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Markets, Trump, and Travel · Bloomberg Intelligence

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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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Speaker 3: Well, let's keep the conversation going as to whether we
0:58
Speaker 3: will see an extension of us close Rally into the
1:01
Speaker 3: Moon music for January and February. We've got Christina Hooper
1:04
Speaker 3: joining us now Chief global market strategist over at Invesco, Christina.
1:08
Speaker 3: Always great to have your voice across our programming, and
1:11
Speaker 3: you seem to be liking equities at this particular moment
1:14
Speaker 3: in terms of risk sentiment.
1:16
Speaker 4: Oh, absolutely, Caroline. What I would anticipate is that as
1:21
Speaker 4: we head into twenty twenty four, we're likely to see
1:24
Speaker 4: markets discount in economic reacceleration in the back half of
1:29
Speaker 4: twenty four, and that should benefit small caps and cyclicals
1:33
Speaker 4: the most. In fact, I think we've already seen a
1:36
Speaker 4: preview of that late in twenty three. I think that
1:39
Speaker 4: continues now on the back half of the year. We
1:42
Speaker 4: could see some give back just because markets will then
1:46
Speaker 4: start to discount twenty twenty five, but I do believe
1:50
Speaker 4: the early part of twenty four is likely to be
1:53
Speaker 4: very positive, although there could be some volatility because there
1:56
Speaker 4: still is some confusion around FED policy given that the
2:02
Speaker 4: Fed dot protests too much.
2:04
Speaker 3: Okay, so talk to us a little. We're going to
2:06
Speaker 3: dig into perhaps where the FED is going to go
2:08
Speaker 3: throughout the show. What do you make of central bank policy?
2:12
Speaker 3: Do you think that they will be cutting as much
2:13
Speaker 3: as the market seems to be.
2:14
Speaker 4: Think they will be I think they ultimately will. I
2:18
Speaker 4: think they have another goal right now, though, which is
2:21
Speaker 4: to tamp down and easing of financial conditions, and so
2:24
Speaker 4: that's why we're seeing predictions there on dot plot saying
2:28
Speaker 4: only seventy five basis points in cuts this year, and
2:32
Speaker 4: of course some of the hawkish language we've heard recently.
2:36
Speaker 4: I think that ultimately will be a non event that
2:40
Speaker 4: we will see probably between one hundred and one hundred
2:43
Speaker 4: and fifty basis points in cuts. Not because the economy
2:47
Speaker 4: deteriorates a lot. I don't think that's going to happen.
2:49
Speaker 4: I think it's because where monetary policy is is quite restrictive,
2:53
Speaker 4: especially if disinflation continues.
2:56
Speaker 2: Christine, reading through your notes, I found a juicy nugget
2:59
Speaker 2: here in your ex his outlook, we see the greatest
3:01
Speaker 2: potential in emerging markets.
3:03
Speaker 5: Talk to us about that.
3:05
Speaker 4: Sure, well, emerging markets are likely to perform well historically
3:10
Speaker 4: they have when the dollar has weakened, and I think
3:13
Speaker 4: we're certainly seeing that trend start and I think it
3:16
Speaker 4: will continue in twenty four. Emerging markets are well positioned.
3:22
Speaker 4: We saw some emerging market central banks act more quickly
3:26
Speaker 4: in the face of inflation, so they're in a better
3:29
Speaker 4: place in terms of normalizing monetary policy, and I think
3:33
Speaker 4: we're likely to see especially Asia em perform quite well
3:38
Speaker 4: this year, and I think that is going to be
3:43
Speaker 4: one of the key stories of twenty four.
3:45
Speaker 5: That's a good one.
3:45
Speaker 2: I like that we're going to circle back on that
3:48
Speaker 2: throughout the year. I look at my Bloomberg Index browser Christina,
3:52
Speaker 2: which allows me to see total returns in the fixed
3:55
Speaker 2: income space, and the good news is for bond investors
3:57
Speaker 2: they have positive returns in twenty twenty three versus some
4:01
Speaker 2: brutally negative returns in twenty twenty two. What's your fixed
4:04
Speaker 2: income outlook here after a decent twenty three.
4:10
Speaker 4: Well, investors certainly went through a lot of pain in
4:13
Speaker 4: twenty two and certainly saw a better environment twenty three.
4:17
Speaker 4: I think that fixed income is well positioned in twenty four.
4:21
Speaker 4: Yields are certainly higher, and my expectation is that investment
4:27
Speaker 4: grade bonds are going to be an area of particular opportunity.
4:33
Speaker 4: I don't anticipate a soft landing so much as more
4:35
Speaker 4: of a bumpy landing in the first half of the year,
4:37
Speaker 4: and I think that the sweet spot for the economy
4:41
Speaker 4: will be investment grade corporates also excited about emerging market debt.
4:48
Speaker 4: I think this is a time where we want to be.
4:50
Speaker 4: We want to have a more waiting to both emerging
4:54
Speaker 4: markets equities and emerging markets debt. In terms of duration,
4:58
Speaker 4: longer duration, we've been taught about that for months now.
5:01
Speaker 4: We think that going long is important, and I think ultimately,
5:06
Speaker 4: when we've looked at past cycles, it has been a
5:09
Speaker 4: good time to go long duration.
5:11
Speaker 3: One interesting point from your notes as well was alternative
5:15
Speaker 3: assets and within their commercial real estate you like it,
5:20
Speaker 3: you fav why and what part?
5:24
Speaker 6: Well.
