Show notes
Lori Calvasina, RBC Capital Markets Head of US Equity Strategy, says the path for equities is higher in 2024. Dana Telsey, Telsey Advisory Group CEO, breaks down record-high Black Friday sales. Aaron David Miller, Carnegie Endowment for International Peace Senior Fellow, discusses the latest on the Israel-Hamas war. Torsten Slok, Chief Economist, Apollo Global Management, says the Fed's rate policy is leading to a gradual slowdown. Steve Schwarzman, Chairman & CEO of Blackstone Inc., says his firm has seen a bevy of buying opportunities in real estate across Europe. Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance Full transcript: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrell and Lisa Abramowitz. Join us each day for insight from the best and economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. We begin the program with Lori Cavasina, head of US ecority Strategy at RBC Capital Markets. Lori, good morning. We hope you all had a wonderful Thanksgiving. I want to kick off with your call fifty one hundred for five thousand rather year rent on the s and P five hundred for next year Deutsche Bank going one further, a fifty one hundred, Lurie talk to us about the path to five k. Well, thanks for having me as always, and look, you know we purposefully did not put out you know, we see a near term pullback and a resurgence. I think a lot of people got caught in that trap in twenty twenty three calling for a near term pullback in the first quarter that didn't end up happening. I do think we'll be watching our sentiment indicator very closely. It's been the best star in the sky to navigate the equity market this year, but it's also round tripped a couple of times. It started out giving you a screaming by signal because of deep pessimism. Return to that post. SBB gave a sales signal in August and then gave a by signal again in November. So I think we're going to have to just be very tactical in that. You know, I have been telling people November is very consistently a strong month, but December is a little bit more hit or miss. So we'll see if we end up getting the Santa or Grinch in December. But I do think the path for equities is higher next year, and if we do have a bit of a short term pullback either in December to start the year, I expect it to be temporary. Llurie Goldman Sachs had a note thanks zero Edge for this on sales girls looking out two years twenty three, twenty four to twenty five and the difference between them magnificent seven with eleven percent sales grows versus the SPX four ninety three of three percent sales growth. Why would anybody sell the magnificent seven right now? I think it's a great question, Tom. When we look at our indicators and we look at the megacap growth trade broadly, it looks crowded. If you look at the weekly CFTC data on Nasdaq one hundred futures positioning, we're basically close to peak valuation and growth relative to value. If you look at the rustle one thousand on a weighted PE multiple, which is going to be very heavily influenced by that magnificent seven. And if you look at earning's momentum, we're still seeing better earnings revision trends and growth and value, but value is starting to catch up a little bit, so we are seeing that leadership on the earning side fade a little bit. All of that tells me that there should be a pause in growth leadership at some point. But I think one of the reasons people can't really permanently quit these growth stocks is kind of hitting on exactly what you said, the idea that there will be superior growth there over the intermediate term. And if you look at GDP forecasts for next year one percent in real terms anticipated by the street one point eighty percent in twenty twenty five. When we're in a sub two percent GDP environment, growth stocks usually do outperform because economic growth is perceived to be scarce. So I do think there is a real tension. You know, we still like the tech sector even though we have these shorter term tactical concerns on growth, had those tactical concerns on growth frankly for a while, and they've yet to really materialize in a big way. And I do feel like you may need to see a real ratcheting up of GDP expectations before you can really see growth loose some of that leadership dominance. When you talk about sentiment and how really that's been the loadstone for you, it's figuring out where is investor sentiment em betting against it? Am I correct? Basically? You know, one of the things I've learned over my career, Lisa, is that when everybody is really really pessimistic, that's usually a fantastic time to buy. If you look at when the AAII net bullishness indicator is, you know, sort of one standard deviation or two standard deviations below the long term average. I forget the exact stat, but it's in the eighties in terms of the percent of time that you're up twelve months later. And you see similar stats if you look on the flip side when people are overly enthusiastic. Now, if you're above one standard deviation on extreme optimism, you still tend to see like a five percent gain over the next twelve months. So it's not necessarily a washout, but it does tell you that you tend to see consolidation. You do tend to see some choppier markets, And I think that's why it's so important, Lisa to really prioritize data over narratives. I know a lot of strategists like to tell a great story and then they go out and put together their charts to try to fit whatever narrative they're pushing out there. But