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Bloomberg Audio Studios, Podcasts, radio News.

This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always I'm Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. Kathy Greifeld in for Paul Sweene. We've got a qualified guest to drive forward this.

This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always I'm Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. Kathy Greifeld in for Paul Sweene. We've got a qualified guest to drive forward this.

Wall of data.

Wall of data.

Yeah, of course we're going to be speaking to now, Jeffrey Cleveland. He is cheap us, a condommist over at Peydon and Reigel. I let's talk about what we just learned. Of course, retail sales a little bit cooler than anticipated, but PPI coming in hot for February, increasing by point six percent. Of course, consensus had been looking for point three percent. Would love to hear your immediate reaction, because it looks like right now the market's reacting to that PPI.

Yeah, of course we're going to be speaking to now, Jeffrey Cleveland. He is cheap us, a condommist over at Peydon and Reigel. I let's talk about what we just learned. Of course, retail sales a little bit cooler than anticipated, but PPI coming in hot for February, increasing by point six percent. Of course, consensus had been looking for point three percent. Would love to hear your immediate reaction, because it looks like right now the market's reacting to that PPI.

Well, I mean it's early here on the West coast, so maybe I should start with a little controversy. I don't see the case for rate cuts in this data. I mean, just in order of importance for.

Well, I mean it's early here on the West coast, so maybe I should start with a little controversy. I don't see the case for rate cuts in this data. I mean, just in order of importance for.

What I'm looking at.

What I'm looking at.

Looking at initial claims dropping back below two hundred and ten thousand in the latest week, I mean exceptionally low layoff activity. So that's the sign of, I think, a still solid labor market. And then if you go next to PPI, it definitely came in hotter than we expected. We already penciled in a point three four pc increase four February so for later this month, So we might have to take another look at this after this broadcast and and me bump that up a little. But nothing there that I think. If I'm a policy maker sitting around Washington next week, I'm going to be really confident that we've done enough. And then the retail sales, I mean, I think Tom is exactly right. Look at Core, look at the control group. The only thing that we always tell clients about retail sales is it's just capturing a subset of consumer spending mostly on goods. I like to look at, you know, consumer incomes still growing at a good pace through February, and I think that will go into spending.

Looking at initial claims dropping back below two hundred and ten thousand in the latest week, I mean exceptionally low layoff activity. So that's the sign of, I think, a still solid labor market. And then if you go next to PPI, it definitely came in hotter than we expected. We already penciled in a point three four pc increase four February so for later this month, So we might have to take another look at this after this broadcast and and me bump that up a little. But nothing there that I think. If I'm a policy maker sitting around Washington next week, I'm going to be really confident that we've done enough. And then the retail sales, I mean, I think Tom is exactly right. Look at Core, look at the control group. The only thing that we always tell clients about retail sales is it's just capturing a subset of consumer spending mostly on goods. I like to look at, you know, consumer incomes still growing at a good pace through February, and I think that will go into spending.

So yeah, that's my Takeing different.

So yeah, that's my Takeing different.

Cleveland with us a paid RAO.

Cleveland with us a paid RAO.

We welcome all of you across America and worldwide. Thrilled with the worldwide performance. Apple car Play is the way to get us. It's a new way to get us safer better. Good morning on Android and Google Play as well on YouTube. Go to Bloomberg Podcasts and it's just growing, growing, growing. Thank you for your interest in Bloomberg Podcasts and our live chat out there.

We welcome all of you across America and worldwide. Thrilled with the worldwide performance. Apple car Play is the way to get us. It's a new way to get us safer better. Good morning on Android and Google Play as well on YouTube. Go to Bloomberg Podcasts and it's just growing, growing, growing. Thank you for your interest in Bloomberg Podcasts and our live chat out there.

Really in forum. Good morning of all places, Caracas, Venezuela.

Really in forum. Good morning of all places, Caracas, Venezuela.

Thank you so much for coming to us from Caracas this morning.

Thank you so much for coming to us from Caracas this morning.

Jeff Jason Furman up.

Jeff Jason Furman up.

At Harvard had a really important and I don't want to sum up the economic data here, but he had a really important insight, which is three point nine percent unemployment is different than four point zero percent unemployment. When I see claims and what they did today two hundred nine thousand with a constructive fully employed revision from two seventeen to two ten, you don't get to a four percent unemployment, right, do you?

At Harvard had a really important and I don't want to sum up the economic data here, but he had a really important insight, which is three point nine percent unemployment is different than four point zero percent unemployment. When I see claims and what they did today two hundred nine thousand with a constructive fully employed revision from two seventeen to two ten, you don't get to a four percent unemployment, right, do you?

No?

No?

And you also have continuing claims dipping back below that one point nine, So that looks good. I'm a little skeptical on the three point nine tom that we got last week. I mean, you look at that household survey. You know that is notoriously volatile survey. I think the confidence interval, the plus minus is six hundred thousand on the household employment survey. It was down a bit last month, but it's been volatile in the last year and a half, and it's possible we touch three point nine, but then we see dip back down in the unemployment rate in the months ahead, you know, back to three point seven or something. So I think we're we're gonna stick under four percent for the year. That's that's our forecast.

And you also have continuing claims dipping back below that one point nine, So that looks good. I'm a little skeptical on the three point nine tom that we got last week. I mean, you look at that household survey. You know that is notoriously volatile survey. I think the confidence interval, the plus minus is six hundred thousand on the household employment survey. It was down a bit last month, but it's been volatile in the last year and a half, and it's possible we touch three point nine, but then we see dip back down in the unemployment rate in the months ahead, you know, back to three point seven or something. So I think we're we're gonna stick under four percent for the year. That's that's our forecast.

So the labor market it is still hot. Of course, like you said at the top, you don't see any reason for the FED to cut rates.

So the labor market it is still hot. Of course, like you said at the top, you don't see any reason for the FED to cut rates.

Here.

Here.

