Latest / Bloomberg Intelligence / A Closer Look At Tesla And The Housing Market

Transcript

A Closer Look At Tesla And The Housing Market · 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. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. The conversation of the
• 0:22
  Speaker 1: morning certainly for me. Dan Eyves, Mountaging director Equity Research
• 0:26
  Speaker 1: at web Securities, UM, Penn State alum and a bad
• 0:30
  Speaker 1: loss last week Matt, Penn State lost to Illinois. At
• 0:33
  Speaker 1: saw that and I thought of Dan when I saw
• 0:35
  Speaker 1: it nine overtimes? I mean, who plays nine overtimes? Anyway?
• 0:39
  Speaker 1: All right, Dan, thanks so much for joining us here.
• 0:41
  Speaker 1: We got Microsoft after the close. I want to get
• 0:43
  Speaker 1: your thoughts as we go into that, But first let's
• 0:45
  Speaker 1: start with Tesla. I mean, Elon Musk is worth more
• 0:50
  Speaker 1: than you know, pretty much the rest of the stock
• 0:52
  Speaker 1: market at this point here, this stock to me is
• 0:56
  Speaker 1: showing really no signs of concern about rising competence from
• 1:00
  Speaker 1: the existing O E M. How do you view that? Look,
• 1:04
  Speaker 1: I think we're seeing the biggest transformation to the auto
• 1:07
  Speaker 1: industry since nanteen fifties, and Tesla's leading the way on
• 1:11
  Speaker 1: ev s and it's really been the one to punch
• 1:13
  Speaker 1: in terms of what we saw on deliveries last week.
• 1:16
  Speaker 1: Profitability and it hurts is a tipping point. I think
• 1:19
  Speaker 1: it's an inflection point overall on evs. There's a five
• 1:23
  Speaker 1: trillion dollar market and I think this is just sort
• 1:27
  Speaker 1: of the middle innings of the street. Further appreciating this
• 1:31
  Speaker 1: Tesla and ev story, Yeah, I mean, what an amazing story.
• 1:36
  Speaker 1: Ordering a hundred thousand Model three Dan As close as
• 1:41
  Speaker 1: I can figure, this is basically list price that they're paying. Well,
• 1:46
  Speaker 1: that's really what sticks out. You know, normally you'll see
• 1:49
  Speaker 1: discount tenss price because right now Tesla, it's Tesla's world.
• 1:56
  Speaker 1: Everyone else paying rent and evs because demands out strip
• 2:00
  Speaker 1: being supplied by about ten per cent. Now you start
• 2:03
  Speaker 1: the trajectory out where this could go along with supply
• 2:07
  Speaker 1: coming on with Berlin in Austin million today, this could
• 2:11
  Speaker 1: be two million a year, and I think that's what
• 2:13
  Speaker 1: you're started seeing the stock even look, the heaters will
• 2:16
  Speaker 1: heat continue here, but right now, as you're seeing this,
• 2:19
  Speaker 1: it's hard for investors to dismiss this green tide away
• 2:23
  Speaker 1: playing out, And Dan, how do you think this EV
• 2:26
  Speaker 1: market will shake out in ten years time? Well, when
• 2:29
  Speaker 1: assuming everybody who's in anybody will have a full complement,
• 2:33
  Speaker 1: a full lineup of electric vehicles, where do you think
• 2:36
  Speaker 1: Tesla's position will be? Would they kind of be the
• 2:38
  Speaker 1: Porsche of the auto industry? Can I just can I
• 2:41
  Speaker 1: just point out, speaking of Porsche, the owner of Porsche
• 2:44
  Speaker 1: and Lamborghini, Ducatti, Bentley, Bugatti, um Folkswagen and Audi, they
• 2:53
  Speaker 1: have a market cap of a hundred fifty million dollars.
• 2:57
  Speaker 1: Tesla's billion dollars. Tesla's worth more than a trillion. How
• 3:01
  Speaker 1: does that make any sense? Well, look, it's a great point.
• 3:05
  Speaker 1: I I've never viewed, and I know we've talked about
• 3:07
  Speaker 1: the last decade Tessa as an automotive company. View them
• 3:10
  Speaker 1: is the disruptive technology player. But I do think to
• 3:15
  Speaker 1: Paul's question, v W for GM and and others is
• 3:20
  Speaker 1: part of this five trillion dollar e V transformation. It's
• 3:24
  Speaker 1: it's not a zero or some game. They're all going
• 3:25
  Speaker 1: to benefit. I mean, you put on perspective, you have
• 3:28
  Speaker 1: three million evs in the road globally, have a hundred
• 3:31
  Speaker 1: million cars. I believe that's fifty million the end of
• 3:33
  Speaker 1: the decade, and Tessa is going to have a significant
• 3:37
  Speaker 1: market share of that. But but others are going to
• 3:40
  Speaker 1: benefit as well. And that's why this is something you
• 3:44
  Speaker 1: look at the rerating that's going to start to happen
• 3:46
  Speaker 1: so or what happened GM forward VW because more and
• 3:50
  Speaker 1: more investors are going to value that disruptive e VPS
• 3:54
  Speaker 1: like a technology ps, not traditional automotive. All right, let's
• 4:00
  Speaker 1: switch gears here to our good friends from Seattle, Washington.
