>> welcome to bloomberg etf iq. >> what a time to be alive between earnings, the fed and politics. >> and crypto. >> let's get to the biggest stories right now. within 13 trillion dollar etf industry. the s&p 500 on pace for its first day since april. an anticipated earnings season.

scarlet: ether etf's are falling a day after $1 billion plus traded in their debut. we are going to talk fees and flows for the top funds. katie: we'll talk about the ether debut. we will talk about. blackrock's call that global active etf assets could reach $4 trillion by 2030. will do that with jay jacobs. first we welcome in eric balchunas taking a look at the flows. eric: we are looking at a powerful week of flows. 28 billion dollars has gone into etf's. that is like over $5 billion a day. the normal pace is 2 billion. we are over double the normal pace. part of this is there are some other areas to invest in. some eyes is on there. spy and voo. there is a rotation out of the more expensive hyg into the cheaper hyg.

bitcoin is relentless. snp and bitcoin have been dominating the leaderboard. there are the cues on here. you see it is not much. it is in the millions. tlt's that is usually a good sign. you see hyg outflow, the cheaper version. this is the unlock. grayscale converted that into an etf. we expect a lot of money to come out. for 84. that is a lot for day one. let's see how that compares to the rest of the ether etf's that launched. there were eight new ones that came out. they took in more. a little over $100 million more. here were the bigger ones. ishares led. fidelity come a bit wise and grayscale has a mini me version. they took in about 83% of what the bitcoin etf's took in. the volume was only about 23%. we are looking at the second or

third guest much of all time. katie: 20 our conversation now we have jay jacobs, head of thematic and active etf's at blackrock. great to see you in person. jay: great to be here. katie: the ishares theory and trust etf leading the way. i have been listening to bloomberg intelligent so i was super -- i was surprised about the strength of this debut. over $100 million in net inflows. a billion dollars traded overall across the cohort. how did it match up relative to the ishares expectations? jay:jay: we had high expectations. we have seen with i bit much interest there is in wrapping digital assets in the etf structure. it brought more access to digital assets. you can buy this in the traditional brokerage account. it made access more convenient by some of fine things like taxes the end trading. just getting tight liquidity on digital assets. you put that together, we were

excited for the e theory him launch. scarlet: clearly a lot of demand in the first day or two. will there be enough interest to ask dane -- to extend nine interests? jay: there is interest in this assets through etf's should what we have seen as it is trading roughly 50 to 60% of the total trading volume of bitcoin etf's. that does show investors or notches looking for convenient access. they are looking for liquidity for tight spread and equality -- inequality. eric: you are tasked with explaining ether to normal people. pretend i am your ex college roommate and i say what is this new ether etf. what is your elevator pitch that will not bore me? jay: i have been on the show a few times and talked about various innovative technologies like artificial intelligence. in a lot of way ether is a bit on the innovation of blockchain technology. if we see blockchain technology

get more use cases as we see people use tokenization, stablecoins, ethereum is going to benefit because it is the underlying infrastructure behind it. that is very distinct from bitcoin. bitcoin is the story around a hedge against geopolitical risks, inflation. . it is more of the diversifier in portfolio. katie: i'm going to take a hard pivot and talk about something that could come to the etf rapper. i'm talking about private assets. there's has been a lot of speculation after blackrock bought frequent. martin small said recently you are going to be able to take some of the data they have to create investable indices and launch things like exchange traded products. that has launched a number of thought pieces. i want to ask you, when it comes to potentially constructing something like that, is it possible to put private assets into an etf. actual private assets.

not some sort of strange proxy think. jay: what i can say is we are focused on innovation of ishares this year. if you look at the products have come out with we have left several different active etf's letter alpha seeking and bring out our best portfolio managers. . we have lunch two digital asset etf's. we have been watching option strategies that wrap things like put spread's and by rights within an etf structure. we have seen a tremendous amount of novation and that is going to continue going forward. scarlet: hypothetically, are private as had something you can invest in passively or it would have to be an active investment? jay: i think there are a lot of different approaches. one of the ways we have to look at the entire platform is there are different structures with different use cases. whether data -- with that is in etf, a mutual fund, it is about providing solutions to clients in the right structures. etf's are the vehicle of choice for a lot of our clients these days. eric:eric: this is a new