Let's try to create a little bit more controversy. Do you put any water in the theory that maybe actually the next move will be a hike.

Let's try to create a little bit more controversy. Do you put any water in the theory that maybe actually the next move will be a hike.

I think you can't rule it out. Why do I say that it's possible to be controversial, that maybe we're just gonna settle in at a bit higher year on year rate of inflation, not you know, not five percent, not six percent like we saw in the middle of twenty two, but you know, three to four percent, something in that range, and then our policy maker is going to be okay with that. Maybe some are maybe some think that the inflation target should be higher, but I think, buy and large, most policy makers want a two handle on a inflation So three to four percent on core inflation is too high. And in that case, if we just sort of linger there, that might open the door to another hike. In our outlook, we put about a ten percent chance on that for.

I think you can't rule it out. Why do I say that it's possible to be controversial, that maybe we're just gonna settle in at a bit higher year on year rate of inflation, not you know, not five percent, not six percent like we saw in the middle of twenty two, but you know, three to four percent, something in that range, and then our policy maker is going to be okay with that. Maybe some are maybe some think that the inflation target should be higher, but I think, buy and large, most policy makers want a two handle on a inflation So three to four percent on core inflation is too high. And in that case, if we just sort of linger there, that might open the door to another hike. In our outlook, we put about a ten percent chance on that for.

The year, So you know, it's a risk. It's not our base price, but it is definitely a risk.

The year, So you know, it's a risk. It's not our base price, but it is definitely a risk.

Katie Chi, your yield up one basis point ten, You're yield up three basis.

Katie Chi, your yield up one basis point ten, You're yield up three basis.

Points this morning.

Points this morning.

Yeah, we are seeing a little bit of a cooling of that knee jerk reaction. You take a look at S and P five hundred futures, they're still higher to the tune of two tenths of a percent. They had been looking at a little pre market gain of three tenths of a percent, So not too much action. But let's keep this conversation going on inflation. That's sticky inflation. What keeps inflation elevated maybe to the tune of three to four percent when you really break apart the components, Well, you.

Yeah, we are seeing a little bit of a cooling of that knee jerk reaction. You take a look at S and P five hundred futures, they're still higher to the tune of two tenths of a percent. They had been looking at a little pre market gain of three tenths of a percent, So not too much action. But let's keep this conversation going on inflation. That's sticky inflation. What keeps inflation elevated maybe to the tune of three to four percent when you really break apart the components, Well, you.

Break apart the components we had.

Break apart the components we had.

We benefited last year from goods prices discillerating quite a bit.

We benefited last year from goods prices discillerating quite a bit.

Falling year on year.

Falling year on year.

It's possible in our view that that's behind us, and goods prices will be sort of flat. There could be even some upside pressure there. So I wouldn't bake in any further disinflation based on that one.

It's possible in our view that that's behind us, and goods prices will be sort of flat. There could be even some upside pressure there. So I wouldn't bake in any further disinflation based on that one.

Another area where I have.

Another area where I have.

The keenest interest in People say to me, look, Jeffrey, look at the private sector rent metrics.

The keenest interest in People say to me, look, Jeffrey, look at the private sector rent metrics.

They're showing disinflation.

They're showing disinflation.

And I say, yeah, a lot of those private sector rent metrics are looking at new leases, so that's only capturing a subset of the market.

And I say, yeah, a lot of those private sector rent metrics are looking at new leases, so that's only capturing a subset of the market.

The BLS metric that's looking at.

The BLS metric that's looking at.

The average rental rate, you know, including people who have renewed leases. That might be a better reflection and five percent rental increase that might be a more a better reflection of reality. That's higher than we saw pre COVID, So that that argues for higher inflation.

The average rental rate, you know, including people who have renewed leases. That might be a better reflection and five percent rental increase that might be a more a better reflection of reality. That's higher than we saw pre COVID, So that that argues for higher inflation.

Core inflation going forward.

Core inflation going forward.

Paid and Riegel are living in the new productivity of America. You're away from three zip codes in Manhattan with a view of a New York City and maybe you can call it the trajectory from Washington up to Boston. Tell us the new productivity you observe in Austin, in Atlanta, I've read about the Georgia boom here a couple of articles the last couple of days. And then out to California. Jeffrey Cleveland the new productivity in America?

Paid and Riegel are living in the new productivity of America. You're away from three zip codes in Manhattan with a view of a New York City and maybe you can call it the trajectory from Washington up to Boston. Tell us the new productivity you observe in Austin, in Atlanta, I've read about the Georgia boom here a couple of articles the last couple of days. And then out to California. Jeffrey Cleveland the new productivity in America?

Do you observe it?

Do you observe it?

Well, yeah, I do, and we definitely are seeing more productivity internally. You know, we've got offices in Los Angeles, Boston, London, and Milan. So I know our London trading floor tunes into this program, tom.

Well, yeah, I do, and we definitely are seeing more productivity internally. You know, we've got offices in Los Angeles, Boston, London, and Milan. So I know our London trading floor tunes into this program, tom.

So hello to those folks. And I think the productivity is maybe it's the key here.

So hello to those folks. And I think the productivity is maybe it's the key here.

You can have higher wage growth four to five percent nominal wage growth, and it not means that you have higher inflation if you get productivity to pick up on a sustainable basis. The last twelve months, I think we've seen that productivity picked up. It's about two percent year on year. So do we get more gains there do we get you know, sustainable two percent type of productivity growth. That's a that's a big open question. We need it because that can keep inflation and check wise we might we might end up at.

You can have higher wage growth four to five percent nominal wage growth, and it not means that you have higher inflation if you get productivity to pick up on a sustainable basis. The last twelve months, I think we've seen that productivity picked up. It's about two percent year on year. So do we get more gains there do we get you know, sustainable two percent type of productivity growth. That's a that's a big open question. We need it because that can keep inflation and check wise we might we might end up at.