5:24
Speaker 4: First, I have to say commercial real estate covers a
5:28
Speaker 4: large swath of territory. Office space is only a relatively
5:32
Speaker 4: small portion of the commercial real estate picture. But even
5:37
Speaker 4: within office space, I think we've seen the worst in
5:41
Speaker 4: terms of occupancies. We're in recovery mode. It could take
5:45
Speaker 4: some time. But the key is that rates are coming
5:49
Speaker 4: down and that has played such an outsized role in
5:53
Speaker 4: pricing for real estate. So I think that twenty twenty
5:57
Speaker 4: four represents opportunities for commercial real estate. If, as we anticipate,
6:03
Speaker 4: rates come down, mortgage rates come down, this could be
6:08
Speaker 4: quite an attractive environment, you know.
6:11
Speaker 2: Christina mentioning and discussing emerging markets. It makes me think
6:14
Speaker 2: about China because it's such a big part of the MSCI.
6:18
Speaker 2: China was a disappointing story for most investors in twenty
6:21
Speaker 2: twenty three. The economy did not rebound as much as
6:24
Speaker 2: people thought on.
6:25
Speaker 5: The great reopening. If you will, how do you view
6:28
Speaker 5: China in twenty twenty four.
6:30
Speaker 4: So China is an interesting investment landscape because you're absolutely right,
6:39
Speaker 4: there was some level of disappointment in twenty twenty three.
6:42
Speaker 4: The economy had a nice reopening, but it wasn't as
6:47
Speaker 4: strong as many anticipated. If we were to sort of
6:50
Speaker 4: dive down, services did a lot better than manufacturing, and
6:55
Speaker 4: I would argue that manufacturing disappointment was largely about a
7:00
Speaker 4: increased global demand that impacted many economies. Now, there of
7:04
Speaker 4: course were issues, and I think they were largely around
7:08
Speaker 4: a consumer sentiment in China and a view that there
7:12
Speaker 4: was a need for more stimulus. So we have seen
7:15
Speaker 4: in the back half of twenty three more of a
7:18
Speaker 4: rollout of policy that has been quite targeted, and I
7:22
Speaker 4: think if we see a continuation of target targeted stimulative
7:26
Speaker 4: policies coming from China, it could be quite a good
7:30
Speaker 4: year for consumer spending.
7:32
Speaker 3: Christine, if we think about this time last year, we
7:35
Speaker 3: thought China was going to do well, we thought the
7:37
Speaker 3: US was going to dip into recession. We got a
7:39
Speaker 3: lot of calls wrong, and we're going to be dipping
7:42
Speaker 3: into that entire discussion a little bit later.
7:44
Speaker 6: But what out of all of.
7:46
Speaker 3: This viewpoint that you have in terms of potentially a
7:48
Speaker 3: little bit of refirming in China, the fact that US
7:51
Speaker 3: equities is going to be good, what are the risks
7:53
Speaker 3: to that from your perspective?
7:55
Speaker 4: Well, I think the greatest risk facing investors right now
7:59
Speaker 4: is that we do see a hard landing for the economy.
8:03
Speaker 4: I would assign that a very low probability. But I
8:07
Speaker 4: do believe that when you have incredibly aggressive monetary policy
8:11
Speaker 4: and it's quite synchronized across a number of different major economies,
8:16
Speaker 4: that is the single biggest risk. And of course that
8:19
Speaker 4: could take down a stock market that has a very
8:22
Speaker 4: different expectation for the economy. But again I would say
8:27
Speaker 4: that is a very low risk now in terms of
8:31
Speaker 4: whim which markets are going to perform better than others,
8:35
Speaker 4: I think because we're going to see that weakening in
8:38
Speaker 4: the US dollar, and I think that's I have a
8:41
Speaker 4: lot of conviction in that call that that should bode
8:45
Speaker 4: well for economies outside the US, and I think there
8:48
Speaker 4: are of course other factors at play as well. But
8:52
Speaker 4: at the end of the day, we can be wrong,
8:54
Speaker 4: especially when it comes to tactical allocations. Everyone can be
8:58
Speaker 4: and that's the importance of being well diverse.
9:01
Speaker 2: Christina, thank you so much for joining us. As always,
9:03
Speaker 2: we're a little bit smarter after spending some time with you.
9:05
Speaker 2: Christina Hooper, chief Global market strategist at a little firm
9:09
Speaker 2: called Invesco.
9:11
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9:25
Speaker 2: Looking back on twenty twenty three, boy geopolitics was front
9:30
Speaker 2: and center, probably a lot more than people would like
9:32
Speaker 2: for a lot of reasons. For he had Ukraine and
9:34
Speaker 2: now the Middle East flaring up yet again, and you
9:38
Speaker 2: have to factor that into your investment outlook.
9:40
Speaker 5: That's certainly been the case throughout this year.
9:42
Speaker 2: That's why we're happy to speak with Wendy Shulder, Professor
9:44
Speaker 2: at Brown University, professor, thanks so much for joining us.
9:48
Speaker 2: I want to start just on the domestic political front here.
9:52
Speaker 2: There are a lot of states that are questioning whether
9:54
Speaker 2: former president of Biden can even be on the ballot. Trump,
9:59
Speaker 2: former president, thank you very much, can never even be
10:02
Speaker 2: on the ballot this year. How do you make what
10:05
Speaker 2: do you make of what's happening here on some of
10:07
Speaker 2: these states.
