>> we're 30 minutes into the u.s. trading day on this monday, january 29. here are the top stories we're following. the biggest week of the year so far. microsoft, alphabet, amazon and apple headline a huge week of earnings, not to mention we also get a fed decision and a jobs report in the coming days, so buckle up. betting on sports gambling, fanduel parent flutter c.e.o. peter jackson joins from us the floor of the new york stock exchange as the company shares start trading in the u.s. more on the competitive landscape for all these betting companies with the super bowl weeks away. and the real estate landscape

after a year of upheaval across the entire real estate sector. where are the opportunities? we'll discuss with al ra before il in our daily segment. >> i'm katie grefeld in new york. take a look 59 these markets, and we're in the green, but just barely. the s&p only up about a tenth of a percent. same thing, too, if you look at big tech with the nasdaq 100 also up about a tenth of a percent. all the while, you take a look 59 volatility as measured by the v.i.x. we are rising slightly. it feels like we haven't seen that in a while. we're still below 14. that's 14 handle, but we're getting closer. we'll see if we get there in the next few days, because this week five of the big tech companies combined with a combined potentially in dollars of market

value set to report in the coming days. name some names here, microsoft and alphabet kick off earnings on tuesday. then we're followed by meta and amazon and apple on thursday. joining us now to help break it all down is mandy singh of bloomberg intense. we're talking about five of the magnificent seven. you think about what we heard from tesla last week wasn't so magnificent, i think it's fair to say. how are you expecting these five to go over? >> look, when it comes to top lines, there is a clear divergence. you're seeing the likes of meta and microsoft growing or expected to grow at mid to high teens, and apple, on the other hand, is expected to have flat revenue growth. clearly there's a divergence. to me the key aspect is the cap ex spent guide. last quart hear we saw was microsoft raising their cap ex guide for 2024. everyone else was kind of on the quieter side, and they didn't really give out much.

and that, to me, sets expectations in terms of what these companies are thinking around the a.i. moanization. look at the end of the day, it has to translate into revenue. microsoft has been the only one who has quantified their a.i. revenues so far. other ones are yet to do that. we know amazon is the largest cloud player. it will be interesting to see what they say around the cloud growth. katie: keep an eye on cloud on cap ex as well. let's pick on apple a little bit here, because it feels like a unique at some time i can brew for apple this quarter when you think about antitrust issues, you also think about china and the fact that it's been downgraded a couple of times at this point on the basis of weak china demand. how are you thinking about apple this week? >> this is the holiday quarter, and we know apple tends to do well in their holiday quart when her it comes to the top-line growth. i know that expectations are quite low now given the downgrades and all the negative news, and china is a weak spot

when it comes to, you know, thinking about 2024 and beyond. but to me, it's all about expectations. right now i feel apple has the bogey that it can deliver on in terms of meeting those or slightly exceeding those expectations. for other ones, the bar is already high. i wouldn't be surprised if apple comes out with better than expected numbers. katie: just quickly before we let you go, let's talk about one of the big headlines this morning, amazon dropping its $1.4 billion deal to buy irobot, the little robot vacuum maker. the readout for irobot is clear. just take a look at the stock, it's plunging right now. what could this possibly mean for amazon though? >> i mean, for amazon, i don't think it makes such a big difference given this was being reviewed for almost 18 months, and the termination fee is like $94 million. so not big of a deal when you compare it to the adobe fee. but what it signals is there

aren't many buyers out there when you think about all these companies that are valued over a billion dollars. who's left to buy them? ultimately it's a large tech companies that have the balance sheet and the capital allocation to make the acquisitions. and right now the environment is such that regulators don't want any of these deals to go through. so it kind of sets the startup ecosystem back in terms of their exit strategy. katie: great to see you. good luck this week. that is mandeep of bloomberg intelligence. for more insight on the week to come, including that rate decision on wednesday, we're joined now by the principal global investor chief global strategist, joining us now. seema, i'll put out spot. we have earnings, the fed decision, the treasury refunding announcement, and then just to top it off, we also have a jobs report to look forward to. what matters the most at this juncture? seema, hi, katie. it's definitely one of those action-filled weeks. i think that from our perspective it's really about the earnings numbers and the

