Barbara Corcoran: NYC Already Coming Back

and wealthy and she sold it. Now she is a judge of Shark on ABC Shark Tank I believing executive producer of that program as well, and she's also got a webinar coming out with a T and T um to help small businesses I guess do better. Barbara, always a pleasure having on the program. Thank you so much for joining us. Talk to me first about this webinar. What are you doing? What are you doing with a T and T today? It's actually a webinar series and we started a good seven eight months ago. I guess

it's called Business Unusual. Its presented by a T and T business and it's intended to help the small business person just succeed more with what they're doing nine to five or small business really nine to nine every day of the week. And so we covered topics that we hear are most in demand, that people are most confused about, and we feel very proud that together we've been able to really push a lot of businesses ahead and give

them a lot of support. So, Barbara, you know, it's been obviously such an incredibly difficult time for all businesses, particularly small businesses, over the past eighteen months. What do you think right now is the key challenges that the delta variant? Is it getting labor? What's the primary focus now? Well, let me let me frame by saying, no, matter what the focus is now, and I think that there's three

pieces that are may be equally important. Of the one thing that strikes me more than any of the detail is that most business owners feel the worst is behind them. And that sounds kind of odd with all the talk about the delta variant, but the attitude of the Delta variant is so different. Initially with the pandemic. With the pandemic, nobody, no one had confidence. They didn't know what was ahead, they didn't know what it was around the corner and

they're scared to death and unable to make changes. But now every one of those entrepreneurs that survived and came through talk about the delta variant is we'll find a way. We'll find a way. And then on top of that, what is terrific now is that a lot of the regulations are being mandated by townships, by states one on one. But at least business people know what's expected of them, their rules to be played by, and that gives them

great peace of mind. But the biggest problem you named it on your list and I had to choose only one is finding the right employees. Everybody's competing for employees, and I don't think there's a single industry that doesn't complain about that day in and day out. But there is a way to skin that cat. And some of the best businesses are having no problem at all hiring people. So what is the way? I mean, you just have to pay more or are you looking the wrong way?

What's what's the answer? I think I think the number one thing is, uh, they're not People who are not winning in this regard are not creative. The creative people are thinking of lures. Creative wars, whether it be additional pay, which is not that common. Frankly, from what I could see, I think it's overplayed in the media as to how much more businesses are willing to pay. But they're helping to pay for education, for night courses, and more important

than that, they're giving flexibility to workers. I'm telling you, when I look at my top performing business is making the most money, their attitude for their employees is that they're working for the employee. That's not a bad place to start if they None of those guys or girls feel like bosses at all. They're trying to figure out what could I make you? What could I do for you to make you happier today? And the number one charm that can charm people to come work for you

and stay put is to give people flexibility. Because people have been spoiled, they need to be at home for a lot of reasons. They don't want to commit to commuting anymore. The attitude has changed, and the employer that's smart enough to give them exactly what they're looking for there is cleaning up. It's every It's true of every one of my top performing businesses. By the way, you mentioned commuting, um and I know you're I guess you're you're born in the Garden's date. But I think of

you as a quintessential New Yorker. What do you make of Manhattan right now? I was there last month walking up and down Lexington Avenue when I was shocked at how many of the really big box businesses have closed and are emptied out. Um, is Manhattan? Is this it? I mean, are people saying, you know, I've had enough of the big city and I'm out. You know, I've lived in Manhattan long enough to never go for that,

because I've never seen it happen. I've seen the claims along the way, O, this is it, this is it''re going to happen. This ain't gonna happen. But one thing I've learned about the city of New York City, it always comes back. It's just a question of when it's coming back and how strong it's coming back. And when it comes back, I'll tell you I learned another thing. It always comes back like three to one in time, bang bang bang bang bang, and you go, WHOA, what happened?

