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JP Morgan saying

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there's going to be four rate

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cuts before the end of the year.

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There's only three more meetings

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this year.

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Do they mean like for like

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as in four quarter points.

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So one of them is going

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to be a half point. That's how I read.

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That's exactly what they mean.

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And.

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Welcome to Drunk Real Estate.

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Grab a drink.

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I enjoyed the show

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here.

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Welcome to episode

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107 of Drunk Real Estate.

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I am Kyle Wilson,

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Ashley Wilson's husband,

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and I'm joined by my best buds

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J, AJ, and Mauricio.

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How's it going, guys?

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Cheers. Woo!

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Got a lot to talk about this week.

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Bunch of economic updates

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to that have happened.

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We talked about jobs last week.

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A lot of things have trickled down

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from that jobs report.

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JP Morgan now sees four fed rate cuts

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on the horizon

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the rest of the year,

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which before it was a lot less than that.

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We have a 90% chance of a rate cut

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coming in September.

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It used to be below 50.

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We had inflation come out this

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this morning and that was a surprise.

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So, Jay,

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why don't you start us off,

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what's going on with the,

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the economy right now?

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Yeah. So can I start with a,

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just a pet peeve of mine.

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So JP Morgan saying there's.

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You talk about the top ten,

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you talk about the top ten.

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That that's a pet peeve of yours.

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All right,

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JP Morgan saying

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there's going to be four rate cuts

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before the end of the year.

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There's only three more meetings

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this year.

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So do they mean like for like

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as in four quarter points.

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So one of them is going

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to be a half point.

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That's how I read that.

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That's exactly what they mean.

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And I'm just I'm just being funny

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because I it's interesting

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how the terminology is changed.

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It used to be a rate cut.

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Was any amount of rate

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cut at a particular meeting.

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Now it's

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I think a rate cut is a quarter point.

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So yeah.

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So they're saying that there's

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going to be a four point cut

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before the end of the year.

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The market is agreeing with them.

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The market's saying that there's

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a 90% chance of of the first cut.

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I don't know if that's agreeing with them

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by the end of the year,

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but the market's saying

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there's going to be at least

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a cut in September

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at the September meeting.

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And a month ago that was like 50%.

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Now it's now to 90%.

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And so

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I think

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today's inflation report kind of cinched

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the idea

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that we're going to see a rate

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cut in September.

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Which is interesting

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because if you look at the inflation

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report, typically speaking,

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when inflation is low

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it's a lot easier to cut

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because cutting could lead to inflation.

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When inflation is high,

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you don't want to cut.

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And so the headline came out today

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that inflation looked good.

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And the headline number did look good.

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If you looked at just the CPI number

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month over month point up 0.2%.

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So same as last month, 2.7%

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growth of inflation since last

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year, which is a good number.

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If you dig in a

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little bit though,

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it's not as pretty a picture.

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I mean, it's not horrendously bad.

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But it definitely doesn't

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look as good when you dig in.

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So,

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if you look at that, that 2.7 number,

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a lot of it was driven

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by the fact that energy was down 1.1%

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last month.

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And that's a monthly number,

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1.1% means down annualized over over

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12%, or over 13%.

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Gas was down 2.2% last month,

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which is a big number.

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It's actually a good thing.

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I mean, gas prices are now back to where

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they were at the beginning of the year.

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So we always want gas to come down.

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That's not in California, man.

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And California

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is still over like five bucks a gallon.

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A half of that's tax though.

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Yeah I was going to say that's, that's

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a lot of states

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have have extra taxes that they throw on

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and that's, that's, that's a state issue.

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But yeah, gas is down a lot last month.

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So if you take out energy,

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you take out that 1.1% drop,

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you take out, food.

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So that's the other piece

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that's pretty volatile, can change a lot.

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And so we have this

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metric called core inflation.

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So it's the inflation number

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minus energy minus food.

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That one went up a bit.

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It went up from 2.7% to 2.9%

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last month and 2.9% to 3.1% this month.

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And basically,

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if you dig into core, what you see is

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things like furniture, appliances,

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household goods,

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recreation equipment, footwear,

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basically anything that you get from the,

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China, Vietnam and India,

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those are the big ones,

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that are sold in big box stores.

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Those went up a good bit.

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So, I think it's clear

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that at least for certain things,

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big box stores are starting to,

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to pass on costs.

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Also, cars

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and trucks were up a good bit

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last month, 0.5%.

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And then there's another measure

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that we don't talk about a lot,

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because normally

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it falls in line with either

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the main CPI number or the core number.

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But that's called super core.

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And super core is

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where you're

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basically just you strip out energy,

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you strip out food just like core,

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but you also strip out housing

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and you strip out goods.

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So it's basically just services.

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Services that are you

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just strip out like two thirds

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of what everybody spends money on you.

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Well, that's the funny thing.

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A lot of what we spend money on in

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this country is services.

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And you don't realize it.

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We talk about the goods

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portion of things a lot.

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We don't talk about the services

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portion of things a lot.

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But the reason why it's important

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to sometimes focus on services

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is because when you measure super core,

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when you measure the cost of services up

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or down,

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you're basically measuring wage

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induced inflation.

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So you're measuring

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how much business owners

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need to charge more

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because they're paying higher wages.

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And that's what we see

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in the service industry.

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That's the core component

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of of cost to business

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owners in the service industry.

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It's wages. And so when we see

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super core

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inflation go up,

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typically it's

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because we're seeing wage inflation

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or we're seeing, businesses

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that are having trouble

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finding employees

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at whatever previous wages were.

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And so for super core this month,

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we saw an increase of 0.5%.

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So 3.7% year over year.

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And we saw some major increases

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and things like airfare,

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shipping costs, insurance costs, health

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care costs,

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personal services, things like haircuts.

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I mean, basically all the services

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that, that most of us need in our lives.

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I mean, maybe

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we don't need to take

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take plane flights all the time, but we

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we need insurance. We need health care.

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We need these personal services.

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And so super core inflation was up

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quite a bit from last month.

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So when you dig in again,

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the headline number wasn't that bad.

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The headline number basically said

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things are the same as last month.

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Which is good.

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Don't get me wrong, that's a good thing.

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But when you dig in, things

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weren't quite as good. So given that,

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you might think, okay,

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there's

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a little bit less chance

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of of the fed cutting

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if at the September meeting.

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But given that the headline

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number looked good,

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given that the jobs data was

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was really soft

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the last couple months and,

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it looks like the Fed's going

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to want to kind of get ahead of that

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if it's not too late

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to get ahead of that.

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I think there's

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I mean, the market's saying

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there's a 90% chance of, of a cut.

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I think that's probably

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pretty reasonable.

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So I think we're looking at a rate cut

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at least a quarter point come September.

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You know what's interest?

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I was just looking this up because I was

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I was out all day.

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So I just

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didn't see the news this morning.

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But what's interesting

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is that the next fed meeting

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is September 16th and 17th.

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The next CPI reading is September 11th.

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So five days before the meeting,

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we have the new CEO.

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We also have BCE too. Right?

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Like theoretically when the fed

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came out and said like what

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their preferred inflation gauge,

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it was core PC

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and that's end of August, right.

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Like the 29th or something.

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Yeah, it's the last Friday of the month.

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So technically we still have a PC report

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and a CPI report coming up.

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I was super surprised

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because I literally had to go

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and look for this.

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Like if you look at headline news,

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go to any major news site,

285
00:07:53,097 --> 00:07:55,600
because I just, I just hit the top three

286
00:07:55,683 --> 00:07:56,601
right now.

287
00:07:56,684 --> 00:07:59,145
None of them are reporting anything

288
00:07:59,228 --> 00:08:01,189
about that inflation report.

289
00:08:01,272 --> 00:08:03,316
What a top three, Mickey Mouse.

290
00:08:03,316 --> 00:08:04,275
Well, so

291
00:08:04,358 --> 00:08:06,402
for if I go to, I go to all sides.

292
00:08:06,486 --> 00:08:07,695
First of all, because that's, that's

293
00:08:07,695 --> 00:08:08,779
where I like to get my news

294
00:08:08,779 --> 00:08:09,363
for the most part.

295
00:08:09,447 --> 00:08:11,073
And it's not even one of the top

296
00:08:11,073 --> 00:08:12,867
ten news, things.

297
00:08:12,867 --> 00:08:13,993
And I went to MSNBC

298
00:08:13,993 --> 00:08:14,785
because I was like, okay,

299
00:08:14,785 --> 00:08:15,828
if anyone's going to be

300
00:08:15,912 --> 00:08:17,330
on this inflation report,

301
00:08:17,413 --> 00:08:19,415
it's going to be MSM, NBC right?

302
00:08:19,499 --> 00:08:20,833
And they have nothing about it.

303
00:08:20,917 --> 00:08:24,337
And so like, I guess like this was to me,

304
00:08:24,795 --> 00:08:25,421
I looked at it,

305
00:08:25,421 --> 00:08:26,631
this was the quintessential

306
00:08:26,631 --> 00:08:27,715
like you could pick and choose

307
00:08:27,715 --> 00:08:29,509
your your headline rate.

308
00:08:29,592 --> 00:08:31,052
You could either pick

309
00:08:31,135 --> 00:08:33,095
to Jay's point, you could pick headline,

310
00:08:33,179 --> 00:08:34,180
inflation and be like, hey,

311
00:08:34,180 --> 00:08:35,181
we got this under control.

312
00:08:35,181 --> 00:08:35,848
Everything's good.

313
00:08:35,932 --> 00:08:37,308
Or you can pick core inflation,

314
00:08:37,308 --> 00:08:38,809
be like, look at the last three months.

315
00:08:38,809 --> 00:08:41,020
Like core inflation is an issue.

316
00:08:41,103 --> 00:08:43,314
And I feel like no one's

317
00:08:43,397 --> 00:08:45,107
jumping on either side of that,

318
00:08:45,107 --> 00:08:46,359
which I don't know,

319
00:08:46,400 --> 00:08:47,443
I guess is kind of a good thing

320
00:08:47,443 --> 00:08:48,110
for the fed. Right.

321
00:08:48,110 --> 00:08:49,362
Like they can,

322
00:08:49,445 --> 00:08:51,405
like they don't have to really answer

323
00:08:51,405 --> 00:08:52,865
to anyone because of this report.

324
00:08:52,865 --> 00:08:53,407
They could just

325
00:08:53,407 --> 00:08:55,243
like slowly do their thing.

326
00:08:55,326 --> 00:08:55,576
Yeah.

327
00:08:55,576 --> 00:08:56,202
Well, keep in mind

328
00:08:56,202 --> 00:08:56,536
the other

329
00:08:56,536 --> 00:08:57,912
the other piece is,

330
00:08:57,995 --> 00:09:00,206
reality versus expectation.

331
00:09:00,289 --> 00:09:03,292
If if the media and

332
00:09:03,376 --> 00:09:04,585
everybody expected

333
00:09:04,585 --> 00:09:06,712
that inflation was coming in lower

334
00:09:06,796 --> 00:09:07,880
this month,

335
00:09:07,964 --> 00:09:09,006
people would be freaking out

336
00:09:09,006 --> 00:09:11,008
about this particular report.

337
00:09:11,092 --> 00:09:11,926
Everybody expected

338
00:09:11,926 --> 00:09:12,635
that inflation was going

339
00:09:12,635 --> 00:09:14,929
to come out a lot higher than it did.

340
00:09:15,012 --> 00:09:16,847
And so things actually were better

341
00:09:16,931 --> 00:09:18,349
than expectations.

342
00:09:18,432 --> 00:09:19,809
And so a lot of times

343
00:09:19,809 --> 00:09:20,685
when you look at the media,

344
00:09:20,685 --> 00:09:21,227
the media

345
00:09:21,310 --> 00:09:23,437
is reporting relative to expectations.

346
00:09:23,479 --> 00:09:26,232
If this is better than expectations,

347
00:09:26,315 --> 00:09:27,191
well, it's hard

348
00:09:27,191 --> 00:09:28,484
to find an alarming headline,

349
00:09:28,484 --> 00:09:30,403
even if they might want to.

350
00:09:30,486 --> 00:09:32,989
And I think at the end of the day, again,

351
00:09:33,072 --> 00:09:33,948
if you dig in

352
00:09:33,948 --> 00:09:35,908
and I probably dug a little bit harder

353
00:09:35,908 --> 00:09:38,160
than most people, you can find good.

354
00:09:38,160 --> 00:09:39,912
You can find bad.

355
00:09:39,996 --> 00:09:41,789
But at the end of the day,

356
00:09:41,872 --> 00:09:43,541
I think a lot of us were expecting

357
00:09:43,541 --> 00:09:45,459
a much worse inflation rate,

358
00:09:45,543 --> 00:09:47,003
and it wasn't that bad.

359
00:09:47,003 --> 00:09:49,005
And so I was not at all.

360
00:09:49,046 --> 00:09:49,422
Yeah,

361
00:09:49,463 --> 00:09:50,381
I don't think

362
00:09:50,381 --> 00:09:53,384
I mean, again, services is is a scary

363
00:09:53,634 --> 00:09:55,094
certainly like the, the

364
00:09:55,094 --> 00:09:55,970
the big box store

365
00:09:55,970 --> 00:09:59,348
commodities is not good but food

366
00:09:59,765 --> 00:10:01,183
I mean food away from home was up

367
00:10:01,183 --> 00:10:02,560
but food food was down.

368
00:10:02,560 --> 00:10:04,562
And I think that's that's amazing.

369
00:10:04,562 --> 00:10:05,980
I think nobody expected that.

370
00:10:05,980 --> 00:10:08,149
So that was a great thing to see.

371
00:10:08,232 --> 00:10:09,442
And so yeah,

372
00:10:09,525 --> 00:10:10,818
there were it was,

373
00:10:10,901 --> 00:10:11,902
it was a lot of good, a

374
00:10:11,902 --> 00:10:13,070
lot of bad in this report.

375
00:10:14,196 --> 00:10:15,740
Jay, was food down or was the

376
00:10:15,823 --> 00:10:17,241
rate of increase lower?

377
00:10:17,325 --> 00:10:20,328
So, food was actually let's see,

378
00:10:20,745 --> 00:10:23,080
like my, my eggs were cheaper this month

379
00:10:23,080 --> 00:10:24,081
and they were last month.

380
00:10:24,165 --> 00:10:25,374
My eggs were cheaper

381
00:10:25,374 --> 00:10:27,501
because my chickens are 11 points

382
00:10:27,585 --> 00:10:29,170
less because your coyote population's

383
00:10:29,170 --> 00:10:30,671
going down. So. Yeah.

384
00:10:30,755 --> 00:10:32,173
Negative, negative.

385
00:10:32,256 --> 00:10:32,548
Oh. No.

386
00:10:32,548 --> 00:10:34,634
I'm sorry. Food was was zero.

387
00:10:34,634 --> 00:10:36,510
So there was no inflation in food

388
00:10:36,510 --> 00:10:37,637
this month.

389
00:10:37,720 --> 00:10:39,096
Food at home was down.

390
00:10:39,138 --> 00:10:40,181
So yeah, food at home

391
00:10:40,181 --> 00:10:41,641
was down a 10th of a percent.

392
00:10:41,641 --> 00:10:42,516
So literally

393
00:10:42,600 --> 00:10:44,894
just seems to be a reoccurring thing

394
00:10:44,977 --> 00:10:46,103
with this inflation.

395
00:10:46,103 --> 00:10:49,732
It's like we were told how the economy

396
00:10:49,815 --> 00:10:50,941
was going to implode

397
00:10:50,941 --> 00:10:52,276
and they've been screaming

398
00:10:52,360 --> 00:10:53,819
and it just keeps missing.

399
00:10:53,819 --> 00:10:57,073
Like it's like Miss Mess mess.

400
00:10:57,156 --> 00:10:58,616
It's better and better

401
00:10:58,616 --> 00:11:00,159
every single month.

402
00:11:00,242 --> 00:11:01,994
And it's so frustrating

403
00:11:01,994 --> 00:11:03,204
to listen to the fed

404
00:11:03,287 --> 00:11:05,164
and everybody else be like, oh,

405
00:11:05,164 --> 00:11:08,167
we can't do anything because this is

406
00:11:08,626 --> 00:11:10,086
happening and

407
00:11:11,295 --> 00:11:13,714
it's not, and we're not getting it.

408
00:11:13,714 --> 00:11:15,257
It's not that it won't,

409
00:11:15,341 --> 00:11:17,968
but the driver of these

410
00:11:17,968 --> 00:11:20,971
excuses are inflation and labor markets.

411
00:11:21,430 --> 00:11:21,972
Well, when you

412
00:11:22,056 --> 00:11:23,349
when you say things are better

413
00:11:23,349 --> 00:11:23,766
every month,

414
00:11:23,766 --> 00:11:25,142
they're not they've actually been worse

415
00:11:25,142 --> 00:11:26,060
every month.

416
00:11:26,143 --> 00:11:28,354
Not than what we've expected.

417
00:11:28,437 --> 00:11:29,563
Well and then again

418
00:11:29,563 --> 00:11:31,107
that's that's expectation.

419
00:11:31,190 --> 00:11:31,982
That's expectation

420
00:11:31,982 --> 00:11:32,775
that that goal

421
00:11:32,775 --> 00:11:34,318
basically of

422
00:11:34,402 --> 00:11:37,113
we're like basic right at the fed.

423
00:11:37,196 --> 00:11:40,032
And if you take out literally housing

424
00:11:40,116 --> 00:11:41,867
like you're there.

425
00:11:41,951 --> 00:11:45,830
So it's we are I mean we are

426
00:11:45,913 --> 00:11:47,665
better than anybody talk

427
00:11:47,665 --> 00:11:49,875
Jada's super core strip housing.

428
00:11:49,959 --> 00:11:51,711
Super core strips housing. Yes ma'am.

429
00:11:51,794 --> 00:11:53,963
So I it just once again

430
00:11:53,963 --> 00:11:57,758
it's like there's these excuses.

431
00:11:57,842 --> 00:11:59,135
It's not

432
00:11:59,218 --> 00:12:03,597
that the economy is not doing horrible.

433
00:12:03,681 --> 00:12:07,685
We don't have inflation issues

434
00:12:08,602 --> 00:12:10,771
and we're still doing all

435
00:12:10,813 --> 00:12:11,647
these things and tariffs.

436
00:12:11,647 --> 00:12:14,108
Yet these are the excuses that

437
00:12:14,191 --> 00:12:15,693
keep getting given.

438
00:12:15,776 --> 00:12:17,778
And it's I think everybody's being told

439
00:12:17,778 --> 00:12:19,029
oh it it will come though.

440
00:12:19,029 --> 00:12:20,114
But it it is guaranteed

441
00:12:20,114 --> 00:12:20,740
it's going to come.

442
00:12:20,740 --> 00:12:22,116
And we've been told that all year

443
00:12:22,116 --> 00:12:24,285
and it just hasn't never happened.

444
00:12:24,368 --> 00:12:25,703
Yeah I still think it's too early.

445
00:12:25,786 --> 00:12:27,204
I mean we say this almost every week,

446
00:12:27,204 --> 00:12:28,330
say it's too early

447
00:12:28,330 --> 00:12:29,206
to tell any of this stuff.

448
00:12:29,206 --> 00:12:30,708
So anyone who acts like they know

449
00:12:30,708 --> 00:12:31,167
for sure,

450
00:12:31,167 --> 00:12:32,710
there are some indicators, AJ said.

451
00:12:32,710 --> 00:12:33,669
Some of these things

452
00:12:33,669 --> 00:12:35,838
that come from China, Vietnam

453
00:12:35,921 --> 00:12:37,089
and things like that.

454
00:12:37,089 --> 00:12:38,299
We are seeing some inflation,

455
00:12:38,299 --> 00:12:41,302
but we also are seeing disinflation

456
00:12:41,469 --> 00:12:43,220
or in in other things.

457
00:12:43,220 --> 00:12:44,305
So it's like maybe

458
00:12:44,305 --> 00:12:45,306
this thing could offset

459
00:12:45,306 --> 00:12:46,724
or maybe that's just

460
00:12:46,724 --> 00:12:47,933
those are the first things to act.

461
00:12:47,933 --> 00:12:48,851
We don't really know.

462
00:12:48,851 --> 00:12:50,060
And honestly,

463
00:12:50,144 --> 00:12:50,644
as I said,

464
00:12:50,644 --> 00:12:51,854
we've already spent more time

465
00:12:51,854 --> 00:12:52,813
talking about it right now

466
00:12:52,813 --> 00:12:55,357
than the entire media.

467
00:12:55,441 --> 00:12:55,816
Has.

468
00:12:55,816 --> 00:12:56,442
I'm like,

469
00:12:56,525 --> 00:12:57,151
you asked me

470
00:12:57,151 --> 00:12:57,943
which sites

471
00:12:57,943 --> 00:12:59,278
I'm on Fox News right now,

472
00:12:59,278 --> 00:13:00,696
and the headlines

473
00:13:00,780 --> 00:13:03,157
above inflation, I can't even find it.

474
00:13:03,157 --> 00:13:04,492
Are the former

475
00:13:04,492 --> 00:13:05,826
first daughter and marriage

476
00:13:05,826 --> 00:13:07,912
with social media post

477
00:13:07,995 --> 00:13:10,956
Chiefs legends reveal how,

478
00:13:11,123 --> 00:13:12,208
Travis Kelsey's love

479
00:13:12,208 --> 00:13:13,918
life was before Taylor Swift.

480
00:13:13,918 --> 00:13:14,293
This is all

481
00:13:14,335 --> 00:13:16,962
before the inflation report, so,

482
00:13:17,046 --> 00:13:18,464
no one's really talking about it.

483
00:13:18,464 --> 00:13:21,592
When 2025 started, inflation

484
00:13:21,675 --> 00:13:24,678
has gone down and stayed below 3%.

485
00:13:25,179 --> 00:13:26,347
It's gone up,

486
00:13:27,598 --> 00:13:28,557
a little in the

487
00:13:28,557 --> 00:13:29,892
spring, you know, but

488
00:13:29,975 --> 00:13:32,728
can we just say that core CPI at 3.1.

489
00:13:32,728 --> 00:13:33,479
So once again

490
00:13:33,479 --> 00:13:34,605
you can kind of pick and choose

491
00:13:34,605 --> 00:13:35,856
which ones I'm looking at.

492
00:13:35,856 --> 00:13:36,941
I'm talking about the CPI.

493
00:13:37,024 --> 00:13:37,942
Yeah. Yeah.

494
00:13:37,942 --> 00:13:39,527
So most

495
00:13:39,527 --> 00:13:40,611
I mean the feds always said

496
00:13:40,611 --> 00:13:42,071
they care about core right.

497
00:13:42,071 --> 00:13:43,489
But they also would say PCG

498
00:13:43,572 --> 00:13:44,323
which is calculate

499
00:13:44,323 --> 00:13:44,990
a little bit different.

500
00:13:44,990 --> 00:13:46,659
And we still have yet

501
00:13:46,659 --> 00:13:47,827
that's to your point.

502
00:13:47,827 --> 00:13:50,454
That's still below three as of right now.

503
00:13:50,538 --> 00:13:53,040
It could change in the end of the month.

504
00:13:53,123 --> 00:13:55,125
But we still have two more reports.

505
00:13:55,125 --> 00:13:56,001
So with that,

506
00:13:56,085 --> 00:13:56,418
you know that

507
00:13:56,460 --> 00:13:57,670
we still have a lot that can happen

508
00:13:57,670 --> 00:13:59,088
before the next fed meeting.

509
00:13:59,171 --> 00:14:00,923
But what we care about, obviously,

510
00:14:00,923 --> 00:14:02,383
is how this is affecting

511
00:14:02,383 --> 00:14:03,300
what the fed is going to do

512
00:14:03,300 --> 00:14:04,635
and more importantly,

513
00:14:04,718 --> 00:14:06,345
expectations going forward. Right.

514
00:14:06,345 --> 00:14:08,180
Like our our interest rates

515
00:14:08,264 --> 00:14:09,265
aren't just most

516
00:14:09,265 --> 00:14:10,432
people think interest rates

517
00:14:10,516 --> 00:14:11,475
are just the fed,

518
00:14:11,475 --> 00:14:13,185
but more important than the

519
00:14:13,227 --> 00:14:14,353
what the fed does is

520
00:14:14,353 --> 00:14:15,813
the expectations of what the fed

521
00:14:15,813 --> 00:14:17,565
is going to do after next meeting,

522
00:14:17,565 --> 00:14:18,732
and how many cuts are going to come

523
00:14:18,732 --> 00:14:19,608
after that.

