July 5, 2024 • 27 mins
Lumber prices have tumbled dramatically in recent weeks, with benchmark futures falling about 20% in the past four months alone. What's more, this is happening at the height of the summer homebuilding season, when there should theoretically be lots of demand for construction materials. In this episode of Lots More, we speak to one of our favorite guests about what's going on in the lumber market right now, and what falling prices might say about this important part of the US economy. Stinson Dean is the founder and owner of Deacon Lumber and he talks to us about why prices are crashing, what he's seeing in the market right now, and how the current environment differs from 2020 and 2021, when lumber prices went parabolic and mills couldn't keep up with demand.
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Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
Are you guys doing anything interesting for fourth of July?
Speaker 3 (00:13):
Nope?
Speaker 2 (00:15):
Well it was nice talking to you.
Speaker 4 (00:17):
You know.
Speaker 5 (00:17):
Uh out in Easthampton, they don't do fireworks.
Speaker 1 (00:20):
It's a good thing we're not having a conversational podcast
or anything. Tom says, you've got to watch the puck
when you're on the bench, Tom Keene, and I'm not.
Speaker 2 (00:28):
Is that an insult? What does that mean? I don't
understand hockey. When you're not playing, you have to watch
the game?
Speaker 5 (00:34):
Is this about your face? I don't know why I
use on the bench, but yeah, why am I on?
Speaker 6 (00:41):
Yeah?
Speaker 5 (00:41):
Well maybe if you're on the oh yeah, the ice,
you would have been paying closer attention. Yeah, you can't
in hockey. When you're on the bench, you're exposed. So
if you're not paying attention, you could get hit in
the face.
Speaker 4 (00:50):
Of the puck.
Speaker 1 (00:52):
Why don't they just build like a little protection thing
like in baseballs, like a dugout.
Speaker 5 (00:58):
They get on and off the ice by jump over
the wall.
Speaker 2 (01:04):
And I hate sports.
Speaker 5 (01:08):
I did a deadlift one two, okay?
Speaker 3 (01:13):
Many?
Speaker 2 (01:14):
Uh barges.
Speaker 5 (01:15):
This isn't after school special, except.
Speaker 1 (01:17):
I've decided I'm going to base my entire personality going
forward on campaigning for a strategic pork reserve in the US.
Speaker 5 (01:23):
Where's the best with imposta?
Speaker 2 (01:25):
These are the important question. Is it robots taking over
the world?
Speaker 3 (01:28):
No.
Speaker 5 (01:28):
I think that like in a couple of years, the
AI will do a really good job of making the
Odd Lots podcast, And people say, I don't really need
to listen to Joe and Tracy anymore. We do have
the perfect welcome to lots More when we catch up
with friends about what's going on right now.
Speaker 1 (01:47):
Because even when Odd Lots is over, there's always lots
more and.
Speaker 5 (01:51):
We really do have the perfect guest. So for those
who don't follow Tracy on Twitter, which you should all be,
she posted this freaky photo that two in the morning
that looked everyone thought was like Halloween or like costume
makeup because you have this big gash in your face.
What's the story there?
Speaker 3 (02:10):
Uh?
Speaker 1 (02:11):
Someone said the Dow was a better index than the
S and P five hundred, so I had to fight that.
Speaker 3 (02:15):
That's me.
Speaker 2 (02:16):
Yeah, that's right.
Speaker 1 (02:17):
You should see the other guy.
Speaker 2 (02:18):
Everyone look at Joe.
Speaker 4 (02:19):
No.
Speaker 1 (02:19):
Uh, you know, someone threw a large platinum coin at
my head and then ran off and I heard them
say something about a trillion dollars. I'm not sure what
that was.
Speaker 5 (02:27):
About, because that's interesting because I thought it sort of
looked like you got hit by a two by four.
I thought you got hit by like someone like slammed
a big piece of lumber.
Speaker 3 (02:36):
In your face.
Speaker 1 (02:37):
Actually, you know, I think that that's what it was.
So unfortunately, I wish I had a dramatic story to
tell about how I ended up with this like four
inch gash on my forehead. But basically, I was trying
to hang a frame while standing on my bed and
I fell off the bed and I'm pretty sure my
face hit the frame, so like kind of a two
(02:58):
by four.
Speaker 5 (02:58):
Yeah, sure, photo. I think you should make it your
Twitter profile.
Speaker 3 (03:02):
Yeah.
Speaker 5 (03:02):
Might actually actually pretty.
Speaker 2 (03:03):
Bad, thank you.
Speaker 1 (03:05):
The stitches themselves aren't quite as glamorous, but I'm willing
to live with them. But anyway, I'm glad you mentioned
to you by fours because there are some interesting things
going on in the lumber market at the moment, and
we really do have the perfect person to talk to
Stinson Dean, president and owner of Deacon Lumber Company, who've
(03:25):
spoken to him many times before about what happens in lumber.
Speaker 4 (03:29):
Yeah. The one piece of advice I've gotten in lumber
trading is don't try to catch it falling.
Speaker 5 (03:34):
To by four classic classic.
Speaker 6 (03:37):
Yes, yeah, we're in that now.
Speaker 4 (03:40):
And Tracy's living proof was that. Now.
Speaker 1 (03:42):
You know how I know lumber prices are falling. It's
because I just bought like all the lumber that we
need for that giant shed. It's because I've finished my
acquisition and so inevitably prices start coming down.
Speaker 5 (03:57):
You bought the top, Yeah.
Speaker 2 (03:59):
It's always the case.
Speaker 1 (04:00):
Wait, okay, so prices are falling.
Speaker 2 (04:02):
What's going on?
Speaker 1 (04:03):
Because you know, would lumber it's not exactly a monolith.
There's different types of it, as we've learned a number
of times at this point. But like, how bad has
the price action been?
Speaker 4 (04:13):
It's been pretty bad, Like lower than I thought we
would go. There's this kind of age old philosophy in
lumber trading that we won't trade below the break even,
specifically the break even of British Columbia two by four
producers and coming out of COVID, there's so much issues
(04:38):
getting product that folks switched species. The cheaper, more available
spech species from the US South and I started to
think maybe British Columbia lost what I call it's peg,
like everyone would peg like to the BC break even.
While we've been well below that. It's kind of a
mystery what it actually is. Maybe it's a little bit
lower than we all thought, and we've been trading well
(05:01):
below it. Now we're trading below even the Southern yellow pine,
the cheap species break even. So we're just way cheaper
than anyone thought we could go because hey, you can't
trade below the break even for too long. But here
we are, I don't know, six plus months probably trading
below that number.
