This is Bloomberg Business Week. I'm Carol Masser and I'm Bloomberg Quick Takes Tim Stanovk. We're here every day bringing you the latest news from the world of business and finance, plus technology, politics, economics, all partnising the power of Business Week reporters and editors, not to mention our journalists and analyst in more than one and twenty countries. You can download Bloomberg Business Week at iTunes, SoundCloud, or Bloomberg dot com.
You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Amazon shares are plummeting, posting their biggest drop since as the company acknowledged that a hiring and warehouse building binge during the pandemic now really catching up with the company as e commerce sales growth inevitably slows from the toward pace that we've seen from
the outbreak. We're all done kind of Mike going crazy on Amazon and look at the if you look at the size and scope, as we like to say over in the newsroom, uh, in the just today for Amazon, that's their worst drop since two thousand and six. About the historic, so even more than I think i'd put it out. So it's it's it's a greater drop. Yeah, yeah, it's huge, all right, and that's why we're seeing the drag on those major equity averages. Hey, let's get to
the story, the fundamentals. Bloomberg News technology reporter Matt Day on the phone in Seattle, joining up Mike and myself. So, Matt, we got the results. Initially, we saw the stock drop. What other insight do we get? Our intel? Um on the analysts call last night, it was it was a lot of playing defense from Amazon, which you might expect given the ugly numbers they reported. You know, they're they're really trying to push people to think of the big picture.
And remember all of that growth Amazon turned through during the pandemic. Um, you know, listen at a different universe they pulled through. You know a lot of a lot of increases in an e commerce behavior just in in a period of twelve months. And to take the long view, investors clearly haven't haven't bought that. They they see some weakness and Amazon's business that that weren't weren't apparent before.
Are they right to focus? Is Amazon right? We had an investor on too Amazon is is his number one pick. He says it's the most undervalued play out there. Um. Probably speaking his book, but he covers the tech sector and has for a while. Um, we talked with him last night. But I'm just wondering, is Amazon right to focus or refocus the analysis community about the growth? You know, they certainly have a point. Um, they've grown a ton, They've they've grabbed a ton of market share since the
beginning of the pandemic. I think the question that that that analysis leaves out is what happens now. You know, is Amazon structurally more profitable business now that they have built all of these warehouses around the U S to meet all of our demand? Or you know, because labor costs are what they are and and supply to him, looks like it's never gonna get uncanked. Um, is it just a structurally more expensive business to run an e
commerce operation? I think that's a that's an open question now in a way it wasn't just just twenty four hours ago. Yeah, Matt, you know, I'm an older guy, as they say, as the reason I have that title senior senior editor, Carol. But I remember back in the day. It almost didn't matter what Amazon's earnings said. You know, they had that top line growth, They had these investments in R and D, branching out into new business lines, cloud computing, you know. I mean, they went from basically
a bookseller to what they are now. Is anyone in the analyst community making that case sort of defending them, saying, look, this is kind of old school Amazon, just laying the groundwork for for the future. We're are we really looking at a scenario where we could see maybe even the closing some of all these warehouses they build, or laying off this massive number of people that they hired. Uh any idea which way people are expecting them to go?
I think it's it's a great question. I mean, it's definitely too soon to suggest they're gonna they're gonna start laying people off in droves or closing some of these facilities. But I think some of the problem that that analysts are chewing on is just how big Amazon has gotten. Like in those in those earlier days you talked about like they could they could move the needle a lot easily.