Higher levels of inflation or higher rates inflation.

Higher levels of inflation or higher rates inflation.

As I mean, jeff I got thirty seconds left. Did you really swim across the English Channel?

As I mean, jeff I got thirty seconds left. Did you really swim across the English Channel?

Yes, their two thousand and eight, September thirteen, two thousand and eight. It was a Saturday. I believe Lehman was preparing to file bankerscy on that Monday morning. So in the midst of the financial crisis, I just decided to swim the twenty six miles from Dover in the UK to France ten hours and change.

Yes, their two thousand and eight, September thirteen, two thousand and eight. It was a Saturday. I believe Lehman was preparing to file bankerscy on that Monday morning. So in the midst of the financial crisis, I just decided to swim the twenty six miles from Dover in the UK to France ten hours and change.

That's phenomenal.

That's phenomenal.

What was your one observation that you did not expect when you did this amazing feat.

What was your one observation that you did not expect when you did this amazing feat.

What was the thing we learned?

What was the thing we learned?

It's the cold, Tom, It's not the distance. You can train, you can prepare for the distance, it's difficult to prepare for the cold. It was fifty eight degrees fahrenheit in the water that day, so that that was the big challenge.

It's the cold, Tom, It's not the distance. You can train, you can prepare for the distance, it's difficult to prepare for the cold. It was fifty eight degrees fahrenheit in the water that day, so that that was the big challenge.

Jeffrey, thank you so much.

Jeffrey, thank you so much.

Don't be a stranger way out on the West coast out of Claremont and all his work with Peyton and Rigel. Jeffrey Cleveland with us this spring, Cather greifeld in for Paul Swinging. You've got a qualified.

Don't be a stranger way out on the West coast out of Claremont and all his work with Peyton and Rigel. Jeffrey Cleveland with us this spring, Cather greifeld in for Paul Swinging. You've got a qualified.

Guest to drive forward this wall of data.

Guest to drive forward this wall of data.

Yeah, of course we're going to be speaking to now, Jeffrey Cleveland. He is cheap us a condomist over at Peydon and Reigel. Let's talk about what we just learned. Of course, retail sales a little bit cooler than anticipated, but PPI coming in hot for February, increasing by point six percent. Of course consensus had been looking for point three percent. Would love to hear your immediate reaction, because it looks like right now the market's reacting to that PPI.

Yeah, of course we're going to be speaking to now, Jeffrey Cleveland. He is cheap us a condomist over at Peydon and Reigel. Let's talk about what we just learned. Of course, retail sales a little bit cooler than anticipated, but PPI coming in hot for February, increasing by point six percent. Of course consensus had been looking for point three percent. Would love to hear your immediate reaction, because it looks like right now the market's reacting to that PPI.

Well, I mean it's early here on the West coast, so maybe I should start with a little controversy. I don't see the case for raycuts in this data. I mean, just in order of importance for what I'm looking at. Looking at initial claims dropping back below two hundred and ten thousand in the latest week, I mean exceptionally low layoff activity. So that's the sign of I think a still solid labor market. And then if you go next to PPI. It definitely came in hotter than we expected. We already penciled in a point three poor PCE increase four February, so for later this month. So we might have to take another look at this after this broadcast and maybe bumped that up a little. But nothing there that I think. If I'm a policy maker sitting around Washington next week, I'm gonna be really confident that we've done enough. And then the retail sales, I mean, I think Tom is exactly right. Look at Core, look at the control group. The only thing that we always tell clients about retail sales is it's just capturing a subset of consumer spending mostly on goods. I like to look at you know, consumer incomes still growing at a good pace through through February, and I think that will go into spending.

Well, I mean it's early here on the West coast, so maybe I should start with a little controversy. I don't see the case for raycuts in this data. I mean, just in order of importance for what I'm looking at. Looking at initial claims dropping back below two hundred and ten thousand in the latest week, I mean exceptionally low layoff activity. So that's the sign of I think a still solid labor market. And then if you go next to PPI. It definitely came in hotter than we expected. We already penciled in a point three poor PCE increase four February, so for later this month. So we might have to take another look at this after this broadcast and maybe bumped that up a little. But nothing there that I think. If I'm a policy maker sitting around Washington next week, I'm gonna be really confident that we've done enough. And then the retail sales, I mean, I think Tom is exactly right. Look at Core, look at the control group. The only thing that we always tell clients about retail sales is it's just capturing a subset of consumer spending mostly on goods. I like to look at you know, consumer incomes still growing at a good pace through through February, and I think that will go into spending.

So yeah, that's my take.

So yeah, that's my take.

Different Cleveland with us a paidrago, we welcome all of you across America and worldwide. Thrilled with the worldwide performance. Apple car Play is the way to get us. It's a new way to get us safer better. Good Morning on Android and Google Play as well on YouTube. Go to Bloomberg Podcasts and it's just growing, growing, growing. Thank you for your interest in Bloomberg Podcasts and our live chat out there really in form Good morning of all places, Caracas, Venezuela. Thank you so much for coming to us from Caracas this morning. Jeff Jason Furman up at Harvard had a really important and I don't want to sum up the economic data here, but he had a really important insight, which is three point nine percent unemployment is different than four point zero percent unemployment. When I see claims and what they did today two hundred and nine thousand with a constructive fully employed revision from two seventeen to two ten, you don't get to a four percent unemployment, right, do you no?

Different Cleveland with us a paidrago, we welcome all of you across America and worldwide. Thrilled with the worldwide performance. Apple car Play is the way to get us. It's a new way to get us safer better. Good Morning on Android and Google Play as well on YouTube. Go to Bloomberg Podcasts and it's just growing, growing, growing. Thank you for your interest in Bloomberg Podcasts and our live chat out there really in form Good morning of all places, Caracas, Venezuela. Thank you so much for coming to us from Caracas this morning. Jeff Jason Furman up at Harvard had a really important and I don't want to sum up the economic data here, but he had a really important insight, which is three point nine percent unemployment is different than four point zero percent unemployment. When I see claims and what they did today two hundred and nine thousand with a constructive fully employed revision from two seventeen to two ten, you don't get to a four percent unemployment, right, do you no?

