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Markets, Juneteenth, And Turks & Caicos (Podcast) · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day, we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. What is going on
• 0:23
  Speaker 1: in markets? And I don't know how you play this? Fundamentally,
• 0:28
  Speaker 1: I wonder how you play this if you're a quant,
• 0:29
  Speaker 1: We'll to find out. Mak mood Arani joins us. He's
• 0:31
  Speaker 1: a co founder of quant Insight UM and Mak mood
• 0:36
  Speaker 1: I don't you know? The drivers have been, uh well,
• 0:40
  Speaker 1: going in different directions. Right on Wednesday, the market rallied
• 0:44
  Speaker 1: because the FED raised basis points, raised rates seventy five
• 0:48
  Speaker 1: basis points. And then yesterday the markets tanked because the
• 0:53
  Speaker 1: FED raised rates seventy five basis points. No idea, what's
• 0:56
  Speaker 1: going on today? How do you? How do you play
• 0:59
  Speaker 1: these markets? Okay, well I wouldn't focus too much on
• 1:03
  Speaker 1: a single day, um, but you know what we do
• 1:07
  Speaker 1: is we asked the data and we gather large amounts
• 1:11
  Speaker 1: of data about what's going on with economic fundamentals, real
• 1:15
  Speaker 1: GDP growth, inflation, financial conditions, which includes you know, real
• 1:20
  Speaker 1: interest rates and across the corporate borrowing and how much
• 1:24
  Speaker 1: is priced for the FED for the next twelve months,
• 1:26
  Speaker 1: and the strength of the dollar and so on, and
• 1:29
  Speaker 1: we connect to all that to what markets are doing.
• 1:33
  Speaker 1: And what we've seen for several months now is that
• 1:37
  Speaker 1: if we take the S and P five, the by
• 1:40
  Speaker 1: far the most important driver is real interest rates and
• 1:45
  Speaker 1: tightening of financial conditions is moving equities lower. And of
• 1:50
  Speaker 1: course what's driving driving that tightening of financial conditions is
• 1:55
  Speaker 1: inflation moving higher. And the FED of course move seventy five.
• 2:01
  Speaker 1: I mean, you had almost seventy priced the day they moved, anyway,
• 2:08
  Speaker 1: so it wasn't a massive news event to be honest. Um.
• 2:12
  Speaker 1: And in terms of going forward, what we can see
• 2:15
  Speaker 1: is that everything is really driven by this momentum of inflation,
• 2:21
  Speaker 1: real interest rates, and credit spreads corporate high yield corporate
• 2:27
  Speaker 1: credit spreads. Now the question then is what's going to
• 2:30
  Speaker 1: shift that momentum. And I think if you put a
• 2:33
  Speaker 1: forward looking hat on and you have this framework, that's
• 2:37
  Speaker 1: kind of giving you a good sense for what's going
• 2:39
  Speaker 1: on right now. Under the surface. The game that's ultimately
• 2:44
  Speaker 1: going to be played here is markets need to get
• 2:48
  Speaker 1: some sense that inflation has peaked. And what want yea
• 2:54
  Speaker 1: so well exactly if inflation peaking, do you need to
• 2:57
  Speaker 1: wait for their next read or is there other data
• 3:00
  Speaker 1: that gets you there? Um. So, if we're looking at
• 3:04
  Speaker 1: headline inflation, clearly you know one of one of the
• 3:07
  Speaker 1: facts here is that if you look at long term
• 3:09
  Speaker 1: inflation expectations, and we know the FED looks at this,
• 3:13
  Speaker 1: those are quite closely correlated over many years to crude
• 3:18
  Speaker 1: oil prices. So there is undoubtedly a dynamic at play
• 3:23
  Speaker 1: that you know, if crude oil prices dropped sharply, you're
• 3:27
  Speaker 1: going to get um inflation expectations going south, and that's
• 3:31
  Speaker 1: going to be a comfort for the FED. Conversely, and
