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Beige Book is at published day times the year, fifty one pages, just crossing the Bloomberg terminal, and it's all about anecdotal information on the current economic condition. So let's get to it deeper analysis with our own Stuart paul Us and Canada economists for Bloomberg Economics use here in our Bloomberg studio. All right, so what jumps out at you, Stuart?
All told, this Beige Book released just today is overall more negative than everything that we saw in July. Most of the twelve federal reserve districts reported little or no change in economic activity overall, most notably, real wage growth seems to be dismal, and it's weighing on consumer spending and consumer activity, focusing on those wages and the labor
market that's producing those wages. Eleven of the twelve Federal Reserve districts describe little or no net change in overall employment levels, corroborating basically what we've seen in the payrolls over the last several months. Looking at prices a little bit more inflationary than everything we saw in July. Ten of the twelve districts characterize price growth as moderate or modest.
The other two districts strong input price growth that's outpacing moderate or moderate or moderate or modest selling prices, and that's going to be the thing that we're going to be thinking about with the inflation landscape going forward. There are some tariff price pressures that are going into the pipeline, and the question is just how much can consumers allow
those prices to rise before demand retrenches. And the Beige Book right now is showing that demand is retrenching because of weakening real wages.
On that Stewart reading from the Beige Book, it says QUOTE contacts frequently cited economic uncertainty and tariffs as negative factors.
New York reported that Quote.
Consumers were being squeezed by rising costs of insurance, utilities, and other expensive expenses. The Beige book, also noting that contacts reported flat to declining consumer spending because from many households, wages were failing to keep up with rising prices. What does all of this mean for the FED meeting later this month and that twenty five basis point cut that pretty much everyone out there is expecting.
Everyone's expecting it. But what this really ends up coming down to is counting the votes on the FOMC, on that Monetary policy making committee. So one of the things that's nice about the page book we get to look at activity in each of the Federal Reserve districts. I think for September, the most important district is Kansas City. Jeffrey schmid Of voter president of the Federal Reserve Bank
of Kansas City. Right now, we're seeing that economic activity was generally flat, employment declined modestly, wage pressures remains subdued. All of those factors might mean that one of the most hawkish voters on the committee could be a little bit more open to the idea of voting for a cut. You could see that true coalition building around exactly what Governor Waller wants. What San Francisco Fed President Daily has said she's wide open to and that's a cut at this upcoming US.
Are you saying because he's been so hawkish and then he's seeing moderate activity, that that's why this is an interesting Fed governor to focus on.
That's exactly right. He's one of the he is, by our natural language processing tools, the most hawkish member of the committee. He is a voter, and conditions locally are weak, conditions locally likely warrants a cut in his eyes.
Do conditions locally inform the way that voting members of the federal who represents certain districts will vote is that their responsibility is that their job to represent their districts.
It's not specifically enumerated in the Federal Reserve Act that they must set policy according to conditions locally. But the reason why the districts are divided up the way they are so that everybody around the country has someone who is representing their interest. And similarly, there are requirements on the Board of Governors that the composition of the governors
are supposed to represent conditions around the country. So these are important qualitative aspects of local conditions that feed into the decision making process. Do we know for certain how any one person is going to vote no. Certainly not. But when we see conditions cooling in a district that is presided over by one of the more hawkish members, you would think they might start pivoting a little bit more dubbish. And we can see that coalition building around the cuts.
Let's not forget we get some inflation prints before the next ved decision, we get the monthly jobs on FREDA. There's a lot that still could come to the Fed that could impact their decision. The other thing, though, and let me just roll this into it, Stewart, this possible legal rollback of tariffs, which could be this is a major uncertainty. I know the President said yesterday some urgency to make this decision, like, let's figure this out sooner
rather than later. Is the FED going to err on the side of holding off on any kind of move because there is still some uncertainty? Are there enough evidence, are a growing number of evidence that the economy is slowing that it does make sense to cut rates of some sort.
I think that there is enough evidence that it's been accumulated when you look across the broad swath of indicators, whether it's real wage growth, whether it's the pace of hiring, whether it's some of the anecdotal data that we're getting just today that a cut is warrant to the question is whether they want to do it in September or whether they want to do it a little bit further down the line. From an economic perspective, it doesn't matter
that much. They could wait until December if they wanted to, They could wait until twenty sixteen if they want to.
