Latest / Bloomberg Intelligence / Bank Earnings, Why Consumers Are 'Roughed Up' & Real Estate Trends

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Bank Earnings, Why Consumers Are 'Roughed Up' & Real Estate Trends · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios. Podcasts.
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  Speaker 2: Radio. News.
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  Speaker 3: Bloomberg Money.
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  Speaker 2: This is the Bloomberg Money Podcast. I'm Tom Keen with
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  Speaker 2: Scarlett Fu. Join us each week for a smart look
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  Speaker 3: Good afternoon, everyone. Bloomberg Money. It's on personal finance. It's
• 0:57
  Speaker 3: on retirement. Wealth management.
• 1:00
  Speaker 2: We're going to talk about that today after those bank
• 1:02
  Speaker 2: earnings this week.
• 1:03
  Speaker 3: Tom Keynes, Scarlett Fu. Good afternoon.
• 1:05
  Speaker 2: I mean, my head is swirling here and I just
• 1:07
  Speaker 2: as a grounding center gloom, fear that Apple is still,
• 1:12
  Speaker 2: as we go to air here, a $ 5 trillion company.
• 1:14
  Speaker 1: Well, thanks to the foldable phone. If you want to
• 1:16
  Speaker 1: order that.
• 1:17
  Speaker 2: Are you getting one?
• 1:17
  Speaker 1: No, I'm not. I'm going to wait. I'm not a
• 1:19
  Speaker 1: first adopter.
• 1:19
  Speaker 3: We stop right now.
• 1:20
  Speaker 2: We halt the show because the first person I know
• 1:22
  Speaker 2: that will get the foldable iPhone is Sri Natarajan.
• 1:25
  Speaker 3: Come on, Sri. Are you going to get the foldable iPhone?
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  Speaker 4: If it was a flip phone, yes. Not the foldable.
• 1:29
  Speaker 3: There we go. Okay. Well, there we're done.
• 1:31
  Speaker 2: Sri will join us here on Wealth Management here in
• 1:34
  Speaker 2: a moment.
• 1:35
  Speaker 3: It's a wonderful show.
• 1:35
  Speaker 2: Scarlett's going to tell you the important part of the
• 1:37
  Speaker 2: show on real estate. Thomas Porcelli will join us. He's
• 1:41
  Speaker 2: chief economist at Wells Fargo. He is the number one
• 1:44
  Speaker 2: guy I know on wage growth or lack thereof. Tom
• 1:48
  Speaker 2: Porcelli will tell us about the state of the American worker.
• 1:52
  Speaker 1: And in the age of 7.5% mortgages, we take aim
• 1:54
  Speaker 1: at the challenges of home purchases. With a one-two punch,
• 1:57
  Speaker 1: we've got Jonathan Miller, who co-founded his own appraisal and
• 1:59
  Speaker 1: valuation firm, and Bess Friedman, CEO of Brown Harris Stevens.
• 2:03
  Speaker 3: Do you think they're on speaking terms?
• 2:05
  Speaker 1: I hope so.
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  Speaker 2: I hope so.
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  Speaker 3: We'll have to see.
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  Speaker 2: A wonderful Bloomberg set of conversations after a busy week.
• 2:11
  Speaker 2: Sreenad Rajan, wonderful to have him for the first time
• 2:14
  Speaker 2: on the show. Yes, the banks, the big banks, but
• 2:17
  Speaker 2: we're going to talk wealth management today. Stacey Vanek-Smith will
• 2:21
  Speaker 2: join us. She's done the math on your next Social
• 2:23
  Speaker 2: Security check, or will you get one out there? I
• 2:27
  Speaker 2: guess Jack Lew says like 2032. Well, for people.
• 2:30
  Speaker 1: Yeah, who are going to get Social Security after 2032,
• 2:31
  Speaker 1: that's the big question. But if you get it now,
• 2:34
  Speaker 1: you're good.
• 2:34
  Speaker 2: I want to give you a vignette into how Bloomberg works.
• 2:37
  Speaker 2: We're going to air. The control room is all steeled up.
• 2:41
  Speaker 2: And we're talking flag football between the Chargers and the Eagles.
• 2:44
  Speaker 3: That's right.
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  Speaker 5: Prospect Park this weekend. It's been rained out weekend after weekend.
• 2:48
  Speaker 3: Do you have orange slices?
• 2:50
  Speaker 5: There'll be orange slices.
• 2:51
  Speaker 3: There'll be orange slices. Gatorade, cooler of Gatorade. We'll be ready.
• 2:53
  Speaker 3: Let's jump into it right now, Sri.
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  Speaker 2: I want to focus on what Bloomberg Money does, which
• 2:57
  Speaker 2: is wealth management. It's usually underplayed when the earnings come out.
• 3:00
  Speaker 2: It's a boom economy, isn't it?
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  Speaker 6: Yes, but right now you've got me feeling nostalgic about
• 3:05
  Speaker 6: my old Motorola flip phone, Tom, I have to say.
• 3:08
  Speaker 2: John Tucker's still using that one. That's a different story.
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  Speaker 2: Tell me about wealth management. Tell me about Morgan Stanley
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  Speaker 2: leading the way.
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  Speaker 6: That's the big story for me through this quarter. You know,
• 3:17
  Speaker 6: you look at the numbers. If you go back to
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  Speaker 6: the summer, you talk about the SpaceX IPO back in June.
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  Speaker 6: And we talked about the $ 500 million in fees for
• 3:25
  Speaker 6: the banks that were leading that IPO offering.
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  Speaker 4: But that was just the start.
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  Speaker 6: This quarter, Morgan Stanley reported $ 232 billion in net new assets.
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  Speaker 6: What was the analyst's estimate? $ 111 billion. More than double
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  Speaker 6: what analysts had been expecting. And that was largely driven
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  Speaker 6: from flows coming from these IPOs. As people were getting
• 3:45
  Speaker 6: this public stock, that got deposited into current. That's a
• 3:47
  Speaker 6: big deal for a firm like Morgan Stanley.
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  Speaker 2: Is wealth management in the future out five years, out
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  Speaker 2: 10 years? Is it like the money machine? Is it
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  Speaker 2: a profit machine? Or is it narrow margins like, say,
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  Speaker 2: ETF fees?
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  Speaker 4: At Morgan Stanley, the pre-tax margin is 30%.
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  Speaker 6: 3-0.
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  Speaker 1: 3-0.
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  Speaker 4: On wealth management.
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  Speaker 3: On wealth management.
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  Speaker 4: We're in the wrong business.
• 4:06
  Speaker 1: And it's steady revenue, too. That's the other thing.
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  Speaker 4: Steady Revenue, you don't have to think about the future.
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  Speaker 4: It is, we're already there.
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  Speaker 6: If you think about the transformation of Morgan Stanley, what
• 4:15
  Speaker 6: has happened to that bank since the depths of the
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  Speaker 6: financial crisis in 2008, how James Gorman transformed it and
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  Speaker 6: how TETPIC is carrying it forward, wealth management is certainly
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  Speaker 6: a big piece of that bank. And it's an integrated
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  Speaker 6: operation that works very closely with the success of its
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  Speaker 6: investment bank.
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  Speaker 2: All right.
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  Speaker 1: So that's one side of the economy and what people
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  Speaker 1: are seeing. This week, we also got indication that inflation
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  Speaker 1: continues to run pretty hot, meaning it's rising faster than expected, Stacey.
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  Speaker 1: And I know you've been looking at different angles of this.
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  Speaker 7: Yes.
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  Speaker 8: So obviously, we've got inflation numbers, inflation up 3.7 percent
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  Speaker 8: across the economy. But in a lot of places, much higher.
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  Speaker 8: Gas prices up 34 percent over last year. Now, Social
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  Speaker 8: Security payments did get a bump. So starting on December 31st,
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  Speaker 8: payments will be up by about 3.6 percent. So almost
• 5:02
  Speaker 8: keeping up with inflation, but.
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  Speaker 1: Just not quite.
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  Speaker 8: That'll be an average of $ 75 per month. So people
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  Speaker 8: are going to be getting a little extra money if
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  Speaker 8: they're on Social Security, but not keeping up with the expenses.
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  Speaker 2: He brilliantly shows the two Americas. He's talking fancy people
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  Speaker 2: buying 6,000 square feet on Fifth Avenue. We'll do that
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  Speaker 2: in the back half of the show. And Stacey's talking
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  Speaker 2: about people waiting for the check because that's all they got.
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  Speaker 1: And the Beige Book, which is the Fed's regional assessment
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  Speaker 1: of how things are going, indicates that businesses report consumers
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  Speaker 1: also holding back, too.
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  Speaker 8: Yeah, that was really interesting. I like the Beige Book.
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  Speaker 8: It's a lot of stories from different business owners.
