Latest / Bloomberg Intelligence / Gelt Financial's Noah Miller on the Appetite for Real Estate

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Gelt Financial's Noah Miller on the Appetite for Real Estate · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com slash podcast Listen. We have a
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Speaker 1: reopening com economy here in the United States, and we're
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Speaker 1: seeing it in lots of different areas of the economy.
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Speaker 1: One area that I think is going to be a
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Speaker 1: real challenge, however, is commercial real estate. And I just
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Speaker 1: speak about here what I'm seeing here in New York City.
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Speaker 1: Here we are on Lexington Avenue between fifty eight and
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Speaker 1: fifty ninth Street at Bloomberg and all of the retail space,
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Speaker 1: with the exception once tiny little Swiss Chocolate uh shop,
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Speaker 1: all of it is vacant, and all of it pre
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Speaker 1: pandemic was actually filled. So let's bring a Noah Miller,
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Speaker 1: vice president of Guelt Financial, a national real estate investment firm.
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Speaker 1: No I'd love to get your thoughts about, particularly in
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Speaker 1: some of the larger urban areas that really have been
1:00
Speaker 1: hit with commercial vacancies, give us a sense of where
1:03
Speaker 1: that market is right now and kind of what's the outlook. Sure, well,
1:07
Speaker 1: thanks so much for having me, guys. I appreciate being here. Um.
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Speaker 1: You know, the the urban retail market is very interesting
1:14
Speaker 1: right now, especially when you compare it to the suburban
1:16
Speaker 1: retail market. You know, a lot of people like to
1:18
Speaker 1: talk about the urban retail market and and and how
1:20
Speaker 1: there's a lot of vacancy and a lot of uncertainty,
1:22
Speaker 1: and it's it's funny, it's it's it's a whole different
1:24
Speaker 1: world in the suburban market. In the suburban market, you're
1:27
Speaker 1: actually seeing small retail strip centers do fairly well. Um.
1:31
Speaker 1: You know a lot of these centers who have the
1:33
Speaker 1: experiential real estate, you know, the dog rooms, the coffee shop,
1:36
Speaker 1: the pizza place, the now salons, they've stayed full dooring
1:38
Speaker 1: COVID and we're actually seeing an increased appetite from investors
1:43
Speaker 1: who who demand that. Um. So it's funny, Like I said,
1:46
Speaker 1: every time I tune it on in I hear retail
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Speaker 1: is dead. But really they're just talking about urban. When
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Speaker 1: you go to a suburban I actually think that sector
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Speaker 1: is gonna be pretty good for the next couple of years.
1:55
Speaker 1: It's pretty amazing. You know. I'm back here in New York,
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Speaker 1: just visiting. I live in berlin Um for the past
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Speaker 1: five years, and obviously I haven't been here for for
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Speaker 1: a while because of the lockdown. It couldn't travel. I
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Speaker 1: walked down Lexington Avenue and all of the stores are shut. Now.
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Speaker 1: I expect that if I'm in like rural Ohio after
2:16
Speaker 1: a massive recession, But you don't expect that in when
2:20
Speaker 1: you're visiting the capital of the world, right, I mean
2:22
Speaker 1: New York City is um, you know, is it? So?
2:27
Speaker 1: How bad has this hit the urban areas? How bad
2:31
Speaker 1: has this hit the densely populated cities around the country
2:34
Speaker 1: and around the world. Well, well they've been hit very hard.
2:37
Speaker 1: But but that's because there was such a massive exodus.
2:40
Speaker 1: I mean, think about how many people left New York
2:42
Speaker 1: during COVID and came to Florida, to Texas. Same with
2:45
Speaker 1: San Francisco. And that's why I'm saying. You know, when
2:48
Speaker 1: when you look at just the urban cities, you're only
2:50
Speaker 1: looking at a piece of what happened. Um. For all
2:52
Speaker 1: the suburban areas where everyone's flocked to, uh, those are
2:56
Speaker 1: are faring pretty well. And not just in by the way,
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Speaker 1: in retail, but also an office. I mean you're seeing
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Speaker 1: a lot of empty office building high rises in Manhattan
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Speaker 1: and San Francisco, But if you go to suburban markets
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Speaker 1: across the country in the office space, those are doing well.
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Speaker 1: This is the small accounting firms, the small law firms
3:12
Speaker 1: who have five, ten, fifteen employees. You know, they're not
3:14
Speaker 1: set up to work from home. That they need to
3:16
Speaker 1: be in the office, they need the interaction and and
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Speaker 1: again it really is tells two cities almost like comparing
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Speaker 1: urban and suburbans. So what's your focus at GULT Financial?
