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- [00:01]
Carol Massar
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- [01:29]
Podcast Host / Narrator
Radio News this is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Massar and Tim Stanvak on Bloomberg Radio.
- [01:54]
Carol Massar
We had some more news, David out of Washington between the President and President Putin.
- [01:58]
David Gore
Yeah, the two of them. I spoke by phone today. This wasn't previously announced. In the middle of that call, we got a post from President Trump on Truth Social indicating that the call was underway. And I think that's the first time we've kind of seen that happen. The President I don't know if pausing the conversation, but tweeting or posting in real time that the two of them are talking. And then there was a subsequent post indicating that they'd had a conversation for about two hours where they discussed all manner of things. The war, of course, and maybe the prospects for another meeting with the two of them. Let's talk to Bloomberg News White House and National Security Editor Michelle Jem Risko, who's in Our Bloomberg Washington, D.C. bureau. She's been tracking this story over the course of the day. Michelle, this is kind of the appetizer to an in person conversation that's gonna take place tomorrow at the White House. President Zelenskyy is gonna be in Washington to meet with President Trump. And President Trump said the conversation he had today is going to inform what he says to President Zelensky, get us up to speed on sort of what the contours of that conversation are likely to be tomorrow.
- [02:52]
Michelle Jem Risko
Yeah, well, never a dull moment over here, David. So we're following the developments minute by minute. And yes, just this morning we heard about this Putin Trump phone call that would be it to take place. So we did get a little bit of a preview of their later a meeting in person that Trump has forecast. But to jump ahead just to tomorrow. Yes, this meeting with Volodymyr Zelensky is a very highly anticipated one, obviously something that Zelensky has been seeking for some time. We expect one centerpiece of this meeting to be the potential for the US to provision Tomahawk missiles to Ukraine. At least that's Zelensky's wish. That is something that we expect may have come up in the conversation today between Trump and Putin as it is something that is a highly sensitive topic, obviously to Russia as well. And Putin himself has kind of threatened that the war would enter a new stage if this were to happen, if this exchange were to take place. While Zelensky, for his part, is obviously constantly looking for more military support that can help him end this war and end this invasion.
- [04:03]
Carol Massar
Yeah. Does it feel like we're moving closer to an end here? I'm trying to kind of read the back and forth here, the two hour phone conversation, President Zelensky at the White House tomorrow. And we have seen as of, as of late, Michelle, it feels like President Trump in the White House leaning more on the side of Ukraine. But we know that that can also change rather quickly. So can you kind of gauge, you know, where we are in this process and the possibility of an end, the White House playing a significant role in putting an end to this war?
- [04:33]
Michelle Jem Risko
Yeah, I mean, always very dangerous, as you know, Carol, to predict the end of these things. But we can say, I mean, first to your point about the evolution of this relationship between President Trump and Zelensky, that has changed quite a bit, even just this year. I mean, we all remember the Oval Office meeting that did not go well before. There was the Oval Office meeting that did go well with Zelensky at the heart of both. And I think there is a long strain now of a month's, months, long episodes of Trump getting publicly frustrated with President Putin. And so the tide did turn in that sense, and now we seem to be kind of coming toward a middle ground. Flying high off of last week's developments in the Middle east, we have a president who's even more emboldened on his peace mission, so to speak, and he's looking to do anything he can to bring a resolution to this war that he admittedly had said he would end on day one when he was back in office and has been the most elusive of the eight wars that he claims to have resolved. On one side. He says this one is much trickier to solve. And so he's doing everything he can to make sure that at least it looks like that things have calmed down. But we are in a war that's in its fourth year and it's not going to be an easy end, as even Trump admits. These two leaders, Zelensky and Putin, don't seem to like each other very much. So it's going to be a bit difficult to bring them together. But we do see a lot of wheels turning in terms of new mechanics, new meetings that otherwise wouldn't have happened and would be kind of surprising to take place. But if not for Trump's willingness to kind of bring people together and at least hash things out in person, on.
- [06:18]
David Gore
The phone and in person. Michelle, thank you very much. Always great to talk with you, Michelle. Jem Risko is a Bloomberg News White House and national security editor, cutting us up to speed on the conversation between President Putin and and President Trump.
