these
• 39:30
  Speaker 6: kind of crypto winters before. So the current poor sentiment
• 39:34
  Speaker 6: regarding cryptos in bitcoin is not necessarily the death warrant
• 39:38
  Speaker 6: that I think some perceive it to be.
• 39:41
  Speaker 1: So what is the future of this ETF here? I mean,
• 39:45
  Speaker 1: it's kind of it feels like the crypto space Matt
• 39:47
  Speaker 1: and I were just talking about it. It's no longer
• 39:49
  Speaker 1: top of mind or what everybody wants to talk about
• 39:51
  Speaker 1: as much as it was, say, six, nine, twelve months ago,
• 39:54
  Speaker 1: And I'm wondering, is the space just waiting on how
• 39:57
  Speaker 1: this ETF issue will be resolved?
• 39:59
  Speaker 11: I think so.
• 40:00
  Speaker 6: And along the same lines, you know, you have this
• 40:03
  Speaker 6: tug of war between the greater trust and legitimacy that
• 40:08
  Speaker 6: would come with an ETF and greater regulation.
• 40:11
  Speaker 11: But on the other hand, pulling in the opposite direction
• 40:13
  Speaker 11: is the.
• 40:13
  Speaker 6: Fact that the crypto market has always been characterized by
• 40:16
  Speaker 6: this kind of free wheeling behavior where it thrives without
• 40:20
  Speaker 6: any oversight. And I think one of the important things that,
• 40:23
  Speaker 6: as you point out, that the market seems to be
• 40:26
  Speaker 6: waiting for, is there's an IRS proposal for new tax
• 40:30
  Speaker 6: reporting rules on digital assets, and so far that has
• 40:34
  Speaker 6: not been very well received by.
• 40:36
  Speaker 11: The crypto industry.
• 40:38
  Speaker 6: And we already know with the FTX to backle what
• 40:40
  Speaker 6: a complete lack of regulation and oversight looks like. But
• 40:44
  Speaker 6: we're going to have to get some kind of clarity
• 40:47
  Speaker 6: in that realm. Otherwise you will see all of the
• 40:50
  Speaker 6: activity in DeFi and Web three in the crypto space
• 40:54
  Speaker 6: will almost certainly move offshore and leave the US.
• 40:57
  Speaker 3: All right, So run more quick quick question forty seconds? Silver?
• 41:01
  Speaker 3: What's the call here?
• 41:03
  Speaker 6: Silver is one of those interesting disappointing things for the
• 41:07
  Speaker 6: precious metal foals. It has not really performed the way
• 41:10
  Speaker 6: that they expected. At the same time, we have to
• 41:13
  Speaker 6: keep in mind that year on year, silver's up about
• 41:15
  Speaker 6: twenty three percent, and I'm looking at a lot of
• 41:18
  Speaker 6: supply concerns. Mexico has seen at silver output drop by
• 41:22
  Speaker 6: nearly twenty percent. They're the world's largest producer, so supply
• 41:25
  Speaker 6: concerns I think give silver some fuel to move higher
• 41:29
  Speaker 6: in the short run.
• 41:30
  Speaker 3: All right, Everick, thank you so much. We appreciate that
• 41:32
  Speaker 3: as always.
• 41:33
  Speaker 1: Everett Milman joining US chief markets analysts at Gainesville Coins.
• 41:39
  Speaker 3: You're listening to the tape.
• 41:40
  Speaker 8: Catch our live program Bloomberg Markets weekdays at ten am
• 41:43
  Speaker 8: Eastern on Bloomberg Radio, the tune it app, Bloomberg dot Com,
• 41:47
  Speaker 8: and the Bloomberg Business app. You can also listen live
• 41:50
  Speaker 8: on Amazon Alexa from our flagship New York station, just
• 41:53
  Speaker 8: say Alexa play Bloomberg eleven thirty.
• 41:58
  Speaker 1: Well, we here in Bloomberg Radio and TV, the media
• 42:00
  Speaker 1: side of Bloomberg.
• 42:01
  Speaker 7: We're here every day.
• 42:02
  Speaker 3: We're required to be here every day.
• 42:03
  Speaker 1: And there are a lot of people in Bloomberg Radio
• 42:06
  Speaker 1: and TV that did not miss one day during the pandemic,
• 42:09
  Speaker 1: that came in every day to get the shows on
• 42:11
  Speaker 1: the air. But we are clearly the exception, not the rule.
• 42:15
  Speaker 1: It seems like this hybrid work is here to stay.
• 42:18
  Speaker 1: Let's see where the latest findings are. Eileen mulaney joins us.
• 42:21
  Speaker 1: She's a workforce transformation lead at Viato Partners. She joined
• 42:25
  Speaker 1: us via Zoom So Eileen is I guess hybrid work
• 42:29
  Speaker 1: is that the new normal going forward?
• 42:33
  Speaker 13: That is the new normal, and first, thank you so
• 42:35
  Speaker 13: much for having me. Yes, that is the new normal.