Two.
But it looks like the coalition probably is there based on the data that we're seeing, based on the anecdotes that we're seeing, to deliver a cut in September.
Steven Maron right, we've got hearing tomorrow. President Trump is very eager to get him in place on the FED board. How might that change some of the composition and change all of the discussions that happen around the table at the FED.
You know that you'd get another voice that's advocating for a cut, and I expect that he will be confirmed in time to vote on the seventeenth. And again, it's just part of that coalition that's building.
All right, We're going to leave it there. So appreciated our own Stuart paul Us and candidate economist at Bloomberg Economics right here in our studio.
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It's a crypto because there is lots of news happening in the world of crypto. Michael Novogratz's Galaxy Digital is offering a version of its Nasdaq list and shares that can be traded on the Salona blockchain, aiming to spur similar tokenization efforts, and an update on the WLFI token.
We talked about this a lot yesterday on Bloomberg. Crypto promoted by the President's Family, which launched with ambitions of serving as the backbone of a new digital ecosystem, It became mired in turbulence and instability within an hour, so that's something we're watching closely. For more on crypto, we are joined by Jamie Leverton, CEO of Reserve One. Jamie
joins us here in the Bloomberg Interactive Broker's studio. Jamie Reserve one calls itself quote an equity vehicle offering institutional great access without the complexity of direct crypto ownership.
Unpack that for us.
Yeah, So, I think one of the guiding principles when we thought about how to how to build the company and really offer something to investors that they can't access
today in an equity vehicle. So we thought about the company and built it so that it gives almost one stop shop, if you will, to crypto exposure, but in a traditional equity So we're expecting to be eighty percent Bitcoin and then twenty percent in alternative assets that are really inspired by the digital asset stockpile and what we expect to see in that stock.
What are some of those alternatives.
So expecting Ethereum, Solana, Ada, and XRP. Those of those have been the tokens that have been named so far. We do expect other tokens to be added to the stockpile as that gets refined over the coming months.
What determines whether or not a digital currency is added to the stockpile.
That's a great question.
We aren't aware of the methodology that they're that they're using, or how they're thinking about what is going to be maintained in the stockpile. But the way we think about it, it's inspired by the digital asset stockpile, but we put our own mechanism and how we weight the assets that we hold.
Kind of makes sense because you're tracking something that you know, there's always been like insider buy strategies or and now with politicians there's like the you know, follow the what the politicians are buying. There's those ETFs, so as we're reminded all the time, there is an ETF for everything.
Well, so you know, then we have to ask you the WLFI token, the presidential token, will that be added?
We are not hearing any rumblings that it's expected to be added to the stockpile. Certainly, the tokens that have been mentioned are the ones that have been been around a long time. They've got they're in the top twenty of tokens worldwide, they have significant free flow market cap, So unlikely that those newer tokens would be added to the stockpile at this point in time, although you.
Never know how far are you from the target of a billion dollar raise.
So we announced in combination with our business combination agreement back in July that we seven hundred and fifty million dollars in a pipe and then in this BAC trust there's two hundred and eighty seven point five million. So we are going to go through the process with the SEC to get to get final approval and then hopefully we'll be trading under our new ticker by by the
end of the year. How much of that is cash, so the funding happens at close it initially it'll it'll all be cash and then it gets converted right away. I put in air quotes into into digital assets. It won't be instantaneous, of course.
How do you make sense between the tokens that you think have legs and longevity or something. I don't know if that might.
Not so, I mean meme coins were kind of all the rage the last the past year. When we when we think about it, it's really what is the utility of the token, what's the ecosystem of developers that are building on chain, what's the what does the free float market cap look like? What's the ability to generate returns
on those tokens? Because we will be looking to generate revenue from the assets that we hold on our balance sheet, which is which is unique from from some of the other players in the space.
What's the profile of investors thus far, the mostly cryptonative funds.
That came into the pie.
Yeah, a mix of a mix of strategic, high networth cryptonative people that we commonly see in the space. As I think you guys know, I was the CEO of HT eight for a number of years.
It's a lot of a lot.
Of familiar faces around around the digital asset treasury.
Space that we should be aware of, so we did.
