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Going back to that Tesla story, disappointing Quartered socks off twelve percent, Elon must trying to redirect the focus of investors on other parts of the company, AI, robotaxis and the like. Steve Man joins as he covers the global auto industry for Bloomberg Intelligence.
Steve, what you make of the quarter last night? Holistically? For the Tesla.
Story, I mean, I still like their long term, medium term A look on AI, I'm not you know, in our view were not including eight billion optimous robots. I think that's a little bit out there. But AI is will continue to drive the stock. But I think today people are focused on their auto business. It's it's a
little bit worrying. I think investors were expecting their automotive gross margin to flatten out in the second quarter versus the first, but it did decline about one hundred and fifty basis points to thirteen thirteen point nine percent, which is in line with you know, the legacy automaker's automotive growth marginal fourteen percent. So there is some concerns with the investors. Is you know, are there any more upside on margin? Are they you know, are they really that good with cost?
But I guess the question is how do we value the stock?
So I hear you that the auto part of their business is very much maybe in line with what other auto companies are talking about, but they trade an estimated pe of like ninety times, Like is it worth it for that? If it's if it's also being valued as an AI company.
I think there's a couple of things that the investors are focused on beyond this second quarter. You know, they did pull ahead the start of production for a more affordable EV from like the second half of next year to the first half, which is critical. I think the market, the the EV market today globally is actually consumers in the EV market actually looking for a more affordable EV something that's you know, less than fifty thousand US dollars.
You know, most of the EV's offered today are above fifty thousand dollars, So, you know, I think the investors are hoping that, you know, into twenty twenty five and into twenty twenty six, we're gonna get a rebound in EV sales because there's gonna be more affordable EV's, budget friendly, EV's for the mass market.
Steve Tesla right now is an auto company and it's an other company. Elon wants you to focus on the other Can you define what's in that other bucket and when investors believe it will be material to their revenution profits.
Yeah, you know, he talks about AI quite a bit, you know, robo taxi, optimism, robot but if you think of AI, I think there's you know, potentially even more ways to generate revenues from AI. One of the things that I think the market is also focused on other than robotaxi, taking a passenger from point A to point
B is for example. You know, these cars have huge battery storage capacity, right, and these things, if they can move about on its own, you can really help out the utilities in terms of, you know, redistributing power across the grid.
Well to that point, I mean, their energy business was actually quite impressive. It had its highest installation of batteries and revenue ever and energy accounted for just twelve percent and sixteen percent of Tesla's revenue and gross profit, respectively. I mean, yeah, it's going to fluctuate, but that's pretty strong.
Yeah, it's it's a good good sign. I think, uh, you know, those those tend to be a little bit lumpy because the orders are big, and so whenever they deliver the the the order and when they ever they book it that that tends to be lumpy. I think we'll have to see if it's going to be consistent. But I think the investors are very focused on the auto business. You know, what are they when are they going to roll out the new are they going to be on time? And rolling out the new EV the
affordable EV? And then longer term it's really uh, you know AI, is he going to deliver? What what is he going to say in October?
Uh?
You know the the AI event that he's hosting. You know, there was there were a lot of questions about that during the call, but he's pretty they were pretty tight lip.
So what is that October evan?
You tell us what the company says it is and what you think it may be good distinction?
Yeah, yeah, I think I think for the most part, it's going to be, you know, what is this new vehicle they're launching. I think investors will be focused on, what is this new vehicle, What is the price of this vehicle? How are you going to manufactures so it further cuts you know, per unit costs. The other one is the full self driving, the full driving system that they're trying to roll out, the robo taxi that they're
trying to roll out. I think people are going to be focused on when is that going to generate you know, material earnings and material revenue. Now I think it's not going to be until twenty thirty, but so but I really think the other thing that's going to get really people really excited is is it is the Optimist robot. Because the Optimist Robot, they really haven't talked too much about it yet. I don't think it's going to get
to eight billion unit sales anytime soon. But you know, if they can incorporate those Optimist robot into their manufacturing, I think there's going to be a lot of potential for cost cuts.
Okay, so the addressable market isn't John Tucker buying one. The adressible market is must using them to build a car. That's right, Okay, so don't worry you disappointed?