524
00:14:19,692 --> 00:14:22,611
And the forward curve, as you might say.

525
00:14:22,695 --> 00:14:25,322
And so AJ, I'll throw it back to you.

526
00:14:25,406 --> 00:14:25,656
Like

527
00:14:26,657 --> 00:14:27,575
how do you

528
00:14:27,658 --> 00:14:28,659
do you think this

529
00:14:28,659 --> 00:14:32,663
is a too big of a whiplash reaction for,

530
00:14:32,830 --> 00:14:34,123
you know, as we said,

531
00:14:34,206 --> 00:14:36,542
what was it JPMorgan said for cuts,

532
00:14:36,625 --> 00:14:38,252
which like

533
00:14:38,335 --> 00:14:40,129
a lot of people were calling for zero

534
00:14:40,212 --> 00:14:41,297
all of a sudden one jobs

535
00:14:41,297 --> 00:14:43,007
report we're going to for cuts,

536
00:14:43,090 --> 00:14:44,216
which would obviously be great

537
00:14:44,216 --> 00:14:46,010
for us as real estate investors.

538
00:14:46,010 --> 00:14:47,595
That means rates are coming down.

539
00:14:47,678 --> 00:14:49,597
But is that

540
00:14:49,680 --> 00:14:51,015
do you think that's going to happen?

541
00:14:51,015 --> 00:14:51,640
And if it does,

542
00:14:51,640 --> 00:14:53,142
like what's the effect on us

543
00:14:53,142 --> 00:14:55,394
as real estate investors?

544
00:14:55,477 --> 00:14:56,645
Well, I mean, I think, you know,

545
00:14:56,645 --> 00:14:58,689
kind of like what was already discussed.

546
00:14:58,689 --> 00:14:59,565
I think everybody's

547
00:14:59,565 --> 00:15:01,400
kind of assuming cuts are happening.

548
00:15:01,483 --> 00:15:04,486
JP Morgan has for I think,

549
00:15:04,987 --> 00:15:07,406
they needed labor and inflation.

550
00:15:07,406 --> 00:15:08,616
That's that's what everybody's

551
00:15:08,616 --> 00:15:09,366
been waiting on.

552
00:15:09,366 --> 00:15:12,494
So and I mean inflation like we talked

553
00:15:12,578 --> 00:15:13,162
about is

554
00:15:14,121 --> 00:15:15,122
it's nothing kind of a

555
00:15:15,122 --> 00:15:17,541
nothing burger there.

556
00:15:17,625 --> 00:15:19,585
And then labor markets

557
00:15:19,585 --> 00:15:21,795
have softened and eased.

558
00:15:21,879 --> 00:15:24,131
So it was like we talked about last week.

559
00:15:24,131 --> 00:15:24,924
It wasn't strong.

560
00:15:24,924 --> 00:15:26,842
So I think that they have a path.

561
00:15:26,842 --> 00:15:27,968
It's whether they're going to

562
00:15:28,052 --> 00:15:28,928
take it or not.

563
00:15:28,928 --> 00:15:31,931
But I mean yeah of like we talked about

564
00:15:32,097 --> 00:15:33,432
yeah I think they're going to lower it.

565
00:15:33,432 --> 00:15:34,516
And that's what the real estate

566
00:15:34,516 --> 00:15:35,184
investors need.

567
00:15:35,184 --> 00:15:37,811
We need lower interest rates.

568
00:15:37,811 --> 00:15:40,105
We need to be able to refinance and buy.

569
00:15:40,105 --> 00:15:42,107
And I think JPMorgan's

570
00:15:42,191 --> 00:15:42,942
four points

571
00:15:42,942 --> 00:15:44,026
and everybody else is saying

572
00:15:44,026 --> 00:15:45,903
it's just how many how many cuts.

573
00:15:45,903 --> 00:15:47,571
Right.

574
00:15:47,655 --> 00:15:50,115
I think we're going to be in

575
00:15:50,115 --> 00:15:50,783
a news cycle.

576
00:15:50,783 --> 00:15:53,369
Oh, like we're in an easing cycle now.

577
00:15:53,452 --> 00:15:54,745
Not a tight tightening one.

578
00:15:54,745 --> 00:15:56,747
Yeah, but you got a you take in.

579
00:15:56,830 --> 00:15:57,456
Let me ask you,

580
00:15:57,539 --> 00:15:59,917
JJ, is your contention in your position

581
00:15:59,917 --> 00:16:03,045
that if the fed lowers the overnight rate

582
00:16:03,128 --> 00:16:04,380
that's going to lower the ten year,

583
00:16:04,380 --> 00:16:06,048
which is really what affects real estate.

584
00:16:06,131 --> 00:16:07,091
Do you think the correlation

585
00:16:07,091 --> 00:16:07,967
there's pretty strong.

586
00:16:07,967 --> 00:16:09,426
Because if you look at the ten year

587
00:16:09,426 --> 00:16:10,010
over the last,

588
00:16:10,010 --> 00:16:11,387
as you guys all know, it's

589
00:16:11,387 --> 00:16:12,471
gone down a lot.

590
00:16:12,554 --> 00:16:12,846
You know,

591
00:16:12,846 --> 00:16:15,849
I think whatever 5 to 10% in the last

592
00:16:16,100 --> 00:16:17,351
I don't know, 30 days or whatever.

593
00:16:17,351 --> 00:16:18,894
It's it's come down significantly. Right.

594
00:16:18,894 --> 00:16:19,770
There's been a lot of buying

595
00:16:19,770 --> 00:16:20,729
at treasuries over the last,

596
00:16:20,813 --> 00:16:22,189
you know, 2 or 3 weeks.

597
00:16:22,272 --> 00:16:23,315
So the question is, is the fed

598
00:16:23,315 --> 00:16:24,066
just catching up.

599
00:16:24,066 --> 00:16:24,566
And you know,

600
00:16:24,650 --> 00:16:26,193
this is the ten years leading the fed.

601
00:16:26,193 --> 00:16:27,194
The fed is going to catch up.

602
00:16:27,277 --> 00:16:29,738
Or do you think the fed reducing rates

603
00:16:29,738 --> 00:16:30,823
by 25 basis

604
00:16:30,823 --> 00:16:31,615
point is going

605
00:16:31,615 --> 00:16:32,992
to really move the ten year. Well yeah.

606
00:16:33,033 --> 00:16:34,827
Because right now we have the

607
00:16:34,910 --> 00:16:36,161
we have on the table

608
00:16:36,161 --> 00:16:38,122
that basically the fed

609
00:16:38,205 --> 00:16:39,623
like isn't going to cut at all.

610
00:16:39,623 --> 00:16:42,626
Like they are like in inflation bulls.

611
00:16:43,043 --> 00:16:44,503
And they believe that,

612
00:16:44,503 --> 00:16:45,379
hey we can't

613
00:16:45,379 --> 00:16:47,047
we can't be cutting into this

614
00:16:47,047 --> 00:16:50,050
this future versus if they just come out

615
00:16:50,134 --> 00:16:51,593
and like once they break this

616
00:16:51,593 --> 00:16:54,596
like like dry spell of cuts

617
00:16:54,680 --> 00:16:57,016
and do one cut that kind of like eases

618
00:16:57,016 --> 00:16:58,934
everyone's mind that,

619
00:16:58,934 --> 00:17:00,436
okay, they are willing to cut

620
00:17:00,436 --> 00:17:01,311
if they're presented

621
00:17:01,311 --> 00:17:02,813
with enough information.

622
00:17:02,896 --> 00:17:05,315
And I feel like that will bring it down.

623
00:17:05,315 --> 00:17:06,942
But it's also expectation is right.

624
00:17:06,942 --> 00:17:08,110
There's already a 90%

625
00:17:08,110 --> 00:17:09,528
expectation of a cut.

626
00:17:09,611 --> 00:17:10,904
So if they actually do cut,

627
00:17:10,946 --> 00:17:12,072
it's not going to change anything.

628
00:17:12,072 --> 00:17:13,365
How is that could affect the ten year?

629
00:17:13,365 --> 00:17:14,116
That's the real question.

630
00:17:14,116 --> 00:17:14,950
Well that's what I'm saying.

631
00:17:14,950 --> 00:17:16,827
There's a 90% chance right now

632
00:17:16,827 --> 00:17:17,661
expectations.

633
00:17:17,661 --> 00:17:20,622
The market is expecting a 90% chance

634
00:17:20,706 --> 00:17:22,875
of a cut of the fed of the overnight

635
00:17:22,875 --> 00:17:24,835
of the Fed's overnight rate. Right.

636
00:17:24,835 --> 00:17:25,669
So that's a short term.

637
00:17:25,669 --> 00:17:26,170
Like what does that have

638
00:17:26,170 --> 00:17:27,129
to do with the tenure.

639
00:17:27,212 --> 00:17:30,215
Because if they just keep with what

640
00:17:30,340 --> 00:17:32,468
the expectations are the 90%

641
00:17:32,468 --> 00:17:34,094
and they cut the ten year

642
00:17:34,178 --> 00:17:35,679
going to be barely affected at all

643
00:17:35,679 --> 00:17:37,431
because that's the market expectations,

644
00:17:37,431 --> 00:17:38,265
is that they cut

645
00:17:38,348 --> 00:17:39,600
what would affect the ten years

646
00:17:39,600 --> 00:17:40,726
if they came out

647
00:17:40,809 --> 00:17:42,186
and they went against what

648
00:17:42,186 --> 00:17:43,479
the expectations of the market,

649
00:17:43,479 --> 00:17:44,521
or even if

650
00:17:44,605 --> 00:17:46,190
the market expectations

651
00:17:46,190 --> 00:17:47,316
came down in that,

652
00:17:47,316 --> 00:17:48,192
you know, somewhere

653
00:17:48,192 --> 00:17:50,569
in the 40 to 60% range,

654
00:17:50,652 --> 00:17:52,613
then you'll see bigger swings

655
00:17:52,696 --> 00:17:54,031
based off of what the fed does.

656
00:17:54,031 --> 00:17:55,866
But if there's if we're getting into 90

657
00:17:55,866 --> 00:17:57,284
plus percent chance

658
00:17:57,367 --> 00:17:58,535
like a fed cut doesn't

659
00:17:58,535 --> 00:18:00,287
change the tenure at all,

660
00:18:00,370 --> 00:18:00,996
I just don't think.

661
00:18:00,996 --> 00:18:01,789
And that's why

662
00:18:01,872 --> 00:18:02,790
I don't want to take it away from me.

663
00:18:02,790 --> 00:18:04,750
I was just questioning

664
00:18:04,833 --> 00:18:05,501
just questioning,

665
00:18:05,501 --> 00:18:06,710
just kind of as a discussion point.

666
00:18:06,710 --> 00:18:07,961
Like I'm questioning

667
00:18:08,045 --> 00:18:09,546
whether the ten year

668
00:18:09,546 --> 00:18:11,715
is affected by the fed cutter

669
00:18:11,715 --> 00:18:12,883
because a lot of people argue

670
00:18:12,883 --> 00:18:13,634
and I'm one of them,

671
00:18:13,634 --> 00:18:14,927
that it doesn't, that there's

672
00:18:15,010 --> 00:18:15,427
first of all,

673
00:18:15,427 --> 00:18:17,096
the ten year treasury

674
00:18:17,096 --> 00:18:18,680
market is one of the deepest

675
00:18:18,680 --> 00:18:20,849
global markets around.

676
00:18:20,933 --> 00:18:22,101
And I've actually seen graphs

677
00:18:22,101 --> 00:18:23,143
where if you look at the

678
00:18:23,227 --> 00:18:24,228
the fed funds

679
00:18:24,228 --> 00:18:26,313
cut rate, rate rate going up and down

680
00:18:26,396 --> 00:18:27,648
doesn't strongly correlate

681
00:18:27,648 --> 00:18:28,607
with the ten year.

682
00:18:28,690 --> 00:18:31,151
And so the short term, the short term.

683
00:18:31,151 --> 00:18:33,362
No. But the long term. Yes.

684
00:18:33,362 --> 00:18:34,571
And the reason for it

685
00:18:34,571 --> 00:18:37,533
is that it's the same pressures

686
00:18:37,616 --> 00:18:38,742
on the thing

687
00:18:38,742 --> 00:18:41,578
that actually controls the ten year

688
00:18:41,578 --> 00:18:42,538
or the other,

689
00:18:42,538 --> 00:18:45,290
the other expiration dates in bonds

690
00:18:45,374 --> 00:18:46,542
as drives

691
00:18:46,542 --> 00:18:48,877
the fed to increase or cut rates

692
00:18:48,961 --> 00:18:51,130
when the economy gets soft.

693
00:18:51,213 --> 00:18:52,965
The Fed's going to decrease rates.

694
00:18:53,048 --> 00:18:54,800
Well, when the economy gets soft,

695
00:18:54,800 --> 00:18:56,218
investors are going to move money

696
00:18:56,218 --> 00:18:57,761
out of the stock market into bonds,

697
00:18:57,761 --> 00:18:59,555
which is going to drive yields down.

698
00:18:59,638 --> 00:19:02,516
And so it's it's not that this

699
00:19:02,599 --> 00:19:03,725
is that the fed lowering it

700
00:19:03,725 --> 00:19:06,228
or is the economy being soft lowering it.

701
00:19:06,311 --> 00:19:06,770
Exactly.

702
00:19:06,770 --> 00:19:08,438
It's the it's the economy being soft.

703
00:19:08,438 --> 00:19:09,565
The economy being soft

704
00:19:09,565 --> 00:19:11,233
gets the fed to lower their rate.

705
00:19:11,233 --> 00:19:12,526
The economy being soft

706
00:19:12,526 --> 00:19:14,820
gets the other rates to go down.

707
00:19:14,903 --> 00:19:16,780
And so they both go down

708
00:19:16,780 --> 00:19:17,865
and it feels like

709
00:19:17,865 --> 00:19:19,950
the Fed's controlling it.

710
00:19:20,033 --> 00:19:21,243
But the reality is

711
00:19:21,243 --> 00:19:23,620
and a lot of economists would argue this

712
00:19:23,620 --> 00:19:25,497
and I don't know,

713
00:19:25,497 --> 00:19:27,124
I've never done the regression analysis

714
00:19:27,124 --> 00:19:28,917
to see if it's causation or correlation.

715
00:19:28,917 --> 00:19:30,586
But a lot of,

716
00:19:30,669 --> 00:19:31,837
economists would argue

717
00:19:31,920 --> 00:19:33,380
that the fed doesn't

718
00:19:33,380 --> 00:19:34,590
control the longer end.

719
00:19:34,590 --> 00:19:35,424
It just so happens

720
00:19:35,507 --> 00:19:36,675
the longer end of the curve,

721
00:19:36,675 --> 00:19:38,427
the ten year and the fed

722
00:19:38,510 --> 00:19:39,720
are both being controlled

723
00:19:39,720 --> 00:19:40,679
by the same thing,

724
00:19:40,762 --> 00:19:43,515
inflation and the economy. Right.

725
00:19:43,515 --> 00:19:45,100
But there is like

726
00:19:45,184 --> 00:19:46,894
if you look go and look back.

727
00:19:46,977 --> 00:19:49,980
And if you ever look at drastic swings

728
00:19:50,355 --> 00:19:52,065
in the expectations of rate cuts.

729
00:19:52,065 --> 00:19:52,983
So we just saw one.

730
00:19:52,983 --> 00:19:54,193
Obviously it was only like

731
00:19:54,276 --> 00:19:55,611
it was right around.

732
00:19:55,694 --> 00:19:56,820
It was bouncing back

733
00:19:56,820 --> 00:19:58,280
between 40 and 6, but it was

734
00:19:58,280 --> 00:19:58,906
it was

735
00:19:58,989 --> 00:20:01,158
basically a coin flip for September

736
00:20:01,241 --> 00:20:03,368
before that jobs report.

737
00:20:03,452 --> 00:20:05,245
And all of a sudden

738
00:20:05,329 --> 00:20:06,830
the jobs report comes out.

739
00:20:06,914 --> 00:20:07,748
The expectation

740
00:20:07,748 --> 00:20:09,374
for a cut goes from coin

741
00:20:09,374 --> 00:20:11,126
flip to 90% chance.

742
00:20:11,210 --> 00:20:12,753
And what happens?

743
00:20:12,836 --> 00:20:14,504
The ten year Treasury

744
00:20:14,588 --> 00:20:17,507
goes down by 20 Bips or whatever it was.

745
00:20:17,591 --> 00:20:18,133
And so

746
00:20:18,133 --> 00:20:19,176
and if you look back

747
00:20:19,176 --> 00:20:21,720
to any major movements

748
00:20:21,720 --> 00:20:24,640
in the expectations for rate cuts,

749
00:20:24,723 --> 00:20:26,558
then that has major movements

750
00:20:26,558 --> 00:20:27,601
in the ten year Treasury.

751
00:20:27,601 --> 00:20:29,144
So like you could

752
00:20:29,144 --> 00:20:30,562
you could say, okay, they don't

753
00:20:30,646 --> 00:20:31,897
they don't affect each other.

754
00:20:31,897 --> 00:20:32,814
But at the same time,

755
00:20:32,814 --> 00:20:34,691
the expectations for the rate cuts

756
00:20:34,691 --> 00:20:35,525
is what affects it.

757
00:20:35,525 --> 00:20:36,193
So

758
00:20:36,276 --> 00:20:37,069
and as they're both

759
00:20:37,069 --> 00:20:38,111
reacting to the same thing,

760
00:20:38,111 --> 00:20:40,572
they're both reacting to a supposedly

761
00:20:40,572 --> 00:20:41,406
bad jobs report,

762
00:20:41,406 --> 00:20:42,908
which means we have a weakening economy.

763
00:20:42,908 --> 00:20:44,159
And that's what's really moving

764
00:20:44,159 --> 00:20:44,618
the ten year,

765
00:20:44,618 --> 00:20:46,203
not the fed expectation of what

766
00:20:46,203 --> 00:20:46,745
the fed is going to do.

767
00:20:46,745 --> 00:20:47,120
It's like they

768
00:20:47,120 --> 00:20:49,957
the the economy's not doing great jobs.

769
00:20:50,040 --> 00:20:51,333
Again, it's just one report.

770
00:20:51,333 --> 00:20:52,125
But if suddenly,

771
00:20:52,209 --> 00:20:52,542
you know,

772
00:20:52,542 --> 00:20:54,044
the economy's just not doing great,

773
00:20:54,044 --> 00:20:55,003
then that's

774
00:20:55,087 --> 00:20:55,712
part of the reason

775
00:20:55,712 --> 00:20:56,421
why the ten year move

776
00:20:56,421 --> 00:20:57,047
is part of the reason

777
00:20:57,130 --> 00:21:00,509
it went to 90% because investor investors

778
00:21:00,592 --> 00:21:01,343
were reacting

779
00:21:01,343 --> 00:21:04,346
a certain way to other news.

780
00:21:04,596 --> 00:21:08,100
And so it's not that that it but

781
00:21:08,350 --> 00:21:09,393
the ten year dropped

782
00:21:09,393 --> 00:21:11,270
because it moved to 90%.

783
00:21:11,353 --> 00:21:12,854
The same thing that moved the ten year

784
00:21:12,854 --> 00:21:13,814
down 20 Bips

785
00:21:13,814 --> 00:21:16,817
and moved the likelihood of a rate cut up

786
00:21:16,900 --> 00:21:18,068
was the same first.

787
00:21:18,151 --> 00:21:19,861
So AJ, do we do we believe them.

788
00:21:19,945 --> 00:21:21,029
Do we think that's coming.

789
00:21:21,113 --> 00:21:22,531
Yeah I think

790
00:21:22,614 --> 00:21:24,491
pretty much like either

791
00:21:24,533 --> 00:21:25,659
how many sources there's

792
00:21:25,742 --> 00:21:26,868
I think

793
00:21:26,952 --> 00:21:29,413
it's a market consensus right now.

794
00:21:29,496 --> 00:21:32,624
I think it's yeah going to happen again.

795
00:21:32,708 --> 00:21:33,292
These happen

796
00:21:34,418 --> 00:21:34,876
is it

797
00:21:34,876 --> 00:21:36,253
is it kind of

798
00:21:36,336 --> 00:21:38,005
is it going to be too little too late?

799
00:21:38,005 --> 00:21:38,338
I guess

800
00:21:38,338 --> 00:21:38,797
is the thing

801
00:21:38,797 --> 00:21:41,341
because there's been this, this feeling

802
00:21:41,425 --> 00:21:42,676
in commercial real estate

803
00:21:42,676 --> 00:21:44,094
that there's a lot of people

804
00:21:44,136 --> 00:21:45,595
been hanging on. Right.

805
00:21:45,679 --> 00:21:46,847
They've been saying, okay,

806
00:21:46,847 --> 00:21:47,681
if we just hang on

807
00:21:47,681 --> 00:21:48,890
till we see these rate cuts

808
00:21:48,890 --> 00:21:50,058
until until they start,

809
00:21:50,142 --> 00:21:51,435
when they start cutting rates

810
00:21:51,435 --> 00:21:53,145
again, everything's going to be fine.

811
00:21:53,228 --> 00:21:54,896
And, you know, back in 2024

812
00:21:54,896 --> 00:21:56,356
it was the survive to 25.

813
00:21:56,356 --> 00:21:57,316
And what was Morrison's

814
00:21:57,316 --> 00:22:00,235
version of this persist to 26 or whatever

815
00:22:00,319 --> 00:22:02,362
are we actually is it hasn't come

816
00:22:02,362 --> 00:22:04,281
the persisted 26 is is

817
00:22:04,364 --> 00:22:06,283
if you have made it this far,

818
00:22:06,366 --> 00:22:07,492
you're going to be fine.

819
00:22:07,576 --> 00:22:09,911
It's going to be heaven in 27.

820
00:22:09,995 --> 00:22:11,079
Yeah.

821
00:22:11,163 --> 00:22:13,206
I think the first of all,

822
00:22:13,206 --> 00:22:14,291
I think delinquency.

823
00:22:14,291 --> 00:22:16,918
Well, I don't think delinquencies are up

824
00:22:17,002 --> 00:22:17,794
their way up.

825
00:22:19,546 --> 00:22:20,922
There's only so long

826
00:22:20,922 --> 00:22:22,591
that people could put it off.

827
00:22:22,674 --> 00:22:26,136
And that is the usually the end of a

828
00:22:26,470 --> 00:22:27,929
that is a key indicator

829
00:22:27,929 --> 00:22:30,932
of an end of a cyclical cycle.

830
00:22:31,641 --> 00:22:34,394
It's the finally people

831
00:22:34,478 --> 00:22:36,772
letting go, like the hope's gone,

832
00:22:36,855 --> 00:22:37,564
they're dropping off.

833
00:22:37,564 --> 00:22:39,399
So we've seen large defaults

834
00:22:39,399 --> 00:22:41,360
that can't just keep bleeding.

835
00:22:41,443 --> 00:22:44,196
And that's what's starting to happen.

836
00:22:44,279 --> 00:22:47,491
And the fed reversing course.

837
00:22:48,158 --> 00:22:49,785
Right. That's the start.

838
00:22:49,868 --> 00:22:52,454
But it's not the end of the defaults

839
00:22:52,454 --> 00:22:53,288
necessarily

840
00:22:53,288 --> 00:22:55,415
because they don't just drop rates

841
00:22:55,415 --> 00:22:57,959
and it goes down to where they need it.

842
00:22:58,043 --> 00:22:59,920
What generally happens is

843
00:22:59,920 --> 00:23:01,630
you know we move through.

844
00:23:01,630 --> 00:23:03,840
So you as the capital shifts,

845
00:23:03,924 --> 00:23:05,467
as interest rates come down,

846
00:23:05,550 --> 00:23:07,636
you still have to entice buyers

847
00:23:07,636 --> 00:23:08,261
to the market,

848
00:23:08,261 --> 00:23:10,389
but you're still having the problem

849
00:23:10,389 --> 00:23:12,516
with defaults just changing comps.

850
00:23:12,599 --> 00:23:15,268
It changes the way that banks loan money.

851
00:23:15,352 --> 00:23:16,186
So it

852
00:23:16,186 --> 00:23:19,606
it takes time, but it is almost always

853
00:23:20,315 --> 00:23:22,609
the defaults are the start

854
00:23:22,692 --> 00:23:24,236
of the new cycle.

855
00:23:24,319 --> 00:23:25,612
It's just a lagger.