thematic etf. you launched pave which do you know that is the biggest theme etf in the world? infrastructure. it passed arc a month ago. is this the follow-up to pave? do you think it has that kind of potential? jay: right now you have an incredible structural tailwind which is the changing supply chains around the world. that previously was about getting the cheapest goods around the world. now it is about resilience. it is about how we can build the goods critical to our economy in the united states. things like semiconductors, electric vehicles, energy production. more of that is being brought back to the u.s. similar to what we saw with infrastructure, this has policy tailwinds across the aisle. is about how we are seeing supportive fiscal policy. how we are seeing different trade arrangements evolve. i see this as being a critical follow one to infrastructure. we are trying to get more efficient with infrastructure. we are trying to increase output. it could be the second leg of the trade.

katie: one to watch as we count down to november. potential policy changes and a potential new administration. i'm not going to ask you about politics. i want to talk about active etf's and this call from blackrock active etf's could hit $4 trillion by 2030. it has been fascinating to watch the evolution of active etf's. what is striking is you take a look at some of the active products getting a lot of flows. it feels active light. it is systematic strategies. things like derivatives backed things. can we truly consider those active? it is not exactly stock pickers getting a ton of flows. jay:jay: i guess i would disagree somewhat. where we have seen them at some of the most -- where we have seen some of the most flows is bank. alpha seeking etf's in our categorization is 80% of the assets within active. active means a few things.

there is a stock picker upon picker we are calling alpha seeking. there are out come seeking etf's. there is exposure active trying to provide better beta using active strategies. overall we see alpha seeking strategies that are active and tactical and target being a big driver going forward. eric: the buffer products and this whole world of these new active as you put it, how much is this because the aggie has failed? it went down in 2022. it has not kept up with inflation. do think investors are looking for something to supplant the 40 in their bond exposure that can protect them? jay: i think it goes beyond looking at the ag. what you are seeing with investors is there indexing the core of their portfolio. they are looking beyond to supplement it either with specific outcomes or to outperform the market.

if you go back over the last 10 years, it has been a great beta fueled rally. a fantastic trade to have exposure to the s&p 500 and the ag. elf is going to be a more important part of peoples portfolios to meet their objectives. katie: the nasdaq 100 following 3%. biggest intraday decline since december 2022. i do want to quickly ask you about buffer etf's. they have been very popular. ishares has one as well. some people have marketed these in talked about these as bond replacements in your portfolio. i hear something like that and i have questions. it is a big claim. how are you thinking about buffers? is ishares thinking about these as bond replacements? jay: one of the biggest use cases is bringing people back into the markets. you still see $5 trillion being held in cash or money market funds. a lot of investors are saying i

would have liked to invest but i don't know if this is the right time. buffer etf's help bring people into the markets while protecting against downside moves. it is one way to ease people back into the markets which is important when so much cash is sitting on the sidelines. katie:katie: it is always great to see you. jay jacobs of blackrock. coming up, etf's representing a lower percentage of rule trading volume. we discuss how single stocks are helping to drive the single etf share lower. scarlet: we were just discussing ether etf's. here are some of the other firms talking about the debut. >> we have been working on getting ethereum listed for six or seven years and we finally winced our regulators. -- finally convinced our regulators. >> we have entered the era. >> some have gotten more comfortable with left -- with listing. then adding staking. >> the things we have learned

from the bitcoin and ethereum launches is etf's work in this asset class. ♪ i was the last athlete out on the floor and i still had a full round to go, and everything in me was saying, “just stop.” i kept plugging through until i got time capped. because i didn't quit and i just kept trying as hard as i could, it's actually one of