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Speaker 1: What do you uh specialize in there? What can people
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Speaker 1: do with you? So what we do is we really
3:31
Speaker 1: specialize in providing in equity in the sub five million
3:34
Speaker 1: dollars space. So there's a lot of owner operators who
3:37
Speaker 1: are these smaller main street owner operators and mom and
3:40
Speaker 1: pops who have a really hard time putting together the
3:43
Speaker 1: capital stack. If you're an institution, it's easy, everyone's throwing
3:46
Speaker 1: money at you, thanks equity investors. But for the mom
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Speaker 1: and pops, you know, those are the hustler investors, the
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Speaker 1: American dream investors, and most people shy away from them,
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Speaker 1: so we provide capital to those types of investors across
3:57
Speaker 1: the country. So what are we seeing in terms of
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Speaker 1: investor appetite for real estate here? You know, I would
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Speaker 1: think a lot of folks who have a higher risk
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Speaker 1: profile be saying this is a once in a one
4:12
Speaker 1: year opportunity to get into real estate at lower prices.
4:16
Speaker 1: Are you seeing that? In fact, when you talk to
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Speaker 1: your investors, we're seeing a big appetite for real estate.
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Speaker 1: But I wouldn't say it's it's it's really because it's
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Speaker 1: a once in a hundred year uh phenomenon. I mean,
4:27
Speaker 1: the truth is, real estate prices haven't dropped considerably since
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Speaker 1: COVID started. Um. Interest rates are still really low, so
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Speaker 1: debt is available. So if deaths available and interest rates
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Speaker 1: are low, people are going to buy real estate and
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Speaker 1: pay a premium for it. I think what's happen is
4:41
Speaker 1: you're seeing the mom and pops get more involved, and
4:43
Speaker 1: those are the ones we're helping out, as well as
4:44
Speaker 1: you're seeing millennials get more involved and want to enter
4:47
Speaker 1: the real estate space, especially in ways that they couldn't
4:50
Speaker 1: do a couple of years ago. I think a couple
4:51
Speaker 1: of years ago, you needed a million dollars to invest
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Speaker 1: in real estate or a couple hundred thousands. Today we
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Speaker 1: have a lot of investors who invest with us with
4:58
Speaker 1: as little as five or ten dollars. It's a good point.
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Speaker 1: It's a good point in real properties, which they couldn't
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Speaker 1: do a couple of years ago. So that's a growing
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Speaker 1: space and the demand of the in the in the
5:08
Speaker 1: real estate world. It's not just the money, right, because
5:10
Speaker 1: it's the admin, it's um, the search. And I was
5:14
Speaker 1: talking to a friend of mine who actually is a
5:17
Speaker 1: concert promoter yesterday but also has been investing in real estate,
5:20
Speaker 1: and it's it's such a hassle if you have to
5:22
Speaker 1: do all that stuff yourself. So if you can find
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Speaker 1: someone else to do it, and you think it's a
5:26
Speaker 1: good asset class um, then I guess it's not just
5:30
Speaker 1: money you're saving, but a lot of time and stress
5:33
Speaker 1: as well. What kind of growth are you expecting. We're
5:37
Speaker 1: expecting a lot of growth. We're a second generation company
5:39
Speaker 1: that the company has actually started thirty years ago by
5:41
Speaker 1: my father. I've been involved for a couple of years
5:44
Speaker 1: now after leading the institutional world, and and our goal
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Speaker 1: is to double this year and then double again next
5:49
Speaker 1: year and again with the increased appetite from the younger
5:52
Speaker 1: generations as well as the mom and pops wanting to
5:54
Speaker 1: get involved. We see that happening. So no, I'd love
5:59
Speaker 1: to get your thoughts on retail. Um. You know, commercial
6:02
Speaker 1: real estate for the retail industry. We've seen even prior
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Speaker 1: to the pandemic, a lot of store closings. Really, you know,
6:08
Speaker 1: the footprint of the Macy's of the world on a
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Speaker 1: national basis declining and um, you know, there's more and
6:14
Speaker 1: more people shop online. It seems like that whole process
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Speaker 1: has really been accelerated by the pandemic. How do you
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Speaker 1: view kind of commercial real estate for in the retail space?
6:25
Speaker 1: The retail is interesting and again it's really it's that's
6:27
Speaker 1: also two stories because you have clearly had the big
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Speaker 1: department stores that are losing footprint. You know a lot
6:33
Speaker 1: of um, individuals who weren't used to shopping on Amazon
6:36
Speaker 1: or into car prior to COVID are now doing and
6:38
Speaker 1: they're probably gonna stick around. So you know, the question
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Speaker 1: of malls is really still uncertain. A lot of these
6:43
Speaker 1: malls are going through um, you know, changes where they're
6:46
Speaker 1: tearing some of them down, they're making them more kind
6:48
Speaker 1: of you know, your experiences, so that I still think
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Speaker 1: is a little bit unseen. I think, you know, some
6:52
Speaker 1: of the Simon malls will be okay, just because they're
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Speaker 1: sending so much money and really driving traffic. But a
6:57
Speaker 1: lot of the more local malls, and you know, the
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Speaker 1: second markets, at the end of the day, I think
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Speaker 1: they'll probably be torn down and made into almost warehouse
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Speaker 1: states for the last mile for companies like Amazon. But
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Speaker 1: again going back to these small strip centers that you know,
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Speaker 1: you can't replace a dog groom, you can't replace the
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Speaker 1: now salan, those those those retail bays will be okay,
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Speaker 1: and I think that's where we're seeing more appetite from
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Speaker 1: our investors rather than the big store, um big box retail. Well,
7:21
Speaker 1: if they or they tournament, as you said, experienced centers,
7:24
Speaker 1: if there's a carding track or a water park or
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Speaker 1: I don't know, I can't think of great experiences. But
7:33
Speaker 1: what about one of those places where it's like you
7:35
Speaker 1: jump out of a plane, but you're still just hovering
7:37
Speaker 1: there over a fan. What do you call that? Yeah, listen,
7:40
Speaker 1: maybe maybe maybe Jeff Bezos will use some of these
7:43
Speaker 1: malls as a launching center for you never know. Yeah,
7:46
Speaker 1: well apparently it was a clean engine rocket rocket engine,
7:50
Speaker 1: so um, you know, we clarified that with detail, it
7:53
Speaker 1: would be okay. Hey, it's been great talking to you
7:56
Speaker 1: know h It's always fascinating talk about real estate and
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Speaker 1: finding is to invest in. I think is um is
8:03
Speaker 1: really interesting without having to do all the legwork yourself.
