December 17, 2025 • 40 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul Sweeney
Wednesday, December 17th, 2025
Featuring:
1) Steve Auth, Executive Vice President & CIO of Equities at Federated Hermes, discusses whether the AI boom signals a dangerous market bubble.
2) Eric Winograd, Chief US Economist at AllianceBernstein, on what the latest jobs data means for Federal Reserve rate policy in 2026.
3) Stephen Kim, Head of Housing Research at Evercore ISI, discusses why household formation is falling short of expectations.
4) Lisa Mateo joins with the latest headlines in newspapers across the US, including Wall Street Journal reporting on Costco's vacation packages, and a Bloomberg News story on how high coffee prices are changing how people get their daily brew.
See omnystudio.com/listener for privacy information.
Mark as Played
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 the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App,
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
We have a perfect guest to speak of our equity.
Conversation of the day is stephenoth He is with Federated
him as we're thrilled that he could join us here
this morning. Just as a general statement, and it goes
back to the day you and I looked at AOL
Time Warner and said, really, did these deals work out?
My answers, No, there's no evidence they're a value.
Speaker 3 (00:49):
Add They haven't added a lot of value.
Speaker 2 (00:51):
Tom. It's gotta go longer than nasty, but it's not TV.
You gotta have longer.
Speaker 3 (00:57):
This is an interesting deal though, I mean, you know,
Netflix getting ahold of these studios.
Speaker 2 (01:04):
I think it's it.
Speaker 3 (01:05):
Could really I've been the whole Hollywood industry.
Speaker 2 (01:09):
I think that's what can create profit where Federated can
invest in it.
Speaker 3 (01:13):
We're not in Netflix. Well, we're in all these stocks,
but we're not heavy there. You know, we we'd rather
on on these mag seven names. We kind of play
relative value, and for us right now, Amazon is maybe
a better value if you will. I mean, people talk
about a bubble, but you can buy Amazon at eighteen
(01:34):
times cash flows. It's really not bad for a company
that we look at it and say to you, you're
you're getting aws AI and you're kind of getting the
retail business for free.
Speaker 2 (01:46):
Yep.
Speaker 4 (01:47):
See twenty twenty five. It has been a really wonderful
year for investors. I mean, fifteen percent in the S
and P twenty percent in the NASTAC fixed income, high
single digit returns. What's kind of the setup for twenty
twenty six for you guys?
Speaker 2 (02:00):
We think it's pretty good.
Speaker 3 (02:01):
We've got a two year target of eighty six hundred,
we've got seventy eight hundred for next year, and really
driven by earnings growth. At this stage, we've got earnings
at yeah, three ninety out three years, and you know
Stock's eight nominal GDP growth. Nominal GDP growth looks really
good to us. You've got the AI revolution driving earnings,
(02:23):
You've got enormous productivity. We've got GDP next year up
three percent. I think the consensus is two we've been
on the high side along, we've been more right than
wrong on that. But you know, you've got a lot
of stimulus coming next year that we think could get
you a surprise on the upside, and with the job
market relatively stable, that means a big boost in productivity,
(02:44):
which is a big boost in earning. So I think
the setup looks pretty good.
Speaker 2 (02:48):
Paul, SPX eighty six hundred, I'm all in is Dow
sixty thousand?
Speaker 4 (02:54):
Yeah, a forty eight.
Speaker 2 (02:56):
I've never done that. I've never done That's the first.
Speaker 4 (02:58):
Again, what sectors kind of screen well for you guys, Steve,
because we've had tech has been such a start for
so long, and then the AI story over the last
two or three years has been the star.
Speaker 5 (03:09):
What sectors screenwall.
Speaker 3 (03:11):
Right, So what we're trying to do is we don't
want to be out of this AI trade because it's
the driver, but we're just modestly overweight those stocks and
again playing relative value within there, and we think the
big picture next year is finally this broadening out happens.
The FED cutting helps the interest rates sensitive parts of
the economy that have been suffering, so that starts to
(03:31):
live housing, regional banks, emerging markets actually had a good
year this year off of very low levels. We think
that's a really interesting place. So we are playing this
broadening out trade, but not going underweight or avoiding. The
drivers of the same witch are the tech stocks, but
we think they're kind of they're going to becoming a
relative value play within there. We don't really see them
(03:54):
as necessarily leading the market forward next year.
Speaker 2 (03:57):
Help us with the gloom that's out there. Three years
of double digit return. People are modeling a fourth year
of double digit return. It's like three times Paul. Since
World War Two, we've had this oddity. How should people cautious,
including clients have federated, How should they be enthusiastic if
(04:17):
they don't feel that way.
Speaker 3 (04:19):
Well, what we've been saying, Tom, is we're in a
secular bull market here. This is only the third one
in the last hundred years. They happen after you've had
a fifteen year bear where everyone is lost a lot
of money, which they did between ninety nine and thirteen,
and they're forever cautious for a generation.
Speaker 2 (04:38):
The scar that's what it's like. Depression, be right, That's.
Speaker 3 (04:40):
What drives the bull and that's why here you know,
as soon as we get a little bit of a pop,
everyone's talking about bubbles. We put out on our website
earlier this week a bubble monitor, because in our experience,
you've got to look at bubbles from the perspective of
several different dementi that tend to happen kind of in
(05:03):
conjunction with one another, not just one. So overinvestment one
people talk a lot about. But excess liquidity, we're not there. Actually,
the Fed's probably too tight regulatory errors.
Speaker 2 (05:14):
We're not there. You know.
Speaker 3 (05:17):
Over investment you could sort of make the case maybe,
but if you look at the levels of investment relative
to GDP in this phase, it's still below what you
saw in the other big industrial revolutions, and it's being
funded by cash excess debt, we're not there. And over evaluations,
we just went through the story on Amazon. I don't
(05:37):
think we're there yet either. So we've got a few
things for lashing y'all. A little bit of fraud out
there that's never good. But you know, we think generally
we're early. Before you start calling for a bubble.
Speaker 2 (05:47):
To get your Wednesday started. Stephen off with this, he's
a federal inter mens here Inequity's got a real equity show.
We'll do some bonds with Irig Jersey later, and we'll
do some real estate as well. We're doing commodities today,
we can do that. We'll do commodities as well. Paulstrading
and Time Keen. The way you listen to us, Thank you,
ninety ninety one FM, Nathan Hager Radio in Washington, ninety
two nine FM in Boston, Bloomberg eleven three zero here,
(06:10):
and of course on YouTube. Subscribe. The way you do
is somebody asked me the other day, how do I
get you on YouTube? Okay, here's the way you go.
On Bloomberg Podcasts. Up comes Bloomberg Podcasts. We do the
live show every morning. Subscribe to Bloomberg Podcasts on YouTube
to see handsome Steve Off.
Speaker 4 (06:27):
Yeah, just click a button. There you go, Steve. How
about US equities versus maybe rest of world equities. We
had a little bit of a migration earlier in the
year out of the US maybe into Europe and some
other markets. How do you think about that?
Speaker 3 (06:39):
Yeah, I mean those markets were really cheap, and a
lot of it was actually a currency place. Okay, yeah,
because you know that was a big move I just
came back in September. I was out in Japan with
our Japanese analysts and just came back last week from
a long trip out to Europe talking to folks out there,
so I'm a little fresh on that. And I would
(06:59):
say this, if you look at EFA, which is a
technical term for basically the developed world outside the USA,
Europe looks okay to US. You know, it's not as
cheap as it used to be relative to US, it's
still relatively inexpensive, and the downside isn't really there the
econ you know, the governments are spending more money thanks
(07:20):
to President Trump on defense, but on the other hand,
there's not a lot of upside and there's not a
lot of AI technology in Europe, so it's kind of backstage.
We think it's okay. Japan is really interesting. It's it's
you know, restructuring, first time the real estate markets finally
come back after thirty years. Tom you probably remember the
(07:41):
days when Tokyo real estate was more expensive than all
of the United States, et cetera. But it's starting to
really come back now. So we think that's interesting. But
basically the way we're staged here is we're modestly overweight
so called EFA Developed because of Japan. We're overweight EM
because emerging markets is the only place outside the US
(08:04):
where you can get technology stocks basically in Asia, and
we think that looks interesting. We think Latin America next
year looks pretty interesting. So we're overweight there, but our
big overweights remain in the US because that's where you know,
this is the leaders here in this industrial revolution.
Speaker 4 (08:23):
Right, I mean, evaluation here is just extraordinary, isn't it.
Speaker 3 (08:26):
Well, As I said earlier, I think on the max
seven in some cases it is are, but there's other
ones in there that look pretty valuable and pretty cheap.
And then on the other side of it, the rest
of the broader market actually is inexpensive. So we think
in the US the big story next year is finally
this broadening out trade. It's going to benefit from these
raid cuts from the FED, the regional banks, the housing sector,
(08:50):
the industrials.
Speaker 2 (08:50):
So you know, we're.
Speaker 3 (08:52):
Playing the broadening out trade in the US, hanging in
there with the US tech stocks but trading relative value
and then looking outside for more attack in Asia.
Speaker 2 (09:01):
Let's go William Priest here, what is the Steve Off?
What is a steve ofth process to identify quality free
cash flow growth.
Speaker 3 (09:11):
Right, So you know people talk about quality and I
had never met a PM in my life who didn't
say he buys quality stocks. So you know, you got
to define it so that we start with a management
team that we believe in and has a track record
of growth. The second is we look at cash flows
being generated by the business in a business position that
can sustain and protect those cash flows. And we want
(09:34):
to see cash flows. We want to see pretty good,
solid balance sheets. We don't want to see people playing
around with fake earnings.
Speaker 2 (09:41):
Because the time I got to bring this up, folks,
this is so important what you're hearing here. This is
like the mistakes that are made out there. The fundamental
outlaw underlying of quality free cash flow is the partial
differential of revenue growth. What you started with anominal yeah
GDP absolutely, if you don't have a revenue growth beeps
(10:03):
above norm however you want, you know, fan distribution whatever.
If you don't have revenue growth, you can't get down
to the bottom of the feld.
Speaker 3 (10:12):
You can't get cash flaw.