We did name a number of our strategic partners in the press release when we announced you might you mentioned Mike Novagrats Galaxy Digital key partner of ours. Yes, well, Mike was spent a lot of time on the Canadian Exchange and actually used used to be on the board of HUT eight prior to to my taking over as CEO. So lots of connective tissue. We worked with Galaxy when I was at HUT.
For for yield generation on bitcoin.
There are there are a great longtime partner and certainly a friend of the firm for sure.
Jimmy talk to us about the White House and the government and the government's plan to buy bitcoin or expectations that they would. How do you think do you think that's going to actually happen? How will they fund it? Like, how do you see that kind of rolling out?
Yeah, I mean they've been pretty clear that they want to find a way to do it in a in a budget neutral way. So far the bitcoin that they hold is through confiscation. I think we're not going to really get more clarity on their intentions around the strategic point bitcoin Reserve or the digital Asset stockpile until we get clarity through I think the focus really within the space and within Washingtonton is to get the Clarity Act passed, which really gives us the regulatory framework we need for
the for the alternative tokens. It's it's been clear for a while the bitcoin's treated as a commodity ethereum likely is as well, but for the rest of the space, we really need that Clarity Act to finalize the regulatority clarity for the space, for the space that Genius gave us for stable coins.
Which I with Jamie Leverton, she's CEO of Reserve one here in our Bloomberg Interactive Broker studio. Do you think we're in a moment in time because of this administration, and that another administration in three and a half years could change the environment for crypto.
Three and a half years in crypto is a very very long period of time. I was here during Genzo's regime. It was certainly a much much different environment, really really difficult for those of us operating in the space in the public markets to get things through the SEC. I think certainly a very very welcome turn of events for the industry with the progress that we're seeing at the federal level as well as across the regulatory space.
So are you saying that it could change or you think like the train has left the station in terms of crypto or could be in three and a half years, depending on who's in the White House and the composition of Congress, could things.
It's possible, But Genius went through properly bipartisan right Seventeen Democrats joined Republicans to get together Genius through. I think as an industry we've been very very careful to keep it by partisan and I think more and more Democrats are getting on board with just what this could really mean for the future of innovation for the United States, and and I hope it stays that way.
I hope the horse has has indeed left the barn.
Well on politics in DC, Wilbe Ross, the former Secretary of Commerce, is vice chair of the company, vice chairman of Reserve one. What is his involvement, what is his input?
Yeah, Wilbert.
Wilbert has been absolutely great. He's the anticipated vice chair. Obviously, nothing's official until until we get through approvals. He was formerly a skeptic of crypto and really I think seeing the regulatory framework change, getting getting clear clear UH policies, and then understanding of how this how this space can really.
Evolve in a way that's more more grown up.
And I think we've assembled a team that is UH that is unique in this space, a ton of public public company experience, Washington experience, Wall Street experience. We're probably one of the more seasoned management teams and board of directors. And I think that gave him comfort. He was really curious and wanted to learn and dive into the space and thought what we were building was was really really unique, and he was ready to join and go on the
journey with us. He's been incredibly incredibly supportive. We're very lucky to have him.
Is he owning more crypto as a result.
I'm certain that is the case.
So lay out the next six months, twelve months in this space. What are you kind of watching out for.
Yeah, I think I think we're all watching Washington really really carefully hopeful as an ecosystem that clarity gets done by the end of the year, and then I think we'll see the alternative digital assets have.
Their moment in the sun.
Really waiting for that, for that regulatory clarity, I think it'll bring a halo to that, to that segment of digital assets. And lots of lots of treasury companies have come out similar to Reserve one where the funding doesn't come to close and then we have to we have to buy the assets at that time. So a lot of pent up demands still in the crypto ecosystem that should prove favorable over the next three to six months.
One of the most read stories on the Bloomberg terminal is about Eric Trump's wealth soaring on a six hundred million dollar American bitcoin steak. We are going to hear from Eric Trump on Bloomberg TV in a few minutes. The article says that the company will says it will accumulate bitcoin using machinery in New York, Alberta, and Texas provided by another crypto company called HUT eight.
That is correct. Yeah, so HUT eight spun out.
They are big proprietary bitcoin mining operations to form what is now and officially trading today American bitcoin money.
