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Pop the Champagne Corks. 2020 Is Finally Ending. · Bloomberg Intelligence

0:01
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
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Speaker 1: with my co host of Bonnie Quinn. Every business day
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Speaker 1: we bring you interviews from CEO, market pros and Bloomberg experts,
0:10
Speaker 1: along with essential market moving news. Find the Bloomberg Markets
0:13
Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
0:17
Speaker 1: and on Bloomberg dot com. Lisa, you know, as we
0:20
Speaker 1: make our way towards New Year's Eve, I'm gonna make
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Speaker 1: a call here. I'm gonna say that people are going
0:25
Speaker 1: to drink a little bit more champagne than they typically do.
0:28
Speaker 1: What do you think that they typically do in quarantine
0:30
Speaker 1: or just general? And I think just I think this
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Speaker 1: is gonna be a big here for champagne. As we
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Speaker 1: get the New Year's Eve, let's talk champagne. There's nobody
0:37
Speaker 1: better to do that with than champagne. There you go.
0:41
Speaker 1: Blaine Ashley, founder New York Champagne Week and the Fizz
0:45
Speaker 1: Is female platform and website, joining us on the phone
0:48
Speaker 1: from New York. Blaine, thanks so much for joining us.
0:51
Speaker 1: I'm looking at a beautiful bottle of champagne right here.
0:55
Speaker 1: My question is what is champagne? Are people drinking more
1:00
Speaker 1: champagne and a pandemic and a quarantine then typically, well,
1:04
Speaker 1: first off, thank you both for having me. I really
1:06
Speaker 1: appreciate it. And yes, the answer is yes, people are
1:09
Speaker 1: drinking a lot more champagne, are actually spending more money
1:12
Speaker 1: on wine in general. UM sales have been a thirty
1:16
Speaker 1: percent for champagne since June. Since mid June, so usually
1:20
Speaker 1: most of the revenue for the champagne industry comes in October, November, December.
1:25
Speaker 1: We call it O n D. But we've been doing
1:27
Speaker 1: those numbers of our sales come from that time frame.
1:31
Speaker 1: We've been doing those numbers since June. Okay, Virtual tastings, yeah,
1:37
Speaker 1: a real thing. I mean do people actually do that
1:40
Speaker 1: and feel satisfied with that? Um it is such a
1:44
Speaker 1: real thing because as you know, as I'm the founder
1:46
Speaker 1: of New York Champagne Week, which has been the live
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Speaker 1: event for the last seven years, we transitioned the web
1:51
Speaker 1: this year. In one week, we did ten events. We
1:55
Speaker 1: shift the Champagne experiences to thirty nine states, and we
1:58
Speaker 1: had over two people per just tickets across the country
2:02
Speaker 1: to attend events like the Fried Chicken and Champagne Bash,
2:05
Speaker 1: which we did with Marcus Danielson of of the Red
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Speaker 1: Rooster in your backyard LISTA and Harlem, I know where
2:12
Speaker 1: I live, my God, and then we we also we
2:17
Speaker 1: paired him up with a Champagne brand. Owner is also
2:21
Speaker 1: based on Harlem Rito Jam for walk Hard All Champagne.
2:24
Speaker 1: I have actually done forty three virtual peastings since May
2:29
Speaker 1: through December. And that's why I love half bottles because
2:32
Speaker 1: they're keeping the waist line and check pennies in my pocket,
2:37
Speaker 1: all of that jobs, and they're they're much healthier for
2:39
Speaker 1: you all around. Right, So that's why I'm loving half
2:42
Speaker 1: bottles of Champagne. Which that business is way up, like
2:47
Speaker 1: so Blaine, So people are drinking more. We've heard that
2:51
Speaker 1: from different parts of the spirits industry. Are you finding
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Speaker 1: new champagne drinkers? Are you attracting new people to champagne?
3:01
Speaker 1: I think so. I think that people are really looking
3:04
Speaker 1: for those little affordable luxuries in life, and so through
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Speaker 1: a lot of the events and the tastings we're doing,
3:10
Speaker 1: we're trying to make it very approachable. Like right now,
3:13
Speaker 1: I have my bottle of Charles hid stuck open with
3:16
Speaker 1: some popcorn. And the newest craze with caviare is instead
3:22
Speaker 1: of it's ditching the balinis but putting it on a
3:24
Speaker 1: potato chip. So it's kind of like all about like
3:27
Speaker 1: the approachable um and the diversity that champagne has to
3:31
Speaker 1: offer a diversification. But also champagne is the most food
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Speaker 1: friendly wine out there. It really pairs from everything really
3:38
Speaker 1: that you can find. And then also um, champagne is
3:41
Speaker 1: lower than lower and alcohol. Uh, so it generally falls
3:45
Speaker 1: in the twelve percent category, whereas a standard still line
3:49
Speaker 1: will be around fourteen. I gotta say, I'm not sure
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Speaker 1: that you want to reduce alcohol. Actually I shouldn't have
3:56
Speaker 1: a joke about that, but I'm wondering going full were
4:00
Speaker 1: this concept of virtual paired with actual how do you
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Speaker 1: see this evolving in a world that isn't necessarily beset
4:08
Speaker 1: with the pandemic woes? Right, So, after Champagne Week, and
4:12
Speaker 1: this is something I never saw coming as a total
4:14
Speaker 1: small business in One Woman's show, I started having financial
4:18
Speaker 1: firms and banks, um uh companies reach out to me
4:21
Speaker 1: to do virtual tastings for their clients. So I actually
4:25
Speaker 1: there's a few Champagne and caveat experiences with Google. I've
4:30
Speaker 1: done some um from age and fays, so like cheese
4:33
Speaker 1: and champagne tastings for banks like JP Morgan. Um. I
4:37
Speaker 1: never saw that coming. I actually booked that. We booked
4:39
Speaker 1: about ten events between December eight and eighteen. Um uh
4:45
Speaker 1: four people that are are switching up there. You know,
4:47
Speaker 1: they can't do traditional client entertaining, so they're looking to
4:50
Speaker 1: do this instead. Another great uh way that we're getting
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Speaker 1: these virtual tastings out there and giving back to the
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Speaker 1: food and bridge industry, which is obviously hurting majorly right now,
5:02
Speaker 1: is doing a lot of chefs collaborations. A lot of
5:05
Speaker 1: these chefs are offering items on sites like gold Belly,
5:08
Speaker 1: which can ship to fifty states, and they're offering their
5:12
Speaker 1: like signature dish and delivering people's doorstep the day before
5:15
Speaker 1: so they can prepare it at home and have these
5:17
Speaker 1: great experiences. Blaine, what are some of the champagne's that
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Speaker 1: you like right now that you're really suggesting people that
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Speaker 1: they take some time in experiment with, right so I
5:28
Speaker 1: selected some today to chat about. Um. We have the
5:31
Speaker 1: Charles types like Group Reserve that is a great champagne
5:34
Speaker 1: to start off your festivities for the holidays with, like
5:38
Speaker 1: cheese and charcooterie boards something like that. Um. It is
5:41
Speaker 1: a blend of the three traditional grapes and champagne so
5:44
Speaker 1: Pino noir, Chardonnay, pinomnier, and it's eleven grams of dosage,
5:50
Speaker 1: which is the sugar. And that's another great thing about champagne.