• 3:35
  Speaker 1: we're starting to hear more and more about the physical
• 3:39
  Speaker 1: energy market not working especially well, crude oil not getting
• 3:44
  Speaker 1: to the places it needs to get to UM, and
• 3:48
  Speaker 1: so there is this specter hanging over the market of
• 3:50
  Speaker 1: a further increase in crude oil prices. And you can
• 3:53
  Speaker 1: add to that the possibility of sort of China emerging
• 3:56
  Speaker 1: from the latest kind of COVID lockdown. To add to
• 4:01
  Speaker 1: global energy demand. And so if you do get inflation rising,
• 4:05
  Speaker 1: that's going to move inflation expectations higher. That's going to
• 4:08
  Speaker 1: keep the FED on edge. And you know, if you
• 4:10
  Speaker 1: if you look at the last twenty years of hiking cycles,
• 4:14
  Speaker 1: what the market needs to go up is essentially to
• 4:18
  Speaker 1: get some idea of where the terminal rate is. Right now,
• 4:21
  Speaker 1: we don't know. We're pricing sort of three and a half,
• 4:25
  Speaker 1: but we don't really know all the FED to tell
• 4:28
  Speaker 1: us that it's close to done. And again we're a
• 4:31
  Speaker 1: long way from that, so markets hit on even has
• 4:34
  Speaker 1: to be a long way from that, right, I mean,
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  Speaker 1: if we're looking at nine inflation um in order for
• 4:42
  Speaker 1: the FED to get to neutral, doesn't it have to
• 4:45
  Speaker 1: be much higher? Yes, you know, from a textbook perspective,
• 4:51
  Speaker 1: it does have to be much higher. And that's one
• 4:53
  Speaker 1: of the reasons the market is stratching instead and why
• 4:55
  Speaker 1: equities couldn't really get out of bed after that, because
• 4:59
  Speaker 1: at the end of the day, there are nowhere close
• 5:00
  Speaker 1: to done. By the way, is it also is there
• 5:04
  Speaker 1: also a difference this time compared to you know, the
• 5:08
  Speaker 1: last twelve thirteen years in that there's no FED put
• 5:12
  Speaker 1: I mean most most people are used to the FED
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  Speaker 1: coming in and saving the day, and they can't do
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  Speaker 1: that now. They can't do that because inflation is too high.
• 5:20
  Speaker 1: You had a FED put in the past, because inflation
• 5:23
  Speaker 1: was solo. In fact, that the underlying fear of all
• 5:26
  Speaker 1: central banks in the decade after the financial crisis was
• 5:29
  Speaker 1: deflation and disinflation. That was the problem. Uh. And so
• 5:33
  Speaker 1: they were always willing to come in with the FED
• 5:35
  Speaker 1: put because the inflation cost was very low. They weren't
• 5:38
  Speaker 1: They didn't feel they were risking letting inflation out of
• 5:41
  Speaker 1: the box. This time, inflation is already out of the box.
• 5:44
  Speaker 1: The stripe on that put is a very long way down.
• 5:47
  Speaker 1: So I don't think there's a FED put anywhere nearby. UM.
• 5:51
  Speaker 1: And you know, the key driving here is inflation. I
• 5:54
  Speaker 1: don't think though, that central banks, whether it's the FED
• 5:58
  Speaker 1: or the ECB, are going to be putting too much
• 6:01
  Speaker 1: weight on the idea of a neutral rate right now.
• 6:05
  Speaker 1: And they're certainly not going to use spots inflation. So
• 6:08
  Speaker 1: spot inflation might be nine percent, but you know, five
• 6:11
  Speaker 1: year inflation expectations are more like four and a half. UM.
• 6:16
  Speaker 1: So I don't think that, you know, the central banks
• 6:20
  Speaker 1: know that their actions have lags and it takes time
• 6:25
  Speaker 1: for those actions to feed through to the real economy.