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  Speaker 1: We like stories.
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  Speaker 4: It's a great, I love the Beige Book.
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  Speaker 8: But there were just a lot of shop owners reporting
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  Speaker 8: that people, they had the same number of customers, but
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  Speaker 8: people were buying less. They were cutting back. They were
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  Speaker 8: flinching at prices. And so far, the American consumers held
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  Speaker 8: out so admirably. But if that starts to crack, that
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  Speaker 8: could really be trouble.
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  Speaker 1: And of course, that all plays into how people feel
• 6:00
  Speaker 1: as we head closer to the midterm elections, David. There's
• 6:03
  Speaker 1: a lot of, I don't want to call it interference,
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  Speaker 1: but it feels like it's a normal thing now, of
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  Speaker 1: Russia using bots to push these fake election videos to
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  Speaker 1: get people all angry.
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  Speaker 2: I know.
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  Speaker 3: Well, it was expected.
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  Speaker 5: Stephanie Baker, our colleague in London, has done amazing reporting
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  Speaker 5: here looking at what is being pushed out by these
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  Speaker 5: Russian bot farms. And what we're seeing this time around
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  Speaker 5: are videos that look like they're legitimate from an American
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  Speaker 5: news agency, but using AI.
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  Speaker 3: Are saying really outlandish and off-the-wall things.
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  Speaker 5: And on top of that, we're seeing these bot firms
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  Speaker 5: kind of pushing them out so that it seems like
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  Speaker 5: they're getting a lot of views as well. Look, we've
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  Speaker 5: heard many members of the intelligence community in this administration
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  Speaker 5: and from before warning that this might happen. And I
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  Speaker 5: think as we get to two weeks out from these midterms,
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  Speaker 5: the fear is what influence, what is this going to
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  Speaker 5: do to the election?
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  Speaker 3: Where do we see those bots? Where do I see those?
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  Speaker 5: On Instagram, on TikTok, I mean, they're cropping up in
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  Speaker 5: the same places, Twitter as well, and so you have,
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  Speaker 5: there's a lot of happy talk from Twitter's current leadership,
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  Speaker 5: they're trying to cull it, but it's a very difficult
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  Speaker 5: thing to fight.
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  Speaker 2: Do the Democrats have an Elon Musk?
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  Speaker 5: No, not in the same way, but you look at
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  Speaker 5: the money that we've seen Elon Musk spending here, it
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  Speaker 5: dwarfs what George Soros, for instance, other big Democratic donors
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  Speaker 5: have spent. So we're seeing it go in one direction.
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  Speaker 5: That is more and more money in each of these
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  Speaker 5: election cycles. Elon Musk far and away the biggest donor here. Yes,
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  Speaker 5: there are Democratic donors who spend a lot of money,
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  Speaker 5: but they are outmatched, broadly speaking. when you compare Democrats
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  Speaker 5: to Republicans, Democrats are still very much lagging Republicans.
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  Speaker 1: The bots spread all kinds of speculation and rumors about
• 7:24
  Speaker 1: where James Tallarico had been prior to showing up.
• 7:26
  Speaker 5: Yes, he made five payments to OnlyFans that he had been... Anyway,
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  Speaker 5: all of this stuff is, to somebody who follows the
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  Speaker 5: news closely, patently false. But again, this kind of veneer,
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  Speaker 5: this patina of legitimacy makes it seem like, indeed, maybe
• 7:39
  Speaker 5: this is a report from ABC News.
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  Speaker 2: What's your biggest mystery to Election Day right now? Is
• 7:43
  Speaker 2: it Senate, House, governors?
• 7:45
  Speaker 3: Is it In the game that you live, what's the
• 7:47
  Speaker 3: biggest mystery?
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  Speaker 5: I think it's the Senate, because you detect the enthusiasm
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  Speaker 5: among many Democrats that there is a possibility that it
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  Speaker 5: could change in terms of leadership. Obviously, that's going to
• 7:55
  Speaker 5: be a harder hill for Democrats to climb here, but
• 7:57
  Speaker 5: that's the mystery. The House seems like a foregone conclusion
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  Speaker 5: because of how few seats Democrats need to win. It
• 8:03
  Speaker 5: would be a sea change were they to get control
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  Speaker 5: of the Senate as well.
• 8:05
  Speaker 2: A sea change here coming out of COVID, and this
• 8:07
  Speaker 2: is to the leadership of Sreenath Rajan. with Bloomberg News,
• 8:11
  Speaker 2: the profitability of the banks as a whole, do we
• 8:16
  Speaker 2: understand just how.
• 8:17
  Speaker 3: Big they are?
• 8:18
  Speaker 6: I'm not quite sure we do because I just ran
• 8:20
  Speaker 6: the numbers in the last 10 years. 10 years ago,
• 8:22
  Speaker 6: the big six US banks combined profitability was $ 86 billion.
• 8:28
  Speaker 4: At the end of 2026, we're going to.
• 8:30
  Speaker 6: Get within kissing distance of $ 200 billion. That has been
• 8:34
  Speaker 6: massive growth. They have been able to expand their margins.
• 8:36
  Speaker 6: Revenue growth has been there. And at the end of
• 8:38
  Speaker 6: the day, the banks are not really the drivers of
• 8:41
  Speaker 6: anything on their own. They are a proxy for consumer health.
• 8:44
  Speaker 6: They're a proxy for corporate health. And they're a proxy
• 8:47
  Speaker 6: for market activity. And all those three fronts have been
• 8:50
  Speaker 6: going great for the banks.
• 8:51
  Speaker 2: In the grind that you do, where will we be
• 8:54
  Speaker 2: in five years between the traditional asset gatherers, Schwab, Fidelity,
• 8:58
  Speaker 2: and Vanguard, the rest of them, and those big banks?
• 9:02
  Speaker 2: Where do you see that mix in five years?
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  Speaker 6: Have to wonder and you have to assume that there's
• 9:08
  Speaker 6: going to be a shift because as we were coming
• 9:10
  Speaker 6: out of 2020, that was the grand period of envy
• 9:14
  Speaker 6: when you talked to bankers and you talked about what
• 9:16
  Speaker 6: they were looking at and they were looking at that
• 9:18
  Speaker 6: golden era for private market firms, the private investment giants.
• 9:22
  Speaker 4: Now we've moved back to the Wall Street circle.
• 9:24
  Speaker 2: We've got to stop the show here. I feel like
• 9:26
  Speaker 2: I'm dealing with Francine Lacroix. Guri shows up with an
• 9:29
  Speaker 2: espresso at 12 noon.
• 9:31
  Speaker 3: Give us a close-up. It's just too much. It's very London.
• 9:36
  Speaker 9: I don't know.
• 9:36
  Speaker 5: I've had a latte already.
• 9:38
  Speaker 4: I have too much milk. You've been up early.
• 9:40
  Speaker 3: I've been up early.
• 9:41
  Speaker 5: I've got to be ready for this show.
• 9:42
  Speaker 3: I'm on my third Sanka.
• 9:45
  Speaker 1: I just got amped up by watching the Tesla Roadster
• 9:48
  Speaker 1: do aerial flips.
• 9:49
  Speaker 4: That was my thing.
• 9:50
  Speaker 3: When cars fly.
• 9:51
  Speaker 6: What are you going to do with a car that
• 9:53
  Speaker 6: does a backflip?
• 9:54
  Speaker 1: Well, don't worry. We're not going to have access to it.
• 9:56
  Speaker 1: It's only in that very contained environment. You can drive
• 9:58
  Speaker 1: behind a car that does a backflip.
• 10:00
  Speaker 2: There you go.
• 10:00
  Speaker 1: All right. Thank you to everyone joining us today. We
• 10:04
  Speaker 1: want to thank our chief Wall Street correspondent, Srinath Rajan,
• 10:06
  Speaker 1: Stacey Vanek-Smith, host of the Everybody's Business podcast, and, of course,
• 10:09
  Speaker 1: David Gurra, co-host of Bloomberg This Weekend. Coming up on
• 10:13
  Speaker 1: Bloomberg Money, Tom Porcelli, chief economist at Wells Fargo. We're
• 10:17
  Speaker 1: going to talk wages and how consumers are navigating rising prices.
• 10:21
  Speaker 1: This is Bloomberg Money.
• 10:25
  Speaker 2: You're listening to Bloomberg Money. Stay with us with more
• 10:28
  Speaker 2: to come after this. Bloomberg Money, good afternoon to you
• 10:38
  Speaker 2: on Wealth Manager Retirement and on the wages to come.
• 10:41
  Speaker 2: We're going to dive into it here in a moment.
• 10:44
  Speaker 2: What was your observation this week among the different shows
• 10:47
  Speaker 2: you do, the ETF show and such?
• 10:49
  Speaker 3: I mean, it's a nuts week.