Speaker 5 (05:20):
So just to be clear, when we talk about the
break even price, this is the cost basically of the
various mills to acquire raw timber and then process it
into usable wood.
Speaker 6 (05:36):
Exactly cost of the log, the labor.
Speaker 4 (05:38):
Yeah, inflation plays a big part of that. So you know,
break evens have leg taken a step up since pre COVID.
Speaker 5 (05:47):
And I assume, okay, so no one wants to lose money.
Have we seen the supply response yet? Have any of
the mills been idled or anything like that in response
to lower prices?
Speaker 6 (05:57):
Yeah?
Speaker 4 (05:58):
So slow, but surely we call them curtailments. Those curtailments
have started started to add up. I think we're over a.
Speaker 6 (06:06):
Billion board feet in British Columbia.
Speaker 4 (06:08):
Again, everyone's looking towards them as that peg, but now
we're looking at like do we need to to curtail,
which is different than closing, And I think personally we
need to close a lot of like permanently shut mills
and burst Columbia. And then now there's talk of like
what do we need to do to reduce supply coming
(06:31):
out of the Southeast United States with Sonyella pines. So
there is an accumulative effect happening, but it's not all
at once, so it's not really headline grabbing. It's kind
of onesie twosies. This is happening, And then people don't
believe it, And is it a curtailment meaning they're going
to turn it back on later if prices respond? Is
it a closure? We close these mills and you're not
(06:54):
opening them back up. But there's a fear when you curtail,
whether that's reducing from three shifts the two shifts, something
like that, you're going to lose your workforce in the
US South, that's the biggest fear if you cut shifts,
like they're going to go work for Amazons, And there's
a lot of investment in the US South, So there's
(07:15):
a very tough decision to be made. Do we retail
and risk losing our workforce that we work so hard
to get over the last several years. It's kind of
a race to the bottom at the moment.
Speaker 2 (07:27):
That's really interesting.
Speaker 1 (07:28):
It also just seems bad to curtail a bunch of
mills and lumber supply at a time when we're still
talking about structural undersupply in the housing market.
Speaker 5 (07:37):
No, this is really interesting because we've talked about labor
hoarding in the past, and all these companies they're anxious
about losing workers. And maybe it's the first time for
many of these managers and CEOs where they had a
hard time working or they had a hard time hiring.
But it's interesting dynamic to say, well, maybe there are
aspects of that are disinflationary or deflationary for certain prices,
(07:58):
because it implicitly means continuing to run the operation at
a loss, contributing to oversupply of the key commodity. Because
the alternative is that libor loss I hadn't really thought
about that aspect.
Speaker 1 (08:11):
No, wait, Stintson, is the market is it?
Speaker 4 (08:14):
So?
Speaker 1 (08:14):
Normally lumber futures are in contango, so the spot prices
are lower than prices further out. Is that still the case.
I'm starting to wonder whether or not I should be
stockpiling umber and you know, just wait a year or two.
Speaker 6 (08:28):
Yes, yeah, it is.
Speaker 4 (08:29):
I don't know what the definition of a super contango is,
but I think we're we're in it or approaching it,
meaning the futures market is paying you above and beyond
what it actually costs the store for sixty days or
sixty days in between each of our contracts, and we
have a deep carry. I always like to say the
(08:51):
futures they don't have to be right until you get
into expiration.
Speaker 6 (08:56):
Which is where we're in July. Second.
Speaker 4 (08:58):
Our July contract expiresly fifteenth. Typically all the speculators and
outside money is long gone before the spot month comes
into the calendar month, and we're seeing the spread the
July losing a tremendous amount of value relative to the
next month in September.
Speaker 6 (09:16):
So yeah, huge carries in the market.
Speaker 4 (09:17):
The market is begging participants to store lumber, don't put
it on the market. Don't put it up for sale.
The market will pay you above and beyond your interest,
insurance and storage costs to keep it till September fifteenth,
and at this pace, January will probably pay you to
not sell it until January fifteenth, and we'll kind of
(09:39):
go from there.
Speaker 5 (09:40):
You have storage, right, so you're you're a lumber trader,
but you're not just like one of these guys who
looks at his computer screen all day. You actually have capacity, right, Yeah.
Speaker 4 (09:51):
Yeah, that's one of the things we invested in coming
out of kind of the windfall of COVID volatility is storage,
indoor Storageecifically, you have to be able to keep lumber
out of the weather and dry, and so we invested
in a lot of storage options for us so we
can take advantage of these carries in the market. And yeah,
(10:12):
my day job is buying physical railcars a lumber, shipping
it right now, shipping it into the storage facilities, and
putting a hedge on it, and then going fishing waiting
for the market to come back.
Speaker 5 (10:23):
To Ustinton Lumber. The Stintson Lumber Reserve is what basically.
Speaker 2 (10:28):
Is a strategic extense.
Speaker 5 (10:29):
The strategic Extenson Lumber Reserve. I like that SSLR.
Speaker 1 (10:33):
So you touched on the unemployment aspect just then. But
of course when people think about lumber prices, I think
the first thing they think is that this is a
traditional arbiter of economic activities. So if lumber prices are
going down, it's probably because people aren't building that much,
and that suggests that something bad is happening to economic growth,
(10:54):
or at the very least it's starting to slow. Is
that the basic read through here.
Speaker 6 (10:59):
I think.
Speaker 4 (11:00):
So, I think you look at lumber was kind of
the first thing to hit headlines and set new all
time highs back in twenty twenty and then and really
became a popular thing to talk about in twenty twenty one.
You know, at the time, I'm like, hey, this is fundamental,
and we got COVID supply chain shutdowns and they can't
get their workforce back, and you know, if you get
(11:22):
test positive, you got to sit down, is stay away
from work, and we couldn't get caught up. All that's fixed,
and so we're at very have very efficient supply lines
now in at the same time we're looking at housing
starts really showing what the lumber industry has seen since January,
which is really weak demand. As a lumber trader, I
(11:44):
would say lumber supply chain is too fixed. Like it
is very smooth. Rail cars are getting from British Columbia
to Atlanta and record time, record speeds, and lumbers getting
produced as much as you could ever want. Everyone has it.
There's no fear of a shortage. The end user lumberyard
(12:04):
is able to run kind of a lean, just in
time inventory model again, and it's so the supply chain
side is very fixed. But then now we have kind
of a broken housing starts world where you know, the
the number one demand a lumber is repairing to model,
(12:25):
and just behind that a single family, and then way
down the list is multifamily. Multi family is less than
ten percent of lumber demand.
