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We are once.
Again starting with China today because for a third day we're looking at headlines over stimulus, got those overnight. It is, of course, the world's second largest economy. What happens in China tells us so much about what's going on in the global economy. China's gross trajectory being closely watched around the world. This is something Nobelle laureate and economist Joseph Stieglitz singled out earlier today at the Bloomberg New Economy Forum.
Unfortunately, we're a real challenge for the emerging markets and developing countries is going to be China because we, you know, and bypartisan view is that China represents a risk or a threat, a threat and you know, I think at this point there's very little evidence of that.
That of course, was Nobel Laurie Joseph Stieglitz at the Bloomberg New Economy Forum happening today. So talking about China. He often talks about what's going on around the world, but certainly emphasizing what's going on there.
Yeah, and I look, the.
Question of a risk or a threat is an interesting dilemma to look at in terms of the announcements that we had today from the Chinese Center Bank cutting interest rates at one year policy loans by thirty basis points. That's by the most on record in terms of a scale of a cut. This follows that package of teramulus that we had announced by the PBOC governor yesterday as well.
This all with a backdrop of the questions continuing to be asked about whether or not China is going to meet that growth target of around five percent this year. Let's get into that. We've got Bloomberg New Senior Editor Chris Ansy with us from our Boston bureau. Chris, great to have you on. Just talk us through the announcements that we had today and how that fits into what we learned yesterday from the PBOC governor.
Well, the one year loan rate was widely expected. This was a follow through from the shock and awe as it were on Tuesday of announcements of a host of different interest rate cuts, a reduction in the banks required reserve ratio, and other monetary policy initiatives. As you say, this was the biggest on record reduction of this one year policy rate. But I would also just focus on the magnitude there that was thirty basis points, and the benchmark seven day rate that was announced on Tuesday that
was cut by just twenty basis points. You know, for those of us who are used to monitoring the Federal Reserve or ECB, and we talked about fifty or seventy five being magnitudes of scale, twenty and thirty really doesn't sound like a whole lot.
Is that why I was looking at the NAZEC Golden Dragon China Index, those Chinese names that trade in the United States yesterday at more than nine percent today giving back about two percent in a market that's got a fair amount of no direction, if you will, but nonetheless giving back. So not as impressive as what we've seen Chris as of late in terms of doing something to change the narrative in China.
Well, I think our colleagues at Bloomberg Economics had a great way of framing it. They talked about this as a growth bump, but not an economy fix. So it's enough to move the needle maybe a little bit on GDP growth, but the bigger problems that China has the property sector, very low consumer confidence levels that never recovered since the pandemic hit, and consumer spending that remains, you know very much, you know, on a weak trend. You've
got demographics, all of these kinds of things. This is not going to be addressed by a twenty or thirty basis point rate cut.
And yet though Chris, as you well know, it's not the only thing that's happened over a series of time, not just this past week, but over months, and some would say over the last year or so. So what
is the fix for China? Is there one? Is it just going to be a series of many, many moves already done to come before we see China maybe the growth story change, or is it a case that China is a very large economy and moving the nut and fixing the real estate thing is something that may take much much longer to change, or maybe maybe not at all.
Yeah, all good questions and questions that China watchers are all asking. There does seem to be a kind of a universality of expect expectation that there will be some sort of next step on the fiscal front, something to try to jolt consumer confidence, something more concerted, perhaps to fix the property market. And you know, we'll see if
that eventuates. But you know, you've got the economists saying that the scale of response really needs to be very large, I mean potentially in the trillions of dollars to really address the property market. And we've had no real sign yet that Chi Jinping and his lieutenants are prepared to endorse you know, that big a fiscal stimulus.
Yeah, well, that's one of the really interesting questions, isn't it. But you know, every time that we talk about stimulus in China, it's that question of essentially, has there been a shift in position from cheating Ping into what he's willing to do to stimulate the economy. I'm looking at a story here about one off cash handouts being given to people in extreme poverty. That's a direct date measure. It's not going to do anything to boost consumer spending
on a macro level. But is that perhaps an indication of the reticence that now exists in China to try and put more money from the fiscal side in.
I think that's exactly right. And you know, some important context to keep in mind here is that the parts of the economy that Chi Jinping particularly cares about new energy vehicles, renewables, you know, solar, wind, nuclear power generations, the defense industry, all of those are going gangbusters. In fact, the latest monthly data showed double digit increases in areas of the economy. The new productive forces that Chigent Ping has said are the priority for his government, all of
those are doing very well. Indeed, so it's not entirely clear that he particularly concerned that retail sales are only growing at a two percent plus year on your pace, rather than the nine percent we saw a pre pandemic.
