This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
We go to a story that is the most read on the Bloomberg or among the most read all day today.
Yeah, it broke after the close yesterday. It raises the question, is Jamie Diamond possibly setting up to really finally, finally, could it be actually say goodbye?
Carol?
I don't know. I don't know.
It looks like it the actual news by the way, JP Morgan Chase Jamie Diamond. Of course, the CEO there moved some of his top lieutenants into new senior roles, positioning them for more experience running the firm's operations.
As he prepares potential successors.
That's how we reported it out. It does look like he's giving people some more experience, or bigger experiences, if you will.
So what does it mean?
Bloomberg New Senior Finance reporter Shtrina Rajan is here in our radio studio, shre what does it mean? Two and a half years left, is he kind of getting ready.
Let's be clear that two and a half years is just the five year retention package you got. That doesn't necessarily put an end line for the Jamie Diamond tenure or a JP Morgan chase. Look, it is the latest edition of the musical chairs at JP Morgan where Jamie Diamond is conducting this move. We've seen this before, we're
seeing it again. And the thing is any organizational reshuffle that we see now this many years into Diamond's tenure atop the country's largest bank, the most profitable bank, obviously begs the question as to what are the tea leaves we can read from it about succession, who is best placed?
So actually, just let's look at what's reason. Let's look at the names here here you have till now, till yesterday, people would have argued Jen Peepsak and Marianne Lake are the two executives who've seemed best positioned to be the
successor to Jamie Diamond. So what does this show do You're taking Gen Peepsack from the consumer and community banking side of it, one of the largest parts of this giant bank with a fortrillan dollar balance sheet, and moving her to the commercial and investment bank site alongside Troy Roorberg, who's that trading head who now gets expanded responsibilities, and by virtue of this promotion, gets added into the mix
of potential successes in a serious way. You have Mary and Lake who's getting expanded responsibilities in the consumer and community bank side, and Chase still is the big beast, big component of JP Morgan Chase. My read of it, you have three contenders. Gen Peepsack gets to now have run all the important parts of JP Morgan, So I would put her a hair ahead of Mary and Lake, who's still very solid contender, But Troy Roorberg now suddenly
leaps into the mix as a long short contender. But it all ultimately depends on how much more time Jamie Diamond wants to spend holding the reins a JP Morgan Chase.
I just got to say, I'm just loving that there are two women who are strong contenders potentially to take over for Jamie Diamond at JP Morgan. Is that something that has certainly been important to him in terms of the role of advancing women at that firm, And then maybe you know, getting ready to set somebody to lead it.
I'm sure he would say it's been important to him. I'm also sure that he'd probably said that at the end of the day, the success that he picks, or he helps the board pack, or the board decides, is not going to be decided based on whether it's a woman or not. He's had two contenders in the mix. A few years ago the move would have been extremely symbolic and valuable, But the fact that Jane Fraser became cu as City Group sort of stole the thunder from
JP Morgan. For the longest time, we always thought that maybe twelve thirteen, fourteen years into Jamie Diamonds tenil, when he's ready to hand over the reins, it would be a woman running the country's largest bank. But Jamie's still there, and Jane Fraser's now the CEO City Group.
And that's what I wanted to talk about. Jamie's still there. He has at least two and a half years left on this, on this portion, what do we know about it seems like he has a lot of fun doing this. It really does. I mean, he's been doing this since two thousand and five.
He seems to be having more fun than ever before. He still has a spring in his step. He's still ready to be the you know, the sort of the dean of Wall Street CEOs. This is the speaker of the caucus, if you may. He's representing the industry in DC. He's speaking his mind. Look, that's been true of Jamie Diamond forever, but more so now than ever before. And the stock's been up twenty five percent in the last year. That's called winning and that does not make anyone feel bored or tired.
So two thousand and five he became president CEO. So would twenty twenty five be a nice round number to come off of this position?
Well, you know, if you could read into his mind, show that sounds like a nice round number. Yes, he's closer to the end of his ten than not. But at the same time he's playing his cards very cool.
So you could argue that twenty thirty also sounds like a good round number. Twenty fifty what about? What about?
When do they have they moved into the new building? Forgive me if I don't know that.
Oh no, it's still Verry. What is that done?
When is that done?
You know?
