Mayoral Candidate Eric Adams On The Future Of NYC

got a day job too, he's Brooklyn Borough President. He joins us here in studio. Mr Adams, thank you so much for joining us. We really appreciate you taking the time. Um, you know, you still have a general election to go, but let's make the assumption that you per that you win that election. What is job one for you? And you're a new administration of public safety? We we have to be safe. I stated this over and over again.

The prerequisite to prosperities, public safety and justice. I must allow New Yorkers to know that they're going to be safe on our their subway system when they returned back to their offices. Our individuals that go to restaurants are not going to be robbed like we saw a few days ago while they sit down and have dinner. This city must be safe for tourism to return and for businesses to grow and thrive. How do we do that

or how does a city do that? Is it simply numbers more cops, better train cops, better deployment of cops. How do we do that? It's a combination. Uh, the bad guys are watching the good people of this city squabble with each other over technical aspects and how we police. So I'm going to hit reset with my police officers and let them know I have their backs. But I'm also going to send aloud message that if you don't respect the nobility of public protection, you can't serve in

my agency. And We're going to reintroduce ourselves to the men and women who are protecting us. Yeah, I saw. I was back in New York, um where I'm from, actually went to PS for kindergarten. I was back in New York in July and Um I was hanging out on Street and Lex waiting for an uber. I saw a group of people riding stolen motorcycles past a few squad cars. Not none of the police moved a finger. I turned around. Somebody was selling drugs right behind me.

The police clearly could see it, not doing anything about it. How do you motivate a police force that is just seemingly given up, and that's true. You motivate them by letting them know that one of their own will be moving into the position of ensuring that they get to support they need to get there to do their jobs.

And you're right, I've witnessed it as well, just a hands off approach to dealing with those quality of life issues, and that's not acceptable a city as diverse and as large as New York is in parative that we have a set of standards and how do we expect to treat our neighbors. I've watched a group of people on a t v s driving up to down the sidewalk of by Fifth Avenue in Manhattan, New Prospect in Central Park. We can't have a city of disorder. We can do

it without heavy handedness. But at the same time, we need to create a standard of expectations in our city. Alright, some stratums you when you came into the Bloomberg in the Bloomberg headquarters here on Election toon Avenue and fifty eight Street. You might have seen that in this block between fifty eight and fifty nine Street on Electionington, every storefront was vacant and pre pandemic. They were thriving with some seemingly big box stores as well as some local retailers.

How do we bring business back to How do we reopen New York City? How do we bring business back to New York City? One thing I have been doing for the last two and a half three years, having focused with business leaders and finding out how do we do just that? And I was alarmed to discover how too expensive, to bureaucratic, and too difficult it is to do business in the empire state. We were a city

where we build empires. But cities are made up of agencies, and if those agencies are in the way of building empires, we would never be able to allow it to happen. This is a city that is vibrating with ten million dreams. Uh, those dreams are about to wake up, and they're going to wake up because I'm going to create a city that is open for business, where we're going to you utilize our agencies and our manpower to make sure businesses are here. We're going to attract them with incentives. We're

going to encourage them to developing out of boroughs. We're going to build out the pipeline of talent so that we can filled the jobs that are available. Right now, no one wants to do business in this city because we have been defined as a business enemy city instead of a business friendly city. It is too expensive and I think, uh for residents as well. I say this as a free market capitalist, and I'm sure that almost all of our listeners and most of our clients also

believe in free markets. On the other hand, if you're you know, a family of three or four or five, and you're working middle class job in New York, there's no way you can afford an apartment big enough for the family. How do you do? How do you deal with that? As mayor? Well, clearly we have decimated the middle class in this city. There are a lot of incentives for low income and high income, but we forgot the backbone of our city. And I believe the backbone

is that teacher and accountant. Uh that backbone. Believe it in odd is even the fast food workers. We were successfully getting them to receive a fifteen dollar minimum wage. Uh, you have a husband and wife. They are moved into an area where the city is unaffordable. And so we must reinvest in the Mitchell Llama style programs that we had, in the officer teacher next door programs that we had where we incentivized people to be able to not only

rent approaches. And then we should look at our affordable housing program and look at some form of affordable housing with ownership in that affordable housing. How do we carry it out so people can start owning and building equity in the city that they love. So we must ensure the areas that government can control, such as rent. We must ensure that we have a cross section based on income bands of low income, middle income New Yorker is so that they can stay in the city that they love. Uh.