They are, They're a cute e commerce company, and getting into new lines of business was with maybe maybe less of a risk and easier to make a big difference. Even even after that crazy decline in their their share price, there's still more than a one trillion dollar company, right, Um, So it's just just getting incrementally harder to keep up with all of this, you know, twenty year growth that they they fed to Wall Street for so many years
in a row. You know, uh that I was reading a story of years a while back on CEO Andy Jesse's compensation package, and I almost I had to take my glasses off and clean them. I I thought I thought I was reading it wrong. It was like moment it was like, yeah, it was like two d and twenty million. Granted a lot of that in stock. Um,
but I'm wondering that. You know, so he has a background in the web services side of the business, which was such a strong driver of growth now, but with this problem on the the e commerce side, is is there any grumblings you're picking up, any grumblings that you know, maybe Jeff Bezos should come back from space and and that maybe you know that they should that they need a stronger leader in that retail side of the business. Nobody's nobody's crying loud enough, but it's it's reaching my
ears so far. I mean, I think this is this is definitely and Jesse's biggest challenge since sitting in this chair. And and and the word we get from Amazon is that he's still asking just really hard questions of a lot of business. You know, certainly today he's asking a bunch of of their core retail unit. Um What what we're hearing at Amazon is this is giving giving Jesse uh kind of an excuse to um to to interrogate some of Amazon's assumptions, right, like what are they what are
they planning on for e commerce growth? And can they sustain that? So I don't think we've seen enough results of that, And certainly, you know, nobody seems to be calling for his head this morning as far as I
can tell. Hey, man, I'm looking at the Bloomberg and looking at three year growth average numbers on the big product revenue segmentation when it comes to Amazon, I mean, online store is obviously the big bulk in terms of the overall revenues, but in terms of growth it is a WS or those third party sellers at least over
the last three years. Subscription services is too when you look especially at a WS, is that still the thing that kind of shining holy grail when it comes to Amazon, and that's where a lot of growth can still come And it really is. And that's that's so much of the bool case for the company and buy some estimates at half of their valuation or more today is just
at AWS. You know, structurally, more business and retail is going to keep growing and they're going to keep expanding as as you know, more companies put put their servers out of business and and trust to the cloud. Right. I think you've also you also got to note the advertising business Amazon. Last four I started to break out
ads and they're doing real well there too. Yeah, it's interesting to our Bloomberg Intelligence team putting that out to when it comes to when we're seeing some of the ad disappointments amongst some of the other companies, whether it was Google right specifically UM saying that increasingly we're seeing Amazon take a bigger share of that. Hey, Matt Day, thank you so much. Technology Putter at Bloomberg News. We know Amazon among the top decliners in both the SMP
and the NASDAC on this Friday. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So outside advisors to the U s f d A tentatively planned to meet UH in June to talk about covenanteen vaccines for younger kids were talking about five years or under five years of age. The news coming one day after Maderna's that it had applied for emergency authorization for itch shot in young kids.
So let's get a pandemic update on this Friday. Back with us, as he often is on a Friday, Dr Ian LUs Bader, clinical Professor of Medicine at n y U Land, going on the phone in New York City, joining Mike Reagan and myself. Ian, how are you doing very well? Carol and Mike. Happy Friday. I hope you guys are doing well. Yeah, it feels good. Feels good to be Friday. Uh. Yeah, we're we're loving it ahead of the weekend. Um. It also does feel good to see that when it comes to the vaccine, we're finally
getting to those little critters. How do you see it? And I'm always curious about what's involved and getting um, you know, youth authorization safe use authorization for younger kids. So there are really a number of questions about COVID of as there have been over the past two years
that we've been following this and vaccines. In a very interesting article in the New York Times entitled Truth and Trust, the author David Leonard really talks about public health officials sending confusing messages about masks vaccines, and I think that's what we're seeing with the really pediatric and UM, you know, essentially neo natal vaccines. And they do have to go through a vaccine committee that reviews the data, and they're taking a little bit of a pause to to really
review this. And I think we have to keep in mind a few things. One, UM, these vaccines still are for the alpha That the alpha virus, which is two years old O macron, both in kids and adults, is a relatively milder vaccine over thirty mutations just in the spike protein alone. So I think their question is going to be, UM, do we really need this uh? And what are the risks and what are the benefits? So a O macron is milder than alphas, So do we
really need to give alpha shots? It's two shots to UM two children really as young as six months old. The studies look from six months to six years to most young people do better than old people anyway. With with the virus and what really are both the short term and long term side effects. We know that the vaccines in a small percent of patients, they can have myocarditis,
neurologic problems, other problems. And do we really need to expose millions of kids to really save the lives potentially of maybe hundreds or perhaps a thousand kids who have died sadly, but that's really mainly from the from the alpha of virus, not from the omicron. So anyway, they have to look at all of that data, right, the
data is sort of questionable. It's the efficacy was fairly low at you know, talk to those calculations that the FDA are doing that you're talking about, I feel like parents in this country are doing the same type of calculations. And I've noticed just anecdotally, you know, friends that I talked to who even have gotten the vaccine themselves, and at the booster, there's a bit more reluctance to have their kids get the booster or to get the shot
when it's available. Do you think the uptake on this Madurna vaccine, if it is approved for these young kids will be will be pretty low as a result, And you know what does that mean for the virus going forward? Mike,
You're exactly right. That's sort of hesitancy I think will be shared by a lot of people because they're seeing an adults that many people have either had COVID or have had three shots and they still get O macron and they're going to wonder like if I even vaccinate my child, my me andate or young child isn't really going to do anything. And that's what we're seeing with questions about the fourth shot, the same question how long does the protection last? Do we really needed for our kids?