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katie:katie: a comeback to bloomberg etf iq. time for the etf grade where i walk you the trends and stores that caught my eye. i want to focus on allocation etf's. you can see equity as a category. bonds has a lot. you put it all together, mixed asset not seeing the love. it seems like advisors want to put the pieces together themselves. missed asset etf's have been left for dust. talk about bonds. we take a look at actively

managed fixed income etf's and as you can see, the flows have been off the charts almost. $44 billion going into active bond etf's. there has been a lot of speculation about when the fed is going to start cutting rates and a lot of money has been going towards bonds. over the long-term let's talk about equity etf's. the account for an average of 30% of exchange volume but this year that share is well below the average. some days down to 14%. that is quite low relative to the average in white and i guess the question is why, scarlet? scarlet: let's talk about this with bloomberg intelligence who put together the data. what do you think is the reason behind that? >> stockpicking is back. we say it every year. the influence of the mag seven has attracted a lot of investors. not saying etf's are not trading

a lot but you need to hold those seven stocks. there was a fair point eric had made that the market is up, we are comfortable, there's not a lot of trading. but trading is still up on the exchanges. they're just not going to etf's. there is more of a stock picking mentality. katie: eric belching this with you. think about what typically happens in volatility, people go right for those etf's. when we have our next huge drawdown, we see the share go higher. athanasios: liquidity aspect is so important. whenever the market hits new highs, volume is very low. that does drive a little bit. we might see a pickup. overall it has been moving over to more niche exposure single stocks.

that necessarily does not bode well for etf trading. scarlet: etf's have been come -- have become increasingly more concentrated. attic about how much attention that is getting. with the big tech trade seemingly fading or unwinding, how do you anticipate this might start to show up in etf's? athanasios: one is the single stock etf's. they are levered. etf's themselves are more concentrated. even though you are picking and etf, the stock selection is more important. that should factor in. you're not just buying the s&p 500. you are picking stocks. there is less of a stock but you are second-order stock picker. scarlet: it all comes back to stockpicking. thank you so much. still ahead, the america reassuring fund as a possible 2020 for election proxy no matter who wins.

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scarlet:scarlet: this is bloomberg etf iq. katie: eric balchunas back with us for today's drill down where we focus on one etf. eric: today we are looking at rsho, which is short for reshore. this caught our attention because the performance is really good which i will show you in a minute. it is already 93 million. this is a big about -- a big amount of any. this is 75 basis points. people are going to need performance to pay the fees. it has been out for a little over a year. let's look at the cross-section. you're going to see a lot of sectors like building materials. this is companies that are going to benefit from bringing a lot

of supply chain and doing things in the u.s. this is a deglobalization play. you are going to get a lot of hard construction type stocks. if you want to look at the gig sectors, it is going to be 78% industrials and a lot of materials. if you look, the pe is 25. it is not quite a value trade. it is all in the u.s.. let's take a look at the performance. you can see the flows. the performance versus the industrial sector of which it has a lot of those stocks is big. 46% versus 29%. the s&p is up 34%. with that kind of performance, it is a decent enough lead you are going to get looks. not to mention. the political timeliness of this theme. katie: that is exactly where i want to go. trying us to talk about is the founder. you have made the point you see this working a matter what administration takes over from

here. while coast through that. you think about reassuring. that seems like more of the right-leaning impulse. >> thanks for having me on the show. there are not many things both sides of the political spectrum agree on. one of the things they do increasingly agree on is bringing jobs, investment, manufacturing back to the u.s. that was initially spurred from what we sell out of covid when there was a lot of supply chain dislocation. what was a tactical move is becoming a more strategic move by government incentives that have accelerated the trend. we are seeing a renaissance every industrialization in manufacturing sweeping the middle of the u.s. but also parts of the coast. scarlet: there are splashy announcements companies make about reassuring their supply chain to the u.s. and then there

is the follow-up whether they do it or not. are you heading the names only after doing the do joe's -- the due diligence to make sure they have taken action. in some ways that would make you like a reporter were you have to follow-up to make sure the company has done what it said it would do. maurits: we are in active fund means we do fundamental research. . the manager of the fund has a 25 year track record of investing in industrials. and understands the sector. . he understands the companies. we engage with companies. we understand. we follow companies closely. to your point, there have been over 40 megaprojects with respect to reassuring since 2022. an estimated combined value of $20 trillion. if you think of how much is spent, we estimate is only 150 billion so far. we are serious and dedicated to reassuring.