5:52
Speaker 1: It actually has a lower sugar content that people realize.
5:55
Speaker 1: Most groups Champagne's fall between six and twelve grams per leader. Um.
6:01
Speaker 1: So that is an excellent um talking point about champagne,
6:06
Speaker 1: reason you should be drinking it. And then moving on, um,
6:09
Speaker 1: we have billa carsmon blanc to blanc now Blanc to
6:13
Speaker 1: blanc is a d percent chardoni and Chardonnay is great
6:16
Speaker 1: with fish. So I would pair that with a feast
6:19
Speaker 1: of seven fishes Christmas Eve dinner and down maybe also
6:23
Speaker 1: if you want to up the antie again, we love
6:25
Speaker 1: caviar and champagne. That's the great pairing. And then you
6:29
Speaker 1: have the su boi. I believe Paul correct and that
6:34
Speaker 1: is excellent with your classic Christmas dinner traditional holiday foods
6:39
Speaker 1: like you know, turkey, uh, mushrooms, stuffing. I love duck,
6:45
Speaker 1: so I love it with duck. And then I believe
6:48
Speaker 1: that Lisa has the Laurent Perier kube rouse and we
6:52
Speaker 1: love to pair rose with dessert around here, so um,
6:57
Speaker 1: that's that's a great pairing with apple pie, of pecan pie,
7:01
Speaker 1: any sort of like fruit tart. Also, if you're not
7:04
Speaker 1: into like sweets, I'm kind of a more of a
7:06
Speaker 1: cheese person, so you could do creamy cheeses, citrusly jams
7:10
Speaker 1: and figs um something like that would be perfect with
7:14
Speaker 1: that rose. And it's also it's stunning bottle, right, it's beautiful.
7:18
Speaker 1: I've actually tasting another one that you sent over currently,
7:24
Speaker 1: so that that's what I believe. Are you having the
7:27
Speaker 1: Child's type or the lacara velve I'm doing yes, so
7:32
Speaker 1: the lacr vel cub Minia and that's what I set
7:35
Speaker 1: off the top um. That has been my good I
7:38
Speaker 1: had too much of it. No, that has been my
7:42
Speaker 1: go to zoom line of this season. And because the
7:45
Speaker 1: brand owner lives in New York and it's been really
7:48
Speaker 1: great for collaboration Steak, She's able to kind of hop
7:51
Speaker 1: onto a lot of these events. So everything we're offering
7:54
Speaker 1: on our website right now for virtual any time booking,
7:58
Speaker 1: we do with Rita, the owner of Laka of All,
8:00
Speaker 1: because she's there and who better to speak to her
8:04
Speaker 1: Champagne for these zoom experiences than than the founder herself.
8:09
Speaker 1: And what's great as Rita used to own a iconic
8:12
Speaker 1: restaurant in Midtown called La Carvell. It closed in two
8:15
Speaker 1: thousand and three, but it was like Kennedy's hot Spot
8:17
Speaker 1: or the Stewart, like tons of glow, Julia Child, tons
8:21
Speaker 1: of g Literatti went there and she is like best
8:23
Speaker 1: friends to every single chef in New York. We have
8:26
Speaker 1: access to the chefs because of the founder of Lacarravel,
8:29
Speaker 1: Rita Jamai Champagne Blaine, you made my Thursday afternoon absolutely fantastic.
8:36
Speaker 1: You made it a little bit harry for Paul, who's
8:38
Speaker 1: a little concerned. I haven't drug that much. I just
8:40
Speaker 1: opened at the beginning of the segment. Champagne Blaine, thank
8:43
Speaker 1: you so much. That was fantastic and I look forward
8:47
Speaker 1: to a very, very fun evening. Champagne Blaine. Ashley, founder
8:51
Speaker 1: of the New York Champagne Week and the phizz is
8:54
Speaker 1: female platform website, joining us on the phone. Uh, it
8:59
Speaker 1: is nice way to end the week. I've got to say, Paul,
9:02
Speaker 1: absolutely and the bottles are beautiful, and you know I'm
9:05
Speaker 1: not a huge champagne person. I know a lot of
9:07
Speaker 1: folks are, but get started. I get started. Champagne Blane
9:13
Speaker 1: definitely got me fired up to open this bottle probably
9:16
Speaker 1: this evening, Yeah, opened up a bottle anything radio. What
9:23
Speaker 1: a year we're all looking forward exactly. Just unbelievable, and
9:30
Speaker 1: you know, it's amazing how these financial markets have reacted.
9:34
Speaker 1: We think, Lisa, back to uh, the depths in that
9:37
Speaker 1: march in April and just the panic in the marketplace.
9:40
Speaker 1: But then the Federal Reserve comes to the rescue, fiscal
9:43
Speaker 1: stimulus comes to the rescue, and we have this major
9:47
Speaker 1: turnaround in the markets. Now Here, we are a couple
9:50
Speaker 1: of days left in the year. The question is what
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Speaker 1: do we do next year? Alan Zafyn founding partner and
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Speaker 1: co CEO of I e Q Capital, based in Foster
9:58
Speaker 1: City and Los Angeles, California. He joins us now, Alan,
10:02
Speaker 1: thanks so much for joining us. We really appreciate it.
