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Hey, we want to stay though on the markets and the ALEC. We've got a great guest to do that, and also to get into some new research that they had out late last month, six for twenty six Essential questions for investors. Investors probably have a lot of questions going into the new year. Back with us is Jason Grannitt. He's chief investment officer of B and Y. Right here in studio. How are you?
I'm great?
How are you love the new studio?
Thank you?
Thank you cool?
We're kind of loving it too. How are you loving kind of the market environment right now? And how are you thinking about the new year?
Yeah, So if I go back and think about this year and we're at the beginning, you think about all the wild things that happened. We went through the new administration, liberation. People forget that the US military was engaged in a war back in the spring, the One Big Beautiful Bill, in negotiations, the long government shutdown, these MEGAAI deals that happened over the course of the year, and what happened
kind of what everyone thought would happen. Policy rates are a little bit lower, risk assets are higher, but it was very nonlinear, and so if I think about twenty six, I think it's probably going to feel somewhat similar. Is going to be weeks maybe months that don't feel that warm and fuzzy, but pretty strong backdrop. You have the stimulus coming from the One Big Beautiful Bill.
Will that be inflationary though, and cause some problems perhaps for the FED and the next feduer, whoever that may be he or she.
So, I mean, look, we're talking a lot about the inflation data today in questions around it. Obviously the headline was softer, but markets are not reacting believing that the underbelly of that data is as clean as it could be from a hangover from the shutdown. I'm not convinced
that it's going to be super inflationary. It could be a little, it could put a little pressure against it and I think, but if you look at where policy rates have been trading for the end of twenty twenty six, no matter what we've talked about, all those things that happened, all the questions about all these different FED people, they've been right between two ninety and three ten, and so the market kind of has this credibility around where it's heading,
no matter all these kind of balls that are thrown at it.
Well, I wanted to just talk about the FED a little bit because the President did say speaking to three or four different candidates. If you look at polymarket, for example, the money's still on Kevin Hasset, but Kevin worsh is a close second favorite. Christopher Waller's on there too. Michelle Bowman, who he mentioned, is still only at one percent at this point. Does it matter to you of those four who gets picked. Yeah, so we've had a lot of names.
I think there were five and there were one. Now there's four.
Back to my point, it seemed to be anchored at a certain point, no matter where the winds swing on these choices. What I would say is, we're still talking about a committee. We're still talking about consensus on a committee. If you look at the dots that come. It looks like a scatterplot. There's a lot of work to do to bring people together. So while I think that it does matter ultimately over a long period of time, obviously who the chair is. We're talking about the New York term.
This is about building consensus, getting the views, and quite frankly, this is a tricky environment, you know, Carol, you raise the underbelly of inflation. We have the labor market that's a little weak. These are tricky times for both the Fed and global central banks.
Question.
All right, so you guys have whittled it down to six for twenty six is all we tried.
We tried.
Was it hard whittling it down to six? Yeah?
Look, I mean we tried to catch the big themes that are out there, right, you know, obviously central bank, obviously the dollar, obviously AI.
We try to capture all those different things.
Let's go through a couple global economy maintain its delicate balance through twenty twenty six, and you just talk about forces balancing toward growth acceleration, and I guess those that might not be towards that.
Yeah, Look, it's it's fragile. This is what we're talking about.
I mean, we think that it can maintain our conviction when we went through and did the work to put that out as we think that the tailwinds continue to aweigh the headwinds.
But there's some fragility.
Yeah, the labor report showed you that it's kind of not every sector with strength. Obviously, the questions about the inflation data are where things are happening. You know, we think it does.
Have the support behind, but it's.
More closer call than not. Jason, We're going to jump around a little bit in the report. The question that you have posed, I think a lot of people have right now and they look at the US equity market. Are US equities overvalued? Yes?
Or no?
Yeah?
I mean obviously this is are some overvalued?
And what I would say is there's always some that are overvalued, and there's always some that doesn't are valued.
But are there some more right now than usual that are overvalued?
It looked there's a lot of price for perf action in the market in certain sectors.
