Latest / Bloomberg Intelligence / Louisiana Prepares For Climate-Linked Flooding, Moving Thousands: Flavelle

Transcript

Louisiana Prepares For Climate-Linked Flooding, Moving Thousands: Flavelle · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa A. Bramowitz. Each day
• 0:11
  Speaker 1: we bring you the most important, noteworthy, and useful interviews
• 0:15
  Speaker 1: for you and your money, whether you're at the grocery
• 0:17
  Speaker 1: store or the trading floor. Find the Bloomberg p m
• 0:20
  Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well,
• 0:33
  Speaker 1: let's sa turn our attention now to climate change and
• 0:36
  Speaker 1: its real world implications. Christopher Flavel is our climate policy
• 0:40
  Speaker 1: reporter for Bloomberg, and Christopher, thank you for being with me.
• 0:45
  Speaker 1: Tell us the story about those people who live in
• 0:48
  Speaker 1: certain areas of Louisiana. They're packing up because of the
• 0:54
  Speaker 1: changes wrought by climate change. Yeah, and thanks for me
• 0:58
  Speaker 1: on the show. Pin. Louise Ana has for a few
• 1:01
  Speaker 1: years been the leader in the US in terms of
• 1:05
  Speaker 1: dealing with climate change, not because it wants to, because
• 1:07
  Speaker 1: it has to. It's land is sinking faster than anywhere
• 1:10
  Speaker 1: else in the country, and so their force with these
• 1:13
  Speaker 1: really in some cases radical ideas. There's a huge swath
• 1:17
  Speaker 1: of Louisiana around the delta of the Mississippi River where
• 1:21
  Speaker 1: land is sinking so fast and the sea is rising
• 1:23
  Speaker 1: so fast that people have to struggle with flooding almost
• 1:27
  Speaker 1: all the time. As a result, the state is trying
• 1:29
  Speaker 1: to figure out how and when to move people out
• 1:34
  Speaker 1: of those areas, and even more radical, and no one
• 1:36
  Speaker 1: else doing this, how to figure out to ensure that
• 1:39
  Speaker 1: no one else moves back in. No one, no other
• 1:42
  Speaker 1: state that I'm aware of, is trying anything like this.
• 1:45
  Speaker 1: Tell us about the money that's involved, because so we'll
• 1:48
  Speaker 1: get to the individual stories in a second. But this
• 1:50
  Speaker 1: costs money to do, and where does the money come from?
• 1:54
  Speaker 1: So I think I think the approach in Louisiana is
• 1:57
  Speaker 1: figure out their strategy first and then worry about money
• 2:02
  Speaker 1: because it's a long term problem. And I think their
• 2:04
  Speaker 1: idea is the cost of inaction would be huge as well,
• 2:08
  Speaker 1: So the assumptions they'll find the money, I think that's
• 2:10
  Speaker 1: probably true. There'll be a mix of federal funding. It's
• 2:12
  Speaker 1: federal funding that that started the program that I was
• 2:16
  Speaker 1: writing about, the l A Safe program. They're also getting
• 2:20
  Speaker 1: money still from the BP oil spill. And look, Luisa's
• 2:23
  Speaker 1: an argument is is they get so much federal disaster
• 2:26
  Speaker 1: money from FEMA after hurricanes and from HUD that instead
• 2:30
  Speaker 1: of using that money to keep on trying to rebuild
• 2:33
  Speaker 1: people's lives where they are, it makes more sense to
• 2:36
  Speaker 1: move them out of harm's way. That's a that's sort
• 2:38
  Speaker 1: of a cliche. You hear that all around the country,
• 2:40
  Speaker 1: especially after this year's hurricane season. Louisiana is really trying
• 2:43
  Speaker 1: to make good on that, and say, what would it
• 2:46
  Speaker 1: mean on a broad scale? Uh, not just rebuilding in
• 2:49
  Speaker 1: different parts of the neighborhood, but really rebuilding miles away
• 2:54
  Speaker 1: from where you were and emptying out entire swaths of
• 2:58
  Speaker 1: the state. How many people would uh this effect? You
• 3:01
  Speaker 1: have any idea? Yeah, I put that question to the
• 3:04
  Speaker 1: state officials behind this program. The amount of land they're
• 3:07
  Speaker 1: looking at is is enormous. It's it's bigger than Delaware
• 3:12
  Speaker 1: and Rhode Island. Uh. And the number of people who
• 3:15
  Speaker 1: live on that land, they guess is about sixty people.
