NYC Rental Market Reaching a Breaking Point

Week on iTunes, SoundCloud, bl Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. One of the areas that we've been talking about, Carol, is a key economic indicator, uh, and it's one that's close to home, is the rental market in New York City. And it's a complicated one to some extent. In other ways, it's very simple, which is if the rents are going there, they're just there's

so many important elements to this. So let's have someone smarter than me explain it all to us, and that is Prescant Gopal. He is us real estate reporter for Bloomberg. He's got a great story about the New York City rental market pushed to the breaking point by tenant debts. Uh, this is a serious story. Presha joins this on the phone from Massachusetts. Presha tell us what you found, Well, you know, New York in many ways is vulnerable to the current um economic crisis that the country is facing.

UM would be more than a lot of cities because for one thing, it's the biggest rental city. Two thirds of UM the households are are are renting. And also even before COVID, obviously there was an affordability crisis in place of people we're struggling to make the rent even before they started to lose these jobs and numbers, and many of the renters are in professions that are hard hit. So the restaurants and bars and nail salons and and you know, the people who cleaned the office is UM.

So uh, you know, there are a lot of them are having trouble paying their rent. Right, And this is what we've been worried about. Pressant right that in terms of the economic shutdown, it's it's kind of you know, the trickle down effect, if you will and and that's you know, initially, I think we didn't think about the real estate market right away, and then we started think like, oh,

wait a minute. You know what if people, you know can't pay their rents and you know, or companies can't pay their rents, whether it's small businesses, you know, and and then the impact of this becomes just so much wider. Yeah, I mean, uh, you know, the people who were most impacted by this um, this economic crisis are renters really because those are the people who are UM. Like I said, they're in these jobs that are hard hit, they make

less money. UM. So when they don't pay there's an effect that you know, it actually moves up the chain to a certain extent. So you have UM landlords, especially small landlords, who have have bills to pay, They have to pay for utilities, and the city is giving them new break on their property taxes. They have to pay late penalties, so late with that and UM and they entertain the mortgages, so that affects banks. So you know, this has widespread impacts. So I want to bring in

the editor of the magazine now, Joel Weber. He joins us from Massachusetts. So Joel real Estate cities. This is right in the Business Week wheelhouse. Help us understand this in the in the context of what you're trying to do in terms of continuing to tell the story of this pandemic and the economic aftermath. Well, I mean, the the spiraling cost of this thing just just keeps happening, right, And I think there's the economic costs of it, and

then there's a human cost of it. And this story is sort of an example where the two meet and we really, um don't have a way out yet. UM. And you know, the things that have been kind of put in place UM felt like temporary stopgap measures. And and as the the crisis sort of lingers, UM, I think we're all trying to figure out, you know what what kind of implications this will ultimately have. UH And and Prisson, I just wanted to kind of bring that

back to you. And you know, the New York State enacted the Tenants Safe Harbor Act UM last month to stop evictions, as you know in the story, and and wondering, you know what what other kinds of policy UH actions might we see from UH legislatures UM and similar effects going forward. Well, let me linger on this just a little bit because I think it's important, like so that the Tenants statee Harbor Act. What that does is it prevents um evictions of people who were impacted by um,

you know, economic victims of COVID nineteen. So that prevents a very short term problem, which is you know, UM of a wave of evictions and a potential spike in homelessness, which could have been devastating to New York. So that's

great that you prevent that. But what happens is, UM there's a long term effect because tenants are in talk to their landlords, they owe large amounts of money that they will never be able to retay, and UM, with each month that passes, they owe more, and then their their credit is shot and it's uh, you know because of this, and then they're not gonna be able to

maybe very easily moved to another apartment. So they're there, you know, there With each potential solution here, there are UM you know, consequences to that, and that the real solution might be the federal government stepping in and providing rent release in a in a very big way. But that has not happened. I mean, there's been I think some resistance in Congress. UM for Republicans in the Senate.