I really think that you have to stick to the data, and things like that centiment indicator will keep you into falling into consensus traps. Again, everybody just sort of gloms onto the same narrative and things get too extreme. Well, the narrative that we've been hearing again and again is five thousand on the SMP going into next year at least, if not more, And there has been a sort of boom and optimism that we've seen. Does that mean it's time to start taking some chips off the table and to be a little bit less optimistic or does this mean that finally you might see some of that cash at record levels going into the equity market. Well, it's interestingly so you know, everybody wants to sort of talk about this idea, and this is maybe on the more barish side of the table that bonds look more attractive than stocks and the earning shield has collapsed relative to the bond yield, and all that is true, But if you actually go back, there have been periods in history when equity investors or investors in general have taken up both their equity allocations and their bond allocations at the same time. So I don't think it's unheard of for both to do. Well, you know, five thousand, it's starting to be a number we're hearing a lot. I think we were maybe the second person on the cell side that had it when we put ours out, but you are starting to hear about it. And I think ten percent is usually a reasonable place that a lot of strategists start, we do have one model that can take us up to fifty three hundred, and that's looking at our valuation work and earning's work. And I will tell you, Lisa, like and as I was putting the report together, you always think about kind of where did you go wrong in the past year. I was more optimistic than most, but not optimistic in the end. And that valuation model was the one thing that was telling me all year to look for forty seven hundred, forty eight hundred on the S and P it's pointing to forty seven hundred on the end of the year. Now twenty twenty three one point it was saying forty eight forty nine. So I do think you have to have a little bit of humility when you look at these forecasts. We look at a bunch of different models. We take the median. Some are more constructive, some are less. But I do think we do have to pay attention to that bowl case setting into next year, because so it's really what works this year? Does that mean a banner? Kelvistin says fifty three hundred. I'd like we could go there quite I think we stick with five K. I just wanted to jump in when you were putting this together. Surely five K was something like twenty percent upside of the time. So you know, John, I started back in October pricing the models, and we actually published a report in October where we said we're not going to do our target yet, but here's what all the models are showing. And back then we were getting, you know, more a little bit of a more subdued number because we had a lower starting point, so we did price everything. As of mid November, I think a lot of our models we froze as November fifteenth, November sixteenth, so we really are kind of getting sort of a true ten percent from current conditions as of mid November. Basically, when I do this, John, I go into a black hole for a few days, don't answer my phone, don't answer email, and don't talk to anybody, and update all at once. So well, welcome Bocasta the black hole, Laurie. We're happy to see you, Lori Cavasena. Obviously, Capital Markets, there's no one better to speak to on this. As if you stand at the four corners of fifty seventh Street and Fifth Avenue, the Dana Telsea is a child gazing upon Berg Dorth Goodman and across the street to Tiffany's and where Louis Vuton is now when there's some other unpronounceable I can't afford store on the other corner. Telsea joins us now CEO, chief Research officer of her Telsey Advisory Group. You got this right. A lot of people got this wrong. How did you expect this optimism that we come out of the season. Well, thank you very much for having me, and hope you guys had a great holiday. Here's I think overall, keep in mind we did have a barrage of earnings reports all talking about the cautious consumer inventory levels are lean. Promotions were in place thirty to forty That isn't outstanding, that isn't going off the rails. In terms of level of promotions, they were definitely clean. What you saw in terms of traffic, look at the Lululemons, the bathroom, body works. Macy's had more traffic than what you had at Nordstrom, and off prices like TJX had a ton of traffic. And the teen retailers picked up the reason why, value and innovation. If you add value and you had innovation, the consumer was coming So look at Uggs and Hoka where there was innovation. You look at the value on the pricing. It meant something. But we have a long season coming up now. Christmas is on a Monday. Watch that weekend before Christmas. Because procrastinators, it's their choice of when they want to spend. Just let's build them that this idea of watch what happens later in the season. Are you saying that you suspect people brought forward their shopping much more than they had in the past because they are being cautious. So the numbers are inflated to represent that more than just excessive spending altogether. Yes, I think. You look at the savings rate which has come down, You take a look at delinquencies which have gone up, and you look at what's happened with the pattern of promotions. It began in October, So with Amazon Prime Day