Now everything for me to this.
Point, like if John Tucker wanted one, could eventually he actually buy one?
No, I don't.
I don't think he doesn't. It's not for sale right now. I think what he's he's I think what he's going to try to do is, uh, you know, built this robot, optimize this robot. Uh, you know within the confines of Tesla first be you know, they're going to make it good enough, then they're going.
To offer it to the public.
All right, So maybe that's going to be not soon.
Yeah, yeah, So you gotta wait, you gotta wait, John Tucker, all right, Steve thinks lot really appreciated. Steve Man Bloomberg Intelligence, Global Autos and Industrials research analysts. You have to wonder, just people on the call, like really addressable mark? Is everyone on the planet? I don't know that's could you.
Look at the stands, I mean from starting the year till like the third week of April, the stock was down fifty percent. Since then up seventy five percent. So I mean it's just do you buy off on all these other bets outside of the car business.
You have to bend metal or don't you?
And then how do you?
That's always been the.
Case for Tessa story. You have to believe in Elon. That's simple as that.
But it's going even bigger and bigger. It's like the other gets bigger and bigger with more stuff.
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This Bloomberg Intelligence Radio, Happy Wednesday, everybody, Happy hump Day, and Alex c alongside Paul Sweeney and John Tucker. We are broadcasting to you live from Interactive Broker Studio right here in Midtown Manhattan. So John Tucker laid out, the market declined perfectly. And my really silly question is well, Wire stocks down? And I say silly because you can say, oh, of course, you know Google Tesla the disappoint and therefore stocks are down.
Is that it?
Or is it a continuation of last week? And the rotation theme is still intact? Is there something else going on here. Bill Dudley talking in a Bloomberg opinion article about how he changed his mind. He thinks that a cut should come in July because employment doesn't look that good.
So let's get the.
Read here with Kim Forrest, founder and chief investment officer of Boca Capital Partners, joining us from Pittsburgh. Kim, it's a dumb question. Wire stocks down so much?
Okay, I'm going to answer it with a dumb answer.
Are you ready?
Yeah, because there's more sellers than buyers.
No.
I love this answer. Actually I know well.
I learned this on my very first day at Parker Hunter when I was a cell side analyst. That's how one of the radio announcers would say, Parker Hunter anyhow. Yes, And they didn't cover this in MBA program on valuation. But when people get afraid that maybe they've paid too much for a stock, or maybe that things aren't going the way they think, they sell and selling makes stocks go down because when there's more sellers and buyers, the prices fall. And that is why we love markets, because
it does the inverse. When there are more buyers than sellers, prices go up. But the fundamentals really are is everything okay, And it looks like some things are okay and some things aren't, and it depends on what day the market thinks more of one than the other.
What do you make of this whole AI trade in the marketplace certainly was a theme not just for tech companies but for the whole market beginning in twenty twenty three.
How do you view it?
Because again we've had Tesla talking about it last night, Google talking about it still.
Well, I have a nuanced view because I was a software developer in company that actually developed neural networks and then used neural networks. So and that is the underlaying technology that's behind chat, GPT and autonomous driving and all of that kind of stuff. So here's the skinny on that. I strongly believe the moment for AI is finally here because computers can be fast enough and we have enough of the right data to be able to train models.
But investors are always impatient with new technology, and they thought, just like they thought autonomous druck cars were just around the corner in twenty sixteen, they're not. It always takes longer to develop really good technology. AI is really good, but it's not going to pay off in the next fifteen to twenty minutes. So investors are becoming aware of that right now, especially as Google kind of outlined its spending plans that go on for the foreseeable future.
Well, that's where I think that question then goes to my first question of why our stocks are selling off, and that basically they have to spend to then monetize, and there's going to be a gap between the spending and the monetization and there's still a race to spend. And as an investor, how do you value something like that?