When they say they're accumulating bitcoin that way, that means they're technically mining it.
Yeah, they're mining and hobbling, just like we were doing it HUT back in twenty twenty one.
How much of an opportunity is left there though, versus just going out and buying it on the open market.
Well, certainly when you have when you're a low cost operator like HUT eight are now American bitcoin mining, you're able to put bitcoin in balance, you will below the cost of acquiring and.
You're on tract Republic.
So we are pending SEC approval and then we would list on the NASDAC through the dsback process.
And that expecting still to happen in the fourth quarter of this Shit's right, Yeah right, good stuff. Stay in touch, Thank you, Yeah, always good to be here. Really appreciate it and thanks. Jamie Leverton, she's CEO of Reserved One, joining us here in our Bloomberg Interactive Brokers Studio.
Stay with us.
More from Bloomberg Business Week Daily coming up after this.
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Folks.
We're going to kind of stay with our major backdrop and go kind of from the economy to what this all means for the financial market backdrop. We've got a great guest. We want to get into how the data, the White House, the geopolitics continue to shape the investment environment, and we do have a good voice on that. Jason Granite is with us Chief Investment Officer b and Y here in studio. Great to be with you.
How are you, Oh, Great to be with you since last time I saw you. Hope you enjoyed your summer.
I've had good summer. I can't believe it's September. I'm kind of bracing for what September might bring.
Yeah, back to school has kind of hit me over the head as well.
Exactly for the first time, I don't have somebody going back to school in a while. Tell me how you're thinking, because I go back to when we were together in June at Inside b and Y Inside twenty twenty five. You and I spoke up on the stage after Kelly and Conway's senior counselor to the President, and we talked a lot about presidential policies and what it means for
the investment environment. What's changed in you know, since early June to now in terms of the investment environment and how presidential policies backing it, has it gotten more certain less uncertain?
So, first of all, a lot has changed and nothing has changed all at the same time. Right, we still have a very fast paced, fluid policy environment where it feels like every day or every few hours, there's some other news to digest and process and what that means for markets. On the flip side, we have a lot more certainty because a lot of tales and a lot of weird outcomes have been taken out off the table.
And so one thing that's amazing to me is the twenty weeks leading up to right before Labor Day was the single biggest drop in the Vicks ever over twenty week period. So you go back twenty weeks from the early spring through the end of the summer, and to think about all the things that happened to have the greatest drop in volatility over that period is kind of amazing.
That's an amazing good amazing bank completely always makes me a little nervous.
Yes, but we've also seen rec at highs in assets. You've seen some other things. Now, one big trend has taken hold on the curve, and that's the curve's gotten much steeper in the month of August alone, two ten's we went from forty to sixty. You know, that's a pretty that's a proper move over the course of a month, and so you have steeple curves. I heard you just discussing with your economist here, obviously because we're expecting he's
in cycled to start here in the US. I think, to me, it's more about pace of what's going to happen than if it will happen. But that's been those have been some of the biggest changes in the operating environment from the beginning of the summer.
I was surprised that you didn't say the so called Big Beautiful Bill being signed into law, because that was a question in June that a lot of people had whether or not the President would get that past the finish line, and he did, signing into law in the early part of July. Does that remove uncertainty from the investing environment.
Well, it definitely removed uncertainty because it took some of the debt ceiling and some of the treasury market kind of tails off the table. But actually, quite frankly, when the when the one Big Beautiful Bill was signed, there were lots of compromises made. If you know, it feels like ages ago now, but some compromises made over the last few weeks, and actually there's more. It looked more
like the ecosystem before than after. So while the uncertainty of if will it get done, what will happen was cleared, you know, and we took some debt ceiling things off the table. And I think that's definitely one of the things that's contributed to this broader drop in volatility, is that these things have just been cleared from the environment.
Do you see a slowdown in the economy, do you see weakness and growth? Do you see weakness in labor.
So I don't see a lot of it. So for example, GDP second quarters revised up. You know three point three is not something that my economics features would tell me to get nervous about. The labor market. Clearly, Chair Pal communicated some uncertainty there. But you know, as I, as I joke with the team, if you were in an alien studying economics and landed and looked at the data and what it looked like, you wouldn't necessarily see a lot of weakness. Today's Jolts figures from this morning showed
a small but that's a noisy time series. You know, that's not exactly the most linear time series to look at over the course of time. So you know, while we might be starting to see some of it, you know, to say I see weakness would not be you know where I'm at.
