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Stocks Jump on Consumer Confidence, Trade Talks · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the
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  Speaker 2: This is Bloomberg Intelligence Radio. All right, let's get to
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  Speaker 2: that consumer confidence on number jumping the most in four
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  Speaker 2: years on outlook for better economy as well as trade truth.
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  Speaker 2: Joining us now to break down those numbers even more
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  Speaker 2: is Stephanie Gusha, a senior economist at the conference Sport.
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  Speaker 2: Is it truly alle relief on trade? At this point?
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  Speaker 3: It's largely We split our sample around May twelve to
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  Speaker 3: see whether there was a stronger improvement in the second
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  Speaker 3: half of the month, and there was, sorry, truly after
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  Speaker 3: the trade did with CHI now that we saw strongest
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  Speaker 3: improvement in our indicators, especially the expectation component.
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  Speaker 4: So in your index here, what's the makeup of kind
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  Speaker 4: of consumer confidence? Is it how much is kind of jobs?
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  Speaker 4: Do I have a job? Or is it more about inflation?
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  Speaker 4: What am I going to have to pay for stuff?
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  Speaker 4: Just general economic concerned? How is that waited?
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  Speaker 3: So it's a lot about jobs, both in the current
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  Speaker 3: situation and in the expectations components. And one thing to
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  Speaker 3: notice that the current job situation is the only component
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  Speaker 3: of the index that didn't improve this month, So there
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  Speaker 3: are still some concern about, you know, where the label
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  Speaker 3: market is going right now, and we don't explicitly have
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  Speaker 3: an inflation component in the index. However, we ask consumers
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  Speaker 3: about how they feel about their future income, which could
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  Speaker 3: be capturing, you know, whether they are going to get
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  Speaker 3: enough money to pay for what they need, and that
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  Speaker 3: that's one of the components of the expectation component. But
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  Speaker 3: it's not really about inflation overall. It's more about the
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  Speaker 3: label market.
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  Speaker 2: Okay, Stephanie, thank you very much. Really interesting, and also
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  Speaker 2: we have not recouped though the big decline that we've seen.
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  Speaker 2: It's not a full v yet that recovery for consumer
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  Speaker 2: confidence a right, Stephanie Kusha joining us there from the
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  Speaker 2: conference board.
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  Speaker 2: Alex still here alongside pauls we need. This is Bloomberg
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  Speaker 2: on realku and your smart tv anywhere where you get
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  Speaker 2: your news. So, the news over the weekend as well
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  Speaker 2: as this morning, is President Trump rolling back it's tariff
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  Speaker 2: deadline and tariff amount on the European Union, saying that
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  Speaker 2: it's speeding up, it's treading negotiations and he thinks this
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  Speaker 2: is a positive event. Now that deadline's extended to July ninth,
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  Speaker 2: after a call this weekend with the European Commission President
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  Speaker 2: Ursula Vonderlyon. Let's get more on this with Roz Matheson,
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  Speaker 2: Bloomberg News director for Europe, the Middle East and Africa.
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  Speaker 2: Ros What do we know that the EU Ursula Vonderlyon
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  Speaker 2: offered President Trump to make him feel so good about it?
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  Speaker 5: Well, part of it might have just been that that
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  Speaker 5: phone call seemed to have gone smoothly, but also what
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  Speaker 5: we saw from the markets when he threatened the fifty
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  Speaker 5: percent tariff, maybe al so perhaps entered into Donald Trump's thinking.
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  Speaker 5: But as you say, we do know after that call
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  Speaker 5: that he walked back that threat. So we've got a
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  Speaker 5: bit more breathing space on the EU side to get
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  Speaker 5: talks going. And now the question is how can talks
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  Speaker 5: occur in a in a proper way, and what is
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  Speaker 5: the EU going to do potentially to crack open the
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  Speaker 5: door with US without giving away its own red lines,
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  Speaker 5: because the E does have a whole lot of stuff
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  Speaker 5: that is just willing, not willing to give ground on.