• 3:19
  Speaker 1: Now they are only looking, at least right now, at
• 3:22
  Speaker 1: trying to move those who live outside of the levee system.
• 3:25
  Speaker 1: And they don't know what share of that wouldn't be
• 3:29
  Speaker 1: in that category will be outside of the levees. It
• 3:31
  Speaker 1: could be it could be a few thousand, it could
• 3:33
  Speaker 1: be tens of thousands. Um, but you know what, no
• 3:36
  Speaker 1: one has tried anything on that scale. So even if
• 3:38
  Speaker 1: it's just a thousand people, that would be just a
• 3:42
  Speaker 1: groundbreaking idea. And the big question is going to be
• 3:45
  Speaker 1: how much pushback will they get where But they get
• 3:48
  Speaker 1: the pushback from the individuals, the people who are actually
• 3:51
  Speaker 1: going to be displaced. To my great surprise, being down
• 3:54
  Speaker 1: there a few days this week and talking to people
• 3:56
  Speaker 1: in these areas, I got a pretty strong sense the
• 3:58
  Speaker 1: people who who the state is trying to help, they
• 4:02
  Speaker 1: realize what's going on. They are not in denial. They
• 4:05
  Speaker 1: know that the flooding risk is so bad they're going
• 4:07
  Speaker 1: to have to move eventually. Hate the pushback might come
• 4:10
  Speaker 1: from developers who probably are aware likewise that in Louisiana's
• 4:16
  Speaker 1: is real, but might be concerned about a precedent. It's
• 4:18
  Speaker 1: one thing if Louisiana does this. If other states facing
• 4:21
  Speaker 1: similar flood risk and is a lot of them start
• 4:24
  Speaker 1: saying which parts of our geography should we declare off
• 4:27
  Speaker 1: limits to new development, that could be a real issue
• 4:30
  Speaker 1: for developers, for realtors, for for commercial industries that want
• 4:35
  Speaker 1: to locate here. So I think they'll be wondering, like
• 4:38
  Speaker 1: the rest of us. How far will this go? Christopher
• 4:41
  Speaker 1: is the is the unintended consequence of hurricanes and flooding
• 4:45
  Speaker 1: that people become more aware of whatever the reason for
• 4:50
  Speaker 1: these catastrophes, their catastrophies that are going to ruin their lives,
• 4:54
  Speaker 1: their property, and as a result, they are more inclined
• 4:58
  Speaker 1: to go along with the idea to move out. Yeah.
• 5:01
  Speaker 1: I think definitely there's a there's some sort of relationship
• 5:04
  Speaker 1: between people being repeatedly hit by these disasters and being
• 5:08
  Speaker 1: open to more and more um far reaching solutions. It's
• 5:13
  Speaker 1: not a straight line. Often after one big event, people
• 5:17
  Speaker 1: will say it happened once, it probably won't happen again.
• 5:20
  Speaker 1: But after enough repeated disasters, my reporting says there's a
• 5:24
  Speaker 1: real shift and what people are willing to accept and
• 5:26
  Speaker 1: in what local officials are willing to endorse. A plan
• 5:29
  Speaker 1: that might work in Louisiana would for the moment, be
• 5:32
  Speaker 1: a really really tough sell in California or Maryland, or
• 5:36
  Speaker 1: Virginia or New York State. But as time goes on
• 5:40
  Speaker 1: and Louisiana looks less like an outlier uh and more
• 5:43
  Speaker 1: like our future, I think there'll be more appetite to say,
• 5:46
  Speaker 1: is it working there? In Louisiana, and if it is,
• 5:49
  Speaker 1: should we try it where we are? Christopher, isn't there
• 5:51
  Speaker 1: a federal designation that would allow people to apply for
• 5:55
  Speaker 1: federal assistance if there was some kind of natural disaster,
• 6:00
  Speaker 1: and that if that's taken away, that's just another push
• 6:03
  Speaker 1: in the direction of leaving. Yeah, there's there. There's a
• 6:06
  Speaker 1: designation um called the Under the Coastal Barrier Resources Act
• 6:11
  Speaker 1: that was meant to protect areas that haven't been developed
• 6:14
  Speaker 1: along the coast and keep them undeveloped. Louisiana saying let's
• 6:17
  Speaker 1: apply that to areas that already have homes on them,
• 6:19
  Speaker 1: which is a really radical idea, and it would say
• 6:22
  Speaker 1: we are not going to help you if you're in trouble,
• 6:24
  Speaker 1: so you better leave because if you don't, you'll be
• 6:27
  Speaker 1: on your own. It's it's a really a very strong
• 6:30
  Speaker 1: push for people to get out of these areas. Thanks
• 6:33
  Speaker 1: very much, Christopher Flavelle, our climate policy reporter for Bloomberg,
• 6:37
  Speaker 1: on how Louisiana is moving people out of areas that
• 6:40
  Speaker 1: are ravaged by climate change. We've got something perhaps more
• 7:00
  Speaker 1: were important, which is food. You can't exist without that.