Well, in my mind, you don't yet, right I don't know what Google is going to be able to monetize because we're not clear what problem they're solving. Like that's the first thing we have to ask, what problem are you solving? Is it worth solving with technology? And how much money will you get? And we don't have any of those answers, But we do have this idea that
AI is going to work out. So how we play this is we've been buying the semis and then storage companies or semis that have to do with storage, because we know AI takes tons of data, unbelievable amounts of data, probably more data than it takes electricity. I mean, I can't emphasize how much data is needed. Okay, I've ever
done that, but that's what we've been doing. So we buy companies like net app, which makes storage enterprise storage devices, and then Micron because they make one of the elements of storage, which is called nand it's a technology a chip that you can store things on. And that is how we've played it because we don't know what time frame we're going to be in. We just know somewhere within the next ten years, AI is going to be a thing and show productivity and people will pay for it.
Outside of technology, Kim, are there areas that are interest you?
Oh?
All of them are interesting, honestly. You know, energy is a big question mark because it's been kind of unloved as we've done the move towards green and now we're kind of going maybe we need you know, energy for a while longer, you know, the old fashioned kind that we dig out of the earth. That's kind of interesting, and I think if we're going to be in a declining interest rate environment, maybe things like housing and then ancillary areas around housing, like home goods and that sort
of thing. You know, items that people buy when they buy a new house that might be interesting. And again, these are kind of three to five year time periods for us. We don't ever really want to make bets on the next six months because anything can happen, right, So we're always looking out three to five.
Years, which brings me though to the election can because I appreciate that you're not going to tradeer on the election, But there are some policies that feel binary and election and energy maybe one of them in a Trump versus Harris world, which would then affect investment and returns and prices in the next, say, three to five years, which is your time frame.
How do you wind up thinking about it?
Sure, well, I'm kind of a realist too. As much as you would like the world to be driven by renewables, it's not practical, isn't if you look at any of the numbers. Even as the use of renewables have gone up, so too has the use of non renewables. Right, So I think if you you know, sure the scale may be tilted towards renewables, maybe you play it by finding
a company that does both. And a lot of the energy companies are trying to get a green footprint somehow, so I think that might be where you look.
Fixed income, Kim, how are you guys allocating to fixed income these days? Because you know, folks can sit into your treasure and get down your you know, four point four percent.
I know, well, we're short. We're still in the short term, right Like whenever I have to replace a bond, I'm trying to go as short as I can to get the highest amount. And two to three years is where we're liking to buy. Anything longer than that, I don't know. It just seems too risky because it could go literally either way. Right if we're going to reinflate, if the curve is going to go back to normal, maybe long term rates will go up a bit, short term rates
will fall. So let's live it up and buy some short term rates because we usually we don't trade them. We just let them expire, right, So we're buying the yield so maturity.
Before we let you go.
Let's get into the debate about small caps. Do you say yay or nay to small caps?
I am a big ya. I have about half of my portfolios in small I would say mid cap. I can't really look at anybody less than a billion dollars, I don't have the temperament for the companies that live there. That being said, those high quality small companies often get bought by larger companies, and that's kind of what we're looking for, is companies that have a really great track record of making products that their clients love, and a lot of them tend to get bought out and it
really does add a boost to your returns. So that's what we look for.
All right, good stuff, Kim, We appreciate you.
Thank you very much, Kim. Forrest founder and CIO. A book of capital partners joining us on that. Okay, de reine.
But it's interesting.
It's an M and A play. It's not like a fed cutting play. It's not necessarily a rotation play, but at takeout play.
So that's also quite interesting.
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It's Bloomberg Intelligence Radio.
We bring you all the top news and business finance, economics and earnings. There are lens of our Bloomberg Intelligence folks that cover two thousand companies and one hundred and thirty industries worldwide, and now is our great time we get to focus on Google aka Alphabet that's dock down, following the most since February twenty six and hitting its lowest level since June eighteenth. This is really hitting it
the earnings from yesterday. So Man Deep saying Bloomberg Intelligence senior tech industry analyst is joining us now in studio to dissect it. So on the one hand, we have the CAPEX spend and the other hand we have.
The YouTube stuff. Which one you want? Which is the bigger driver of the downside today?
Capex I mean simply because this quarter companies are not getting a pass on boosting CAPEX. That wasn't the case last quarter. But clearly I think investors vary about how much CAPEX these companies are going to throw on AI. And look, in the case of Alphabet, there is revenue in the cloud segment, so they quantified the AI impact on cloud which was high single digit contribution to cloud segment, and cloud segment actually saw on acceleration in top line growth.