856
00:23:26,738 --> 00:23:27,948
And so

857
00:23:27,948 --> 00:23:28,615
I think that

858
00:23:28,615 --> 00:23:31,618
that's going to persist with that.

859
00:23:31,827 --> 00:23:34,079
I think we're going to see the defaults

860
00:23:34,162 --> 00:23:36,706
as they've they've really gone up.

861
00:23:36,790 --> 00:23:38,875
And I think that that will continue

862
00:23:38,875 --> 00:23:40,877
to happen through the rest of the year.

863
00:23:40,961 --> 00:23:43,964
But next year and on its

864
00:23:45,632 --> 00:23:47,259
I think and I think JP Morgan

865
00:23:47,259 --> 00:23:47,801
lots of other

866
00:23:47,884 --> 00:23:48,885
that Fed's now

867
00:23:48,885 --> 00:23:51,555
going to move into more of an easing.

868
00:23:51,638 --> 00:23:54,141
But it's not going to be dramatic.

869
00:23:54,224 --> 00:23:55,308
It just it's

870
00:23:55,392 --> 00:23:55,934
it won't

871
00:23:56,017 --> 00:23:57,018
as long as the economy's

872
00:23:57,018 --> 00:23:58,061
doing as good as it is

873
00:23:58,061 --> 00:24:00,355
it can't be dramatic.

874
00:24:00,439 --> 00:24:03,191
You can't I mean inflation

875
00:24:03,191 --> 00:24:04,192
isn't

876
00:24:04,276 --> 00:24:05,485
a problem right now,

877
00:24:05,485 --> 00:24:06,570
but that's because interest

878
00:24:06,570 --> 00:24:08,029
rates are sky high.

879
00:24:08,113 --> 00:24:09,281
So, you know,

880
00:24:09,281 --> 00:24:12,284
they're they will begin to ease

881
00:24:13,076 --> 00:24:14,870
how much they do.

882
00:24:14,953 --> 00:24:16,037
Right.

883
00:24:16,121 --> 00:24:17,456
That's the question.

884
00:24:17,456 --> 00:24:19,207
So they're going to be late

885
00:24:19,207 --> 00:24:20,917
probably to the party

886
00:24:21,001 --> 00:24:21,668
because they're not

887
00:24:21,668 --> 00:24:22,544
going to ease it enough

888
00:24:22,544 --> 00:24:24,796
I think, to stop a lot of damage.

889
00:24:25,964 --> 00:24:27,507
But that still has to come.

890
00:24:27,507 --> 00:24:30,510
The job numbers was helpful for us,

891
00:24:30,844 --> 00:24:33,805
showing the reality of the situation.

892
00:24:33,889 --> 00:24:35,849
And the job market,

893
00:24:35,932 --> 00:24:37,142
that's, you know, once again,

894
00:24:37,142 --> 00:24:38,351
one of those key indicators.

895
00:24:38,351 --> 00:24:40,729
But for real estate investors,

896
00:24:40,729 --> 00:24:43,190
you got to remember a lot of the stuff.

897
00:24:43,273 --> 00:24:44,816
It doesn't even correlate. Right.

898
00:24:44,858 --> 00:24:47,444
So what the fed is doing

899
00:24:47,527 --> 00:24:50,280
and trying to manage,

900
00:24:50,363 --> 00:24:52,782
they're not thinking about

901
00:24:52,866 --> 00:24:53,992
you and your property

902
00:24:53,992 --> 00:24:54,826
and how it's better to have

903
00:24:54,826 --> 00:24:57,037
a lower interest rate. Now, I don't care.

904
00:24:57,120 --> 00:24:58,872
That's not,

905
00:24:58,955 --> 00:25:01,124
even for the most part, a systemic issue.

906
00:25:01,208 --> 00:25:02,542
They'll let real estate

907
00:25:02,626 --> 00:25:06,046
developer operators default to avoid

908
00:25:06,254 --> 00:25:09,216
inflation and crushing Main Street.

909
00:25:09,341 --> 00:25:11,176
That's just how it works.

910
00:25:11,259 --> 00:25:12,427
So, they're

911
00:25:12,469 --> 00:25:14,679
they're going to walk easily into it,

912
00:25:14,679 --> 00:25:16,348
even if they do four cuts

913
00:25:16,431 --> 00:25:18,099
from where we're at,

914
00:25:18,183 --> 00:25:20,977
that's not going to change

915
00:25:21,061 --> 00:25:22,062
most of the problems,

916
00:25:22,062 --> 00:25:23,396
the resetting of value.

917
00:25:24,439 --> 00:25:26,274
That won't happen until

918
00:25:26,358 --> 00:25:28,151
we get deeper into it,

919
00:25:28,235 --> 00:25:31,571
which will probably be 12 months.

920
00:25:33,281 --> 00:25:35,742
And then markets will start to,

921
00:25:35,825 --> 00:25:36,701
adjust further.

922
00:25:36,701 --> 00:25:38,828
But you're going to have to

923
00:25:38,912 --> 00:25:40,163
some of the stuff's got to go out.

924
00:25:40,163 --> 00:25:43,124
Defaults will probably continue

925
00:25:43,208 --> 00:25:45,585
or we'll see more job

926
00:25:45,669 --> 00:25:47,587
properties on the market have gone up.

927
00:25:47,671 --> 00:25:49,256
People are trying to sell.

928
00:25:49,339 --> 00:25:50,257
Capital is moving.

929
00:25:50,257 --> 00:25:52,342
They're walking away from equity now,

930
00:25:52,342 --> 00:25:53,385
which it's stalled out

931
00:25:53,385 --> 00:25:55,595
for basically two years.

932
00:25:55,679 --> 00:25:56,137
Once again,

933
00:25:56,137 --> 00:25:58,974
the wealth transfer has begun.

934
00:25:59,057 --> 00:26:01,226
That's a good sign.

935
00:26:01,309 --> 00:26:03,436
And, as that stuff flushes out.

936
00:26:03,436 --> 00:26:03,937
So.

937
00:26:04,020 --> 00:26:06,940
Yes, but it's it's not fast.

938
00:26:07,023 --> 00:26:08,733
But yes, the news cycle,

939
00:26:08,817 --> 00:26:09,442
I believe,

940
00:26:09,442 --> 00:26:10,902
is completely begun, where

941
00:26:10,986 --> 00:26:14,239
we're putting in 15 plus million

942
00:26:14,322 --> 00:26:16,575
of our own capital along with investors

943
00:26:16,658 --> 00:26:17,742
on the next six months.

944
00:26:17,742 --> 00:26:19,995
We're buying everything we can

945
00:26:20,078 --> 00:26:21,913
and just to clarify, for everybody

946
00:26:21,913 --> 00:26:22,455
that's listening,

947
00:26:22,455 --> 00:26:23,873
I assume when you're talking about

948
00:26:23,873 --> 00:26:25,709
you think defaults are going to,

949
00:26:25,792 --> 00:26:26,418
pick up,

950
00:26:26,418 --> 00:26:26,918
you're talking about

951
00:26:26,918 --> 00:26:29,337
the single family market because not

952
00:26:29,379 --> 00:26:29,838
you're not talking

953
00:26:29,838 --> 00:26:31,089
about multifamily or self student.

954
00:26:31,089 --> 00:26:32,215
I'm talking you are.

955
00:26:32,299 --> 00:26:33,550
Yeah. I am talking about commercial.

956
00:26:33,550 --> 00:26:34,676
You are talking commercial.

957
00:26:34,759 --> 00:26:35,343
Okay. Yeah.

958
00:26:35,343 --> 00:26:37,762
Commercial markets right now

959
00:26:37,804 --> 00:26:41,474
defaults are at or as are.

960
00:26:41,683 --> 00:26:43,226
So if we looked at a CMBS

961
00:26:43,226 --> 00:26:45,645
market of delinquency rates

962
00:26:45,729 --> 00:26:48,398
they're up to 7%.

963
00:26:48,398 --> 00:26:51,192
They were below five.

964
00:26:51,192 --> 00:26:54,571
They were down like almost 4 in 24.

965
00:26:55,196 --> 00:26:56,406
But to be clear, commercial.

966
00:26:56,406 --> 00:26:56,865
We're talking

967
00:26:56,865 --> 00:26:59,993
office, warehouse, retail, multifamily,

968
00:27:00,076 --> 00:27:01,703
you know, all of it.

969
00:27:01,703 --> 00:27:02,871
Right. It's not all of it.

970
00:27:02,954 --> 00:27:04,372
By 2024,

971
00:27:04,372 --> 00:27:05,498
overall delinquency rate

972
00:27:05,498 --> 00:27:07,459
of all commercial CMBS,

973
00:27:07,459 --> 00:27:10,378
which is a is a big distinction

974
00:27:10,462 --> 00:27:12,339
if you are in the multifamily space.

975
00:27:12,339 --> 00:27:14,174
But this is see, CMBS,

976
00:27:15,342 --> 00:27:17,469
was 5.431

977
00:27:17,469 --> 00:27:20,430
year ago and is now 7.23.

978
00:27:20,513 --> 00:27:23,058
It's huge, huge moves up.

979
00:27:23,141 --> 00:27:23,683
And we're seeing

980
00:27:23,683 --> 00:27:24,934
and we're seeing that in the trenches,

981
00:27:24,934 --> 00:27:25,393
by the way. Right.

982
00:27:25,393 --> 00:27:26,269
Well, seeing

983
00:27:26,353 --> 00:27:27,187
we're seeing that where

984
00:27:27,187 --> 00:27:28,188
like we have all

985
00:27:28,188 --> 00:27:29,022
have our own

986
00:27:29,022 --> 00:27:31,066
anecdotal evidence of people

987
00:27:31,066 --> 00:27:32,567
we know well.

988
00:27:32,651 --> 00:27:33,610
Yes and no.

989
00:27:33,610 --> 00:27:34,903
Multifamily

990
00:27:34,986 --> 00:27:36,404
I feel like

991
00:27:36,488 --> 00:27:37,322
has to be taken

992
00:27:37,322 --> 00:27:38,698
a little bit separate from,

993
00:27:38,782 --> 00:27:40,408
from these other aspects,

994
00:27:40,408 --> 00:27:41,242
just because

995
00:27:41,326 --> 00:27:42,911
such a large portion of these

996
00:27:42,911 --> 00:27:45,830
loans are Fannie and Freddie loans and,

997
00:27:45,914 --> 00:27:46,956
you know, at its peak,

998
00:27:46,956 --> 00:27:48,792
Fannie and Freddie had over

999
00:27:48,875 --> 00:27:51,086
had like 85% of the loan market.

1000
00:27:51,127 --> 00:27:52,128
That's come down quite a bit.

1001
00:27:52,128 --> 00:27:53,296
I can't it's tough for me

1002
00:27:53,296 --> 00:27:54,547
to find exact numbers,

1003
00:27:54,547 --> 00:27:56,299
but it's still in the,

1004
00:27:56,299 --> 00:27:59,302
I think, 70% range, 60, 60 something

1005
00:27:59,636 --> 00:28:02,472
range of all loans or Fannie and Freddie.

1006
00:28:02,555 --> 00:28:04,099
And if you look at the Fannie

1007
00:28:04,099 --> 00:28:05,600
and Freddie delinquency rate,

1008
00:28:05,684 --> 00:28:09,354
we're still like 0.5%, like

1009
00:28:09,437 --> 00:28:11,773
less than 1% for Fannie and Freddie

1010
00:28:11,856 --> 00:28:13,650
by the nature of those loans as well.

1011
00:28:13,650 --> 00:28:13,775
Like,

1012
00:28:13,775 --> 00:28:14,776
there are obviously better

1013
00:28:14,776 --> 00:28:15,485
loans than you're

1014
00:28:15,485 --> 00:28:17,737
getting on the CMBS markets.

1015
00:28:17,821 --> 00:28:20,865
But if you march to July for multifamily

1016
00:28:20,949 --> 00:28:22,492
delinquency rates

1017
00:28:22,575 --> 00:28:26,871
went from 5.4 to 6, what, two I

1018
00:28:26,955 --> 00:28:28,123
and so I actually

1019
00:28:28,123 --> 00:28:30,500
I dove into that a little bit and

1020
00:28:30,583 --> 00:28:31,876
if you look back,

1021
00:28:32,877 --> 00:28:34,462
that can

1022
00:28:34,546 --> 00:28:35,964
kind of be brushed,

1023
00:28:36,047 --> 00:28:37,590
I don't want to say brushed off,

1024
00:28:37,674 --> 00:28:40,009
but that can kind of be attributed

1025
00:28:40,009 --> 00:28:40,760
to seasonal,

1026
00:28:40,760 --> 00:28:41,136
like just

1027
00:28:41,136 --> 00:28:43,054
just the way these loans are

1028
00:28:43,138 --> 00:28:45,557
that the delinquency

1029
00:28:45,640 --> 00:28:48,017
adjusted a seasonally adjusted numbers.

1030
00:28:48,101 --> 00:28:49,936
Well,

1031
00:28:50,019 --> 00:28:52,939
I read enough articles that said that

1032
00:28:53,022 --> 00:28:55,024
that it's

1033
00:28:55,066 --> 00:28:56,568
like if you, if you look at like

1034
00:28:56,568 --> 00:28:58,653
still eight of the top ten. Okay.

1035
00:28:58,737 --> 00:28:59,571
But don't look at it

1036
00:28:59,571 --> 00:29:01,948
seasonally year to year. Right.

1037
00:29:01,948 --> 00:29:03,950
So if you look just like year to year

1038
00:29:03,950 --> 00:29:04,534
where it's up,

1039
00:29:04,534 --> 00:29:08,079
I mean springtime low, but I mean

1040
00:29:09,414 --> 00:29:11,875
they're still definitely moving up.

1041
00:29:11,875 --> 00:29:14,794
You have a 24 basis point increase.

1042
00:29:14,878 --> 00:29:17,839
I think that all commercial real estate

1043
00:29:17,922 --> 00:29:19,966
delinquencies are going up

1044
00:29:20,049 --> 00:29:21,551
and you know it.

1045
00:29:21,551 --> 00:29:22,510
That's

1046
00:29:22,594 --> 00:29:25,305
I think obviously some are much higher.

1047
00:29:25,305 --> 00:29:27,307
So if you looked at office

1048
00:29:27,390 --> 00:29:29,350
or others, they're they're much higher.

1049
00:29:29,350 --> 00:29:31,603
Right. Than the average.

1050
00:29:31,603 --> 00:29:33,396
But they're all going up.

1051
00:29:33,396 --> 00:29:34,355
But keep in mind,

1052
00:29:34,355 --> 00:29:34,814
I mean,

1053
00:29:34,814 --> 00:29:37,233
when we look at the single family market,

1054
00:29:37,317 --> 00:29:40,945
a softening in, in the economy overall

1055
00:29:41,321 --> 00:29:42,405
is likely to lead

1056
00:29:42,405 --> 00:29:44,741
to a higher default rate.

1057
00:29:44,824 --> 00:29:45,492
Now, talking

1058
00:29:45,492 --> 00:29:46,868
historically, I'm not talking

1059
00:29:46,868 --> 00:29:49,871
about today specifically, but in general,

1060
00:29:50,079 --> 00:29:51,122
softening in the economy

1061
00:29:51,122 --> 00:29:53,082
is going to lead to a higher default rate

1062
00:29:53,082 --> 00:29:54,584
because people are losing their jobs.

1063
00:29:54,626 --> 00:29:57,545
And, and people are having to move

1064
00:29:57,629 --> 00:29:58,880
to other places for jobs,

1065
00:29:58,880 --> 00:30:00,381
and they have trouble

1066
00:30:00,381 --> 00:30:01,549
paying their mortgage

1067
00:30:01,633 --> 00:30:02,675
in the commercial space.

1068
00:30:02,675 --> 00:30:03,676
And when I say commercial,

1069
00:30:03,676 --> 00:30:05,386
I should say in the multifamily space,

1070
00:30:05,386 --> 00:30:06,221
because I don't want to speak

1071
00:30:06,221 --> 00:30:07,180
for other asset classes

1072
00:30:07,180 --> 00:30:08,264
I'm not as familiar with.

1073
00:30:08,348 --> 00:30:10,099
But in the multifamily space,

1074
00:30:10,183 --> 00:30:14,270
there's some amount of, economic pain

1075
00:30:14,687 --> 00:30:16,898
that is actually good

1076
00:30:16,898 --> 00:30:19,067
for multifamily investors.

1077
00:30:19,150 --> 00:30:21,194
If there's enough pain that we see

1078
00:30:21,194 --> 00:30:22,278
rates drop

1079
00:30:22,362 --> 00:30:24,739
without seeing vacancies spike,

1080
00:30:24,739 --> 00:30:25,865
without seeing rents

1081
00:30:25,865 --> 00:30:27,951
drop, without seeing,

1082
00:30:28,034 --> 00:30:29,536
other bad things happen

1083
00:30:29,536 --> 00:30:30,829
on the income side,

1084
00:30:31,830 --> 00:30:33,832
if we see rates drop to the point

1085
00:30:33,832 --> 00:30:35,458
where we can refinance,

1086
00:30:35,458 --> 00:30:36,584
we can originate

1087
00:30:36,584 --> 00:30:38,044
new loans at lower rates.

1088
00:30:38,127 --> 00:30:40,421
We can basically cut our expenses.

1089
00:30:40,505 --> 00:30:41,631
And again,

1090
00:30:41,714 --> 00:30:43,132
with, with unless there's something

1091
00:30:43,132 --> 00:30:43,967
major that happens,

1092
00:30:43,967 --> 00:30:44,592
we're probably not going

1093
00:30:44,592 --> 00:30:46,553
to get hit too hard on the income side.

1094
00:30:46,636 --> 00:30:47,470
So softening

1095
00:30:47,470 --> 00:30:49,305
economy can actually be good

1096
00:30:49,389 --> 00:30:51,766
for multifamily to a degree.

1097
00:30:51,850 --> 00:30:53,309
Also keep in mind

1098
00:30:53,309 --> 00:30:56,271
that for all commercial real estate,

1099
00:30:56,354 --> 00:30:57,522
the value of that real estate

1100
00:30:57,522 --> 00:30:59,774
is going to be based on a cap rate,

1101
00:30:59,858 --> 00:31:01,943
and cap rates have a relationship

1102
00:31:01,943 --> 00:31:03,528
with the federal funds rate.

1103
00:31:03,611 --> 00:31:04,654
There's going to be a delta

1104
00:31:04,654 --> 00:31:05,488
between what

1105
00:31:05,488 --> 00:31:08,032
somebody can get in the bond market

1106
00:31:08,116 --> 00:31:09,450
and what somebody's

1107
00:31:09,450 --> 00:31:11,202
going to be willing to to invest in.

1108
00:31:11,286 --> 00:31:12,370
That's what the let's just clarify.

1109
00:31:12,370 --> 00:31:13,329
That's not the fed funds rate.

1110
00:31:13,329 --> 00:31:14,122
That's the bond market

1111
00:31:14,122 --> 00:31:15,498
and the fed funds rate.

1112
00:31:15,582 --> 00:31:16,416
Sorry. You're right.

1113
00:31:16,416 --> 00:31:18,793
And that's that's 100%. Right.

1114
00:31:18,793 --> 00:31:19,836
And so

1115
00:31:19,919 --> 00:31:21,629
when I say rates coming down I'm

1116
00:31:21,629 --> 00:31:22,422
not I'm talking about

1117
00:31:22,422 --> 00:31:23,590
the softening economy

1118
00:31:23,590 --> 00:31:24,549
that leads rates down.

1119
00:31:24,549 --> 00:31:25,425
Not just the fed

1120
00:31:25,425 --> 00:31:26,926
arbitrarily lowering rates.

1121
00:31:27,010 --> 00:31:28,720
But if the economy softens and rates

1122
00:31:28,720 --> 00:31:29,554
come down,

1123
00:31:29,637 --> 00:31:30,763
we're going to see cap rates

1124
00:31:30,763 --> 00:31:31,890
likely come down.

1125
00:31:31,890 --> 00:31:34,392
Some which I would say right now,

1126
00:31:34,434 --> 00:31:36,352
multifamily is probably most

1127
00:31:36,352 --> 00:31:38,104
tied to the ten year

1128
00:31:38,187 --> 00:31:40,481
just or you know, those longer

1129
00:31:40,481 --> 00:31:42,442
and maybe seven year.

1130
00:31:42,525 --> 00:31:43,860
Just because

1131
00:31:43,943 --> 00:31:45,904
what I'm seeing in the market right now,

1132
00:31:45,987 --> 00:31:47,530
there's very few people

1133
00:31:47,530 --> 00:31:48,656
who are getting these bridge

1134
00:31:48,656 --> 00:31:50,199
loans, right, like fool

1135
00:31:50,199 --> 00:31:51,284
me once kind of thing.

1136
00:31:51,284 --> 00:31:51,743
Like,

1137
00:31:51,826 --> 00:31:53,202
no one really wants those,

1138
00:31:53,202 --> 00:31:55,538
like high priced bridge loans.

1139
00:31:55,538 --> 00:31:56,080
Right now,

1140
00:31:56,080 --> 00:31:57,081
everyone's

1141
00:31:57,165 --> 00:31:58,291
trying to make the numbers

1142
00:31:58,291 --> 00:31:58,875
work on these

1143
00:31:58,875 --> 00:32:00,293
these fixed rates,

1144
00:32:00,376 --> 00:32:01,502
these longer term ones,

1145
00:32:01,502 --> 00:32:02,503
and those ones are tied

1146
00:32:02,503 --> 00:32:04,839
to those longer treasuries versus

1147
00:32:04,839 --> 00:32:06,299
if you were getting some sort of bridge

1148
00:32:06,299 --> 00:32:09,385
loan, those are tied to almost directly

1149
00:32:09,469 --> 00:32:11,304
tied to the fed funds rate

1150
00:32:11,387 --> 00:32:13,640
and the sofr curve going forward.

1151
00:32:13,640 --> 00:32:17,352
So I like I just want to do I'm sorry

1152
00:32:17,435 --> 00:32:18,561
I, I didn't want to derail

1153
00:32:18,645 --> 00:32:20,688
but what's that like.

1154
00:32:20,772 --> 00:32:23,524
So what's that orange line industrial.

1155
00:32:23,608 --> 00:32:25,026
What's included in industrial

1156
00:32:25,985 --> 00:32:28,529
storage warehouse storage.

1157
00:32:28,529 --> 00:32:30,156
Self storage.

1158
00:32:30,239 --> 00:32:31,658
What was their delinquency rate

1159
00:32:31,658 --> 00:32:33,701
on the CMBS markets?

1160
00:32:33,701 --> 00:32:34,994
Well I yeah

1161
00:32:35,078 --> 00:32:35,745
AJ, I don't know

1162
00:32:35,745 --> 00:32:36,996
if you should be taking credit for that.

1163
00:32:36,996 --> 00:32:37,538
I think that's

1164
00:32:37,538 --> 00:32:40,249
a lot of the large industrial

1165
00:32:40,333 --> 00:32:41,459
warehouse type.

1166
00:32:41,459 --> 00:32:43,544
I'll take credit for it.

1167
00:32:43,628 --> 00:32:45,672
Yeah I don't think they

1168
00:32:45,755 --> 00:32:47,090
will default or not.

1169
00:32:47,173 --> 00:32:48,883
And I know a lot of those like

1170
00:32:48,967 --> 00:32:50,385
especially those like marijuana

1171
00:32:50,385 --> 00:32:51,219
growers and stuff,

1172
00:32:51,219 --> 00:32:52,095
like they're paying their year

1173
00:32:52,095 --> 00:32:53,638
in advance, you know what I mean?

1174
00:32:53,638 --> 00:32:54,472
Like they're these,

1175
00:32:54,555 --> 00:32:55,890
they it's tough for them to go in

1176
00:32:55,890 --> 00:32:57,725
and go delinquent on these things

1177
00:32:57,725 --> 00:32:59,769
when they're paying the year in advance.

1178
00:32:59,852 --> 00:33:00,561
Here's an important thing

1179
00:33:00,561 --> 00:33:01,854
to keep in mind with this chart.

1180
00:33:01,938 --> 00:33:03,106
For those I'm sorry,

1181
00:33:03,106 --> 00:33:05,233
I probably should let you say Kyle off,

1182
00:33:05,233 --> 00:33:06,734
because I know you've been waiting.

1183
00:33:06,818 --> 00:33:08,236
But Kyle put up a chart of

1184
00:33:08,319 --> 00:33:09,612
delinquency rates.