payroll report. it's not to say the fed decision on wednesday isn't important, but we're going to hear from a lot of other fed speakers over the next coming weeks, maybe stepping back potentially what powell says on wednesday. i think that it's really about what is the path forward. we know the fed isn't going to do anything on wednesday, so probably going to maybe pull back a little bit in terms of the expectations that is already in the market. but they'll keep the door open. so i'm not expecting to hear too much additional news this week. it's really about the data and the earnings. katie: economic data and the earnings. i mean, is it safe to say at this point that maybe the fed takes a back seat when it comes to what's really driving these markets? seema: i think it's a little bit of both. what's driving the market at the market is that debate about the fed hike. but at this point, given that their data dependent, it is about what the data is telling us. what's important about earnings season is, you know, actually something that is quite difficult to read. we know there's not that much,

as many respondents as we typically see. some of the bottom-up information that you're going hear from the earnings season could be a little bit more important than usual. the kind of things that we're going to look out for, of course, what is continuing resilience? our c.e.o. is still worried about the continuing resilience fading. i wonder if it continued through this quarter. both of the aspects, which i think are building up to that economic picture, that's going to help us guide on what to expect from the fed over the come months. katie: is it big tech that's going to give you the read on consumer resilience, or is that coming more from perhaps the smaller companies, the russell 2000 names? seema: it's going to be from smaller companies. again, the big tech is a super important discussion. one of the biggest debates that we're having internally at the moment is are you going to see this rally broaden. it doesn't mean that if you see the rally broaden out, you're actually going to see pullback in some of these names. those are the kind of things that i think in terms of the

resilience and that story telling, that comes from the smaller companies that we should be hearing from. katie: when you think about where the smaller companies sit right now, it's interesting, you think about those small caps being a read on the economic environment, basically risk appetite, to you think about how painful small caps have been in some of these cycles. what's your current thinking on small caps? i know they have quite a run to end 2023, but it feels like they are typically the underperformer. seema: you can see that, in the first couple of weeks of this year, they have struggled, which makes sense when you know that there is a debate raging on about the fed and what was priced in at the end of the year. we're expecting that actually to continue for the next couple of months, the volatility, the discussion point about what the fed is going to bring, which will clearly impact small caps. but then as you get to middle of the year, by which point there should be a lot of clarity about what the fed is going to do and maybe a little bit more clarity about the economic cycle, that's when small cap can get up to

start outperforming. we're looking at this as maybe this isn't the greatest time, but valuations are quite attractive. you could see them becoming more attractive over the come months, and that should really provide a good entry point. i think the rally is going to broaden out. that doesn't mean take away from big cap, but you could see extending to some of the smaller came. katie: let's talk about where the money might come from when it comes to entry points, maybe into small caps and the like. it's telling to me that you take a look at money market funds, and they've actually dropped for two straight weeks. it feels like we haven't seen that in a while, the bid into cash has been so persistent. now with money reliably starting to leave some of the money market funds, starts to come off the sidelines, does that mean belong to risk assets? seema: it does, and i think this is really the time that investors need to be gearing up. that window of opportunity, i suspect it's going to be quite short. you have to fully deploy this that have been sitting in money market funds. it's one of the reasons why, actually there could an lot of concern on the macro basis, but

from a technical perspective, the amount of cash that's sitting there does suggest that you could see this rally at least extending, maybe no major pullbacks. s if think pullback, lot of investors will use the dip to buy. we are expecting risk. if you have a combination which seems likely at this stage of fed cups, accompanied by a slow economic environment, but not a recession, what that typically means risk assets across the equity space, credit space, and even real asset space can't perform well. so there's a lot of opportunities, and investors need to start thinking about that now. katie: seema, you're staying with us, so sit tight for just a moment. let's quickly take a look at what's moving this morning. we're going to do that with bloomberg's emily, sitting right next to me. emily, let's talk about chocolate. emily: hershey's stock is getting an upgrade this morning from bernstein. it's not only about chocolate here, but it's actually about the effect of g.o.p. weight losses drugs, which were a huge theme last year. it felt like everyone was talking about, what is the

actual impact on other companies, of the rise of these drugs? bernstein today raised their price target on hershey to $235, and they also upgraded to an outperform, saying that while these drugs are going to have an impact on chocolate sales, they actually expect hershey to innovate, raise prices, so maybe chocolate is getting more expensive. but they noted that the company seems like they're going to be able to pivot. hershey's acquired a popcorn company, so they're going to be pivoting perhaps to more healthier snacks to offset that impact of people maybe buying less chocolate. katie: it's healthy until you put the butter on. i guess you could put chocolate on the popcorn, and that would outweigh the benefits there. interesting, though, when it comes to the weight loss drugs. we've been hearing from the c.e.o.'s. we actually heard from one c.e.o. on friday, saying that the ozempic effect is overblown. that's the hershey story. what else do you have? emily: we also have two companies reporting earnings