• 42:38
  Speaker 13: I think what we're seeing in a lot of industry sectors, though,
• 42:41
  Speaker 13: is this combination of really hybrid work. There really is
• 42:45
  Speaker 13: a big focus on return to the office. So we
• 42:48
  Speaker 13: definitely are seeing that. I think in the height of
• 42:50
  Speaker 13: the pandemic, we never thought we'd see returns office. We
• 42:52
  Speaker 13: thought we were folding remote forever, but there has been
• 42:55
  Speaker 13: a big push to get people back to the office,
• 42:58
  Speaker 13: and I think three two or four to one is
• 43:00
  Speaker 13: the most common schedules we're seeing.
• 43:02
  Speaker 1: I mean, there are a lot of folks. It seems
• 43:04
  Speaker 1: like a lot of industries, a lot of companies. I'm
• 43:07
  Speaker 1: thinking of the financial services industry. I'm thinking that Jamie
• 43:09
  Speaker 1: Diamonds of the world that are pushing still for five
• 43:14
  Speaker 1: days a week, but they again, they feel like the
• 43:18
  Speaker 1: exception rather than the rule here.
• 43:21
  Speaker 13: I think we're not seeing as much on the five
• 43:23
  Speaker 13: days a week though. I think there is a lot
• 43:24
  Speaker 13: to be said for human interaction collaboration, more than you
• 43:28
  Speaker 13: can do just on zoom. So I do see a
• 43:31
  Speaker 13: lot of focus on that, especially when it's very junior staff,
• 43:35
  Speaker 13: young staff that perhaps have not developed their professional network,
• 43:38
  Speaker 13: and that really is a plus to be in the
• 43:41
  Speaker 13: office and just see how things get done. Also, some
• 43:45
  Speaker 13: of the challenges with developing relationships with new clients new
• 43:48
  Speaker 13: customers can often be difficult if the relationship is purely
• 43:52
  Speaker 13: video based and not really in person. So I think
• 43:56
  Speaker 13: for me personally, the hybrid is kind of the best
• 43:58
  Speaker 13: in all worlds. But I do think that there are
• 44:00
  Speaker 13: some CEO some companies in particular that are really trying
• 44:04
  Speaker 13: for that five day week work in the office, But
• 44:07
  Speaker 13: we have seen employee expectations have significantly changed coming out
• 44:12
  Speaker 13: of COVID.
• 44:13
  Speaker 1: Yeah, I have two twenty seven year olds and a
• 44:15
  Speaker 1: twenty five year old in the workforce, my offspring, and
• 44:19
  Speaker 1: to them coming in five days a week, it's not
• 44:21
  Speaker 1: even something that's in their mindset. And I kind of
• 44:25
  Speaker 1: feel like this this generation, it's just a non starter.
• 44:29
  Speaker 1: Is that kind of how it seems at this point.
• 44:32
  Speaker 13: I think it certainly feels like that sometimes. I think
• 44:35
  Speaker 13: a lot of them started their career in COVID, so
• 44:37
  Speaker 13: it's all they know. But I think and some of
• 44:40
  Speaker 13: them do have an expectation when they do come into
• 44:43
  Speaker 13: the office kind of what's happening that day? Is there
• 44:45
  Speaker 13: something exciting? Is there you know, a happy hour? Is
• 44:48
  Speaker 13: there a lunch? You know, what's happening? Why should I?
• 44:50
  Speaker 13: Why do I need to be in the office? And
• 44:52
  Speaker 13: I think it's because they haven't seen the benefits of
• 44:55
  Speaker 13: that kind of collaboration full time. So I think that's
• 44:59
  Speaker 13: the importantsage to get to all of them for sure.
• 45:02
  Speaker 1: You know, when this whole thing started I was. I
• 45:05
  Speaker 1: just saw no way that this economy could function efficiently
• 45:10
  Speaker 1: with everybody working from home, like I thought, you know,
• 45:13
  Speaker 1: for example, just the business that I'm in Wall Street,
• 45:16
  Speaker 1: I couldn't imagine traders trading as efficiently and as successfully
• 45:21
  Speaker 1: from home as they do in the office, and they've
• 45:23
  Speaker 1: got all this computer screens and all the technical tools.
• 45:27
  Speaker 1: But they did, and the economy did, and the global
• 45:29
  Speaker 1: economy did just well. I mean, it's just really shocking
• 45:33
  Speaker 1: how it really played out.
• 45:34
  Speaker 13: I was one of those that thought, oh, this will
• 45:37
  Speaker 13: be in place for about two weeks and we'll get
• 45:38
  Speaker 13: back to normal. I kind of shared the same opinion
• 45:41
  Speaker 13: that it's going to be hard to really shift to
• 45:43
  Speaker 13: being productive efficient and just continue on as if this
• 45:48
  Speaker 13: was a normal and none of us were really prepared
• 45:51
  Speaker 13: for it, and none of us were really trained properly
• 45:54
  Speaker 13: for it. It's different with the organizations now. They're doing
• 45:57
  Speaker 13: a lot of focus training on helping manage understand how
• 46:01
  Speaker 13: to really manage a workforce that's not in the office,
• 46:04
  Speaker 13: how to kind of look at social cues on video,
• 46:07
  Speaker 13: all different kinds of training that we had never thought
• 46:10
  Speaker 13: of putting our teams through before COVID. So certainly a
• 46:13
  Speaker 13: lot more age and tools to help people, But I
• 46:16
  Speaker 13: agree with you, I don't think we all expected it
• 46:19
  Speaker 13: would be quite so successful without any planning or training.