• 7:02
  Speaker 1: And Alan Stillman knows a lot about food and serving people.
• 7:05
  Speaker 1: He is a restaurateur, is also the founder of Quality
• 7:09
  Speaker 1: Branded Partners, and he may be better known as the
• 7:12
  Speaker 1: founder of Smith and Wilenski, but he's also the founder
• 7:15
  Speaker 1: of t G I. Friday's. Alan, thank you very much
• 7:17
  Speaker 1: for coming into the studio. Let I want you to
• 7:21
  Speaker 1: begin by telling the story of how you started in
• 7:25
  Speaker 1: the business with t G I Friday's. Yeah. My relationship
• 7:29
  Speaker 1: to the restaurant business walls exactly zero. But my relationship
• 7:34
  Speaker 1: to having a beer on the way home was at
• 7:36
  Speaker 1: least once a week. And us called our First Avenue
• 7:39
  Speaker 1: in sixty three Street in Manhattan, had a bullet hole
• 7:43
  Speaker 1: in the window, typical first avenue bar, And while drinking
• 7:47
  Speaker 1: about beer, I said to the bartender, you know, there's
• 7:49
  Speaker 1: an awful lot of young people that live in this area.
• 7:51
  Speaker 1: You've got stewardess as, you've got models, you've got pilots.
• 7:55
  Speaker 1: I wonder if you put some sort of on the
• 7:57
  Speaker 1: floor and hung some Tiffany lights, would all those people
• 7:59
  Speaker 1: come in here? And he said yeah, hey, yeah, and
• 8:02
  Speaker 1: I walked away and walked out. I came back about
• 8:05
  Speaker 1: ten days later and he said, hey, aren't you the
• 8:08
  Speaker 1: guy that wanted to hang tipp and I said, I
• 8:10
  Speaker 1: don't want to hang anything. I suggested it to you
• 8:13
  Speaker 1: and he said, well, you ought to do it. I said,
• 8:15
  Speaker 1: what do you mean. He said, well, why don't you
• 8:17
  Speaker 1: do it? And I said, yeah, it's not a bad idea.
• 8:20
  Speaker 1: I said, who was the owner of this corner place?
• 8:22
  Speaker 1: He said, that's me, And fifteen minutes later I owned
• 8:26
  Speaker 1: the bar and it was called the Good Tavern, and
• 8:31
  Speaker 1: I immediately said, in my mind, I now need a name.
• 8:33
  Speaker 1: And the name turned out to be t g I Fridays.
• 8:36
  Speaker 1: And the rest of the story is as it is
• 8:39
  Speaker 1: for about twelve units around the world today. And it's
• 8:43
  Speaker 1: not as if this particular venture was your last, obviously,
• 8:46
  Speaker 1: because you sold t g I Fridays and you decided
• 8:51
  Speaker 1: you liked the business so much you're gonna expand even more.
• 8:54
  Speaker 1: Tell us about how that went, like, actually expanded it
• 8:59
  Speaker 1: while it was around in New York City, and I
• 9:02
  Speaker 1: built uh ten or twelve of them around the country.
• 9:05
  Speaker 1: But I also built Sundays, Monday's, Tuesdays, Wednesday. I was
• 9:07
  Speaker 1: gonna say, you have an affinity for days of the week,
• 9:09
  Speaker 1: and yeah. Then then I got out of the business
• 9:11
  Speaker 1: for a while and left those I still owned it,
• 9:14
  Speaker 1: but I wanted I lived over the South France and
• 9:17
  Speaker 1: that was great. Six months I had gotten married and
• 9:21
  Speaker 1: I had our four year old with us, and we
• 9:24
  Speaker 1: had a very good time. But I also then learned
• 9:27
  Speaker 1: about food and wine, and coming back to New York City,
• 9:31
  Speaker 1: I put the two together because I didn't know that
• 9:34
  Speaker 1: much about the food end of it, but I did
• 9:37
  Speaker 1: learn a lot about wine. And I discovered that all
• 9:40
  Speaker 1: the steakhouses in New York City were terrific steakhouses, and
• 9:44
  Speaker 1: they were the best in the world, but none of
• 9:45
  Speaker 1: them had wine lists. You'd walk in and they'd say,
• 9:49
  Speaker 1: what would you like red or white? And it would
• 9:51
  Speaker 1: come into tumbler and I said, you know, it doesn't
• 9:54
  Speaker 1: really fit for a glass of great red wine they had.