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  Speaker 5: We do know they seem to be wanting to now
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  Speaker 5: split up the talks a little bit, So separate all
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  Speaker 5: these big things out into smaller pieces and see if
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  Speaker 5: they can make any traction on individual things. So more
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  Speaker 5: on the political side, there's hot button issues around auto's pharmer,
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  Speaker 5: civil aircraft chips and so on, and then more technical
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  Speaker 5: level conversation around things like non tariff barriers. So split
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  Speaker 5: everything up into smaller compartments again and see if they
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  Speaker 5: can edge anything forward. But in doing so you do
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  Speaker 5: also risk fragmentation. And the question is in conversations going forward,
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  Speaker 5: do you end up with partial bits of a framework
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  Speaker 5: deal and nothing really complete? And what then happens if
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  Speaker 5: we get very very close to this July deadline and
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  Speaker 5: things are still deadlocked.
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  Speaker 4: So ross how united is the European Union in these negotiations?
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  Speaker 4: Here in these discussions do you think?
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  Speaker 5: Well, that's always the classic question, isn't it with the
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  Speaker 5: EU unity in the minute? Because it is a bunch
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  Speaker 5: of very different economies and very different politicians leading each country.
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  Speaker 5: In this case, there does seem to be a decent
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  Speaker 5: amount of unity. You're not seeing some of the bigger
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  Speaker 5: economies speak out necessarily against each other. I mean, that's
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  Speaker 5: been the weakness and the strength of the EU for
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  Speaker 5: many many decades, is trying to peel individual leaders away
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  Speaker 5: from each other. We've seen that for example on how
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  Speaker 5: to handle the war in Ukraine. But on this they
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  Speaker 5: do seem to be unified. So even some of the
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  Speaker 5: economies that have tended to side with Donald Trump are
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  Speaker 5: falling in line. The question again is like, is there
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  Speaker 5: any wiggle room between the EU and the US to
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  Speaker 5: get to some kind of framework agreement or are we
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  Speaker 5: going to see this all happen in July and then
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  Speaker 5: EU retaliation, which could be quite significant, kicks in automatically
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  Speaker 5: at that point, and so it's really downe to the
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  Speaker 5: negotiators at this point to see if they can find
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  Speaker 5: common ground and the role potential of Ursula Vonderline in
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  Speaker 5: that her chief trade negotiator been talking a lot with
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  Speaker 5: US officials like Howard Lutnick for example, and jameson Gria
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  Speaker 5: of late. Is that personal relationship going to get any
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  Speaker 5: kind of traction and are they able to represent and
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  Speaker 5: hear you collectively then as a whole.
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  Speaker 2: But that's sort of what confuses me because is it
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  Speaker 2: concrete stuff or is it just having a good phone
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  Speaker 2: call with President Trump? And like, what can Europe actually
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  Speaker 2: offer thus concrete that's not going to make all the
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  Speaker 2: other twenty six members mad?
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  Speaker 4: Well, that's the thing.
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  Speaker 5: It does seem to be quite personal, right. I was
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  Speaker 5: thinking about recently, even to Donald Trump's first term in
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  Speaker 5: office and some of the trade tensions with China for
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  Speaker 5: example that came up at the G twenty's and so on,
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  Speaker 5: and how it always took like a meal with sieging
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  Speaker 5: Pings sitting down at a table together, that leader level
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  Speaker 5: conversation to break the eyes to get a thaw, even
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  Speaker 5: if it's temporary in trade tensions. We saw that with
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  Speaker 5: China over and over again. And then of course it
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  Speaker 5: all fell apart some months later and we were back
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  Speaker 5: to a trade war. So it does seem to be
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  Speaker 5: quite personality dependent, and it's about again the EU does
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  Speaker 5: have its red lines. It's not going to roll over
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  Speaker 5: in order to get a deal. Equally, it's about letting
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  Speaker 5: Donald Trump feel like he's got a win on some
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  Speaker 5: parts of it potentially, So it's a very careful exercise.