this morning. it's a big jump in the sofi stock. this is a stock that is up about 20%, and they posted their first-ever profit since going public in 2021. they met income at $48 million. that was versus estimates of $9.9 million. i think that's why we're seeing such a big jump in that stock right now. they also reported $18.6 billion in total deposits. that was up $7.34 mill billion from a year earlier. the stock is on a massive tear already, up 50% in the last 12 months. we'll see how much this move holds. right now so few having a very good earnings day. katie: of course, the c.e.o. coming up on "bloomberg technology" in the next hour or two. that's the sofi story. quickly tell us about what's going on with franklin templeton. emily: their parent company was up 6% in the premarket, but now it's down, i'm not exactly sure what's driving that negative

sentiment, because their adjusted e.p.s. beat for the first quarter. their assets under management also beat. they were up $1.46 trillion versus estimates of $1.52 trillion. we think of franklin, and we think of their new e.t.f., but it's only $57 million. it's actually one of the smaller ones. that, of course, came after these earnings. that's not contributing to the $1.46 trillion in assets. katie: definitely gun to watch. as maybe some of the bitcoin e.t.f.'s gain assets as well. emily, thank you so much. now coming up, reddit looking red hot, targeting a $5 billion valuation as the social platform eyes an i.p.o. we'll have details next. this is bloomberg. ♪

katie: let's talk i.p.o.'s, because reddit is said to be looking at a valuation of at least $5 billion, with a possible listing date of as soon as march. bloomberg's bailey helped to break that story. he jones us now. let's talk about $5 billion. isn't that below where it's been trading in the private market? bailey: it's right around where it's been trading, katie, in the private market, but it's a notable haircut compared to where they raised cash back in 2021 at about a $10 billion valuation. then we had been reporting in 2022 that they could be eyeing $15 billion. so it does seem like reddit, along with a number of other technology companies, would be i.p.o.'s, kind of coming to terms that they aren't going to be able to valuations that we had back in 2021 when the market looked quite different for technology companies in

particular. katie: bailey, like you said, you have been covering this potential i.p.o. for years at this point. why has it taken so long, and what are the ingredients that got us to a potential march listing date? bailey: well, the broader i.p.o. market really has been shut since call it late 2021 when the fed kind of signaled that they were going to rapidly hike interest rates, and that kind of soured the mood for investor risk appetite. when you look at reddit, there are a lot of questions about their growth, ability to monetize their users, continue to grow their user base in terms of monthly active users. so when you look at a company like this, you've been battling with valuation and expectations from both the buy and sell side. and as we see the i.p.o. market, i.p.o. window start to creek open, it does seem like reddit will be one of the companies that investors and analysts are closely watching, again, with the key focus on valuation. if it's in the $5 billion range, does that reset the table for the likes of other companies? katie: it will be fascinating,

the ripple effects there. to your point that maybe the window is starting to open here, what is the reception been like from investors who are actually receiving these newly listed companies? bailey: it's been mixed. when we look back at the end of last year, all eyes were on birkenstock, but back above the i.p.o. price. arm has been up around 40% from its listing price. we've seen a few companies, smith douglas homes, a smaller home builder, rallying after pricing its i.p.o., as did a biotech company focused on the cancer space. but on friday at the end of last year, we did see another company price its i.p.o. below the marketed range, trade down about 15% in its opening session. so it does seem mixed. all eyes will be this week on omer sports, the company that makes wilson products and a number of other things, like solomon skis and ski boots. that's going to be the big bellwether for the month of january. another consumer name kind of like birkenstock that will maybe

tease out whether investors want to pay for brands and companies they know and understand as we march toward, again, the likes of a reddit, a data brick, some of those bigger companies that could be waiting for that march into the summer window. katie: bailey, great reporting. we'll see you soon. now, we are rejoined by seema shaw, principal global investors chief global strategist. i want to shift gears and talk about commercial real estate. coming out of last march's banking crisis, whatever you want to call it, seems like real estate, commercial real estate, was going to be maybe the black swan of 2023. it feels like that didn't quite materialize or land. where do we stand in 2024 when it comes to c.r.e.? seema: you're right, 2023 was a tough year, and although the worst-case scenario didn't come to pass, it was still a pretty difficult year in commercial real estate. what we've seen since the beginning to the end of last year is that because they have