• 10:51
  Speaker 1: It was a nuts week. The chip sell-off has gathered
• 10:53
  Speaker 1: steam and it's a tough week for anyone who's long tech,
• 10:57
  Speaker 1: which is basically.
• 10:58
  Speaker 2: All of us.
• 10:58
  Speaker 3: I was thunderstruck.
• 10:59
  Speaker 2: CoreWeave is 550 employees. The way we're talking about it,
• 11:03
  Speaker 2: I would have thought it was 20,000 employees.
• 11:04
  Speaker 1: And one analyst says the stock could go to zero.
• 11:07
  Speaker 2: Well, we'll have to see on that. The raging debate
• 11:09
  Speaker 2: out there. Ed Ludlow with leadership at Bloomberg Technology.
• 11:13
  Speaker 3: This is a joy.
• 11:13
  Speaker 2: There's a moment where economists become famous. And for Tom
• 11:17
  Speaker 2: Purcell years ago, it was sterling analysis of your paycheck.
• 11:23
  Speaker 2: and it adjusted for inflation. He's chief economist at Wells Fargo.
• 11:27
  Speaker 2: How bad is the real wage right now? I'm going
• 11:29
  Speaker 2: to put the chart up in a minute, but just
• 11:30
  Speaker 2: give us the update. Are we making any money here
• 11:34
  Speaker 2: after inflation? Well, first of all, thank you for that
• 11:36
  Speaker 2: lovely introduction.
• 11:37
  Speaker 10: Very appreciated. And I love the format of the show.
• 11:40
  Speaker 10: I think it's fantastic. So good luck with it. I
• 11:42
  Speaker 10: think it looks like you.
• 11:43
  Speaker 3: Got- It's okay. We're not on speaking terms, but move on.
• 11:48
  Speaker 10: Yeah, look, I think that the consumer right now, from
• 11:50
  Speaker 10: a real wage perspective, it's obviously looking pretty rough for
• 11:54
  Speaker 10: them at this juncture. And so whether you look at ECI,
• 11:57
  Speaker 10: which I think you're going to pull up a chart
• 11:58
  Speaker 10: of that, or you look at just something even more
• 12:01
  Speaker 10: simple like, I don't know, real average hourly earnings, it
• 12:03
  Speaker 10: doesn't really matter.
• 12:06
  Speaker 1: We're behind inflation.
• 12:07
  Speaker 10: I mean, the consumer is really struggling from a real
• 12:10
  Speaker 10: earnings perspective. And the truth is, and we should talk
• 12:12
  Speaker 10: about this more. But the truth is, I don't really
• 12:14
  Speaker 10: see that going away imminently.
• 12:17
  Speaker 2: Let me bring up the chart here. This is back
• 12:18
  Speaker 2: to 2001, so it's a quarter of a century chart.
• 12:22
  Speaker 2: And this is Porcelli. This is the ECI index, which
• 12:27
  Speaker 2: is wages and benefits. It's a little bit fancier paycheck
• 12:32
  Speaker 2: than hourly wages. And what's so important there, folks, is
• 12:35
  Speaker 2: the good news before COVID. We had a positive real wage,
• 12:39
  Speaker 2: and then COVID and the noise and all that.
• 12:41
  Speaker 3: And then there was a nice rebound.
• 12:42
  Speaker 2: And then, Tom, you're saying this negative raise, the red circle,
• 12:46
  Speaker 2: could continue.
• 12:46
  Speaker 10: Yeah, and so what everyone should know is what they're
• 12:49
  Speaker 10: looking at there in that chart, that's ECI, which includes everything, right?
• 12:53
  Speaker 10: It's not just wages. It's also benefits. If you just
• 12:56
  Speaker 10: did the wages part... of ECI, it looks meaningfully worse.
• 13:01
  Speaker 10: In fact, it's in negative territory. So again, I think
• 13:04
  Speaker 10: that's a really important caveat to what people see, because
• 13:07
  Speaker 10: what I would tell you is that it's actually worse
• 13:08
  Speaker 10: than that chart.
• 13:09
  Speaker 1: How well does anyone understand how much inflation, higher prices
• 13:14
  Speaker 1: influence behavior like consumer spending? For instance, my 15-year-old dishwasher
• 13:18
  Speaker 1: now leaks water when it's running a cycle. So I
• 13:20
  Speaker 1: can either pay a plumber, like what, $ 300 to diagnose
• 13:23
  Speaker 1: and repair, or spend at least $ 800 to buy a
• 13:26
  Speaker 1: new one. It makes more sense for me to buy
• 13:28
  Speaker 1: a new one before prices go up even higher, but
• 13:31
  Speaker 1: I may just end up not doing anything and trying
• 13:33
  Speaker 1: to get a used one off Facebook Marketplace.
• 13:35
  Speaker 10: I think this is a really important idea. because as
• 13:37
  Speaker 10: much as I can tell you that real wages are
• 13:40
  Speaker 10: really sort of struggling here, the reality is there's still
• 13:42
  Speaker 10: a wealth effect in place, right? The reality is people
• 13:45
  Speaker 10: still look at their 401k statements when they come in
• 13:48
  Speaker 10: or their investment accounts when they come in, and they
• 13:50
  Speaker 10: see that they're looking pretty positive. And that wealth effect,
• 13:54
  Speaker 10: I think, is really emboldening people to basically feel comfortable
• 13:58
  Speaker 10: dipping into saving to the extent that they are. And that,
• 14:02
  Speaker 10: to me, is, I think, again, a really important part
• 14:04
  Speaker 10: of the story because You know, if the one side
• 14:07
  Speaker 10: of your balance sheet is looking pretty good, right, whether
• 14:09
  Speaker 10: you're sitting on a house, whether you're sitting on a
• 14:12
  Speaker 10: 401k or, again, any investment account, the truth is, for
• 14:15
  Speaker 10: most people, that's what's encouraging them to continue to go
• 14:19
  Speaker 10: out and spend. And that's why we actually, it's funny,
• 14:21
  Speaker 10: when we think about, like, our consumption forecast, I can
• 14:23
  Speaker 10: tell you that beneath the surface, the consumer is looking, again,
• 14:26
  Speaker 10: a little roughed up. But it doesn't change our consumption
• 14:31
  Speaker 10: forecast because consumers are still feeling pretty good on Wealth Effect.
• 14:34
  Speaker 2: I look here, Tom, and this is the heritage of
• 14:36
  Speaker 2: Wells Fargo economics, Jay Bryson and John Sylvia from decades ago,
• 14:42
  Speaker 2: brilliant analysis of how Americans used to move around. We
• 14:46
  Speaker 2: used to look over the horizon, the cliche, go west,
• 14:49
  Speaker 2: or at least go down to Key West. But I look, Tom,
• 14:52
  Speaker 2: where we are, and the research I've seen for years
• 14:55
  Speaker 2: at Wells Fargo We've become a more static America.
• 14:58
  Speaker 3: We're not moving, right? Absolutely right.
• 15:01
  Speaker 10: And, you know, you can see that in a, I mean,
• 15:03
  Speaker 10: if you wanted to sort of zoom out and look
• 15:05
  Speaker 10: at it in a more aggregate sense, you know, you
• 15:07
  Speaker 10: could look at something like the quit rate. I mean,
• 15:08
  Speaker 10: the quit rate is one, nine, two percent. I mean,
• 15:12
  Speaker 10: you have to go back to 2015 to see a
• 15:13
  Speaker 10: lower quit rate. And what's interesting about 2015, I mean,
• 15:16
  Speaker 10: I know that just sounds like a random number. It's
• 15:18
  Speaker 10: not that random. I mean, think about what was happening
• 15:20
  Speaker 10: in 2015. I mean, that was the jobless recovery. And
• 15:23
  Speaker 10: so we're back to there. So it's not like people
• 15:26
  Speaker 10: feel very comfortable.
• 15:27
  Speaker 1: When the labor market's doing fairly well, in fact.
• 15:29
  Speaker 10: Yeah, well, I think that that's part of the point, right? Like,
• 15:32
  Speaker 10: I don't know how... I don't know if the labor
• 15:33
  Speaker 10: market is doing nearly as well as, you know, something by,
• 15:37
  Speaker 10: if you're just simply looking at the unemployment rate, I
• 15:39
  Speaker 10: don't think that's the right way of really capturing sort
• 15:42
  Speaker 10: of the underlying essence of what's happening in the labor market.
• 15:45
  Speaker 3: I think, you know, you have to.
• 15:46
  Speaker 10: Look at sort of the degree of confidence towards labor.
• 15:49
  Speaker 10: And you can see that there's not a ton of confidence,
• 15:51
  Speaker 10: and that shows up in the quit rate or something
• 15:53
  Speaker 10: like the labor differential. And that is, I think, really
• 15:56
  Speaker 10: acting as a.