• 4:04
  Speaker 1: UM Microsoft all time hyphe poy put up that max
• 4:08
  Speaker 1: chart on your Bloomberg terminal GP go just extraordinary. What
• 4:12
  Speaker 1: do you expect after the close from Microsoft? In I
• 4:16
  Speaker 1: think another world series performance by by Nidel and Microsoft,
• 4:20
  Speaker 1: I mean continues out the golden touch on cloud cloud
• 4:24
  Speaker 1: Armor is playing out, but Microsoft is gaining more and
• 4:26
  Speaker 1: more share. This is just the growth story still underestimated
• 4:30
  Speaker 1: by the street. So we have a three seventy five
• 4:33
  Speaker 1: price target. I think it's just another sort of beaten
• 4:35
  Speaker 1: raised special coming out of Redmond. And you see that
• 4:41
  Speaker 1: for the other tech companies as well. For Alphabet, Oh yeah,
• 4:46
  Speaker 1: I think this is gonna be just a headline week
• 4:50
  Speaker 1: for tech across the board Social Media week link because
• 4:53
  Speaker 1: what we're seeing on the Apple privacy, I think Apple,
• 4:56
  Speaker 1: you're gonna see robust coming out despite chip short just
• 5:00
  Speaker 1: right now, demand now stripped and supply by about ten
• 5:02
  Speaker 1: million iPhones. Alphabet as well in digital advertising. I believe
• 5:07
  Speaker 1: this is sort of the fuel in the tank now
• 5:11
  Speaker 1: to get Nazac to our Yarine target of sixteen thousand.
• 5:15
  Speaker 1: You know, it's funny day when I look at Microsoft,
• 5:17
  Speaker 1: I look at the stock and you know, I'm I've
• 5:19
  Speaker 1: been in this market long enough to really kind of
• 5:21
  Speaker 1: follow the Microsoft story from day one. When there's a
• 5:24
  Speaker 1: you know, I lost decade or so for this company,
• 5:27
  Speaker 1: and I feel like such an Adela it doesn't get
• 5:31
  Speaker 1: the do that he has deserved, you know, even like
• 5:34
  Speaker 1: maybe not an Elon Musk but a Tim Cook or
• 5:37
  Speaker 1: some of the other guys from Silicon Valley. The job
• 5:40
  Speaker 1: he's done in repositioning this company, I think it's just
• 5:44
  Speaker 1: an extraordinary story. How do you think about it? Nadela
• 5:49
  Speaker 1: is in the Hall of Fames. I mean, for any
• 5:52
  Speaker 1: company what you see in the last fifteen years play
• 5:54
  Speaker 1: out what he's done in Microsoft, transforming them into a
• 5:58
  Speaker 1: cloud behemus go back to when he took over stocks
• 6:01
  Speaker 1: thirty and forty, Mini thought that was really just gonna
• 6:04
  Speaker 1: be another mature company playing out. I believe he is
• 6:08
  Speaker 1: up there with the likes of Besos Cooking others in
• 6:12
  Speaker 1: terms of what he's done. Nonetheless, when you look at
• 6:15
  Speaker 1: the I mean I look at cop charts all the time, UM,
• 6:19
  Speaker 1: which is automatically a five year chart on the Bloomberg terminal.
• 6:24
  Speaker 1: And although Microsoft has done better than almost all of
• 6:28
  Speaker 1: the mega tech peers. In fact, Microsoft for the last
• 6:31
  Speaker 1: five years done better than Google, Apple, Netflix, Amazon, UM,
• 6:37
  Speaker 1: but it just pales in comparison to Tesla. Like this
• 6:39
  Speaker 1: chart is unbelievable to look at. Look it is. I mean,
• 6:46
  Speaker 1: we're seeing, you know what what what's really some of
• 6:49
  Speaker 1: the most transformational growth they're really ever been witnessed in
• 6:53
  Speaker 1: the last thirty years. And I think you put these
• 6:56
  Speaker 1: stories on a pedestal Tessa, Amazon, Netflix, of course, Apple
• 7:02
  Speaker 1: and others, and I think what you're seeing there is
• 7:05
  Speaker 1: that more investors are starting to recognize the transformation that's happening,
• 7:10
  Speaker 1: and you're seeing the stock continue to reread as this
• 7:14
  Speaker 1: all takes place. All right, It's it's a pretty incredible story,
• 7:18
  Speaker 1: to say the least. And Dan has been at the
• 7:21
  Speaker 1: forefront of this without performs. Yeah, it's it's been amazing
• 7:27
  Speaker 1: and I'm sorry about Penn State. I really was thinking
• 7:29
  Speaker 1: of Dan. Now. We have to go to Columbus this weekend.