Speaker 5 (12:33):
Wait, sorry, what's first again? Single family or repair? Oh okay, okay,
this is interesting.
Speaker 6 (12:37):
Repair and renovation, yes, repair and remodel this.
Speaker 4 (12:43):
Yes.
Speaker 1 (12:45):
So on that note, is it possible that like in
the post uh the immediate post twenty twenty period, we
just had everyone remodeling their homes and so you know,
that sort of took care of demand further out, or
that maybe because lumber prices went up so much, you
had this huge supply response from the mills, and so
(13:08):
there's just over supply, Like, is it possible that this
is something that's still very pandemic specific versus something that's
about slowing growth.
Speaker 4 (13:16):
Well, Tracy, that's a good way to frame it, because
I'm thinking, you know, my initial thought is like, oh,
this is a very is an economic indicator slow and growth.
But also I want to say we clearly now I
think undisputed can say we had pulled forward demand of
repair and remodel, so projects that would have been spread
out over five years got crunched into twenty four months,
(13:38):
and now we're on the back half of that five years,
and there's not much business to kind of float and
handle the supply that we have. So I don't know,
is that the definition of slowing economic growth is pull forward?
I don't know that's over my pay grade, but I
think it's clearly what happened is there is a repair
model boom that has really one of your housing and
(14:01):
lumber guests, Dustin Jolbert, has tweeted about it. Repairing the
models kind of flatted down and dead in the water.
That's a lot of big box home depot lows monards business,
and that's fifty percent of lumber that's produced goes to
that that sector, and it's it's down, and then we
all know, single families down just in time her supply
(14:22):
to be as efficient as it's ever been. And lastly,
I haven't been able to mention pre COVID eighteen nineteen,
there's a ton of cap X to invest in the US.
Speaker 1 (14:34):
Sorry eighteen nineteen or nineteen eighteen nineteen, I'm sorry, sorry, was.
Speaker 5 (14:46):
Technically sorry.
Speaker 4 (14:48):
I'll restated.
Speaker 1 (14:49):
No, No, it's fine, it's uh did I mention? I've
bumped my head, so my my numerical understanding is not
as great as it might normally be.
Speaker 4 (15:00):
Well, in twenty eighteen and twenty nineteen, their plans announced
and enacted to build new production sawmills in the US
South to take advantage of the larger fiber basket forest
logs down there versus the Canadian fiber basket. And it
was and is the Canadians who are doing that investment.
(15:20):
They own over fifty percent of the US South production
and a lot of those projects got delayed and for
COVID reasons, they couldn't get their saw mills built. They
couldn't get them staffed, but now they can't. So a
lot of those projects are now online and they are
not going to get shut down. There's debt to service,
there's cash flow motivations to just run. Who cares what
(15:42):
the break even is. So we have that, we have
repaired supply chains, and we have the hangover of the
pull forward demand of repairing the model, and then you
know the single family stories at this point.
Speaker 5 (15:54):
So when Stinson first mentioned, when you said repair and
remodel is actually the biggest category, Like at first, I
was kind of surprised by that, but you know, I
would have thought single family was a bigger source of demand.
But it occurred to me that there is a connection
here between what we've talked about in some our recent
conversation with Brad Jacobs, where he made the point that
like the US housing stock is really old right now,
(16:16):
and there is just and houses have to be repaired.
They're like any other asset, especially the moment you buy
a house that starts to fall apart. And so if
we have this historically old housing market, that is just
a big source of ongoing structural demand right just to
keep those homes in existence for all kinds of materials
they might need, So that actually sort of makes sense
(16:36):
to me.
Speaker 1 (16:37):
I feel like this is something you internalize as soon
as you actually buy.
Speaker 5 (16:41):
Oh no, no, no, for real, I bought my apartment
in Manhattan and it never had any issues and then
literally like a window started leaking. They like literally that week.
Speaker 3 (16:53):
It was so perfect.
Speaker 1 (17:07):
Wait, so Stintent, you mentioned something interesting, which is this
idea of the mills kind of hoarding workers first of all,
but then also just trying to withstand the lower prices
and maybe operating at a loss for as long as
they can and just sort of waiting to see if
they can beat out others who are forced to shut down.
(17:29):
What's the sort of differentiating factor in survival for some
of these mills. Is it just whoever has access to
like extra cash laying around for a rainy day, or
is it mills that maybe have supply agreements with like
big builders and big box companies and that sort of thing.
Speaker 4 (17:49):
You know, I would say, and I'm not honestly the
best to speak to this, but I would guess it's
these newer steady dart mills have the advantage they're going
to have been located strategically closer to a fiber supply
for trees and logs, they are going to have a
lot of investment. They're largely public companies that have built these,
(18:10):
so they have access to the cash to kind of
see to get to the other side. In the South,
it's still it's much more fragmented as far as they're smaller,
single location, mom and pop type locations. Those folks are
going to struggle. But then those folks have probably more
discipline and have saved some cash over the last several years.
(18:34):
And there's no way to know, but you would think
they've made it this far. They knew twenty one to
twenty two wasn't going to be around forever, so they
save some cash. Where the publics, you know, have to
disperse their cash. They pay down debt and then pay dividends, YadA, YadA, YadA.
So you know, I think the advantage is just the
newness of the mill because of the state of the art,
(18:54):
state of the art, less manpower, higher yields out of logs,
and then its strategic location where the old mills are
naturally going to be further away. They're going to have
logged everything within their radius and they're having to go
further and further away to get their logs. That's the
only thing I can think of. And this the structural
(19:15):
housing shortage that we all know by evidence by home
prices have not crashed in the phase of eight percent morgages.
We know that, the mills know that, and it's just like, well,
it's just going to turn and rate cuts. We got
to wait for rate cuts. And here we are and
I don't know, and I haven't heard, like how long
is this runway? Like how long can they bleed? And
(19:36):
I don't I don't know, but it's clearly been longer
than most traders had anticipated.
Speaker 5 (19:42):
Wait, I have a total curveball question actually, and if
you don't want to answer it, that's fine. But we
actually this week we did publish that interview with Brad Jacobs,
who is trying to do a roll up of the
what he calls a highly fragmented building supply industry, and
lumber is a building supply though I don't know if
he's going to get into lumber, though maybe he will
(20:03):
a from your perspective, is it really is it? Does
it seem very fragmented to you? And b let's say
Brad listens to odd lives and he hears this, smart
Stinson fellow, and he calls you up. What kind of
asset would you buy to create a platform for consolidating
this industry? A few had billions of dollars four and
a half billion dollars.