1185
00:33:09,696 --> 00:33:11,406
For anybody who's watching on YouTube

1186
00:33:11,489 --> 00:33:12,699
of different asset

1187
00:33:12,699 --> 00:33:13,908
classes, it's really

1188
00:33:13,908 --> 00:33:15,410
it's worth mentioning here

1189
00:33:15,493 --> 00:33:18,162
that, multifamily,

1190
00:33:18,246 --> 00:33:20,665
is going to be a good bit

1191
00:33:20,748 --> 00:33:22,166
different than all these other

1192
00:33:22,166 --> 00:33:23,334
asset classes

1193
00:33:23,418 --> 00:33:24,127
in the sense

1194
00:33:24,127 --> 00:33:27,505
that leverage or the total debt to

1195
00:33:27,588 --> 00:33:28,381
to price

1196
00:33:28,381 --> 00:33:30,758
ratio is going to be much higher

1197
00:33:30,758 --> 00:33:31,509
in multifamily.

1198
00:33:31,509 --> 00:33:32,135
Oftentimes

1199
00:33:32,135 --> 00:33:32,635
we get

1200
00:33:32,719 --> 00:33:33,302
loans for

1201
00:33:33,302 --> 00:33:36,305
65, 70, 75, even 80% of the value.

1202
00:33:36,973 --> 00:33:39,392
And so it's a lot easier in theory

1203
00:33:39,392 --> 00:33:41,811
for multifamily to to become delinquent

1204
00:33:41,894 --> 00:33:43,521
because values only have to drop 10

1205
00:33:43,521 --> 00:33:45,231
or 20 or 30%,

1206
00:33:45,314 --> 00:33:47,525
before our properties are underwater.

1207
00:33:47,608 --> 00:33:48,818
AJ, what's typical

1208
00:33:48,860 --> 00:33:51,029
in the self-storage market?

1209
00:33:51,112 --> 00:33:53,489
What's typical 30, 30%

1210
00:33:53,573 --> 00:33:54,699
in the office space?

1211
00:33:54,699 --> 00:33:55,033
I think

1212
00:33:55,116 --> 00:33:56,117
I think I once heard the number

1213
00:33:56,117 --> 00:33:58,369
like 42% is the average.

1214
00:33:58,453 --> 00:34:00,371
And so for office to be all the way

1215
00:34:00,371 --> 00:34:00,997
at the top,

1216
00:34:00,997 --> 00:34:02,498
delinquency like way

1217
00:34:02,498 --> 00:34:04,500
above all the other asset classes,

1218
00:34:04,584 --> 00:34:05,543
that's scary

1219
00:34:05,626 --> 00:34:08,046
because those, those properties

1220
00:34:08,046 --> 00:34:10,089
are like 40% loan

1221
00:34:10,089 --> 00:34:11,924
to value that barely leveraged.

1222
00:34:12,008 --> 00:34:14,802
And so so just keep in mind

1223
00:34:14,802 --> 00:34:16,095
that not all asset

1224
00:34:16,095 --> 00:34:17,263
classes are created equal

1225
00:34:17,263 --> 00:34:18,556
when it comes to delinquency rate,

1226
00:34:18,556 --> 00:34:19,640
because leverage

1227
00:34:19,640 --> 00:34:20,892
ratios are going to be a good bit

1228
00:34:20,892 --> 00:34:23,227
different between, asset classes.

1229
00:34:23,227 --> 00:34:25,313
I've been surprised by lodging.

1230
00:34:25,396 --> 00:34:26,856
We did discuss this before though

1231
00:34:26,856 --> 00:34:30,610
I, I also think that's lodging malls.

1232
00:34:31,152 --> 00:34:33,321
I think they were on a different cycle

1233
00:34:33,404 --> 00:34:34,489
where like, you know,

1234
00:34:34,489 --> 00:34:36,908
like Covid and other things, like they

1235
00:34:36,991 --> 00:34:39,952
they kind of put them on a different path

1236
00:34:39,952 --> 00:34:40,995
in the rest of commercial

1237
00:34:40,995 --> 00:34:41,829
where, like,

1238
00:34:41,829 --> 00:34:43,539
they really bottomed at a different time

1239
00:34:43,539 --> 00:34:44,957
than the rest of these asset classes.

1240
00:34:44,957 --> 00:34:46,209
I completely agree,

1241
00:34:46,209 --> 00:34:47,126
and I will I'll go

1242
00:34:47,126 --> 00:34:48,836
I'll go pull a different chart.

1243
00:34:48,920 --> 00:34:50,171
I always reference

1244
00:34:50,171 --> 00:34:52,632
so I like trap for their, for their,

1245
00:34:52,715 --> 00:34:53,299
loan data.

1246
00:34:53,299 --> 00:34:54,926
But then I like Green Street actually

1247
00:34:54,926 --> 00:34:57,428
for their, their value of, of assets.

1248
00:34:57,512 --> 00:34:58,471
So while we talk

1249
00:34:58,471 --> 00:34:59,472
I'll go and pull that one.

1250
00:35:00,556 --> 00:35:01,849
But if you look at like where

1251
00:35:01,849 --> 00:35:03,518
the peaks and troughs are, like,

1252
00:35:03,518 --> 00:35:05,186
you could see that

1253
00:35:05,186 --> 00:35:06,896
those are, those are two asset classes

1254
00:35:06,896 --> 00:35:07,730
that are completely different

1255
00:35:07,730 --> 00:35:08,648
than multifamily,

1256
00:35:08,648 --> 00:35:10,399
self-storage, industrial,

1257
00:35:10,399 --> 00:35:11,442
those things like that.

1258
00:35:11,526 --> 00:35:12,735
There's an interesting observation

1259
00:35:12,735 --> 00:35:13,736
I've been making.

1260
00:35:13,736 --> 00:35:14,654
And I

1261
00:35:14,737 --> 00:35:17,532
in preparation for this, I, I pulled up

1262
00:35:17,615 --> 00:35:18,825
all the different schools

1263
00:35:18,825 --> 00:35:19,992
of economic thought,

1264
00:35:19,992 --> 00:35:22,036
like whether Keynesians or Austrians

1265
00:35:22,036 --> 00:35:23,746
or traditionalist or monetarist.

1266
00:35:23,830 --> 00:35:25,748
They all have different explanations

1267
00:35:25,748 --> 00:35:26,499
of what it means

1268
00:35:26,499 --> 00:35:27,625
that interest rates are going down.

1269
00:35:27,625 --> 00:35:28,251
Because what's

1270
00:35:28,334 --> 00:35:28,835
what I found

1271
00:35:28,835 --> 00:35:29,585
fascinating is a lot of

1272
00:35:29,585 --> 00:35:30,336
people are saying, well,

1273
00:35:30,336 --> 00:35:32,088
interest rates are going down,

1274
00:35:32,171 --> 00:35:34,006
which is going to be great

1275
00:35:34,090 --> 00:35:34,757
for real estate,

1276
00:35:34,757 --> 00:35:35,716
but now it's going to be like,

1277
00:35:35,716 --> 00:35:37,093
oh, the booms going or whatever.

1278
00:35:37,093 --> 00:35:38,052
And none of the schools

1279
00:35:38,052 --> 00:35:38,928
that I was looking at it

1280
00:35:38,970 --> 00:35:39,679
like how they would,

1281
00:35:39,720 --> 00:35:41,222
they all have different explanations

1282
00:35:41,222 --> 00:35:44,142
to why interest rates are going down.

1283
00:35:44,225 --> 00:35:45,601
Some some would say, look, it's

1284
00:35:45,601 --> 00:35:46,561
inflation and growth.

1285
00:35:46,561 --> 00:35:47,478
Expectations of interest

1286
00:35:47,478 --> 00:35:48,146
rates are going down.

1287
00:35:48,146 --> 00:35:50,189
That means people are expecting inflation

1288
00:35:50,189 --> 00:35:50,857
to be lower

1289
00:35:50,857 --> 00:35:51,899
and growth to be lower,

1290
00:35:51,899 --> 00:35:52,733
which is not a good thing

1291
00:35:52,733 --> 00:35:53,860
because they're buying bonds

1292
00:35:53,860 --> 00:35:54,652
and all that stuff.

1293
00:35:54,735 --> 00:35:55,987
And other people say different reasons,

1294
00:35:55,987 --> 00:35:56,946
but none of them say

1295
00:35:56,946 --> 00:35:57,822
that it's a good thing.

1296
00:35:57,822 --> 00:35:59,323
And so I find it fascinating

1297
00:35:59,323 --> 00:36:00,700
that when people are arguing

1298
00:36:00,783 --> 00:36:01,742
interest rates are coming down,

1299
00:36:01,784 --> 00:36:03,452
this is a great time to buy.

1300
00:36:03,536 --> 00:36:04,871
It's like saying,

1301
00:36:04,954 --> 00:36:05,746
you know, hey,

1302
00:36:05,830 --> 00:36:06,330
you know, my

1303
00:36:06,372 --> 00:36:08,291
the good news is my my property taxes.

1304
00:36:08,291 --> 00:36:09,500
We talked about this a couple weeks ago.

1305
00:36:09,584 --> 00:36:10,710
The property taxes are down.

1306
00:36:10,751 --> 00:36:11,460
It's like, yeah, they're down

1307
00:36:11,460 --> 00:36:12,879
because your properties are lower

1308
00:36:12,920 --> 00:36:13,379
like less.

1309
00:36:13,421 --> 00:36:14,630
So it's like it's good news

1310
00:36:14,630 --> 00:36:15,882
within the overall bad news.

1311
00:36:15,882 --> 00:36:16,340
So the

1312
00:36:16,424 --> 00:36:17,508
the fact that we have lower

1313
00:36:17,508 --> 00:36:18,885
interest rates,

1314
00:36:18,968 --> 00:36:20,636
if that means the economy is softening

1315
00:36:20,636 --> 00:36:21,220
and we're going into

1316
00:36:21,220 --> 00:36:23,055
some kind of a recession,

1317
00:36:23,139 --> 00:36:24,891
even if you're getting a better deal

1318
00:36:24,891 --> 00:36:26,058
in terms of a better loan

1319
00:36:26,058 --> 00:36:26,767
for your real estate,

1320
00:36:26,767 --> 00:36:28,519
does that really mean it's a good thing

1321
00:36:28,603 --> 00:36:30,313
that I throw that out to you guys?

1322
00:36:30,396 --> 00:36:31,939
It's the 2008 effect.

1323
00:36:31,939 --> 00:36:33,941
I talk all the time about how

1324
00:36:33,983 --> 00:36:35,359
after 2008,

1325
00:36:35,443 --> 00:36:37,153
once we had forgotten about 2008,

1326
00:36:37,153 --> 00:36:40,156
by the time we got to 2014, 15, 16,

1327
00:36:40,364 --> 00:36:42,658
everybody was talking about,

1328
00:36:42,742 --> 00:36:45,161
well, I wish we had another 2008 event

1329
00:36:45,161 --> 00:36:47,288
because I would buy everything.

1330
00:36:47,371 --> 00:36:49,373
But I was around during 2008.

1331
00:36:49,373 --> 00:36:51,042
You guys were around during 2008.

1332
00:36:51,083 --> 00:36:52,335
Nobody was buying everything

1333
00:36:52,335 --> 00:36:53,002
because everybody. Yeah.

1334
00:36:53,085 --> 00:36:54,170
How long did you have to wait?

1335
00:36:54,170 --> 00:36:56,255
You probably had to wait until 2010.

1336
00:36:56,255 --> 00:36:57,882
11. You couldn't even get a loan.

1337
00:36:57,882 --> 00:36:59,592
In 2008, I was buying,

1338
00:36:59,592 --> 00:37:00,551
I was buying stuff,

1339
00:37:00,551 --> 00:37:02,261
but only because I was too stupid

1340
00:37:02,261 --> 00:37:03,512
to know otherwise.

1341
00:37:03,596 --> 00:37:05,973
Turns out that it worked out well, but I.

1342
00:37:05,973 --> 00:37:07,934
I didn't know that at the time.

1343
00:37:08,017 --> 00:37:10,394
But yeah, everybody thinks

1344
00:37:10,478 --> 00:37:12,647
if stuff were on on sale half price,

1345
00:37:12,647 --> 00:37:13,314
they would buy everything.

1346
00:37:13,314 --> 00:37:14,315
But they don't realize

1347
00:37:14,315 --> 00:37:16,067
that at the same time,

1348
00:37:16,150 --> 00:37:17,318
you get out of bed in the morning

1349
00:37:17,318 --> 00:37:18,778
and you're terrified to walk outside

1350
00:37:18,778 --> 00:37:19,904
because you don't know

1351
00:37:19,904 --> 00:37:21,072
what's going on in the world

1352
00:37:21,072 --> 00:37:22,198
and you can't get loans

1353
00:37:22,198 --> 00:37:24,825
because loan is is tightening up

1354
00:37:24,909 --> 00:37:25,910
and you can't sell

1355
00:37:25,993 --> 00:37:26,869
or your rents are there,

1356
00:37:26,869 --> 00:37:28,871
your rents are weaker, software

1357
00:37:28,871 --> 00:37:30,081
or your occupancy is lower,

1358
00:37:30,081 --> 00:37:31,332
or maybe no occupancy,

1359
00:37:31,332 --> 00:37:31,749
but at least

1360
00:37:31,749 --> 00:37:34,210
your economic vacancy is lower because

1361
00:37:34,293 --> 00:37:34,710
people up,

1362
00:37:34,752 --> 00:37:34,961
you know,

1363
00:37:34,961 --> 00:37:35,670
they're losing their jobs

1364
00:37:35,670 --> 00:37:36,337
and they can't pay rent,

1365
00:37:36,337 --> 00:37:37,421
or your delinquencies go up

1366
00:37:37,421 --> 00:37:37,964
and it's like, it's

1367
00:37:37,964 --> 00:37:39,006
a nightmare out there. Yeah.

1368
00:37:39,006 --> 00:37:39,340
So so

1369
00:37:39,340 --> 00:37:40,883
everybody is wishing for lower rates,

1370
00:37:40,883 --> 00:37:42,218
but they don't realize that

1371
00:37:42,218 --> 00:37:44,804
with lower rates that they just assume

1372
00:37:44,887 --> 00:37:46,097
you can have lower rates,

1373
00:37:46,097 --> 00:37:47,473
but none of the bad stuff.

1374
00:37:47,473 --> 00:37:48,307
You can get the good stuff

1375
00:37:48,307 --> 00:37:49,100
without the bad stuff,

1376
00:37:49,100 --> 00:37:51,352
and that doesn't work that way. Right?

1377
00:37:51,435 --> 00:37:51,644
I mean,

1378
00:37:51,644 --> 00:37:53,729
does anybody on the panel, at the panel,

1379
00:37:53,813 --> 00:37:56,482
anybody here think that lower rates

1380
00:37:56,565 --> 00:37:57,400
is in generally

1381
00:37:57,400 --> 00:37:58,859
a good thing in the economy,

1382
00:37:58,859 --> 00:37:59,694
or does everybody

1383
00:37:59,777 --> 00:38:01,153
associate lower rates with

1384
00:38:02,446 --> 00:38:04,031
bad things to a softening?

1385
00:38:04,031 --> 00:38:06,075
I mean, theoretically they could be.

1386
00:38:06,075 --> 00:38:08,911
It's just historically

1387
00:38:08,995 --> 00:38:11,998
especially like we obviously want a rapid

1388
00:38:12,164 --> 00:38:13,291
rate decrease.

1389
00:38:13,291 --> 00:38:13,749
And anytime

1390
00:38:13,749 --> 00:38:14,083
there's been

1391
00:38:14,083 --> 00:38:16,085
any kind of rapid rate decrease, it's

1392
00:38:16,085 --> 00:38:18,296
because of a bad thing happening. Right.

1393
00:38:18,379 --> 00:38:19,839
Like theoretically

1394
00:38:19,839 --> 00:38:20,589
we could just see

1395
00:38:20,589 --> 00:38:22,216
these rates taper off

1396
00:38:22,216 --> 00:38:23,592
into that quote unquote

1397
00:38:23,592 --> 00:38:24,260
neutral rate

1398
00:38:24,260 --> 00:38:25,678
that no one really knows what it is.

1399
00:38:25,678 --> 00:38:27,513
But, predicted

1400
00:38:27,513 --> 00:38:29,098
the fed is kind of implied.

1401
00:38:29,098 --> 00:38:30,850
It's somewhere in the mid threes.

1402
00:38:30,933 --> 00:38:31,934
So theoretically

1403
00:38:31,934 --> 00:38:33,269
we could just see a taper off

1404
00:38:33,269 --> 00:38:34,061
into those mid threes

1405
00:38:34,061 --> 00:38:34,979
and then just hold it

1406
00:38:35,062 --> 00:38:37,732
and everything's going to be great.

1407
00:38:37,815 --> 00:38:41,736
But historically most rate

1408
00:38:41,819 --> 00:38:42,695
significant rate

1409
00:38:42,695 --> 00:38:44,530
decreases have come at the result

1410
00:38:44,530 --> 00:38:45,698
of something bad happening.

1411
00:38:45,698 --> 00:38:46,490
And usually that's

1412
00:38:46,490 --> 00:38:47,408
something bad happening.

1413
00:38:47,408 --> 00:38:48,492
Is is bad

1414
00:38:48,492 --> 00:38:50,494
for most of commercial real estate.

1415
00:38:50,578 --> 00:38:51,537
But but this goes back

1416
00:38:51,537 --> 00:38:53,122
to what we were talking about earlier.

1417
00:38:53,205 --> 00:38:55,082
It's the economy.

1418
00:38:55,082 --> 00:38:56,625
I think it can be argued

1419
00:38:56,625 --> 00:38:58,794
that it's the economy that drives rates.

1420
00:38:58,794 --> 00:38:59,962
It's not the fed.

1421
00:39:00,046 --> 00:39:02,089
And so the fed could lower rates

1422
00:39:02,089 --> 00:39:03,049
all they want.

1423
00:39:03,132 --> 00:39:06,135
But the ten year and mortgage rates

1424
00:39:06,427 --> 00:39:08,429
and cap rates aren't coming down

1425
00:39:08,429 --> 00:39:10,139
unless there's something bad

1426
00:39:10,139 --> 00:39:11,682
going on in the economy.

1427
00:39:11,766 --> 00:39:13,476
So I think to Moriscos point,

1428
00:39:13,476 --> 00:39:14,810
my take is

1429
00:39:14,894 --> 00:39:17,480
there's no way to get low rates

1430
00:39:17,563 --> 00:39:18,856
without the pain

1431
00:39:18,856 --> 00:39:20,691
that comes along with them,

1432
00:39:20,775 --> 00:39:22,443
at least not in the current environment.

1433
00:39:22,443 --> 00:39:22,568
Right?

1434
00:39:22,568 --> 00:39:22,777
I mean,

1435
00:39:22,777 --> 00:39:23,819
if we were

1436
00:39:23,819 --> 00:39:25,946
if we were in a free market place,

1437
00:39:25,946 --> 00:39:27,198
then rates would come down.

1438
00:39:27,198 --> 00:39:28,282
When there's more

1439
00:39:28,366 --> 00:39:29,825
you could pick and choose, obviously,

1440
00:39:29,825 --> 00:39:30,576
like if you go back

1441
00:39:30,576 --> 00:39:33,579
and look at history of of the fed moves,

1442
00:39:33,871 --> 00:39:35,831
like there have been fed moves

1443
00:39:35,915 --> 00:39:39,377
that were not as a result of something

1444
00:39:39,460 --> 00:39:40,211
bad happening.

1445
00:39:40,211 --> 00:39:40,628
You know,

1446
00:39:40,628 --> 00:39:42,797
like most recently, just back

1447
00:39:42,880 --> 00:39:44,048
the last time that Trump

1448
00:39:44,048 --> 00:39:45,132
yelled at Powell,

1449
00:39:45,216 --> 00:39:46,342
Powell was raising rates

1450
00:39:46,342 --> 00:39:47,718
and then he just started backing off.

1451
00:39:47,718 --> 00:39:48,552
And nothing bad

1452
00:39:48,552 --> 00:39:49,720
was happening at the time.

1453
00:39:49,720 --> 00:39:51,806
And that right up until Covid.

1454
00:39:51,889 --> 00:39:54,850
So like like you could pick and choose.

1455
00:39:54,850 --> 00:39:57,228
There are instances of well

1456
00:39:57,311 --> 00:39:59,021
that was 2018, 19

1457
00:39:59,021 --> 00:39:59,980
and we were starting to see

1458
00:39:59,980 --> 00:40:01,190
a softening in the economy

1459
00:40:01,190 --> 00:40:03,192
leading up to to the pandemic.

1460
00:40:03,192 --> 00:40:04,110
So I feel like it was

1461
00:40:04,110 --> 00:40:05,361
the same is going on right now

1462
00:40:05,361 --> 00:40:06,404
where some people were saying

1463
00:40:06,404 --> 00:40:07,071
it was softening.

1464
00:40:07,071 --> 00:40:07,905
Other people were saying

1465
00:40:07,905 --> 00:40:09,490
we have a robust economy.

1466
00:40:09,573 --> 00:40:10,366
Like it

1467
00:40:10,366 --> 00:40:12,034
just kind of depended who you were.

1468
00:40:12,076 --> 00:40:13,619
Yeah, but it wasn't clear.

1469
00:40:13,661 --> 00:40:14,286
It wasn't clear.

1470
00:40:14,286 --> 00:40:15,496
We should be raising or lowering.

1471
00:40:15,496 --> 00:40:15,996
It wasn't clear

1472
00:40:15,996 --> 00:40:18,165
the economy was strong or weak.

1473
00:40:18,249 --> 00:40:20,835
And if anything, I would argue that,

1474
00:40:20,918 --> 00:40:22,420
we could talk all day

1475
00:40:22,420 --> 00:40:23,796
about whether we think the economy

1476
00:40:23,796 --> 00:40:25,923
is getting better or getting worse.

1477
00:40:26,006 --> 00:40:28,217
But rates is going to be the best

1478
00:40:28,217 --> 00:40:28,968
indicator of that,

1479
00:40:28,968 --> 00:40:30,636
regardless of what we say

1480
00:40:30,636 --> 00:40:32,805
or anybody else or the fed says,

1481
00:40:32,888 --> 00:40:33,264
rates

1482
00:40:33,264 --> 00:40:36,183
themselves are a reflection of the market

1483
00:40:36,183 --> 00:40:37,560
in general.

1484
00:40:37,643 --> 00:40:39,395
The long in the longer in

1485
00:40:39,478 --> 00:40:40,771
the long run, certainly.

1486
00:40:40,855 --> 00:40:41,605
So I'm interested.

1487
00:40:41,605 --> 00:40:42,565
So AJ, you

1488
00:40:42,565 --> 00:40:43,190
mentioned that

1489
00:40:43,190 --> 00:40:43,899
like how much money

1490
00:40:43,899 --> 00:40:46,485
you were earmarking for investing, right.

1491
00:40:46,527 --> 00:40:47,194
Are you doing

1492
00:40:47,194 --> 00:40:49,321
are you planning right now

1493
00:40:49,405 --> 00:40:50,948
or do you still see

1494
00:40:51,031 --> 00:40:52,575
additional softening coming.

1495
00:40:52,575 --> 00:40:52,825
And you're

1496
00:40:52,825 --> 00:40:55,619
just kind of like ready to pounce. Yes.

1497
00:40:55,661 --> 00:40:58,372
And then we see we see softening coming.

1498
00:40:58,372 --> 00:40:59,832
But we're not waiting.

1499
00:40:59,832 --> 00:41:00,541
We don't wait.

1500
00:41:00,541 --> 00:41:01,709
We don't time markets.

1501
00:41:01,709 --> 00:41:03,252
So the deals are there.

1502
00:41:03,335 --> 00:41:05,379
We're we're buying. We've loaded up

1503
00:41:06,881 --> 00:41:09,884
capital and we are we're executing.

1504
00:41:10,134 --> 00:41:12,887
We're buying as much as we can.

1505
00:41:12,970 --> 00:41:15,556
So we'll continue to over the next

1506
00:41:15,556 --> 00:41:16,724
with the expectations

1507
00:41:16,724 --> 00:41:17,766
that like, things

1508
00:41:17,766 --> 00:41:19,226
still could start to come down

1509
00:41:19,226 --> 00:41:21,645
a little bit or that. Yeah, absolutely.

1510
00:41:21,729 --> 00:41:23,105
And it's similar in the multifamily.

1511
00:41:23,105 --> 00:41:24,648
And we were just came back,

1512
00:41:24,732 --> 00:41:26,317
Jay and I were at limitless.