8:06
Speaker 1: And I think it's something that we talked about. You know,
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Speaker 1: the young people are getting in the accumulation phase right
8:12
Speaker 1: now in terms of stocks and and maybe they want
8:15
Speaker 1: to get involved in real estate as well, so they
8:17
Speaker 1: can do that with Guelt Financial. Noah Miller is the
8:19
Speaker 1: vice president there. All right, we're gonna talk carbs. Let's
8:24
Speaker 1: do it. It's not just carburetors. Because I know this
8:26
Speaker 1: because I talked to Tom Tomlinson yesterday as a president
8:29
Speaker 1: and CEO of Holly, which is an iconic, I mean
8:34
Speaker 1: truly iconic auto parts maker. If you've ever tuned up,
8:37
Speaker 1: souped up um uh an old motor, you probably used
8:43
Speaker 1: parts from Holly. And now they're trading on the New
8:45
Speaker 1: York Stock Exchange. They combined with Back yesterday and I
8:48
Speaker 1: think the ticker is h L L Y Tom h
8:52
Speaker 1: talk to me about new products, because I'm always on
8:55
Speaker 1: about the Holly carbs. I think they're probably the most famous,
8:57
Speaker 1: either Holly or Edelbrock, probably the most fam as carbs
9:00
Speaker 1: in the world. But you're making much newer components for tuning. Absolutely.
9:06
Speaker 1: So Holly e f I Electronic fuel injection is a product,
9:11
Speaker 1: um you know, that we introduced actually about a dozen
9:14
Speaker 1: years ago. It's done very well, been very popular. We've
9:18
Speaker 1: got products within the Holly FI line that actually allow
9:22
Speaker 1: you to convert a carbureted car very easily and cost
9:25
Speaker 1: effectively through electronic fuel injections. So while we still sell carburetors,
9:30
Speaker 1: um you know, we're happy to upgrade people to e
9:32
Speaker 1: f I, but we're building out a product uh strategy
9:37
Speaker 1: and portfolio that provides for um, you know, a wide
9:41
Speaker 1: range of products exhaust products, ignission products, intake manifolds. UM
9:47
Speaker 1: you know, we branched out, just got our uh dipped
9:50
Speaker 1: our toe in the waters of suspension products. So um
9:53
Speaker 1: you know, we we there's a lot of room here
9:55
Speaker 1: for us to grow by adding categories. So before we
9:59
Speaker 1: get into the new prin and I do want to
10:00
Speaker 1: because obviously we're kind of standing in front of a
10:03
Speaker 1: revolution here. What's the difference would you say between you
10:07
Speaker 1: and your main competitor. I mean people say Holly carbs
10:09
Speaker 1: have lower gas mileage, smoother acceleration than Aedelbrock carbs, but
10:14
Speaker 1: each has its own kind of quirks. Is it the
10:16
Speaker 1: application that matters? Well, I mean, from from our perspective,
10:22
Speaker 1: one of the things that's unique about the Holly carburetors,
10:25
Speaker 1: if UM is really the modular design which gives you know,
10:29
Speaker 1: the racer and the performance enthusiast a lot of flexibility
10:33
Speaker 1: and how to tune that carburetor. And then when you
10:36
Speaker 1: think about it from a modern standpoint, we have a uh,
10:39
Speaker 1: you know, good sized part of our business all around
10:41
Speaker 1: electronic tuning. So, um, you know, this would be your
10:45
Speaker 1: late model car. Um. You know, you maybe you add
10:48
Speaker 1: some exhaust, cold air intake, whatever the case may be.
10:51
Speaker 1: You know, none of that stuff really helps uh performance
10:55
Speaker 1: until you, uh, you know, tune the motor for the
10:59
Speaker 1: additional are in fuel that you can put through. UM.
11:02
Speaker 1: So again, UM, so you can you can go a
11:08
Speaker 1: little bit more in depth and do a little bit
11:09
Speaker 1: more customizing. Well, you know, I'm probably about to buy
11:13
Speaker 1: my last big displacement V eight. I doubt after the
11:17
Speaker 1: next car, I'm going to get anything over six leaders
11:20
Speaker 1: in the V eight, So and I might have to
11:22
Speaker 1: buy an electric car if my wife has her way.