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  Speaker 5: In this case, the EU is saying, you know, these
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  Speaker 5: negotiators are representing all of us. You can't try and
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  Speaker 5: come to each leader individually and peel us off. The
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  Speaker 5: representatives for us are the people who are talking to you.
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  Speaker 5: So this is the EU chief negotiator, for example Shaskovich.
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  Speaker 5: It's also Oshel of Vondeline and those in the Commission.
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  Speaker 5: So they are holding the line on that versus coming individually.
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  Speaker 5: But again, do they have that personal rapport that's going
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  Speaker 5: to get this over the line.
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  Speaker 4: Ross, thanks so much for joining us. Really appreciate getting
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  Speaker 4: your reporting. Ross Math as a news director for you're
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  Speaker 4: the Middle East and Africa for Bloomberg News. Joining us
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  Speaker 4: via zoom from our London headquarters at Queen Victoria Street.
• 7:52
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch US live
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  Speaker 2: All Right, One of the great stories over the weekend,
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  Speaker 2: I mean great as in you can really sink your
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  Speaker 2: teeth into the ongoing drama of this is President Trump's Administration's.
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  Speaker 6: Attack on Harvard.
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  Speaker 2: The latest is the administration's moving to council all remaining
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  Speaker 2: federal contracts with Harvard University, worth an estimated one hundred
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  Speaker 2: million dollars. The latest in this battle with this university.
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  Speaker 2: Janet Lauren is Bloomberg Higher Education finance reporter and joins us. Now,
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  Speaker 2: what's the end goal?
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  Speaker 6: Do you think is Harvard.
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  Speaker 2: Kind of understands this from the Trump administration.
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  Speaker 6: That's a really good question, because it seems like several
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  Speaker 6: times a week we're seeing a new financial tool being
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  Speaker 6: hammered down on Harvard. The Trump administration has a lot
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  Speaker 6: of issues with Harvard, and many of these elite universities,
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  Speaker 6: Harvard and Columbia have been single dart. Harvard is the
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  Speaker 6: richest and the oldest university in America, so it has
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  Speaker 6: a particular status. But the administration is outlined several things
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  Speaker 6: in addition to them not doing enough about anti Semitism.
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  Speaker 6: They say they're discriminatory in hiring and admissions, and what
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  Speaker 6: does that mean. They you know, it's related to diversity
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  Speaker 6: and DEI that they're potentially not picking the best candidates
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  Speaker 6: and other candidates are being excluded. He is a problem
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  Speaker 6: with the ideal ideological bias, as he said, which is
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  Speaker 6: very left leaning at Harvard, and they should they should
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  Speaker 6: promote more viewpoints than just one. And Harvard has said
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  Speaker 6: they don't disagree with him on some of these points,
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  Speaker 6: but they don't agree with the way Trump is trying
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  Speaker 6: to implement this with you know, huge financial penalties. And
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  Speaker 6: people say, well, Harvard's a private university. Why does the
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  Speaker 6: US government have a say in this? And the US
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  Speaker 6: government gives universities like Harvard, you know, billions of dollars
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  Speaker 6: in invest in grants, grants, it's true, grants and contracts.
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  Speaker 6: But the federal government also allows student visas. They allow
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  Speaker 6: international students to come to study at universities.
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  Speaker 2: Well, not necessarily. Now Politico is just reporting Paul. The
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  Speaker 2: US orders halts a student visa interviews, so there is that.
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  Speaker 3: Okay, So student visas.
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  Speaker 6: Are regulated, you know, through the US government, and Harvard
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  Speaker 6: has almost seven thousand international students. If you look at
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  Speaker 6: the international community in total, it's more like ten thousand people,
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  Speaker 6: which doesn't the lower number doesn't include people who are
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  Speaker 6: here for fellowships or doing research and their families and
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  Speaker 6: international students typically pay the full price. So there's more
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  Speaker 6: than a million of them in the US, and it's
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  Speaker 6: really propped up a lot of universities, including Harvard.