Mr Adams talked to us about infrastructure. We've um, you know, the subways and just general infrastructure in this city challenge. We just have the recent um, you know, the remnants from the Hurricane Ida, you know, putting a crimp into the subway system for about twenty four hours. How do you think about infrastructure in this city? Great question of you know, we need to be honest with ourselves. We screwed up the planet and we didn't do it in one day. We did it over years of improper treating

of the planet. So we're not going to fix this instantly. We must have an intervention plan and a prevention plan, prevention other long term things. Every new sewer project we should build it with a one hundred year outlook of canna withstand the water levels and the changes in our environment. We need to look at how do we learn how to live with water UH, And there's some amazing programs that are taking place globally. I'm getting ready to take a trip to the Netherlands so I could look at

some of the things that they're doing. But then we need intervention right now. Mother Nature is not going to wait for us to build out our sewer systems, so we need to have early warning systems, identified those basement apartments and give people the proper escape routes, investing legalizing

some of the units. UH build large retaining pools of We could use some of our open spaces to build large retaining pools to deal with water spill off, spill off and to hold the water into we did with the emergency situation of something they're doing in Hoboken right now where they're building basketball courts over retaining pools. So we have to think differently and embrace the concept that are coming from the experts who we have been meeting with.

But there must be a two pronged attack, both intervention and prevention. Have you got any um, you know, think differently solutions to the congestion, the traffic, the double parking. You know, it's always been an issue with New York, but cities around the world are coming up with other ideas and ways to fight it. I'm a congestion pricing guy. I believe in it. I believe the concept is important. Is similar to what London has done many years ago. I think it's important that we do so. But I

also believe we need to incentivize truck deliveries. A lot of our congestion is coming from deliveries. We need to start delivering at night, and I think if we incentivize that, we can get a lot of the deliveries done. Uh. And then we need to use alternative methods of transportation. UH. That's everything from the scooters, uh, the you know, the

mopas I've visited many countries bike use. When I'm in China or in other parts of the globe, people are using non cars to get around for those who can do so. And not only does it encourage a greater level of mobility diversity, but it does it also deals with the congestion because this congestion is not sustainable in the city. Too much is lose, is lost doing business in the city because you're stuck in traffic somewhere. And then we must create a first rate transportation system. I'm

gonna train user, I have a metro card. We create a safe, first rate transportation system, people will utilize our subways and buses. Inequality. As this city builds back, reopens, how do we ensure it reopens and builds back for everyone. It's so true. That is a real problem we have in the city. Uh, the inequalities that we're witnessing is leading to the lack of prosperity for so many New Yorkers and it's just on so many levels. We must do so, and it's not going to be done in

the first four years. What I must do, if I'm fortunate enough to become the mayor, is to build the foundation that other mayors can build on. Uh. The inequalities is to go to the source. Number one education. We need to deal with children with special needs and learning disability tease. One study showed that over thirty of our prison population a place like uh like Texas, we're dyslexic. We don't just do dyslexia screening in our city. UM

learning disabilities. Uh, you see, fifty five percent of the inmates a rich is a dealing with learning disabilities. So one way of ending inequalities is to focus on education so people can have the opportunities they deserved. Eric Adams, thank you so much for joining us. We really appreciate your time. Eric Adams, New York City Mayoral. Kennedy in Brooklyn Borough President joining us here in our Bloomberg Interactive

Broker studio. I want to bring in Megan Horneman, director of portfolio Strategy Advertence Capital Advisors, about two point six billion dollars in assets under management, located in Hunt Valley, Maryland, just outside the Charms City of Baltimore. Megan, thanks so

much for joining us here. You know, let's turn to earnings here, evaluation and some of the old time fundamental stuff here we've had some really good earnings over the past several quarters, but some economic concerns you know, from the delta variant and so on, or maybe causing some people to question some of the earnings essments out there for ACQUES three and four. How do you think about

that in potential risk for this market. Yes, I think we we've likely seen that peak in the earnings growth rate. We probably saw that this year, and now there's just a little bit more uncertainty because people had come into the third quarter with such heightened expectations for economic growth and now a lot of the data has been mixed. I mean you can see that even just by looking at the City Group Economic Surprise Index that's deeply in

