Latest / Bloomberg Intelligence / Banks, Israel, Retail, and Choice Hotels

Transcript

Banks, Israel, Retail, and Choice Hotels · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moving news.
• 0:14
  Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com Slash podcast.
• 0:21
  Speaker 3: Alison Williams Joyce. She's our senior bank's analyst.
• 0:23
  Speaker 1: She's also the director of research for all the US
• 0:25
  Speaker 1: research stuff they do with Bloomberg Intelligence. So she's got
• 0:28
  Speaker 1: a lot of hats to wear, so we appreciate getting
• 0:30
  Speaker 1: a couple of minutes of her time.
• 0:32
  Speaker 4: Goldman Sachs Bank of America. What do you takeaways today, Alison?
• 0:35
  Speaker 5: So it's been a good quarter. You wouldn't know it
• 0:38
  Speaker 5: from the stocks, but not interesting income.
• 0:42
  Speaker 1: Or I can make huge money running a bank today
• 0:45
  Speaker 1: with the interest rates they're paying like nothing to you
• 0:48
  Speaker 1: and me to depositor, and they're loaning out at these
• 0:50
  Speaker 1: high rates.
• 0:51
  Speaker 6: Are what are the margins? What are the margins like?
• 0:53
  Speaker 6: Right now?
• 0:53
  Speaker 5: They have started they have actually started to pay up
• 0:56
  Speaker 5: and so we have seen that, right So that's been
• 0:58
  Speaker 5: a little bit of ahead when that's what people.
• 0:59
  Speaker 7: Are worrying about.
• 1:01
  Speaker 5: But the cost of deposits, the rate of those costs
• 1:05
  Speaker 5: increasing is slowing. So you know, we like a second derivative,
• 1:09
  Speaker 5: and we like when the second is.
• 1:10
  Speaker 2: There an overall number, you know, like at Bank America,
• 1:14
  Speaker 2: the average deposit payment is like, I don't know, I
• 1:17
  Speaker 2: would guess like zero point five percent, right, and the
• 1:20
  Speaker 2: average amount that they're charging on a loan is probably
• 1:23
  Speaker 2: more like six.
• 1:24
  Speaker 6: I mean, what are we looking at.
• 1:26
  Speaker 7: I mean it depends bank by bank and so.
• 1:28
  Speaker 5: And by the way, if you know you did your math,
• 1:30
  Speaker 5: you'd get a much higher spread. Then you're actually, you know,
• 1:35
  Speaker 5: earning on the margin. So it's really like a couple
• 1:37
  Speaker 5: of percent depending on the banks, depending on the mix.
• 1:41
  Speaker 5: And we could get into the weeds and talk segment
• 1:44
  Speaker 5: by segment. The wealth segment, for example, much closer to
• 1:49
  Speaker 5: matching the market rate, right, So if you have a
• 1:51
  Speaker 5: balance of a few million dollars, you're gonna be a
• 1:54
  Speaker 5: lot more sensitive in terms of moving that balance very quickly.
• 1:57
  Speaker 5: Commercial balance is similar, right. People that are managing those
• 2:02
  Speaker 5: balances are doing it for a living, so they're obviously
• 2:04
  Speaker 5: going to move those So in those two segments, we've seen,
• 2:08
  Speaker 5: you know, the cost very much matching what's happening on
• 2:11
  Speaker 5: the funding side. It's really the consumer banks where you
• 2:14
  Speaker 5: have very much smaller balances.
• 2:17
  Speaker 7: Even then you would.
• 2:18
  Speaker 5: Think it's you know, people should be moving and Paul,
• 2:21
  Speaker 5: you talked about your savvy daughter looking at Marcus and
• 2:25
  Speaker 5: the highest rates there, but some people are slower to move.
• 2:28
  Speaker 7: And if you think about Wells.
• 2:30
  Speaker 5: Fargo, Bank America, JP Morgan, huge retail branches, tons of
• 2:36
  Speaker 5: these mom and pop deposits, especially Bank of America and
• 2:39
  Speaker 5: JP Morgan gaining that share over the last several years.
• 2:44
  Speaker 5: And so that's that's really the benefit is those big
• 2:47
  Speaker 5: the deposit base and the portion of that deposit base
• 2:50
  Speaker 5: that pays you know, closer closer to zero.
• 2:55
  Speaker 2: Not the hot money, right. That was the worry last
• 2:58
  Speaker 2: quarter is the hot money, which means.
• 3:00
  Speaker 4: Like John Tucker's money.
• 3:01
  Speaker 2: No, no, okay, I mean and correct me if I'm
• 3:04
  Speaker 2: wrong here, but that is basically broker deposits, right, Allison.
• 3:08
  Speaker 2: So the worry was that it's not just Marcus that's
• 3:11
  Speaker 2: paying more than five percent.
• 3:12
  Speaker 6: There are a number of other upstarts that.
• 3:15
  Speaker 2: Are paying decent interest rates, and so you have broker
• 3:19
  Speaker 2: deposits that just move back and forth all over the place.
• 3:22
  Speaker 2: And investors don't like to see too many of a
• 3:26
  Speaker 2: bank they own too many of those deposits brokeer, right.
• 3:29
  Speaker 7: They don't.
• 3:29
  Speaker 5: That's why they really look for the core deposits, and
• 3:33
  Speaker 5: they're really looking for those.
• 3:35
  Speaker 7: Super cheap deposits that live.
• 3:38
  Speaker 5: You know, as I said, in the consumer units are
• 3:40
  Speaker 5: not the wealth or the commercial or those the higher
• 3:43
  Speaker 5: beta as we would call it, not beta as we
• 3:46
  Speaker 5: know in the market, but you know, a deposit with
• 3:49
  Speaker 5: a high beta to the market rate.
• 3:52
  Speaker 1: So what are we hearing from the likes of mister
• 3:54
  Speaker 1: Solomon and Goldman Sachs about just the investment banking businesses.
• 3:57
  Speaker 1: Doesn't seem to be a lot going on over there anywhere.
• 4:00
  Speaker 5: So if you look at the fees, it doesn't seem
• 4:02
  Speaker 5: to be a lot going on. But I think what
• 4:06
  Speaker 5: investors are focusing on, or some of the some of
• 4:08
  Speaker 5: the commentaries beneath the surface. So obviously you're familiar with
• 4:11
  Speaker 5: the fact that there's activity, there's you start those conversations
• 4:16
  Speaker 5: and then you see.
• 4:18
  Speaker 7: The uplift and fees a few quarters later.
• 4:20
  Speaker 5: And what was exciting in September was a lot of
• 4:23
  Speaker 5: commentary from the Goldman, Sachs and other banks that things
• 4:27
  Speaker 5: were happening beneath the surface. We're hearing a bit more
• 4:31
  Speaker 5: of that today from both Goldman and Bank America. Equity
• 4:35
  Speaker 5: fees and has been disappointing. We did get a few deals,
• 4:38
  Speaker 5: so we're looking for things to get a little bit better.
• 4:41
  Speaker 5: Dept fees being helped out on the high yeald side
• 4:44
  Speaker 5: and em and A despite very low levels, at least
• 4:49
  Speaker 5: increasing from the second quarter.
• 4:52
  Speaker 1: So one of the things that I've been amazed with
• 4:55
  Speaker 1: over the last ten twelve years is the whole growth
• 4:58
  Speaker 1: of the private credit business.
• 4:59
  Speaker 4: That's seems to.
• 5:00
  Speaker 1: Be actual fees that are leaving Wall Street and going
• 5:03
  Speaker 1: to the private credit business, whether it's from the leverage
• 5:05
  Speaker 1: loan business or the high yield market. What are the
• 5:08
  Speaker 1: Brian moynihand's, the mister Solomon's lord.
• 5:10
  Speaker 3: What do they say about that business? I mean, it
• 5:12
  Speaker 3: seems like they just let that go, I mean and
• 5:15
  Speaker 3: let it walk across the street.
• 5:16
  Speaker 8: Yeah.
• 5:16
  Speaker 5: So, so if you looked at large so if we
• 5:20
  Speaker 5: looked at sort of large corporate lending, that tends to
• 5:23
  Speaker 5: be almost like a has been over the long term,
• 5:26
  Speaker 5: a loss leader for the banks they want it more
• 5:30
  Speaker 5: for the for the overall relationship, right, and then the
• 5:34
  Speaker 5: types of lending that tend to be profitable, sort of
• 5:37
  Speaker 5: that core bread and butter commercial business. I think that's
• 5:41
  Speaker 5: where maybe some of the BBC's have tried to become
• 5:43
  Speaker 5: more competitive. But the but the big you know, the
• 5:46
  Speaker 5: business right now that's working and the business that's good
• 5:49
  Speaker 5: for these banks over the long term is card because
• 5:52
  Speaker 5: that's you know, the consumer business has much higher yields.
• 5:55
  Speaker 1: Yeah, but back in the day when I was at
• 5:56
  Speaker 1: Chase Elson, I'd do a big leverage loan to comp
• 6:00
  Speaker 1: kiss cable billion dollar loan. We'd get a big fee
• 6:02
  Speaker 1: up front, we'd get a nice liboard spread, we sell
• 6:05
  Speaker 1: off ninety percent of our loans. We don't have to,
• 6:08
  Speaker 1: you know, muddy up our balance sheet, and then we
• 6:10
  Speaker 1: turn around to do it again.
• 6:11
  Speaker 3: I thought that was a really well, you're.
• 6:12
  Speaker 7: Talking out loads.
• 6:13
  Speaker 5: Leverage lendings is obviously a little bit more exciting, and
• 6:16
  Speaker 5: again like you're talking about the full relationship, right, Like
• 6:19
  Speaker 5: you're really looking for the fees and the full relationship.
• 6:23
  Speaker 5: And keep in mind that, you know, even when banks
• 6:27
  Speaker 5: do loan syndications and such like, they're generally selling off
• 6:30
  Speaker 5: those pieces as well, right, Like they're looking for the
• 6:33
  Speaker 5: overall origination fee on that business.