in October their second Prime Day, you had a pull forward of what the promos were, and of course online is going to be strong. Stores are no longer open on Thanksgiving Day? So what did people do? They shop with their phone? Mobile mattered? Well, this really raises this question. Is it the modality of shopping that matters? Right now or is it the type of product mix that matters right now? And I'm curious, can you parse that up? Is it just online shopping or is it the products that people are getting online. It's the products that people are getting, and don't throw out the stores. The stores matter, the engagement that people have, the social interaction. So many companies in twenty twenty three came out with new store formats. You look at on mall and off mall, they both won and even outlets are strong. And that measure for value, where's the best total return of twelve months? You and Joe Feldman they're not on speaking terms on this, but the basic idea of which kind of retail and which individual stock is the best possibility off price I think is going to win over the next twelve months. TJ Max, would you off price? Off price? Not luxury, different world, it's off price. It's the TJ max Is of the world, the Burlington's and the Ross stores. Why they're getting the benefit of a trade down. Look at what you just saw in their results last week when they each delivered same store sales of at least five percent, when you typically these are three percent same store sales increases. They're getting the benefit of the trade down. There's been a heritage of Tjmax executing what's the secret sauce that makes them do that? The experience of their buyers. They know how to buy, They have their relationships with brands. Brands like being in their stores and they sell through and don't forget their locations. The description that you're painting of the American consumer is not that positive. It's one that is trading down. As you said, it's one that has caution that might not show up in force before that Monday Christmas. So where are we in this cycle, right? I mean, is this a matter of people running out of money or is it just them saying, well, we've been spending a lot recently. We probably should be a little more prudent. They had more money two years ago with the stimulus package during the pandemic. The load to middle income consumer is battered right now by higher interest rates. Even though inflation's moderating, it's still a higher price than it was in the past. And even you take a look at the luxury consumer, you need the feel good factor. With the geopolitical issues going on, the macro headwinds out there and the volatility the stock market, it makes it more challenging. So that's why experience. Look at the tailor swift concerts over the summer, what people are willing to spend on. Give them something innovative, they'll be there. So what does it say about the trajectory of the consumer and how people are going to be spending. Is it the beginning of more pain or is this basically the bulk of it. I think this is in the middle of the pain that we're I think the focus on essentials is right there. I think you need newness in order to drive demand. And even though the labor market continues to remain very good, the watchwords are out there and saying what's it going to look like? And inventory is cleaner, so you don't need to promote as deeply as you had in the past. Look at what's happening with the department stores. They're ordering more cautiously, and why are they ordering cautiously if they don't feel the demand is going to be there. They'd rather sell at full price than markdowns. And your most profitable markdown is your lowest markdown, not your greatest markdown. Toughest job in retail this year is a guy named Sabata Dico at Gucci absolute toughest, toughest job. Dana Telsey on what Gucci's going to do right off that corner of Fifth Avenue and fifty seventh. I think they're going more basic than they've ever been before. Absolutely, they're going away from what the idiocy was for three years. Yeah, the mismatching of the three years is all about matching now and it's about safe. They're going back back to their archives and seeing what can they reinvent and updated proof that we want that. Is there a proof that will sell to the Chinese? I think there's some proof it will sell to the Chinese, But we're not seeing the Chinese travel yet. We need them traveling to really drive demand. And don't forget you're seeing the local Europeans slow down. Also, what do you make of the buy now, Pay Later and we were hearing that it's actually picking up. Do you buy that? Do you think that this is a positive sign for the retail world or is it a negative sign that people are just basically turning to leverage. People are turning towards leverage. When buy Now, Pay Later first came out, it was a huge event. A huge development because it got younger people and frankly the millennials to spend. I think now that it's been around for a few years, if they can't pay on time, they're willing to delay and frankly be able to extend what their payment terms are. Is it changing charge cards? I mean, is buy now, pay later changing the charge card business? Not what we've seen. It didn't take off tremendously. It took off with a certain graphic and those are the millennials single best buke go. I think that it's going to be TJX. I think TJX is going to be the winner for Holiday in twenty twenty four. Dana, thank you for the brief. Dana Telsey with Telsey