• 6:28
  Speaker 1: They don't like to overshoot their conservative institutions by their nature,
• 6:32
  Speaker 1: and they're definitely not going to say, gee, inflation is
• 6:34
  Speaker 1: nine percent. If I need real interest rates that there,
• 6:36
  Speaker 1: I'm gonna I'm gonna have to put them at nine. No,
• 6:39
  Speaker 1: they're not going to do that. Thanks so much, Thanks
• 6:41
  Speaker 1: so much for joining us. Mak Mudnarani, their co founder
• 6:44
  Speaker 1: of quant Insight, talking to us about UM what the
• 6:47
  Speaker 1: market drivers is all right. Greg Jarrett there with the
• 6:52
  Speaker 1: Bloomberg Business flash, Thanks very much for joining us. UM
• 6:55
  Speaker 1: gas matters to some extent right now, because it's a
• 6:58
  Speaker 1: long weekend most right, we've got Juneteenth coming up on Monday, UM,
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  Speaker 1: and it's a new holiday and important holiday, especially as
• 7:09
  Speaker 1: we UH celebrate and value diversity, hopefully more UM than
• 7:14
  Speaker 1: we have be before. Kim Crowder joins us right now,
• 7:17
  Speaker 1: founder and see of Kim Crowder Consulting UM and Kim,
• 7:21
  Speaker 1: let's talk first of all about what companies UM should
• 7:26
  Speaker 1: do to avoid making a mistake. I mean, obviously you're
• 7:30
  Speaker 1: giving employees the day off, but you're also sometimes holding
• 7:35
  Speaker 1: um events, or allowing employees to celebrate in the way
• 7:38
  Speaker 1: that they want. We had a really cool poetry reading
• 7:42
  Speaker 1: in the in the cafeteria area here a couple of
• 7:44
  Speaker 1: days ago. What what are you hearing about? Yeah? I
• 7:49
  Speaker 1: think the biggest thing that organizations can think about when
• 7:52
  Speaker 1: figuring out how to celebrate Juneteenth is how are they
• 7:54
  Speaker 1: doing this beyond just the day? Right? Letting folks off
• 7:58
  Speaker 1: is great, um all, so you know, providing information around
• 8:02
  Speaker 1: what June tenth was that education pieces always great, but
• 8:05
  Speaker 1: also what are they looking at around things like pay equity,
• 8:08
  Speaker 1: What does that look like? Around leadership? Are they providing
• 8:10
  Speaker 1: opportunities for leadership and mentorship for team members? What does
• 8:15
  Speaker 1: visibility look like around celebration for visibility around certain projects,
• 8:19
  Speaker 1: but also visibility around wins for team members? So how
• 8:24
  Speaker 1: are they looking at this three and sixty five days
• 8:27
  Speaker 1: of the year instead of just sort of this one holiday,
• 8:30
  Speaker 1: one time, you know, in all the twelve months. One
• 8:35
  Speaker 1: thing that's really interesting is, you know, we look very
• 8:37
  Speaker 1: closely here at the e O one data. That's the
• 8:40
  Speaker 1: data that really disclosures how companies are doing on diversity
• 8:43
  Speaker 1: and inclusion goals when it comes to their own ranks
• 8:47
  Speaker 1: and it's choppy. It's really choppy. There's some companies that
• 8:50
  Speaker 1: have actually regressed. I'm wondering, you know, what's the push
• 8:53
  Speaker 1: to for companies to really renew the promises they've made
• 8:56
  Speaker 1: in terms of achieving equity. Yeah, I think the biggest
• 9:01
  Speaker 1: thing is looking at retention internal rates. What we find
• 9:03
  Speaker 1: is when we're working with the organization that retention rates are,
• 9:07
  Speaker 1: it can be low, particularly when we start to look
• 9:10
  Speaker 1: at folks wore from historically ignore backgrounds, whether they be
• 9:14
  Speaker 1: you know, oftentimes their black employees are cycling out really quickly,
• 9:18
  Speaker 1: and that costs organizations money. Right. Um. Also you don't
• 9:23
  Speaker 1: get you know, there's a benefit to having someone on
• 9:26
  Speaker 1: the team with a different perspective but also different experiences
• 9:29
  Speaker 1: and different approaches to the work. And so workplaces are
• 9:33
  Speaker 1: losing out on that when they're not keeping those team
• 9:35
  Speaker 1: members in place, but also not engaging those team members
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  Speaker 1: or providing opportunities for them to move up. Because despite
• 9:41
  Speaker 1: what organizations think, folks have options. Especially right now, you know,
• 9:45
  Speaker 1: we're still in the midst of the great resignation. Um.
• 9:48
  Speaker 1: If you follow any HR facebook uh you know facebook page,
• 9:52
  Speaker 1: you know that HR is still looking to keep people
• 9:56
  Speaker 1: on or even to bring people on. And so it
• 9:59
  Speaker 1: really is important that organizations realize that it is sort
• 10:04
  Speaker 1: of you know, no longer sort of here's this job.
