tv Bloomberg Surveillance Bloomberg July 30, 2021 8:00am-9:00am EDT
>> growth expectations are coming off in the second half of the year. >> growth is going to be strong, just not as strong as the first half. >> we are still getting some very high and potentially very concerning inflation readings in the near-term. >> there are consequences of the fed asset purchases. the markets are awash. >> i think we are still a long way away from rate hikes. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: one more trading day. you've made it. from new york city, for our
audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside lisa abramowicz, i'm jonathan ferro. together this morning with kailey leinz. mr. kenne back with us -- mr. keene back with us on monday. amazon stock down by almost 7% in the premarket. lisa: slowing sales going forward. channeling tom keene as part of his contract, he says that the pendulum, that is what we are facing today. in all honesty, that seems to be the trend, the idea that higher prices is leading to slower growth, and the idea that we are leading to peak growth in what follows, jan hatzius summed it up. how much does this weigh on a host of companies that were thought of as unstoppable? jonathan: gdp growth north of 5%, and we are having a conversation about stagflation. kailey: if you ask jan hatzius,
going back down to 1.5% to 2% in the back have a 2022, but whether or not consumers are actually going to tolerate these higher prices come up that means for growth, but also for companies because we are seeing important in this earnings season is the ability to pass higher input costs onto those consumers. if consumers prove unwilling which is that going to mean for the margins of some of these big corporate? jonathan: stag light sounds like a drink you would have before a wedding. [laughter] futures look like this, down 34, down 35, -0.8%. in the bond market coming to slightly defensive. yields lower by two or three basis points to 1.24%. the dollar not doing a lot against the euro, euro-dollar $1.1885. lisa: real yields more negative if you look at the 10 year. inflation expert patients staying higher than where yields are, leading to this question of what is behind the move. i love that fed chair jay powell
said i don't know, and every one is saying even he doesn't know. jonathan: they don't know either. and you know everybody savor it excuse, technicals. with a big asterisk, that means we don't know. [laughter] leaf average, state street head of multi-asset strategy for north america, joins us. just give me the pushback. if you want to pushback. lee: i would love to pushback. stagflation is a phrase that comes up virtually every slow down we have, when we have a high inflation print. real stagflation is really hard to get in an economy, and really the last time was probably may 19 70's, but that's when you've got price controls. if you have a slowdown in the economy, price pressure stimulus , in a normal functioning market economy, that is what happens. growth is going to be north of 5% this year. we've got some reopening
inflation pressures we are seeing now. that is not stagflation. you can call it stag light if you want, but let's call it something new that actually doesn't exist. jonathan: important to recognize where the price pressure is coming from. is it coming from demand that is too big, or from supply constraints? lee: in my mind, this is from supply constraints. yes, they could persist. what people aren't doing, not even the fed really, is to work out or to define what is the difference between transitory and persistent. the difference between the two is transitory will go away on its own without the fed having to do anything. price pressures will diminish. they will come back down towards 2% or maybe even below without any fed action. persistence means that without the fed tightening and reducing demand, we will have constantly rising inflation for the
foreseeable future with no change in that path. it will need to shock from outside to stop inflation rising. that's not where we are. these are reopening pressures. some retailers are taking the opportunity with the reopening's to raise prices from where they were pre-pandemic. people are desperate to go out again, desperate to go to restaurants, etc. they are paying those higher prices. that doesn't mean they will raise prices again next year or the year after or in six months. that is what persistent inflation is. this is transitory. jonathan: one of the key -- lisa: one of the key determining factors is wages. if we start to see wage pressure, that could change the equation to a more persistent impulse. i have two pair this idea of stagflation light and higher wages with this statistic. the biggest u.s. in the family landlords boosted rent by 8% nationwide just in the second quarter, giving you a sense of some of the basic costs of life going up. how much do you expect wages to have to increase with labor