And what other potential side effects? So I do think, as you say, the uptake on this may not be as great as we think. I think it's good to offer to people they can make their own decision. Um. I think it's nice for for some kids who may have immune compromise. Is it good for everyone? I think we have to wait and really review more data. Yeah. I feel like anything that has to do with COVID, I feel like there's always a ton of question. No, um Ian, thank you so much. Listen, have a great weekend.
Dr Ian los Spader, clinical Professor of Medicine at n y U Lango Medical Center with us on the phone from New York City. The FDA, though, has said it is holding the dates of June eight je June for potential meetings of its Vaccines and Related Biological Products Advisory Committee to talk about pediatric use of vaccines made my Manderna and also the partnership of Fiser and bion Tech, so they're going to be Mike certainly looking into it.
This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So in the new issue of Bloomberg business Week magazine, it's already out on newsstands, it's online at Bloomberg dot com, also business Week dot com and off of course, on the Bloomberg terminal. It's a story by Josh Green that looks at Florida's Governor Rondo Santis raising his profile while managing to not alienate former President Donald Trump, which is tricky as we
all know. That story from Bloomberg Business Week National correspondent Josh Green, who joins us on the phone in Washington, d C. Josh, good to have you here with Mike Reagan and myself. So tell us about what the Florida governor is up to, because he's been quite public uh as of late, especially when it comes to his spat
with the Walt Disney Company. Yeah. I'm really looking at it, at the Santis and the Disney fight in our new issue, because it's it's just odd to see the popular governor of a big state attack his state's most prominent employer.
And yet that is what is happening in Florida, with the Santis attacking the Walt Disney Company for uh statements and support it's put out for for gay people and for criticizing what Democrats called the Don't Say Gay law in Florida that the sand is pushed and signed that forbids teachers from teaching about gender to uh younger school kids. UH. And it's turned into this big fight in politics, and
people are kind of wondering what is going on. And basically, as I lay out in the new issue of Business Week, de Santis is purposely picking this fight because it is something that chimes with what conservatives care about it's about the culture wars. But he's also trying to do something very tricky for Republican presidential hopeful, and that is to raise his own profiles presidential prospect without pissing off the biggest guy in Republican politics, and that is Donald Trump.
You know. And first, Carol, full disclosure, as a father of three daughters, I don't know how much I've spent at Disney and on their products. Just get that out of the way. But josh I, I think you you make a good point in this column about how this is really something that kind of riles up the base, uh and and the real sort of vocal thought leaders,
if you will, of the Republican Party. It's the type of thing that maybe makes sense in a primary season, but if de Santis is to get the nomination, um, I'm curious what you think, you know, does being anti Disney play nationally or is it the type of thing where he you know, suddenly we'll see him make amends with with Disney and be riding the teacups in a in a photo op and and making friends with the LGBTQ community a little bit. When he tries to move
to the middle of a little bit in a general election. Yeah. Well, what he's really doing, and he's been doing this since last fall I wrote about him back then, before Disney was in his crosshairs, is it's not so much that he's fighting against Disney. He's fighting against this broader notion of what he calls woke capitalism, the idea that businesses generally are spurning their shareholders and kind of subordinating themselves to UM activist liberals who want them to adopt a
social agenda. And in fairness to the Santus, that is not entirely untrue. Liberals have made a point of targeting Fortune five companies in states like Georgia where they really don't have political power. He saw that last year with all the fights over Delta and Coca Cola. UM activists had pressured them to speak out against these voting restriction laws.