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  Speaker 4: What's the legal path that Harvard has taken here?
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  Speaker 6: So Harvard suit immediately and there's a temporary restraining order.
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  Speaker 6: There's a hearing coming up this week, but procedurally that
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  Speaker 6: we'll see what happens. But if you're an international student
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  Speaker 6: and you're thinking, well, it's been my dream to come
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  Speaker 6: to Harvard, should I go. I'm going to do a
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  Speaker 6: program for two years or an undergrad for four years,
• 11:20
  Speaker 6: but maybe I'm not going to complete it. It's introducing
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  Speaker 6: a huge amount of uncertainty in this calculation for students.
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  Speaker 4: And what's happening on the ground. I could tell for
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  Speaker 4: my time at Duke, kids are choosing not to come
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  Speaker 4: to the US right in the study elsewhere, and some
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  Speaker 4: of the best and brightest going to other places. And
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  Speaker 4: what do those students do after they get the degrees?
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  Speaker 4: They tend to stay there, right, right.
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  Speaker 2: Because why would you run the risk of going there
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  Speaker 2: for a year and all of a sudden being asked
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  Speaker 2: to leave. Why not go some you know, Oxford is
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  Speaker 2: just nice? Go ahead?
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  Speaker 4: Why not?
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  Speaker 6: Exactly?
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  Speaker 2: Okay, So what happens like what I mean, Harvar's going
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  Speaker 2: through the courts, But that's going to take forever, right.
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  Speaker 6: No, I mean, you think about COVID when there was
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  Speaker 6: a huge amount of uncertainty, people had the option of
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  Speaker 6: taking a gap year, and the colleges were very accommodating
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  Speaker 6: in that there's less at some point the pandemic was
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  Speaker 6: going to end in real life, would return on campus.
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  Speaker 6: But no, it could have a large impact for universities
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  Speaker 6: in their bottom lines if they decide to go elsewhere.
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  Speaker 4: So again, it's I'm guessing every other university in the
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  Speaker 4: country is just kind of keeping their head down hoping
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  Speaker 4: they don't get into those sites of President Trump. Is
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  Speaker 4: there a sense that this is going to have a
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  Speaker 4: real chilling effect on just higher education in general, in
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  Speaker 4: terms of investment, in terms of recruiting the best and
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  Speaker 4: brightest students and faculty and all that kind.
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  Speaker 6: Of Well, there are a couple of things going on
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  Speaker 6: within higher education, as Paul. You know, the cost of
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  Speaker 6: it is something that I don't think any American is
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  Speaker 6: going to disagree with. It's very high. You know, there's
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  Speaker 6: a whole system of discount but you know, if you
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  Speaker 6: look at some of the richest colleges, you know, more
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  Speaker 6: than half actually pay the full price. Why is a
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  Speaker 6: year at say Harvard Law School one hundred and twenty
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  Speaker 6: thousand dollars. Why do students take six years to graduate
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  Speaker 6: from college. There's a lot of issues within higher education
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  Speaker 6: that should be addressed, and I think the American public
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  Speaker 6: would like to see some of those things answered. But
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  Speaker 6: the system is, you know, there's a lot of federal
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  Speaker 6: money in this system, so in some ways the federal
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  Speaker 6: government certainly has a right to ask a lot of questions.
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  Speaker 5: Yeah.
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  Speaker 4: Yeah, interesting, it's a tough time spread, oh my gosh. Yeah,
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  Speaker 4: and they already had some of the just the fact
• 13:44
  Speaker 4: that there are fewer fewer candidates.
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  Speaker 6: You know, because of pure demographics.
• 13:49
  Speaker 4: Yeah, demographics.
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  Speaker 2: And yeah, there was one area where you didn't think
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  Speaker 2: would be affected by elections like you might have thought education.
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  Speaker 2: But anyway, all right, Jane, thanks a lot. Jane Lauren
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  Speaker 2: Boomberg higher education finance reporter on the latest President Trump
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  Speaker 2: versus Harvard University very much sort of as we walk
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  Speaker 2: through that issue between the two of them.