actually putting dollars behind it. in some cases have realized our projects. these are projects that take a number of years. often take big amounts of money to unlock. we don't think these are short-term solutions. these are long-term trends. you don't build a $20 billion plant to open it next year. it is a 10 to 20 year commitment. someone call this the process of deglobalization. globalization was a process that went over 20 to 30 years. the process of deglobalization or relocation will take another 10 to 20 years. we believe we are in their early innings of that process. eric: one of the things that some angles in this theme is the environmental theme. could this be converted into an est play because if you are putting less stress on moving stuff around the world, wouldn't that be helpful for the environment? maurits: we are not an est fund what i think you are right in

iteration of re-industrialization would be a lot cleaner than previous reindustrialization's we saw some 50, 100 years ago. we think that will allow for for more scalable manufacturing which will be better for all parties associated whether it is on the environmental or government or social side. we believe we are encouraged by how we are seeing this process of manufacturing and reindustrialization take place. we believe it is different anything we have seen in left -- the last 20 to 30 years. katie: appreciate you taking the time with us. our thanks to the tema founder and ceo. we are seeing quite a selloff on our hands. . the s&p 500 off by 1.7%. the nasdaq 100 even more. i find this interesting. you were talking about the flows earlier. we have been seeing this massive selloff. we have been seeing a lot of

money coming into these funds. voo breaking a record. eric: spy has been taking in money. the trader crowd might get spooked temporarily. the good news is the volume in spy is 12 million. that is below average. volume and etf's goes up when there is fear. low volume means no one is freaking out according to this one metric we use that is a pretty good indicator. i would think this would be short-lived but we will see. scarlet: the other thing worth pointing out is the rotation in small caps is in place. the russell 2000 is down but it has been outperforming even when it is down compared with the big cap stocks and the nasdaq. what kind of flows have you been seeing into the russell? eric: we have seen this movie before. people have tried so hard and then it does not work. maybe it will work this time. i thought it was going to work for a while. we had a week where it was up. breath is what everyone wants to see.

katie: a lot to keep track of. we will follow it throughout the day on bloomberg television. that does it for bloomberg etf iq. i'm katie greifeld along with scarlet fu and eric balchunas. this is bloomberg. ♪ why do couples choose a sleep number smart bed? i need help with her snoring. sleep number does that. thank you. and now, save 40% on the sleep number limited edition smart bed. plus special financing. shop now at sleepnumber.com (♪♪) (♪♪) sandals rhythm and blues caribbean sale is now on. visit sandals.com or call 1-800-sandals.

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>> welcome to bloomberg markets. the bears are out with stocks in the red and then some aztec ways on the major benchmarks. the nasdaq on pace for its biggest intraday loss since 2002. let's get a check on where markets are. it is very ugly out there. the s&p 500 off by 1.8%. the nasdaq 100 bearing the brunt of the pain down almost 3%.

the small-cap rotation may be taking a bit of a pause in terms of the money going into the small caps but they are your relative outperformer. the russell 2000 only down 2/10 of a percent. haven bid into bonds building with your two year yield down 10 basis points. let's talk about some of the midday movers on the equity side. tesla getting hit in a big way after reporting another quarter of disappointing profit. the stock on pace for its worst day since january after the company's earnings missed estimates for the fourth consecutive quarter. elon musk postponing a highly anticipated unveiling of robotaxis. we should check in on alphabet shares on pace for their worst day since february should in its effort to support ai programs, company capital spending rose to more than $13 billion in the second quarter which exceeded analyst estimates. let's discuss everything going on with markets.

we are going to do that with michael casper of bloomberg intelligence. he is he an equity strategist. you take a look at what is going on. the nasdaq 100 on pace for the worst day since december 2022. another tesla and alphabet disappointed. is this an overreaction? >> i don't know if it is necessarily an overreaction. everyone is looking for the broadening trade to occur in the s&p 500. within equities across small caps as well so i don't know if it is an overreaction. tech evaluation is certainly high. 29 times on the aggregate for the s&p 500 tech. the companies have to beat to continue the optimism. that is definitely out to be seen next week when the bulk of tech reports to katie: feels like tesla is an idiosyncratic story. they are dealing with their own story --. their own issues alphabet caught my eye. seems like a lot of investor discontent has to do with how much they are spending on ai and they are not seeing the return on investment. it has turned into a show me