I do also wonder a very different China going forward. When I see that they're going to do different initiatives or the rules seem to change. Foreign investors have to be looking perhaps at China very differently going forward. And yet I don't know that we've seen dramatic outflows from global companies or moving their operations elsewhere, or their involvement elsewhere.
But I do wonder what are we seeing in terms of investment flows that we really think about China's role, at least in the global marketplace as being something very very different.
Well, direct investment into China has turned out to a net outflow in recent quarters. As you say, it's not a huge outflow. Some of this might be simply reflecting less in terms of retained profits being patriated abroad. So it's not a wholesale kind of shunning of China. But at the same time, it is a shift in direction.
And if you look at the recent announcements of troubles with China sales on the part of BMW, on the part of Mercedes, you look at the Calvin Klein Maker running into problems with the Chinese authorities with regard to sourcing cotton from Shinjiang, China is a much less attractive place for a whole host of reasons than it was you say, you know, even as much as few as five years ago.
As we say often, we're living in interesting times and changing times. Chris Antsy, Thank you so much, so appreciated, Bloomberg News Senior Editor, Chris Antsy. There, all right, now, we want to get to a story that is getting a lot of attention on the Bloomberg today.
Yeah, look, this is a question about trust. Once upon a time, the story was a growing economy lifted everyone, the whole rising tide, lifting all boats things. These days, though, the rich only seem to be rising, and the presentage of Americans are told gallup that they have a great dealer. Quite a lot of confidence in major companies has dropped from thirty percent in nineteen ninety nine to sixteen percent this year. Writing about their republic of distrust is Bloomberg Opinion.
Senior conlist Beth Coot is here with us in studio. Beth, great to see you, Thanks very much for joining us.
It's depressing.
This is depressing. But like, lay it out first, why do we need to trust companies?
I mean, I think that this is a huge problem, right, This is what if you don't If people don't trust business, if they don't trust companies, our economy basically can't run. It can't function. People need to believe that big institutions in general have their best interested heart, and I think that we're seeing that's just not the case in business and a lot of other institutions as well.
Well, let's talk about this because I do think that you know you and I feel like Stephen. Over the last couple of days, I've been talking about this, but I do think about we understand the push back in politics where people feel like government doesn't represent them anymore, and that goes hand in hand. They feel like there is an economy and marketplace that doesn't include them anymore. And I feel like the idea of companies taking care of employees, is it maybe there anymore?
Us?
You know, we work for a really great company. I'm going to lay it out fully transparent. We say it all the time, but that doesn't many people don't feel that way.
I think that's true, and you know, one of the questions I tried to answer is why do people believe that? Why do they think that that business has their best interest at heart? And I think, if you what we really looked at was this sort of twenty five year period after World War Two when you know, rising tides really did seem to lift all boats right. Everybody prospered, you know, obviously some more than others. It wasn't a perfect era, but the gap between the wealthiest Americans and
the poorest actually closed. And for a number of factors at play there. But I think a lot of people look back to this period and want to return to it, and there's some question is that even possible.
Yeah. I mean, look, there's even the prominent examples of of scandals at companies. You able to think about everything that happened to Boeing this year, for example, that shifts how people think about a company. I mean, how important is this for companies to get the handle on as well?
I think it's huge. I really think it's huge. I mean, yeah, I point to some of those in the piece right and ron financial crisis. There's just one after another where people not only feel like it means that they can't trust business, but that the rules don't apply fairly to everybody, that somehow the wealthiest leave unscathed. Well, it's sort of those at the bottom that bear the front of it.
What about things like productivity gains technology helping us out unions where workers maybe had more of a voice at the negotiating table, that we used to be an economy that actually made a lot of stuff here before we started outsourcing it. We've talked with the folks who talk about all the consulting companies, said hey, here's a better idea. Outsource it safe costs, but workers have been penalized I think as a result here.
Absolutely, And I think again that sort of golden era, that twenty five year period, unions were in their heyday.
You know.
I think we people coming back from the front. We had a you know, an influx of workers. There was a lot of demand for goods. We were making things here in this country, as you mentioned, and I think that really, you know, there was a very progressive tax code. So I think that there were all these factors at play. And you know, one one historian I was talking to said, you can't ring that belt.
Whats right?
Like it was just sort of this confluence of events that led to this era. And even people who didn't weren't even alive during that time, I think do idolize that period, and it's affected the way we do think about how business and the economy should work.
It's interesting to think about the timeline over this as well, because when we look at the polling from Gallop on where trusting companies is through good times and in bad, it's still been pretty weak. Every recently is like this. It's not a question of when the economy is doing badly. Yeah, that that's the moment when just trust spikes, there seems to be something that's lasting kind of as I say it, you're good times in bad yeah, And.
I think part of this is people feel like there there is this promise, right, I'm going to work hard and that should mean that I can, you know, buy a house, May we send my kids to college, that the next generation should prosper more than minded And I think we're not seeing that.