So what struck me in early June speaking with Kelly and Conway first and then talking with you, But it seemed overwhelming to me that the audience was like, it's time for a rate cut, and I remember even kind of I feel like cheering when it was mentioned. But from what you're saying that things are strong enough that maybe we don't need a rate cut. What's what's your you know, informed view on what the FED needs to do right now?
I appreciate being informed.
Fuck, so a few things.
One is I have sympathy with the view that Paulson more maybe tight than not. And so if you want to look at it from a perspective of all right, we can take some rates out to get closer to or more neutral stance, I like, I'm neither here nor there.
Like I have.
Sympathy with that view. Look, we still have inflation that is on the stickier side. I think the trend has started to trend up, not continue the trend down. Core is still pushing three not two, which are our friends at the FED would prefer. You know, the unemployment story and the labor story. Headline seems to be holding up fine. As I mentioned, three point three percent growth is not a story, but you know so to me, I wouldn't be in the most rush to take rates down so fast.
And by the way, sorry, Tim, the market here is telling you that we're not going to get to that different of a place one year. One year is still around three percent. It's been this two ninety to three ten. Even with all these gyrations and moves where we're going to land has not really changed out on the horizon, and so I think that makes sense.
Jason on the labor market, I want to hone in on this and talk a little bit about immigration and immigration policy and the actual effects of immigration policy, the crackdown on illegal immigration and in your view, what that is or could do to the economy, and also the crackdown on necessarily legal immigration. But a decline and interest of people who are not in the United States coming to work in the United States, as we've seen over the last few months.
What does that do to the economy.
It's two things I'm thinking about from that perspective. Number One, because you're changing the denominator here, maybe the amount of monthly job ads is lower than previously expected.
We've we've heard this a lot from.
Yeah, and so if people are expecting over one hundred k, if we get something closer to what's expected here this Friday, sixty k, that might not be a degradation in the labor as much as kind of the hiss your old time series might tell you should look at. That's number one.
The second is that the expectation of this would flow through somewhere on wage pressure, and so you know, with that show up in the inflation story we're seeing, you know, I don't know if it would show up so much in services, which which was a little bit higher this time. But you know, the inflation story is still like I said, sticky, but this is more on the core side, not necessarily on the labor side. But that's where I would watch to see if it really shows up.
You guys are such an important firm. You see so much in terms of money flows, investment flows. I don't know what is that. What is that telling you about kind of where we are, because I do think there's still some questions about what happens from here.
Yeah, So look, there's been there's been two themes that have been very obvious.
You know.
One you've seen in the markets.
You saw you know, the dollars down what ten percent? That's a line from the upper left of your paper to the bottom right of your paper, and that's been somewhat consistent, and the steeper curve has been somewhat consistent. Those are been two constant drumbeats, no matter what the headlines things are, over the many many months. Those two things have been in place. You know, one of the
things that we have seen in our data. People got very excited about the flows around the world in a but if you go back a year to last summer over a year, so we have an eyeflow product that the team there is wonderful. They do amazing analysis across
the data to see what happens. And what we saw was actually there were some our scored flows showed out from dollar assets going back to last summer and kind of you know, obviously ups and downs, but the trend and I'd say it's leveled off more recently and that now aligns with what we see in the TIC data that you're not seeing the big infos. So while we saw that trend.
Where's the money that we're coming back?
Not necessarily, but it's not flowing out. And I think that's that's what's showing up in markets.
I have to squeeze my producers getting made. But are you concerned about the independence of the feed? It was something that we talked about in early June. We talked about with Kelly and Conway just got about twenty five seconds.
Yeah, so look, I look at this about how the markets pricing and the market seeing that we're getting to three percent either before or after any of these things. So the market's saying we're going to get to a fair neutral or our star or neutral rate over a period of time. It might come faster or slower, but that's where we're headed. And you know, I think the market will tell you if there's more concern.
Okay, So good to see you guys, to see Yeah, Happy September Jason granted, Chief investment Officer b and Y.