story. you think about the gobs of money some of the other tech companies are spending. could we see a repeat of this one? michael: yeah and this is a theme across communications. google is a member of communications. in that sector is specially margins have been driving a lot of the earnings advance. it is not really a top line story yet. i think everybody is waiting to see if top line can kick into gear and take up some of the margin slack from the spending going on. katie: the stakes are certainly high. let's talk about smaller companies. it has been one of the developments. the rotation into small caps. even today you are seeing that outperformance i guess the question is how durable is it. how high are the stakes heading into earnings for some of the smaller companies? michael: it feels very different from some of the previous small-cap rallies in that you don't have the junkie has companies in the russell 2000

leading. you do have this right reversal bit going on but you have financials, utilities and real estate leadership. it is a red sensitive leadership and decent companies within those baskets. on top of the earnings season side, small caps expect to have 2.5% revenue growth. everyone is looking for that number two tick higher. katie: when you think about what we are seeing in terms of the driver, something i have an wondering is whether it is truly the microenvironment, the rate story. whether it is the fundamentals or valuations that are in charge. the point has been made over and over again. you take a look at small caps still pretty inexpensive relative to their big tech peers. michael: i would argue it is mostly a fundamental and valuation story across stocks. the jury is still out to see what the fed is going to do both this year and 2025. fundamentals have driven the s&p 500 advanced. they have not kicked into gear

for small caps necessarily. that trade away from the mag seven tour the 493 and the s&p 500 is starting to occur is mostly a fundamental driven trade. katie: michael casper of bloomberg intelligence. appreciate your time as we keep a check on this market selloff. . the s&p 500 down significantly led by big tech. your nasdaq 100 having its worst day since december 2022. outside of the markets, attention will be on it really prime minister benjamin netanyahu who will address congress this afternoon. will be the first foreign leader kamala harris will meet as the likely democratic nominee. he will sit down with donald trump on friday. let's discuss all of this with jewel ribbon. is democratic strategist and former deputy assistant secretary under president obama. it is a critical juncture when we think about u.s. israel relations.

what do you think netanyahu's message will be to congress later today? >> it is great to be with you. the last time the prime minister came to washington to speak i was our senior official at the state department for the obama administration working with the house and it was a very different time but back then he came with the mission of trying to end president obama's iran policy. . this is very much a different context which now he is trying to rally support in the united states for israel's war in gaza, the broader relationship. . he has a lot of repair work to do in particular with democrats who are very concerned about his lack of getting to a cease-fire with hamas and hostages still being there in captivity as part of that dynamic. and so he is going to have to show democrats where he stands but also this place back i'd home. he is in a week position in

polls in israel he. has a strong mende in the government but the polls are very hostile to him. i think for him, he has to show israelis he does have broad support in the united states to continue to govern the country. let's katie: talk about what is going on on the u.s. side because net and yahoo! was supposed to meet with biden should he will now be meeting with harris. how does that look from an outside perspective? kind of relying on u.s. and democratic support right now in their efforts. this is a party that is in disarray. joel: the story of israel and its relationship with the united states for nearly seven plus decades since the founding of the state. broad support from the united states and democrats tend to be the party where american jews vote. three-quarter support democratic candidates in all recent elections. for him, he has to show that he

is continuing to maintain that. you cannot get much done these days if you don't have bipartisan support. it is waiting for israel right now. it is crucial these meetings with the president should he will meet with the president tomorrow as well as the vice president separately. these are very important meetings. he has to give a little as well. it cannot be like what happened nine years ago when he opposed the american president's policy. he has to show he is grateful for what president biden has done to support israel. katie: speaking a bipartisan support, it is worth pointing out netanyahu and speaker johnson our meeting right now. it's talk about the meeting scheduled with donald trump on friday. when it comes to netanyahu and his goals for that meeting, what would success look like? joel: he really is in a pickle to get -- clinically speaking.

prime minister netanyahu had a close relationship with donald trump when donald trump was president. when president trump asked for netanyahu's endorsement, netanyahu pulled back and said i respect whoever wins the american election should they have had hard times ever since. his trip to mar-a-lago is reminiscent of the kevin mccarthy trip to mar-a-lago after the january 6 insurrection when he had to repair some old wounds. the problem for netanyahu is he cannot look like he is an ally of donald trump and maintain the support of american jews and the democratic party. he is walking into a difficult dynamic. he does not want to offend president trump but he cannot look as if he is picking one party over the other. katie: very difficult needle to thread. joel rubin. really appreciate your perspective. we do want to come back to the stock selloff.

