Wall Street WeekOn this edition of Wall Street Week, Centerview Partners Senior Counselor Richard Haass tells investors to fasten their seatbelts in dealing with geopolitics. PGIM Real Estate Co-CEO Cathy Marcus says that doom and gloom around commercial real estate is overblown. Willett Advisors Chairman and CEO Steve Rattner looks at why US automakers approached electric vehicles with so much exuberance, and Aperture Investors Chairman and CEO Peter Kraus sees opportunities to buy even amid high valuations.
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The global push into infrastructure, breaking the IPO logjam in text.
The financial stories that sheep.
Are work cutting inflation without losing jobs. Do we need rate cuts? And if so? How many? Investing in a time of geopolitical turmoil.
Through the eyes of the most influential voices.
Ten Rogueff Economists of Harvard, former FDIC had Shila Bert ge CEO, Larry Kulp, San Francisco FED President Mary Daily.
Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
The IMF warns aboug growing US debt as it meets in Washington. Tesla lays off ten percent of its employees, and Fetcher Pal says he wants to wait to be sure about that inflation. This is Bloomberg Wall Street Week. I'm David Weston this week. Steve Ratner of will of Advisors on EV's losing their momentum.
The industry has been criticized for decades, has been behind, and so they really wanted to be ahead of the curve.
And Kathy Marcus of Pigeum on timing the commercial real estate market.
June series could likely be a very attractive entry point.
We begin with geopolitics at the top of the news again this week, in the wake of the Iranian strikes against Israel last weekend and then Israel's drone strikes in retaliation at the end of the week, we asked amb Bessador Richard has A's centerview partners and author of the news at are Home in a way, how much escalation we could see.
We're potentially into a cycle of escalation, not definitely, and if it were to happen, I think the most obvious area, other than the emotional reaction to violence, there would be did the Iranians take steps to close down the straits of Homeboos?
Did the calculus change, even if subtly, with the role, whether tacit or active, of Saudi Arabia, UAE and Jordan Because retrospect there are reports that in fact that helped with the Israeli defenses, which I think may be something different in that region.
It does it shows you just how alienated they are from Iran and how worried they are about the Iranian threat. But at the same time, when Iran is not front and center, and if we were cycle back to Gaza or the West Bank, it's difficult to these countries to move closer to Israel given their differences over the Palestinian issue. So you've almost got a Middle East now that's operating along different fault lines, the Israeli Iranian one directly, what's happening in Gaza, what's happening in the North, which has gotten worse in the last few days, between Israel and Isbela.
Many of us follow the news carefully, whether on TV or reading the New York Times, Wall Street Journal, but much of what's going on we don't see. It's below the services were you were part of that. When you're in the State Department with Colin pow you've been in those rooms. Give us some sense of what you think maybe going on that we don't know about it, and particularly what the US role is or should be in this.
Well.
The big thing is the is the US is trying to be reassuring to Israel at the same time they're trying to urge them not to respond against Iran. The parallel here, David is when I was at the White House in nineteen ninety one, it was the opening.
Days of the go for Iraqi.
Scuds were landing on Israel, and we the Bush administration Bush forty one prevailed upon the Israelis not to retaliate directly against Iraq. We were worried that could break apart this coalition we had built, but we were in a very strong position. Then. We had half a million American men and women in uniform over in the Middle East.
We were at the center of it.
The Biden administration does not have that kind of influence over Israel right now, so I think It's hand is somewhat weaker.
A turn fo Roe, if you went to Ukraine, there are a lot of reports that the Russians are really putting more and more pressure on Ukrainian forces in the east of the country. And we have this debate going in the United States and efforts in Europe to try to give more support to Ukraine. How bad is the situation do you think.
Well, it's bad, it's getting worse. The shortages of munitions, the.
Shortages of equipment is it's frustrating, it's tragic, it's irresponsible, let's be honest. Hopefully the House of Representatives will correct this and reopen this figot of aid to Ukraine, and if they do, Ukraine will not be able to liberate Crimea or the Eastern Lands. But they'll be able to hold the Russians at bay, as they've pretty much done for the best part of the last two years.
So this is critical.