But YouTube miss, I think I attribute that more to software spending outside of financial services and retail sectors like automotive. They're not spending on digital ads right now because the sector is going through a cyclical downturn. So there is that cyclical element to YouTube's business. But I think there are a lot of positives. Course search growing at fourteen percent. I mean, think about the scale of search and the
fact that they are able to grow double digits. That's quite impressive, and that too at a very healthy margin. I mean, the biggest fear for this company was margins are going to get degraded because of you know, AI and whatnot. That we haven't seen that. So a lot of positives, but clearly kapex was an overhang.
All right, I've been making a point today. If any team deserves a benefit of the doubt of higher CAPEX, it's Sundar, Punchai and all the folks at Google. Let's stop whining about capex. Have they ever not generated to return on their spending?
I mean, the problem with Google's management team is they say very little on their earnings call. Like even when you answer them, like ask a question, they would answer it with as little words as possible, So you know it sounded like they are bullish on their AI opportunity and it's actually monetizing. Uh, some of that capex is going towards Wemo. If you think about you know, robotaxis and what Tesla had to go through their call last night.
Wemo actually did two million rides here to date and these are all autonomous rides and they're expanding to other cities. So think about, you know, the skill in that business if they're able to do actually autonomous driving successfully. So I do think their capex as well spent, but they just don't explain it that well to the street, you know, to get the credit.
So when it comes to then the AI spend, what other companies are going to get judged in the same harsh light and what's Google's one up on them?
If any Meta I mean you saw a negative reaction with Alphabet, I mean think about what happened to be worse. Meta is going to be worse. Even last quarter when they raise their capex, Meta had a negative stock reaction simply because investors are concerned about how much this company is going to spend on metaverse versus AI. And so in the case of Meta, they're losing eighteen billion dollars
a year on reality labs. They're spending Capex in addition to the AI Capex, which they launched a new large anglid model. And to my mind, any company right now with their own large anglid model, whether it's Alphabet, Meta or a Microsoft Open AI, they have an advantage. They have the best reasoning capability when it comes to the AI spend and it's actually a future driver of revenue. So it all comes down to how they are going
to monetize it. And I think with Microsoft and Google they have an advantage because it shows up in the cloud revenue. In the case of Meta, they have to monetize the AI spend through ad revenue or a subscription based you know, chat pot offering, which nobody knows when that will come.
What is Gemini and John Talker and I be using it.
It's a better way to search for certain type of queries. So whenever you want you know something with a detailed answer as opposed to going through ten blue links to find that answer. Gemini is great. The one good thing about Gemini is when you search for a query, it's going to show you the relevant YouTube link, whereas if you search that on chatch Ept or Claude. It's not
going to have that YouTube link. So it's going to generate the text, it's going to generate a summary, it's going to answer your query, but it won't have that appropriate YouTube link. And that's Google's biggest advantage with the large anguage models.
It's do you have to pay for that?
Yeah, it's a twenty dollars subscription for the advanced version that app will that that's kind of and that's where I mean you are not like you don't think it's a big deal, But I think Google owning maps and YouTube is such a big deal in this arena of large anglid models, because it's one thing to generate a text based response, it's another thing to have a blue link with the YouTube video that they want you to see or the map link that they want you to
click on inside that response. And other large anglid models can't do it because they don't own these assets.
So well, before we go.
One thing though, but the meta is that if if these companies, though don't spend, then at some point when all this is monetizable in a big, big way, all of a sudden numbers Gonta complain that then Meta's super far behind.
So what's the chicken in the egg here?
I mean, I still think nobody wants to be the first one to pull back on capex. So it really is a question of when do we have sufficient supply of GPUs, And because the market is supply constrained when it comes to the chip side of the equation, nobody wants to come across and say, oh, I have enough
and I don't need to spend on cap anymore. And I think right now, these companies generate so much cash every year, like Alphabet will generate over one hundred billion in free cash flow, so they can afford to spend sixty billion in capex, and they're looking to make a twenty three billion dollar acquisition that fell through, but clearly they want to spend their free cash flow, which.
To your point, like, yeah, go ahead, you earned it, you spend it, all right, Mandy, you're the best, so helpful, so great, I asked Mabe slept.