the nasdaq 100 down by 3%. helped in large part by tesla weighing down the major averages after a disappointing earnings report. it is our stock of the hour coming up next. this is bloomberg. ♪

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katie: this is bloomberg markets. it is time for our stock of the hour. we are talking about tesla. one of the worst performers in the s&p 500 after reporting its fourth consecutive quarter of disappointing profits. elon musk confirmed a delay to the company's autonomous taxi ambitions and on top of that the company was downgraded by an industry this morning. ed ludlow joints me now.

elon musk himself said if you don't believe in autonomy, sell the stock at it looks like that -- that is what people are doing ed:. traditional legacy wall street institutional investors downbeat clearly by the side deck the size of the move. tell investors come the body of tesla and elon musk fans will probably tell you it is a buying opportunity. the reality is in the present and fundamentals of the business are not going in the right direction. fourth consecutive quarter where eps misses estimate. revenue is a bright spot because they return to growth on a year on year basis when the street was forecasting continued decline in topline growth. it is automotive growth margin. they have had to do a lot to think about profit and environment where they have cut costs. they're getting competition from hybrids. it is hard to see the jump to a future where we are all in tesla

robotaxi. katie: you and i were talking about this. it feels like some of the big way down is investors recalibrating to some of the timelines. thing about rodent -- robotaxis, that unveil not coming until october. those will only be prototypes. the more affordable models, those don't go into production until the first half of next year. seems like all the things that could put some of the spark back into tesla's stock is a long way off. ed: a delay of an unveil event to see prototypes by two months not catastrophic to many that follow the stock. the bigger picture is the pathway to an outcome where whenever it happens, tesla operates this proprietary ride-hailing app with a fleet of robotaxis made up both of

purpose built robotaxi any contribution from tesla owners who put their own cars on the fleet. musk on the call was at pains to explain this idea. he repeated it because he felt they had not been understood. recalibrating when that is going to happen. we always say elon musk often gets there in the end but never on the original timeline. he has been promising us it will be the year of self-driving every year going back to 2014. that is the thing the market has to juggle. katie: it is an election year so we have to talk about politics. it's talk about elon musk's relationship with donald trump should we know he is donating to some super pac's. it was interesting. he is putting off production of the mexico factory because of uncertainty around trump's policies. we know trump wants to do with some of the ev subsidies in the inflation reduction act.

where does the relationship stand? ed: muskets politics himself and operating a company in scenario were trump ends up in the white house. on the politics musk clarified he has made a donation or ongoing donations to the america pac but not at the $45 million level reported. he confirmed what bloomberg reported july 12. he had made a donation not specifying the amount. on ira he was asked if trump comes to office and the ira or the provisions within it go away, what happens? he basically said that would be bad for tesla in the short-term but not in the long-term. it would be worse for tesla's competition. tesla would gain against its peers. it is not prudent to plan for a mexico plant knowing the policy platform of trump will be to make america more competitive vis-a-vis doing business in mexico. he physically said if that is the logic, why would we go full

in on a project where we don't know the outcome of this year's u.s. presidential election? katie: a lot of big questions. we saw the combination of -- the culmination of that. tesla shares down double digits right now close to 10%. that is weighing on the broader market you can see that in the nasdaq 100 off by 3%. the worst days since december of 2022. you take a look at the biggest points contributor to the downside. tesla leading the way is in nvidia. we heard from musk saying they are going to double down on the dojo because they are worried they will not be able to get enough chips from nvidia. of course alphabet down mightily as well. coming up, we will speak to be geos sunny kelce. he joins to discuss his work at some of the bigger commercial real estate private equity firms. that conversation coming up next. this is bloomberg.