shortages and the fact that consumers are looking at these costs and saying i can't afford to get the same way jack that last year -- the same wage i got last year? lee: that may be the case, but are they going to get paid more? there are 6.8 million people out of work more than there were prepend them in. we have labor shortages now because of the supplementary unemployment insurance, but that runs out in september. we are going to get a huge increase of supply and labor in september. we had a 3.5% on them limit right before the pandemic with no wage inflation. why do we think we are going to get it now? what do we think has changed in the labor market during the pandemic, where they are going to get all of these wage increases? we get headline stories now. we talk about bonuses -- about sign-on bonuses and shortage of workers, but as the unemployment runs out in september, you'll see the supply of labor come back, and suddenly you will not
have sign-on bonuses and wage increases to the same extent. you are absolutely right on the rents, and that is a huge problem for people, but this is where we come back to stagflation or stag light. jonathan: the median rent in new york, and i understand new york is not america, was down 17% in 2020. lisa: this is the distinction between big cities that have gotten slammed and some suburban areas that have gotten prices increased to record highs at record pace is. but you make a good point, it is not consistent across the board. people can move if they so choose. honestly, you raise a controversial point, which is the gap and how quickly people are coming back online. the low participation rate despite the fact that the economy does seem to be going back, and the fact that companies say we need workers who want higher people -- who want to hire people. is it that simple that the enhanced unemployment benefits will roll off and it is solved? lee: i mean, where have the 6.8
million people gone? do they not need to work anymore? once the unemployment insurance has rolled off, you made a good point about childcare because that is a factor as well. there is some nervousness still about covid, and quite rightly with delta variant. but those six point 8 million people who were working pre-pandemic don't need to work. we could argue that some may have retired, etc., but there's a large number of people who aren't working now who were working before the pandemic. why do we think they are not going to need a job? they are going to need a job when the end limit insurance runs out. kailey: how do you think the fed views all of this? lee: the fed views this, they haven't got a clear picture yet. i think the fed views it that we are going to have to wait until later this year and maybe even the first part of next year to get a clear picture of the labor market and what is going on. the labor market is the key thing for the fed now. powell has told us this over and over again. but they don't know what is happening in the labor market. none of us do because of these uncertainties we are talking
about now. it is probably november, december, maybe even into 2022 before we start to get some sort of clear picture of the labor market. you mentioned before about the consensus risk in q4, and you are absolutely right. the same goes for the picture in the labor market. kailey: while there are still so many known unknowns, while we try to figure out what the trajectory of monetary policy is going to look like, the resurgence of covid-19, how do you construct a portfolio? how defensive would you recommend being here? lee: i wouldn't be that defensive at all because we are still getting $120 billion a month in liquidity. we are still hitting all-time highs in equity markets. i think there are certain areas you can be more defensive on. clearly, emerging markets are more of a challenge. because valuations are more attractive. but the thing is we are still seeing equity markets hit all-time highs because we still got a huge amount of liquidity. what we are seeing is the
duration trade has tapped the high tech stocks. they are the ones doing well now . your mid-caps are more of the reflation trade, which have certainly underperformed over the last few months. i think that sort of duration, the nasdaq over russell trade, is probably going to continue over the next couple of months as we have these growth fears. but it is too soon to be defensive i think. once we get clarity on the taper , you can't sit on the sidelines with $120 billion being printed. jonathan: a lot of people feel that way. good to catch up, as always. leverage, head of microstrategy for state street -- head of multi-asset strategy for state street. i think a lot of people wonder what things will look like and what the supply-side response
develops into. no clue whatsoever. lisa: specifically with your point about new york city rent, the idea that they were lower than they were pre-pandemic, was the great mike gratian to the suburbs going to reverse? are we going to see -- the great migration to the suburbs going to reverse? these are all good questions we don't know the answers. how much is sticky post-pandemic? jonathan: do we get the employment population ratio back to where the fed chair would like it to be? how quickly does that happen? how tight is this labor market? no idea. terry haines, pangaea policy founder, will weigh in. hopefully he's got a clue to the questions we ask. down 30 on the s&p, negative zero point 7%. yields are lower by three basis points, 1.238 9%. be aware the person that has conviction and confidence about the future. that was philosophical, wasn't it? tom is back on monday. we can get silly again next