• 6:35
  Speaker 1: So what's what's the outlook for investors here? They are
• 6:38
  Speaker 1: clients you talk to, are they are they buying the
• 6:40
  Speaker 1: Goldman's of the world, they buying the Bank of Americas,
• 6:42
  Speaker 1: the JP Morgans or are they just waiting to see how
• 6:45
  Speaker 1: the economy shakes out.
• 6:46
  Speaker 5: It's definitely the latter. People are still very focused. Investors
• 6:51
  Speaker 5: are very focused on commercial real estate. We know that
• 6:53
  Speaker 5: that's something that's going to take so what are a
• 6:55
  Speaker 5: long time to play out. I mean, the banks are
• 6:58
  Speaker 5: we're seeing weakening and that's what we expected, but it's
• 7:01
  Speaker 5: it's going to be a slow process. I think investors
• 7:04
  Speaker 5: definitely get concerned when some of those concerns start playing
• 7:07
  Speaker 5: out in the CNBS market, which moves a lot quicker
• 7:10
  Speaker 5: and you know, has shown some significant decline. So we
• 7:14
  Speaker 5: know commercial real estate is coming, but broadly credit is
• 7:17
  Speaker 5: very strong and investors are also still looking at.
• 7:20
  Speaker 7: Those unrealized loan losses. We did see a tick up.
• 7:25
  Speaker 5: Bank of Marca spent a lot of time talking about
• 7:27
  Speaker 5: their portfolio this morning, and I think that is just
• 7:30
  Speaker 5: something that again it's going to be a while. So
• 7:34
  Speaker 5: the stocks, as I said, are not responding to the
• 7:37
  Speaker 5: good earnings. And then we have these two concerns that
• 7:39
  Speaker 5: are just going to take a fair amount of time
• 7:42
  Speaker 5: to play out. And at the same time, investors are
• 7:45
  Speaker 5: trying to grapple with what do higher rates mean? What
• 7:47
  Speaker 5: does that mean for the economy? Credit loss tends to
• 7:51
  Speaker 5: be the big wildcard, and what's what's going to happen
• 7:54
  Speaker 5: next year if these rates continue to be high?
• 7:56
  Speaker 6: Any any most dangerous times quotes today? I mean, well,
• 8:01
  Speaker 6: Jamon always.
• 8:02
  Speaker 5: Makes Jamie always kicks off earning season, and he always
• 8:06
  Speaker 5: does make some high some good headlines. I think, you know,
• 8:10
  Speaker 5: the most interesting thing if you read between the lines
• 8:12
  Speaker 5: and some of his comments, he's continually said, at least
• 8:16
  Speaker 5: for the last couple of years, that the world needs
• 8:18
  Speaker 5: to prepare for higher rates, although the number he throws
• 8:21
  Speaker 5: out there continues to ratchet up, and so a bank
• 8:25
  Speaker 5: should prepare for any type of risk scenario.
• 8:29
  Speaker 6: There are there are a lot.
• 8:30
  Speaker 5: Of uh, you know, there's a lot of risks out there.
• 8:33
  Speaker 5: But he has also been saying, you know, last Investor Day,
• 8:36
  Speaker 5: he talked about sort of detailed all the unprecedented times
• 8:39
  Speaker 5: and we've continued to have some risks since then.
• 8:41
  Speaker 4: All right, good stuff.
• 8:42
  Speaker 1: Alison Williams as always senior banks annalists for Bloomberg Intelligence.
• 8:46
  Speaker 1: She's also the director of Research for the Americas.
• 8:49
  Speaker 4: For Bloomberg Intelligence.
• 8:50
  Speaker 3: So a busy, busy plate.
• 8:53
  Speaker 9: You're listening to the team Ken's are Line program Bloomberg
• 8:57
  Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Dot, the
• 9:00
  Speaker 9: iHeartRadio app, and the Bloomberg Business app, or listen on
• 9:03
  Speaker 9: demand wherever you get your podcasts.
• 9:07
  Speaker 1: The retail sales came in this morning much stronger than expected.
• 9:10
  Speaker 1: So you can't keep a good consumer down, it doesn't appear,
• 9:13
  Speaker 1: So I'm going to see what this really means for
• 9:15
  Speaker 1: the global macro environment. Here, Russell Price joints us He's
• 9:18
  Speaker 1: a chief economist at Ameriprice Financial. He's based in Deti, Michigan,
• 9:23
  Speaker 1: but he is here in a Bloomberg interactive Brooker's studio.
• 9:26
  Speaker 1: We appreciate that, Russell, thanks so much for joining us here. Again,
• 9:29
  Speaker 1: the retail sales numbers come out pretty darn strong.
• 9:33
  Speaker 4: This consumer.
• 9:34
  Speaker 1: You can't hold this consumer down. How did you read
• 9:36
  Speaker 1: these numbers? And how does that kind of kind of
• 9:38
  Speaker 1: weave into your economic outlook.
• 9:40
  Speaker 10: Yeah, certainly it's a further upside that's likely for third
• 9:44
  Speaker 10: quarter GDP. But retail sales that shows the consumers still
• 9:49
  Speaker 10: have a lot of money available to spend, even if
• 9:52
  Speaker 10: they don't maybe they're adding it to the credit card
• 9:55
  Speaker 10: and they're certainly willing to spend. A big jump for
• 9:58
  Speaker 10: this morning's retails came from restaurants and bars. Nine tenths
• 10:04
  Speaker 10: a month over month shows consumers are still looking to
• 10:07
  Speaker 10: enjoy themselves after the pandemic. Some of the areas that
• 10:11
  Speaker 10: were down were even just down after big jumps the
• 10:13
  Speaker 10: prior month. We had a eight tenths decline in electronics,
• 10:17
  Speaker 10: but that comes after a month that we saw a
• 10:19
  Speaker 10: one point two percent increase the month before, And so
• 10:23
  Speaker 10: consumers are still driving this bus. And even if we
• 10:25
  Speaker 10: have the student loan repayments beginning here in October, it's
• 10:30
  Speaker 10: still there. Still seem to be spending at.
• 10:32
  Speaker 8: A good level.
• 10:33
  Speaker 2: Where are they getting the money or is it credit?
• 10:36
  Speaker 2: Because I recall at one point looking at a graph
• 10:40
  Speaker 2: from Torsten slock over to Pollo that showed credit card
• 10:43
  Speaker 2: usage taking off. It scared me at the time, but
• 10:45
  Speaker 2: everybody I ask about it says well, we're just getting
• 10:48
  Speaker 2: back to pre pandemic levels.
• 10:51
  Speaker 6: How do you see that.
• 10:53
  Speaker 10: I'm not very worried about credit card debt, because, yes,
• 10:55
  Speaker 10: we are at an all time high, but just because
• 10:58
  Speaker 10: of the way the federalies are met measures credit card
• 11:00
  Speaker 10: debt gives it a natural upside bias. It measures on
• 11:04
  Speaker 10: average monthly based on an average monthly balance, and so
• 11:08
  Speaker 10: the more and more we as consumers use our credit cards,
• 11:11
  Speaker 10: you know, the days of emergency use. Only those days
• 11:14
  Speaker 10: are long gone, it gives it a natural upside bias.
• 11:17
  Speaker 10: So what I do, There's no real way to factor
• 11:20
  Speaker 10: that part out, But what I do is I look
• 11:22
  Speaker 10: at consumer credit card debt relative to overall consumer income,
• 11:27
  Speaker 10: and on that basis, we are at very healthy levels.
• 11:30
  Speaker 10: We're well below what we were pre financial crisis two
• 11:34
  Speaker 10: thousand and nine timeframe. So even though it's at record
• 11:39
  Speaker 10: levels on a dollar basis, it's still very manageable.
• 11:41
  Speaker 2: I mean, to me, it would be worrying to roll
• 11:43
  Speaker 2: over any debt at what are rates on credit cards.
• 11:47
  Speaker 2: People are just putting stuff on credit cards and then
• 11:49
  Speaker 2: not paying them off every month With twenty five percent rates,
• 11:53
  Speaker 2: that doesn't sound like a smart decision.
• 11:55
  Speaker 10: Well, even if you pay it off at the end
• 11:57
  Speaker 10: of every month, just because your average monthly balance.
• 12:00
  Speaker 8: It's still.
• 12:03
  Speaker 2: And now I'm coming along with you. Now I'm getting
• 12:06
  Speaker 2: on the same page here, I see. So that doesn't
• 12:08
  Speaker 2: sound like a I mean, if you looked at what
• 12:10
  Speaker 2: I charged every month, you would be probably shocked.
• 12:15
  Speaker 4: Sure, you have a huge cash burn with.
• 12:17
  Speaker 2: Your it's massive, and I mean probably spend, you know,
• 12:21
  Speaker 2: like a good American.
• 12:22
  Speaker 6: More than I earn.
• 12:23
  Speaker 2: Right, But I do pay off the balances because I
• 12:26
  Speaker 2: don't want to get hit with that interest rate cost.
• 12:29
  Speaker 3: Hey, Russell, are we gonna Are we gonna see a
• 12:31
  Speaker 3: recession here?
• 12:31
  Speaker 4: And if so, how deep?
• 12:33
  Speaker 1: I mean, personally for my forecast, I've taken that off
• 12:36
  Speaker 1: the table. Although no one cares about my forecast, they
• 12:39
  Speaker 1: care about your forecast. What do you what are you
• 12:41
  Speaker 1: thinking about that?
• 12:42
  Speaker 8: Well?
• 12:42
  Speaker 10: I think the most likely path still implies that we're
• 12:45
  Speaker 10: likely to avoid a recession. But as we were talking earlier,
• 12:49
  Speaker 10: I think the negative influence of higher rates are still
• 12:53
  Speaker 10: to be seen as their full impact on the economy,
• 12:56
  Speaker 10: particularly when it comes to small businesses, refinancings, office refinancings,
• 13:01
  Speaker 10: and auto loans things like that. So there's still more
• 13:05
  Speaker 10: pressure to come. So we do expect the pace of
• 13:07
  Speaker 10: economic growth to down shift over the next few quarters.
