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Green Investing, The Fed, and Real Estate · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moven news.
• 0:14
  Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
• 0:21
  Speaker 1: All right, Matt, we're going to elect electric vehicles. Matt,
• 0:23
  Speaker 1: it's happening. I mean, you were so kind to let
• 0:26
  Speaker 1: fired me up with the Bloomberg I mean with the
• 0:28
  Speaker 1: Ford f one fifty.
• 0:29
  Speaker 3: That was awesome.
• 0:30
  Speaker 1: But I'm not going there unless there's like the batteries
• 0:34
  Speaker 1: are better into charging stations everywhere we got gas stations.
• 0:38
  Speaker 3: I'm not going to be a first adopter. Number of
• 0:39
  Speaker 3: reasons I'm not going to be a first adopter there
• 0:42
  Speaker 3: about it.
• 0:43
  Speaker 4: Yes, call it that, but sorry my mic was off.
• 0:46
  Speaker 4: Thank you, Ken.
• 0:47
  Speaker 2: There are a number of reasons to be tentative about it.
• 0:49
  Speaker 2: But how fun was it to drive the fifty light?
• 0:53
  Speaker 1: Yeah, it's a beast. I have to admit that was
• 0:55
  Speaker 1: pretty cool. Jeff Chramberlin joins us. He's the CEO of
• 0:58
  Speaker 1: Volta Energy technology. He joined just live here in our
• 1:01
  Speaker 1: Bloomberg Interactive Broker studio.
• 1:02
  Speaker 3: Appreciate that.
• 1:03
  Speaker 1: See, when it's a climate, we can get people coming
• 1:04
  Speaker 1: into New York. When it's un week, people come into
• 1:07
  Speaker 1: New York, you get them in studio. Jeff, tell us
• 1:09
  Speaker 1: about your company, Vaulta Energies Technologies. What do you guys
• 1:12
  Speaker 1: do here in this EV space?
• 1:14
  Speaker 5: We invest in battery and associated tech technologies, including the
• 1:18
  Speaker 5: kind of infrastructure you were talking about, charging stations, et cetera.
• 1:22
  Speaker 5: A whole bunch of new technology requirements there that will
• 1:24
  Speaker 5: be and RB are being adopted. And so our whole
• 1:28
  Speaker 5: goal is to invest in companies at that inflection point
• 1:31
  Speaker 5: when they come out of science and they're all ready
• 1:33
  Speaker 5: for scale, and we're industrialists and we're investors by training
• 1:37
  Speaker 5: and by experience, And ultimately I ran all the battery
• 1:39
  Speaker 5: work at Ragon National Laboratory for ten years, got to
• 1:42
  Speaker 5: see supply chains developing around the entire world and what
• 1:45
  Speaker 5: the customer's needs were, so that we believe we can
• 1:48
  Speaker 5: place capital more effectively than most.
• 1:50
  Speaker 4: So unlike Paul, I am there.
• 1:52
  Speaker 2: I'm ready, and I've got my eye on a few
• 1:54
  Speaker 2: evs that I think are just amazing in terms of
• 1:58
  Speaker 2: the powertrain. And my one concern is that I buy
• 2:04
  Speaker 2: something and it becomes obsolete by the time it gets delivered.
• 2:07
  Speaker 4: Do you see the same kind.
• 2:08
  Speaker 2: Of what's it called Moore's law, you know in batteries
• 2:13
  Speaker 2: that we famously saw in chips. Do they just double
• 2:17
  Speaker 2: in capacity every year or have in price?
• 2:21
  Speaker 5: Yeah? Thanks for the question, Matt, and by the way,
• 2:22
  Speaker 5: thanks for having me on. I appreciate it. I come
• 2:25
  Speaker 5: from the chip industry, and so we have tried to
• 2:28
  Speaker 5: design or declare what a More's law looks like. But no,
• 2:31
  Speaker 5: in Moore's law, it's double the density of transistors on
• 2:34
  Speaker 5: a way for every twelve to eighteen months. What's happened
• 2:37
  Speaker 5: in the battery industry is they were first commercialized lit
• 2:40
  Speaker 5: the Mind batteries first commercialized in nineteen ninety two for
• 2:43
  Speaker 5: cam quarters. So thirty years have progressed. The average is
• 2:46
  Speaker 5: something like in the low single digits, maybe low double
• 2:50
  Speaker 5: digits percentage improvements year over year as opposed to a doubling.
• 2:54
  Speaker 5: So there is a kind of Moore's law for battery,
• 2:56
  Speaker 5: but it's not as extreme as what you're describing me.
• 2:58
  Speaker 5: But I do want to say one thing in two
• 3:00
  Speaker 5: thousand and four when Tesla started the battery costs the
• 3:04
  Speaker 5: unit of meritage dollars per killo what hour they were
• 3:06
  Speaker 5: at about four to six thousand dollars per kilo what hour?
• 3:09
  Speaker 5: Parody with gas powered vehicles, you need to be about
• 3:12
  Speaker 5: one hundred to one hundred and fifty dollars a killo
• 3:13
  Speaker 5: what hour. So they had the hubrit the hubris to
• 3:17
  Speaker 5: believe economies of scale and better engineering could get you there.
• 3:19
  Speaker 5: And guess what it did. The costs are down over
• 3:23
  Speaker 5: ninety five percent since they were very close to parody
• 3:25
  Speaker 5: with gas.
• 3:26
  Speaker 4: So what are we looking at now for killo what hour?
• 3:28
  Speaker 5: It's depending on the supplier. It ranges between eighty and
• 3:31
  Speaker 5: one hundred and eighty dollars a kilo one hour. So
• 3:33
  Speaker 5: we're essentially there.
• 3:34
  Speaker 2: Okay, because the ones I like, well, GM has these
• 3:36
  Speaker 2: massive two hundred and ten kilowat hour battery packs. I
• 3:39
  Speaker 2: don't know how efficient they are, but I just like
• 3:42
  Speaker 2: it's like a big block V eight, you know in
• 3:45
  Speaker 2: the truck they get four hundred and fifty miles of range.
• 3:48
  Speaker 4: The new Escalade EQ I think it's called or Escalate IQ,
• 3:52
  Speaker 4: can't remember anyway, The.
• 3:53
  Speaker 2: New EV Escalade does zer to sixty and five seconds
• 3:56
  Speaker 2: and it weighs damn near ten thousand pounds. It's just
• 4:00
  Speaker 2: unbelievable the amount of thrust you get from these electric motors.
• 4:06
  Speaker 2: What do you think about the obsolescence of the battery
• 4:10
  Speaker 2: though over a few years, Like, you can't just swap
• 4:13
  Speaker 2: out a battery from these the way you could with
• 4:15
  Speaker 2: an ice engine.
• 4:17
  Speaker 5: You can swap them out. I mean you could if
• 4:19
  Speaker 5: you wanted to keep your truck and put a more
• 4:21
  Speaker 5: modern battery in it. There are ways to do that,
• 4:23
  Speaker 5: But my guess is it'll be less costly for you
• 4:26
  Speaker 5: as a consumer to buy a new vehicle. I don't
• 4:28
  Speaker 5: think obsolescens going to move that quickly. And the battery tech,
• 4:31
  Speaker 5: the key that they're aiming for is cost and range today.
• 4:34
  Speaker 5: But there's another key that Paul mentioned it that's the
• 4:37
  Speaker 5: infrastructure surrounding it. Where can I go to charge my
• 4:39
  Speaker 5: vehicle quickly? What is potentially more important than range is
• 4:43
  Speaker 5: ubiquitous fast charging. Can I fill my vehicle with energy
• 4:47
  Speaker 5: to go three four, five hundred miles in five to
• 4:50
  Speaker 5: twenty minutes. That technology is on the rise, It's being
• 4:52
  Speaker 5: adopted right now.
• 4:53
  Speaker 1: What do we know at this stage of development of
• 4:55
  Speaker 1: the evs and batteries, about the supply chain, the raw
• 4:59
  Speaker 1: materials need. I've heard from some people that that's going
• 5:02
  Speaker 1: to be a gating issue. What do you know about
• 5:04
  Speaker 1: that from your.
• 5:04
  Speaker 5: Yeah, there's a lot of folks out there that talk
• 5:07
  Speaker 5: about lithium being a resource. Lithium is the key, let's
• 5:10
  Speaker 5: start there. In fact, I was hoping to talk today
• 5:12
  Speaker 5: about a comparison with oil. The last time the human
• 5:15
  Speaker 5: race has experienced an energy transition like the one that
• 5:17
  Speaker 5: has started was a shift from whale oil to rock oil.
• 5:21
  Speaker 5: And this transition is on the scale of that transition.
• 5:25
  Speaker 5: By rock oil, I mean petroleum.
• 5:29
  Speaker 2: What the shift from foil from whale oil? Which no, no,
• 5:33
  Speaker 2: but now what's comparable now to the shift from oil?
• 5:37
  Speaker 5: The shift from oil to renewable power and electric transportation
• 5:41
  Speaker 5: is on par in terms of the size of the
• 5:43
  Speaker 5: shift and the overall impacts on a wide variety of industries.
• 5:48
  Speaker 5: As oil was. Oil was started for lanterns right look
• 5:51
  Speaker 5: at where it ended up.
• 5:52
  Speaker 2: So I'm wondering actually about that in terms of you know,
• 5:55
  Speaker 2: how much lithium there is in the ground, how easy
• 5:59
  Speaker 2: it's going to be. I guess it's going to get
• 6:01
  Speaker 2: easier and easier to get it out of the ground.
• 6:02
  Speaker 2: You know, is it as reliable as oil has.
• 6:06
  Speaker 4: Been for the last century.
• 6:07
  Speaker 5: Short answer is yes. I think there's a lot of
• 6:10
  Speaker 5: handwringers that are telling us so there's not enough lithium
• 6:12
  Speaker 5: and there's crust there. Definitely is. Your point's a good one.
• 6:15
  Speaker 5: Though some is economic today in terms of extracting and
• 6:18
  Speaker 5: refining it, some is not. One of the things we
• 6:20
  Speaker 5: invest in, and we're not the only ones. Is new
• 6:22
  Speaker 5: technology to make the extraction of lithium more economic, and
• 6:26
  Speaker 5: so that getting back to the supply chain issue, you know,
• 6:28
  Speaker 5: there's the headline is China controls a lot of the materials,
• 6:32
  Speaker 5: but in the case of lithium, the vast majority of
• 6:34
  Speaker 5: lithium that's ready to use in batteries comes out of China.