• 46:23
  Speaker 1: For sure, I think one of the unintended consequences. But
• 46:25
  Speaker 1: something that people are starting to think about now is
• 46:28
  Speaker 1: is this kind of creating a divide or exacerbating a
• 46:31
  Speaker 1: divide between those people will call them essential workers that
• 46:34
  Speaker 1: have to be in whether it's on a factory floor
• 46:37
  Speaker 1: or at a fast food restaurant, and those that don't
• 46:40
  Speaker 1: and those that actually have the flexibility. How big of
• 46:43
  Speaker 1: a problem is that now and could it evolve into
• 46:47
  Speaker 1: it continues to be a problem.
• 46:48
  Speaker 13: We certainly saw it as a lot of organizations started
• 46:51
  Speaker 13: to design their future of work programs, And this was
• 46:53
  Speaker 13: during the height of COVID, when, as you said, those
• 46:56
  Speaker 13: essential workers had to be at work by day's a
• 46:59
  Speaker 13: week and everybody else was at home. And it's I
• 47:02
  Speaker 13: think companies still really struggle with what kind of peer
• 47:05
  Speaker 13: equity do we want to develop, what kind of culture
• 47:07
  Speaker 13: do we want to develop for the organization? When there's
• 47:10
  Speaker 13: definitely in a lot of industry sectors, a lot of companies,
• 47:13
  Speaker 13: very distinct workforces. A part of the same organization, and
• 47:17
  Speaker 13: it's very challenging to come up with policies that are
• 47:20
  Speaker 13: viewed as equitable across the board for everyone when certain
• 47:24
  Speaker 13: roles and even certain locations just have a bit more
• 47:27
  Speaker 13: flexibility than others. So I think that tension is here
• 47:31
  Speaker 13: to stay for.
• 47:31
  Speaker 1: Sure, and I wonder if that's kind of driving to
• 47:33
  Speaker 1: some extent, some of the strikes that we've seen worker strikes,
• 47:36
  Speaker 1: whether it's a UAW or the actors and writers in
• 47:39
  Speaker 1: Hollywood or the ups drivers. I'm guessing a lot of
• 47:43
  Speaker 1: those folks are saying I need to get some now.
• 47:46
  Speaker 1: I mean, I was an a central worker. I made
• 47:48
  Speaker 1: the big commitment, I took the risk. Now I want something.
• 47:52
  Speaker 9: You know.
• 47:52
  Speaker 13: It's hard for me to comment on those I'm not
• 47:53
  Speaker 13: part of any of those unions, but I can say
• 47:56
  Speaker 13: for the organizations that I work with across the board,
• 47:59
  Speaker 13: flexible ability is a critical design feature more than it
• 48:03
  Speaker 13: ever was before. And it's interesting when companies think about
• 48:06
  Speaker 13: flexibility for their workforce, they think about it in two parts.
• 48:10
  Speaker 13: One employee flexibility, where the employees can work flexibly, and
• 48:15
  Speaker 13: that doesn't always mean I get to work at home,
• 48:17
  Speaker 13: but it could be more creativity around the shifts they
• 48:20
  Speaker 13: have to work or how much time off there is.
• 48:23
  Speaker 13: So I think that whole kind of creative approach, it's
• 48:26
  Speaker 13: not kind of business as usable when we're thinking about
• 48:28
  Speaker 13: designing policies and approaches. And then on the other hand,
• 48:31
  Speaker 13: there's also a flexibility for the managers to be able
• 48:34
  Speaker 13: to have a little bit more autonomy in the decisions
• 48:37
  Speaker 13: they can make and the arrangements they can approve for
• 48:41
  Speaker 13: their team members.
• 48:42
  Speaker 3: Right, it's a whole new world. Everybody's adapting.
• 48:44
  Speaker 1: It seems like Aileen Malany, workforce Transformation lead at Viato Partners,
• 48:49
  Speaker 1: talking about the new workforce is it appears to be
• 48:52
  Speaker 1: for most organizations some form of hybrid, and I guess
• 48:56
  Speaker 1: a lot of folks that are still trying to work
• 48:58
  Speaker 1: that out. But whether it's three two or four to
• 49:01
  Speaker 1: one or something different, hybrid seems to be the new normal.
• 49:06
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• 49:09
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• 49:13
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• 49:17
  Speaker 2: at Matt Miller nineteen seventy three.
• 49:19
  Speaker 1: And I'm fall Sweeney. I'm on Twitter at pt Sweeney
• 49:22
  Speaker 1: before the podcast. You can always catch us worldwide at
• 49:24
  Speaker 1: Bloomberg Radio