This is critical for not just for Ukraine, but for stability in Europe, and this is critical really for stability in the world. Chinese are taking note what we're doing here, and people are judging the United States. You know, when you're a great power, you don't have the luxury of doing things in isolation. What you do on one square of the chessboard affects inevitably how you're perceived by friends and foes alike everywhere else.
Richard, you always take a strategic view of these things, not just tactical, but given what you just said about Ukraine at this point, realistically, are we, if I can put us together with Ukraine in the Western world, are we playing for a tie rather than a win? As you said, it's unlikely that Ukraine anytime soon is going to liberate the eastern part of the country.
Look, tie is not as good as a win, but it's a hell of a lot better than a loss. And I believe given Russia's scale, given its war economy, the best Ukraine can get for the foreseeable future through military force is a tie. Then I think over time, and this may have to wait, David, beyond Vladimir or Putin. I think Ukraine, if it has close ties to the EU, close ties to NATO, we continue to arm it can play for a win, not through military liberation, but through diplomacy and the use of economic coercion. So you almost need to break this down in phases. For the foreseeable future, Let's get a tie. Let's get a situation where Ukraine can continue to exist as a viable, successful country, where Putin is frustrated. Then over time we can get Ukraine what's rightfully theirs.
So Richard will of course try to address long term investors, big time investors here at Bloomberg. Give us your best advice that you would give to investors right now, you talk about the Middle East, you talk about Ukraine. By the way, we haven't mentioned China with now new tariffs on Chinese steel coming in in an election year, and we have an election year which itself may pose some real issues for the United States and even for financial markets. If you're an investor, what do you need to have on your dashboard. What do you need to be most concerned about.
You need to have a seat belt and keep it fastened, David, more than anything else. Look, you've got the two parties competing.
Over how tough they can be on China, over protectionism to some extent, which is all problematic, and obviously it has all sorts of consequences for inflation. The pressure will be to titan flows across the border whatever, even though that's a good thing, I would argue in terms of security. Also, again, that could add to inflationary pressures if we suddenly don't have so much.
Labor that's available.
I worry, David about the seventy five days between election day and inauguration day. That's the period four years ago when January sixth happened.
Imagine this is a close contest.
Imagine we have not just division and dysfunction, but political violence.
A lot of people around the world could get unnerved.
A lot of foes around the world might see that as a moment of opportunity.
And then again after inauguration day.
What would be functional or dysfunctional is what's happening over this aid bill. Is that an exception to the rule. Will that be the rule after the election. So I think there's lots of issues that obviously if mister Trump water win, does he try to undo a lot of the architecture in the world that has served this country well over seventy five years.
Richard is always so very helpful to talk with you. Thank you.
That is Richard has of Center View Partners. Market spent the week trying to come to terms with that geopolitical risk, and in the end it may have been the path of the FED and some doubts about big tech that drove equities as much as anything else, with the S and P five hundred down three percent for the week to ended forty nine sixty seven, dipping below that five thousand mark for the first time since February and well below the consensus year end number of our Bloomberg elves of fifty one seventy. The Nasdaq did even worse, giving up five and a half percent on the week, while the yield on the tenure was up just under ten basis points to end the week at four point six percent. To take us through it all, welcome back now, Peter Krauss, Chairman and CEO of Aperture.
Investors, Peters such a delight to have you with us.
Thank you. So give us your take on what the markets went through, because we did have the geopolitics at the beginning in the end, and then we had a fair amount of speculation about the FED.
In between, well, there was some mixture. I agree with that.
I do think the geo politics kind of resolved itself with Israel taking a somewhat modest approach to retaliation to the Iran attack. I think the bigger issue is the combination of how people perceive the Fed's behavior and what the FED will do over the course of the year, and how that interplays with the valuations in the marketplace. Coming into the year, as was true last year, people were quite optimistic that the FED was going to cut rates. Inflation data actually early in the year looked like it was benign and actually getting better, and then it got strong and then the FED said no, I'm not going to cut rates.
In the market ultimately was very unhappy about.
That, and so what I think we're seeing is people reassessing their positions as a result of the FED saying I'm not going to cut rates. There's also a scenario that people believe could be happening that if the FED doesn't cut rates and in fact companies reporting weaker earnings, then the FED maybe behind the curve and could create a recession.
And that's also causing people to take off.