• 10:07
  Speaker 1: You should be so grateful, But employees are really pushing
• 10:09
  Speaker 1: back and saying, I wouldn't been a workplace where I'm valued.
• 10:12
  Speaker 1: I want to be seen, but not only that, I
• 10:14
  Speaker 1: want to be paid. Well, I'm gonna have the opportunity
• 10:16
  Speaker 1: to move forward. And so that's that's the approach that
• 10:19
  Speaker 1: organizations should be taken at this point. So that's what
• 10:21
  Speaker 1: organizations should do in terms of hiring their employees, looking
• 10:26
  Speaker 1: UH to diversify their workforce and treat those people right,
• 10:30
  Speaker 1: treat them equally UM. But there's more right, especially for
• 10:34
  Speaker 1: bigger companies that have UM vendors that have third party relationships,
• 10:40
  Speaker 1: they can look to work with black owned businesses, for example,
• 10:44
  Speaker 1: or they can look to give contracts to UM minority
• 10:47
  Speaker 1: run businesses. Right, that's absolutely right. And also what I
• 10:52
  Speaker 1: would love for organizations as they're doing that is to
• 10:55
  Speaker 1: not just go with the same few that always get
• 10:57
  Speaker 1: the opportunity to actively look for partners who they have
• 11:01
  Speaker 1: not necessarily engaged with. Also actively look to make sure
• 11:05
  Speaker 1: that they're paying them equitably. Are they paying them the
• 11:08
  Speaker 1: same way that they would pay a non black owned business. UM,
• 11:12
  Speaker 1: Are they making sure that in their expectations that they're fair.
• 11:16
  Speaker 1: One of the things that we see, particularly with job descriptions,
• 11:19
  Speaker 1: and so I'm gonna make a parallel here with job descriptions,
• 11:22
  Speaker 1: uh that black women typically are more harshly UM give
• 11:27
  Speaker 1: received harsher criticism and job performance reviews. And if that's
• 11:31
  Speaker 1: the case, is that translating into the way that they
• 11:33
  Speaker 1: are working with vendors where that that sort of um
• 11:37
  Speaker 1: natural look is more Uh, it comes with more criticizing, UM,
• 11:43
  Speaker 1: it comes with more expectations that wouldn't be necessarily UM
• 11:47
  Speaker 1: looked for and non black owned businesses. And so this
• 11:51
  Speaker 1: really is a holistic viewpoint in the way that organizations
• 11:55
  Speaker 1: can really move this forward. But the goal is Black liberation,
• 11:57
  Speaker 1: and so in that theations should be looking to say,
• 12:01
  Speaker 1: how can we continuously create and create opportunities and to
• 12:06
  Speaker 1: move forward black liberation, including the type of organizations that
• 12:09
  Speaker 1: we partner with. Where we put our money is what
• 12:11
  Speaker 1: communities are we celebrating on a regular basis. If we
• 12:14
  Speaker 1: have lobbyists, what are we asking them to look for
• 12:16
  Speaker 1: and watching and so all of those ways the organizations
• 12:19
  Speaker 1: can really make this tactful. But I feel like we
• 12:24
  Speaker 1: may have lost him there. Did the line drop? I
• 12:26
  Speaker 1: think the line may have dropped, you know, Nally. I
• 12:28
  Speaker 1: think the interesting thing is, of course, for June tenth,
• 12:31
  Speaker 1: we're celebrating, um, the freedom of of black people in America,
• 12:37
  Speaker 1: that the end of slavery, UM, and of course black
• 12:40
  Speaker 1: liberation and equality should be goals. But when you practice uh,
• 12:46
  Speaker 1: you know, these kind of diversity and inclusion UM ethics,
• 12:50
  Speaker 1: you also raise your own organization financially. You also increase
• 12:55
  Speaker 1: your revenue growth. You also can increase profitability. Do we
• 12:58
  Speaker 1: have him back? Can you know? For for selfish business
• 13:02
  Speaker 1: leaders out there, UM, this is about more than just
• 13:07
  Speaker 1: doing the right thing right you You become a better business.