• 6:38
  Speaker 5: But it's process there, it's not mind there. And this
• 6:41
  Speaker 5: is something I was hoping to talk about, getting back
• 6:43
  Speaker 5: to the supply chain, where is in mind the primary
• 6:46
  Speaker 5: resources the so called cone in South America. Chile has
• 6:50
  Speaker 5: a massive resource, so does Bolivia. In Argentina, that's where
• 6:53
  Speaker 5: the biggest resources are. There's some in Australia, there's some
• 6:56
  Speaker 5: in China, there's a lot in the US there And
• 6:59
  Speaker 5: this is really what I'm saying. We're at the early
• 7:01
  Speaker 5: stages of this. It's like finding a new you know,
• 7:04
  Speaker 5: it started with spindletop oil oil did in Texas. Then
• 7:07
  Speaker 5: we found oil, humans found oil in Saudi Arabia. This
• 7:09
  Speaker 5: same thing is going to be happening with lithium.
• 7:11
  Speaker 2: So are you you know, at Volta, are you investing
• 7:15
  Speaker 2: in or are you involved in other companies investing in
• 7:19
  Speaker 2: the processing of.
• 7:20
  Speaker 4: These materials here because we don't want it to all be.
• 7:23
  Speaker 5: Absolutely, we absolutely are including new technologies to process them
• 7:28
  Speaker 5: more efficiently and less costly. So this and that is
• 7:32
  Speaker 5: something I want to say. The supply chain movement is
• 7:34
  Speaker 5: evidence of the maturity state of this industry. And what
• 7:38
  Speaker 5: I mean by that is a guy from the chip industry.
• 7:40
  Speaker 5: We'd been preaching to anyone that would listen, investors in
• 7:43
  Speaker 5: the government up in Capitol Hill for fifteen years. The
• 7:46
  Speaker 5: supply chains are going to move out of China. And
• 7:48
  Speaker 5: here's why. In the chip industry it makes sense to
• 7:51
  Speaker 5: have centralized manufacturing. The mass of microchips versus their value.
• 7:57
  Speaker 5: Their value is massive compared to their mass. So you
• 8:00
  Speaker 5: can get economies of scale, centralized manufacturing and Taiwan shipping
• 8:03
  Speaker 5: around the world. You can't do that with the battery technology.
• 8:06
  Speaker 5: And you don't have to look any further than the
• 8:08
  Speaker 5: automotive industry itself to believe me that by units, the
• 8:11
  Speaker 5: largest manufacturer of cars in the US is Toyota. They
• 8:14
  Speaker 5: don't make their cars in Japan for the American customers.
• 8:17
  Speaker 5: It's the same thing with battery tech. Those supply chains
• 8:19
  Speaker 5: are moving right now.
• 8:20
  Speaker 2: And by the way, in terms of the change in technology,
• 8:23
  Speaker 2: what you're saying reminds me of something that Gary Shilling,
• 8:27
  Speaker 2: who's a famous eighty six year old economist, He tells
• 8:30
  Speaker 2: me when he was a kid, people were wringing their
• 8:34
  Speaker 2: hands and worried that there wasn't enough copper in the
• 8:36
  Speaker 2: Earth's crust for the telecoms industry.
• 8:39
  Speaker 4: And obviously we've moved on from that piece.
• 8:42
  Speaker 5: Yes, in the fiber. And there's another thing. There are
• 8:44
  Speaker 5: New York Times articles in the nineteen thirties when the
• 8:47
  Speaker 5: horseless carriage was really taken off, that there's not enough
• 8:50
  Speaker 5: lead in there is crust. And this is an important
• 8:52
  Speaker 5: point as well regarding movement of supply chains. Lead is
• 8:55
  Speaker 5: recycled lead acid batteries out of vehicles. It's like ninety
• 8:58
  Speaker 5: eight point seven percent of those are recycled. The same
• 9:00
  Speaker 5: thing is going to happen here. So we may not
• 9:02
  Speaker 5: have access to cobalt in those batteries that comes out
• 9:05
  Speaker 5: of the congo, but we will because we're going to
• 9:07
  Speaker 5: move to so called urban mining waste materials to get copper, cobalt, lithium,
• 9:12
  Speaker 5: et cetera.
• 9:13
  Speaker 4: Fascinating, So cool it is.
• 9:15
  Speaker 1: I mean, I mean, I guess you get bachelor's in
• 9:17
  Speaker 1: chemistry from Wake Forest, and what are youna do with that?
• 9:19
  Speaker 1: So you triple down you get a PhD in physical
• 9:22
  Speaker 1: chemistry from Georgia Tech. I mean, those are some serious
• 9:25
  Speaker 1: engineering geeks down there in Georgia Tech.
• 9:28
  Speaker 4: So he means that in a good way.
• 9:29
  Speaker 1: Yeah, in a good way, some really big ones. So anyway,
• 9:33
  Speaker 1: then you go into the electric car business, why not?
• 9:35
  Speaker 1: Jeff Chamberlain, CEO Volta Energy Technologies, thanks so much for
• 9:38
  Speaker 1: joining us, coming into the Bloomberg Interactive Broker's studio. So again,
• 9:42
  Speaker 1: it is a climate week in New York, and so
• 9:44
  Speaker 1: we get a lot of smart people coming through here
• 9:46
  Speaker 1: talking to us about what's happening out there in the
• 9:49
  Speaker 1: evolution of the energy space.
• 9:51
  Speaker 6: You're listening to the Team Ken's are Live program Bloomberg
• 9:55
  Speaker 6: Markets weekdays at ten am East ding on Bloomberg dot com,
• 9:58
  Speaker 6: the iHeartRadio app and the Bloomberg Business App, or listen
• 10:02
  Speaker 6: on demand wherever you get your.
• 10:03
  Speaker 3: Podcast, Matt.
• 10:06
  Speaker 1: Instead of buying the latest car with a scat pack
• 10:09
  Speaker 1: or whatever it is, you could put your money into
• 10:12
  Speaker 1: your treasure.
• 10:13
  Speaker 3: You can get five points zero six percent today. How
• 10:15
  Speaker 3: about that?
• 10:16
  Speaker 2: I mean, it's probably a smart idea, which is why
• 10:19
  Speaker 2: I won't be doing it, but a lot of others
• 10:21
  Speaker 2: are not. Just in the twos, right, the fives hit
• 10:24
  Speaker 2: the highest level since two thousand and seven. The tens
• 10:26
  Speaker 2: hit the highest levels since two thousand and seven, and
• 10:28
  Speaker 2: a reminder, you.
• 10:29
  Speaker 4: Know that was sixteen years ago. So these rates are incredible.
• 10:35
  Speaker 2: And keep in mind, right, prices move in the opposite direction.
• 10:40
  Speaker 2: So when we see these high prices, that mean rates,
• 10:43
  Speaker 2: It means that the prices are low. Why is everybody
• 10:46
  Speaker 2: selling off treasuries right now? Let's ask Joanna Diegos. She's
• 10:51
  Speaker 2: the co founder of bond Blocks and she joins us
• 10:53
  Speaker 2: right now in the Interactive Brokers studio. So Joanna, I
• 10:56
  Speaker 2: know you well from our ETF show or you're a
• 10:58
  Speaker 2: frequent guest, and I also know from that show that
• 11:04
  Speaker 2: everyone's been getting long in treasuries and they've been losing
• 11:08
  Speaker 2: money on that big bet.
• 11:09
  Speaker 7: Why yeah, over the last three months that that trade
• 11:13
  Speaker 7: is down ten percent if you're going long treasuries twenty plus.
• 11:17
  Speaker 7: I think that this is a trend that the treasury
• 11:20
  Speaker 7: flow into the long end has been probably the biggest
• 11:23
  Speaker 7: percentage of flow into treasuries year on year, So the
• 11:26
  Speaker 7: twelve months trailing it's the biggest. It's a thirty percent
• 11:30
  Speaker 7: of flows into treasuries for twenty twenty three. I think
• 11:32
  Speaker 7: people are just taking a really really big view on
• 11:35
  Speaker 7: trying to call the bottom and they're sticking with it,
• 11:38
  Speaker 7: which is pretty fascinating that they're doing that. I think
• 11:40
  Speaker 7: the good sign is that.
• 11:41
  Speaker 2: Today it makes sense, right because we haven't seen yields
• 11:45
  Speaker 2: this high and as we just said, sixteen years.
• 11:48
  Speaker 4: Yes, yeah.
• 11:49
  Speaker 7: I think I think the encouraging thing is that we've
• 11:52
  Speaker 7: seen less of than twenty twenty three or recently is
• 11:54
  Speaker 7: all of more flow into the short short end, so
• 11:57
  Speaker 7: three months, six months and more flow balanced across US
• 12:00
  Speaker 7: one one plus years into three, five ten, just as
• 12:04
  Speaker 7: you described. I think that's encouraging and people are trying
• 12:06
  Speaker 7: to just have feather in more duration into their into
• 12:10
  Speaker 7: their portfolio.
• 12:10
  Speaker 2: Now, just tell us quickly about your products at bond Blocks,
• 12:13
  Speaker 2: because there are some very popular ETFs that people use
• 12:16
  Speaker 2: to make these trades.
• 12:18
  Speaker 7: Yeah, So for that very reason, we observe that you
• 12:21
  Speaker 7: can't actually trade exact duration in the current and in
• 12:25
  Speaker 7: the current ETF offering. So we launched eight duration specific
• 12:29
  Speaker 7: treasury funds. So if you want one your duration to
• 12:31
  Speaker 7: your duration three it duration, you can use our products
• 12:34
  Speaker 7: more precisely for exactly the trades I think people are
• 12:37
  Speaker 7: trying to put on. If you broadly put on duration
• 12:40
  Speaker 7: in your portfolio, you may have you may you may
• 12:43
  Speaker 7: overallocate to that duration. And so we want people in
• 12:45
  Speaker 7: these markets to be able to be very very prescriptive
• 12:48
  Speaker 7: and selective where they go into into high yield.