11:25
Speaker 1: What do you do when people switched to battery power? Well,
11:29
Speaker 1: we are charged up about the emerging opportunity on the
11:32
Speaker 1: electric side. I've been daily driving the Tesla Model three
11:36
Speaker 1: now for a couple of years. Um. I just actually
11:39
Speaker 1: I reserved a Tesla models plaid last year and just
11:44
Speaker 1: got the email from Tesla yesterday that it will be
11:46
Speaker 1: delivered this month. We're actively developing products around electric and
11:52
Speaker 1: then one of the things that consumers are very interested
11:54
Speaker 1: in is electric powertrain conversions on you know, whether it
11:59
Speaker 1: be a class asset or even some of these you
12:01
Speaker 1: know modern ice uh cars. So, um, you know, we're
12:06
Speaker 1: we're all about the enthusiast and focus that focused on
12:09
Speaker 1: providing them products that will allow them to continue to
12:12
Speaker 1: pursue modification no matter which way they go. Ay, time
12:15
Speaker 1: stroke Cookie thirty seconds. I'd love to get your thoughts
12:17
Speaker 1: on going public via s back. So from our perspective,
12:22
Speaker 1: it was a natural time for us to to be
12:24
Speaker 1: out in the market looking for capital Historically we've done
12:27
Speaker 1: that through private equity sponsors. We got familiar with the
12:30
Speaker 1: spack vehicle. You know, it looked like a very efficient
12:34
Speaker 1: way for us to go public. And also our partner
12:38
Speaker 1: on the back side, UM has a lot of expertise
12:41
Speaker 1: and you know, we we think that can help ease
12:44
Speaker 1: our transition into life as a public company, so specifically,
12:48
Speaker 1: you know, knowledge of operating public companies. Uh. They also
12:52
Speaker 1: have a lot of expertise on the digital side, which
12:54
Speaker 1: is important for our consumer engagement. So I mean it's
12:58
Speaker 1: been a great approach for us, and and um, you
13:01
Speaker 1: know we're now uh you know, arguably no longer a
13:04
Speaker 1: spack although maybe that's how we got public. Um, we're
13:08
Speaker 1: you know, we're just back to Holly, you know, company
13:10
Speaker 1: with a very long, rich history, iconic brands, uh, growth
13:15
Speaker 1: and you know grade margins and free cash flows. So, UM,
13:19
Speaker 1: I guess that's how i'd sum it up. Tim Great,
13:22
Speaker 1: Tom great talking to you. Um, obviously I care a
13:26
Speaker 1: lot Tom. Tomlinson their CEO of Holly, and they're now
13:29
Speaker 1: traded under ticker h l L wil Let's get over
13:35
Speaker 1: to Mo Hagmen right now. He's the chief operating officer
13:38
Speaker 1: of Investco Investment Solutions. We're gonna get back to the markets. Um,
13:42
Speaker 1: As we saw MOE yesterday, a big sell off. Actually
13:45
Speaker 1: since Thursday, I guess we saw more than three percent
13:48
Speaker 1: lopped off the SMP five hundred, and today we're seeing
13:51
Speaker 1: a little bit of a bounce back. Is it just
13:54
Speaker 1: all about by the dip or is there some you know,
13:57
Speaker 1: other reason are we are we today excited about corporate
14:00
Speaker 1: earnings whereas yesterday we were just so bummed about the
14:03
Speaker 1: delta variant. Well, good morning and thanks for having me. Well,
14:07
Speaker 1: I think, you know, if we start with just a
14:08
Speaker 1: macro backdrop, Um, what we look at is leading economic
14:12
Speaker 1: indicators and risk sentiment in the market. And it's hard
14:15
Speaker 1: to argue that the macro backdrop is still not very
14:17
Speaker 1: supportive of equities and other risk assets. But to your point,
14:21
Speaker 1: we are seeing a little bit of a change in sentiment,
14:24
Speaker 1: and I think that's related to some decelerating and growth expectations. Uh.
14:29
Speaker 1: Of course, there's also the fear of the delta variant,
14:31
Speaker 1: which has some people worried about style lockdowns. Um, So
14:36
Speaker 1: that's really I think what's driving some of the market action.
14:39
Speaker 1: In our view, some of this is probably related also
14:42
Speaker 1: to rates, right, So the bond markets are a good
14:45
Speaker 1: place to start when you're thinking about the equity market.
14:48
Speaker 1: Generally bond markets lead equities, and what we've been seeing
14:51
Speaker 1: is the yield curve flattening and long rates really coming
14:54
Speaker 1: down significantly, which again kind of puts pressure on the
14:58
Speaker 1: cyclical stocks and some of the inflation trade that we've
15:01
Speaker 1: seen outperformed for many, many months. So Mom, you know,
15:05
Speaker 1: it's interesting here we have the volatility that Matt was
15:07
Speaker 1: to speak about over the last couple of days, but
15:09
Speaker 1: there's also been that discussion point of you know, do
15:12
Speaker 1: I stick with the big growth names, the Amazons, the Apples,
15:16
Speaker 1: and the Netflix also reporting after the clothes tonight that
15:19
Speaker 1: have been so good to me really since the financial crisis?