• 13:11
  Speaker 10: And as such, it really wouldn't take much to for
• 13:14
  Speaker 10: that downshift to push us a little bit lower if
• 13:17
  Speaker 10: we were to see something such as a spike in
• 13:19
  Speaker 10: oil prices to boost the gasoline prices to push us
• 13:24
  Speaker 10: into negative territory for a short period of time. So
• 13:27
  Speaker 10: even if we do see a recession, I think it
• 13:29
  Speaker 10: would be very shallow and it would not what's most
• 13:32
  Speaker 10: important in most people's mind, it would not likely push
• 13:35
  Speaker 10: the unemployment rate up beyond five percent.
• 13:38
  Speaker 2: What's your view of you know, federal spending to me
• 13:42
  Speaker 2: seemed to be moving at cross purposes with what the
• 13:45
  Speaker 2: Federal Reserve was trying to do, right, I mean, we're
• 13:48
  Speaker 2: just pouring money on this economy out of Washington, DC.
• 13:52
  Speaker 2: As the Fed is raising rates to try and slow
• 13:54
  Speaker 2: down the economy. The bond market seems to be a
• 13:58
  Speaker 2: new player though involved in this. As they drive up
• 14:02
  Speaker 2: rates on the long end. Is that tightening financial conditions enough?
• 14:06
  Speaker 10: Well, it certainly is, clearly, But I do think we
• 14:10
  Speaker 10: will start to see some alleviation in the upward pressure
• 14:13
  Speaker 10: in market based rates, Treasury rates particular because part of
• 14:19
  Speaker 10: the boost that we've had over the last few months
• 14:22
  Speaker 10: was from the federally from the Treasury Department rebuilding its
• 14:25
  Speaker 10: checking account. Back in June, we had the Treasury balance
• 14:30
  Speaker 10: down below forty billion, and now it's built back up
• 14:34
  Speaker 10: to over six hundred and forty billion, So the checking
• 14:38
  Speaker 10: account is largely rebuilt. Usually they keep that at a
• 14:41
  Speaker 10: level between three hundred and five hundred billion, so it's
• 14:44
  Speaker 10: pretty flush today, so that component should alleviate. We still
• 14:49
  Speaker 10: have obviously deficuspending and the Federal Reserve working off its
• 14:53
  Speaker 10: balance sheets, so there's still a lot of upward pressure.
• 14:56
  Speaker 10: So once we see further confirmation that inflation truly is
• 15:00
  Speaker 10: sid and I think that's what the market's waiting for,
• 15:02
  Speaker 10: is further confirmation of that data, that we should start
• 15:06
  Speaker 10: to see rates moderate a little bit.
• 15:08
  Speaker 2: But we're on I mean five percent watch yeah, out
• 15:12
  Speaker 2: thirty years right, the thirty year right now four point
• 15:15
  Speaker 2: nine nine percent, up ten basis points today. You know,
• 15:20
  Speaker 2: the twenty year has already been in past five percent.
• 15:24
  Speaker 2: So does that you think is that a high high
• 15:27
  Speaker 2: water mark for yields.
• 15:30
  Speaker 10: I think it will end up being close to it.
• 15:32
  Speaker 10: I think we'll probably be at this these levels for
• 15:34
  Speaker 10: a little while longer. But again, as we move into
• 15:37
  Speaker 10: twenty twenty four, the inflation outlook starts to get a
• 15:39
  Speaker 10: little bit better. The Federal reserve insin indicates that they're
• 15:43
  Speaker 10: more on pause. I do think that we'll see those
• 15:46
  Speaker 10: rates come down a little bit, maybe somewhere between a
• 15:49
  Speaker 10: quarter and fifty basis points, so they'll come down somewhat.
• 15:53
  Speaker 10: That'll alleviate some of the concern about the economic environment,
• 15:57
  Speaker 10: and I think we'll have some up side for twenty
• 16:01
  Speaker 10: twenty four overall.
• 16:03
  Speaker 1: Andy Russell, just real quick, you're based in Detroit. A
• 16:05
  Speaker 1: lot of your fellow Detroit folks are on strike here.
• 16:08
  Speaker 1: When are they gonna work something out here between the
• 16:09
  Speaker 1: auto companies and the audio?
• 16:11
  Speaker 10: Yeah, that's it is a very difficult question. Certainly, I
• 16:15
  Speaker 10: don't have much insight into the negotiations by any means,
• 16:18
  Speaker 10: but it is something that's a rolling pressure on activity
• 16:23
  Speaker 10: in the area. Fortunately, we didn't see much of that
• 16:27
  Speaker 10: in today's industrial productiony. Manufacturing activity still expanded, but certainly
• 16:32
  Speaker 10: the auto industry needs to see that resolved sooner rather
• 16:35
  Speaker 10: than later.
• 16:35
  Speaker 4: You guys have a football team this year.
• 16:37
  Speaker 10: That's a very good that's a good.
• 16:39
  Speaker 6: With the Lions.
• 16:40
  Speaker 4: Yeah, that's right, that's the NFL.
• 16:42
  Speaker 2: Met That's okay with me as long as we're just
• 16:45
  Speaker 2: talking about the Lions and the NFL.
• 16:47
  Speaker 1: Yes, that's all you need to know. Russell Price, thanks
• 16:49
  Speaker 1: so much for joining us. Russell Price is the chief economist
• 16:51
  Speaker 1: for Amerprice Financial. Joining us live in our Bloomberg Interactive
• 16:54
  Speaker 1: Brokers studio.
• 16:55
  Speaker 9: You're listening to the tape cans Are Live program Bloomberg
• 16:58
  Speaker 9: Markets weekdays ten am Eastern on Bloomberg Radio, the tune
• 17:02
  Speaker 9: in app, Bloomberg dot Com, and.
• 17:04
  Speaker 8: The Bloomberg Business App.
• 17:05
  Speaker 9: You can also listen live on Amazon Alexa from our
• 17:08
  Speaker 9: flagship New York station. Just say Alexa, play Bloomberg eleven thirty.
• 17:15
  Speaker 3: Talk about It, Diplomatic, full court Press.
• 17:18
  Speaker 1: US Secretary of s Anthony Blincoln in Israel for the
• 17:22
  Speaker 1: second time in like a week.
• 17:23
  Speaker 4: Now.
• 17:23
  Speaker 1: We've got news that tomorrow President Biden will be going
• 17:27
  Speaker 1: to Israel as well. Let's get the latest on kind
• 17:29
  Speaker 1: of what this means for this difficult situation. Henry Meyer
• 17:32
  Speaker 1: joins a season reporter for Bloomberg News based in Tel Aviv. Here, Henry,
• 17:37
  Speaker 1: it seems like the United States obviously the top, top
• 17:40
  Speaker 1: political folks making their way to Israel to try to,
• 17:43
  Speaker 1: I guess, improve a very difficult situation. What's the feeling
• 17:47
  Speaker 1: in Israel about President Biden coming over tomorrow.
• 17:51
  Speaker 11: Well, clearly it's seen first of all as a signal
• 17:55
  Speaker 11: of US support at this really critical time for Israel.
• 18:00
  Speaker 11: You know, they've been preparing now for a grand offensive
• 18:06
  Speaker 11: into Gaza, and the US has been pledging, you know,
• 18:09
  Speaker 11: military support and also saying that it supports Israel right
• 18:13
  Speaker 11: to defend itself in the face of a lot of
• 18:16
  Speaker 11: criticism now of the bombing which has taken place in
• 18:20
  Speaker 11: Gaza and concern about the civilian casualties that will result
• 18:25
  Speaker 11: if Israel does indeed decide to send grand troops into Gaza.
• 18:30
  Speaker 2: What is the status of that right now? I mean,
• 18:33
  Speaker 2: I imagine they're still all amassed at the border. They've
• 18:36
  Speaker 2: swept as many are pushed as many people from the
• 18:39
  Speaker 2: north of Gaza down to the south in order to
• 18:42
  Speaker 2: get in there.
• 18:45
  Speaker 6: Is it imminent?
• 18:46
  Speaker 2: I mean, are you hearing anything about the timing of
• 18:47
  Speaker 2: the invasion?
• 18:50
  Speaker 11: I mean, what we understand is that you know, it
• 18:53
  Speaker 11: is planned to take place imminently. I mean, clearly it's
• 18:57
  Speaker 11: not going to take place while these visits are occurring.
• 19:01
  Speaker 11: I mean, today we have the German Chancellor who's visiting
• 19:04
  Speaker 11: tomorrow President Biden. But you know, it is anticipated that
• 19:08
  Speaker 11: it could start pretty soon after that.
• 19:11
  Speaker 12: You know.
• 19:12
  Speaker 11: At the same time, you know, the US has also
• 19:15
  Speaker 11: been telling Israel, both privately and publicly, that it's got
• 19:20
  Speaker 11: to do everything to avoid civilian casualties. So you know,
• 19:24
  Speaker 11: it's not clear whether that will influence the type of
• 19:28
  Speaker 11: operation that Israel is going to conduct and go.
• 19:31
  Speaker 1: Henry, I guess you know here in the States, you know,
• 19:34
  Speaker 1: we're watching like everyone else here. One of the questions
• 19:37
  Speaker 1: that I think a lot of folks have is how
• 19:39
  Speaker 1: much collateral damage to civilians and others do you believe
• 19:44
  Speaker 1: that Israel's willing to inflict in an effort.
• 19:48
  Speaker 3: To achieve its stated military goals.
• 19:50
  Speaker 4: Is there a sense of in Israel how far they
• 19:52
  Speaker 4: really want to go?
• 19:54
  Speaker 11: I mean, everyone that you speak to here says that
• 19:57
  Speaker 11: you know, this is there in a new reality now,
• 20:01
  Speaker 11: and you know they have to go to the end.
• 20:03
  Speaker 11: They have to achieve the objective. The objective is to
• 20:06
  Speaker 11: dismantle Hamas militarily and its administrative role as well. In Gaza,
• 20:12
  Speaker 11: of course, you know, this does risk extremely high civilian casualties.