Speaker 4 (20:23):
Yeah, storage, storing, storage, Yeah, I think, I think the
sawmill production business. I learned this when I start. I
started out in grains. Yeah, it's just so tough and
you just rather have someone else. But with that, and
when they are over produced, you become a You've become
their liquidity provider. You give them cash, they give you lumber,
(20:45):
and you store it and wait for the supply response.
The crap and oil traders taught me this, I think.
And when I started in commodities in fourteen fifteen, there's
a big contango and the boats, the oil bart is
the just float around with no destination because they were
getting paid to store it. And if you have the
balance sheet to store your material when no one else
(21:08):
needs it, then you're the only one who has it
when when things change, and there's inevitably going to be
a supply response, and the lower we go, the more
violent it'll be. But for me, it's in my niche.
It's it's all about storage. I wouldn't be interested in
owning a producer. This is just a very, very tough business.
But if you if you can store, and the balance
(21:31):
sheet has a lot to do with that because your
liquidity is tied up in inventory.
Speaker 6 (21:36):
You know that that's what I would be doing. But
I'm a and I we are doing it.
Speaker 4 (21:42):
But the public the pressures that public companies have with
their lean balance sheets and their lean inventory models and
turning inventory terms with that, it's hard to execute. So
that's why folks like me exist where they can't execute.
I can, So I'll take on that risk. I'll warehouse it,
I'll hedge it and wait for things to shake out.
(22:02):
And it's not uncommon for me to sell the lumber
right back to the same people I bought it from.
And I'm just able to navigate slower inventory terms than anyone.
Speaker 2 (22:11):
Else, huh.
Speaker 1 (22:13):
I remember one of the first times we talked to
you ever, you spoke about how the industry was slow
to build out inventory because of the reasons that you
just explained. You know, the tendency towards efficiency and the
desire to be as streamlined as possible, and so when
demand starts picking up, it really takes people a lot
(22:33):
of time to get hold of the wood the lumber
that they need to actually match it. Is there any
sign that that behavior is kind of changing? So I
take the point that people like you exist to bridge
that gap. But do you see more and more industry
participants start to build out additional inventory or additional supply
(22:55):
just in case or is it still not really a reality.
Speaker 4 (22:59):
I think they tried, and that was kind of the
top of the market, and it was kind of this
whipsaw like, oh, we need to build inventory. Everyone builds inventory,
price goes up, and then it crashes because I bought
three months worth of inventory. Is almost the same concept
to pull forward demand instead of spreading it out over
three months, they rushed in about it all over within
a few weeks. I think folks are back to just
(23:23):
in time lean inventories. I don't think they have an
interest in building inventory to cost to do so is
expensive with where interest rates are and there everyone's very
uncomfortable with having low inventory turns. So no, I don't
think there's been a lesson learned to have more inventory
just the case. I think they tried to learn it
(23:44):
in real time and didn't didn't work out, And more
than anything, the interest rates are painful to store inventory. Now,
Oh yeah, if they ran a grain elevator hedging model,
they would know Fature's contract is compensating you for the
cost of interest, but not everyone is able to execute
(24:05):
on that.
Speaker 5 (24:05):
Yeah, this is an important point actually because just on
this point specifically, so right, it's easy enough to say, Okay,
you're going to buy when it's low and the future's
curve there's a higher price out there that you theoretically
be able to sell it at, but you do have
to match that against the interest rates. So it needs
to be sufficiently steep I guess that curve such that
(24:27):
it makes sense for you to hold rather than just
like buy treasuries or whatever.
Speaker 4 (24:32):
Yes, yes, exactly, And there's a level of sophistication, yeah,
I mean is needed for that. And then you know,
the futures market's small, so the bigger players kind of like,
we can't really have a material impact on our risk
because we can't put on a big enough position. All
our little futures contract that we adjusted last year is
(24:53):
doing much better, but we still have some room to grow.
Speaker 6 (24:56):
But you know, there's a reason.
Speaker 4 (24:59):
Well I'm wait over my skis here, but I think
a Cargill, there's a reason they're they're private, you know,
and I think one of them is they can execute
on these fairly sophisticated storage strategies. And I really have
to explain to everyone like, this is a six month
plus ARB and we're going to pay a bunch of
margin call and pay a bunch of interests, but we're
(25:21):
making it up because our cost basis goes lower and
lower every time we roll into the next contract. That's
just a really hard thing to explain to public investors.
Speaker 6 (25:29):
And and you.
Speaker 4 (25:31):
Know, public commodity companies often tell me when I was
a consultant, you know, our investors pay us to have
pretty naked exposure to the underlying commodity, and that was
as an uphill battle as a consultant.
Speaker 6 (25:43):
So I've said, I'll do it.
Speaker 4 (25:45):
And I know if you're not hedging, someone's going to
hedge for you, and that that's me, that's your investors.
And there's a level of you just realities of hedging
that not everyone could take advantage of.
Speaker 2 (25:56):
The secret to success is storage.
Speaker 6 (25:59):
I love it.
Speaker 5 (26:00):
Wait, just real quickly thirty second question, you have some
other businesses. I know, you have your hands all things
in other pods. You're out in the real world and
not like in Manhattan. You're like out in the real economy.
Do you think you see a slow down day to day?
Speaker 6 (26:15):
Gosh, I'm so concentrated in the lumber, but I do.
I do. Yeah, it's just like it's a front and.
Speaker 4 (26:23):
Center because you know, there's a reason on the show today.
But yeah, there's some other service businesses that are unrelated
and uncrrelated that I was in the middle of the
hiring when it was so tough to hire quality people
and we're just having to raise the wage. Yeah, to
find a clearing wage that has significantly cooled. We're able
to hire whenever we want and frankly let go of
(26:47):
folks without fear of being able to replace them.
Speaker 6 (26:50):
Yes, that aspect, it's like, is it too easy? I
don't know.
Speaker 4 (26:56):
This is it kind of feels like it used to
be where the employer had such an advantage over the employee,
like the employee really needed the job, and that's kind
of what we're getting. More professional follow ups and and
there's they're like they are vuying for the job. Versus
us buying for them. Like I think that dynamic has
has certainly changed, but I wouldn't say there's a material
(27:20):
drop off and activity in these businesses that would see.
Outside of Number.
Speaker 1 (27:30):
Lots More is produced by Carmen Rodriguez and dash Ell Bennett,
with help from Moses Ondom and Cal Brooks.
Speaker 5 (27:36):
Our sound engineer is Blake Maple's Sage Bouman is the
head of Bloomberg Podcasts.