• 7:32
  Speaker 1: Hope boy, oh, the Ohio State University University. Dan ives
• 7:38
  Speaker 1: there from web Bush Morgan. Always great to get a
• 7:40
  Speaker 1: little bit of time with him. This is Bloomberg, all right,
• 7:48
  Speaker 1: Let's bring in David Harden right now. He's the CEO
• 7:51
  Speaker 1: and chief investment officer at Summit Global Investments. They have
• 7:54
  Speaker 1: one point eight billion dollars in assets under management. And uh, Dave,
• 7:59
  Speaker 1: I'll just ask you what I've been asking everybody today. Um,
• 8:02
  Speaker 1: we're at an all time high on the S and
• 8:04
  Speaker 1: P five, even though we face so many headwinds and
• 8:08
  Speaker 1: there are so many question marks out there as well, Um,
• 8:13
  Speaker 1: what do you make of the SMP. It's pretty amazing
• 8:19
  Speaker 1: and the markets always had to climb a wall of
• 8:23
  Speaker 1: worry and so definitely, I continue to think this is
• 8:26
  Speaker 1: going to be choppy, but I do think it's higher ahead.
• 8:30
  Speaker 1: And hey, thanks for having me on your should today.
• 8:31
  Speaker 1: But that's what I'm that's what I see all right, David.
• 8:35
  Speaker 1: You know, as Matt was just suggesting here, you know,
• 8:37
  Speaker 1: with this market at the all time high, a lot
• 8:39
  Speaker 1: of valuation concerns in there. That's a big part of
• 8:42
  Speaker 1: that wall of worry. But we've had really good earnings
• 8:45
  Speaker 1: this third quarter period. Do you think earnings are strong
• 8:48
  Speaker 1: enough to support the valuation here? Well, clearly, and and
• 8:52
  Speaker 1: the earnings have been crushing it. And I think that
• 8:54
  Speaker 1: the earnings revisions will continue. I think that the earnings
• 8:56
  Speaker 1: will continue to do well. Yes, growth is slowing, and
• 9:00
  Speaker 1: that absolutely inflation is out there, and I think that's
• 9:03
  Speaker 1: flattening the yield curve, and I see the tenure going
• 9:05
  Speaker 1: to two percent. But I don't see the bubble bursting
• 9:10
  Speaker 1: until the FED becomes negative towards the market. I think
• 9:14
  Speaker 1: this thing continues and so choppy trading, but you know,
• 9:18
  Speaker 1: for me, it's still equities ahead and and cautiously optimistic here,
• 9:22
  Speaker 1: but equities still it's the place to play. What what
• 9:26
  Speaker 1: is the FED gonna do? I mean, especially now that
• 9:28
  Speaker 1: so many people are talking about the possibility of Chinese
• 9:32
  Speaker 1: growth slowing maybe less than five percent next year, it
• 9:37
  Speaker 1: seems to me difficult for the FED raise rates in
• 9:39
  Speaker 1: that kind of situation. Um, and it is and it's
• 9:43
  Speaker 1: going to be difficult, and I think that there's gonna
• 9:45
  Speaker 1: you know, it doesn't mean that we're going to be
• 9:47
  Speaker 1: straight up forever. The market has cycles and people have
• 9:51
  Speaker 1: to understand. I think that risk management needs to become
• 9:54
  Speaker 1: more central in their investing mindset, and that's one of
• 9:59
  Speaker 1: the things we do at s c I is that,
• 10:01
  Speaker 1: you know, we focus on managing risk and providing the
• 10:05
  Speaker 1: protection that the clients deserve when they're in those situations
• 10:10
  Speaker 1: in the future. Because let's face it, the more risk
• 10:11
  Speaker 1: management you put in your portfolio, the more that it
• 10:14
  Speaker 1: will perform how you designed it to do. So you know,
• 10:19
  Speaker 1: there is gonna be a time a time of reckoning,
• 10:22
  Speaker 1: and it's gonna and it's gonna be very important to
• 10:24
  Speaker 1: investors that their positioned correctly. Many times we just talked
• 10:28
  Speaker 1: about the next trade and not about the investment long term,
• 10:32
  Speaker 1: and those are two different conversations. David, you've got to
• 10:36
  Speaker 1: sell on Southwest Airlines. Is that a call on the
• 10:40
  Speaker 1: sector or a call on the fact that Southwest Council's
• 10:43
  Speaker 1: flights every day? It's more well the latter, right, I
• 10:48
  Speaker 1: think that if you're in this sector UM and and
• 10:50
  Speaker 1: there's still business travels still extremely weak. We know that
• 10:54
  Speaker 1: right and we know that UM with the pandemic with Delta,
• 10:58
  Speaker 1: even though maybe the numbers look better than they did
• 11:01
  Speaker 1: last week, so to speak, are we coming out of this?