• 9:57
  Speaker 1: Don't change that. So I just I was going to
• 10:00
  Speaker 1: open up baby steakhouse, and luckily enough, there was a
• 10:03
  Speaker 1: big recession. I bought the corner of forty nine Street
• 10:06
  Speaker 1: and Third Avenue, and we still in the corner of
• 10:08
  Speaker 1: forty nine and third Avenue and Smith. Wilenski is now
• 10:11
  Speaker 1: forty years old this year. Happy birthday, congratulators. Much forty
• 10:16
  Speaker 1: year old restaurants don't exist very often it's a good
• 10:20
  Speaker 1: thing to have and went from there. What do you
• 10:23
  Speaker 1: believe to be one of the biggest differences from when
• 10:26
  Speaker 1: you started Smith of Wilenski's and the way it operates now. Well,
• 10:32
  Speaker 1: certainly wine, because almost every great steakhouse has a good
• 10:37
  Speaker 1: to great wine list, and I believe that people associate
• 10:42
  Speaker 1: great red wine with great red meat, and that never happened.
• 10:46
  Speaker 1: Forty years ago, there was no such thing. So I
• 10:49
  Speaker 1: think that's a very very big difference. And I didn't
• 10:52
  Speaker 1: you start National Wine Week? Yes? I did National And
• 10:55
  Speaker 1: I remember there was a story about you actually transporting
• 10:58
  Speaker 1: something like a million dollars worth of line in a
• 11:00
  Speaker 1: Brinx armored truck. Yes, we did that too. Well, we
• 11:02
  Speaker 1: we We kind of have a lot of fun with
• 11:04
  Speaker 1: this stuff. I mean, the restaurant business is one of
• 11:07
  Speaker 1: the most difficult businesses in the world, and it's not
• 11:10
  Speaker 1: only difficult to make money, but it's difficult just to
• 11:13
  Speaker 1: stay open. So you need to come out with ideas
• 11:17
  Speaker 1: and with all sorts of public relation and marketing gimmicks,
• 11:21
  Speaker 1: if you will, in order to keep people interested in
• 11:24
  Speaker 1: who you are what you are. And about a year
• 11:28
  Speaker 1: after we opened, uh Smith of Lensky. We discovered somebody
• 11:31
  Speaker 1: who was trying to sell a wine collection, which we bought,
• 11:36
  Speaker 1: and after we've spent the billion dollars on the wine collection,
• 11:39
  Speaker 1: we decided, well, why don't we transported by Brinks truck
• 11:42
  Speaker 1: to the front of Smith and Lensky, which worked, and
• 11:45
  Speaker 1: we got a couple of million dollars worth of publicity
• 11:47
  Speaker 1: for it, along with the million dollars worth of wine.
• 11:50
  Speaker 1: That whole idea of being a showman and an entertainer
• 11:53
  Speaker 1: and a host that has become a much more important factor,
• 11:58
  Speaker 1: it seems in the restaurant industry. I'm not sure that
• 12:01
  Speaker 1: that's true anymore. It was going back before all of
• 12:06
  Speaker 1: the new technology. The new technology has taken away a
• 12:12
  Speaker 1: lot from the showmanship of the restaurant business, because the
• 12:17
  Speaker 1: methodology of putting it together a restaurant, to making a reservation,
• 12:22
  Speaker 1: to how you get a reservation, to getting into restaurants
• 12:25
  Speaker 1: has taken away quite a bit from the showmanship of restaurateuring.
• 12:30
  Speaker 1: It hasn't taken away from the showmanship of cheffing. The
• 12:34
  Speaker 1: chefs still rule the market, and that is quite interesting
• 12:39
  Speaker 1: there sort of the artists of the food world. Tell
• 12:43
  Speaker 1: us about your son Michael, and why did he decide
• 12:47
  Speaker 1: to follow in your footsteps or did you not not
• 12:50
  Speaker 1: able to dissuade him from entering. No, it's actually the opposite.