Right that being said, we are getting some stimulus that's coming into the market next year. We do have easier or not tighter monetary policy on the horizon. We do have fiscal stimulus, corporate tax benefits that are there. I think a lot of it's in the price, but we think there continue to be a little support on risk assets here into next year, for sure.
Jason, what do you do? Who do you talk to? What is the research that you guys look at to figure out whether the AI trade, the AI spend, the AI build out is getting frothy. Is it just a case of looking at valuations or who do you talk to? You to kind of get an idea?
So you can't just look at valuations. These are new technologies and new horizons where on some level the raw evaluation doesn't really matter as much as what are the fundamentals, what's the forward of the different projects, what partnerships you're seeing all these partnerships come out, So there's a whole series of strategic alliances that are going to be developed over time.
Are you comfortable though, with the circular financing and complicated relationships and kind of coosy relationships.
I'm a bond guy a little. I'm always a little nervous. That's how it works.
So are you know those folks when they look at Oracle right and what's going on in their balance.
Yeah, I think what you're seeing across the horizon is that we're starting to sift through and think about who some possible.
Winners and losers are. But this is a long game.
You know.
If I think about back in the spring, people are questioning Google, what's going to happen to search? What's going to happen in that ecosystem? Now people see Google as you know, maybe the biggest winner. So these things can change very, very very quickly. And I think that we're early enough. And we have a little chart that shows how early we are kind of in the journey here, and that's what I think it's.
Important for folks to remember.
We're early days in whatever this AI adventure will be. It's not going to be all highs or all.
Lowse but we're But you know, there's going to be some sorting that goes.
Through what what's the risk, the main risk for twenty twenty six? What what gets the train off the rails?
Ye?
Look, like I said, there's a lot of fragility. I think obviously for the FED and for policy here in the US is clear.
The labor market.
You seeing a lot of unevenness across the labor market, you know, growth is strong, but probably slightly below potential. So is there a point where the late taking folks out of the labor market brings growth down and.
That starts to fall further below potential?
And then look, we've had rate cuts last fall, we've had rate cuts this fall, and we still have ten years that won't get all four percent. Yeah, and so to me, that's something that has to manifest itself through the economy still as well.
Yeah, it's so funny because we dipped below for a moment, it felt like, and then we had some guests maybe even talking about moving, you know, closer to three, and yet here we are at four point one and we're sitting there for a while.
Yeah, it's pretty stubborn there.
Well, you said, you know, you're a bond guy. So the diverging one of the things that you guys are talking about the six essential questions for investors. How are diverging rate paths shaping fixed income of the US, Europe and emerging markets? And this is on a day where the BOE and ECB right rained in with rates. We get a decision from the Bank of Japan tomorrow. We had the FED recently. There are diverging policies amongst some central banks, and.
Carol would say beyond diverging policies, the agreement is not there. The Bank of England had a five to four vote, very tight. Look as I said, look at the dots, it's all over the ECB.
Look listen to what they're saying.
It's not everyone is student body rights, student body left at all these different central banks. So not only do you have different speeds across these, but you also have inside there's still some sorting that happened. So when you ask about the risks and the things, you can see the confusion in the market and even from the experts you make these decisions.
So it could go a lot of different ways into yeah.
Let's have fun. That's what makes this a fun That's what it makes it fun to do.
It does sound like there's a consensus that we got to keep our watch on Washington, whether it's policy out of the White House. In so many different ways, our policy over you know, monetary policy from the Fed. There's a lot that's going to be coming our way that way.
Yeah, people or policy, and so you got to listen to what the people are saying. They push it through and that's what happened this year, right, They drove all these undulations. But if you talked about where we were at the beginning, I think we are where we thought we'd beat the end.
But it wasn't that smooth.
No, And there were points where you never thought it was going to it was going to end out this way, right, Jason, Happy holidays.
Hay Holiday is great to see you. Enjoy your break.
We'll see you in twenty twenty twenty six.
Best everybody.
Yeah, same to you, Jason Granite, Chief Investment Officer, b and Y right here in studio.
Stay with us. More from Bloomberg Business Week Daily coming up after this.