• 11:04
  Speaker 1: We get scarce all the time, but people are getting
• 11:06
  Speaker 1: their third shot now. So I think the sector. I'm
• 11:11
  Speaker 1: not negative on the sector. But Southwest has continue to
• 11:14
  Speaker 1: have problems. It's had problems in their c suite. We've
• 11:16
  Speaker 1: seen that this year. We can CEO changes and different things.
• 11:19
  Speaker 1: They've had problems now with their computer systems. And what
• 11:22
  Speaker 1: you want to understand what those thousands of cancelations is
• 11:25
  Speaker 1: the next time people go to book a flight, do
• 11:28
  Speaker 1: they think in their minds, I don't. I don't know,
• 11:31
  Speaker 1: maybe Southwest is going to cancel me. Once that happens,
• 11:34
  Speaker 1: they booked somewhere else, you lose revenue. So the seventy
• 11:37
  Speaker 1: five million one time charge great, but what about the
• 11:41
  Speaker 1: next flight? That's what I'm worried about with Southwest. I
• 11:44
  Speaker 1: see a lot of downside volatility here or risk, and
• 11:47
  Speaker 1: so from my standpoint, short term struggles. If you're going
• 11:50
  Speaker 1: to be in this sector, avoid Southwest. You do like
• 11:54
  Speaker 1: x On Mobile, and this is a company that I
• 11:57
  Speaker 1: think a lot of people with E s G concerns
• 11:59
  Speaker 1: would have void what draws you to the big oil?
• 12:04
  Speaker 1: You know, it's interesting we've been doing E s G
• 12:06
  Speaker 1: before e SU was sexting that and and before it
• 12:09
  Speaker 1: was even called that, And so sometimes E s G
• 12:12
  Speaker 1: is not always about not uh, it's it's more about
• 12:16
  Speaker 1: doing what you do really well and avoiding damage. Right. So,
• 12:21
  Speaker 1: if Exon was responsible for the oil spill that was
• 12:23
  Speaker 1: off the hunt it'son beach coach coast last two or
• 12:26
  Speaker 1: three weeks ago, that'd be really bad. But they're not,
• 12:30
  Speaker 1: and they're doing really well and you're getting a really
• 12:32
  Speaker 1: well paid yield here. Um, you're getting very manageable risk,
• 12:36
  Speaker 1: really good management team. And our call is that oil
• 12:40
  Speaker 1: stays above where it's at, or stays where it's at
• 12:43
  Speaker 1: right now for a longer period of time. And let's
• 12:45
  Speaker 1: face it, at this price of crude, excellent is a
• 12:48
  Speaker 1: really good opportunity and it's a good value play too.
• 12:51
  Speaker 1: So from my standpoint, energy right now is a really
• 12:54
  Speaker 1: good play and I would be increasing my energy exposure
• 12:57
  Speaker 1: if I was a client. Dave, you're salt Lake cities
• 13:00
  Speaker 1: at right correct, we're out of Salt Lake with offices
• 13:04
  Speaker 1: in Boise, San Francisco, and Tampa. Let's getting the important stuff.
• 13:08
  Speaker 1: How's the snow going to be in Utah this year? Well,
• 13:12
  Speaker 1: after a foot of snow last night, nice continued going
• 13:15
  Speaker 1: this morning, and a storm every about three days. Our
• 13:20
  Speaker 1: resorts are opening up sooner than they've ever done before,
• 13:25
  Speaker 1: and so I think it's gonna be a fantastic ski season.
• 13:28
  Speaker 1: But I love the skis um book. I've already booked
• 13:31
  Speaker 1: two trips out there, so it you know, better keep
• 13:33
  Speaker 1: dumping after missing skiing for a couple of years, it's
• 13:35
  Speaker 1: gonna be great to get back. Boy. We always make
• 13:38
  Speaker 1: plans to do something different, crazy Montana or this or that.
• 13:40
  Speaker 1: Then again, he screw it. It's flying to Salt Lake.