already peaked, things have improved. the situation has improved considerably. but you still see the investors are quite worried about commercial real estate. you just have to think about the fomc minutes from december, where they specifically highlighted the maturity debt while facing real estate this year. so you continue to see challenges, but we've quite sanguine in our outlook. we don't believe it's going to be too difficult, main reason is if you have to think about which sectors are really exposed, so this year more than half of the maturity debt space coming out is in the apartment sector, which we know has got strong demand. it's really well funded, a lot of liquidity. the consent continues to be in the opposite sector, which takes up a large chunk of the refinancing for this year. but actually, especially from a u.s. rate perspective, it's less than three, it's about 3% of that market. so today, you're looking at valuations which are very attractive. you're looking at real wields which have peaked. in the important sectors, which are impacting the broader markets, those continue to be

well funded. we have quite a positive year. katie: you bring up an interesting point, it seems like a lot of my conversations that i've been having around c.r.e. in the past couple of months have evolved to the point where it's, ok, c.r.e. as a whole, there are opportunities, but avoid office. you bring up office. when it comes to the current concerns around office, does it have to do with the maturity laws, some of the concerns that you mentioned, or is this more structural in nature at this point? seema: i think a bit of both. there's definitely a structural concern with the risk of working from home continues to be an issue. we're not expecting that to really get the result in the coming months. but maturity, all t all ties together. there's just a lack of office demand, which means for the refinancing office sector, it is challenging. again, this is about looking at specific sectors. none of the asset classes, you can take a big broad brush to

it, and it's true for the risk market as well. katie: i'm putting office to the side, but i'm taking a look, i see residential, i see real estate when it comes to retail shots, etc. where are you seeing the attractive opportunities and valuations right now? seema: we think the apartment sector is looking really good. the liquidity is still very strong, and demand hasn't really dropped. i think that's why you're seeing one of the better opportunities. on top of that, of course, valuations have been dragged down by the broader asset class, means that they're looking pretty good. the retail space is maybe a little bit more concerning, but also in terms of data centers, there's other opportunities in those areas. katie: i want to just come back to office, because again, it seems like that is the weak link. it seems like in every conversation that comes up as the weak link. what is needed there? the fact that we have this maturity wall, the concerns are out there, of course, that's not the principal concern. but would rates coming down help

office become more attractive? seema: i think it all helps in the margin. these are fundamental impacts, which should help the outlook for the office space. valuations are already attractive now. so it needs a little bit more. it might just mean that you need to have some kind of fundamental improvement in demand, which at this stage is pretty tough to see. but if you're getting on the back of an economic cycle which is set to improve as you get to the end of this year, then at that stage maybe the sector is going to look stronger. it's probably not the area that we would be focusing on for this year, given that there are so many other risks. katie: got to leave it there. really appreciate your time this morning. seema shaw of principal global investors. still ahead, we're going to look at the companies making the most social buzz today. we're going to do that in our social climbers segment up next. this is bloomberg. this is bloomberg. ♪ introducing j.p. morgan res personal advisors.

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katie: time now for social climbers, a look at the stocks making waves on social media this morning. first up, archer daniels midland. the ag giant is delaying performance bonuses to some executives until its financial statements are completed and audited. next up, warner brothers. the entertainment company getting downgraded by wells fargo. the analysts also cutting estimates for 2024, citing nearly flat multiples. and finally, we have bayer, the german con glom late is ordered to pay $2.3 billion to a former roundup user who blames the weed killer for his cancer. the verdict is the largest so far after five years of litigation over the herside. you can follow all the latest company buzz on tren go on bloomberg terminal. coming up, flutter entertainment is looking to move its primary

listing from london to new york. we'll speak to peter jackson, flutter entertainment c.e.o., up next. this is bloomberg. this is bloomberg. ♪ that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy. fresh, warm hot dogs! when i'm not selling hot dogs, i invest in a fund that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso! one for you, one for you. oh, you're a messy one. cool, right? so cool. anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. hot dogs! fresh, warm hot dogs! before investing carefully read and consider