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Bloomberg has reported out, as many other news organizations, something you and I've talked about a lot tim about how.
Some including you, just open up the app formerly known as Twitter. This is true.
It's about how some that are wealthy and just some in general are concerned about some of the priorities of incoming New York City mayors or on Mumdannie on that we cut up with Kathy Wilde outgoing presidency of the Partnership for New York City. They represent a lot of the city's corporate leaderships that we're talking about, real estate developers, pe firms, banks, law firms. By the way, Bloomberg Elp is a member of the Partnership for New York City.
Kathy Wilde also part of New York City Mayor Elect Zoron Mundani's transition team, and she addressed some of his policies that he campaigned on, including higher taxes. Check it out.
You may raise the rates of taxes, but that may not result in more revenues if you scare people away, or if you scare companies away, or as we've seen lately, we're seeing a real threat to jobs in New York for the first time, first time in my experience over fifty years, are seeing a decline in the number of jobs in our financial services industry. Scary thing. That's forty percent of our state income. Text news. We don't I mean these are you know, we've got to pay attention
and I think he gets that. But we've got to be at the table discussing these issues and helping figure out how to employers help solve the childcare problem.
It's Kathy Wilde, outgoing president and CEO of the Partnership for New York City, also part of New York City Mayor like Zorah and Mam Donnie's transition team.
Carol.
Here's what our next guest has to say about all this.
Yeah, great to have back in studio. Frank Sorrentino, chairman and CEO at the publicly held New Jersey based community bank connect One Bank Core there, the parent company of connect One Bank. Great. Great, great to have you here.
How are you here?
Great to be here, Great to be the new studio. It's fantastic, Thank.
You, thank you. Yeah, we've been working on, you know, real estate around here.
Huh.
Tell us about the environment. You are kind of consistently optimistic and have been a lot over the past year. Is that still the case.
I'm very very optimistic about where we are. Yeah, and especially the journey we've taken this year to get here. It's been a you know, quite the roller that are up and down, and we certainly didn't start the year
in the same place. But I really felt the foundation was there for a very solid end to twenty twenty five, but that foundation now has really created, I believe, an unbelievable ramp into twenty six, and I think we're going to have a lot less of the noise that we heard during twenty five and more focus on how this economy is building strength as we move through twenty six.
I want to go to what Kathy Wilde was saying about concern over New York City. She has a close relationship with many business leaders. She's also part of the mayor's transition team. Last time you're on with us, it was just after the election. We spent a lot of time talking about politics, specifically housing. Because of your construction background.
It's a great conversation.
But the New York City side of things, I mean, you've got locations in New Jersey and New York and Florida as well, but you've lot locations here in New York City, so you understand the economy. What are you hearing from your New York City based clients.
Look, I think the economy in general is very strong, but we are, as you just heard, we are on the press of if there are changes that drive the sentiment to think that New York is not a friendly place to do business. We could see change, and so certainly that's a concern. We certainly know there's a concern about affordability in New York City. But overall, I think it's all going to work out. It always has before.
Does it make you optimistic that somebody like Kathy Wilde, who has the year of so many in the business community, is involved with the incoming mayor.
Yeah.
Absolutely.
And there's others who are joining the team who I think we would all say we're happy they're there. Look, at the end of the day, I don't think anybody can argue with some of why this mayor was elected. Right, the issue of affordability, trying to make a fair system for everyone, I think we could all get around that. How we go about doing that is a different story.
How do we I know we talked about this with you, and but you know you're a builder, So that's why we talk about with you, because you understand these things. I'm trying to unpack this. I mean, a builder's not going to build a building if it's not going to be profitable.
Right. There's been numerous studies across this country and across various time periods. It doesn't matter when, how or where you look at it. There's a really interesting story right now in the Twin Cities, where you know, one city is trying to maintain affordability by government control and then the other city is doing it by free market. Let's let the builders build because you know, to me, some of the laws of economics they like the laws of physics.