negative territory. Um. I know, we got some some positive news from the consumer, but it is on the backup some downward revisions to the prior month. And then as as mentioned, the consumer confidence is still relatively weak. So I think you're going to see some estimates coming down, not just from the earnings perspective, but also from the

economic growth perspective as well. We have our own economic Surprise Index as L and a really cool page that you can pull it up with e C s U. Paul just in case you're on right now is the command and obviously, UM it matches up with Megan with the city surprise in Dex we've seen you can you can if you click on the chart on e C S you go, you can blow up the surprise index. Um, look look at or zoom into what we've seen happen over the last I don't know, UM, I guess six months.

It hit a high in April May and has come down now into pretty extreme negative territory. Um does this opera opportunities you think, Megan, I don't think quite yet. I think there's still is some more there's some other things in the market that keep us a little hesitant. Um, we have some dry powder, we have cash in portfolios that we're waiting to put to work. We're still optimistic long term, but in the very near term, I think there's still some other risks that we have to digest.

Whether it's from the political standpoint. Um, there's going to be a lot of noise just over the next next couple of months, the Federal Reserve next week evaluation. Still even with the modest you know, weakness we've seen here and I say very modest. Keep in mind, the smps only down about two um. This isn't really a pullback that we're seeing here, um. But the valuations still look a little bit stretched here. And do you expect to

pull back? Do you expect that we've been hearing so many warnings of maybe there's a ten even fiftcent pullback to come. I think that there is chance for this to continue to get for us to go a bit weaker from here. I can't pinpoint exactly whether it'll be ten or fifteen percent, but I think we're well overdue for at least a minimum of five percent correction. We

haven't even pullback. We haven't even had that this year yet. Megan, where are you suggesting your clients allocate their equity portfolios. Is it more than the growth, typical growth kind of portfolio and that has worked so well for a decade or more, or is it some of the more cyclical trades that might be more sensitive to maybe you know, you know, rising in flay, shouldn't reopening economy, that type

of thing. Yeah, we we have a little bit of both in our portfolios, but we definitely have more of the value til given our view that we think the cyclical trade has room to go. And also we think that interest rates are going to go higher from here. I think that everybody knows that. But I think interest rates right now just aren't justified where they are looking at long term ten thirty year treasure yields, that's just

not justifiable. And when you're talking about the FED tapering, those types of things will weigh on those expensive, you know, growth types of stock, so we have more of a value till here in the US you expect a serious taper. I think you're gonna get the first um, you know, a solid suggestion about it um in the meeting next week. I think you'll start to see the actual taper or taping taking place before the end of this year, probably

in the in the November meeting. But I think we're probably going to kind of get us through this debt ceiling that we have at the end of this month. I don't think you're gonna get a firm commitment of its starting next week. I think it'll probably be in November or December, and then they'll have that continue to taper through the all of next year and they'll continue to say, you know, interest rates and tapering are not

tied together, so the interest rate hikes are still aways off. Megan, do you get a lot of incoming calls from your clients about crypto and if so, what do you tell them? Uh? No, We've been UM pretty vocal and some of our publications about the crypto market UM that we at this time we're not investing in in the cryptocurrency market or any of the other crypto type of investments. There's still this is such a um the crypto market and all of

these other crypto coins and things. But this is a very new UM kind of experiment trying to look at at things. Is using this as some sort of a uh form of tender. But I just don't think that at this time that it really warrants us investing in it. It's way too violatble for our clients, just doesn't have a place in client portfolios. We don't leave it's going to take over any kind of the regular you know, the US dollar or anything from a currency perspective and regulation.

I think it's the biggest risk that you're going to see in the crypto market. Could really take the wind out of the sales here and then also just spark volatility and that's just not something that we that we find profit find a good place for portfolios. Megan, thanks so much for joining us. Great to get your take and I hope we can get you back on the

program soon. Megan Hornum and their director of portfolio Strategy at Verden's Capital Advisers out of Hunt Valley, Maryland, where they have about two point six billion dollars of assets under management. Earlier I said we're gonna bring in Morgan Stanley's global chief economist, Seth Carpenter, and we've got him on the line right now. Seth, great to have you with us. Um. I guess the overriding question is what does the global economy look like right now after a

big spike in the delta variant? Is it rolling over? Are we reopening again? It's your view. Yeah, it's great that it's great to be on with with both of you, So thank you for having me. You know, in the medium term where we're pretty constructive and then there are a bunch of asterisks to talk about downside risks, but you sort of nailed it with the delta variant being there.