- [06:29]
Podcast Host / Narrator
Stay with us. More from Bloomberg businessweek Daily coming up after this.
- [06:36]
Carol Massar
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- [07:25]
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- [08:25]
Podcast Host / Narrator
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- [09:09]
David Gore
Now, economist and chief market strategist at New York Life Investment. She's here with us in the Interactive Brokers studio. Lauren, let me just get your perspective on again acknowledging what we don't know. And there's a lot we don't know. The kind of mood that we've seen develop over the course of this week, I think beginning with those comments from Jamie Dimon of JP Morgan suggesting there could be some problems with private credit that have gone ignored or unattended to now we see this kind of action in the regional banks today. Your sense of just kind of how you're watching this unfold, what you're looking for and what it might tell us about the market.
- [09:42]
Lauren Goodwin
It's such an important question and to be honest with you, as I've worked with public and private markets investors for the last 15 years, this has been on the radar. As banks pulled back after the financial crisis, private capital has stepped in in a meaningful way to fuel business activity and one of the things that's sort of become apparent to me in this, let's call it shadow bank, as is commonly used, is the shadow banking system is a lot like the normal banking system. There is some really just high quality lending, very well backed, normal activity happening and there's some more challenging fraudulent activity happening. And so in terms of what we monitor, it's all the same stuff you monitor in the public markets. The major difference is that you have to be much more careful with things like default rates or some of the more standard areas of data that are going to have different definitions depending on who your lender is. Makes it a little more difficult to parse in the private markets. But it's the same idea.
- [10:40]
Carol Massar
I mean, I feel like we still have to figure out what happened here, right? I mean, I don't know, there are regulators over Zion, so you would assume that everybody was being a bit more careful. Having said that, I mean, when you think about private markets and Jamie Dimon, what he said this week, are you getting a little bit more nervous about that there might be more problems in the financial system?
- [11:01]
Lauren Goodwin
I think it's incredibly reasonable, as you.
- [11:03]
Carol Massar
Said, private markets for a while now.
- [11:05]
Lauren Goodwin
Yeah, I think it's so reasonable to be more attentive, let's say when you have valuations and credit spreads where they are right. You know, it gets more and more difficult for people to see enormous amounts of upside in economic activity and market activity as well. And when you have a lending system that is so important to the real economy, it, again, it's, it's, it's reasonable to say, hey, what's going on in this, in this enormous segment of the economy that has grown so much over the last five to seven years. And so I think this is going to be an area that's going to draw more and more importance in our investment conversations. Coming up, the. When it comes to making investment decisions though, you're seeing all in yields in these asset classes that are still attractive to investors. The transition that we're seeing then is a focus on quality, on workout capabilities, on, you know, if there is a problem in these asset classes, how do these teams navigate?
- [12:01]
David Gore
When you were mentioning sort of the surge that we've seen of interest in private credit, suffice to say there's been a surge of interest in AI and artificial intelligence as well. And it does strike me that over the last week or so there's been kind of a different conversation surrounding it. Maybe one of outright skepticism, maybe one just sort of needing to see more Proof in the pudding. And I wonder if you're seeing that as well, how you're rethinking about thinking about the kind of breakneck growth we've seen in AI and what needs to happen in the quarters ahead.
- [12:27]
Lauren Goodwin
I'm absolutely saying this. It's really interesting actually. I just got back from a three week roadshow with our clients in Europe and I was expecting a lot of things, but I wasn't expecting all of my conversations to include a big portion just about AI and US tech and, and what's really going on there. And I would say that the, the skeptics story is increasing. I think the catalyst, in addition to valuations being high, etc. I think the catalyst for this was really this sort of Roy Bose spending announcements out of Nvidia and OpenAI that have raised questions about the sustainability of the great earnings capacity that we've seen in AI. What I'm really watching to determine whether this is reaching bubble conditions is the transition from capitalizing tech spend from cash off of these companies balance sheets and to the debt markets. It's starting, but it's really early. I think we need to see that mature more before I be really concerned. Concerned about bubble conditions.
- [13:25]
Carol Massar
All right, that's really interesting because I do feel like last earnings time we looked at things like Metti and some of the big hyperscalers and we did see them actually having an impact from all the air spend in terms of boosting revenues. But I feel like we're going to have to go through that once again. Having said that, you know, we've had quite a bounce back on the equity side of things. It would be normal to see maybe another correction of some sort here.
