Streamline Your Document Signing Process for Closing Big Deals in European Union

How to create outlook signature

GUY: MONDAY, 25TH OF SEPTEMBER. IT IS UGLY OUT THERE. >> THE COUNTDOWN IS ON IN EUROPE. THIS IS BLOOMBERG MARKETS EUROPEAN CLOSE WITH GUY JOHNSON AND ALIX STEEL. ♪ GUY: ONE OF MY TEAM EARLIER TODAY SAID HAPPY MONDAY. I DID NOT THINK IT WAS A THING AND CERTAINLY NOT TODAY WHEN IT COMES TO FINANCIAL MARKETS. STOXX 600 DOWN BY A PERCENT. LUXURY STOCKS ARE GETTING DINGED UP PRETTY BADLY. STOXX 600, 448. READING THROUGH SOME TECHNICAL LEVELS IN EUROPE AS WELL WHICH IS PRETTY UGLY. THIS IS WHAT I MEAN ABOUT THE TRAVELER LEDGER SECTOR. THE OUTLOOK, NOT GOOD. THIS MARKET IS -- THIS COMPANY IS HAVING TO TAKE A LOOK AT THESE MARKETS. PARIS FASHION WEEK IS UNDERWAY. APPARENTLY THE CARING -- KERING SHOW WAS GOOD. YOU ALSO HAVE VALENTINO OUT. VISIO MAKING PRETTY NEGATIVE COMMENTS AS WELL AS TO WHAT IS HAPPENING THE LUXURIES A'S. HAPPY MONDAY, NOT REALLY. KAILEY: IT DOES NOT REALLY SEEM LIKE A HAPPY MONDAY IN THE U.S. BECAUSE YOU ARE SEEING SELLING IN THE EQUITY MARKET. THE S&P 500 OFF BY A QUARTER OF 1%. IT REALLY IS THE 10 YEAR YIELD THAT CAPTURES OUR ATTENTION. AT YIELD NOW EIGHT BASIS POINTS ON THE DAY. THIS IS A FRANCHISE SINCE GOING BACK TO OCTOBER OF 2007. WHAT IS INTERESTING IS IT IS CONCENTRATED IN THAT LONG END OF THE CURVE. WE ARE FLAT ON THE DAY ON THE TWO-YEAR WHICH IS AT 5.1%. BLOOMBERG DOLLAR INDEX UP BY HALF A PERCENT. WE ARE NOW THE HIGHEST LEVEL GOING BACK TO DECEMBER OF LAST YEAR. GUY: LET'S TALK ABOUT WHAT IS HAPPENING IN EUROPE BECAUSE APPARENTLY WE ARE RESPONSIBLE FOR ALL OF THIS. ARE WE GOING TO 3% ON THE GERMAN 10-YEAR? CERTAINLY IF WE TAKE A LOOK AT THE ACTIVITY AND MOVE WE HAVE SEEN OVER THE LAST COUPLE OF DAYS. I THINK WE HAVE NINE YEAR HIGHS ON REAL YIELDS. GERMANY IS STAGNATING RIGHT NOW. THE ECONOMIC DATA IS NOT GOOD. PEOPLE TALKING ABOUT GERMANY BEING THE SICK MAN OF EUROPE. WHAT IS HAPPENING IS POTENTIALLY HIGHER INFLATION AND LOWER GROWTH COINCIDING. MAYBE THAT IS WHAT IS BEING PRICED INTO THE GERMAN 10-YEAR. KAILEY: IT ALL IS GOING TO COME DOWN TO HOW THE ECB REACTS TO POTENTIAL STAG MARY INFLATION. CHRISTINE LAGARDE REITERATED THAT BORROWING COSTS WILL REMAIN ELEVATED FOR AS LONG AS NEEDED TO TAME INFLATION. >> OUR MISSION, OUR DUTY IS TO RETURN INFLATION BACK TO TARGET IN A TIMELY MANNER. THE FASTER IT GETS THERE, THE MORE STABLE PRICES ARE, THE LESS PAINFUL IT WILL BE GOING FORWARD. FOR BOTH THOSE WHO INVEST BUT ALSO THOSE WHO HAVE BORROWED. GUY: EARLIER FROM APOLLO, STAGNATION, STAGFLATION LOOKS LIKE THE REAL STORY IN EUROPE. YOU HAVE TO KEEP INTEREST RATES HIGHER AND AT SOME POINT, YOU HOPE THERE IS A SPARK THAT WEEKNIGHTS GROWTH. WHY ARE YIELDS HIGHER IS A KEY QUESTION AND I THINK THAT IS A QUESTION WE NEED TO ANSWER. I THINK IT IS A COCKTAIL OF FACTORS. WHY ARE YIELDS HIGHER AND WHICH YIELDS ARE MORE IMPORTANT IN THIS WHOLE STORY? I WANT TO PIN YOU DOWN ON WHAT YOU THINK THE ANSWER IS THE WHAT IS HAPPENING HERE. WHAT DO YOU THINK IS DRIVING YIELDS HIGHER? IS IT A COCKTAIL OF FACTORS? THE OIL PRICE? CENTRAL BANKS? JUSTINA: IT SEEMS LIKE INVESTORS ARE SLOWLY ADJUSTING TO THE REALITY. LAST WEEK, WE ALSO GOT NOISE FROM FED OFFICIALS SAYING THERE MIGHT EVEN BE ONE MORE RATE HIKE COMING UP. I THINK THE CATALYST FOR ALL OF THAT IS THAT MOVE IN OIL HIGHER. A LOT OF THAT NARRATIVE IS MORE ABOUT THE SUPPLY SIDE THAN THE DEMAND SIDE. IT IS NOT NECESSARILY HAVING TO DO WITH INFLATIONARY PRESSURES INCREASING THAT MUCH. YOU HAVE HIGHER OIL PRICES, THAT TRANSLATES TO A FASTER INFLATION IN TERMS OF THE HEADLINE NUMBERS. KAILEY: BUT WHAT IS SO INTERESTING AND I WILL LET YOU CHIME IN, THIS IDEA THAT IT IS NOT BREAKEVENS THAT HAVE BEEN DRIVING ANY OF THE MOVES WHICH IS WHERE YOU WOULD NORMALLY SEE YIELD COMING IN. EDDIE: THIS IS A STORY ABOUT THE HIGHER FOR LONGER IS HERE TO STAY. MARKETS BUYING INTO THAT. I THINK WE ARE SEEING REAL CHANGES ABOUT JUST HOW LONG INFLATION IS GOING TO BE WITH US. IF YOU SEE INFLATION THAT STICKY, YOU DON'T WANT TO BE ANYWHERE NEAR THE LONG END. IF WE ARE GOING TO GET THIS BENIGN STEEPENING -- IT IS NOT BENIGN FOR