That's that's the other favorite partner game. At least I've had a bed with at least some JP Morgan executives, and I said, a good time to call time on his time at wow? I said time four times and six words. Okay, But a good time to call time on his tenure JP Morgan would be when the new building is completed, call it the Jamie Diamond Building and say goodbye. But I have been definitively told that if I were to make that bet, I would lose it.
Three twenty seconds left. Is there anything else we need to know about the people moves announced yesterday? Because it wasn't just these three individuals you named.
There were other moves beneath that top layer. But the most important news for all of us is it clearly puts the spotlight on these three individuals. And when we think about succession and when we think about who will run the tree's most profitable bank, it's these three names we have to look at right now.
Really fascinating and it certainly popped when the news crossed yesterday. Shere always making sense of the comings and goings on Wall Street, Thank you so much, really appreciate it. That is, of course, Bloomberg New Senior finance reporter Strina A. Rajan here in our studio at Bloomberg Headquarters. Shares of JP Morgan. By the way, they're up about one point four percent so far this year, just down a little bit in
this trade. You are listening and watching Bloomberg Business Week, Carol Master, Tim Stenovic, this is Bloomberg.
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 brought auto with a Bloomberg Business app or watch us live on YouTube.
Well, real estate continues to be on our radar.
Yesterday you might recall we've got a great check on commercial real estate. We talked with Michael Levy, who's the CEO of Crow Holdings. What he talked about, Tim was top tier office. I got a problem. In fact, he's still building office space in places such as Doubt.
I know.
I pushed back on it. He said, it's got to be top tier. Yeah, I mean they building so much. Yeah, it's struggling right now. So we wondered too about the hospitality side of the business. The Bloomberg reat Hotels indexes rallied twenty six percent since late October, and we had the perfect guest with us. Kevin Davis is CEO America's hotel and Hospitality at JL Jones Langlas Soli's, the publicly held real estate and investment management consultancy. It trades under
the ticker JL. Kevin's here in our studio at Bloomberg Headquarters in New York. Good to have you with us this afternoon. Welcome back, Great to be here. You know, our Bloomberg Pursuits team called it already, they said, twenty twenty four is going to be a record setting year when it comes to travel on the tourism side, on
the business travel side. First up, though at JLL you're involved in office, industrial, retail, give us size and scope here when it comes to the hotel and hospitality business that you're in charge of.
Yeah, So our business relative to some of the other asset classes is relatively small, but certainly our impact on g GDP is relatively large given the number of people that work in hotels and hospitality and leisure around the country. So's a business that has a pretty significant impact on the economy.
Yeah.
Absolutely, And you guys obviously want to get into because why and want you assume you can grow to how much of your business.
Look, we have aggressive and ambitious growth goals, and so our hope is that we continue to move the business forward and make significant strides in terms of growth.
I mean, is it going to grow faster? Is it going to grow faster than office, industrial and retail?
You know, it's Look, it's hard to say. Certainly, some of those sectors have been challenged and are in the midst of recovering. I will tell you one of the things that we're super optimistic about as it relates to hospitality, it has proven to be a strong inflation hedge, and while inflation looks like it's in the rear view mirror, as a result of that, it's attracted a lot of
institutional investors into the space. And also hospitality typically offers incremental yield relative to other asset classes, and so as a result of that, investors are coming into the space.
Kevin, you talk about investor interests, quantify that give us an idea of how it was maybe pre pandemic. I mean, tell us, what how long have you guys been building up this business.
I mean, we've been in the hospitality business at JLL for over twenty five years. So this is a core business for US, and we are leaders in the space. So just by a order of magnitude, and I'll give you global numbers. I mean generally globally hospitality, it's typically between seventy five and one hundred billion dollars worth of
transactions that take place in a given year. Last year, globally, we had about fifty billion dollars worth of transactions, so we were down about thirty percent relative to twenty twenty two. But we expect that it will likely increase sales volume. Transaction volume will likely increase fifteen to twenty five percent this year, so we are on the way back. We don't expect to get all the way back this year, but we think we're on a great trajectory toward stronger transactions.
What's feeling that you talk about investor demand? Is it because we're expecting a lower rate environment? Is because you expect the economy and I'm curious when you look at the economies, I'm assuming it's the US and elsewhere or is it the US specifically?