- [13:49]
Lauren Goodwin
I think that's right. But there's a. I can make a list of five or six really credible reasons why you might see a pullback in the equity market and specifically US Tech. But as we think about the next six to nine months in the equity market, the tailwinds are stronger than the headwinds. You have a Fed that's, that's cutting interest rates. You have quantitative tightening that looks like it's likely to be easing. You have tax refunds in the spring that look like they're going to be much stronger than they've been in recent years. There's really a lot of important tailwinds to this market. And so until we see the hyperscaler, say demand is falling, until we see the headwinds with respect to trade etc. Really make their way into the data, we're likely to see a pretty constructive market backdrop over the next six to.
- [14:38]
David Gore
Nine months just for your perspective on the economy. So we heard a lot from Chris Waller today. He was on our air in the morning and then our colleague Tom Keene sat down with them at cfr. They had a longer conversation still. And his perspective here is another quarter point cut here at the next meeting. Talked a lot about the labor market, inflation, your sense of where this US Economy is, particularly when it comes to inflation, the stickiness thereof. How are you thinking through where that's headed?
- [15:03]
Lauren Goodwin
Yeah, this is another area where we've spent a lot of time because we anticipate that the first level impact of tariffs to consumer price and inflation are here, but aren't really going to be felt until the, until the holiday season in the turn of the year. And so I anticipate that we're going to have next year a growth environment that's slower. We're looking a little below one and a half percent. So it's a little below consensus inflation. That's about a little higher than consensus where it's sticky around 3%. For core inflation, that's a stagflation light scenario. But when you, again, when you, when you layer on, you add the modifier. Yeah, when you add the modifier, it's, it's, no, it's, it's, it's, it's not an overly bearish view on the US economy, but it's one where the Fed and the market are grappling with these same questions while you have the overlay of sort of relatively bullish for the economy and for inflation, meaning inflation lower story coming out of AI. There's just really, when we talk about the long term implications of inflation, things like technological change in productivity and demographics are always on the list and you put a question mark by them and that's what we're all going to be grappling with over the next year.
- [16:17]
David Gore
So funny because I've been kind of watching all these conversations happening in Washington.
- [16:20]
Carol Massar
Yeah.
- [16:21]
David Gore
Talked with some of our colleagues down there and they say the same thing, which is there's the promise of increased productivity, but nobody really knows at this point.
- [16:29]
Lauren Goodwin
It gives us all permission to acknowledge the lack of conviction.
- [16:32]
Anna Kennedy Kaiser
Right.
- [16:33]
Lauren Goodwin
And look, it's interesting, I think that there is, there is a, you know, a trade to place and money to be made by having a really sort of one sided perspective on this issue of inflation in particular. What we're seeing investors do is instead lean way more into diversification. And it's funny because diversification isn't a new investment idea. But if you look back in the last 15 years, your ideal asset allocation wouldn't have actually been very diversified. You should have been all in on us large cap growth equity for your ideal allocation. And so closing underweights to international equities, adding gold and other commodities, that's where.
- [17:11]
Carol Massar
I wanted to go. Because gold is up what, 64%.
- [17:14]
David Gore
Carol is at 20% gold. Yeah.
- [17:19]
Carol Massar
But over such a long time gold did nothing. So I mean, how much should it be in your portfolio?
- [17:25]
Lauren Goodwin
So I am of the team here, here's one of the areas where I do actually have a strong conviction personally, I am of the team that gold has become a new asset class and that we will continue to see the price of gold rise in the coming years. We've heard folks like Ray Dalio say that gold should be as much as 15% in your portfolio. I think that's a little high for the average wealth investor, if only because it is not a yielding asset class. And so when you look at price return off of equity by comparison, it's kind of cheating. You really should look at total.
- [17:54]
Carol Massar
What's your take on why it's going up? Safe haven or is it there's.
- [17:59]
Lauren Goodwin
So there's hedging or a pushback on the dollar? Like what is it there? So there's structural factors related to central banks over the last, really since Russia invaded Ukraine have been meaningfully trading dollars for gold. That's accelerated this year as a result of central bank and corporate hedging in response to some of the political volatility we've seen out of the U.S. i expect that sort of demand for gold to continue. There's also not been much development in supply. It's, you know, you can't wish gold mines into being. And so there's been a little bit.