So we haven't really seen that yet, right. I think of people who had the discussion during the financial crisis who said, you know what, maybe we should have just gone in and short up all of those bad mortgages, made mortgage payments, you know, kept people in their homes, would have saved the economy, would have protected those financial

investments that were based on the mortgages. You know. And I do wonder if as we try to figure out the rest of this crisis and what's the best way to help out individuals, I feel like, um, do you come in and give them some kind of relief, because you know, you think about if they if landlords to lose tenants and there are people who can't find jobs, they can't find new tenants. Potentially, I mean there's this ugly cycle p some that just keeps ongoing. Absolutely, I mean,

that's that's what it is. It's like, you know, do you, um,

if you do provide that rent relief. I mean some people are worried that you know, it's a disincentive for people to work or something like that, right, But but by doing that, you end up preventing all these knock on effects, which are things that may be very difficult to recover from, you know, de curiating buildings, you know, landas not making repairs, uh, you know, going lands going into foreclosure and you know, um, you could just see

how that could spiral out of control. Right alright, Priscian couple, thank you so much. US real estate reporter for Bloomberg, Joe Webber, final word to you. Give us a preview of next week's session. Can you do that? Give us a UM. So, I think we've got some really fun

story that it's interesting. Right, There's like there's the Crisies stories and we kind of all, um, you know, it feels like this magnetic poll towards them, and we have to do those um and we will, you know, with great interest and public service duty and all of the great stuff that I think the heroism of journalism requires. Uh. And then on the other side, there's also just like sort of some fun stories all of a sudden. So I'm just gonna leave it broad and evasive like that

and say that there's a little bit of both. I got a fun one for you. We just talked with the Mondalese CEO and people are cooking with oreos Joel. Yeah, Well, you know, oreos have been around for a while. They're they're trusted and tried and true exactly. And you know, if you bring them out in our home, they disappear very quickly, whether or not you're dunked in milk or you know. I've never attempted to cook with them, but you know, I'll take someone's word for it. There is stable. However,

you're the best week and weekend in Massachusetts. Joining us there, the editor of the magazine. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. I gotta say I'm so excited we're gonna get into this story because I feel like there has been a theme this week about the changing world order. In today's Business Week Economics, it is about a new world order for the coronavirus era, and we're starting to see what it

looks like. Bloomberg News Executive editor for International Government act up. As I said on the phone from London, Rosalind Matheson joining us, Um, nice to have you here with Jason and myself. Tell us about this era that we're in, and I do wonder about how the history books are going to look back at it, and the economic books are going to look back at it, and the changes that we're seeing. It's very interesting because, if anything, what we're seeing in a ways an acceleration and a hardening

of trends that we were already seeing. It's like the veneer and a ways being stripped away, and countries are showing themselves for what they are. China, for example, is very much out and unapologetic with their recent security law in Hong Kong, something they probably would not have done just a few years ago, but now they're making a judgment call that they have a mass enough how to get away with it that they can wear the punishments

that come. That's one thing that we're going to see accelerating. Meanwhile, the U ways is further withdrawing from international organizations and showing a willingness to criticize longstanding our lives like Germany. It's very much the one to one focus games from them now with their arrive where we with China, so aside from that, it's a country that really is turning inwards.

One way that we will see things possibly being withdrawn is that there's a bit of unity and strength coming into Europe, and that despite Brexit, despite the squabbling that you see between North and South and so on, and that's really under Anglo miracles steady hand, and particularly we could see a new role from middle countries, middle powers if you like, like Australia, Japan, Canada, South Korea and so on, starting to express themselves more basically saying we

can't rely on the US here, so we'll brand together and do something. Iselves so rise, I'm so glad you brought that up about Europe because I was I was reading a story some of the coverage that came out of I think your team, because you have this massive role in the Bloomberg Empire, and it was about the an election at the EU Group. Keep me honest here that Ireland, the financiment Minister of Ireland sort of won

this surprise victory. And so you have these countries in Europe, even these sort of smaller to mid size economies, who were going to be maybe a little more important or at least have a louder voice. That's kind of interesting in the midst of all this. Right, Well, that's slight and in fact that was the victory for the smallest states.

As you said, and the four biggest economies in Europe had supported an alternate candidate to leave what'sne as the euro Group, that's the finance ministers really within the EU. So that was a real backlash against those and in fact it was quite a tight result. They weren't very late last night and caused unusual excitements really for the euro Group, beyond what we'd normally have. But it's it's really a way that we're seeing these countries saying, well,

we need to put ourselves more out there. There's risk to our economies, of course, as we do, for one thing,

by taking on China more assertively. But given that we're not seeing a real concerted global leadership he called to the G seven, the D twenty or whatever, or to other institutions, at least countries are saying well, we'll have to form new alliances ourselves and move those alliances around and they'll be based on different things perhaps, And we saw those groupings based on before and that's really where

we're going to see a key shifts happening. I feel like a key line in this story by Alan Crawford is the problem is that there's no obvious form to debate the shape of the post pandemic world. Inness increasingly we see countries look inward, right, they're not getting together

and talking about these issues on a global scale. I'm curious what are the implications And is it to be expected that you know, the US dominated for a long time, right and other you know, parts of the world before that, and now is it a natural progression that maybe China

becomes the leader. Well, that's that's a very interesting question because the US, of course, really was sort of the glue that held the post war I think institutions together the global order in a way like it led the way through these institutions that provided a strong security umbrellas many parts of the world, the Pacific, Europe, and so on.