Yeah, it's strong growth in the US, strong growth in Europe globally, though relatively speaking, we actually expect more growth in Asia, which has been slow to emerge out of the pandemic Japan. Japan has actually started, but more specifically China, which has recently opened up much more so, we expect that you'll see strong growth in China. Also inbound travel from China to the US, which is something that certainly has not it's not close to recovering to what it was pre pandemic.
Hey, talk a little more about that, because we've talked a lot on our program about the struggles that China faces internally, the struggles that they face with their own property market, with the economy, with youth unemployment, with demographic challenges. Why are you bullish on China?
Well, I'm bullish relative to what we've seen over the past couple of years. I'm bullish in terms of Chinese travelers getting out and traveling. I mean, you ultimately have an emerging and growing middle class in China, and as the middle class grows, we expect that more people will travel and will travel specifically to the US into Europe as well.
So what type of hospitality properties do you think investors are investors kind of clamoring for or asking for of you?
Guys, Absolutely, it's really the two poles. If you will it's luxury, which has performed exceptionally well coming out of the pandemic, and it's select service and extended stay assets, which have also performed well.
What's select service?
Select service? So typically you don't have extensive food and beverage. It's primarily rooms, and you typically don't have a lot of meeting space, so you wouldn't if you're going to a big conference, you're generally not the meetings are not going to be at a select service hotel. You'll typically go to a full service hotel that has meeting space
and banquets and catering, et cetera. Part of the reason why the select service space has grown though, particularly extended stay, is people have a lot more flexibility now post COVID as it relates to work, and you've seen a bit of the blended business and leisure travel, the so called bleisure travel. So because people have a lot more flexibility to travel when they are frequently on the road, they
want a bit more homelike amenities. So extended stay, which typically have kitchens, are attractive and that's a sector where we expect to see a lot of growth.
What about regional differences here in the US, you talked about where you're seeing action globally, but what about here in the US.
Yeah, So in the US, it's interesting and it's changing. In the first couple of years out of COVID, we saw strong growth in the Sun Belt and the resort markets, which we expect to continue. We saw meaningful contraction in the urban markets New York, Boston, Chicago, Los Angeles, San Francisco.
But the trend that we started to notice last year, which picked up steam and we expect will continue over the course of this year, is really improving performance in urban markets, so again the New York's, the Boston's, Chicago, etc. The reason really threefold. You've had return of leisure travelers. For many years, people were concerned to go to an urban city, to an urban market because the pandemic. So you've had leisure comeback. You've also had group travel comeback,
so people coming to the cities for meetings. And then you've also had a sector called business business transient, which are business people coming to meet with clients and colleagues, et cetera. So that segment is all coming back. The other part, the last component though, is the global which is early days of coming back. But we expect that that will pick up in earnest and that's going to drive performance in markets like New York, Boston, San Francisco.
Go move a little bit more on San Francisco because I feel like Tim, we've had some different guests who are it's fine, it's coming back.
Others say no way, we're not touching it, and that they make.
It so hard to build or do anything in that city. So you see opportunities there.
Look, San Francisco is a gateway market, it's a top five market. It's not going anywhere. Certainly, it's having its challenges now they're political issues, social issues.
Et cetera.
But we certainly believe that longer term, San Francisco is going to be a great place to invest. So, yes, the market is challenged today, but we think this is a short, medium term issue which over time San Francisco will recover.
You sound really optimistic.
I have bottom lined.
So what's the risk at there?
I mean, we have spent so much of January, you know, laying out quite a long list of risks for folks out there, whether it's geopolitical politics here in the US and elsewhere. What if the FED gets it wrong, just got about thirty seconds. What's your number one risk that could kind of upend this optimism.
Number one risk is if the FED doesn't cut rates as aggressively as the market expects, so six ' five or or look, I think it's at least three, okay, Or or if the rate cuts get pushed to later in the year. I think if one or both of those things happen, that will take some, not all, some of the optimism out of the market, and we may be on a slightly different trajectory. But ultimately we feel very good about twenty twenty four.
All right, well, this was a fun check up. Thank you so much.
Thank you, I appreciate it.
Kevin Davis, He's chief executive officer of America's Hotels and Hospitality over it. Jones Lang LaSalle joining us here in our studio at Bloomberg Headquarters. All right, folks, you are listening and watching Bloomberg Business with Carol Master Tim Steedvik. We're back in a moment.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday. He's starting at two pm Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty A welcome glass. Here is something to be.