week. this is bloomberg. ritika: with the first word news, i'm ritika gupta. the u.s. has reportedly stopped processing ipo registrations for chinese companies, according to reuters. the news agency says the securities and exchange commission is working on new guidance to disclose to investors the risk of new regulatory crackdowns by china. president biden's power over vaccinations has had a wall in the fight to curb the delta variant. he ordered federal employees to get shots or face strict public health precautions. he offered ordinary american holdouts $100 for a shot. what happens next in the pandemic is largely out of the president's hands. he says he hopes more employers will require workers to get those shots. exxon mobil posted the highest profit in two years. the energy giant's cash flow was lifted by surging demand for oil and gas. all of this cements exxon
mobil's recovery from a period in which it burned almost $2 billion in cash. amazon faces the biggest european union find in history. the eu's data production walked job -- reduction watchdog has been hit with an $8 million penalty. amazon said the company is processing if personal data did not comply with regulations, and amazon says it will appeal the decision. go to bank has lost a string of wealth management executives for the last year. at least 10 senior bankers and numerous junior employees have left. global news 24 hours a day, on air and on bloomberg quicktake. i'm ritika gupta.
right now, 6.5 percent growth in q2, probably more than that in q3, but then we are at 1.5% to 2% by the second half of 2022, and that is partly because the return to full utilization in the service sector is a slow process. jonathan: fantastic to catch up with jan hatzius this morning. from new york city, good morning. alongside kailey leinz and lisa abramowicz, i'm jonathan ferro. your s&p 500 down 30, -0.7%. yields are lower by three basis points. defensive not because of amazon. chunky waiting in the s&p -- chunky weighting in the s&p, even more in the nasdaq 100, but the small caps softer too, so
risk sentiment softening into the weekend. lisa: there's a sense of a slowdown in the growth rate going for that has been pretty much persistent. it follows after yesterday was disappointing economic data. point also to the real yield. you host a show today. jonathan: thank you for the promo. usually my cheerleader does that for me, but he's taking a long weekend. lisa: it is interesting because real yields are down near all-time lows. just speaking to this uncertainty, but also a negative feel out there about how quickly this economy could grow. jonathan: rising yields was a sign of confidence in the economy, but declining yields is a shrug of the shoulder, i have no idea why we are down here. it's a bit different, isn't it? when yields were higher, this fed had confidence that was a better outlook.
now it is lower, it is just technicals? it means nothing? lisa: bill dudley saying it is because of the fed basically printing money and coming out and buying as many bonds as they have, and they have not come out and talked about their responsibility in where the yield is. jonathan: and i imagine they might not either. does policy ndc change anything -- policy in d.c. change anything? terry haines joins us, pangaea policy founder. 80% chance we get infrastructure in october. walk me through the timeline for you and which bill is which. terry: good morning, all. the reason why it is october is because there are four things going on that will all sort of collide. it is the end of the fiscal year, the end of september, which is why i pick october. two things absolutely have to happen. the federal government has to be funded, and we have to deal with the debt limit or debt ceiling,
which needs to be extended or suspended. then we get to the physical infrastructure bill, which is almost baked. the fourth thing is there's really an intramural war among democrats about this human infrastructure piece which hasn't really even been defined yet, much less been given a budget topline or maximum spending amount. democrats are going to have to fight among themselves for quite a while to figure out exec he how much they want to spend and what is going to be in that. my view is very simple. the time allotted is the end of the fiscal year when all of this other stuff has to happen. what i think happens is we get funded, we get a debt ceiling, we almost certainly get the physical infrastructure bill, but what ends up happening is the human infrastructure piece is only about 30% likely in any form right now. lisa: the idea of this infrastructure plan being market positive is interesting to me,
as much as the fact that it is $550 billion. why is this a market positive when people expected so much more earlier? terry: to me, i think it is a valid point. to me it is a market positive in sentiment more than anything else. there's an awful lot of talking up about how this is going to help stimulate the economy and move things forward and help fix our infrastructure problem. frankly, i think there's truth to all of that, but there's a great deal overblown. there's no urgency about how this money is going to be spent and win. road projects take years to start, much less to finish. my favorite example, this is a four mile stretch near the place where i grew up in pennsylvania that has taken 10 years to become permanent, and it is still not finalized.