You may like to agree or disagree, but they are what they are. And if we increase supply, we're going to have lower prices. And that's something I think politicians don't typically understand. I mean, if you look right now, even in the rent regulated portfolio, rent stabilized portfolio of New York City, there's fifty thousand units that are unoccupied
because they're uneconomical to put back on the market. Based on what they're rent stabilized at and the investment needed to get them back in order, you would think that that would be a priority. We want to get those units back into the marketplace because that would help the that would help those who need the help.
So if you were advising a politician, the incoming mayor perhaps or I'd love the opportunity to do that what would you what would you have to but.
Not yet, what would we have our opportunity?
So what would be the suggestion to actually fill those vacant apartments?
Oh, there's there's a number of things we could do, right, we could mean test for the people that live in rent stabilized apartments. There there are incentives the city could provide to entice the builders to be able to invest the you know, make the investments they needed each one of those apartments to make them viable since they're vacant,
allow for vacancy decontrol up to some level. I mean, there's there's a there's a so many common sense things that we could do, probably over at dinner, napkin, that would get those those apartments back online in ninety to one hundred and twenty days.
So why is this so hard?
You know, it's it's how politics works, I don't know. And it's a mindset, right, there's a mindset that government can do a better job than the market can do, when in fact, we've learned over and over and over again here in the United States, the market generally is able to solve these problems and in a very efficient way.
Mind you all right, I want to broaden out. We always do like to talk to you because you have such great exposure to small business and construction generally. How are both of those areas doing. And I'm also curious about small business as we had a story this week about PayPal looking to apply to become a bank and really tap into the small business area. It doesn't happen overnight, so I'm just curious. You laugh, Do you think that's I.
Think it's fine. You know what I find fascinating is all these companies that want to be banks because in the current regulatory environment it's fashionable, profitable and whatever to be a bank.
They've done really well this' here there.
You know, there are other times in history when being a bank is you know, is a little bit more difficult than that. And you know, the banking industry is not just one particular point in time. It's built the last for very very long periods of time, and so we'll see how they like the regulatory environment at other points.
So small business, small.
Business, I think is doing very very well today. Again, the noise is out of the marketplace. People are feeling good. I think one of the biggest things we're hearing, notwithstanding some of the employment or unemployment information is that small business is having a hard time hiring qualified people to fill positions. You know, I think they're getting their arms around what's happening with tariffs. I think they're getting their arms around whether or not there's real structural inflation in
the economy, and it appears there really isn't. There's been, you know, some price setting that's been going on. But overall, the vast majority of the small to medium sized businesses that we represent a connect Water are doing quite well, and they're seeing what's more important, they're seeing pipelines and backlogs that are taking them into twenty six, which is one of the reasons I feel so optimistic about we're headed in twenty six.
So let's get to We got the environment side of this, Let's get to the actual running of the banking business. We saw an uptick this year in M and A. You mentioned a favorable regulatory environment. We saw you guys actually close on first of Long Island. That deal was announced last year. Any more M and A for you in the new year.
Listen, this is I think our fourth or fifth transaction we've done over the twenty years that we've been in business, and we always like to say we're very opportunistic based on where we are, where the market is, what opportunities are in the marketplace. We've gone through stretches of three, four or five years at a time without any M and A. That's okay. I do think there's going to be a robust organic growth engine for us as we continue to move forward. But there could be opportunities for
M and A and right now. One of the things that I think would promote that is a regulatory environment that's a little bit more favorable towards it happening. We did not have well that's when we announced the last transaction. There are only a few that were done that year.
That's what I wanted to like follow up on, is that you are in an environment that's much more favorable. So as someone who runs a bank and knows that you haven't done that many over the entire lifespan, but you're in an environment where it is much more you know, favorable because it doesn't make you.
Say, you know, it's not so much that it makes us say it because it has to make financial sense. It has to be something that for us, you know, we can say this is a good opportunity for us to take advantage of the better regulatory environment, though, provides more opportunities because then there'll be other institutions that think they're better off if they partner with somebody, and you know, in the last three, four or five years, that hasn't
been the case. Right, Many institutions to saying, hey, we don't want to take a risk here of trying to sell ourselves or partner with someone, and maybe that doesn't happen, or it takes too long to happen and they hurt the franchise.