• 13:42
  Speaker 1: We got world class resorts, you know, minutes away. It's
• 13:45
  Speaker 1: just Park City, much easier. Yeah, I know. Awesome, awesome,
• 13:49
  Speaker 1: all right. Dave Harden, CEO and Chief investment officer Summit
• 13:51
  Speaker 1: Global Investments and our Utah ski man on the ground.
• 13:56
  Speaker 1: We appreciate that. Markets again trading higher again. Good earnings,
• 14:00
  Speaker 1: we had some good earnings. We have more big tech
• 14:03
  Speaker 1: after the close today, but as Dave said, earnings doing
• 14:07
  Speaker 1: their part here for this market. Let's bring in Fiona
• 14:11
  Speaker 1: Sencata right now, senior financial markets analyst at City Index,
• 14:16
  Speaker 1: and Fiona as a journalist. We have to try and
• 14:19
  Speaker 1: be skeptical. It's not hard right now. Uh, supply chain,
• 14:23
  Speaker 1: I don't think crisis is a is a too strong
• 14:26
  Speaker 1: a word to use. Labor shortages, inflation scares, and yet
• 14:31
  Speaker 1: we're trading at basically forty six hundred right now on
• 14:34
  Speaker 1: the SMP. That's got to be a game of like
• 14:38
  Speaker 1: twenty year to day what's going on, that's right. I mean,
• 14:44
  Speaker 1: it does feel that very much, this sort of optionism
• 14:47
  Speaker 1: that's coming out of earnings at the moment, which is
• 14:50
  Speaker 1: actually just lifting the stocks. There's very much the shadowing
• 14:53
  Speaker 1: the concerns that we saw heading into earning seasons that
• 14:57
  Speaker 1: the inflation confirms, just to surroundings of the labor market,
• 15:02
  Speaker 1: the sort of energy crisis and supply chain bottlenecks, all
• 15:06
  Speaker 1: that seems to be just being overshadowed right now by
• 15:09
  Speaker 1: some some nice strong earnings that we've seen, and I
• 15:13
  Speaker 1: think we're not seeing sort of the reflection yet of
• 15:18
  Speaker 1: those sort of concerns thing really shown through in the
• 15:22
  Speaker 1: earnings from that's something that's helping sort of investors optimism. UM.
• 15:28
  Speaker 1: Just for example, the as far as supply chain bottlenecks
• 15:32
  Speaker 1: were concern, I think that's very much to see that
• 15:35
  Speaker 1: sort of starting to come through in the following quarter.
• 15:38
  Speaker 1: And I think that's just what we're seeing at the moment,
• 15:41
  Speaker 1: is the market or at that sort of happy point
• 15:43
  Speaker 1: where things although we know there are a lot of
• 15:45
  Speaker 1: headwinds coming and there are problems surrounding, the numbers just
• 15:49
  Speaker 1: aren't quite showing that yet. And also we've got sort
• 15:51
  Speaker 1: of consumer confidence data came through today much better than
• 15:54
  Speaker 1: expected as well, and so that really helps lift up
• 15:58
  Speaker 1: the mood. Adding to that upb we were expecting to
• 16:01
  Speaker 1: meet consumer confidence to come in much lower and to
• 16:04
  Speaker 1: fall for a fourth straight months. It's actually had a
• 16:06
  Speaker 1: surprise jump. So that does bode well in fact for
• 16:11
  Speaker 1: the the the economic pick up picture for the start
• 16:14
  Speaker 1: of the fourth quarter. UM. If you know, we have
• 16:18
  Speaker 1: some big techno names reporting earnings after the closed Microsoft
• 16:21
  Speaker 1: alphabet and which I prefer to as Google on old school,
• 16:25
  Speaker 1: how are you thinking about the text base right here? Yes,
• 16:29
  Speaker 1: so we've had some good numbers, haven't we I mean,
• 16:31
  Speaker 1: I think we've had as far as the Facebook was concerned,
• 16:35
  Speaker 1: that was as far as I'm concerned, that came better
• 16:37
  Speaker 1: than we were expecting in the sense that we saw
• 16:40
  Speaker 1: that beat on the earning pressure. Revenue was a little
• 16:43
  Speaker 1: bit on the disappointing side, but that perhaps isn't so
• 16:46
  Speaker 1: surprising given what we know about what's happening with Apple
• 16:50
  Speaker 1: and the the privacy policy change there, and as far
• 16:55
  Speaker 1: as what we're expecting from from Microsoft to Alphabet, I mean,
• 16:58
  Speaker 1: if we think about how these have rallied over the
• 17:01
  Speaker 1: past six months, I mean Microsoft are up thirty over
• 17:04
  Speaker 1: the past six months, Alphabets up year today, So there
• 17:08
  Speaker 1: are pretty high expectations for these stocks. But I mean
• 17:11
  Speaker 1: with Alphabet, for example, not only Google proved to be
• 17:14
  Speaker 1: resilient as far as sort of advertising revenue concern, we
• 17:18
  Speaker 1: do see it sort of picking up as well from
• 17:20
  Speaker 1: that gain in the pickup in travel sector and travel searches,
• 17:25
  Speaker 1: which is going to help it along as well. Microsoft
• 17:29
  Speaker 1: very much been involved with that remote working companies sort
• 17:32
  Speaker 1: of increasingly spend on cloud and on digital transformations because
• 17:37
  Speaker 1: of that remote working. This is all very supportive of
• 17:41
  Speaker 1: the tech sector. I think we've still got you know,
• 17:43
  Speaker 1: we've seen these stocks trading out record highs and they
• 17:46
  Speaker 1: have eased off some of them. I think they could
• 17:49
  Speaker 1: potentially push higher if we get some more solid numbers
• 17:53
  Speaker 1: in terms of the in terms of next year, what
• 17:58
  Speaker 1: are you expecting, because the consumer confidence numbers, although they
• 18:01
  Speaker 1: were good just now, have been lacking of late, and
• 18:04
  Speaker 1: I've heard more and more people use the word recession.