Speaker 2 (10:13):
Yeah, it's just that simple part. I can't say nominal
GDP is where I am.
Speaker 4 (10:19):
Steve, we said the biggest IPO of the year, price
less name Medline.
Speaker 2 (10:23):
I missed this.
Speaker 4 (10:24):
What is it? I mean, six point three billion dollar IPO.
That's going to be kind of a bullish sign, right,
I mean, I mean it just seems like if you're
raising that kind of capital in this market for a
traditional healthcare company, what do you make of that?
Speaker 3 (10:39):
The middle syllable economy is confidence.
Speaker 5 (10:43):
YEP.
Speaker 3 (10:44):
So you're absolutely rightful with that question. It's something when
I review everything's going on with our board every quarter,
our clients. I look at IPO activity M and a
activity of late. I found myself kind of as the
reception a Federal Hermes after five pm when the regular
staff goes home and you've got these road shows coming through. Uh,
(11:07):
and it's you know, Steve is introducing me able to you.
But you know there's a lot of activity there. We're
never not nowhere near back the bubble days, if you will,
when things are really popping through lunches.
Speaker 2 (11:20):
Yeah.
Speaker 3 (11:20):
I love to see this activity because to me, it
is a sign that animal spirits are coming back into
the economy, and that's what drives everything else.
Speaker 2 (11:28):
Medline MDL and thank you Paul, I miss this completely.
Did you get your eight thousand shares?
Speaker 6 (11:34):
Yes?
Speaker 2 (11:34):
Sure, absolutely, I just want to be sure we're taking
care of But this is like, Paul, this is like
the way it used to be. I mean, and you said.
Speaker 4 (11:41):
We're seeing some M and A activity out there, We're
seeing some IPO activity out there. A lot of that
boats I mean, or suggests that the market's pretty comfortable
with where things are right here. So get that thing.
Speaker 2 (11:53):
Steve, wonderful to have you in. Thank you. Likewise, stranger
Stephen a legend at Princeton Federated amazild that he could
come in stay with us. More from Bloomberg Surveillance coming
up after this.
Speaker 1 (12:14):
You're listening to the Bloomberg Surveillance podcast. Catch us Live
weekday afternoons from seven to ten am Eastern Listen on
Applecarplay and Android Otto with the Bloomberg Business app, or
watch us live on YouTube.
Speaker 2 (12:26):
One of my great inventions is the phrase chart paragraph. Charter.
Came out of Bear Stearns and Golden Sex years ago,
John Writing's work. David Malpasses worked on Ossius and Dudley
and the team there carrying on that tradition. Eric Winnigrad
is brilliant at Alliance Bernstein doing the chart paragraph thing.
I want to get to aggregate paycheck in a moment.
Steve Authur new Guests just came in with a wild
(12:49):
two year optimism on the equity market and the equivalent
Dow is now fifty nine sixty thousand, and he pins
it off nominal GDP gus current GDP, real GDP plus
the inflation component. What do you see out two years?
Speaker 7 (13:06):
Well, so I think that's the important part of that
is the inflation component. Right, A nominal GDP has been
elevated this year because inflation has been sticking. With inflation
still running three percent, nominal GDP is going to be higher,
and Steve is right, equities benefit from higher nominal GDP.
Speaker 5 (13:20):
So that all makes sense.
Speaker 7 (13:22):
The question on a forward basis is, if inflation comes down,
as we expect that it will, what does real GDP do?
What does real growth do? And I think the jury's
out on that. You can tell optimistic stories around AI
and the booster productivity history tells you it usually takes
longer than a year or two for these technological advances
to really manifest themselves in terms of massive productivity growth.
(13:43):
So we share the idea that the economy will continue
to expand. I would say that we are not quite
as optimistic as Steve seems to be. I'm an economist,
or sort of. I lose my guild card if I'm
too optimistic about anything.
Speaker 2 (13:55):
I switch Deceber. We're asking the economists what the market
will do, and we're asking strategists and managers what the
economy will do.
Speaker 4 (14:03):
Well, Eric, what do you make of the economy The
labor data we got yesterday?
Speaker 7 (14:07):
So I don't think the labor market data really changed
our picture of the economy, right.
Speaker 4 (14:11):
The labor market is certainly.
Speaker 7 (14:12):
A lot slower than it was six nine months ago,
where we're in a low higher, low fier economy.
Speaker 4 (14:17):
I think people are aware of that.
Speaker 7 (14:19):
I think that it is I would phrase it as
sort of precariously balanced, in the sense that labor supply
has been constrained by migration policy, and labor demand has
been constrained by a variety of different factors, and so
we're sort of sitting close to a neutral ish level
at a lower level of hiring. What I do take
information from, though, is that it is only close to balanced.
(14:40):
The unemployment rate has gone up for several months in
a row. Now is at a new cycle high. And
that's tells you that labor demand is falling faster than
labor supply. It's not a lot faster, but it is faster,
and to me, that's the primary driver of why I
expect the FED to cut as we move through next year.
Speaker 4 (14:57):
We're going to get some inflation data tomorrow. There, how
do you view that? What do you expecting to see tomorrow? Again?
Speaker 7 (15:03):
You know, the evidence that we have, and this is
the first week that we've gotten data since the government
shutdown ended. The evidence that we have from private sector sources,
from other places is that the economy didn't change meaningfully
during the shutdown. I expect the inflation data to show that,
which is to say that it's going to be sticky.
You know, I don't think we should expect a dramatic
change from where we were before. Goods prices are elevated
because of tariffs. Services prices are coming down, but only slowly.
(15:26):
We're still stuck sort of around three percent, and it
won't be until next year that we see real progress
on that.
Speaker 2 (15:31):
A lot of good analysis yesterday is really really valuable.
A lot on LinkedIn and Twitter, Eric Uinigrette, I love
your phrase aggregate paycheck. That's sort of how each and
every house listening and watching the show feels. There's like
the aggregate paycheck into the house. Do we risk a
negative real aggregate paycheck.
Speaker 7 (15:52):
We've been close at different times this year. You know,
that's where inflation really starts to bite, because salaries adjust,
but they don't adjust as quickly as prices do. And
so you have at various times this year been dancing
with the idea of households losing ground in aggregate. Right,
so this doesn't mean every household, but some households losing
ground relative to where prices are. Right now, we're sitting
(16:14):
on a six month annualized basis just above zero, and
to me, that's the primary driver of the economy. We
can talk about capecs, investment, we can talk about AI
and all that. At the end of the day, this
is still a consumer driven economy. And if the household
paycheck doesn't stay above water, things start to look pretty
pretty dangerous.
Speaker 2 (16:30):
Then in Dartmouth College, when you looked at this, you
bring it over to the political mandate. If we have
flat real wages, a crushing aggregate paycheck in America. That
really drives a central bank to a more accommodative strategy.
Speaker 4 (16:45):
Right, Well, it should do, right.
Speaker 7 (16:46):
You know, it's a challenge for the central bank because
if the reason that the paycheck is running close to
zero is that inflation is too high, it's not clear
that they're supposed to cut rates, right. Maybe they're supposed
to stay tight and address it through the inflation side
of the mandate. I think Chair Powell's been eloquent in
talking about this and saying that the FED is being
pulled away from its mandate in both directions. That's why
you see the discord within the Fed. That's why you
(17:07):
see the sense in both directions there is some evidence
of economic weakness. There is also evidence of inflation stickiness,
and so it's not clear what they're supposed to do.
But Tom, when you say, you know, this brings up
the political side of things. We have not had to
think about this for a while, but we will as
the year progressive. We're rolling toward midterm elections, and you know,
with affordability looking likely to be one of the primary issues,
(17:29):
it's not clear how the American public will react in
a political sense if the paycheck were to fall into
negative territory, or if they were to feel that things
are deteriorating.
Speaker 4 (17:39):
You say that the run rate of hiring has clearly
slowed this year and remains weak by historical standards. Why
is that so? I think there's a couple of aspects
to that.
Speaker 7 (17:47):
One is that labor supply has slowed, there are fewer
workers available. Another part of it is that businesses have
gotten a little fat on labor. I think that people
hired and you know, rewind a few years when we
were here talking about labor shortages and businesses couldn't find people.
As a result, once they found them, they've been very
reluctant to let them go. So businesses have been running
at full staff for a while, which diminishes their hiring needs.
(18:10):
But the primary driver I think has been economic uncertainty.
Businesses have not wanted to hire in an environment where
they don't know the policy regime. The month, if you
have to pick a month where hiring really deteriorated the
most and moved into this lower trajectory, it was April,
right after the tariffnounce And I don't know that that's
a reaction to tariff specifically so much as it is
a reaction to the uncertainty.
Speaker 2 (18:31):
We do our Eric winnigred audible here folks on China
with his work at Dartmouth and their acclaimed Asian studies
program Dembra eight can publish out of London today for
Bloomberg on luxury and there's a basic idea that the
three cities in China that do luxury Shanghai, Hong Kong vision.
I guess it will come back. I'm reading Bloomberg News
(18:51):
on the fiscal structure of the Xi administration, the GI government,
and I'm seeing some real stress there. How do you
received China for Americans in the next year.
Speaker 7 (19:03):
So from an American perspective, you know, China is not
as relevant as it was before because of the tariff policy.
There's been a redirection of exports. If you look at China,
their trade surplus has hit a record this year, even
as their trade into the US has diminished because of
tariff policy. They are exporting more to Europe, they are
exporting more within Asia, they are exporting more to South America.
(19:26):
They have to continue exporting because in order to keep
growth positive, they have to continue producing and domestic demand
in China. As we've talked about before is very weak.
So if they're going to produce it and people in
China won't buy it and they can't sell it to
the US, they have to find somewhere else to sell it,
and they have. And I find it a little bit
ironic that in the US we're talking about the affordability crisis,
(19:46):
China is essentially exporting deflation everywhere else in the world
because we won't let them export it here anymore.
Speaker 2 (19:53):
So you know, look, that's brilliant, Lisa, write that down.
Place that was brilliant not to import their price decline.
Speaker 7 (20:04):
Yeah, and look, there may be sound political reasons for that.
You know, we've talked about wanting to reshore manufacturing and
all of these already.