15:21
Speaker 1: Or uh, do I make that rotation play on a
15:24
Speaker 1: reopening economy, think about banks and cyclical areas such as energy.
15:28
Speaker 1: Where are you, guys in investor, how do you think
15:30
Speaker 1: about that outlook? Sure? So post the presidential election and
15:36
Speaker 1: for most of the year, we have been very much positioned,
15:40
Speaker 1: uh towards kind of the more cyclical parts of the market.
15:43
Speaker 1: So we've maintained a higher risk part posture to the
15:46
Speaker 1: benchmark have been overweight equities and risky credit. But then
15:49
Speaker 1: within the equity market, to your point, uh, focused on
15:53
Speaker 1: things like financials, energy, small caps, uh, economically sensitive sectors
15:59
Speaker 1: and companies. What we've seen with rates I think is
16:02
Speaker 1: really renewing this conversation and debate around growth versus value,
16:06
Speaker 1: and we have seen defensives outperformed. I think, you know,
16:09
Speaker 1: today is an interesting day where we see kind of
16:11
Speaker 1: a little bit of a bounce back on on kind
16:13
Speaker 1: of the cyclical names, while we're also seeing declining rates,
16:16
Speaker 1: which is interesting. That's generally not the uh normal way
16:21
Speaker 1: um uh you know markets behave when rates are you know, rallying,
16:25
Speaker 1: but then obviously low volatility and quality is not outperforming.
16:29
Speaker 1: What would you say, um, people should go for right now?
16:34
Speaker 1: In terms of hedges, I noticed yesterday puts UM outweighed
16:40
Speaker 1: calls by two and a half times, and that's the
16:42
Speaker 1: biggest ratio that we've seen in I think least twelve months.
16:46
Speaker 1: So everybody's hedging UM or maybe they're just making a
16:50
Speaker 1: bet that we hit the top and we're going down. Yeah. Look,
16:54
Speaker 1: so I don't think there's UM at least we're not
16:56
Speaker 1: overly concerned with some of the volatility recently, and and
17:00
Speaker 1: really the macro backdrop is still very supportive of equities.
17:03
Speaker 1: So when we think about asset allocation, we're really thinking
17:06
Speaker 1: about the mix between equities and bonds and alternatives. And
17:10
Speaker 1: you know, we still maintain a slight overweight to equities
17:13
Speaker 1: and a slight over overweight to risk your credit UM
17:16
Speaker 1: really thinking through some of the risks to the market
17:19
Speaker 1: when I think about what we're seeing from a headline perspective,
17:22
Speaker 1: obviously the UM economic growth picture, and some concerns about
17:27
Speaker 1: growth maybe slowing down, but you know that's expected, right close,
17:30
Speaker 1: growth should slow down. We've we've been growing at you know,
17:33
Speaker 1: nominal eight percent uh in the normal kind of growth
17:37
Speaker 1: rate that we'd expect. Poster recovery is probably something that
17:40
Speaker 1: we we're experiencing for you know, ten plus years after
17:44
Speaker 1: the global financial crisis, so three or four percent growth. Well,
17:48
Speaker 1: how are you guys thinking about emerging markets? A lot
17:50
Speaker 1: of folks say, you know, gosh, with these yields so low,
17:52
Speaker 1: I gotta really go out on the risk profile here
17:55
Speaker 1: in search for yield, and that may take me to
17:57
Speaker 1: emerging markets. How do you guys think about that. From
18:01
Speaker 1: a valuation standpoint, emerging market equities UH look more favorable
18:06
Speaker 1: than domestic equities or international developed equities, but again that's
18:11
Speaker 1: really UM, you know, risk tolerance driven. So from a
18:15
Speaker 1: global allocation standpoint right now, we do maintain a slight
18:18
Speaker 1: overweight to international UH, specifically emerging markets, again because we've
18:23
Speaker 1: positioned really towards more risks on post the presidential election
18:28
Speaker 1: and through most of the year. Now that said UM,
18:32
Speaker 1: from a risk management standpoint is some of the UM
18:36
Speaker 1: run up in those themes and those sectors allow us
18:41
Speaker 1: to kind of reduce those overweights. So we've actually been
18:43
Speaker 1: reducing some of that overweight to international equities as well
18:47
Speaker 1: as some of the developed world outside the US. Are
18:51
Speaker 1: aren't we going to see a lag in terms of
18:53
Speaker 1: their reopening? I mean, you know, the US seems like
18:58
Speaker 1: we're past the pandemic, and I know I'm sitting here
19:01
Speaker 1: in New York where everyone's vaccinated, and it's probably not
19:03
Speaker 1: the same in Springfield, Missouri. But UM, in terms of
19:07
Speaker 1: Europe and the UK, even though they've selled celebrated Freedom Day,
19:12
Speaker 1: they still are pretty locked down, and so aren't we
19:16
Speaker 1: gonna see a big reopening bounce there later on possibly
19:22
Speaker 1: and you know there's some risk to that. You know,
19:25
Speaker 1: the variant and some of the flare ups we've seen globally, UM,
19:30
Speaker 1: have the market a little bit concerned about style lockdowns?