10:08
Speaker 8: Well, I mean we've had Colorado and the state Supreme
10:11
Speaker 8: Court ruled there, and then Maine. It was a decision
10:13
Speaker 8: by the Secretary of State of Maine. And the issue is,
10:16
Speaker 8: you know, did Donald Trump commit insurrection in allegedly inciting
10:22
Speaker 8: the January sixth riots, but also you know, trying to
10:26
Speaker 8: sort of undermine or change the electoral results of twenty
10:30
Speaker 8: twenty fake elector schemes. You know, all of his claims
10:34
Speaker 8: were thrown out sixty different court cases, but he was
10:37
Speaker 8: not ever convicted of insurrection, which is really important part
10:40
Speaker 8: for the fourteenth Amendment. If you commit insurrection, if you
10:44
Speaker 8: were a Confederate soldier and you took up arms against
10:46
Speaker 8: the United States the Union, you were considered an insurrectionist.
10:50
Speaker 8: But even Jack Smith is not charging former President Trump
10:53
Speaker 8: with insurrection. So in this case, it's a pretty wide
10:57
Speaker 8: application of the Fourteenth Amendment for somebody who has not
11:00
Speaker 8: been convicted in the court of law of insurrection.
11:04
Speaker 3: Nevertheless, does it set the stage for some sort of
11:07
Speaker 3: constitutional showdown as some experts think, is this going to
11:10
Speaker 3: the Supreme Court?
11:12
Speaker 8: Well, the Supreme Court has to decide. Certainly the decision
11:16
Speaker 8: in the colle or state supreme court. That's a natural
11:18
Speaker 8: path to go from a state supreme court to the
11:21
Speaker 8: federal courts. And of course this is a state question.
11:25
Speaker 4: Who gets on the ballot?
11:26
Speaker 8: Is time manner in place? In other words, that clause
11:29
Speaker 8: of the Constitution that's controlled by states, not the federal
11:32
Speaker 8: government unless it's overridden by a federal law. We don't
11:35
Speaker 8: have actual massive federal law on ballot access.
11:39
Speaker 4: We leave that to the states.
11:40
Speaker 8: So Supreme Court has to decide, are they going to
11:42
Speaker 8: punt it and just say this is a state matter
11:44
Speaker 8: altogether they've been devolving a lot of things to the
11:47
Speaker 8: state in their term, or will they say this is
11:50
Speaker 8: a misapplication of the provision of the Fourteenth Amendment and
11:54
Speaker 8: get involved. And I think people don't know yet, but
11:56
Speaker 8: now that there's a second state involved, I do think
11:59
Speaker 8: it's going to be more pressurable build on them to
12:02
Speaker 8: at least hear the coloradle case.
12:04
Speaker 3: Meanwhile, of course many anticipate here is indeed the front
12:07
Speaker 3: Russer runner as it stands for the Republican nomination. We
12:10
Speaker 3: also know he'll be up against one current President Biden.
12:14
Speaker 3: President Biden being busy at the moment, he's taking to
12:17
Speaker 3: the air waves talking about an overnight Russia attack launched
12:20
Speaker 3: larged aerial assault on Ukraine and the latest attack shows
12:23
Speaker 3: Putin's objective remains unchanged. All of this while really President
12:28
Speaker 3: Brden tries to garner some sort of support for further
12:30
Speaker 3: aid to Ukraine and indeed to Israel. At that how
12:34
Speaker 3: much is that likely to be passed? How much is
12:36
Speaker 3: that going to be taking up the headspace of well
12:39
Speaker 3: the administration at the moment.
12:41
Speaker 8: Well, the issue is that there's a very short window
12:43
Speaker 8: until the first deadline for refunding the government for fiscal
12:48
Speaker 8: year twenty twenty four comes, which is January nineteenth, and
12:51
Speaker 8: then the bigger blow up date is February second, And
12:55
Speaker 8: so the House of Representatives is the place to watch
12:57
Speaker 8: certainly living you know Linston, the leader from Louisiana, and
13:04
Speaker 8: thinking about the speaker, thinking about whether that clucus can
13:07
Speaker 8: hold together. There's a very strong opposition to sending more
13:11
Speaker 8: money to on behalf of Ukraine. Certainly the amount of
13:14
Speaker 8: the bid administration is asking for, which is fifty or
13:16
Speaker 8: sixty billion, there's only fourteen billion or so for Israel.
13:19
Speaker 8: Point is, there's enough people in that Republican clock is
13:22
Speaker 8: to kill any aid bill, So Democrats will have to
13:25
Speaker 8: come to the rescue and Israel. Gauzla is very controversial
13:28
Speaker 8: in the Democrat Party. So the appetite for sending more
13:31
Speaker 8: money to overseas countries while you're fighting about cutting the
13:36
Speaker 8: US budget, which is the fight the Democrats and Republicans are
13:38
Speaker 8: going to have. That is an incredibly difficult path to
13:41
Speaker 8: walk for the current speaker in a divided Republican.
13:44
Speaker 2: Claus And when it appears that one of the strategies
13:47
Speaker 2: from the Republican Party is to tie any aid to
13:51
Speaker 2: Ukraine and Israel to border security and maybe border policy,
13:56
Speaker 2: what's the status of that.
13:58
Speaker 8: Well, that's actually a win for the administration. If the
14:01
Speaker 8: bidenmistration is forced quote unquote to accept more aid to
14:04
Speaker 8: reinforce the border, that means that they'll probably reinforce the
14:08
Speaker 8: border and diminish some of the migration that's happening, which
14:12
Speaker 8: is a soft spot for Biden going into twenty four.
