September 3, 2025 • 45 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Wall Street traders kept piling into bets the Federal Reserve will cut rates in September as weak labor data lifted bonds. Those wagers also propped up stocks, which halted a two-day rout amid a rally in big tech.
Just days ahead of the US payrolls report, a drop in job openings to the lowest in 10 months saw traders almost fully pricing in a Fed cut this month and projecting at least two in 2025. Treasuries bounced after a slide that put the 30-year yield close to 5%. While most shares in the S&P 500 actually fell, Alphabet Inc. led gains in megacaps as Google dodged a forced sale of Chrome.
The slide in vacancies indicates companies are becoming more cautious and selective with their hiring as they attempt to gauge the impact of tariffs on the economy. In addition to the openings data, the pace of hiring has slowed and it is taking longer for unemployed people to find another position.
Before that, Friday’s jobs data will be a crucial input for Fed officials. Some are less concerned about the slowdown in payrolls growth because it’s being accompanied by a decline in the participation rate. They’re also wary of reducing borrowing costs when inflation is gradually increasing.
Today's show features:
- Bloomberg Economics US and Canada Economist Stuart Paul details the Federal Reserve’s August Beige Book release
- Jason Granet, Chief Investment Officer of BNY, on the market outlook and the Federal Reserve
- Jaime Leverton, CEO of ReserveOne, on the role of crypto treasury companies and her firm’s IPO plans
- Rick J. Caruso, Founder and Executive Chairman of Caruso, on the hospitality and commercial real estate business, and California economic recovery from this year’s wildfires
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Beige Book is at published day times the year, fifty
one pages, just crossing the Bloomberg terminal, and it's all
about anecdotal information on the current economic condition. So let's
get to it deeper analysis with our own Stuart paul
Us and Canada economists for Bloomberg Economics use here in
our Bloomberg studio. All right, so what jumps out at you, Stuart?
Speaker 3 (00:50):
All told, this Beige Book released just today is overall
more negative than everything that we saw in July. Most
of the twelve federal reserve districts reported little or no
change in economic activity overall, most notably, real wage growth
seems to be dismal, and it's weighing on consumer spending
and consumer activity, focusing on those wages and the labor
(01:14):
market that's producing those wages. Eleven of the twelve Federal
Reserve districts describe little or no net change in overall
employment levels, corroborating basically what we've seen in the payrolls
over the last several months. Looking at prices a little
bit more inflationary than everything we saw in July. Ten
of the twelve districts characterize price growth as moderate or modest.
(01:37):
The other two districts strong input price growth that's outpacing
moderate or moderate or moderate or modest selling prices, and
that's going to be the thing that we're going to
be thinking about with the inflation landscape going forward. There
are some tariff price pressures that are going into the pipeline,
and the question is just how much can consumers allow
(01:58):
those prices to rise before demand retrenches. And the Beige
Book right now is showing that demand is retrenching because
of weakening real wages.
Speaker 4 (02:06):
On that Stewart reading from the Beige Book, it says
QUOTE contacts frequently cited economic uncertainty and tariffs as negative factors.
Speaker 5 (02:14):
New York reported that Quote.
Speaker 4 (02:15):
Consumers were being squeezed by rising costs of insurance, utilities,
and other expensive expenses. The Beige book, also noting that
contacts reported flat to declining consumer spending because from many households,
wages were failing to keep up with rising prices. What
does all of this mean for the FED meeting later
this month and that twenty five basis point cut that
(02:37):
pretty much everyone out there is expecting.
Speaker 3 (02:38):
Everyone's expecting it. But what this really ends up coming
down to is counting the votes on the FOMC, on
that Monetary policy making committee. So one of the things
that's nice about the page book we get to look
at activity in each of the Federal Reserve districts. I
think for September, the most important district is Kansas City.
(02:58):
Jeffrey schmid Of voter president of the Federal Reserve Bank
of Kansas City. Right now, we're seeing that economic activity
was generally flat, employment declined modestly, wage pressures remains subdued.
All of those factors might mean that one of the
most hawkish voters on the committee could be a little
bit more open to the idea of voting for a cut.
(03:21):
You could see that true coalition building around exactly what
Governor Waller wants. What San Francisco Fed President Daily has
said she's wide open to and that's a cut at
this upcoming US.
Speaker 2 (03:33):
Are you saying because he's been so hawkish and then
he's seeing moderate activity, that that's why this is an
interesting Fed governor to focus on.
Speaker 3 (03:40):
That's exactly right. He's one of the he is, by
our natural language processing tools, the most hawkish member of
the committee. He is a voter, and conditions locally are weak,
conditions locally likely warrants a cut in his eyes.
Speaker 4 (03:55):
Do conditions locally inform the way that voting members of
the federal who represents certain districts will vote is that
their responsibility is that their job to represent their districts.
Speaker 3 (04:07):
It's not specifically enumerated in the Federal Reserve Act that
they must set policy according to conditions locally. But the
reason why the districts are divided up the way they
are so that everybody around the country has someone who
is representing their interest. And similarly, there are requirements on
the Board of Governors that the composition of the governors
(04:29):
are supposed to represent conditions around the country. So these
are important qualitative aspects of local conditions that feed into
the decision making process. Do we know for certain how
any one person is going to vote no. Certainly not.
But when we see conditions cooling in a district that
is presided over by one of the more hawkish members,
(04:49):
you would think they might start pivoting a little bit
more dubbish. And we can see that coalition building around
the cuts.
Speaker 2 (04:55):
Let's not forget we get some inflation prints before the
next ved decision, we get the monthly jobs on FREDA.
There's a lot that still could come to the Fed
that could impact their decision. The other thing, though, and
let me just roll this into it, Stewart, this possible
legal rollback of tariffs, which could be this is a
major uncertainty. I know the President said yesterday some urgency
to make this decision, like, let's figure this out sooner
(05:17):
rather than later. Is the FED going to err on
the side of holding off on any kind of move
because there is still some uncertainty? Are there enough evidence,
are a growing number of evidence that the economy is
slowing that it does make sense to cut rates of
some sort.
Speaker 3 (05:32):
I think that there is enough evidence that it's been
accumulated when you look across the broad swath of indicators,
whether it's real wage growth, whether it's the pace of hiring,
whether it's some of the anecdotal data that we're getting
just today that a cut is warrant to the question
is whether they want to do it in September or
whether they want to do it a little bit further
down the line. From an economic perspective, it doesn't matter
(05:54):
that much. They could wait until December if they wanted to,
They could wait until twenty sixteen if they want to.
Speaker 5 (06:00):
Two.
Speaker 3 (06:00):
But it looks like the coalition probably is there based
on the data that we're seeing, based on the anecdotes
that we're seeing, to deliver a cut in September.
Speaker 2 (06:07):
Steven Maron right, we've got hearing tomorrow. President Trump is
very eager to get him in place on the FED board.
How might that change some of the composition and change
all of the discussions that happen around the table at
the FED.
Speaker 3 (06:19):
You know that you'd get another voice that's advocating for
a cut, and I expect that he will be confirmed
in time to vote on the seventeenth. And again, it's
just part of that coalition that's building.
Speaker 2 (06:30):
All right, We're going to leave it there. So appreciated
our own Stuart paul Us and candidate economist at Bloomberg
Economics right here in our studio.
Speaker 5 (06:38):
Stay with us.
Speaker 4 (06:38):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (06:46):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (07:00):
It's a crypto because there is lots of news happening
in the world of crypto. Michael Novogratz's Galaxy Digital is
offering a version of its Nasdaq list and shares that
can be traded on the Salona blockchain, aiming to spur
similar tokenization efforts, and an update on the WLFI token.
We talked about this a lot yesterday on Bloomberg. Crypto
promoted by the President's Family, which launched with ambitions of
(07:21):
serving as the backbone of a new digital ecosystem, It
became mired in turbulence and instability within an hour, so
that's something we're watching closely. For more on crypto, we
are joined by Jamie Leverton, CEO of Reserve One. Jamie
joins us here in the Bloomberg Interactive Broker's studio. Jamie
Reserve one calls itself quote an equity vehicle offering institutional
(07:42):
great access without the complexity of direct crypto ownership.
Speaker 5 (07:47):
Unpack that for us.
Speaker 6 (07:48):
Yeah, So, I think one of the guiding principles when
we thought about how to how to build the company
and really offer something to investors that they can't access
today in an equity vehicle. So we thought about the
company and built it so that it gives almost one
stop shop, if you will, to crypto exposure, but in
(08:10):
a traditional equity So we're expecting to be eighty percent
Bitcoin and then twenty percent in alternative assets that are
really inspired by the digital asset stockpile and what we
expect to see in that stock.
Speaker 5 (08:23):
What are some of those alternatives.
Speaker 6 (08:25):
So expecting Ethereum, Solana, Ada, and XRP. Those of those
have been the tokens that have been named so far.
We do expect other tokens to be added to the
stockpile as that gets refined over the coming months.
Speaker 4 (08:39):
What determines whether or not a digital currency is added
to the stockpile.
Speaker 7 (08:43):
That's a great question.
Speaker 6 (08:44):
We aren't aware of the methodology that they're that they're using,
or how they're thinking about what is going to be
maintained in the stockpile. But the way we think about it,
it's inspired by the digital asset stockpile, but we put
our own mechanism and how we weight the assets that
we hold.
Speaker 4 (09:02):
Kind of makes sense because you're tracking something that you know,
there's always been like insider buy strategies or and now
with politicians there's like the you know, follow the what
the politicians are buying. There's those ETFs, so as we're
reminded all the time, there is an ETF for everything.
Speaker 2 (09:18):
Well, so you know, then we have to ask you
the WLFI token, the presidential token, will that be added?
Speaker 6 (09:27):
We are not hearing any rumblings that it's expected to
be added to the stockpile. Certainly, the tokens that have
been mentioned are the ones that have been been around
a long time. They've got they're in the top twenty
of tokens worldwide, they have significant free flow market cap,
So unlikely that those newer tokens would be added to
(09:48):
the stockpile at this point in time, although you.
Speaker 4 (09:50):
Never know how far are you from the target of
a billion dollar raise.
Speaker 6 (09:55):
So we announced in combination with our business combination agreement
back in July that we seven hundred and fifty million
dollars in a pipe and then in this BAC trust
there's two hundred and eighty seven point five million. So
we are going to go through the process with the
SEC to get to get final approval and then hopefully
we'll be trading under our new ticker by by the
(10:15):
end of the year. How much of that is cash,
so the funding happens at close it initially it'll it'll
all be cash and then it gets converted right away.