Speaker 2 (20:10):
Now it's the manufacturing jobs and the jobs report, Paul,
there's no evidence we're not yet.
Speaker 7 (20:15):
And again this goes back to business uncertainty. We might
at some point. Part of our forecast for next year
is the idea that you'll get a little bit more
capex in the US as uncertainty fades. But there's a
reason that we were producing stuff offshore in the first place,
which is that it's a whole lot cheaper. And if
you can produce it a lot cheaper, then you can
sell it a lot cheaper. And so you know, this
idea that you can just sort of cut China out
of our production chain and not have an impact prices
(20:37):
doesn't make any sense, and we're seeing that.
Speaker 2 (20:39):
Eric, Thank you so much Alliance Producing. Eric winnigred I
can't say enough about his work. He's a chief US
economist is thrilled to get his perspective. Stay with us.
More from Bloomberg Surveillance. Coming up after this.
Speaker 1 (21:00):
Is the Bloomberg Surveillance Podcast. Listen live each weekday starting
at seven am Eastern on Applecarplay 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 2 (21:17):
Stephen Kim is Withley, I didn't know you were. How
did you end up in Evercore? Does? Did ed Heyman
call up and say please?
Speaker 5 (21:24):
Now? It was fortuitous? It was really it was really
a great move on my part because so much of
my sector is dominated by or influenced by macro And
what better macro shop on the planet is?
Speaker 2 (21:35):
How do you read ed Heymen? How does a guy
like you own the high ground in American housing? What
do you read in ed Heyman where you lean forward?
Speaker 5 (21:45):
Well, I think ed Heiman has phenomenal contacts, and so
he hears so much about what people are thinking across
pretty much every sector that gives him an ed. I
think that nobody else can mas the.
Speaker 2 (22:02):
FED bet as we get disinflation and they's tight about
multifamily housing, signal family housing everywhere but where Paul Sweeney lives. Okay,
do you get just as a beginning conversation, do you
agree that housing prices in housing inflation will dampen this year?
Speaker 5 (22:21):
My view is that actually you could see existing home
prices go retreat a bit, you know, one to two percent.
I don't think it'll be palpable, because you don't. I
think that would be very problematic. But I think you
could see prices down one to two percent this year
next year on the exist in the existing market, and
(22:44):
I think actually that would be you know, positively received.
And I think that really what would drive that is
homeowners who have been wanting to sell finally saying, you
know what, we're going to make the move and I'm
willing to take a little bit of a lower price
because I still have significant amounts of home equity. I
think that's something to really watch for in twenty twenty six.
Speaker 4 (23:07):
Tom, You know, Steve's a player. He does not have
to schlep into the evercore Isi offices in York City.
He hangs a shingle in Raleigh, North Oh. Yeah, one
of the most beautiful parts of the country down there,
and he's right next to my duke, so you can
go over there anytime he wants to see some good basketball.
Speaker 5 (23:22):
Stephen.
Speaker 4 (23:23):
We have Lenar reported today. It's some disappointing numbers that
last night, some disappointing numbers here. Talked to us about
Lenar and what these home building companies are telling you
guys these days.
Speaker 5 (23:32):
Well, the first thing to say upfront is that Lenar
has a lot of idiosyncratic aspects to it. Right now,
it's very, very fascinating, but there's no question there is
a read across They are the second largest home builder
in the country and it is tough out there. And
what they told you was that even though mortgage rates
have you know, trended down, it has not stimulated an
(23:56):
improvement in home buying demand that was anywhere near what
they were hoping for. Okay, so that's certainly an important
read across it generally confirms frankly, what I think most
folks you know, would have gleaned if they if they,
you know, just we're sort of paying attention to what
the builders have been saying.
Speaker 2 (24:15):
All right.
Speaker 4 (24:16):
As a former director of research, this stuck out of me, Steve,
you cover fourteen stocks, You've got fourteen holds.
Speaker 5 (24:22):
I do right now.
Speaker 2 (24:23):
I have going on.
Speaker 5 (24:23):
We used to have. We used to be the permeable,
you know, And a couple of months ago we said
we still like the long term potential, but we basically
hit the pause button. We said this group cannot be owned.
And there was a lot of uncertainty, not only because
the market was not responding to the lower rates that
(24:47):
we saw coming into September, but also because the government
was becoming increasingly interested in and proactive or talking like
they were going to be proactive, and it was very
difficult to determine what exactly they might do. Their initial commentary,
mostly communicated through Bill Poulty of the FHFA, was not
looking good to me and or investors. Right now, Bill
(25:10):
Poulty has sort of taken a step back, but it
is still very uncertain what the government is going to do.
And so in that kind of environment, I was, I said,
we can't really make a convicted call with conviction. You know,
a couple of months I've transpired. We're thinking about a
few things. So you know, we'll see what twenty twenty
six looks like. But that's the explanation of what's going
on right now with the ratings.
Speaker 2 (25:30):
Across America this morning. The way you listen to us
Stephen Kim, he is the evercore ISI on American housing,
the research ones. I can't say enough about the acuity. Okay,
let's start with this scam. What's a buydown?
Speaker 5 (25:44):
So a mortgage rate buydown is an innovation that has
actually has its genesis from many, many years ago. We're
simply put anytime that any of us had gotten a mortgage,
at some point we were actually asked, well, what kind
of how many points do you want to put down?
How much money do you want to put down upfront
to get a little bit of a lower rate? You know,
(26:05):
generally speaking, you know, you put one percent down or
one point they call it one, you know, one percent down,
and you can buy down the mortgage rate, call it
twenty twenty five basis points. You know, it depends on
you know, what's happening with the bond market at the time.
But something like that, you know, people put one or
two points down. There's a couple of wrinkles though. One
is the seller can sometimes pay for that instead of
(26:26):
the buyer. And so these home builders who are sellers, right,
have been doing that so that they can offer a
lower rate. But they're not just buying down one or
two percent, you know, to putting one or two points in.
They're actually sometimes putting down ten points and you know,
ten percent of the loan amount and buying down the
mortgage rate like one hundred and fifty two hundred basis points.
(26:49):
This sort of thing. That's what's been going on for
most of the last two years.
Speaker 2 (26:53):
To keep the business going. Why don't they just cut
price and affect a clean trendsaction.
Speaker 5 (27:00):
So here's the important thing to understand. If you pay
four percent of effectively the home price, you can buy
down the rate one hundred basis points. Right. That takes
let's say the mortgage rate down from let's say seven
percent down to six.
Speaker 8 (27:15):
Sweeney's taking notes, I'm taking all right, that's like a
twelve percent reduction in the mortgage payment, roughly ten to
ten to twelve percent reduction in the mortgage payment.
Speaker 5 (27:25):
Well, how would you affect that if you didn't change
the rate and you just you know, lowered the home price,
it would be a twelve hundred basis point hit. Right,
you have to lower the price twelve twelve percent to
get a reduction, right if the rate was the same. Right, So,
so which would you rather do? Give up four hundred
basis points a margin or give up twelve hundred basis
points in margin. They'll just said, you know what, I
can do that math, I'm going to go with the
(27:46):
buy down. It'll cost me less, the buyer is happy,
the payment gets reduced the same to tyebo.
Speaker 2 (27:51):
On is this is legal? What's going on? So?
Speaker 5 (27:54):
It is legal?
Speaker 2 (27:56):
Right?
Speaker 5 (27:56):
Beak but there, but but there's a button. It's legal,
but the government has set certain limits to how much
the seller can pay, and those limits are generally depending
on the mortgage type, six percent, six points or three points.
But I just told you that the builders were doing
ten points sometimes even more. How do they do that?
Because there's a loophole if you do your buy down
(28:18):
a certain way called the forward purchase commitment. It's exempt,
and with a stroke of a pen, that exemption could
be modified or removed. And so we point out this
as a potential vulnerability that the builders should think about
as we look into twenty twenty six and twenty twenty cent.
Speaker 4 (28:37):
Interesting, we're talking to Stephen Kim, head of housing research
at Evercore is side is.
Speaker 2 (28:41):
Enough inside baseball?
Speaker 4 (28:42):
That was some theme stuff the mortgage back Mortgage Bankers
Association thirty or fixture rates like six point three percent
or something. Is there a rate that's going to prompt
sellers to say, all right, I'm ready to like sell
my house, move down to Florida wherever I'm going to go,
and move down to Raleigh to the Triangle, And is
(29:02):
there a rate that will clear this market because nobody's.
Speaker 5 (29:05):
Putting their house up for sale. I think that we
get that question all the time. As you might imagine, right,
there's this locked in effect of low mortgage rates. Somebody's
got like a three and a half percent or three
percent mortgage rates. They loving it, you know, because prevailing,
as you said, is six point three This is great.
And so people have asked people initially said, well, all
those people are going to like die in their homes.
(29:25):
They're never going to move, right, that's a little simplistic.
The reason why one moves. Some of it's financial, a
lot of it ain't, yep. A lot of it is,
you know what, mom's getting older, you know, we really
need to go see her, or we're not seeing their
grandkids enough, or I'm retiring. There's all kinds of reasons
(29:46):
why the house that was good for you ten years
ago is not really that great for you anymore. And
I would say that given the incredibly low amount of
housing turnover that we've seen, it is very clear that
millions of people we estimate about four million people right now,
would normally have moved in the last few years but
have not yet. Now the impetus for them to want
(30:08):
to move has not gone away. Those things that I
just retirement, being close to the kids, being close to
the aging parents, you know, those those are itches that
do not go away unless they are scratched, and until
they are scratched. So we think there's a significant penuptimend.
Now that's not a rate thing, though, right, that's a
steady pressure that's building building, and it's going to keep
building until they actually move. I think therefore that we
(30:32):
should think about the unlock with respect to rates is
it's not binary. There's not like a magic rate, but
certainly rates go on and the lower makes it a
little bit easier. You leave a little less money on
the table. But meanwhile, it's really these life factors that
I think are more important.
Speaker 2 (30:47):
Well, and it's unfair to you. You know have record,
you know you're looking at national and you've got all
your list of companies, and that if you had a
cup of coffee right now with a new mayor in
New York City or with the governor of New York,
the governors of the tri state area, this American housing
crisis is tangible. What's the Stephen Kim's solution? Yeah, for Queens,
(31:11):
what's the solution for Kansas City, what's the solution for
la Well.