• 12:51
  Speaker 1: Given rates where they are. Are you seeing flows? I
• 12:53
  Speaker 1: mean it seems like you're perfectly positioned for where the
• 12:56
  Speaker 1: market is today at bond Blocks. I mean are you
• 12:58
  Speaker 1: seeing flows come in and if so, kind of where
• 13:01
  Speaker 1: are they going?
• 13:01
  Speaker 7: With a really cool trade this week in our double
• 13:04
  Speaker 7: b high yield fund. We have a credit rating a series,
• 13:07
  Speaker 7: and I think that's acknowledging the strength that you're seeing
• 13:11
  Speaker 7: corporate balance sheets and the resiliency that has been in
• 13:14
  Speaker 7: the economy this year. So I think I think people
• 13:17
  Speaker 7: are taking on very measured risk and to see a
• 13:21
  Speaker 7: trade like that is really compelling.
• 13:24
  Speaker 3: Interesting.
• 13:25
  Speaker 1: So for bond blocks, I mean, again, what are some
• 13:29
  Speaker 1: of the products that are kind of most popular these
• 13:32
  Speaker 1: days in your ETF portfolio.
• 13:35
  Speaker 7: Yeah, we're starting to see increase interest across duration as
• 13:38
  Speaker 7: I mentioned, like moving out a little bit into the
• 13:40
  Speaker 7: duration trade, and as well, we're seeing interest in some
• 13:44
  Speaker 7: of the corporate products that we have out. We have
• 13:46
  Speaker 7: a really robust offering in high yield. We have over
• 13:49
  Speaker 7: ten products in high yold. So you can trade sectors
• 13:51
  Speaker 7: with bomb blocks, the bond blocks, you can trade credit ratings,
• 13:54
  Speaker 7: as I mentioned, and I think Matt would be happy
• 13:57
  Speaker 7: to hear that. In the summer, we saw a lot
• 13:59
  Speaker 7: of interest in our triple C product.
• 14:01
  Speaker 4: It's one of my favorite. So you just picked my favorite. Yeah,
• 14:05
  Speaker 4: but they're.
• 14:06
  Speaker 7: Tight, right, Yeah, So obviously they do what they say
• 14:09
  Speaker 7: they're going to do. They track their indexes, they give
• 14:11
  Speaker 7: you that exact exposure. Also, what I think is interesting
• 14:15
  Speaker 7: is people are starting to realize that the fundamentals in
• 14:18
  Speaker 7: high yield are really strong, and if you think about it,
• 14:21
  Speaker 7: relative the other risks that are in your portfolios, those
• 14:24
  Speaker 7: high coupon rates are providing you a ton of cushion
• 14:26
  Speaker 7: for any relativity that might come going forward in fixed
• 14:30
  Speaker 7: income plus relative to equities, which over the last ten
• 14:33
  Speaker 7: or fifteen years portfolios have been heavily heavily allocated to
• 14:38
  Speaker 7: eke out more return. These are great protocols to look
• 14:42
  Speaker 7: for exposure to to get you to those levels of
• 14:46
  Speaker 7: return seven ten percent a year, whatever you're looking for,
• 14:49
  Speaker 7: with less risk. In fact, the broad high yield category
• 14:53
  Speaker 7: has over less than half the risk of the S
• 14:55
  Speaker 7: and P five hundred. Yet you're getting all this yield
• 14:57
  Speaker 7: and all this cushion and strength and the balance.
• 15:00
  Speaker 4: That's interesting.
• 15:01
  Speaker 2: So high yield in general, which is what triple b's
• 15:05
  Speaker 2: and lower.
• 15:06
  Speaker 7: So no triple B is investment grade, so it's double
• 15:09
  Speaker 7: B B and triple.
• 15:10
  Speaker 4: C double B and lower.
• 15:12
  Speaker 2: Yeah, that general category has less risk than buying the
• 15:17
  Speaker 2: S and P five hundred.
• 15:18
  Speaker 8: Yeah.
• 15:18
  Speaker 7: From a Volatiley perspective, over the last ten years, you
• 15:22
  Speaker 7: just don't think that you really have to reintroduce yourself
• 15:24
  Speaker 7: to some of these categories and fixed income and remind
• 15:27
  Speaker 7: yourself of the characteristics of them.
• 15:29
  Speaker 2: You know.
• 15:29
  Speaker 7: Also, this isn't the same credit cycle we've seen in
• 15:32
  Speaker 7: the past. The defaults haven't shown up in past any
• 15:36
  Speaker 7: kind of historical highs that they should be. They should be.
• 15:40
  Speaker 7: The distressed names in the overall category is pretty low.
• 15:43
  Speaker 7: It's only about seven and a half percent. So it's
• 15:46
  Speaker 7: an interesting thing if you get familiar with the corporate
• 15:49
  Speaker 7: issuers and the corporate categories investment grade two. There's a
• 15:53
  Speaker 7: lot of relative risk and reward here that you haven't
• 15:57
  Speaker 7: been able to deploy in your portfolio for a long time.
• 16:00
  Speaker 4: Do you see demand for up and quality over high yield?
• 16:02
  Speaker 7: Now up and quality over high yield like getting getting
• 16:06
  Speaker 7: some of these? Yeah, so that's the thing. You can
• 16:08
  Speaker 7: be really selective within these categories. With you know, at
• 16:11
  Speaker 7: bomb blocks we have, you were able to choose the
• 16:13
  Speaker 7: categories very very precisely, and so yeah, you can go
• 16:16
  Speaker 7: seek out quality high yield and you can go seek
• 16:20
  Speaker 7: out quality corporate exposure. And it sounds like those two
• 16:24
  Speaker 7: things aren't supposed to go together, but there's just a
• 16:26
  Speaker 7: lot of misconceptions about the category and what's going on
• 16:29
  Speaker 7: with them right now.
• 16:30
  Speaker 1: Yeah, I'm looking at ETFO on the Bloomberg terminal x
• 16:33
  Speaker 1: c c C, the CC triple C rated US A
• 16:38
  Speaker 1: dollar high yield corporate bond up twelve percent trailing twel
• 16:41
  Speaker 1: month basis.
• 16:42
  Speaker 7: Yeah, Yeah, that's that's that yield that is just really
• 16:45
  Speaker 7: hard to look away from, especially with as I mentioned,
• 16:49
  Speaker 7: the different level of volatility that that gives you in
• 16:52
  Speaker 7: your portfolio. And you know, it's twenty twenty three, We're
• 16:55
  Speaker 7: almost at the end of twenty twenty three at bomb blocks.
• 16:57
  Speaker 7: If we don't see a recession or any downturn half
• 17:00
  Speaker 7: through the end of this year or even into the
• 17:01
  Speaker 7: beginning of next year, and you're going on your second
• 17:05
  Speaker 7: almost third year of this market environment with yields at
• 17:08
  Speaker 7: these levels, which are double where they were before the
• 17:11
  Speaker 7: Fed started hiking rates. And really, if we think things
• 17:15
  Speaker 7: are higher for longer with ja bomb blocks we do
• 17:18
  Speaker 7: and we don't see these hard landings, you really need
• 17:21
  Speaker 7: to think about what's going on with your portfolio for
• 17:22
  Speaker 7: the next two to three years.
• 17:23
  Speaker 1: All right, Joanna, always great stuff to chat with you.
• 17:26
  Speaker 1: Joanna Diego's co founder of bond Blocks.
• 17:29
  Speaker 6: You're listening to the tape cans are live program Bloomberg
• 17:32
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 17:36
  Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 17:39
  Speaker 6: You can also listen live on Amazon Alexa from our
• 17:42
  Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 17:48
  Speaker 3: Danielle di Martino Booth made it here.
• 17:51
  Speaker 1: To the studio. She's the CEO, Chief Strategistic QI Research.
• 17:55
  Speaker 1: You came in from LaGuardia. Not a quick trip today.
• 17:57
  Speaker 4: You need a police escort.
• 17:59
  Speaker 3: Yeah, you need to dissk like in a helicopter press. Well,
• 18:02
  Speaker 3: we know a guy that could help us out next.
• 18:04
  Speaker 9: This is not the right time to like break a leg. Really,
• 18:07
  Speaker 9: this is not the right time to need an ambulance
• 18:09
  Speaker 9: in Matt.
• 18:10
  Speaker 1: Forget about it, particularly on the East side. All right, Danielle,
• 18:12
  Speaker 1: you were just talking about housing market. Give us some
• 18:16
  Speaker 1: of those stats you were talking about, because Matt and
• 18:18
  Speaker 1: I both now are real estate moguls.
• 18:20
  Speaker 3: Home.
• 18:21
  Speaker 4: Oh, yes, we own property. We own property.
• 18:24
  Speaker 3: Exactly what are you seeing in the real estate market?
• 18:27
  Speaker 9: Does that mean you topped the market?
• 18:29
  Speaker 2: You know what?
• 18:29
  Speaker 9: We're seeing is is kind of this this supply over
• 18:34
  Speaker 9: supply bloodbath that we've been worried about for a few
• 18:36
  Speaker 9: years on the apartment side finally coming to fruition. So
• 18:40
  Speaker 9: before the pandemic, you might have had eighty two eighty
• 18:42
  Speaker 9: three thousand units absorbed a month. This the last month,
• 18:45
  Speaker 9: we had like forty six I want to say a thousand,
• 18:47
  Speaker 9: don't quote me, but about about half of what was
• 18:50
  Speaker 9: pre pandemic normal from the one hundred and nine thousand
• 18:53
  Speaker 9: units that came online out of the pipeline. So you're
• 18:55
  Speaker 9: not even getting fifty percent of what's being produced you had.
• 18:59
  Speaker 9: You've had one point two million units come on in
• 19:01
  Speaker 9: the last three years, and there's another one million units
• 19:04
  Speaker 9: in the pipeline. So we saw multi family permits yesterday
• 19:07
  Speaker 9: really get hit hard. But you've still got to work
• 19:10
  Speaker 9: through a pipeline of another million units.
• 19:13
  Speaker 2: Are going to take out a mortgage at seven and
• 19:14
  Speaker 2: a half percent to well someday they will, right. It
• 19:18
  Speaker 2: looks bad compared to a couple of years ago, but
• 19:19
  Speaker 2: not so bad compared to twenty years ago.
• 19:21
  Speaker 9: Refinancings were up like thirteen percent in this morning's Mortgage
• 19:25
  Speaker 9: Bankers Association dated. Somebody's taking cash out of their homes
• 19:28
  Speaker 9: at these mortgage rates.