1513
00:41:26,317 --> 00:41:26,942
And so I was talking

1514
00:41:26,942 --> 00:41:27,943
to a lot of operators out there

1515
00:41:27,943 --> 00:41:29,320
in the sort of the larger ones,

1516
00:41:29,320 --> 00:41:30,112
they were all saying,

1517
00:41:30,112 --> 00:41:31,363
at least in the multifamily space,

1518
00:41:31,363 --> 00:41:31,822
that this is it.

1519
00:41:31,822 --> 00:41:32,490
This is the window.

1520
00:41:32,490 --> 00:41:35,201
You got 18 to 24 months to load up.

1521
00:41:35,284 --> 00:41:36,327
Everybody's fearful.

1522
00:41:36,327 --> 00:41:37,244
It's like uncertainty.

1523
00:41:37,244 --> 00:41:37,745
But this is

1524
00:41:37,745 --> 00:41:39,038
if you know what you're doing,

1525
00:41:39,121 --> 00:41:40,539
you're buying stuff that's cash flowing,

1526
00:41:40,539 --> 00:41:42,666
that's below replacement costs.

1527
00:41:42,750 --> 00:41:43,709
You've got like a two year

1528
00:41:43,709 --> 00:41:44,460
window to go buy it.

1529
00:41:44,460 --> 00:41:45,961
It's it's still so tough

1530
00:41:46,045 --> 00:41:46,962
because here's, here's

1531
00:41:46,962 --> 00:41:47,880
the it's harder to buy

1532
00:41:47,880 --> 00:41:49,173
when when the nice falling

1533
00:41:49,173 --> 00:41:49,673
and you want to go

1534
00:41:49,673 --> 00:41:50,382
you don't want to catch

1535
00:41:50,382 --> 00:41:51,008
the falling knight.

1536
00:41:51,008 --> 00:41:51,842
But this is the time.

1537
00:41:51,926 --> 00:41:52,801
That's when you start.

1538
00:41:52,843 --> 00:41:53,302
Well this is,

1539
00:41:53,302 --> 00:41:53,636
this is

1540
00:41:53,636 --> 00:41:55,137
when you want to be Blackrock right.

1541
00:41:55,137 --> 00:41:55,554
Where you can

1542
00:41:55,554 --> 00:41:56,639
basically just

1543
00:41:56,639 --> 00:41:58,057
you have all that capital

1544
00:41:58,057 --> 00:41:59,308
and it's trusted capital.

1545
00:41:59,308 --> 00:42:00,976
And they just kind of like

1546
00:42:01,060 --> 00:42:01,977
like you don't have

1547
00:42:01,977 --> 00:42:02,978
to really answer to it.

1548
00:42:02,978 --> 00:42:04,438
Because here's the problem is

1549
00:42:04,438 --> 00:42:06,398
even if you have the theory

1550
00:42:06,482 --> 00:42:08,901
of all of these things happening,

1551
00:42:08,984 --> 00:42:10,194
and it's going to be the best

1552
00:42:10,194 --> 00:42:11,153
time to buy,

1553
00:42:11,237 --> 00:42:13,906
you still have to put together a proforma

1554
00:42:13,906 --> 00:42:15,866
and sell it to investors

1555
00:42:15,950 --> 00:42:17,117
that this is

1556
00:42:17,201 --> 00:42:19,370
this is going to be a good investment.

1557
00:42:19,453 --> 00:42:21,830
And if you start putting any

1558
00:42:21,914 --> 00:42:24,792
expectations of of growth or,

1559
00:42:25,834 --> 00:42:27,336
like any of these outsized

1560
00:42:27,336 --> 00:42:28,254
things that aren't

1561
00:42:28,254 --> 00:42:29,421
historically

1562
00:42:29,505 --> 00:42:32,383
haven't happened into your proforma,

1563
00:42:32,466 --> 00:42:35,010
like investors aren't going to invest in

1564
00:42:35,010 --> 00:42:36,053
your deals like you.

1565
00:42:36,136 --> 00:42:37,263
So, yeah, I mean, I,

1566
00:42:37,346 --> 00:42:38,722
I'm I'm pretty sure, AJ,

1567
00:42:38,722 --> 00:42:39,557
you're not promising

1568
00:42:39,598 --> 00:42:41,725
to double people's money after year one.

1569
00:42:41,725 --> 00:42:42,560
Like, it's like this

1570
00:42:42,601 --> 00:42:44,478
the you educate your investors

1571
00:42:44,478 --> 00:42:44,895
to say, look,

1572
00:42:44,895 --> 00:42:46,188
this is where we are in the cycle.

1573
00:42:46,188 --> 00:42:47,189
And this is,

1574
00:42:47,273 --> 00:42:49,066
you know, in the it's a 5 to 7.

1575
00:42:49,066 --> 00:42:50,192
In five years from now,

1576
00:42:50,192 --> 00:42:51,151
we're all going to be great shape.

1577
00:42:51,193 --> 00:42:51,860
Maybe next year.

1578
00:42:51,860 --> 00:42:52,987
It's not great the year after.

1579
00:42:52,987 --> 00:42:53,654
That's not great.

1580
00:42:53,654 --> 00:42:54,947
But I know we don't

1581
00:42:55,030 --> 00:42:57,074
we don't even invest like,

1582
00:42:57,157 --> 00:42:57,992
like that at the end.

1583
00:42:58,033 --> 00:42:59,034
At the end of the day.

1584
00:42:59,076 --> 00:42:59,326
That's right.

1585
00:42:59,326 --> 00:42:59,952
You have your

1586
00:42:59,952 --> 00:43:01,495
your investments are all ATM

1587
00:43:01,495 --> 00:43:02,079
machines, right?

1588
00:43:02,121 --> 00:43:03,789
AJ you that's your deals.

1589
00:43:03,789 --> 00:43:05,332
And then you get ATM they,

1590
00:43:05,374 --> 00:43:07,376
they've they just spit out money

1591
00:43:07,376 --> 00:43:08,711
like it's it's stupid.

1592
00:43:08,711 --> 00:43:09,753
It's just like crazy.

1593
00:43:10,879 --> 00:43:11,630
No, we

1594
00:43:11,630 --> 00:43:14,633
we buy deals predicated on yield.

1595
00:43:14,925 --> 00:43:16,719
So at the end of the day,

1596
00:43:16,719 --> 00:43:17,261
I don't care

1597
00:43:17,261 --> 00:43:18,971
what the future market's going to do.

1598
00:43:19,054 --> 00:43:20,264
I don't care

1599
00:43:20,264 --> 00:43:22,808
if cap rates are going to go down,

1600
00:43:22,891 --> 00:43:25,894
because if I can purchase at a yield

1601
00:43:26,020 --> 00:43:27,354
that is,

1602
00:43:27,438 --> 00:43:27,855
you know,

1603
00:43:27,855 --> 00:43:30,316
we can get it to our what we call our,

1604
00:43:30,357 --> 00:43:32,234
our golden ratio,

1605
00:43:32,318 --> 00:43:33,527
then we're going to buy.

1606
00:43:33,611 --> 00:43:37,156
And that is hard to do at certain prices.

1607
00:43:37,448 --> 00:43:38,115
Right now

1608
00:43:38,115 --> 00:43:39,158
we're getting deals

1609
00:43:39,158 --> 00:43:40,993
that are hitting our golden ratio.

1610
00:43:41,076 --> 00:43:42,953
And of course as things

1611
00:43:42,953 --> 00:43:45,956
soften, we get more deals

1612
00:43:46,206 --> 00:43:47,750
and we believe that's happening.

1613
00:43:47,833 --> 00:43:51,211
But we have got we're getting those deals

1614
00:43:51,295 --> 00:43:53,255
that we're getting yields

1615
00:43:53,339 --> 00:43:56,592
on cost that are amazing.

1616
00:43:56,675 --> 00:43:58,177
And we believe

1617
00:43:58,177 --> 00:43:59,637
that obviously will continue

1618
00:43:59,637 --> 00:44:00,679
and we'll just keep buying.

1619
00:44:00,763 --> 00:44:02,890
So weather with the markets

1620
00:44:02,973 --> 00:44:05,017
turn around and eventually come back.

1621
00:44:05,017 --> 00:44:05,267
Right.

1622
00:44:05,267 --> 00:44:06,852
Which for us we care

1623
00:44:06,852 --> 00:44:09,855
I care more about occupancy and rates,

1624
00:44:09,938 --> 00:44:11,065
which we believe

1625
00:44:11,065 --> 00:44:11,982
that will happen due

1626
00:44:11,982 --> 00:44:16,278
to the, contraction in overall supply.

1627
00:44:16,570 --> 00:44:17,780
So the biggest thing

1628
00:44:17,780 --> 00:44:18,781
with high interest rates

1629
00:44:18,781 --> 00:44:21,408
are it constrains, market supply.

1630
00:44:21,492 --> 00:44:24,495
You can't high cost because of inflation.

1631
00:44:24,787 --> 00:44:27,456
High interest rates constrains new supply

1632
00:44:27,456 --> 00:44:28,123
out of the market.

1633
00:44:28,123 --> 00:44:29,541
There's a three year lag.

1634
00:44:29,625 --> 00:44:31,710
So that is pent up demand.

1635
00:44:31,710 --> 00:44:34,088
So today's yield

1636
00:44:35,047 --> 00:44:37,424
we can buy a stabilized

1637
00:44:37,508 --> 00:44:39,718
ten on cost

1638
00:44:39,802 --> 00:44:42,763
tomorrow with without saying market rates

1639
00:44:42,846 --> 00:44:43,764
are going to go up.

1640
00:44:43,847 --> 00:44:44,807
What that happens

1641
00:44:44,807 --> 00:44:46,934
in high demand and high markets.

1642
00:44:46,934 --> 00:44:48,644
It's

1643
00:44:48,727 --> 00:44:51,271
and once again we did this in 2008.

1644
00:44:51,271 --> 00:44:53,774
And it was you know

1645
00:44:53,857 --> 00:44:55,776
obviously at those returns

1646
00:44:55,776 --> 00:44:57,403
if Mark with markets change

1647
00:44:57,403 --> 00:44:58,654
or when markets change

1648
00:44:58,737 --> 00:45:00,489
you get a huge windfall from it.

1649
00:45:00,489 --> 00:45:02,616
But we don't backed it.

1650
00:45:02,658 --> 00:45:03,867
We don't underwrite it for it.

1651
00:45:03,867 --> 00:45:06,870
I mean so as markets

1652
00:45:07,538 --> 00:45:09,665
go down and buy, go down, I mean

1653
00:45:09,665 --> 00:45:12,584
price of assets that are being sold

1654
00:45:12,668 --> 00:45:13,293
are sold

1655
00:45:13,293 --> 00:45:15,170
at lesser and lesser amounts

1656
00:45:15,170 --> 00:45:17,131
as people are either bailing or ditching.

1657
00:45:17,214 --> 00:45:18,757
We do not believe there's

1658
00:45:18,757 --> 00:45:20,718
too much liquidity in the market

1659
00:45:20,801 --> 00:45:21,635
right now

1660
00:45:21,635 --> 00:45:24,596
to we're not going to see anything crazy.

1661
00:45:24,680 --> 00:45:27,891
We have $3 trillion in money markets.

1662
00:45:27,975 --> 00:45:28,892
We have,

1663
00:45:28,976 --> 00:45:29,727
you know,

1664
00:45:29,810 --> 00:45:30,561
almost $1

1665
00:45:30,561 --> 00:45:31,812
trillion already earmarked

1666
00:45:31,812 --> 00:45:33,647
for real estate.

1667
00:45:33,731 --> 00:45:34,898
It's it's bonkers.

1668
00:45:34,898 --> 00:45:38,736
And we have Blackrock, Blackrock, others.

1669
00:45:38,986 --> 00:45:40,404
They're rolling out billion dollar

1670
00:45:40,404 --> 00:45:41,572
funds at the moment.

1671
00:45:41,655 --> 00:45:44,491
There's so much liquidity in the market.

1672
00:45:44,575 --> 00:45:46,493
This is not 2008.

1673
00:45:46,577 --> 00:45:48,704
You are not going to get assets of

1674
00:45:48,704 --> 00:45:51,498
fire sells like we did. Why

1675
00:45:52,708 --> 00:45:54,001
I'm buying them

1676
00:45:54,084 --> 00:45:56,712
I don't need it to give me it for free.

1677
00:45:56,712 --> 00:45:58,672
I need a ten year old on cost.

1678
00:45:58,756 --> 00:46:01,842
And then as Marcus I, I assume AJ like

1679
00:46:02,176 --> 00:46:03,677
and maybe this is just me

1680
00:46:03,761 --> 00:46:06,305
trying to make excuses for us

1681
00:46:06,388 --> 00:46:08,390
not being able to buy deals.

1682
00:46:08,474 --> 00:46:11,935
But I assume because of the nature

1683
00:46:12,019 --> 00:46:12,728
of your industry,

1684
00:46:12,728 --> 00:46:15,105
you're still able to find some deals

1685
00:46:15,105 --> 00:46:16,648
where you can buy them

1686
00:46:16,648 --> 00:46:17,858
with no competition, right?

1687
00:46:17,858 --> 00:46:18,609
Like whatever

1688
00:46:18,609 --> 00:46:20,861
your marketing tactics or whatever,

1689
00:46:20,861 --> 00:46:21,737
how you're finding this,

1690
00:46:21,737 --> 00:46:22,196
this isn't

1691
00:46:22,237 --> 00:46:23,572
like the problem with

1692
00:46:23,572 --> 00:46:25,908
multifamily is we're competing.

1693
00:46:25,991 --> 00:46:27,868
If it's if it's an asset and good

1694
00:46:27,951 --> 00:46:29,620
if you guys operate on margins

1695
00:46:29,620 --> 00:46:31,705
in competition, that it's different

1696
00:46:31,789 --> 00:46:32,873
than we do for

1697
00:46:32,873 --> 00:46:35,876
a lot of ours is operationally,

1698
00:46:37,211 --> 00:46:37,961
hard.

1699
00:46:38,045 --> 00:46:40,714
And so to have be able to underwrite,

1700
00:46:40,714 --> 00:46:42,341
be able to execute

1701
00:46:42,424 --> 00:46:44,593
like everything from expansions

1702
00:46:44,593 --> 00:46:45,928
to understand the difference

1703
00:46:45,928 --> 00:46:49,139
between street market rates, there's not

1704
00:46:49,932 --> 00:46:50,682
lots of people

1705
00:46:50,682 --> 00:46:51,809
that are versed in that

1706
00:46:51,892 --> 00:46:52,726
in the storage industry.

1707
00:46:52,726 --> 00:46:54,269
You got to remember 80%,

1708
00:46:54,269 --> 00:46:55,145
over 80%,

1709
00:46:55,145 --> 00:46:58,023
well over 80% of all syndications

1710
00:46:58,023 --> 00:47:01,693
and funds in my industry came after 2018.

1711
00:47:02,528 --> 00:47:02,986
Like,

1712
00:47:03,946 --> 00:47:05,864
you just don't like how it.

1713
00:47:05,906 --> 00:47:09,284
So when we're looking at getting,

1714
00:47:10,202 --> 00:47:12,079
10% yield on cost,

1715
00:47:12,162 --> 00:47:14,498
I'm not talking about a listed deal,

1716
00:47:14,581 --> 00:47:16,250
even though I,

1717
00:47:16,333 --> 00:47:18,043
we've bought listed deals stuff.

1718
00:47:18,126 --> 00:47:18,919
What I mean is it's

1719
00:47:18,919 --> 00:47:20,504
not like other markets where it's just,

1720
00:47:20,504 --> 00:47:21,338
oh, yeah,

1721
00:47:21,421 --> 00:47:23,215
deals are just

1722
00:47:23,298 --> 00:47:25,217
everybody kind of we go back to 2008

1723
00:47:25,217 --> 00:47:26,301
where you could just go buy it

1724
00:47:26,301 --> 00:47:27,427
like you just go on

1725
00:47:27,427 --> 00:47:29,346
the MLS and buy something.

1726
00:47:29,429 --> 00:47:30,472
That was great, right?

1727
00:47:30,556 --> 00:47:31,849
That will not

1728
00:47:31,849 --> 00:47:33,308
I just don't think that will happen.

1729
00:47:33,308 --> 00:47:34,059
As of right now,

1730
00:47:34,059 --> 00:47:35,894
I haven't seen one deal in two years.

1731
00:47:35,978 --> 00:47:37,271
I mean, not even close.

1732
00:47:37,354 --> 00:47:38,230
That actually traded

1733
00:47:38,230 --> 00:47:39,523
what it was listed for.

1734
00:47:39,606 --> 00:47:42,276
It was listed for $10 million

1735
00:47:42,276 --> 00:47:43,694
and it sold for eight.

1736
00:47:43,777 --> 00:47:46,238
The last two development

1737
00:47:46,321 --> 00:47:47,739
or excuse me not development deals,

1738
00:47:47,739 --> 00:47:49,616
but brand new builds that we bought.

1739
00:47:49,700 --> 00:47:52,703
Both groups walked away from all

1740
00:47:52,911 --> 00:47:55,038
of the equity, all of it.

1741
00:47:55,122 --> 00:47:58,125
And so they're walking away from millions

1742
00:47:58,125 --> 00:48:00,586
that we're now buying, which,

1743
00:48:00,669 --> 00:48:02,254
you know, a lot of times that was

1744
00:48:03,255 --> 00:48:05,674
what it cost to build put into it.

1745
00:48:05,757 --> 00:48:06,884
They didn't

1746
00:48:06,967 --> 00:48:08,218
they didn't listed on the market

1747
00:48:08,218 --> 00:48:09,386
for that.

1748
00:48:09,469 --> 00:48:09,970
You know, we

1749
00:48:10,053 --> 00:48:11,179
we had a deal

1750
00:48:11,263 --> 00:48:11,889
a month ago

1751
00:48:11,889 --> 00:48:13,515
I didn't get, which sucks,

1752
00:48:13,599 --> 00:48:15,934
but it was put on the market

1753
00:48:15,934 --> 00:48:18,228
for $16 million.

1754
00:48:18,312 --> 00:48:19,479
We found out from the broker

1755
00:48:19,479 --> 00:48:21,356
it closed at, like, nine.

1756
00:48:21,440 --> 00:48:22,816
What's, what was.

1757
00:48:22,858 --> 00:48:24,359
So, I guess.

1758
00:48:24,443 --> 00:48:25,986
What's the change in cap rate?

1759
00:48:26,069 --> 00:48:28,238
Have you seen since the peak to, like,

1760
00:48:28,238 --> 00:48:29,239
what you're purchasing?

1761
00:48:29,281 --> 00:48:30,407
Third tier markets.

1762
00:48:30,407 --> 00:48:33,410
We've seen easily at 300 basis.

1763
00:48:33,660 --> 00:48:34,995
So it's gone from five.

1764
00:48:34,995 --> 00:48:36,121
And this is third tier,

1765
00:48:36,121 --> 00:48:37,372
fourth tier markets

1766
00:48:37,456 --> 00:48:38,707
if you go into first tier market.

1767
00:48:38,707 --> 00:48:40,542
So I, I'm in the middle of a sell.

1768
00:48:40,542 --> 00:48:41,793
We're selling at a four cap.

1769
00:48:41,877 --> 00:48:45,464
So I sold a deal a year ago

1770
00:48:45,547 --> 00:48:46,632
at a four cap

1771
00:48:46,715 --> 00:48:49,426
at this disparity is massive.

1772
00:48:49,509 --> 00:48:50,928
The inefficiency in their market

1773
00:48:50,928 --> 00:48:52,471
that you're able to buy things

1774
00:48:52,471 --> 00:48:53,472
probably at seven

1775
00:48:53,472 --> 00:48:55,766
plus and still be able to sell things

1776
00:48:55,766 --> 00:48:57,100
at four, right? Yeah.

1777
00:48:57,100 --> 00:48:58,477
And to the inefficiencies

1778
00:48:58,477 --> 00:48:59,811
in the operations.

1779
00:48:59,895 --> 00:49:00,938
So when we go in

1780
00:49:00,938 --> 00:49:02,105
and I'm buying something at 30,

1781
00:49:02,105 --> 00:49:03,398
40% occupied

1782
00:49:03,482 --> 00:49:04,358
because you have an operator

1783
00:49:04,358 --> 00:49:05,442
that's never even ran,

1784
00:49:05,442 --> 00:49:06,944
it doesn't want to write.

1785
00:49:07,027 --> 00:49:08,111
That is hard

1786
00:49:08,111 --> 00:49:10,155
in asset classes like multifamily

1787
00:49:10,238 --> 00:49:12,199
that are extraordinarily efficient

1788
00:49:12,282 --> 00:49:13,450
and even even those ones,

1789
00:49:13,450 --> 00:49:15,369
because those ones do pop up right now

1790
00:49:15,369 --> 00:49:17,245
because you're you're having some kick

1791
00:49:17,245 --> 00:49:17,996
the can people

1792
00:49:17,996 --> 00:49:19,122
and the occupancy just goes

1793
00:49:19,122 --> 00:49:20,582
down, down, down, down.

1794
00:49:20,666 --> 00:49:22,125
But even those ones, like

1795
00:49:22,125 --> 00:49:23,710
they're still hitting the market

1796
00:49:23,794 --> 00:49:25,212
and they're still catching

1797
00:49:25,295 --> 00:49:26,296
like to your point,

1798
00:49:26,338 --> 00:49:27,255
there's a lot of people

1799
00:49:27,255 --> 00:49:29,383
who want to be buying

1800
00:49:29,466 --> 00:49:30,884
properties right now.

1801
00:49:30,968 --> 00:49:32,594
They just they just don't make sense.

1802
00:49:32,594 --> 00:49:33,679
The numbers don't work.

1803
00:49:33,679 --> 00:49:34,513
And so every single

1804
00:49:34,513 --> 00:49:35,472
one of these properties,

1805
00:49:35,472 --> 00:49:36,807
like there's a lot of eyes on it,

1806
00:49:36,807 --> 00:49:37,474
a lot of people

1807
00:49:37,474 --> 00:49:39,267
who are still bidding on these things

1808
00:49:39,351 --> 00:49:41,311
and all of those people,

1809
00:49:41,395 --> 00:49:42,729
you know, I guess this is probably me

1810
00:49:42,729 --> 00:49:43,689
just complaining.

1811
00:49:43,689 --> 00:49:44,523
All of those people

1812
00:49:44,523 --> 00:49:47,526
are willing to underwrite outsized,

1813
00:49:47,776 --> 00:49:50,862
like cap rates, outsized rent, gross

1814
00:49:50,946 --> 00:49:53,532
outside stuff. Because you know what?

1815
00:49:53,615 --> 00:49:54,825
They're probably right.

1816
00:49:54,908 --> 00:49:56,535
If I'm going to be honest, there

1817
00:49:56,535 --> 00:49:58,829
probably, probably will happen.

1818
00:49:58,912 --> 00:50:00,372
But you don't know that

1819
00:50:00,455 --> 00:50:01,456
that's the problem.

1820
00:50:01,456 --> 00:50:02,666
You don't know that

1821
00:50:02,666 --> 00:50:05,085
we probably will see cap rates come down.

1822
00:50:05,085 --> 00:50:07,546
We probably will see occupancies go up,

1823
00:50:07,629 --> 00:50:09,172
and we probably will see

1824
00:50:09,172 --> 00:50:11,842
rent growth above 3%.

1825
00:50:11,925 --> 00:50:12,884
I actually believe

1826
00:50:12,926 --> 00:50:15,053
those are likely scenarios.

1827
00:50:15,053 --> 00:50:16,054
But the same point,

1828
00:50:16,054 --> 00:50:17,472
if I'm doing the underwriting,

1829
00:50:17,472 --> 00:50:19,391
I can't go to my investors and say,

1830
00:50:19,391 --> 00:50:22,102
hey, look, I decrease the cap rate.

1831
00:50:22,144 --> 00:50:24,479
We I know for the last five years

1832
00:50:24,479 --> 00:50:25,105
we've been

1833
00:50:25,188 --> 00:50:27,566
increasing the cap rates on sale

1834
00:50:27,566 --> 00:50:28,608
every single one.

1835
00:50:28,692 --> 00:50:29,526
Now, right now, we're

1836
00:50:29,526 --> 00:50:31,194
not only we're not keeping it

1837
00:50:31,194 --> 00:50:32,529
level, we're actually

1838
00:50:32,612 --> 00:50:34,531
performing a decrease in cap rate.