The city is already coming back when you walk down Madison Avenue. I'm sure I'm sure you saw, which I see. Roughly fifty percent of the stores are empty black windows. It's depressing, But I'm also seeing construction inside most of those stores from new entrepreneurs, less impressive stores that are making a go of it and getting their rent at half price. And that's what regurgitates the city, that's what

gets it back on its feet. Because if there's one thing that New York City does better than any of the city in the world, that reinvents itself, it has to. It's been forced to over the years, and it always rises to the price. So I don't see Manhattan as a problem everybody thinks it is. I think it's just like every other problem we had that was going to put away New York City that never really happened. I think it's just a matter of short time before everyone

acknowledges it. And in fact, even apartment prices are up. No one expected that even six months ago. Rental prices are Everybody said, you could get a deal, and you could you get off. Right now, it's about more expensive to live here already. Look how fast our city rebounds. It is the nature of the town. Yeah, So it's interesting, Barbara.

One of the things that I guess a lot of businesses big and small learned during the pandemic is the ability to really have a really viable digital presence, you know, whether it's ordering online or picking up at the store, that type of thing. For the small business operator, are they making the necessary investments? Do you think I'm gonna

tell you something that might surprise you. The necessary investments that small businesses have to make today to be vibrant in the on the digital platform are next to nothing. The costs of these improvements have come down so dramatically. There's so many options, there's so much competition in that space that they've actually been empowered to make changes very radically and quickly, simply because there are so many options

is out there. One of the best things I have personally learned because I don't ever think of technology is my strong suit. I think of people is what I do well with right, But from running all these business Unusual webinar series presented by a T and T business, I have learned that the name of the game is technology. It used to be an extra You've got to be on the digital space, no matter what kind of space you're Now, no, I feel very differently it starts with digital.

And when I see all the new businesses opening, and in fact, when I'm on Shark Tank, what I'm listening to the pitch is the only thing I'm investing is the people that understand the digital space. I really have changed my whole attitude because only covid itself could have brought about the radical speed that we've encountered lately. It should have taken five years, but it took us dime month. That's it. It's changed. Is all about digital. It's all

about digital. It's absolutely been compressed and we hear that from a lot of guests as well. Barbara, great having you on the program. Thank you so much for joining us. Barbara Corkran as she was saying, she's got a webinar series of a T and T business. Unusual with Barbara Corkran, it's geared towards um well small businesses, stores, marketplaces, restaurants, online merchants. I guess online is everything now and you can watch it online. Her website is eight eight eight

Barbara dot com, Triple eight Barbara dot Com. Always great to talk to, the founder of the Corkoran Group. This is Bloomberg. Well, we've got some big spending bills winding their way through Congress. Financial markets certainly paying attention. They're including UH, especially the fixed income markets in municipal bond markets as well. Michael Jesus, chief US public policy and municipal strategist at Morgan Stanley joins us. Michael, thanks so

much for taking the time here. Again, a lot of spending bills getting through Congress looks like they're making some progress, at least in the House and on the Democratic side from your perspective, UM, as a public policy I mean, municipal strategists, what are the issues you're focusing on. Yeah, first and foremost, it is going to be the depths of impact, because that's what we think is going to be the mean feed through to the economic outlook and

to the level of treasury yield. UH. In our view, this is tracking towards a total spending number spread over ten years that is approaching four trillion dollars. But then the next question, I think this becomes particularly important given that some procedural hurdles were just clear. The next question is what types of taxes or Democrats gonna raise to

offset that spending? And then what's the remaining deficit. Our view is that could probably get to two to two and a half trillion dollars of new revenue to offset this. That still means you're looking at a trillion and a half over ten years of new deficits, and it's probably going to be pretty front loaded given how these spending bills have worked out in the past. So maybe it

does much as a trillion dollars over five years. All of that, when you mix it in with our expect station that the Fed is gonna start talking taper here, UM, is enough to push yield higher into your end and that's probably gonna matter a lot more than you That's a that's a big statement considering what we've seen thus far. UM, there's been a lot that's enough to push yield higher and it still hasn't done it yet. Yeah, I think