Advisory Group. Here we have seen far too much of him. He is an expert on turmoil, war and terrorism. Aaron David Miller with a continued brief, Senior Fellow Carnegie Endowment for International Piece. Aaron, just let me just cut to the chase. If we get out to a point of negotiation from where you sit, is there a hamas to negotiate with? Now there is, and the cutteries and the Americans are validating Hamas's effectiveness. The three of you are better analysts than I am, because you've i think, identified the core questions. There's growing daylight. The world is mad at Joe Biden, even though I think frank his own party's mad at him. There's a degree twenty five years at Department of State, I've never seen, never the degree of dissension and vocal opposition to an administration's policy from inside the foreign policy and national security space. On one resignation, but an extraordinary amount of noise. I think the President Frankly handled this pretty effectively. The Israeli Lebanese border is relatively quiet. The fears of escalation into a regional war which could produce plunging financial markets and rising up prices. So far that's been avoided, And you're right to focus on ostages, but I think the deal is very clear. I'd be stunned, frankly, if this humanitarian past collapsed. Hamas is trading hostages for time. They're hoping that the hostage families inside of Israel will continue to pressure the government in order to redeem all of the hostages that have not been The Arabs are angry, and THEWS earliers are going to face probably in the next week. If the ten hostages for a day of quiet, which is the offer on the table, If Amas accepts that doesn't add requests for more Palestinian prisoners, you could get another week out of this. But at some point the Israelis are going to want to resume in their ground campaign, and at that point, I think you're going to see growing awkwardness and uncomfortableness, maybe even tension in the US Israeli relationship. There's daylight between President Biden and some of his own members within his party, within his team that he has surrounding him. But he also reportedly has expressed concern about the collateral damage, about the civilians who have gotten killed, the incredible number, more than people had originally expected. How much is that going to lead to pressure in a new way that Benjamin not to Yahoo, who is not exactly popular at home, we'll have to listen to. I think that's the core question. President persona alone among modern presidents, he considers himself part of the Israeli story and is preternaturally his emotional support for Israel literally is impressed on his DNA. The politics. As you point out, he has to be concerned about rising the rising type opposition the Democratic Party, but the Republicans, who have emerged as the sort of Israel right or wrong party, are also waiting for him to pressure the Israelis so that they can pressure Joe Biden. And finally, there's I think the president's realization that he doesn't have many good answers to the two or three critical questions that the Israelis are facing with. How do you prosecute a ward to eradicate Hamas without an exponential rise in Palestinian desks? How do you surge humanitarian assistance into a war zone? And finally, what do you do about the proverbial day after its weeks and months after? So I think part of the reason he's reluctant to press the Israeli's hard so far is because he doesn't have better answers for them these core questions. Aaron David Miller a student of this, with your books back thirty years, don't go out thirty years for but I'm going to give you five years or ten years forward. Is our relationship with Israel irrevocably changed? A fascinating question. The headline would suggest that generational changes in voter constituency in Congress. The growing divergence between United States and the values proposition that Israel is a liberal democracy more or less seeking the same things that we do, and growing policy differences suggest that, yeah, there is a lot of fraud tension in this relationship. Whether it's a headline or a trend line, that's the key issue. I suspect that the operating system that has kept the US's a Reeli relationship pretty much very close together is going to continue for quite some time. But again, we support Israel because it's an American interest to do so, and because it reflects American values to do so. When those things change in the face of our right wing Israeli government that's pursuing opposite policies both at home and with respect to diplomacy on the Israeli Polish Ennian issue, then I think the US is really relationship will begin to change. That tension is continuing to build. And thank you so fantastic to hear from you, Aaron David Miller. There of the kind of endowment for international pain. Torsten Sluck He's chief economist at Appalled Global Management and writes a piercing short note each morning and here he hearkens back to the skeletons in the closet, the worries that those older have about is this time like well, try nineteen seventy two, Is this time like a nifty to fifty or the point where Polaroid and Xerox were one of the five Magnificent five that we're out there, Doctor Slock joins us this morning, I loved the equal multiples. Now with nineteen seventy two, I believe that ended ugly. Do you take that over to an analog that this will end ugly? Well, we still, of course have to wait and see exactly how AI will be used, and no one really knows