I put in air quotes into into digital assets. It
won't be instantaneous, of course.
Speaker 2 (10:30):
How do you make sense between the tokens that you
think have legs and longevity or something. I don't know
if that might.
Speaker 6 (10:36):
Not so, I mean meme coins were kind of all
the rage the last the past year. When we when
we think about it, it's really what is the utility
of the token, what's the ecosystem of developers that are
building on chain, what's the what does the free float
(10:57):
market cap look like? What's the ability to generate returns
on those tokens? Because we will be looking to generate
revenue from the assets that we hold on our balance sheet,
which is which is unique from from some of the
other players in the space.
Speaker 4 (11:09):
What's the profile of investors thus far, the mostly cryptonative funds.
Speaker 7 (11:14):
That came into the pie.
Speaker 6 (11:15):
Yeah, a mix of a mix of strategic, high networth
cryptonative people that we commonly see in the space. As
I think you guys know, I was the CEO of
HT eight for a number of years.
Speaker 7 (11:25):
It's a lot of a lot.
Speaker 6 (11:26):
Of familiar faces around around the digital asset treasury.
Speaker 5 (11:30):
Space that we should be aware of, so we did.
Speaker 6 (11:33):
We did name a number of our strategic partners in
the press release when we announced you might you mentioned
Mike Novagrats Galaxy Digital key partner of ours. Yes, well,
Mike was spent a lot of time on the Canadian
Exchange and actually used used to be on the board
of HUT eight prior to to my taking over as CEO.
So lots of connective tissue. We worked with Galaxy when
(11:53):
I was at HUT.
Speaker 7 (11:54):
For for yield generation on bitcoin.
Speaker 6 (11:56):
There are there are a great longtime partner and certainly
a friend of the firm for sure.
Speaker 2 (12:01):
Jimmy talk to us about the White House and the
government and the government's plan to buy bitcoin or expectations
that they would. How do you think do you think
that's going to actually happen? How will they fund it? Like,
how do you see that kind of rolling out?
Speaker 6 (12:16):
Yeah, I mean they've been pretty clear that they want
to find a way to do it in a in
a budget neutral way. So far the bitcoin that they
hold is through confiscation. I think we're not going to
really get more clarity on their intentions around the strategic
point bitcoin Reserve or the digital Asset stockpile until we
get clarity through I think the focus really within the
(12:38):
space and within Washingtonton is to get the Clarity Act passed,
which really gives us the regulatory framework we need for
the for the alternative tokens. It's it's been clear for
a while the bitcoin's treated as a commodity ethereum likely
is as well, but for the rest of the space,
we really need that Clarity Act to finalize the regulatority
(12:58):
clarity for the space, for the space that Genius gave
us for stable coins.
Speaker 2 (13:02):
Which I with Jamie Leverton, she's CEO of Reserve one
here in our Bloomberg Interactive Broker studio. Do you think
we're in a moment in time because of this administration,
and that another administration in three and a half years
could change the environment for crypto.
Speaker 6 (13:16):
Three and a half years in crypto is a very
very long period of time. I was here during Genzo's regime.
It was certainly a much much different environment, really really
difficult for those of us operating in the space in
the public markets to get things through the SEC. I
think certainly a very very welcome turn of events for
the industry with the progress that we're seeing at the
(13:39):
federal level as well as across the regulatory space.
Speaker 2 (13:42):
So are you saying that it could change or you
think like the train has left the station in terms
of crypto or could be in three and a half years,
depending on who's in the White House and the composition
of Congress, could things.
Speaker 6 (13:53):
It's possible, But Genius went through properly bipartisan right Seventeen
Democrats joined Republicans to get together Genius through. I think
as an industry we've been very very careful to keep
it by partisan and I think more and more Democrats
are getting on board with just what this could really
mean for the future of innovation for the United States,
and and I hope it stays that way.
Speaker 7 (14:13):
I hope the horse has has indeed left the barn.
Speaker 4 (14:16):
Well on politics in DC, Wilbe Ross, the former Secretary
of Commerce, is vice chair of the company, vice chairman
of Reserve one. What is his involvement, what is his input?
Speaker 7 (14:27):
Yeah, Wilbert.
Speaker 6 (14:28):
Wilbert has been absolutely great. He's the anticipated vice chair. Obviously,
nothing's official until until we get through approvals. He was
formerly a skeptic of crypto and really I think seeing
the regulatory framework change, getting getting clear clear UH policies,
and then understanding of how this how this space can really.
Speaker 7 (14:50):
Evolve in a way that's more more grown up.
Speaker 6 (14:53):
And I think we've assembled a team that is UH
that is unique in this space, a ton of public
public company experience, Washington experience, Wall Street experience. We're probably
one of the more seasoned management teams and board of directors.
And I think that gave him comfort. He was really
curious and wanted to learn and dive into the space
(15:13):
and thought what we were building was was really really unique,
and he was ready to join and go on the
journey with us. He's been incredibly incredibly supportive. We're very
lucky to have him.
Speaker 2 (15:24):
Is he owning more crypto as a result.
Speaker 7 (15:28):
I'm certain that is the case.
Speaker 2 (15:30):
So lay out the next six months, twelve months in
this space. What are you kind of watching out for.
Speaker 6 (15:35):
Yeah, I think I think we're all watching Washington really
really carefully hopeful as an ecosystem that clarity gets done
by the end of the year, and then I think
we'll see the alternative digital assets have.
Speaker 7 (15:50):
Their moment in the sun.
Speaker 6 (15:52):
Really waiting for that, for that regulatory clarity, I think
it'll bring a halo to that, to that segment of
digital assets. And lots of lots of treasury companies have
come out similar to Reserve one where the funding doesn't
come to close and then we have to we have
to buy the assets at that time. So a lot
of pent up demands still in the crypto ecosystem that
(16:12):
should prove favorable over the next three to six months.
Speaker 4 (16:16):
One of the most read stories on the Bloomberg terminal
is about Eric Trump's wealth soaring on a six hundred
million dollar American bitcoin steak. We are going to hear
from Eric Trump on Bloomberg TV in a few minutes.
The article says that the company will says it will
accumulate bitcoin using machinery in New York, Alberta, and Texas
provided by another crypto company called HUT eight.
Speaker 7 (16:35):
That is correct. Yeah, so HUT eight spun out.
Speaker 6 (16:38):
They are big proprietary bitcoin mining operations to form what
is now and officially trading today American bitcoin money.
Speaker 4 (16:48):
When they say they're accumulating bitcoin that way, that means
they're technically mining it.
Speaker 6 (16:53):
Yeah, they're mining and hobbling, just like we were doing
it HUT back in twenty twenty one.
Speaker 4 (16:57):
How much of an opportunity is left there though, versus
just going out and buying it on the open market.
Speaker 6 (17:02):
Well, certainly when you have when you're a low cost
operator like HUT eight are now American bitcoin mining, you're
able to put bitcoin in balance, you will below the
cost of acquiring and.
Speaker 2 (17:14):
You're on tract Republic.
Speaker 6 (17:16):
So we are pending SEC approval and then we would
list on the NASDAC through the dsback process.
Speaker 2 (17:22):
And that expecting still to happen in the fourth quarter
of this Shit's right, Yeah right, good stuff. Stay in touch,
Thank you, Yeah, always good to be here. Really appreciate
it and thanks. Jamie Leverton, she's CEO of Reserved One,
joining us here in our Bloomberg Interactive Brokers Studio.
Speaker 5 (17:37):
Stay with us.
Speaker 4 (17:37):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (17:46):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 7 (18:04):
Folks.
Speaker 2 (18:05):
We're going to kind of stay with our major backdrop
and go kind of from the economy to what this
all means for the financial market backdrop. We've got a
great guest. We want to get into how the data,
the White House, the geopolitics continue to shape the investment environment,
and we do have a good voice on that. Jason
Granite is with us Chief Investment Officer b and Y
here in studio. Great to be with you.
Speaker 8 (18:24):
How are you, Oh, Great to be with you since
last time I saw you. Hope you enjoyed your summer.
Speaker 2 (18:28):
I've had good summer. I can't believe it's September. I'm
kind of bracing for what September might bring.
Speaker 8 (18:33):
Yeah, back to school has kind of hit me over
the head as well.
Speaker 2 (18:36):
Exactly for the first time, I don't have somebody going
back to school in a while. Tell me how you're thinking,
because I go back to when we were together in
June at Inside b and Y Inside twenty twenty five.
You and I spoke up on the stage after Kelly
and Conway's senior counselor to the President, and we talked
a lot about presidential policies and what it means for
the investment environment. What's changed in you know, since early
(19:00):
June to now in terms of the investment environment and
how presidential policies backing it, has it gotten more certain
less uncertain?
Speaker 8 (19:08):
So, first of all, a lot has changed and nothing
has changed all at the same time. Right, we still
have a very fast paced, fluid policy environment where it
feels like every day or every few hours, there's some
other news to digest and process and what that means
for markets. On the flip side, we have a lot
more certainty because a lot of tales and a lot
(19:29):
of weird outcomes have been taken out off the table.
And so one thing that's amazing to me is the
twenty weeks leading up to right before Labor Day was
the single biggest drop in the Vicks ever over twenty
week period. So you go back twenty weeks from the
early spring through the end of the summer, and to
think about all the things that happened to have the
(19:51):
greatest drop in volatility over that period is kind of amazing.
Speaker 2 (19:54):
That's an amazing good amazing bank completely always makes me
a little nervous.
Speaker 8 (19:58):
Yes, but we've also seen rec at highs in assets.
You've seen some other things. Now, one big trend has
taken hold on the curve, and that's the curve's gotten
much steeper in the month of August alone, two ten's
we went from forty to sixty. You know, that's a
pretty that's a proper move over the course of a month,
and so you have steeple curves. I heard you just
(20:19):
discussing with your economist here, obviously because we're expecting he's
in cycled to start here in the US. I think,
to me, it's more about pace of what's going to
happen than if it will happen. But that's been those
have been some of the biggest changes in the operating
environment from the beginning of the summer.
Speaker 4 (20:36):
I was surprised that you didn't say the so called
Big Beautiful Bill being signed into law, because that was
a question in June that a lot of people had
whether or not the President would get that past the
finish line, and he did, signing into law in the
early part of July. Does that remove uncertainty from the
investing environment.