10:04
Speaker 1: On Christmas Eve, again, what a year. I'd love to
10:07
Speaker 1: get your thoughts one, how are you positioning your portfolio?
10:14
Speaker 1: Lisa and Paul happy, alidays, Thank goodness, We're going to
10:18
Speaker 1: get through this year. Absolutely, there's still a couple of
10:21
Speaker 1: days left, though, let's not take sick. Carry on all right. Uh,
10:26
Speaker 1: here's the longest short of it. If you talk to
10:29
Speaker 1: almost any analysts, they'll tell you we're going to go
10:32
Speaker 1: up in the U S stock market next year. And
10:34
Speaker 1: the reason is you're going to see US economic growth
10:38
Speaker 1: the fastest it's been since the mid eighties. And that's
10:41
Speaker 1: because when you pump literally nearly fifty worth of g
10:46
Speaker 1: d P in the form of monetary and fiscal stimulus,
10:49
Speaker 1: which is what we have done this year, you're setting
10:52
Speaker 1: yourself for a boom on the back end of that.
10:55
Speaker 1: So again, with all due respect to the horrific, horrific
10:59
Speaker 1: elements of oalth crises and literally social and economic crisis,
11:03
Speaker 1: and we clearly have problems with inequality as it relates
11:07
Speaker 1: to the stock market. The money has got to go somewhere.
11:09
Speaker 1: And when cash is giving you nothing, and when bonds
11:13
Speaker 1: give you so little, risk appetites perk up. And with
11:16
Speaker 1: that massive amount of money, equities move higher and other
11:20
Speaker 1: risk assets moved higher. All things equal, there's plenty of
11:23
Speaker 1: risks and bumps, but the base cases we keep grinding higher,
11:28
Speaker 1: largely because the money has got to go somewhere. That's
11:30
Speaker 1: your story for two. So another way of putting this
11:34
Speaker 1: perhaps is that in two it will sort of be
11:37
Speaker 1: like what we saw in the second half of two.
11:40
Speaker 1: Nothing really matters except for the money keeps keeps flowing,
11:43
Speaker 1: so you might as well buy stocks. Is that the
11:45
Speaker 1: same thing here with luck? Yes? With let me give
11:49
Speaker 1: you a little bit of nuance. So please give an example.
11:55
Speaker 1: I don't know if you know this, but Brexit finally passed.
11:58
Speaker 1: I heard about that. Nobody can't the markets that move right?
12:02
Speaker 1: How many years have we obsessed about that darn thing? Uh? Frankly,
12:06
Speaker 1: it's a modest positive. It's not a not actually that
12:09
Speaker 1: big of a deal, but it's a modest positive. But
12:13
Speaker 1: you know, one thing that is um a good and
12:16
Speaker 1: about is if the economy really improves and broadens out,
12:19
Speaker 1: you will finally see this rotation to a degree anyway
12:24
Speaker 1: where you start to see the smaller companies perform as
12:26
Speaker 1: well as the larger stocks, and you start to see
12:29
Speaker 1: the value industries do as well as the technology and
12:33
Speaker 1: growth related related stock. And so it may actually be
12:36
Speaker 1: a year where it's a little deceptive. And what I
12:39
Speaker 1: mean by that is our indexes in the US are
12:41
Speaker 1: now dominated by technology companies. It's possible we'll see a
12:46
Speaker 1: year where the average stock is doing better than that index.
12:50
Speaker 1: The index being market cap weighted, so the big technology
12:53
Speaker 1: companies comprise a big part of that index. It could
12:56
Speaker 1: be oddly enough, a year the index doesn't go up
12:59
Speaker 1: too much in actually a bunch of individual stocks do
13:02
Speaker 1: modestly better because as the economy picks up, businesses that
13:06
Speaker 1: are a lower quality and need economic growth, they're gonna
13:08
Speaker 1: get a little bit of a pickup next year. So
13:11
Speaker 1: industrial stocks, financial stocks, selective consumer oriented stocks might actually
13:18
Speaker 1: do a little better than the apples and facebooks and
13:20
Speaker 1: Microsoft's of the world. Um, that's sort of the other
13:24
Speaker 1: element of two thousand twenty one is maybe we'll get
13:27
Speaker 1: a broadening of market stock market recovery and that will
13:32
Speaker 1: kind of help everybody a little bit. Do you embrace
13:35
Speaker 1: that rotation trade there? Allan It's it's certainly been successful here,
13:38
Speaker 1: you know, over the last several months, I guess a
13:40
Speaker 1: lot of folks are just saying, how much legs does
13:43
Speaker 1: that cyclical trade, that rotation trade have in How do
13:47
Speaker 1: you think about that? Coming from a guy right here
13:50
Speaker 1: in Silicon Valley, I'm gonna be a heretic. I can
13:52
Speaker 1: tell you I think there's an element of truth, So
13:54
Speaker 1: I embrace it, but only, but you know, only to
13:57
Speaker 1: a modest degree. It's like, you know, bulls and bear
14:00
Speaker 1: make goals, and bears make money and pigs don't. Um,
14:02
Speaker 1: I think you're crazy to just think I'm going to
14:04
Speaker 1: rotate entirely out of the large cap tech names and
14:07
Speaker 1: go into small caps, low value companies. That's not the trade.
14:11
Speaker 1: You still want to be in strong balance sheet businesses
14:14
Speaker 1: that generate consistent growth, and so you can find again financials, industrials,
14:19
Speaker 1: consumer staples that meet that description without being a technology company.