how it'll be implemented, and how much productivity we'll get out of it, how much more consumption or welfare overall. But the bottom line really is what we can track is the valuations, And what I did right in the note today is exactly that the valuations and the trajectory is beginning to look quite similar, including the levels we're at with the pe for AI stocks or the Magnificent seven. Now at above fifty on a trailing basis, it does make you wonder a little bit whether this is indeed going to have a different story compared to what we've seen before, or whether this is actually going to be similard some I mentioned Tom Galvin years ago at Donald sim Lufkin Generator was very top line sales specific. Are we going to have the nominal GDP to support the magnificent seven even if they level out, or to bring the breadth up in a good market. Well, the problem is that the SMP four ninety three has basically been flat for the last year. So the conclusion is that so far all the market gains have been driven by this handful of stocks. So that of course also should bring us all to the discussion, Okay, is this sustainable? To what degree? Is this something that is a good representation of the oral index? If you really end up just buying into one simple story, namely AI, which is the reason why a lot of people are focused on the consumer to understand exactly where we are in this spending picture. And I want to go back to what we really began with this idea of are we seeing sustained sales and a sustained strong consumer or are we just seeing these shifts underway regardless of who ends up benefiting the most. But shifts underway. That represents strength in pockets in the overall picture. Yeah, and absolutely, I do think that it's clear that the shifts have been towards services. So that's why goods have generally been slowing down. Another strength point, as you're pointing out, is that we've also seen strengthen online. But if you really back up and look at the data for how is the consumer doing. Well, we just heard your previous guests talk about trading down. If you look at the language rates for all the loans have been going up, the language rates for credit cards have been going up. We're seeing across the board the level of interest rates are beginning to bite harder and harder and harder on consumers. So the conclusion, of course, is that the FED is actually achieving exactly what the textbook would have predicted. Namely, the slowdown might not have been as fast as we all thought just a few quarters ago, but it is still playing out. The slowdown is here and it will continue. We still have the worst ahead of us. It is the case that monetary policy is biting continuously also going forward, what's the distance between goldilocks and a full blown recession. Well, the runway that we are on here for slowing the economy down. From a FED perspective, certainly is that inflation is coming down. The labor market is also gradually coming down, and we got to get a soft landing not only in invasion but also the labor market. But we begin to see that on a plant rate has gone up from three point falls now at three point nine. That's create a lot of discussion about the PSAM rule and to what degree that's an indicator of a recession or not. But the conclusion to your question, Lisa is I do think that we should view this in the broader context of what is it the FIT is trying to do? And the FIT is trying to slow the economy down. That's why they raise interest rates, they raise interust rates because they want us to buy fewer costs fuel wash us fuel refrigerators, let's furniture, let fewer iPhones, and because of that we should over time continue to see that process play out. There is a real tension right now, and I see this under the notes underpinning the notes calling for five thousand or fifty one hundred on the S and P by the end of next year, which is how the federal respond to the slowdown that they wrought that they wanted to see. Will they cut rates aggressively just simply because they're tightening the screws at a faster pace as growth slows. Do you buy that they will do that even if it keeps perhaps the economy flow and prolongs this period of disinflation. This is a really important discussion in teams. In M language, we are looking at the tailor rule. How much weight do they put on inflation? How much weight do they put on the labor market. So far, all the weight has almost entirely been on inflation. And the question is next year, once inflation does get closer to two, will they begin to shift their attention over towards the label market? In other words, are the coefficients changing so that we put more weight on the label market. Now that the labor market is beginning to show some signs of weakening, I appreciate that jobless claims are not slowing, but the work week is coming down. If you look at job openings is coming down. A number of indicators are suggesting that label demand is weakening. So I do think that they will begin to shift away from focusing purely on inflation to begin to focus. Also more on the label a slock rule. It's like the tailor. I'm inventing it right now. Focus the slock rule. Look for this. The slock rules is three months moving average and non farm payrolls. What statistic do we need on a three months moving average of non farm payrolls? Where we make the great tailor to slock shift. See if you look at your latest number for a non found it was one hundred and fifty thousand. If idays one eighty eight two, and