14:15
Speaker 8: So if he has to quote unquote compromise, it's actually
14:18
Speaker 8: something that is in his favor because it better insulates
14:21
Speaker 8: him against charges on the border. We saw the Sector
14:24
Speaker 8: of State actually go to Mexico to talk about how
14:27
Speaker 8: we can get.
14:27
Speaker 6: Mexico to help with the border.
14:29
Speaker 8: So I think the Biden administration realizes this is a
14:31
Speaker 8: very important factor going into the election. Even people very
14:34
Speaker 8: far away from the border seem to be very concerned
14:36
Speaker 8: about it, And there's a big balance between worrying about
14:39
Speaker 8: Ukraine and Israel and our southern border.
14:41
Speaker 4: But that's a gift to Biden.
14:43
Speaker 8: Even though Republicans want it and they'll claim credit for it,
14:45
Speaker 8: it's also a gift to Biden that I think he'll
14:47
Speaker 8: happily accept.
14:48
Speaker 2: Hey, Wendy, want are good friends in Washington do come
14:50
Speaker 2: back to work in the new year.
14:52
Speaker 5: They've got a big to do list.
14:53
Speaker 2: I wonder what's a I would guess at the top
14:55
Speaker 2: of that to do list is it's keeping this government
14:58
Speaker 2: open and funded. How is that going to proceed? Do
15:01
Speaker 2: you think are we just going to kick the can
15:03
Speaker 2: down the road the entire year.
15:05
Speaker 8: Well, I mean, because of the debtinally negotiations, it's very
15:09
Speaker 8: difficult to kick the can down the road. If they
15:11
Speaker 8: don't do certain things, bigger cuts will happen in the summer,
15:14
Speaker 8: which is closer to the November elections, so very few
15:17
Speaker 8: people want that. The problem for the Republicans is Donald
15:20
Speaker 8: Trump may very well win the Iowa caucuses on January fifteenth,
15:24
Speaker 8: The deadline is the nineteenth, and then he's propelled into
15:26
Speaker 8: the twenty third, which is New Hampshire primary. He is
15:29
Speaker 8: going to be the spokesperson for the Republican Party and
15:32
Speaker 8: for some people that's fantastic news. For other people, that's chaos.
15:36
Speaker 8: So if the Republicans in the House do not manage
15:38
Speaker 8: to keep the government open, that's further chaos. So it
15:42
Speaker 8: sets the stage for the Republicans bearing the label of
15:44
Speaker 8: chaotic and unable to govern. And I think that's what
15:48
Speaker 8: the Democrats are counting on to push Republicans to prevent
15:52
Speaker 8: any long term shutdown.
15:54
Speaker 3: This kind of takes us a nicely full circle back
15:56
Speaker 3: to the discussion of an election of twenty twenty four
15:59
Speaker 3: and who will be the front run of for the Republicans.
16:01
Speaker 3: I mean, just of late, we've seen Nicki Haley, who
16:03
Speaker 3: is gaining some momentum, sort of do an unforced era
16:07
Speaker 3: once again, sort of being brought into a racially charged
16:10
Speaker 3: controversy that seems to be coming time and time again.
16:13
Speaker 3: And then twenty twenty four fight, is she just unlikely
16:17
Speaker 3: to manage to win out Anne indeed Dessantis at that point.
16:20
Speaker 8: Well, we have to look at Iowa. You know, Trump
16:22
Speaker 8: has such a big lead in Iowa. Does that translate
16:24
Speaker 8: into a really big win in the caucuses or does
16:27
Speaker 8: it really tighten up when they go in to vote.
16:30
Speaker 8: And if there's actually momentum, If either disantras Her or
16:33
Speaker 8: Nicki Elli gets something like thirty percent of the caucus
16:36
Speaker 8: vote rather than where they are on the polls now
16:38
Speaker 8: or thirty five percent, that shows some vulnerability for Trump
16:41
Speaker 8: going to New Hampshire. If Nicki Alli doesn't win but
16:44
Speaker 8: comes in a really close second, for example, again more
16:47
Speaker 8: momentum for the challengers to Trump, then I think it's
16:50
Speaker 8: a little bit less certain that the party goes with Trump.
16:53
Speaker 8: So I think that's the big thing to watch in
16:55
Speaker 8: the next couple of weeks. Nickielli's remarks really reflect the
16:59
Speaker 8: divide in the Republican Party. Desantans has already gone this
17:02
Speaker 8: way in Florida on the issue of revisiting slavery, discrimination,
17:06
Speaker 8: the legacy of the country. You know, there's a real
17:09
Speaker 8: appetite to move on from that in the Republican Party.
17:12
Speaker 8: But the independent voters and suburban voters that might be
17:15
Speaker 8: Nikki Haley's big base that can cross over and vote
17:17
Speaker 8: Republican primaries, for example, they're uncomfortable with abandoning that and
17:22
Speaker 8: they don't like that side of the Republican Party. So
17:25
Speaker 8: she's really caught strategically in a really difficult place and
17:30
Speaker 8: who she appeals to in the next basically the next month.
17:34
Speaker 5: Wendy Schiller.
17:35
Speaker 2: There's a lot of topics, and I think we're going
17:37
Speaker 2: to be talking to you often in the new year
17:39
Speaker 2: as we think about domestic politics, geopolitics.
17:43
Speaker 5: In an election year.
17:44
Speaker 2: Wendy Schiller, she is professor at Brown University, and there's
17:47
Speaker 2: a lot of ground to cover in that type of discussion.