You know.
One of the things I looked at as well is CEO pay and the ratio of CEO to work our compensation has only that gap has just increased exponentially. So there's also this sense of you know, why am I struggling so much when those at the very top just seem to be getting paid more.
It's really wild. And you put this in the story. And we used to cover the business Roundtable. We would do broadcasts from there. But this whole idea of laying out a few years ago, we talked about it all stakeholders matter, yes, investors, yes.
Custom stakeholder capitalism that.
Right, Like, where is that? And I feel like we have constant conversations with executives that companies say like our employees matter. I mean they can't do it without them.
Right right, And I think this is a little bit. I think there is this of hypocrisy where we have seen a lot of companies retreat on some of these promises very quickly when under pressure from you know, certain conservative groups, right DEI ESG. We've seen a real role back there. And it makes people wonder, did you actually ever care about this or was this you know, simply good marketing.
But that that's also, I think such an interesting point because companies moved into this space and started taking positions on it as they failed to importance and they thought would drive customer loyalty.
Did a lot of the pandemic and the murder of George Floyd.
But is that is that?
I mean, is that gone now? Is that just not possible anymore?
I do think that companies are saying, Okay, maybe maybe we went a little too far on this. Maybe we don't want to take that, Maybe we don't want to take a position, you know. I think the hard thing is in this era we are so polarized, there is no such thing as a neutral position. Right. If you take a position, you're gonna someone's gonna feel like, you know, this is against my beliefs. But if you don't, you're also sort of taking a position. So that's a tricky line.
Beth, gotta ask, because we've got we've got We're going to talk with a very senior exec at Cisco Systems coming up. What do you think we should be asking companies about this?
Yeah, if they are retreating, why you know, why are why are we rolling back on some of these positions? But also, you know, what do they hear from their workers? Do are they feeling some of this erosion?
And the war for talent right is going to be a key factor for that as well.
Absolutely, all right, good stuff.
As we said, it's among the most read stories of the Bloomberok Beth, thank you as always, Bethcohit She's Bloomberg Opinion senior columnist talking is about the Republic of Distress.
Yeah, you can find it on Bloomberg dot com for it Slash Opinion as well if you want to read the piece in full. Bath great to have you with us in studio. Look, this is a question that I think comes through so many of the conversations were at a plaza yesterday talking to senior exacts as well. It feeds into how people are perceiving companies too. I'm not something that's you know, it means you're going to got questions ast on that as well.
Yeah, and you know, important issues, but you know, employees feeling taken care of. We talk increasingly too about pensions going away. Right, People used to retire and they didn't have to worry about things, but that's not necessarily given anymore by a lot of companies.
You're listening to the bloom Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then brought auto with a Bloomberg Business app, or watch us live on YouTube.
We mcro call. It was just a couple of weeks ago, Tim and I actually caught up with Accenture's global talently. We talked about ais impact on work workers and the workforce on that Accenture is part of a consortium along with Cisco Systems on a build out of the AI enabled workforce and the information and communication technology or I see T space and our next guests definitely had some
thoughts on that. We're so delighted at back with us in studio friend Casudas, she's executive vice president Chief People, Policy and Purpose Officer over at Cisco Systems. As I said here in studio, how are you good.
It's wonderful to be back.
It's great to have you here. A lot of things we want to get to. First up, I want to ask you, just as I often do the macro business environment, how do you see things going right now?
So it's funny because I think there's so much going on in the world at the moment, but when we look at the macro business environment, what we see is a tremendous amount of focus still on technology. I think today the realization that we're hearing from our customers is that cybersecurity AI can't wait, and so I think there's a lot of learning. I think there's growth. I think anytime you go into an election season there's some hesitancy.
And I will tell you around the world this year sixty elections, and there are countries where we see projects being held as people wait to see what happens in those countries.
But just as in terms off of the US elections, you.
Know what, it's interesting from a US perspective, I don't see this much. But I think part of that is because when you're talking about cybersecurity. When you're talking about the build out of infrastructure, it is pretty critical. I think some of the bigger projects that we're looking at around the world, you need to have a head of state and government that really believes and commits to the change. And so I think in those places you are going to see a little bit of a pause as well.
Are those clients the willing to put money into this as well? Are they kind of up for spending to try and catch that innovation?
Yeah?
You know, it's funny. I see two things at the moment. So the first is I see around the world this belief that AI creates amazing opportunity, and so you have countries now around the world that are even creating AI ministers that are thinking about how do we capture the opportunity, and fortunately, I think a lot of them are also thinking about how do we ensure that we don't leave a subset of the community behind, and so I think
that's a big part of the focus. I think many governments and companies are still sorting what does that build out need to look like? What are the use cases really that we'll be using over the next twelve months.