So what have we seen. We've seen a clear deceleration, but there was always going to be a bit of a deceleration once we got past the surge and growth from reopening and settled into something you know, more medium term and sustainable. So we still feel like we'll see the slowdown, but it will be sustained. What's driving that, I mean, look at global trade for example, trade and consumer good sort of exploded out and brought us back to pre COVID levels. We're seeing now trading capital goods

in a CAPEX cycle. What could get in the way, though, is if DELTA is not as contained as we think, So as you implied and as we think, you know, we're peaking with delta, it should be subsiding. And if that's the case, then we should see continued, you know, reasonably strong growth from consumers globally, not just in the US.

And the part of global trade that's lower than pre COVID levels is trade and services, especially tourism, and if travel restrictions keep getting lifted, you know, we should see that coming back as well. Seth, I'm a logistics geek here and I'm just fascinated by it, by this global supply chain UH challenges out there, and it's affecting all types of companies and industries. We hear that, then they're

quarterly conference calls. Um, how does that impact your global economic outlook if we can't get goods to where they need to be in a timely fashion. Uh so, yeah, I think I think you're right to focus on it. And I think the even more sort of nerdy part of it is that there are non linear implications here. It's not as though there's a producer that has a supplier and if that supplier has trouble, then we have

a supply chain issue. It's the fact that they are producers, many of them, who have suppliers, and those suppliers have suppliers and those suppliers of suppliers as well. And so when a country somewhere has a COVID case flare up and there are these very intense restrictions, but in place to limit things, you can get a disruption that just spreads out in a very rapid way. So you know, we're trying to monitor those sorts of things as well as we can. We turn to our colleagues, whore the

equity analysts who cover specific firms. This general feedback we're getting as things have got past their worst for supply chain's disruptions and they're gradually getting better. You can look at some of the p M I type surveys and look at how long the delivery delays are, and does also give you the impression that we got past worse than things are slowly starting to normalize by no means good right now, but hopefully starting to heal. And so again it with that is the baseline view that the

supply chains are going to get fixed over time. You've got to feel pretty good as a baseline, But we have seen flare ups time and again, and and so I think again you don't want to get too complacent and just assume that everything's on a steady path back to normal. Well, I'm sure that UM J. Powell and Christine Leguard would agree with you. Nonetheless, it doesn't really seem like all these asset purchases are doing that much. Should they be wrapping this stuff up? Is it time

to taper? Yeah? Well, I mean I think just listening to the FED commentary themselves, the answer is yes. And so Powell and the rest of the committee has said that tapering this year is their baseline view, and so I see no reason to disagree with them. You know, our view is slightly more probability on December than the November,

whereas November is clearly from my perspective, market consensus. You know, the last um CPI report, the last retail sales report, the last jobs report have shown us that forecasting and current circumstances is even harder than usual, and so I think that favor is slightly more patient fed to accumulate, you know, two more jobs report before tapering instead of just the one that they're going to get at the November meeting. But nevertheless, it seems like they're set to

start tapering. I think the ECB is a little trickier they're President le Guard said in her press conference. You know, the lady isn't tapering and trying to draw a big distinction between the PEP, the emergency QUEI program versus the app ongoing QUI program. You know, our the Morgan Stanley European Economics team expects, uh as the PEP program is tapered down, the APP program gets more flexible and actually picks up a little bit um. You know, is that constructive?

You asked you they be wound down. I think the challenge that the ECB has to confront is where inflation expectations are for them and how how low they are. Their own forecasts have inflation coming back down well below two percent, you know, one and a half percent or so in coming years. That for them, I think is the key struggle if they ever want to get their

inflation rate back up to their two percent target. And I think that from from the CBS perspective, is the real reason to keep going with their QUI program is to try to support those inflation expectations. So that's how coordinated are the global central banks these days? As again this is a global issue, like you know, we haven't really seen before. How coordinated are they? Should they be more coordinated? How do you view it? Yeah? So, um,

it's interesting. So it spent fifteen years doing central banking at the FED, and one thing that always happens is lots of communication. Coordination where they actually take actions together is quite rare. And I think now we're actually in a place where there's meaningful divergence that's starting to happen. And I think right now that divergence is between e M central banks and d M central banks in general.