i think this is where the economic impact is overblown. that said, market sentiment being what it is, this is a net positive. kailey: the fact that we will have to deal with the debt ceiling in the fall, even though it expires tomorrow, and something else that expires tomorrow is the eviction moratorium, and yet joe biden waited until yesterday to actually say something about it and asked congress to act. is there any likelihood something could be done tomorrow? terry: the debt limit, as everyone on this program knows, does expire tomorrow, but treasury usually employs this thing they call extra neri circumstances. in other words -- call extraordinary circumstances. in other words, shoving more coal into the fire to keep things going as long as possible. suet will end up hitting in late september, early october, even november. the other thing is on the
eviction moratorium, what i am hearing and understand is the president last-minute ask certainly didn't help marshall forces behind it. number two, there's a lot of people in the house that want to do this. number three, it is going to be very difficult to pass anything, so i tend to think it probably doesn't happen. people ought to prepare for that. they may end up sticking something in the infrastructure bill if it goes well and ends up getting passed by next week, which is a possibility, although it is a little murky right now. other than that, i don't think i would look for smooth or quick action on congress' part. jonathan: good to hear from you, as always. terry haines, pangaea policy founder, walking through some of the issues in d.c. policy and sanders brace for democratic upheaval over the bad and agenda. bernie sanders hadn't -- the
biden agenda. bernie sanders had an urgent plea. "we are with you on this bipartisan bill, so you better be with us on every $.5 trillion spending package," according to attendees -- on this $3.5 trillion spending package," according to attendees. lisa: this is telling as to the desperation you are feeling behind his comments from senator sanders and house speaker nancy pelosi. jonathan: a real split within the same party in the house. kailey: aoc is the one to watch. the divergence between nancy pelosi and progressives like representative alexandria ocasio-cortez and her coalition, nancy pelosi has her work cut out for her, writing that in and making sure the progressives are satisfied and making sure we still get a package that can be passed in the senate with moderates like joe manchin of west virginia. jonathan: alongside lisa abramowicz and kailey leinz, i'm jonathan ferro. tom keene back with us on
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jonathan: live from new york city for our audience worldwide on tv and radio, this is "bloomberg surveillance." alongside lisa abramowicz and kailey leinz i'm jonathan ferro. tom keene back monday. yields in three basis points to 1.2373, just a little bit defensive. that is the price action. personal income at .1%. looking at a median estimate of -0.3. personal spending firm for june. the employment cost index coming in softer than anticipated at .7% for the second quarter. the median estimate 0.9%. lisa: the idea to me, the most
and outnumbered is the personal spending number that came in bigger than expected, given the fact that people were wondering how much dry powder people would be using. interesting to see the mixed data and that inflation is not picking up as people had expected. the idea of fed has more right. jonathan: core inflation month on month .4%. this is for the month of june. kailey leinz, have you had a chance to look through this? kailey: downward revisions last month in terms of personal income and personal spending. real personal spending down .6%, which was revised lower. personal income falling 2.2% in the month prior, which was interesting considering we are getting an upside surprise on that metric. jonathan: no big moves in the market, futures lower. s&p -.7%.
the bond market still bit firmer. let's talk about the fx market with daragh maher. walk me through your thinking on the u.s. dollar. daragh: big picture, i think there is actually a battle for the soul of the dollar. it sounds dramatic but i think this is the case because we have two conflicting frameworks. we have the dollar on good u.s. news and local news and the cyclical model where you are looking at a u.s. recovery, not in the context of risk appetite but what does this mean for the fed taper and for interest rates, and the u.s. becomes dollar positive. that is been a real struggle for the market to work out which will be the dominant framework. we are headed to a transition that will create a stronger dollar in the medium-term.