You know, you mentioned communities feeling left behind. And we just talked about a Bloomberg story about how Americans trust in big business went from bad to worse, and a lot of it has to do with workers feeling left behind. What are you hearing about that on your front? We've talked with you a lot about people who issues employees shoes. This is your world. What do you hear back in terms of feedback from your workforce about what's important and
maybe why they maybe feel behind. Not yours particular, but in general.
You know what, I think it's real. I think that anytime you see such significant changes in technology that will truly impact roles, I think it's natural for people to say, will I be relevant? What is changing?
But it's funny.
I think I would say around eighteen months ago it was a bit more negative. I think the delta is that today our employees are playing with the technology, they're experimenting, they're learning that in many cases the technology will make them better. I do think we have to admit that there's areas where jobs are going to go away.
But letting go a bunch of workers you talked about in your earnings report, and a lot of it said it wasn't financially related, right or profitability related, but it was that you guys were having a strategy shift.
It was a mix of both.
It was a mix of both.
And I think that it's important for us to always focus on growth innovation, what we're going to need moving forward. And I think the commitment that we need to make to our people is that we're going to help them understand the changes that are coming and help them build
the skills that they need. And it's funny it ties to where you started, Carol, But when we did that AI Consortium body of work with Accenture and Google and Microsoft IBM, what we found was that all of us collectively believe that the large majority of technical roles are going to shift, and what we can see is that some of the skills and the task will evolve. The beautiful thing is when you have that blueprint, it allows you to start to train and prepare your people. And
that's the commitment that we're making. And I think Cisco and all of us need to do a better job of helping people get ready for what's coming.
But how much you need to prepare it in budget terms for training as well. Surely some of these people. It's a question of hiring in different skill sets. But if you're going to invest in adopting, that's a commitment financially.
It's so funny because I think in some cases retraining your people is a lot less expensive than hiring from the outside, and I think it's it's a bit of a win win. I think what's so different that we're going to have to figure out how to scale to both from a budget perspective, but maybe even more so from a time perspective, is that we're not talking about freshening up your skills once a year.
What we're talking it's not a power points learning.
Yeah, that's and we're talking about maybe it's weekly, maybe it's monthly. Maybe there's one day a month where we're going to have to all go through training to be able to leverage the technology that's in front of us. And I think it's the mindset shift that's actually going to be bigger than the budget requirement.
I feel like we're hearing that a lot. I mean, we do it sort of as an organization here that there's whether it's something going on in markets and so on and so forth. Having said that, then do workers need a college degree.
So this transition, and it's funny because so many of the transitions from a workforce perspective were there already and the technology is really bringing it to fruition. What we've seen over the last five years is that you don't need a college degree the way that you did in the past. I remember a time when at Cisco, if you didn't have a college degree, you couldn't apply for
a role. I think Cisco and so many other companies moved away from that when we had a talent shortage because we realized there's amazing skills that are out there, and if you can invest in training and onboarding talent, you can get to tremendous talent. And so I think that shift has started. I think it's very possible with what we're talking about that you're going to see an emergence of multiple paths for talent, and I think that's great for the US and beyond.
That's something that actually links into while you're here in New York for the globe, but cites an event as well, because that's one of the things that Cisco is involved in with that organization, fostering new talent as well. I wonder you know, in an environ I and where we're talking about perceptions of where companies are positioning themselves. How important is it for a company like Cisco to be involved in Global citizens?
You know, I think at this moment we see a couple of really important trends. And so the first is there's this realization that it's through public private partnerships and in many cases including nonprofits that have incredible capability and scale, that we're having the biggest impact on communities. So that's the first thing. The second thing that I would say is I see both employees and candidates wanting to work
for companies that are doing good. And then from a Cisco perspective, because of our technology, because we drive connection, one of the biggest ways that we can impact poverty as an example, which is where Global Citizen truly focuses is around education. And so this year, Cisco will have trained twenty three and a half million students in technology over the last twenty five years, and it's a great way for us to really partner with Global Citizen and
having this impact around the world. And so I think it's critical and more and more I see our corporate partners out there doing a lot of good.
Come back soon because I feel like there's stuff too. When you talk about communities around the world and the education emerging world, love to dig even deeper into that. Friend as always, thank you so much, really appreciate it.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on applecar Play and Androyd Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.
Hey, there's even a local New York City landmark. It's got its own eighty three foot climbing wall that is among the New York City pricey properties that can be yours or yours for the right price. As for we meet our mortals, we're just excited that rates are coming down from mortgages because mortgage refinancings we have seen them take up surging for a second week in a row. So we wanted to talk real estate specifically what's going on with the high end New York City residential real
estate market. And back with us is Louise Phillips Forbes. She's an agent, real estate broker at Brown Harris Stevens. Back here in our interactive Brokers studio. How are you.
I'm great, longtime no see, I have long time no see.