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katie: we are about one hour into the u.s. trading day on this monday, january 29. let's get to abigail doolittle who is tracking all the moves. abigail: we are looking at small fluctuations for the s&p 500. the nasdaq 100, not a lot of movement on this monday. where we do have movement is your to date for the s&p 500 up more than 2.5%.

you also have the bloomberg dollar index up 2.2%. typically when the dollar gains, it pressures assets. some interesting relationships that may change as the year goes on to more typical relationships of the inverse unless it's a sign that everybody think the economy has truly recovered. that could be the suggestion. two year yield up eight basis points. more volatility. take a look at the amount of market cap reporting this week. six point 8 trillion on tuesday, nearly 3 trillion on wednesday. 8.1 trillion on thursday. a lot of the big tech cap companies. where the real volatility is being priced in, if we take a look at the vix futures curve, not very high at all, almost at a 14 handle. looking at the futures for may,

16. the yellow line is the vix futures for october. out of 20, some positioning. uncertainty. never a dull day for futures other than today. katie: as we were talking earlier, it's expected that we could see ipo's finally pickup this year. lynn martin joined surveillance earlier today to talk about new listings on the exchange. >> companies will be more disciplined on when they tap the public markets. they will want to articulate a path to probability that profitability -- to profitability. when companies come to the public markets, they will be public market ready. they will be able to articulate a very clear message to investors, to their shareholders

that will enable them to thrive. katie: of course one company that is transitioning to the nyse today is flutter entertainment, the parent company of vandal on a debut today on the new york stock exchange. in march, stock alters mobile to see if the nyse should replace the london exchange as the primary holding for those stocks. joining us now is peter jackson, flutter entertainment ceo. let's start there. what does the u.s. have that the u.k. doesn't have necessarily? peter: we are so excited to bring flutter entertainment to the new york stock exchange this morning. it's the home of our business that biggest business, fan duel. to have access to the world's biggest capital market is something we are excited about. katie: is that decision, pursuing a primary listing in new york, is that more about what the u.s. market has to

offer versus what is going on in your home country? peter: we feel our home here in new york. it will be a fantastic opportunity for us subject to our server holders approving it on the first of may to move our primary listing here. fan duel is the number one sports book in the united states, the proud owner of that, together with our other fantastic brands internationally. katie: why is now the time to make this potential move? why pursue it at this moment? peter: for us there are some big advantages of being listed on the new york stock exchange. there is media that you get access to, but more importantly, when i look at the volume of trading in the u.s., significantly higher than we see on the european exchange. that leads to companies being able to, with those higher volumes, you see investors being prepared to take bigger positions in u.s. business than

they would do in europe. we also open ourselves up to those domestic investors based in the u.s. it feels like the right thing for us to do. katie: i hear what you are saying, where the business, where the volumes are. but did brexit impact this decision at all, when you think about the relevance of u.k. exchanges? peter: the main reason we brought our listing here to the states is those factors, the fact that we see high levels of liquidity here on the new york stock exchange, a number of potential investors that i have met, domestic investors that want to invest in the business. those factors are what brought us over here. katie: let's talk about the process of what it takes to move that primary listing over to the u.s. you will be asking your shareholders if they want to move the listing to the nyse at your general meeting on may 1. how confident are you that shareholders want this? peter: when we told our

shareholders we were contemplating getting a secondary listing, we were clear that our primary listing was our ultimate aim. we had a norma support, 99% of our general meeting last year for that shift. i'm very confident that shareholders will be supportive of flutter moving it primary listing on the first of may. then you will see us shift at the end of this year, the end of the first half of the year, we should have our primary listing here on the nyse. katie: you are a betting man. you know more than most that anything can happen but that seemed like a done deal. i'm curious when it comes to fan duel, would you consider breaking that out as its own separate listing? peter: if you walk around the fan duel offices, the numbers of irish and australian accents that you hear is tremendous. they benefit from what we describe as the flutter edge

. we have thousands of colleagues across the world providing support and technology into the vandal business. it is what makes us number one. we will keep the business together and will keep going from strength to strength. katie: i like to think about the cacophony of irish and australian accents. i want to ask you a personal question. if you go ahead with the primary listing in the u.s., would you personally moved to the united states? peter: that is something i would have to consider. i travel an awful lot around the world visiting our markets. we just bought a business in serbia. we are a global business. i need to go where our investors are, colleagues are based around the world, and that is really my focus, to keep growing the business in the u.s. with fan duel and internationally with all of the long run we of growth we see ahead of us.