- [18:32]
Carol Massar
Of a hold up and down, necklaces front.
- [18:36]
Lauren Goodwin
And then I think right now we are seeing a bit of a momentum or FOMO factor coming in where investors that maybe, you know, set it and forget it or wouldn't have thought very much about this are saying like did I miss the boat on this one? And piling in nuts.
- [18:49]
David Gore
Yeah.
- [18:49]
Carol Massar
Well, it's fun though in your portfolio.
- [18:53]
David Gore
Not enough, I'll say that unequivocally.
- [18:56]
Lauren Goodwin
Well, a gold bar costs what, more like more than $1 million now. So it's the, the, the starting point prices.
- [19:02]
Mark Gurman
Yes.
- [19:04]
Carol Massar
On a day just got like 30 seconds on day when we're feeling just a little bit nervous and wondering is this the beginning of something to come undone. Are you more optimistic or pessimistic about the outlook?
- [19:12]
Lauren Goodwin
My economist brain will always want to be pessimistic, but I am, I am, I'm constructive. I think that we have some, some tailwinds for the economy and markets that get us through another nine months.
- [19:22]
Carol Massar
I didn't hear optimism. No. Well, optimistic. No, no, no. Too late. Thank you so much.
- [19:30]
Lauren Goodwin
Thank you for having me.
- [19:31]
Carol Massar
Great to have you back. Lauren Goodwin, she's economist and chief market strategist two hats at New York Life Investments joining us here in studio.
- [19:38]
Podcast Host / Narrator
This is the Bloomberg Businessweek Daily Podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa. Play Bloomberg 11:30.
- [19:56]
Carol Massar
Carol Massar along with David Gore. We're here on Bloomberg businessweek Daily. There's a lot going on. We mentioned Apple getting ready to finally launch a touchscreen version of its Mac computer. Kind of a big reversal to the company's long strategy. Apple shares still down about 1% but they're definitely off their lows. And then meantime, David, you know, we are constantly seeing, I feel like headlines over the last few weeks, over the last few months, even go back all the way through the summer earlier this year of AI executives leaving well known big tech companies a la Apple and heading to Metta.
- [20:28]
David Gore
This is something that Sarah Fryer has been observing. She's our big tech team leader out in San Francisco. Mark Gurman covers this for Apple. Try to get his perspective on this in just a moment. Sarah, let me turn to you first. It does seem like there is this pipeline being built. I don't know how fortified it is, but we're seeing something of a trend here that is meta picking off high level AI experts from Apple. And I read all of this. I read your reporting and Mark's reporting and others. And I think, you know, in the world of finance on Wall street, there are all these prohibitions in place about if you take one job when you can start the next job. Doesn't seem to be the case out in Silicon Valley to the same extent, does it? I just remark on how quickly this has happened. Of course we're talking about this today because Apple, an Apple executive is now moving to meta working at Apple on kind of high end web search, AI powered web search. What's going on here and why does matter have this edge? It seems in this fight between Apple.
- [21:18]
Sarah Fryer
And Metta, Met is paying a lot. They're really, they're putting out these. I'm sure you've seen the headlines of hundreds of thousands of dollars in pay. Sorry, hundreds of millions of dollars in pay for these very high level AI names. And especially from Apple, we've seen about a dozen people go from the Apple team over to Matter and speaks not only to met his ability to recruit, but also of Apple's failure to make big inroads in AI for consumers the way that they had promised they would. It's really been a shortcoming for the company and they've been trying to revamp their whole strategy. And during a time of upheaval there, I think a lot of executives are finding that they, they could just not, they could just not try again at Apple and instead go to Meta, which is really going all in on their quote unquote superintelligence team. Yeah, under Mark Zuckerberg.
- [22:22]
Carol Massar
Mark, come on in. Mark Gurman, come on in on this because what's interesting is this guy at Apple, I thought he just had gotten kind of a new big job at Apple and now he's leaving. Who is this and how significant is it to Apple to lose him?