Speaker 1 (27:40):
Please rate, review, and subscribe to Odd Lots and Lots
More on your favorite podcast platforms.
Speaker 5 (27:46):
And remember that Bloomberg subscribers can listen to all of
our podcasts and free by connecting through Apple Podcasts.
Speaker 3 (27:52):
Thanks for listening.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
Are you guys doing anything interesting for fourth of July?
Speaker 3 (00:13):
Nope?
Speaker 2 (00:15):
Well it was nice talking to you.
Speaker 4 (00:17):
You know.
Speaker 5 (00:17):
Uh out in Easthampton, they don't do fireworks.
Speaker 1 (00:20):
It's a good thing we're not having a conversational podcast
or anything. Tom says, you've got to watch the puck
when you're on the bench, Tom Keene, and I'm not.
Speaker 2 (00:28):
Is that an insult? What does that mean? I don't
understand hockey. When you're not playing, you have to watch
the game?
Speaker 5 (00:34):
Is this about your face? I don't know why I
use on the bench, but yeah, why am I on?
Speaker 6 (00:41):
Yeah?
Speaker 5 (00:41):
Well maybe if you're on the oh yeah, the ice,
you would have been paying closer attention. Yeah, you can't
in hockey. When you're on the bench, you're exposed. So
if you're not paying attention, you could get hit in
the face.
Speaker 4 (00:50):
Of the puck.
Speaker 1 (00:52):
Why don't they just build like a little protection thing
like in baseballs, like a dugout.
Speaker 5 (00:58):
They get on and off the ice by jump over
the wall.
Speaker 2 (01:04):
And I hate sports.
Speaker 5 (01:08):
I did a deadlift one two, okay?
Speaker 3 (01:13):
Many?
Speaker 2 (01:14):
Uh barges.
Speaker 5 (01:15):
This isn't after school special, except.
Speaker 1 (01:17):
I've decided I'm going to base my entire personality going
forward on campaigning for a strategic pork reserve in the US.
Speaker 5 (01:23):
Where's the best with imposta?
Speaker 2 (01:25):
These are the important question. Is it robots taking over
the world?
Speaker 3 (01:28):
No.
Speaker 5 (01:28):
I think that like in a couple of years, the
AI will do a really good job of making the
Odd Lots podcast, And people say, I don't really need
to listen to Joe and Tracy anymore. We do have
the perfect welcome to lots More when we catch up
with friends about what's going on right now.
Speaker 1 (01:47):
Because even when Odd Lots is over, there's always lots
more and.
Speaker 5 (01:51):
We really do have the perfect guest. So for those
who don't follow Tracy on Twitter, which you should all be,
she posted this freaky photo that two in the morning
that looked everyone thought was like Halloween or like costume
makeup because you have this big gash in your face.
What's the story there?
Speaker 3 (02:10):
Uh?
Speaker 1 (02:11):
Someone said the Dow was a better index than the
S and P five hundred, so I had to fight that.
Speaker 3 (02:15):
That's me.
Speaker 2 (02:16):
Yeah, that's right.
Speaker 1 (02:17):
You should see the other guy.
Speaker 2 (02:18):
Everyone look at Joe.
Speaker 4 (02:19):
No.
Speaker 1 (02:19):
Uh, you know, someone threw a large platinum coin at
my head and then ran off and I heard them
say something about a trillion dollars. I'm not sure what
that was.
Speaker 5 (02:27):
About, because that's interesting because I thought it sort of
looked like you got hit by a two by four.
I thought you got hit by like someone like slammed
a big piece of lumber.
Speaker 3 (02:36):
In your face.
Speaker 1 (02:37):
Actually, you know, I think that that's what it was.
So unfortunately, I wish I had a dramatic story to
tell about how I ended up with this like four
inch gash on my forehead. But basically, I was trying
to hang a frame while standing on my bed and
I fell off the bed and I'm pretty sure my
face hit the frame, so like kind of a two
(02:58):
by four.
Speaker 5 (02:58):
Yeah, sure, photo. I think you should make it your
Twitter profile.
Speaker 3 (03:02):
Yeah.
Speaker 5 (03:02):
Might actually actually pretty.
Speaker 2 (03:03):
Bad, thank you.
Speaker 1 (03:05):
The stitches themselves aren't quite as glamorous, but I'm willing
to live with them. But anyway, I'm glad you mentioned
to you by fours because there are some interesting things
going on in the lumber market at the moment, and
we really do have the perfect person to talk to
Stinson Dean, president and owner of Deacon Lumber Company, who've
(03:25):
spoken to him many times before about what happens in lumber.
Speaker 4 (03:29):
Yeah. The one piece of advice I've gotten in lumber
trading is don't try to catch it falling.
Speaker 5 (03:34):
To by four classic classic.
Speaker 6 (03:37):
Yes, yeah, we're in that now.
Speaker 4 (03:40):
And Tracy's living proof was that. Now.
Speaker 1 (03:42):
You know how I know lumber prices are falling. It's
because I just bought like all the lumber that we
need for that giant shed. It's because I've finished my
acquisition and so inevitably prices start coming down.
Speaker 5 (03:57):
You bought the top, Yeah.
Speaker 2 (03:59):
It's always the case.
Speaker 1 (04:00):
Wait, okay, so prices are falling.
Speaker 2 (04:02):
What's going on?
Speaker 1 (04:03):
Because you know, would lumber it's not exactly a monolith.
There's different types of it, as we've learned a number
of times at this point. But like, how bad has
the price action been?
Speaker 4 (04:13):
It's been pretty bad, Like lower than I thought we
would go. There's this kind of age old philosophy in
lumber trading that we won't trade below the break even,
specifically the break even of British Columbia two by four
producers and coming out of COVID, there's so much issues
(04:38):
getting product that folks switched species. The cheaper, more available
spech species from the US South and I started to
think maybe British Columbia lost what I call it's peg,
like everyone would peg like to the BC break even.
While we've been well below that. It's kind of a
mystery what it actually is. Maybe it's a little bit
lower than we all thought, and we've been trading well
(05:01):
below it. Now we're trading below even the Southern yellow pine,
the cheap species break even. So we're just way cheaper
than anyone thought we could go because hey, you can't
trade below the break even for too long. But here
we are, I don't know, six plus months probably trading
below that number.
Speaker 5 (05:20):
So just to be clear, when we talk about the
break even price, this is the cost basically of the
various mills to acquire raw timber and then process it
into usable wood.
Speaker 6 (05:36):
Exactly cost of the log, the labor.
Speaker 4 (05:38):
Yeah, inflation plays a big part of that. So you know,
break evens have leg taken a step up since pre COVID.