14:23
Speaker 1: And I still think you've got to be balanced, um
14:27
Speaker 1: between putting all your eggs and ones ask. But it's
14:29
Speaker 1: just a reckless strategy, and it also drives a lot
14:31
Speaker 1: of transactional activity and taxes. So you know, just be
14:35
Speaker 1: prudent about it, don't You know. You don't have to
14:37
Speaker 1: find the next test one, just keep balanced. But yeah,
14:40
Speaker 1: I do embrace the fact the economy is going to strengthen,
14:43
Speaker 1: and I do think the market will broaden out the participation,
14:47
Speaker 1: and I think it will end up being a good year,
14:49
Speaker 1: not not an amazing year, but a good year, and
14:51
Speaker 1: the risks um include the outcome of the Georgia election
14:56
Speaker 1: and that the market doesn't want to see corporate tax
14:58
Speaker 1: rates higher. So if it's both seats on January fifth
15:01
Speaker 1: go to a Democrat, it's possible the market won't react
15:05
Speaker 1: well because there will be a perception corporate tax rates
15:07
Speaker 1: might ultimately hike as a result, we certainly need to
15:11
Speaker 1: see the distribution of the vaccines working. And then, lastly, ironically,
15:16
Speaker 1: even though you want great economic growth, you don't want
15:19
Speaker 1: the economic growth to be so strong as to create
15:22
Speaker 1: an inflation scare. So if you see interest rates spiking
15:26
Speaker 1: spiking up towards two percent on an tender treasure bond
15:29
Speaker 1: too quickly, we'll get some hiccup in the stock market,
15:33
Speaker 1: because this market is built on low interest rates supporting
15:36
Speaker 1: the current higher than average valuation. Once rates get high enough,
15:41
Speaker 1: it gets to the point where they compete with taking stocks.
15:44
Speaker 1: But I don't think we're going to be in a
15:47
Speaker 1: protracted inflationary environment for at least another couple of years,
15:51
Speaker 1: for all sorts of reasons, including our aging population. Older
15:54
Speaker 1: individuals tend to spend less, and we still have some
15:57
Speaker 1: elements of benefit of technology and product the UH preventing
16:01
Speaker 1: inflation from coming to play. So that's two thousand twenty one.
16:04
Speaker 1: It's a good environment, not a great environment for stocks
16:07
Speaker 1: and a broadening economic outlook. We're speaking with Alan Zaffron,
16:11
Speaker 1: founding partner and co CEO of I e Q Capital.
16:15
Speaker 1: You said a lot there. Let's unpack one aspect. We're
16:17
Speaker 1: talking about the Georgia elections and how a democratic outcome.
16:22
Speaker 1: If the Democrats ended up taking leadership in the Senate,
16:25
Speaker 1: that could be a negative for the market because of
16:28
Speaker 1: a higher regulation and taxes. This actually is a bit
16:32
Speaker 1: contrarian because some people think it's a positive for the
16:34
Speaker 1: market due to more fiscal support. Can you sort of
16:38
Speaker 1: talk about the balance between those two risk factors. Yeah,
16:42
Speaker 1: absolutely so, UM various amost the Communists have projected that
16:47
Speaker 1: if corporate tax rates, as stated initially by the Biden
16:50
Speaker 1: platform in the campaign, and of course it could all change. Um,
16:54
Speaker 1: if those corporate tax rates arose from it would reduce
16:58
Speaker 1: the earnings per share of the SMP five by anywhere
17:02
Speaker 1: from nine to fifteen percent. So in a vacuum that
17:06
Speaker 1: all we're going to do is raise corporate tax rates.
17:08
Speaker 1: I could argue that if the multiple stay the same,
17:11
Speaker 1: I could argue that the market is going to take
17:13
Speaker 1: a nine to hit. You could also give me the
17:16
Speaker 1: argument that a democratic administration, all things equal, might be
17:19
Speaker 1: slightly more regulatory on technology companies which comprise part of
17:23
Speaker 1: the index, which could even worsen stock market reactions as well.
17:27
Speaker 1: On the other hand, there is absolutely belief that such
17:30
Speaker 1: an administration will imediately increase infrastructure spending, that which has
17:33
Speaker 1: desperately needed in other forms of fiscal spending, which will
17:37
Speaker 1: clearly amplifies consumer spending in US directed corporate spending. And
17:42
Speaker 1: again now talking about analysts uh an economists of ranges
17:47
Speaker 1: arguing that that could actually increase uh earnings pretty sure
17:52
Speaker 1: on a magnitude of anywhere from seven to twelve percent.
17:55
Speaker 1: So I would argue it's a modest negative. Ultimately, I
17:59
Speaker 1: think it's got more headline risk than ultimate economic impact,
18:03
Speaker 1: and it shifts where the winners and losers are. It
18:06
Speaker 1: actually amplifies what we just talked about in a broadening economy,
18:09
Speaker 1: all things equal, those perspective target technology companies which historically
18:13
Speaker 1: have not paid high taxes. It's going to force them
18:16
Speaker 1: pay higher taxes, and they might be under greater regulation.
18:19
Speaker 1: The businesses that benefit from greater infrastructure spending tend to
18:23
Speaker 1: be more cursory, basic industry economically sensitive companies. So it's
18:28
Speaker 1: another argument towards the rotation. I'd argue you would get
18:33
Speaker 1: ahead if both seats go to Democrats in Georgia. I
18:37
Speaker 1: think you'll get a knee jerked reaction down. You know,
18:40
Speaker 1: pick your number, will take a week or two, maybe
18:42
Speaker 1: the market goes down. Kick a number five to ten percent.
18:45
Speaker 1: I think that's a knee jerk reaction, and it's the
18:47
Speaker 1: proverbial buying opportunity. In the long run, companies will do
18:52
Speaker 1: just find profits will be made, and those that are
18:54
Speaker 1: fortunate enough to have savings in an IRA or you know,
18:57
Speaker 1: in their own personal accounts, I think they will benefit
18:59
Speaker 1: by own stocks. So you get a need jerk reaction down.
19:02
Speaker 1: It's not a permanent erosion of someone's well. Alan, you
19:05
Speaker 1: mentioned that you're in Silicon Valley. One of the stories
19:08
Speaker 1: in twenty twenty, maybe starting in nineteen, was the increased
19:12
Speaker 1: regulatory oversight from US US officials, not just European officials,
19:17
Speaker 1: but UH regulators Congress. What's the feeling in the valley
19:21
Speaker 1: right now about kind of the regulatory environment as it
19:25
Speaker 1: relates to tech, it's historically been a very light touch.