How are things going? How are things changed from we just talked a little while ago.
Like I said, when I was here last fastened your seatbelt. It just took a little bit longer for the Feds to respond and be cautious in the dropping and the process that they've given. Since October of twenty twenty three, we have a shift in the buying power of literally seventy thousand dollars for an individual today and that's so what you would have paid in October of twenty twenty three. Today it is upwards of eleven hundred dollars difference. It's cheaper,
you're buying that much more buying power. So it's exciting to watch, and the buyers are out and active.
I'm always curious, as you know, we if you're going to buy a home, I wonder how close you really are watching the fad to say, you know, as soon as the fad rights are caught, then I'm going to jump into the house. Is there a really kind of a as quick a function. Are you getting calls after the you know, Jerome pals Listen.
Cash has been king for some time, but cash can't compete when you have five people looking at the same property, whereas it was two in a one week and we have twenty in a day. I did twenty six buyer tours in a two week period. My team and myself is that a lot, I don't know for perspective, over a hundred appointments of apartments for individual people, and that performed for us. I'm three times higher buyer transactions than
i am exclusives. That's that's pretty significant and that started the conversations that I had talking to the beginning of the year. We had a huge surge unexpectedly in the first quarter because people didn't want to compete with all the buyers that are in the market. Now it's already affecting our rental market, and there's an efficiency.
What what's going on in the rental markets?
When rates go down, so do rents. When rates go up, we sit on the sideline. So that is a cause and effect. And New York, unlike some places in the country, have product to sell, so people are in, you know, they're figuring out whatever they need to do to purchase a home.
Talk to us about where cash like. It feels like there's an AFO, a lout of cash buyers in the city.
So yes, absolutely, Well what proportion are we looking at a quarter? I mean, well, the first and second quarter I did about sixty seven percent of my transactions were cash. That doesn't mean and there's also a tax opportunity there. If you're paying cash, then you can pull money out and you write off all of the interest on that. Talk to your accountant. I'm not an accountant, but but there's an opportunity.
Don't play one on TV either, Yep, Nope, don't want to.
Play one on TV. But there's an opportunity that people are taking advantage of that tax credit and so not that in today, we're seeing people even considering refinancing things I sold less than twenty four months ago, even twelve months ago. If it's not real property and they don't have a mortgage recording tax, it doesn't cost anything to refinance.
What's the tyficult property that you when you talk about all these showings you've done over the last couple of weeks, give us is there an yeah, I know it runs the gamut.
I know it does. We're from six hundred to twenty million, so but but but these are five million down to a million two and the million to two million to two and a half. That is a market where people are back in very strongly and they're being absorbed. Things that have been on the market in some cases on and off for three years are now in contract. So it's it's it's an efficient market.
What does that mean for repricing? Are people rethinking?
It's you know, you're going to find more today than less tomorrow because as interest rates continue to drop, prices are going to continue to climb.
Remind us too, and I know what we always love to talk about the demographic first time buyers, second time buyers, foreign bar buyers, who's buying.
Let me just say, there's there's a whole tech search that's been happening here. I spoke about my project at three ninety three West End Avenue, which is a small boutique seventy five unit building. One out of three not only purchases, but every appointment, which I'm talking hundreds in the last year and a half are tech individuals. But the first time buyers are in the market now parents are facilitating by supporting their children co purchasing. We have
empty nesters. I mean, listen, we uh we just did sixteen transactions in August and part of September, maybe the tail end of July, and I would say that four of those of the sixteen were parents co purchasing with their kids because they don't I want to pay rent and why not build equity in that asset so cord to those transactions. Wow, yeah, that's a lot.
Where's foreign buyers and all this? I know, I always like to ask because I'm always cious about it.
I mean, you know, listen, we have a very strong presence of mechs. I did three transactions with people from Mexico. I've had a big strong contingency in Asia, but we also have Italian and people are Look. New York has been on really a discount. It's been for sale and on at very low entry level for us historically since we've been on the national the international platform of the market.
And so people are parking their money here and they'll park it for everybody wants to buy a piece of the rock.
So I find this investment it's in no no, their user.
They may be investment temporarily while their kids tell their kids go to school here or they leave. I have a lot of Israeli money coming here, so I think that it's the gam it because of the war. No, I think it's it's it's wanting to buy a piece of what is stable. We are stable, We are, you know, a leader and in our economies of all sorts, whether it's real estate, you know, the stock market, or the tech, the tech scene.
I want to go back to this idea of that all these tech people that are that are buying as well. I mean, are they typical buyers? Are they people that are buying everyone in their level?
You have you have new Wealth where you have gen X individuals that started some dot com thing or maybe that's not even the hip thing now.
But a AI, we don't even know if we can say hip thing anymore. Yeah, it's just forget it or edited constant.