• 15:57
  Speaker 2: Sort of a ceiling.
• 15:58
  Speaker 1: How much does the data reflect the reality of how
• 16:00
  Speaker 1: people work now, which is some people have a full-time
• 16:02
  Speaker 1: job where they get a W-2, but other people are
• 16:05
  Speaker 1: putting together lots of gigs and hustling their way to
• 16:07
  Speaker 1: some kind of paycheck?
• 16:08
  Speaker 3: Yeah, for sure.
• 16:09
  Speaker 10: I mean, look, that is a huge part of the
• 16:12
  Speaker 10: labor backdrop today. I mean, that's an inescapable truth. And look,
• 16:16
  Speaker 10: at the end of the day, the unemployment rate is
• 16:19
  Speaker 10: still relatively low, right? I mean, it's between 4% and 4.5%,
• 16:22
  Speaker 10: which has been the case now for you know, the
• 16:25
  Speaker 10: last year or so. So labor is generally okay. I
• 16:31
  Speaker 10: just don't think it's as nearly as good as a
• 16:32
  Speaker 10: lot of people would think if you're just looking at
• 16:34
  Speaker 10: the unemployment rate.
• 16:35
  Speaker 2: I want to get you back here, but Tom, I
• 16:37
  Speaker 2: want to talk about retirement. The struggle in America, we've
• 16:42
  Speaker 2: got this huge number of halves. Bess Friedman's going to
• 16:45
  Speaker 2: be on from Brown hair Stevens. Thanks, Luigi, for that.
• 16:50
  Speaker 2: By Friday, my brain is just gone.
• 16:52
  Speaker 1: I know. I hear you.
• 16:52
  Speaker 3: Do you understand?
• 16:53
  Speaker 1: You can bond.
• 16:54
  Speaker 3: With me on this. Absolutely. I'm glad you like that, Susan.
• 16:59
  Speaker 2: I look, Tom, where we are, and we've got to
• 17:01
  Speaker 2: get to retirement. Yes. Peter Orszag sitting in this chair
• 17:04
  Speaker 2: last week. A huge body of America can't get to retirement,
• 17:09
  Speaker 2: can they?
• 17:10
  Speaker 10: Yeah, look, I think that that is going to be
• 17:12
  Speaker 10: the persistent challenge for, I think, for quite a number
• 17:15
  Speaker 10: of folks. You know, the reality is, and we just
• 17:18
  Speaker 10: did this work actually in a note, which hopefully you're
• 17:21
  Speaker 10: both getting that.
• 17:22
  Speaker 1: We'll get on the mailing list.
• 17:23
  Speaker 3: Please just let me know. I don't open my emails.
• 17:25
  Speaker 1: Continue.
• 17:26
  Speaker 2: I'll get you added.
• 17:28
  Speaker 10: And what we showed is that more and more people
• 17:32
  Speaker 10: are actually relying on investment income more so than wage income.
• 17:39
  Speaker 10: There's this transition that's happening right now. And what that
• 17:43
  Speaker 10: means is that you're more at the mercy of what
• 17:45
  Speaker 10: happens from a market perspective. That's an interesting thing, particularly
• 17:49
  Speaker 10: as you think about retirement.
• 17:50
  Speaker 1: Especially as a record 58% of all U.S. households are
• 17:52
  Speaker 1: now exposed to the stock market as opposed to before.
• 17:54
  Speaker 3: Yes, that's exactly right.
• 17:55
  Speaker 1: Tom, I know you spend a lot of your time
• 17:57
  Speaker 1: thinking about and writing about employment, inflation. What would surprise
• 18:02
  Speaker 1: other people about how you approach managing your own finances?
• 18:05
  Speaker 10: Oh gosh, I think that they would probably be surprised
• 18:08
  Speaker 10: to learn that I'm incredibly hands off. I sort of
• 18:11
  Speaker 10: set it and leave it. I really don't touch it
• 18:13
  Speaker 10: all that much.
• 18:13
  Speaker 1: Do you rip open your statements when they come in?
• 18:16
  Speaker 2: I don't.
• 18:17
  Speaker 10: I don't know what that says about me exactly, but no,
• 18:20
  Speaker 10: I'm very comfortable knowing that my time horizon is sufficient
• 18:23
  Speaker 10: where I'm not all that bothered by market swings. If
• 18:27
  Speaker 10: my macro view really lines up with, hey, by the way,
• 18:30
  Speaker 10: we're about to go into a very rough branch, I'll
• 18:33
  Speaker 10: make some adjustments. But otherwise, I'm just sort of, you know,
• 18:36
  Speaker 10: set it and let it go.
• 18:37
  Speaker 3: Our listeners and viewers are.
• 18:39
  Speaker 2: Opening their monthly statements and they're seeing price down and
• 18:42
  Speaker 2: fixed income. Is that something we need to get used to?
• 18:44
  Speaker 3: Yeah.
• 18:45
  Speaker 10: You know, we've been talking about this for quite some
• 18:47
  Speaker 10: time now. I think the rise in yields is real.
• 18:51
  Speaker 10: I think there's a new floor underneath yields. And I
• 18:55
  Speaker 10: think what people have to keep in mind, because it's
• 18:56
  Speaker 10: very easy, and this is especially true for, I think,
• 18:58
  Speaker 10: a lot of equity.
• 18:59
  Speaker 2: Investors, I think, sometimes.
• 19:00
  Speaker 10: I'm really worried about this, I think, more than most.
• 19:03
  Speaker 10: What you have to keep in mind is yields rising
• 19:05
  Speaker 10: in and of itself is not a bad thing. It's
• 19:07
  Speaker 10: the reason, right? It's the reason that matters. And if
• 19:09
  Speaker 10: yields are rising for good reasons, then I think it's OK.
• 19:12
  Speaker 10: I think most of the rise has been for good reasons,
• 19:14
  Speaker 10: even though it's been a lot of quirks.
• 19:15
  Speaker 1: OK, then there's all the existential crisis kind of questions
• 19:18
  Speaker 1: about national debt. Tom, thank you so much. Tom Porcelli,
• 19:21
  Speaker 1: chief economist at Wells Fargo. More to come on Bloomberg
• 19:24
  Speaker 1: Money with Jonathan Miller and Bess Friedman.
• 19:29
  Speaker 2: You're listening to Bloomberg Money. Stay with us with more
• 19:32
  Speaker 2: to come after this.
• 19:42
  Speaker 3: Bloomberg Money. Good afternoon. Yes, the fish are real. They
• 19:45
  Speaker 3: were not fake. It's not AI.
• 19:47
  Speaker 2: CoreWeave didn't do that or something.
• 19:50
  Speaker 3: Or the rest of them as well.
• 19:51
  Speaker 2: Bloomberg Money here on a Friday after sort of like
• 19:53
  Speaker 2: a kind of like an exhausting week.
• 19:55
  Speaker 1: It has been. And for the tech stocks, it continues
• 19:58
  Speaker 1: to be. I'm looking at eight straight days of losses
• 20:00
  Speaker 1: for chip companies. Remember when they were the high flyers?
• 20:03
  Speaker 3: Yeah, like three weeks ago.
• 20:04
  Speaker 1: Not so long ago.
• 20:05
  Speaker 2: Fortunately, I'm a long term six week record here.
• 20:08
  Speaker 9: All right.
• 20:08
  Speaker 1: Bloomberg Money is your new destination for personal finance. It's
• 20:11
  Speaker 1: a cross-platform effort that extends beyond your television screen, including
• 20:15
  Speaker 1: our new digital hub at Bloomberg.com slash money. And Tom,
• 20:18
  Speaker 1: this week we had a story about how 7% mortgage
• 20:21
  Speaker 1: rates have hit the U.S. housing market. It's actually more
• 20:23
  Speaker 1: than 7% now. And those rates have sent pending home
• 20:26
  Speaker 1: sales tumbling to near 12-year lows. So it's having an
• 20:29
  Speaker 1: impact on the numbers. The housing market has really slowed down.
• 20:33
  Speaker 3: It's really slowed down.
• 20:34
  Speaker 2: But I wonder, after talking to Sreenad Rajan about it,
• 20:36
  Speaker 2: how it's slowed down in certain climes of.
• 20:39
  Speaker 3: Wall Street as well.
• 20:41
  Speaker 2: Eight Ways to Go with Jonathan Miller. He's co-founder of
• 20:44
  Speaker 2: Miller Samuel.
• 20:46
  Speaker 3: Far more than that, in this nation, he is the.