He said yes, but I don't know if that's as at home too, to make it even worse, I know, I.
Know, but he was on late yesterday, early today and all that stuff. All right, Mandy, the best Mandy is saying Bloomberg Intelligence senior tech industry analysts.
It's like, I feel like.
Investors want both, Like they want the growth and they want the company to be profitable with it, but then they don't want the CAPEC spend.
It's like, dude, you can't have both.
Yeah, But then you get analysts like Dan Ives It just says, you know, you pick the manager teams, you pick the technology, and you just go and you just got to shut your eyes and you know, not worry about the peaks and valleys, and you think that Tesla again.
First, you know, the first quarter through the third.
Week of April down fifty percent, only to bounce back seventy five percent, So you.
Gotta be ready for those roller coachs with these tech names.
I guess yeah.
But then the problem with Tesla is, at least I feel like it's clearly laid out if you're listening to a Google conference call. The problem with Texla A Tesla is like when he says something about a robotaxi and Elon Musk says, our solution would work anywhere, even a New Earth. What I don't understand, like that they're all these it's Elon musky stuff.
And that must be very difficult.
Where is that elon musk risk that you take.
Or musky stuff? As I am saying it.
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Alex Steel false when you're live here on our Bloomberg Interactive Broker Studio doing that streaming thing on the internet, YouTube dot com search Bloomberg Podcasts, and that's where you'll. Let's tell commercial real estate because I have no idea what's going on here. I need to see some price action, price discovery out.
There in the marketplace.
If I'm going to buy an office building on Third Avenue in Manhattan, what kind of discount am I going to get? Fortunately, Abbail Duolottle knows a ton of people in that business. Abigail Doulttle's on markets reporter, but she's got her She's wired into that commercial real estate business, which means the whole Morgan Stanley real estate mafia.
Alumni crew.
One of them is Sunny Kelsey Co Chief executive Officer Bgo. I said, who is bgl? They got eighty five billion in assets under management? What rock have I been sleeping under? So these guys are big, Sonny. Thank you so much for joining us here in our studio. Abbigil, thank you so much for joining us as well.
Sonny.
All I know is I walk down Third Avenue in a lot of empty buildings, and I'm just wondering how representative is that of the commercial real estate business. How do you guys view the commercial real estate business today? It's got to be like something you've never seen before.
It is something like we've never seen before. And you think, after thirty four years, you see everything, and you know, we always get asked to compare cycles, and every cycle is different, and this one is definitely different. I'll answer
your question in a second. But the context around it is you just pick the asset class that's been hit the worst in the last four years, right two years of a pandemic call it, where people were working from home, and a bunch of other stuff, and then you've got it piling on in terms of kind of bad secular news for the for the office sector. Right. Work from home was one problem on real estate owner, so I think it's a problem. Work from home was one problem
which never would have happened without technology like Zoom. But then you have AI, you have a bunch of other stuff coming, which are all going to come after jobs. Presumably office and gateway cities like New York City is probably the if you want to take about lower left, if that's the bad place to be, that's a bad place to be, right. I do agree when the baby gets thrown out with the bathwater and they say all
real estate is bad. You know, people focus on that because it's kind of what's present.
Right.
We're Abigail and our talking about how the streets and not here in the retailers are all empty that used to be here. That's what you see, right. What you don't see as much is people are still living somewhere. You still get your goods and services. Somehow those are coming to you from a warehouse somewhere as opposed to coming to you because you're going to a store. Not that those have been immune, right, But office it's been tough, and honestly, I don't see it getting better in the near term.
Well, then to that point, what part of real estate is cyclical versus secular? Yes, so like the warehouse point you make, that has to be a secular shift. But we're still in a cyclical market, so that's going to be very tricky, correct.
Yeah. Well so look, I would say as I think about investing, I think about the four quadrants. And people think about dead equity, public, private, I actually think about cyclical, secular and headwind tailwind Right, So if you think about who what's in secular decline and as secular headwinds, office is the best asset class to think about, right, All the top down news is bad, the bottom up news is bad. Capital markets are bad. Terms of what has
cyclical tailwinds? Right, What has cyclical tailwinds and secular tailwinds? Anything related to technology. So I'm sure you've had a lot of people come in to talk about data centers. We have a big data center business too. It's been great. The issue is it's no secret that it's great. So there's a lot of money piling in. There's a huge amount of demand, which is what makes great secular cyclical opportunity.