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katie: welcome back to bloomberg markets. let's get right back to the selloff. you can see the nasdaq 100 close to session lows. we are down about 3% on your big tech benchmark. tech the big lacquered today. . you can see that in the s&p 500 which is off 1.8%. small-cap outperformance continues today even though the russell 2000 is down. it is only done about half a percent because the mega cap tech companies where all the concentration is, the nasdaq 100 down 3%. one of the specific names we are watching is blackstone's mortgage reit cutting its dividend by 24% as default increase and barber struggle to make payments. let's continue the conversation

with abigail doolittle. abigail: i'm pleased to say joining us is the co-ceo of bdo and the former head of morgan stanley's real estate. so great to have you with us. katie was mentioning it is a perfect day for you to be here with commercial real estate. it seems like there are big pieces of news that come out in this overall what some have described as a slow-moving crash in real estate. they have cut the dividend by 24%. blacks torn mortgage reit -- blacks torn not so long ago but eric communities for $10 billion. price to little high. in my perception it was they were trying to set a bottom floor for the commercial real estate market. is this a way of conceiving it is not over yet? >> it is a way to concede that it is a super complicated thing. it is a multi-tens of trillion dollar market globally. when people think about -- they

try to paint it with one brush, they cannot do that. i don't know the specific makeup of the mortgage reit but they probably have office exposure and offices have been deft -- have been decimated. you take that with a rate environment which is higher for longer than most people thought it was going to be and it is not. abigail: you are a lender also could how logjam does it and what kind of deals -- would you lend on office and if not, what younger fees? what properties? sonny: we have not lent yet to regular office buildings in the united states. one of the questions i get asked is have we had bottom there. abigail: that is amazing you are saying we have not had bottom. we had a realtor on not so ago and saying there are office buildings that could trade for $.10 or less on the dollar.

nobody is able to say it is like the gfci were the savings and loan. . everyone agrees it is going to keep going on and on. is it a long bottom? sonny: it is a long bottom for a couple of reasons. it is secular and cyclical. thing about these things in this framework all the time. the secular think that is hurting office is work from home to now it is what is ai going to do with office demand. tendency. we have -- tendency. we have one of the political parties talking about we have too many government workers. we think about love those, those are headwinds. at a time when there is a bunch of cyclical stuff going on. i am very much a glass is half-full kind of person but you have to be realistic and practical. eating an investor, you have to have conviction. it is hard to go in and buy an office building on 3rd avenue. abigail:abigail: where are you lending and from the equity side, what is attractive in this

environment? there have to be all kinds of deals out there. sonny: we have been very active as a lender. . what we do as an equity investor and lender align a lot. what do we like? technology is everything. it is tech and demographics those of the two things that drive everything should real estate is an old-fashioned industry. we follow the broader economy. warehouses are good. brand-new warehouses are better. . warehouses that are temperature control because of food. they could but how much more food you buy online now then when you did before the pandemic. cold storage warehouses. those are really good. we need more of them. those are u.s. things. globally, we do a lot of those same things in europe. warehouses, data centers. data centers are super hot. i'm sure you have a lot of guests that come on and talk about them. asia. we are still buying office buildings. we are buying a lot of them. we are buying them partly

because there is no work from home problem in asia. abigail: all of this pain has to do with the fed in terms of unexpected massive hiking cycle which you guys got right. you planned for higher for longer. sonny: we had a different point -- different point of view maybe. abigail: how did you position and what are you expecting this year? last december people thought there would be six cuts. what do you think the fed is going to do this year? sonny: i am not an economist. . i have to put that disclaimer out there. we have thought rates were going to be higher for longer for a long time and it is partly because we are the big warehouse portfolio. we see what is going on from a throughput perspective. supply chains were broken. the were in the ukraine. for all those reasons, we got the call quote unquote right. i think the fed is going to cut. they have enough data now they are going to cut. they might cut next week. who knows? they might. at this point i would be surprised they did not cut in

september. abigail: thanks for joining us. katie: our think the abigail doolittle and sonny kelce. that does it for bloomberg markets. this is bloomberg. ♪ the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

>> from the world of politics to the world of business, this is balance of power.

live from washington, d.c. kailey: welcome to balance of power on bloomberg tv and radio. joe mathieu is off today. it is a busy day from here in washington, d.c. just about one hour from now, it is really prime minister benjamin netanyahu is set to address a joint session of congress on capitol hill. with a lot of lawmakers protesting the speech and we will speak to one of them. democratic congressman ami bera from california. there is other big speech this evening. prime time it :00 p.m. eastern joe biden addresses the nation from the oval office about his decision to leave the presidential race. we will have more with our political panel. there is a lot happening in financial markets. a lot of red on my screen. i but a lot of red on charlie pellett's. he has a check from new