19:35
Speaker 1: I don't think that's very likely. UM. We should see,
19:40
Speaker 1: UM some of this reopening move more to the developed
19:44
Speaker 1: world and also the emerging markets which are a little
19:46
Speaker 1: bit further behind in terms of vaccinations. UM. So that's
19:49
Speaker 1: still very positive for the themes that have worked for
19:53
Speaker 1: most of the year, with the exception of the last
19:56
Speaker 1: few months. Alright, So MO is the risk in your
20:01
Speaker 1: outlook here? Simply that FED chairman j Pal may make
20:06
Speaker 1: a mistake as it relates to tapering and eventually moving rates.
20:12
Speaker 1: So I would say there's three things right. That is
20:13
Speaker 1: absolutely one of them. Right, So, UM, you know, equity markets,
20:18
Speaker 1: bowl markets don't really die based on age, they die
20:21
Speaker 1: because of a policy mistake. I also think that the variant,
20:25
Speaker 1: you know, I think we've um I thought about the
20:28
Speaker 1: probability of a significant lockdown to be low, but that
20:33
Speaker 1: is still a risk. So I would say that's the
20:35
Speaker 1: number two risk. And then lastly, if growth does decelerate
20:39
Speaker 1: and then you know it really takes a turn for
20:42
Speaker 1: the worst. You know, if earnings start to disappoint, if
20:45
Speaker 1: we start to see some of the leading indicators start
20:48
Speaker 1: to come down and below expectations, I would say that's
20:51
Speaker 1: also a risk of the market. Well, great, talking to you, greats,
20:54
Speaker 1: get your insight. Thanks very much for bringing us back
20:57
Speaker 1: to the markets. Let's bring in Laura Forstick right now,
21:01
Speaker 1: space analysts and owner of Astroltical. She's also the author
21:06
Speaker 1: of Rise of the Space Age. Millennials and Laura, I mean,
21:11
Speaker 1: talk to us about what we're seeing here. Clearly, Jeff
21:14
Speaker 1: Bezos is not a millennial, nor is Elon Musk or
21:19
Speaker 1: Richard Branson by any means. But these guys are driving
21:24
Speaker 1: a totally new era in space exploration. That's right. What
21:28
Speaker 1: they're doing is inspiring millennials and Generation Z, which I
21:32
Speaker 1: believe Oliver Damon, one of the astronauts today on Blue Origin,
21:35
Speaker 1: is a member of And so if you go back
21:37
Speaker 1: in history and you think of the Apollo Lunar landings
21:40
Speaker 1: back in the nineteen seventies, that inspired whole generations. But
21:45
Speaker 1: for millennials and generations the the you know people, they're
21:49
Speaker 1: you know, young kids all the way through about age
21:51
Speaker 1: forty I'm talking about. They are mostly inspired by this
21:55
Speaker 1: seneration of entrepreneurs and new space quote unquote companies like
22:00
Speaker 1: Elon Musk, SpaceX, Jeff Uses his Blue Origin and Richard
22:03
Speaker 1: Branson's Virgin Galactic and all the great things that we're
22:07
Speaker 1: doing right now with commercial spaceflight. Yeah, Laura, that's kind
22:10
Speaker 1: of where we wanted to go. I mean, you know,
22:11
Speaker 1: when I grew up in the ear of NASA and
22:14
Speaker 1: you know the Apollo missions, it was primarily about science.
22:19
Speaker 1: Talk to us now about what some commercial applications or
22:24
Speaker 1: commercial uses of space and space travel. What do you
22:27
Speaker 1: think the future is for some of these folks that
22:30
Speaker 1: are in fact on on a private scale commercializing space. Yeah, well,
22:35
Speaker 1: a lot of it still is science. There's some really
22:37
Speaker 1: great suborbital science that can spend so research and development,
22:40
Speaker 1: both for just science and also for commercial companies, and
22:44
Speaker 1: NASA also wants to train astronauts on these suborbital craft
22:47
Speaker 1: as well. There's a lot of reasons. But of course
22:50
Speaker 1: what we heard today, those screams of joy and celebration
22:53
Speaker 1: as they were in space, it's just an inspiration. It's
22:56
Speaker 1: a way to get people to look at planet Earth differently,
23:00
Speaker 1: and to look at the way that we interact with
23:01
Speaker 1: our universe differently, floating around in microgravity, seeing the cover
23:04
Speaker 1: cho the Earth and the sin atmosphere, and the lack
23:07
Speaker 1: of borders other than geographic borders. I mean, that's the
23:10
Speaker 1: way to really change the perspective of how we view
23:13
Speaker 1: our planet. So I noticed the tourists are only going
23:16
Speaker 1: up to the Carmen line, maybe a little over, maybe
23:18
Speaker 1: a little under. Um Uh. Is it just the cost
23:23
Speaker 1: that limits them? Because if I went up there, I'd
23:25
Speaker 1: want to go in orbit, I'd want to do a spacewalk.