• 18:08
  Speaker 1: I think recession is quite a strong word sense still,
• 18:12
  Speaker 1: I think we we will see a sort of very
• 18:14
  Speaker 1: much a change as we're going into next year. Obviously,
• 18:17
  Speaker 1: let's not forget this year has been very much about recovery, rebounding.
• 18:22
  Speaker 1: We've had the support from the fiscal support. We've also
• 18:25
  Speaker 1: had military policy support. And those taps are going to
• 18:28
  Speaker 1: be turned off, we know, sort of as far as
• 18:30
  Speaker 1: the Fed is concerned, will be looking for that for
• 18:33
  Speaker 1: the taping in them. Those bond purchases to start happening,
• 18:36
  Speaker 1: you know, potentially as soon as November December, and then
• 18:40
  Speaker 1: as far as interest rates being heiked, that's something that
• 18:44
  Speaker 1: could really start to flow the growth that we're seeing.
• 18:49
  Speaker 1: I do think recessions a very strong word. I think
• 18:51
  Speaker 1: there are concerns about as far as growth is trying
• 18:54
  Speaker 1: to flow, particularly as we see those these supply chain
• 18:59
  Speaker 1: bottom x the energy crisis sort of moves through the
• 19:02
  Speaker 1: market and the markets come to terms with those and
• 19:05
  Speaker 1: moved past them. But I think the as Sara's actually
• 19:09
  Speaker 1: greatest concern, and do you think we'll continue to see growth,
• 19:12
  Speaker 1: but just as a much slower pace, And obviously any
• 19:15
  Speaker 1: rising interest rates that bring sort of inslation back under
• 19:19
  Speaker 1: control will just sort of stem that groat a little
• 19:22
  Speaker 1: bit more. You mentioned energy just real quickly, I'm seeing
• 19:26
  Speaker 1: w t I just about eighty five dollars a barrel.
• 19:28
  Speaker 1: Have I missed the energy stock trade or the energy
• 19:31
  Speaker 1: commodity trade. No, I think there is more here. I mean,
• 19:36
  Speaker 1: I get energy, and as far as oil is concerned,
• 19:39
  Speaker 1: it's had a very impressive run I mean we know
• 19:43
  Speaker 1: sort of coal prices and gas prices have absolutely surge,
• 19:47
  Speaker 1: and w t I has also had a very good
• 19:50
  Speaker 1: run up. Was just in the the gas and the
• 19:51
  Speaker 1: coal prices starting to edge down after we've had that
• 19:54
  Speaker 1: intervention from China, particularly in the coal market. But I
• 19:58
  Speaker 1: think as far as oil in this concern, we know
• 20:01
  Speaker 1: that demand is still very strong, particularly in the US,
• 20:04
  Speaker 1: and then we've also got to very tight supplies from Ope,
• 20:09
  Speaker 1: they're not looking to sort of move so far beyond
• 20:12
  Speaker 1: those four D extra barrels they agreed back into life,
• 20:15
  Speaker 1: So so I think there is further to run that
• 20:18
  Speaker 1: all right, Fiana, thank you so much for joining us.
• 20:19
  Speaker 1: As always, Fiona and card A, senior financial markets analysts
• 20:23
  Speaker 1: for City in next giving her her thoughts on these
• 20:26
  Speaker 1: markets again earnings after the close, Big Tech, this is Bloomberg.