Speaker 5 (31:17):
One of the reasons why I'm not in politics. There
are many, by the way, but one of the reasons
is because I don't think that the housing market is
really really lends itself to a quick fix. There are fixes,
but the fix comes from supply. You need to increase supply,
and if you do that, you will put some downward
(31:38):
pressure on pricing. However, if pricing goes negative full retreat,
you're going to kill demand because who wants to buy
a leveraged you know, get themselves into a significantly lever
transaction when prices are going down, right, your home equity
is the first hit, right, So that's why I say
I would say Goldilocks is a price reduction across the
market one to two percent, adding supply, and you're going
(32:01):
to work yourself out of this thing eventually. But it's
not a quick fix Research Triangle Park. It's Raleigh, Durham
Chapel Hill, North Carolina.
Speaker 4 (32:09):
It's been a great, great market for forty years.
Speaker 5 (32:12):
Yes, how is it today? It's very good. You have
a lot of in migration from places like New York,
but much more so I would say the DC market.
Most of the people that I run into are generally
from DC, some Chicago, some California. There's a lot of tech,
there's a diversified employment based there's also the state capitol
y you have the three major universities, NC, State, UNC
(32:36):
and Duke that are there. So it's a great market.
Speaker 2 (32:39):
We're the CEO of Cornyn Steers in earlier what's it
real estate to hear something and you know, I talked
about the culture of management, so to go to Stephen
Kim single best Buy, I assume that's wrapped around management
as well, which is the superior operating officer of homebuilders right.
Speaker 5 (32:57):
Now, I think in the home building area, I think
it's it's pretty clear that Dr. Horton has an exceptional
management team. They demonstrated that what's.
Speaker 2 (33:06):
Their distinction, what are you different?
Speaker 5 (33:08):
Well, it's a good, really good question, because it's not
just one thing, but through decades of managing their company,
they have successfully migrated from being sort of a scrappy
entrepreneurial kind of company to being a more large scale
but still entrepreneurial company. And they have made some very
(33:32):
savvy bets without necessarily dictating it just from the top.
So their their skill is in homebuilding, so much of
the decision making has to happen locally, and they've been
able to incentivize their people interesting and empower those people
to make really good that's hard.
Speaker 2 (33:47):
Paul ten year track record, eighteen point nine percent per year.
It's trained like Apple comput exactly. I think they nailed two,
but forced.
Speaker 4 (33:57):
I'll tell you the nail gun Tom. That is revolutionized
the home building. I see these frame people frame up
a house in like fifteen minutes. Now, it was unbelievable.
Speaker 2 (34:05):
I mean a construction site. As a kid, they gave
me a hammer, Tom, go to lud Suirley. That was
the assumption.
Speaker 4 (34:13):
Good stuff real quickly. Cost of building a house is
lumber going? I mean, where are we just the cost
of building a house these days?
Speaker 5 (34:19):
So you know, we certainly have had seen some material
inflation of how wherever lumber has actually been very well contained,
and labor has also been surprisingly well contained. Going into
the year, we thought, all my goodness, you know, with
all the deportations and all that rhetoric, that we were
going to see a lot of the laborers disappear, and
that didn't happen.
Speaker 4 (34:37):
Actually, why didn't that happen because I that was always
called out here in it.
Speaker 5 (34:40):
It was. One of the things is that the multifamily
starts dropped significantly because you had had kind of a
boom there like a few years ago, and then that
came down and a lot of the same workers, you know,
who are there's no there's no multi family. Well then
they go to single family. So that's part of it.
And the second of all, you know the guys, you know,
the guys who might be afraid I shows up. Yeah,
(35:01):
that keeps them away for a couple of days or something.
But you know what if they don't work, they don't eat. Yeah, right,
so they're very tenacious.
Speaker 2 (35:07):
All right, Stephen, thank you so much for coming on.
Kim has head pausing research at ever court is I
stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1 (35:25):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay 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 Paul Stunian Time.
Speaker 2 (35:43):
Keep Paul like Wednesday before the holidays, you know, and
Lisa's got the party dresser?
Speaker 5 (35:48):
Yep?
Speaker 2 (35:49):
I mean you can't see the Bloomberg. Is it two
or three parties tonight?
Speaker 4 (35:53):
It's two?
Speaker 2 (35:54):
Yes? Okay?
Speaker 9 (35:55):
Dress was a steal. Okay, so the newspaper okay, speaking
of a steal.
Speaker 4 (36:00):
Okay.
Speaker 6 (36:00):
You know how I always talk about the Costco hot dog,
you know, dollar fifty deal. Okay, but the Wall Street
Journal says you have to check out their vacation deals.
Speaker 9 (36:09):
I'm telling you, I almost.
Speaker 6 (36:11):
Booked my trip to Greece through Costco because of the offers.
It's actually been around for a while, like Costco started
babbling about twenty five years ago.
Speaker 4 (36:19):
Yeah.
Speaker 5 (36:19):
Yeah.
Speaker 9 (36:19):
You walk out and there's huge advertisements everywhere.
Speaker 6 (36:22):
It has like eight hundred in house agents, thirteen buyers,
five call managers. I mean they it's multimillion dollars. It's
not just booking in vacation packages, but it's cruises, it's
rental cars.
Speaker 4 (36:33):
It's like the whole I didn't notice the thing. Yeah
my rental cars through there.
Speaker 9 (36:39):
Yeah yeah yeah, but saving money I am because.
Speaker 6 (36:42):
I compared it. I mean, granted, I'm paying for the membership,
and that's the thing. You have to be a member
in order to get the vacation. It comes with a
few It's not Expedia, it's not booking dot Com. It's
not that big. But you get like airline tickets through
a package, so you don't get to kind of choose
the exact airline like you It's kind of like Costco.
You go there and you get what you get. And
(37:02):
you don't get upset. You know, as my mom used
to say.
Speaker 2 (37:05):
We should say, folks surveillance. Lisa Mattea is not have
a business affiliation with Costco now, except I want your
record number shopping carts.
Speaker 9 (37:18):
It's one in half, one and a half three.
Speaker 2 (37:22):
You got radar, you've got red lights in the back.
One here, so you don't take someone out in vegetables.
Speaker 9 (37:28):
Next it gets dangerous.
Speaker 6 (37:29):
Okay, global coffee prices, right, we've been talking about it.
They've been going higher and higher for that cup of coffee.
But I mean, let's face it, you can't kick the
caffeine habit, right, So what Bloomberg has this article in
the terminal. It says what more people are doing to
make the cup more affordable? So they say drinkers are
kind of trading down, like they're choosing the cheaper drive
through options. Maybe they're going to convenience store coffee instead.
Speaker 4 (37:53):
Don't knock the wah wah.
Speaker 6 (37:54):
They have really good coffee, cutting back on the number
of times they make the coffee run too.
Speaker 9 (37:58):
That's another thing. And then you have the real like.
Speaker 6 (38:01):
Die hard coffee fans who are going for they're binding
the grind, they're buying the grinders, right, they're buying the
drip coffee.
Speaker 4 (38:07):
Make sure you're.
Speaker 9 (38:07):
Buying the fancy espresso machine. Yes, that fill the counter space.
Speaker 6 (38:13):
Yes, they say it's pricey, you know, upfront, but it's
worth it because you say, even having to go, you know,
to the store every day.
Speaker 2 (38:19):
I mean, I got the charge. And Bloomberg folks just
just grat in commodities. Will Kennedy driving that forward for
us pretty much is the bottom of COVID and all
that Paul ready, yep, up three hundred and sixty seven percent,
twenty seven percent per year. That on a quick look
at the commodity coffee.
Speaker 4 (38:37):
My double short Moca on Saturday when I'm out doing
the errands, five dollars and sixty cents and then I
tip a buck. So there you go. That's my six
dollars and sixty cents for a double short Moca. Some
people do that, do it once a week. That's kind
of mine. Once a week. Sure, that's your thing, all right,
because we've got we've got again seven thousand different varieties
of coffee up on the sixth floor here. That's Bloomberg
(38:59):
from all parts, very good, they are very good. I
do have to say, next, okay.
Speaker 9 (39:04):
This next one.
Speaker 6 (39:04):
It's it's it's how more moms are taking over their
kids adult kids dating profiles. And this is like the
kid's request. So the kids are saying, you know what,
I'm tired, I'm burnt out. This is in the journal
they're saying. They're saying, mom, take over my profile.
Speaker 4 (39:21):
Okay.
Speaker 6 (39:21):
And it's not just mom, it's dads, it's the brothers
and sisters.
Speaker 4 (39:25):
Even grandma's getting in on the action. Okay.
Speaker 6 (39:27):
They're redoing their profiles. They're you know, getting them a
little bit better. They say it can bring some new perspectives.
But there's some challenges too, because family members have different opinions, right,
I mean, you know some people go for certain things.
Speaker 4 (39:40):
You're not doing this for others. I never did.
Speaker 9 (39:42):
They didn't have this when I was dating that my
son does.
Speaker 4 (39:46):
Yeah, okay, he did. It didn't lead to anything.
Speaker 6 (39:48):
He found his other kids girlfriend by through a friend
you know, at school.
Speaker 5 (39:53):
Yeah, very good.
Speaker 2 (39:54):
I don't know.
Speaker 5 (39:55):
I think it's God.
Speaker 2 (39:56):
I think the most intelligent thing, ladies, the most intelligent
thing I heard the newspapers today was just.
Speaker 4 (40:02):
Go to a bar, exactly exactly the old fashioned way.
Speaker 6 (40:06):
Go to a bar, talk to somebody, You actually talk
to someone I know.
Speaker 5 (40:10):
Put the phone.
Speaker 2 (40:10):
Dinversation at home yesterday? Is there a way to get
rid of Nintendo? Switch is easy?
Speaker 4 (40:18):
For no?
Speaker 2 (40:20):
They threw a tantrum the newspapers a Lisa Manteo, thank
you so much.
Speaker 1 (40:25):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot com, the
iHeartRadio app, tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(40:45):
always on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App,
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
We have a perfect guest to speak of our equity.