Speaker 8 (20:53):
Well, it definitely removed uncertainty because it took some of
the debt ceiling and some of the treasury market kind
of tails off the table. But actually, quite frankly, when
the when the one Big Beautiful Bill was signed, there
were lots of compromises made. If you know, it feels
like ages ago now, but some compromises made over the
last few weeks, and actually there's more. It looked more
(21:16):
like the ecosystem before than after. So while the uncertainty
of if will it get done, what will happen was cleared,
you know, and we took some debt ceiling things off
the table. And I think that's definitely one of the
things that's contributed to this broader drop in volatility, is
that these things have just been cleared from the environment.
Speaker 2 (21:35):
Do you see a slowdown in the economy, do you
see weakness and growth? Do you see weakness in labor.
Speaker 8 (21:41):
So I don't see a lot of it. So for example,
GDP second quarters revised up. You know three point three
is not something that my economics features would tell me
to get nervous about. The labor market. Clearly, Chair Pal
communicated some uncertainty there. But you know, as I, as
I joke with the team, if you were in an
(22:02):
alien studying economics and landed and looked at the data
and what it looked like, you wouldn't necessarily see a
lot of weakness. Today's Jolts figures from this morning showed
a small but that's a noisy time series. You know,
that's not exactly the most linear time series to look
at over the course of time. So you know, while
we might be starting to see some of it, you know,
(22:24):
to say I see weakness would not be you know
where I'm at.
Speaker 2 (22:28):
So what struck me in early June speaking with Kelly
and Conway first and then talking with you, But it
seemed overwhelming to me that the audience was like, it's
time for a rate cut, and I remember even kind
of I feel like cheering when it was mentioned. But
from what you're saying that things are strong enough that
maybe we don't need a rate cut. What's what's your
(22:49):
you know, informed view on what the FED needs to
do right now?
Speaker 9 (22:53):
I appreciate being informed.
Speaker 5 (22:54):
Fuck, so a few things.
Speaker 8 (22:57):
One is I have sympathy with the view that Paulson
more maybe tight than not. And so if you want
to look at it from a perspective of all right,
we can take some rates out to get closer to
or more neutral stance, I like, I'm neither here nor there.
Speaker 9 (23:13):
Like I have.
Speaker 8 (23:15):
Sympathy with that view. Look, we still have inflation that
is on the stickier side. I think the trend has
started to trend up, not continue the trend down. Core
is still pushing three not two, which are our friends
at the FED would prefer. You know, the unemployment story
and the labor story. Headline seems to be holding up fine.
As I mentioned, three point three percent growth is not
(23:37):
a story, but you know so to me, I wouldn't
be in the most rush to take rates down so fast.
And by the way, sorry, Tim, the market here is
telling you that we're not going to get to that
different of a place one year. One year is still
around three percent. It's been this two ninety to three ten.
Even with all these gyrations and moves where we're going
(23:59):
to land has not really changed out on the horizon,
and so I think that makes sense.
Speaker 4 (24:04):
Jason on the labor market, I want to hone in
on this and talk a little bit about immigration and
immigration policy and the actual effects of immigration policy, the
crackdown on illegal immigration and in your view, what that
is or could do to the economy, and also the
crackdown on necessarily legal immigration. But a decline and interest
(24:24):
of people who are not in the United States coming
to work in the United States, as we've seen over
the last few months.
Speaker 5 (24:30):
What does that do to the economy.
Speaker 8 (24:31):
It's two things I'm thinking about from that perspective. Number One,
because you're changing the denominator here, maybe the amount of
monthly job ads is lower than previously expected.
Speaker 5 (24:42):
We've we've heard this a lot from.
Speaker 8 (24:44):
Yeah, and so if people are expecting over one hundred k,
if we get something closer to what's expected here this Friday,
sixty k, that might not be a degradation in the
labor as much as kind of the hiss your old
time series might tell you should look at. That's number one.
The second is that the expectation of this would flow
through somewhere on wage pressure, and so you know, with
(25:06):
that show up in the inflation story we're seeing, you know,
I don't know if it would show up so much
in services, which which was a little bit higher this time.
But you know, the inflation story is still like I said, sticky,
but this is more on the core side, not necessarily
on the labor side. But that's where I would watch
to see if it really shows up.
Speaker 2 (25:24):
You guys are such an important firm. You see so
much in terms of money flows, investment flows. I don't
know what is that. What is that telling you about
kind of where we are, because I do think there's
still some questions about what happens from here.
Speaker 8 (25:37):
Yeah, So look, there's been there's been two themes that
have been very obvious.
Speaker 5 (25:41):
You know.
Speaker 9 (25:41):
One you've seen in the markets.
Speaker 8 (25:42):
You saw you know, the dollars down what ten percent?
That's a line from the upper left of your paper
to the bottom right of your paper, and that's been
somewhat consistent, and the steeper curve has been somewhat consistent.
Those are been two constant drumbeats, no matter what the
headlines things are, over the many many months. Those two
things have been in place. You know, one of the
things that we have seen in our data. People got
(26:03):
very excited about the flows around the world in a
but if you go back a year to last summer
over a year, so we have an eyeflow product that
the team there is wonderful. They do amazing analysis across
the data to see what happens. And what we saw
was actually there were some our scored flows showed out
from dollar assets going back to last summer and kind
(26:26):
of you know, obviously ups and downs, but the trend
and I'd say it's leveled off more recently and that
now aligns with what we see in the TIC data
that you're not seeing the big infos. So while we
saw that trend.
Speaker 2 (26:38):
Where's the money that we're coming back?
Speaker 8 (26:42):
Not necessarily, but it's not flowing out. And I think
that's that's what's showing up in markets.
Speaker 2 (26:47):
I have to squeeze my producers getting made. But are
you concerned about the independence of the feed? It was
something that we talked about in early June. We talked
about with Kelly and Conway just got about twenty five seconds.
Speaker 8 (26:58):
Yeah, so look, I look at this about how the
markets pricing and the market seeing that we're getting to
three percent either before or after any of these things.
So the market's saying we're going to get to a
fair neutral or our star or neutral rate over a
period of time. It might come faster or slower, but
that's where we're headed. And you know, I think the
market will tell you if there's more concern.
Speaker 2 (27:17):
Okay, So good to see you guys, to see Yeah,
Happy September Jason granted, Chief investment Officer b and Y.
Speaker 5 (27:25):
Stay with us.
Speaker 4 (27:26):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (27:33):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us Live on YouTube.
Speaker 2 (27:48):
Well, earlier, we got to read on the US economy
courtesy of the Fed Beige Book. In keeping with that,
we have a guest who has a very informed view
on what's going on in the US economy. His firm
is over two and a half million square feet apart
property assets all owned and operated by CARUSO, all capital
coming from within. The assets include upscale retail, resort, office,
and residential properties across southern California. He and his firm
(28:11):
have been investing in and developing property since nineteen eighty seven.
He's a philanthropist, also the president of the LA Police Commission,
was part of the board of Water end Power Commissioners
out in LA and has been involved in politics, notably
running as a candidate for LA mayor in twenty twenty two.
That's not all. He leads a nonprofit aimed at accelerating
private sector involvement in the LA area's massive rebuilding effort
(28:33):
after those wildfires earlier this year, is known as Steadfast
to LA. A lot to get to with. Rick Caruso.
He's founder and executive chairman of Caruso, as we said,
the privately held real estate company. He joins us from LA.
How are you.
Speaker 9 (28:46):
I'm doing great. Thanks for having me on. How are you?
Speaker 2 (28:49):
We're doing okay. Try to take in all the information
that seems to come at us on NonStop. I'd love
to if we may, Rick, start big and broad with you.
The US economy. You have a great vantage point. How
would you describe it right now?
Speaker 9 (29:03):
I think it's still very robust.
Speaker 10 (29:05):
To be honest, now, the data that I look at
is obviously off of our properties and our properties are
growing in terms of attendance on a double digit basis
year over years, so that's very strong. Our sales per
square foot are continuing to grow at a very strong pace,
and we have a lot of demand for retail space.
So retailers, the best in class retailers are growing. You
(29:28):
take a look at a broader picture, I think there's
a little bit of softness out there in some of
the categories. Luxury is not growing as much as it has.
There's some luxury retailers that are suffering a bit. But
I'm still pretty bullish on the consumer in the United States.
Speaker 4 (29:45):
We should remind everybody the properties and the developments that
you've done have really served at the higher end of
the consumer. People even outside of the Los Angeles area
would be familiar with the Grow for example, or perhaps
Miramar in Moncito, just around Santa barb Uh, but the
vast majority in the Southern California area. What about Southern
California's economy, that economy that you focus on. What have
(30:09):
you noticed in terms of changes in the last couple
of years. As we've heard the steady drumbeat of information
about people leaving the region because of the regulatory environment,
the cost pressures, what have you.
Speaker 10 (30:22):
Well, I think you're right, and I think it's a challenge.
So when you take a look at La City in
particular La County, you do have a very over regulated,
tough business environment, and it's very tough, especially on middle
or small businesses to operate in the city because of
the cost of operation. So you do have businesses leaving,
and that's troubling because the backbone of our economy in
(30:44):
Southern California are the small businesses.
Speaker 9 (30:48):
So you know, one of the.
Speaker 10 (30:49):
Things that we push for, I push for as just
a business person and a member of this community, is
to be more business friendly and to start deregulating so
we can grow businesses in the Los Angeles region.
Speaker 9 (31:02):
And I think as a state, we have a problem
with that.
Speaker 10 (31:04):
We have businesses leaving the state of California going to
regions that are more business friendly, have less red tape,
allow businesses to thrive on a much easier basis. So
you know, hopefully the tide will change on that, but
it's certainly an issue in Southern California and I think
California in general.
Speaker 4 (31:23):
Yet you remain rick, you have not moved to Arizona
you have not moved businesses to Arizona, to Texas, to Florida,
these areas of the country where people from California have
been going as a result of regulatory easing. One could say,
you will you stay in California.
Speaker 10 (31:42):
Well, I'm bullish on California. I'm gonna stay in California.
I believe in it. I think we should be leading
the nation in California. I think we should be leading
the nation in Los Angeles. And I also have a
practical problem. You can't pick up large projects and move them.
I can't pick up move it. So I have to
remain engage, bullish, and hope we change the trajectory.
Speaker 9 (32:03):
And I think we will. I really do.