- [22:38]
Mark Gurman
It's usually significant. This person was running the search component of the Answers Knowledge and Information Group. That's a team working on web search ChatGPT like features for Siri and other parts of Apple's operating systems. He took the role a few weeks ago because the person who was previously in the role left the company at the end of September. So this is a quick turn of events for Apple and I would believe there's going to be more AI ML shakeups to come come at the company in the coming weeks, months and years, specifically because of the failures that Sarah described that they've had with Siri and Apple Intelligence. Something needs to change. And regarding the recruitment here, one of the things that I get all the time in my inbox and on Twitter and what have you is if Apple Intelligence and Siri is so terrible, why is Meta paying millions of dollars to bring these people and having them work on their own AI? Well, first thing I'll say, at a very basic level, Meta likely believes the problem is not so much these mid level people leaving, but maybe the overall company strategy. Things like privacy that are clearly holding back the company's initiative. So they feel like if the people are put in the right environment they will succeed. But I think the bigger thing is Mark Zuckerberg just despises Apple and Tim Cook and he wants to inflict pain on Apple and He feels like he can inflict pain on Apple by stealing their best AI minds and putting them on Meta projects. So he is worsening Apple by removing their talent and he's also potentially putting them in a position in creating a business opportunity for Meta. He probably figures that if Apple's AI initiatives are in the toilet, they're going to have to partner with someone and they're going to have to pay boat loads of money to other companies and probably figures that, you know, Meta and Apple may get a partnership and Apple may be paying Meta tons of money because they have all the folks working on the AI that they need to help power the iPhone.
- [24:34]
David Gore
That's my two of a sort there.
- [24:35]
Carol Massar
Maybe gentlemen's agreements right in Silicon Valley.
- [24:38]
David Gore
Sarah, we've talked to Mark as recently as yesterday just about how Apple plans to deploy this, you know, their AI when they, when they get there, feel, you know, ready to deploy it so much as they would. What is Meta's plan under Mark Zuckerberg's vision? How does it, how does it intend to use AI more going forward?
- [24:54]
Sarah Fryer
You know, they are saying that they're planning to use AI to race to superintelligence, which is this unproven idea that eventually AI will be able to achieve the things that we as humans can achieve or even exceed human abilities in reasoning and tasks, which could then upend all of business, all of, all of human behavior. Right. So they want to get to that first. So far, what we've seen from Meta has, has been kind of behind the scenes driving their business. They've really improved their ad recommendation engine again, you know, this goes back to the rivalry with Apple because Apple cut off their ability to have data on mobile phone users. So they had to come up with a way to serve them the right kinds of ads. And they used AI to do that and it was actually quite successful. So in some ways Meta has Apple to thank for the initial motivation to dive so deeply into AI. But they've also used it to improve what kind of content is recommended to people and even how content is created. And that's something that I think is one of the things that people see, AI generated content and they say, is this really what we're using all of our natural resources and capital to do? You're going to make videos of hamsters eating unicorns. Like, this is not what I signed up for. But that is what you can do with Meta's video generating tools. But that's, I think, the path. But then we are all led to believe in this gold Rush that there is some pot of gold at the end of the tunnel, this super intelligence that will free us all.
- [26:40]
Carol Massar
I gotta say, I've asked ChatGPT to like draw a horse. Like, I don't know, like I've been playing around with it, but I am also doing more sophisticated stuff. Mark, come on in back, you know, because I'm looking at the FA function on the Bloomberg. Met has got about 47 billion in cash on its balance sheet. Apple's got about 133. I mean, they both have tons of cash to do kind of whatever they want. Having said that, is Apple getting kind of ticked off at this talent raid and how deep is their bench? What do they do? Do they start paying up? How important is this to Apple's future that they figure out the AI world and you know how it relates to Siri and elsewhere in the company.