19:28
Speaker 1: Are they concerned it's gonna get a little heavier, Yes,
19:32
Speaker 1: But I would tell you everyone around here is always paranoid,
19:36
Speaker 1: and so that doesn't change anything. You always hope for
19:39
Speaker 1: the best and planned for the worst. Another story we're
19:42
Speaker 1: not covering much today is take a look at Ali
19:44
Speaker 1: Baba stock Alibaba stock, and it's down from its peak.
19:49
Speaker 1: Why because the Chinese regulators have said, we don't like
19:52
Speaker 1: Ali Baba's anti um you know, it's it's monopolistic policies
19:57
Speaker 1: and we're going to go after them. And that's exactly
20:00
Speaker 1: with these large cap, largest tech companies fear by the way,
20:04
Speaker 1: lots of the small entrepreneurs, smaller companies of entrepreneurs around here,
20:08
Speaker 1: they love that because they want to be able to
20:11
Speaker 1: have a more competitive or fair marketplace. So there's two
20:14
Speaker 1: sides of that coin. There's absolutely concerned that there will
20:17
Speaker 1: be greater elements of regulation, but usually the bark is
20:22
Speaker 1: worse than the bike, so there's a belief that the
20:25
Speaker 1: regulation probably won't get to the point that it's demonstrably
20:28
Speaker 1: punitive to the business. Business models, again, modestly negative impacts
20:33
Speaker 1: and probably the headlines will actually be worse than the
20:36
Speaker 1: actual damage to the business model in the long run.
20:39
Speaker 1: It's gonna be hard for you to convince me that
20:41
Speaker 1: companies like Amazon and Microsoft and Google are going to
20:45
Speaker 1: lose permanent competitive advantages given their scale and first mover
20:49
Speaker 1: advantage and their respective businesses they've entered into before we
20:54
Speaker 1: let go, Allen, what are you doing for the new year?
20:56
Speaker 1: In the holidays, I'm going to be doing from reading
21:00
Speaker 1: a few books I think big essentialism. I'm going to
21:04
Speaker 1: take a few walks in the Redwoods and clear my
21:08
Speaker 1: mind and hope and pray for a much better two
21:11
Speaker 1: thousand twenty one for everyone at every socio economic level.
21:15
Speaker 1: This has been a really tough year, so I had
21:17
Speaker 1: a lot of gratitude and I'm counting my blessings. That's
21:20
Speaker 1: what I'm doing. A wonderful message, Thank you, Alan Saffron.
21:24
Speaker 1: I'm doing probably about half of that, maybe a quarter,
21:28
Speaker 1: maybe an eighth. Definitely less ambitious, that's for sure. No reading,
21:32
Speaker 1: Definitely not a walk in the redwoods, trying to wrangle kids.
21:35
Speaker 1: Alan's after in Central Park. That's that's that's sure. Sure. Yeah,
21:39
Speaker 1: I'll check out the mud from the snow and the rain.
21:42
Speaker 1: Alan Zaffred, founding partner and co chief executive officer at
21:45
Speaker 1: I e Q Capital, talking about the Redwoods and some
21:48
Speaker 1: lofty goals and really really wonderful market calls. Thank you
21:50
Speaker 1: for everything, Allen. I will say in all seriousness, Paul,
21:53
Speaker 1: it actually has been beautiful because after it snowed, it
21:56
Speaker 1: was great. It was going sledding, it was going out
21:58
Speaker 1: and enjoying the city. And now we're facing down with
22:01
Speaker 1: a very wet Christmas Eve, and yes, it's gonna be windy,
22:04
Speaker 1: so it's gonna be tough out there for Santa and
22:05
Speaker 1: the sled but hopefully he'll be okay. Yeah, I know
22:08
Speaker 1: that you're worried about him. He'll make it through. I promise.
22:14
Speaker 1: This is Bloomberg Markets with Lisa Rama, Weds and Paul's
22:17
Speaker 1: Wheeney on Bloomberg Radio, twelve minutes left before the end
22:22
Speaker 1: of the shortened trading day. Here ahead of Christmas, we're
22:25
Speaker 1: thinking about all of the things to come that would
22:28
Speaker 1: be nice and bubbly, just like the champagne that we
22:31
Speaker 1: were just talking about and now drinking. Joining us now
22:33
Speaker 1: to discuss the outlook for perhaps an area that needs
22:37
Speaker 1: to see brighter days if you look in some of
22:38
Speaker 1: the bigger cities, but certainly is seeing brighter days if
22:41
Speaker 1: you look at the likes of Florida. Is Bonnie Stone
22:44
Speaker 1: Sellers and Jeff Highland, co founders of Forbes Global Properties,
22:48
Speaker 1: taking a look at the Luxury Outlook, I just to
22:51
Speaker 1: give you a sense of what Forbes Global Properties is.
22:52
Speaker 1: It's a luxury portal membership only for elite real estate
22:56
Speaker 1: firms showing high end residences across the world. So, Bonnie,
23:00
Speaker 1: you could just start by giving us a sense of
23:02
Speaker 1: what you do and how much interest you have seen
23:06
Speaker 1: at a time of such bifurcated fortunes. It's it's an
23:10
Speaker 1: incredibly interesting time to be launching a consumer marketplace and
23:15
Speaker 1: an elite brokerage network. Was clearly the year of the home,
23:21
Speaker 1: and although there are a few cities that didn't do
23:24
Speaker 1: as well in the luxury real estate world, nearly every
23:28
Speaker 1: place around the world in luxury was reflective of people
23:33
Speaker 1: wanting bigger homes, people wanting second homes, people wanting vacation homes,
23:37
Speaker 1: and accordingly, home sale prices doubled in the past home
23:42
Speaker 1: sales doubled in the past year. But we see as
23:47
Speaker 1: being even better for the luxury housing market. There's so
23:51
Speaker 1: much pent up demand and foreign buyers will then be
23:54
Speaker 1: going back after the vaccine into lots of markets. And
23:58
Speaker 1: we also see, um, what a great time for a
24:01
Speaker 1: digital platform. If if nothing else, Uh, the COVID gear
24:06
Speaker 1: has taught us that everyone buys things online, looks at
24:10
Speaker 1: things online, and um, doesn't matter what the price of
24:14
Speaker 1: the home is, it'll start with digital. So we're pretty
24:17
Speaker 1: upbeat about the luxury market and our platform. Hey, Jeff,
24:22
Speaker 1: give us a sense of kind of the geographic strengths
24:25
Speaker 1: and weaknesses. It's just you know, around the world wherever
24:28
Speaker 1: you're seeing kind of the real demand. Because here in
24:31
Speaker 1: New York City it seems like everybody's leaving for Florida.