THE BOND MARKET, BUT THE MARKET SAYS WE ARE PROBABLY GOING TO SEE STEEPENING. IF WE SEE THAT, WE SEE 200 BASIS POINTS. THAT IS GOING TO HAVE TO COME QUICK IN THE NEXT 12 MONTHS. I THINK THERE IS A LOT OF PAIN. THIS SEEMS TO BE THE OUTLOOK. TO YOUR QUESTION ABOUT WHY WE ARE NOT SEEING THIS IN BREAKEVENS, I THINK THE BREAKEVEN MARKET IS A MUCH MORE ILL LIQUID MARKET. I DON'T THINK IT IS AS GOOD AT FORECASTING INFLATION AS PEOPLE ASSUME. GUY: YOU ARE FIRMLY OF THE VIEW THIS IS UNDERLYING, THIS MOVE WE ARE SEEING HAS ITS GENESIS IN INFLATION. IT IS NOT SUPPLY AND DEMAND. IT IS NOT WHAT IS HAPPENING WITH THE STRIKES AND THE FACT THAT ULTIMATELY, WE ARE SEEING A POTENTIALLY LONGER TERM SHIFT IN LABOR. IT IS NOT WHAT IS HAPPENING IN TERMS OF THE EUROPEAN STORY VERSUS THE U.S. IT IS FUNDAMENTALLY DRIVEN BY INFLATION. EDDIE: I THINK ALL OF THE ABOVE. I THINK WE HAVE A BUNCH OF NARRATIVES. THE DEBATE, I WILL LEAVE FOR OTHERS BUT I DO THINK WAGES, I THINK PEOPLES INFLATION EXPECTATIONS HAVE SHIFTED. WE ARE GOING TO TALK ABOUT STRIKES, THE STAGFLATIONARY DEBATE YOU ARE TALKING ABOUT HAS -- IS BECOMING ENTRENCHED. IT POPS UP BUT I HAVE NEVER HAD AS MANY MAINSTREAM INVESTORS AND ECONOMISTS TALK TO ME ABOUT STAGFLATION SO IT FEELS LIKE THAT IS HERE TO STAY. KAILEY: AND TO GO BACK TO WHAT ULTIMATELY STAGFLATION IS GOING TO MEAN FOR THE ECB, THAT THEY ARE GOING TO STAY HIGH UNTIL INFLATION COMES LOW ENOUGH THAT THEY ARE COMFORTABLE, WHO IS GOING TO BE ABLE TO HOLD HIGHER FOR THE LONGER PERIOD OF TIME? CAN EUROPE DO IT, OR THE FED? JUSTINA: IT IS KIND OF INTERESTING BECAUSE ON THE ONE HAND, YOU HAVE CHRISTINE LAGARDE TRYING TO SEND A MESSAGE OR AT LEAST TELL INVESTORS THAT WE WANT TO KEEP RATES HIGH. WE ARE ALREADY HEARING A BIT OF DIVERGENCE FROM OTHER ECB OFFICIALS SAYING THAT MAYBE THE EUROPEAN ECONOMY CANNOT TAKE THIS FOR MUCH LONGER. I THINK YOU ARE ALREADY SEEING THAT IN THE EUROPEAN NUMBERS. IT HAS ALWAYS BEEN A MORE CYCLICAL ECONOMY SO IT IS MORE EXPOSED TO SLOWER CHINESE GROWTH. THAT ALSO DEPENDS ON WHAT WE ARE GOING TO SEE OUT OF CHINA. IT WOULD SEEM LIKE FOR NOW, THE ECB PROBABLY WILL HAVE TO RELENT EARLIER. GUY: DO YOU THINK THE CENTRAL BANKS ARE HAPPY WITH WHAT IS HAPPENING IN THE BOND MARKET BECAUSE IN SOME WAYS, THEY HAVE MADE IT VERY CLEAR. WE ARE NOT TALKING ABOUT CUTS. WHAT IS FINALLY HAPPENING IN THE BOND MARKET NOW IS AN ACCEPTANCE THEY ARE NOT COMING. THE COST OF THAT IS HIGHER YIELDS WHICH IS GOING TO HAVE AN IMPACT ON GROWTH. DO THINK FUNDAMENTALLY CENTRAL BANKS ARE TAKING THE BOX? JUSTINA: I THINK THEY ARE PROBABLY HAPPY WITH THE SELF-FULFILLING PROSPECT OF IT IN THE SENSE THAT THEY DON'T WANT INVESTORS TO THINK WE ARE GOING TO CUT RATES NEXT YEAR. THAT HOPEFULLY HAS THE EFFECT OF PREVENTING INFLATIONARY EXPECTATIONS FROM BECOMING ENTRENCHED. OF COURSE, YOU CAN SAY ONCE BORROWING COSTS NO UP ENOUGH, IT DOES MAKE IT HARDER TO PULL OFF A SOFT LANDING WHICH A LOT OF FEDERAL OFFICIALS WERE STILL HOPING FOR. AT THIS POINT, I WE STILL GOING TO GET THAT? KAILEY: WE JUST HAD A HEADLINE CRASHING FROM S&P NOW EXPECTED THE U.S. ECONOMY TO EXPAND 2.3%. IT SPEAKS TO THE RESILIENCE THAT WE HAVE SEEN THAT MAYBE TOOK A LOT OF PEOPLE BY SURPRISE. WHAT THAT HAS COME UP WITH IS PRETTY SURPRISING RESILIENCE OF THE U.S. DOLLAR. WHAT DO YOU MAKE OF THAT? EDDIE: I SPOKE TO A LOT OF INVESTORS OVER THE LAST WEEK OR SO ABOUT WHERE DO YOU POSITION FOR STAGFLATION. IF YOU BELIEVE THAT NOT ONLY ARE WE GOING TO SEE STAGFLATION, YOU ALSO LOOK AND THE DOLLAR IS THE PLACE TO BE. THE FED HAS THE MOST ROOM TO MANEUVER. I THINK THE FED HAS CREATED SOME ITSELF IN ORDER TO REACT WHEREAS THE ECB, THE SITUATION IS TOUGH. I THINK JUST THE FRAGMENTATION OF EUROPE STILL IS A RISK FACTOR. I THINK INVESTORS IN ANY KIND OF PANIC WILL FLOAT TO THE DOLLAR. GUY: THE YIELDS GOING HIGHER, JUST AN EXAMPLE OF THE MARKET GETTING EVERYTHING WRONG AGAIN. WE SAW THERE WERE GOING TO BE CUTS AND WE WERE WRONG. I'M NOW WONDERING WHETHER THE FACT THAT YIELDS ARE HIGHER AND WE ARE ALL PRICING IN THIS HIGH FOR LONGER BASICALLY SIGNALS THAT WE ARE RIGHT AT THE POINT WHERE THE ECONOMIC STORY FALLS OUT OF BED IN A VERILY -- FAIRLY BIG WAY. IT IS HARD TO PULL OFF THE SOFT LANDING. PRICING IN HIGHER YIELDS BECAUSE THE ECONOMY IS PROVING RESILIENT BUT THE FACT WE'RE DOING THAT PROBABLY MEANS IT WON'T BE. EDDIE: YOU HAVE GOT TO ACCEPT THAT IF YOU ARE GOING TO GET BEAR STEEPENING, THERE IS GOING TO BE PAIN. IF WE ARE NOT GOING TO GET A STEEPENING FROM THE FRONT END OF THE CURVE WHERE THE FED IS FORCED INTO CUTTING, I THINK THERE IS GOING TO BE PAIN FOR SOME BUT THAT NARRATIVE IS PROBABLY ONE OF LESS ECONOMIC PAIN AND GROWTH RETURNING AT THE SAME TIME AS INFLATION REMAINS HIGH AND PERHAPS A SECONDARY OR SECOND ACCELERATION OF INFLATION. I DO WONDER WHETHER THE FED AND OTHER CENTRAL BANKS WILL MAKE THE TRANSITORY MISTAKE. I THINK THEY WILL PULL THE BRAKES FAIRLY HARD IF INFLATION STARTS GETTING AWAY. >> ONCE SUMMER IS OVER, THERE IS PROBABLY GOING TO BE A BIG GLOBAL OIL PRODUCER WHO SUDDENLY DECIDES THEY DON'T HAVE A SUPPLY THEY THOUGHT THEY HAD, THE PRICE NEEDS TO GO UP AND I THINK WE NEED TO START -- STOP BEING SURPRISED BY THAT. LOOKING AT A WORLD WHERE RUSSIA IS AN WAR WITH UKRAINE, I THINK WE ARE GOING TO SEE THEM HAVE A LOT OF SUPPLY ISSUES IN THE WINTER THAT REALLY DRIVES UP THE PRICE WHETHER WE LIKE IT OR NOT AND THAT HAS AN IMPACT ON YIELD. GUY: SPEAKING TO -- A LITTLE EARLIER ON. CERTAINLY POINTING US IN THE DIRECTION OF OIL PRICES. LET'S GET ANOTHER GO AT THIS QUESTION. BARCLAYS MANAGING DIRECTOR JOINS US NOW. THIS IS NOT YOUR WHEELHOUSE, BUT IT SEEMS TO BE IMPACTING WHAT YOU DO. YIELDS ARE HIGHER. WHY DO YOU THINK THEY ARE HIGHER? EMMANUEL: BECAUSE THE MARKETS ARE LISTENING TO THE CENTRAL BANKS. IT SEEMS THE FED IS WANTING THE MARKET TO -- AND THE FED HAS BEEN FORCING THIS RISE IN RATES. IT WAS LARGELY BECAUSE THE FED HAS BEEN REVISING. COMPARED TO ONE WEEK AGO, WE HAVE BAD FORECASTING HIGHER GROWTH IN THE U.S. YEAR AND LOWER UNEMPLOYMENT. THAT IS WHY THE FED HAS BEEN MAKING A POINT. RATES HAVE TO BE THERE FOR LONGER. WE HAVE DEPENDED -- DEBATING THIS FOR THE PAST SEVERAL MONTHS NOW. AT THE END OF THE DAY, YOU SHOULD INSPECT -- EXPECT INFLATION TO REMAIN RESILIENT. KAILEY: SO IF THAT IS THE CASE, IF WE ARE GOING TO LIVE IN A HIGHER FOR LONGER WORLD AND BORROWING COSTS ARE GOING TO BE LOWER, THAT WOULD PUT PRESSURE ON CERTAIN POCKETS OF THE U.S. AND EUROPEAN EQUITY MARKET. WHAT IS IT GOING TO DO IN TERMS OF THE RELATIVE ATTRACTION OF WHAT YOU CAN GET IN THE BOND MARKET VERSUS THE YIELD OFFERED BY EQUITIES? EMMANUEL: CLEARLY, THE BOND MARKET IS BECOMING MUCH MORE ATTRACTIVE TO US. WE HAVE BEEN QUITE CAUTIOUS BUT WE PRETTY MUCH HAVE A 40 OR 50 BAYS .1 PRICING IN THE CURVE THE LAST COUPLE OF WEEKS. THE BOND MARKET IS REFLECTING A MUCH MORE REASONABLE OUTCOME IN TERMS OF INFLATION AND GROWTH. WE FIND MORE AND MORE VALUE IN FIXED INCOME. OR DO WE START TO SEE HIGHER INTEREST RATES HURTING THE ECONOMY? I'M NOT SURE THE MARKET IS GOING TO GIVE THE BENEFIT OF THE DOUBT BECAUSE AS WE KNOW, MOST OF THE PAST TIGHTENING CYCLE -- BUT WHAT WE HAVE SEEN SO FAR AS INDICATED EQUITIES BEING ABLE TO SHRUG OFF THE HIGHER RATES BECAUSE THEY HAVE BEEN QUITE STRONG. GUY: THE PMI'S ARE CLEARLY SHOWING WEAKNESS. EVEN ON THE SERVICES SIDE, STARTING TO SHOW THEY EUROPE IS STRUGGLING. COMPANIES HAVE BEEN ABLE TO KEEP THEIR MARGINS LOOKING GOOD AS YOU HAVE BEEN TALKING ABOUT BECAUSE THE TOP LINE HAS BEEN STRONG. DO YOU THINK THE TOP LINE WILL CONTINUE TO BE AS STRONG? WHERE DOES THE PAIN START? IS IT THAT TOPLINE? IN MARGINS? WHERE DO YOU THINK WE SHOULD BE LOOKING? EMMANUEL: PMI'S ARE VERY MISLEADING BECAUSE THEY FAILED TO CAPTURE THE IMPACT AND BENEFIT OF HIGHER INFLATION ON THE TOP LINE AND EARNINGS. EARNINGS HAVE BEEN QUITE RESILIENT DESPITE PMI GOING DOWN. WE HAVE INFLATION AND ACTIVITY THAT SHOULD COME WITH A BIT OF CUSHION. LOOKING AT ANY SIGN OF DEMAND OR PRESSURE. WE HAVE SEEN AGAIN, THAT ADVICE FROM CONSUMERS, ADVICE SERVICES. DO WE START TO SEE CRACKS IN THE CONSUMER MARKET AND THAT I THINK, DO WE START TO SEE COMPANIES TALKING ABOUT NOT BEING ABLE TO PAY THE DEBT. DO WE HAVE CREDIT ISSUE. KAILEY: TO THE IDEA POTENTIALLY STARTING TO SEE SOME CRACKS IN DEMAND ON THE PART OF THE CONSUMER, ARE YOU WORRIED