- [27:16]
Mark Gurman
I mean, they've raised salaries for a bunch of their AI talent, part of their Apple foundation models group. Those are the prized researchers. Meta, OpenAI, Gemini, everyone is going after. So they're trying there, but they're also going to do some acquisitions here in the next few weeks, I believe, to help restore some of their AI talent. I'm not talking about a giant perplexity or anthropic level acquisition, but smaller teams, smaller startups here in the U.S. you know, I also want to talk about Meta's ambitions with superintelligence. You know, the problem for Meta is they don't have the platform in terms of a hardware platform, and Apple has the hardware platform. And until someone else has the hardware platform that people can switch to, Apple's going to be in good shape and will be able to run models and technologies and apps and software and services from all these other companies. But the problem really is going to take off when Apple, Google or Meta or OpenAI or Microsoft, you name it, has a real hardware alternative to Apple that maybe is half as good hardware wise, but is 10 times better AI wise. And so that's what Apple needs to watch out for. That's why it's so critical for them to continue shoring up that moat and building out their ecosystem by improving their AI.
- [28:31]
David Gore
Carol, I know you're here to talk to Mark about Apple Hardware and his latest story. I'm going to tee that up for you because you've been buzzing about this since we got in the studio and the story broke.
- [28:39]
Carol Massar
It's kind of cool. You got to talk about this other story that crossed the Bloomberg Mark and what they are doing with the Mac which goes against the company's strategy. I'm kind of looking forward to a Mac that I can play at the screen so that my family can stop making fun of me because I touches.
- [28:56]
David Gore
The screen of her laptop and they.
- [28:57]
Carol Massar
Make fun of me.
- [28:58]
David Gore
Touch sensitive capability does not but it's coming.
- [29:02]
Mark Gurman
Touch screens are table stakes. All the PC laptops have it. People are used to iPads. People have been multi touching with their iPhone and whatever for years. It's about time. So that's going to change between the end of next year and early 27 with a revamped MacBook Pro OLED. Thinner, lighter, faster processing and they are going to remove the notch cut out top of the MacBook Pro screen right now and move to a hole punch design. So I've been holding out for this one for a while and I'm pumped to get it myself in a year and change or so.
- [29:34]
David Gore
What does it say? Just about like arc consumer behavior how we use these devices. So why you're looking forward to it? Carol's looking forward to it. What's wrong with the, the old fashioned keyboard and trackpad or mouse? What do people, why do they want this so desperately?
- [29:47]
Mark Gurman
There's nothing wrong with it, it's just it's become table stakes. The PC makers have been pushing it for years now and some consumers like it. And if Apple wants to remain as competitive as possible they need to match the functionality that everyone else has or people are going to look at other ecosystems systems. It's really less about coming up with breakthrough new things and doing enough with their existing products to make sure people don't leave to the competing ecosystems.
- [30:14]
Carol Massar
All right Sarah, don't you want a screen that you can touch, a Mac that you can touch?
- [30:18]
Sarah Fryer
If you go to any like young person, anyone who's a teenager or younger, they'll just assume that every screen they see is touchable. So I think Mark's right. I think it's just the way the world works now. It just makes sense whether I would use it. You know I'm, I'm, I'm doing a lot of writing on my computers so I'm probably going to be using the keyboard for the most part but I don't know, probably keyboard devotee. I do like an iPad here and there.
- [30:51]
David Gore
I broke the go key on my keyboard. I hit the keys very hard which.
- [30:55]
Carol Massar
Is a problem if you kind of can't do anything. Be careful with that. All right guys, thank you so much.
- [31:01]
David Gore
Thank you very much.
- [31:02]
Carol Massar
Mark Gurman Managing editor for Global Consumer Tech Bloomberg News in our LA bureau and then in our San Francisco Beer Sapphire, Big Tech Team leader at Bloomberg News. Love that we can just kind of figure it all out with them. Can't wait for that. I like touching my screens. This is Bloomberg.
- [31:17]
Podcast Host / Narrator
Stay with us. More from Bloomberg Businessweek Daily coming up after this.
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Carol Massar
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- [33:31]
Podcast Host / Narrator
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg business app or watch us live on YouTube.
- [33:47]
Carol Massar
Betrayed. You ready to go south?
- [33:48]
David Gore
Sure, let's do it. Where are we going?
- [33:50]
Carol Massar
Wall Street, South Miami.
- [33:51]
David Gore
All right, Wall street, bunch of financial firms having set up shop down there. As a result, they have to go somewhere. They do have to build homes, find.
- [33:59]
Carol Massar
Apartments, nice office towers.
- [34:01]
David Gore
Office towers as well. And Miami's most exclusive office tower where tenants like Citadel and Thoma Bravo have planted their flags, means a sophisticated and pricey members only. You can't have just the office. No, there has to be a members only club.