And now to the cover story of the new issue of Bloomberg Business Week, featuring none other than Sean Fain, the president of the United Auto Workers, who earlier this week made quite a bit of news when the UAW endorsed Joe Biden's twenty twenty four reelection bid. But Carol, that's not why we're talking about Sean Fain today, No.
It is it.
We're talking about Sean Fayn because after making historic gains for autoworkers last year, he's now got his site set on a company we talked about a lot this week.
Tesla Well, Josh Idelson, and Gabriella Coppola write all about Sean Fayne and the new issue of Business Week magazine, available on newsstands, on the Bloomberg terminal and at Bloomberg dot com slash BusinessWeek. Josh Idelson is Bloomberg News Labor reporter. He joins us on Zoom from Washington, DC. So, Josh, before we get to what exactly Faine is trying to
do and the UAW are trying to do. It's not just Tesla, by the way, there are a lot of companies in the US that are trying to organize beyond the Big Three. Talk a little bit about the wins that he had last year and how big of a deal it was that he was able to get those concessions for the UAW workers from the Big Three.
The contract victory that the UAW pulled off this fall has no precedent in the set past several decades of the union's history. The union one raises that with cost of living increases will be a third over the next four and a half years for many workers. Some workers will see their pay more than double if they were
previously classified as temps. The union also won some key victories in areas like making it easier for workers at the joint ventures of General Motors and Stilantis to unionize, join the OW, and join the existing union contract over the coming years. And so this was both a reversal of a trend where auto workers have been losing ground to inflation and also a big step towards securing the
union's future as the auto industry changes. But to continue to do that is going to take a lot more work and in fact climbing more difficult mountains for this union.
All Right, it sounds like one of those mountains is named Tesla. So talk to us about he set his sights on Tesla and what his goal mission and how he thinks about it.
So the union is trying to organize thirteen companies non union plants to organize one hundred and fifty thousand workers, double the number of automaker employees that are in the UAW, a union that has lost the majority of its membership in the past several decades. And Tesla is one of those thirteen companies. It's a particularly alluring and difficult target. It's the company that is synonymous for many people with EVS.
It's the most valuable automaker in the world. But it's a company whose CEO, Elon Musk, has shown that he's staunched the anti union and willing to put up with embarrassing media and lengthy legal battles in order to get what he wants. The US National Labor Relations Board is found that Tesla repeatedly violated the law in response to prior UAW organizing, including by firing an activist who still
has not gotten his job back. Now seven years later, Tesla has denied wrongdoing, has made clear that he would see unionization in the plant as a failure on the company's part.
So how then, why is it so difficult then for the UAW to organize? Because it's it's ultimately not up to Tesla as a company and not up to Elon Musk. Why is it so hard for the UAW two actually organize the folks who work at Tesla and get them on their side.
So under US labor law, it is not easy to unionize a big company that is trying to stop workers from organizing. Companies have the ability to use tactics like mandatory anti union meetings that Labor Board precedent says are legal when there is retaliation. Although it's illegal to punish someone for organizing, the Labor Board does not have the authority to hold executives liable or to make companies pay
punitive damages. And as we've talked to people, there is a real sense among a number of Tesla employees that if they challenged the company, it could lead to punishment for them or even to shutting down the plant. There, of course, other employees who don't see a reason to have the UAW. And over the years, the corruption scandals within the UAW have been one of the talking point
greatly on Musk and other executives against the union. So Sean Fains worked hard to distinguish himself from the union's recent past, and he's been quite a vocal critic of the direction that the union was going until he took over.
I kind of know the answer to this because I've read your story, But I mean, Tesla didn't respond, right, so they haven't weighed in on this, at least for you guys.
Correct, Tesla did not respond to inquiries.
So you know you've been watching this movement, and you know it's really fascinating in the auto industry because I do think, right, they have to be careful because you don't want to it's a global ev race specifically, and you want to make sure that the US automakers are winners as well, right, that they are part of this
market going forward. How does he think about being fair and making sure that the automakers here in the US are still competitive globally And just got about twenty five thirty seconds.
Sean Fain has argued the US should not be copying Chinese labor standards. There should not be a race to the bottom to try to match how cheap labor may be some other places. If anything, he suggested us, it's the fact that China has a strong industrial policy that the US should learn from and that trade policy has
a role here. But also he's working to raise the floor by organizing the non union companies, which of course would make it easier to continue to win more at the Big three in the future, so that the union is not an island in Detroit.