Speaker 10 (32:05):
I think people are at a point, certainly in the
Los Angeles area, that they've realized that the path we're
going down is not sustainable. We've got a budget in
LA City that's a billion dollars out of budget. We
have revenue decreases in La City because businesses have pulled
back and left, and we don't have new capital and
investment coming into La like we should. They're going into
(32:27):
other regions. Even immediately outside of Los Angeles. You have
cities that are doing incredibly good jobs. The City of Glendale,
the city of Culver City that are more business friendly,
are safer, cleaner, more supportive of great neighborhoods, and they're
attracting the business at the cost of LA City. So
we've got to change that. But I remain optimistic the
(32:51):
change is coming soon.
Speaker 2 (32:52):
How are politics getting in the way of all of this?
And I ask it, Rick, You've got Caliphnia, Governor Newsom
and President Trump really of high stakes feuds over a
bunch of issues, whether it's California's universities, their environment, redistricting
excuse me, and other issues. I mean, talk to me
about that. And whose side are you on in all
of this?
Speaker 10 (33:14):
Well, I'm on the honestly, I'm on the side of
the people of LA and the people of California. Here's
the problem that I have with the battle that's going on.
We've got some really serious problems that need to be
dealt with, crime, shortage of housing, homelessness, et cetera, the
cost of living in California. Having an argument between the
(33:36):
governor and the president, between the mayor and the president,
a lot of name calling going on doesn't advance anybody's
cause to solving these problems. So what I hope is
that we get past the rhetoric, figure out a way
to sit down, find some common ground, and work together.
Here in Los Angeles, we have three hundred thousand acres
(33:58):
in Pacific Palisades, Malibu, and then also at an Alta
Dina that was burned to the ground the size of
two Manhattans. To put it in perspective for New Yorkers,
we need federal help, we need federal funding, and we're
getting none of that. And I don't think as the
bickering is going on and the name calling is going on,
(34:19):
that serves any purpose in advancing the negotiations, of the
discussions and getting federal help.
Speaker 4 (34:25):
In Los Angeles, we're speaking with Rick Caruso, founder and
executive chairman of Caruso, the privately held real estate company,
on the federal aid, on the federal funding. Have you
had conversations with President Trump or members of the Trump
administration expressing the need in your view, for federal help
for California in the wake of these disasters.
Speaker 10 (34:44):
I've had those discussions now with the President directly, but
I've had those discussions with intermediaries. I've certainly had that
discussion with our governor, and we need to find a
way to get those discussions at a higher level and
more productive. I know there's some talk Governor Scott or
Senator Scott was out here in Los Angeles and talking
(35:07):
about it, but it really is critical path because you
have hundreds of thousands of people that have been displaced,
You've got jobs that have been lost, you have a massive,
massive rebuilding effort that's going to take tens and tens
of billions of dollars in infrastructure.
Speaker 9 (35:22):
So we need the federal help. It just has to happen.
Well I should Yeah, No.
Speaker 2 (35:27):
I hear you, and you've since the fires. I know, Tim,
and I just kind of preparing for this. Listen to
a lot of conversations you've had with various individuals about
this in terms of what needs to be done. You
know what's interesting is need more federal help in terms
of the rebuilding efforts. So then, how do you feel
when President Trump illegally used federal troops in LA I mean,
(35:49):
if you were mayor there, how would you respond to
President Trump and his threats and use of troops like
that's going on when obviously, as you say, there are
efforts needed to do the re out.
Speaker 9 (36:01):
Well, I've been very clear the federal troops coming into.
Speaker 10 (36:04):
LA were wrong. Uh, and I don't I don't think
it should have ever happened. I would have gone to
court immediately did They finally did go to court.
Speaker 9 (36:12):
As you know, the court ruled that.
Speaker 10 (36:14):
It was an illegal use of those troops to come
into the city of Los Angeles in this region. So
it's not right to be doing that, and we don't
need to be doing that. I mean that just this
this power grab that's going on does not advance the
cause for any It just doesn't. And the division between
(36:34):
the politics is harmful to the residents of Los Angeles.
We've got to find some common ground. We've got to
act like grown ups. We've got to put our differences
aside as elected officials and figure out how to work together.
Speaker 9 (36:49):
And so I.
Speaker 10 (36:50):
Would hope that our elected officials find a way to
drop the name calling, maybe get on a plane and
get over to Washington and see if we can find
and common ground to work together. We also have the
Olympics coming here, so Los Angeles is going to be
the world stage for the United States, and we need
to be putting our best foot forward, and we're going
(37:11):
to need to be making a lot of investments in
order to do that, and again we need to have
the help of the federal government to do that.
Speaker 2 (37:18):
So Rick, I'm kind of waiting for the flood of
my emails to come into my Bloomberg because I thin
people are listening with saying, well, this is the kind
of folk you know, individual you do want in politics.
So what's your latest thinking on maybe running again for
mayor or possibly governor of the state of California.
Speaker 10 (37:35):
Well, I'm seriously looking at it, and I've got a
team of people that are working on it, and I'll
make a decision soon on that. And I'm looking at
both paths and there's good opportunities in both paths. But
now I'm just remaining focus on what we're doing at steadfast,
making sure we're getting people back in their communities as
quick as possible. Yesterday I spent the afternoon in Altadena.
(37:58):
We were giving out grants for small bits businesses to
get reopened in Altadena. We're doing the same in Palisades
and in Malibu. So those kind of efforts are incredibly
important to me, because again, small businesses are critically important
for jobs, and we're giving out about a million dollars
in grants over the next couple of weeks. So that's
(38:18):
what I'm going to stay focused on for now. Politics
will come down the road fairly soon.
Speaker 2 (38:23):
All right, we want to talk about some of those
efforts you're doing in terms of the rebuild. I got
to ask you, though, if you do run or make
a decision, would it be for mayor or for governor.
Speaker 9 (38:32):
I don't know yet. We're fine, We're going to find out.
I'll let you know.
Speaker 2 (38:35):
Okay, I'm going to hold you to it. I'm going
to hold you to it.
Speaker 4 (38:40):
Hey, Rick, I'm curious about just fire resilience in California,
especially in the wake of Palace States. I'm from the
Central Coast. I was glued to watch duty because of
the Gifford fire just a couple of weeks ago. I mean,
I spent you know, ten days just refreshing that thing,
watching the.
Speaker 5 (38:56):
Progress of that fire.
Speaker 4 (38:58):
What is the right way for California onions to be
ready for what has become just a part of daily
life for a big portion of the year.
Speaker 10 (39:08):
Well, we have to have very smart brush management, you know.
One of the problems in the Palisades, we had forty
years of brush that were not maintained by the state,
the county or the city that was rocket fuel.
Speaker 9 (39:20):
We have to have water.
Speaker 10 (39:21):
I mean, it was an unbelievable circumstance that we had
reservoirs that are empty. So the competency level at the
government and being prepared is critically important. La City was
not prepared for this fire. This fire, in my opinion,
and I think in most people's opinion that have seen
the facts, as this fire could have been prevented certainly
(39:42):
significantly mitigated in terms of the damage.
Speaker 9 (39:45):
And then we have.
Speaker 10 (39:46):
To be encouraging people to build with non combustible materials. Unfortunately,
the village that we built survived it, but it survived
it because we were prepared to fight the fire. But
equally important, we built it with non comb stable materials
and so it was able to stain the fire around us.
And we had a lot of smart people doing some things.
(40:09):
So we can build better and smarter. But we also
have to have better infrastructure. You know, the fire hydrants
need to work. They were not working in Los Angeles.
The reservoirs need to be full, and this is an
opportunity right now to rebuild Malibu, Pasadena, Alta, Dina and
Palisades in a way for the next hundred years and
(40:32):
to get the right infrastructure put in. It's an incredible
opportunity to create these communities for the future. And that's
why we need to work with the federal government, get
the right federal funding and get some smart leadership locally
that builds it back properly so that we can with
stain fires and other natural disasters in the future can
(40:54):
be done.
Speaker 2 (40:54):
The nonprofit you are leading, as we said, called Steadfast LA.
You've got comp such as Netflix, Amazon, JP Morgan, Cha,
CBRE Group, so many who are working to restore these communities.
But you guys are looking at everything you're using AI.
How long do you think it's going to take for
the rebuild and ultimately are we talking about kind of
(41:16):
the cities of the future in terms of the materials
used and how it's done.
Speaker 9 (41:21):
You know, I think it's going to take. There's going
to be phases. I look at it.
Speaker 10 (41:25):
What's going to be happening one year from now, three
years from now, five years from now, one year from now.
For example, the little downtown of the Palisades is going
to get reopen. We're going to rebuild the park. Steadfast
is leading the park rebuilding. Schools are getting back reopen
and we're involved in supporting the school systems and getting reopen.
Same and Altadena, Sam and Malibu. I think in three
(41:46):
years you're going to see a lot of the homes
back and running. We have some really encouraging programs with
an alliance of builders who are coming together to buy
in bulk, be able to build less expensive, and so
that's really important to do. And I think in five
years we're going to be in pretty good shape getting
these communities back on its feet. The biggest challenge we have,
(42:09):
honestly is the lack of diligence, the lack of urgency
from the local governments to get permits issued. And we've
got to speed that up in the red tape, both
in the county and in La City so people can rebuild.
Speaker 4 (42:24):
Hey, Rick, before we let you go, I want to
talk a little bit about your family foundation that's been
involved at this point for more than thirty years in Watts,
the Crusoe Family Foundation, and it serves organizations a slew
of organizations in the area and I'm just wondering. You know,
the focus is in healthcare, it's on education at risk kids.
(42:45):
I'm wondering why we need organizations to step in and
fill the gap that isn't necessarily provided by other organizations.
Why do we need the Crusoe Family Foundation to do this?
When will your work be done and you won't have
to help bridge that gap.
Speaker 10 (43:00):
Well, I don't think our work is ever going to
be done, but I have to tell you something. It's
one of the most rewarding parts of my life, and
my wife's life, and my family's life that we can
help kids that are at risk, living at or below
the poverty line, and you bring opportunities to them and
the right education and the right support. We have kids
that are living in some of the worst and toughest
(43:20):
conditions in LA and they're now at Harvard, MIT, Georgetown, USC,
UCLA and they're just excelling and doing it on their
own because they have the right ecosystem around them and
the right start and the right support. And a government
alone can't do everything. It never has been able to.
You have to have philanthropy, and people need to give
(43:43):
back and lean in and support churches and schools, and
all these great organizations that we have out there, And
what I would argue for is we need more people
to be leaning in. We need more foundations to be
giving back because the reward and the payoff is so
great and huge, and it really does change these communities
(44:03):
because these kids are coming back and helping others. I
just find it one of the greatest parts of my
life is being involved in being able to see these
kids just take off and do great things.