AT ALL ABOUT LUXURY? EMMANUEL: WE DO. WE HAVE BEEN WORRIED FOR SOME TIME. TRYING TO FIND A BALANCE. WE STILL WANT TO HAVE SOME RISK IN SOME CASES BUT WE DON'T WANT TO OVERPAY FOR RISK. WE TRY TO COMBINE AND LOW EXPECTATION. WE SEE EARNINGS OF QUITE POSITIVE. ON THE OTHER HAND ALSO HAVE EARNINGS. MORE CAUTIOUS ON SOME OF THE NAMES AND LUXURY. A COUPLE WEEKS AGO, INDUSTRIALS. WHAT WE ARE MUCH MORE FOCUSED ON TO EXPRESS EARNINGS RISK. GUY: LVMH DOWN 20% FROM ITS PEAK. LET'S TALK ABOUT BETWEEN NOW AND YEAR END. HIS CASH GOING TO BE THE KING BETWEEN NOW -- HERE AND YEAR END? WHAT DO I NEED TO DO TO OUTPERFORM CASH IF I WANT TO BE IN THE EQUITY MARKET? EMMANUEL: IT IS GOING TO BE VERY HARD TO BE RISK-ADJUSTED. WITHIN THE EQUITY MARKET, WE SIMPLY WANT TO BE IN CHEAP STOCK SECTORS WHICH HAVE AN EARNINGS. WE ALSO WANT TO HAVE AND GENERATE SIGNIFICANT CASH FLOW. WE DON'T WANT TO BE IN THE EXPENSIVE LONG-RANGE SECTORS. IF I LOOK AT THE DIFFERENT MARGINS, THE U.S., VERY HARD TO SEE MONEY GOING WITHOUT ANY KIND OF SENSE OF INFLATION PEEKING OR GROWTH PICKING UP AGAIN. I WOULD JUST SAY THE MOTIVATION OF THE U.S. MARKET LOOKS A BIT VULNERABLE. >> THE AMERICAN MARKET IS SLOWING DOWN DUE TO THE REALITY THAT THE STORES ARE REALLY IN A SUFFERING SITUATION AT THE MOMENT. PLUS THE REALITY THAT SPENDING IS SLOWING DOWN. THE EXPECTATION CHINA WILL COME INTO THE MARKET IN A BIG WAY AFTER SUFFERING OF THE LAST TWO YEARS IS NOT HAPPENING. GUY: CHAIR OF VALENTINO, THE FOUNDER OF THE INVESTMENT GROUP TALKING TO BLOOMBERG A LITTLE BIT EARLIER ON TODAY. BASICALLY MIRRORING WHAT HAS BEEN SET ACROSS THE WHOLE OF THE LUXURY SPACE OUT THE MOMENT. YOU HAVE HEARD IT FROM ALL KINDS OF PEOPLE. TALKING ABOUT THE WEAKNESS THEY ARE NOW SEEING. TALKING ABOUT IT BEING A 10 YEAR UNWIND OF EXCESS THAT IS GOING TO COME. THOSE COMMENTS FROM VALENTINO CERTAINLY HAVING AN IMPACT AS WELL. A NOTE OUT FROM WHICH HAS HAD QUITE A BIG IMPACT ON CHARACTER. DOWNGRADING BASED ON ITS CONSUMER PROFILE. BEING MORE EXPOSED TO THIS CONSUMER SLIDE OUT WE ARE SEEING. THAT IS A STRAIGHT LOW PRICE TARGET. KAILEY THE NEW GUCCI SHOW WENT WELL. KAILEY: I GUESS THE QUESTION IS HOW GOOD IS A GOOD COLLECTION OF PEOPLE DON'T HAVE THE SPENDING POWER TO BE ABLE TO PURCHASE THOSE ITEMS. AFTER SOLANO SEEING RESILIENCE AND CONSUMPTION, ARE THOSE CRACKS STARTING TO EMERGE AND HOW IS THAT GOING TO WEIGH ON THE NERVES? GUY: CHINA IS A BIG FACTOR IN ALL OF THIS. NONE OF THESE ENGINES ARE FIRING AND I THINK THAT IS A BIG PROBLEM. THE MORE EXPOSED YOU ARE, THAT GETS WORSE AND WORSE. GUY: IT IS A MONDAY, A HOLIDAY, BUT STILL FEELS LIKE IMPORTANT THINGS ARE HAPPENING. THE GLOBAL BOND MARKET STORY IS A SIGNIFICANT NARRATIVE THAT FEELS LIKE IT HAS NOT RIPPLED FULLY OUT INTO OTHER ASSET CLASSES. YIELDS ARE CLIMBING AND FAST. EUROPEAN EQUITIES ARE UNDER PRESSURE TODAY. SERIES OF BIG SECTORS ARE UNDER PRESSURE TODAY. LUXURY IS DOWN. YOU'VE GOT THE BIG MINING STOCKS ARE REALLY UNDER PRESSURE AS WELL. MOLLY WAS PICKED UP. A BIT OF A LAG IN VOLLEY IN MIDDAY IS BEGINNING TO PICK UP A LITTLE BIT NOW WHICH IS INTERESTING. KEEP AN EYE ON THE VOLUME NARRATIVE. ARE WE STARTING TO SEE A PICKUP IN VOLATILITY AS WELL WHICH COULD MAKE THIS INTO AN EVEN MORE INTERESTING WEEK? A KIND OF FEELS LIKE INTERESTING THINGS ARE GOING TO HAPPEN. I WANT TO TALK ABOUT AIRBUS A LITTLE BIT. FANTASTIC TEAM AT BLOOMBERG MONITORING WHAT IS HAPPENING. LOOKS LIKE ING TO THOSE GUYS TELLING ME THIS, WE COULD POTENTIALLY SEE A BIG AIRBUS ORDER COMING THROUGH. WE ARE GOING TO WAIT AND WATCH AND SEE WHAT HAPPENS. WATCH FOR NEWS ON MANAGEMENT RESHUFFLING. MAYBE GOING BACK TO THE AND IS THE MODEL AT AIRBUS. IT MAKING IT A LITTLE BIT MORE MANAGEABLE IN TERMS OF MANAGEMENT BANDWIDTH. REALLY UNDER SIGNIFICANT PRESSURE DESPITE THE FACT THAT THE SHOW GUCCI WAS QUITE GOOD. DOWN BY 2%. THAT IS WHAT IS HAPPENING. ALL OF THIS COMING TOGETHER. EVERYTHING SEEMS TO BE COMING TOGETHER RIGHT NOW. WE HAVE THE REST OF THE WEEK TO GET THROUGH. LET'S TALK ABOUT WHAT WE ARE GOING BE LOOKING ABOUT. I'M GOING TO BE GOING TUESDAY OR WEDNESDAY FOR THE WORLD AVIATION FEST. WHAT IS HAPPENING WITH THE AIRLINES AND THE