that's fair. I think that's fair. Um. But we've got a confluence of events here that we see coming together. There's this legislative package, Uh, there's the FED taper. Also, I think there's improvement in the trajectory of the delta Varan covid Are. Our biotech team which is modeling this for us UM thinks that we're basically at a plateau there. You've also got boosters coming out over the course of the fall, uh, and so all of that should continue

to allow consumption, activity, travel activity, etcetera. To pick up that confluence of events to us can be pretty powerful to push field higher, Michael. As we think about funding all these pro rams, are we going to see a revival of the Build America bonds uh that we had before? Yeah, we think so. There's obviously another important interaction with the muni market. UH. This is a program that obviously state governments generally wants, and the Democrats in Congress have supported,

in particular Democrats in the House Ways Means Committee. Now, originally a revival of this program was supposed to be in the bipartisan bill. It seems to have been left out of that bill. But this three and a half trillion dollar budget reconciliation bill, we think we'll have plenty of space to include that. UM. That's important because what it does for the muni market over time is will probably shift more of the issuance from tax exempt the

taxable market. That's probably good news for investors over the long run because it creates some scarcity value. But we probably take a long time before that market fully developed. Do you see any what's the multiplier when when the general government spends um, you know, a hundred dollars, how

much does that boost growth in terms of GDP? Yeah, Well, obviously depends on how they're spending that hundred dollars um our economists, and I think the consensus amongst economists is that hard infrastructure dollar spending tends to have the highest multiplier effect over the long run. It creates the most potential GDP. Uh, you're sort of your next biggest bang for your bucket is if you are taking dollars and

giving them to higher marginal propensity to consume cohorts. Right, So a lot of the spending in this bill is directed uh in ways that will impact middle and lower income households UM. And then the taxes are also skewed towards higher income individuals and corporations, which, given their current wealth status, probably is a lower marginal inpency to consume. And so the net effect here plus the depths to affect our economists will probably view very favorably. Hey, Michael,

appy got you here. I love to get your thoughts on the taxable municipal bond market has been really a fast growing market and a good performing market as well. Yeah, so there is in the intaxable markets generally, right, so not just the muni market, but the corporate bond market. There one pocket of the market that doesn't have a lot of supply is highly rated long duration taper, something

that insurance companies need, banks, me etcetera. And muni bond market can easily fill that demand, and it has been increasingly over the past couple of years because that demand pocket is there, so you brought to build America bond program earlier. This is one of the reasons that this type of program could create a relatively attractive source of capital for municipalities because they can meet that demand that's currently not being met by the corporate bond market by

and large. All Right, Michael, always great to get some time with you. Thanks so much for joining us. Michael zesus their chief US public policy and muni strategist at Morgan Stanley UM. And this is, you know, a particularly important issue to discuss as we saw and Anti Pelosi getting getting the the Reconciliation bill UM or at least plans for it through the House yesterday. Now that has to go to the Senate and back to the House. Plus we have to deal with the fifty slash one

point two trillion dollar bill. In any case, we could be looking at four to five trillion dollars of spending from the federal government. I guess about four trillion in additional spending. Matt. You know, when I was a sell side analystson going out to see clients on the West Coast, my boss wouldn't even pay for a ticket unless I got a meeting with TCW and Capitol Group. Those were the lockdown meetings in Los Angeles. Uh, important folks to

chat with. Stephen Kane, He's a group managing director and portfolio manager at t c W. Steve, thanks so much for joining us here. We've got um jackson Hole coming up here. I guess really on Fridays, the big day, what are you looking for? What do you expect? What do you hope not to hear? Well? Uh, good morning and uh and thanks for having me. Um. Yeah. In terms of Jackson Hole, I really wish I could give you and the listeners some exciting prognostication or some off

consensus view. But I really think the consensus, which is a fairly benign one UH is probably right, which is that we're not going to get much from Chairman Powell. He's he's likely to recognize that there's been some improvement in the labor market, and he's probably going to balance that with some negative concerns about the delta virus and