• 19:30
  Speaker 2: Wow, So does this is this what the FED wanted
• 19:34
  Speaker 2: or does this make the transition transmission mechanism slower?
• 19:41
  Speaker 9: It makes it a lot slower. Yeah, And I think
• 19:44
  Speaker 9: that's exactly what we've seen.
• 19:46
  Speaker 2: And because some people say, you know, when we talked
• 19:50
  Speaker 2: to Danny Blanchflower, he says it takes eighteen to twenty
• 19:53
  Speaker 2: four months for these great hikes to work their way
• 19:56
  Speaker 2: through the economy. But other people like jan Hatzias say, actually,
• 20:01
  Speaker 2: the lags are much quicker than they had been the past,
• 20:05
  Speaker 2: which is why he thinks that they've worked their way
• 20:07
  Speaker 2: through the coom.
• 20:08
  Speaker 9: They could have been quicker, could have been, but the
• 20:11
  Speaker 9: fiscal impulse kicked right back up. So that's not normally
• 20:15
  Speaker 9: what you see when you're when your economy is slowing,
• 20:18
  Speaker 9: when you're getting to the end of the cycle. You
• 20:20
  Speaker 9: don't normally see the government re up completely re up
• 20:23
  Speaker 9: as if we're at war, fiscal spending along with the
• 20:27
  Speaker 9: employee retention credit which is now on hold, thank you god.
• 20:30
  Speaker 4: But no one talks about the fiscal side.
• 20:32
  Speaker 2: But if we were either when it comes to a
• 20:34
  Speaker 2: driver of inflation, nor when it comes to the economy,
• 20:37
  Speaker 2: everyone talks.
• 20:38
  Speaker 9: In the month of July, the employer retention credit pumped
• 20:41
  Speaker 9: out twenty nine point eight billion dollars in one month
• 20:44
  Speaker 9: in cash directly deposited into people's check just like the
• 20:48
  Speaker 9: stimulus checks were those one two three stimulus checks. It's
• 20:51
  Speaker 9: the same exact thing that bypasses monetary policy and the
• 20:55
  Speaker 9: fed'sibility to try and slow the economy.
• 20:57
  Speaker 4: Now the plug's been pulled on.
• 20:58
  Speaker 9: That, so you know, and student loans, people are preemptively
• 21:03
  Speaker 9: getting out there and paying their student loans. Who would
• 21:05
  Speaker 9: have predicted this, that we would have seen this spike
• 21:08
  Speaker 9: and fiscal in government revenues in the month of August.
• 21:11
  Speaker 9: People are like, hey, interest is going to start back up.
• 21:14
  Speaker 9: This is just a fact of life. My budget's going
• 21:16
  Speaker 9: to take a hit. I might as well just start
• 21:17
  Speaker 9: paying right now in August.
• 21:18
  Speaker 1: And they did, all right, putting all the millions of
• 21:21
  Speaker 1: pieces of data that you look at and your team
• 21:23
  Speaker 1: of QI research look at, what's your recession call.
• 21:27
  Speaker 9: I think that the reason we're seeing some for lack
• 21:31
  Speaker 9: of a better way to describe it, preemptive Chapter eleven filings,
• 21:36
  Speaker 9: some stores just up. I mean, we're seeing massive amounts
• 21:39
  Speaker 9: of stores closing, closing, closing, closing. I think we're seeing
• 21:42
  Speaker 9: it because they know that the holidays are not going
• 21:44
  Speaker 9: to save them, So I think we're I think I
• 21:46
  Speaker 9: think we're finally getting to the hard part of the
• 21:49
  Speaker 9: landing as opposed to where we've.
• 21:51
  Speaker 3: Been, because I'm not buying it to that soft landing rhetoric.
• 21:56
  Speaker 8: No, it's certainly not.
• 21:57
  Speaker 9: With the UAW on.
• 21:58
  Speaker 2: Strike, Okay, the government shutdown, and the government shutdown, u
• 22:01
  Speaker 2: aw on strike, Student loan payments getting ready to resume.
• 22:05
  Speaker 4: I've got a whole list I can't do. I don't
• 22:07
  Speaker 4: have it.
• 22:07
  Speaker 9: Uprate crisis as high as they are, people are substituting
• 22:10
  Speaker 9: out things.
• 22:11
  Speaker 2: Credit card debt rising, credit card delinquencies rising, auto load
• 22:16
  Speaker 2: delinquencies rising.
• 22:18
  Speaker 5: And where is it.
• 22:19
  Speaker 9: It's in that sweet spot the thirty to thirty nine
• 22:21
  Speaker 9: year old who has the biggest student loan payment. That's
• 22:25
  Speaker 9: where you're seeing credit card delinquencies the highest, according to
• 22:28
  Speaker 9: New York Fed data. Same thing with auto loan delinquencies
• 22:32
  Speaker 9: the highest. Auto Finance weekly it's kind of a trade
• 22:36
  Speaker 9: trade weekly. They said that repossessions this year are tracking
• 22:40
  Speaker 9: at two million for the year, and there repossessions right
• 22:45
  Speaker 9: now are just a factor of how many cars per
• 22:48
  Speaker 9: day can the repo men get. There's literally it's capacity constrained.
• 22:54
  Speaker 2: I have Danielle di Martino, booth fan, who always writes
• 22:57
  Speaker 2: in when you're on he He has sent me like
• 23:01
  Speaker 2: eight questions so far, but I'll state I'll just suppose one,
• 23:05
  Speaker 2: which I think is really interesting. Do you fear the
• 23:08
  Speaker 2: whoe home data is lulling investors into lazy risk adding,
• 23:14
  Speaker 2: which makes sense to me.
• 23:16
  Speaker 9: I do, especially because you have to understand that going
• 23:20
  Speaker 9: into the Great Financial Crisis, we didn't have like a
• 23:23
  Speaker 9: trillion plus dollar fixed income exchange trade at fund Universe,
• 23:28
  Speaker 9: but now we do. So the structure of the financial
• 23:30
  Speaker 9: system has changed, and what we see reflected in kind
• 23:34
  Speaker 9: of high yield spreads, and that's where you're like danger, danger.
• 23:38
  Speaker 9: We're not seeing it reflected in spreads because of the
• 23:40
  Speaker 9: ETF structure, So you're just seeing spreads reflect inflows and
• 23:45
  Speaker 9: redemptions from these gigantic fixed income ETFs and the super
• 23:50
  Speaker 9: liquid names that trade when there's redemptions and when there's inflows,
• 23:54
  Speaker 9: So you don't see the ninety percent of the garbage
• 23:56
  Speaker 9: that's trading by appointment only reflected in spreads, So that
• 24:00
  Speaker 9: gives investors, I think another this this air of confidence
• 24:04
  Speaker 9: that they should not have.
• 24:06
  Speaker 4: Al Right, that's fascinating.
• 24:07
  Speaker 1: Does the FED share your sense of caution? Do you
• 24:11
  Speaker 1: think such that they will just settle down and stop?
• 24:15
  Speaker 9: I would have to say no, given how sanguine John
• 24:18
  Speaker 9: Williams is, and that he runs the New York FED,
• 24:21
  Speaker 9: where the market's desk is housed, and that's where they
• 24:24
  Speaker 9: get their markets intelligence throughout the Federal Reserve system, So
• 24:28
  Speaker 9: I would have to say absolutely not.
• 24:30
  Speaker 4: So when's the when's the cliff risk?
• 24:33
  Speaker 5: Here?
• 24:34
  Speaker 2: Is it when unemployment jumps? Is it when we don't
• 24:36
  Speaker 2: get a great holiday shopping season?
• 24:39
  Speaker 4: Is it's?
• 24:40
  Speaker 9: I think it's both of those things. Remember Yellow trucking
• 24:44
  Speaker 9: had severance. Okay, so we didn't see that thirty thousand hit.
• 24:50
  Speaker 4: The truck bankers initial jobs. A lot of people lost jobs.
• 24:52
  Speaker 9: But thirty thousand people lost their jobs, but we didn't
• 24:55
  Speaker 9: see that hit because of severance. So we've only got
• 24:58
  Speaker 9: three states left that don't rising continuing jobless claims Oklahoma, Kansas,
• 25:03
  Speaker 9: and Alaska. That's it. We had zero states with rising
• 25:06
  Speaker 9: continuing jobs claimed last September. Now we have forty seven,
• 25:11
  Speaker 9: fifty one forty seven.
• 25:12
  Speaker 1: So you think the FED should sit stop raising rates
• 25:19
  Speaker 1: and or should they actually cut rates?
• 25:20
  Speaker 4: Where are you?
• 25:21
  Speaker 9: I don't think we're necessarily at the juncture of cutting rates.
• 25:25
  Speaker 9: But even when we get there in twenty twenty four,
• 25:28
  Speaker 9: keep shrinking the balance sheet?
• 25:30
  Speaker 3: And is the FED doing that?
• 25:32
  Speaker 9: Oh yeah, okay, it's slowed a little.
• 25:34
  Speaker 4: Bit and a half trillion now for eight and a
• 25:36
  Speaker 4: half billion. It slowed a.
• 25:37
  Speaker 9: Little bit during the debt ceiling showdown, which was very
• 25:40
  Speaker 9: that was very clever.
• 25:41
  Speaker 4: Fed space bowl go okay, Fed space Baal, go on
• 25:45
  Speaker 4: the Bloomberg terminal.
• 25:46
  Speaker 9: But what are you not going to hear asked at
• 25:48
  Speaker 9: the press conference today. Nobody's going to ask them about
• 25:51
  Speaker 9: the balance sheet. It's like the press is gagged.
• 25:54
  Speaker 4: Why is that horedible?
• 25:55
  Speaker 2: Because Neil Grosman comes in here, he calls it QD
• 25:58
  Speaker 2: quantitative drip.
• 26:00
  Speaker 9: Well again, but the first time they tried QT, they
• 26:04
  Speaker 9: were trying to empty out a lake. Now every central
• 26:08
  Speaker 9: bank in the world jumped in after the pandemic. So
• 26:11
  Speaker 9: now QT is working where they're trying to empty out
• 26:14
  Speaker 9: an ocean. So it's it's a it's a different dynamic,
• 26:17
  Speaker 9: but that does not mean that it's not happening. And
• 26:20
  Speaker 9: by the way, it's global, right, and it wasn't.