• 14:07
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  Speaker 2: They cover two thousand companies and one hundred thirty industries
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  Speaker 2: all around the world. All right, as we have raids
• 14:34
  Speaker 2: still treading around that five percent level for the thirty year,
• 14:37
  Speaker 2: despite the fact that rates have come down a touch
• 14:40
  Speaker 2: over the last two days, it does bring into question
• 14:42
  Speaker 2: what happens with commercial real estate. Patrick Wilson, portfolio manager
• 14:46
  Speaker 2: of Center Square Investments, joins us. Next, Okay, what's the
• 14:49
  Speaker 2: remarket looking like right now?
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  Speaker 7: Yeah, so it's been very interesting, to say the least
• 14:56
  Speaker 7: to start the year. Obviously, trade policy has affected all
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  Speaker 7: asset classes across the economy, but in terms of reachs,
• 15:04
  Speaker 7: you know, we are seeing things like interest rate volatility. Obviously,
• 15:08
  Speaker 7: reats are a pretty capital intensive business, so the issuing
• 15:12
  Speaker 7: of debt and equity capital has had to be really
• 15:15
  Speaker 7: precisely timed. I mean, just this year, we've been from
• 15:18
  Speaker 7: a four point eight percent yield on the tenure to
• 15:21
  Speaker 7: bottoming at three ninety nine. Depending on where you were
• 15:24
  Speaker 7: in and when you were in the queue, it could
• 15:27
  Speaker 7: either scuttle or even postpone some of your debt and
• 15:30
  Speaker 7: equity issuance on that front. So it's been times where
• 15:34
  Speaker 7: we've also seen development starts year to date have also
• 15:39
  Speaker 7: slowed on the reach side and commercial real estate as
• 15:41
  Speaker 7: a whole, And obviously that relates to the tariffs and
• 15:44
  Speaker 7: the thread of cost overruns and whatnot being a little
• 15:47
  Speaker 7: bit more difficult to forecast, and so it's kind of
• 15:50
  Speaker 7: taking a wait and see approach to the market a
• 15:52
  Speaker 7: little bit.
• 15:53
  Speaker 4: So in the commercial real estate space, how's that the
• 15:55
  Speaker 4: deal flow been. It doesn't seem like I'm reading a
• 15:59
  Speaker 4: lot about deals getting done.
• 16:02
  Speaker 7: Yeah, it's a great point. There's if you roll back
• 16:06
  Speaker 7: the clock, we actually came into this year at very
• 16:09
  Speaker 7: healthy levels. That was when the agenda on the Trump
• 16:13
  Speaker 7: administration was going to be very pro growth. People were
• 16:16
  Speaker 7: a little bit more gung ho and more optimistic about
• 16:19
  Speaker 7: our economic outlook. And then as we roll through early
• 16:22
  Speaker 7: April and what's occurred since, there's definitely been some trepidation
• 16:27
  Speaker 7: coming through. And so we've seen things like property transactions
• 16:31
  Speaker 7: by count, so property transaction count and portfolio acquisitions, Larger
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  Speaker 7: M and A deals certainly get you postponed or in
• 16:39
  Speaker 7: some cases possibly have been pulled back as a result
• 16:41
  Speaker 7: of just not having that same amount of confidence on
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  Speaker 7: where the economy is heading.
• 16:46
  Speaker 2: What areas in the market can kind of weather this storm, right,
• 16:49
  Speaker 2: Like we obviously had the data center build up, but
• 16:51
  Speaker 2: even that has been trimming around the edges, right and
• 16:54
  Speaker 2: sort of changing the type of investments that's going into
• 16:57
  Speaker 2: AI and data centers as well.
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  Speaker 7: Yeah, so you're speaking more broadly to just areas where
• 17:05
  Speaker 7: you could.