And it really is withdrawing from that, and those institutions are now in fundamental states of change, and the idea of the G seven or a G twenty really coming out with some kind of coherent statement or policy at this point is kind of moot because we've been seeing two years under the Trump administration those meetings fall into

disarray and disagreement. So as you say, what where does that lead the idea of kind of organized responses and coherent responses, and it will form, perhaps in new and different ways, with these smaller groupings what's known as the quad, which is the US of course, also that India, Japan, and Australia, UM and it might be China led to organizations as well. But at the same time, the UI still is the biggest economy on the planet. It successes,

you need the success of other countries too, um. So there will be always a role for the U S. It's just how big that role would be and so rise as you think about, as we think about all the time this upcome presidential election here in the United States, how does that factor in? And I guess the real question is is how much of this is sort of unstoppable to to some extent, and how much of it may be arrested if there is a change in power here in the United States. Well, it's absolutely the big

wild card. Of course, if Donald Trump wins the game, you can imagine him being emboldened and America first becoming of America said with a big exclamation mark at the end, even more so um and continuation of his policies, but even more dramatically so a greater rupturing of the established

world order. And rent that other actors also to come in Russia and Turkey included not just China, but equally if Joe Biden wins, and even if there is that greater outreach to allies, so perhaps a more collaborative mood. There can't be a return to the way things were because the mood in America has changed too much amongst faces, and bically, the mood in the other countries have changed.

People say it's about America only, but also about the way that other countries now see themselves in the world.

So you'll see greater protectionism, greater unilateral behavior, and so on, regardless of who is in the White House after November just quickly thirty seconds rose, I mean, as a result of this, you know, does that mean economies are going to struggle more because they're not necessary playing on the global stage or not necessarily just quickly, Well, that's a very interesting question because we are seeing, of course, country is no longer thinking about trade as a unifying factor.

In fact, they're using trade as a weapon in politics, and that really does raise the risk of what we see is increasing trade wars, not just between the US and China, but also US and Europe. And other countries and China. So definitely that atmosphere of less collaboration does create economic risks with it. Alright, Roz Mathson, you are the best. Thanks for spending some of your Friday evening with us. Executive editor for International Government for Bloomberg, joining

us on the phone from London. This is Bloomberg Business Week with Carol Mazer and Jason Kelly on Bloomberg Radio. We are still in the midst of a major national and global health crisis, so let's understand where we are when it comes to COVID nineteen. We turn again to Dr Penny Wheeler at the president CEO of A Line

of Health, joining us on the phone from Minnesota. This, of course, is a not for profit healthcare system based there in Minneapolis, thirteen hospitals, more than ninety clinics across the state of Minnesota and western Wisconsin. Dr Wheeler, really nice to have you back with us. It's nice to

be back with you. Thank you. So tell us what it looks like, what this outbreak looks like on the ground there in Minnesota, because I know it's different across the country, and I think the last time we talked to you it was a few weeks, maybe a couple of months ago, and a lot has changed in the world. Yeah, yeah, no,

and a lot of change in our world. So not only do we have a COVID crisis, but sitting in the middle of Minneapolis, since it's killing of George Floyd took place, we had a lot of civil unrest UM that occurred beyond it. So it's kind of crisis upon crisis here. UM. In terms of the COVID, we actually are a little island here right now, a bit in the Midwest that is seeing less than the sun Belt

and the western um Coast is seeing. You know. So we have had since since May, had a diminution of the number of people who required hospitalization down collectively from like six hundred to UM sorry about that, given given the six hundred, about two hundred and we in our geography UM have had also decline in hospitalization rates even after the number of significant protests that occurred. Right, well

that Carol brought that up earlier. Interestingly, UM, when we were talking about some of these upbreaks, and I think people wore masks, right, yeah, people did wear man. Okay, I think that one of the things that saving us and I was so glad to hear your public service announcement is really it gets to a concern about caution fatigue, but wearing masks, physical distancing, washing, hand staying almost those