• 26:23
  Speaker 4: It was a ton of supply.
• 26:24
  Speaker 2: This is what we're just talking about with Ira Jersey
• 26:26
  Speaker 2: right at the same time we're getting one and a
• 26:28
  Speaker 2: half trillion.
• 26:28
  Speaker 4: I think he said, yep, supply maybe through And I.
• 26:31
  Speaker 9: Mean, you know, for the moment. You know, if you
• 26:34
  Speaker 9: if you dig deep pension funds, life insurance companies, they're delighted.
• 26:38
  Speaker 9: They don't know what to do with themselves with these yields.
• 26:41
  Speaker 9: They're like, oh my gosh, I can do this weird
• 26:42
  Speaker 9: thing called asset liability matching, which I haven't been able
• 26:46
  Speaker 9: to do for years. I've been stuck in private equity
• 26:48
  Speaker 9: paying god knows what fees for diversification that I you know,
• 26:52
  Speaker 9: all of a sudden, I can't get why are we
• 26:54
  Speaker 9: seeing CIOs of public pensions falling quickly one after another
• 26:59
  Speaker 9: like dominoes.
• 27:00
  Speaker 3: All right, Jess saying I'm glad you made it to
• 27:02
  Speaker 3: the studio. It was worth every minute.
• 27:04
  Speaker 1: Danielle di Martino Booth, she's the CEO and chief strategistic
• 27:07
  Speaker 1: QI Research, one of our favorite folks I talked to
• 27:10
  Speaker 1: about these markets, about the Federal Reserve. She did spend
• 27:12
  Speaker 1: some time at the Federal Reserve Bank of Dallas, so
• 27:14
  Speaker 1: she knows of what she speaks. Again, we're gonna hear
• 27:17
  Speaker 1: from the Fed today. We'll get those minutes at two
• 27:19
  Speaker 1: pm Wall Street Time. Bloomberg Surveillance TV coverage starts at
• 27:23
  Speaker 1: one thirty. That's gonna be simulcast on radio.
• 27:25
  Speaker 3: I believe the FED decide FED sides well full cover.
• 27:28
  Speaker 6: You're listening to the team Ken's her live program Bloomberg
• 27:32
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com,
• 27:35
  Speaker 6: the iHeartRadio app, and the Bloomberg Business App, or listen
• 27:39
  Speaker 6: on demand wherever you get your podcasts.
• 27:44
  Speaker 1: It's not working in New York City the way I
• 27:46
  Speaker 1: thought it was, which is city approved dispensaries and nice
• 27:49
  Speaker 1: shops and all every block has two or these, two
• 27:53
  Speaker 1: or three of these, you know, kind of I don't know,
• 27:55
  Speaker 1: under the table kind of.
• 27:57
  Speaker 2: I mean, the road to hell is paid with good intentions.
• 28:00
  Speaker 2: I think the cannabis management in New York State wanted
• 28:03
  Speaker 2: to do the right thing and then just ended up
• 28:06
  Speaker 2: making a mess of it because there's only a few
• 28:09
  Speaker 2: legal well there's only a few licensed dispensaries around here,
• 28:14
  Speaker 2: but you can't get any of the products that everybody wants,
• 28:18
  Speaker 2: so they go to everywhere else.
• 28:20
  Speaker 1: All right, Kyle Kasen joins as he's the CEO of Glasshouse.
• 28:24
  Speaker 1: Over the counter, ghbf WF is the ticker GHBWF. Yes,
• 28:30
  Speaker 1: GHBWF is the ticker.
• 28:32
  Speaker 5: Thank you.
• 28:32
  Speaker 1: He joined us live here in our Bloomberg Interactive Broker studio.
• 28:35
  Speaker 3: Kyle, you're in the city here today. You've seen it all.
• 28:38
  Speaker 3: What did New York City?
• 28:40
  Speaker 4: Well, what does Glasshouse do?
• 28:41
  Speaker 3: What does glass House do?
• 28:42
  Speaker 5: Let's go there, so thank you for having me on.
• 28:45
  Speaker 10: Glasshouse Brands is a vertically integrated company in California. We
• 28:49
  Speaker 10: own the largest greenhouse facility or cultivation facility in the
• 28:54
  Speaker 10: history of man mankind. It's five point five billion square feet.
• 28:58
  Speaker 10: Coupled with our other two greenhouses, if we have six
• 29:01
  Speaker 10: million square feet of cultivation. We have ten stores throughout
• 29:04
  Speaker 10: the state, and we have a manufacturing facility. So we're
• 29:07
  Speaker 10: only in California and we're basically the largest seller of
• 29:12
  Speaker 10: cannabis in the biggest state in the country.
• 29:14
  Speaker 1: How is that business rolling out in the state of California.
• 29:18
  Speaker 10: You know, it has been very, very difficult. The industry
• 29:23
  Speaker 10: is littered with just carnage and lots of lost money
• 29:26
  Speaker 10: and things like that. We are of cash flow positive,
• 29:31
  Speaker 10: maybe the only company in the state of California is
• 29:34
  Speaker 10: cashul a positive and we pay our two ade which
• 29:37
  Speaker 10: without getting wonky. It just we can't deduct a lot
• 29:40
  Speaker 10: of our expenses because it's federally illegal. So it is
• 29:44
  Speaker 10: the craziest industry I've ever been in. But I love
• 29:47
  Speaker 10: being in it, and we grow cheaper and better than
• 29:50
  Speaker 10: anyone else in the country.
• 29:51
  Speaker 4: But you can't.
• 29:52
  Speaker 2: Your brands are not allowed to be sold in New
• 29:56
  Speaker 2: York State and I imagine a number of other states
• 29:59
  Speaker 2: because of the way the regulation works. Is there any
• 30:03
  Speaker 2: potential for that to change?
• 30:05
  Speaker 3: Yes.
• 30:05
  Speaker 10: So the cause of that is the federal government. The
• 30:07
  Speaker 10: federal government has absolutely done zero's we're a schedule on
• 30:11
  Speaker 10: drug which is the most dangerous and right now checked
• 30:15
  Speaker 10: I checked that the ticker just where I came in.
• 30:17
  Speaker 10: The total number of overdose deaths in the history of
• 30:20
  Speaker 10: human beings from cannabis is still at zero. So it
• 30:23
  Speaker 10: is absolutely ridiculous what's happening. But we're starting to see
• 30:27
  Speaker 10: some federal relief potentially coming.
• 30:31
  Speaker 4: You have a number of brands. One of your brands
• 30:35
  Speaker 4: is the Plus Gummies. Yes, And someone I know very.
• 30:39
  Speaker 2: Well who hadn't smoked weed in years was given a
• 30:42
  Speaker 2: box of those and thought nothing of it until he
• 30:46
  Speaker 2: just decided to take it one day, and the experience was,
• 30:48
  Speaker 2: I think different than he imagined.
• 30:50
  Speaker 4: He ended up.
• 30:52
  Speaker 2: Reorganizing his filing cabinet, cleaning out, you know, the dressing room,
• 30:57
  Speaker 2: and it just was was something that was different than
• 31:01
  Speaker 2: he may he may have expected.
• 31:02
  Speaker 4: Do you hear that kind of story a lot all
• 31:04
  Speaker 4: the time.
• 31:05
  Speaker 10: And the one that I would tell you people that
• 31:07
  Speaker 10: are of an older age, they go with the sleep
• 31:10
  Speaker 10: gummies because they don't like ambien, they don't like, you know,
• 31:13
  Speaker 10: some of the other things that are available pharmaceutically, and
• 31:15
  Speaker 10: they can just take a five miligram gummy.
• 31:18
  Speaker 5: And they sleep like a baby.
• 31:21
  Speaker 10: There's no bad effects.
• 31:22
  Speaker 3: It's a plant.
• 31:23
  Speaker 10: And so that and then the next question from somebody
• 31:26
  Speaker 10: like my eighty year old aunt and uncle that when
• 31:29
  Speaker 10: they go on their RV they always have to have
• 31:31
  Speaker 10: their Plus gummies is can I do something and maybe
• 31:34
  Speaker 10: take the edge off, drink a little less wine?
• 31:36
  Speaker 5: And we and we absolutely have those in the gummies as.
• 31:39
  Speaker 2: Well, I mean I know a lot of people who
• 31:41
  Speaker 2: quit drinking completely. Thanks in Part two plus gummies.
• 31:46
  Speaker 10: I love that, And yes, I think cannabis is much
• 31:49
  Speaker 10: more benign than alcohol.
• 31:51
  Speaker 3: All right, competing, what's it like to compete in the
• 31:54
  Speaker 3: state of California. Who are your competitors?
• 31:55
  Speaker 2: Oh my goodness, you've got to compete against Kana, You've
• 31:58
  Speaker 2: got Camino, Well, you've got Stizzy. I mean, you've got
• 32:02
  Speaker 2: a lot of big name brands that you have to
• 32:04
  Speaker 2: go up against.
• 32:04
  Speaker 10: I was not expecting to hear a California expert.
• 32:07
  Speaker 3: You are absolutely right.
• 32:09
  Speaker 4: I have friends in California.
• 32:10
  Speaker 10: Wild would be Wild, would be seriously upset. I don't
• 32:13
  Speaker 10: know if you just mentioned Wild, But what I would
• 32:17
  Speaker 10: tell you is the future of cannabis. If you're an
• 32:19
  Speaker 10: investor and you say, hey, I want to look at
• 32:21
  Speaker 10: investing in a multi state operator, first go to California
• 32:24
  Speaker 10: to see on our stores. Again, we're vertically integrated, but
• 32:27
  Speaker 10: in our stores we sell twenty five to thirty percent
• 32:30
  Speaker 10: of our own products. We have to carry all these
• 32:33
  Speaker 10: other brands that you mentioned because the consumer is very
• 32:36
  Speaker 10: discerning in California and they want a selection, and so
• 32:40
  Speaker 10: the trader Joe's model that you might see in a
• 32:42
  Speaker 10: lot of the other states. We don't get that. We
• 32:45
  Speaker 10: have to run it like we just have to run
• 32:47
  Speaker 10: it straight and get the best products, and hopefully there
• 32:50
  Speaker 10: are ours as well. And so yes, our cell throughout
• 32:52
  Speaker 10: a lot of other stores that are also vertically integrated.