Conversation of the day is stephenoth He is with Federated
him as we're thrilled that he could join us here
this morning. Just as a general statement, and it goes
back to the day you and I looked at AOL
Time Warner and said, really, did these deals work out?
My answers, No, there's no evidence they're a value.
Speaker 3 (00:49):
Add They haven't added a lot of value.
Speaker 2 (00:51):
Tom. It's gotta go longer than nasty, but it's not TV.
You gotta have longer.
Speaker 3 (00:57):
This is an interesting deal though, I mean, you know,
Netflix getting ahold of these studios.
Speaker 2 (01:04):
I think it's it.
Speaker 3 (01:05):
Could really I've been the whole Hollywood industry.
Speaker 2 (01:09):
I think that's what can create profit where Federated can
invest in it.
Speaker 3 (01:13):
We're not in Netflix. Well, we're in all these stocks,
but we're not heavy there. You know, we we'd rather
on on these mag seven names. We kind of play
relative value, and for us right now, Amazon is maybe
a better value if you will. I mean, people talk
about a bubble, but you can buy Amazon at eighteen
(01:34):
times cash flows. It's really not bad for a company
that we look at it and say to you, you're
you're getting aws AI and you're kind of getting the
retail business for free.
Speaker 2 (01:46):
Yep.
Speaker 4 (01:47):
See twenty twenty five. It has been a really wonderful
year for investors. I mean, fifteen percent in the S
and P twenty percent in the NASTAC fixed income, high
single digit returns. What's kind of the setup for twenty
twenty six for you guys?
Speaker 2 (02:00):
We think it's pretty good.
Speaker 3 (02:01):
We've got a two year target of eighty six hundred,
we've got seventy eight hundred for next year, and really
driven by earnings growth. At this stage, we've got earnings
at yeah, three ninety out three years, and you know
Stock's eight nominal GDP growth. Nominal GDP growth looks really
good to us. You've got the AI revolution driving earnings,
(02:23):
You've got enormous productivity. We've got GDP next year up
three percent. I think the consensus is two we've been
on the high side along, we've been more right than
wrong on that. But you know, you've got a lot
of stimulus coming next year that we think could get
you a surprise on the upside, and with the job
market relatively stable, that means a big boost in productivity,
(02:44):
which is a big boost in earning. So I think
the setup looks pretty good.
Speaker 2 (02:48):
Paul, SPX eighty six hundred, I'm all in is Dow
sixty thousand?
Speaker 4 (02:54):
Yeah, a forty eight.
Speaker 2 (02:56):
I've never done that. I've never done That's the first.
Speaker 4 (02:58):
Again, what sectors kind of screen well for you guys, Steve,
because we've had tech has been such a start for
so long, and then the AI story over the last
two or three years has been the star.
Speaker 5 (03:09):
What sectors screenwall.
Speaker 3 (03:11):
Right, So what we're trying to do is we don't
want to be out of this AI trade because it's
the driver, but we're just modestly overweight those stocks and
again playing relative value within there, and we think the
big picture next year is finally this broadening out happens.
The FED cutting helps the interest rates sensitive parts of
the economy that have been suffering, so that starts to
(03:31):
live housing, regional banks, emerging markets actually had a good
year this year off of very low levels. We think
that's a really interesting place. So we are playing this
broadening out trade, but not going underweight or avoiding. The
drivers of the same witch are the tech stocks, but
we think they're kind of they're going to becoming a
relative value play within there. We don't really see them
(03:54):
as necessarily leading the market forward next year.
Speaker 2 (03:57):
Help us with the gloom that's out there. Three years
of double digit return. People are modeling a fourth year
of double digit return. It's like three times Paul. Since
World War Two, we've had this oddity. How should people cautious,
including clients have federated, How should they be enthusiastic if
(04:17):
they don't feel that way.
Speaker 3 (04:19):
Well, what we've been saying, Tom, is we're in a
secular bull market here. This is only the third one
in the last hundred years. They happen after you've had
a fifteen year bear where everyone is lost a lot
of money, which they did between ninety nine and thirteen,
and they're forever cautious for a generation.
Speaker 2 (04:38):
The scar that's what it's like. Depression, be right, That's.
Speaker 3 (04:40):
What drives the bull and that's why here you know,
as soon as we get a little bit of a pop,
everyone's talking about bubbles. We put out on our website
earlier this week a bubble monitor, because in our experience,
you've got to look at bubbles from the perspective of
several different dementi that tend to happen kind of in
(05:03):
conjunction with one another, not just one. So overinvestment one
people talk a lot about. But excess liquidity, we're not there. Actually,
the Fed's probably too tight regulatory errors.
Speaker 2 (05:14):
We're not there. You know.
Speaker 3 (05:17):
Over investment you could sort of make the case maybe,
but if you look at the levels of investment relative
to GDP in this phase, it's still below what you
saw in the other big industrial revolutions, and it's being
funded by cash excess debt, we're not there. And over evaluations,
we just went through the story on Amazon. I don't
(05:37):
think we're there yet either. So we've got a few
things for lashing y'all. A little bit of fraud out
there that's never good. But you know, we think generally
we're early. Before you start calling for a bubble.
Speaker 2 (05:47):
To get your Wednesday started. Stephen off with this, he's
a federal inter mens here Inequity's got a real equity show.
We'll do some bonds with Irig Jersey later, and we'll
do some real estate as well. We're doing commodities today,
we can do that. We'll do commodities as well. Paulstrading
and Time Keen. The way you listen to us, Thank you,
ninety ninety one FM, Nathan Hager Radio in Washington, ninety
two nine FM in Boston, Bloomberg eleven three zero here,
(06:10):
and of course on YouTube. Subscribe. The way you do
is somebody asked me the other day, how do I
get you on YouTube? Okay, here's the way you go.
On Bloomberg Podcasts. Up comes Bloomberg Podcasts. We do the
live show every morning. Subscribe to Bloomberg Podcasts on YouTube
to see handsome Steve Off.
Speaker 4 (06:27):
Yeah, just click a button. There you go, Steve. How
about US equities versus maybe rest of world equities. We
had a little bit of a migration earlier in the
year out of the US maybe into Europe and some
other markets. How do you think about that?
Speaker 3 (06:39):
Yeah, I mean those markets were really cheap, and a
lot of it was actually a currency place. Okay, yeah,
because you know that was a big move I just
came back in September. I was out in Japan with
our Japanese analysts and just came back last week from
a long trip out to Europe talking to folks out there,
so I'm a little fresh on that. And I would
(06:59):
say this, if you look at EFA, which is a
technical term for basically the developed world outside the USA,
Europe looks okay to US. You know, it's not as
cheap as it used to be relative to US, it's
still relatively inexpensive, and the downside isn't really there the
econ you know, the governments are spending more money thanks
(07:20):
to President Trump on defense, but on the other hand,
there's not a lot of upside and there's not a
lot of AI technology in Europe, so it's kind of backstage.
We think it's okay. Japan is really interesting. It's it's
you know, restructuring, first time the real estate markets finally
come back after thirty years. Tom you probably remember the
(07:41):
days when Tokyo real estate was more expensive than all
of the United States, et cetera. But it's starting to
really come back now. So we think that's interesting. But
basically the way we're staged here is we're modestly overweight
so called EFA Developed because of Japan. We're overweight EM
because emerging markets is the only place outside the US
(08:04):
where you can get technology stocks basically in Asia, and
we think that looks interesting. We think Latin America next
year looks pretty interesting. So we're overweight there, but our
big overweights remain in the US because that's where you know,
this is the leaders here in this industrial revolution.
Speaker 4 (08:23):
Right, I mean, evaluation here is just extraordinary, isn't it.
Speaker 3 (08:26):
Well, As I said earlier, I think on the max
seven in some cases it is are, but there's other
ones in there that look pretty valuable and pretty cheap.
And then on the other side of it, the rest
of the broader market actually is inexpensive. So we think
in the US the big story next year is finally
this broadening out trade. It's going to benefit from these
raid cuts from the FED, the regional banks, the housing sector,
(08:50):
the industrials.
Speaker 2 (08:50):
So you know, we're.
Speaker 3 (08:52):
Playing the broadening out trade in the US, hanging in
there with the US tech stocks but trading relative value
and then looking outside for more attack in Asia.
Speaker 2 (09:01):
Let's go William Priest here, what is the Steve Off?
What is a steve ofth process to identify quality free
cash flow growth.
Speaker 3 (09:11):
Right, So you know people talk about quality and I
had never met a PM in my life who didn't
say he buys quality stocks. So you know, you got
to define it so that we start with a management
team that we believe in and has a track record
of growth. The second is we look at cash flows
being generated by the business in a business position that
can sustain and protect those cash flows. And we want
(09:34):
to see cash flows. We want to see pretty good,
solid balance sheets. We don't want to see people playing
around with fake earnings.
Speaker 2 (09:41):
Because the time I got to bring this up, folks,
this is so important what you're hearing here. This is
like the mistakes that are made out there. The fundamental
outlaw underlying of quality free cash flow is the partial
differential of revenue growth. What you started with anominal yeah
GDP absolutely, if you don't have a revenue growth beeps
(10:03):
above norm however you want, you know, fan distribution whatever.
If you don't have revenue growth, you can't get down
to the bottom of the feld.
Speaker 3 (10:12):
You can't get cash flaw.
Speaker 2 (10:13):
Yeah, it's just that simple part. I can't say nominal
GDP is where I am.
Speaker 4 (10:19):
Steve, we said the biggest IPO of the year, price
less name Medline.
Speaker 2 (10:23):
I missed this.
Speaker 4 (10:24):
What is it? I mean, six point three billion dollar IPO.
That's going to be kind of a bullish sign, right,
I mean, I mean it just seems like if you're
raising that kind of capital in this market for a
traditional healthcare company, what do you make of that?
Speaker 3 (10:39):
The middle syllable economy is confidence.
Speaker 5 (10:43):
YEP.
Speaker 3 (10:44):
So you're absolutely rightful with that question. It's something when
I review everything's going on with our board every quarter,
our clients. I look at IPO activity M and a
activity of late. I found myself kind of as the
reception a Federal Hermes after five pm when the regular
staff goes home and you've got these road shows coming through. Uh,
(11:07):
and it's you know, Steve is introducing me able to you.