Speaker 5 (05:47):
And I assume, okay, so no one wants to lose money.
Have we seen the supply response yet? Have any of
the mills been idled or anything like that in response
to lower prices?
Speaker 6 (05:57):
Yeah?
Speaker 4 (05:58):
So slow, but surely we call them curtailments. Those curtailments
have started started to add up. I think we're over a.
Speaker 6 (06:06):
Billion board feet in British Columbia.
Speaker 4 (06:08):
Again, everyone's looking towards them as that peg, but now
we're looking at like do we need to to curtail,
which is different than closing, And I think personally we
need to close a lot of like permanently shut mills
and burst Columbia. And then now there's talk of like
what do we need to do to reduce supply coming
(06:31):
out of the Southeast United States with Sonyella pines. So
there is an accumulative effect happening, but it's not all
at once, so it's not really headline grabbing. It's kind
of onesie twosies. This is happening, And then people don't
believe it, And is it a curtailment meaning they're going
to turn it back on later if prices respond? Is
it a closure? We close these mills and you're not
(06:54):
opening them back up. But there's a fear when you curtail,
whether that's reducing from three shifts the two shifts, something
like that, you're going to lose your workforce in the
US South, that's the biggest fear if you cut shifts,
like they're going to go work for Amazons, And there's
a lot of investment in the US South, So there's
(07:15):
a very tough decision to be made. Do we retail
and risk losing our workforce that we work so hard
to get over the last several years. It's kind of
a race to the bottom at the moment.
Speaker 2 (07:27):
That's really interesting.
Speaker 1 (07:28):
It also just seems bad to curtail a bunch of
mills and lumber supply at a time when we're still
talking about structural undersupply in the housing market.
Speaker 5 (07:37):
No, this is really interesting because we've talked about labor
hoarding in the past, and all these companies they're anxious
about losing workers. And maybe it's the first time for
many of these managers and CEOs where they had a
hard time working or they had a hard time hiring.
But it's interesting dynamic to say, well, maybe there are
aspects of that are disinflationary or deflationary for certain prices,
(07:58):
because it implicitly means continuing to run the operation at
a loss, contributing to oversupply of the key commodity. Because
the alternative is that libor loss I hadn't really thought
about that aspect.
Speaker 1 (08:11):
No, wait, Stintson, is the market is it?
Speaker 4 (08:14):
So?
Speaker 1 (08:14):
Normally lumber futures are in contango, so the spot prices
are lower than prices further out. Is that still the case.
I'm starting to wonder whether or not I should be
stockpiling umber and you know, just wait a year or two.
Speaker 6 (08:28):
Yes, yeah, it is.
Speaker 4 (08:29):
I don't know what the definition of a super contango is,
but I think we're we're in it or approaching it,
meaning the futures market is paying you above and beyond
what it actually costs the store for sixty days or
sixty days in between each of our contracts, and we
have a deep carry. I always like to say the
(08:51):
futures they don't have to be right until you get
into expiration.
Speaker 6 (08:56):
Which is where we're in July. Second.
Speaker 4 (08:58):
Our July contract expiresly fifteenth. Typically all the speculators and
outside money is long gone before the spot month comes
into the calendar month, and we're seeing the spread the
July losing a tremendous amount of value relative to the
next month in September.
Speaker 6 (09:16):
So yeah, huge carries in the market.
Speaker 4 (09:17):
The market is begging participants to store lumber, don't put
it on the market. Don't put it up for sale.
The market will pay you above and beyond your interest,
insurance and storage costs to keep it till September fifteenth,
and at this pace, January will probably pay you to
not sell it until January fifteenth, and we'll kind of
(09:39):
go from there.
Speaker 5 (09:40):
You have storage, right, so you're you're a lumber trader,
but you're not just like one of these guys who
looks at his computer screen all day. You actually have capacity, right, Yeah.
Speaker 4 (09:51):
Yeah, that's one of the things we invested in coming
out of kind of the windfall of COVID volatility is storage,
indoor Storageecifically, you have to be able to keep lumber
out of the weather and dry, and so we invested
in a lot of storage options for us so we
can take advantage of these carries in the market. And yeah,
(10:12):
my day job is buying physical railcars a lumber, shipping
it right now, shipping it into the storage facilities, and
putting a hedge on it, and then going fishing waiting
for the market to come back.
Speaker 5 (10:23):
To Ustinton Lumber. The Stintson Lumber Reserve is what basically.
Speaker 2 (10:28):
Is a strategic extense.
Speaker 5 (10:29):
The strategic Extenson Lumber Reserve. I like that SSLR.
Speaker 1 (10:33):
So you touched on the unemployment aspect just then. But
of course when people think about lumber prices, I think
the first thing they think is that this is a
traditional arbiter of economic activities. So if lumber prices are
going down, it's probably because people aren't building that much,
and that suggests that something bad is happening to economic growth,
(10:54):
or at the very least it's starting to slow. Is
that the basic read through here.
Speaker 6 (10:59):
I think.
Speaker 4 (11:00):
So, I think you look at lumber was kind of
the first thing to hit headlines and set new all
time highs back in twenty twenty and then and really
became a popular thing to talk about in twenty twenty one.
You know, at the time, I'm like, hey, this is fundamental,
and we got COVID supply chain shutdowns and they can't
get their workforce back, and you know, if you get
(11:22):
test positive, you got to sit down, is stay away
from work, and we couldn't get caught up. All that's fixed,
and so we're at very have very efficient supply lines
now in at the same time we're looking at housing
starts really showing what the lumber industry has seen since January,
which is really weak demand. As a lumber trader, I
(11:44):
would say lumber supply chain is too fixed. Like it
is very smooth. Rail cars are getting from British Columbia
to Atlanta and record time, record speeds, and lumbers getting
produced as much as you could ever want. Everyone has it.
There's no fear of a shortage. The end user lumberyard
(12:04):
is able to run kind of a lean, just in
time inventory model again, and it's so the supply chain
side is very fixed. But then now we have kind
of a broken housing starts world where you know, the
the number one demand a lumber is repairing to model,
(12:25):
and just behind that a single family, and then way
down the list is multifamily. Multi family is less than
ten percent of lumber demand.
Speaker 5 (12:33):
Wait, sorry, what's first again? Single family or repair? Oh okay, okay,
this is interesting.
Speaker 6 (12:37):
Repair and renovation, yes, repair and remodel this.
Speaker 4 (12:43):
Yes.