• 12:53
  Speaker 1: There was no there was no persuasion involved. Michael graduated
• 12:58
  Speaker 1: from Brown University and is looking around for something autistic
• 13:02
  Speaker 1: to do, and he was definitely not interested in the
• 13:05
  Speaker 1: restaurant business. And a couple of years later he came
• 13:08
  Speaker 1: to me and he said, you don't beginning to think
• 13:10
  Speaker 1: maybe there's a little bit of art form in the
• 13:12
  Speaker 1: restaurant business. And I said, well, if you don't have
• 13:15
  Speaker 1: any art form, the restaurant business will not be in it,
• 13:17
  Speaker 1: because we're in the high end of the restaurant business.
• 13:21
  Speaker 1: And Michael decided he wanted to come on in. I
• 13:25
  Speaker 1: then turned to my good friend Danny Myers and said,
• 13:28
  Speaker 1: Danny put him to work for a year or so,
• 13:30
  Speaker 1: which he did. Michael then came with us. He traveled
• 13:33
  Speaker 1: around the United States opening up Smith of Wilenski's, and
• 13:37
  Speaker 1: for the last ten years he has run a restaurant
• 13:40
  Speaker 1: company that he sort of transferred from what we had
• 13:45
  Speaker 1: into the Quality Restaurant Group and he's opening his own
• 13:49
  Speaker 1: take on high end restaurants Quality meets quality Italian and
• 13:54
  Speaker 1: he is also running around the country. He's opened in Denver,
• 13:56
  Speaker 1: He's about to open up in Chicago. So uh, he
• 14:01
  Speaker 1: did it by mistake, as I did it by mistake,
• 14:05
  Speaker 1: and so far it's worked out wonderfully. He loves what
• 14:07
  Speaker 1: he's doing and he's fantastic at it. Well, you're getting
• 14:10
  Speaker 1: us ready for lunch, thanks very much. Alan Stillman is
• 14:13
  Speaker 1: a restaurants whore, of course, a founder, Quality branded partner,
• 14:16
  Speaker 1: founder of Smith and Wilinski's, founder of t g I Friday's.
• 14:19
  Speaker 1: He knows all about the restaurant industry. Well, we want
• 14:37
  Speaker 1: to know the real intentions of Bowing and whether they
• 14:40
  Speaker 1: will be acquiring Ember Air. Here to help us understand
• 14:43
  Speaker 1: the situation is George Ferguson, our senior Aerospace and Defense
• 14:46
  Speaker 1: and Airlines analyst for Bloomberg Intelligence. George always a pleasure.
• 14:50
  Speaker 1: Why would Boeing be interested in acquiring this Brazilian manufacturer
• 14:55
  Speaker 1: of aircraft? Hey, Pam, Yeah, So as we look at it,
• 14:59
  Speaker 1: we think that the Bombardier air bus uh sort of
• 15:04
  Speaker 1: tie up with the C series earlier this year would
• 15:07
  Speaker 1: be the reason. You know, So if you recall Bombardier
• 15:12
  Speaker 1: face with tariffs and bringing the C series into into
• 15:14
  Speaker 1: the US. Basically, you know, gave the program to Airbus,
• 15:19
  Speaker 1: and now Airbus can go out and market airplanes to
• 15:21
  Speaker 1: airlines from about a hundred forty to just over two
• 15:25
  Speaker 1: hundred seats. That's there, and they can offer the C series,
• 15:29
  Speaker 1: which which an airline can use for a hundred forty seats.
• 15:33
  Speaker 1: We think that you know, what what Boeing might be
• 15:36
  Speaker 1: doing here is looking to blunt Airbus' ability to market
• 15:40
  Speaker 1: two airplanes like that. You know, if they had to
• 15:42
  Speaker 1: tie up with embry Are, they could they can market
• 15:45
  Speaker 1: two airlines and airplanes, two airplanes, one two families, I
• 15:50
  Speaker 1: should say, one that would go from to about a
• 15:52
  Speaker 1: hundred and ten fifteen seats and another that could go
• 15:58
  Speaker 1: from a hundred and thirty up to you know, two hundreds.
• 16:01
  Speaker 1: So we think it gives them sort of the same
• 16:03
  Speaker 1: product palette as as Airbus. Okay, we would that be
• 16:07
  Speaker 1: like the in terms of products we're talking about what
• 16:09
  Speaker 1: the ember air one, the different variants of that, and
• 16:12
  Speaker 1: then maybe even the smaller the one s. Yeah, I
• 16:16
  Speaker 1: mean any thing about embry Are is that Embry's um
• 16:19
  Speaker 1: their primary airplane, the E jet has the one seventy five,
• 16:23
  Speaker 1: like you said to the one in the middle of
• 16:25
  Speaker 1: refreshing it. So they're putting new engines on it and
• 16:28
  Speaker 1: making it slightly larger. And yeah, that that airplane can
• 16:32
  Speaker 1: can operate from seats two hundred and thirty. The other
• 16:36
  Speaker 1: really neat thing about it is that one seventy five
• 16:39
  Speaker 1: is very very successful selling into regional airlines in the
• 16:43
  Speaker 1: United States. They buy the majority of airplanes I would
• 16:46
  Speaker 1: say that are less than a hundred and thirty seats.