• 13:12
  Speaker 1: You make more money for yourself and for your shareholders,
• 13:15
  Speaker 1: your stakeholders if you if you practice these diversity and
• 13:19
  Speaker 1: inclusion techniques correctly, you do One thing that I really
• 13:24
  Speaker 1: try hard not to do is to focus on that
• 13:27
  Speaker 1: revenue piece. And I'm going to tell you why. When
• 13:29
  Speaker 1: we think about why June tenth was in place, it
• 13:32
  Speaker 1: was because of black labor being used in ways that
• 13:35
  Speaker 1: were um inequitable, being used in ways that were unfair
• 13:39
  Speaker 1: and basically with prossibility right, it was based on capitalism,
• 13:43
  Speaker 1: and so I tried to move away from seeing it's
• 13:46
  Speaker 1: from providing that viewpoint for organizations as to why this
• 13:50
  Speaker 1: is the right thing to do, to say, hey, you
• 13:51
  Speaker 1: can make more money if you just use black people
• 13:54
  Speaker 1: this certain way. I really like to focus on, you know,
• 13:57
  Speaker 1: what are the things that go beyond that again and
• 14:00
  Speaker 1: the innovation piece, what are ways that you should be
• 14:02
  Speaker 1: looking at that the moral of your organization in totality,
• 14:07
  Speaker 1: what are some ways where you might be missing out
• 14:09
  Speaker 1: on having a great leader in place that could really
• 14:12
  Speaker 1: turn the organization around, but because they're not given that opportunity,
• 14:15
  Speaker 1: they can't do So, how do you keep employees in place?
• 14:18
  Speaker 1: Because now that does cost you money, right to make
• 14:20
  Speaker 1: sure that employees are in place. And so that is
• 14:24
  Speaker 1: where we really like to focus beyond this idea of
• 14:26
  Speaker 1: you could make more money if you treated people people better.
• 14:30
  Speaker 1: That could be a byproduct, but it's bigger than that,
• 14:33
  Speaker 1: all right, Kim, great to have you and thanks so
• 14:34
  Speaker 1: much for joining us. Kim Crowder their founder and CEO
• 14:37
  Speaker 1: of Kim Crowder Consulting certified d e I and six
• 14:41
  Speaker 1: Sigma Leadership CEO Lyle Honba joins us right now a
• 14:47
  Speaker 1: partner with Granted Group Advisers, to talk about what we
• 14:51
  Speaker 1: should be um doing in terms of um our investments.
• 14:57
  Speaker 1: Have we gone far enough? Lyle, do you think at
• 15:00
  Speaker 1: this point that, especially if you have a long enough window,
• 15:04
  Speaker 1: you should start buying? You know, great question, Thanks for
• 15:07
  Speaker 1: having me. Yeah, listen, I think you know everything's about valuation, valuation, valuations,
• 15:12
  Speaker 1: So to your point, you know, just to give you
• 15:14
  Speaker 1: a little history, U two thousand two, we traded in
• 15:17
  Speaker 1: a recession at eleven times forward numbers, and then back
• 15:21
  Speaker 1: in we were trading also at eleven times forward numbers.
• 15:25
  Speaker 1: Right now we're trading at about fourteen times forward numbers,
• 15:29
  Speaker 1: which is historically below the long term average of fifteen
• 15:32
  Speaker 1: and well well below the seventeen and a half average
• 15:35
  Speaker 1: of the last ten years. So I think it's a
• 15:38
  Speaker 1: really it is a time to start looking and start
• 15:40
  Speaker 1: taking things around. We personally don't believe that we're going
• 15:42
  Speaker 1: to be in a recession. The valuations in the market
• 15:46
  Speaker 1: are accurately predicted a slowdown the market. Since we're trading
• 15:49
  Speaker 1: at fourteen times numbers, So I think it's time to
• 15:52
  Speaker 1: start dipping the toe. And I wouldn't go full more,
• 15:55
  Speaker 1: but I would definitely start looking at you know, like
• 15:57
  Speaker 1: the financials and uh some of these other uh, you know,
• 16:01
  Speaker 1: sectors that have been really just disserrated beyond where they
• 16:05
  Speaker 1: should be. There's the valuations, some valuations in certain stocks.