Republicans had responded with the boycott. What the Santus is doing and essentially is turning the table and starting a political fight with Disney because he wants to draw his attention to himself as someone combating UH this issue of woke capitalism, which is very popular with conservatives UM, and it serves his immediate political interests because it helps to raise his profile in the lead up to the Republican presidential primary. And you know, Josh, you follow this stuff
a lot more closely than I do. But it seems to me that Donald Trump hasn't really staked out a position on Disney per se, and he never really seemed to show too much animosity, at least in his in his statements towards the LGBTQ community. Do you think he'll he'll try to chase the Santis on this issue or how do you see him reacting to this? You know, it's interesting. I'm not sure if you will are not.
The reason to Santis started this issue is because he needed something to raise his profile, and the problem he had is that most of the fights in Republican politics are cultural fights that revolve around Donald Trump. There fights Donald Trump has started, Their fights that revolve around him.
The big one that's royaling a lot of primary races, including the one I've written about um in the Pennsylvania Senate race, is the question of whether or not Trump was the rightful winner of the election and had it stolen from him. The status correctly recognizes that anytime you know he's gotta he's got to sort of talk about Trump's issues, subordinate himself to Trump. It makes him look feckless, it doesn't make him look like a strong, standalone candidate
who can develop his own following. And so one reason he started this fight with with Disney is that it's the kind of uh cultural grievance that Republicans have really learned to care a lot about um in the era of Donald Trump. And yet it isn't a fight that revolves around Trump or one that Trump has even particularly involved. Then, so I think we'll have to wait and see whether Trump or not decides to get involved in the Disney fight.
But the Santus has already won to an extent, at least in the political realm um by by creating this spectacle that revolves around him, that's raised his profile, that's gotten conservatives excited, and that has nothing to do for the time being with Donald Trump. Hey Josh, what is the relationship between De Santis and Donald Trump? It sounds
like it's a little complicated, very frosty, very frosty. Yes, I mean, Trump expects people in the Republican Party, all politicians, to essentially bow down to him, in genuflect um de Santis in particular because when the Santis was first running for governor in the Republican primary, Trump endorsed him and frankly, probably got him elected. I don't think the Santis would
be governor were it not for Donald Trump. UM. But at the same time, the Santus has ambitions of his own and recognizes that deferring to Trump is going to make it impossible for De Santis to be the Republican nominee in two and so he's refused to try. Has noticed this, Uh, it's angered him quite a bit. He's complained privately to advisers that the Sanders is a loser, that he has a dull personality, and he's taken shots at the Santis publicly for refusing to reveal, for instance,
whether or not he's had a COVID booster shot. He doesn't like the fact that the Santus has become popular on terms that don't put him um as a secondary figure to Trump, you know. Trust. Another story that caught my eye this week was that the whole Q and
On community has piled in on this Disney issue. Is are we seeing the signs of that sort of fringe element of the right wing getting on board with the Santis or is or is that just absolutely well, certainly they're being attracted to the fight that the Santus has started, and to the extent that this fight raises, the santass profile, you know, sucks in all the kind of activist fringy wackos who drive so much Republican politics these days, you'd have to think, you know, not great for Disney, not
great for teachers and kids and l g B, t q Q folks who are in the cross singers here. But as far as the Santus's own short term political interests, it's really hard to see that hurting him. It's fascinating to see how this is playing out here, and of course the midterms just really months away. A Josh Father, excuse me, thank you so much. Josh Green. He's national
correspondent at Bloomberg Business Week. His story is featured in the new issue of Business Week magazine, available on newsstands, on the Bloomberg and at Bloomberg dot com slash business Week, so be sure to check it out. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick takes Tim Stinovic on Bloomberg Radio. So Goldman Sacks offering its first ever lending facility back by bitcoin. It's a significant step for a major US bank that accelerates Wall streets