24:34
Speaker 1: What can you tell us, Well, you know that's a
24:37
Speaker 1: momentary thing. We all hope everyone comes back to New York.
24:41
Speaker 1: But then you look at everything's like the Hampton's and
24:44
Speaker 1: Florida maybe for taxes, Austin again, for taxes Southern California.
24:50
Speaker 1: It's it's a boom time again. Uh. And I hate
24:53
Speaker 1: to say that COVID had something to do with it,
24:55
Speaker 1: but I had a client whose house we ever sale
25:00
Speaker 1: or nine digits who who was asked the question do
25:05
Speaker 1: you know it caused the Roaring twenties? And he said, no,
25:09
Speaker 1: I don't, And the person answered him it was the
25:13
Speaker 1: Spanish flu. He said, what do you mean? He said, well,
25:16
Speaker 1: all that pent up demand from two years and deaths
25:19
Speaker 1: and no one doing anything just got everybody out. They
25:23
Speaker 1: wanted the party, they wanted to spend money, they wanted
25:25
Speaker 1: to play. So he said, he feels the same thing
25:28
Speaker 1: is going to happen in four and uh, we could
25:34
Speaker 1: have a whole another boom time. Uh. And unfortunately, the
25:37
Speaker 1: way that we're going with um you know, the rich
25:40
Speaker 1: getting richer and the poor getting poorer. Uh, it is
25:44
Speaker 1: affecting the high end of the market. And what bye
25:46
Speaker 1: not created here with Forbs Global Properties is a luxury portal.
25:52
Speaker 1: It's basically going to be the zello of high net
25:55
Speaker 1: worth individuals. And we'll be able to attract as we've
25:59
Speaker 1: already had. We're like twelve days out now since we
26:02
Speaker 1: launched our website, UH, to really attract and direct the
26:07
Speaker 1: high net worth individual to the site, and then we'll
26:10
Speaker 1: have them contact directly with our individual agents on the portal.
26:16
Speaker 1: And we're just terribly excited about it the Roaring twenties.
26:20
Speaker 1: I gotta say, Paul, this is what you buy into, right,
26:22
Speaker 1: you think it's going to be the Roaring twenties? Do
26:24
Speaker 1: and Uh, I absolutely do. I think it's the similarities
26:27
Speaker 1: are pretty telling. So body, I mean, one of the
26:30
Speaker 1: things driving real estate in general and certainly the high
26:33
Speaker 1: end are just these record low interest rates here. What
26:38
Speaker 1: are your buyers of luxury properties? How sensitive are they
26:41
Speaker 1: to interest rates? Yeah? I don't think that UM buyers
26:45
Speaker 1: of high end properties are particularly sensitive to interest rates.
26:50
Speaker 1: Of course, low interest money is available and that helps
26:54
Speaker 1: on any purchase, but the luxury market is also in
26:57
Speaker 1: an old cash market, and it's more or less a
27:01
Speaker 1: global phenomena. Having said that, I think that the the
27:06
Speaker 1: UH real estate markets overall will definitely benefit from the
27:10
Speaker 1: low interest rates. There's a question, Jeff, going back to
27:14
Speaker 1: what you were talking about the Roaring twenties I find
27:17
Speaker 1: really compelling, which is I think about the Great Gatsby
27:20
Speaker 1: and the Hampton's and the scene there. Is that what
27:22
Speaker 1: we're going to do a repeat of or is it
27:25
Speaker 1: going to take place in Austin, in Florida? Is it
27:28
Speaker 1: going to take place in new places? Because of tax
27:32
Speaker 1: reasons because of other reasons. Well, you know the whole
27:35
Speaker 1: thing about East Dag it was one big mansion on
27:37
Speaker 1: the north shore. What we're talking about now are people
27:41
Speaker 1: with multiple homes around the world. And almost every home
27:45
Speaker 1: that we sell in Beverly Hills it's fifty million dollars
27:47
Speaker 1: in up. It's not the primary residence. It could be
27:51
Speaker 1: the fourth, the fifth, the sixth home. So it's such
27:54
Speaker 1: such it's so well spread out. And one of the
27:57
Speaker 1: things that attracted Body and me to create forms global
28:01
Speaker 1: properties is that we now have people from all over
28:04
Speaker 1: the world. We're already in seventy markets, and they come
28:08
Speaker 1: from everywhere. There were waves when maybe you had a
28:10
Speaker 1: certain group who would let's say, uh, Middle Easterners would
28:15
Speaker 1: come to the United States, or then you had had
28:16
Speaker 1: Venezuelan's going to Florida, etcetera, etcetera. We've had that whole cycle.
28:22
Speaker 1: So now it's a little of everything coming from everywhere,
28:26
Speaker 1: and it no longer has a distinction of well, this
28:29
Speaker 1: is the year of the Chinese uh getting their money
28:33
Speaker 1: out of China. It's it's it's coming from everywhere, and
28:36
Speaker 1: I think we'll see throughout the United States people from
28:41
Speaker 1: every portion UH going. Whether it's for business, or it's
28:45
Speaker 1: for pleasure, or it's even tax avoidance, but we're going
28:49
Speaker 1: to see a boom in the high end luxury market continue.
28:56
Speaker 1: I jump in. Our portal is not just for ultra
29:00
Speaker 1: high net worth individual it's a consumer marketplace. Forbes is
29:05
Speaker 1: UH an incredibly well respected business brand with a hundred
29:09
Speaker 1: years history and a hundred forty million unique visitors every
29:13
Speaker 1: month who you know will be chaperone to our website,
29:18
Speaker 1: and you know there will be lots of people. All
29:20
Speaker 1: of your audience comes from many industries. They all have
29:23
Speaker 1: one thing in common, and that's that they all have homes.