And you also have continuing claims dipping back below that one point nine, So that looks good. I'm a little skeptical on the three point nine tom that we got last week. I mean, you look at that household survey. You know that is notoriously volatile survey. I think the confidence interval, the plus minus is six hundred thousand on the household employment survey. It was down a bit last month, but it's been volatile in the last year and a half, and it's possible. We touched three point nine, but then we see a dip back down in the unemployment rate in the months ahead, you know, back to three point seven or something. So I think we're going to stick under four percent for the year.

And you also have continuing claims dipping back below that one point nine, So that looks good. I'm a little skeptical on the three point nine tom that we got last week. I mean, you look at that household survey. You know that is notoriously volatile survey. I think the confidence interval, the plus minus is six hundred thousand on the household employment survey. It was down a bit last month, but it's been volatile in the last year and a half, and it's possible. We touched three point nine, but then we see a dip back down in the unemployment rate in the months ahead, you know, back to three point seven or something. So I think we're going to stick under four percent for the year.

That's our forecast.

That's our forecast.

So the labor market it is still hot. Of course, like you said at the top, you don't see any reason for the FED to cut rates here. Let's try to create a little bit more controversy. Do you put any water in the theory that maybe actually the next move will be a hike?

So the labor market it is still hot. Of course, like you said at the top, you don't see any reason for the FED to cut rates here. Let's try to create a little bit more controversy. Do you put any water in the theory that maybe actually the next move will be a hike?

I think you can't rule it out. Why do I say that it's possible to be controversial that maybe we're just going to settle in at a bit higher year on year rate of inflation, not you know, not five percent, not six percent like we saw in the middle of twenty two, but you know, three to four percent something in that range, and then our policy maker is going to be okay with that. Maybe some are maybe some think that the inflation target should be higher, but I think, buy and large most policy makers want a two handle on inflation. So three to four percent on core inflation is too high. And in that case, if we just start of linger there that might open the door to another hike. In our outlook, we put about a ten percent chance on that for the year, so you know it's it's a risk. It's not our base pes, but it is definitely a risk.

I think you can't rule it out. Why do I say that it's possible to be controversial that maybe we're just going to settle in at a bit higher year on year rate of inflation, not you know, not five percent, not six percent like we saw in the middle of twenty two, but you know, three to four percent something in that range, and then our policy maker is going to be okay with that. Maybe some are maybe some think that the inflation target should be higher, but I think, buy and large most policy makers want a two handle on inflation. So three to four percent on core inflation is too high. And in that case, if we just start of linger there that might open the door to another hike. In our outlook, we put about a ten percent chance on that for the year, so you know it's it's a risk. It's not our base pes, but it is definitely a risk.

Katie Chire, yield up one basis point ten, You're yield up three basis points this morning.

Katie Chire, yield up one basis point ten, You're yield up three basis points this morning.

Yeah, we are seeing a little bit of a cooling of that knee jerk reaction. You take a look at S and P five hundred futures, they're still higher to the tune of two tenths of a percent. They had been looking at a little pre market gain of three tenths of a percent, So not too much action. But let's keep this converse going on inflation. That's sticky inflation. What keeps inflation elevated maybe to the tune of three to four percent when you really break apart the components, Well.

Yeah, we are seeing a little bit of a cooling of that knee jerk reaction. You take a look at S and P five hundred futures, they're still higher to the tune of two tenths of a percent. They had been looking at a little pre market gain of three tenths of a percent, So not too much action. But let's keep this converse going on inflation. That's sticky inflation. What keeps inflation elevated maybe to the tune of three to four percent when you really break apart the components, Well.

You break apart the components we had we benefited last year from goods prices discillerating quite a bit.

You break apart the components we had we benefited last year from goods prices discillerating quite a bit.

Falling year on year.

Falling year on year.

It's possible in our view that that that's behind us and goods prices be sort of flat. There could be even some upside pressure there. So I wouldn't I wouldn't bake in any further disinflation based.

It's possible in our view that that that's behind us and goods prices be sort of flat. There could be even some upside pressure there. So I wouldn't I wouldn't bake in any further disinflation based.

On that one.

On that one.

Another area where you know, I have a keenest interest in People say to me, look, Jeffrey, look at the private sector rent metrics.

Another area where you know, I have a keenest interest in People say to me, look, Jeffrey, look at the private sector rent metrics.

They're showing disinflation.

They're showing disinflation.

And I say, yeah, a lot of those private sector rent metrics are looking at new leases, so that's only capturing a subset of the market. The BLS metric that's looking at the average rental rate, you know, including people who have renewed leases. That might be a better reflection and five percent rental increase that might be a more a better reflection of reality that's higher than we saw pre COVID, So that argues for higher inflation core inflation going forward.

And I say, yeah, a lot of those private sector rent metrics are looking at new leases, so that's only capturing a subset of the market. The BLS metric that's looking at the average rental rate, you know, including people who have renewed leases. That might be a better reflection and five percent rental increase that might be a more a better reflection of reality that's higher than we saw pre COVID, So that argues for higher inflation core inflation going forward.

Peyton Riegel are living in the new productivity of America.

Peyton Riegel are living in the new productivity of America.

You're away from three zip codes.

You're away from three zip codes.

In Manhattan with a view of a New York City and maybe you can call it the trajectory from Washington up to Boston. Tell us the new productivity you observe in Austin. In Atlanta, I read about the Georgia boom here a couple articles the last couple of days, and then out to California. Jeffrey Cleveland, the new productivity in America.

In Manhattan with a view of a New York City and maybe you can call it the trajectory from Washington up to Boston. Tell us the new productivity you observe in Austin. In Atlanta, I read about the Georgia boom here a couple articles the last couple of days, and then out to California. Jeffrey Cleveland, the new productivity in America.