• 16:09
  Speaker 1: Talk more about that because you know, on one hand,
• 16:11
  Speaker 1: if you got into the market now and the market
• 16:13
  Speaker 1: faces for the decline, you face a loss. But if
• 16:17
  Speaker 1: you don't start dipping your foot in, you know are
• 16:20
  Speaker 1: also works very closely with Bloomberg for Masters of Business
• 16:23
  Speaker 1: is Barry Riddholt, and he makes the point that a
• 16:25
  Speaker 1: lot of investors don't get back in at the right
• 16:29
  Speaker 1: time and therefore lose a lot of money that way,
• 16:32
  Speaker 1: they get back in a too high a price. So
• 16:35
  Speaker 1: talk about that kind of issue that investors face here.
• 16:39
  Speaker 1: And you know, to what extent do you face a
• 16:41
  Speaker 1: risk of not getting back in at this point? Yeah,
• 16:44
  Speaker 1: I think if you have a long term view, and
• 16:46
  Speaker 1: I wouldn't dip your you know, your foot and I
• 16:48
  Speaker 1: would dip a toe in, right, So I think I would.
• 16:51
  Speaker 1: I would absolutely if if investors don't go back in,
• 16:55
  Speaker 1: it's a they will be very sorry a few years
• 16:58
  Speaker 1: from now. Right, So those people who are just indiscriminated
• 17:01
  Speaker 1: selling now, I think are going to be upset in
• 17:03
  Speaker 1: in a couple of years. Now. Stock market is a
• 17:05
  Speaker 1: long term gain. It's it's not not a short term price.
• 17:09
  Speaker 1: You know. We we actually are fiduciaries to UH uh
• 17:13
  Speaker 1: to four owing case, and we've noticed people are cutting
• 17:18
  Speaker 1: back on their contributions to offset so they have the
• 17:21
  Speaker 1: cash flow to pay for higher gas prices. And to
• 17:24
  Speaker 1: your point, they're going to miss out on UH. They
• 17:28
  Speaker 1: won't get back in right away, and they're gonna miss
• 17:30
  Speaker 1: out on, I think on some pretty good prices. Yeah.
• 17:32
  Speaker 1: John Author has had a piece today pointing out that UM,
• 17:35
  Speaker 1: even if you'd gone back into the market just two
• 17:37
  Speaker 1: weeks after the collapse of Lehman Brothers UM right now,
• 17:42
  Speaker 1: you'd be looking at four hundred and forty games, right,
• 17:45
  Speaker 1: because there was still a long way to go at
• 17:47
  Speaker 1: that point. I think markets were only down twenty five
• 17:49
  Speaker 1: or thirty percent, and we ended up down at the
• 17:52
  Speaker 1: end of it all. But it's difficult to time the bottom.
• 17:56
  Speaker 1: I mean, even the best investors get burned trying to
• 17:59
  Speaker 1: do that, so, um, what what kind of valuations do
• 18:02
  Speaker 1: you think we should be seeing longer term? Lyle? What's
• 18:05
  Speaker 1: normal that's a great and what's normals fifteen into sixteen?
• 18:09
  Speaker 1: I also know we also think that, uh, you knows,
• 18:12
  Speaker 1: the ten year bond yield will is pretty much maxed
• 18:15
  Speaker 1: out here for the short term. It's already actually anticipated everything.
• 18:19
  Speaker 1: And the reason why that's important for your listeners is
• 18:21
  Speaker 1: that it'll sort of helps dictate the valuation. Right, So
• 18:25
  Speaker 1: if we think that this is sort of tapped out
• 18:27
  Speaker 1: here for the short term, you know, a valuation of fifteen,
• 18:30
  Speaker 1: sixteen or even sixteen and a half could be a
• 18:33
  Speaker 1: good a good valuation point. But we're trading at fourteen,
• 18:37
  Speaker 1: So I think there's some real upside here. You know,
• 18:39
  Speaker 1: if my friend dropping go little bit cred swist says
• 18:42
  Speaker 1: that we're gonna have seven point five percent predicted earnings growth, well,
• 18:46
  Speaker 1: if we have seven point five predicted earnings uh increase
• 18:50
  Speaker 1: for companies and we're trading at a real slow down level,
• 18:54
  Speaker 1: you know, I think it's it's it's a good time
• 18:56
  Speaker 1: all right, Lyle, thanks so much for joining us. Lyle Hamba,