23:27
Speaker 1: I'd probably want to land on the dark side of
23:29
Speaker 1: the Moon and play some pink Floyd. Is it? Is
23:32
Speaker 1: it a massive cost difference between you know, sixty five
23:36
Speaker 1: miles up and one loop around. Yes, you can go
23:40
Speaker 1: to orbit right now. You can go with Spacebax. They
23:43
Speaker 1: are flying people to the International Space Station around fifty
23:47
Speaker 1: five million dollars. They're also sending people in a free
23:50
Speaker 1: bit around the Earth for a few days with a
23:53
Speaker 1: dragon caps gole and that undisclosed price, but probably in
23:57
Speaker 1: the same rate compared to you know, Blue Origin hasn't
24:01
Speaker 1: announced their pricing yet, but we can guess probably about
24:03
Speaker 1: a million dollars somewhere around there. Origin Galactic is about
24:06
Speaker 1: to raise their prices up from a quarter of a million,
24:08
Speaker 1: so we don't know what yet, So it is a
24:10
Speaker 1: significant cost difference with you. I'd love to go up
24:12
Speaker 1: there in orbit to do do some loops'll be fantastic. Yeah,
24:16
Speaker 1: it's only two thousand bitcoin. Then basically, if you want
24:18
Speaker 1: to ride to the loops around in orbit, SpaceX can
24:23
Speaker 1: do it. Why does SpaceX seem to be so far
24:27
Speaker 1: ahead of the rest, Laura, are they just you know,
24:30
Speaker 1: did did Elon Musk just go all in and um
24:34
Speaker 1: everybody else kind of held back a little to watch
24:36
Speaker 1: his lead. Well, it's very difficult and Elon Musk had
24:40
Speaker 1: some real challenges in the beginning, but his goal is
24:43
Speaker 1: to send humans to Mars, and so everything that SpaceX
24:46
Speaker 1: does is to get that goal, sending humans to Mars.
24:49
Speaker 1: And a lot of the work that they did early
24:50
Speaker 1: on has been ber Nassas then being cargo to the
24:53
Speaker 1: International Space Station, which helped them develop their Falcon nine
24:57
Speaker 1: rocks Crew Dragon Um which Crew Dagon now carries astronauts
25:01
Speaker 1: to the International Space Station as well, and that has
25:03
Speaker 1: been their real push is getting these government contracts, whereas
25:07
Speaker 1: Virgin Galactic, for example, doesn't really care so much about
25:10
Speaker 1: government contracts. They have a few again orbital science, but
25:14
Speaker 1: their focus has all been on the space tourism, and
25:16
Speaker 1: Blue Origin has a mix. They want to do space tourism,
25:19
Speaker 1: they also want to go beyond. They want to take
25:20
Speaker 1: their new Gland rocket and development right now to orbit,
25:23
Speaker 1: and they want to build uh space stations. As you
25:26
Speaker 1: heard Jesse's obay, getting people m off Earth and getting
25:29
Speaker 1: Earth and really doing this whole cities and space concept. So, Laura,
25:33
Speaker 1: what's the role of NASA right now? We've seen three
25:38
Speaker 1: successful privatized commercial applications here with Mr Sir Richard Branson,
25:43
Speaker 1: Elon Musk and now Jeff Bezos. What is the role
25:47
Speaker 1: of NASA right now? NASA is a great innovator for
25:51
Speaker 1: pushing those boundaries. So NASA right now is focused on
25:54
Speaker 1: getting humans to the Moon, and they are actually contracting
25:57
Speaker 1: with SpaceX and hopefully in the future Blue Origin to
26:00
Speaker 1: send people to the lunar surface as early as four
26:04
Speaker 1: and so that's really exciting to have a new space
26:06
Speaker 1: station built in lunar orbit. So um not just in
26:09
Speaker 1: National Space station anymore. It's can also be the gateway
26:12
Speaker 1: in lunar orbit around the Moon and then sending people
26:14
Speaker 1: to the surface and then hopefully a lunar base in
26:16
Speaker 1: the future. So really pushing those boundaries and also bringing
26:19
Speaker 1: commercial companies along with so contracting to commercial companies, large
26:23
Speaker 1: ones like I just mentioned, but also smaller ones as
26:25
Speaker 1: well that can really help bring the technology and the
26:29
Speaker 1: humans the U S industry followers, how far is it
26:33
Speaker 1: into the future when there's a lunar base where we live?
26:36
Speaker 1: You know, I loved an Interstellar. Um, you know at
26:40
Speaker 1: the end when they show and I want to spoil it,
26:42
Speaker 1: But if if you haven't seen Interstellar, then you have
26:44
Speaker 1: really bad taste in movies because it rules. Um they
26:48
Speaker 1: show that, you know, the space station that they live
26:52
Speaker 1: in that has the kind of mirrored really weird anti
26:56
Speaker 1: gravity baseball field and stuff. How long until people live
27:00
Speaker 1: in space who have been living in space for twenty
27:04
Speaker 1: years on the International Space Station? Yeah, but not you
27:06
Speaker 1: and me, Laura. No, not you and me. But maybe
27:10
Speaker 1: someday it'll be people like us who can afford it.