• 32:55
  Speaker 4: So it's it's a very interesting Well, it's like beer.
• 32:57
  Speaker 2: I mean, this is the problem I have with the
• 32:59
  Speaker 2: New York City or New York State o CM Brooklyn
• 33:03
  Speaker 2: Lauger is a fine beverage. But if I want Sierra Nevada,
• 33:07
  Speaker 2: I don't want it to be illegal for me to
• 33:10
  Speaker 2: buy it somewhere.
• 33:11
  Speaker 3: Right. Why is it illegal?
• 33:12
  Speaker 4: Well, because in New York.
• 33:13
  Speaker 2: They can only sell products that are grown in state,
• 33:18
  Speaker 2: so any of the California brands can't be sold here.
• 33:22
  Speaker 3: Go on.
• 33:23
  Speaker 2: But I mean, you're you know you're gonna go to
• 33:25
  Speaker 2: You're gonna end up going to an unlicensed vender, is
• 33:28
  Speaker 2: what's gonna happen, obviously, And then there are problems because
• 33:32
  Speaker 2: you could get something that's counterfeit, and you could get
• 33:35
  Speaker 2: something that's more dangerous than a typical marijuana product is
• 33:38
  Speaker 2: in the first place.
• 33:39
  Speaker 10: When I just want to sit and listen, because you're
• 33:41
  Speaker 10: making the argument better than I could.
• 33:43
  Speaker 1: All Right, when you walk down the streets here in
• 33:44
  Speaker 1: New York City and you see all these unlicensed places,
• 33:47
  Speaker 1: what's the city doing?
• 33:48
  Speaker 3: How did they screw this up?
• 33:50
  Speaker 10: What's amazing to me is and I would agree with
• 33:52
  Speaker 10: the initial quote of you know, the road to Hell's
• 33:55
  Speaker 10: paid with good intentions. All they had to do is
• 33:57
  Speaker 10: look at look at the city of Los Angeles, who
• 33:59
  Speaker 10: did this some time ago. We have illicit market and
• 34:02
  Speaker 10: illicit market that's huge in California, and if you don't
• 34:06
  Speaker 10: properly regulate the market, they will own it. And we
• 34:10
  Speaker 10: have one store in the city of Los Angeles. It's
• 34:12
  Speaker 10: our worst performing store because there's ten illegal stores around us.
• 34:15
  Speaker 10: So when I saw what New York was doing, I
• 34:17
  Speaker 10: thought it was crazy. And what's interesting is, you know
• 34:20
  Speaker 10: you're gonna end up. They're gonna grow cannabis in the
• 34:22
  Speaker 10: Hudson Valley. It's going to be far more expensive than
• 34:26
  Speaker 10: what we grow in California.
• 34:27
  Speaker 4: And so what's.
• 34:29
  Speaker 10: Interesting is I think you're gonna just unless they decide
• 34:31
  Speaker 10: they're going to take a harder line and regulate this
• 34:33
  Speaker 10: market properly, you're gonna see California products continually sold.
• 34:36
  Speaker 2: Yeah, because also maybe not as good, right, Hudson versus Humbled.
• 34:39
  Speaker 2: It's a big delta. Do you expect the DA to
• 34:43
  Speaker 2: make a decision this year.
• 34:45
  Speaker 10: I expect them to make a decision. I've been told
• 34:48
  Speaker 10: it'll probably before the end of the calendar year, and
• 34:50
  Speaker 10: it will likely be a schedule three and go with
• 34:53
  Speaker 10: the recommendation from the Health and Human Services Secretary.
• 34:57
  Speaker 1: All Right, Kyle, we spent a lot more time, a
• 34:59
  Speaker 1: lot more to talk, but I also want to talk
• 35:00
  Speaker 1: about the real estate business in southern California. So we'll
• 35:03
  Speaker 1: get in touch with you again. And of course, the
• 35:05
  Speaker 1: next summer in New York, let us know, Kyle casn
• 35:07
  Speaker 1: he's to see a glasshouse talking about the cannabis industry.
• 35:11
  Speaker 1: More and more states are going there, but some more
• 35:13
  Speaker 1: successfully than others.
• 35:15
  Speaker 6: You're listening to the tape catch are live program Bloomberg
• 35:18
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 35:22
  Speaker 6: tune in app, Bloomberg dot Com, and.
• 35:23
  Speaker 5: The Bloomberg Business App.
• 35:25
  Speaker 6: You can also listen live on Amazon Alexa from our
• 35:28
  Speaker 6: flagship New York station, Just Say Alexa, Play Bloomberg eleven thirty.
• 35:33
  Speaker 3: All right, let's talk real estate here. Some he joins us.
• 35:36
  Speaker 1: She's a chief economist at Core Logic, So some give.
• 35:41
  Speaker 3: Us a sense.
• 35:41
  Speaker 1: Here, we got mortgage rates just continuing to climb higher. Here,
• 35:45
  Speaker 1: how's that impacting the real estate market?
• 35:49
  Speaker 11: Yeah, it's been really bad for the housing market. It
• 35:52
  Speaker 11: continues the housing market down to continues to drag home
• 35:55
  Speaker 11: sales activity, particularly for existing homes because you know, there's
• 36:00
  Speaker 11: inventory issue there that continues with elevated mortgage rates. So
• 36:05
  Speaker 11: existing market is just crushed with higher mortgage rates.
• 36:09
  Speaker 1: Sema, we cannot but notice in your zoom there's nobody
• 36:12
  Speaker 1: in your office.
• 36:13
  Speaker 4: There is does it work from home day?
• 36:18
  Speaker 10: No?
• 36:18
  Speaker 8: This is my back.
• 36:20
  Speaker 3: Oh, it's your back.
• 36:22
  Speaker 4: Okay.
• 36:23
  Speaker 2: By the way, for listeners who aren't aware, you can
• 36:26
  Speaker 2: go to YouTube dot com and search Bloomberg Radio and
• 36:29
  Speaker 2: watch US streaming. You can see Selma there as well. Selma,
• 36:34
  Speaker 2: how uh how bad is it in terms of you know,
• 36:40
  Speaker 2: the drop in transactions, especially with previously owned homes, and
• 36:46
  Speaker 2: when do you expect that to change?
• 36:47
  Speaker 4: What's going to be the breaking point?
• 36:50
  Speaker 11: Right? So home sales, existing home sales are trending some
• 36:53
  Speaker 11: twenty three percent a year to date. I'll compare to
• 36:57
  Speaker 11: a year before twenty twenty two, and decline is shrinking
• 37:01
  Speaker 11: because home sales dropped off in latter part of last year,
• 37:04
  Speaker 11: so because of the base effect, that is shrinking. But
• 37:07
  Speaker 11: we are still expecting some twenty percent decline in existing
• 37:11
  Speaker 11: home sales compared to twenty twenty two now that you
• 37:14
  Speaker 11: know historically looking that lines up where we were in
• 37:18
  Speaker 11: twenty fourteen. So it is pretty low and I don't
• 37:23
  Speaker 11: see it improving anytime soon, unfortunately, because of high mortgage rates.
• 37:27
  Speaker 11: I mean, I think really we'd have to see mortgage
• 37:30
  Speaker 11: rates come down to closer to that six percent handle
• 37:33
  Speaker 11: on the lower end, like six point two before we
• 37:37
  Speaker 11: see any significant pickup in home sales activity and inventory
• 37:41
  Speaker 11: for that matter, because inventory is really a huge constraint
• 37:44
  Speaker 11: in addition to lack of affordability.
• 37:47
  Speaker 1: Isn't there a little bit of a timing or I
• 37:50
  Speaker 1: don't know, any point where mortgage rates are, whether it's
• 37:53
  Speaker 1: three percent, whether it's six percent or seven point five percent,
• 37:57
  Speaker 1: if they stay there for a while, don't people kind
• 37:58
  Speaker 1: of get used to it that if nothing else, people
• 38:01
  Speaker 1: start just doing deals again.
• 38:04
  Speaker 11: Yeah, yeah, no, I mean that's definitely true, and we
• 38:06
  Speaker 11: do see people moving for family reasons. So we you know,
• 38:11
  Speaker 11: people are people that were going to move, that have
• 38:14
  Speaker 11: to move anyways.
• 38:15
  Speaker 8: You know, there's life events that happen and make people move.
• 38:18
  Speaker 11: So you know, because of that, we're not seeing a
• 38:21
  Speaker 11: larger decline in home sales activities. So if people were
• 38:24
  Speaker 11: just staying put, I think that that decline would be
• 38:27
  Speaker 11: even larger. But people do move every year because of
• 38:31
  Speaker 11: family reason, job reasons, and these are now the major
• 38:35
  Speaker 11: reasons that are driving those moves.
• 38:37
  Speaker 1: You know, I look, I'm looking at the stocks of
• 38:39
  Speaker 1: the homebuilders and are all up fifty percent kind of
• 38:42
  Speaker 1: this year alone, up more than that on a trailing
• 38:45
  Speaker 1: twelve month basis. So it's good to be in the
• 38:46
  Speaker 1: homebuilding business. How much longer they can they enjoy this
• 38:50
  Speaker 1: kind of demand?
• 38:52
  Speaker 8: Well, I mean, I think we have a lot of
• 38:54
  Speaker 8: pent up demand.
• 38:55
  Speaker 11: And when you think about that housing shortage that we
• 38:58
  Speaker 11: keep talking about for many years now, we are down
• 39:01
  Speaker 11: you know, anywhere between two and five million homes. And
• 39:05
  Speaker 11: you know, while the number of home news starts has increased,
• 39:09
  Speaker 11: well not in the latest reading, but you know, with
• 39:11
  Speaker 11: the permits being uh and we do expect home sales
• 39:14
  Speaker 11: to pick up again. You know, I think we still
• 39:17
  Speaker 11: have years to go because before we can, uh, you know,
• 39:21
  Speaker 11: make up for that that loss or that inventory.
• 39:24
  Speaker 8: That wasn't built. So we do have a lot of
• 39:26
  Speaker 8: paint of demand.
• 39:26
  Speaker 11: And you know, it's not just millennials, it's it's baby
• 39:30
  Speaker 11: boomers who are now retiring and moving to other areas.