17:51
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18:10
Speaker 2: And continuing on personal finance, you got to talk about
18:12
Speaker 2: residential real estate and real estate in general because for
18:15
Speaker 2: many Americans, their home is their biggest asset.
18:18
Speaker 5: And boy, we've had a.
18:20
Speaker 2: Really really high interest rates and real shock to the system.
18:22
Speaker 2: But now rates you're coming back down. So what does
18:25
Speaker 2: that mean for the residential real estate market. Well, Selma
18:28
Speaker 2: Hepp joined us. She's a chief economist at Core Logic. Salma,
18:31
Speaker 2: thanks so much for joining us here. I mean, I
18:33
Speaker 2: guess the key question for me is affordability. That is
18:37
Speaker 2: really a challenge for many folks out there.
18:40
Speaker 5: Talk to us about where we are there.
18:43
Speaker 9: Yeah, so, I mean, we're seeing definitely a lot of
18:45
Speaker 9: improvement in terms of affordability simply because you're paying much
18:49
Speaker 9: more on your cosset of home ownership is much lower
18:53
Speaker 9: with decline and mortgage rates. So let's put this in numbers.
18:56
Speaker 9: You know, when mortgage rates were over eight percent and
19:00
Speaker 9: with the decline now to six point six six percent
19:03
Speaker 9: over the last week, you're looking at the saving of
19:06
Speaker 9: about three hundred dollars on a five hundred thousand dollars mortgage, right,
19:12
Speaker 9: And so the more expensive the mortgage gets, the more
19:16
Speaker 9: the more of savings you have. The issue really these
19:19
Speaker 9: days is in terms of affordability, even when mortgage rates
19:22
Speaker 9: come down, is that it's really difficult in many ways
19:26
Speaker 9: to find to get a mortgage unless you are a
19:28
Speaker 9: very credit worthy borrower.
19:31
Speaker 6: And also you're competing a lot against a lot of
19:34
Speaker 6: people that.
19:34
Speaker 9: Have cash or are coming down with large cash down payments,
19:39
Speaker 9: and so you know, there's many aspects of affordability.
19:43
Speaker 6: It's not just mortgage rates at the moment exactly right.
19:46
Speaker 2: And you know what I'm kind of thinking about is
19:49
Speaker 2: one of the key issues in the real estate market
19:51
Speaker 2: is nobody wants to move out of their house. Therefore
19:53
Speaker 2: there's no existing home sales or they're very very low.
19:56
Speaker 5: If you want a home, you got to go look
19:57
Speaker 5: for a new one.
19:58
Speaker 2: So my question, is there a mortgage rate do you
20:01
Speaker 2: think that would kind of like be a clearing rate,
20:03
Speaker 2: if you will, where it would entice sellers to sell
20:07
Speaker 2: and buyers to buy. Deserves when you talk to you
20:11
Speaker 2: get a sensor's a clearing rate, Yeah.
20:13
Speaker 9: That's a billion dollar question this year because everybody is
20:17
Speaker 9: asking at what point people will give up that inventory.
20:20
Speaker 9: There's been some surveys out and they show that five
20:23
Speaker 9: point five percent seems to be a magic rate.
20:26
Speaker 6: It's really difficult to say that.
20:28
Speaker 9: That would actually happen, at least for sellers because a
20:32
Speaker 9: majority the median rate is still about three point eight percent,
20:36
Speaker 9: so people are still locked in in that rate and
20:39
Speaker 9: they bought probably before you know more home prices have
20:44
Speaker 9: gone up some forty percent. So when you think about
20:46
Speaker 9: how much you've seen how much appreciation we've had over
20:49
Speaker 9: the last few years.
20:50
Speaker 6: It's been forty percent. So that's a lot to consider.
20:53
Speaker 9: You know, it's not just your mortgage rates you're giving up,
20:56
Speaker 9: but you're also giving up the much lower of a home,
21:01
Speaker 9: so you know, so that's.
21:03
Speaker 6: You know, that's kind of I think. What's going to
21:05
Speaker 6: keep people put for a little while.
21:07
Speaker 3: What is sentiment like right now? How many consumers out
21:11
Speaker 3: there think this is a decent time to buy.
21:13
Speaker 6: Or not many? Not many?
21:15
Speaker 9: And it's actually that sentiment has been on a decline
21:19
Speaker 9: at least until you know, We'll see what happens in
21:22
Speaker 9: next month or two. With the decline that we solve
21:24
Speaker 9: over the last couple of weeks. I think that will
21:27
Speaker 9: improve the sentiment. The other thing is, you know, we
21:29
Speaker 9: are going into spring home buying season that tends to
21:32
Speaker 9: be see a better sentiment, and people do tend to
21:35
Speaker 9: come out in a spring home buying season. And you know,
21:38
Speaker 9: if you remember what happened last year, mortgage rates peaked
21:41
Speaker 9: in November and then they declined coming into spring home
21:45
Speaker 9: buying season, and we had a really good season at
21:47
Speaker 9: least in terms.
21:47
Speaker 6: Of how many buyers came out.
21:49
Speaker 9: The problem was that sellers didn't come out, and so
21:52
Speaker 9: we saw a lot of home press appreciation. That actually
21:55
Speaker 9: may happen again this year. We'll see more buyers than sellers.
21:58
Speaker 9: It will put pressure on home prices and that tends
22:01
Speaker 9: to challenge affordability again.