- [34:12]
Carol Massar
Got a place to go with only.
- [34:14]
David Gore
Hopefully at altitude, maybe on the top floor or two.
- [34:17]
Carol Massar
All right, let's go to Bloomberg News Florida correspondent Anna Kennedy Kaiser. Excuse me. She's in our Bloomberg News bureau in said Miami and joins us here. All right, so first of all, we've been talking about Wall Street South. I feel like Anna, for a while now give us kind of where we are. Is it still like frenetic people, financial firms moving in and there's a lot of building still going on?
- [34:40]
Anna Kennedy Kaiser
No, actually I would say that that is kind of plateaued. There's just not that many buildings that are coming online here in Miami. A common complaint that I've heard from developers is that people want small amounts of space. If people only want small amounts of space, it's pretty hard to get financing to build these giant towers. Usually you're looking for a tenant that's going to take up like 40% of the building. So this building in particular had very fortuitous timing. They broke ground in 2019 and then they really got that windfall from the pandemic. You know, had Citadel, Microsoft, Thoma Bravo, all of these firms signed up at this brand new super fancy office tower. But the success of that office tower hasn't really been able to be repeated since then.
- [35:26]
David Gore
We should say Citadel building a tower of its own. So just a temporary home for that small company, Citadel. But Anna, talk more about the amenities that you've written about in your most recent piece. That is this club at the top. And I guess this fits into this larger narrative about kind of the renaissance of the private club as a space, yes, for work and for meetings, but also a place to have dinner and entertain. What are they building in that, in that high rise and sort of how is that being replicated across Miami? What's it competing with?
- [35:53]
Anna Kennedy Kaiser
Yeah, so this club is going to be on the, I think 40. No, on the 55th floor and 54th floor there's going to be a restaurant that's open to the public. And then on the very top is members only. Only they are. It's invite only. If you work in the building, you automatically get an invite, but you don't necessarily get accepted. You still have to go through a vetting process. The fees are pretty steep. It's $25,000 to join, and then there's annual dues on top of that. And they say that they're going to be hosting cultural events, music performances. I heard today that they were going to be doing, like, private showings of artists, new collections. So I think they're trying to make it this very exclusive kind of cultural center. But it's also like a business center during the day. So you can have meetings there. You can bring clients there to impress them. I've been to the very top of this building. The view certainly is impressive, but it is competing with some other members clubs in the city. City zz, which is a club, a private club in New York. They opened an outpost here in Miami during the pandemic in 2021, I believe. And then there was another sort of spin off from CZ's that opened in Miami beach. And that's on top of, you know, the traditional clubs that are, you know, have been in Miami for decades. So there is definitely some. Some competition in this space, but this one probably has the best view.
- [37:25]
Carol Massar
Yeah, it sounds like it's pretty nice. What's interesting is, you know, go to the. I'm curious, with Citadel, are they going to, like, scale back or. They're. They're doing their thing. They're not changing any of their plans, right?
- [37:37]
Lauren Goodwin
Yeah.
- [37:37]
Anna Kennedy Kaiser
So, I mean, the latest that we've heard from them is in this building that we're talking about, they occupy eight floors, so a pretty significant presence. And then in terms of the building that they're going to build or the Ken Griffin is going to build themselves, he recently told one of our colleagues that that is going to break ground next year. So that building actually coming online is pretty far down the road.
- [38:02]
Carol Massar
Two and a half billion dollars, right? Two and a half billion dollars, exactly.
- [38:06]
Anna Kennedy Kaiser
I had reported on the initial plans that that was going to cost $1 billion. And then more recently, he spoke with one of our colleagues and sort of said, I wish it cost a billion dollars. It's going to cost two and a half. Like, it's. The prices have sort of gone insane. But, you know, if anyone can afford it, it's him, I guess.
- [38:23]
David Gore
Yeah, I mean, it's like, I think driving to work here past the JP Morgan Skyscraper they built, I think that was close to 3 billion, if not a little bit over as well.
- [38:30]
Carol Massar
Wary. Like, there are things, you know, like when the CEO or somebody appears on the COVID or when you build a big headquarters, like, sometimes things can go wrong.