Well, we talk about themes to watch, We talk about AI definitely, we're watching the new class of diet drugs if you will, or weight loss drugs, and I feel like union organizations that too.
This is the cover.
Josh Idelson, thank you so much. He is Bloomberg News Labor reporter.
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 brout Auto with a Bloomberg Business app, or watch us live on YouTube.
Well engageing minding us existing sales rebandaged sharply in December to a five month high, suggesting the recent drop in mortgage rates is helping to stabilize the resale market.
That recent drop, by the way.
In mortgage rates also helping to bring sales of new homes in the US past forecasts in December. We got that data yesterday, and in general, we've been thinking a lot about real estate and talking to different voices in different sectors of the industry.
Yes, some sectors that we've covered in recent days have been office, hospitality, hotel, industrial, but it got us thinking more about so called alternative real estate assets. We're talking about senior housing, self storage, student housing, and more. It's top of mind at Harrison Street, a company that focuses
exclusively on so called alternative real assets. The company has fifty five a billion dollars in assets under management with more than five hundred institutional investors around the world.
Christopher Merrill is CEO of the Chicago based Harrison Street. He's in town and he joins us here in our Bloomberg Interactive Broker studio. So great to have you here. We like to start big broad It's a new year. How are you looking at twenty twenty four and how it compares to coming off of the pandemic and then even pre pandemic.
Sure, well, thank you for having me. It's great to be here. You know, we look at this year and we're absolutely excited about the alternative segments. To us, this is now sort of the second black Swan event we've been through as a firm. We were the first move and alternaive real estate, starting the business in five so we saw how these alternative assets did in the global financial crisis, and then we saw how they performed the pandemic.
So coming out of this environment going to twenty twenty four, what you have as a situation where demographics are solid, they're strong, but supply has been choked off. So many asset classes that you mentioned have a ton of headwinds. When you think about what's happening in student housing, senior housing, medical, life science, tremendous tail ones right now is demands increasing, enrollments are up at schools, aging population, and there's no supply.
So we look at this as some of the greatest vintage hears we're going to see for some time.
I understand that for life sciences, medical, senior housing, student housing, but self storage isn't there a glut?
You know, it's interesting self storage is a fantastic asset class, and it's really is one that you have to look market by market. It's a sort of not in my backyard asset. But the great thing about storage is people use it in good and bad times. It's life events.
People never get rid of their They don't ever get.
Rid of I have ever seen storage.
It's so uniquely but it's it's isn't there a glut of it?
I mean the way we do how we invest in all terms, because there's a lot of different ways to invest in terms, we like to invest in asset by asset, create portfolios and then sell to the larger players. So for us, there's a huge demand in owning these assets. It's consistent cash flow month to month leases, so in
a inflationary environment you can really reprice. And so what we like to do is do the hard work, build portfolios and then sell to those groups that are really trying to get exposure to the asset class.
Is it nice that self storage also as zero employees, so their overhead is so.
Low it's amazing. It's the lowest default asset class. You get about the same rent per square foot as an apartment, but you really don't have a tenant. When someone leaves, you roll it up, you sweep it. So it's a great business. But the challenge with it is it's an easy asset class to build, so you have to go into markets where it's hard entitlements because it's not in my backyard. So you've got to find high barrier entry markets once you own those assets. Fantastic what happened.
During the pandemic to all of those assets.
So what happened it was fantastic, you know during the pandemic because at first people were nervous, what's going to happen to student housing, what is online learning? What's going to happen to your off campus housing environment?
And self storage particularly?
Yeah, I mean what happened with all these asset class is just consistent, consistent. People that were doing businesses online were using storage facilities. People were you know, when you thought about people moving, there was more flexibility. So people were starting to move into other markets.
Right.
You saw a lot of remote working, so people are traveling, moving and so they were using storage.
And student housing. Same thing.
Student housing was fantastic because really the students didn't want to be in mom or dad's basement. They wanted to stay in their off campus.
Apartment with Nieces.
My daughter wasn't in college yet, but my Nieces didn't care if she was on college. I think it was her first year, she was a freshman, and I think after having to stay home for a little bit, was like, I think, very happy to be at least on campus and had a whole dorm room to herself.