DEMAND STORY. THURSDAY, WE GET INTO THE CPI'S. SPAIN AND GERMANY, DATA OUT FRIDAY. WHAT IS THAT DATA GOING TO TELL US? CHRISTINE LAGARDE VERY CLEAR TALKING ABOUT THE IDEA. SHE IS NOT TALKING CUTS JUST YET. LET'S TALK ABOUT HOW IMPORTANT THE CPI DATA IS GOING TO BE. NICE TO SEE YOU. CPI ENDED THE WEEK. CHRISTINE LAGARDE MAKING IT VERY CLEAR THE RATES ARE GOING TO STAY UP AND STAY THERE FOR A WHILE. WHAT IS THE CPI GOING TO TELL US ABOUT WHETHER OR NOT SHE IS GOING TO BE ABLE TO ACHIEVE THAT? THE BASTION: ULTIMATELY, THE MESSAGE OF HIRE FOR LONGER IS GOING TO HAVE TO BE VALIDATED BY THE DATA. THE CPI IS THE DATA INVESTORS WILL LOOK AT FOR THE AREA GIVEN THE SINGLE MANDATE OF THE ECB. WE DON'T EXPECT A PARTICULAR LARGE SURPRISE EITHER WAY. WE THINK THE INFLATION PROCESS IS IN PLACE FOR THE COMING MONTHS. FOR THIS ONE IN PARTICULAR, WE DON'T EXPECT THE LARGEST SURPRISE. MORE TO COME IN TERMS OF ECB NEWS. KAILEY: FOR HOW LONG DO YOU THINK THE ECB IS GOING TO BE ABLE TO KEEP RATES HIGH? THIS IS WHERE A RECESSION FORECAST I WOULD THINK COMES INTO PLAY UNLESS YOU THINK THE ECB IS GOING TO BE WILLING TO TOLERATE THAT BECAUSE OF THE INFLATION FIGHT. SEBASTIAN: OUR VIEW IS THAT RATES WILL REMAIN HIGH UNTIL AT LEAST THE SECOND HALF OF 2024 DESPITE THE FACT THAT WE SEE INFLATION COMING DOWN TOWARDS 2%. ECONOMY HAS WEEKEND BUT INFLATION REMAINS HIGH AND REMAINS MUCH HIGHER THAN TARGETS. THE ECB IS TRYING TO MANAGE THAT GROWTH RISK IN THE CONTEXT OF INFLATION THAT REMAINS PRETTY ELEVATED. IT IS A CENTRAL BANK THAT HAS A SINGLE MANDATE ON INFLATION. WE THINK THE ECB WILL BE BIASED IN TERMS OF CUTTING LATER THAN OTHER CENTRAL BANKS. GUY: IS IT STAGFLATION? ARE WE THERE YET? BASICALLY SAYING THIS IS WHERE EUROPE IS NOW. IN REALITY, WHAT THAT MEANS IS THE CENTRAL BANK PLAYBOOK IS FAIRLY STRAIGHTFORWARD. YOU HAVE TO KEEP RATES HIGHER AND AT SOME POINT, HOPE THERE IS A SPARK THAT IGNITES GROWTH. YOU HAVE TO DEAL WITH THE INFLATION STORY AND THEY CLEAR AND DECISIVE WAY. IT IS TOO PAINFUL, WE HAVE TO GET IT DOWN. THAT IS OUR JOB. SEBASTIAN: THINK ULTIMATELY, THE ECB WILL MANAGE RISK THAT WAY AND WILL PROBABLY TEND TO OVER EXCITE THE ECONOMY. THE MOMENT, IT IS IN THE STAGFLATION ENVIRONMENT. THE BASIS FOR WHERE IT STARTS HIS LACK OF GROWTH. IT IS STILL TOO HIGH FOR THE ECB TO RELAX. THAT, TO ME AND TO WAS MEANS THEY WILL KEEP RATES ELEVATED UNTIL GROWTH DETERIORATES MORE AND MORE SHARPLY. KAILEY: EARLIER, OUR QUESTION OF THE DAY WAS WHY EXACTLY YIELDS ARE HIGHER AND WE HAD A WHOLE CONVERSATION ON WHY OIL AND ENERGY IS FACTORING INTO THAT. HOW DO YOU THINK THE ECB IS LOOKING AT THE PICTURE GIVEN HOW PROBLEMATIC IT HAS BEEN FOR EUROPE SPECIFICALLY? SEBASTIAN: ENERGY IS AN INTERESTING STORY. TRADITIONALLY, CENTRAL BANKS HAVE TO LOOK THROUGH THESE SHOCKS. I THINK WE ARE IN A DIFFERENT SITUATION AT THE MOMENT. THE STARTING LEVEL OF INFLATION MATTERS QUITE A BIT. WHAT ALSO MATTERS IS THAT INFLATION EXPECTATIONS TEND TO BE FAIRLY COORDINATED WITH ENERGY PRICES. THE ECB WILL BE LOOKING AT THIS PARTICULAR SHOT THEY HAWKISH LENS. IT IS ANOTHER SHOCK THAT CONTRIBUTES IN THE IDEA THAT THEY WILL KEEP RATES FOR HIGHER. GUY: RATES ARE GOING UP, DO YOU THINK THEY WANT TO MAKE CLEAR THE MESSAGE THEY ARE TRYING TO GET ACROSS IS THAT LAGARDE IS SPELLING IT OUT TIME AND TIME AGAIN, SHE DOES NOT WANT UP ON TO TURN INTO PRICING OF CUTS. DO THINK THE CENTRAL BANK IS FEELING THAT THEIR COMMUNICATION IS WORKING AND THE WAY THEY CAN SEE IT IS WORKING IS BECAUSE YIELDS ARE GOING UP AND GOING UP ACROSS THE CURVE? SEBASTIAN: THE FACT THAT YIELDS ARE RISING, IT IS TIGHTENING CONDITIONS WHICH IS IN LINE WITH THE MESSAGE THAT CENTRAL BANKS BROADLY SPEAKING AROUND THE WORLD, PARTICULARLY IN DEVELOPED MARKETS ARE TRYING TO DELIVER TO THE MARKETS. THE ECB OBVIOUSLY DOES NOT WANT EXCESSIVE TIGHTENING OF CONDITIONS. I THINK THE MOVES WE HAVE SEEN ARE IN LINE WITH THE MESSAGE THEY PROVIDED. OBVIOUSLY, THERE IS OTHER NEWS AROUND THE WORLD. THE FED HAS PROVIDED A HAWKISH MESSAGE AND I THINK PART OF THE MOVES EVEN IN EUROPE ARE DRIVEN BY WHAT WE HAVE SEEN IN THE U.S. GUY: JUST A COMING UP. EUROPEAN STOCKS DOWN FOR THE DAY. A TAKE