• 18:58
  Speaker 1: their partner at Grand Group Advisers, talking to us about UM,
• 19:02
  Speaker 1: the point we are where we are in these markets now, UM,
• 19:10
  Speaker 1: we are going to focus on uh, something that one
• 19:15
  Speaker 1: of my producers put together, and I'm pretty impressed. Travel
• 19:19
  Speaker 1: is finally bouncing back from the pandemic. Tourist destinations took
• 19:22
  Speaker 1: a big hit over the past two years, but exclusive,
• 19:25
  Speaker 1: upscale destinations are still doing fine. And when it comes
• 19:29
  Speaker 1: to real estate, perhaps no destination has been as resilient
• 19:33
  Speaker 1: as the Island of Turks and Caicos. Bloomberg's Eric Mallow
• 19:36
  Speaker 1: tells us more in this report, there's a lot to
• 19:41
  Speaker 1: like about the white sand beaches and clear waters of
• 19:43
  Speaker 1: Turks and Caicos. The likes of Christie Brinkley, Keith Richards,
• 19:46
  Speaker 1: and Bruce Willis have owned properties there, and now more
• 19:49
  Speaker 1: people are getting in on the action. We've had fairly
• 19:52
  Speaker 1: consistent growth and in en obviously that reached an apex
• 19:57
  Speaker 1: kicked in and we virtually doubled the kind of numbers
• 19:59
  Speaker 1: that we had. In twenty nineteen, after years of steady growth,
• 20:02
  Speaker 1: the island's real estate sales increased one hundred and fifty
• 20:05
  Speaker 1: eight percent and condominium sales nearly tripled, massive jumps that
• 20:10
  Speaker 1: portend another strong year in two, So what's driving the growth.
• 20:14
  Speaker 1: Grace Bay Resorts CEO Mark Durleyot points to a few things.
• 20:17
  Speaker 1: All of our properties are residential resort hotels. We're able
• 20:21
  Speaker 1: to sustain our tourism product year round and also brand
• 20:25
  Speaker 1: these properties as stillbone hotels, and it makes the customer
• 20:28
  Speaker 1: who's not a buyer of residential makes them comfortable on
• 20:32
  Speaker 1: the tourism side. So there's two markets happening at the
• 20:35
  Speaker 1: same time, ownership and those who are just coming as
• 20:37
  Speaker 1: a tourist. Southby's Nina seegin Thaler was the listing agent
• 20:40
  Speaker 1: when Bruce Willis sold his property on the island. She
• 20:43
  Speaker 1: tells me the environments comfortable for visitors. In many ways,
• 20:46
  Speaker 1: it is an extension of the US. On the other hand,
• 20:49
  Speaker 1: it is a British overseas territory. So it's just a
• 20:52
  Speaker 1: wonderful combination. We used the US dollar, English is the
• 20:56
  Speaker 1: spoken language, the only correctives. We drive on the left
• 20:59
  Speaker 1: side of the road. And the tax component opens up
• 21:01
  Speaker 1: more opportunity for investment. We have a one time tax
• 21:05
  Speaker 1: that table upon purchases. It's called a stamp duty. And
• 21:08
  Speaker 1: then we have import duties and you know, their local
• 21:12
  Speaker 1: business license fees and work permits, feeds and accommodations taxes,
• 21:16
  Speaker 1: but on property on an ongoing basis, you do not
• 21:19
  Speaker 1: have a property tax yet. Nina and Mark have high
• 21:21
  Speaker 1: expectations for Turks and Caicos real estate market in two.
• 21:25
  Speaker 1: But how might luxury real estate properties hold up in
• 21:27
  Speaker 1: an inflationary environment where interest rates are rising the housing
• 21:31
  Speaker 1: market shifting here in the US, US new home sales
• 21:34
  Speaker 1: recently plunged to its lowest points since the start of
• 21:36
  Speaker 1: the pandemic, and interest rates and inflation are slowing the
• 21:40
  Speaker 1: economy and squeezing a lot of buyers out of homes.
• 21:42
  Speaker 1: I think there's becoming a bay economic divide with the
• 21:45
  Speaker 1: high and the low, and the high just keeps getting
• 21:46
  Speaker 1: higher and the wealdy keeps getting wealthier. And I think
• 21:49
  Speaker 1: that's what we're seeing that fall out in the luxury market.