• 17:06
  Speaker 2: Well typically like the bull case for Readze was data centers, right,
• 17:10
  Speaker 2: But then now it does feel like that narrative is
• 17:13
  Speaker 2: not changing but shifting a little bit and trimming like
• 17:15
  Speaker 2: maybe we're going to go more to the infront stage,
• 17:17
  Speaker 2: so you need to build different types of centers in
• 17:20
  Speaker 2: different areas versus the huge behemoth data centers.
• 17:24
  Speaker 7: Yeah, no, that's definitely fair. You know, you're speaking to
• 17:28
  Speaker 7: the transition from training in data centers often far flung
• 17:32
  Speaker 7: where power and land was widely available, to now bringing
• 17:36
  Speaker 7: it more to the inference phase of the data center buildout,
• 17:39
  Speaker 7: which has to be closer to population density. So what
• 17:42
  Speaker 7: we see here is that making its way into main
• 17:45
  Speaker 7: street America where we start seeing you know, Microsoft Copilot
• 17:49
  Speaker 7: being integrated into your workflows and that has to have
• 17:52
  Speaker 7: a lower latency. So we're in the crux of kind
• 17:56
  Speaker 7: of that transition. We've seen over the last few quarters
• 17:58
  Speaker 7: more and more discussion inferencing truly taking place in the
• 18:03
  Speaker 7: data center reads. So those would be Digital Realty TICK
• 18:06
  Speaker 7: or DLR EQUINIX eqi X, those would be two platforms
• 18:10
  Speaker 7: that are starting to speak to where they have a
• 18:12
  Speaker 7: greater amount of network, dense collocation and facilities where that
• 18:17
  Speaker 7: latency does matter, and you start to see that AI
• 18:20
  Speaker 7: inferencing take place. And so that's kind of a new
• 18:22
  Speaker 7: phenomenon over the last few quarters.
• 18:25
  Speaker 4: So as Michael McKee walks into the studio, I naturally
• 18:28
  Speaker 4: think of senior housing package. Wow, that's got to be
• 18:36
  Speaker 4: a long term bullish story in your space.
• 18:40
  Speaker 7: Yes, it is. At Center Square. We really do have
• 18:44
  Speaker 7: a very optimistic view and outlook for the senior housing space.
• 18:47
  Speaker 7: So we in the demographics, not just in the US,
• 18:51
  Speaker 7: but across the globe, there is the concept of the
• 18:54
  Speaker 7: baby boomer generation moving through a bit of you know,
• 18:57
  Speaker 7: pigging the python, if you will, as we move through
• 19:00
  Speaker 7: that age cohort and they're sitting on a profound amount
• 19:04
  Speaker 7: of equity capital in their homes, so the capacity to
• 19:07
  Speaker 7: pay is very, very high, and demographically speaking, this kind
• 19:10
  Speaker 7: of speaks to that secular demand that we're targeting at
• 19:12
  Speaker 7: Center Square right now to kind of buffer any economic weakness.
• 19:16
  Speaker 7: What we see is the keger in the eighty plus
• 19:19
  Speaker 7: population that we've seen over the last really twenty years
• 19:22
  Speaker 7: has been hovering at one one and a half percent,
• 19:25
  Speaker 7: and starting about next year, that keger will increase to
• 19:28
  Speaker 7: four four and a half percent of that eighty plus population.
• 19:32
  Speaker 7: And we don't see, again real estate being a very
• 19:35
  Speaker 7: supply and demand driven industry, we don't see really any
• 19:39
  Speaker 7: supply on the horizon that will satiate that uptick in demand.
• 19:44
  Speaker 7: So combining the capacity to pay along with the really
• 19:47
  Speaker 7: really favorable demographic led demand coming through, we see that
• 19:52
  Speaker 7: to be very very favorable for senior housing going forward.
• 19:55
  Speaker 2: All right, really great, really appreciate it. Come back. We
• 19:57
  Speaker 2: love to a continue to update from you. Patrick Wilson
• 20:00
  Speaker 2: joining us on the reed market and where there is
• 20:03
  Speaker 2: still value. Patrick Wilson, Portfolio manager of Center Square Investment.
• 20:07
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