embrace of crypto. Meantime, Mike and I just talking about the journal, talking about the labor department and officials they're believing Fidelities planned to allow investors to put bitcoin in there four oh one k accounts, risks, the retirement security of Americans, so so much as always on a daily basis to talk about when it comes to crypto. In our weekly crypto segment, we welcome Rick Edelman. He's founder
of dac FP. That's Digital Assets Council of Financial Professionals, which worked with financial professionals when it comes to learning about blockchain and digital assets. Rick is with us on the phone in Virginia. Rick, nice to have you here. I do feel like every day we are flooded by people embracing the crypto world and people taking a step
back and being more cautious about crypto. Tell us, first of all your organization, what you are doing to educate the financial world when it comes to the crypto world. Thanks for having me on Carol. The challenge, of course, is that crypto is so new financial advisors don't know much more about it than everybody else, and that's not really good when clients come asking what is bitcoin? Should
I invest? How do I invest? So we created dak FPA four years ago to serve as the premier education resource. We're the only game in town, really the only objective independent, we're not proud sponsored, we're not pushing products, etcetera. UH, that gives a product agnostic level of education for financial advisors.
We offer the Certificate in blockchain and Digital Assets so that advisors get a deep dive not only in understanding the tech, but in understanding how to build a portfolio, how to serve clients, how to explain all this to clients. And UH there's a huge amount of increased demand from advisors for this knowledge because their clients are asking like never before. Watch this evolution of UH, the attitudes towards
crypto on Wall Street. You know, back from the days when Jamie Diamond was saying he would, you know, basically fire anyone who traded crypto at JP Morgan's, you know, dipping his toe at JP Morgan, dipping their tone into the space. I'm wondering what the sort of mood is among those registered advisors that you're talking about. UM. Are they skeptics? Are they warming up to the asset class? Uh?
You know, it's a lot for UH, AN R, I A to wrap their head around when you've got complicated traditional markets all of a sudden layer on top the digital markets and and defying everything else. Are you know, is there an embrace of the risk uh sort of tolerance among these advisors that you need to to get
into crypto? There really is. According to the most recent surveys, nearly half of all financial advisors personally on bitcoin, but only fiftent are recommending it to clients predominantly because their
firms won't let them. And advisors are realizing that they're got their hands tied behind their back because clients want to engage, they want to invest, and if the firms won't let them, then the clients are going to go somewhere else, and that's costing the firm's assets and and a U M. It's reducing their fee revenue and helping them frankly lose credibility. UM as clients are saying, are you that inequated, you're not able to help me with
the newest asset class on the marketplace. So advisors are are recognizing the value and importance of this. They cite as the number one reason for investing in bitcoin, the non correlation, the fact that this is additive to a diversified portfolio. It helps to improve returns while reducing risks. And advisors are big fans of portfolio diversification and bitcoin is just the latest way to help make that even better. Right right, Although, does that non correlation really hold up
all the time? It seems like, you know, we see bitcoin and ethereum really trading as as risky assets like stocks these days. But I guess, I guess one day the potential and the hope is that they will be completely uncorrelated. You're absolutely right. We're beginning to see over the past six months exactly what you said, and everybody is wondering is this a temporary aberration or is this representative of a new long term trend? Jury is out,
We'll have to wait and see. Well, how much of the education that you guys are doing is also though about the volatility of it and how investors need to be incredibly cautious. I mean we talked about the Labor department. They're not so comfortable with what Fidelity might be doing here and allowing investors to put bitcoining their own K costs. I mean, to be fair, Rick, there is still so much for trying to figure out about the crypto world.