29:27
Speaker 1: So we think there's a very broad spectrum of of
29:31
Speaker 1: of consumers who would love to come to our marketplace
29:35
Speaker 1: and see the homes. Hey, Bonnie and Jeff, thank you
29:38
Speaker 1: so much. We really appreciate a Bonnie Stone Sellers and
29:40
Speaker 1: Jeff Highland, co founders of Forbes Global Properties, joining us
29:44
Speaker 1: talks about the luxury market here. It's like everything else
29:47
Speaker 1: in this pandemic has taken a pause, but there's certainly
29:51
Speaker 1: a bullish call out there for UH luxury properties going
29:54
Speaker 1: forward least, and I think UH, you know, there's will
29:56
Speaker 1: be interesting to see how New York fares, for example. Yeah,
30:00
Speaker 1: well it's not as desolate as you might think, Paul,
30:02
Speaker 1: I will tell you that good. It's good to hear.
30:04
Speaker 1: I'm you know, I missed coming in and look forward
30:06
Speaker 1: to doing it very soon. And uh so, Lisa, have
30:09
Speaker 1: a great couple of days weekends, Christmas and we get
30:13
Speaker 1: into the new year. We'll have more for you on
30:16
Speaker 1: a Bloomberg radio coming up. Here's a question heading into
30:21
Speaker 1: year end of whether this deal that was passed with
30:24
Speaker 1: bipartisan support by by Congress to give nillion dollars to
30:29
Speaker 1: help support and plug the gap in people's finances as
30:33
Speaker 1: a result of the pandemic of where there was President
30:35
Speaker 1: Trump will now veto it and what the implications are
30:38
Speaker 1: joining us now Jeanne's you know, Bloomberg opinion contributor and
30:41
Speaker 1: professor at political of political science at i own a College.
30:45
Speaker 1: G what's the thinking that President Trump has in videoing
30:50
Speaker 1: this bill, vidoing the defense bill like he did last night?
30:55
Speaker 1: What's he going for? You know it? Really? I mean,
30:58
Speaker 1: it's been a whild cool days in Washington, and I
31:01
Speaker 1: think you know the answer is, we don't quite know.
31:04
Speaker 1: We know that he has expressed reservations about the stimulus package.
31:08
Speaker 1: We know he's a reservations obviously that led to a
31:12
Speaker 1: vito of the Defense bill. UM. There's a lot of
31:14
Speaker 1: speculation as to what his motives are UM and I
31:17
Speaker 1: would not question those. But what we do know is
31:20
Speaker 1: that we have a Congress that could a federal government
31:24
Speaker 1: that could shut down. UM. We have a Congress with
31:28
Speaker 1: a bill that hasn't quite reached the president's desk yet,
31:30
Speaker 1: but he could either sign that or veto it, or
31:33
Speaker 1: do nothing. And if he either vetos that or does nothing,
31:38
Speaker 1: it really not only puts Congress UM in a strange position,
31:42
Speaker 1: but it puts the American public in a strange position,
31:45
Speaker 1: as we will have UM. Ten days before a pocket
31:48
Speaker 1: Vito would go through, which would be in the Congress'
31:51
Speaker 1: session would end, a new Congress would come in, and
31:53
Speaker 1: this entire bill would be blown up, so we wouldn't
31:57
Speaker 1: get the COVID relief that people are seeking. So it's
32:00
Speaker 1: a really sort of tumultuous point that we're at at
32:03
Speaker 1: this point, and we really don't know where he's going
32:05
Speaker 1: to go. He's now down in Florida and we don't
32:07
Speaker 1: know again whether he'll veto sign or simply do nothing. So, Genie,
32:12
Speaker 1: what's striking or there's many things that are striking about
32:14
Speaker 1: the less several days as it relates to the stimulus discussions,
32:17
Speaker 1: but the lack of coordination or even communication, it seems
32:21
Speaker 1: between the White House and the Republicans in Congress. What
32:24
Speaker 1: do you make of that? Yeah, I think that's the
32:27
Speaker 1: strangest part of this. I think for so many Republicans
32:30
Speaker 1: who said they not only had the cooperation, they had
32:33
Speaker 1: the administration in there as part of the negotiations. Seed Minuchin,
32:37
Speaker 1: who Mitch McConnell and others praised on the Senate floor
32:41
Speaker 1: for getting this bill done. You had poor David Purdue,
32:44
Speaker 1: who is facing a runoff in January fifth in Georgia,
32:48
Speaker 1: saying tweeting out that they had done the work that
32:51
Speaker 1: was needed for Georgians and he was going home to
32:53
Speaker 1: fight for his elections. All of them assuming and thinking
32:56
Speaker 1: they had the support of the White House. And then
32:59
Speaker 1: at the eleventh hour, the President came in with this
33:01
Speaker 1: video and you know, just back to what Lisa was asking,
33:04
Speaker 1: you know, because some of the speculation is the President
33:07
Speaker 1: is frustrated because Mitch McConnell, Johnson and other leaders in
33:11
Speaker 1: the Senate have said, is Enohings enough about fighting for
33:14
Speaker 1: this election to be overturned? And it's his frustration that
33:17
Speaker 1: they no longer want to fight the electoral college that
33:20
Speaker 1: led him to this path to blow that up. And
33:22
Speaker 1: that's purely speculation, but at your point, he certainly put
33:26
Speaker 1: his own Republican Party in a very difficult position, as
33:29
Speaker 1: they were led to believe he was supportive, and then
33:31
Speaker 1: at the end hour he has come in with this
33:33
Speaker 1: massive that his criticism what is this do for the
33:36
Speaker 1: Georgia election? Makes it very difficult for Republicans. I mean,
33:41
Speaker 1: if anything, this is a gift to Democrats who, as
33:44
Speaker 1: we've seen Nancy Pelosi tweeting, great, you know we're going
33:47
Speaker 1: to move forward. We can try to get the two
33:49
Speaker 1: thousand dollars you want. It puts you know, the Lessler
33:53
Speaker 1: and Perdue who are in these runoffs in Georgian a
33:55
Speaker 1: very strange position. Remember, one of the reasons Mitch McConnell
33:59
Speaker 1: pushed Republican to make this deal in in the end
34:02
Speaker 1: was because of Georgia, saying we can't keep the Senate
34:05
Speaker 1: if we don't have a deal that these senators can
34:08
Speaker 1: bring home to their constituents. They thought they had that
34:10
Speaker 1: and now that's been blown up. It really were in
34:14
Speaker 1: sort of unturned territory. Are Republicans really gonna come out
34:18
Speaker 1: now and support Leffler and Purdue given that they may
34:22
Speaker 1: not get the release they were seeking. On top of which,
34:25
Speaker 1: they have a president who has gone back and forth
34:27
Speaker 1: on whether they can even trust the electoral system in
34:29
Speaker 1: which they're supposed to be voting. So it really puts
34:32
Speaker 1: Republicans in a very difficult position for this runoff. And
34:35
Speaker 1: of course, if they lose both of these seats, then
34:38
Speaker 1: Mitch McConnell is no longer going to be a majority
34:40
Speaker 1: leader and they will lose Washington because they will lose
34:43
Speaker 1: the Senate. What are the polls saying about Georgia right now?