things still really matter. And I think we're really worried about the exponential effects that this can take off if we lower our guard. I think even with some of the preventive measures, like in a state like California, we've seen that with some of that relaxation comes higher caseloads than sadly, higher hostitalizations and deaths as well. What are you hearing about, you know, officials and where they are. I think earlier this week you met with some of

your state legislators on your response, the state's response and rebuilding. Um, what's on everybody's minds Because I do feel like there's this push and pull between wanting to move forward, get the economy back on track, but we're still kind of constantly looking behind us or in front of us, you know, about the rising virus cases that we're being around the country. I think there's still fear of a second wave. UM, So I'm just curious what what that meeting was all

about and what came about. I think it was exactly that. It was worry about this balancing. You know, there's not lost on us the economic hit that this virus is causing us, But now seeing what's happening in so many other states and geography, is the economic hit greater if you if you reduce caution as you reopen. So I think that largely the testimony was about that. And so what's your biggest concern? And maybe you've already said it,

Dr Wheeler? As you look around the country, and you know, I feel like you're sitting in a similar place to where we are here in the Tri State area, where it's like we sort of did the work. The numbers are down there trending in the right direction, and yet they are wildly trending in the wrong direction in the rest of the country. So what do people who are in these as you say, sort of oases, these sort of comfortable or slightly more comfortable places. What do we

do at a time like this? What do we need to be working? Yeah, I think caution you know is like, for example, one of the big questions in front of our legislature was do we go to universal masking? So do we do? You know, as we open up. Can we continue to do that as smartly as possible to devoid these exponential rises and other geographies so it's really hard to close things back down once you've reopened. Can you reopen them and have enough you know, civic responsibility

you know to do that. We know that for example, wearing masks, you know, yes, it protects you a little bit, but about the protection goes to the people around you that that you're protecting from. So if we can do those things, then I think we can open up more safely and won't see these unfortunate rises we're now just starting to see and leading indicator of some case rising in our geographies. And and I worry as I look around.

We're doing pretty well as a geography so far in masking, but our mobility increases increased a lot, and people naturally there's caution fatigue. But Dr Wheeler, don't you find that amazing? I mean, Jason and I kind of laugh about it, but we don't laugh about it. That this whole idea of just wear a mask. You know, you're not losing your your rights as a citizen. It's just about keeping

others safe. And I do find it kind of baffling that we're still struggling with this and we just unfortunately only have about thirty seconds here. But don't you find that frustrating. I find it totally, un wholeheartedly frustrating. That doesn't intinge on our our liberties, and quite honestly, it's a way into service to the rest of humanity by protecting others from getting the virus if we may be in asymptomatic carey ourselves. So please wear masks. Yeah, all right,

we're gonna be We're right there with you. We're gonna keep beating this drum uh dr Petty Wheeler. We really appreciate President CEO of a Line of Health. Jonas on the phone from Minnesota, love catching up with her and getting that perspective from the Midwest and man, Minneapolis, they have been through a lot. As she pointed out, she's such a nice Midwesterner because she said, please wear a mask, as you and I are, like, just wear a mask,

ask darn it, just do sometimes stronger. Yeah, but we're a family show, so we're going to keep your new jersey, nice jersey, nice brother journal. Yeah, but you let me drive Oh no, no, no, nor home, honey. Please I'll do the right drivel me. I want to drive, just drive baby, the questions trying. This is the drive to the globe commune. Thanks, we'll drive us to dawn. On Bluebird Radio, it is time for the drive to the closed and Pipotone is with us, co founder of Trade

zero America. He joins us on the phone in Brooklyn and this as we've got a market that's pretty much at its ties of the session. Just got about twenty minutes left in the trading day and we're on track for some games for the week overall. Uh Dan, good to have you here with Jason and myself. Remind us about your platform, because you guys are UM zero commissions, correct, and talk to us a bit about how it all works. Sure, we are a zero commission broker, more geared towards the

active investor. A lot of the tools that we offer our gear to those people who are looking for a little bit more than essentially just a free stock trading mobile app. Many of our customers UM trade both directions. They equally on both the long and the short side. Uh and we give fair treatment to both of those styles of trading. Additionally, the access that we provide we span the entire market hours from four am to eight

pm Easter. So what are you seeing in terms of demand for this platform right now, Dan, Because you know, we've read a lot about robin Hood and other um platforms that are really appealing at this time because people are stuck at home, they've got a little more time, and especially the younger set seemed to be discovering the stock market, especially as we've seen this pretty nice run. Yes, well, for sure, we we've haven't. We've had a captive audience