I think where we actually do our job, where we make where we can be in a position to make the most money is places that have secular tailwinds and cyclical headwinds. Okay, right now, most things have cyclical headwinds right now because the capital markets. When you ask Paul when things are going to come back, until credit comes back into the market, we're not going to see it. But right now it's a great time to be in warehouses. The secular tailwinds are still pretty good, but it's expensive
to build them, it's expensive to buy them. And so if you can figure that out with data, with anything else to kind of get an edge, that's good. Housing is the best bet in my view right now. And this is a US common hap of our portfolios. US half as non US people have to live somewhere. We have a structural housing shortage, but we have some issues, and so to me, it's actually the really interesting.
Place to be.
Well, speaking of your portfolio, it's not all bad because right here over on Park Avenue four twenty five, I've walked by that building many times.
It's the new Citadel building.
It is absolutely beautiful and there is the Bental Greek green.
Oak stamp right on it.
You know, when we think about this pain though, it really comes back to rates, and you've had you know, we've stayed in touch, and I know that you've had a great call on rates that back in twenty twenty one, twenty twenty two, when the Fed forecast or telegraph that they were going to raise, you took a particular view.
Bond traders didn't do this. I know a lot of other commercial real estate investors that were more the hopium talk to us about what you were seeing, what you did, and what it meant for your portfolio.
So I think, and again I'm not an economist, but my philosophy has always been you can do nothing about what you can't control, so focus on what you can control. We can control the rate environment. So when the FED raise rates, and they did it at the pace they did it and at the you know, the slope at which they did it, our view was we couldn't count on when they were going to come back down again. That was and so what do we do We invested against that. Now, part of it is why did we
think they were doing what they were doing right? And I think a lot of people focused what I would say on the demand side. They focus on cash. They talked on central banks had pumped in COVID money all that stuff. We actually focus on the supply side, the benefit of having a big global industrial portfolios. We see three put we have a big business in Asia. We saw China shut down, the world's largest manufacturer shut down for three years. It's a little bit of a statement
of hyperbole, but they shut down for three years. Our view was, you are not going to get back to normality until China reopened. China didn't reopen until the end of twenty two beginning of twenty twenty three, after the five year Congress. So until that happened, it was our vu that you weren't going to see stuff come back to normal again, right, whatever normal is, by the way, And so the way we kind of thought about it
is we're going to ignore it. There are a lot of people that are trying to invest against, hoping cap rate, interest rates to come down quickly and then bet against that. I have too much scar tissue from too many other cycles.
Which you buy a third Avenue office building today at thirty cents on the dollar, I think.
They're plenty on offer, and we haven't bought any yet. All Right, at some point it will get interesting. I think the issue right now, back to the cyclical secular thing is there's so many headwinds to office right now, and.
We're about conversion.
So conversion looks great theoretically. It sounds great theoretically, but if you talk about one of those Third Avenue office buildings with a forty thousand square foot floor plate and you try to actually cut that up into an apartment, people are going to be living in Bowling alleys. And that's basically if you just visualize it. So, actually, conversion work great. Downtown after nine to eleven, a lot of stuff got converted, but those are older buildings with better ceiling,
heights and other stuff. They converted a lot to multifamily and a lot to hotels, bigger window, every of that sounds but yeah, yeah, people never used to live on Wall Street. Now people live on Wall Street. But that's why, Look, it's gonna be a it's gonna be a slow grind too.
So when you say office building is publishing thirty cents on the dollar, yeah, I get that. We're still in the headwind place. Yeah, but is it like fifteen cents on the dollar. You're like, okay, fine, like it when did it become a valuation thing.
It becomes a valuation thing when you have some degree conviction you can lease that space.
Okay, So it still has to come back.
To the fun It has to come back to the fundamental. So that has to come back to that number one. Number two, the financing markets are upside down for real estate. You know there's news today about it.
You've got banks that they kill free business. They wine and dine you for thirty years. Now you go back to them. Now I need the money. Well, I could buy this B plus property on Third Aven thirty cents on a dollar.