But you know there's a lot of activity there. We're
never not nowhere near back the bubble days, if you will,
when things are really popping through lunches.
Speaker 2 (11:20):
Yeah.
Speaker 3 (11:20):
I love to see this activity because to me, it
is a sign that animal spirits are coming back into
the economy, and that's what drives everything else.
Speaker 2 (11:28):
Medline MDL and thank you Paul, I miss this completely.
Did you get your eight thousand shares?
Speaker 6 (11:34):
Yes?
Speaker 2 (11:34):
Sure, absolutely, I just want to be sure we're taking
care of But this is like, Paul, this is like
the way it used to be. I mean, and you said.
Speaker 4 (11:41):
We're seeing some M and A activity out there, We're
seeing some IPO activity out there. A lot of that
boats I mean, or suggests that the market's pretty comfortable
with where things are right here. So get that thing.
Speaker 2 (11:53):
Steve, wonderful to have you in. Thank you. Likewise, stranger
Stephen a legend at Princeton Federated amazild that he could
come in stay with us. More from Bloomberg Surveillance coming
up after this.
Speaker 1 (12:14):
You're listening to the Bloomberg Surveillance podcast. Catch us Live
weekday afternoons from seven to ten am Eastern Listen on
Applecarplay and Android Otto with the Bloomberg Business app, or
watch us live on YouTube.
Speaker 2 (12:26):
One of my great inventions is the phrase chart paragraph. Charter.
Came out of Bear Stearns and Golden Sex years ago,
John Writing's work. David Malpasses worked on Ossius and Dudley
and the team there carrying on that tradition. Eric Winnigrad
is brilliant at Alliance Bernstein doing the chart paragraph thing.
I want to get to aggregate paycheck in a moment.
Steve Authur new Guests just came in with a wild
(12:49):
two year optimism on the equity market and the equivalent
Dow is now fifty nine sixty thousand, and he pins
it off nominal GDP gus current GDP, real GDP plus
the inflation component. What do you see out two years?
Speaker 7 (13:06):
Well, so I think that's the important part of that
is the inflation component. Right, A nominal GDP has been
elevated this year because inflation has been sticking. With inflation
still running three percent, nominal GDP is going to be higher,
and Steve is right, equities benefit from higher nominal GDP.
Speaker 5 (13:20):
So that all makes sense.
Speaker 7 (13:22):
The question on a forward basis is, if inflation comes down,
as we expect that it will, what does real GDP do?
What does real growth do? And I think the jury's
out on that. You can tell optimistic stories around AI
and the booster productivity history tells you it usually takes
longer than a year or two for these technological advances
to really manifest themselves in terms of massive productivity growth.
(13:43):
So we share the idea that the economy will continue
to expand. I would say that we are not quite
as optimistic as Steve seems to be. I'm an economist,
or sort of. I lose my guild card if I'm
too optimistic about anything.
Speaker 2 (13:55):
I switch Deceber. We're asking the economists what the market
will do, and we're asking strategists and managers what the
economy will do.
Speaker 4 (14:03):
Well, Eric, what do you make of the economy The
labor data we got yesterday?
Speaker 7 (14:07):
So I don't think the labor market data really changed
our picture of the economy, right.
Speaker 4 (14:11):
The labor market is certainly.
Speaker 7 (14:12):
A lot slower than it was six nine months ago,
where we're in a low higher, low fier economy.
Speaker 4 (14:17):
I think people are aware of that.
Speaker 7 (14:19):
I think that it is I would phrase it as
sort of precariously balanced, in the sense that labor supply
has been constrained by migration policy, and labor demand has
been constrained by a variety of different factors, and so
we're sort of sitting close to a neutral ish level
at a lower level of hiring. What I do take
information from, though, is that it is only close to balanced.
(14:40):
The unemployment rate has gone up for several months in
a row. Now is at a new cycle high. And
that's tells you that labor demand is falling faster than
labor supply. It's not a lot faster, but it is faster,
and to me, that's the primary driver of why I
expect the FED to cut as we move through next year.
Speaker 4 (14:57):
We're going to get some inflation data tomorrow. There, how
do you view that? What do you expecting to see tomorrow? Again?
Speaker 7 (15:03):
You know, the evidence that we have, and this is
the first week that we've gotten data since the government
shutdown ended. The evidence that we have from private sector sources,
from other places is that the economy didn't change meaningfully
during the shutdown. I expect the inflation data to show that,
which is to say that it's going to be sticky.
You know, I don't think we should expect a dramatic
change from where we were before. Goods prices are elevated
because of tariffs. Services prices are coming down, but only slowly.
(15:26):
We're still stuck sort of around three percent, and it
won't be until next year that we see real progress
on that.
Speaker 2 (15:31):
A lot of good analysis yesterday is really really valuable.
A lot on LinkedIn and Twitter, Eric Uinigrette, I love
your phrase aggregate paycheck. That's sort of how each and
every house listening and watching the show feels. There's like
the aggregate paycheck into the house. Do we risk a
negative real aggregate paycheck.
Speaker 7 (15:52):
We've been close at different times this year. You know,
that's where inflation really starts to bite, because salaries adjust,
but they don't adjust as quickly as prices do. And
so you have at various times this year been dancing
with the idea of households losing ground in aggregate. Right,
so this doesn't mean every household, but some households losing
ground relative to where prices are. Right now, we're sitting
(16:14):
on a six month annualized basis just above zero, and
to me, that's the primary driver of the economy. We
can talk about capecs, investment, we can talk about AI
and all that. At the end of the day, this
is still a consumer driven economy. And if the household
paycheck doesn't stay above water, things start to look pretty
pretty dangerous.
Speaker 2 (16:30):
Then in Dartmouth College, when you looked at this, you
bring it over to the political mandate. If we have
flat real wages, a crushing aggregate paycheck in America. That
really drives a central bank to a more accommodative strategy.
Speaker 4 (16:45):
Right, Well, it should do, right.
Speaker 7 (16:46):
You know, it's a challenge for the central bank because
if the reason that the paycheck is running close to
zero is that inflation is too high, it's not clear
that they're supposed to cut rates, right. Maybe they're supposed
to stay tight and address it through the inflation side
of the mandate. I think Chair Powell's been eloquent in
talking about this and saying that the FED is being
pulled away from its mandate in both directions. That's why
you see the discord within the Fed. That's why you
(17:07):
see the sense in both directions there is some evidence
of economic weakness. There is also evidence of inflation stickiness,
and so it's not clear what they're supposed to do.
But Tom, when you say, you know, this brings up
the political side of things. We have not had to
think about this for a while, but we will as
the year progressive. We're rolling toward midterm elections, and you know,
with affordability looking likely to be one of the primary issues,
(17:29):
it's not clear how the American public will react in
a political sense if the paycheck were to fall into
negative territory, or if they were to feel that things
are deteriorating.
Speaker 4 (17:39):
You say that the run rate of hiring has clearly
slowed this year and remains weak by historical standards. Why
is that so? I think there's a couple of aspects
to that.
Speaker 7 (17:47):
One is that labor supply has slowed, there are fewer
workers available. Another part of it is that businesses have
gotten a little fat on labor. I think that people
hired and you know, rewind a few years when we
were here talking about labor shortages and businesses couldn't find people.
As a result, once they found them, they've been very
reluctant to let them go. So businesses have been running
at full staff for a while, which diminishes their hiring needs.
(18:10):
But the primary driver I think has been economic uncertainty.
Businesses have not wanted to hire in an environment where
they don't know the policy regime. The month, if you
have to pick a month where hiring really deteriorated the
most and moved into this lower trajectory, it was April,
right after the tariffnounce And I don't know that that's
a reaction to tariff specifically so much as it is
a reaction to the uncertainty.
Speaker 2 (18:31):
We do our Eric winnigred audible here folks on China
with his work at Dartmouth and their acclaimed Asian studies
program Dembra eight can publish out of London today for
Bloomberg on luxury and there's a basic idea that the
three cities in China that do luxury Shanghai, Hong Kong vision.
I guess it will come back. I'm reading Bloomberg News
(18:51):
on the fiscal structure of the Xi administration, the GI government,
and I'm seeing some real stress there. How do you
received China for Americans in the next year.
Speaker 7 (19:03):
So from an American perspective, you know, China is not
as relevant as it was before because of the tariff policy.
There's been a redirection of exports. If you look at China,
their trade surplus has hit a record this year, even
as their trade into the US has diminished because of
tariff policy. They are exporting more to Europe, they are
exporting more within Asia, they are exporting more to South America.
(19:26):
They have to continue exporting because in order to keep
growth positive, they have to continue producing and domestic demand
in China. As we've talked about before is very weak.
So if they're going to produce it and people in
China won't buy it and they can't sell it to
the US, they have to find somewhere else to sell it,
and they have. And I find it a little bit
ironic that in the US we're talking about the affordability crisis,
(19:46):
China is essentially exporting deflation everywhere else in the world
because we won't let them export it here anymore.
Speaker 2 (19:53):
So you know, look, that's brilliant, Lisa, write that down.
Place that was brilliant not to import their price decline.
Speaker 7 (20:04):
Yeah, and look, there may be sound political reasons for that.
You know, we've talked about wanting to reshore manufacturing and
all of these already.
Speaker 2 (20:10):
Now it's the manufacturing jobs and the jobs report, Paul,
there's no evidence we're not yet.
Speaker 7 (20:15):
And again this goes back to business uncertainty. We might
at some point. Part of our forecast for next year
is the idea that you'll get a little bit more
capex in the US as uncertainty fades. But there's a
reason that we were producing stuff offshore in the first place,
which is that it's a whole lot cheaper. And if
you can produce it a lot cheaper, then you can
sell it a lot cheaper. And so you know, this
idea that you can just sort of cut China out
of our production chain and not have an impact prices
(20:37):
doesn't make any sense, and we're seeing that.
Speaker 2 (20:39):
Eric, Thank you so much Alliance Producing. Eric winnigred I
can't say enough about his work. He's a chief US
economist is thrilled to get his perspective. Stay with us.
More from Bloomberg Surveillance. Coming up after this.