And that's what's happening that you look at the Power five universities, enrollments are up, You're seeing rent increases eight to ten percent a year. There's just no supply.
Talk to me about the type of student housing you do, because not all student housing is created equal. I know that the student housing that I experience and student housing that I experience isn't necessarily the same student housing that other folks have experienced.
You know, it really is a different level of quality a lot of us experience.
But is that what you say.
Well, it's what it is.
It's come with a beer soaked couch outside. You're couch outside.
You know.
I think that the key, the key with the business is it's all a bed bath parody. So it's like multifamily, but really what it is is not bed bath parody, three bedroom, three bath, But it's a real focus on gated, well lit. Safe safety is a big issue, So that's really a focus is creating an environment where you are providing safe environment study rooms, amenities, health clubs, et cetera.
So what are these are? These? Are these student housing? Are these student houses that are multi multi unit that are affiliated with a college or university so a or is it are you essentially building like a huge building of apartments?
So a big part of our business. We're sort of the largest owner of off campus housing, so that's not really affiliated with university. It's off campus, but the school loves it because it becomes an amenity to the school. They can say to a student when you're a sophomore, junior, senior, this is where you can live. So the schools like
working with good managers. We also have a part of our business what we call our P three business where we're doing public to private partnerships with universities where we're working with and helping them build dormitory because a lot of these big universities don't have the capital. So we're going we've probably got thirty to thirty five universities that we are actually helping them with their housing.
Hey, security deposits in student housing, Like, what's the average rate that you actually keep from those is these people just destroy their rooms.
You know what, It's fascinating that if you provide a nice, high quality product and you walk the units on a regular basis and you have the willingness to kick children out if they're not taking care of it, and you're building their parents. Actually they're taking very good care of the units. And you know, we have a higher percentage of women a lot of times in these units, and so you're actually seeing it's not the type of thing. And that's when we started the business. It was student
housing is an institucial asset class. It's animal house. There's no way this is going to be institutional. But I think people have seen how the industry has really developed and it's really become an asset class where insurance costs are lower than multifamily. We have better rent growth than multifamily, and you have really sticky, strong demand drivers.
Well, and you have parents who are footing the bill, and.
You have parents who are footing the bill. So from a credit standpoint, you think of owning a multifamily versus student housing, we have great credit.
Sticky, not because you've spilled jello shots everywhere.
I have to tell you, like I go and.
I hang out with you too.
There's a story there.
I've helped my daughter move out and I am amazed at like some of the haroommates or like you will just leave that in the fridge. I'm like, nope, You're cleaning it all out. It's going to be clean because I want the security to posit right.
That's right.
I'm a tough good bringing me back, Carol. What's senior housing?
So senior senior we're just getting older.
People are getting older. But the challenge is, and there's different ways to invest in senior housing is.
People getting older.
But we're having memory issues, assisted dementia. So where we focus is on independent living, memory care, dementia, rental for and private pay. We don't focus on skilled nursing. That's more public pay issues. But when you look at what's happening, five million people turning eighty by more turning eighty by you know twenty thirty, there is not near enough supply
right now. So we're going to wake up in four and five years and wonder where are we going to house all of the folks that have memory and health issues. It's almost impossible to take care of a loved one that has Alzheimer's dementia. So it is a very important assa class. It's hard, it's not easy. You need great operating partners. But it's a business that we're very bullsh on and we're seeing occupancies back to pre pandemic levels right now.
How do you design for that just in the last thirty seconds that we have, you know, I.
Think what you do is we have folks that have been taking care of dimension all se repairers for decades. So it's really about what paint colors you use, you know, how do you do how do you do carpets, how do you do the right caregivers? And so really for us, it's about choosing great local partners to work with.
I've seen it firsthand. And there's safety issues, so you can't somebody can't just walk out. There's a lot of safety measures in place. Favorite favorite market right now, geography real quick.
You know, I think right now we're active in the US, Canada and Europe, and so we love all those markets. So for us, if I'm near a great university, or near a great hospital system. You know, that's where we want to be, and so we can be really diversified the US and Europe, and so it's hard to pick a favorite market. We just love some of the fundamentals right now, all.
Right, I can leave it there. Real fun.
Thank you so much, a great trip back home to Chicago. Chris Christopher Merrill. He's the chief executive officer at Harrison Street. Joining us here in our Bloomberg Interactive Broker studio.