So that's probably a no for twenty twenty six.
Well, it's hard to say.
Well, just geographically, just in twenty seconds, geographically the most appealing area where you want to be where you're not right now.
Look, we're in New York Metro, you know, based institution, So that's a big market.
Is awful?
You want to grow here?
Yeah, we want to go And as I always joke here, you know Florida is part of that market. So I like the growth prospects here in the New York metro market. I like what's going on in Florida.
Okay, we'd be remiss in terms of FED policy and what we get in terms of a new FED chair. And also we did get that additional rate cut last week. Frank, you know the bank.
We said, we said we were going to have a rape cut last time we were here.
Just real quickly, thirty second, how's the bank managing the rate backdrop in the steeper yeal curve that we're seeing?
Just quickly listen.
I think it's great for banks, and I think you see it, you know, in the market reaction to banks over the last thirty forty five days, right, bank valuations are up pretty strongly. Banks are now you know, favored in portfolios today. I think part of it is the steepness of the Yeal curve, and I think part of it is the optimism around the economy.
And it's twenty six it's still optimistic. Yeah, very kind of love that, right, We could do use some optimism. Frank Sorrentino. Thank you have a great holiday.
Oh you heavy new year?
Yeah, I really appreciate it. Founder chairman, founder chairman and chief executive officer of Connect One Bank right here in our studio.
Stay with us. More from Bloomberg Business Week Daily coming up after this.
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I'm looking at shares a dgt US. It's Trump Media and Technology Group. It's the parent company True Social, THEYDA so Crypto financial Services. They're getting into nuclear fusion. It's surging today more than forty one percent. The company said today will merge with Tae Technologies. It's a closely held fusion developer founded in nineteen ninety eight. This is a transaction value at more than six billion dollars.
It's it's kind of wild.
Shareholders not on my business, my big go card. This was not on mine either.
Shareholders of each company or are going to own about fifty percent of the combined business after the all stock deals completed. That according to Trump Media. They put that out in a statement. We have a ton of questions about this, and we knew right off the bat that we want to talk to Will Waite.
He's Bloomberg News Energy reporter. He joins us here in the Bloomberg Interactive Brokers Studio. I got a full disclosure I had never heard of this company before six thirty am this morning. Had you ever heard of it? No, there were, Yeah, I've heard of Okay, so people in the energy people in the energy world know this company.
Yeah, yeah, TA is one of the companies in fusion that we've been watching that's making solid progress.
Solid progress. That's an important way to put it, because because this is unproven at this point.
Yeah, because is hard.
Fusion is really hard. I mean I write about nuclear fission, which moves really slow. Fusion is slower than that. It's you know, it's it's literally creating a little tiny star that you can find with super powerful magnets and somehow get energy out of that. So if that sounds hard, yeah, it is hard. But TA is a company that's been They've been at this for a long time. We've been watching them. But when I say solid progress, what that
really means is nobody has done this yet. It's been demonstrated in a lab situation about and a couple times since then. It's Lawrence Livermore in California. But no one's got a commercial system working, no one's got demo systems working. We're we're waiting for it.
Is it the kind of thing will that all of a sudden, like you know, Eureka, all of a sudden, they figure it out and it could happen tomorrow. No, it's more likely it's not going to happen for fill in the blank.
How many years, maybe less than ten for a couple things.
That's a long ways out.
So, I mean, the company I've really been watching is called Commonwealth. They're already planning their first commercial system. They're working on it in Virginia, but they're doing all their research outside Boston because they came out of MIT. They don't have their demo system working yet. They've been talking about reaching like this critical milestone in twenty twenty seven, twenty twenty eight ish. So, like I said, no one can do this yet, but there's several companies that we
think are getting close. So I put TAE on the list and they told us, you know that they're going to start construction next year on a commercial system. I'm like, you're going to start building what next year? I'd love to see it happen. It'd be great, but I have questions.
Apart from the association with the president and the close ties to the president, that this gives the company. What else would be in this I don't want this combination of these two companies, Like, why would TAU do this money?