Risk at the present time, and that may be some of what we see in the tech world.
The FED says, at least it's concentrated on full employment and inflation period, not so much worry about what happens to corporations and the consequences of that. Do we believe them. I mean, they haven't been too concerned about loosening financial conditions.
I think right now the economy is relatively strong and it's actually in the numbers, and I think the FED, when the economy is as strong, actually sticks to those two principles.
If the economy really weak, then they would start.
Worrying about the impact that corporations might have on the overall economy if in fact they started laying off workers, and if in fact they had defaults on their securities and we had real chaos in the market and the equity market then would go down dramatically, and then I think the FED would start.
Paying attention to that indicator as well.
But when the market and the economy is relatively strong. The Fed's going to stick to its two principles.
The value of equity Designer stated is basically a discount of future cash flow, which you're expected to do, and that it's important what the discount rate is. So if the interest date's higher, that means the stock values today is lower, particularly with some of the stocks that are expecting it in the out years not having it right away. Is that a simple explanation for what may be going on right now that we were going too far too fast with the equity evaluations.
Well, it's certainly part of the explanation, but I think it's maybe a little bit to one, you know, one indicator, one dimensional, thank you, one dimensional.
I think it's I think.
What we're seeing is more sophisticated than that, or more nuanced than that.
I think that earnings are going to go up.
The market is reflecting a relatively strong economy. The multiples at which stocks trade, which is related to the discount rate, that may be under pressure a bit. Remember we had a pretty fast increase in stock prices at the beginning of the year. Sp was up ten percent, NASDEK was up twelve or thirteen percent. Even the tal which was lagging, was up five or six percent in a short period of time, and that's usually what you get for a whole year. So I think that investors are taking a breather effectively, and they're reacting to this lack of FED enthusiasm for cutting rates. There's also another question of what does the yield curve shape look like.
You know, the yield curve shape has been.
Inverted for a very long period of time relative to history. That creates capital allocation that is not efficient, because when you have interest rates in the short end that are higher than industrates in the long end, investors then don't take risk. In fact, you know they're piling into shorter rates because they're more attractive than longer rates. That has a tendency to effectively retard economic growth. That's the main point of the FED actually having an inverted gild curve.
But they can't keep it like that forever.
Thank you so much for Peter Crass. It's really great to have you always. Peter Crasse of Avererateuur Investors. Coming up, we take a close look at the specific asset class of real estate, commercial and otherwise with Kathy Marcus of PGM real Estate.
A lot of the Gyman gloom about the sector has been somewhat overblown.
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This is Wall Street Week. I'm David weston commercial real estate investments. At least some of them have had a hard time of late, but there may be signs that we've seen the worst of it. With news this week that Ken Griffin is going forward with his sixty two story office tower on Park Avenue, and Bank of America is saying it's seeing losses on its office property loans. Easy for the perspective of a major real estate investor. Welcome back now, Kathy Marcus, co CEO and Global Chief Operating Officer of PGIUM Real Estate. Okay, so tell us where we are on the cycle. Last time you were with us, you said it's coming. Basically, the repricing is not quite done yet. Where are we on the repricing?
In terms of the repricing, it's about twenty percent on average across the sectors, and that can range from something like manufactured housing that has had really almost zero declines to office that's closer to thirty five percent, So at peach and real estate, we've projected that by the end of the day sort of peaked a tross, it'll be probably on average twenty two percent. So for a twenty we're very close, and so we're feeling a lot better. And you know, from my perspective, a lot of the gum and gloom about the sector has been somewhat overblown.
So I'm sure you're not a market timer.
At the same time, you have to have some sense of that cycle, because if you wait too long, the price can come back up.
And you lose some opportunities.
Do you have any sense of where it really makes sense you need to get back in.
We're advising our investors that June thirtieth could likely be a very attractive entry point, and at that point it's possible that maybe you're a quarter early, maybe there's one more quarter of some value declines, but in this case, we really believe that it's better to be a quarter early than a quarter late. There's broad consensus that there's a lot of capital on the sidelines that is going to come in as soon as they feel like the values have bottomed.
We've heard some talk about a wall of maturities?
Is there a wall of matoritis coming where people are going to all have to refine its at the same time and have problems.