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Well, earlier, we got to read on the US economy courtesy of the Fed Beige Book. In keeping with that, we have a guest who has a very informed view on what's going on in the US economy. His firm is over two and a half million square feet apart property assets all owned and operated by CARUSO, all capital coming from within. The assets include upscale retail, resort, office,
and residential properties across southern California. He and his firm have been investing in and developing property since nineteen eighty seven. He's a philanthropist, also the president of the LA Police Commission, was part of the board of Water end Power Commissioners out in LA and has been involved in politics, notably running as a candidate for LA mayor in twenty twenty two.
That's not all. He leads a nonprofit aimed at accelerating private sector involvement in the LA area's massive rebuilding effort after those wildfires earlier this year, is known as Steadfast to LA. A lot to get to with. Rick Caruso. He's founder and executive chairman of Caruso, as we said, the privately held real estate company. He joins us from LA. How are you.
I'm doing great. Thanks for having me on. How are you?
We're doing okay. Try to take in all the information that seems to come at us on NonStop. I'd love to if we may, Rick, start big and broad with you. The US economy. You have a great vantage point. How would you describe it right now?
I think it's still very robust.
To be honest, now, the data that I look at is obviously off of our properties and our properties are growing in terms of attendance on a double digit basis year over years, so that's very strong. Our sales per square foot are continuing to grow at a very strong pace, and we have a lot of demand for retail space. So retailers, the best in class retailers are growing. You take a look at a broader picture, I think there's a little bit of softness out there in some of
the categories. Luxury is not growing as much as it has. There's some luxury retailers that are suffering a bit. But I'm still pretty bullish on the consumer in the United States.
We should remind everybody the properties and the developments that you've done have really served at the higher end of the consumer. People even outside of the Los Angeles area would be familiar with the Grow for example, or perhaps Miramar in Moncito, just around Santa barb Uh, but the vast majority in the Southern California area. What about Southern California's economy, that economy that you focus on. What have you noticed in terms of changes in the last couple
of years. As we've heard the steady drumbeat of information about people leaving the region because of the regulatory environment, the cost pressures, what have you.
Well, I think you're right, and I think it's a challenge. So when you take a look at La City in particular La County, you do have a very over regulated, tough business environment, and it's very tough, especially on middle or small businesses to operate in the city because of the cost of operation. So you do have businesses leaving, and that's troubling because the backbone of our economy in Southern California are the small businesses.
So you know, one of the.
Things that we push for, I push for as just a business person and a member of this community, is to be more business friendly and to start deregulating so we can grow businesses in the Los Angeles region.
And I think as a state, we have a problem with that.
We have businesses leaving the state of California going to regions that are more business friendly, have less red tape, allow businesses to thrive on a much easier basis. So you know, hopefully the tide will change on that, but it's certainly an issue in Southern California and I think California in general.
Yet you remain rick, you have not moved to Arizona you have not moved businesses to Arizona, to Texas, to Florida, these areas of the country where people from California have been going as a result of regulatory easing. One could say, you will you stay in California.
Well, I'm bullish on California. I'm gonna stay in California. I believe in it. I think we should be leading the nation in California. I think we should be leading the nation in Los Angeles. And I also have a practical problem. You can't pick up large projects and move them. I can't pick up move it. So I have to remain engage, bullish, and hope we change the trajectory.
And I think we will. I really do.
I think people are at a point, certainly in the Los Angeles area, that they've realized that the path we're going down is not sustainable. We've got a budget in LA City that's a billion dollars out of budget. We have revenue decreases in La City because businesses have pulled back and left, and we don't have new capital and investment coming into La like we should. They're going into other regions. Even immediately outside of Los Angeles. You have
cities that are doing incredibly good jobs. The City of Glendale, the city of Culver City that are more business friendly, are safer, cleaner, more supportive of great neighborhoods, and they're attracting the business at the cost of LA City. So we've got to change that. But I remain optimistic the change is coming soon.
How are politics getting in the way of all of this? And I ask it, Rick, You've got Caliphnia, Governor Newsom and President Trump really of high stakes feuds over a bunch of issues, whether it's California's universities, their environment, redistricting excuse me, and other issues. I mean, talk to me about that. And whose side are you on in all of this?