right now it is still in the balance. jonathan: are deficits a factor for you? daragh: i am 50 years old and the u.s. has done between deficits for every year i've been on this planet. what we have been through in the context of the deficit blowout in the u.s., and yet it did not provoke a debasing of the dollar. if we get through that and the qe program without it being a structural dollar bear story, i'm not sure it ever gets traction. it comes into focus when the dollar is weakening from the fact that people say look at the twin deficits. i think is really a jumping off point for a dollar view. lisa: what has been the metric you are looking at to determine the path of strengthening in the dollar versus europe. you look at vaccination rates, already looking at fed policy, are you looking at spending? daragh: there are a few moving parts. vaccination rates and
vaccination rollouts can have some bearing, they tend to be short-term. think about euro sterling. that was a big relative story. now they have coalesced. in australia the vaccination slow rollout, maybe the new zealand slow rollout. there is one ankle that can work. 12 months down will we still be talking about relative vaccination rates? i don't think so. critically i think it is what has happened to state and local growth. if that is beginning to turn over, it is still growing. the acceleration fading away? that is a different environment. it is a bullish environment for the dollar when we get to that point. then you move into the relative -- who is hiking, who is not, who is delaying? i think that is how it plays out. we need to get to that point where the global cycle is decelerating.
the risk on, risk off, it loses its grip on the fx market a little bit more. kailey: you are seeing the deceleration story in china specifically. we got news in part related to overseas listing but also the economy, pledge and support as they see a tough growth environment. what you do? daragh: earlier this year the market was build up on the remember the story. my colleague in hong kong was very clear we thought dollar remember the woodhead shire -- dollar remimbi would edge higher. we are still pretty comfortable with the view. china wants a market exchange rate that behaves itself. i've also compared it to parents with the teenager. we want to let it out but do not push your luck or you will be
grounded. that is the tinkering we are getting. they have done a good job of managing it. the china growth story is critical. china is a driver but also an anchor for asia in general. that is why the market is looking at those pmi numbers which will be getting at tonight. kailey: what is the readthrough to emfx asia? daragh: i am not done on the rem embi being the central anchor. maybe you go back to -- that it becomes a relative growth story, relative yield story, and it is a pick and choose. there is no overarching theme. i would say this is a pretty challenging environment. if the dollar turned stronger, that it will be a headwind to how emfx performs. lisa: are you going to be in the pub?
jonathan: 1:00 eastern time when the china data drops, no where you will be. [laughter] daragh: is the only forecast i get right is jonathan ferro in the pub. jonathan: that is probably true. i get more london and get calls from the g10. things like the norwegian krone, where does norway fit into that? daragh: the problem with the norwegian krone is it is the best currency on the planet. everything on the paper is fantastic. the problem is an equity markets are selling off the norwegian krone is the worst currency on the planet for price action. that is what it comes down to. i can make a bullish case for the currency on domestic fundamentals, but it just gets embroiled all the time. a lot is in the price and deutsche bank. i think it will be pre-much determined by equity markets.