22:04
Speaker 2: Hey sama, one of the challenges I know out there
22:06
Speaker 2: is that while the builders and their home building company
22:09
Speaker 2: stocks have just ripped in twenty twenty three, done really
22:12
Speaker 2: really well because there's so much demand out there, But
22:14
Speaker 2: I'm wondering what are they building. Are they just building
22:17
Speaker 2: the next McMansion around the corner, or are they building
22:19
Speaker 2: the homes that kind of starter homes that you.
22:22
Speaker 5: Young people need to get into the market.
22:24
Speaker 2: We have a sense of what's coming onto the market
22:26
Speaker 2: in terms of new construction.
22:28
Speaker 9: Yeah, it does feel like they are tending to move
22:31
Speaker 9: towards more traditional, smaller homes. In the data we've seen
22:36
Speaker 9: recently the size of a home declined by some ten
22:39
Speaker 9: percent for twenty twenty builds versus twenty twenty three builds,
22:44
Speaker 9: So it does seem like they're building smaller home They're
22:47
Speaker 9: trying to adjust to who their buyers are at the moment.
22:52
Speaker 3: One thing I suppose while consumers out there don't feel
22:55
Speaker 3: like it's a good time to buy, there are people
22:57
Speaker 3: sitting pretty. There are people who have looked at the
23:00
Speaker 3: you of the home equity and probably felt a little
23:02
Speaker 3: bit more buoyant and stride in their step. Who have
23:05
Speaker 3: those people been Where have been benefiting the most of.
23:08
Speaker 9: Like, Yeah, that's the really interesting is that, you know,
23:12
Speaker 9: Ecological we do a home equity report every quarter and
23:15
Speaker 9: in the last report we saw home equity increase to
23:21
Speaker 9: about three hundred and four thousand dollars on average per
23:24
Speaker 9: mortgage borrowers. So that means across country right on average,
23:29
Speaker 9: people have over three hundred.
23:30
Speaker 6: Thousand dollars in equity.
23:31
Speaker 9: Now that's much larger in more expensive markets and more
23:35
Speaker 9: markets that have seen.
23:36
Speaker 6: More appreciation over time.
23:38
Speaker 9: So one market that leads, one state that leads is Hawaii,
23:44
Speaker 9: that's over six hundred thousand dollars on average in equity,
23:49
Speaker 9: followed by California about five hundred and eighty thousand dollars.
23:54
Speaker 9: So some of that what's interesting about this is particularly
23:58
Speaker 9: California for example, or Washington State.
24:00
Speaker 6: Those are also the markets where we see a lot
24:02
Speaker 6: of migration from.
24:04
Speaker 9: So those folks not only have tend to have higher incomes,
24:09
Speaker 9: but they also have more of that cash saved up,
24:12
Speaker 9: you know, and so that actually tends to feed into
24:15
Speaker 9: home press appreciation in other markets that they're moving to.
24:19
Speaker 2: Hey, some interesting development, A bill introduced in the House
24:23
Speaker 2: and Senate would prevent hedge funds from owning single family
24:26
Speaker 2: host houses in the United States. From your perspective, how
24:30
Speaker 2: prevalent has Wall Street institutional investors been in buying up
24:33
Speaker 2: residential real estate over the last several years.
24:36
Speaker 9: Yeah, much more so during the pandemic. Before the pandemic,
24:40
Speaker 9: we saw about eighteen percent of single family homes being
24:43
Speaker 9: bought by investors, and that share increased to about twenty
24:46
Speaker 9: eight percent at the peak of the pandemic, but actually
24:50
Speaker 9: it remained there. The reason is that overall sales are up,
24:54
Speaker 9: so as a share it does remain elevated. But one
24:56
Speaker 9: thing to keep in mind is that it's mostly small investors.
25:00
Speaker 9: Over fifty percent of these purchases are actually small and
25:03
Speaker 9: medium investors. At large investors, the institutional investors that we're
25:08
Speaker 9: worried about, they actually comprise pretty small share overall purchases
25:12
Speaker 9: of single family homes.
25:14
Speaker 3: Samma, it's great to have you from Colgank.
25:16
Speaker 6: It's the chief.
25:17
Speaker 3: Economist Selma hat joining us on all things real to state,
25:20
Speaker 3: whether it's hedge funders, whether it's me mortals trying to
25:24
Speaker 3: be buying a home.
25:25
Speaker 7: You're listening to the tape cans our live program, Bloomberg
25:28
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25:32
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25:35
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Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
25:44
Speaker 10: Let's get more on what exactly travel trends are looking like.
25:47
Speaker 10: Joining us now is the Points guy, Brian Kelly. Very
25:50
Speaker 10: nice to have him on the program. Brian, Obviously we're
25:54
Speaker 10: coming out of the holiday travel season for twenty twenty three.
25:57
Speaker 10: We're just coming out of twenty twenty three as a whole,
25:59
Speaker 10: and when you're looking ahead to twenty twenty four, how
26:02
Speaker 10: much is that travel demand going to be resilient? The
26:05
Speaker 10: CEO of Carnival there just suggested that this is no
26:07
Speaker 10: longer revenge travel, that we're seeing that that's over and
26:11
Speaker 10: demand is still sticking around. How do you see it?