Well, I'm on the honestly, I'm on the side of the people of LA and the people of California. Here's the problem that I have with the battle that's going on. We've got some really serious problems that need to be dealt with, crime, shortage of housing, homelessness, et cetera, the cost of living in California. Having an argument between the governor and the president, between the mayor and the president, a lot of name calling going on doesn't advance anybody's
cause to solving these problems. So what I hope is that we get past the rhetoric, figure out a way to sit down, find some common ground, and work together. Here in Los Angeles, we have three hundred thousand acres in Pacific Palisades, Malibu, and then also at an Alta Dina that was burned to the ground the size of two Manhattans. To put it in perspective for New Yorkers, we need federal help, we need federal funding, and we're
getting none of that. And I don't think as the bickering is going on and the name calling is going on, that serves any purpose in advancing the negotiations, of the discussions and getting federal help.
In Los Angeles, we're speaking with Rick Caruso, founder and executive chairman of Caruso, the privately held real estate company, on the federal aid, on the federal funding. Have you had conversations with President Trump or members of the Trump administration expressing the need in your view, for federal help for California in the wake of these disasters.
I've had those discussions now with the President directly, but I've had those discussions with intermediaries. I've certainly had that discussion with our governor, and we need to find a way to get those discussions at a higher level and
more productive. I know there's some talk Governor Scott or Senator Scott was out here in Los Angeles and talking about it, but it really is critical path because you have hundreds of thousands of people that have been displaced, You've got jobs that have been lost, you have a massive, massive rebuilding effort that's going to take tens and tens of billions of dollars in infrastructure.
So we need the federal help. It just has to happen. Well I should Yeah, No.
I hear you, and you've since the fires. I know, Tim, and I just kind of preparing for this. Listen to a lot of conversations you've had with various individuals about this in terms of what needs to be done. You know what's interesting is need more federal help in terms
of the rebuilding efforts. So then, how do you feel when President Trump illegally used federal troops in LA I mean, if you were mayor there, how would you respond to President Trump and his threats and use of troops like that's going on when obviously, as you say, there are efforts needed to do the re out.
Well, I've been very clear the federal troops coming into.
LA were wrong. Uh, and I don't I don't think it should have ever happened. I would have gone to court immediately did They finally did go to court.
As you know, the court ruled that.
It was an illegal use of those troops to come into the city of Los Angeles in this region. So it's not right to be doing that, and we don't need to be doing that. I mean that just this this power grab that's going on does not advance the cause for any It just doesn't. And the division between the politics is harmful to the residents of Los Angeles. We've got to find some common ground. We've got to
act like grown ups. We've got to put our differences aside as elected officials and figure out how to work together.
And so I.
Would hope that our elected officials find a way to drop the name calling, maybe get on a plane and get over to Washington and see if we can find and common ground to work together. We also have the Olympics coming here, so Los Angeles is going to be the world stage for the United States, and we need to be putting our best foot forward, and we're going to need to be making a lot of investments in order to do that, and again we need to have the help of the federal government to do that.
So Rick, I'm kind of waiting for the flood of my emails to come into my Bloomberg because I thin people are listening with saying, well, this is the kind of folk you know, individual you do want in politics. So what's your latest thinking on maybe running again for mayor or possibly governor of the state of California.
Well, I'm seriously looking at it, and I've got a team of people that are working on it, and I'll make a decision soon on that. And I'm looking at both paths and there's good opportunities in both paths. But now I'm just remaining focus on what we're doing at steadfast, making sure we're getting people back in their communities as quick as possible. Yesterday I spent the afternoon in Altadena. We were giving out grants for small bits businesses to
get reopened in Altadena. We're doing the same in Palisades and in Malibu. So those kind of efforts are incredibly important to me, because again, small businesses are critically important for jobs, and we're giving out about a million dollars in grants over the next couple of weeks. So that's what I'm going to stay focused on for now. Politics will come down the road fairly soon.
All right, we want to talk about some of those efforts you're doing in terms of the rebuild. I got to ask you, though, if you do run or make a decision, would it be for mayor or for governor.
I don't know yet. We're fine, We're going to find out. I'll let you know.
Okay, I'm going to hold you to it. I'm going to hold you to it.
Hey, Rick, I'm curious about just fire resilience in California, especially in the wake of Palace States. I'm from the Central Coast. I was glued to watch duty because of the Gifford fire just a couple of weeks ago. I mean, I spent you know, ten days just refreshing that thing, watching the.