There is a wall of maturity? Is There's lots of different numbers out there. One of the more popular numbers is two point two trillion dollars of maturities that are coming somewhere between two thousand and four and two thousand and seven.
I've been at this.
For a little over thirty five years. In that time, there have been at least three other times where a wall of maturities was about to crush us any minute, and it never came to fruition. And what happens in real life is very different than what a chart on a piece of paper is going to tell you. The fact is that borrowers get ahead of their maturities. Loans are extended, loans are restructured, and loans are repaid. And even in a very capital constrained environment like we're in right now, loans are being repaid every day.
We tend in the media, we tend to talk about real estate or commercial real estate, but how specific is it? Even within the office space, some offices presumably are created more equal than others.
There's a lot of divergence in the office space. And it's a really good point because in reality, especially if you look at the public markets, the public markets are pricing office the sector broadly as if it's a very homogeneous sector, and it's not a homogeneous sector. It's never been a homogeneous sector. But right now it's the least homogeneous that it's ever been. And there are you know, as many people have talked about winners and losers in the office sector, and what do the winners look like. The winners generally have some level of green certification. We've seen recently that there's about a fifty percent difference in the availability rate in office buildings that have some level of green certification are close to transit. There's a huge difference in how those assets are faring.
At what point does it make sense to invest in an existing office building to bring it up upscale when it comes to things like green and office air quality.
That's actually a very strong strategy right now, and in particular in Europe. In Europe, you know, one of the investment theses that we believe very strongly in is in taking existing office stock in someplace like Paris and investing to make it enable it to have the EESG certifications that both tenants and then ultimately investors are looking for.
So we're going to talking about offices. What about multifamily dwellings, I mean, where does that stand? Because we've seen some sort of a suppression in the building of new homes.
Yes, for sure, we're seeing a suppression in supply of new homes, but also in sales of existing homes, which is really being driven by interest rates.
So we're very we have a.
Lot of conviction around the living sectors broadly, and in particular in this idea of people renting for longer. More people renting for longer, so there's a lot of growth in the population cohort that tends to rent. Single family dwellings, and single family dwellings from an ownership perspective, are less and less attainable by people because of a lot of trends that we've talked about, this longer, higher for longer interest rate and environment, the fact that there's not a lot of supply of new homes. All of that leads to you know, less and less people being able to afford to actually buy a single family home and therefore they're going to rent one. So historically the pricing difference, the cost between renting a single family home and owning a single family home has been somewhere in the thirty to thirty five percent range. Now, because of interest rates and the cost of for sale housing, it's closer to seventy percent. So it's really like an historic delta, and it's going to take a while. It will come down, but we think it's actually going to be years before it even gets close to forty percent.
One of the.
Topics we taluched on this last time as well, and that's data centers. We hear about data center's an awful lot. Where is that market right now? Is it close to saturation?
I wouldn't say it's close to saturation. From a demand perspective, there's still a tremendous amount of demand. There's a very long lead time in terms of you know, bringing a data center online a law if you will, It can be years because first you have to get the power and then you start building. So it really can be and there are certain markets in the US where it's years to get the power that you need. And if you think about, you know, the investment thesis and the demand side. You think about the ubiquity of cloud computing, and you think about the continued adoption of AI. You know, we see a long term demand fundamental here and you know you also it's very much of a landlord's market right now, and the rental increases have been double digit and are expected to continue.
Okay, thank you so much, Kathy, It's always great to have you with us.
Come back again, please.
That's Kathy Marcus of PGIM the the news this week of cutbacks at Tesla. We're just the latest in a series of setbacks in what seemed to be before a steady march toward the world of electric vehicles. To provide some perspective on that world and whether we may have gotten.
A little bit ahead of ourselves.
Welcome back now, Steve Ratner, chairman and CEO of Build Advisors, who invest the personal and filmanthropic assets of our founder and majority shareholder Michael Bloomberg.
Steve, welcome back. Great to have you here. Thanks so much.
David.
Of course, you know the auto industry so well. You took it apart and put it back together for President Obama. In fairness, you know, EV's where are we is it as bad as it looks right now, because at first it was really the cats mew and now the bloom is off the roads.