• 20:48
  Speaker 2: Definitive statistical voice on what's happening to your renting. what's
• 20:53
  Speaker 2: happening to your home ownership. I was going to start
• 20:56
  Speaker 2: with Seattle, but I got to rip up the script
• 20:57
  Speaker 2: after Sreenath Rajan was with us here. How do you
• 21:01
  Speaker 2: see in real estate the Wall Street boom that's out
• 21:04
  Speaker 2: there right now? Is it simplistically just the Hamptons? Is
• 21:08
  Speaker 2: it Bess Friedman coming up in a bit? Her Fifth Avenue?
• 21:11
  Speaker 2: Where does all that.
• 21:12
  Speaker 3: Wall Street money go in the Jonathan Miller world?
• 21:14
  Speaker 11: Well, it goes to the upper half or upper third
• 21:17
  Speaker 11: of the housing market. The lower you go in price,
• 21:20
  Speaker 11: the more dependent consumers are on mortgage rates. Equity drawdowns
• 21:26
  Speaker 11: are fueling a tremendous strength in the luxury market. New
• 21:29
  Speaker 11: York Metro the West Coast, certain markets, really is the story.
• 21:35
  Speaker 11: And I think we're overly obsessed with mortgage rates as
• 21:40
  Speaker 11: sort of the determinant of health of the housing market.
• 21:43
  Speaker 11: I think the biggest issue with mortgage rates is if
• 21:47
  Speaker 11: they stabilize, I think that there's a lot of people,
• 21:50
  Speaker 11: I call it, they're basically procrastinating to make a decision because.
• 21:57
  Speaker 11: Because they can't get their arms around the current rate
• 21:59
  Speaker 11: because five minutes later, it's going up or changing. Consumers
• 22:04
  Speaker 11: need time to sort of get comfortable, and there's been
• 22:07
  Speaker 11: sort of too much information flowing in.
• 22:10
  Speaker 3: What I love about your work.
• 22:11
  Speaker 2: Is you not only show San Francisco's mental up-up AI
• 22:14
  Speaker 2: and all that. I mean, the starter homes are like
• 22:17
  Speaker 2: half a million, a million dollars.
• 22:18
  Speaker 1: You can't get a starter home.
• 22:19
  Speaker 3: Yeah, there's no starter home. That's right.
• 22:21
  Speaker 7: Sorry.
• 22:21
  Speaker 2: But just north, Seattle's really struggling. Jonathan Miller and Miller
• 22:24
  Speaker 2: Samuel here on Seattle. Seattle is not San Francisco. There's
• 22:29
  Speaker 2: tech unemployment, uncertainty, there's layoffs, fewer job-driven relocations, and less
• 22:34
  Speaker 2: confidence among workers who still have jobs. And then you
• 22:37
  Speaker 2: list the name of the companies as well.
• 22:40
  Speaker 3: Are there a lot of Seattles out there? There are.
• 22:43
  Speaker 11: It's starting to, you're starting to break out and see that.
• 22:47
  Speaker 11: What's really interesting is that you can't sort of pigeonhole
• 22:52
  Speaker 11: a tech location as sort of with the AI boom
• 22:56
  Speaker 11: as being sort of safe. You look at San Francisco
• 23:01
  Speaker 11: was this dire downturn. The tech sector was really weak.
• 23:07
  Speaker 11: Housing prices were falling. Now we have the tech sector
• 23:10
  Speaker 11: in the switching to AI, but that's not happening in Seattle.
• 23:16
  Speaker 11: So it's very market dependent. Now we're seeing housing prices
• 23:19
  Speaker 11: in San Francisco up about 20% over the last year,
• 23:22
  Speaker 11: which is incredible.
• 23:24
  Speaker 1: San Francisco or San Francisco suburbs by Silicon Valley?
• 23:26
  Speaker 2: Both.
• 23:27
  Speaker 11: And what's really interesting is that Oakland across the Bay
• 23:31
  Speaker 11: Bridge is I see that as the Brooklyn of San
• 23:35
  Speaker 11: Francisco really saw declining housing prices for two or three years.
• 23:41
  Speaker 3: Now we're starting.
• 23:43
  Speaker 11: I think, seeing a San Francisco spillover where the jobs,
• 23:47
  Speaker 11: the suit for affordable housing is pushing prices up again.
• 23:50
  Speaker 1: So our understanding of all these different specific markets, a
• 23:53
  Speaker 1: lot of it comes from social media, from whatever people
• 23:55
  Speaker 1: who live there or who talk about places they're portrayed
• 23:58
  Speaker 1: in the narrative that they tell. How has social media,
• 24:01
  Speaker 1: the TikToks, Instagrams, YouTube shorts, changed the way people think
• 24:05
  Speaker 1: about how to transact in this housing market?
• 24:07
  Speaker 11: Well, I think social media, at least my feed, when
• 24:11
  Speaker 11: I look at the information coming at me, you get
• 24:14
  Speaker 11: the impression that every market in America is.
• 24:17
  Speaker 3: Flooded with supply.
• 24:18
  Speaker 11: And if you really look at it regionally, the Northeast,
• 24:22
  Speaker 11: the Midwest is devoid of supply.
• 24:25
  Speaker 3: You look at the Sunbelt, actually.
• 24:28
  Speaker 11: Has the most supply, but it's not as much as
• 24:32
  Speaker 11: that sort of has stopped, the inventory growth.
• 24:35
  Speaker 3: And the West is somewhere in between. So it's a
• 24:38
  Speaker 3: really mixed bag.
• 24:39
  Speaker 11: But inventory is the most important metric in housing right
• 24:42
  Speaker 11: now and has been coming out of the pandemic.
• 24:44
  Speaker 2: There seems to be, Jonathan Miller, in the arc of
• 24:46
  Speaker 2: your career, a society, cross-generation society, giving up on home ownership.
• 24:52
  Speaker 2: Are we becoming like Europe, where there's just a dominant
• 24:56
  Speaker 2: idea we're going to rent and never own?
• 25:00
  Speaker 11: I guess the short answer to that is absolutely not.
• 25:03
  Speaker 11: I don't think that. I think the problem is we're
• 25:06
  Speaker 11: in sort of a short-term environment where we have this
• 25:09
  Speaker 11: heavy burden caused by higher rates, which largely is an
• 25:14
  Speaker 11: economic unforced error. And I think, you know, this sort
• 25:19
  Speaker 11: of ends. The problem is the chaos. It's less about
• 25:24
  Speaker 11: the rate itself.
• 25:25
  Speaker 3: Rates are 7.5%.
• 25:25
  Speaker 11: Mm-hmm. That's not some crazy high number. It's just relative
• 25:32
  Speaker 11: to the pandemic where I believe the Fed kept rates
• 25:35
  Speaker 11: too low for too long.
• 25:36
  Speaker 1: Let's talk about the costs of housing ownership overall, because
• 25:39
  Speaker 1: it's not just high mortgage rates. It's not just high
• 25:41
  Speaker 1: prices for the homes overall. You also have high property
• 25:44
  Speaker 1: taxes and high insurance costs. And a lot of cities
• 25:47
  Speaker 1: and states are now looking into cutting property taxes because
• 25:50
  Speaker 1: they know that that's a pain point for a lot
• 25:51
  Speaker 1: of people.
• 25:52
  Speaker 3: Especially Florida.
• 25:53
  Speaker 1: Especially Florida. How does that all play out? Because something's
• 25:56
  Speaker 1: got to give, and services are going to go by
• 25:57
  Speaker 1: the wayside. You're not going to get your garbage picked up.
• 26:00
  Speaker 1: How do you get that idea across to people?
• 26:03
  Speaker 11: First of all, it's very weird to cut or remove
• 26:07
  Speaker 11: property taxes when they pay for police and fire and EMT,
• 26:12
  Speaker 11: maybe a little bit of school. That's all going to
• 26:16
  Speaker 11: be paid out of some other location. So maybe property
• 26:21
  Speaker 11: taxes go down, but essentially local governments lose control of
• 26:26
  Speaker 11: how the property taxes are spent and it becomes centralized where...
• 26:30
  Speaker 11: a municipality has to go to, say, Tallahassee in Florida
• 26:34
  Speaker 11: and sort of beg for their share of the pie
• 26:36
  Speaker 11: as opposed to a local government actually.
• 26:38
  Speaker 2: The mayor of Tallahassee or the mayor of New York City,
• 26:41
  Speaker 2: what's your number one advice to them? to fix, solve
• 26:45
  Speaker 2: this national headache?
• 26:47
  Speaker 11: Well, I think we're actually seeing some of that here
• 26:50
  Speaker 11: in New York. There's been a lot of fear-mongering about
• 26:54
  Speaker 11: New York and people fleeing the city, you know, taxes.
• 26:58
  Speaker 3: Are we? No.
• 26:59
  Speaker 11: We're actually not seeing it in the data at all.