katie: the real estate market over here is pretty tenuous, i should tell you. we will put a bookmark on that. let's talk about the competitive landscape, if you will. you think sports betting in the u.s. and most people think fan duel or draftkings, but there is also espn bet, fanatics, as well. how will you continue to take market share? peter: many years ago we brought the concept of the same game parlay with fan duel to america. this was something that we developed in 2013 in australia. we are eight years on from that and they are still developing and pushing the product forward. having a market-leading product is the most important thing for our customers. we are convinced we have the best product. we keep investing and growing and developing our products. that is the best way we can stay ahead of the market. katie: what does growth look

like, deepening your presence in specific sports? how do you think about adding new sports to the platform? peter: there are two ways we think about it. in the international business we continue to grow by acquiring businesses that we can invest behind, using that flutter edge to take them on to achieve what we describe as a podium or gold-medal position. here in the united states, new states are opening for sports betting or i-gaming, and we want to take advantage of that. there is growth in different dimensions across the business. that is one of the advantages investors have if they choose to invest in flutter entertainment. katie: focusing on u.s. ports, of course we have the super bowl coming up in a couple of weeks. hopefully taylor's be there. post super bowl, how do you plan to keep the momentum going? peter: there is always sport happening.

after the super bowl, the question for me after is whether gronk makes or misses. he has been in training, he told me this morning. after the super bowl we get straight into march madness. we know how much our customers enjoy basketball, that whole bracket captivates america. we are provided to provide some entertainment for our customers after the super bowl, too. katie: really enjoyed the conversation. hope to speak with you again soon. peter jackson of flutter entertainment. now we take a look at the markets. you are looking at an s&p 500 that is a little bit green. i think we can call that unchanged. the nasdaq 100 higher as well by .1%. it is a consequential week and it comes to the earnings picture, when it comes to the macro economic environment. we will see how these numbers

change as the week goes on. coming up on the program, we will explore the pain points and opportunities when it comes to real estate. we will do that with al rabil, kayne anderson founder and ceo. this is bloomberg. ♪

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katie: it's time for our wall street week daily segment. joining us now is al rabil, kayne anderson real estate founder and ceo, the host of wall street week, david westin with me. commercial real estate, it feels like one of the biggest fears that never quite materialized in

2023. david: a little trouble particularly with the rates going up. it's really great to have you with us to explain this all to us. as i look at it from the outside, not a lot of transaction going on. measurements show down in total value but there is still huge pent-up demand for refinancing. is that an accurate portrayal, and what will give? al: completely accurate when you have rising interest rates and a dislocation. generally you have reduce transaction volume because this is a buyers market. you don't have a tremendous number of sellers other than forced by distress or duress. transaction buying going down. the desire for refinancing is massive, liquidity constraints are very evident in the market

today. we could talk about the regional banking dynamic where that seems to be quiet at the moment, but i think while it is quiet, i don't think we are out of the woods from a liquidity perspective when it comes to regional banks and dynamics. i personally think the soft landing was 2023, 2024, 2025 will be the hard landing. i will say that is good and bad news. from a buying perspective, real estate present the best opportunity we have seen for over a decade, probably for 10 years on a going forward basis. katie: you said at least two contrarian things when it comes to regional banks and soft versus hard landing. you say we are not out of the woods yet. what would be the catalyst to see some more issues when it comes to that sector? al: you have the marching date approaching, so more liquidity

constraints coming from banks. there is not much debate about this but true and accurate marks within real estate portfolios. you have a lot of trepidation post svp, signature, first republic, in terms of how we progress with creating liquidity. regional banks selling home portfolios, there is the fear of leaks or deposits disappearing, short-sellers coming in, and then maybe the truth doesn't matter, you find yourself in receivership. it's a tricky path to liquidity but we will have significant real estate write-downs on the regional banks side, more than 20% of loans have been to traditional office. that has been a challenge to sector, one that is not returning ever to pre-pandemic dynamics. you have got some factors where you need liquidity, where there