Do you observe it?

Do you observe it?

Well, yeah, I do, and we definitely are seeing more productivity internally. You know, we've got offices in Los Angeles, Boston, London, and Milan, so I know our London trading floor tunes into this program, Tom.

Well, yeah, I do, and we definitely are seeing more productivity internally. You know, we've got offices in Los Angeles, Boston, London, and Milan, so I know our London trading floor tunes into this program, Tom.

So hello to those folks. And I think the productivity is maybe it's the key here.

So hello to those folks. And I think the productivity is maybe it's the key here.

You can have higher wage growth four to five percent nominal wage growth, and it not mean that you have higher inflation if you get productivity to pick up on a sustainable basis. The last twelve months, I think we've seen that productivity picked up.

You can have higher wage growth four to five percent nominal wage growth, and it not mean that you have higher inflation if you get productivity to pick up on a sustainable basis. The last twelve months, I think we've seen that productivity picked up.

It's about two percent year on year. So do we get more gains there?

It's about two percent year on year. So do we get more gains there?

Do we get you know, sustainable two percent type of productivity growth, that's a that's a big open question. We need it because that can keep inflation and check. Otherwise we might we might end up at higher levels of inflation or higher rates of inflation.

Do we get you know, sustainable two percent type of productivity growth, that's a that's a big open question. We need it because that can keep inflation and check. Otherwise we might we might end up at higher levels of inflation or higher rates of inflation.

As I mean, Jeff, I got thirty seconds left. Did you really swim across the English channel?

As I mean, Jeff, I got thirty seconds left. Did you really swim across the English channel?

Yes?

Yes?

There, two thousand and eight, September thirteen, two thousand and eight.

There, two thousand and eight, September thirteen, two thousand and eight.

It was a Saturday.

It was a Saturday.

I believe Lehman was preparing to file bankerscy on that Monday morning. So in the midst of the financial crisis, I just decided to swim the twenty six miles from Dover in the UK to France ten hours and change.

I believe Lehman was preparing to file bankerscy on that Monday morning. So in the midst of the financial crisis, I just decided to swim the twenty six miles from Dover in the UK to France ten hours and change.

That's phenomenal.

That's phenomenal.

What was your one observation that you did not expect when you did this amazing feet?

What was your one observation that you did not expect when you did this amazing feet?

What was the thing with learned?

What was the thing with learned?

It's the cold, Tom, It's not the distance. You can train, you can prepare for the distance. It's difficult to prepare for the cold. It was fifty eight degrees fahrenheit in the water that day, so that was that was the big challenge.

It's the cold, Tom, It's not the distance. You can train, you can prepare for the distance. It's difficult to prepare for the cold. It was fifty eight degrees fahrenheit in the water that day, so that was that was the big challenge.

Jeffrey, thank you so much.

Jeffrey, thank you so much.

Don't be a stranger way out on the west coast out of Claremont and all his work with Peyton and Rigel. Jeffrey Cleveland with us this morning. Commercial real estate isn't part of the buoyancy right now. And instead of talking, you know, we could talk sell side by this stock sell that. How about talking to somebody with a heritage Back to Grubb and Ellis and he's with Marcus and Miltchep in the trenches of this is somethime. Geez joins us right now with twenty six years of like in the trenches work. I love that on Twitter. Whether it's an ex JP Morgan guy, I don't have them in front of me. And it'll take a certain property. It's suburban, it's nineteen eighties. Either they're given the keys back to the bank or the selling it for an eighty six percent discount. How bad is it out there in nineteen eighties? Ugly suburban office buildings that we work used to be in, but they're.

Don't be a stranger way out on the west coast out of Claremont and all his work with Peyton and Rigel. Jeffrey Cleveland with us this morning. Commercial real estate isn't part of the buoyancy right now. And instead of talking, you know, we could talk sell side by this stock sell that. How about talking to somebody with a heritage Back to Grubb and Ellis and he's with Marcus and Miltchep in the trenches of this is somethime. Geez joins us right now with twenty six years of like in the trenches work. I love that on Twitter. Whether it's an ex JP Morgan guy, I don't have them in front of me. And it'll take a certain property. It's suburban, it's nineteen eighties. Either they're given the keys back to the bank or the selling it for an eighty six percent discount. How bad is it out there in nineteen eighties? Ugly suburban office buildings that we work used to be in, but they're.

Not in them anymore.

Not in them anymore.

Good morning, Great to be with you on the program. There are instances of those pretty terrible occurrences that we're tracking and witnessing all over the country, mostly in urban areas, less so in suburban areas, and very limited to exactly what you said. Older product that's obsolete, that hasn't been kept up, didn't have capital improvements, especially in suburban markets where migration has benefited office usage. Look at Florida, for example, the office market there is doing far better than many other markets.

Good morning, Great to be with you on the program. There are instances of those pretty terrible occurrences that we're tracking and witnessing all over the country, mostly in urban areas, less so in suburban areas, and very limited to exactly what you said. Older product that's obsolete, that hasn't been kept up, didn't have capital improvements, especially in suburban markets where migration has benefited office usage. Look at Florida, for example, the office market there is doing far better than many other markets.

What happens to that building?

What happens to that building?

If this was in Quincy, Mass outside one twenty eight too far from Famway Park for me to live there, But there's Quincy Mass typical building belly up the person that bought that for twenty dollars per square foot or whatever, what are they going to do with that property?

If this was in Quincy, Mass outside one twenty eight too far from Famway Park for me to live there, But there's Quincy Mass typical building belly up the person that bought that for twenty dollars per square foot or whatever, what are they going to do with that property?

Mostly reuse.

Mostly reuse.