34:48
Speaker 1: And can we believe those polls? Yeah, we've seen. One
34:52
Speaker 1: of the fascinating um sort of undertold stories about this
34:55
Speaker 1: race is that many of the public posters have pulled
34:58
Speaker 1: out of Georgia after the general election, in part because
35:01
Speaker 1: they were criticized for polling in a way that didn't
35:04
Speaker 1: turn out the way the results did. In part because
35:07
Speaker 1: of the timing, and a lot of posters don't want
35:09
Speaker 1: to pull over the holidays, So we have very limited
35:12
Speaker 1: polling coming out of Georgia, and the polling we have
35:15
Speaker 1: shows it is too tight to call. Most of these
35:18
Speaker 1: polls that I've seen that are again the public polls
35:20
Speaker 1: are within the margin of error, meaning this thing could
35:23
Speaker 1: go either way. And I know people hate to hear this,
35:25
Speaker 1: but this really is a case of turnout and Democrats
35:29
Speaker 1: seemed had be turning out people in record numbers, but
35:32
Speaker 1: Republicans usually have an advantage historically and runoff in a
35:35
Speaker 1: state like Georgia. So again, this thing could go either way.
35:40
Speaker 1: A lot of investment managers have been watching the Georgia
35:42
Speaker 1: race and actually saying it could be a game changer
35:44
Speaker 1: for them because if Democrats do take the majority in Senate,
35:47
Speaker 1: we could see a bigger fiscal support package or fiscal stimulus,
35:51
Speaker 1: even actual true stimulus that we could call it that.
35:54
Speaker 1: Do you think that people are a little ahead of
35:56
Speaker 1: themselves and that given the moderate tilt of a lot
35:59
Speaker 1: of the Democo hats that have gotten in, Yeah, I
36:03
Speaker 1: do think. I think it's the right way to be
36:05
Speaker 1: thinking about it. But I do think they're a little
36:07
Speaker 1: bit ahead of themselves. As you mentioned, not only the
36:10
Speaker 1: moderate tilt of the Democrats who have gotten in, but
36:13
Speaker 1: also the fact that the House, the new Congress, will
36:16
Speaker 1: be more Republican than it was or is now, and
36:19
Speaker 1: also the fact that even if Democrats take the Senate,
36:23
Speaker 1: it is by the narrowest of margins. So I think
36:26
Speaker 1: any idea that we are going to see if we
36:29
Speaker 1: had a Democratic Senate, that we would see a massive
36:32
Speaker 1: stimulus package, I think is not going to happen. And
36:35
Speaker 1: if you look back at the two two thousand and
36:37
Speaker 1: nine what Barack Obama faced, he faced something very similar.
36:41
Speaker 1: He was never able to get the deal that most
36:44
Speaker 1: economists said he should because he couldn't get the moderate
36:48
Speaker 1: Democrats and enough of the Republicans go along with him.
36:51
Speaker 1: And this is going to be even a narrower Senate.
36:53
Speaker 1: So I think the idea of a massive bill is
36:56
Speaker 1: something that we won't see, but I do think it's
36:59
Speaker 1: the right way to be thinking about it within the margins.
37:01
Speaker 1: If Democrats take the Senate, they obviously do have the
37:04
Speaker 1: upper hand on these things. The other prospect is this
37:07
Speaker 1: for Joe Biden, is that he isn't going to be
37:10
Speaker 1: even more pressured by the liberal the liver more and
37:13
Speaker 1: it's going to be hard given the numbers are so slim,
37:16
Speaker 1: So there's also the flip side of it, if you will,
37:18
Speaker 1: for Joe Biden, if they take the sentence, Genie twenty seconds.
37:21
Speaker 1: I'd love to get your thoughts on just the of
37:24
Speaker 1: all the pardons we're seeing from President Trump. Yeah, not surprising,
37:29
Speaker 1: but I think really devastating to the part in um,
37:32
Speaker 1: the parted power that the president has, and I think
37:35
Speaker 1: the black Water ones, the ones that have to do
37:37
Speaker 1: with what happened in the Rock, particularly devastating for the
37:40
Speaker 1: U S Military and US justice overseas. Genie, thank you
37:43
Speaker 1: so much for joining us. As always, we appreciate your perspective.
37:46
Speaker 1: Gene Xano, political contributor to Bloomberg News. She's also a
37:50
Speaker 1: professor of political science at i own, a college based
37:53
Speaker 1: in New Rochelle, New York. Just getting us her thoughts
37:58
Speaker 1: here on the stimulus. Seems to be bogged down a
38:00
Speaker 1: little bit here obviously the last days, and it really
38:03
Speaker 1: is a time crunch, a cliff, if you will. Hopefully
38:07
Speaker 1: progress can be made over the next several days. Thanks
38:11
Speaker 1: for listening to Bloomberg Markets podcast. You can subscribe and
38:15
Speaker 1: listen to interviews at Apple Podcasts. Or whatever podcast platform
38:19
Speaker 1: you prefer. I'm Bonnie Quinn, I'm on Twitter at bonnie Quinn.
38:22
Speaker 1: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney.
38:25
Speaker 1: Before the podcast, you can always catch us worldwide at
38:27
Speaker 1: Bloomberg Radio