• 21:52
  Speaker 1: Correy sass Hour is an associate real estate agent in
• 21:55
  Speaker 1: another top luxury market, Westchester County. She tells me buyers
• 21:59
  Speaker 1: were moving quickly to start the year, but she noticed
• 22:01
  Speaker 1: things started to slow a bit in April, one of
• 22:03
  Speaker 1: the most popular times for showings in the area. I
• 22:05
  Speaker 1: think people feel like they're getting hit from every direction,
• 22:08
  Speaker 1: from gas to furniture to their kids classes. And at
• 22:13
  Speaker 1: some point, if you're not making enough to subsidize the inflation,
• 22:17
  Speaker 1: then that's going to prevent people from be able to
• 22:19
  Speaker 1: afford the monthly that they need to pay. Even if
• 22:21
  Speaker 1: buying word of slow In Turks and Caicos, property owners
• 22:23
  Speaker 1: can supplement their income. Here's Mark Durley out in, the
• 22:26
  Speaker 1: CEO of Grace Bay Resorts. Once again, we have this
• 22:29
  Speaker 1: perpetual tourism market that helps to prop up all of
• 22:33
  Speaker 1: these single family homes because if there is a void
• 22:36
  Speaker 1: in the residential investment market, which we had in two
• 22:40
  Speaker 1: thousand and eight to twelve, the reason it didn't freefall
• 22:43
  Speaker 1: is those owners were able to rely on the tourism
• 22:46
  Speaker 1: market to continue to help support economically the cost of ownership.
• 22:51
  Speaker 1: Nina segn Thaller of Southebyes says that's pretty common. Most
• 22:55
  Speaker 1: owners do not spend the entire years here. During the
• 22:58
  Speaker 1: time that they're not here, it's really nice to be
• 23:01
  Speaker 1: able to offset the operating costs with the rental of
• 23:05
  Speaker 1: a property. Dream Hotel Group CEO J Stein tells Bloomberg
• 23:09
  Speaker 1: he expects a surgeon travel this year, which should give
• 23:11
  Speaker 1: property owners a lot of opportunity to rental. Leisure is
• 23:14
  Speaker 1: not only back, it's it's stronger than it ever was
• 23:17
  Speaker 1: because what we call leisure people traveling from business and
• 23:20
  Speaker 1: leisure that a lot of them are working remotely anyway.
• 23:23
  Speaker 1: So we used to just go work for a weekend.
• 23:25
  Speaker 1: Now you can go for Florida's and still work on
• 23:27
  Speaker 1: a couple of those days. So the leisure is actually
• 23:29
  Speaker 1: stronger than it ever was, more than just back. And
• 23:31
  Speaker 1: there's even a question of buying wood slow in a
• 23:33
  Speaker 1: place like Turks and Caicos. Sass Hour points out that
• 23:36
  Speaker 1: in her experience, many people looking to buy luxury property
• 23:40
  Speaker 1: usually are able to There's more luxury buyers now than
• 23:43
  Speaker 1: ever before. I think if you asked them in eighteen
• 23:46
  Speaker 1: to nineteen and fifteen to sixteen, what was the trajectory,
• 23:49
  Speaker 1: how many luxury sales were there, how many were the
• 23:52
  Speaker 1: d's on the market, or however they kind of want
• 23:54
  Speaker 1: to look at it, I think you'll see a very
• 23:56
  Speaker 1: similar situation. While there are pressures all over the U. S.
• 23:59
  Speaker 1: House market, Turks and Kikos has shown it was able
• 24:02
  Speaker 1: to weather the economic storm of COVID and with its
• 24:05
  Speaker 1: limited supply, broad appeal and consistent growth. It's once again
• 24:09
  Speaker 1: poised to weather economic pressures. In two for Bloomberg News
• 24:13
  Speaker 1: in New York. I'm Eric Mollow. Eric Mallow, who produces
• 24:17
  Speaker 1: this show and does a fantastic job of it every day.
• 24:20
  Speaker 1: Somehow found the time to put together that package on
• 24:23
  Speaker 1: turks and Kikos. Have you been Shinali? Maybe that's what's next.
• 24:26
  Speaker 1: That should be what's next for us for sure. Thanks
• 24:32
  Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
• 24:35
  Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast
• 24:39
  Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
• 24:43
  Speaker 1: Matt Miller. Pen On fal Sweeney I'm on Twitter at
• 24:46
  Speaker 1: pt Sweeney. Before the podcast, you can always catch us
• 24:49
  Speaker 1: worldwide at Bloomberg Radio