Speaker 2 (44:16):
Well, we're going to end it on that optimistic note
that makes us, I think all feel really super good. Rick,
thank you so much, really appreciate your time and efforts,
and we're going to mark our calendars to check back
with you about maybe that political decision you may make
very very soon. Rick Caruso, thank you so much. Be
while founder executive chairman of Caruso joining us from LA.
Speaker 1 (44:37):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(44:58):
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Speaker 2 (45:08):
Mhm
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Week Daily reporting from the magazine that helps global leaders
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shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Beige Book is at published day times the year, fifty
one pages, just crossing the Bloomberg terminal, and it's all
about anecdotal information on the current economic condition. So let's
get to it deeper analysis with our own Stuart paul
Us and Canada economists for Bloomberg Economics use here in
our Bloomberg studio. All right, so what jumps out at you, Stuart?
Speaker 3 (00:50):
All told, this Beige Book released just today is overall
more negative than everything that we saw in July. Most
of the twelve federal reserve districts reported little or no
change in economic activity overall, most notably, real wage growth
seems to be dismal, and it's weighing on consumer spending
and consumer activity, focusing on those wages and the labor
(01:14):
market that's producing those wages. Eleven of the twelve Federal
Reserve districts describe little or no net change in overall
employment levels, corroborating basically what we've seen in the payrolls
over the last several months. Looking at prices a little
bit more inflationary than everything we saw in July. Ten
of the twelve districts characterize price growth as moderate or modest.
(01:37):
The other two districts strong input price growth that's outpacing
moderate or moderate or moderate or modest selling prices, and
that's going to be the thing that we're going to
be thinking about with the inflation landscape going forward. There
are some tariff price pressures that are going into the pipeline,
and the question is just how much can consumers allow
(01:58):
those prices to rise before demand retrenches. And the Beige
Book right now is showing that demand is retrenching because
of weakening real wages.
Speaker 4 (02:06):
On that Stewart reading from the Beige Book, it says
QUOTE contacts frequently cited economic uncertainty and tariffs as negative factors.
Speaker 5 (02:14):
New York reported that Quote.
Speaker 4 (02:15):
Consumers were being squeezed by rising costs of insurance, utilities,
and other expensive expenses. The Beige book, also noting that
contacts reported flat to declining consumer spending because from many households,
wages were failing to keep up with rising prices. What
does all of this mean for the FED meeting later
this month and that twenty five basis point cut that
(02:37):
pretty much everyone out there is expecting.
Speaker 3 (02:38):
Everyone's expecting it. But what this really ends up coming
down to is counting the votes on the FOMC, on
that Monetary policy making committee. So one of the things
that's nice about the page book we get to look
at activity in each of the Federal Reserve districts. I
think for September, the most important district is Kansas City.
(02:58):
Jeffrey schmid Of voter president of the Federal Reserve Bank
of Kansas City. Right now, we're seeing that economic activity
was generally flat, employment declined modestly, wage pressures remains subdued.
All of those factors might mean that one of the
most hawkish voters on the committee could be a little
bit more open to the idea of voting for a cut.
(03:21):
You could see that true coalition building around exactly what
Governor Waller wants. What San Francisco Fed President Daily has
said she's wide open to and that's a cut at
this upcoming US.
Speaker 2 (03:33):
Are you saying because he's been so hawkish and then
he's seeing moderate activity, that that's why this is an
interesting Fed governor to focus on.
Speaker 3 (03:40):
That's exactly right. He's one of the he is, by
our natural language processing tools, the most hawkish member of
the committee. He is a voter, and conditions locally are weak,
conditions locally likely warrants a cut in his eyes.
Speaker 4 (03:55):
Do conditions locally inform the way that voting members of
the federal who represents certain districts will vote is that
their responsibility is that their job to represent their districts.
Speaker 3 (04:07):
It's not specifically enumerated in the Federal Reserve Act that
they must set policy according to conditions locally. But the
reason why the districts are divided up the way they
are so that everybody around the country has someone who
is representing their interest. And similarly, there are requirements on
the Board of Governors that the composition of the governors
(04:29):
are supposed to represent conditions around the country. So these
are important qualitative aspects of local conditions that feed into
the decision making process. Do we know for certain how
any one person is going to vote no. Certainly not.
But when we see conditions cooling in a district that
is presided over by one of the more hawkish members,
(04:49):
you would think they might start pivoting a little bit
more dubbish. And we can see that coalition building around
the cuts.
Speaker 2 (04:55):
Let's not forget we get some inflation prints before the
next ved decision, we get the monthly jobs on FREDA.
There's a lot that still could come to the Fed
that could impact their decision. The other thing, though, and
let me just roll this into it, Stewart, this possible
legal rollback of tariffs, which could be this is a
major uncertainty. I know the President said yesterday some urgency
to make this decision, like, let's figure this out sooner
(05:17):
rather than later. Is the FED going to err on
the side of holding off on any kind of move
because there is still some uncertainty? Are there enough evidence,
are a growing number of evidence that the economy is
slowing that it does make sense to cut rates of
some sort.
Speaker 3 (05:32):
I think that there is enough evidence that it's been
accumulated when you look across the broad swath of indicators,
whether it's real wage growth, whether it's the pace of hiring,
whether it's some of the anecdotal data that we're getting
just today that a cut is warrant to the question
is whether they want to do it in September or
whether they want to do it a little bit further
down the line. From an economic perspective, it doesn't matter
(05:54):
that much. They could wait until December if they wanted to,
They could wait until twenty sixteen if they want to.
Speaker 5 (06:00):
Two.
Speaker 3 (06:00):
But it looks like the coalition probably is there based
on the data that we're seeing, based on the anecdotes
that we're seeing, to deliver a cut in September.
Speaker 2 (06:07):
Steven Maron right, we've got hearing tomorrow. President Trump is
very eager to get him in place on the FED board.
How might that change some of the composition and change
all of the discussions that happen around the table at
the FED.
Speaker 3 (06:19):
You know that you'd get another voice that's advocating for
a cut, and I expect that he will be confirmed
in time to vote on the seventeenth. And again, it's
just part of that coalition that's building.
Speaker 2 (06:30):
All right, We're going to leave it there. So appreciated
our own Stuart paul Us and candidate economist at Bloomberg
Economics right here in our studio.
Speaker 5 (06:38):
Stay with us.
Speaker 4 (06:38):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (06:46):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (07:00):
It's a crypto because there is lots of news happening
in the world of crypto. Michael Novogratz's Galaxy Digital is
offering a version of its Nasdaq list and shares that
can be traded on the Salona blockchain, aiming to spur
similar tokenization efforts, and an update on the WLFI token.
We talked about this a lot yesterday on Bloomberg. Crypto
promoted by the President's Family, which launched with ambitions of
(07:21):
serving as the backbone of a new digital ecosystem, It
became mired in turbulence and instability within an hour, so
that's something we're watching closely. For more on crypto, we
are joined by Jamie Leverton, CEO of Reserve One. Jamie
joins us here in the Bloomberg Interactive Broker's studio. Jamie
Reserve one calls itself quote an equity vehicle offering institutional
(07:42):
great access without the complexity of direct crypto ownership.
Speaker 5 (07:47):
Unpack that for us.
Speaker 6 (07:48):
Yeah, So, I think one of the guiding principles when
we thought about how to how to build the company
and really offer something to investors that they can't access
today in an equity vehicle. So we thought about the
company and built it so that it gives almost one
stop shop, if you will, to crypto exposure, but in
(08:10):
a traditional equity So we're expecting to be eighty percent
Bitcoin and then twenty percent in alternative assets that are
really inspired by the digital asset stockpile and what we
expect to see in that stock.
Speaker 5 (08:23):
What are some of those alternatives.
Speaker 6 (08:25):
So expecting Ethereum, Solana, Ada, and XRP. Those of those
have been the tokens that have been named so far.
We do expect other tokens to be added to the
stockpile as that gets refined over the coming months.
Speaker 4 (08:39):
What determines whether or not a digital currency is added
to the stockpile.
Speaker 7 (08:43):
That's a great question.
Speaker 6 (08:44):
We aren't aware of the methodology that they're that they're using,
or how they're thinking about what is going to be
maintained in the stockpile. But the way we think about it,
it's inspired by the digital asset stockpile, but we put
our own mechanism and how we weight the assets that
we hold.
Speaker 4 (09:02):
Kind of makes sense because you're tracking something that you know,
there's always been like insider buy strategies or and now
with politicians there's like the you know, follow the what
the politicians are buying. There's those ETFs, so as we're
reminded all the time, there is an ETF for everything.
Speaker 2 (09:18):
Well, so you know, then we have to ask you
the WLFI token, the presidential token, will that be added?
Speaker 6 (09:27):
We are not hearing any rumblings that it's expected to
be added to the stockpile. Certainly, the tokens that have
been mentioned are the ones that have been been around
a long time. They've got they're in the top twenty
of tokens worldwide, they have significant free flow market cap,
So unlikely that those newer tokens would be added to
(09:48):
the stockpile at this point in time, although you.
Speaker 4 (09:50):
Never know how far are you from the target of
a billion dollar raise.
Speaker 6 (09:55):
So we announced in combination with our business combination agreement
back in July that we seven hundred and fifty million
dollars in a pipe and then in this BAC trust
there's two hundred and eighty seven point five million. So
we are going to go through the process with the
SEC to get to get final approval and then hopefully
we'll be trading under our new ticker by by the
(10:15):
end of the year. How much of that is cash,
so the funding happens at close it initially it'll it'll
all be cash and then it gets converted right away.
I put in air quotes into into digital assets. It
won't be instantaneous, of course.
Speaker 2 (10:30):
How do you make sense between the tokens that you
think have legs and longevity or something. I don't know
if that might.
Speaker 6 (10:36):
Not so, I mean meme coins were kind of all
the rage the last the past year. When we when
we think about it, it's really what is the utility
of the token, what's the ecosystem of developers that are
building on chain, what's the what does the free float
(10:57):
market cap look like? What's the ability to generate returns
on those tokens? Because we will be looking to generate
revenue from the assets that we hold on our balance sheet,
which is which is unique from from some of the
other players in the space.
Speaker 4 (11:09):
What's the profile of investors thus far, the mostly cryptonative funds.