- [38:38]
David Gore
It looks very handsome from the road.
- [38:40]
Carol Massar
It does, it does.
- [38:41]
David Gore
Could I ask you about residential real estate? So we've been talking a lot about kind of the. The interest from Wall street types in Miami. Obviously, they have to have places to live as well. You've noted there have been some really high dollar sales recently. What are people. These kind of new, I guess, immigrants to Miami from these other American cities looking for when. When they move there. What. What's selling and what's on the market when it comes to residential real estate?
- [39:01]
Lauren Goodwin
Oh, gosh.
- [39:02]
Anna Kennedy Kaiser
Well, anything waterfront is. The prices have gone through the roof. You know, if you're coming to Miami from the Midwest or the Northeast, you're probably looking for some of that, like, sunshine, beach life. So that's really popular. There's a lot of traffic in Miami, so neighborhoods that are close to the central business district are also really popular. And then schools are a big issue. A lot of people can't find places to get their kids into schools. So between all that traffic, trying to find a space, trying to get to your job, and also trying to enjoy the Miami lifestyle, I think it's been a challenge for a lot of those newcomers to, like, wrap all of that into one. But that has commanded some really high prices for the properties that do that.
- [39:50]
Carol Massar
Yeah, it's. You know, it's really fascinating. I just was wondering if any of these big properties, I mean, you. You talk about this one. This one property that I think initially when they bought it was 1.2 million. Armando Codena. And then he's selling it for, what is it, 45 million.
- [40:07]
David Gore
A sizable increase of some magnitude, I should say, on that investment.
- [40:12]
Carol Massar
That's called alpha. Some alpha.
- [40:14]
Michelle Jem Risko
Yeah.
- [40:15]
Carol Massar
I mean, it's still happening, right? I mean, I get that he bought it a long time ago, but it's still. We're still seeing these inflated values or would seem to be inflated.
- [40:24]
Anna Kennedy Kaiser
Yeah, totally. And, I mean, it was a lot, but still, that's like. I mean, it's just a crazy price. And yes, this is a waterfront property. You know, there's a boat dock. It has all of these amenities. And, you know, this developer who's. Who's selling the house, when I spoke to him, he was just like, look, I don't need all of this anymore. And if you had told me that you had told me that I could sell this house for even half this amount. I would have, you know, thought that that was great. But like he had just decided he was sitting on so much equity with the house that he's, you know, offloading it and going to go live in an apartment building that he's building himself.
- [40:57]
Carol Massar
He's downsizing.
- [40:58]
David Gore
Downsizing. Yeah. Well, doesn't need the boat dock anymore.
- [41:02]
Carol Massar
Apparently not. We're going to leave it there. Anna, thank you so much. Fun to catch up with you and just get a little peek into what's going on there in Miami.
- [41:12]
Podcast Host / Narrator
This is the Bloomberg Business Week daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm eastern on bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.
- [41:42]
David Gore
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Podcast Host / Narrator
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David Gore
Four, I use it.
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Mark Gurman
Five, my mom used to say, are.
- [41:59]
Podcast Host / Narrator
You, are you playing me off?
- [42:00]
Carol Massar
That's what's happening, right?
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Mark Gurman
Okay, give it a try.
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Lauren Goodwin
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Carol Massar
$15 per month equivalent required. New customer offer first three months only, then full price plan options available, taxes and fees extra.
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David Gore
See mint mobile.com in our new podcast, Everybody's Business, we talk about the business news that concerns everybody.
- [42:18]
Lauren Goodwin
From Bloomberg Businessweek, I'm Stacey Vanek Smith.
- [42:21]
David Gore
And I'm Max Chavkin.
- [42:22]
Carol Massar
Each week we unpack what is happening.
- [42:24]
Lauren Goodwin
On Main street and Wall street, all the streets. WrestleMania has taken over the US economy.
- [42:31]
David Gore
Poetry that executives write on LinkedIn.
- [42:33]
Lauren Goodwin
A little actual magic in our underrated story of the week.
- [42:37]
David Gore
The single greatest marketing campaign the music business has ever seen.
- [42:39]
Lauren Goodwin
I decided to ask people how they felt about the penny going away. Listen to everybody's business wherever you get your podcasts.