• 20:17
  Speaker 11: They're already three thousand almost Palestinians who've died in the bombing.
• 20:23
  Speaker 11: And although yes, they have succeeded in getting large numbers
• 20:27
  Speaker 11: of people to move south, still you know, there are
• 20:31
  Speaker 11: several hundred thousand left in the north, and there are
• 20:35
  Speaker 11: air strikes also taking place in the south as well,
• 20:39
  Speaker 11: so you know the risk of collateral damage is very real.
• 20:43
  Speaker 6: Why are there air strikes in the south.
• 20:44
  Speaker 2: I thought they moved everybody to the south to avoid
• 20:46
  Speaker 2: the air strikes in the north.
• 20:48
  Speaker 11: Correct. What we understand is that they said there were
• 20:53
  Speaker 11: targets that they had to focus on their hamas targets.
• 20:55
  Speaker 11: So it's not that they're bombing you know, as much
• 20:59
  Speaker 11: in the as in the North. But nonetheless that is
• 21:02
  Speaker 11: taking place. According to what we've.
• 21:03
  Speaker 1: Heard Henry, prior to this, that the the terrorist attack,
• 21:09
  Speaker 1: there was a fair about a division within Israel, you know,
• 21:12
  Speaker 1: profound division within Israel do in large part to Netyandu
• 21:17
  Speaker 1: and what he was trying to do with the judicial system.
• 21:20
  Speaker 1: To what extent post attack has the averages really do
• 21:24
  Speaker 1: they feel more united? Give us a sense of just
• 21:27
  Speaker 1: what it feels like on the ground in Israel talking
• 21:30
  Speaker 1: with you know, Israelis on on on on the street.
• 21:33
  Speaker 11: I mean, Israelis have put aside those differences for now.
• 21:37
  Speaker 11: I mean this is you know, a national emergency and
• 21:41
  Speaker 11: the country has come together. And you know, one of
• 21:44
  Speaker 11: the illustrations of that was the protest movement that you
• 21:48
  Speaker 11: know that was raising funds to protest against the judicial reforms.
• 21:52
  Speaker 11: You know, those funds have now been redirected to help
• 21:56
  Speaker 11: you know, the military effort. You have you know a
• 21:59
  Speaker 11: government now which is an emergency government which includes the opposition. So, yes,
• 22:04
  Speaker 11: the country has come together.
• 22:05
  Speaker 1: And Henry, it seems give us the latest reporting from
• 22:09
  Speaker 1: the West Bank. That's it seems quiet there. What's the
• 22:14
  Speaker 1: latest reporting.
• 22:16
  Speaker 11: Well, I mean it's quiet because the Israeli authorities the
• 22:19
  Speaker 11: same day that the terrorist attacks happened, you know, launched
• 22:24
  Speaker 11: a massive clampdown, security clampdown. So they've been you know,
• 22:27
  Speaker 11: carrying out mass arrests. They have been limiting, you know,
• 22:31
  Speaker 11: the movement of people within the West Bank. So you know,
• 22:35
  Speaker 11: they knew that that was potentially going to be another
• 22:38
  Speaker 11: flash point that you know, they could be a spill
• 22:40
  Speaker 11: over into the West Bank, and so they have taken
• 22:42
  Speaker 11: very very tough measures to prevent that from happening.
• 22:47
  Speaker 2: What is the value, Henry of the Israelis allowing Ismael
• 22:53
  Speaker 2: Hanayah to continue to live in Katar.
• 22:57
  Speaker 6: I mean, we talked with Bobby Ghosh.
• 22:58
  Speaker 2: Yesterday who told us so this gentlemen, he's the leader
• 23:00
  Speaker 2: of Hamas, and he lives in Qatar, and he is alive.
• 23:05
  Speaker 2: And so yesterday we were talking with Bobby Gosh who
• 23:08
  Speaker 2: pointed out that the Arab States armies are not serious,
• 23:13
  Speaker 2: you know, fighting groups. And I imagine if Israel, if
• 23:17
  Speaker 2: Masad wanted to go in there and take out Hanaya,
• 23:20
  Speaker 2: it would be no problem.
• 23:21
  Speaker 6: Why don't they do that?
• 23:23
  Speaker 8: Well?
• 23:23
  Speaker 11: I do think that, you know, there is a benefit
• 23:26
  Speaker 11: I think still having some kind of interlocutor. There are,
• 23:30
  Speaker 11: for example, talk taking place now and trying to get
• 23:34
  Speaker 11: hostages out freed. You know, more than two hundred hostages
• 23:40
  Speaker 11: as ready, hostage is being held in Gaza. And apart
• 23:43
  Speaker 11: from that, you know, there's so much criticism now of
• 23:47
  Speaker 11: what Israel is doing in the Arab world that I
• 23:50
  Speaker 11: just don't think that they would want to do such
• 23:52
  Speaker 11: an inflammatory thing as that.
• 23:55
  Speaker 2: I also wonder, you know, you're in a unique position
• 23:57
  Speaker 2: as a reporter, Henry, you were based in Moscow before this,
• 24:03
  Speaker 2: even god, I think a master's degree at Moscow University.
• 24:06
  Speaker 2: So you spent a lot of time covering Russia, covering
• 24:09
  Speaker 2: Vladimir Putin and the beginning of the war in Ukraine.
• 24:14
  Speaker 2: How does this play into all of that, because my
• 24:17
  Speaker 2: first thought was when I saw that Hamas had, you know,
• 24:22
  Speaker 2: committed these attacks, is this draws so much attention away
• 24:26
  Speaker 2: from what Vladimir Putin is doing in Ukraine.
• 24:30
  Speaker 11: Yeah, I mean, I think you're absolutely right. The Russians
• 24:33
  Speaker 11: see this as an opportunity. They see it as something
• 24:37
  Speaker 11: which is going to draw a US attension away from Ukraine.
• 24:41
  Speaker 11: I mean, there was already a sense that, you know,
• 24:44
  Speaker 11: the focus was switching. You saw that when eight Ukraine
• 24:48
  Speaker 11: got held up in Congress, and now you know, the
• 24:53
  Speaker 11: sense is that, well, the US is not going to
• 24:54
  Speaker 11: be able to focus on two things at the same time,
• 24:57
  Speaker 11: that the focus is going to be on making sure
• 25:00
  Speaker 11: that you know, Israel gets the military assistance it needs,
• 25:03
  Speaker 11: and therefore Ukraine is not going to get as much
• 25:07
  Speaker 11: help as it was getting in the past, so very
• 25:11
  Speaker 11: much so. Yeah, from a Russian perspective, they see the
• 25:14
  Speaker 11: tide turning in their favor.
• 25:16
  Speaker 1: Henry, what do you believe or what does the averages
• 25:20
  Speaker 1: rarely believe that they will get from President Biden tomorrow.
• 25:24
  Speaker 1: Is this is simply a show of solidarity or is
• 25:26
  Speaker 1: there anything particular that you think is youre really is
• 25:29
  Speaker 1: going to ask of the President?
• 25:33
  Speaker 11: Well, I mean, I think the fact of his coming
• 25:35
  Speaker 11: here is going to be seen, you know, as making
• 25:39
  Speaker 11: sure that Israel's enemies know that the US stands with Israel,
• 25:43
  Speaker 11: and that is particularly aimed at Iran. Of course, you know,
• 25:47
  Speaker 11: the risk now that everyone is concerned about and that
• 25:50
  Speaker 11: the US particularly has been trying to sort of counter
• 25:54
  Speaker 11: that threat, is of this conflict spreading, spreading to the region,
• 25:58
  Speaker 11: and specifically if Hezbollah, which is backed by Iran, launches
• 26:04
  Speaker 11: you know, major missile attacks from Lebanese territory into Israel,
• 26:08
  Speaker 11: you could see this this war becoming a much much
• 26:11
  Speaker 11: wider war in the region, potentially also drawing Iran into it.
• 26:17
  Speaker 2: Is he going He's going to meet with King Abdullah,
• 26:19
  Speaker 2: I know in Jordan and possibly elseci in Egypt as well.
• 26:24
  Speaker 6: Do they stand with us?
• 26:26
  Speaker 2: Can those two countries be counted on as US allies?
• 26:29
  Speaker 2: Or I mean I believe they talked to putin first.
• 26:33
  Speaker 11: Those two countries, you know, have been warning about the
• 26:37
  Speaker 11: risk the impact that would follow if Israel launches a
• 26:42
  Speaker 11: large scale offensive in Gaza. They're very concerned about that.
• 26:45
  Speaker 11: And you know, Sexuary Blincoln crisscrossed the region just in
• 26:49
  Speaker 11: the last few days to try and you know, enlift
• 26:52
  Speaker 11: Arab support for Israel's actions, but he was not successful.
• 26:57
  Speaker 1: All right, Henry, thank you so much for your reporting there.
• 26:59
  Speaker 1: Henry Meyer, Senior reporter Economy and Government for Bloomberg News.
• 27:02
  Speaker 8: And you're listening to the team.
• 27:04
  Speaker 9: Can's a live program Bloomberg Markets weekdays at ten am Eastern.
• 27:08
  Speaker 8: On Bloomberg dot Com, the iHeartRadio.
• 27:11
  Speaker 9: App, and the Bloomberg Business app, or listen on demand
• 27:13
  Speaker 9: wherever you get your podcasts.
• 27:17
  Speaker 1: Matt Lila, Paul Sweeney live here and I Bloomberg an
• 27:19
  Speaker 1: Active Broker studio.
• 27:20
  Speaker 2: Also, you know what I do when I get to cash, yep,
• 27:23
  Speaker 2: when I have a fair amount sitting around on my
• 27:26
  Speaker 2: bank balance, you spend it.
• 27:28
  Speaker 6: Of course, But how do I spend it?
• 27:30
  Speaker 4: So motorcycle.