Speaker 7 (11:14):
That came into the pie.
Speaker 6 (11:15):
Yeah, a mix of a mix of strategic, high networth
cryptonative people that we commonly see in the space. As
I think you guys know, I was the CEO of
HT eight for a number of years.
Speaker 7 (11:25):
It's a lot of a lot.
Speaker 6 (11:26):
Of familiar faces around around the digital asset treasury.
Speaker 5 (11:30):
Space that we should be aware of, so we did.
Speaker 6 (11:33):
We did name a number of our strategic partners in
the press release when we announced you might you mentioned
Mike Novagrats Galaxy Digital key partner of ours. Yes, well,
Mike was spent a lot of time on the Canadian
Exchange and actually used used to be on the board
of HUT eight prior to to my taking over as CEO.
So lots of connective tissue. We worked with Galaxy when
(11:53):
I was at HUT.
Speaker 7 (11:54):
For for yield generation on bitcoin.
Speaker 6 (11:56):
There are there are a great longtime partner and certainly
a friend of the firm for sure.
Speaker 2 (12:01):
Jimmy talk to us about the White House and the
government and the government's plan to buy bitcoin or expectations
that they would. How do you think do you think
that's going to actually happen? How will they fund it? Like,
how do you see that kind of rolling out?
Speaker 6 (12:16):
Yeah, I mean they've been pretty clear that they want
to find a way to do it in a in
a budget neutral way. So far the bitcoin that they
hold is through confiscation. I think we're not going to
really get more clarity on their intentions around the strategic
point bitcoin Reserve or the digital Asset stockpile until we
get clarity through I think the focus really within the
(12:38):
space and within Washingtonton is to get the Clarity Act passed,
which really gives us the regulatory framework we need for
the for the alternative tokens. It's it's been clear for
a while the bitcoin's treated as a commodity ethereum likely
is as well, but for the rest of the space,
we really need that Clarity Act to finalize the regulatority
(12:58):
clarity for the space, for the space that Genius gave
us for stable coins.
Speaker 2 (13:02):
Which I with Jamie Leverton, she's CEO of Reserve one
here in our Bloomberg Interactive Broker studio. Do you think
we're in a moment in time because of this administration,
and that another administration in three and a half years
could change the environment for crypto.
Speaker 6 (13:16):
Three and a half years in crypto is a very
very long period of time. I was here during Genzo's regime.
It was certainly a much much different environment, really really
difficult for those of us operating in the space in
the public markets to get things through the SEC. I
think certainly a very very welcome turn of events for
the industry with the progress that we're seeing at the
(13:39):
federal level as well as across the regulatory space.
Speaker 2 (13:42):
So are you saying that it could change or you
think like the train has left the station in terms
of crypto or could be in three and a half years,
depending on who's in the White House and the composition
of Congress, could things.
Speaker 6 (13:53):
It's possible, But Genius went through properly bipartisan right Seventeen
Democrats joined Republicans to get together Genius through. I think
as an industry we've been very very careful to keep
it by partisan and I think more and more Democrats
are getting on board with just what this could really
mean for the future of innovation for the United States,
and and I hope it stays that way.
Speaker 7 (14:13):
I hope the horse has has indeed left the barn.
Speaker 4 (14:16):
Well on politics in DC, Wilbe Ross, the former Secretary
of Commerce, is vice chair of the company, vice chairman
of Reserve one. What is his involvement, what is his input?
Speaker 7 (14:27):
Yeah, Wilbert.
Speaker 6 (14:28):
Wilbert has been absolutely great. He's the anticipated vice chair. Obviously,
nothing's official until until we get through approvals. He was
formerly a skeptic of crypto and really I think seeing
the regulatory framework change, getting getting clear clear UH policies,
and then understanding of how this how this space can really.
Speaker 7 (14:50):
Evolve in a way that's more more grown up.
Speaker 6 (14:53):
And I think we've assembled a team that is UH
that is unique in this space, a ton of public
public company experience, Washington experience, Wall Street experience. We're probably
one of the more seasoned management teams and board of directors.
And I think that gave him comfort. He was really
curious and wanted to learn and dive into the space
(15:13):
and thought what we were building was was really really unique,
and he was ready to join and go on the
journey with us. He's been incredibly incredibly supportive. We're very
lucky to have him.
Speaker 2 (15:24):
Is he owning more crypto as a result.
Speaker 7 (15:28):
I'm certain that is the case.
Speaker 2 (15:30):
So lay out the next six months, twelve months in
this space. What are you kind of watching out for.
Speaker 6 (15:35):
Yeah, I think I think we're all watching Washington really
really carefully hopeful as an ecosystem that clarity gets done
by the end of the year, and then I think
we'll see the alternative digital assets have.
Speaker 7 (15:50):
Their moment in the sun.
Speaker 6 (15:52):
Really waiting for that, for that regulatory clarity, I think
it'll bring a halo to that, to that segment of
digital assets. And lots of lots of treasury companies have
come out similar to Reserve one where the funding doesn't
come to close and then we have to we have
to buy the assets at that time. So a lot
of pent up demands still in the crypto ecosystem that
(16:12):
should prove favorable over the next three to six months.
Speaker 4 (16:16):
One of the most read stories on the Bloomberg terminal
is about Eric Trump's wealth soaring on a six hundred
million dollar American bitcoin steak. We are going to hear
from Eric Trump on Bloomberg TV in a few minutes.
The article says that the company will says it will
accumulate bitcoin using machinery in New York, Alberta, and Texas
provided by another crypto company called HUT eight.
Speaker 7 (16:35):
That is correct. Yeah, so HUT eight spun out.
Speaker 6 (16:38):
They are big proprietary bitcoin mining operations to form what
is now and officially trading today American bitcoin money.
Speaker 4 (16:48):
When they say they're accumulating bitcoin that way, that means
they're technically mining it.
Speaker 6 (16:53):
Yeah, they're mining and hobbling, just like we were doing
it HUT back in twenty twenty one.
Speaker 4 (16:57):
How much of an opportunity is left there though, versus
just going out and buying it on the open market.
Speaker 6 (17:02):
Well, certainly when you have when you're a low cost
operator like HUT eight are now American bitcoin mining, you're
able to put bitcoin in balance, you will below the
cost of acquiring and.
Speaker 2 (17:14):
You're on tract Republic.
Speaker 6 (17:16):
So we are pending SEC approval and then we would
list on the NASDAC through the dsback process.
Speaker 2 (17:22):
And that expecting still to happen in the fourth quarter
of this Shit's right, Yeah right, good stuff. Stay in touch,
Thank you, Yeah, always good to be here. Really appreciate
it and thanks. Jamie Leverton, she's CEO of Reserved One,
joining us here in our Bloomberg Interactive Brokers Studio.
Speaker 5 (17:37):
Stay with us.
Speaker 4 (17:37):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (17:46):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple Cocklay
and Android Auto with the Bloomberg Business App. You can
also listen live on Amazon Alexa from our flagship New
York station, Just say Alexa Play Bloomberg eleven thirty.
Speaker 7 (18:04):
Folks.
Speaker 2 (18:05):
We're going to kind of stay with our major backdrop
and go kind of from the economy to what this
all means for the financial market backdrop. We've got a
great guest. We want to get into how the data,
the White House, the geopolitics continue to shape the investment environment,
and we do have a good voice on that. Jason
Granite is with us Chief Investment Officer b and Y
here in studio. Great to be with you.
Speaker 8 (18:24):
How are you, Oh, Great to be with you since
last time I saw you. Hope you enjoyed your summer.
Speaker 2 (18:28):
I've had good summer. I can't believe it's September. I'm
kind of bracing for what September might bring.
Speaker 8 (18:33):
Yeah, back to school has kind of hit me over
the head as well.
Speaker 2 (18:36):
Exactly for the first time, I don't have somebody going
back to school in a while. Tell me how you're thinking,
because I go back to when we were together in
June at Inside b and Y Inside twenty twenty five.
You and I spoke up on the stage after Kelly
and Conway's senior counselor to the President, and we talked
a lot about presidential policies and what it means for
the investment environment. What's changed in you know, since early
(19:00):
June to now in terms of the investment environment and
how presidential policies backing it, has it gotten more certain
less uncertain?
Speaker 8 (19:08):
So, first of all, a lot has changed and nothing
has changed all at the same time. Right, we still
have a very fast paced, fluid policy environment where it
feels like every day or every few hours, there's some
other news to digest and process and what that means
for markets. On the flip side, we have a lot
more certainty because a lot of tales and a lot
(19:29):
of weird outcomes have been taken out off the table.
And so one thing that's amazing to me is the
twenty weeks leading up to right before Labor Day was
the single biggest drop in the Vicks ever over twenty
week period. So you go back twenty weeks from the
early spring through the end of the summer, and to
think about all the things that happened to have the
(19:51):
greatest drop in volatility over that period is kind of amazing.
Speaker 2 (19:54):
That's an amazing good amazing bank completely always makes me
a little nervous.
Speaker 8 (19:58):
Yes, but we've also seen rec at highs in assets.
You've seen some other things. Now, one big trend has
taken hold on the curve, and that's the curve's gotten
much steeper in the month of August alone, two ten's
we went from forty to sixty. You know, that's a
pretty that's a proper move over the course of a month,
and so you have steeple curves. I heard you just
(20:19):
discussing with your economist here, obviously because we're expecting he's
in cycled to start here in the US. I think,
to me, it's more about pace of what's going to
happen than if it will happen. But that's been those
have been some of the biggest changes in the operating
environment from the beginning of the summer.
Speaker 4 (20:36):
I was surprised that you didn't say the so called
Big Beautiful Bill being signed into law, because that was
a question in June that a lot of people had
whether or not the President would get that past the
finish line, and he did, signing into law in the
early part of July. Does that remove uncertainty from the
investing environment.
Speaker 8 (20:53):
Well, it definitely removed uncertainty because it took some of
the debt ceiling and some of the treasury market kind
of tails off the table. But actually, quite frankly, when
the when the one Big Beautiful Bill was signed, there
were lots of compromises made. If you know, it feels
like ages ago now, but some compromises made over the
last few weeks, and actually there's more. It looked more
(21:16):
like the ecosystem before than after. So while the uncertainty
of if will it get done, what will happen was cleared,
you know, and we took some debt ceiling things off
the table. And I think that's definitely one of the
things that's contributed to this broader drop in volatility, is
that these things have just been cleared from the environment.