Exactly, please edit. But but the bottom line is is that that they're the amount of job security. I mean when I in two thousand and five, when Google started, they committed five hundred people here, I don't even know how many they are, but they're more I mean, yes, I mean, and and they have helped compliment the tri States on top of the city, and they're not just downtown. As they get older, they want to move to the
uptown market where the schools are. So it's a very interesting transition that that's metamorphosed through the last twenty years.
Anybody they're waiting to say, okay, if that's going to cut even more, so I can just hold off a little bit. But or are They're like, Nope, we're going to do it.
It doesn't make sense because it's okay if you can't afford your payment. That's one question, that's one decision, right, But the bottom line is what's priced today is going to be higher when when the buying power gets stronger because of the increased demands and more people are in
the market. So there is a concern about bubbles, like immediate bubbles where a lack where you have a certain niche of a market where there's not enough inventory and there's so many people parents trying to support their kids. They'll have eleven offers on an apartment that's coming, that's coming across the nation.
A couple questions how much new inventory is coming in terms of building because you know, obviously there's just New York City is only so big, But that doesn't mean that there isn't new construction still going up or building's being torn, new stuff coming up? Do people?
You know?
So what are we seeing in terms of new supply? And I am also curious about again the office concern, the excess office that's still in New York City, how that maybe impacts an area.
You would never know that you're sitting in the Bloomberg building, just to be bilar but.
There is a fair amount of occupancy. Now there's been nice pictures put up, but we the container store went out, and Out of Republic went out, Victoria's Secret went out. I mean, there's a whole host of retail ye that is gone and it hasn't been replaced.
Me.
Part of that is the pattern that we've been anticipating, the shifting on. I mean, listen, I just ordered a brace for my son's niece, my son's knee.
Yeah came.
I ordered it last night and it was here today at before by before we left it four o'clock to go back to school. So yeah, an, the access of what we have has changed, how the patterns of shopping is done. But from a from the concern on office is there we are going to see people trying to
convert office to residential. There are a lot of challenges because they're deep and they need light wells, so the construction costs on that is difficult, and the tax base is going to be higher than your traditional residential markets.
So we need to see prices go significantly higher to mat We were talking about the Goat former Goldman building being converted recently as.
Two fifty West Street. Yeah, well every no excuse me, that was the City Bank. But they were anticipating that to be very, very challenging, but they made it a lifestyle building because they had the square footage to create fifty five thousand square feet of amenities. So you know, I find that those are going to continue to have an attraction, both domestic and international.
What's your favorite kind of property right now to be involved in and represent in terms of selling?
Oh wow, I mean I love selling places that. I mean, I love old architecture.
But I find that what you know, like I'm just saying, when you're offered up like a got that one, that's gonna be an easy one?
Oh gosh, I mean, you know, I find that if we price prepare and present properly, then we can sell anything. It's all about pricing because people want to have a piece of this rock. And it's really such a great city that has had a challenging time that we all have recovery still occurring from the pandemic.
Is there an area though with this?
I am all over the city. I would say that there's nothing better than a West Village townhouse, which I did a couple of those this past the last quarter, and I've got more coming. Those are amazing because the history that's behind them, right and the stories that can be told about who lived in them. I find that to be fascinating. And then I love you know, my backyard is the Upper west Side, but the East Village also is like it's unique to me because I live
on the Upper west Side. So there's something for everyone, which is what makes Manhattan so special. And there are no boundaries. It's like, oh, you can't go this over this, It's it's not safe. It's just not the case.
I'm going to ask a really European question, are people worried?
Are you shopping for a place in New York City?
Did the bosses want to know a co sponsor?
Can call me.
I'm the climate proofing older properties. This is such a big conversation being hot in parts of the world of how much money you need to put into it to make sure that it's more heated fish and more energytician. Are people are buyers interested in that?
Absolutely? They would be crazy not to be listen. I just took We refinanced my own building where I live from a from a two million dollar mortgage to a seven million dollar mortgage to do a four million dollar improvement, which we did it. And you know it's it's really the local law eleven and ninety seven. All of these are safety opportunities that are going to make the world better and and ourselves. But you have to go in with your eyes open and know what you're getting in.
And it's it's up to those brokers to educate themselves.
It is that safety or climate, just quickly both.
It's both safety. I mean the elevator laws have changed how we do local law leven meaning the point work so bricks don't fall off buildings, all of that, and then the climate comes with what our exmissions are and the quality of the energy savings.