• 39:34
  Speaker 11: People are still moving because they can work some some areas.
• 39:38
  Speaker 11: You know, you still can work from home, and you're
• 39:41
  Speaker 11: moving for that reason too. So I think we still
• 39:43
  Speaker 11: have a lot of paint of demand.
• 39:45
  Speaker 2: I wonder in terms of the FED activity or the
• 39:50
  Speaker 2: FED uh you know, rate rising cycle, when this comes
• 39:54
  Speaker 2: to an end, do you think, uh, and when we
• 39:57
  Speaker 2: know it, do you think, you know, seven percent mortgages
• 40:00
  Speaker 2: are going to look slightly less terrifying or are people
• 40:03
  Speaker 2: going to wait for them to cut rates?
• 40:07
  Speaker 8: Well?
• 40:07
  Speaker 11: Right, So the knowing part is the critical part because
• 40:11
  Speaker 11: I think that would introduce some certainty into the market.
• 40:14
  Speaker 8: And we've talked about mortgage spread being.
• 40:17
  Speaker 11: High before and it still remains high because of that
• 40:21
  Speaker 11: uncertainty around what the FED is going to do and
• 40:24
  Speaker 11: what inflation. You know, inflation seems to be an issue
• 40:27
  Speaker 11: again now with rising gas prices and food prices. So
• 40:31
  Speaker 11: all of that uncertainty introduces some risks that investors are
• 40:36
  Speaker 11: not happy with or not not not you know, they
• 40:38
  Speaker 11: want to account for that. So until we do have
• 40:41
  Speaker 11: that more of that certainty, that's where when the spread
• 40:45
  Speaker 11: is going to come down. And I think that's when
• 40:47
  Speaker 11: people are going to come back in so, you know,
• 40:49
  Speaker 11: and then.
• 40:49
  Speaker 8: Obviously federal reserve cutting rates will help as well.
• 40:53
  Speaker 4: Well.
• 40:54
  Speaker 2: When I was a kid, a lot of people used
• 40:56
  Speaker 2: arms and post financial crisis rate mortgages and post financial crisis,
• 41:02
  Speaker 2: nobody except for Paul Sweeney has done so is that
• 41:05
  Speaker 2: going to change.
• 41:07
  Speaker 11: Well, we've seen pickup in arms over the last year,
• 41:10
  Speaker 11: but honestly, even arms have gotten more expensive, so the
• 41:14
  Speaker 11: share of arm or origination has gone down.
• 41:17
  Speaker 8: As a result.
• 41:18
  Speaker 11: But people, I mean people are trying in any way
• 41:21
  Speaker 11: anyway that it can to save some money.
• 41:24
  Speaker 1: So if a buyer finds something, h what is the
• 41:27
  Speaker 1: mortgage market like, can I get a mortgage?
• 41:29
  Speaker 2: Can I can of a competitive out there? What is
• 41:32
  Speaker 2: the more banks rolling back? Are they much more cautious?
• 41:36
  Speaker 11: Yeah, I mean I think there are particularly in that
• 41:39
  Speaker 11: jumble market, you know, in the markets that is anyway,
• 41:43
  Speaker 11: more uncertainty we've had more price reductions, there's less inventory.
• 41:47
  Speaker 11: I mean, the markets that are suffering, they suffer too
• 41:50
  Speaker 11: in terms of availability of lending. But overall, an interesting
• 41:56
  Speaker 11: thing that I recently saw from HAMDA data is just
• 41:59
  Speaker 11: how MU originations went to higher income households. So higher
• 42:04
  Speaker 11: income households don't have as part of a time getting
• 42:07
  Speaker 11: a loan as much as a lower income households.
• 42:09
  Speaker 8: So so you know, that's that's really the concern here
• 42:12
  Speaker 8: with lack of affordability. And then on top of that
• 42:15
  Speaker 8: you can't even get a mortgage.
• 42:18
  Speaker 1: So what's the what is your expectation of Core Logic?
• 42:20
  Speaker 1: You know, a year from now, where do you think
• 42:22
  Speaker 1: mortgage rates will be?
• 42:25
  Speaker 11: Oh my crystal ball is not working these days. But
• 42:30
  Speaker 11: you know, I think I'm hoping closer to six again.
• 42:33
  Speaker 11: You know, our forecast for the end of this year
• 42:34
  Speaker 11: six point seven. I think by the middle of next
• 42:37
  Speaker 11: year we could be down to that six point to
• 42:40
  Speaker 11: six point three.
• 42:42
  Speaker 3: All right, Salma, thanks so much for joining us.
• 42:43
  Speaker 1: Some a heaps chief economists at core Logic talking about
• 42:46
  Speaker 1: the real estate biz.
• 42:47
  Speaker 6: You're listening to the tape Cats are Live program Bloomberg
• 42:51
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 42:54
  Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business app.
• 42:58
  Speaker 6: You can also listen live on Amazon and Alexa from
• 43:00
  Speaker 6: our flagship New York station, Just say Alexa play Bloomberg
• 43:04
  Speaker 6: eleven thirty.
• 43:06
  Speaker 1: Boy, what perfect timing? UK delayed ban on sale of
• 43:09
  Speaker 1: new petrol diesel cars until twenty thirty five, pushing it back.
• 43:12
  Speaker 3: Our next guest probably hasn't.
• 43:14
  Speaker 2: It's the worst timing. Why would they announce this during
• 43:17
  Speaker 2: Climate Week?
• 43:17
  Speaker 3: I don't know, That's my point.
• 43:18
  Speaker 1: So I'm thinking what is going on there? Ian sim
• 43:21
  Speaker 1: joins us. He's the CEO of Impacts Asset Management and
• 43:24
  Speaker 1: the reasons this is irrelevant?
• 43:25
  Speaker 3: Ian? How what's your investment strategy at Impacts? What do
• 43:29
  Speaker 3: you guys do?
• 43:30
  Speaker 12: So we're investing in the transition to a more sustainable economy,
• 43:34
  Speaker 12: which essentially is the industrial revolution around clean energy.
• 43:38
  Speaker 1: So your UK Prime Minister during Climate Week says we're
• 43:42
  Speaker 1: going to slow it down a little bit.
• 43:44
  Speaker 12: Well, the UK had become an outlier in the sense
• 43:47
  Speaker 12: of banning or announcing a ban on internal combustion engine
• 43:50
  Speaker 12: vehicles new sales by twenty thirty and just about everyone
• 43:53
  Speaker 12: else that's got that twenty thirty five, how the European
• 43:56
  Speaker 12: Union had committed to something five years later. So this
• 43:58
  Speaker 12: is just an alignment with what the rest, all right.
• 44:00
  Speaker 1: The other thing that blew me away just from chatting earlier,
• 44:02
  Speaker 1: like environmental investing here has lost the momentum in the
• 44:07
  Speaker 1: United States, and I know it's way different in Europe,
• 44:09
  Speaker 1: particularly Northern Europe. But you got fifty billion dollars in
• 44:13
  Speaker 1: assets under management. You're making big bets here.
• 44:17
  Speaker 5: Yeah.
• 44:17
  Speaker 12: So we've been going for twenty five years since I
• 44:19
  Speaker 12: started the business in nineteen ninety eight, So we're running
• 44:21
  Speaker 12: money for about one hundred institutional investors around the world,
• 44:24
  Speaker 12: including many in the US. So actually, this is not
• 44:26
  Speaker 12: about environmental investing. This is the industrial revolution, around renewable energy,
• 44:31
  Speaker 12: around energy efficiency, around electric vehicles. These are producing better
• 44:35
  Speaker 12: products for consumers, cheaper products, and this is good for everybody.
• 44:39
  Speaker 4: Talk to us about like what might be a couple
• 44:41
  Speaker 4: of the big areas where.
• 44:42
  Speaker 3: You guys have invested in. Give us a sense of
• 44:44
  Speaker 3: kind of how that works for.
• 44:46
  Speaker 2: You, And I mean to sort of build on the
• 44:49
  Speaker 2: idea that this is a revolution. We were talking a
• 44:53
  Speaker 2: little bit earlier with someone who's invested in battery technology,
• 44:58
  Speaker 2: and he told us this is like the shift from
• 45:01
  Speaker 2: whale oil to petrocarbons, Like it's that big of a deal.
• 45:06
  Speaker 12: Yeah, I mean, solar power has come down and cost
• 45:09
  Speaker 12: by ninety five percent over the last twenty years. It's
• 45:12
  Speaker 12: cheaper than.
• 45:13
  Speaker 2: As has the price per kilo at hour for batteries precisely.
• 45:17
  Speaker 12: Yeah, so that means that that you can get cheaper transportation,
• 45:20
  Speaker 12: cheaper electrons when you plug a device into to the grid.
• 45:26
  Speaker 12: So what are we investing in? What we're investing in
• 45:28
  Speaker 12: large scale wind projects, We're investing in building's energy projects.
• 45:32
  Speaker 12: If you just taken the average office building, you can
• 45:35
  Speaker 12: typically reduce the energy use by thirty percent just by
• 45:38
  Speaker 12: putting it a better building management system, better software, better sensors.
• 45:42
  Speaker 12: So these are global opportunities, massive markets.
• 45:45
  Speaker 2: Well, and I think it's nice that you highlight the
• 45:47
  Speaker 2: office investment case because Paul and I we talk about
• 45:53
  Speaker 2: us a lot, right, we like to talk about ourselves.
• 45:55
  Speaker 2: But this isn't about as much consumer adoption as it
• 45:59
  Speaker 2: is CapX. At least that's what corporate capex. That's what
• 46:02
  Speaker 2: Jeff Chamberlain was telling us. He's the CEO of Vaulta
• 46:04
  Speaker 2: Energy Technologies used to run Argon National Laboratory, and he
• 46:08
  Speaker 2: said that's why he got into this business. Because you're
• 46:11
  Speaker 2: going to see large multinational conglomerates really shifting spend into
• 46:17
  Speaker 2: this transition.