1839
00:50:34,531 --> 00:50:35,240
And not only that,

1840
00:50:35,323 --> 00:50:36,908
we have a three and a half rent growth

1841
00:50:36,908 --> 00:50:38,744
instead of a three or a two and a half.

1842
00:50:38,827 --> 00:50:41,163
And we also on the top of that,

1843
00:50:41,204 --> 00:50:43,206
we think occupancy is going to be 97

1844
00:50:43,206 --> 00:50:44,750
instead of 95.

1845
00:50:44,833 --> 00:50:47,502
And do I think those things could happen?

1846
00:50:47,586 --> 00:50:48,253
For sure.

1847
00:50:48,336 --> 00:50:49,004
I'm looking at all

1848
00:50:49,004 --> 00:50:51,631
the data like there's there are no

1849
00:50:51,715 --> 00:50:53,967
no Arclight properties coming online.

1850
00:50:53,967 --> 00:50:55,552
So that's like

1851
00:50:55,635 --> 00:50:56,344
like you being

1852
00:50:56,344 --> 00:50:57,763
a conservative underwriter.

1853
00:50:57,846 --> 00:50:58,513
That's the difference

1854
00:50:58,513 --> 00:51:00,724
between our market or our industries.

1855
00:51:00,807 --> 00:51:01,725
I can do that.

1856
00:51:01,725 --> 00:51:02,768
And by deals,

1857
00:51:02,851 --> 00:51:05,520
as in, I cannot project lower cap rates,

1858
00:51:05,604 --> 00:51:07,981
I cannot project rate increases

1859
00:51:07,981 --> 00:51:09,274
and I can still get deals

1860
00:51:09,274 --> 00:51:11,026
that will get me right, that high yield

1861
00:51:11,109 --> 00:51:12,277
because of two reasons.

1862
00:51:12,277 --> 00:51:13,070
You're

1863
00:51:13,153 --> 00:51:14,696
the competition in your industry

1864
00:51:14,696 --> 00:51:16,782
is it's a lot,

1865
00:51:16,782 --> 00:51:19,076
but also you have a system

1866
00:51:19,076 --> 00:51:20,786
that supports it, right.

1867
00:51:20,869 --> 00:51:23,205
In self-storage, try to go to a bank

1868
00:51:23,288 --> 00:51:25,832
and tell a bank, no bro, it's it's cool.

1869
00:51:25,832 --> 00:51:27,667
It'll go from a seven to a four cap,

1870
00:51:27,667 --> 00:51:28,752
I promise.

1871
00:51:28,835 --> 00:51:30,462
Like you're going to see rates

1872
00:51:30,462 --> 00:51:32,923
that are going to go up, a lot.

1873
00:51:32,923 --> 00:51:35,342
Even though they went down 15%

1874
00:51:36,426 --> 00:51:37,719
over the last two years.

1875
00:51:37,803 --> 00:51:39,096
Trust me, occupancy

1876
00:51:39,096 --> 00:51:40,305
and rents will go go up.

1877
00:51:40,388 --> 00:51:41,056
Banks,

1878
00:51:41,139 --> 00:51:44,059
they don't because the replacement cost

1879
00:51:44,142 --> 00:51:47,729
is not nearly, a thing like it is in your

1880
00:51:47,813 --> 00:51:49,064
your industry.

1881
00:51:49,106 --> 00:51:50,440
You have a large asset

1882
00:51:50,440 --> 00:51:51,817
where banks can value it.

1883
00:51:51,817 --> 00:51:53,151
Investors can value it out.

1884
00:51:53,151 --> 00:51:55,570
Like what it's built cost self storage.

1885
00:51:55,570 --> 00:51:56,947
It's like net income.

1886
00:51:57,030 --> 00:51:59,449
Like these are metal boxes.

1887
00:51:59,533 --> 00:52:01,034
So the value

1888
00:52:01,034 --> 00:52:04,871
can go from 4 million to 15 million.

1889
00:52:04,955 --> 00:52:06,289
Just purely it's

1890
00:52:06,289 --> 00:52:07,749
still kind of the same with apartments,

1891
00:52:07,749 --> 00:52:08,875
but I guess so

1892
00:52:08,959 --> 00:52:10,627
there's more of a floor to that

1893
00:52:10,627 --> 00:52:12,963
once you get to replacement cost. Right.

1894
00:52:13,046 --> 00:52:14,923
People are going to start buying well.

1895
00:52:14,923 --> 00:52:16,591
So I always use the example

1896
00:52:16,591 --> 00:52:18,301
that like you have two properties

1897
00:52:18,301 --> 00:52:19,511
that have $1 million

1898
00:52:19,511 --> 00:52:21,847
and NOI ones, 90% occupied ones

1899
00:52:21,847 --> 00:52:23,598
50% occupied.

1900
00:52:23,682 --> 00:52:25,517
Like I'll pay a three cap

1901
00:52:25,600 --> 00:52:28,395
on the 50% occupied, one 100%

1902
00:52:28,395 --> 00:52:30,188
because the the opportunity

1903
00:52:30,188 --> 00:52:31,398
of buying that even.

1904
00:52:31,481 --> 00:52:33,191
But then I'll pay, you know, a five cap

1905
00:52:33,191 --> 00:52:34,025
or a five and a half

1906
00:52:34,025 --> 00:52:35,152
for the one that's 90%.

1907
00:52:35,152 --> 00:52:36,653
And that's what we're doing.

1908
00:52:36,653 --> 00:52:38,071
We're buying deals that are not

1909
00:52:38,155 --> 00:52:39,823
we might pay a negative cap rate.

1910
00:52:39,823 --> 00:52:40,699
You might buy a property

1911
00:52:40,699 --> 00:52:42,367
that's losing losing money

1912
00:52:42,450 --> 00:52:44,578
if it's got if it's got value at.

1913
00:52:44,661 --> 00:52:47,080
Yeah, I bought one four months ago.

1914
00:52:47,164 --> 00:52:47,372
Yeah.

1915
00:52:47,414 --> 00:52:48,999
Because because of that exact reason.

1916
00:52:48,999 --> 00:52:49,583
What you're saying.

1917
00:52:49,666 --> 00:52:49,958
Yeah.

1918
00:52:49,958 --> 00:52:51,126
That's why we talked about the fact

1919
00:52:51,126 --> 00:52:53,587
that going in cap rate is meaningless.

1920
00:52:53,670 --> 00:52:55,213
We will buy a negative

1921
00:52:55,213 --> 00:52:57,924
going in a negative cap rate property.

1922
00:52:58,008 --> 00:53:01,178
If we can get a good deal.

1923
00:53:01,928 --> 00:53:03,096
And to, to Kyle,

1924
00:53:03,180 --> 00:53:04,598
I'm going to point out to you

1925
00:53:04,598 --> 00:53:05,807
and make you feel a little bit better.

1926
00:53:05,807 --> 00:53:07,684
I've been sitting in weekly meetings

1927
00:53:07,684 --> 00:53:08,143
with you

1928
00:53:08,143 --> 00:53:09,269
talking about the market

1929
00:53:09,269 --> 00:53:11,646
and underwriting for five years

1930
00:53:11,646 --> 00:53:12,439
now, six years

1931
00:53:12,439 --> 00:53:15,442
now, and five years ago, four years ago,

1932
00:53:15,525 --> 00:53:16,193
three years ago,

1933
00:53:16,193 --> 00:53:17,235
you were saying the same thing.

1934
00:53:17,235 --> 00:53:18,528
How annoying it was that

1935
00:53:18,528 --> 00:53:19,988
all these people were outbidding us

1936
00:53:19,988 --> 00:53:22,532
because they were willing to assume

1937
00:53:22,616 --> 00:53:23,283
cap rates weren't

1938
00:53:23,283 --> 00:53:24,117
going to expand as much.

1939
00:53:24,117 --> 00:53:25,118
They were willing to assume

1940
00:53:25,118 --> 00:53:26,870
ridiculous rent increases. Whatever.

1941
00:53:26,953 --> 00:53:27,495
Well, we're

1942
00:53:27,495 --> 00:53:28,830
patting ourselves on the back today

1943
00:53:28,830 --> 00:53:29,623
because we didn't

1944
00:53:29,623 --> 00:53:30,957
get into the same issues

1945
00:53:30,957 --> 00:53:32,167
that they did for several years.

1946
00:53:32,167 --> 00:53:34,002
So yeah, we probably will miss out

1947
00:53:34,002 --> 00:53:35,337
on some some opportunities,

1948
00:53:35,420 --> 00:53:37,881
but quite a few acquisition fees too.

1949
00:53:37,964 --> 00:53:41,468
Yeah, but that said, well, who cares?

1950
00:53:41,551 --> 00:53:42,886
We protected our investors

1951
00:53:42,886 --> 00:53:45,764
and I was that was I was being facetious.

1952
00:53:45,847 --> 00:53:46,932
I know you were,

1953
00:53:46,932 --> 00:53:48,266
but it just pisses me off

1954
00:53:48,266 --> 00:53:49,601
that there are investors out there

1955
00:53:49,601 --> 00:53:50,685
and there are a lot of them

1956
00:53:50,769 --> 00:53:52,604
that honestly, they wouldn't do that

1957
00:53:52,604 --> 00:53:54,731
go after the the acquisition fees and,

1958
00:53:54,731 --> 00:53:55,690
and just hope that

1959
00:53:55,690 --> 00:53:57,192
that cap rates come down

1960
00:53:57,192 --> 00:53:58,693
and hope that occupancies go well.

1961
00:53:58,693 --> 00:53:59,486
They have to.

1962
00:53:59,486 --> 00:54:00,904
And we ran into this problem

1963
00:54:00,904 --> 00:54:03,156
like for two years

1964
00:54:03,240 --> 00:54:04,449
and for self storage

1965
00:54:04,449 --> 00:54:06,159
because self storage got slaughtered.

1966
00:54:06,159 --> 00:54:07,535
As we were looking at those numbers

1967
00:54:07,535 --> 00:54:08,286
we were like the worst

1968
00:54:08,286 --> 00:54:09,579
performing 1 in 24,

1969
00:54:09,579 --> 00:54:11,706
I think, you know, we had like our

1970
00:54:11,706 --> 00:54:13,708
we had market rates dropped like 20%.

1971
00:54:13,708 --> 00:54:14,334
Right.

1972
00:54:14,417 --> 00:54:15,669
And all of a sudden

1973
00:54:15,669 --> 00:54:18,672
you have firms that they

1974
00:54:18,922 --> 00:54:22,592
they only can make money by doing deals.

1975
00:54:22,676 --> 00:54:24,219
So what do you do in a market

1976
00:54:24,302 --> 00:54:27,931
where deals are gone lower than 2008.

1977
00:54:28,014 --> 00:54:30,600
Like let's Deals were trading hands

1978
00:54:31,810 --> 00:54:32,185
and I think

1979
00:54:32,185 --> 00:54:36,106
224 than they were in you know like 2008.

1980
00:54:36,189 --> 00:54:37,357
What do you do in that scenario

1981
00:54:37,357 --> 00:54:38,733
when you have staff,

1982
00:54:38,817 --> 00:54:40,986
when you have all these people?

1983
00:54:41,069 --> 00:54:41,653
Right.

1984
00:54:41,653 --> 00:54:44,406
And you built this big engine off

1985
00:54:44,406 --> 00:54:45,198
doing deals

1986
00:54:45,198 --> 00:54:47,075
and you're getting paid for those fees,

1987
00:54:47,158 --> 00:54:49,661
all of a sudden you got to fire people.

1988
00:54:49,661 --> 00:54:51,204
You're doing mass layoffs.

1989
00:54:51,288 --> 00:54:53,123
And unfortunately,

1990
00:54:53,206 --> 00:54:54,291
a lot of people like Jay

1991
00:54:54,291 --> 00:54:56,084
saying they choose to,

1992
00:54:56,167 --> 00:54:58,253
we're just going to keep

1993
00:54:58,336 --> 00:54:59,337
trying to do deals.

1994
00:54:59,337 --> 00:55:00,088
We're going to we're going to do

1995
00:55:00,088 --> 00:55:01,131
whatever we can

1996
00:55:01,214 --> 00:55:02,924
to keep the money flowing in,

1997
00:55:03,008 --> 00:55:04,884
not to get good returns.

1998
00:55:04,968 --> 00:55:07,929
And that is a dangerous game.

1999
00:55:08,013 --> 00:55:10,390
So but you guys, you know, for for that

2000
00:55:10,390 --> 00:55:11,266
being more conservative

2001
00:55:11,266 --> 00:55:14,144
and keep a tight ship it

2002
00:55:14,227 --> 00:55:16,229
you are placing

2003
00:55:16,313 --> 00:55:18,732
reality as opposed to hopes and dreams.

2004
00:55:18,815 --> 00:55:20,567
So a lot of people are doing deals

2005
00:55:20,567 --> 00:55:23,320
saying we believe Kyle, like you said,

2006
00:55:23,320 --> 00:55:24,654
all those things will happen.

2007
00:55:24,738 --> 00:55:26,781
But what they really believe is

2008
00:55:26,865 --> 00:55:28,616
I need that fee.

2009
00:55:28,700 --> 00:55:30,702
That's what they really believe.

2010
00:55:30,785 --> 00:55:31,786
And unfortunately,

2011
00:55:31,786 --> 00:55:32,787
there are a lot of people

2012
00:55:32,787 --> 00:55:33,913
that are doing that.

2013
00:55:33,997 --> 00:55:34,706
It just sucks

2014
00:55:34,706 --> 00:55:35,915
because I do believe

2015
00:55:35,999 --> 00:55:38,126
those things will happen.

2016
00:55:38,209 --> 00:55:39,252
But at the same time, like,

2017
00:55:39,252 --> 00:55:40,754
I can't, I can't underwrite it, right?

2018
00:55:40,754 --> 00:55:42,505
Like I can't, I just can't.

2019
00:55:42,589 --> 00:55:45,133
And so like, if you can find a deal

2020
00:55:46,092 --> 00:55:47,218
that you can make

2021
00:55:47,218 --> 00:55:47,719
pencil,

2022
00:55:47,719 --> 00:55:50,930
even if it's like skinning in their eye

2023
00:55:51,306 --> 00:55:52,057
to your point,

2024
00:55:52,057 --> 00:55:53,892
like I would be if it was,

2025
00:55:53,892 --> 00:55:55,810
if I just had a war chest

2026
00:55:55,894 --> 00:55:56,728
like I would be buying

2027
00:55:56,728 --> 00:55:57,562
everything that I can.

2028
00:55:57,562 --> 00:55:59,397
Every single property that came on

2029
00:55:59,397 --> 00:56:01,608
that had that value add, that had,

2030
00:56:01,691 --> 00:56:02,984
you know, even some distress,

2031
00:56:02,984 --> 00:56:03,735
even those things.

2032
00:56:03,735 --> 00:56:05,987
Because there's some crazy stuff.

2033
00:56:05,987 --> 00:56:06,946
I don't know if you're seeing this

2034
00:56:06,946 --> 00:56:08,239
in your market,

2035
00:56:08,239 --> 00:56:09,449
you're probably not seeing it as much

2036
00:56:09,449 --> 00:56:10,742
because you said, like,

2037
00:56:10,742 --> 00:56:12,827
the TVs aren't as crazy as ours,

2038
00:56:12,911 --> 00:56:14,496
but banks like banks

2039
00:56:14,496 --> 00:56:15,455
don't want to be running

2040
00:56:15,455 --> 00:56:16,206
these properties.

2041
00:56:16,206 --> 00:56:18,291
And banks are doing awful jobs of it.

2042
00:56:18,291 --> 00:56:19,959
And they they learned their lesson.

2043
00:56:19,959 --> 00:56:20,794
They're not very good at.

2044
00:56:20,835 --> 00:56:21,127
We have a

2045
00:56:21,169 --> 00:56:21,878
we have a property

2046
00:56:21,878 --> 00:56:22,962
that's like next door

2047
00:56:22,962 --> 00:56:24,047
to one of our properties

2048
00:56:24,130 --> 00:56:25,340
that the bank took over.

2049
00:56:25,423 --> 00:56:26,800
And the place looks like a war zone.

2050
00:56:26,800 --> 00:56:27,675
Now. It's killing us.

2051
00:56:27,759 --> 00:56:29,511
But anyway,

2052
00:56:29,594 --> 00:56:30,845
the the point is, is

2053
00:56:30,845 --> 00:56:32,180
that the banks are terrible,

2054
00:56:32,180 --> 00:56:33,515
but the banks are terrible at it.

2055
00:56:33,515 --> 00:56:34,265
But they're pretty good

2056
00:56:34,265 --> 00:56:35,975
at matching people.

2057
00:56:35,975 --> 00:56:37,936
So they may want to take over property,

2058
00:56:37,936 --> 00:56:39,813
but they can go find another syndicator,

2059
00:56:39,813 --> 00:56:41,481
another buyer and say, hey,

2060
00:56:41,481 --> 00:56:42,857
why don't you take over the loan

2061
00:56:42,941 --> 00:56:45,402
or we'll take a 5% haircut on the loan,

2062
00:56:45,485 --> 00:56:46,945
but hey, will you come in and buy it?

2063
00:56:46,945 --> 00:56:48,530
AJ your bank. Thank you.

2064
00:56:48,530 --> 00:56:48,947
So that's

2065
00:56:49,030 --> 00:56:50,323
that's where I was going with that.

2066
00:56:50,407 --> 00:56:52,575
We've we've had quite a few properties

2067
00:56:52,575 --> 00:56:53,410
that we've been on.

2068
00:56:53,410 --> 00:56:54,744
We didn't end up winning them.

2069
00:56:54,828 --> 00:56:57,414
But the banks are willing to because

2070
00:56:57,497 --> 00:56:59,124
they're taking this over

2071
00:56:59,124 --> 00:57:00,625
or even if they're not taking over,

2072
00:57:00,625 --> 00:57:01,668
they're about to take it over.

2073
00:57:01,668 --> 00:57:02,836
And so they say they

2074
00:57:02,836 --> 00:57:04,045
they go to the current operator

2075
00:57:04,045 --> 00:57:05,505
and be like, hey, like flip it.

2076
00:57:05,588 --> 00:57:06,548
These are the terms

2077
00:57:06,548 --> 00:57:07,507
that we would be willing

2078
00:57:07,549 --> 00:57:08,508
to like take the quote

2079
00:57:08,508 --> 00:57:09,884
unquote loss or whatever.

2080
00:57:09,968 --> 00:57:11,928
And they're, they're giving like

2081
00:57:12,011 --> 00:57:12,720
the terms

2082
00:57:12,720 --> 00:57:13,596
and the loan

2083
00:57:13,596 --> 00:57:15,348
that they'll give to the new operator

2084
00:57:15,348 --> 00:57:15,974
because they,

2085
00:57:15,974 --> 00:57:16,266
you know,

2086
00:57:16,266 --> 00:57:17,058
you have to obviously

2087
00:57:17,058 --> 00:57:17,892
stay with that lender.

2088
00:57:17,892 --> 00:57:18,768
So they don't want to

2089
00:57:18,768 --> 00:57:20,270
take a huge haircut,

2090
00:57:20,353 --> 00:57:20,979
but they'll give

2091
00:57:20,979 --> 00:57:25,442
you like a 95% LTV sometimes or like,

2092
00:57:25,775 --> 00:57:26,609
like up to

2093
00:57:26,651 --> 00:57:27,610
they keep that includes

2094
00:57:27,610 --> 00:57:29,654
like renovation budget and stuff.

2095
00:57:29,737 --> 00:57:31,573
But like they understand

2096
00:57:31,573 --> 00:57:33,491
a lot more than they did in 2008.

2097
00:57:33,491 --> 00:57:36,453
To your point, though, like, I mean,

2098
00:57:36,536 --> 00:57:38,621
the DCR measurement,

2099
00:57:38,705 --> 00:57:40,081
they've got to work within that.

2100
00:57:40,081 --> 00:57:41,708
So, you know, they're looking at

2101
00:57:41,708 --> 00:57:43,460
who's the operator, what can they do.

2102
00:57:43,543 --> 00:57:46,379
But they it's it's a conversation

2103
00:57:46,379 --> 00:57:47,380
just wildly different.

2104
00:57:47,380 --> 00:57:49,674
So we had a conversation on a property

2105
00:57:49,674 --> 00:57:51,676
where our DCR is

2106
00:57:51,759 --> 00:57:53,720
it doesn't work on the property.

2107
00:57:53,803 --> 00:57:54,637
And the bank's

2108
00:57:54,637 --> 00:57:55,305
literally like

2109
00:57:55,305 --> 00:57:58,308
your taxes went up 3X1 year

2110
00:57:58,475 --> 00:58:01,102
and they're like, this is 100% because,

2111
00:58:01,186 --> 00:58:02,562
you know, like of taxes

2112
00:58:02,604 --> 00:58:04,314
want to nothing else has changed.

2113
00:58:04,314 --> 00:58:06,733
And they're having conversations

2114
00:58:06,733 --> 00:58:08,109
that I'm like,

2115
00:58:08,193 --> 00:58:09,903
we never had these kind of conversations

2116
00:58:09,903 --> 00:58:11,196
with banks before.

2117
00:58:11,196 --> 00:58:13,448
I think the 2008 issue was the banks

2118
00:58:13,448 --> 00:58:14,866
didn't have an exit strategy.

2119
00:58:14,866 --> 00:58:16,117
They thought a reasonable exit

2120
00:58:16,117 --> 00:58:16,868
strategy is

2121
00:58:16,868 --> 00:58:18,495
we will take over this property,

2122
00:58:18,495 --> 00:58:19,454
and we will manage it

2123
00:58:19,454 --> 00:58:20,872
until we find a buyer.

2124
00:58:20,955 --> 00:58:22,749
And what they realized was

2125
00:58:22,832 --> 00:58:24,209
banks aren't in the asset

2126
00:58:24,209 --> 00:58:25,084
management business.

2127
00:58:25,084 --> 00:58:27,462
And when they sell shady stuff to

2128
00:58:27,545 --> 00:58:30,381
if they take over a $50 million property

2129
00:58:30,381 --> 00:58:31,716
for $40 million

2130
00:58:31,716 --> 00:58:34,427
because the the borrower can't,

2131
00:58:34,511 --> 00:58:35,678
can't make payments,

2132
00:58:35,762 --> 00:58:36,095
well,

2133
00:58:36,095 --> 00:58:37,555
that property is going to be 30 million

2134
00:58:37,555 --> 00:58:38,932
by the time they get rid of it.

2135
00:58:39,015 --> 00:58:40,558
And so they would have been better off

2136
00:58:40,558 --> 00:58:41,601
working with the

2137
00:58:41,601 --> 00:58:42,685
with the borrower

2138
00:58:42,769 --> 00:58:45,772
to either cash themselves

2139
00:58:45,855 --> 00:58:47,023
because now you have comps,

2140
00:58:47,106 --> 00:58:47,607
they're like,

2141
00:58:47,607 --> 00:58:48,441
oh, we're going to take it

2142
00:58:48,441 --> 00:58:49,484
lower in this market.

2143
00:58:49,484 --> 00:58:50,151
And they're like, well,

2144
00:58:50,151 --> 00:58:53,321
we have 100 million or 500 or a billion

2145
00:58:53,404 --> 00:58:55,240
more of assets in that market.

2146
00:58:55,323 --> 00:58:56,991
We just shot ourselves in the foot

2147
00:58:56,991 --> 00:58:58,368
because we just literally,

2148
00:58:58,451 --> 00:58:58,743
you know,

2149
00:58:58,785 --> 00:59:00,620
we're destroying our own market.

2150
00:59:00,703 --> 00:59:01,621
And it's fun.

2151
00:59:01,621 --> 00:59:02,080
It's funny,

2152
00:59:02,080 --> 00:59:04,290
you're actually better off right now.

2153
00:59:04,374 --> 00:59:04,916
The worse

2154
00:59:04,916 --> 00:59:07,835
your property is, because the bank

2155
00:59:07,919 --> 00:59:09,254
won't do anything.

2156
00:59:09,254 --> 00:59:10,672
They'll try and help you

2157
00:59:10,672 --> 00:59:11,130
if you

2158
00:59:11,130 --> 00:59:11,881
if you are

2159
00:59:11,923 --> 00:59:13,091
like struggling

2160
00:59:13,091 --> 00:59:13,925
to make your payments

2161
00:59:13,925 --> 00:59:14,926
because of a rate cap or,

2162
00:59:15,009 --> 00:59:15,927
or something like that,

2163
00:59:15,927 --> 00:59:17,470
but there's equity in your property

2164
00:59:17,470 --> 00:59:19,013
like then the,

2165
00:59:19,097 --> 00:59:20,765
the bank's going to be all over you.