You know this is a good deal.
Right.
Well, look, first of all, most many managers of our scale are both on the equity. So twenty billion of our eighty five billion. We're a lender, okay, all right, So we have a lending business. So the pain I am seeing our lenders bear right now, we bear as a lender as well. So that's complicated the regulators. Basel three. There are a lot of headwinds against banks, regular way
banks coming back into commercial real estate lending. That's why the private markets have exploded the way they have, and I think our views that they're going to continue to be really robust. But the problem is a first mortgage on sixty percent loan to today's value that costs someone nine to ten percent is not a normally functioning capital market.
This is not well, you know, to pick up on something that Alex and Paul were just asking about relative and Alex in particular the valuation so Igon Namdar not so long ago one even further, he was saying some of these buildings you could get them at less than ten cents on the dollar. He was saying, he thinks it's the bottom. It's hard to not think that's the bottom.
But so many people that I talked to, so many of my sources, this is the one point of agreement as to whether how much pain is ahead or not. That it's going to take a long, long, long time to work out. So how long do we just skirt along the BOTO just have about twenty seconds?
Well, if we're just talking about office, I'm not.
Sure we're at the bottom of out.
They that's gonna that's interesting though.
Yeah, I don't know.
Until I start seeing some of these things on Third Avenue start trading in the comparable place in Boston and San Francisco, we'll see Sonny CALSI thank you so much for joining us.
Sonny Cawsei is a co chief executive officer.
B g and Ablegail do Little, markets reporter for Bloomer News, joining Talk a little bou comercial real estate. You can't put it all in one bucket. It's not all office. It's a lot of different stuff out there, but office is tough, like keeping track.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple card Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Let's get more Now on the money behind this race, Max Abelson joins us Bloomberg News finance reporter article about the get rich quicks ideas. I was gonna call them schemes, but they're not ideas. They're not schemes, they're ideas from Wall Street donors. They need to raise money fast for president for Vice President Harris Well.
First of all, I have to give a shout out to the journalists who's really responsible.
For this work.
Who is Amanda Gordon, My friend and colleague who's been reporting on the rich people who love Donald Trump, the former president, and the rich people who want to make Kamala Harris the next president.
And you know, listen, I don't want to give the wrong idea.
I mean, wealthy Democratic donors on Wall Street have been, you know, putting a lot of money, were putting a lot of money into the effort to reelect Biden. It's not as if they had closed their purses and their wallets and then all of a sudden they're opening it up. But I think what Amanda's journalism highlights in a really vivid way is that they are going strong, and they're going hard, and.
They don't have a lot of time to raise this money.
And when I say they, I want to be clear that we're talking about, like, you know, essentially the krem Delak of Democratic donors. You've got you know, do you all know the name Blair Ephron su yep Center View. I mean, you got Brad carp that's a Bradcarpey is technically a lawyer, but I think there's a part of big law that's.
Essentially an extension of Wall Street.
You've got Mark Lazari, Ray MacGuire where a profile of for BusinessWeek back.
When he was running for mayor.
If you all remember that, you know it's funny at Blackstone. Obviously, the most important donor inside Blackstone is Steve Schwartzman, who's giving a lot of money to Republicans.
But don't forget Blackstones.
John Gray is there to you know, I don't know if he's essentially probably I'm assuming not wealthy enough to counterbalance Schwartzman, but still a lot of money. The list goes on, Peter Orzag, Roger Altman. These are the people who've been at the highest levels of Wall Street's kind of democratic caucus for a long time. And you know, you just you just sense a lot of excitement about Harris, and they're going to be spending a lot of money.
It's interesting because I think Wall Street and just business in general is trying to get a sense of these early days. What is what would a Harris presidency.
Mean for business? Would it be good for business?
And I see a man that quotes uh Jim Kramer in here telling investors on CNBC Wednesday that Harris Winn would quote absolutely absolutely.
No doubt about an end quote be good for us business.