are going to be write-downs. for the moment, we seem to have fallen into the consensus, soft landing. i don't fall into that category. david: let me go to the second contrarian thing katie referenced, the soft versus hard landing issue. what does that hard landing look like? how much of the problem is that sellers cannot get their arms around the value of their property, given what is happening with interest rates. it is not worth as much, and they don't want to admit that, going into a transaction. al: we could call it the three stages or nine stages of acceptance. the reality from a sellers perspective, you cannot kick the can down the road any further for many sellers. liquidity is not there, regional banks cannot extend, you have regulatory scrutiny. as many know, you have got to

trillion dollars of real estate debt coming due. that will not be rolled out another year or three years. that will force dynamics, forced velocity. banks will have to mark more reasonably on a going forward basis. that will create some additional liquidity dynamics. am i predicting a gfc or some kind of disaster? no. i think the banking system is solid. but this is not a question of putting in additional regulatory capital. we are not at where bear stearns was, 33 times. we have the best, maximum 10 times levered today. we don't have that dynamic but still eight to 10 times leverage, something goes wrong, things go in the wrong direction. i think you'll have to see a reckoning.

you will see more velocity as sellers are forced to sell. that presents huge opportunities on both the debt and equity side of the equation in real estate. well capitalized players who are disciplined investors, and we have been running in recession cycles the last 50 years, so those prepared for this current opportunity will be leaning in. you will see a similar dynamic to what we saw post gfc. almost anything bought in 2011, 2012 from a real estate perspective turned out fantastic. we are in a similar dynamic now. not saying that you could throw a dart and make money, but it is very much a buyers market. i would add to that, i think investors are starting to look for where the puck is going, not where it has been. office and retail has taken a lot of allocations over the last 15 years. that is not where the puck is going.

demographically-driven sectors with a lot of more institutional interest, including health care, real estate, student housing, data centers, logistics, a number of other sectors. i would say those sectors are tremendously well positioned because you have demand tailwinds, supply tailwinds in terms of constraints, and a buyers market because of where interest rates are. katie: i want to talk about how you access those opportunities. you mention opportunities in both the debt and equity. what situation would make more sense for an equity position, versus taking one on the debt side? al: i always say it is and not or. if you agree with me that this is a fantastic time to be buying, you want to be on the equity side of the equation, so the setup is basically this. demand drivers, kayne anderson

specifically, let's say we are looking at medical office and senior housing, dramatically constrained supply, double-digit rent growth in many markets, and sellers who don't have a significant amount of time to wait from a necessity perspective to create liquidity. that is the trifecta in terms of ability to buy at appropriate cost basis, with an outlook that is very strong going forward. people say, if i can get midteens return debt, midteens return equity, why would i do equity? your return on investment will be significantly more. typically a five to seven-year hold timeframe. the setup right now, as good as it has been for a significant period of time. david: what happens if the fed

cuts sooner than expected? al: i don't see that happening, but what happens, the market throws a short-term party. i don't think it has an impact on longer-term. what i say from a realistic perspective, what the fed does from this point going forward, how quickly they cut rates, march, may, second half of the year, real estate is a long-duration asset. that doesn't really matter. i don't think we have seen the full impact of rate increases we have already experienced. a fed easing will take a significant amount of time to work its way through the system. the buyers market i'm describing, liquidity constraints i'm talking about, are going to stay in place regardless of what the fed does from this point forward. i think you are looking at a very robust buying opportunity here for real estate. we are incredibly bullish on the next two years.

obviously, there's a fair amount of trepidation. if you have exposure to real estate, that is a tricky dynamic because you have markdowns, pandemic-related issues have been very different across different asset classes. katie: unfortunately, we have to leave it there. we hope to see you on set next time. that is al rabil of kayne anderson and david westin. tune in tomorrow, where david will be joined by chris miller, the author of "chip war." friday, sitting down with paul krugman at 6:00 p.m. eastern time. this is bloomberg. ♪ get help reaching your goals with j.p. morgan wealth plan, a digital money coach in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach.

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katie: let's take a quick look at some of the stocks hitting 52-week eyes.

colgate-palmolive hitting a high after an upgrade at raymond james. meta and microsoft on the board as well, making their 52-week eyes had ever this week. coming up on bloomberg technology, anthony noto, ceo of sofi joins caroline hyde and ed ludlow next. this is bloomberg. ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first.

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>> from the heart of innovation, money, and power collide in silicon valley and beyond, this is "bloomberg technology" with caroline hyde and ed ludlow. ♪ caroline: caroline hyde in new york. ed: i'm ed ludlow in san francisco. this is "bloomberg technology." caroline: sofi shar