Look, it's so like so many things. You start something new, people get excited about it. You do get a new often into a little bit of a rational exuberance to borrow Allen Greenspan's famous phrase, And there were all kind of resets, and so that's what's happening. You had a lot of early adopters, you had a lot of enthusiasm, and I think as to settle down, people have taken a step back and taken a look around. As you know, there's been a much greater emphasis on hybrids, which are doing really well. So people haven't given up the idea of an energy transition. They're just a little worried about EV's, particularly about the range anxiety.
Representative Hayley Stevens of Michigan Service Steve Ratner on President Obama's Auto Task Force and her district outside Detroit has a lot at stake in the move to EVS. She acknowledges that there's some hesitation after an initial spurt, but says it should come as no surprise.
We were never expecting a linear trajectory of growth. We've certainly seen big numbers coming out eighteen percent a million EV sold. Very pleased to see where we are this year technically over the last year and the year before that, but we realized it's going to be a little bit more of a curve than just that straight linear line.
It's not so much that consumers don't want evs as it is that they want them at affordable prices.
According to JD Power Consumer.
Research, there are three key factors that consumers look for to transition to an EV.
The first is is there an EV.
Substitute that meets their needs? The second is can they afford it? And then the third will be infrastructure work for them. So when we break down those first two and we look at where manufacturers really have the most impact today, we compare availability of evs to ICE, and only forty three percent of the market is covered with a viable substitute, and that's relative to consumer preferences.
Consumer preferences relative.
To the segments, the brands, and the price that they want to pay. Premium segments have more market coverage at seventy three percent. But now as we're poised to move into that early majority phase. There's just not enough coverage for mass market segments.
If part of the problem with evs are the prices, why did the big automakers start with a high end of the markets. Steve Rattner says it was understandable given the history of the industry and some of the mistakes made in the past.
Look, I think part of what went on in Detroit specifically is the industry has been criticized for decades, has been hind that it missed, missed SUVs and it's compacts and miss system. It's that, and so they really wanted to be ahead of the curve, and GM, going back to its investment and crews and so forth, was determined to be ahead of the curve. I think they also made a determination, which I'm not sure was wrong, that the early buyers were probably going to be high end people because they had the income. They didn't matter as much that the cost of the car was greater. They had more commitment, perhaps to the energy transition aspect of it. And making an inexpensive EV is tough. It's really tough. Making anything small and in expensive in Detroit is tough, but EV's especially tough.
So I don't think it was.
It may not have been absolutely perfectly pumped, but you don't get everything one hundred percent right.
There is, of course a middle course for those in the market for a new car that is environmentally friendly or at least friendlier.
Last year, ED year over year growth was fifty percent.
Plug in hybrid year over year of growth was thirty six percent. But evs outsold plug in hybrids four to one, and the reason is because there are a lot more evs available than plug and hybrids. You know, there's a consumer element to this question, and then also the manufacturers. Manufacturers have to balance their portfolio and meet the emission requirements.
But from a consumer standpoint, we do.
Collect data from both EV owners and plug in hybrid owners, and our ownership data tells us that overall consumers are very satisfied with evs, more so than he has in almost every category that we measure, and especially in that category of the total cost of ownership. It's much higher satisfaction for evs. But that said, p has our great.
Introduction to evs, and our data shows that seventy percent of plug and high owners are very likely to consider stepping up into an EV and.
There are people who want to go right into evs and as I said, a lot of the early adopters have and there are others who are committed and believe in climate change. Really they just simply want to save money on fuel, doesn't matter, and they're going to take the hybrid step. Hybrids have been around a long time, and they again, they went through their.
Own sort of cycle.
They caught on for a little while and then you kind of forgot about them. And now every carmaker is going to have a hybrid version I think of most of their cars, and I think it's great for people to have a set of choices.
Steve Ratner is going to be staying with us as we turn to the broader question of investing in a world of higher rates and higher geopolitical risk. That's the next time on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
This is Wall Street Week. I'm David Weston.
Steve Ratner Will Advisors is still with the So, Steve, we love to talk about investing. Get your thoughts. You have an awful lot of money you're responsible for putting to work.
So give us your.
Sense, particularly right now, with higher interest rates for longer, something that you anticipated on Wall Street we a couple of years ago, it's come to pass. How is that affecting your investment decisions?