You're absolutely right about that, Carol, But you know what, in this particular case with fidelities four O one K, the Department of Labor is dead wrong. Think about it. We know that the best way to invest is dollar cost averaging. Everybody is an agreement on that. You invest a little bit of money at a regular interval over many, many years. It smooths out the volatility. We also know that when you do it this way, you're not investing
in a lump sum. And we want the most volatile investment we can find me to take advantage of the price wings. That's what makes dollar cost averaging work. It wouldn't make any sense to dollar cost average into a bank account. So if bitcoin is an incredibly volatile asset, it's ideal for dollar cost averaging, which is what you do automatically in a four O one K with the tax deductability, the tax referral and free employer match. What
you're going to discover happening? Hang out, hang out Mike life. I know Mike has done to jump in. I get you, Rick, but I'm wondering what is the responsible way to approach putting bitcoin into a four one K? I mean, would you limit allocations? Would you have a big red flashing box come up and say this is a risky asset? Read all this first, know how? Because this is on advised money, right, not the financial advisors you're talking about. Most people set their four ones on their own? How
do you do that responsibly? And just got about thirty seconds advise four one K plans are increasingly engaging in financial education. To your exact point, I believe you're going to find employers using this as a recruitment tool, saying to workers are trying to hire, come work for our company and we'll provide you bitcoin in your four O one K to our match. This is here to stay and it's a sea change, big advance for crypto. I'm
just gonna say, younger generation is asking for flexibility. Right now, I'm being able to work. I don't know if it's bitcoin, and I wonder if they'll be matching in bitcoin. I'd be interesting. Alright, great conversation. Rick Edelman, founder of doc FP, joining us on the phone in Virginia. That's a Digital Assets Council of Financial Professionals. Bro Mac turn on yaw. But you let me drive? No, no, no, all right please, i'vels I want to drive. It's a good question. Drive.
This is the Drive to the clothes well on Bloomberg Radio. All right, TikTok, everybody, About ten minutes left to wrap up the Friday trading session. Wrap up a wild week. We're seeing stocks selling into the clothes here. We're down down about four on the NASTAC more than four percent. You heard Charlie talk about at three point six percent. Lower on the sp Dow off two point seven percent. Katy Nixon is with us for the drive to the close back with us. In fact, she's chief investment officer
at Northern Trust Wealth Management. On the phone from Ryan, New York. So how many phone calls, Katie, Mike and I Mike Reagan and I want to know how many calls are you getting from some of your clients? You know, Carol, first of all, thank you for having me, But I would say was prepared our clients for this kind of volatility.
We've been anticipating that we would be in this period of uncertainty and that would be reflected in lots of gyrations both up and down um in markets and bond markets and and stock markets, and certainly that has come come to bear. I'm just in the last week alone, we've had great upside and and um some painful downside as we see today. So we've kind of prepared folks for this, so we're not getting as many pone calls as you would think, Katie. It's funny, you know, uh
months ago. I don't know, at the end of last year, earlier this year, people started sort of whispering that word stagflation, um, and immediately they'd be sort of hushed and and and someone else would say, no, there's no no chance. The consumers too strong, the economy is too strong. Uh, you know. But then we see this negative GDP print for the first quarter, uh this week, are we is this what stagflation looks like? Or is that is that repurchased a
false signal? Do you think? Well, I think the data was pretty annoyed. The honestly, for the first quarter, we had that big trade drag um, and then we had consumption that did come in pretty pretty good, A little bit light, but about pretty good. So the data was I wouldn't say conclusive in terms of one way or another, but I would say the risks of staglation have risen for sure. Um, we have seen some rolling over of data. Um,
We're gonna get a lot more data next week. Obviously, we're gonna get the non farm payroll numbers, We'll get some I S M data. Um, we'll hear from the Fed clearly. Um, So we're gonna get a lot of a lot of stuff coming at us next week. But I don't think, um, that's our base case just yet.
I think we're gonna have to watch really carefully what happens, and certainly listening to some of the earnings announcements over the last couple of days also present, I would say a little bit of a mixed story in terms of what the macro environment is. How do you feel about big tech right now, after this weekend, after last week?