downside risks. UM. But the bottom line is he's most likely going to stay away from any specifics on taper um, and that's mainly because he wants to maintain flexibility and really not to front run the f O m C, which is really the standard process US by which they make formal pronouncements on on on paper and that type

of thing. So as much as we'd like to hear him get into the details of what substantial further progress might mean or something along those lines, I think those types of uh uh evolutions in the in the FED will will occur at the September meeting most likely. What you know, it's I don't see how they can ignore what's going on in the housing market. It's just unbelievable, um, especially for younger you know, first time homebuyers, good luck. Unless you have the cash on hand, you're just not

going to get it. Um. How does the FED contribute

to that with its merches, with its mortgage bond purchases. Yeah, I don't think the Fed is all that concerned, although they arguably should be about the conditions in the housing market actually the housing you know, their goal is to provide affordable credit UM and assist in that way through the UH purchase of agency mortgages, which are doing to the tune of forty billion a month, so with UH you know, thirty year mortgage rates below three um uh,

even though housing prices are high. I think they view their job is controlling the price of credit and not not necessarily the price of the asset UM. So it's a little bit beyond their control, at least that's probably how they're viewing it, all right, Stephen, Looking at the Bloomberg terminal, here, I see the tenure at yielding one point three. It's it's higher than it had been over the last week or so, but still in that range

that we've seen for such a long time. Here Where don't you and the good folks at TCW look for yield, look for total return in this kind of market, it's a challenge, but it bluntly we're we're a value investor here, which means we tend to buy things as they get cheaper, and there's not a whole lot that is cheap right now.

You've got, as you've just pointed, a very low treasury yields um, and beyond that it's even worse as you look to the UH, the risk markets, the corporate market, in the high yeld market, emerging market, UH spreads and risk premium are near all time tight. So the general theme for us is to to begin, or we've already

been doing it, to rain in risk budgets. And what that means is carry our durations or interest rate risk short of benchmarks or carry um short um with the expectations rates are going to rise, pull back on our credit beta, which means we've been trimming UH corporate exposure, although we do see idiosyncratically some some opportunities and specific credits that are improving and deleveraging, but generally speaking we

have less exposure than the market. Some of the areas we actually find a little bit of value in is the agency mortgage back securities market. That's the Ginny Fanny Freddie market that the FED is actively supporting through UH asset purchases and that those purchases are creating a bit of a distortion in the t b A or forward delivery market that is giving additional carry to those securities

in the market. So you're getting spreads beyond what you get in corporate bonds for a zero credit risk asset and one that has very good liquidity. So I would highlight that it's hard to get super excited about something yielding you know, about one and a half percent, but nonetheless it's still fairly attractive on a risk adjusted basis.

And then I would say, beyond that, the high quality area of the securitized market, um, non agency mortgages, some areas of the commercial mortgage backed securities market clos are actually an area of the market, uh, particularly that kind of triple A double A area that look reasonably appealing when compared to un secure corporate credit. Just got like twenty seconds left. But um, you agree then that rates

are going to rise when and how high? Yeah, I think our view is the market probably has it right at the front end of the curve, meaning you know, when you look at two years at a at a whopping twenty four basis points, or even the five year at a basis points that implies a very slow gradual pace of of FED hikes starting maybe late next year. Where we think the risk is out the curve that

one thirty ten year or sub two thirty year. We think it's the FED tapers, and as the market begins to anticipate uh normalization of short term rates, you're going to get higher rates out the curve. So we do think you'll get tenure rates above two percent in the future. Hey, Steven, thanks so much for joining us. We really appreciate your thoughts on insight. Stephen Kane, Group Managing Director, Pultorlio manager

at TCW, Let's bring in Steve quick right now. He is the CEO of Unit Space to talk to us about UM, the future of work, how the office may change, how the delta variant is impacting UM. The r t O plans to use the popular new acronym for return to Office. Steve, thanks very much for joining us UM. Everything seems to be there's a lot of deja vou going on right now compared to what we had at the end of last summer. Is this the final year you think? I certainly hope, So thanks for having me.