• 46:19
  Speaker 12: Yeah. I mean, this essentially is a game around strengthed
• 46:22
  Speaker 12: assets or avoiding them. Because if you're an auto manufacturer
• 46:24
  Speaker 12: and you've got a plant that's producing thousands of vehicles
• 46:27
  Speaker 12: a year with internal combustion engines, but twenty thirty five,
• 46:31
  Speaker 12: you're not going to have a market in Europe, so
• 46:33
  Speaker 12: you need to pivot that manufacturing process to an electric
• 46:37
  Speaker 12: vehicle process, and that's not easy. So this is where
• 46:39
  Speaker 12: the investment capital comes in, because what we're trying to
• 46:41
  Speaker 12: do is find for companies that are going to be
• 46:43
  Speaker 12: winners over the next five to ten years. And those
• 46:46
  Speaker 12: are the companies have got strategies that are going to
• 46:48
  Speaker 12: be successful with twenty thirties.
• 46:49
  Speaker 2: Which are the most exciting ones. I mean, I love cars,
• 46:52
  Speaker 2: so I always think of battery later vehicles. But you
• 46:54
  Speaker 2: could tell me like new HVAC systems are even more important,
• 46:58
  Speaker 2: I would have no idea.
• 47:00
  Speaker 12: Well, we're investing across the board. There isn't like a
• 47:02
  Speaker 12: silver bullet here, that's going to be the one to
• 47:05
  Speaker 12: go for. So and it's not just all about energy, right. Look,
• 47:08
  Speaker 12: look what's happened in the water sector this year. We've
• 47:10
  Speaker 12: got a huge contention in the UK around sewage overflows,
• 47:15
  Speaker 12: pollution of rivers. I think there were problems with one
• 47:19
  Speaker 12: of the big athletic events in Paris because people couldn't
• 47:21
  Speaker 12: swim in the River Seine for the triathlon. That this
• 47:24
  Speaker 12: is a major investment opportunity as well. Look at garbage,
• 47:27
  Speaker 12: the amount of money that's just been put into landfill
• 47:31
  Speaker 12: by throwing stuff away. Regulations are trying to tighten up
• 47:34
  Speaker 12: on that. So there's new regulations in France now that
• 47:36
  Speaker 12: are requiring buildings developers, buildings owners to guarantee the use
• 47:42
  Speaker 12: of certain levels of recycled product and also guarantee the
• 47:45
  Speaker 12: removal of waste when they're doing construction.
• 47:48
  Speaker 4: Wow.
• 47:49
  Speaker 1: Yeah, So what are some of the where are the
• 47:52
  Speaker 1: new ideas coming from for to manage this transition? Are
• 47:55
  Speaker 1: are there certain parts of the world that are you
• 47:57
  Speaker 1: find the companies are kind of sprouting up.
• 48:00
  Speaker 12: One of the reasons we opened an office in Hong
• 48:01
  Speaker 12: Kong in two thousand and eight was because we could
• 48:04
  Speaker 12: see that a lot of the technology around this revolution
• 48:06
  Speaker 12: was going to come out of the Asian region. So
• 48:08
  Speaker 12: we've built a very smart investment team in Hong Kong.
• 48:11
  Speaker 12: We've just added some capability in Tokyo as well, so
• 48:13
  Speaker 12: that sort of access from Singapore up to Tokyo via
• 48:16
  Speaker 12: Hong Kong, Greater China, Korea, Japan, that's where a lot
• 48:20
  Speaker 12: of this is coming from. But it's not just an
• 48:21
  Speaker 12: Asian story. There's great technology coming out of the lambs
• 48:24
  Speaker 12: in the US, as out of Europe as well.
• 48:27
  Speaker 2: In your athas under management are big. I don't know
• 48:30
  Speaker 2: if we said or not, but fifty billion right dollars?
• 48:34
  Speaker 2: What's the trajectory, like, is it growing and where is
• 48:38
  Speaker 2: that money coming from?
• 48:40
  Speaker 12: So it's been growing rapidly recently, it's been plateaued for
• 48:43
  Speaker 12: the last twelve months or so because we're in quite
• 48:45
  Speaker 12: a fragile market for equity investing in general. So what
• 48:48
  Speaker 12: I've been talking about are the fabulous opportunities in this
• 48:50
  Speaker 12: industrial revolution. But we can't get away from the fact
• 48:53
  Speaker 12: that equity market sentiment is quite weak at the moment.
• 48:55
  Speaker 12: So that's meant that our flows are fairly flat right now.
• 48:59
  Speaker 12: So looking at head eighteen months two years. We're expecting
• 49:02
  Speaker 12: that to pick up again. But we've got distribution now,
• 49:04
  Speaker 12: sales to clients across the world, one hundred sales and
• 49:08
  Speaker 12: marketing people. So we're expecting that new money to come
• 49:10
  Speaker 12: in from pension funds, sovereign wealth funds we're in dialogue with.
• 49:13
  Speaker 12: We just won a mandate a year ago with the
• 49:16
  Speaker 12: Government Pension Fund of Japan. We managed money for calsters
• 49:19
  Speaker 12: out of California. But also the man and woman in
• 49:22
  Speaker 12: the street are really starting to vote with their checkbooks
• 49:25
  Speaker 12: through their money managers in favor of these new industries.
• 49:28
  Speaker 12: There's a lot of private wealth money coming out way.
• 49:30
  Speaker 2: I think it's interesting that growth in assets has been flat,
• 49:33
  Speaker 2: considering we got over the last twelve months of the IRA.
• 49:36
  Speaker 2: In that period, right, you're starting to see governments put
• 49:39
  Speaker 2: not just millions or billions, but hundreds of millions, approaching
• 49:44
  Speaker 2: trillion trillions of dollars behind this transition. Isn't that like
• 49:50
  Speaker 2: the whistle to get on board?
• 49:52
  Speaker 12: Yeah, So, the Inflation Reduction Act in the US, the
• 49:55
  Speaker 12: Green Deal in Europe, and similar policies out of China
• 49:57
  Speaker 12: are really propelling corporate investment. That's great for earning's outlook
• 50:01
  Speaker 12: over the next sort of next few years. But we
• 50:03
  Speaker 12: can't get away from the fact that multiples and the
• 50:05
  Speaker 12: equity market are depressed because sentiment is weak as inflation
• 50:08
  Speaker 12: has come through and central banks has been raising rates.
• 50:10
  Speaker 12: But as right starts a plateau and inflation's under control,
• 50:14
  Speaker 12: we can definitely see sentiment improving for equities, and that
• 50:17
  Speaker 12: should be fabulous for growth at a reasonable price, transition
• 50:20
  Speaker 12: to more sustainable garment when the sentiment, when that sentiment improves.
• 50:23
  Speaker 1: Right, We have a guest that comes on occasionally when
• 50:26
  Speaker 1: when he's in town. His focus is not necessarily new technology.
• 50:30
  Speaker 1: His focus is just kind of capturing the energy that's lost,
• 50:34
  Speaker 1: even like fossil fuels. You know, he's got some crazy number,
• 50:38
  Speaker 1: you know, the the amount of energy that's lost. Me
• 50:41
  Speaker 1: to take a barrel of oil out of the ground
• 50:42
  Speaker 1: and it gets into whatever it's Jonathan Maxwell, right from
• 50:45
  Speaker 1: Sustainable Development Capital. He also wrote the book The Edge,
• 50:49
  Speaker 1: How competition for re sources is pushing the world and
• 50:52
  Speaker 1: its climate to the brink yep And so, how do
• 50:54
  Speaker 1: you guys think about that little part We're not little part,
• 50:56
  Speaker 1: but that part of the whole move towards Green Industrial Revolution.
• 51:00
  Speaker 12: Well, that's sting waste, I guess, right, mean, that's just
• 51:02
  Speaker 12: money that's sort of lying on the sidewalk to be
• 51:05
  Speaker 12: picked up. It's an absolute no brainer to invest in
• 51:07
  Speaker 12: energy efficiency. The payback periods for many of the things
• 51:10
  Speaker 12: that we're investing in that space for two three years.
• 51:12
  Speaker 12: Another reason that they're not at scale is because I
• 51:14
  Speaker 12: quite often very fragmented. So that's where our insights come
• 51:17
  Speaker 12: in as analysts around the world is looking for these
• 51:19
  Speaker 12: opportunities that can scale quite quickly with the right capital support.
• 51:24
  Speaker 2: Interesting, it's I mean, I'm glad Climate Week happen because
• 51:27
  Speaker 2: I've been learning a ton about an issue that you know.
• 51:30
  Speaker 2: The problem is, I think for a lot of Americans,
• 51:34
  Speaker 2: they get kind of beaten over the head of this
• 51:36
  Speaker 2: ESG thing and it gets kind of.
• 51:39
  Speaker 4: Muddied in with the whoe thing complain.
• 51:42
  Speaker 2: It's become very politicized, and that makes it harder to
• 51:45
  Speaker 2: talk about from an investment from a completely logical point
• 51:49
  Speaker 2: of view.
• 51:50
  Speaker 12: Yeah, we need to bear at ESG. ESG is an unhelpful,
• 51:53
  Speaker 12: muddy concept. We need to move on from that.
• 51:55
  Speaker 1: Because I like the way you phrase it, because I
• 51:57
  Speaker 1: could take that message down the Tallahassee, Florida, Austin, Texas,
• 52:01
  Speaker 1: and pitch.
• 52:02
  Speaker 3: I think the.
• 52:02
  Speaker 1: Pension funds well. And I wouldn't be physically thrown out
• 52:05
  Speaker 1: of the office. You would be if you said esg right.
• 52:08
  Speaker 12: But and if you go in and you say, look,
• 52:09
  Speaker 12: if you buy an electric vehicle, it's got forty percent
• 52:11
  Speaker 12: of the parts of an internal combustion engine vehicle. It's
• 52:13
  Speaker 12: more reliable, it's going to be cheaper, it's going to
• 52:15
  Speaker 12: be more fun to drive. Why wouldn't you want to
• 52:17
  Speaker 12: buy one of those rather than the clunky old guests?
• 52:19
  Speaker 3: Thusiads all right, Ian, thanks so much for joining US.
• 52:21
  Speaker 1: Ian sim he's the CEO of Impacts Asset Management, joining
• 52:24
  Speaker 1: US live.
• 52:25
  Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
• 52:29
  Speaker 2: subscribe and listen to interviews on Apple Podcasts or whatever
• 52:33
  Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 52:36
  Speaker 2: at Matt Miller nineteen seventy three.
• 52:39
  Speaker 3: And I'm fall Sweeney. I'm on Twitter at pt Sweeney.
• 52:41
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• 52:44
  Speaker 1: Bloomberg Radio.