Office is very difficult to reimagine and reuse. We saw retail go through a significant degree of reuse and reimagination of obsolete shopping centers over the last fifteen twenty years. Much easier to do than office buildings, which has a cost of conversion to other uses and cost of modifications is a lot higher. But there are entrepreneurial and private investors out there with a lot of capital on the side, yes, that are converting these distressed situations to really interesting investment opportunities over the long haul. One really important factor commercial real estate is being judged as a book by the cover of that example that you just talked about, And the generalization is really harmful because apartment fundamentals are fine. They're soft, but they're fine. Retail is coming back strong. Niches like self storage, hospitality, they're all doing very very well. Industrial warehouses still doing very well.

Office is very difficult to reimagine and reuse. We saw retail go through a significant degree of reuse and reimagination of obsolete shopping centers over the last fifteen twenty years. Much easier to do than office buildings, which has a cost of conversion to other uses and cost of modifications is a lot higher. But there are entrepreneurial and private investors out there with a lot of capital on the side, yes, that are converting these distressed situations to really interesting investment opportunities over the long haul. One really important factor commercial real estate is being judged as a book by the cover of that example that you just talked about, And the generalization is really harmful because apartment fundamentals are fine. They're soft, but they're fine. Retail is coming back strong. Niches like self storage, hospitality, they're all doing very very well. Industrial warehouses still doing very well.

Little bit of how he did that. He said, basically, Tom, you don't.

Little bit of how he did that. He said, basically, Tom, you don't.

Know what you're talking about, touch and go, but I do.

Know what you're talking about, touch and go, but I do.

I want to go back to that thought on conversion, because how many you must hear that all the time. Why don't we just take all this unused office space converted into residential Like you said, I mean the cost to do that is very high. But elaborate a little bit more on that. There are some people who are trying.

I want to go back to that thought on conversion, because how many you must hear that all the time. Why don't we just take all this unused office space converted into residential Like you said, I mean the cost to do that is very high. But elaborate a little bit more on that. There are some people who are trying.

To do that.

To do that.

There are and there's examples that work out. If the basis of acquiring the distressed office really justifies the amount of costs that there is, we're seeing other uses start to pop up. It's interesting how versatile the market is. You have like data banks, you have outsourced call centers that are now able to get housed in some of this obsolete or older or highly distressed office properties that weren't even on the radar three or four years ago or before the pandemic. And the one thing that it's also important to communicate the perception is that this threat of what's happening with office use may bring down the entire banking system or may become a contagion for commercial real estate loans. The banking system has a three and a half percent total exposure to office loans as a percent of all loans outstanding, so and half of office space is performing just fine. The newer suburban product. The newer urban product as a ten to twelve percent vacancy rate. It's the older, obsolete urban market that's seeing vacancies of twenty five percent or higher.

There are and there's examples that work out. If the basis of acquiring the distressed office really justifies the amount of costs that there is, we're seeing other uses start to pop up. It's interesting how versatile the market is. You have like data banks, you have outsourced call centers that are now able to get housed in some of this obsolete or older or highly distressed office properties that weren't even on the radar three or four years ago or before the pandemic. And the one thing that it's also important to communicate the perception is that this threat of what's happening with office use may bring down the entire banking system or may become a contagion for commercial real estate loans. The banking system has a three and a half percent total exposure to office loans as a percent of all loans outstanding, so and half of office space is performing just fine. The newer suburban product. The newer urban product as a ten to twelve percent vacancy rate. It's the older, obsolete urban market that's seeing vacancies of twenty five percent or higher.

Well, focusing on the urban core, I want to talk about the path that even got us to this conversation, because the typical narrative is that you look at the pandemic, this shift to hybrid work that really killed off a lot of what you're seeing in the urban core. But you make the point in your notes that office demand, actually it was deteriorating before the pandemic even started.

Well, focusing on the urban core, I want to talk about the path that even got us to this conversation, because the typical narrative is that you look at the pandemic, this shift to hybrid work that really killed off a lot of what you're seeing in the urban core. But you make the point in your notes that office demand, actually it was deteriorating before the pandemic even started.

That's true.

That's true.

That's wild. That is true. That has a lot to do with the fact that millennials were entering marriage age or those that have had already been in that category, or moving to suburbs to buy their first homes, and they were tired of being in the urban core. After ten years of a demographic boom that really benefited urban America, that shift with millennials aging and moving to suburbs that had already started to show.

That's wild. That is true. That has a lot to do with the fact that millennials were entering marriage age or those that have had already been in that category, or moving to suburbs to buy their first homes, and they were tired of being in the urban core. After ten years of a demographic boom that really benefited urban America, that shift with millennials aging and moving to suburbs that had already started to show.

You notice how no one ever talks about They talk about the marriage age.

You notice how no one ever talks about They talk about the marriage age.

Yeah, nobody ever talks about the divorce age. That's where you're moving from the suburbs to wherever. I don't know why I brought that.

Yeah, nobody ever talks about the divorce age. That's where you're moving from the suburbs to wherever. I don't know why I brought that.

Probably I want this is brilliant. I was with a real estate heavyweight last night. I think he owns half the Upper West Side, and I said to him, and I think the media has really got this wrong.

Probably I want this is brilliant. I was with a real estate heavyweight last night. I think he owns half the Upper West Side, and I said to him, and I think the media has really got this wrong.

The magic of your business is there is a loss taken. I get that.

The magic of your business is there is a loss taken. I get that.

But after a seven year old or whatever, when the loss is taken, the market clears and we move on.

But after a seven year old or whatever, when the loss is taken, the market clears and we move on.

I don't think that's talked about enough. Correct expand on that.

I don't think that's talked about enough. Correct expand on that.

That's the benefit of owning commercial real estate for the long term. And if you don't get over your skis by taking on too much leverage, there is very fewsiness is where you can't ride out a downturn.

That's the benefit of owning commercial real estate for the long term. And if you don't get over your skis by taking on too much leverage, there is very fewsiness is where you can't ride out a downturn.