27:12
Speaker 1: And there's going to be commercial space stations coming on
27:14
Speaker 1: board after the International Space Station, which has planned to
27:17
Speaker 1: be retired somewhere in the So there's going to be
27:20
Speaker 1: commercial space stations that could maybe bring people like you
27:22
Speaker 1: and me eventually up into orbit. And then Luna bas
27:25
Speaker 1: is coming up as well. On the Artumus program is
27:27
Speaker 1: going to first start with government astronauts, both US and
27:30
Speaker 1: international partners, and then it'll be built up over the
27:34
Speaker 1: coming deck. You well, andsume we go back to the Moon,
27:36
Speaker 1: Right when do we go? I don't know why we
27:37
Speaker 1: stopped going there at the end of for all mankind,
27:41
Speaker 1: but hopefully soon we go go back. That's the and
27:45
Speaker 1: as early as twenty four as the goal. And so
27:48
Speaker 1: that is the plan for the very first lunar landing mission.
27:51
Speaker 1: But they want to be round the moon so soon.
27:55
Speaker 1: All right, We're waiting to have a press conference from
27:57
Speaker 1: Jeff Bezos coming up in just moments and we'll bring
27:59
Speaker 1: that to you. Uh. We're speaking with law Force, space
28:01
Speaker 1: analysts and owner of Astroltical Law. We've got three billionaires
28:06
Speaker 1: so far in the game. Uh. Is there expectations that
28:10
Speaker 1: there will be more private either billionaires or enterprises or
28:15
Speaker 1: what's the future there, or even bigger government investment, right,
28:18
Speaker 1: because why don't some big governments get into this. Well,
28:23
Speaker 1: there are around the country something called the Artemis Accords,
28:26
Speaker 1: which is now as well as governments are around the
28:28
Speaker 1: world that has signed to do this partnership with the
28:31
Speaker 1: Artemis program with NASA to go to the Moon, and
28:34
Speaker 1: also established some rules as we go to make sure
28:36
Speaker 1: the ware all cooperating. And then on the other side
28:38
Speaker 1: of the planet, we've got China and Russia partnering to
28:41
Speaker 1: also go to the Moon, and they're going to bring
28:43
Speaker 1: international partners as well, probably not the United States, but
28:46
Speaker 1: you know, we don't know how that's going to play
28:48
Speaker 1: out in the future. And then they've also lotched investment
28:50
Speaker 1: in UM just some of the stuff that's really practical
28:53
Speaker 1: on the ground. How do you take this technology that
28:55
Speaker 1: we're developing here and make it really useful for helping
28:58
Speaker 1: out the planet. For example, if you want to go
29:02
Speaker 1: to UM the International Space Station, live on the International
29:05
Speaker 1: Space Station, you need life support system. Well, how do
29:07
Speaker 1: you use that life suport system to clean the air,
29:10
Speaker 1: clean the water on the space station. It can also
29:12
Speaker 1: be used for a set of Earth. So a lot
29:14
Speaker 1: of that investment goes right back to Earth and it's
29:16
Speaker 1: not a weight in any ways. UM. And then when
29:19
Speaker 1: you think about the future. Like I said, there's commercial
29:21
Speaker 1: space stations coming on board. They're not all going to
29:23
Speaker 1: be privately funded. It's going to be a combination of
29:26
Speaker 1: government financing and public private partnerships. And there's also going
29:29
Speaker 1: to be some really great stuff happening um in terms
29:32
Speaker 1: of susan lunar space. That's the space between the Earth
29:34
Speaker 1: and the Moon and that millunar's surface. So a lot
29:37
Speaker 1: of private investment there possibly in lunar mind so taking
29:41
Speaker 1: the dirt and dust that's on the Moon and merely
29:43
Speaker 1: transforming it into something that's useful. All right, Laura, thanks
29:47
Speaker 1: so much for joining us. Fascinating stuff. Laura Force like
29:49
Speaker 1: there's a space analyssue os astroltical and she also read
29:52
Speaker 1: a book entitled Rise of the Space Age. Millennials. Actually
29:57
Speaker 1: now they think about we saw someone from J and
30:00
Speaker 1: Z go up and the Bezos bros. Are kind of
30:04
Speaker 1: like generation Golf, Like my generation, your generation, right, Uh,
30:08
Speaker 1: I don't know, I'm the tail end of the Baby boomers. Really, yeah,
30:11
Speaker 1: you're so young for a Baby Boomer. And then Wally
30:14
Speaker 1: of course, yes, she's like the greatest generation. Sure, I
30:18
Speaker 1: guess that's what we call that we can't really remember
30:20
Speaker 1: it anyway, Laura, thanks so much for joining us. Thanks
30:22
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
30:26
Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast
30:29
Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
30:33
Speaker 1: Matt Miller three. On False Sweeney, I'm on Twitter at
30:37
Speaker 1: pt Sweeney Before the podcast, you can always catch us
30:40
Speaker 1: worldwide at Bloomberg Radio