You know, Carol, it's such a great question, and you know you you were just reporting on what a tough day the Nasdaq is having, and clearly it's embar their market territory right now, and investors have just really run away from these high valuation stocks. I mean, I think valuation is very fragile in this rising rate environment here. And then at the same time, um, you've got some fundamentals that you know, at best are sort of flattening
out and at worst are showing some declining trends. I mean, Netflix is sort of the poster child, joined now by Amazon that's really showing a weakening of demand as those sort of stay at home stocks get kicked to the curb in uh, in favor of the stocks more more into the reopening trade, the rere reopening trade, I guess I would say, so, well, let me just follow real quickly, would you though? See this? I mean, you're right where the nastack one hundred um from its top right now
is down about Is that a buying opportunity? Well, here's something which I think is really interesting is our outlook is that the economy is actually going to start slowing in the back half of two three. And in a slowing economy, these are the kinds of stocks that actually tend to do well. The have sustainable growth models, they
have great cash flow. They have fortu spanace sheets, so we would we would really advise investors not to sort of have to pick sides here between the cyclicals and the growth stocks, but really have both in their portfolio, because there will come a day when investors prioritize growth and will pay more for growth in a slow and growth environment. Okay, I know you've been looking keeping an eye on mortgage traits. I guess everyone has these days. Uh,
you know, in tandem with just higher shelter costs. Uh, this rip roaring housing market at least up till now. Are are we setting ourselves up for a hard landing and housing? Do you think? And if if so, how does that play out? Is that part of your sort
of thinking on why we'll see a slow down in growth? Well, I would say that that's that's part of our thinking why we think inflation is probably going to continue to surprise on the upside because housing costs, whether it's rents or or or home prices, we think are going to remain elevated. And the interesting thing is despite the fact that certainly financing costs of gone up. I mean that the thirty year mortgage fixed rate mortgages up significantly in
just a couple of months. There's still such strong fundamental demand for housing, and we have a sixply problem, so that's going to continue to put upward pressure on housing prices, probably not at the pace that we have seen in one, but we certainly think housing price inflation is going to going to persist for a while until supply catches up with this really robust demand. So what do you do if you've got some new money to put to work?
Do you do? You stick it in cash or cash like investments at this point and just kind of ride this out. You know, Carol, this is going to be hard advice for a lot of folks to hear, but I would say get invested. I mean, we see the bigs so ellly to hear it. Over thirty we see prices down significantly. When you have those two things in tandem, these very sharp price declines coupled with heightened volatility, for long term investors, it's typically a very good time to
get invested. Now. Clearly though, it's always the hardest time to get invested, because there there's certainly fear overwhelming greed at this point. Um. But if you have a long enough time horizon, history would suggest this is a good time to get to your strategic allocations. Talk about fear
overwhelming greed. I'm looking at the markets now that thatw average down almost a thousand points out makes me wonder what warm Buffet's going to say, right, because this is when he would say, this is when you want to be time. But Keatie also, I wonder you know you pointed out that investor sentiment is at sort of historic woes. I think what you're looking at one measure lowis sance.
Now that to Carol's point about Buffet, that gets every contrarians sort of sputty, senses tingling, and you know they want to jump in and and be the hero. Is it? Is it that easy when when sentiments that bad? Or is there you know or a sentiment right? Yeah? Right, well how are you thinking about that? It can always get worse. So we're never going to time the market perfectly at the bottom, but we can look back at history that shows us, generally speaking, these are good times
for long term investors in very much. I'm glad you mentioned more in Buffet because you know the compliment launch term investor or UM would probably have that same advice you know you want to be buying when everyone else is selling, running in when everyone else is running out, and certainly not just a sentiment, so not just words, but indeeds. Investors are just selling. Retail investors are selling
stocks and bombs now here at really enormous levels. All right, we're gonna leave it there us so great as always to check in with you. Kitty Nixon, she's chief investment officer for the wealth management business over at Northern Trust, on the phone from Rotten, New York. It's sticking with me that she's saying. As we're seeing selling into the clothes, it can always get worse. But history like right, over time,
how many market cycles have you seen? We are way higher than where we were how many years ago, you know what I mean? Five years ago, ten years ago, twenty years ago. So just a little bit of a reminder. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube. Sarah to Bloomberg Global News with the d