Speaker 1 (12:45):
So on that note, is it possible that like in
the post uh the immediate post twenty twenty period, we
just had everyone remodeling their homes and so you know,
that sort of took care of demand further out, or
that maybe because lumber prices went up so much, you
had this huge supply response from the mills, and so
(13:08):
there's just over supply, Like, is it possible that this
is something that's still very pandemic specific versus something that's
about slowing growth.
Speaker 4 (13:16):
Well, Tracy, that's a good way to frame it, because
I'm thinking, you know, my initial thought is like, oh,
this is a very is an economic indicator slow and growth.
But also I want to say we clearly now I
think undisputed can say we had pulled forward demand of
repair and remodel, so projects that would have been spread
out over five years got crunched into twenty four months,
(13:38):
and now we're on the back half of that five years,
and there's not much business to kind of float and
handle the supply that we have. So I don't know,
is that the definition of slowing economic growth is pull forward?
I don't know that's over my pay grade, but I
think it's clearly what happened is there is a repair
model boom that has really one of your housing and
(14:01):
lumber guests, Dustin Jolbert, has tweeted about it. Repairing the
models kind of flatted down and dead in the water.
That's a lot of big box home depot lows monards business,
and that's fifty percent of lumber that's produced goes to
that that sector, and it's it's down, and then we
all know, single families down just in time her supply
(14:22):
to be as efficient as it's ever been. And lastly,
I haven't been able to mention pre COVID eighteen nineteen,
there's a ton of cap X to invest in the US.
Speaker 1 (14:34):
Sorry eighteen nineteen or nineteen eighteen nineteen, I'm sorry, sorry, was.
Speaker 5 (14:46):
Technically sorry.
Speaker 4 (14:48):
I'll restated.
Speaker 1 (14:49):
No, No, it's fine, it's uh did I mention? I've
bumped my head, so my my numerical understanding is not
as great as it might normally be.
Speaker 4 (15:00):
Well, in twenty eighteen and twenty nineteen, their plans announced
and enacted to build new production sawmills in the US
South to take advantage of the larger fiber basket forest
logs down there versus the Canadian fiber basket. And it
was and is the Canadians who are doing that investment.
(15:20):
They own over fifty percent of the US South production
and a lot of those projects got delayed and for
COVID reasons, they couldn't get their saw mills built. They
couldn't get them staffed, but now they can't. So a
lot of those projects are now online and they are
not going to get shut down. There's debt to service,
there's cash flow motivations to just run. Who cares what
(15:42):
the break even is. So we have that, we have
repaired supply chains, and we have the hangover of the
pull forward demand of repairing the model, and then you
know the single family stories at this point.
Speaker 5 (15:54):
So when Stinson first mentioned, when you said repair and
remodel is actually the biggest category, Like at first, I
was kind of surprised by that, but you know, I
would have thought single family was a bigger source of demand.
But it occurred to me that there is a connection
here between what we've talked about in some our recent
conversation with Brad Jacobs, where he made the point that
like the US housing stock is really old right now,
(16:16):
and there is just and houses have to be repaired.
They're like any other asset, especially the moment you buy
a house that starts to fall apart. And so if
we have this historically old housing market, that is just
a big source of ongoing structural demand right just to
keep those homes in existence for all kinds of materials
they might need, So that actually sort of makes sense
(16:36):
to me.
Speaker 1 (16:37):
I feel like this is something you internalize as soon
as you actually buy.
Speaker 5 (16:41):
Oh no, no, no, for real, I bought my apartment
in Manhattan and it never had any issues and then
literally like a window started leaking. They like literally that week.
Speaker 3 (16:53):
It was so perfect.
Speaker 1 (17:07):
Wait, so Stintent, you mentioned something interesting, which is this
idea of the mills kind of hoarding workers first of all,
but then also just trying to withstand the lower prices
and maybe operating at a loss for as long as
they can and just sort of waiting to see if
they can beat out others who are forced to shut down.
(17:29):
What's the sort of differentiating factor in survival for some
of these mills. Is it just whoever has access to
like extra cash laying around for a rainy day, or
is it mills that maybe have supply agreements with like
big builders and big box companies and that sort of thing.
Speaker 4 (17:49):
You know, I would say, and I'm not honestly the
best to speak to this, but I would guess it's
these newer steady dart mills have the advantage they're going
to have been located strategically closer to a fiber supply
for trees and logs, they are going to have a
lot of investment. They're largely public companies that have built these,
(18:10):
so they have access to the cash to kind of
see to get to the other side. In the South,
it's still it's much more fragmented as far as they're smaller,
single location, mom and pop type locations. Those folks are
going to struggle. But then those folks have probably more
discipline and have saved some cash over the last several years.
(18:34):
And there's no way to know, but you would think
they've made it this far. They knew twenty one to
twenty two wasn't going to be around forever, so they
save some cash. Where the publics, you know, have to
disperse their cash. They pay down debt and then pay dividends, YadA, YadA, YadA.
So you know, I think the advantage is just the
newness of the mill because of the state of the art,
(18:54):
state of the art, less manpower, higher yields out of logs,
and then its strategic location where the old mills are
naturally going to be further away. They're going to have
logged everything within their radius and they're having to go
further and further away to get their logs. That's the
only thing I can think of. And this the structural
(19:15):
housing shortage that we all know by evidence by home
prices have not crashed in the phase of eight percent morgages.
We know that, the mills know that, and it's just like, well,
it's just going to turn and rate cuts. We got
to wait for rate cuts. And here we are and
I don't know, and I haven't heard, like how long
is this runway? Like how long can they bleed? And
(19:36):
I don't I don't know, but it's clearly been longer
than most traders had anticipated.
Speaker 5 (19:42):
Wait, I have a total curveball question actually, and if
you don't want to answer it, that's fine. But we
actually this week we did publish that interview with Brad Jacobs,
who is trying to do a roll up of the
what he calls a highly fragmented building supply industry, and
lumber is a building supply though I don't know if
he's going to get into lumber, though maybe he will
(20:03):
a from your perspective, is it really is it? Does
it seem very fragmented to you? And b let's say
Brad listens to odd lives and he hears this, smart
Stinson fellow, and he calls you up. What kind of
asset would you buy to create a platform for consolidating
this industry? A few had billions of dollars four and
a half billion dollars.
Speaker 4 (20:23):
Yeah, storage, storing, storage, Yeah, I think, I think the
sawmill production business. I learned this when I start. I
started out in grains. Yeah, it's just so tough and
you just rather have someone else. But with that, and
when they are over produced, you become a You've become
their liquidity provider. You give them cash, they give you lumber,
(20:45):
and you store it and wait for the supply response.