• 20:34
  Speaker 1: Now we got us new home sales numbers um UH
• 20:39
  Speaker 1: sales of new homes in America increase in September to
• 20:42
  Speaker 1: the highest level in six months, underscoring what we already
• 20:46
  Speaker 1: knew was pretty solid underlying demand. Brad Dillman joins us
• 20:50
  Speaker 1: right now, chief economists at Courtland out of Atlanta, And Brad,
• 20:56
  Speaker 1: what do you think I mean? We knew it was
• 20:58
  Speaker 1: going to be hot, but I'm not sure everybody knew
• 21:01
  Speaker 1: that purchases of single family homes would grow fourteen percent
• 21:07
  Speaker 1: to an annualized eight hundred thousand. It's definitely higher than expectations.
• 21:13
  Speaker 1: The figure I had had in front of me for
• 21:15
  Speaker 1: the expectations figure with seven twenty thousand on a seasonally
• 21:18
  Speaker 1: does at annualized basis so it's certainly be what most
• 21:22
  Speaker 1: models have been predicting. You know, one of the things
• 21:25
  Speaker 1: as we think about the housing market bread it's been
• 21:28
  Speaker 1: so consistently strong through this entire economic tumult from the pandemic,
• 21:33
  Speaker 1: But when we think about the supply of housing in
• 21:35
  Speaker 1: the US, it hasn't been necessarily where it's needed. I'm
• 21:39
  Speaker 1: thinking the entry level home. We haven't seen new home
• 21:42
  Speaker 1: construction really address that market. Uh, Is that changing at all? No, Unfortunately,
• 21:48
  Speaker 1: it's not that. If we look at the price movement
• 21:51
  Speaker 1: in what's happened on the new home sales side. For example,
• 21:53
  Speaker 1: the median price came in it fo UM. That's up
• 21:57
  Speaker 1: from about eight thousand pre COVID and US. To put
• 22:00
  Speaker 1: it an a broader reference, twenty years ago, the price
• 22:03
  Speaker 1: for a new home would have been about a hundred
• 22:04
  Speaker 1: and sixty eight thousand, So that's a two and a
• 22:06
  Speaker 1: half times increase. So we are definitely seeing those prices
• 22:10
  Speaker 1: continue to take up. Now. I would make the argument
• 22:13
  Speaker 1: that that's in part due to financial conditions, and I
• 22:16
  Speaker 1: think part of the reason that housing has been so
• 22:17
  Speaker 1: strong since the onset of the pandemic has been what's
• 22:21
  Speaker 1: gone on and with mortgage rates, which is that they've
• 22:23
  Speaker 1: come down so much and remain quite low. Um. I've
• 22:26
  Speaker 1: talked in the past about the tenure tregury rate being
• 22:28
  Speaker 1: negative in real terms once week factor and inflation and
• 22:32
  Speaker 1: an aspect of this passing through the mortgage rates with
• 22:34
  Speaker 1: they're being really low as well. But when we look
• 22:37
  Speaker 1: to new homesale too, you know, we had this huge
• 22:39
  Speaker 1: rebound in the wake of the pandemic that it's then
• 22:41
  Speaker 1: cooled a bit. And now I'd say when I look
• 22:43
  Speaker 1: at this figure, I'd say it's it's really resuming its
• 22:45
  Speaker 1: pre COVID trend. So maybe we'll see a continuation of
• 22:48
  Speaker 1: that going for what is I mean, it's a very
• 22:52
  Speaker 1: regional market, right The United States is gigantic and um,
• 22:57
  Speaker 1: you know I realized that even more having lived in
• 23:01
  Speaker 1: Europe for for years. Now, where do you see the
• 23:04
  Speaker 1: strongest growth and where do you see a little bit
• 23:07
  Speaker 1: more normalcy? So month to months, the big games have
• 23:11
  Speaker 1: been in the Northeast and the south. Um, I wouldn't
• 23:14
  Speaker 1: really say that we're you know, the other parts of
• 23:16
  Speaker 1: the country and again we're talking large regions, you know,
• 23:19
  Speaker 1: are in a bad spot. We gotta remember when we
• 23:21
  Speaker 1: look at the new home sales figure. While it was strong,
• 23:23
  Speaker 1: it actually is still down year to year. And so
• 23:26
  Speaker 1: I mentioned earlier, you know, in the latter half of
• 23:28
  Speaker 1: we really saw some strong figures that cooled off a
• 23:31
  Speaker 1: lot in the first part of this year, and we're
• 23:33
  Speaker 1: now seeing them swing back up again and resume that
• 23:36
  Speaker 1: pre COVID trend. Brad, you know, I'm still at a loss.