• 27:31
  Speaker 2: There are things that I'm always looking for a good
• 27:34
  Speaker 2: place to buy Clinch boots engineering boots made with shinky
• 27:38
  Speaker 2: horse hide, the kind you can only get out of
• 27:41
  Speaker 2: Japan from one tannery there that makes the best horse side.
• 27:45
  Speaker 6: In the world.
• 27:45
  Speaker 2: Or if I'm looking for jeans, I'll go with Samurai denim,
• 27:49
  Speaker 2: and I like twenty five ounce Samurai blue jeans made
• 27:54
  Speaker 2: the old fashioned way on looms that Americans sold the
• 27:58
  Speaker 2: Japanese cent Go.
• 28:00
  Speaker 4: All right, so this is Gore.
• 28:02
  Speaker 2: I like, uh, the real McCoy's the best place to
• 28:05
  Speaker 2: get flight jackets like A two's or B three's that
• 28:10
  Speaker 2: are like perfect compared to the old ones, only much
• 28:14
  Speaker 2: higher quality in terms of the leather and stitching. All
• 28:17
  Speaker 2: of this stuff comes from Japan, So how do I
• 28:19
  Speaker 2: get it?
• 28:20
  Speaker 4: Racketon?
• 28:20
  Speaker 6: That's right, Boom, there's.
• 28:22
  Speaker 2: A website that I use to buy all of this stuff.
• 28:25
  Speaker 2: Now I've grown up saying Rakuton, but maybe it's Racketon.
• 28:29
  Speaker 3: Let's ask our next.
• 28:30
  Speaker 6: Yeah, let's do that.
• 28:31
  Speaker 1: Julie Van Allen, she's a chief revenue officer for Racketon.
• 28:34
  Speaker 1: Who pronounces it right.
• 28:35
  Speaker 13: Julie, Racketon is the way we go?
• 28:40
  Speaker 8: All right?
• 28:40
  Speaker 2: Well, I've been using it for years and Paul has
• 28:42
  Speaker 2: never heard of it. So to us about the other
• 28:45
  Speaker 2: things that you can do on your website because you're
• 28:47
  Speaker 2: the chief revenue officer there, which I guess means that
• 28:51
  Speaker 2: you're in charge of making more and more money and
• 28:54
  Speaker 2: I only use it for maybe one niche part of
• 28:57
  Speaker 2: your business.
• 28:57
  Speaker 6: So what is racketin?
• 29:00
  Speaker 7: So yeah, and my.
• 29:01
  Speaker 13: Job is just making money. It's really about ensuring that
• 29:04
  Speaker 13: all of the merchants, so the brands and retailers who
• 29:08
  Speaker 13: use our site to have access to the loyal shoppers
• 29:11
  Speaker 13: who go to racketin to start their purchases have the
• 29:15
  Speaker 13: best experience possible. So effectively, Racketin offers cash back to
• 29:19
  Speaker 13: shoppers and helps brand in retailers engender loyalty through the
• 29:24
  Speaker 13: shopper base who uses racketin to shop for everyday purchases.
• 29:28
  Speaker 1: So give us an example of Juliet kind of a
• 29:30
  Speaker 1: typical retailer that uses your site to reach your customer base.
• 29:35
  Speaker 13: We range a vast array of categories from a parol
• 29:40
  Speaker 13: to footwear. So you have your department stores, you have
• 29:42
  Speaker 13: luxury department stores, so Macy's, the Bloomingdale's, we have direct
• 29:47
  Speaker 13: to consumer brands. We have over thirty five hundred brands
• 29:51
  Speaker 13: on the site. We also are across the travel vertical
• 29:55
  Speaker 13: as well. So really hard pressed for shoppers, for consumers
• 29:59
  Speaker 13: to come to our site and not find what they're
• 30:01
  Speaker 13: looking for.
• 30:03
  Speaker 1: So give us a sense of how the consumer's behaving
• 30:05
  Speaker 1: to We had some really strong retail sales numbers reported
• 30:08
  Speaker 1: by today, and what are you finding on your platform?
• 30:11
  Speaker 4: How's the consumer these days?
• 30:14
  Speaker 13: Yeah, I mean your question is actually a great segue
• 30:17
  Speaker 13: because we see such a vast array of purchases from
• 30:20
  Speaker 13: across a number of categories, and we've been tracking the
• 30:22
  Speaker 13: consumer sentiment and what they've been buying over the last
• 30:26
  Speaker 13: couple of years, of course, which has been pivoting and
• 30:29
  Speaker 13: changing constantly given the economic conditions. But what we're seeing
• 30:34
  Speaker 13: right now is, of course the CPI rows a little bit,
• 30:38
  Speaker 13: which means that consumers are still feeling tighter budgets due
• 30:43
  Speaker 13: to inflation, especially since that core inflation is what's impacting
• 30:48
  Speaker 13: folks student loan debt repayments resuming, so that's still a burden.
• 30:54
  Speaker 13: But what we're seeing now, especially given the raid the
• 30:58
  Speaker 13: retail trade sales have gone on a little bit, is
• 31:00
  Speaker 13: that they're still willing to shop, and they're still willing
• 31:04
  Speaker 13: to shop using discretionary spending as well. So while year
• 31:09
  Speaker 13: to date there's been this trade down effect, whereas if
• 31:12
  Speaker 13: you shopped at a high end department store, perhaps you've
• 31:16
  Speaker 13: been shopping at more of a discount department store year
• 31:18
  Speaker 13: to date. That will continue because discount steals value is
• 31:23
  Speaker 13: definitely going to be central to the consumer mindset through
• 31:27
  Speaker 13: the holidays. But it's interesting already to see a willingness
• 31:32
  Speaker 13: to increase discretionary spending start to uptick, which is something
• 31:36
  Speaker 13: that we would anticipate to see throughout the rest of
• 31:38
  Speaker 13: Q four.
• 31:39
  Speaker 2: How are your customers paying for the stuff that they're buying?
• 31:42
  Speaker 2: I mean, imagine they could do that with a with.
• 31:45
  Speaker 6: A credit card or the debit card.
• 31:48
  Speaker 2: There are a million other ways nowadays, with PayPal and
• 31:50
  Speaker 2: Venmo and buy now, pay later.
• 31:52
  Speaker 6: How are you seeing that breakdown?
• 31:55
  Speaker 13: So at Racketon, we don't actually facilitate the purchase. We
• 31:59
  Speaker 13: facilitate the consumer engaging with the brand of their choosing.
• 32:03
  Speaker 13: So you would start your shopping trip at Racketon, But
• 32:06
  Speaker 13: say you're shopping at Macy's. You would shop at Macy's
• 32:09
  Speaker 13: just as you would if you went to their site directly.
• 32:12
  Speaker 13: And of course most brands and retailers these days are
• 32:15
  Speaker 13: offering an array of ways to shop and buy.
• 32:19
  Speaker 2: No, but what is the selling point that, Like, why
• 32:21
  Speaker 2: wouldn't I just go to Macy's directly?
• 32:23
  Speaker 6: Why do I make a stop at Racketin?
• 32:26
  Speaker 8: Yeah?
• 32:26
  Speaker 13: So Racketin is a place where you get cash back
• 32:29
  Speaker 13: on your purchases. So we have a hugely loyal base
• 32:33
  Speaker 13: of shoppers who shop more frequently, who shop across different
• 32:39
  Speaker 13: categories when they can find an offer that is enticing
• 32:43
  Speaker 13: for them. And I think what's so interesting to a
• 32:45
  Speaker 13: lot of brands, especially going into a season like this
• 32:48
  Speaker 13: where you have consumers who are looking for value. You
• 32:51
  Speaker 13: have a lot of brands who aren't interested in the
• 32:54
  Speaker 13: discount space, who aren't interested in offering coupons. There's brand
• 32:58
  Speaker 13: devaluation associated with these things. But at Racketon, this is
• 33:02
  Speaker 13: really an incentive where consumers can come and get an
• 33:05
  Speaker 13: exciting offer via cash back to shop more, buy higher
• 33:09
  Speaker 13: value cart sizes with these brands and shop more frequently
• 33:12
  Speaker 13: through the holidays and feel really good about what they're
• 33:15
  Speaker 13: doing because they're getting cash back.
• 33:17
  Speaker 1: Well, what are some of the retail partners that you
• 33:19
  Speaker 1: work with, what are they saying about this holiday season?
• 33:22
  Speaker 1: Coming up here? Because again, the retail sales today look
• 33:24
  Speaker 1: prett darn strong.
• 33:27
  Speaker 13: Yeah, they are strong, and they're going to continue to
• 33:29
  Speaker 13: be strong. But I think the thing that everyone is
• 33:32
  Speaker 13: aware of is that consumers are going to be looking
• 33:35
  Speaker 13: for the best bang for their buck this holiday, and
• 33:38
  Speaker 13: for retailers this year, especially coming out of the last
• 33:42
  Speaker 13: couple of years where it was there the focus was
• 33:46
  Speaker 13: on top line spend. It was just ensuring sales, ensuring
• 33:50
  Speaker 13: that the customer base that was loyal to these brands
• 33:52
  Speaker 13: continued to shop with them through hard times. Gross margin
• 33:57
  Speaker 13: kind of went out the window for the last couple
• 33:59
  Speaker 13: of years. But this year to date it's been a
• 34:02
  Speaker 13: bit of a back to health focus for most most
• 34:05
  Speaker 13: retailers and brands. But what I will say that we're
• 34:08
  Speaker 13: hearing from nearly all categories and all brands and retailers
• 34:12
  Speaker 13: is that they realize that this is going to be
• 34:15
  Speaker 13: a very very competitive shopping season where discounts and value
• 34:20
  Speaker 13: adds are going to be central to what consumers are
• 34:22
  Speaker 13: looking for to make their dollars go as far as possible.
• 34:26
  Speaker 13: So brands are really focused on how to make sure
• 34:29
  Speaker 13: to get the best deals in front of the best
• 34:31
  Speaker 13: shoppers and meet them where they are this holiday.
• 34:34
  Speaker 3: So what's what categories are really moving these days?
• 34:38
  Speaker 1: I mean when I go into the holidays, I always
• 34:41
  Speaker 1: kind of hear electronics things like that.