• 16:49
  Speaker 1: They can only operate airplanes that are seventy six seats
• 16:53
  Speaker 1: are less due to clauses in the pilot contracts that
• 16:56
  Speaker 1: the main airlines that they fly four and so that
• 16:59
  Speaker 1: airplane the one that is very successful because of its
• 17:02
  Speaker 1: its product placement, and that would be potentially in Boeing
• 17:06
  Speaker 1: lineup to market the airlines well Air Canada Express, I
• 17:09
  Speaker 1: think they all they fly as just one example, the
• 17:12
  Speaker 1: ember Air one seventy five. Does Boeing really need this
• 17:16
  Speaker 1: deal because I thought that Boeing was putting a lot
• 17:18
  Speaker 1: of effort behind the new seven three seven, the Max
• 17:22
  Speaker 1: and the focus has been on not just the aircraft
• 17:26
  Speaker 1: but on making it more fuel efficient and reducing the
• 17:29
  Speaker 1: cost of operating the actual aircraft. Agreed, you know, agreed
• 17:34
  Speaker 1: on that's what the focus has been. It's interesting. I
• 17:38
  Speaker 1: wouldn't think this would have been this interesting to Boeing. So,
• 17:42
  Speaker 1: you know, really what we've seen demand in the marketplace
• 17:44
  Speaker 1: has been that airlines have been looking to fly larger airplanes.
• 17:48
  Speaker 1: Pilot salary salaries have been going up, and they'd like
• 17:51
  Speaker 1: to you know, um, expense it over more seats in
• 17:55
  Speaker 1: the airplane. That's one of the ways they're sort of
• 17:56
  Speaker 1: combating rising expenses. And so we've seen airlines again moving
• 18:00
  Speaker 1: to larger and larger airplanes. We haven't seen a lot
• 18:04
  Speaker 1: of orders for airplanes from a hundred to a hundred
• 18:06
  Speaker 1: and thirty seats, So it kind of looks like a
• 18:09
  Speaker 1: market to us that is betwixt and between. It's not
• 18:13
  Speaker 1: there yet maybe yeah, And you know, but they keep
• 18:16
  Speaker 1: stretching the size of the seven and eight three twenties, right,
• 18:19
  Speaker 1: the latest iterations of those two narrow bodies that Boeing
• 18:22
  Speaker 1: and Airbus are larger than their predecessors, and therefore the
• 18:26
  Speaker 1: efficiency um, you know, the efficiency point gets pushed higher.
• 18:31
  Speaker 1: So this might be a response to sort of that
• 18:33
  Speaker 1: continuing increase of seven thirty seven and eight three twenty airlines.
• 18:37
  Speaker 1: May you know if they're if they're running to less
• 18:40
  Speaker 1: dense markets, they may really need something more efficient underneath
• 18:45
  Speaker 1: that hundred and fifty seat point and in the Embry
• 18:49
  Speaker 1: air and the C Series one three hundred could be
• 18:54
  Speaker 1: that answer. So I think Boeing might be looking a
• 18:56
  Speaker 1: little further down the road than you know. We we
• 18:59
  Speaker 1: see evidence in order is at you know, the ability
• 19:02
  Speaker 1: to compete in that space and offer a product. Okay,
• 19:05
  Speaker 1: you gotta give me your thoughts though on the fact
• 19:06
  Speaker 1: that the Brazilian government is still involved in ember Air.
• 19:10
  Speaker 1: It started as a government financed company military contracts. For example,
• 19:16
  Speaker 1: the government of Brazil is said already, at least according
• 19:19
  Speaker 1: to one Brazilian newspaper, that majority control from Boeing not
• 19:23
  Speaker 1: necessarily going to happen. Yeah, I think this is going
• 19:26
  Speaker 1: to be a really hard deal to put together, and
• 19:29
  Speaker 1: it's not going to look like a wholesale takeover by anybody.
• 19:31
  Speaker 1: It's if it gets done, it will look like a venture.