Speaker 1 (21:00):
Is the Bloomberg Surveillance Podcast. Listen live each weekday starting
at seven am Eastern on Applecarplay 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 2 (21:17):
Stephen Kim is Withley, I didn't know you were. How
did you end up in Evercore? Does? Did ed Heyman
call up and say please?
Speaker 5 (21:24):
Now? It was fortuitous? It was really it was really
a great move on my part because so much of
my sector is dominated by or influenced by macro And
what better macro shop on the planet is?
Speaker 2 (21:35):
How do you read ed Heymen? How does a guy
like you own the high ground in American housing? What
do you read in ed Heyman where you lean forward?
Speaker 5 (21:45):
Well, I think ed Heiman has phenomenal contacts, and so
he hears so much about what people are thinking across
pretty much every sector that gives him an ed. I
think that nobody else can mas the.
Speaker 2 (22:02):
FED bet as we get disinflation and they's tight about
multifamily housing, signal family housing everywhere but where Paul Sweeney lives. Okay,
do you get just as a beginning conversation, do you
agree that housing prices in housing inflation will dampen this year?
Speaker 5 (22:21):
My view is that actually you could see existing home
prices go retreat a bit, you know, one to two percent.
I don't think it'll be palpable, because you don't. I
think that would be very problematic. But I think you
could see prices down one to two percent this year
next year on the exist in the existing market, and
(22:44):
I think actually that would be you know, positively received.
And I think that really what would drive that is
homeowners who have been wanting to sell finally saying, you
know what, we're going to make the move and I'm
willing to take a little bit of a lower price
because I still have significant amounts of home equity. I
think that's something to really watch for in twenty twenty six.
Speaker 4 (23:07):
Tom, You know, Steve's a player. He does not have
to schlep into the evercore Isi offices in York City.
He hangs a shingle in Raleigh, North Oh. Yeah, one
of the most beautiful parts of the country down there,
and he's right next to my duke, so you can
go over there anytime he wants to see some good basketball.
Speaker 5 (23:22):
Stephen.
Speaker 4 (23:23):
We have Lenar reported today. It's some disappointing numbers that
last night, some disappointing numbers here. Talked to us about
Lenar and what these home building companies are telling you
guys these days.
Speaker 5 (23:32):
Well, the first thing to say upfront is that Lenar
has a lot of idiosyncratic aspects to it. Right now,
it's very, very fascinating, but there's no question there is
a read across They are the second largest home builder
in the country and it is tough out there. And
what they told you was that even though mortgage rates
have you know, trended down, it has not stimulated an
(23:56):
improvement in home buying demand that was anywhere near what
they were hoping for. Okay, so that's certainly an important
read across it generally confirms frankly, what I think most
folks you know, would have gleaned if they if they,
you know, just we're sort of paying attention to what
the builders have been saying.
Speaker 2 (24:15):
All right.
Speaker 4 (24:16):
As a former director of research, this stuck out of me, Steve,
you cover fourteen stocks, You've got fourteen holds.
Speaker 5 (24:22):
I do right now.
Speaker 2 (24:23):
I have going on.
Speaker 5 (24:23):
We used to have. We used to be the permeable,
you know, And a couple of months ago we said
we still like the long term potential, but we basically
hit the pause button. We said this group cannot be owned.
And there was a lot of uncertainty, not only because
the market was not responding to the lower rates that
(24:47):
we saw coming into September, but also because the government
was becoming increasingly interested in and proactive or talking like
they were going to be proactive, and it was very
difficult to determine what exactly they might do. Their initial commentary,
mostly communicated through Bill Poulty of the FHFA, was not
looking good to me and or investors. Right now, Bill
(25:10):
Poulty has sort of taken a step back, but it
is still very uncertain what the government is going to do.
And so in that kind of environment, I was, I said,
we can't really make a convicted call with conviction. You know,
a couple of months I've transpired. We're thinking about a
few things. So you know, we'll see what twenty twenty
six looks like. But that's the explanation of what's going
on right now with the ratings.
Speaker 2 (25:30):
Across America this morning. The way you listen to us
Stephen Kim, he is the evercore ISI on American housing,
the research ones. I can't say enough about the acuity. Okay,
let's start with this scam. What's a buydown?
Speaker 5 (25:44):
So a mortgage rate buydown is an innovation that has
actually has its genesis from many, many years ago. We're
simply put anytime that any of us had gotten a mortgage,
at some point we were actually asked, well, what kind
of how many points do you want to put down?
How much money do you want to put down upfront
to get a little bit of a lower rate? You know,
(26:05):
generally speaking, you know, you put one percent down or
one point they call it one, you know, one percent down,
and you can buy down the mortgage rate, call it
twenty twenty five basis points. You know, it depends on
you know, what's happening with the bond market at the time.
But something like that, you know, people put one or
two points down. There's a couple of wrinkles though. One
is the seller can sometimes pay for that instead of
(26:26):
the buyer. And so these home builders who are sellers, right,
have been doing that so that they can offer a
lower rate. But they're not just buying down one or
two percent, you know, to putting one or two points in.
They're actually sometimes putting down ten points and you know,
ten percent of the loan amount and buying down the
mortgage rate like one hundred and fifty two hundred basis points.
(26:49):
This sort of thing. That's what's been going on for
most of the last two years.
Speaker 2 (26:53):
To keep the business going. Why don't they just cut
price and affect a clean trendsaction.
Speaker 5 (27:00):
So here's the important thing to understand. If you pay
four percent of effectively the home price, you can buy
down the rate one hundred basis points. Right. That takes
let's say the mortgage rate down from let's say seven
percent down to six.
Speaker 8 (27:15):
Sweeney's taking notes, I'm taking all right, that's like a
twelve percent reduction in the mortgage payment, roughly ten to
ten to twelve percent reduction in the mortgage payment.
Speaker 5 (27:25):
Well, how would you affect that if you didn't change
the rate and you just you know, lowered the home price,
it would be a twelve hundred basis point hit. Right,
you have to lower the price twelve twelve percent to
get a reduction, right if the rate was the same. Right, So,
so which would you rather do? Give up four hundred
basis points a margin or give up twelve hundred basis
points in margin. They'll just said, you know what, I
can do that math, I'm going to go with the
(27:46):
buy down. It'll cost me less, the buyer is happy,
the payment gets reduced the same to tyebo.
Speaker 2 (27:51):
On is this is legal? What's going on? So?
Speaker 5 (27:54):
It is legal?
Speaker 2 (27:56):
Right?
Speaker 5 (27:56):
Beak but there, but but there's a button. It's legal,
but the government has set certain limits to how much
the seller can pay, and those limits are generally depending
on the mortgage type, six percent, six points or three points.
But I just told you that the builders were doing
ten points sometimes even more. How do they do that?
Because there's a loophole if you do your buy down
(28:18):
a certain way called the forward purchase commitment. It's exempt,
and with a stroke of a pen, that exemption could
be modified or removed. And so we point out this
as a potential vulnerability that the builders should think about
as we look into twenty twenty six and twenty twenty cent.
Speaker 4 (28:37):
Interesting, we're talking to Stephen Kim, head of housing research
at Evercore is side is.
Speaker 2 (28:41):
Enough inside baseball?
Speaker 4 (28:42):
That was some theme stuff the mortgage back Mortgage Bankers
Association thirty or fixture rates like six point three percent
or something. Is there a rate that's going to prompt
sellers to say, all right, I'm ready to like sell
my house, move down to Florida wherever I'm going to go,
and move down to Raleigh to the Triangle, And is
(29:02):
there a rate that will clear this market because nobody's.
Speaker 5 (29:05):
Putting their house up for sale. I think that we
get that question all the time. As you might imagine, right,
there's this locked in effect of low mortgage rates. Somebody's
got like a three and a half percent or three
percent mortgage rates. They loving it, you know, because prevailing,
as you said, is six point three This is great.
And so people have asked people initially said, well, all
those people are going to like die in their homes.
(29:25):
They're never going to move, right, that's a little simplistic.
The reason why one moves. Some of it's financial, a
lot of it ain't, yep. A lot of it is,
you know what, mom's getting older, you know, we really
need to go see her, or we're not seeing their
grandkids enough, or I'm retiring. There's all kinds of reasons
(29:46):
why the house that was good for you ten years
ago is not really that great for you anymore. And
I would say that given the incredibly low amount of
housing turnover that we've seen, it is very clear that
millions of people we estimate about four million people right now,
would normally have moved in the last few years but
have not yet. Now the impetus for them to want
(30:08):
to move has not gone away. Those things that I
just retirement, being close to the kids, being close to
the aging parents, you know, those those are itches that
do not go away unless they are scratched, and until
they are scratched. So we think there's a significant penuptimend.
Now that's not a rate thing, though, right, that's a
steady pressure that's building building, and it's going to keep
building until they actually move. I think therefore that we
(30:32):
should think about the unlock with respect to rates is
it's not binary. There's not like a magic rate, but
certainly rates go on and the lower makes it a
little bit easier. You leave a little less money on
the table. But meanwhile, it's really these life factors that
I think are more important.
Speaker 2 (30:47):
Well, and it's unfair to you. You know have record,
you know you're looking at national and you've got all
your list of companies, and that if you had a
cup of coffee right now with a new mayor in
New York City or with the governor of New York,
the governors of the tri state area, this American housing
crisis is tangible. What's the Stephen Kim's solution? Yeah, for Queens,
(31:11):
what's the solution for Kansas City, what's the solution for
la Well.
Speaker 5 (31:17):
One of the reasons why I'm not in politics. There
are many, by the way, but one of the reasons
is because I don't think that the housing market is
really really lends itself to a quick fix. There are fixes,
but the fix comes from supply. You need to increase supply,
and if you do that, you will put some downward
(31:38):
pressure on pricing. However, if pricing goes negative full retreat,
you're going to kill demand because who wants to buy
a leveraged you know, get themselves into a significantly lever
transaction when prices are going down, right, your home equity
is the first hit, right, So that's why I say
I would say Goldilocks is a price reduction across the
market one to two percent, adding supply, and you're going
(32:01):
to work yourself out of this thing eventually. But it's
not a quick fix Research Triangle Park. It's Raleigh, Durham
Chapel Hill, North Carolina.