First of all, Yeah, I here's what I think it's going to happen as it relates. I think it is uh the final year. I think realistically, you know, we could be seeing you know, and I'm no epidemiologists, but we could be you know, we could be seeing some rolling COVID variants you know, over the next several years. But I think we've we've got the mechanisms is to adapt to that hopefully alright. So you know, I think

it's interesting Steve. You know, back in September you said that the office space would not die per se, maybe just be smaller. I think you said maybe smaller. It's been almost a year. Is that still kind of where you think things are going to go here in US? Yeah,

it's it's exactly what we're seeing. I guess. We just finished a survey with more of a hundred of Hunter Global companies and it still looks like about is sort of the sweet spot of range where people are looking to reduce their their footprint, UM kind of in this

you know, this new normal. And then and then what they're doing is, you know, they're reconfiguring, um, not just their workplace but also some of their HR standards and things like that to to adjust to as you said, the the r T O the industry jargon here, because if we get back to r T O um, and so that's what we're still seeing. Um. You know, I think the thing we're seeing in the US is delta variant has has delayed that r T O by you know,

six nine days. And you've seen all those those reports to where you know, there was a return to office by September one, October one, and now people are saying, let's let's look further out in the fall. Um, so that's been that's been the return to the return to office. Um. Do a land hasn't changed. The timing has has has changed? Given the delta Bearriet. You know, when I was a kid, my dad um had his own office, still has his

own office. It was great, his own whole room. You could keep a few toys in there for the kid's visits. He had a stereo and even a bar in the corner. That's no longer, I mean that's been for twenty years. Not the way it works, right. We all have cubicles that are slightly glorified, but not really. Is it going to get even worse going forward? Or we're gonna be hot desking in a bullpen from now on, I would Yeah, when you're saying that, it reminds me a madman or something. Um, yeah,

so yeah, but how awesome was that? By the way that that that that was you know, enough inspiration to get up, have him get up and going to work at four thirty every day. You don't look forward to going to a hot desk, do you? Yeah? No, I so I said, I will tell you, I think it's

gonna get better. So we've we've been on this evolution of the workplace for you know, like you said, you know, arguably a couple of decades, but at least you know, I've seen it upfront and close for the last decade as we've moved to the open plan, less dedicated offices you know, etcetera, etcetera. And so we've all seen that what COVID has done is accelerated that evolution by you know, we've taken ten years or further revolution and we can

press in an eighteen months. And so you know, I think, what's you're you know, because what was preventing sort of that true flexible working it was it was sometimes it was concerned about technology bandwidth and kind of figured that out in the last eighteen months that was eight people still couldn't get their head around well, I need to see Some people still had the mentality of I had to see my employees to make sure they're doing the work, and I think I was sort of people that were

last holdouts of managing employees that way have sort of had to adapt. So we've broken down those barriers and now now we're as we get back to work, it's going to be about flexibility or omni working is one of my friends likes to call it. And so I don't think you're actually gonna be in two many cubicles

crammed in doing heads down to work. The purpose the office is going to be it's kind of you do that, do that work wherever you want to do that work, whether that's at home or the train or the Starbucks or wherever. But when you do come to the office, it's going to be more and more about getting to

go with your colleagues, training sessions, collaboration. Mentoring has come up a lot in our surveys where some of the younger players aren't getting the mentoring like they do when you're sort of in the office or pulled into a meeting and then have a debrief, and so the purpose of the office is going to be more around those elements versus sort of let's let's get even closer and heads down and crank out emails together. So I actually think that that sort of Delbert approach is actually going

to get better or not worse. It's my view. All right, Steve, thank you so much for joining us. We really appreciate it's a fascinating discussion that I think a lot of

companies are having with their employees here. Um as we get back and Labor Day seems to be one of those kind of days where our time periods where I think some companies are gonna want to try to get a little bit more uh, part of a getting people back in your office, Steve Quick, CEO of unice Space, Let's get back to markets and focus in on what's going on with Dave Harden. He's the CEO and chief