2166
00:59:20,848 --> 00:59:21,808
They're going to be pushing you

2167
00:59:21,808 --> 00:59:22,809
to very short sale.

2168
00:59:22,809 --> 00:59:23,685
They're going to put like

2169
00:59:23,768 --> 00:59:25,562
like trying to figure out something

2170
00:59:25,562 --> 00:59:27,355
for you to do versus

2171
00:59:27,438 --> 00:59:28,648
if you aren't making payments

2172
00:59:28,648 --> 00:59:29,649
and they're looking at and say, hey,

2173
00:59:29,649 --> 00:59:31,693
we got a $70 million loan on this

2174
00:59:31,693 --> 00:59:33,486
and this property is worth 60.

2175
00:59:33,570 --> 00:59:34,237
They're going to be like,

2176
00:59:34,320 --> 00:59:35,280
let's work something out.

2177
00:59:35,321 --> 00:59:36,114
You know, keep

2178
00:59:36,197 --> 00:59:37,574
let's let's try and get you paying.

2179
00:59:37,574 --> 00:59:38,449
Let's extend this.

2180
00:59:38,449 --> 00:59:38,950
Let's, you know,

2181
00:59:38,950 --> 00:59:39,576
you put a little bit

2182
00:59:39,576 --> 00:59:40,785
more money in reserves

2183
00:59:40,785 --> 00:59:41,953
will lower your rate.

2184
00:59:42,036 --> 00:59:43,871
Like they're willing to do a lot more

2185
00:59:43,913 --> 00:59:45,123
than if it's a property

2186
00:59:45,123 --> 00:59:48,042
that's actually not doing that well.

2187
00:59:48,126 --> 00:59:50,003
But they there's still equity in it.

2188
00:59:50,086 --> 00:59:50,587
Just the,

2189
00:59:50,670 --> 00:59:52,005
the one of the things that we've seen

2190
00:59:52,005 --> 00:59:53,715
with the banks too, is

2191
00:59:53,798 --> 00:59:55,383
I think they are on board

2192
00:59:55,383 --> 00:59:58,136
with the rates thing rates being lower.

2193
00:59:58,219 --> 01:00:01,472
I think their outlook is similar

2194
01:00:02,056 --> 01:00:05,351
and that changes, I think, how they act.

2195
01:00:05,435 --> 01:00:08,229
If they know in six months

2196
01:00:08,313 --> 01:00:09,772
rates will be lower

2197
01:00:09,856 --> 01:00:14,110
and some ways good, in some ways good,

2198
01:00:14,485 --> 01:00:16,863
right where they go, hey, you know,

2199
01:00:16,946 --> 01:00:18,114
we're on a better path

2200
01:00:18,114 --> 01:00:18,948
and we might succeed.

2201
01:00:19,032 --> 01:00:21,075
But in other ways not so good.

2202
01:00:22,368 --> 01:00:25,371
And we've seen them drag out things

2203
01:00:25,955 --> 01:00:30,084
that aren't, I'll say, beneficial to them

2204
01:00:30,710 --> 01:00:33,796
and no reason at all for it.

2205
01:00:34,088 --> 01:00:36,215
Like they're no driving factor.

2206
01:00:36,299 --> 01:00:36,966
They're just.

2207
01:00:37,050 --> 01:00:38,885
We couldn't like it got weird.

2208
01:00:38,885 --> 01:00:40,094
We're like, what is going on?

2209
01:00:40,094 --> 01:00:41,929
Why are you dragging

2210
01:00:42,013 --> 01:00:43,431
some of the stuff out?

2211
01:00:43,514 --> 01:00:44,932
That's just we didn't see

2212
01:00:44,932 --> 01:00:46,059
the market was more fluid.

2213
01:00:46,059 --> 01:00:48,227
We didn't see banks doing these things

2214
01:00:48,311 --> 01:00:49,729
2 or 3 years ago.

2215
01:00:49,812 --> 01:00:51,397
Right. It was nope.

2216
01:00:51,397 --> 01:00:52,815
We do a deal done.

2217
01:00:52,899 --> 01:00:55,151
And there's a lot going on

2218
01:00:55,151 --> 01:00:56,319
in the inside of these banks.

2219
01:00:56,319 --> 01:00:58,029
I think we don't know about.

2220
01:00:58,112 --> 01:00:59,822
I think their balance sheets,

2221
01:00:59,822 --> 01:01:01,699
what they're playing around with

2222
01:01:01,783 --> 01:01:04,327
as they're getting while interest rates

2223
01:01:04,410 --> 01:01:06,037
as they're moving up on deals

2224
01:01:06,037 --> 01:01:07,789
and that equity is changing.

2225
01:01:07,872 --> 01:01:08,456
I think there's

2226
01:01:08,456 --> 01:01:10,416
a lot of internal discussions

2227
01:01:10,416 --> 01:01:13,878
at local banks, different credit unions

2228
01:01:14,295 --> 01:01:16,297
and even some of the national banks,

2229
01:01:16,297 --> 01:01:17,006
but not nearly as much

2230
01:01:17,006 --> 01:01:17,757
because they don't deal as much

2231
01:01:17,757 --> 01:01:18,800
in commercial real estate

2232
01:01:18,883 --> 01:01:20,593
where they're looking at,

2233
01:01:20,677 --> 01:01:23,262
more of portfolio management right now

2234
01:01:23,346 --> 01:01:25,973
and saying, we're moving cards around.

2235
01:01:26,057 --> 01:01:27,517
And I think people can be

2236
01:01:27,517 --> 01:01:28,768
a little surprised at which

2237
01:01:28,768 --> 01:01:30,478
side they end up on. Right.

2238
01:01:31,437 --> 01:01:31,854
Because

2239
01:01:31,854 --> 01:01:33,189
they're motivated by things

2240
01:01:33,189 --> 01:01:34,982
that aren't specific to that property.

2241
01:01:34,982 --> 01:01:36,776
But hey, but it's even a

2242
01:01:36,818 --> 01:01:38,820
like even if we talk about the JP

2243
01:01:38,861 --> 01:01:40,154
Morgan prediction

2244
01:01:40,154 --> 01:01:41,197
and let's just say interest rates

2245
01:01:41,239 --> 01:01:42,031
go down one

2246
01:01:42,115 --> 01:01:43,866
100 basis point, like,

2247
01:01:43,866 --> 01:01:45,076
does that really help

2248
01:01:45,076 --> 01:01:45,785
other than those on

2249
01:01:45,785 --> 01:01:46,661
the margins obviously.

2250
01:01:46,661 --> 01:01:47,704
But does it really help?

2251
01:01:47,704 --> 01:01:48,079
I mean,

2252
01:01:48,162 --> 01:01:48,996
if you again,

2253
01:01:48,996 --> 01:01:50,164
going back to the multifamily.

2254
01:01:50,206 --> 01:01:51,791
So this is maybe you know Kyle you're

2255
01:01:51,791 --> 01:01:52,458
this is your area.

2256
01:01:52,458 --> 01:01:54,585
But if you bought this property at 4%

2257
01:01:54,585 --> 01:01:55,837
or like a 4% interest

2258
01:01:55,837 --> 01:01:56,963
or four and a quarter

2259
01:01:57,046 --> 01:01:59,716
and you have a recap at 6%, like

2260
01:01:59,757 --> 01:02:01,968
the interest rates has to go down

2261
01:02:02,051 --> 01:02:04,011
to meet your stress test level, right?

2262
01:02:04,011 --> 01:02:04,178
Are you

2263
01:02:04,178 --> 01:02:05,138
you stress tested

2264
01:02:05,138 --> 01:02:06,431
where this kind of breaks

2265
01:02:06,431 --> 01:02:07,432
even or whatever.

2266
01:02:07,515 --> 01:02:08,516
The interest rates are way

2267
01:02:08,516 --> 01:02:09,517
above that stress, does it?

2268
01:02:09,517 --> 01:02:11,352
They would have to come down sufficiently

2269
01:02:11,436 --> 01:02:12,854
to reach that stress case.

2270
01:02:12,854 --> 01:02:14,147
Well, there's two sides of it, right?

2271
01:02:14,147 --> 01:02:14,814
Like there's

2272
01:02:14,897 --> 01:02:15,440
the one you're

2273
01:02:15,440 --> 01:02:17,275
the side you're talking about is people

2274
01:02:17,275 --> 01:02:17,817
being able

2275
01:02:17,817 --> 01:02:19,652
to like perform

2276
01:02:19,652 --> 01:02:21,279
on their current held assets.

2277
01:02:21,279 --> 01:02:22,363
And then there's the other side

2278
01:02:22,447 --> 01:02:24,574
to getting to getting the two to the DCR,

2279
01:02:24,657 --> 01:02:25,700
DSR right.

2280
01:02:25,783 --> 01:02:27,034
That then the other side of

2281
01:02:27,034 --> 01:02:28,578
is it like like

2282
01:02:28,661 --> 01:02:29,954
if it does come down

2283
01:02:29,954 --> 01:02:31,164
significantly enough,

2284
01:02:31,164 --> 01:02:33,458
first of all, it's not 1 to 1.

2285
01:02:33,541 --> 01:02:36,252
So like if the ten year Treasury

2286
01:02:36,335 --> 01:02:37,670
like it wasn't that long ago,

2287
01:02:37,712 --> 01:02:39,380
the ten year Treasury was was below

2288
01:02:39,380 --> 01:02:40,381
four and staying for

2289
01:02:40,381 --> 01:02:41,299
and we didn't think it was going

2290
01:02:41,299 --> 01:02:43,384
to go ever going to go above four

2291
01:02:43,468 --> 01:02:44,927
if it comes down.

2292
01:02:45,011 --> 01:02:47,805
And the other side of this is too,

2293
01:02:47,805 --> 01:02:50,349
if banks start to get a little bit

2294
01:02:50,349 --> 01:02:52,351
more comfortable with rates

2295
01:02:52,351 --> 01:02:53,060
and where they are

2296
01:02:53,060 --> 01:02:54,187
and them not running up

2297
01:02:54,187 --> 01:02:56,022
and not doing anything crazy,

2298
01:02:56,105 --> 01:02:57,690
like we still have a lot of runway

2299
01:02:57,690 --> 01:02:59,150
in spreads, two

2300
01:02:59,233 --> 01:03:01,319
that spread above the treasuries.

2301
01:03:01,402 --> 01:03:04,697
So like we could see if we see rates

2302
01:03:04,781 --> 01:03:06,115
come down for multifamily,

2303
01:03:06,115 --> 01:03:08,326
if we see that ten year treasury down,

2304
01:03:08,409 --> 01:03:10,119
you know, in the 4% range,

2305
01:03:10,119 --> 01:03:12,455
and then banks all of a sudden are,

2306
01:03:12,538 --> 01:03:12,914
you know,

2307
01:03:12,914 --> 01:03:14,624
they're bringing their spreads down

2308
01:03:14,707 --> 01:03:16,292
that like let's say we get it down

2309
01:03:16,292 --> 01:03:17,919
to like ten year treasury at three,

2310
01:03:17,960 --> 01:03:18,628
seven, five.

2311
01:03:18,628 --> 01:03:19,045
And the bank

2312
01:03:19,045 --> 01:03:21,297
spreads are like one and a half,

2313
01:03:21,297 --> 01:03:23,508
which we we've seen at some points

2314
01:03:23,508 --> 01:03:25,551
that's low, but that's, we've seen that.

2315
01:03:25,635 --> 01:03:26,302
Then all of a sudden

2316
01:03:26,302 --> 01:03:27,053
we're looking at five

2317
01:03:27,053 --> 01:03:28,763
and a quarter rates.

2318
01:03:28,846 --> 01:03:31,057
Then like that's, that's significant.

2319
01:03:31,057 --> 01:03:31,724
And then all of a sudden

2320
01:03:31,724 --> 01:03:33,100
we're seeing cap rates come down

2321
01:03:33,100 --> 01:03:34,018
quite a bit.

2322
01:03:34,101 --> 01:03:35,770
So if the cap rates come down

2323
01:03:35,770 --> 01:03:37,814
quite a bit, even if those properties

2324
01:03:37,897 --> 01:03:40,399
that are on those, those loans that,

2325
01:03:40,441 --> 01:03:41,859
you know, word

2326
01:03:41,943 --> 01:03:42,735
really got hit,

2327
01:03:42,735 --> 01:03:44,487
they took about the peak of the market,

2328
01:03:44,570 --> 01:03:46,697
at least they should be able to exit.

2329
01:03:46,697 --> 01:03:47,949
You're getting a more fluid

2330
01:03:47,949 --> 01:03:48,950
market, right.

2331
01:03:49,033 --> 01:03:50,618
They should be able to get out of it.

2332
01:03:50,618 --> 01:03:51,202
The problem is

2333
01:03:51,202 --> 01:03:53,746
you can't get out of these loans at all.

2334
01:03:53,830 --> 01:03:55,164
You gets the second.

2335
01:03:55,206 --> 01:03:55,581
Like,

2336
01:03:55,581 --> 01:03:58,125
I don't think I think for us

2337
01:03:58,125 --> 01:04:01,087
and Wells, it's it is actually the

2338
01:04:02,839 --> 01:04:05,383
it really second or third consequence.

2339
01:04:05,466 --> 01:04:06,676
It

2340
01:04:06,759 --> 01:04:08,386
lower rates

2341
01:04:08,469 --> 01:04:11,472
will help move the housing market.

2342
01:04:11,722 --> 01:04:13,391
And I think that

2343
01:04:13,474 --> 01:04:15,142
is going to be beneficial. Right.

2344
01:04:15,184 --> 01:04:17,478
I mean for, for our industry,

2345
01:04:17,562 --> 01:04:20,565
if we got rates to come down

2346
01:04:20,815 --> 01:04:23,818
100 basis points, we already saw it last.

2347
01:04:24,569 --> 01:04:25,653
Was it last spring?

2348
01:04:25,653 --> 01:04:27,446
J when we saw that drop in the rates

2349
01:04:27,446 --> 01:04:28,322
where it was like,

2350
01:04:28,406 --> 01:04:29,740
oh it was well I don't remember.

2351
01:04:29,740 --> 01:04:31,492
That was me.

2352
01:04:31,576 --> 01:04:31,993
Yeah. Right.

2353
01:04:31,993 --> 01:04:33,286
Where that sudden drop

2354
01:04:33,369 --> 01:04:35,538
occupancy across our portfolio

2355
01:04:35,621 --> 01:04:36,539
boom shot up.

2356
01:04:36,539 --> 01:04:39,792
We were having like 150 200 move a day.

2357
01:04:40,543 --> 01:04:43,045
And then when the rates went back up,

2358
01:04:43,129 --> 01:04:44,881
completely done.

2359
01:04:44,964 --> 01:04:47,133
And it was amazing

2360
01:04:47,133 --> 01:04:50,052
how much pent up demand

2361
01:04:50,136 --> 01:04:51,512
there was

2362
01:04:51,596 --> 01:04:54,765
that even a small move in the markets

2363
01:04:55,516 --> 01:04:56,976
immediately shot

2364
01:04:57,059 --> 01:04:58,603
changed the housing market.

2365
01:04:58,603 --> 01:04:59,353
And I think there's a

2366
01:04:59,353 --> 01:05:00,771
lot of that going on.

2367
01:05:00,855 --> 01:05:02,607
Not just in the housing market.

2368
01:05:02,690 --> 01:05:04,901
And whether you're multifamily

2369
01:05:04,984 --> 01:05:07,445
or storage, moving is good.

2370
01:05:07,528 --> 01:05:07,945
People.

2371
01:05:07,945 --> 01:05:10,239
Moving from California to Texas

2372
01:05:10,323 --> 01:05:11,324
is really good.

2373
01:05:11,324 --> 01:05:13,701
When you own multifamily in Texas, right?

2374
01:05:13,784 --> 01:05:16,746
So when you have a market that's frozen,

2375
01:05:17,246 --> 01:05:19,373
commercial real estate gets hit.

2376
01:05:19,457 --> 01:05:21,792
And so we need movement

2377
01:05:21,792 --> 01:05:23,169
and economic activity,

2378
01:05:23,252 --> 01:05:24,879
not just in the form of cap

2379
01:05:24,879 --> 01:05:25,963
rates sale,

2380
01:05:25,963 --> 01:05:28,716
but in the form of overall demand

2381
01:05:28,716 --> 01:05:30,134
from people having different

2382
01:05:30,134 --> 01:05:31,177
housing choices,

2383
01:05:31,177 --> 01:05:32,637
lifestyle choices

2384
01:05:32,637 --> 01:05:33,638
and being able

2385
01:05:33,638 --> 01:05:35,222
to actually extract on that.

2386
01:05:35,222 --> 01:05:37,808
You get 100 basis point.

2387
01:05:37,808 --> 01:05:39,060
I mean, we saw movement,

2388
01:05:39,143 --> 01:05:41,354
you get 200 basis point change.

2389
01:05:41,437 --> 01:05:44,774
It's an entirely different world

2390
01:05:45,316 --> 01:05:48,235
for us than we've been in for two years.

2391
01:05:48,319 --> 01:05:49,028
Fair enough.

2392
01:05:49,028 --> 01:05:50,237
Well,

2393
01:05:50,321 --> 01:05:52,990
any final thoughts, Mauricio J or,

2394
01:05:53,074 --> 01:05:55,034
can we get a sneak at the top ten here?

2395
01:05:55,034 --> 01:05:56,535
I know Mauricio has been waiting.

2396
01:05:56,619 --> 01:05:58,204
Let me see if I can stall this out

2397
01:05:58,204 --> 01:05:59,205
for another hour

2398
01:05:59,205 --> 01:06:00,623
so we can avoid the top ten.

2399
01:06:00,623 --> 01:06:01,749
Let me see what I can come back.

2400
01:06:01,749 --> 01:06:02,416
One topic

2401
01:06:02,416 --> 01:06:03,542
and we're still one over an hour.

2402
01:06:03,626 --> 01:06:04,627
Good job guys.

2403
01:06:04,710 --> 01:06:07,171
Yeah, I mean, this is at the root.

2404
01:06:07,171 --> 01:06:07,672
I feel like

2405
01:06:07,672 --> 01:06:09,465
there are some people who that they love

2406
01:06:09,465 --> 01:06:10,424
to listen to the podcast

2407
01:06:10,424 --> 01:06:12,969
just for some real world. So yeah. 100%.

2408
01:06:13,052 --> 01:06:14,470
This is a good of what we're seeing.

2409
01:06:14,470 --> 01:06:15,888
So I it's always good to

2410
01:06:15,972 --> 01:06:16,681
come back to that.

2411
01:06:16,681 --> 01:06:18,099
Every once in a while. We'll touch on it.

2412
01:06:18,099 --> 01:06:20,476
Hopefully in a month it'll be a second.

2413
01:06:20,518 --> 01:06:21,978
Let's let's do quick predictions.

2414
01:06:21,978 --> 01:06:23,062
How many rate cuts are we going to see

2415
01:06:23,062 --> 01:06:23,896
before the end of the year.

2416
01:06:23,980 --> 01:06:26,023
Oh, let's define what rate cuts.

2417
01:06:26,023 --> 01:06:26,607
Thank you. So

2418
01:06:27,733 --> 01:06:29,568
we have three more meetings.

2419
01:06:29,652 --> 01:06:31,278
There's going to be six

2420
01:06:31,362 --> 01:06:34,365
different rate cuts

2421
01:06:35,199 --> 01:06:36,575
ten basis point each.

2422
01:06:36,575 --> 01:06:39,161
I mean, we could joke theoretically like

2423
01:06:39,161 --> 01:06:40,538
the fed can call an emergency

2424
01:06:40,538 --> 01:06:42,707
meeting at anytime. That's true.

2425
01:06:42,790 --> 01:06:44,125
I'll start it off.

2426
01:06:44,125 --> 01:06:44,959
I'm going to say

2427
01:06:44,959 --> 01:06:47,003
we're going to see 50

2428
01:06:47,003 --> 01:06:48,337
basis points between.

2429
01:06:48,337 --> 01:06:48,921
Oh, I

2430
01:06:49,005 --> 01:06:50,214
that's why you wanted to start it off.

2431
01:06:50,214 --> 01:06:50,548
Because that's

2432
01:06:50,548 --> 01:06:51,590
I feel like that's

2433
01:06:51,674 --> 01:06:54,010
a general conservative consensus.

2434
01:06:54,010 --> 01:06:56,429
Well JP Morgan says 100 basis.

2435
01:06:56,512 --> 01:06:59,348
Yeah I know but I said 75 whatever

2436
01:06:59,348 --> 01:07:00,349
that was two weeks ago

2437
01:07:00,349 --> 01:07:01,308
and I'm sticking with it.

2438
01:07:01,392 --> 01:07:03,602
75 Mauricio

2439
01:07:03,686 --> 01:07:06,022
I think it's going to be data dependent.

2440
01:07:06,105 --> 01:07:08,482
I agree on that, Jerome.

2441
01:07:08,566 --> 01:07:10,568
It was not so low.

2442
01:07:10,651 --> 01:07:12,111
So I think it was like

2443
01:07:12,194 --> 01:07:13,029
these days, though,

2444
01:07:13,112 --> 01:07:13,612
where

2445
01:07:13,696 --> 01:07:14,321
we're apparently

2446
01:07:14,321 --> 01:07:15,865
getting news that the BLS might

2447
01:07:15,865 --> 01:07:17,742
just stop reporting jobs.

2448
01:07:17,742 --> 01:07:18,743
So, like, you know what,

2449
01:07:18,743 --> 01:07:20,244
what data they depending on.

2450
01:07:20,327 --> 01:07:21,078
Yeah, I heard

2451
01:07:21,078 --> 01:07:22,580
the BLS might be changing their,

2452
01:07:22,663 --> 01:07:23,247
their technique.

2453
01:07:23,247 --> 01:07:24,040
No, I think,

2454
01:07:24,040 --> 01:07:24,331
you know,

2455
01:07:24,331 --> 01:07:26,000
all kidding aside, I think, you know,

2456
01:07:26,042 --> 01:07:28,836
I think the September 11th report

2457
01:07:28,836 --> 01:07:30,046
will dictate

2458
01:07:30,046 --> 01:07:31,797
if the September 11th report

2459
01:07:31,797 --> 01:07:33,090
shows more weakening that I'm.

2460
01:07:33,090 --> 01:07:34,592
Look, I'm just gonna say 50 basis

2461
01:07:34,633 --> 01:07:36,135
I I'm ruling out AJ.

2462
01:07:36,135 --> 01:07:36,635
AJ is

2463
01:07:36,635 --> 01:07:37,887
I don't know what he's smoking today

2464
01:07:37,887 --> 01:07:38,763
75 I forgot it.

2465
01:07:38,763 --> 01:07:40,931
There's no way 75 basis point but 50.

2466
01:07:40,931 --> 01:07:43,976
If the if the September 11th comes bad

2467
01:07:44,060 --> 01:07:45,102
I could see 50.

2468
01:07:45,102 --> 01:07:46,854
But if it's normal I'm

2469
01:07:46,937 --> 01:07:47,521
to we're talking about

2470
01:07:47,521 --> 01:07:48,647
by the end of the year

2471
01:07:48,731 --> 01:07:49,982
how many how many ways are

2472
01:07:49,982 --> 01:07:50,900
we allowed to hedge this?

2473
01:07:50,900 --> 01:07:52,526
Am I allowed to hedge each meeting

2474
01:07:52,526 --> 01:07:53,861
and each jobs report

2475
01:07:53,861 --> 01:07:55,988
or or we just get one like Mauricio,

2476
01:07:55,988 --> 01:07:57,656
we're allowed to hedge one time.

2477
01:07:57,740 --> 01:07:59,200
Mine's going to be a moving average.

2478
01:07:59,200 --> 01:07:59,992
I'm going to adjust it

2479
01:07:59,992 --> 01:08:02,203
every time the fed speaks. Yes, exactly.

2480
01:08:02,244 --> 01:08:03,579
Every every

2481
01:08:03,662 --> 01:08:06,332
I'm just episode until I get it right.

2482
01:08:06,415 --> 01:08:08,417
Just because Mauricio said that

2483
01:08:08,417 --> 01:08:09,877
AJ smoking something

2484
01:08:09,877 --> 01:08:11,045
by saying 75, I'm

2485
01:08:11,045 --> 01:08:12,088
going to say 75 to

2486
01:08:12,088 --> 01:08:13,297
then just to jump on with it.