The crap and oil traders taught me this, I think.
And when I started in commodities in fourteen fifteen, there's
a big contango and the boats, the oil bart is
the just float around with no destination because they were
getting paid to store it. And if you have the
balance sheet to store your material when no one else
(21:08):
needs it, then you're the only one who has it
when when things change, and there's inevitably going to be
a supply response, and the lower we go, the more
violent it'll be. But for me, it's in my niche.
It's it's all about storage. I wouldn't be interested in
owning a producer. This is just a very, very tough business.
But if you if you can store, and the balance
(21:31):
sheet has a lot to do with that because your
liquidity is tied up in inventory.
Speaker 6 (21:36):
You know that that's what I would be doing. But
I'm a and I we are doing it.
Speaker 4 (21:42):
But the public the pressures that public companies have with
their lean balance sheets and their lean inventory models and
turning inventory terms with that, it's hard to execute. So
that's why folks like me exist where they can't execute.
I can, So I'll take on that risk. I'll warehouse it,
I'll hedge it and wait for things to shake out.
(22:02):
And it's not uncommon for me to sell the lumber
right back to the same people I bought it from.
And I'm just able to navigate slower inventory terms than anyone.
Speaker 2 (22:11):
Else, huh.
Speaker 1 (22:13):
I remember one of the first times we talked to
you ever, you spoke about how the industry was slow
to build out inventory because of the reasons that you
just explained. You know, the tendency towards efficiency and the
desire to be as streamlined as possible, and so when
demand starts picking up, it really takes people a lot
(22:33):
of time to get hold of the wood the lumber
that they need to actually match it. Is there any
sign that that behavior is kind of changing? So I
take the point that people like you exist to bridge
that gap. But do you see more and more industry
participants start to build out additional inventory or additional supply
(22:55):
just in case or is it still not really a reality.
Speaker 4 (22:59):
I think they tried, and that was kind of the
top of the market, and it was kind of this
whipsaw like, oh, we need to build inventory. Everyone builds inventory,
price goes up, and then it crashes because I bought
three months worth of inventory. Is almost the same concept
to pull forward demand instead of spreading it out over
three months, they rushed in about it all over within
a few weeks. I think folks are back to just
(23:23):
in time lean inventories. I don't think they have an
interest in building inventory to cost to do so is
expensive with where interest rates are and there everyone's very
uncomfortable with having low inventory turns. So no, I don't
think there's been a lesson learned to have more inventory
just the case. I think they tried to learn it
(23:44):
in real time and didn't didn't work out, And more
than anything, the interest rates are painful to store inventory. Now,
Oh yeah, if they ran a grain elevator hedging model,
they would know Fature's contract is compensating you for the
cost of interest, but not everyone is able to execute
(24:05):
on that.
Speaker 5 (24:05):
Yeah, this is an important point actually because just on
this point specifically, so right, it's easy enough to say, Okay,
you're going to buy when it's low and the future's
curve there's a higher price out there that you theoretically
be able to sell it at, but you do have
to match that against the interest rates. So it needs
to be sufficiently steep I guess that curve such that
(24:27):
it makes sense for you to hold rather than just
like buy treasuries or whatever.
Speaker 4 (24:32):
Yes, yes, exactly, And there's a level of sophistication, yeah,
I mean is needed for that. And then you know,
the futures market's small, so the bigger players kind of like,
we can't really have a material impact on our risk
because we can't put on a big enough position. All
our little futures contract that we adjusted last year is
(24:53):
doing much better, but we still have some room to grow.
Speaker 6 (24:56):
But you know, there's a reason.
Speaker 4 (24:59):
Well I'm wait over my skis here, but I think
a Cargill, there's a reason they're they're private, you know,
and I think one of them is they can execute
on these fairly sophisticated storage strategies. And I really have
to explain to everyone like, this is a six month
plus ARB and we're going to pay a bunch of
margin call and pay a bunch of interests, but we're
(25:21):
making it up because our cost basis goes lower and
lower every time we roll into the next contract. That's
just a really hard thing to explain to public investors.
Speaker 6 (25:29):
And and you.
Speaker 4 (25:31):
Know, public commodity companies often tell me when I was
a consultant, you know, our investors pay us to have
pretty naked exposure to the underlying commodity, and that was
as an uphill battle as a consultant.
Speaker 6 (25:43):
So I've said, I'll do it.
Speaker 4 (25:45):
And I know if you're not hedging, someone's going to
hedge for you, and that that's me, that's your investors.
And there's a level of you just realities of hedging
that not everyone could take advantage of.
Speaker 2 (25:56):
The secret to success is storage.
Speaker 6 (25:59):
I love it.
Speaker 5 (26:00):
Wait, just real quickly thirty second question, you have some
other businesses. I know, you have your hands all things
in other pods. You're out in the real world and
not like in Manhattan. You're like out in the real economy.
Do you think you see a slow down day to day?
Speaker 6 (26:15):
Gosh, I'm so concentrated in the lumber, but I do.
I do. Yeah, it's just like it's a front and.
Speaker 4 (26:23):
Center because you know, there's a reason on the show today.
But yeah, there's some other service businesses that are unrelated
and uncrrelated that I was in the middle of the
hiring when it was so tough to hire quality people
and we're just having to raise the wage. Yeah, to
find a clearing wage that has significantly cooled. We're able
to hire whenever we want and frankly let go of
(26:47):
folks without fear of being able to replace them.
Speaker 6 (26:50):
Yes, that aspect, it's like, is it too easy? I
don't know.
Speaker 4 (26:56):
This is it kind of feels like it used to
be where the employer had such an advantage over the employee,
like the employee really needed the job, and that's kind
of what we're getting. More professional follow ups and and
there's they're like they are vuying for the job. Versus
us buying for them. Like I think that dynamic has
has certainly changed, but I wouldn't say there's a material
(27:20):
drop off and activity in these businesses that would see.
Outside of Number.
Speaker 1 (27:30):
Lots More is produced by Carmen Rodriguez and dash Ell Bennett,
with help from Moses Ondom and Cal Brooks.
Speaker 5 (27:36):
Our sound engineer is Blake Maple's Sage Bouman is the
head of Bloomberg Podcasts.
Speaker 1 (27:40):
Please rate, review, and subscribe to Odd Lots and Lots
More on your favorite podcast platforms.
Speaker 5 (27:46):
And remember that Bloomberg subscribers can listen to all of
our podcasts and free by connecting through Apple Podcasts.
Speaker 3 (27:52):
Thanks for listening.
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Joe Weisenthal
Tracy Alloway
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