Speaker 4 (32:09):
It's been a great, great market for forty years.
Speaker 5 (32:12):
Yes, how is it today? It's very good. You have
a lot of in migration from places like New York,
but much more so I would say the DC market.
Most of the people that I run into are generally
from DC, some Chicago, some California. There's a lot of tech,
there's a diversified employment based there's also the state capitol
y you have the three major universities, NC, State, UNC
(32:36):
and Duke that are there. So it's a great market.
Speaker 2 (32:39):
We're the CEO of Cornyn Steers in earlier what's it
real estate to hear something and you know, I talked
about the culture of management, so to go to Stephen
Kim single best Buy, I assume that's wrapped around management
as well, which is the superior operating officer of homebuilders right.
Speaker 5 (32:57):
Now, I think in the home building area, I think
it's it's pretty clear that Dr. Horton has an exceptional
management team. They demonstrated that what's.
Speaker 2 (33:06):
Their distinction, what are you different?
Speaker 5 (33:08):
Well, it's a good, really good question, because it's not
just one thing, but through decades of managing their company,
they have successfully migrated from being sort of a scrappy
entrepreneurial kind of company to being a more large scale
but still entrepreneurial company. And they have made some very
(33:32):
savvy bets without necessarily dictating it just from the top.
So their their skill is in homebuilding, so much of
the decision making has to happen locally, and they've been
able to incentivize their people interesting and empower those people
to make really good that's hard.
Speaker 2 (33:47):
Paul ten year track record, eighteen point nine percent per year.
It's trained like Apple comput exactly. I think they nailed two,
but forced.
Speaker 4 (33:57):
I'll tell you the nail gun Tom. That is revolutionized
the home building. I see these frame people frame up
a house in like fifteen minutes. Now, it was unbelievable.
Speaker 2 (34:05):
I mean a construction site. As a kid, they gave
me a hammer, Tom, go to lud Suirley. That was
the assumption.
Speaker 4 (34:13):
Good stuff real quickly. Cost of building a house is
lumber going? I mean, where are we just the cost
of building a house these days?
Speaker 5 (34:19):
So you know, we certainly have had seen some material
inflation of how wherever lumber has actually been very well contained,
and labor has also been surprisingly well contained. Going into
the year, we thought, all my goodness, you know, with
all the deportations and all that rhetoric, that we were
going to see a lot of the laborers disappear, and
that didn't happen.
Speaker 4 (34:37):
Actually, why didn't that happen because I that was always
called out here in it.
Speaker 5 (34:40):
It was. One of the things is that the multifamily
starts dropped significantly because you had had kind of a
boom there like a few years ago, and then that
came down and a lot of the same workers, you know,
who are there's no there's no multi family. Well then
they go to single family. So that's part of it.
And the second of all, you know the guys, you know,
the guys who might be afraid I shows up. Yeah,
(35:01):
that keeps them away for a couple of days or something.
But you know what if they don't work, they don't eat. Yeah, right,
so they're very tenacious.
Speaker 2 (35:07):
All right, Stephen, thank you so much for coming on.
Kim has head pausing research at ever court is I
stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1 (35:25):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay 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 Paul Stunian Time.
Speaker 2 (35:43):
Keep Paul like Wednesday before the holidays, you know, and
Lisa's got the party dresser?
Speaker 5 (35:48):
Yep?
Speaker 2 (35:49):
I mean you can't see the Bloomberg. Is it two
or three parties tonight?
Speaker 4 (35:53):
It's two?
Speaker 2 (35:54):
Yes? Okay?
Speaker 9 (35:55):
Dress was a steal. Okay, so the newspaper okay, speaking
of a steal.
Speaker 4 (36:00):
Okay.
Speaker 6 (36:00):
You know how I always talk about the Costco hot dog,
you know, dollar fifty deal. Okay, but the Wall Street
Journal says you have to check out their vacation deals.
Speaker 9 (36:09):
I'm telling you, I almost.
Speaker 6 (36:11):
Booked my trip to Greece through Costco because of the offers.
It's actually been around for a while, like Costco started
babbling about twenty five years ago.
Speaker 4 (36:19):
Yeah.
Speaker 5 (36:19):
Yeah.
Speaker 9 (36:19):
You walk out and there's huge advertisements everywhere.
Speaker 6 (36:22):
It has like eight hundred in house agents, thirteen buyers,
five call managers. I mean they it's multimillion dollars. It's
not just booking in vacation packages, but it's cruises, it's
rental cars.
Speaker 4 (36:33):
It's like the whole I didn't notice the thing. Yeah
my rental cars through there.
Speaker 9 (36:39):
Yeah yeah yeah, but saving money I am because.
Speaker 6 (36:42):
I compared it. I mean, granted, I'm paying for the membership,
and that's the thing. You have to be a member
in order to get the vacation. It comes with a
few It's not Expedia, it's not booking dot Com. It's
not that big. But you get like airline tickets through
a package, so you don't get to kind of choose
the exact airline like you It's kind of like Costco.
You go there and you get what you get. And
(37:02):
you don't get upset. You know, as my mom used
to say.
Speaker 2 (37:05):
We should say, folks surveillance. Lisa Mattea is not have
a business affiliation with Costco now, except I want your
record number shopping carts.
Speaker 9 (37:18):
It's one in half, one and a half three.
Speaker 2 (37:22):
You got radar, you've got red lights in the back.
One here, so you don't take someone out in vegetables.
Speaker 9 (37:28):
Next it gets dangerous.
Speaker 6 (37:29):
Okay, global coffee prices, right, we've been talking about it.
They've been going higher and higher for that cup of coffee.
But I mean, let's face it, you can't kick the
caffeine habit, right, So what Bloomberg has this article in
the terminal. It says what more people are doing to
make the cup more affordable? So they say drinkers are
kind of trading down, like they're choosing the cheaper drive
through options. Maybe they're going to convenience store coffee instead.
Speaker 4 (37:53):
Don't knock the wah wah.
Speaker 6 (37:54):
They have really good coffee, cutting back on the number
of times they make the coffee run too.
Speaker 9 (37:58):
That's another thing. And then you have the real like.
Speaker 6 (38:01):
Die hard coffee fans who are going for they're binding
the grind, they're buying the grinders, right, they're buying the
drip coffee.
Speaker 4 (38:07):
Make sure you're.
Speaker 9 (38:07):
Buying the fancy espresso machine. Yes, that fill the counter space.
Speaker 6 (38:13):
Yes, they say it's pricey, you know, upfront, but it's
worth it because you say, even having to go, you know,
to the store every day.
Speaker 2 (38:19):
I mean, I got the charge. And Bloomberg folks just
just grat in commodities. Will Kennedy driving that forward for
us pretty much is the bottom of COVID and all
that Paul ready, yep, up three hundred and sixty seven percent,
twenty seven percent per year. That on a quick look
at the commodity coffee.
Speaker 4 (38:37):
My double short Moca on Saturday when I'm out doing
the errands, five dollars and sixty cents and then I
tip a buck. So there you go. That's my six
dollars and sixty cents for a double short Moca. Some
people do that, do it once a week. That's kind
of mine. Once a week. Sure, that's your thing, all right,
because we've got we've got again seven thousand different varieties
of coffee up on the sixth floor here. That's Bloomberg
(38:59):
from all parts, very good, they are very good. I
do have to say, next, okay.
Speaker 9 (39:04):
This next one.
Speaker 6 (39:04):
It's it's it's how more moms are taking over their
kids adult kids dating profiles. And this is like the
kid's request. So the kids are saying, you know what,
I'm tired, I'm burnt out. This is in the journal
they're saying. They're saying, mom, take over my profile.
Speaker 4 (39:21):
Okay.
Speaker 6 (39:21):
And it's not just mom, it's dads, it's the brothers
and sisters.
Speaker 4 (39:25):
Even grandma's getting in on the action. Okay.
Speaker 6 (39:27):
They're redoing their profiles. They're you know, getting them a
little bit better. They say it can bring some new perspectives.
But there's some challenges too, because family members have different opinions, right,
I mean, you know some people go for certain things.
Speaker 4 (39:40):
You're not doing this for others. I never did.
Speaker 9 (39:42):
They didn't have this when I was dating that my
son does.
Speaker 4 (39:46):
Yeah, okay, he did. It didn't lead to anything.
Speaker 6 (39:48):
He found his other kids girlfriend by through a friend
you know, at school.
Speaker 5 (39:53):
Yeah, very good.
Speaker 2 (39:54):
I don't know.
Speaker 5 (39:55):
I think it's God.
Speaker 2 (39:56):
I think the most intelligent thing, ladies, the most intelligent
thing I heard the newspapers today was just.
Speaker 4 (40:02):
Go to a bar, exactly exactly the old fashioned way.
Speaker 6 (40:06):
Go to a bar, talk to somebody, You actually talk
to someone I know.
Speaker 5 (40:10):
Put the phone.
Speaker 2 (40:10):
Dinversation at home yesterday? Is there a way to get
rid of Nintendo? Switch is easy?
Speaker 4 (40:18):
For no?
Speaker 2 (40:20):
They threw a tantrum the newspapers a Lisa Manteo, thank
you so much.
Speaker 1 (40:25):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot com, the
iHeartRadio app, tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(40:45):
always on the Bloomberg terminal
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Betrayal: Weekly
Betrayal Weekly is back for a brand new season. Every Thursday, Betrayal Weekly shares first-hand accounts of broken trust, shocking deceptions, and the trail of destruction they leave behind. Hosted by Andrea Gunning, this weekly ongoing series digs into real-life stories of betrayal and the aftermath. From stories of double lives to dark discoveries, these are cautionary tales and accounts of resilience against all odds. From the producers of the critically acclaimed Betrayal series, Betrayal Weekly drops new episodes every Thursday. Please join our Substack for additional exclusive content, curated book recommendations and community discussions. Sign up FREE by clicking this link Beyond Betrayal Substack. Join our community dedicated to truth, resilience and healing. Your voice matters! Be a part of our Betrayal journey on Substack. And make sure to check out Seasons 1-4 of Betrayal, along with Betrayal Weekly Season 1.