HIRE DURING THE AUCTION BUT WE ARE STILL FINISHING FIRMLY IN NEGATIVE TERRITORY. LET'S COLA DOWN 1%. THE INFLATION NARRATIVE CERTAINLY A BIG FACTOR IN WHAT WE ARE SEEING WITH YIELDS RIGHT NOW. OIL PLAYING ITS PART. ARE WE HEADING FOR 100? WE HEAD BACK TO THE 2023 AMERICAN ENERGY SECURITY SIDE TAKING PLACE IN OKLAHOMA CITY. THAT IS WHERE WE FOUND ALEX STEELE. SHE IS JOINED BY THE CONTINENTAL RESOURCES PRESIDENT AND CEO. ALIX: IS A LOT OF FUN TALKING TO EVERYBODY HERE. HE HAS PROMISED ME AN INTERVIEW LIKE EIGHT YEARS AGO AND FINALLY MAKING GOOD ON THAT. LET'S JUST START OFF WITH CONTINENTAL NOW BEING PRIVATE. YOU ARE NOT CONSTRAINED BY THE PRIVATE MARKET. DOES THAT MEAN YOU'RE GOING TO GO PUMP EVERYTHING THERE IS TO PUMP CONTINENTAL? >> IT DOES NOT MEAN THAT. WE ARE INVESTING AT A VERY PRUDENT LEVEL CONSISTENT WITH OUR CASH FLOWS. JUST TO GO INVEST AND BE PRODUCING AS MUCH AS WE CAN IS NOT HOW WE GENERATE THE GREATEST VALUE. WITH THE HOMEOWNERS, WE STOP SHAREHOLDERS. WE ARE INTERESTED IN INVESTING AT A PACE THAT CREATES THE GREATEST VALUE. BEING FREE FROM ONE OF THE GREATEST MARKET COMPLAINTS ALLOWS US TO GO VALUE -- VALUE. ALIX: 200 OIL? DOUG: I THINK WE WILL CONTINUE TO SEE VOLATILITY IN THE $80 TO $100 OIL PRICE ENVIRONMENT. I THINK THE HIGHER PRAISE IS THE REALITY WE ARE GOING TO HAVE TO DEAL WITH AS WE THINK ABOUT OUR INVESTMENTS AND THE ENERGY NEEDS OF THE GLOBE AND THE FACT THAT WE KNOW TODAY IT IS BEING MORE BROADLY RECOGNIZE THE OIL AND GAS IS GOING TO PLAY A KEY ROLE IN OUR SOURCES OF ENERGY AND ENERGY STOCK OVER TIME. ALIX: HELP ME UNDERSTAND. THE IDEA IS THAT YOU GUYS WANT POLICY TO BE SUPPORTIVE OF OIL AND GAS BECAUSE WE NEED IT IN THE ENERGY TRANSITION. BUT THEN YOU ARE STILL GOING TO BE CAPITAL DISCIPLINED. WHAT GIVES? WHAT IS THE PROBLEM? IF PRODUCTION IS ALMOST NEAR A RECORD HIGH AND YOU ARE STILL PRODUCING? WHAT IS THE PROBLEM? DOUG: I DON'T THINK THERE IS A BROAD ENOUGH RECOGNITION THAT THIS IS A DEPLETING RESOURCE. WE STILL HAVE A STRONG NEED FOR OIL AND GAS TO POWER THE ENERGY NEEDS OF THE ENTIRE GLOBE. WE KNOW BY ALL PROJECTIONS WHETHER THEY BE GOVERNMENT OR BY INDUSTRY OR RESEARCH ASSOCIATIONS, THE OIL AND GAS IS GOING TO PLAY A SIGNIFICANT ROLE , GREATER THAN 50% ALL THE WAY THROUGH 2050 AND BEYOND. THE PROBLEM WE HAVE AND WHAT WE NEED TO BE MOST CONCERNED ABOUT AND WE DOUBT GIVE ENOUGH ATTENTION ON HIS THERE HAS BEEN A FUNDAMENTAL LACK AN INVESTMENT IN THE LAST 10 YEARS. WHEN YOU TALK ABOUT MOBILIZING RESOURCES AND BRINGING MORE OIL AND GAS TO PRODUCTION, WE ARE FAIRLY BALANCED AND THAT IS GOOD BUT WHAT WE ARE NOT DOING IN DEPLETING RESOURCES IS INVESTING ENOUGH IN EXPLORATION FOR FUTURE ENERGY NEEDS. ALIX: WHAT I'M HEARING IS YOU DON'T SO MUCH NEED PERMISSION TO DRILL BUT TO EXPLORE. BECAUSE PRODUCTIVITY HAS BECOME A PROBLEM IN U.S. SHALE, YOU ARE NOT GOING TO CONTINUE GETTING MORE AND MORE OUT OF THE ASSET. IS THAT A FAIR ASSESSMENT? ALIX: -- DOUG: IT IS, BUT BEING ABLE TO HAVE THE PERMITS TO DRILL ARE VERY IMPORTANT IN THE UNITED STATES. ALIX: BUT YOU GUYS ARE THE TECH GUYS. PIONEERS, THE SHALE COWBOYS. YOU HAVE YOUR COWBOY HAT AND DO COOL TECH STUFF THAT GETS MORE OIL OUT OF ROCK. IS THAT UNDERSELLING YOUR ABILITY TO KEEP DOING THAT? DOUG: NOT AT ALL. WE WILL CONTINUE TO INNOVATE AND IMPROVE. THE HORIZONTAL DRILLING WE HAVE HEARD SO MUCH ABOUT, THE INDUSTRY HAS MADE HUGE ADVANCES. WE ARE ALSO SEEING WHERE THE AVERAGE LATERAL LENGTH AND HORIZONTAL SHALES HAS BEEN TWO MILES AND NOW WE ARE LOOKING AT THREE AND FOUR. THOSE THINGS ARE GOING TO CONTINUE TO PROVIDE AN OPPORTUNITY FOR GOOD INVESTMENT AND PRODUCTION. THE KEY IS THAT THERE HAS BEEN UNDERINVESTMENT IN EXPLORATION. IF WE DON'T START THINKING ABOUT MORE EXPLORATION AND INVESTMENT HERE IN THE U.S. AND GLOBALLY, THIS DEPLETING RESOURCES GOING TO BE A CHALLENGE AND WILL RESULT IN HIGHER PRICES. ALIX: FOUR NONOIL N ERDS LISTENING, THAT IS A LONG WAY AWAY. YOU MESS UP ONE THING, IT IS HUGE. IS THE RISK IT REALLY WORTH THE REWARD ON THAT? DOUG: IT IS BECAUSE IT IS ENABLING US TO ACCESS ADDITIONAL ROCK THAT WE COULD ACTUALLY STIMULATE AND PRODUCE. INSTEAD OF WE ARE VERTICALLY DEVELOPED BEING