What was your student housing like in college? Like old?
I was here in New York City, so it's some old New York apartment buildings once I went off campus, but it was owned by the school. Yeah, yeah, there were some roaches.
Okay, well, more stories to come.
Romco Journal.
How about you let me drive?
No, no, no, no, alright please, I'll gravels.
I want to try.
It's a good question.
Good This is the drive to the globe. Well Yoda don on Blueberg Radio.
All right, everybody coming up on eighteen minutes left in today's training session, getting ready to wrap up the Friday trade here, wrap up the trading week. That's it around a little bit on the equity side of things today but our next guest says, the market is trading in an erratic mode.
So it's like like you knew exactly the.
Day it's going to be at exactly.
It's kind of what we got to do a little bit.
Yeah, it's a fair characterization.
Let's get to it with Vance Howard. He's CEO at Howard Capital Management. He's on Zoom from Texas. Hey, Howard, it's so great to have you, Advance. Rather, it's great to have you back with us. I think I've done that to you before. You know, you got a name that's got I could call you Vance where I could call you Howard and it would work.
How are you?
You and me?
Both, you and me both. It's good to have you here. Happy New Year.
It is kind of a bouncing around kind of day, certainly on the equity side of things. I think we get some cross currents when it comes to earning, some cross currents when it comes to some of the economic data points. Talk to us a little bit about how you are seeing things, because you know, if you're a bunch of your mutual funds and your ETFs, they continue to really outperform. Tell us about the markets and what interesting trends you're seeing right now.
Well, you know, our proprietary trend indicated HC on byline's positive, So that's telling us that the trend is clearly up. And you know, when I wrote that little article about the markets being a radic, you know, it's just just some throth that needs to kind of come off the market. You know, we had a great last quarter of twenty twenty three, and then the first the first three weeks going into four of twenty twenty four has been really
robust and positive. So to have a little modest pullback and some volatilities is normal and it's going to happen. And of course Tesla dropping twelve percent didn't help anything either.
Okay, we'll get to Tesla in a second, but I want to know how the proprietary technology that you have is giving you a bya signal even though you're seeing froth.
Well, you know, even though you've got enough trending market, you're going to still have the markets that want to pull back two, three, four percent, and five percent or whatever the case may be. That's not going to change the trend. The trend's still going to be up. And all pullbacks as we see it right now, as long as the trend's up or vibe. So you know, any of this throwt that wants to work its way off.
And you know a little bit of sell offs here in some market, some stocks that are selling off more than others. You really need to take a look at those because those are going to be some really great opportunities into twenty twenty four. I'm very bullish on twenty twenty.
Four because of the trends that you are seeing and your trend lines.
Yes, yeah, does it ever go wrong?
Oh absolutely, it's wrong thirty percent of the time, but it's usually right seven also, so it has a good hit ratio. But you know, Carol, there's so much cash on the sidelines too. I mean, everybody's sitting on a mountain of cash, and these one and three treasuries. I mean, my goodness, if any of that money starts to come back into the market, you'll see it move higher.
Where do you think that money goes?
Though?
Because Carol and I have had this debate over the past few months quite a bit. Yeah, is that money going to go to fixed income or is it going to go to equities? Because it's in cash right now for a reason, and that reason is that these money market funds are paying five percent and you can still get fixed income round there.
You can.
And let's say you're getting five percent on a money market but he drops rates. Now you're down to maybe four and a half or four three and seven, three and three, three and seven eighths or something. But if you think about that, if you're getting two and a half or three on a dividend paying stock with upside appreciation, all of a sudden, that cash becomes a little less attractive and dividend paying stocks become more attractive. But the
market's also broadening out. Guys. One thing that we noticed in the last quarter of twenty twenty four is how small caps started to finally move up. And you know they when I say the throwt that was kind of the throt I was talking about, is because we did very well in the small caps, they ran out and we're seeing a pullback. But that pullback's nothing more than technical and healthy, that's what. That's what. That's just a period of consolidation. So lots of opportunity out there this year.
So we what kind of though consolidation or do what kind of move to the downside? Do we need to see to get some of the froth out of the market. And I'm assuming you're looking specifically at the S and P five hundred, or maybe you're looking at it at that as well as the Nasdaq.