They want money. In fact, they had a call this morning and their CEO said that capital is becoming one of their big challenges. And I'm like, I thought the physics and the engineering was your big challenges. But you know, they said they get up to three hundred million cash out of this right away or when the deal closes, but you know, close to nowish to start working on their commercial system.
So that's great.
And they get you know, access to the Trump media backing, so that's good for them. So there's a lot of money happening here.
I mean, if it was so promising, why aren't other investors rushing to give them money or others? Is it just because of how long this is taking?
It could be.
I don't know the answer to that question, but it's the right question to ask. They've already raised like I think a billion three to date, which is, you know, a lot of money. But fusion takes time and takes a lot of money. There's a lot of companies you know, working on it, and they've all raised billions of dollars as well.
So let's say one of these companies, maybe TA, maybe another company, maybe Commonwealth, is able to pull this off. What is the ultimate promise and what does that look like in terms of facilities, in terms of what it does to the grid, in terms of what it does to our power bills.
Okay, the ultimate promise is really something special. This fusion energy. It does not have the dangerous radioactive waste that you get from fission energy, so that's great. And some of the raw materials that they use for fuel and a lot of it just comes from hydrogen, so it's not
as hard to get. So fusion companies will say we have the promise of abundant clean energy and like it sounds, you know, like a fantasy, but it's actually kind of what they're what they're working towards, so it would be great.
It's called nuclear fusion. Yeah, where's the Where does the nuclear part come at?
The process?
The process? All right?
So fission, which is what we have now, is when you have a big atom and you break it up and you get energy from splitting it. Fusion is the exact opposite. You take small atoms and you smush them together and you get energy when they fuse into something.
Else and there's no byproduct.
I wouldn't say there's no byproduct. So some of the processes have some radioactive waste, but it's not the dangerous toxic waste like from fuel rods, you know, the old spent uranium fuel rods. It's low level waste. It's not as bad, it's not nothing. It's easier to deal with it.
Is it interesting? And forgive me, I was just looking for the specifics, but I believe the administration dropped some nuclear regulation regulations or regulatory framework this week. I mean, is it interesting? Kind of the.
Timing on all of this.
And I don't well to point fingers in anything, but it seems kind of coinky digg.
It could be a coincidence. It could be not a coincidence. I'm not in a position to say, but I might say it would be.
Yeah.
But it's definitely true that the Trump administration is really supportive of nuclear energy. They've done a lot of executive orders and policy changes to make nuclear happen.
Is that a good thing in your view? For someone who's been following this space. Has there been too much regulatory oversight to be fair?
To be fair?
I hear consistently that one of the challenges for getting a nuclear power plant built is the paperwork. It's getting all the approvals. Now. To be even more fair, I want a government that takes radiation seriously, but it has been something that slows the process, and especially in this country, nuclear is very, very expensive, and one of the reasons is because it takes so long to get things going. So having some of the processes streamlined, I'm in favor of that.
Very briefly. Well, ten seconds. How many nuclear plants will be brought online next year?
Next year?
Yeah, one that I know of, Okay, more than's one? More than this year?
Yeah.
Then Palisades Plant Michigan should come back online January February.
Five seconds. How many are China putting online next year?
Way more than that?
Okay. We will continue this conversation into the New York will wait. Thank you so much, Happy Holidays, Merry Christmas, all that good stuff. Bloomberg News Energy Reporter.
Stay with us. More from Bloomberg Business Week Daily coming up after this.
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Darden Restaurants, the owner of Olive Garden and Longhorn Steakhouse, climbed after the company Race's comp sales forecast is cited better than expected growth fueled by affordable meal options and strong spending from higher income diners. Dartnet expects some economic pressure in the first half of next year, but Carol this could be offset by consumer spending from potential fiscal stimulus in early twenty twenty six, and beef prices are
also expected to fall next year. Hallelujah as production increases. I mean, beef has been getting hit hard.