26:14
Speaker 11: Yeah, I see it the same. You know, revenge travel
26:18
Speaker 11: to me is sort of like people were paying ridiculous
26:20
Speaker 11: amounts to go to Miami. I remember when hotel rooms
26:23
Speaker 11: in Miami were like two thousand dollars a night, and
26:26
Speaker 11: I think now consumers are much more discriminating. They want
26:29
Speaker 11: better experiences. So we're seeing a big shift into adventure
26:33
Speaker 11: travel on hotels dot Com hold a bunch of data
26:37
Speaker 11: recently people are now looking to stay at really unique
26:41
Speaker 11: accommodations and riokens and going to Morocco and staying at riodds.
26:46
Speaker 11: So I think consumers are spending they just don't want
26:49
Speaker 11: to do get stuck in that pandemic habit of overpaying
26:53
Speaker 11: for moderate hotels.
26:55
Speaker 5: So, Brian, where are we?
26:58
Speaker 2: You know, we just heard the CEO, Josh To CEO
27:00
Speaker 2: of Carnival, talking about he's just mentioning he was in
27:03
Speaker 2: a New York's in a New York hotel and it's
27:05
Speaker 2: not having a great experience. Some of the services maybe
27:08
Speaker 2: have been cut back. You know, initially when things were
27:11
Speaker 2: opening back up, hotels would say we're not going to
27:13
Speaker 2: make your room every day, We'll make it once every
27:15
Speaker 2: two or three days. And you know, we did see
27:17
Speaker 2: some service issues as that industry tried to get back.
27:20
Speaker 5: On its feet.
27:21
Speaker 2: Understandably, where we in terms of the hotel industry and
27:24
Speaker 2: staffing and service levels, are we back to pre pandemic levels.
27:28
Speaker 11: We are not at pre pandemic levels. And really that
27:31
Speaker 11: in the mid tier they took the pandemic as an
27:33
Speaker 11: opportunity to roll back room service, cleaning. You kind of
27:38
Speaker 11: still have to argue at some of those mid tier
27:40
Speaker 11: properties to get those same perks back. I think at
27:43
Speaker 11: the luxury side of things, the luxury hotels are now
27:46
Speaker 11: competing like never before. I think the service levels are
27:50
Speaker 11: back at the high end of the spectrum. But now
27:54
Speaker 11: in general, a lot of hotel chains took this as
27:56
Speaker 11: an opportunity to cost cut in the name of safety
27:59
Speaker 11: and then really take it back to where it was.
28:02
Speaker 10: Well, Brian, you talk about the high end of the spectrum,
28:05
Speaker 10: what is the difference between kind of the luxury tourism
28:08
Speaker 10: and travel now and those seeking deals? Are there still
28:11
Speaker 10: good deals to be found and where are they?
28:14
Speaker 11: Yeah, there are actually really good deals and airfare has
28:17
Speaker 11: come down quite a bit. Gas prices are down as well,
28:19
Speaker 11: so there is the positive outlook for travelers in twenty
28:22
Speaker 11: twenty four. The budget airlines are actually struggling because the
28:25
Speaker 11: consumers are spending on these bespoke experiences and they're spending
28:29
Speaker 11: in first and business class. I don't know if any
28:32
Speaker 11: of you looked at flights to Europe this past summer.
28:34
Speaker 11: I was absolutely shot eight thousand dollars to go to
28:39
Speaker 11: Paris from the US. So the airlines are making a fortune.
28:42
Speaker 11: You know. United has a big bet on the Pacific.
28:44
Speaker 11: They just launched a new route to christ Church, New Zealand.
28:49
Speaker 11: They're seeing strong bookings Asias now, not quite back to
28:52
Speaker 11: where it was, but increasing dramatically. So the gains in
28:56
Speaker 11: travel I think are international and luxury. You know, the
29:00
Speaker 11: loes and spirits of the world. They have a much
29:02
Speaker 11: less rosy outlook. And I was just checking. And back
29:05
Speaker 11: to your question on where to find the deals. I
29:08
Speaker 11: love this tip and no one knows about but Google flights.
29:10
Speaker 11: So Google dot com slash flights. That's where most people
29:13
Speaker 11: travel experts go to search airfare. They have a little
29:16
Speaker 11: feature called Explore, so it'll say flights. Click the Explore map.
29:20
Speaker 11: You can actually type in New York to say Caribbean,
29:23
Speaker 11: so you want to go for a week in March.
29:25
Speaker 11: You can basically reverse engineer. And this is what I'm
29:29
Speaker 11: telling people. There are deals out there, you just need
29:31
Speaker 11: to know where they are, so you can put New
29:33
Speaker 11: York to Caribbean and see where the cheap flights are.
29:36
Speaker 11: That's how you find your parises.
29:38
Speaker 10: Always not me on Fogle flights right now, Yes, I know,
29:40
Speaker 10: I'll take a so Brian.
29:43
Speaker 2: My personal flying policy these days is I only fly
29:46
Speaker 2: when I get paid to fly, with a couple of
29:48
Speaker 2: exceptions coming up. But where's the airline industry in terms
29:53
Speaker 2: of capacity today? Can they handle these record flights and
29:57
Speaker 2: record number of flyers we're seeing and that includes the
30:00
Speaker 2: whole tsa folks, Where's our system these days.
30:04
Speaker 11: You reminded me of Naomi Campbell. You only get out
30:07
Speaker 11: of bed for ten thousand dollars or more.
30:09
Speaker 7: I like it.
30:10
Speaker 11: So capacity is an issue. You know, there still are
30:13
Speaker 11: strains on air traffic. The FAA actually just opened up
30:18
Speaker 11: new lanes along the East Coast to allow more planes
30:22
Speaker 11: to fly. But our airports are congested, especially in New York.