And then as we get into next year and beyond, it will be divergence between the ECB on the one hand and other developed market central banks. And what I mean here is, you know, inflation, the inflation surges is global. It's likely to be transitory. But a lot of e m UH central banks are saying, we can't rely on anchored inflation expectations given the performance of inflation in recent decades, so they have to be a little bit more active

to the high inflation. Until we're seeing, for example, Latan central banks shifting to a hawkish stance UH in contrast to where the d M central banks are UM and I think you know that makes sense. They also have to react to the market starting to say, wow, the Fed's gonna start to taper, and after that, at some point, the Fed's gonna start to hike, and they have to

worry about depreciation possibly exascerbating inflation. Fast forward to next year when we see the Bank of England the Bank of Canada starting to tighten policy, and then we think the FED actually raises rates in the middle of three that's going to be very different than the ECB with their inflation outlook. I think they're in trouble if they have any communication missteps and inflation expectations go lower, not higher.

You know, if you push our European econ economics team and you say when when is the ECB gonna hike? They they say, well, I'd say you had five but with the risk to never, because you know, I'm an economist. We forecast, but how good is the forecast? Exactly? All right, set thank you so much for joining us. To really appreciate your time. Seth Carpenter, Global chief economist for Morgan Stanley. Joining us now we are truly global. We not only cover what happens in New York, but we also cover

what happens outside of Detroit. Let's go to David Diets right now. Sorry, some in New Jersey, David, and some in New Jersey. It is a booming outdoor dining capital of New Jersey. Yeah, I don't know how I I was thinking of something else anyway. David Deets joins us managing Principal and senior portfolio strategist at Peapack Private Wealth Management. We've got about ten billion dollars of assets under management,

so not that far off from New York. David, what did you think about the our interview with the next mayor. I mean, how important is uh is New York to Summit New Jersey. Well, it's critical, I think. I mean I would say that the residents Summit New Jersey have historically commun it it into New York. Now we'll see, of course, in this post pandemic world, whether there's a

little bit more permanent remote working. But uh, the somewhat depends on New York and and our real estate prices go up as New York real estate prices go up. So whatever is good for New York is gonna be good for Summer. And David, I just so you know, I hopped on New Jersey Transit from Summer today and make my way into New York. To everybody, trains are more packed. I will say they're much more crowded than they were even a couple of weeks ago. So it

looks like people slowly are coming back to work. So David, is your day job is looking at these markets here and trying to get a sense of where the next six to twelve months are. I'm a valuation guy, you know, I'm a little more than a little I'm a lot concerned with valuation here. Yes, I know the ten years, you know, one point three eight percent, But still this

is a big multiple. How do you think about evaluation? Yeah, so evaluation is critical, of course, because we all know that the more you pay, the lower is going to be your returns. But I guess I would pushed back just a little bit insofar as UM your key valuation metric perhaps is what you can uh earn in terms of alternatives like putting your money in a CD, like buying a ten year treasury. It we've got historic lows

on those levels. Indeed, the yield on the SMP five hundred is about comparable with that yield on attain your treasury. Now ten your treasury payout is going to be locked in for the next ten years. Historically, dividends move up two to ten percent each year. So if people put a gun to my head and say, Dave, where am I going to make more money over the next ten years? Was with the dividend payout on stocks going up and presumably asset prices moving up as well, it seems to

tilt pretty well in favor of fixed income. Of course, there's not going to be a straight line. One other thing I point out is, remember, uh, Matt, you know five companies at the very top of the SMP five hundred account for of the overall waiting of that market. That index, okay, and those are the ones that, for example, Microsoft trying to get thirty three times earnings if you strip is out. Although it's not a cheap market, is certainly more reasonably priced. Well, some stocks are cheap. Some

uh industries or regions have taken a hit. I noticed that some of your ideas wells Fargo taken a beating lately, Exxon as well, I share as large cap China. Is the idea that the bad news you think is has passed on these Well, you know, we we do like to buy things that you know, have solid valuations but are a little bit out of favor. So let's look at China for a moment. Here. You know, the China Large cap et F is down thirty seven since March. So if the if the concern is we're at nosbley

valuations China maybe the antidote. Of course, that doesn't mean things are going to turn around. But the more I look at it, and I was certainly heartened by the fact that they injected about fourteen billion dollars of reserves in the past twenty four hours into the economy. It doesn't make any sense for the second largest economy if it wants to be a true geopolito, well power to kneecap that private sector. It just doesn't really make sense.