In our home. Yeah. Michelle Coursmo is presidency of the National Restaurant Association. We're curious what she has to say. It is the trade group for the restaurant industry, and she joins us from Washington, d C. Michelle tim just laid out really good news, or some good news, we should say, from Darden today. We've seen mixed results though from the restaurants. It's a great read on the business community,
a great read on the consumer. Sweet Greens co founder also stepping down from the struggling salad chain after the share price has dropped about eighty percent so far this year, covs down sixty percent from this year's size to poutlet is down forty five percent from this year's high. It doesn't sound so great. These are your members, these are this is your community. What are you hearing from them?
Well, exactly what you've said in terms of such a great industry and such a great bell weather for how the economy is doing. And it really is a mixed bag. So we've seen one point five trillion dollars in restaurant industry sales in twenty twenty five, which is up from last year, but not as strong as it needs to be and not as strong as we want it to
be in these really tight margin businesses. And what we found is it kind of depends on is it kind of depends on how your it is and really how you're leaning into that price certainty for customers, value matters. Price certainty really matters. And so you see that making a difference as they're also navigating all of the tariff and supply chain and beef price problems that you've just talked about.
Yeah, we're going to get to some of the challenges in just a minute. So that's how your members are doing. Your members depend on consumers. From your perch, how's the consumer doing? And it's not monolithic by any means, but how would you describe the US consumer right now?
So?
The US consumer right now, I would say is very deliberate. They want to be certain about what they are spending and how they're doing it. And that's really a place where restaurants have been able to lean into some of that certainty in the offerings they have in the pricing. But it's definitely been a situation where we're not seeing as.
Much traffic as we normally would.
We always want to see those guest count numbers going up in restaurants, and it hasn't been going up at the level that people want.
Okay, So I just want to go through some of the challenges you mentioned. Some of the challenges you said, the tariff related challenges, the beef price challenges. What is the biggest challenge that restaurants are facing.
Certainty.
I think with every industry and with every business, what everyone is looking for is certainty. And we certainly know that the President has an aggressive agenda to try to make a strong economy for US consumers, but the lack of certainty actually creates.
Something that feels quite the opposite.
When restaurants are dealing with how to navigate different pricing, supply chain problems, tear iff price increases, changing from day to day. That definitely gets to be a bit of a challenge for restaurants trying to serve consumers that are looking for that certainty.
You know, one thing that we're seeing certain about is immigration, And this note from Torsten Slock at Apollo this morning really caught my attention, he said. He writes, from twenty twenty two to twenty twenty four, net immigration was around three million people per year, the CBO forecasting that annual immigration at twenty twenty five and twenty twenty six will
be around five hundred thousand people. Torston writing quote, this has important consequences for labor supply, wage growth, and housing demand. From a labor supply issue that affects your members, but also from a customer's perspective that affects your members. Which one is harder for the restaurants in the US right now. Is it the lack of workers from immigration? Yeah, that customers from immigration.
That feels like a Hobson's choice.
So, without a doubt, the restaurant industry really cares about ensuring that we've got enough workforce to help provide that great hospitality that makes people love restaurants. And there's nine hundred and eighty eight thousand open positions in restaurant and hospitality this month.
So we need workers.
And this is why it's been a significant issue for us to push for immigration reform. We need more legal pathways for guest worker programs, more opportunities.
For people to come in and do this.
Work even as a guest worker, in a legal, documented fashion. And so getting to that solution is something we're really pushing for for Congress because we need to get people in jobs in restaurants well, the constomers need it.
Well. Big problem that's a lot of workers that aren't that the industry needs. Is the White House listening. Are members of Congress listening?
We never feel like they're listening enough on immigration, so they're always seems.
Are they listening less than maybe they were in years past, recent years.
Past, this has been a difficult issue. In fact, some would call this the third rail in terms of issues that Congress deals with. For decades, frankly, and we get close often, but we need to get it across the
finish line. And so that's really what we're pushing, is it's time for them to realize that it has to provide some legal pathways because we're seeing I mean, those numbers that you're talking about with immigration coming down, I think we're going to see in twenty twenty five in reports I've read that this will be the first year that the US population will not have increased. And that's a significant impact on our workforce. And so we care a lot about making sure that we've got enough workers
in the restaurant industry. You know, there's certainly a lot of places for technology to take jobs, but hospitality is still built on people and personal interactions. So we want those people to work in restaurants, and we want obviously a robust economy with lots of consumers that are coming in to enjoy those restaurants.