• 27:02
  Speaker 11: We're not seeing people fleeing the city. And I guess,
• 27:06
  Speaker 11: you know, as my grandfather told me when I was
• 27:09
  Speaker 11: a kid growing up in D.C., if you're not working
• 27:12
  Speaker 11: in New York, then you're just camping out.
• 27:14
  Speaker 2: Scarlett, is this another reason that Jalen is God?
• 27:17
  Speaker 3: We're not leaving.
• 27:18
  Speaker 1: Jalen's God for so many reasons, we can't even begin
• 27:20
  Speaker 1: to list them. Let's talk a little bit about the Northeast,
• 27:26
  Speaker 1: because I think about extreme weather as well, and how
• 27:29
  Speaker 1: that's become... I don't know, makes certain places uninhabitable in
• 27:33
  Speaker 1: many ways. You think about, for instance, the northern coast
• 27:36
  Speaker 1: of Long Island or Connecticut, where they had a lot
• 27:38
  Speaker 1: of extreme flooding. How does that change evaluation of what
• 27:41
  Speaker 1: used to be fairly desirable regions that were always in demand?
• 27:46
  Speaker 11: So right now, there's no recognition of sort of flood
• 27:50
  Speaker 11: zone risk.
• 27:51
  Speaker 3: And that's going to.
• 27:54
  Speaker 11: Be a problem in 30 years, maybe not immediately.
• 27:58
  Speaker 3: But actually, what you're seeing.
• 28:00
  Speaker 11: Is in areas that are sort of constantly threatened by flooding,
• 28:04
  Speaker 11: we're actually seeing in these markets like in Long Island,
• 28:07
  Speaker 11: especially the south shore of Long Island, that these locations
• 28:10
  Speaker 11: that were formerly middle class waterfront type locations, Lots are
• 28:16
  Speaker 11: being doubled down, and it's luxury housing.
• 28:19
  Speaker 2: John, I need advice. Bess Friedman's coming on. She has
• 28:23
  Speaker 2: $ 36 million up Fifth Avenue. The monthly maintenance fee for
• 28:27
  Speaker 2: the guy standing out front.
• 28:31
  Speaker 4: Is $ 24, 396.
• 28:32
  Speaker 1: Wow.
• 28:33
  Speaker 3: That's almost like a Knicks ticket. I think that's real money, right?
• 28:37
  Speaker 3: That's real money.
• 28:38
  Speaker 1: That's a month's salary. It's a lease. I mean, someone's
• 28:40
  Speaker 1: annual salary. Jonathan, thank you so much for joining us today.
• 28:43
  Speaker 3: My pleasure.
• 28:43
  Speaker 1: Jonathan Miller is co-founder of Miller Samuel. This hour on
• 28:54
  Speaker 1: Bloomberg Money, we are talking about real estate. Bess Friedman,
• 28:57
  Speaker 1: CEO of Brown Harris Stevens, is with us. Bess, how
• 29:00
  Speaker 1: is business right now? Are people actually going in wanting
• 29:03
  Speaker 1: to buy or sell, or are they just kind of
• 29:04
  Speaker 1: forever looking?
• 29:06
  Speaker 7: Well, the market is actually really strong in New York City,
• 29:09
  Speaker 7: particularly at the high end of the market. That business
• 29:13
  Speaker 7: is really good, stronger than last year. But if you
• 29:15
  Speaker 7: look at Wall Street, it's supposed to make something like
• 29:18
  Speaker 7: $ 90 billion this year, and bonuses are going to be
• 29:20
  Speaker 7: something like $ 60 billion approximately. So You know, the rich
• 29:24
  Speaker 7: keep getting richer, and we have this sort of tale
• 29:26
  Speaker 7: of two different markets where discretionary spending is up, and
• 29:30
  Speaker 7: then we're in an affordability crisis on the other front,
• 29:33
  Speaker 7: which you guys talked about a little bit with Jonathan Miller.
• 29:35
  Speaker 1: So when you look at mortgage rates at these current levels,
• 29:38
  Speaker 1: almost 7.5 and mortgage rates affects the high-income buyer and
• 29:43
  Speaker 1: the low-income buyer just as much, what is the psychology
• 29:45
  Speaker 1: of sellers versus buyers now when you have mortgage rates
• 29:48
  Speaker 1: at 7.5%? You know, it depends.
• 29:50
  Speaker 7: So last year in New York City, 65% of the
• 29:54
  Speaker 7: deals were done without a mortgage.
• 29:55
  Speaker 4: They were cash.
• 29:56
  Speaker 7: So that's a little bit different. Most Americans get a mortgage.
• 29:59
  Speaker 7: And so, you know, rates are still historically pretty low,
• 30:03
  Speaker 7: but people are still adjusting. And the real issue, as
• 30:05
  Speaker 7: Jonathan said, is supply. We are 5 million homes in
• 30:09
  Speaker 7: deficit in the United States of America. My parents bought
• 30:12
  Speaker 7: a home when they were in their 20s. I bought
• 30:14
  Speaker 7: a home when I was in my 30s. And I
• 30:15
  Speaker 7: bet my kids are going to buy a home when they're.
• 30:17
  Speaker 11: In their 40s.
• 30:18
  Speaker 3: Or never buy one.
• 30:19
  Speaker 2: Or never buy one.
• 30:20
  Speaker 7: And the American dream is being, you know, running past us.
• 30:23
  Speaker 2: Your magic in the grind of real estate is you
• 30:26
  Speaker 2: started out reading real estate articles at Ithaca College a
• 30:29
  Speaker 2: million years ago. Ithaca College, like any other college town
• 30:32
  Speaker 2: with a number of universities, is an absolute outrage of
• 30:36
  Speaker 2: housing non-affordability.
• 30:37
  Speaker 3: That's right.
• 30:38
  Speaker 2: I mean, let's take Ithaca as a microcosm of what
• 30:40
  Speaker 2: needs to be done. Why can't we do it like
• 30:42
  Speaker 2: our grandparents and build houses?
• 30:45
  Speaker 7: Well, the challenge is state and local. You have to
• 30:47
  Speaker 7: get past the legislators.
• 30:49
  Speaker 1: And you need to change the zoning.
• 30:51
  Speaker 7: Like Mayor Adams was successful in getting the city of
• 30:54
  Speaker 7: Yes passed and we got more zoning in New York City.
• 30:56
  Speaker 7: We need more people that are willing to communicate and
• 30:59
  Speaker 7: work together. It shouldn't be what flag you wave. We
• 31:01
  Speaker 7: should just vote for good policies. And we have the
• 31:04
  Speaker 7: midterms coming up, and people are thinking about the economy,
• 31:07
  Speaker 7: but every politician should be talking about housing affordability. How
• 31:11
  Speaker 7: do we get more supply in the market? Those are
• 31:13
  Speaker 7: the most important things today for Americans. But they can't
• 31:15
  Speaker 7: solve that on their own, right? That becomes something very local,
• 31:19
  Speaker 7: and there's a lot of opponents and proponents.
• 31:21
  Speaker 1: There's a lot of nimbyism. I mean, it's a mess,
• 31:24
  Speaker 1: and it doesn't get solved anytime soon.
• 31:25
  Speaker 7: No, but it gets solved if people are willing to
• 31:27
  Speaker 7: just drop their flags and come together and talk and say,
• 31:30
  Speaker 7: how do we solve these problems? We have to stop
• 31:32
  Speaker 7: this sort of ridiculousness.
• 31:35
  Speaker 3: I look, Bess, at.
• 31:37
  Speaker 2: Some of the critics who say the kids aren't sacrificing.
• 31:40
  Speaker 3: They've got to do this. They've got to do that.
• 31:41
  Speaker 2: They're not saving their pennies to get the 20% down payment.
• 31:45
  Speaker 2: We're really beyond that now, aren't we?
• 31:47
  Speaker 7: Way past that. I mean, the wages can't even keep
• 31:50
  Speaker 7: up with what they would have to pay to buy
• 31:52
  Speaker 7: a home. It's just not affordable today for them. They
• 31:55
  Speaker 7: can't pay their rent.
• 31:55
  Speaker 11: Right.
• 31:56
  Speaker 7: I mean, a lot of my daughter's friends, their parents
• 31:58
  Speaker 7: are helping them to pay their rent today. It's a
• 32:01
  Speaker 7: tough environment for young people today. And so we have
• 32:04
  Speaker 7: to figure out solutions. It's our job to... We're the adults.
• 32:07
  Speaker 7: We need to come up with solutions.
• 32:09
  Speaker 1: You talked about how your parents bought a house when
• 32:10
  Speaker 1: they were in their 20s. There are a lot of
• 32:12
  Speaker 1: baby boomers that have homes, multiple homes, in fact. And
• 32:15
  Speaker 1: they have real assets that have appreciated a lot in value.