Yeah, I think we do have higher interest rates for longer, and we have been cautious about the equity markets for some time. Obviously that was not completely correct last year in the first few months of this year, but I'm never.
Going to get it exactly right.
I feel comfortable with being in a somewhat defensive posture. I think I've said on this program before, we pivoted a lot toward credit because the risk award ratio between credit and equities had really narrowed dramatically with interest rates going higher and giving us a lot of opportunity and credit, and that is still our position. The market has remained more resilient in the face of a rising ten year for the first part of the year than I would have predicted the last week or so. Obviously this month, even the market is certainly taking into account the fact that the probability of FED rate cuts I think is close to zero for the balance of the year, and so we're going to maintain a reasonably defensive position.
What are you if it's going to do?
I would take slight Larry Summers didn't say exactly what he was The headline said he said, but what I think he actually said was a fifteen to twenty five percent chance that the next move was up. And I'm going to take the other side of that bet. I think for the Fed to raise interest rates in this environment, election year, no election year, Leome politics aren't even part of it. I think it's would take an enormous market upheaval, a revolt against the inflation numbers we're seeing now. That said, the inflation numbers are not good. Inflation really does seem stuck in the three and a half to four percent range. Real wages, nominal wages arising a bit faster, which is good for real wages, which is good for the real economy, but doesn't really help you get inflation down, may keep it from going up some more, and so the Fed at some point may face a tough choice. There's no question that the economy has been more resilient into higher interest rates than anybody probably would have predicted, and Fed at some point is going to have to deal with that.
Now, one of the things voke Larry one more time has sat in this program more than once. Is part of the reason why the economy seems to be more resistant higher interstrateges is because he thinks that neutral rage, which we can't exactly calibrate, is higher than what the Fed thinks it is. Where are you in terms of the longer term, not just what happens this year, but in the longer term, are we looking at a higher interest rate environment? And yes, in higher inflation environment, we're not talking about two percent, we're talking two and a half.
We're talking at three.
Well, I'm going to leave the theory of all this to Larry and Olivia Blanchard and all the real economists to sit there and debate our start and all this kind of stuff. But look, if you assume inflation is even two percent in the long run, and you assume investors want something like a two to three percent term premium for taking the risk of what might happen over a ten year or twenty or thirty year period, then four or five percent interest rate on a risk free basis is not unreasonable. And so I think we all got a lot spoiled. We're worried about the other side, the secularstagnation side during the during their first part of the century. But now we're facing the opposite issue, and I think we have to expect interest rates to hire for longer, and that's a shock to the system, especially for first time home buyers.
A shock to the system. One that may explain perhaps your tency sy. Let's take a look at credit, because in that world, credit might be a little bit more attractive because there's a higher yield than for example, stocks, to have a higher discount rate. At the same time, as you said, private credits really interesting, is that getting crowded because an awful lot of people are talking.
In private credit right now. It has gotten crowded.
Partly there's always supply and demand, and yes, it has definitely gotten more crowded. I think when probably we talked about it last time, was the sort of the golden moment where you had high base rates and you had high spreads and we were able to put money to work at ten percent on a floating rate basis in really secure credits, and that seemed to us to be an exceptional opportunity. Base rates are still exactly the same, but the spreads have narrowed one hundred and two hundred basis points a bit. The banks have gotten a little less worried about their own situation. They've come back in the market, and as you said, there have been a slew of private equity funds raised out there to do private credit, and the demand hasn't quite been as strong. Private equity is still pretty slow business at the moment, and so the demand hasn't been quite as strong, and so we haven't certainly reduced our private our private credit, or any of our credit, but it's got certainly gotten harder to find new things to do.
To add Steve tals U about geography, we talked about in the past, We talked about China ed various times. Your views have changed someone on that is, by the way investors views have changed. As I look at the numbers, what is attractive to you now right now?