investment officer Summit Global Investments. They have one point eight billion dollars of assets under management that assault Lake City and Dave um Let's start with just the fact that even though we're not moving a lot today, we keep having these new records. I think fifty new record highs this year, even as Dave Wilson shows us, the spread between investment grade and high yield debt um and treasuries gets wider and wider. What what are we? What are

we missing? Who help? And it's hard, it's hard to say we're missing anything, But I tell you, it sure feels like a right. I appreciate you have me on, Matt and Paul. You know, I would say that these new highs were on pace for seventy seven if it continues, and that ties with record set in nifty four, and so definitely interesting that we're continuing to hit new hives. But can you really doubt it? We have a supported FED, we have a Congress that's writing bills like you know,

they have a blank check. We have so much stimulus going into the market right now it's hard not to be short term positive. So I guess one of the issues that investors are working through, Dave is kind of where do I want to be in this market? Do I want to stay with those growth stocks, the apples, the amazons, the apples that have worked so well for me for so long and have been the mainstay of

my IRA and my portfolio. Or do I want to follow this rotation trade, which again has been a great trade, you know in terms of the cyclicles and maybe the small caps and things like that. How do you think about that? Well, I think if you want to brag about your portfolio by Christmas, then maybe staying with growth is where you want to be, uh, you know, because it's hard to not favor growth short term, but long

term I would favor more value. And if you can find that very big quality company that also still has value in it and they're out there, that's where I would start to rotate. It's it's better to be early to the trade a little bit than late. So you know, as we look out, the growth is going to be hard, inflation is coming in hotter than expectator expat expected, and we have the possibility of taking the punch bowl away

from the FED and the quantitative easing. So if you look out longer term, I think it's the right time for people to start thinking about, because they have not thought about it, whatsoever is risk and how to manage risk and how to look at the potential dry powder or the risk in their portfolio. And that's what we do really well at st I is we look at the potential risk and we say, how do we put prudently and properly manage your portfolio. These un teamed risk

are going to hurt people in the future. All right, so what do you, um, what do you see? It's on it happening post Jackson Hole. You said the FED is going to take away the punch bowl. Obviously they're gonna at some point they have to scale back purchases. Do they ever raise rates? I think they. I think they're going to have to. I don't think it's going

to come right out after Jackson Hole. Um, it's it's just too great of a place there if you've ever been there, um to take to kind of make you relax, And I think they're pretty relaxed. But the fact is is that we have delta, this COVID variant that's really hitting the workforce productivity, and so even if it doesn't do more damage in the sense of of deaths or severe illness, it's stopping people from being productive. And that's what seems to be the case of inflation, and it's

causing inflation. We've got these supply chains problems. So the real reality is is that I think that it's gonna inflation is gonna be hotter. It's gonna put pressure on the FED, and they're gonna have to taper a little bit sooner than what I mean, not tap, yeah, stop the quantitative evening a little bit sooner than what expectations are currently out there. So I do see interest rates rising. I do see a pressure on the FED to act. So, Dave,

where's your asset allocation? Now, you know, equities, credit, that type of thing. You know, from an assallocation standpoint, it's hard to say, hey, I'm really long bonds right now with that, you know what with the ten year under one and a half percent, right, So this is a really difficult thing when you have a yield of like exnmobile at six point two percent and uh, you know, very low, shorter interest and marginal risk. So you can get yield in a number of different ways if it's

just yield. But from an asset allocation standpoint, there's other things to take into consideration, and that is protection. So we do see, for you know, the kind of the non aggressive investors that are more conservative in their portfolios to have some allocation to credit, to have some allocation into this bond market um because it does offer protection and so you know there is some uh legitimacy to that that for decades has has has done just that

offer protection. All right, Dave, thanks so much for joining us. To really appreciate you taking the time here. Dave Harden, CEO and Chief Investment Officer of Summit Global Investments. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. On Fall Sweeney, I'm on Twitter at

pt Sweeney Before the podcast. You can always catch us worldwide at Bloomberg Radio