We're talking with Louise Phillips Forbes. She's real estate broker at Brown Harris Stevens. We do want to remind everybody we are watching actually a live feed in Pittsburgh, Pennsylvania. We are expecting Vice President Kamala Harris to make some comments unveiling her economic plan. That's how it's been played up and promoted. If you will, so as soon as she takes to the podium, we will take you there live to listen to her comments. Meantime, I'm Carol Masser
along with Stephen Carroll right here on Bloomberg BusinessWeek. You know, I love talking with folks like you. You obviously love what you do. You're excited real estate. It's like I read the business pages, but it's my next thing that I always like, right best it? No, it is, It's just everybody wants to talk about it. You've seen different cycles. Are we back to where we were pre pandemic?
Where are think so?
I don't think so.
I think there's certain things like listen that you read about iconic pieces of property trading for seventy nine million that didn't even come on the market. You know, those are those are luxury buys that our trophy and to some of the elite that we have. We attract those kinds of owners, and that's a domestic, local person who
bought that too. I think that, you know, I think it was still great opportunity and huge growth to come forth, you know, come forth when you were when I was selling real estate, when Bloomberg rezoned forty percent of the land mass, the opportunities in the shift in the boundaries of where people would live was amazing. And we've got that continuing. Yeah.
I was just going to say, didn't this used to be what was the department store?
Yes, it was think of Alexander's Alexander Sorry, like an old brand. Yeah, that's what I mean.
And then you look at kind of what's here now?
Yep, yeah, forget me.
No, this is trivia. I feel like I need to store away and be able.
You can't go shopping anymore here? Well you can, well right there, Yeah, fair enough.
I wanted to ask about the question around in your conversations with buyers and sallus, does anyone bring up the election? Is anyone thinking about they're going to hold off?
Well?
Well, I will say that there has been a little more optimism since there was this shift, and I think that you know if you know, if you didn't know Kamala, which I didn't, she's held her own in hers and how she speaks, what her what her principles are. So I think there was a lot of unknown about that, and I think people feel have embraced it. Secondly, my experience is historically it has there's a pause where people are like, let's wait and see what happens.
Are we in that zone now?
No? I mean you've got to remember, we're coming off of twenty twenty now on top of that COVID, so nobody they've been waiting a long time, and interest rates are giving them that motivation that's going to override their life decisions over who's going to be president.
What about though, Donald Trump coming out right, he came to Long Island like it was kind of an unusual, you know, campaign stop. I think many build it as.
Plus he's shut down four ninety five. I was stuck there. I watched a movie with my husband on the street.
Not exactly probably in your plan, but he pledged salt taxes to lift a cap on state and local taxes, and that deduction that is means so much to those of us who live in the New York Metro era absolutely where there's a lot of taxes and we can't deduct them. And I understand people say, you make those choices, that isn't shifting people politically. You think about when they're buying or mean, think about that.
I think there are everybody they think about it who lives in New York who's in that top whether it's two percent or ten percent. Elections financially will will sway some, But to me, it's really about what's best for our country. I mean, listen, I went from ninety thousand dollars worth of real estate taxes that I rode off to ten I didn't. I had multiple pieces of property. Yeah, so that's forty five thousand dollars that I'm paying the government now. So I think you have to it. It's going to
mean more to some than others. I don't live my life through what's in my wallet.
You didn't sell your home, you didn't move, you didn't move to another state, And I think.
That that your home is a long view.
When things are hot? Right now? Is that the simes I'm getting right? You know, the Fed's coat rights were into this cycle. Where what are you thinking about in six months or a year. I mean, is that does that demands to light?
There?
You do?
You have see that long line at your door?
Absolutely? You know. Look, I think that we have room for a big recovery and we have room for growth because as Carol said, there's only so much real estate and floor to be built or converted or whatever, and so owners buyers need to have a long view and I push, I push my buyers today buy more. I know you really want to only spend this much, but why you want to have a second child? Reach this
is the time and refinance again. So that's my advice is by long and stay and buy more today than less tomorrow.
Before you go, I want to bring up there's a story kind of teed up in the introduction. This is written by our James Ptarmi about the New York City townhouse with an eighty three foot climbing wall listing for twenty million. It's the Manetta Lane Home. It's a local landmark and as our James Ptarmi mentioned, it can now
be yours obviously if you can afford it. But I do think about old buildings, as you said, you know, with a history with people who lived in them or some really cool stuff to it, whether it's a pool, whether it's a climbing wall, what have you. Is there something we've noticed in properties where there is even just more and more being added in terms of a mendic Absolutely.
I mean, listen, the West Village. I just sold a transaction. I did a transaction on Perry Street earlier this year, and that is like mecca for a location of the West Village, right down the street from uh Sex and the City Townhouse. And you know, they hadn't it hadn't been on the market for forty five years, right, so they paid one hundred and thirty five thousand dollars for it.
That we had eight offers in eight days and it went two million dollars over the asking price, and most of the people that wanted to make those offers wanted to spend seven million dollars and then flip it for twenty six unbelievable, and that would have been possible.