Geographically, I think the US is still a pretty extraordinary, pretty extraordinary place. The performance of this economy in the face of everything going on here in the world and so on, none of us, as I said, would likely have predicted this four percent inflation three and a half. It's not great, but it's not cataclysmic, and hopefully we can get that down. But you have decent consumer spending numbers that just came out this week. You have incredible jobs numbers, as I said, you have real Way just still going up a bit. I think the tech community has kind of pulled itself together AI, which we can debate. It's a little bit like EVS. You can debate is it going to be big, is it going to be medium, whatever, but it's going to be something. And the US is clearly the leader by a wide margin in AI, and so I still feel very optimistic here. China has become a value stock basically that you can buy very quality companies at ten times PE's that are still growing reasonably, and that is just very attractive. The political risk is enormous and it's scary, and I would certainly not want to be a China at the multiples that we're there two or three years ago, and we wouldn't be if they were. I was just in India a few months ago. Definitely, I think they're finally getting it together. But that stock market has had a pretty big run, and so it feels like it a bit price to perfection. And Europe, as I've said many times on this show and elsewhere is really not great for a whole slower reasons.
I'm not getting better.
They've just got one challenge after another and they're not dealing with it terribly well. But they've also got a tough hand to play, and so we've been very, very absent from Europe.
You didn't mention Japan because we have some people come on the program and say, Japan really is an opportunity again where it wasn't for many many years.
Are you seeing as a potential opportunity. I should have mentioned Japan.
I was also there in the last six or eight months, and it's a bit like India. It's definitely come back, gotten itself together for the first time. You've got wages growing, you've got the economy growing.
But again you've.
Got the problem that the stock market does a pretty good job of anticipating this sort of stuff, and so the stock market has had a strong run, and so it makes you a little cautious. The end has obviously had a big depreciation against the dollar, which in a way could be attractive if you want to bet on the end or hedge it, I guess. But so we've been we find Japan interesting, but a bit like India might be a little bit late to the party.
Steve, it's such a treat having you here. Thank you so much of the time. That's Steve Rattner of will It Advisors. Conventional Wisdom, Paul Krugman writes, very heavily tends to reflect the preferences and the interests of the elite. A fair number of those preferences of the elite are being upset these days, like the preference for investing in iPhones.
The overall theme this time around is a nearly ten percent shipment decline on an annual basis for Apple. It's the most significant decline of any of the phonemakers they track. It indicates that Samsung is back in the number one global sport ohone sales position, or.
The preference for buying a new Tesla, which it turns out isn't strong enough to justify all those employees.
This is a company that ended last year with over one hundred and forty thousand people, so assuming this is company wide, we know it's a global According to Musk's email to staff, that would be more than fourteen thousand p people.
Things are certainly changing in the oil industry, as long as most of us can remember, the world has had something of preference for Middle Eastern oil, judging by how much it's bought. But now we learn the United States has actually passed Saudi Arabia, not to mention Russia as the largest global oil producer. Speaking of Russia, there was a day when we knew for certain the Republicans were the ones to be the toughest on the Russians.
The ideas of freedom now are on trial. If they don't work, there will be a reversion to not communism, which has failed, but what I call a new despotism, which would pose a mortal danger to the rest of the world because it would be infected with the virus of Russian imperialism, which of course has been a characteristic of Russian foreign policy for centuries.
But now we have the de facto leader of the Grand Old Party inviting mister Putin to invade European countries if they don't pay as much as he'd like on defense.
You didn't pay your delinquent, he said, yes, let's say that happened.
No, I would not protect you.
In fact, I would encourage them to do whatever the hell they want.
You gotta pay you gotta pay your bills.
And maybe the biggest surprise of them all comes from the world of college sports. Until now, we thought we knew that, for whatever reason, audiences prefer to watch their college basketball played by men rather than women. But thanks in large part to Caitlin Clark, those days are gone. Her University of Iowah Hawkeyes battled South Carolina for the national championship in front of eighteen point seven million viewers, which was not only more than watched any other men's game, it was the largest audience for any basketball game men's or women's, amateur or professional since twenty nineteen.
That's the next evolution of college women's best way.
Now, Ms Clark heads on to start for the Indiana Fever of the WNBA, and we'll all get to see what magic she can work.
There, no matter what the opponent was. I prepped the exact same way. I prepared the same way. I brought the same fire, I brought the same energy, And I think that's the biggest thing going in the into my w n B A career.
That does it.
For this episode of Wall Street Week, I'm David Weston. This is Bloomberg.
See you next week.
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