Well, you know, and I just want to go back to the speech that President Trump gave last night, the primetime speech, and he talked a lot about immigrants and immigration, but he said a lot of the immigrants and forgive me and I should have the exact quote in front of me, but basically that a lot of the immigrants that are coming in are criminals, and so on, what's the restaurant industry's experience with immigrants who come into the
United States? And I realized, there's legal, there's illegal. So I'm just but there's a lot of folks that maybe aren't legal that are in the restaurant industry that you might hear that kind of on the side. So I'm just curious about that commentary from the President and the reality of of what it really is all about.
We don't think that that commentary tells the full story. And I think we want to start with a complete agreement that people that are breaking laws, especially those laws that are hurting Americans, really aren't as illegal immigrants certainly not a place for them here, and so creating a
safe environment for Americans is really important. But there's a lot of people who are showing up every day, working hard, being reliable, taking care of their families, doing the right thing, mowing their law, all of those things that make your neighbor somebody that is friendly and reliable that.
You want to see.
And so this is why it's important to us that we push for more legal pathways to guestworker programs because those people need to be in our communities contributing. And obviously we need.
To deal with the people that are breaking the laws.
But for those people that want to work hard and show up and contribute to our economy, let's find a place for them to do that.
Beef price is still up thirteen percent so far this year, though they're down from the highs that we saw in August and September of this year. We've spoken to you in the past and we've talked about inflationary concerns, but it hits restaurants different because the margins are so tight. What are the biggest costs right now for your members?
So beef costs for sure. We're seeing a lot of fluctuation on seafood. One of the things that we're seeing in the data that we're trying to figure out is a lot of data is showing seafood as a protein price going down. But what our members are telling us from our survey work is that they're seeing increase seafood prices, and so there's a lot more we've got to figure
out there. And I think this is a place where tariffs or the threat of tariffs is really hurting that supply chain, especially as whatever happened to be in the warehouse under a pre tariff price really starts to deplete. And so I think anytime you're looking at ros, that's going to be a place where people are concerned. And then anytime you're.
Looking at any kind of vegetable.
Or produce, we want to make sure that those tariffs stay off as well, because we can't produce in the United States the amount of produce that can we consume on a regular basis, and we certainly can't produce it year.
Round, Michelle, not in DC in.
The wind that is that is true, and even in California, doesn't you know, satisfy the entire country or provide for the entire country. Hey, before we let you go, we got to talk about cold hard cash, specifically the penny. I was surprised on our editorial call when our producer already said that this is a big issue for you guys. Costing your restaurants thirteen to fourteen million dollars monthly enforced rounding losses will explain what's going on with the penny.
Well, it is certainly interesting and nobody really had on our BINGO card for twenty twenty five that we would be talking about penny shortages. But for some reason that we can't quite figure out, the FED has stopped c
sculating pennies. So the Federal Reserve does a really important thing by keeping money and coins circulating around the country so that we've got the right level of those coins and bills in the right areas and regions, And right now they're not doing that with pennies, and so we're seeing pennage shortages, and so often consumers are coming in and paying cash. In fact, I think people would be surprised to know that one in four transactions and restaurants
is a cash transaction. So people are coming in paying cash and often they can't get exact change. So that's creating a difficult situation for consumers. But also that difficult situation that you cited in the thirteen to fourteen million dollars a year in lost revenue for restaurants.
Wow, that's a real number. It's interesting. My understanding is they stop mining them because I think it costs more.
But this is different. This is the Federal Reserve in circulation versus the US not producing them.
New ones, so they're amount of circulation.
Yeah, there are three hundred million pennies that are in circulation right now in the US, and so there should be enough pennies rolling around that we can keep using pennies even though they are not mint.
They check the couch cushions, that's right.
My husband's for the washing machine. That's usually where they end.
U TU bring up those pennies, It matters, and those single socks. Michelle, Thanks so much. Michelle Cosmo, President and CEO of the National Restaurant Association trade group for the restaurant industries.
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