Love that. That's such a great way to wrap up. Louise as always so appreciated. Thank you, Thank you, Louise Phillips Forbes real estate broker at Brown Harris Stevens. Here in our Interactive Broker studio working on properties for Stephen Carroll to come to New York.
City be able to dose h here.
We might be waiting for a while, work.
Assic immigration things or whatever it is. I don't know what it's worked for.
I think I'm happy that I'm going before Tamala. Then after there might have been questions.
There might have been questions. Art Luis, thank you so much.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple car Play and then Bright Auto with a Bloomberg Business act or want us live on YouTube.
Let's bring in on Zachron, expanding partner co CEO at IQ Capital from Foster City, California. As we drive to the close here on Bloomberg Radio. So Alan, look, yesterday was the forty first record for the S and P five phonded. This year, we're not going to get forty two. It looks like we're doing about a quarter of one percent on the S and P five funded. What breaks this bull run? What takes us out of this the level that we're seeing so many records for stocks?
Thanks for having me on your show. It takes us out of this market.
It is some unexpected event because when valuations are the site, you just had less root for error. The reality is, I think the feed is pretty much articulated. The soft landing few people thought they could, and growth is still there and inflation is moderating.
So what it's not what you know what you know, and you know what you don't know. It's what you don't know that you don't know that's going to hurt you.
If things stay as planned, the market is going to slowly continue to work its way up. Most of the valuation increase in multiples has probably been witnessed. But if earnings can continue to grow at a moderate pace, the markets.
Can plot their way higher from here. So the unexpected is what's going to take us down.
Hey, one thing I want to ask you is we continue to monitor Vice Presid Kamala Harris there in Pittsburgh trying to get more details of what the specifics are on when it comes to our economic plan, and to be fair, as our Mike Dorning pointed out, we want more specifics when it comes to what a second term of a Trump White House would be. Having said that, you talk with investors, you guys, are investing money. Do you often have your clients, institutional or otherwise saying, hey,
you know, I'm a little confused. I want to know what the economic plans are. Our folks is saying here's what I want to do with my money.
For the most part, we're finding both individual as well as institutional investors are basically focused on economic growth and inflation, because at the end of the day, no matter which administration is in office, let alone, and which Democrats are Republicans controlling Congress, who makes the rules taxes, inflation.
And economic growth of what drive asset dount and so both.
Parties more or less look like we're going to be in an environment where the deficit ind continued to grow and where the biggest differences.
Are sector wise, whether you're going to focus on traditional energy versus electric vehicles and de electrification is a big issue of change or perhaps moderate changes of.
Respect to the healthcare system.
But for the most part, the administrations aren't that much a part, other than probably potential tax changes from the TCGA that we're imposed during the Trump administration. So we see handfuls of clients that take on let's wait and see what happens with the US president's election outcome.
The reality is the markets move in the end on economic growth, not on who's in the office as a president.
And look, the economic picture pretty solids by all accounts. They always de forecasts out today seeing US GDP for rising two point six percent this year, one point six percent next year. Though, where are you on your outlook on a soft landing and your concerns about where growth is going up from here?
I think the soft landing has actually been achieved, and you're seeing things like rates have come down now on the long end of the curve, and you're seeing actually refinancing applications of spiked. They've had more big index on mortgage refinancings is the highest point has been since April of twenty twenty two. So you can begin to see the fact of slower rates rekindling economic growth.
Where we come out as you're going to be in a GDP growth.
Environment of two to three percent, you are going to be in a higher inflationary environment closer to three percent peranum than what it was prior to COVID.
So what COVID and it's saving COVID.
By printing tons trillions of dollars has created a higher inflationary environment going forward, and so that ultimately needs to probably have moderately higher yields, and that in turn tells you that there's probably less room from here twenty times forward earnings for the S ANDP to expand its PE multiple, and therefore market growth public equity market growth of here
is more dependent on earnings growth down on PE multiple expansion. Hence, they answered my first question, there's less room for error because the likelihood of exceptional additional multiple expansion from here is pretty limited.
All right, sounds like you're also then starting to think about earnings. Is that kind of your next focal point? Just got about thirty seconds here, Alan real quickly.
Yes, we need to see earnings growth to merit the relatively high multiples that investors continue to pay on the markets. So if you think the market and trading a little SMB five hundred training a little over twenty times forward earnings is fully valued, then your expectation if the multiple holes is the market growth at the rate of earnings growth, that might be something lowered or of six to eight percent.
For the next couple of years. All right, not terrible, better than bonds, but not.
Extraor yeah, exactly right. It's a little perspective there, Alan, Thank you so much, as always appreciate you jumping around as we had watching the vice president in Pittsburgh and just something's going on here. Are keeping us busy on this Wednesday, Alan Zaffron, founding partner co CEO at IQ Capital out there on the West Coast.
This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Jerminal