if I type Ecoco on Bloomberg, I will see that by second quarter of next year, non found paybrows will on average fall April, May and June be thirty five thousand. So now goes not wondering, thirty five thousand, So that is not wondering. That's the average, So that can have some fluctuation. I was not wondering. I always say this and p going to trade. If we get thirty five thousand and non fund payrose, what if it even goes below zero? The risk is here that we may have a runway and the lack of effects of Martins hear pology essentially beginning to be a big a trag on growth. Adobe just out Amy, Thank you so much for this. This is Bramo spending this weekend. Adobe a twelve billion to twelve point four billion Cyber Monday spend last year was eleven point three billion. But to your distinction, that's cyber that's just we're parsing out how all of us are glued to Amazon and it's cyber Monday today, let alone all the other spending that we've seen over this period of time. Really, I mean, honestly, the distortions have been incredibly difficult to really pick up on, which is the reason why I'm listening to what you're saying toward Sten, this idea of the labor market weakening and the FED maybe responding to that, and I'm thinking about, well, people still have money to spend, Their real wages are actually going up, and oh yeah, this is a job full recession that people are accepting. This is what they say, right, that people are hoarding labor, this is a new world. Do you push back against that? Well, there is in your weekend reading from the Fed the working papers that write about this. There is some debate between the Boston Fed, the San Francisco Fed, the New York Fed, has also written about this. The Board of Prominence has also written about this. The key issue still is it's very clear that we are ultimately running out of savings, excess savings in the household sex. So the question is some people view that has already happened, other view that's about now, other view that may only happen in the next few quarters. But the trend is very clear. The fit is getting what they want. They want a slowdown, and that's why you will also madly get excess savings running out. And let's not forget student dont payment started on the first of Octoba. That's why retail sales for Octoba was readtivy week. If we put all these things together, I still think that the slowdown continues. Deutsche Bank put out a forecast for one hundred and seventy five basis points of FED rate cuts next year. Is that feasible with the recipe that you just put out there. Well, that does require, of course quite a hot slowdown in the economy. That certainly requires a recession and a hot landing. The question is that's not what the contentious is expecting at the moment. But it's clear that if we do get a shop all slow down, and that is also what the contentious is expecting. It's just above ceral DP is expecting it below zero. Both scenarios make sense on their own, but the conclusion still is we still have more downside risk from where we are at the moment. I got to go back to your day job a couple of years ago before you got this easy slog with Apollo, and that was a Deutsche Bank Rischie Senak, the Prime Minister told our Francine Lacroix adamantly he is not prescribing austerity. You and folk arts Landau live this at Deutsche Bank, of the continent of Europe and of the United Kingdom. Is there a risk they slip into an incorrect austere policy. Well, the problem is that both the UK and EU have some same list of problems at the US broadly speaking, and then have some addition. We stimulus. We did a lock in New world stimulus. They're stuck in the old world. Isn't that simple? Well, in some sense, fiscal policy is certainly very different. In the US. It was much more aggressive than what it was in the UK and Europe, and in that sense, all the rules that in particular the growth constability plaque in Europe but also in the UK have certainly played a very critical role in why fiscal policy has been very different in the UK relative to the US. The fiscal policy will be more expensive than perhaps some people would say given where rates are. That's what we saw from Germany and the recent prognostications over there. Do you think auctions matter? I do think auctions matter a lot. And as you know, as you just talked about two year, three year, a five years and seven year this week is very important. And if you go also and look at the auction sizes over the last several months, they have gone up and as they continue to go up. The risk really here is that short rates may eventually come down, but we may have a steepener because long rates may potentially not come down as much because now we are dealing with this supply issue that potentially to put up what pressure and limit how much of a time we can get in loong rates. Let's revisit a banner from two hours ago. Outnumbered again, Pharaoh gone slock here. Auctions matter two, No one cares one. I think we were at two before. Now I think we're at three. Yeah, you know, it's just so it's like three to one is how we're going to take that matter. It depends if you care. I care auction a few weeks ago with a matter quite alone, Yes, exactly. Thank you doctor, Please of the tursen go away at least till next week by Steve Schwartzman of course Blackstone. Steve, thank you. You were just on stage with the Prime Ministeryunak. How much are you putting in the UK? What are you most excited about when it comes to the UK growth. Well, we've