Speaker 2 (21:35):
Do you see a slowdown in the economy, do you
see weakness and growth? Do you see weakness in labor.
Speaker 8 (21:41):
So I don't see a lot of it. So for example,
GDP second quarters revised up. You know three point three
is not something that my economics features would tell me
to get nervous about. The labor market. Clearly, Chair Pal
communicated some uncertainty there. But you know, as I, as
I joke with the team, if you were in an
(22:02):
alien studying economics and landed and looked at the data
and what it looked like, you wouldn't necessarily see a
lot of weakness. Today's Jolts figures from this morning showed
a small but that's a noisy time series. You know,
that's not exactly the most linear time series to look
at over the course of time. So you know, while
we might be starting to see some of it, you know,
(22:24):
to say I see weakness would not be you know
where I'm at.
Speaker 2 (22:28):
So what struck me in early June speaking with Kelly
and Conway first and then talking with you, But it
seemed overwhelming to me that the audience was like, it's
time for a rate cut, and I remember even kind
of I feel like cheering when it was mentioned. But
from what you're saying that things are strong enough that
maybe we don't need a rate cut. What's what's your
(22:49):
you know, informed view on what the FED needs to
do right now?
Speaker 9 (22:53):
I appreciate being informed.
Speaker 5 (22:54):
Fuck, so a few things.
Speaker 8 (22:57):
One is I have sympathy with the view that Paulson
more maybe tight than not. And so if you want
to look at it from a perspective of all right,
we can take some rates out to get closer to
or more neutral stance, I like, I'm neither here nor there.
Speaker 9 (23:13):
Like I have.
Speaker 8 (23:15):
Sympathy with that view. Look, we still have inflation that
is on the stickier side. I think the trend has
started to trend up, not continue the trend down. Core
is still pushing three not two, which are our friends
at the FED would prefer. You know, the unemployment story
and the labor story. Headline seems to be holding up fine.
As I mentioned, three point three percent growth is not
(23:37):
a story, but you know so to me, I wouldn't
be in the most rush to take rates down so fast.
And by the way, sorry, Tim, the market here is
telling you that we're not going to get to that
different of a place one year. One year is still
around three percent. It's been this two ninety to three ten.
Even with all these gyrations and moves where we're going
(23:59):
to land has not really changed out on the horizon,
and so I think that makes sense.
Speaker 4 (24:04):
Jason on the labor market, I want to hone in
on this and talk a little bit about immigration and
immigration policy and the actual effects of immigration policy, the
crackdown on illegal immigration and in your view, what that
is or could do to the economy, and also the
crackdown on necessarily legal immigration. But a decline and interest
(24:24):
of people who are not in the United States coming
to work in the United States, as we've seen over
the last few months.
Speaker 5 (24:30):
What does that do to the economy.
Speaker 8 (24:31):
It's two things I'm thinking about from that perspective. Number One,
because you're changing the denominator here, maybe the amount of
monthly job ads is lower than previously expected.
Speaker 5 (24:42):
We've we've heard this a lot from.
Speaker 8 (24:44):
Yeah, and so if people are expecting over one hundred k,
if we get something closer to what's expected here this Friday,
sixty k, that might not be a degradation in the
labor as much as kind of the hiss your old
time series might tell you should look at. That's number one.
The second is that the expectation of this would flow
through somewhere on wage pressure, and so you know, with
(25:06):
that show up in the inflation story we're seeing, you know,
I don't know if it would show up so much
in services, which which was a little bit higher this time.
But you know, the inflation story is still like I said, sticky,
but this is more on the core side, not necessarily
on the labor side. But that's where I would watch
to see if it really shows up.
Speaker 2 (25:24):
You guys are such an important firm. You see so
much in terms of money flows, investment flows. I don't
know what is that. What is that telling you about
kind of where we are, because I do think there's
still some questions about what happens from here.
Speaker 8 (25:37):
Yeah, So look, there's been there's been two themes that
have been very obvious.
Speaker 5 (25:41):
You know.
Speaker 9 (25:41):
One you've seen in the markets.
Speaker 8 (25:42):
You saw you know, the dollars down what ten percent?
That's a line from the upper left of your paper
to the bottom right of your paper, and that's been
somewhat consistent, and the steeper curve has been somewhat consistent.
Those are been two constant drumbeats, no matter what the
headlines things are, over the many many months. Those two
things have been in place. You know, one of the
things that we have seen in our data. People got
(26:03):
very excited about the flows around the world in a
but if you go back a year to last summer
over a year, so we have an eyeflow product that
the team there is wonderful. They do amazing analysis across
the data to see what happens. And what we saw
was actually there were some our scored flows showed out
from dollar assets going back to last summer and kind
(26:26):
of you know, obviously ups and downs, but the trend
and I'd say it's leveled off more recently and that
now aligns with what we see in the TIC data
that you're not seeing the big infos. So while we
saw that trend.
Speaker 2 (26:38):
Where's the money that we're coming back?
Speaker 8 (26:42):
Not necessarily, but it's not flowing out. And I think
that's that's what's showing up in markets.
Speaker 2 (26:47):
I have to squeeze my producers getting made. But are
you concerned about the independence of the feed? It was
something that we talked about in early June. We talked
about with Kelly and Conway just got about twenty five seconds.
Speaker 8 (26:58):
Yeah, so look, I look at this about how the
markets pricing and the market seeing that we're getting to
three percent either before or after any of these things.
So the market's saying we're going to get to a
fair neutral or our star or neutral rate over a
period of time. It might come faster or slower, but
that's where we're headed. And you know, I think the
market will tell you if there's more concern.
Speaker 2 (27:17):
Okay, So good to see you guys, to see Yeah,
Happy September Jason granted, Chief investment Officer b and Y.
Speaker 5 (27:25):
Stay with us.
Speaker 4 (27:26):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (27:33):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us Live on YouTube.
Speaker 2 (27:48):
Well, earlier, we got to read on the US economy
courtesy of the Fed Beige Book. In keeping with that,
we have a guest who has a very informed view
on what's going on in the US economy. His firm
is over two and a half million square feet apart
property assets all owned and operated by CARUSO, all capital
coming from within. The assets include upscale retail, resort, office,
and residential properties across southern California. He and his firm
(28:11):
have been investing in and developing property since nineteen eighty seven.
He's a philanthropist, also the president of the LA Police Commission,
was part of the board of Water end Power Commissioners
out in LA and has been involved in politics, notably
running as a candidate for LA mayor in twenty twenty two.
That's not all. He leads a nonprofit aimed at accelerating
private sector involvement in the LA area's massive rebuilding effort
(28:33):
after those wildfires earlier this year, is known as Steadfast
to LA. A lot to get to with. Rick Caruso.
He's founder and executive chairman of Caruso, as we said,
the privately held real estate company. He joins us from LA.
How are you.
Speaker 9 (28:46):
I'm doing great. Thanks for having me on. How are you?
Speaker 2 (28:49):
We're doing okay. Try to take in all the information
that seems to come at us on NonStop. I'd love
to if we may, Rick, start big and broad with you.
The US economy. You have a great vantage point. How
would you describe it right now?
Speaker 9 (29:03):
I think it's still very robust.
Speaker 10 (29:05):
To be honest, now, the data that I look at
is obviously off of our properties and our properties are
growing in terms of attendance on a double digit basis
year over years, so that's very strong. Our sales per
square foot are continuing to grow at a very strong pace,
and we have a lot of demand for retail space.
So retailers, the best in class retailers are growing. You
(29:28):
take a look at a broader picture, I think there's
a little bit of softness out there in some of
the categories. Luxury is not growing as much as it has.
There's some luxury retailers that are suffering a bit. But
I'm still pretty bullish on the consumer in the United States.
Speaker 4 (29:45):
We should remind everybody the properties and the developments that
you've done have really served at the higher end of
the consumer. People even outside of the Los Angeles area
would be familiar with the Grow for example, or perhaps
Miramar in Moncito, just around Santa barb Uh, but the
vast majority in the Southern California area. What about Southern
California's economy, that economy that you focus on. What have
(30:09):
you noticed in terms of changes in the last couple
of years. As we've heard the steady drumbeat of information
about people leaving the region because of the regulatory environment,
the cost pressures, what have you.
Speaker 10 (30:22):
Well, I think you're right, and I think it's a challenge.
So when you take a look at La City in
particular La County, you do have a very over regulated,
tough business environment, and it's very tough, especially on middle
or small businesses to operate in the city because of
the cost of operation. So you do have businesses leaving,
and that's troubling because the backbone of our economy in
(30:44):
Southern California are the small businesses.
Speaker 9 (30:48):
So you know, one of the.
Speaker 10 (30:49):
Things that we push for, I push for as just
a business person and a member of this community, is
to be more business friendly and to start deregulating so
we can grow businesses in the Los Angeles region.
Speaker 9 (31:02):
And I think as a state, we have a problem
with that.
Speaker 10 (31:04):
We have businesses leaving the state of California going to
regions that are more business friendly, have less red tape,
allow businesses to thrive on a much easier basis. So
you know, hopefully the tide will change on that, but
it's certainly an issue in Southern California and I think
California in general.
Speaker 4 (31:23):
Yet you remain rick, you have not moved to Arizona
you have not moved businesses to Arizona, to Texas, to Florida,
these areas of the country where people from California have
been going as a result of regulatory easing. One could say,
you will you stay in California.
Speaker 10 (31:42):
Well, I'm bullish on California. I'm gonna stay in California.
I believe in it. I think we should be leading
the nation in California. I think we should be leading
the nation in Los Angeles. And I also have a
practical problem. You can't pick up large projects and move them.
I can't pick up move it. So I have to
remain engage, bullish, and hope we change the trajectory.
Speaker 9 (32:03):
And I think we will. I really do.
Speaker 10 (32:05):
I think people are at a point, certainly in the
Los Angeles area, that they've realized that the path we're
going down is not sustainable. We've got a budget in
LA City that's a billion dollars out of budget. We
have revenue decreases in La City because businesses have pulled
back and left, and we don't have new capital and
investment coming into La like we should. They're going into
(32:27):
other regions. Even immediately outside of Los Angeles. You have
cities that are doing incredibly good jobs. The City of Glendale,
the city of Culver City that are more business friendly,
are safer, cleaner, more supportive of great neighborhoods, and they're
attracting the business at the cost of LA City. So
we've got to change that. But I remain optimistic the
(32:51):
change is coming soon.
Speaker 2 (32:52):
How are politics getting in the way of all of this?