You write it out and you wait, and then you find it a twenty cents on the dollar. Are people really My answer is foreign money is going to come in at fifty cents of the dollar. Where you know, basically this goes back to your hair. Did you grub an ellis? Where's your number on that?

You write it out and you wait, and then you find it a twenty cents on the dollar. Are people really My answer is foreign money is going to come in at fifty cents of the dollar. Where you know, basically this goes back to your hair. Did you grub an ellis? Where's your number on that?

Well, again, on a very selective basis, this is not a repeat of the early nineties RTC and mass scaled discounting of commercial real estate in a fire sale, which is what the RTC was. Well, you're talking about as much more select situations for the most part, limited to office space, maybe some absolutely chopping centers, and so the twenty cents on the dollar kind of a theme is not the overriding outlook for this market. Like I said, many other product types are doing just fine. They're not even close to being in a distress.

Well, again, on a very selective basis, this is not a repeat of the early nineties RTC and mass scaled discounting of commercial real estate in a fire sale, which is what the RTC was. Well, you're talking about as much more select situations for the most part, limited to office space, maybe some absolutely chopping centers, and so the twenty cents on the dollar kind of a theme is not the overriding outlook for this market. Like I said, many other product types are doing just fine. They're not even close to being in a distress.

This has been a huge value.

This has been a huge value.

In a live chat on Twitter's on our YouTube is lit up, i said, thank you so much, don't be a stranger.

In a live chat on Twitter's on our YouTube is lit up, i said, thank you so much, don't be a stranger.

Please caet out my pleasure for great to be with you, And there's.

Please caet out my pleasure for great to be with you, And there's.

Clear talking there.

Clear talking there.

On CIRE commercial at real estate, we like to have the newspapers with us here. Come on at Lisa Safety, what are our boring you or me? And New York newspapers look like?

On CIRE commercial at real estate, we like to have the newspapers with us here. Come on at Lisa Safety, what are our boring you or me? And New York newspapers look like?

All right, so we're starting with the Wall Street Journal. This is an exclusive. It's really in depth, so I'm gonna try and get to the nuts and bolts of it as best I can. But it says a lot of women leaving Goldman sacks because they're not getting those big positions at the company. So the executives decided that in order to run groups in the market's division, so we'll start there, they would need to have certain experience. Now women didn't have certain that amount of that experience. Men were affected too, but bigger impact on women, so a lot of them left. Then you have the asset management side of it. They had changes that were overseen by David Solomon. They created new leadership jobs and men were chosen to fill those positions, some cases passing over women. So this all comes down to Monday, David Solomon plans to host several women partners for dinner at his Manhattan apartment. They're going to face questions about why it hasn't happened, why women haven't advanced over at the company. So this has been an ongoing issue. I mean Solomon became president, when he became CEO, he made promoting women to senior levels like a firm, This was going to be a priority over at the firm. And so these women are saying it's not happening. So what's going to be.

All right, so we're starting with the Wall Street Journal. This is an exclusive. It's really in depth, so I'm gonna try and get to the nuts and bolts of it as best I can. But it says a lot of women leaving Goldman sacks because they're not getting those big positions at the company. So the executives decided that in order to run groups in the market's division, so we'll start there, they would need to have certain experience. Now women didn't have certain that amount of that experience. Men were affected too, but bigger impact on women, so a lot of them left. Then you have the asset management side of it. They had changes that were overseen by David Solomon. They created new leadership jobs and men were chosen to fill those positions, some cases passing over women. So this all comes down to Monday, David Solomon plans to host several women partners for dinner at his Manhattan apartment. They're going to face questions about why it hasn't happened, why women haven't advanced over at the company. So this has been an ongoing issue. I mean Solomon became president, when he became CEO, he made promoting women to senior levels like a firm, This was going to be a priority over at the firm. And so these women are saying it's not happening. So what's going to be.

Done, Katie, What do you think?

Done, Katie, What do you think?

I mean you think about reporting from her own Shri Natarajan, he broke the news last month that Beth Hammock. She was one of the most likely women seen likely to break into the top tier at Goldmen Sack. She's leaving after thirty years. Of course, the details of that departure unknown, but it sort of fits into the broader theme that the Wall Street Journal is covering here.

I mean you think about reporting from her own Shri Natarajan, he broke the news last month that Beth Hammock. She was one of the most likely women seen likely to break into the top tier at Goldmen Sack. She's leaving after thirty years. Of course, the details of that departure unknown, but it sort of fits into the broader theme that the Wall Street Journal is covering here.

It's really really to me a long term cultural issue, which is a sensitive issue. I'm going to say good morning in New Jersey to the Camden Water Company, Camden, New Jersey. I think it's an American water park. I don't have the name in front of me. Who have aggressively done what people are talking about. They really have a balance board with women in management, and it's got to be a cultural decision, doesn't matter if it's Golden Sacks or anybody else.

It's really really to me a long term cultural issue, which is a sensitive issue. I'm going to say good morning in New Jersey to the Camden Water Company, Camden, New Jersey. I think it's an American water park. I don't have the name in front of me. Who have aggressively done what people are talking about. They really have a balance board with women in management, and it's got to be a cultural decision, doesn't matter if it's Golden Sacks or anybody else.

It's great reporting for the Wallster Journal.

It's great reporting for the Wallster Journal.

As you mentioned shrine Otto Roger on the watch at Bloomberg News.

As you mentioned shrine Otto Roger on the watch at Bloomberg News.

What else do you have?

What else do you have?

Sure we're talking about Gerald Levin, This was all over the news. He was behind the nineteen ninety merger of Time Warner Communications. He passed away Wednesday, was diagnosed with Parkinson's disease. But he was known for so many things. He oversaw the purchase of Turner Broadcasting in nineteen ninety six. Also remembered though for that disastrous decision selling Time Warner to upstart America Online at the peak of that Internet bubble. But he left AOL Time winner twenty two thousand and two after the company posted those big losses, and he was eighty four years old.