been putting a lot of money into the UK. First of all, we're doing our headquarters building here, which is very significant size building. It will be the largest built in the Mayfair area in the last several decades. We bought two companies in the last two weeks in the United States in the UK, and you know we have a total of seventy billion pounds that's close to ninety billion dollars of investments in the UK with thirty seven thousand people working in these companies in real estate. See what stands out as the biggest strength actually for the UK. So there are many questions. There was an autumn statement we're not sure how they're going to fund some of the tax cuts if they continue down the road, and we don't know if the Conservatives are in power in twelve months. Well, the big advantages of the UK are the English language, the rule of law. They have a terrific university system, they have a great life science areas. They're the number one tourist area in Europe, which actually I found surprising, and so they have a lot of pockets of strength. They've been through a complex time politically, but if you look longer term, the rule of law in the UK is very strong. Their regulatory posture has been quite consistent over time. But we forget that these are good things and not all places in the world have them, and so I think I'm not an expert on the UK, you know, sort of laws in the sense of what they're doing politically. I think their autumn statement on balance, which was stimulative, is and necessary thing for their economy. And they have a much more open approach to immigration at the top levels of education, which is good for helping to power an economy. So I think there's some interesting things going on here. Steve, what can you tell us about private market valuations at Pe firms? So in general. Do you see LPs actually demanding more information on marks and more reporting requirements and evaluation. Is that something that's shifting. I don't see a big set of enormous concerns on that. What always happens at this stage and the cycle, you know, when you go to very high interest rates and the world sort of starts slowing down, is that deals slow down. So for l P is their biggest concern is they're not getting capital flows back that they normally were depending on. Just people aren't selling assets. These types of cycles always end and things returns to normal. It's quite interesting that, you know, we just did two deals in the UK in the last two weeks, one in the affordable in what they call social housing area, one in computer software. Both are million billion dollar, two billion dollar type deals. We're doing a number of things in the US now, some of which have been announced, some of which haven't. We just were involved with a situation in Norway that's twelve billion dollars. So the deal business is not totally in mothballs, and these things start again, and I think we're more on that side of the cycle. Although it has been you know, somewhat dreary for a year in terms, for example of real estate, I think you're raising an opportunity to stake funds ten billion. How's that going, Well, we're raising money for a European fund. Actually, we're always raising money for a lot of funds for ran scene, and you know, we're gone through a big fund raising cycle. So we have over two hundred billion dollars. It's one of the biggest pools of uninvested capital in the world and that will be deployed in due course. Interestingly, in real estate, which you just asked about, we're seeing a good deal of volume of buying things in Europe because European real estate is under pressure in large parts because interest rates were so low here for so long. Sometimes in countries they were negative, so the barring costs to own real estate were next to nothing, and now it's closer to six percent. So if you have to carry a whole portfolio that used to cost you next to nothing at six percent, they need to sell things, you know, it's necessary to just hold their other properties. And so we're seeing some very very good buys in that kind of environment because unlike most people, we have enormous capital and can buy the types of real estate that we like, whether they're data centers, whether they're warehouses, whether they're student housing, where those sectors have done very well. See what can you tell us about great? So, have you seen any redemptions in that? How's that going? It breaks greats? How do you say b r e it t you say b reat Yeah, Well, those those redemptions have gone down. You know, they're I think forty or something like that of what they were a year ago. And so that that pool of capital is actually doing quite well compared to almost all of the real estate, and so you know, we look forward to that sort of ultimately going back to a very normal kind of world. Overall. Does UK politics seem benign compared to the US, but also what we saw in the Netherlands, well, you know, commenting on politics of other countries, let alone our own, which has a sense of drama and you know sort of incredulity is outside of my remit fair Steve Schwartz with a thank you so much. As always, Steve also has to get to another meeting right here, because people are coming and going in all the corridors of course of Hampton Court Palace. John subscribe to the Bloomberg Surveillance Podcast on Apple, Spotify, and anywhere else you get your podcasts. Listen live every weekday, starting at seven am Eastern. 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