• 32:18
  Speaker 1: When they're passing, what happens... to that portfolio of houses
• 32:23
  Speaker 1: I mean do they get left to the kids left
• 32:25
  Speaker 1: to the grandkids I mean.
• 32:27
  Speaker 7: Obviously it's very circumstantial depending on but many times they'll
• 32:31
  Speaker 7: sell them and make a lot of money or it'll
• 32:33
  Speaker 7: go to the family and the family will sell it
• 32:35
  Speaker 7: it just depends on the person's circumstances but they made
• 32:38
  Speaker 7: enormous sums of money and having a home was a
• 32:41
  Speaker 7: big part of it it's a commitment to your future
• 32:43
  Speaker 7: and economic security for.
• 32:45
  Speaker 2: People For people that rent, they have to get into
• 32:47
  Speaker 2: a mindset of saying, I'm not going to get home appreciation.
• 32:50
  Speaker 2: I've got to rent, and I've also got to save,
• 32:53
  Speaker 2: whether it's retirement plan 401k, or frankly, accounts outside that.
• 32:57
  Speaker 2: Do you see that happening?
• 32:59
  Speaker 7: I don't see that enough happening. And I think, I
• 33:03
  Speaker 7: wish that more people were buying versus renting because you're literally, unfortunately,
• 33:08
  Speaker 7: throwing your money out the window. Now, if you're testing
• 33:11
  Speaker 7: a market and you're going to be there temporarily, I
• 33:13
  Speaker 7: totally get it. But if you plan to live in
• 33:15
  Speaker 7: a place, if you can, ideally, you want to buy
• 33:18
  Speaker 7: something and build equity.
• 33:19
  Speaker 3: So many people can't.
• 33:20
  Speaker 7: I know, but that is the very issue that we
• 33:24
  Speaker 7: have today in front of us.
• 33:25
  Speaker 1: For those who do have the means to buy a place,
• 33:28
  Speaker 1: they go to a broker and they look at the
• 33:29
  Speaker 1: listings to see what's available. There's a thing called private listings.
• 33:33
  Speaker 1: How big of a deal is this where you don't
• 33:35
  Speaker 1: have access to the houses that are available, those apartments
• 33:38
  Speaker 1: that are available that other people do?
• 33:39
  Speaker 7: I mean, I think it's a huge issue. I mean,
• 33:41
  Speaker 7: if we think about fair housing, we don't want to
• 33:43
  Speaker 7: dismantle fair housing laws. And fair housing is not about
• 33:47
  Speaker 7: the intent of the policy.
• 33:49
  Speaker 4: It's about the impact.
• 33:50
  Speaker 7: And if people can't get access to homes, it's gonna
• 33:53
  Speaker 7: have a very bad impact on minorities. Derek Johnson, the
• 33:56
  Speaker 7: president of the NAACP, spoke specifically about this in his
• 34:00
  Speaker 7: piece in Time. And I think access to housing is crucial.
• 34:03
  Speaker 7: We just talked about having a housing affordability crisis.
• 34:06
  Speaker 1: This is a real problem.
• 34:08
  Speaker 7: And let me ask you, if you were buying a home,
• 34:10
  Speaker 7: Would you want to know how many days the home
• 34:12
  Speaker 7: was on the market?
• 34:13
  Speaker 3: Absolutely.
• 34:14
  Speaker 1: Well, that's what they're doing.
• 34:15
  Speaker 7: They are hiding that information with the private listing networks.
• 34:18
  Speaker 7: They're saying that the days on market.
• 34:20
  Speaker 2: I'm going to interrupt. This is so important. I look
• 34:23
  Speaker 2: at other countries' real estate, and we're heading back to
• 34:26
  Speaker 2: the opaqueness. of those other countries.
• 34:28
  Speaker 3: Thank you.
• 34:29
  Speaker 1: And that's 100%.
• 34:32
  Speaker 2: We're retreating back to what I see in other nations. 100%.
• 34:35
  Speaker 7: And that's why we've been raising alarm bells and saying, look,
• 34:39
  Speaker 7: this is not helpful. I mean, there are investigations going on,
• 34:42
  Speaker 7: but this is a policy or platform that is super
• 34:45
  Speaker 7: dangerous to fair housing, to affordability, to everything that matters.
• 34:49
  Speaker 7: And we should not allow these private listing networks to exist.
• 34:52
  Speaker 2: We've got our books out today, and we did it
• 34:54
  Speaker 2: on real estate for Bess.
• 34:55
  Speaker 3: We've been here.
• 34:57
  Speaker 2: Scarlett, why don't you start with your piercingly wonderful book?
• 35:00
  Speaker 1: Well, Bess mentioned zoning and how that's a big deal.
• 35:03
  Speaker 3: No, no, no.
• 35:04
  Speaker 1: It's not boring because my book is called- It is
• 35:06
  Speaker 1: a little boring.
• 35:07
  Speaker 9: No, no, no.
• 35:07
  Speaker 2: Book is?
• 35:08
  Speaker 1: I'm going to connect it, right?
• 35:09
  Speaker 9: Okay.
• 35:09
  Speaker 1: My book is Paved Paradise, How Parking Explains the World
• 35:12
  Speaker 1: by Henry Graybar. And full disclosure, this book is on
• 35:15
  Speaker 1: my reading list, so I have not yet started it.
• 35:17
  Speaker 1: But the basic thesis here is that Americans expect parking
• 35:20
  Speaker 1: to be convenient, available, and free. So that leaves the U.S. over-parked,
• 35:24
  Speaker 1: lots of parking, and under-housed. That's another contributing factor to
• 35:28
  Speaker 1: the fact that we have limited supply.
• 35:30
  Speaker 7: Yeah, a lot of economists and people talk about this,
• 35:32
  Speaker 7: that that could help if we could build more housing
• 35:35
  Speaker 7: in those areas near MTA state where people can get
• 35:37
  Speaker 7: to public transportation. We don't need to have so many
• 35:40
  Speaker 7: cars and so much parking.
• 35:41
  Speaker 1: We need more homes. There are rules in certain cities
• 35:44
  Speaker 1: that require new housing developments to build a minimum number
• 35:47
  Speaker 1: of parking spaces. And so this simultaneously raises the cost
• 35:50
  Speaker 1: of construction and then gives NIMBY people a reason to
• 35:53
  Speaker 1: object to new developments.
• 35:54
  Speaker 2: And that's one of the ideas that they're working with,
• 35:56
  Speaker 2: trying to get a little more uh a little more
• 35:58
  Speaker 2: done because Bess Friedman is here mine is on home
• 36:02
  Speaker 2: design can you see me on a ladder like a
• 36:05
  Speaker 2: threat to.
• 36:05
  Speaker 3: Society what do you do if you're dealing with the
• 36:08
  Speaker 3: Upper East.
• 36:09
  Speaker 2: Side and Bess Farrow and Ball recipes for decorating Bess
• 36:14
  Speaker 2: has been in their seven I think it's the 70th
• 36:16
  Speaker 2: street office so many times and I'm sorry what it's
• 36:20
  Speaker 2: about it's about the color I mean, you look, the color,
• 36:24
  Speaker 2: you know, each color tells a story.
• 36:25
  Speaker 4: Oh, color with a U-L-O-U-R.
• 36:28
  Speaker 1: Oh, color. This is a new vocabulary.
• 36:32
  Speaker 2: John Farrow told me that, you know, it's not Saturday
• 36:34
  Speaker 2: Night Live. John Farrow, I said, John's British and Farrow
• 36:37
  Speaker 2: and Ball is very British. I said, John, I said,
• 36:39
  Speaker 2: how do you pronounce it?
• 36:40
  Speaker 3: John said, color. I said, okay.
• 36:41
  Speaker 2: Okay.
• 36:43
  Speaker 3: I mean, everybody has to redecorate, right? The fancy people.
• 36:46
  Speaker 7: Yes, the fancy people. Yes, and they have to say
• 36:49
  Speaker 7: color instead of color.
• 36:50
  Speaker 1: Apparently.
• 36:51
  Speaker 4: That's the way it works. Yes.
• 36:52
  Speaker 1: So this book treats paint and color choices like cooking recipes.
• 36:56
  Speaker 1: Fair and bold. Like a formula you can follow.
• 36:57
  Speaker 2: It started in Dorset, and their magic was they didn't
• 37:00
  Speaker 2: use chemicals. They used soil, dirt. They would charcoal it
• 37:04
  Speaker 2: and all that. And it used to be reasonably priced.
• 37:07
  Speaker 2: Over the years, thank you to Mr. Trump's tariffs as well,
• 37:10
  Speaker 2: is to the Saturday Night Live spoof. It's outrageously expensive.
• 37:14
  Speaker 2: The only people that can use this stuff are people
• 37:17
  Speaker 2: that deal with Bess Friedman.