Now there's a lot of noises here, but to destroy the value of companies like Ali Baba in ten cent, well, what do they really get out of that? Yeah, it's been an extraordinarily difficult time for those stocks there, and it just kind of highlights, you know, the whole quote unquote China risk uh that people always had in the

back of their mind. But boys are coming to roost here. Uh. David back closer to home with the U S stocks here, do I go reopening cyclical small caps or do I stick with my big cab growthy Amazon, Apples, Google's kind of things? Well, certainly you want to beat the first of five. But I share the concern we started conversation with that our evaluations are an issue. So I valuations are an issue. You've got to be cautious with Microsoft, You've gotta be cautious with for example, Amazon, and and

we like for example financial services. We think that five years now, interest rates will be higher as inflation picks up, as the economy picks up, and loan demand goes up, and you know, the financial services companies are so well poised to benefit from that because the price of their key product, loans will will go up. Historically, they're not trading much above what they've normally traded in the last

twenty years in terms of relative to book value. The one word, oh did I I think you might have lost David Diets. I thought it was me for a second. Maybe there's probably some problems, you know, in the summit, maybe the phone issues out there and someone off the check on that. When we get home. We didn't even get to get to bud. Yes, I mean, I mean we didn't. You know, it's t Bush. He likes Anheuser Busch as well, which I wanted to ask about now.

It's shocking if you pull up the chart right bud uh the ticker b U D obviously, and the beer um has risen this year up to eighty dollars a share, but it's now back down at fifty seven, and I wonder why that is. I mean, we're people drinking more bud at home, and you think when they go out to the bars in the reopening trade, they're gonna be ordering um, you know, yava or Vosh diner becks something

a little bit more high brow. Or is the idea that the delta variant has stopped people from going out and ordering a bud at the ballpark. Here's what I think it is. I think it's the hard seltzer thing. It's a fat. It's gone. It's over the white claw every oh and Anheuser Bush makes. It's not You're right, they don't just make beer. They make that stuff. What's

for the whole industry. It's for the whole industry. And that was kind of that was one of the really near term growth drivers for um, you know, the malt liquor business, if you will, kind of the beer business over the last couple years of these hard seltzer So it was kind of like the wine coolers of our day. So, but it was a fat. It reminded me of Zema. When I was in high school, there was there was a malt liquor beverage called Zema. I remember that it

was clear and absolutely delicious. Really you didn't drink that, did you? Well? I did when I was fifteen. Um, but obviously a else aren't down and that's the same with the hard Seltzer. Right, we got David Diet's back. Let me David just asked you quickly about Anheuser Busch. Why has it been hit so hard coming from eight down to fifty seven? And why do you like it? Sure? Absolutely so we like it because when you talk about beer, you know it's got. UM is one of the largest

consumer products companies in the world. It's got like ten of the twenty largest brands. So why is it off from the start of the summer. I think several things. One is UM busting beer, which is big on the hard Seltzer and not very disappointing continuing trend in in hart Seltzer, So the whole category were sold off, but of course we know, but there's a lot more than the hard Seltzer. Second, of course, there is concerned about this surging dollar UM and of course so much of

their revenues come in from overseas. That's not helpful. And of course the big difference between the start of the summer and now is the continuing delta variant issues, and so much of their business comes in from the emerging markets. There's real questions, says delay in the reoining great, but I thank you very longer term for you. You'll do well. Yeah, all right, David. Thanks, I'm glad we got you back in for that. David Dietz talking to us there from

Peapack Private Wealth Management. 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. Yet on Fall Sweeney I'm on Twitter at pt Sweeney before the podcast. You can always catch us worldwide at Bloomberg Radio