30:26
Speaker 11: And while there are some renovations going on at JFK
30:30
Speaker 11: and some of our nation's biggest airports, it's not really
30:32
Speaker 11: going to create the capacity we need, so there are
30:35
Speaker 11: issues there. Airlines can't just expand and add tons of
30:38
Speaker 11: new routes, especially to places like London. We've seen Jeff
30:41
Speaker 11: Blue try to expand to Amsterdam and London. They're getting
30:45
Speaker 11: the second tier airports. So you know, these airlines are
30:49
Speaker 11: struggling to grow and running into a lot of challenges.
30:53
Speaker 11: So they need to figure out how to maximize the
30:56
Speaker 11: revenue of what they have today. And that's why we've
30:58
Speaker 11: seen airlines really charge up premium and customers are paying
31:01
Speaker 11: for first class. You know, ten years ago, eighty percent
31:03
Speaker 11: of first class seats on Delta were given to elite
31:06
Speaker 11: members for free. Now it's flipped. Eighty percent of people
31:09
Speaker 11: are buying first class and twenty percent are going to
31:12
Speaker 11: elite travelers. So the airlines are doing whatever they can
31:16
Speaker 11: to maximize everything on board that they have today.
31:19
Speaker 6: Yeah.
31:19
Speaker 10: I just recently went to Europe, and to your point, Brian,
31:22
Speaker 10: the actual business class tickets where you get the live
31:24
Speaker 10: flat seats and everything were wildly expensive. So I did
31:27
Speaker 10: premium economy from the first time.
31:29
Speaker 5: Yeah, how was us?
31:29
Speaker 10: It's pretty nice, you know, it definitely made a difference.
31:32
Speaker 5: Also, I couldn't do that.
31:34
Speaker 10: Yeah, please, okay, not for everybody. And Brian, you've got
31:38
Speaker 10: me on Google Flights now. Yeah, just so you're aware.
31:40
Speaker 10: Sixty seven dollars round trip New York to Miami January
31:44
Speaker 10: twenty first to twenty seventh on Frontier on fothing tells
31:47
Speaker 10: me maybe Paul wouldn't.
31:49
Speaker 5: Be a fly in Frontier.
31:51
Speaker 10: Brian, you were talking about how airlines are able to
31:53
Speaker 10: maximize all this stuff. They're getting people to pay for
31:55
Speaker 10: first class, and that brings me to lounges. When we
31:57
Speaker 10: think about points and rewards, it feels like everybody gets
31:59
Speaker 10: to in the lounge now, and the lounges are too
32:01
Speaker 10: crowded and they're starting to pull everything back. How much
32:04
Speaker 10: more kind of restriction in that are we going to see?
32:08
Speaker 11: Well, so back to the point, the airlines need to
32:10
Speaker 11: make more money out of what they have today adding
32:12
Speaker 11: tons of new planes and routes. They can't even buy
32:14
Speaker 11: new planes, you know, there's backlogs. So what they're doing
32:17
Speaker 11: is turning to loyalty. All of the credit card you know,
32:20
Speaker 11: all the major airlines, Delta, United, American, they're making billions
32:23
Speaker 11: from their credit card partnerships and they're doubling down. So
32:27
Speaker 11: what we're seeing now in terms of lounge access, you know,
32:30
Speaker 11: Delta really is pulling back next year and especially in
32:34
Speaker 11: twenty twenty five. American Express Platinum used to be able
32:37
Speaker 11: to use that to get in the Delta lounges and
32:40
Speaker 11: even bring guests into their own Sentorian lounges. Now they're
32:43
Speaker 11: making you spend at least seventy five thousand dollars on
32:45
Speaker 11: the card to get a perk that used to be
32:47
Speaker 11: for free. So and it's brilliant business when you think
32:50
Speaker 11: about it, because every time you use a credit card
32:52
Speaker 11: or an airline co branding card, that airline's making money.
32:55
Speaker 11: So they need to figure out how to take their
32:57
Speaker 11: customers at fly a couple times a year and get
32:59
Speaker 11: a piece said, They're spend every single day. So that's
33:02
Speaker 11: the trend. These frequent flyer programs are now frequent buyer programs.
33:06
Speaker 2: Real quickly, Brian thirty seconds. What's a wellness resort? It
33:09
Speaker 2: doesn't sound like something that's down my alley.
33:13
Speaker 11: Yeah, yoga, you know, no ask Actually some of them
33:16
Speaker 11: have alcohol. Mira Ball and Mira Ball's a Hiatt property.
33:20
Speaker 11: You can use your Higatt points at Mirrorball properties. But
33:24
Speaker 11: you know that definitely is a trend people wanting to
33:27
Speaker 11: escape and focus on wellness.
33:29
Speaker 2: But all right, I like the escape part, I'm just
33:31
Speaker 2: not sure sure about the wellness.
33:33
Speaker 5: Brian Kelly, Thank you very much, Brian Kelly. He's the
33:36
Speaker 5: Points Guy.
33:36
Speaker 2: We always learn something today every time we speak to Brian.
33:40
Speaker 5: He's the founder and CEO of the Points Guy.
33:42
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
33:46
Speaker 1: subscribe and listen to interviews in Apple Podcasts or whatever
33:49
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
33:53
Speaker 1: at Matt Miller nineteen seventy three and on Ball.
33:56
Speaker 2: Sweeney I'm on Twitter at pt Sweeney. Before the podcast.
33:59
Speaker 2: You can always catch us worldwide at Bloomberg Radio