Mainly looking at the Nasdaq. The S and P P five hundred has been trading, you know, quite well. But you know, when you take certain sectors like the small casts, because of the massive run up they had in the last quarter of last year in a couple of weeks in the beginning of this year, you know, some of this pullback and small caps are needed and warranted. They just can't go straight up. They've got a saw tooth their way up. So this is a Bible opportunity in
small caps. And you know, we saw an explosive rally in the Semiconductor index, and you know when you have that big of an explosive rally, there's going to be a pullback's people are going to start to take profits. And that's kind of what we mean by throwf here is some of these sectors that have really done really, really well, you know they're due for a pullback, and they're Bible pullbacks too.
Okay, let's talk Tesla now, because we are just under a month in two the start of the year, and already Tesla has lost twenty six and a half percent just this year. What are your thoughts on Tesla?
Fortunately, and I'm very grateful, we didn't known any Tesla going into that sell off, so you know, we feel it. So that's great. So we got a lot of cash to work with. It's going to be a great stock to buy down here. And the way to trade this stock, guys is you're going to see it run up a little bit and then it'll come back and retest the lowst then you know that the bottom is pretty much set on Tesla. But it's a great company. I mean, the thing is is it's a true It's truly a
wonderful company. If they start selling cars at twenty five or twenty six thousand, what they're talking about doing later this year and into next, you'll see a lot of revenue flow back into Tesla. But for a long term trader or investor, I'm sorry, Tesla I think is just an outstanding play. Especially why do you.
Like it so much? Why do you think it's such a great company.
Well, you talked about selling lower priced cars, if and nuts were candy BUTTSOO, don't have fun at Christmas is what I like to say. But I mean that has been kind of the goal, and they've cut prices a lot, but that's impacted margin. So I mean you feel comfortable enough that they're going to get there?
Oh I do. And you know, don't ever bet against Elon Musk. I mean, some people hating, some people loving, but well, I sure would hate to bet against the guy because he's a true innovator. And the guy's young and still got a lot of energy, so there's a lot that he can do with the company like Tesla.
You don't think he's distracted by Twitter, you don't worry about it and being distracted by something like our X.
That guy is always going to be distracted by something. That's just the way his mind works. But when he stays focused on something, it usually usually comes out to be a very very good outcome and he'll be back into Tesla. He hasn't quit running Tesla. He's still all in. Was reading other day that he'd like doing more of it. But you know, you can't hardly you can't short Elon Musk. I just wouldn't do it.
Okay, what about salesforce up six percent this year.
We just got news that they're going to cut some more workers, are going to cut about seven hundred workers. And this is on top of what a year ago they cut their headcut by about ten percent.
I love that. I love companies have recurring revenue, Carol, because this one is great. I mean, they've got a monthly subscription base, so they have recurring revenue coming each and every month. They don't have to sell a new product every month. Steep their head above water. And a lot of what they're doing financially is they're becoming more profitable by reducing overhead because they've had a lot of activist investors that are really sniffing around and sort of
getting on top of them. And so this reduction sales in their salesforce I think is warranted needed. I think that was now that was throw off they could get rid of. So I think salesforce, from a technical standpoint and from a financial standpoint, I think it looks really attractive this year.
So it's interesting. And then your other things that you like is something you've talked about. The small cap are the small growth area as well as the Russell you think that the small cap is an area of the market that you think investors have to continue to focus on and plow new money into. Just got about thirty seconds.
I do. I think you buy that on a pullback, and I think it's pulled back now, like if you're looking at VBK, you're looking at the rustle two thousand. Either one, it's pulled back now or it's a bible opportunity. And as the market spreads out, which is going to this year, you're going to see other areas like small and midcamp start to move higher and start to regain some traction and look a lot more attractive going into twenty twenty four.
Fans real quickly. Fifteen seconds. Do you care what the Fed does next week?
Absolutely? I do, And I don't think they're going to do anything that it's going to surprise anybody. But I'm watching the FED very closest like everybody else.
All Right, We're going to leave it there.
Always get so much you pack it in and so appreciate it. That's Vance Howard, of course, he is CEO at Howard Capital Management, joining us on Zoom from Texas. Just got a few minutes left in the trade folks, and we've got the SMP down about four points. It's the Dow up about fifty two, and the NAZAG down just about sixty. This is Bloomberg.
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