Only Jim Kramer would would say no doubt about it, when of course no one ever knows what the future holds. But you know, speaking of business, I think it's important to pause and to remind our listeners that you know Donald Trump, we know what Donald Trump will do for the business community, and let's talk about it. I mean, the big the big news is that he likes low taxes, and I mean I mean low corporate taxes and then
low taxes on on onnwealthy people. He also has pledged to deregulate and and he has shown that that that he wants to That's why you have real enthusiasm for him on Wall Street. You know Howard Lutnick, John Paulson, Woody Johnson, John Katzvetids. There are really really deep wells of really rich Wall Street executives who want this guy to win.
A Meed Malik.
They've been raising money for him, They're going to be raising money for him. I don't want listeners to think that when Wall Street looks at the twenty twenty four presidential election, all of their money is going to Democrats, because that is not the case. But I think that there is a really big part of Wall Street that looks at Kamala Harris with a kind of optimism, with the kind of optimism that she gets them, that she
understands them. I don't think they look at her the way that they would look at Bernie Sanders or Elizabeth Warren as a sort of is a loaded word, but as a.
Kind of enemy. I think they look at her.
Maybe the right way to say this is as a potential ally well.
I mean, Bloomberg's been reporting that the Harris campaign pulled in one hundred million dollars just from the announcement through Monday evening. Presumably that's from smaller donations, as opposed to point in somebody's Wall Street it is from smaller donations.
Well, I was going to say to that point that it also is from new donors, not just smaller but new, which also raises the question that she would be the first woman and the first Indian American to be elected president. Obviously President Obama was African American, so she would not be the first African American. But and the idea is are that it is that hope going to bring in a lot of new donors that otherwise wouldn't have donated, even on the high end.
Yes, listen to the statistics. That's as stittius, you're ready.
There are one point one million unique donors, not one point one donations, one point one million different donors who contributed in that.
What was it?
It was like thirty six hours after she announced two thirds, not fully two thirds, sixty two percent giving for the first time.
Wow.
But no matter how much how many small, small donations she gets, she's gonna have to raise a lot of money, and she's gonna have to do it quickly. So I think that the way the landscape looks is that she's getting support from like a you know, a Barry Diller, you know, a literal billionaire, and she's going to need support from from those one point one million unique donors, you know, practically two thirds doing it for the first time.
She is going to be embracing I.
Think both of those, although obviously I'm pretty sure that when it comes to publicly bragging, she's going to be publicly bragging about those small donors and not publicly bragging about the building.
On Saturday coming up, Harris is scheduled to appear at a donor event featuring the performances of James Taylor, Yo Yo Ma and Emmanuel ax sounds.
It's like an episode from the West Wing.
Shout out to Yoyoma though I love I love the box, but.
Don't you want somebody who's more in tune with, you know, the younger generation.
Well she also came out yesterday to Beyonce, which she had full rights to use. So there's also that Yo Yoma. Yeah, well that's really Beyonce. Yea, this is but this is pane Is. You got to have the different level.
Well, her husband's also in the game.
He will attend several fundraisers next week, including an event in Martha's Vineyard featuring me David Letterman.
Listen, the kids love Yo Yoma, though, I'm telling you they do.
So I guess, like, what are you trying to appeal to? Are you trying to appeal to the kids base?
So you're trying to appeal to heavy donors, Like what is that goal when you're coming out to Beyonce or your.
You're trying to appeal to the voters, the younger voters especially.
I can I answer that.
I want to answer the question. Though Emmanuel axe Ye really lovely pianist. Okay, we have listeners to when when you're not listening to Blue mcg radio, listen to some Manuel acts, great pianists.
I do love Yo Yom, but then again, I don't think I'm the young kids.
But it's a good metaphor though. It's a good metaphor.
She's gonna want Beethoven listeners and Mozart listeners and she's gonna want Beyonce listeners, And that's a way.
It's kind of a good simile for the Swifties.
Where the Swifties, can I get the swiftiest thing that's a big coach.
Actually funny you say that Michael McKee has been texting a group chat that we have kind of NonStop as to who Taylor swift full indoors?
Will she endorse.
Kamala Harris, and will that, you know, move her away from any MAGA attendees.
And I'm trying to be like, dude, chill, that's not.
Gonna happen, all right, I mean, jesus, this.
Band's won't for Harris. Yeah, we're good anyway.
Much more coming up rather at the state of commercial real Estate.
Hey, Max, really appreciate it. Max Abilson joining us.
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