for the better part of the last four or five months. Uh, And what we've seen is that there have been a lot of new entrance to the marketplace. Some of our competitors really have done a great job of of really demystifying the stock market. But at some point it's these new these newly entrants to the market are left wanting more and left wanting a little bit more access, better tools,

and a better handful on on their trading. And so you know, when when looking at a mobile app and only seeing the last price instead of the bid and the ask is not enough. When when traders and and and new investors are graduating to the next level, we're seeing a lot of attention in what we do. Hey, I want to know a little bit more about the demographics who is using your platform and what kind of trading activity have you seen and maybe changes in that

activity over the last few months. We had a great story Jason and I talked about it, uh, Dan earlier in the week about citadel Um saying that retail traders now account for about a fifth of stock market trading and as much as a quarter on the most active days. That's what they're seeing. What are you seeing? Yeah, we since January, we've we've had huge increases in both volume UH and new entrance. What's huge? What's huge? Trading up

two hundred fifty percent since January. Uh. The the attention to the short side and trading on the short side at our firm is up over two hundred percent in that time. And as I mentioned, a lot of the millennial investors of people like to talk about these is really the new new drivers of the market. UM are are now, you know, left wanting to have more access and more tools to the market. So we're seeing a lot of these millennials sort of trade up to a

platform like the one that we have. So Dan let's talk about, um, you know, some of the stocks out there that you're seeing when it comes to this pandemic. What's providing some investment opportunity out there? I mean, this is a health crisis, and I know one of the things that you guys are are looking at, are you know names that stand to benefit here? Sure, lots of attention and sort of what we call the COVID sector.

A lot of the treatment providers and those companies that are searching out VACS teams like the Nova Vacs, the Madernas, those companies that have partnered with the US government and US government has has has given them grants and sponsored their development of various vaccines. Uh an oval Pharmaceuticals is another one, and some smaller cap names. These have been very actively trading on our platform on both an intra

day and overnight basis. Come when it's like Sorental Therapeutics sr NY, UH and ultimately another one symbol a l T, which has had a nice run the last few days. So you guys get to see a lot of data and that's you know, kind of interesting in terms of where people are trading, what they're interested in, and whether they're you know, taking a shorter or long position. I am curious about some of those uh pharma or biotech companies, whether it's Nervavacs. I mean, this is a stock that's

had a really really good run. It's up about god, it's up twenty two hundred almost this year. So are what's the trend that you're seeing? Are people shorting it at this point? You know, on an intra day basis, you know a lot of these pops that are occurring in the morning based on overnight news. It's really giving trade or is the opportunity to many times fade the open so to speak, where they'll you know, they'll short based on the news that's come out and then and

then look to buy back a couple of points lower. Um. The news cycle has really created the volatility that gives the opportunity for traders to you know, to play these things on an intra day basis, both long and short. So you're not necessarily seeing more traders. I know what you're saying, they're getting in and at they love the movement, but you're not seeing more take maybe a long position

versus a shorter vice versa. We're not We're not most of the most of the clientele and the traders that we're dealing with, for the most part, are are holding uh not holding the positions overnight. Interesting, So how do you make this, I mean, for your businesses sake, Dan, if we get back to whatever the next normal is going to be, how do you hang onto these customers? Well? By keeping fresh, by ensuring that the tools and the

technology that you're providing is always a step ahead. By by empowering the investor with ease of access of both on boarding the platform and also banking, moving funds back and forth from from the brokerage firm to their bank account. Um and and really um, you know, providing better tools. All Right, we're gonna leave it there. Thank you so much. Dan Pipotone, co founder of Trade zero America joining us

on the phone from Brooklyn. Listen, this has been, uh an interesting time for these types of companies because, as Dan said at the top, it's a captive audience in many ways, and you've got um, you know, even in in tough economic times, there are still people who want to take advantage of this market. They're seeing this market especially We've talked a lot about this today and probably we'll talk more about it. These tech names that have been on an absolute run over the course of this year,

and even with that tough march. And by tech you mean pure tech as well as biotech because because of the push not only to find a vaccine, but also you know, various therapies, you know, modalities to treat uh, the ailment to treat the virus at different levels, you know, everybody, and there's so much money that's being committed from the government and elsewhere, and so you're really seeing that sector really get a big boost. Thanks so much for listening

to Bloomberg Business Week. Download the podcast on iTunes, Southcloud, Bloomberg dot com, or wherever you get your podcasts. And of course you can always listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube by searching Bloomberg Global News.