• 34:43
  Speaker 4: But what's what are consumers really looking for these days?
• 34:47
  Speaker 13: Of course, I mean, nothing's going to change in terms
• 34:50
  Speaker 13: of what are giftable categories that that consumers will be
• 34:54
  Speaker 13: shopping this holiday. Certainly electronics, certainly apparel, and certainly luxury.
• 35:01
  Speaker 13: And I think that that's actually one of the more
• 35:03
  Speaker 13: interesting categories right now, because luxury tends to be one
• 35:08
  Speaker 13: of those categories that doesn't really see a lot of
• 35:11
  Speaker 13: impact from changes in the economy. And we kind of
• 35:14
  Speaker 13: affectionately say that that's because the rich stay rich, but
• 35:19
  Speaker 13: who are actually seeing some changes and the core shoppers
• 35:23
  Speaker 13: who shop luxury typically, Which is a good lesson to
• 35:27
  Speaker 13: learn for really any brand heading into Q four, which
• 35:30
  Speaker 13: is to say that with current economic challenges and consumers
• 35:36
  Speaker 13: making different sorts of decisions as to where they spend
• 35:38
  Speaker 13: their dollars, they need to figure out who is buying
• 35:42
  Speaker 13: their products these days. What are the younger what are
• 35:45
  Speaker 13: the gen zers spending on? And how can they attract
• 35:49
  Speaker 13: an engender loyalty to new shopper bases and categories who
• 35:53
  Speaker 13: might not have been the traditional focus of their marketing spend.
• 35:58
  Speaker 1: All right, Julie, thank you so much for joining us.
• 36:00
  Speaker 1: Really interesting conversation. Julie van Ullen. She is the chief
• 36:04
  Speaker 1: revenue officer for Rocketon.
• 36:07
  Speaker 9: You're listening to the tape cat'sur live program Bloomberg Markets
• 36:11
  Speaker 9: weekdays at ten am Eastern on Bloomberg Radio, the tune
• 36:14
  Speaker 9: in alf, Bloomberg dot Com, and the.
• 36:16
  Speaker 8: Bloomberg Business app.
• 36:17
  Speaker 9: You can also listen live on Amazon Alexa from our
• 36:20
  Speaker 9: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 36:26
  Speaker 6: I'm Tucker and I are.
• 36:27
  Speaker 1: Proud natives of New Jersey, so that means we know malls.
• 36:32
  Speaker 4: Yeah, we know shopping malls.
• 36:34
  Speaker 1: You know, when I lived in some A, New Jersey,
• 36:36
  Speaker 1: right across the street was the Short Hills.
• 36:39
  Speaker 4: Mall, which is a nice mall.
• 36:40
  Speaker 6: That's the mall where you can get valley parking.
• 36:43
  Speaker 2: Yes, ways, I can get valley parking at the Westchester.
• 36:46
  Speaker 2: I could get valley parking at the City Center in Columbus.
• 36:48
  Speaker 6: Are you a mall guy.
• 36:49
  Speaker 2: I'm a lover of malls. Yes, I'm both indoor and outdoor.
• 36:52
  Speaker 2: But I reject the notion that you know more about
• 36:56
  Speaker 2: malls being from New Jersey than I do being from
• 36:59
  Speaker 2: a high close.
• 37:01
  Speaker 6: You don't you you live near malls, but you don't
• 37:04
  Speaker 6: go to them. Have you been to the American Dream Mall?
• 37:07
  Speaker 2: No?
• 37:07
  Speaker 6: That all right?
• 37:08
  Speaker 2: If that live near the most impressive mall probably in
• 37:11
  Speaker 2: the whole country and you've not been.
• 37:13
  Speaker 4: That's a good point. That's a good point.
• 37:14
  Speaker 3: Our next guest knows about this mall thing.
• 37:16
  Speaker 4: Donna Blair.
• 37:17
  Speaker 1: She's a chief a COEO of Pacific Retail Capital Partners,
• 37:20
  Speaker 1: and these folks there they invest in malls and all
• 37:23
  Speaker 1: kinds of retail stuff.
• 37:24
  Speaker 4: She joins us here.
• 37:25
  Speaker 1: Hey, Donna again, I'm a huge fan of the mall
• 37:27
  Speaker 1: kid of the eighties, all that kind of stuff. Where
• 37:30
  Speaker 1: are we with the American shopping mall today? A lot
• 37:32
  Speaker 1: of folks were saying, you know, particularly with the pandemic,
• 37:35
  Speaker 1: that business is dead.
• 37:36
  Speaker 4: Where are we with that?
• 37:38
  Speaker 8: No?
• 37:38
  Speaker 12: Good morning, Paul, Good morning Matt. Thank you for having me.
• 37:42
  Speaker 12: I think that at Pacific Retail we have a different
• 37:45
  Speaker 12: opinion about malls. You know, we look at the malls
• 37:48
  Speaker 12: not just as is where is, but really where are
• 37:51
  Speaker 12: they going? And the future of the mall is not
• 37:54
  Speaker 12: necessarily all retail. It really is this mall to mixed
• 37:57
  Speaker 12: juice approach where you look at the real estate, look
• 38:00
  Speaker 12: at the demographics, but more importantly you look at the psychographics.
• 38:03
  Speaker 12: You know, why is the mall important? Is it from
• 38:07
  Speaker 12: a retail perspective or really is it more about creating
• 38:10
  Speaker 12: community and lifestyle. And our focus at PUERCP is really
• 38:15
  Speaker 12: being strategic in that approach and trying to really reposition
• 38:18
  Speaker 12: them all into more of a mixed U sasset that
• 38:21
  Speaker 12: is going to have to evolve from just retail to
• 38:24
  Speaker 12: being more that lifestyle and community.
• 38:28
  Speaker 1: So do you guys focus on the enclosed mall or
• 38:31
  Speaker 1: the open air mall? Because I've had some matt and
• 38:34
  Speaker 1: I've had some retail investors come in there and say, Hey,
• 38:36
  Speaker 1: the open air mall, There's a lot we can do
• 38:38
  Speaker 1: with that kind of business.
• 38:40
  Speaker 4: How do you guys view the market?
• 38:42
  Speaker 12: Sure, we focus on both. I would say a majority
• 38:45
  Speaker 12: of our centers are in closed shopping centers. But when
• 38:48
  Speaker 12: you look at the plethor or real estate that an
• 38:51
  Speaker 12: enclosed mall has in terms of the parking fields, the
• 38:53
  Speaker 12: anchor boxes, it actually has a lot of real estate
• 38:57
  Speaker 12: that can be repositioned and so that a bil to
• 39:00
  Speaker 12: kind of pivot and change and evolve the asset is
• 39:04
  Speaker 12: super important in terms of making sure that it's relevant.
• 39:07
  Speaker 12: There will always be retail as part of a mall,
• 39:10
  Speaker 12: but how do you actually reposition it? And they're a
• 39:12
  Speaker 12: little bit more complicated when you look at the enclosed
• 39:15
  Speaker 12: malls because you've got reciprocal easement agreements between the owners
• 39:19
  Speaker 12: of the mall and then the anchor tenants, some of
• 39:22
  Speaker 12: your major tenants, and also the municipalities, so they're going
• 39:25
  Speaker 12: to govern everything. What are the uses, what are the
• 39:27
  Speaker 12: parking availabilities, the parking counts, how tall, how wide? And
• 39:32
  Speaker 12: it really is how do you strategically unlock all of
• 39:36
  Speaker 12: those encumberances to create value in the real estate and
• 39:40
  Speaker 12: reposition it. And that's how we're really focused on the
• 39:42
  Speaker 12: malls centric assets that we own, is just to do
• 39:46
  Speaker 12: that to unlock their actual value of potential for us
• 39:50
  Speaker 12: as investors and owners, but more importantly for the community
• 39:53
  Speaker 12: and the consumers too.
• 39:55
  Speaker 2: What are the main complaints you know, or what do
• 39:59
  Speaker 2: you aim to change compared to a typical mall, Because
• 40:03
  Speaker 2: as I said, you know, I'm a huge fan. I
• 40:05
  Speaker 2: love these indoor shopping centers and outdoor you know, communities
• 40:09
  Speaker 2: as well, but there are issues like they all seem
• 40:13
  Speaker 2: to have the exact same retailers, which I guess those
• 40:16
  Speaker 2: would be your anchors, right, I don't want to go
• 40:18
  Speaker 2: to I went to a mall in Berlin and noticed
• 40:21
  Speaker 2: that they had the same retailers as the mall in Westchester.
• 40:24
  Speaker 2: I don't need to have a Gucci, a Coach and
• 40:26
  Speaker 2: a Nimh and Marcus and every mall I go to.
• 40:28
  Speaker 6: You know, so how do you how do you make
• 40:31
  Speaker 6: those kind of changes?
• 40:33
  Speaker 12: No, for sure, I think what we're focusing a lot
• 40:35
  Speaker 12: is on that dynamic mix. You know, there are less
• 40:38
  Speaker 12: national tenants that are actually in the business these days,
• 40:41
  Speaker 12: and so right sizing the amount of retail and then
• 40:44
  Speaker 12: creating that diversification is important. Local is key. We spend
• 40:48
  Speaker 12: a lot of time in our leasing strategy really focusing
• 40:52
  Speaker 12: in on local businesses, whether they're mom and pop restaurants
• 40:56
  Speaker 12: or whether they're local retailers, and we put them together
• 40:59
  Speaker 12: and collect so that you can really get that local flavor.
• 41:02
  Speaker 12: We find one the community's more interested in that because
• 41:05
  Speaker 12: to your point, it's something new, it's something different, You're
• 41:08
  Speaker 12: not seeing it everywhere, but more importantly is that the
• 41:12
  Speaker 12: community is committed to helping their own to actually help
• 41:15
  Speaker 12: bring those businesses to life and to support them. So
• 41:18
  Speaker 12: that's a really important focus. You're seeing obviously a lot
• 41:21
  Speaker 12: more food and beverage and entertainment because the experiential aspect
• 41:26
  Speaker 12: of the shopping center is really super important and is
• 41:31
  Speaker 12: the way that we are going to be able to
• 41:33
  Speaker 12: create that experience where our consumers come back over and
• 41:36
  Speaker 12: over and find something different. It's all about that activation,
• 41:39
  Speaker 12: the experience and then that diversification of your mix.