• 23:39
  Speaker 1: I'm gonna follow on my prior question. Why isn't the market,
• 23:42
  Speaker 1: the housing market more efficient? I e. There's demand at
• 23:45
  Speaker 1: the low end, and there's where's the supply to meet
• 23:49
  Speaker 1: that demand. I mean, I know the margins on the
• 23:51
  Speaker 1: McMansion are better for builders, but at some point the
• 23:55
  Speaker 1: pricing dynamic has to drive supply of lower end housing. Yeah,
• 24:01
  Speaker 1: and I argue to a degree. We have seen, of course,
• 24:03
  Speaker 1: over the last ten years, we've seen supply pick up.
• 24:06
  Speaker 1: It just hasn't kept pace with our population growth. So
• 24:08
  Speaker 1: there's estimates out there related to our total deficit of housing.
• 24:12
  Speaker 1: The The estimate that I have is one point one
• 24:14
  Speaker 1: million housing units. That's to say that we would need
• 24:16
  Speaker 1: to build one point one million housing units instantaneously just
• 24:20
  Speaker 1: to satisfy what we would need right now. That's nothing
• 24:24
  Speaker 1: to do with sort of a go forward basis, just
• 24:25
  Speaker 1: to clean things right now. And so when I look
• 24:28
  Speaker 1: at the last ten years, I see the difficulty for
• 24:30
  Speaker 1: home builders really being in what I would call artificial
• 24:33
  Speaker 1: home price appreciation that came about from the kind of
• 24:36
  Speaker 1: policies that we've set about on to stimulate housing coming
• 24:39
  Speaker 1: out of the Great Recession. If you raise home prices
• 24:41
  Speaker 1: to the point that people can't afford them, there's really
• 24:44
  Speaker 1: not a big market into which home builders can build
• 24:47
  Speaker 1: and deliver supply. And that's precisely what's happened at the
• 24:49
  Speaker 1: low end. Even though this situation has to a degree
• 24:53
  Speaker 1: uh been solved over the last ten years, as as
• 24:57
  Speaker 1: our total amount of housing completions has in increased, we
• 25:01
  Speaker 1: haven't have we seen UM rentals keep up then with
• 25:06
  Speaker 1: the demand for housing. I mean, do people who can
• 25:09
  Speaker 1: afford to buy houses, do they end up renting places instead?
• 25:13
  Speaker 1: Has it working out? Yes? So there's been some huge
• 25:17
  Speaker 1: strength in the multifamily space and in the single family
• 25:19
  Speaker 1: rental space, and in fact q Tree annual rent growth
• 25:22
  Speaker 1: in multi family came in much stronger than expectations UM
• 25:26
  Speaker 1: and the occupancy rates and multi family remained very tight. Now,
• 25:29
  Speaker 1: what's interesting is during the pandemic, when we saw lots
• 25:31
  Speaker 1: of people move out to buy homes, we did see
• 25:34
  Speaker 1: that these vacant rental units were back silled by something
• 25:37
  Speaker 1: that we've covered in surveys as first time renters. So
• 25:40
  Speaker 1: that's something we can see with call it your younger
• 25:42
  Speaker 1: millennials at this point or older gen zers who are
• 25:44
  Speaker 1: able to move out and form their own household as
• 25:47
  Speaker 1: as those units become vacant um. But where that's going
• 25:51
  Speaker 1: to be heading going forward. You know, if we if
• 25:53
  Speaker 1: we do see mortgage rates take up in the wake
• 25:54
  Speaker 1: of a taper, and we see activity in the floor
• 25:56
  Speaker 1: purchase space start to slow down a little bit, maybe
• 25:59
  Speaker 1: in some ae month's time, we may see higher renewal
• 26:02
  Speaker 1: rates again in multi family, something that's already been relatively
• 26:05
  Speaker 1: consistent over the last call it six months or so.
• 26:07
  Speaker 1: That's the same increase in renewal rates in Reynolds. Interesting stuff.
• 26:11
  Speaker 1: You can always talk real estate lots going on out there.
• 26:14
  Speaker 1: Brad Dillman, chief economist for Courtland, joining us on the
• 26:18
  Speaker 1: phone there, and again, the real estate market remains very,
• 26:21
  Speaker 1: very strong. We saw that in the in the ECO
• 26:24
  Speaker 1: numbers today coming out of d c UM. So good
• 26:27
  Speaker 1: time to be a seller of a house. Not so
• 26:29
  Speaker 1: sure enough already a buyer. But Matt's going to give
• 26:33
  Speaker 1: us some on the ground, real world feedback starting next week.
• 26:37
  Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
• 26:40
  Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
• 26:44
  Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 26:48
  Speaker 1: at Matt Miller three pt on Ball Sweeney I'm on
• 26:51
  Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always
• 26:54
  Speaker 1: catch us worldwide at Bloomberg Radio