what you will do is say i will try to forecast equity markets and origin try to forecast norwegian krone. jonathan: i think it is difficult and thankless to forecast euro-dollar. you're in fee our survey data is 1.20. we are at 1.19 at the moment. you think we can ever rage about europe into year end? daragh: it is definitely a possible path for the currency is. we have seen euro-dollar rally alongside that. i think the relative ecb fed story, who does not know about that right now? to say that is why we should be selling euro, i do not think that is the pitch point. for me we come back to are we transitioning to a new framework to the dollar, one where we are not just looking at in terms of reflation and a global upset story, we will look at the
relative story and the u.s. is ahead. if we will break euro-dollar range, i think it is more likely to come on the downside rather than the top side and i think we will have to be a bit patient. jonathan: good to catch up. daragh maher. before you get carried away with the long idea, there is no total on the other side of the microphone. i have been known to sit in a pub late at night having a chamomile tea as everyone else is running around getting drunk. lisa: reading the china pmi. jonathan: when tom and i used to go on tour and go to places like switzerland. he would have a cocktail or five that i would be there with the teapot propping him up as we make our way back to the hotel rooms. coming up, mohamed el-erian, bloomberg opinion columnist and president of queens college cambridge on this transitory story, the federal reserve. i have to say, he will not might
be saying this, very outspoken this week on the fed. lisa: talking about the perverse consequences of some of their actions and how confusing the message was, the internal inconsistencies of chair powell's speech. jonathan: were you confused on wednesday? lisa: not confused as much is taken by the dovish tone despite some higher inflationary expectations. the main clear message was they talked about tapering for the first time in a more extensive way. that was the first clear message they will hold off. people basically pushing back. as to what their inputs were, more confusing than has been. jonathan: i am with you. kailey leinz, it has been confusing for all of us. kailey: my famous tape on the fed from matt bailey was how can it turn any more hawkish?
maybe he is starting to get less dovish. that characterization spoke to what i saw from the fed chairman . it is not a total pivot in a hawkish direction. he is still treading carefully. maybe just not quite as dovish. jonathan: i am with you on this point. there are no hawks on the federal reserve, just a spectrum of jobs. lisa: that comments are like rorschach test. -- fed comments are like rorschach test. jonathan: that was very philosophical. this is been nice. i feel really relaxed at the end of the week. what is changed? i do not know what it is. i do not know why feel so much calmer and relaxed. tom is back on monday. with the wonderful lisa abramowicz and kailey leinz, i'm jonathan ferro. this is bloomberg. ritika: with the first word news, i'm ritika gupta.
shares of didi global are falling in premarket trading after china promised to step up shares of ride-hailing. the transportation ministry said some companies are disrupting of fair competition and also said companies must protect the rights of drivers and data security management. the treasury department is set to start dipping into its toolkit to avoid reaching the u.s. debt limit. congress has still not come up with a way to avoid default later this year. the treasury will use the first of its extraordinary measures to help states and cities invest bond. the u.s. navy has charged a sailor with arson and a fire that destroyed a warship. the fire broke out in san diego and raged out of control. it took four days to put out. the sailor faces a hearing to determine whether there will be a court-martial.
in hong kong a protester has been sent to prison for 90 years in the first ruling on the sweeping national security law. he is accused of crashing his motorcycle into protesters. the security law is imposed by hong kong on -- on hong kong by china's government. -- the large maker of mining construction equipment was hit by the rising cost of law -- of raw materials. that was offset by rising demand for caterpillars trucks. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪
anything for a while. they said we will sit here, but we will not actually change policy for some time. lisa: mike schumacher, wells fargo gribble head of macro strategy on the confusion in the economy going forward. some people talk stagflation light and others cop -- and others talk about a new renaissance. the sec -- this is an official sec statement following the earlier reuters report about halting ipo's from chinese companies in the united states as they do this additional review. this is widely expected and amid a growing tit-for-tat with respect to the domestic alley of the ipo's registration, as well as data supremacy. right now this is perhaps one of the more important interviews of the month. the idea of how our cities recovering, offices recovering
in a pandemic that does not seem to be going away. lisa abramowicz and kailey leinz still here. and people loan is covering the -- anthony paolone is covering the real estate trust industries for decades. we were speaking with jan hatzius of goldman sachs earlier about the slow return to offices. how is that being reflected in some of these earnings reports? anthony: thanks. good morning. what is interesting is even with a slow return to the office that we are seeing, commercial real estate more broadly is rebounding pretty quickly. you mentioned cbre. they reported yesterday. the numbers were extraordinarily strong. what it comes from is not just somewhat of rebound, as you see businesses return and start to make decisions. what you're releasing his broader activity starting to transact and businesses starting to make decisions.