Progress of that fire.
What is the right way for California onions to be ready for what has become just a part of daily life for a big portion of the year.
Well, we have to have very smart brush management, you know. One of the problems in the Palisades, we had forty years of brush that were not maintained by the state, the county or the city that was rocket fuel.
We have to have water.
I mean, it was an unbelievable circumstance that we had reservoirs that are empty. So the competency level at the government and being prepared is critically important. La City was not prepared for this fire. This fire, in my opinion, and I think in most people's opinion that have seen the facts, as this fire could have been prevented certainly significantly mitigated in terms of the damage.
And then we have.
To be encouraging people to build with non combustible materials. Unfortunately, the village that we built survived it, but it survived it because we were prepared to fight the fire. But equally important, we built it with non comb stable materials and so it was able to stain the fire around us. And we had a lot of smart people doing some things. So we can build better and smarter. But we also have to have better infrastructure. You know, the fire hydrants
need to work. They were not working in Los Angeles. The reservoirs need to be full, and this is an opportunity right now to rebuild Malibu, Pasadena, Alta, Dina and Palisades in a way for the next hundred years and to get the right infrastructure put in. It's an incredible
opportunity to create these communities for the future. And that's why we need to work with the federal government, get the right federal funding and get some smart leadership locally that builds it back properly so that we can with stain fires and other natural disasters in the future can be done.
The nonprofit you are leading, as we said, called Steadfast LA. You've got comp such as Netflix, Amazon, JP Morgan, Cha, CBRE Group, so many who are working to restore these communities. But you guys are looking at everything you're using AI. How long do you think it's going to take for the rebuild and ultimately are we talking about kind of the cities of the future in terms of the materials used and how it's done.
You know, I think it's going to take. There's going to be phases. I look at it.
What's going to be happening one year from now, three years from now, five years from now, one year from now. For example, the little downtown of the Palisades is going to get reopen. We're going to rebuild the park. Steadfast is leading the park rebuilding. Schools are getting back reopen and we're involved in supporting the school systems and getting reopen. Same and Altadena, Sam and Malibu. I think in three years you're going to see a lot of the homes
back and running. We have some really encouraging programs with an alliance of builders who are coming together to buy in bulk, be able to build less expensive, and so that's really important to do. And I think in five years we're going to be in pretty good shape getting these communities back on its feet. The biggest challenge we have, honestly is the lack of diligence, the lack of urgency
from the local governments to get permits issued. And we've got to speed that up in the red tape, both in the county and in La City so people can rebuild.
Hey, Rick, before we let you go, I want to talk a little bit about your family foundation that's been involved at this point for more than thirty years in Watts, the Crusoe Family Foundation, and it serves organizations a slew of organizations in the area and I'm just wondering. You know, the focus is in healthcare, it's on education at risk kids. I'm wondering why we need organizations to step in and fill the gap that isn't necessarily provided by other organizations.
Why do we need the Crusoe Family Foundation to do this? When will your work be done and you won't have to help bridge that gap.
Well, I don't think our work is ever going to be done, but I have to tell you something. It's one of the most rewarding parts of my life, and my wife's life, and my family's life that we can help kids that are at risk, living at or below the poverty line, and you bring opportunities to them and
the right education and the right support. We have kids that are living in some of the worst and toughest conditions in LA and they're now at Harvard, MIT, Georgetown, USC, UCLA and they're just excelling and doing it on their own because they have the right ecosystem around them and the right start and the right support. And a government alone can't do everything. It never has been able to.
You have to have philanthropy, and people need to give back and lean in and support churches and schools, and all these great organizations that we have out there, And what I would argue for is we need more people to be leaning in. We need more foundations to be giving back because the reward and the payoff is so great and huge, and it really does change these communities
because these kids are coming back and helping others. I just find it one of the greatest parts of my life is being involved in being able to see these kids just take off and do great things.
Well, we're going to end it on that optimistic note that makes us, I think all feel really super good. Rick, thank you so much, really appreciate your time and efforts, and we're going to mark our calendars to check back with you about maybe that political decision you may make very very soon. Rick Caruso, thank you so much. Be while founder executive chairman of Caruso joining us from LA.
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