• 37:18
  Speaker 3: I mean, that's it.
• 37:19
  Speaker 1: Bess Friedman deals with everybody. She likes everybody.
• 37:22
  Speaker 7: I work with everyone. Even the people who like Kalor.
• 37:26
  Speaker 1: What color would you paint your north-facing room versus your
• 37:29
  Speaker 1: south-facing room?
• 37:31
  Speaker 2: Well, that's actually a sophisticated discussion. I mean, the fancy
• 37:34
  Speaker 2: people in Fifth Avenue will have six shades of white.
• 37:36
  Speaker 1: There you go. No, six shades of, like, eggshell, not white.
• 37:39
  Speaker 3: That's right.
• 37:39
  Speaker 4: It's eggshell. That's correct.
• 37:41
  Speaker 3: Excuse me. I'm out of touch.
• 37:42
  Speaker 1: Off-white.
• 37:43
  Speaker 3: Off-white.
• 37:44
  Speaker 1: Bess, thank you so much for joining us.
• 37:45
  Speaker 11: So fun.
• 37:45
  Speaker 3: You guys are wonderful. We'll do it again.
• 37:46
  Speaker 1: Thanks, guys. Bess Friedman, CEO of Brown Harris Stevens. And
• 37:49
  Speaker 1: for the latest reviews and recommendations from Bloomberg, be sure
• 37:52
  Speaker 1: to subscribe to the On Books newsletter. Bess, come back anytime.
• 37:57
  Speaker 1: You guys are so fun. Coming up, the NBA season
• 38:00
  Speaker 1: begins on Tuesday. The Knicks begin their title defense.
• 38:04
  Speaker 3: Tom? $ 61, 000.
• 38:06
  Speaker 2: For two tickets where you want to sit. Just by Jalen.
• 38:09
  Speaker 1: Have we pulled the trigger yet? Are we doing it?
• 38:11
  Speaker 3: No, we're not. We're looking.
• 38:12
  Speaker 2: Alexis Christophorus may go.
• 38:14
  Speaker 1: Okay.
• 38:14
  Speaker 2: All right.
• 38:15
  Speaker 1: Well, we'll see how it all shakes out.
• 38:18
  Speaker 2: You're listening to Bloomberg Money. Stay with us with more
• 38:21
  Speaker 2: to come after this. Bloomberg Money here on Personal Finance, Retirement,
• 38:29
  Speaker 2: Wealth Management.
• 38:30
  Speaker 3: I've got to say this again, CoreWeave. Good morning, Ed Ludlow.
• 38:33
  Speaker 2: And a good afternoon.
• 38:35
  Speaker 3: To Ed Ludlow.
• 38:36
  Speaker 2: What a week for him on technology. I've got to
• 38:38
  Speaker 2: say it because I called it CrossWeave this morning. CrossWeave?
• 38:41
  Speaker 3: CrossWeave. Yeah, I nailed it. CoreWeave here down $ 7.
• 38:44
  Speaker 1: Yeah, well, it's been a brutal week for CoreWeave.
• 38:46
  Speaker 3: That's as much tech as we're doing today.
• 38:48
  Speaker 4: That is it.
• 38:49
  Speaker 1: OK, let's move on to basketball because the world champion
• 38:52
  Speaker 1: New York Knicks begin their season on Tuesday.
• 38:55
  Speaker 2: Yay.
• 38:56
  Speaker 1: And it's going to be huge. They're going to take
• 38:58
  Speaker 1: on the Philadelphia 76ers. And Lisa Mateo is here with
• 39:01
  Speaker 1: us to look ahead to all of this. She is
• 39:03
  Speaker 1: co-host of Bloomberg This Weekend. I know you've been doing
• 39:06
  Speaker 1: a lot of reporting around this. Yes, yes, yes.
• 39:08
  Speaker 9: I mean, it's the Sixers. It's LeBron in a Sixers jersey.
• 39:11
  Speaker 9: The next, the same day.
• 39:12
  Speaker 1: Titan versus Titan.
• 39:13
  Speaker 9: Yes, and like the same day, they're hiding up that
• 39:16
  Speaker 9: championship banner to the top of Madison Square Garden. So
• 39:18
  Speaker 9: everybody's out there. I took a little sneak peek because
• 39:21
  Speaker 9: a girl can dream. Okay, went on StubHub. Courtside, you
• 39:23
  Speaker 9: can still get $ 19, 000 tickets.
• 39:25
  Speaker 4: Oh, my God.
• 39:26
  Speaker 1: Okay, and even at the way top, $ 1, 100. That's the cheapest.
• 39:30
  Speaker 4: That it's going to go.
• 39:30
  Speaker 1: The cheap seats are $ 1, 100. Cheap seats are $ 1, 100.
• 39:33
  Speaker 2: You look down at the court, it's like Jupiter in
• 39:36
  Speaker 2: the western sky at night.
• 39:37
  Speaker 3: It's crazy.
• 39:39
  Speaker 9: But, you know, this is what we're talking about on
• 39:41
  Speaker 9: Bloomberg this weekend. It is all about the merch, right?
• 39:43
  Speaker 11: Mm-hmm.
• 39:43
  Speaker 9: And it is the growing woman sports fan. And that's
• 39:47
  Speaker 9: kind of what we're focusing on. Because women have the
• 39:50
  Speaker 9: buying power. They love to shop. There's more women watching.
• 39:53
  Speaker 9: The fans are growing. So I sat down. Her name
• 39:56
  Speaker 9: is Zara Therese Tish. And she is owner of this company, Therese.
• 40:01
  Speaker 9: They're an activewear company. But she has the licensing with
• 40:04
  Speaker 9: about 100 teams. So she does the NHL, the MLB,
• 40:08
  Speaker 9: the NFL. All the teams.
• 40:11
  Speaker 4: Plus she does WNBA sports.
• 40:12
  Speaker 9: She does some of the National Women's Soccer League.
• 40:14
  Speaker 1: So she's designing it or her team is designing it?
• 40:16
  Speaker 9: So she is designing it. Her team is designing it.
• 40:18
  Speaker 9: And they put out, you know, all the collection out there. Now,
• 40:21
  Speaker 9: this is high-end merch.
• 40:22
  Speaker 4: Just want to let you know.
• 40:23
  Speaker 9: Like a tank top will run you about $ 70. The
• 40:25
  Speaker 9: bomber jacket, which I loved. It's going to be about $ 350.
• 40:29
  Speaker 1: And that's a New York Giants t-shirt or hoodie. And
• 40:31
  Speaker 1: that's because her husband is David Tisch?
• 40:34
  Speaker 9: Yeah, well, her husband is David Tisch, so he has
• 40:36
  Speaker 9: that family history line, you know, to the Tisch family.
• 40:40
  Speaker 9: It was his great uncle that actually bought the New
• 40:42
  Speaker 9: York Giants way back in the day.
• 40:43
  Speaker 1: So this is not just pink it and shrink it.
• 40:45
  Speaker 1: This is, like, designed for women.
• 40:47
  Speaker 9: This is designed for women by women. And it's not, like,
• 40:50
  Speaker 9: just pink. You know how we come out and it's, like,
• 40:52
  Speaker 9: either pink or in the back of the day you
• 40:54
  Speaker 9: had to go and, like, wear your husband's jersey because
• 40:56
  Speaker 9: they didn't have anything for the child.
• 40:58
  Speaker 4: This is a little bit different.
• 40:59
  Speaker 9: So it's like sequence.
• 41:01
  Speaker 1: It's all these type of different things.
• 41:02
  Speaker 9: But because you have to go, you go to a
• 41:04
  Speaker 9: Knicks game and you think about it, it's a fashion show. Oh,
• 41:06
  Speaker 9: it is.
• 41:08
  Speaker 1: Tom, I think it's time for us to check out
• 41:09
  Speaker 1: the merch at the New York Knicks game.
• 41:11
  Speaker 2: I've already checked it out.
• 41:13
  Speaker 3: We have custom made Jalen shoes.
• 41:16
  Speaker 1: Lisa Mateo, thank you. Be sure to catch Bloomberg this weekend,
• 41:19
  Speaker 1: every Saturday and Sunday morning.
• 41:28
  Speaker 2: This is the Bloomberg Money Podcast, bringing you a smart
• 41:31
  Speaker 2: look at the forces shaping your financial life. I'm Tom
• 41:35
  Speaker 2: Keen with Scarlett Fu. You can watch the show live
• 41:39
  Speaker 2: on Bloomberg TV every Friday at noon Wall Street time.
• 41:43
  Speaker 2: Subscribe to the podcast on Apple, Spotify, or wherever you listen.
• 41:48
  Speaker 2: And as always, on the Bloomberg Terminal and the Bloomberg
• 41:51
  Speaker 2: Business app. Thank you.