Sure we're talking about Gerald Levin, This was all over the news. He was behind the nineteen ninety merger of Time Warner Communications. He passed away Wednesday, was diagnosed with Parkinson's disease. But he was known for so many things. He oversaw the purchase of Turner Broadcasting in nineteen ninety six. Also remembered though for that disastrous decision selling Time Warner to upstart America Online at the peak of that Internet bubble. But he left AOL Time winner twenty two thousand and two after the company posted those big losses, and he was eighty four years old.

I had the clearest memories of four ninety nine park In talking to Steve case that more and the clearest memories, and we couldn't figure the transaction out with that said, mister Levin was hugely philanthropic, and Katie, you can give some perspective here. This is a guy that followed the Greyfeld footsteps out of Haverford College.

I had the clearest memories of four ninety nine park In talking to Steve case that more and the clearest memories, and we couldn't figure the transaction out with that said, mister Levin was hugely philanthropic, and Katie, you can give some perspective here. This is a guy that followed the Greyfeld footsteps out of Haverford College.

He graduated in nineteen sixty from Haverford College. He had a degree in philosophy in Haverford.

He graduated in nineteen sixty from Haverford College. He had a degree in philosophy in Haverford.

Which is their heavyweight degree. Yeah, that's like why you go to haverdid.

Which is their heavyweight degree. Yeah, that's like why you go to haverdid.

Yeah, I've full disclosure. I went to Haverford. Yeah, yeah, Well just for the audience. Maybe they don't know, but Haveverford Obviously it's a Quaker founded school and those roots run really deep at Haverford even today. I mean I graduated in twenty fifteen and that was you know still the guiding principal of the schools.

Yeah, I've full disclosure. I went to Haverford. Yeah, yeah, Well just for the audience. Maybe they don't know, but Haveverford Obviously it's a Quaker founded school and those roots run really deep at Haverford even today. I mean I graduated in twenty fifteen and that was you know still the guiding principal of the schools.

So freaking old, No, Lisa, please.

So freaking old, No, Lisa, please.

It was like ten years ago almost, and I've been at Bloomberg ever since.

It was like ten years ago almost, and I've been at Bloomberg ever since.

Okay, she can't come back tomorrow, right, cancel.

Okay, she can't come back tomorrow, right, cancel.

We're talking about people who want to go to Showeo Tani's debut with the Dodgers in Soul next week. It's gonna cost you. It's gonna cost you more than three thousand dollars, five times the face value. That's because you have the secondary market. You have ticket based scalpers. Here's the thing, though, Those scalpers say that they'll accompany buyers to get them into the game, So you actually go with the scalper into the game. I don't know if they'll buy you a drink there while you're at the game, but apparently they're gonna go with you while you're the This is his debut with the Dodgers sold next week because it's like a six games here.

We're talking about people who want to go to Showeo Tani's debut with the Dodgers in Soul next week. It's gonna cost you. It's gonna cost you more than three thousand dollars, five times the face value. That's because you have the secondary market. You have ticket based scalpers. Here's the thing, though, Those scalpers say that they'll accompany buyers to get them into the game, So you actually go with the scalper into the game. I don't know if they'll buy you a drink there while you're at the game, but apparently they're gonna go with you while you're the This is his debut with the Dodgers sold next week because it's like a six games here.

Oh, the Pacific Room Dodgers. Yeah, this is San Diego in La going.

Oh, the Pacific Room Dodgers. Yeah, this is San Diego in La going.

Over to Korea, right, yes, correct.

Over to Korea, right, yes, correct.

And they're gonna do career Japan whatever. I call them the Pacific Room Dodgers because the amount of money they're throwing around. You can only make that back off of massive Asian interest.

And they're gonna do career Japan whatever. I call them the Pacific Room Dodgers because the amount of money they're throwing around. You can only make that back off of massive Asian interest.

I mean three thousand dollars a ticket. That's like Taylor Swift level.

I mean three thousand dollars a ticket. That's like Taylor Swift level.

That's true.

That's true.

No, it's it's huge and a major shot at the baseball I've seen some of the San Diego Padre Prix on this and you know they're excited to go and yeah, it reached true. I remember the first time I saw NFL football in London.

No, it's it's huge and a major shot at the baseball I've seen some of the San Diego Padre Prix on this and you know they're excited to go and yeah, it reached true. I remember the first time I saw NFL football in London.

I was in what a shock. I was in a bar by the Tower of London, even bigger shock and they were really captivated.

I was in what a shock. I was in a bar by the Tower of London, even bigger shock and they were really captivated.

I mean London really cared in that bar about NFL football.

I mean London really cared in that bar about NFL football.

I think it's going to be the same over there. It's a huge deal.

I think it's going to be the same over there. It's a huge deal.

What was your bevers of choice?

What was your bevers of choice?

I have no recollection. There was some grog from the sixteenth century. Are you donner? Do you have one more?

I have no recollection. There was some grog from the sixteenth century. Are you donner? Do you have one more?

One more quickly? We heard about this yesterday to Elon Musk canceling CNN veteran Don Lemon show just days before it was supposed to go on X. There's been this back and forth on X. You know. Lemon said there will be additional episodes of the series that will appear on YouTube, podcast channels and X but Elon Mus said the show's approach was basically just CNN but on social media, and he said that doesn't work. That's the reason why he canceled.

One more quickly? We heard about this yesterday to Elon Musk canceling CNN veteran Don Lemon show just days before it was supposed to go on X. There's been this back and forth on X. You know. Lemon said there will be additional episodes of the series that will appear on YouTube, podcast channels and X but Elon Mus said the show's approach was basically just CNN but on social media, and he said that doesn't work. That's the reason why he canceled.

Lisa Matereo, thank you so much.

Lisa Matereo, thank you so much.

This is a Blueoomberg surveillance podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

This is a Blueoomberg surveillance podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.