• 41:43
  Speaker 4: Done.
• 41:44
  Speaker 1: With the cost of capital rising dramatically over the past
• 41:46
  Speaker 1: twelve to eighteen months, what are you guys doing in
• 41:48
  Speaker 1: terms of your acquisition activities?
• 41:50
  Speaker 4: That kind of made the economics a lot more.
• 41:53
  Speaker 12: Difficult certainly, you know, the investor pool is a lot different,
• 41:57
  Speaker 12: and we're not going to traditional institutional investors. You know,
• 42:01
  Speaker 12: we're really seeing a lot of individuals from the high
• 42:05
  Speaker 12: net worth category family businesses enter the market. We have
• 42:09
  Speaker 12: actually found a little sweet spat spot in distressed. You
• 42:13
  Speaker 12: were talking about New Jersey when you opened up, and
• 42:15
  Speaker 12: we just recently acquired in may Bridgewater Commons and you know,
• 42:20
  Speaker 12: this is an asset that has really strong demographics, really
• 42:23
  Speaker 12: strong psychographics, but really wasn't a distressed state.
• 42:27
  Speaker 6: We were stress.
• 42:28
  Speaker 4: How about the living stone mall.
• 42:31
  Speaker 7: The living st mall?
• 42:33
  Speaker 12: I mean, are those are tougher assets to really reposition?
• 42:38
  Speaker 12: Focusing on an asset like a Bridgewater Commons, we're really
• 42:42
  Speaker 12: able to capitalize on the strong demographics there and be
• 42:45
  Speaker 12: able to reposition it. So we look at a strategy
• 42:48
  Speaker 12: that is more mall to mixed use and looking how
• 42:51
  Speaker 12: do we bring densifications. So that's residential, that could be
• 42:54
  Speaker 12: for cell product, for rent product, it could be market rate,
• 42:57
  Speaker 12: it could be senior living, and how do we really
• 43:00
  Speaker 12: blend all of those different types of density strategies to
• 43:04
  Speaker 12: drive traffic, but more importantly, to drive lifestyle back to
• 43:07
  Speaker 12: them all.
• 43:08
  Speaker 1: Hey Donald, we had some really good retail sales numbers
• 43:10
  Speaker 1: out today. What are your clients? What are they saying
• 43:14
  Speaker 1: about this important holiday season coming up?
• 43:18
  Speaker 12: Sure, I think that we're all a little bit surprised
• 43:20
  Speaker 12: by the sales this morning, especially when you look at
• 43:23
  Speaker 12: the core sector. You know three times what the projections were.
• 43:26
  Speaker 12: I think we have to caution ourselves. The cost of
• 43:30
  Speaker 12: goods are higher, and so when we look at the
• 43:32
  Speaker 12: point seven percent increase you know that there is still
• 43:36
  Speaker 12: some consumer resilience, which I think is super important looking
• 43:40
  Speaker 12: into holiday, but there also is there's a lot of
• 43:44
  Speaker 12: caution headwinds that are happening here. Credit card debt is climbing,
• 43:49
  Speaker 12: we have a lot of defaults. You know, we're seeing
• 43:51
  Speaker 12: the highest and eleven years. We're also seeing that student
• 43:55
  Speaker 12: loans are now having to be paid, and so that's
• 43:58
  Speaker 12: going to put pressure on holiday sales. I think that
• 44:02
  Speaker 12: when it comes to gift giving, people are still going
• 44:05
  Speaker 12: to be spending the money, but they're going to be
• 44:07
  Speaker 12: looking for the values, and they're also going to change
• 44:09
  Speaker 12: their trends. They're not just going to be from Black Friday,
• 44:13
  Speaker 12: you know, until the day after sales. That starting earlier,
• 44:17
  Speaker 12: and certainly on this on last week, we saw that growth.
• 44:21
  Speaker 4: All Right, Donna, thank you very much for joining us.
• 44:23
  Speaker 1: Really appreciate getting some of your thoughts there on the
• 44:25
  Speaker 1: greater retail business, the shopping mall business.
• 44:28
  Speaker 9: You're listening to the tape cans our live program, Bloomberg
• 44:31
  Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 44:35
  Speaker 9: tune in app, Bloomberg dot Com, and.
• 44:37
  Speaker 8: The Bloomberg Business App.
• 44:38
  Speaker 9: You can also listen live on Amazon Alexa from our
• 44:41
  Speaker 9: flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.
• 44:47
  Speaker 4: In the deeal front.
• 44:48
  Speaker 1: Today, Wyndham Hotels and Resorts rejected a cakeover offer from
• 44:51
  Speaker 1: Choice Hotels, saying the proposal under values the company's potential
• 44:55
  Speaker 1: for growth and would be subject to a linking regulatory review.
• 44:58
  Speaker 1: Let's break down this deal or non deal with Jody Lorii.
• 45:02
  Speaker 1: She is the credit analyst with Bloomberg Intelligence. SOO follows
• 45:04
  Speaker 1: a hotel industry, all the leisure industries from a credit perspective. Jody,
• 45:09
  Speaker 1: thanks so much for joining us via zoom Here. What's
• 45:11
  Speaker 1: going on between Choice and Windom? Are we going to
• 45:13
  Speaker 1: get a deal done here? What's going on?
• 45:16
  Speaker 6: Yes?
• 45:17
  Speaker 14: So, I mean, you know, Wyndham kind of came back
• 45:19
  Speaker 14: to Choice and said, hey, listen, we are The words
• 45:22
  Speaker 14: that they used were it was underwhelming, highly conditional, and
• 45:26
  Speaker 14: subject to significant business regulatory and execution risk. And the
• 45:30
  Speaker 14: way that I read that, and my initial take on
• 45:32
  Speaker 14: the deal was, you know, if they were going to
• 45:34
  Speaker 14: go with the financing that they proposed, which was half cash,
• 45:37
  Speaker 14: you're talking about four billion dollars that likely would come
• 45:40
  Speaker 14: from the debt markets. We put that into perspective about
• 45:43
  Speaker 14: where the debt markets are now and where interest rates are.
• 45:46
  Speaker 14: I don't know if you necessarily would like the cost
• 45:50
  Speaker 14: of financing this sort of transaction. Considering where cash flows
• 45:55
  Speaker 14: could potentially be for the two.
• 45:56
  Speaker 2: Companies, what do you think the cost of financing would be?
• 46:00
  Speaker 2: Are we talking like Carnival cruise pandemic level costs?
• 46:05
  Speaker 7: No, No, I don't.
• 46:06
  Speaker 14: I don't think they would be that high. We're we're
• 46:08
  Speaker 14: looking at two companies. So choice is triple B minus
• 46:12
  Speaker 14: by Moody's and SMP or BA A three by Moody's
• 46:14
  Speaker 14: and triple B minus by S and P. And then
• 46:17
  Speaker 14: you have Window, which is one notch lower, so it's
• 46:19
  Speaker 14: the highest notch in high yield, which is b BA
• 46:21
  Speaker 14: one double B plus. And so those two companies together
• 46:25
  Speaker 14: would probably command somewhere closer to to what we've been
• 46:29
  Speaker 14: seeing across you know, standards sort of high healed rates.
• 46:33
  Speaker 6: Now, the question is we don't watch junk dead all day.
• 46:35
  Speaker 6: What's the number how much?
• 46:39
  Speaker 14: Well, it depends what the choice actually gets done, because
• 46:41
  Speaker 14: the interest rates have been changing all the time. I mean,
• 46:43
  Speaker 14: I think I think you know the key is nine question.
• 46:47
  Speaker 6: Is double digits.
• 46:49
  Speaker 14: No, No, I think it's a little bit less than
• 46:51
  Speaker 14: nine percent at this point. I mean, I think, you know,
• 46:53
  Speaker 14: if if we're talking about okay, so we're saying it's
• 46:56
  Speaker 14: a four billion dollar company, I think the big question
• 46:59
  Speaker 14: is for a compny like this, you say, okay, four
• 47:01
  Speaker 14: billion dollar company, they or four billion dollars of debt
• 47:07
  Speaker 14: rather for a company that combined would be about three
• 47:10
  Speaker 14: billion dollars in revenue. You know, it's it's sort of
• 47:15
  Speaker 14: like a weird scenario because they're like, Okay, what would
• 47:19
  Speaker 14: investors really feel comfortable with that? Would they not? You know,
• 47:21
  Speaker 14: are we are we looking at like a seven or
• 47:23
  Speaker 14: eight percent rate like we saw last week with with Norwegian?
• 47:28
  Speaker 14: Are we looking you know, is it going to be
• 47:30
  Speaker 14: a little bit better than that because they're a little
• 47:32
  Speaker 14: bit higher rated. I think it would depend, you know,
• 47:35
  Speaker 14: where they decided to go in the you know, in
• 47:37
  Speaker 14: the yield curve. Although the yield curve right now is
• 47:41
  Speaker 14: so flat that doesn't matter.
• 47:42
  Speaker 1: So JORDI, what's what's what's going on in the hotel
• 47:44
  Speaker 1: space or why why would why does choice think that
• 47:48
  Speaker 1: this is the deal to do here?
• 47:52
  Speaker 14: So I think what's happening with Choice right now is
• 47:55
  Speaker 14: is you know, they're they're in a spot where they've
• 47:57
  Speaker 14: improved their balance sheet, they are starting to generate cash.
• 48:01
  Speaker 14: They're seeing that the larger hotel companies such as the
• 48:04
  Speaker 14: Marios and the Hilton's are very interested in their space.
• 48:06
  Speaker 14: You know, they have sort of a commanding presence in
• 48:08
  Speaker 14: the extended stay and budget area. That's where Wyndham operates primarily.