IN MOST OF THE OIL IN GLASS -- OIL AND GAS IN THE UNITED STATES, 10000 AND 14,000 FEET ON AVERAGE. WE WILL ACTUALLY TURN AND GO HORIZONTALLY ANOTHER TWO MILES. NOW LOOKING TO EXTEND THAT. ALIX: THAT HAS GOT TO BE REALLY EXPENSIVE. MORE HORSEPOWER, CASING FOR YOUR TUBING. WHAT IS EXPENSIVE RIGHT NOW FOR YOU GUYS? WHAT IS GOING TO BE STICKY COST? DOUG: WE OBVIOUSLY HAVE SEEN INCREASE IN COST. WE ALSO, THIS DEAL, WATER, SAND, ALL OF THE RAW ELEMENTS THAT GO INTO OUR DRILLING AND DEVELOPMENT PROGRAMS HAVE BEEN HIGHER. IT IS GOING TO BE A CONSTANT CHALLENGE. YOU THINK ABOUT THESE COSTS, IT IS NOT INEXPENSIVE TO BRING ENERGY TO MARKET. ALIX: HOW MUCH OF THAT IS STICKY? DOUG: I THINK IT IS ALL FAIRLY STICKY. WE SEE OPPORTUNITIES WITH TECHNOLOGY TO CONTINUE TO IMPROVE OUR COST BUT A LOT OF WHAT IS TAKING PLACE IN THE LAST FEW YEARS, WE ARE SEEING IT TO BE MORE RESISTANT THAN WHAT WE WOULD HAVE LIKED IN BEING ABLE TO CLAW BACK SOME OF THOSE INFLATIONARY GAINS. ALIX: IF YOU ARE HERE AND YOU ARE GOING TO MAKE A PITCH FOR WE NEED CLEARER, MORE CONSISTENT POLICY TO BE ABLE TO EXPLORE AND GET THE OIL SO WE DON'T HAVE VOLATILE PRICES BETWEEN 80 AND 100 PLUS, WHAT IS THAT POLICY? WHAT ABOUT THE PEOPLE THAT ARE GOING TO SAY YOU'RE JUST GOING TO POLLUTE THE ENVIRONMENT. DOES THAT MEAN YOU HAVE TO GO FULL ON ENCOURAGEMENT -- CARBON MANAGEMENT? DOUG: THE OIL AND GAS INDUSTRY HAS MADE TREMENDOUS PRIDE -- PROGRESS. WE ARE DOING THINGS IN THE NEAR TERM LOOKING FOR HOW WE CAN HELP OTHER INDUSTRIES, HOW WE CAN HELP THINGS IN THE AGRICULTURE SPACE AND RETAIL SPACE. WE ARE GOING TO CONTINUE TO MAKE IMPROVEMENTS. IT IS JUST NOT FULLY RECOGNIZED WITH OIL AND GAS IS DOING FOR OUR TOTAL ENERGY AND HOW WE ARE WORKING SO HARD TO IMPROVE THE ENVIRONMENT. NATURAL GAS, CALLING A BRIDGE FEEL A FEEL HAS MADE A HUGE DIFFERENCE IN REDUCING RELIANCE ON COAL IN THE UNITED STATES. IT HAS TO CONTINUE GLOBALLY. ALIX: FOR THE IRA INFLATION REDUCTION ACT, WHAT DO YOU LIKE AND WHAT DO YOU HATE? DOUG: I JUST LIKE ANYTHING THAT DISCOURAGES CONTINUED INVESTMENT. ALIX: DOES IT DO THAT? DOUG: THERE IS NOT ANYTHING IN THERE THAT IS HELPING TO INCENTIVIZE CONTINUED DEVELOPMENT. THE FACT THAT WE ARE NOT RECOGNIZING THE ENERGY, OUR SOURCES OF ENERGY ARE GOING TO INCLUDE OIL AND GAS FOR A LONG TIME. IT IS CRITICAL AND ESSENTIAL TO OUR EVERYDAY LIFE. ALIX: IF WE DON'T HEAR YOUR MESSAGE, WHAT HAPPENS? DOUG: INSTEAD OF SEEING $80 TO $100, YOU ARE GOING TO SEE 100 -- $120 TO $150. IT TIES BACK TO WHAT WE HAVE BEEN TALKING ABOUT, THE PERMIAN BASIN HAS BEEN A TREMENDOUS GROWTH BASIN FOR THE OIL AND GAS DOMESTICALLY BUT ALSO A GREAT IMPACT GLOBALLY BECAUSE OF THE SUPPLY THAT HAS BEEN MOBILIZED. THEY HAVE REACHED THEIR PIG. THE PREMIER BASIN WILL REACH ITS PEAK ALSO. WHEN THAT HAPPENS, THAT IS GOING TO SEND A SHOCK THROUGH THE SYSTEM THAT THE UNITED STATES CAN NO LONGER GROW A MAJOR BASIN. WHEN THAT HAPPENS WITHOUT ENCOURAGEMENT AND GOOD POLICY TOWARD ENERGY INVESTMENT. THE OPPORTUNITY FOR COMPANIES TO INVEST -- ALIX: THANK YOU SO MUCH. BACK TO YOU. KAILEY: THANKS VERY MUCH. OF COURSE, ALIX IS GOING TO BE BACK FOR MORE LATER TODAY. KAILEY: WE TURN NOW TO THIS WEEK'S MONEY UNDER COLOR FOR VALUABLE INSIGHT INTO ALTERNATIVE INVESTMENTS. WE GET AN INSIDE LOOK INTO THE WORLD OF PRIVATE DEBT, EQUITY AND REAL ESTATE. LISA: WE ORIGINALLY STARTED MONEY UNDER COVER BEFORE THE PANDEMIC TO TAKE A LOOK AT SOME OF THE AREAS THAT WERE LESS TRANSPARENT AND CAPITAL MARKETS THAT WERE JUST ATTRACTING SO MUCH MONEY. NOW, WE TAKE A LOOK AT THOSE AREAS THAT ARE STILL ATTRACTING QUITE A BIT OF MONEY. AND QUITE A BIT OF NOTICE IN SOME OTHER WAYS. JOINING US NOW IS SOMEBODY WHO CAN ANSWER SOME QUESTIONS THAT PEOPLE KEEP RAISING ABOUT PARTICULAR COMMERCIAL REAL ESTATE WHERE PEOPLE ARE WONDERING WHAT IS THE NEXT SHOE TO DROP? MARK GIBSON JOINS. I WANT TO START THERE, YOU HAVE HEARD ALL OF THESE DISCUSSIONS ABOUT HOW COMMERCIAL REAL ESTATE IS THE NEXT SHOE TO DROP. DO YOU THINK THAT IS INACCURATE DESCRIPTION OF THE TSUNAMI OF POTENTIAL DEFAULTS THAT COULD BE HANGING OUT? MARK: LISA, THANKS FOR THE QUESTION. I DON'T. SIMPLY BECAUSE COMMERCIAL REAL ESTATE, LIKE