• 19:34
  Speaker 1: And that's exactly that. The reason you know it's uh
• 19:37
  Speaker 1: Embry is Brazil's most important defense contractor they're they're aerospace
• 19:43
  Speaker 1: national champion. The Brazilian government does have a golden share
• 19:47
  Speaker 1: in it, so they can decide, you know, what the
• 19:50
  Speaker 1: fate of the company is, and you know, they want
• 19:52
  Speaker 1: it for high tech aerospace jobs. They want to foster
• 19:56
  Speaker 1: high tech aerospace jobs in Brazil. Obviously, letting Boeing buy
• 19:59
  Speaker 1: the whole thing and take it home isn't going to
• 20:02
  Speaker 1: help them much. I don't think Bowing wants to take
• 20:03
  Speaker 1: it home anyways. Um, I think it's going to be
• 20:06
  Speaker 1: you know, there's always a lot of politics around defense
• 20:09
  Speaker 1: contractors and things like that. The defense business doesn't make
• 20:12
  Speaker 1: a lot of money, and Embry are also as a
• 20:14
  Speaker 1: bust business that doesn't make a lot of money, and
• 20:16
  Speaker 1: I don't think Bowing really wants those businesses. So I
• 20:19
  Speaker 1: think this has to become sort of some sort of
• 20:22
  Speaker 1: complex structure that might get the Brazilian government the aims
• 20:27
  Speaker 1: they want out of this company and give Boeing the
• 20:29
  Speaker 1: opportunity to market the Embry air you know aircraft. Well,
• 20:34
  Speaker 1: thanks very much, it makes a lot of sense, and
• 20:37
  Speaker 1: thanks for keeping an eye on this topic, and we
• 20:39
  Speaker 1: know we're going to come to you in the future
• 20:40
  Speaker 1: about it. Much appreciated. George Ferguson is our senior Aerospace,
• 20:43
  Speaker 1: Defense and Airlines analyst for Bloomberg Intelligence. Well, here to
• 21:02
  Speaker 1: help us understand what's going on in the housing market
• 21:05
  Speaker 1: as it relates to the tax overhaul bill that the
• 21:08
  Speaker 1: President has just signed is Jonathan Miller. He is the
• 21:10
  Speaker 1: president and chief executive of Miller Samuel Jonathan. Great to
• 21:15
  Speaker 1: have you with us. What do you make what do
• 21:19
  Speaker 1: you make of the future for the UH? Well, let's
• 21:22
  Speaker 1: start with the high end, high cost markets such as Manhattan,
• 21:26
  Speaker 1: Westchester County and also other areas around the country, whether
• 21:30
  Speaker 1: they be in Connecticut or in the state of Massachusetts
• 21:33
  Speaker 1: or California high cost property. What's going to happen as
• 21:38
  Speaker 1: a result of this tax overhaul plan? So I think
• 21:42
  Speaker 1: they'll be downward pressure on housing prices, UH, as you
• 21:47
  Speaker 1: stew higher in price across the US. The basic theme
• 21:52
  Speaker 1: of this bill as it relates to housing favors being
• 21:57
  Speaker 1: a landlord over HOMEO worship in general. And you know,
• 22:02
  Speaker 1: I think I think the way to think of it
• 22:04
  Speaker 1: is that, um, you know, someone that's buying a home
• 22:09
  Speaker 1: has a certain safe financial footprint in terms of that
• 22:13
  Speaker 1: they can afford as a payment. And so if you
• 22:16
  Speaker 1: could just think of it is that you're adding some
• 22:18
  Speaker 1: additional costs, meaning reduced UM deductions in the context of
• 22:23
  Speaker 1: mortgage interest of seven hundred fifty thousand dollars of ten
• 22:28
  Speaker 1: thousand dollar cap on real pay taxes, those sort of
• 22:32
  Speaker 1: creep into that payment as a share, and we reduces
• 22:36
  Speaker 1: principle and interest. UM. I don't think it's catastrophic in
• 22:40
  Speaker 1: terms of I don't mean to exaggerate it, but it
• 22:42
  Speaker 1: certainly applies downward pressure to these higher end housing markets
• 22:46
  Speaker 1: far more than it would say in the middle in
• 22:49
  Speaker 1: the Midwest, where you know a home price might be
• 22:51
  Speaker 1: a hundred seventy five thousand dollars Jonathan, Will that pressure
• 22:55
  Speaker 1: actually turn into lower prices or will it just be
• 22:59
  Speaker 1: a argaining chip when it comes to negotiations. So it's
• 23:04
  Speaker 1: interesting because one of the things that came out of
• 23:07
  Speaker 1: the discussions on the tax bill was at the yet,
• 23:10
  Speaker 1: you know, the higher cost markets, you know that the
• 23:13
  Speaker 1: higher cost of housing would be offset by the uh,
• 23:18
  Speaker 1: the bigger tax cuts and UM. And you know, human
• 23:23
  Speaker 1: beings or homeowners don't think that way in the sense
• 23:26
  Speaker 1: that they don't look at all their their net worth
• 23:30
  Speaker 1: in one bucket and say, you know, because I'm getting
• 23:32
  Speaker 1: a tax cut, I can overpay for my home. Because
• 23:36
  Speaker 1: what's going to happen is, you know, there's a saying
• 23:39
  Speaker 1: that housing prices are sticky on the downside, and and
• 23:42
  Speaker 1: what happens is there's some sort of change, the prices
• 23:46
  Speaker 1: draw declined slowly simply because transactions, uh slow down because sellers,
• 23:54
  Speaker 1: um uh, you know, buyers are immediately adaptable to changes
• 23:58
  Speaker 1: that favor them. Sellers tend to take a year or two.