the actual office piece and return to offices is a bit on the slow side. commercial real estate is rebounding rapidly. lisa: there's a question of whether companies have been moving to suburban locations in terms of office space or whether that was a myth and they double down with their office space in city centers even with other companies coming in and adding to space at cheaper rates. are we seeing any evidence of that? anthony: generally speaking, there were some shifts occurring prior to the pandemic. you are seeing certain southbound -- certain sunbelt markets like atlanta and austin, seeing corporations embrace those areas. that has been accelerated with the pandemic. you are still in the early innings of trying to figure out where this is going to settle out. we think the vast majority of people are going to return to the office and go back to doing
what they were doing before. even the small changes, even if you see companies haircut space by 5% or 10%, the impact on rent would be dramatic. there is still a lot of concern we have around office, but it will not be a straight forward as some of the headline suggest. kailey: are we seeing rent start to go up? we are seeing the recovery at least in residential. they are rising quite quickly. what is the picture like for commercial real estate business? anthony: it varies. office is still trying to figure out where the rent will land because of the work from home and returned office we just talked about. we you look at other areas, equity residential reported this week, and they saw substantial bounce and rebound in rent going into july and starting to look
into the second half of the year. on balance, residential rents are now above 2019 levels. that is an area of strength. industrial has been a strong area as well. so has storage. there are areas of significant strength. office is the area that lags. kailey: we talk a lot about peak everything, peak earnings, peak recovery trade. is there a sense we have hit the peak in real estate? does the recovery slow down are we still climbing to that peak? anthony: it seems we are still climbing. it is still early. figuring out where companies and their people are going to be. a lot of the activity we are seeing now is just bouncing off of the bottom. we had 15 months where you did
not have organizations making a lot of decisions around future space needs. that still has to happen. a lot of the decisions were delayed. there are still runway to go from our vantage point, especially as long as the economy continues to move ahead. lisa: when you talk about commercial real estate values and strength, i wonder about foreign investment, especially with a pullback you are seeing from chinese buyers and other overseas individuals. how much have you seen that come back, if at all? how crucial is that piece to the commercial real estate market? anthony: the transaction side of the business is what has surprised on the upside. typically you would wait for rent to rebound so buyers can understand what their underwriting and come up with a price. in an environment where you have very low rates, very high multiples in the equity markets, and concerns over inflation, suddenly commercial real estate
will end up very well for capital allocators. so you've seen the response on that front with flows into real estate stocks as well as flows directly into commercial real estate assets. these returns stack up pretty well for large capital allocators. that probably continues. it has been very strong. in the second quarter, transaction volume in the u.s. was basically back to 2019 levels. that is with very few transactions in office buildings, which is a big part of the market. things are quite strong. jonathan: anthony -- lisa: anthony paolone, thank you so much. a mystery in terms of people returning to the office. it is interesting that the office values have not gone down , especially as we see all of the storefronts. i understand this is a different market, but the storefronts remain empty and traffic not yet
back up to anywhere close to where it was in 2019. kailey: and it is not just storefronts. i would say office. i live in the financial district and it has gotten astronomically busier since i moved in the middle of the pandemic, but there are still a lot of empty offices. this returned office and the way it relates to growth, you are talking to jan hatzius about his downgraded gdp call this is part of it. office occupancy rates are not going up the pace once thought. until that improves and we see more full recovery as people emerge from their stay-at-home pandemic cap it, that is when growth is actually going to accelerate. it is not going to happen as quickly as many of us thought. lisa: we saw twitter reversed their back to work policies on the heels of delta and we are seeing re-masking in the delta variant continuing to spread. we are looking at a softer market. will be talking about what is continuing to that -- amazon --
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"the countdown to the open" starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: from new york, we begin with the big issue. the recovery hitting supply-side headwinds. >> shortages. >> higher cost of materials. >> supply chain bottlenecks. >> lower supply chain. >> we have growth recovery, on the others we have volatility. >> i'm not surprised we are seeing lots of bottlenecks. i have enough confidence in the market that most of these bottlenecks will be overcome. >> most of those will and