EVERY ASSET CLASS, I JUST THE COST OF CAPITAL. AS A RESULT, JUST GIVEN THE DEFENSIVE LIGHT AGAINST INFLATION AND COST OF SHORT-TERM CAPITAL INCREASING AT A VERY RAPID PACE, EVERYONE HAS HAD TO STEP BACK AND REASSESS VALUES. AND DEAL WITH WHAT EVERY INDUSTRY IS DEALING WITH. WE DON'T SEE THIS TSUNAMI OF DEFAULTS AND ISSUES AND COMMERCIAL REAL ESTATE AS IS BEING PORTRAYED. PRIMARILY BECAUSE MOST OF THE INVESTORS IN COMMERCIAL REAL ESTATE OF BEEN CONSERVATIVE IN THEIR CAPITAL CONSTRUCTS AND ARE BEGINNING TO THINK ABOUT A LITTLE BIT HIGHER FOR NORMAL AND ARE ADJUSTING INGLY. LISA: HOLD ON ONE SECOND. BUT THE WAY THAT YOU ARE TALKING ABOUT IT, READJUSTMENTS AND VALUATIONS, THE REAL ESTATE DO LOOP IS HOW JOURNALISTS DESCRIBED IT. WE'RE LOOKING OFFICE READS FOLLOWING THE MOST. WE ARE LOOKING AT YIELDS THAT ARE PRICING OUT A LOT OF PEOPLE FROM THE REAL ESTATE MARKET WITH TRANSACTIONS FALLING OFF A CLIFF. IS THEY SAY MARKET RIGHT NOW THAT IS FUNCTIONAL OR A BROKEN MARKET IN TERMS OF PRICE DISCOVERY WHEN IT COMES TO SOME OF THE LOANS? MARK: I THINK ANYTIME YOU GET A RAPID INCREASE TO THE COST OF CAPITAL, YOU HAVE WHAT WE CALL BOTH SELLERS AND BUYERS TRYING TO FIGURE OUT WHO IS RIGHT. DO THEY BELIEVE THE COST OF CAPITAL WILL CONTINUE TO INCREASE OR DO THEY BELIEVE WE WILL NORMALIZE AT A DIFFERENT LEVEL? IF YOU ARE A SELLER, YOU ARE GOING TO BELIEVE THE LATTER AND IF YOU ARE A BUYER, YOU ARE GOING TO BELIEVE THE FORMER. THEY GENERALLY NEED MORE DATA TO DETERMINE WHAT IS INACCURATE COST OF CAPITAL. FOR TODAY, IN TODAY'S WORLD, LET'S TAKE A BREATH. THE THING ABOUT WHY ARE WE WHERE WE ARE IN THE COMMON ENEMY IS INFLATION. DO YOU BELIEVE THE FED WILL CONQUER INFLATION? THE ONLY DEBATE IS TIME. WHAT IS THE RISK WE ARE UNDERWRITING? MOST OF THESE LOAN INVESTORS ARE BEGINNING TO DISCOUNT INFLATION RISK. AND REALLY FOCUS ON RECESSIONS BECAUSE HISTORICALLY, THAT IS WHAT HAPPENS WHEN YOU HAVE SUCH A RAPID INCREASE IN RATE MOVES. THERE IS A NORMAL GAP SO TRANSACTIONAL VOLUMES IN THE U.S. AND THAT IS NORMAL. BUT WE ARE BEGINNING TO SEE THAT CHANGE PARTICULARLY AS PEOPLE ADJUST TO THE COST OF CAPITAL PRICING. WE ARE BEGINNING TO SEE TRANSACTIONAL VOLUME IN CHOP AS A RESULT OF THAT. LISA: WHAT ABOUT NOVICE REAL ESTATE GIVEN THE FACT THAT IT IS NOT JUST INFLATION, IT IS ALSO THE IDEA THAT OCCUPANCY IS DRAMATICALLY LOWER THAN IT WAS PRE-PANDEMIC. MARK: OCCUPANCY, WE COULD SPEND AN HOUR TALKING ABOUT IT. THE NARRATIVE IS GOING TO CHANGE SIGNIFICANTLY OVER THE NEXT 12 MONTHS. WE ARE BEGINNING TO SEE THAT TAKE PLACE ACROSS EVERY INDUSTRY AND COMMERCIAL REAL ESTATE AND THE PRIMARY DRIVER FOR THAT IS FOLLOWING PRODUCTIVITY ACROSS EVERY INDUSTRY. THE NEED FOR TRAINING, COLLABORATION, TEAMWORK AND CULTURE IS REALLY BEGINNING TO TAKE PRECEDENT IN EVERY INDUSTRY ACROSS THE UNITED STATES. WE THINK THE NARRATIVE IS GOING TO BE CONSIDERABLY BETTER IN THE NEXT 12 MONTHS, BUT THERE IS GOING TO BE A VAST STRATIFICATION OF VALUES ACROSS THE OFFICE SECTOR. WHAT I MEAN BY THAT ARE BUILDINGS THAT WILL BE CONSTRUCTED OVER THE LAST 10 YEARS OR SO I GOING TO GET PREFERENCE IN TERMS OF OCCUPIER INTEREST, MEANING TENANCY. THERE ARE GOING TO BE QUITE A FEW HAVES AND HAVE-NOTS IN THE OFFICE SECTOR AND COMMERCIAL REAL ESTATE. LISA: WE ONLY HAVE ABOUT ONE MINUTE LEFT AND I'M WONDERING WHETHER HOW FAR YOU THINK WE ARE IN THIS DOWNDRAFT PARTICULARLY IN THE OFFICE SPACE AREA WHICH IS DOWN I BELIEVE 30% EVEN IN LESS LIQUID MARKETS. HOW MUCH FURTHER DO WE HAVE TO GO? MARK: ONE NEVER KNOWS. IT DEPENDS ON THE COST OF CAPITAL, WHERE WE SEE THE INFLATION RISK. WOULD TELL YOU FROM OUR PERSPECTIVE IN WHERE WE ARE SEEING THE MARKET REACT IN TERMS OF ACTUAL TRANSACTIONS TAKING PLACE, WE JUST ANNOUNCED A FAIRLY LARGE TRADE IN NEW YORK, THERE ARE MANY MORE HAPPENING. OUR BELIEF IS THAT WE ARE AT BOTTOM FROM AN OFFICE VALUATION PERSPECTIVE. IT IS A VERY GENERAL STATEMENT. GENERALLY SPEAKING, I THINK THE OFFICE SECTOR HAS FOUND A BOTTOM LEVEL. LISA: MARK GIBSON, THANK YOU SO MUCH FOR SPENDING THE TIME WITH US AT A TIME WHERE EVERYONE IS WONDERING WHAT IS GOING TO BE THE RAMIFICATIONS, PARTICULARLY FOR BANKS THAT OWN A LOT OF REAL ESTATE.