• 48:13
  Speaker 14: That's where Choice operates primarily. Well, now Marriott and Hilton
• 48:16
  Speaker 14: are saying we want a piece of the pie, and
• 48:18
  Speaker 14: so they've been aggressively expanding into that area. And I
• 48:21
  Speaker 14: think Choice is trying to stay ahead of that conversation
• 48:24
  Speaker 14: by looking at Wyndham and saying, hey, here's two very
• 48:26
  Speaker 14: large companies. Let's also be a very large company to
• 48:29
  Speaker 14: compete with them.
• 48:31
  Speaker 1: So the budget hotel space, how is that different from
• 48:34
  Speaker 1: you know where Match stays, the you know, the Ritz
• 48:36
  Speaker 1: and the four seasons every time.
• 48:40
  Speaker 14: Well, if he wants to check in one of the
• 48:42
  Speaker 14: super eights, let me.
• 48:43
  Speaker 6: Know, is that a good business? I gotta say.
• 48:47
  Speaker 2: I was just you know, I was just about before
• 48:49
  Speaker 2: the flood a couple weeks ago to drive to Ohio
• 48:51
  Speaker 2: and my dream was to bring my daughter along and
• 48:55
  Speaker 2: we would stay at a Motel eight really like because
• 48:58
  Speaker 2: that's what you do on the road trip, right, it's
• 49:00
  Speaker 2: such a cool thing little kids. I remember when my
• 49:02
  Speaker 2: dad took me to stay at a Hojo's or a
• 49:05
  Speaker 2: Motel eight or whatever, and it was like awesome. Then
• 49:09
  Speaker 2: it didn't happen because of the flood. But this these
• 49:12
  Speaker 2: brands would be I mean they would have days In,
• 49:14
  Speaker 2: they would have Ramata, they would have Super eight. Right,
• 49:19
  Speaker 2: that's not to be compused with Motel six. So they
• 49:21
  Speaker 2: have like a lot of really cool brands that are
• 49:24
  Speaker 2: still named after big automobile engines of back in the day.
• 49:30
  Speaker 2: Are they are those like popular? Are they profitable?
• 49:36
  Speaker 14: Yeah, I mean they're certainly profitable. You see cash flows generated,
• 49:40
  Speaker 14: so the two companies each, I mean they generate you know,
• 49:43
  Speaker 14: you're talking somewhere in the three hundreds range for Choice,
• 49:46
  Speaker 14: what's to be expected for twenty twenty three or twenty
• 49:48
  Speaker 14: twenty four, and then for Windom you're expecting four hundred
• 49:52
  Speaker 14: at least that's what our MODL screen shows for concessus estimates.
• 49:56
  Speaker 14: That said, I mean, I think I think it's a
• 49:58
  Speaker 14: different sort of you know, when you talk about the
• 50:01
  Speaker 14: structure of the company. It's a different sort of concept
• 50:03
  Speaker 14: to stay at an extended stay than it is to
• 50:06
  Speaker 14: stay at the high end resorts. You're looking for a
• 50:09
  Speaker 14: different feature. A lot of people who stay at extended
• 50:12
  Speaker 14: stays are staying there for different reasons and and also
• 50:15
  Speaker 14: the definition of extended stay can be different among companies.
• 50:18
  Speaker 14: So some companies like Windham will say extended day, We
• 50:20
  Speaker 14: really mean extended to say you're doing a renovation on
• 50:22
  Speaker 14: your house and you have to stay somewhere else for
• 50:24
  Speaker 14: a little bit of time. Other companies say extended stay
• 50:28
  Speaker 14: is more in the you know, competitor to Airbnb type.
• 50:32
  Speaker 1: So how has Airbnb kind of impacted your industry, the
• 50:36
  Speaker 1: hotel motel business just in general?
• 50:41
  Speaker 14: I think, you know, what's most interesting is that the
• 50:44
  Speaker 14: companies have had to reconsider how they do their business model.
• 50:48
  Speaker 14: There's there's going to be consumers who always stay at
• 50:51
  Speaker 14: hotels for whatever reason, whether they're dedicated to insert your
• 50:55
  Speaker 14: favorite rewards system. But then there's going to be people
• 50:59
  Speaker 14: who are looking for the cheapest alternative and the most
• 51:02
  Speaker 14: convenient alternative, which during the pandemic we saw much more
• 51:05
  Speaker 14: of that. We want a kitchen, we want this, we
• 51:08
  Speaker 14: want that that's going to come with this day. We
• 51:11
  Speaker 14: just don't want a small hotel room, particularly if we're
• 51:14
  Speaker 14: trying to stay away from other people. That might shift
• 51:17
  Speaker 14: a little bit more. Now that we're getting back into
• 51:19
  Speaker 14: the quote unquote normal times, you're seeing a little bit
• 51:21
  Speaker 14: more pick up in business and conference travel. You know.
• 51:24
  Speaker 14: We we were actually just in Vegas last week, and
• 51:27
  Speaker 14: the conference situation there is much more on the quote.
• 51:30
  Speaker 3: Unquote normal side than we're in Vegas.
• 51:32
  Speaker 14: You know a year and a half ago.
• 51:33
  Speaker 3: I'm sorry, would you say, where'd you stay in Vegas?
• 51:36
  Speaker 2: Oh?
• 51:37
  Speaker 14: I stay at the Venetian because that's where the conference was.
• 51:40
  Speaker 1: Yeah, it was the big Well, I'm a Blagio guy.
• 51:42
  Speaker 1: Next next time you can go there, use my name. Yeah,
• 51:44
  Speaker 1: they'll take care of you.
• 51:45
  Speaker 14: So beautiful.
• 51:47
  Speaker 8: Yeah.
• 51:48
  Speaker 2: You know, just while we're playing with hypotheticals here in
• 51:51
  Speaker 2: terms of the debt, would they would this kind of
• 51:56
  Speaker 2: deal sell debt in the market or where they go
• 51:59
  Speaker 2: to a prime of it credit credit place and get
• 52:04
  Speaker 2: alone there. Because now we're starting to see deals. I
• 52:07
  Speaker 2: think we saw a five billion dollar private credit deal,
• 52:09
  Speaker 2: and the idea is that these numbers are going to
• 52:11
  Speaker 2: keep growing, so they could handle this.
• 52:13
  Speaker 6: What do you think.
• 52:16
  Speaker 14: I think we're a little bit in early stages to
• 52:18
  Speaker 14: figure out how they go financing. Choice did indicate.
• 52:21
  Speaker 7: That there's.
• 52:25
  Speaker 14: I mean choice, Yeah, I know, I mean it's it's
• 52:27
  Speaker 14: definitely anything's a possibility.
• 52:29
  Speaker 7: Let me put it that way.
• 52:30
  Speaker 14: Anything's a possibility. That said, Choice indicated that they are
• 52:34
  Speaker 14: working with two bank banking companies that you know, two
• 52:37
  Speaker 14: bankers that said that they could give them financing, you know,
• 52:40
  Speaker 14: give them short term financing while they go secure longer term.
• 52:43
  Speaker 14: That said, yeah, I mean the public markets, it's really
• 52:46
  Speaker 14: a question of timing. So companies come to market and
• 52:51
  Speaker 14: it's terrible timing and they get these horrible rates like
• 52:53
  Speaker 14: we saw with some of the other companies I cover.
• 52:55
  Speaker 14: Then they'll come to market, I'll get these fantastic rates.
• 52:58
  Speaker 14: So it really is just a matter of timing, and
• 53:01
  Speaker 14: it's a matter of how comfortable people are with the deal. Now,
• 53:05
  Speaker 14: in normal times, the lodging industry is usually pretty sleepy.
• 53:08
  Speaker 14: People aren't super excited by it. Unless there's some sort
• 53:12
  Speaker 14: of transaction that happens, then it becomes a little bit
• 53:14
  Speaker 14: more interesting. Normally, the bonds don't trade all that much
• 53:17
  Speaker 14: for lodging, so this is the type of thing that
• 53:19
  Speaker 14: you say, oh we we you know, we can wake
• 53:22
  Speaker 14: up from our beds of lodging and decide to really
• 53:25
  Speaker 14: care about the That was my terrible way of making
• 53:28
  Speaker 14: some sort of achnology for effort. But but companies can
• 53:34
  Speaker 14: you know now we're starting to see that their their
• 53:37
  Speaker 14: bonds are a little bit more volatile today. So it
• 53:39
  Speaker 14: is exciting. It's it's unlikely that, you know, for the
• 53:43
  Speaker 14: window bonds, it's a negative per se, although you know,
• 53:49
  Speaker 14: it's really a question of whether or not the change
• 53:51
  Speaker 14: of control gets triggered gets triggered. I don't think it would,
• 53:55
  Speaker 14: in which case, you know, the bondholders are kind of
• 53:58
  Speaker 14: taken for a ride, so it will be in a
• 54:00
  Speaker 14: thing to play out. I don't really know how much
• 54:03
  Speaker 14: more it's going to go, though, yeap.
• 54:05
  Speaker 1: All right, we'll stay on top of this deal. When
• 54:06
  Speaker 1: we get anything else, we'll get back to you. Jody Lori,
• 54:09
  Speaker 1: she's a credit analyst for Bloomberg Intelligence following the lodging
• 54:12
  Speaker 1: industry and again a potential deal here in the lodging business.
• 54:15
  Speaker 1: Choice Hotels take a look at Wyndham Hotels and they're
• 54:18
  Speaker 1: jockey back and forth on price We appreciate gatting Jody's points.
• 54:22
  Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can
• 54:25
  Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
• 54:29
  Speaker 2: podcast platform you prefer.
• 54:30
  Speaker 6: I'm Matt Miller.
• 54:31
  Speaker 2: I'm on Twitter at Matt Miller nineteen seventy three.
• 54:35
  Speaker 4: And I'm fall Sweeney.
• 54:36
  Speaker 3: I'm on Twitter at pt Sweeney.
• 54:37
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 54:40
  Speaker 1: Bloomberg Radio