And I ask it, Rick, You've got Caliphnia, Governor Newsom
and President Trump really of high stakes feuds over a
bunch of issues, whether it's California's universities, their environment, redistricting
excuse me, and other issues. I mean, talk to me
about that. And whose side are you on in all
of this?
Speaker 10 (33:14):
Well, I'm on the honestly, I'm on the side of
the people of LA and the people of California. Here's
the problem that I have with the battle that's going on.
We've got some really serious problems that need to be
dealt with, crime, shortage of housing, homelessness, et cetera, the
cost of living in California. Having an argument between the
(33:36):
governor and the president, between the mayor and the president,
a lot of name calling going on doesn't advance anybody's
cause to solving these problems. So what I hope is
that we get past the rhetoric, figure out a way
to sit down, find some common ground, and work together.
Here in Los Angeles, we have three hundred thousand acres
(33:58):
in Pacific Palisades, Malibu, and then also at an Alta
Dina that was burned to the ground the size of
two Manhattans. To put it in perspective for New Yorkers,
we need federal help, we need federal funding, and we're
getting none of that. And I don't think as the
bickering is going on and the name calling is going on,
(34:19):
that serves any purpose in advancing the negotiations, of the
discussions and getting federal help.
Speaker 4 (34:25):
In Los Angeles, we're speaking with Rick Caruso, founder and
executive chairman of Caruso, the privately held real estate company,
on the federal aid, on the federal funding. Have you
had conversations with President Trump or members of the Trump
administration expressing the need in your view, for federal help
for California in the wake of these disasters.
Speaker 10 (34:44):
I've had those discussions now with the President directly, but
I've had those discussions with intermediaries. I've certainly had that
discussion with our governor, and we need to find a
way to get those discussions at a higher level and
more productive. I know there's some talk Governor Scott or
Senator Scott was out here in Los Angeles and talking
(35:07):
about it, but it really is critical path because you
have hundreds of thousands of people that have been displaced,
You've got jobs that have been lost, you have a massive,
massive rebuilding effort that's going to take tens and tens
of billions of dollars in infrastructure.
Speaker 9 (35:22):
So we need the federal help. It just has to happen.
Well I should Yeah, No.
Speaker 2 (35:27):
I hear you, and you've since the fires. I know, Tim,
and I just kind of preparing for this. Listen to
a lot of conversations you've had with various individuals about
this in terms of what needs to be done. You
know what's interesting is need more federal help in terms
of the rebuilding efforts. So then, how do you feel
when President Trump illegally used federal troops in LA I mean,
(35:49):
if you were mayor there, how would you respond to
President Trump and his threats and use of troops like
that's going on when obviously, as you say, there are
efforts needed to do the re out.
Speaker 9 (36:01):
Well, I've been very clear the federal troops coming into.
Speaker 10 (36:04):
LA were wrong. Uh, and I don't I don't think
it should have ever happened. I would have gone to
court immediately did They finally did go to court.
Speaker 9 (36:12):
As you know, the court ruled that.
Speaker 10 (36:14):
It was an illegal use of those troops to come
into the city of Los Angeles in this region. So
it's not right to be doing that, and we don't
need to be doing that. I mean that just this
this power grab that's going on does not advance the
cause for any It just doesn't. And the division between
(36:34):
the politics is harmful to the residents of Los Angeles.
We've got to find some common ground. We've got to
act like grown ups. We've got to put our differences
aside as elected officials and figure out how to work together.
Speaker 9 (36:49):
And so I.
Speaker 10 (36:50):
Would hope that our elected officials find a way to
drop the name calling, maybe get on a plane and
get over to Washington and see if we can find
and common ground to work together. We also have the
Olympics coming here, so Los Angeles is going to be
the world stage for the United States, and we need
to be putting our best foot forward, and we're going
(37:11):
to need to be making a lot of investments in
order to do that, and again we need to have
the help of the federal government to do that.
Speaker 2 (37:18):
So Rick, I'm kind of waiting for the flood of
my emails to come into my Bloomberg because I thin
people are listening with saying, well, this is the kind
of folk you know, individual you do want in politics.
So what's your latest thinking on maybe running again for
mayor or possibly governor of the state of California.
Speaker 10 (37:35):
Well, I'm seriously looking at it, and I've got a
team of people that are working on it, and I'll
make a decision soon on that. And I'm looking at
both paths and there's good opportunities in both paths. But
now I'm just remaining focus on what we're doing at steadfast,
making sure we're getting people back in their communities as
quick as possible. Yesterday I spent the afternoon in Altadena.
(37:58):
We were giving out grants for small bits businesses to
get reopened in Altadena. We're doing the same in Palisades
and in Malibu. So those kind of efforts are incredibly
important to me, because again, small businesses are critically important
for jobs, and we're giving out about a million dollars
in grants over the next couple of weeks. So that's
(38:18):
what I'm going to stay focused on for now. Politics
will come down the road fairly soon.
Speaker 2 (38:23):
All right, we want to talk about some of those
efforts you're doing in terms of the rebuild. I got
to ask you, though, if you do run or make
a decision, would it be for mayor or for governor.
Speaker 9 (38:32):
I don't know yet. We're fine, We're going to find out.
I'll let you know.
Speaker 2 (38:35):
Okay, I'm going to hold you to it. I'm going
to hold you to it.
Speaker 4 (38:40):
Hey, Rick, I'm curious about just fire resilience in California,
especially in the wake of Palace States. I'm from the
Central Coast. I was glued to watch duty because of
the Gifford fire just a couple of weeks ago. I mean,
I spent you know, ten days just refreshing that thing,
watching the.
Speaker 5 (38:56):
Progress of that fire.
Speaker 4 (38:58):
What is the right way for California onions to be
ready for what has become just a part of daily
life for a big portion of the year.
Speaker 10 (39:08):
Well, we have to have very smart brush management, you know.
One of the problems in the Palisades, we had forty
years of brush that were not maintained by the state,
the county or the city that was rocket fuel.
Speaker 9 (39:20):
We have to have water.
Speaker 10 (39:21):
I mean, it was an unbelievable circumstance that we had
reservoirs that are empty. So the competency level at the
government and being prepared is critically important. La City was
not prepared for this fire. This fire, in my opinion,
and I think in most people's opinion that have seen
the facts, as this fire could have been prevented certainly
(39:42):
significantly mitigated in terms of the damage.
Speaker 9 (39:45):
And then we have.
Speaker 10 (39:46):
To be encouraging people to build with non combustible materials. Unfortunately,
the village that we built survived it, but it survived
it because we were prepared to fight the fire. But
equally important, we built it with non comb stable materials
and so it was able to stain the fire around us.
And we had a lot of smart people doing some things.
(40:09):
So we can build better and smarter. But we also
have to have better infrastructure. You know, the fire hydrants
need to work. They were not working in Los Angeles.
The reservoirs need to be full, and this is an
opportunity right now to rebuild Malibu, Pasadena, Alta, Dina and
Palisades in a way for the next hundred years and
(40:32):
to get the right infrastructure put in. It's an incredible
opportunity to create these communities for the future. And that's
why we need to work with the federal government, get
the right federal funding and get some smart leadership locally
that builds it back properly so that we can with
stain fires and other natural disasters in the future can
(40:54):
be done.
Speaker 2 (40:54):
The nonprofit you are leading, as we said, called Steadfast LA.
You've got comp such as Netflix, Amazon, JP Morgan, Cha,
CBRE Group, so many who are working to restore these communities.
But you guys are looking at everything you're using AI.
How long do you think it's going to take for
the rebuild and ultimately are we talking about kind of
(41:16):
the cities of the future in terms of the materials
used and how it's done.
Speaker 9 (41:21):
You know, I think it's going to take. There's going
to be phases. I look at it.
Speaker 10 (41:25):
What's going to be happening one year from now, three
years from now, five years from now, one year from now.
For example, the little downtown of the Palisades is going
to get reopen. We're going to rebuild the park. Steadfast
is leading the park rebuilding. Schools are getting back reopen
and we're involved in supporting the school systems and getting reopen.
Same and Altadena, Sam and Malibu. I think in three
(41:46):
years you're going to see a lot of the homes
back and running. We have some really encouraging programs with
an alliance of builders who are coming together to buy
in bulk, be able to build less expensive, and so
that's really important to do. And I think in five
years we're going to be in pretty good shape getting
these communities back on its feet. The biggest challenge we have,
(42:09):
honestly is the lack of diligence, the lack of urgency
from the local governments to get permits issued. And we've
got to speed that up in the red tape, both
in the county and in La City so people can rebuild.
Speaker 4 (42:24):
Hey, Rick, before we let you go, I want to
talk a little bit about your family foundation that's been
involved at this point for more than thirty years in Watts,
the Crusoe Family Foundation, and it serves organizations a slew
of organizations in the area and I'm just wondering. You know,
the focus is in healthcare, it's on education at risk kids.
(42:45):
I'm wondering why we need organizations to step in and
fill the gap that isn't necessarily provided by other organizations.
Why do we need the Crusoe Family Foundation to do this?
When will your work be done and you won't have
to help bridge that gap.
Speaker 10 (43:00):
Well, I don't think our work is ever going to
be done, but I have to tell you something. It's
one of the most rewarding parts of my life, and
my wife's life, and my family's life that we can
help kids that are at risk, living at or below
the poverty line, and you bring opportunities to them and
the right education and the right support. We have kids
that are living in some of the worst and toughest
(43:20):
conditions in LA and they're now at Harvard, MIT, Georgetown, USC,
UCLA and they're just excelling and doing it on their
own because they have the right ecosystem around them and
the right start and the right support. And a government
alone can't do everything. It never has been able to.
You have to have philanthropy, and people need to give
(43:43):
back and lean in and support churches and schools, and
all these great organizations that we have out there, And
what I would argue for is we need more people
to be leaning in. We need more foundations to be
giving back because the reward and the payoff is so
great and huge, and it really does change these communities
(44:03):
because these kids are coming back and helping others. I
just find it one of the greatest parts of my
life is being involved in being able to see these
kids just take off and do great things.
Speaker 2 (44:16):
Well, we're going to end it on that optimistic note
that makes us, I think all feel really super good. Rick,
thank you so much, really appreciate your time and efforts,
and we're going to mark our calendars to check back
with you about maybe that political decision you may make
very very soon. Rick Caruso, thank you so much. Be
while founder executive chairman of Caruso joining us from LA.
Speaker 1 (44:37):
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Speaker 2 (45:08):
Mhm
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