• 24:02
  Speaker 1: So I think what we're really looking at over the
• 24:04
  Speaker 1: next year, year and a half is this sort of
• 24:08
  Speaker 1: figuring out between buyer and seller what the actual new
• 24:12
  Speaker 1: value is in these markets. So this puts the buyer
• 24:15
  Speaker 1: in a better position. It absolutely does, because it's just
• 24:22
  Speaker 1: that they may not their demand may not be satiated
• 24:26
  Speaker 1: initially simply because the sellers, you know, you know, this
• 24:30
  Speaker 1: is a you know, a hundred years of homeownership as
• 24:34
  Speaker 1: sort of the federal um, the federal push in this
• 24:40
  Speaker 1: whole American dream concept. High cost housing markets on the
• 24:44
  Speaker 1: East and West Coast are more impacted by this, and
• 24:48
  Speaker 1: it's going to take a year or two for the
• 24:51
  Speaker 1: two parties to sort of figure it out. Um. You know,
• 24:54
  Speaker 1: this is this is sort of like literally what we
• 24:57
  Speaker 1: just went through. The last couple of years we've had
• 25:01
  Speaker 1: at the high end of the market or higher cost markets,
• 25:05
  Speaker 1: sellers have had a phenomenon that I've called aspirational pricing,
• 25:10
  Speaker 1: where that they're asking way more than what the buyers
• 25:14
  Speaker 1: are willing to come up with. And just only in
• 25:16
  Speaker 1: two thousand seventeen we've started to see equilibery in between expectations.
• 25:21
  Speaker 1: Now we have this new factor that will you know,
• 25:24
  Speaker 1: undergo a period of a couple of years of testing
• 25:28
  Speaker 1: out before it settles in. Could this be a positive
• 25:32
  Speaker 1: in the for the long term that people will not
• 25:35
  Speaker 1: be burdened with mortgages that they cannot afford that would
• 25:38
  Speaker 1: be so linked to their income. Hey, I absolutely in
• 25:43
  Speaker 1: the law in the long term certainly. Uh, you know,
• 25:45
  Speaker 1: there's a lot that made of sort of runaway high
• 25:48
  Speaker 1: end housing prices. We did see some reining in of
• 25:52
  Speaker 1: that I called two thousand fourteen nationally peak luxury and uh,
• 25:57
  Speaker 1: you know, and and since then we've seen a correction
• 26:00
  Speaker 1: at the very high end of the market generally overall affordability.
• 26:04
  Speaker 1: You know, one small benefit in the New York metro
• 26:07
  Speaker 1: area that whose economy is heavily dependent on Wall Street
• 26:12
  Speaker 1: accounting for about of the wages. Is higher. Bonus comp
• 26:19
  Speaker 1: with tax cuts is a is you know, maybe a
• 26:23
  Speaker 1: modest improvement or help for the high end, but I
• 26:27
  Speaker 1: don't really see it as anywhere is significant with the
• 26:30
  Speaker 1: regulatory overlay that we didn't when you compare it against
• 26:34
  Speaker 1: sort of pre financial crisis. Got it. Thank you very much.
• 26:38
  Speaker 1: Jonathan Miller is the president and the chief executive of
• 26:41
  Speaker 1: Miller Samuel talking about how it is going to be,
• 26:45
  Speaker 1: at least for now, going to be a buyer's market.
• 26:51
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 26:54
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
• 26:58
  Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
• 27:02
  Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa
• 27:05
  Speaker 1: Abramo wits one. Before the podcast, you can always catch
• 27:08
  Speaker 1: us worldwide on Bloomberg Radio.