2487
01:08:13,297 --> 01:08:13,672
Well, we know,

2488
01:08:13,756 --> 01:08:15,466
we know you're smoking is just more it's

2489
01:08:15,508 --> 01:08:17,134
rare for AJ to be smoking,

2490
01:08:17,134 --> 01:08:18,844
but for you it's like a daily occurrence.

2491
01:08:18,928 --> 01:08:20,930
I'm going to be in Canada in like a week

2492
01:08:21,013 --> 01:08:21,889
I guess most.

2493
01:08:21,972 --> 01:08:23,349
I can't make this joke anymore

2494
01:08:23,349 --> 01:08:24,308
because most of the US

2495
01:08:24,308 --> 01:08:25,267
it's legal anyway now.

2496
01:08:25,267 --> 01:08:25,810
But I was gonna say in

2497
01:08:25,810 --> 01:08:27,561
Canada it's completely legal.

2498
01:08:27,645 --> 01:08:29,146
Yeah, me and you will be in Canada

2499
01:08:29,146 --> 01:08:30,022
in a week.

2500
01:08:30,106 --> 01:08:30,856
I'm going to be in Canada

2501
01:08:30,856 --> 01:08:32,608
a couple in like next month or something.

2502
01:08:32,608 --> 01:08:33,192
And we're all going

2503
01:08:33,275 --> 01:08:34,693
to let you guys in jeans.

2504
01:08:34,777 --> 01:08:36,821
I'm snaking, running across the border.

2505
01:08:36,862 --> 01:08:37,947
Oh that's right.

2506
01:08:38,030 --> 01:08:39,615
Aren't you bringing guns too?

2507
01:08:39,698 --> 01:08:40,699
Yeah, that's

2508
01:08:40,783 --> 01:08:41,700
that's got to be a tough one.

2509
01:08:41,742 --> 01:08:42,701
Have I know?

2510
01:08:42,701 --> 01:08:44,954
Okay, I'm telling you the story.

2511
01:08:45,037 --> 01:08:46,622
This is my favorite story about.

2512
01:08:46,705 --> 01:08:48,374
You're already told it on the podcast

2513
01:08:48,374 --> 01:08:49,542
one time.

2514
01:08:49,625 --> 01:08:49,875
Okay.

2515
01:08:49,917 --> 01:08:50,584
I'm telling again

2516
01:08:50,626 --> 01:08:52,586
I'm guns in the airport.

2517
01:08:52,670 --> 01:08:53,045
All right.

2518
01:08:53,045 --> 01:08:54,463
My one of the about the airport.

2519
01:08:54,547 --> 01:08:56,090
Everyone that listen to this podcast

2520
01:08:56,090 --> 01:08:56,549
and heard it.

2521
01:08:56,549 --> 01:08:57,675
You are going to sit

2522
01:08:57,675 --> 01:08:59,301
and listen to this again.

2523
01:08:59,385 --> 01:09:00,094
All right, well, let's do it.

2524
01:09:00,094 --> 01:09:01,095
Cheers to the drink.

2525
01:09:01,095 --> 01:09:02,388
While we're while we're doing this,

2526
01:09:02,388 --> 01:09:04,640
I'm drinking Woodford, by the way.

2527
01:09:04,723 --> 01:09:06,517
Diet Coke solo cup baby

2528
01:09:06,600 --> 01:09:08,769
red blend from North Carolina.

2529
01:09:08,853 --> 01:09:09,228
All right.

2530
01:09:09,228 --> 01:09:11,480
So I love Canada like I'm.

2531
01:09:11,480 --> 01:09:12,940
You know, I, I do, you know.

2532
01:09:12,982 --> 01:09:16,485
Okay, listen, I love western Canada,

2533
01:09:17,069 --> 01:09:17,945
so I,

2534
01:09:19,488 --> 01:09:21,699
I love Vancouver.

2535
01:09:21,699 --> 01:09:24,201
He doesn't love Vancouver I love Alberta.

2536
01:09:24,285 --> 01:09:27,496
So I, I go up I go up there,

2537
01:09:28,497 --> 01:09:28,747
I mean,

2538
01:09:28,747 --> 01:09:29,373
almost once a year,

2539
01:09:29,373 --> 01:09:31,125
but we go up there,

2540
01:09:31,125 --> 01:09:32,543
and it was on a hunting trip with my son

2541
01:09:32,543 --> 01:09:33,878
because he wanted to go hunting.

2542
01:09:33,878 --> 01:09:35,629
I'm not a hunter, but I guess I am now

2543
01:09:35,671 --> 01:09:37,339
because he wants to be,

2544
01:09:37,423 --> 01:09:38,924
I go to the airport.

2545
01:09:38,924 --> 01:09:40,926
They're crazy about guts.

2546
01:09:40,926 --> 01:09:42,178
They kick you out of the airport.

2547
01:09:42,178 --> 01:09:42,887
You got to go check in.

2548
01:09:42,887 --> 01:09:43,679
You got to come back,

2549
01:09:43,679 --> 01:09:44,263
and you're going through

2550
01:09:44,263 --> 01:09:46,182
all the security stuff, and I'm in there.

2551
01:09:46,182 --> 01:09:47,183
And I asked the guy,

2552
01:09:47,183 --> 01:09:47,892
we're down in the bottom.

2553
01:09:47,892 --> 01:09:48,100
I'm like,

2554
01:09:48,184 --> 01:09:50,227
do you think this is a little overkill?

2555
01:09:50,227 --> 01:09:51,687
First of all, not a lot of this

2556
01:09:51,687 --> 01:09:53,189
even makes sense.

2557
01:09:53,272 --> 01:09:57,067
And let me tell you what, I got a speech.

2558
01:09:57,443 --> 01:10:00,613
And that speech was how us Americans

2559
01:10:00,696 --> 01:10:03,699
don't value things like guns

2560
01:10:03,782 --> 01:10:04,742
and Canadians.

2561
01:10:04,742 --> 01:10:07,745
They understand how dangerous

2562
01:10:07,828 --> 01:10:09,663
guns are, and they take care of it,

2563
01:10:09,663 --> 01:10:11,332
and they got to be careful with it.

2564
01:10:11,415 --> 01:10:12,833
And this is a serious matter

2565
01:10:12,833 --> 01:10:15,544
to Canadians, unlike Americans.

2566
01:10:15,628 --> 01:10:17,087
So I'm like,

2567
01:10:17,171 --> 01:10:18,756
okay, sorry,

2568
01:10:18,756 --> 01:10:20,216
I shouldn't have said anything.

2569
01:10:20,299 --> 01:10:22,718
I was like, I got my big speech.

2570
01:10:22,801 --> 01:10:25,304
We go and we head up to the Yukon, okay?

2571
01:10:25,387 --> 01:10:26,513
We get there.

2572
01:10:26,597 --> 01:10:27,765
Guns aren't there.

2573
01:10:27,848 --> 01:10:29,808
Nobody knows where our guns are.

2574
01:10:29,892 --> 01:10:30,976
Can't find them.

2575
01:10:31,060 --> 01:10:32,937
We have to leave the airport.

2576
01:10:33,020 --> 01:10:34,939
So the following day, I'm

2577
01:10:35,022 --> 01:10:35,648
everything we're

2578
01:10:35,648 --> 01:10:39,276
calling our guns and ammo are gone.

2579
01:10:39,944 --> 01:10:40,736
So I'm like,

2580
01:10:40,736 --> 01:10:41,528
maybe I could talk

2581
01:10:41,528 --> 01:10:42,404
with somebody at the airport.

2582
01:10:42,404 --> 01:10:43,113
We can't get anything.

2583
01:10:43,197 --> 01:10:44,865
So I go to the airport,

2584
01:10:44,949 --> 01:10:46,116
not in the security,

2585
01:10:46,116 --> 01:10:46,992
you know, out where they have,

2586
01:10:46,992 --> 01:10:47,743
like, baggage.

2587
01:10:47,743 --> 01:10:49,745
And then there's a huge walking area

2588
01:10:49,828 --> 01:10:51,372
in the middle of the airport

2589
01:10:51,372 --> 01:10:55,584
is sitting on the floor, my guns and ammo

2590
01:10:56,126 --> 01:10:58,963
sitting as people are walking by,

2591
01:10:59,046 --> 01:11:01,215
just strolling through the airport.

2592
01:11:01,298 --> 01:11:02,216
I look around,

2593
01:11:02,258 --> 01:11:03,050
I walk over,

2594
01:11:03,050 --> 01:11:04,927
I just grab my guns and ammo

2595
01:11:05,010 --> 01:11:05,928
and walked out.

2596
01:11:06,011 --> 01:11:06,929
And they're just sitting

2597
01:11:06,929 --> 01:11:08,722
in the middle of the airport.

2598
01:11:08,806 --> 01:11:09,848
I don't know how long they were

2599
01:11:09,848 --> 01:11:10,516
there for.

2600
01:11:10,516 --> 01:11:11,850
You should have put a big sticker on it

2601
01:11:11,850 --> 01:11:13,143
like this is a gun,

2602
01:11:13,143 --> 01:11:13,602
and then

2603
01:11:13,602 --> 01:11:15,312
maybe they would have taken it better.

2604
01:11:15,396 --> 01:11:16,480
Oh wait, no, you could tell

2605
01:11:16,480 --> 01:11:18,565
it was in a gun bag.

2606
01:11:18,649 --> 01:11:21,110
I don't know, guns, I assume was a rifle.

2607
01:11:21,110 --> 01:11:21,360
That's.

2608
01:11:21,360 --> 01:11:22,945
That looks a lot like a hockey stick.

2609
01:11:22,945 --> 01:11:23,654
And those are just left

2610
01:11:23,654 --> 01:11:24,822
around everywhere in Canada.

2611
01:11:24,822 --> 01:11:27,283
So Canadians don't steal stuff.

2612
01:11:27,366 --> 01:11:28,033
All right. Sorry.

2613
01:11:28,033 --> 01:11:30,035
I love that story I got. All right.

2614
01:11:30,035 --> 01:11:33,247
I got a little off beat top ten here.

2615
01:11:33,330 --> 01:11:34,081
And it's just

2616
01:11:34,081 --> 01:11:35,165
just because it was something

2617
01:11:35,165 --> 01:11:36,125
interesting that I found,

2618
01:11:36,208 --> 01:11:39,211
I saw a random article about this.

2619
01:11:39,586 --> 01:11:40,963
I don't even know how it's pronounced.

2620
01:11:40,963 --> 01:11:41,964
SLA train.

2621
01:11:43,090 --> 01:11:44,842
And they were really

2622
01:11:44,925 --> 01:11:45,884
excited about it

2623
01:11:45,884 --> 01:11:46,468
because it's

2624
01:11:46,468 --> 01:11:47,177
now going to go up

2625
01:11:47,177 --> 01:11:49,179
to 160mph,

2626
01:11:49,179 --> 01:11:50,514
surpassing the current fleet

2627
01:11:50,514 --> 01:11:51,307
of ten miles per hour.

2628
01:11:51,307 --> 01:11:54,101
And I thought to myself, Holy, 160mph.

2629
01:11:54,101 --> 01:11:55,436
That's fast.

2630
01:11:55,519 --> 01:11:58,522
But then they mentioned in the article

2631
01:11:58,689 --> 01:11:59,273
how like,

2632
01:11:59,273 --> 01:12:00,733
we have very antiquated,

2633
01:12:00,733 --> 01:12:03,235
antiquated rail systems

2634
01:12:03,235 --> 01:12:04,570
and how this is like

2635
01:12:04,653 --> 01:12:05,446
nothing compared

2636
01:12:05,446 --> 01:12:06,238
to the rest of the world.

2637
01:12:06,238 --> 01:12:08,324
And I was like 160 miles.

2638
01:12:08,324 --> 01:12:09,742
That's that's not even fast.

2639
01:12:09,825 --> 01:12:10,242
So I was like,

2640
01:12:10,242 --> 01:12:12,286
what is the rest of the world doing?

2641
01:12:12,369 --> 01:12:13,329
And so I went and looked it

2642
01:12:13,329 --> 01:12:14,038
up, and I thought,

2643
01:12:14,038 --> 01:12:15,039
this would be interesting

2644
01:12:15,039 --> 01:12:16,582
to talk about

2645
01:12:16,582 --> 01:12:17,833
how fast the trains

2646
01:12:17,833 --> 01:12:20,627
go in some of these other countries.

2647
01:12:20,711 --> 01:12:22,338
So,

2648
01:12:22,421 --> 01:12:23,464
there's quite a few of them.

2649
01:12:23,464 --> 01:12:25,632
They almost all use the same systems.

2650
01:12:25,716 --> 01:12:27,217
But so we'll start with

2651
01:12:27,217 --> 01:12:28,761
number seven and it's a tie,

2652
01:12:30,429 --> 01:12:32,181
186mph in the

2653
01:12:32,181 --> 01:12:35,184
United Kingdom, Germany, Italy,

2654
01:12:35,976 --> 01:12:38,228
and China, one of the Chinese ones.

2655
01:12:38,228 --> 01:12:41,231
I'll go 186mph, which

2656
01:12:41,231 --> 01:12:42,733
obviously that's faster, 160,

2657
01:12:42,733 --> 01:12:43,609
but it's not like, okay,

2658
01:12:43,609 --> 01:12:45,110
like that much faster.

2659
01:12:45,194 --> 01:12:49,823
Then we get to South Korea 190mph.

2660
01:12:49,907 --> 01:12:53,619
Then we get to Spain 193mph.

2661
01:12:54,203 --> 01:12:57,122
And then in Morocco and France,

2662
01:12:57,206 --> 01:13:00,250
they have trains that go 199mph.

2663
01:13:01,043 --> 01:13:03,337
And then and Japan, sorry, Japan's

2664
01:13:03,337 --> 01:13:07,007
199mph, but it's capable of reaching 217.

2665
01:13:07,091 --> 01:13:07,674
They just don't

2666
01:13:07,716 --> 01:13:11,053
they just dial it back and then in

2667
01:13:11,470 --> 01:13:12,221
I'm not even going to one

2668
01:13:12,304 --> 01:13:16,433
few Fuyang how China they have trains.

2669
01:13:16,517 --> 01:13:17,184
Their trains

2670
01:13:17,184 --> 01:13:21,730
go 217mph from place to place.

2671
01:13:22,689 --> 01:13:22,856
You know,

2672
01:13:22,856 --> 01:13:23,816
it doesn't really seem

2673
01:13:23,816 --> 01:13:25,984
that much faster than 160.

2674
01:13:26,068 --> 01:13:27,778
But think about an hour trip though.

2675
01:13:27,861 --> 01:13:28,862
Like how much farther?

2676
01:13:28,862 --> 01:13:29,988
Like like okay,

2677
01:13:30,072 --> 01:13:31,407
like I was I like,

2678
01:13:31,490 --> 01:13:32,950
I took I like taking the train

2679
01:13:32,950 --> 01:13:34,201
to New York City

2680
01:13:34,284 --> 01:13:36,370
and like, that trip takes an hour

2681
01:13:36,370 --> 01:13:37,413
and a half to two hours,

2682
01:13:37,413 --> 01:13:39,456
depending on which train you take.

2683
01:13:39,540 --> 01:13:41,917
And I know a lot of these trains

2684
01:13:41,917 --> 01:13:44,086
go like New York to Washington,

2685
01:13:44,169 --> 01:13:46,338
like you will be cutting off hours

2686
01:13:46,338 --> 01:13:47,756
to that trip

2687
01:13:47,840 --> 01:13:49,299
by train like you could if you were.

2688
01:13:49,299 --> 01:13:50,384
If we had trains

2689
01:13:50,384 --> 01:13:51,802
going from Philadelphia

2690
01:13:51,802 --> 01:13:54,805
to New York at 217mph,

2691
01:13:54,930 --> 01:13:56,181
that means it would be

2692
01:13:56,265 --> 01:13:57,891
it was like less than an hour

2693
01:13:57,975 --> 01:13:59,726
to get from Philadelphia

2694
01:13:59,810 --> 01:14:01,603
to to New York City.

2695
01:14:01,687 --> 01:14:02,771
And if you do that, like,

2696
01:14:02,771 --> 01:14:03,355
people would just

2697
01:14:03,355 --> 01:14:05,274
live here in Philadelphia

2698
01:14:05,274 --> 01:14:07,151
and every day commute to New York.

2699
01:14:07,192 --> 01:14:09,111
That's what they're doing in California.

2700
01:14:09,194 --> 01:14:10,821
I mean, they've been, you know,

2701
01:14:10,904 --> 01:14:12,781
now 20 years.

2702
01:14:12,865 --> 01:14:15,367
They've been, doing that, that train.

2703
01:14:15,367 --> 01:14:18,162
And, how many billions have they spent?

2704
01:14:18,245 --> 01:14:21,331
I mean, there is no train nor tracks, nor

2705
01:14:21,790 --> 01:14:23,584
anything else, but,

2706
01:14:23,667 --> 01:14:24,585
they've been trying

2707
01:14:24,668 --> 01:14:26,670
so I think they they give up.

2708
01:14:26,753 --> 01:14:28,964
I still know, I know one guy,

2709
01:14:30,048 --> 01:14:31,550
a who, like,

2710
01:14:31,633 --> 01:14:33,260
our kids go to school together.

2711
01:14:33,343 --> 01:14:34,553
He works in New York City,

2712
01:14:34,553 --> 01:14:35,721
but he only has to go in the office

2713
01:14:35,721 --> 01:14:37,347
2 to 3 times a week.

2714
01:14:37,431 --> 01:14:38,682
And so he takes the train

2715
01:14:38,682 --> 01:14:40,601
2 or 3 times a week in New York City.

2716
01:14:40,601 --> 01:14:41,768
It takes some, you know, an hour

2717
01:14:41,768 --> 01:14:42,895
and 45 minutes.

2718
01:14:42,895 --> 01:14:45,647
But like, imagine if that was 45 minutes,

2719
01:14:45,731 --> 01:14:47,232
like it would just break down

2720
01:14:47,232 --> 01:14:47,649
all of these,

2721
01:14:47,649 --> 01:14:49,318
especially these northeast cities

2722
01:14:49,318 --> 01:14:51,612
that are all like three hours apart,

2723
01:14:51,695 --> 01:14:52,654
like people would just live

2724
01:14:52,654 --> 01:14:53,197
where it's cheap.

2725
01:14:53,197 --> 01:14:54,406
I'll think about the West.

2726
01:14:54,490 --> 01:14:57,075
Our closest city is seven hours away.

2727
01:14:57,159 --> 01:14:59,286
That's the closest one to us.

2728
01:14:59,369 --> 01:15:01,538
So, you know, if you had a metro,

2729
01:15:01,538 --> 01:15:02,831
if you had a train

2730
01:15:02,915 --> 01:15:04,166
that connected,

2731
01:15:04,249 --> 01:15:07,127
literally, you went from Seattle,

2732
01:15:07,211 --> 01:15:09,421
Boise, Salt Lake, Denver,

2733
01:15:09,505 --> 01:15:12,174
and then you could go to like, Texas.

2734
01:15:12,257 --> 01:15:14,635
I mean, the United States is

2735
01:15:14,635 --> 01:15:16,094
the perfect landscape

2736
01:15:16,094 --> 01:15:18,680
for that kind of stuff because it's huge.

2737
01:15:18,764 --> 01:15:21,892
And if you connected metros, I mean it

2738
01:15:21,975 --> 01:15:24,895
to the density problem traffic in LA.

2739
01:15:24,978 --> 01:15:26,146
Like who?

2740
01:15:26,146 --> 01:15:28,982
If you had a train that went downtown LA,

2741
01:15:29,066 --> 01:15:30,400
they could go up the coast

2742
01:15:30,400 --> 01:15:31,485
to those other cities.

2743
01:15:31,485 --> 01:15:33,487
You would disperse population

2744
01:15:33,570 --> 01:15:36,406
like for for reference to that 160

2745
01:15:36,406 --> 01:15:37,366
is really fast

2746
01:15:37,366 --> 01:15:38,992
compared to the next fastest.

2747
01:15:38,992 --> 01:15:39,868
J should know this.

2748
01:15:39,868 --> 01:15:41,745
What's the next fastest train in the U.S?

2749
01:15:43,747 --> 01:15:44,540
Oh come on,

2750
01:15:44,623 --> 01:15:45,999
it's all over the bright line.

2751
01:15:45,999 --> 01:15:47,417
And in Florida

2752
01:15:47,501 --> 01:15:49,169
goes 125mph

2753
01:15:49,169 --> 01:15:50,629
and just kills people every day.

2754
01:15:50,712 --> 01:15:51,713
It's nowhere near me.

2755
01:15:51,713 --> 01:15:52,714
So I have no idea

2756
01:15:52,714 --> 01:15:52,923
is that

2757
01:15:52,965 --> 01:15:53,590
I think that's the one

2758
01:15:53,590 --> 01:15:55,342
that they're talking about extending

2759
01:15:55,425 --> 01:15:56,468
to Orlando, to Miami.

2760
01:15:56,468 --> 01:15:58,011
So nowhere near you, like, isn't

2761
01:15:58,053 --> 01:15:59,638
Orlando like an hour from you?

2762
01:15:59,721 --> 01:16:01,932
Well, Orlando's two hours from me

2763
01:16:02,015 --> 01:16:02,933
with all the stops.

2764
01:16:02,933 --> 01:16:03,350
I'm better off

2765
01:16:03,350 --> 01:16:04,476
just popping on a horse

2766
01:16:04,476 --> 01:16:05,352
and just galloping.

2767
01:16:05,352 --> 01:16:06,311
But by the way, when we say

2768
01:16:06,311 --> 01:16:09,314
two hours, that's like a, hour

2769
01:16:09,398 --> 01:16:12,401
train ride at 160 miles an hour.

2770
01:16:13,235 --> 01:16:15,862
Anyway, you got to, you got to need.

2771
01:16:15,862 --> 01:16:16,572
What's it called?

2772
01:16:16,655 --> 01:16:17,322
Hypotheticals.

2773
01:16:17,322 --> 01:16:19,741
First J to finish this off.

2774
01:16:19,825 --> 01:16:20,492
Here's one.

2775
01:16:20,576 --> 01:16:21,159
How much would

2776
01:16:21,159 --> 01:16:22,494
somebody have to pay you

2777
01:16:22,578 --> 01:16:24,997
to be ten years older immediately,

2778
01:16:25,956 --> 01:16:26,915
at ten years to your

2779
01:16:26,915 --> 01:16:29,918
life, but $1 billion?

2780
01:16:30,127 --> 01:16:30,794
Can you at

2781
01:16:30,794 --> 01:16:32,337
can I also determine

2782
01:16:32,337 --> 01:16:33,463
what kind of shape I'm going at?

2783
01:16:33,463 --> 01:16:34,756
Can I be in, like, tip top shape

2784
01:16:34,756 --> 01:16:36,174
and ten years older?

2785
01:16:36,258 --> 01:16:37,426
You can be in the same shape you're in.

2786
01:16:37,426 --> 01:16:37,843
No, no,

2787
01:16:37,843 --> 01:16:39,136
no, I'm talking about tip top shape.

2788
01:16:39,136 --> 01:16:41,221
I don't want to be the same shape.

2789
01:16:41,305 --> 01:16:41,763
Do you,

2790
01:16:41,763 --> 01:16:42,848
do you guarantee that

2791
01:16:42,848 --> 01:16:44,558
your spouse stays with you?

2792
01:16:44,641 --> 01:16:46,476
I know your spouse, Kyle.

2793
01:16:46,476 --> 01:16:47,519
You can't guarantee that.

2794
01:16:47,519 --> 01:16:49,521
Now, I might add, my

2795
01:16:49,605 --> 01:16:52,399
my spouse is looking for an excuse, so

2796
01:16:52,482 --> 01:16:53,859
I'll stay the same age.

2797
01:16:53,942 --> 01:16:54,568
Does your spouse

2798
01:16:54,568 --> 01:16:57,237
also go ten years with, you know,

2799
01:16:57,321 --> 01:16:58,614
she stays the same.

2800
01:16:58,697 --> 01:16:59,948
She stays the same age.

2801
01:17:00,032 --> 01:17:01,074
She's going to be happy about it

2802
01:17:01,074 --> 01:17:02,868
because she's going to inherit that money

2803
01:17:02,951 --> 01:17:03,869
ten years sooner.

2804
01:17:03,869 --> 01:17:06,371
We can we can joke about hypotheticals.

2805
01:17:06,371 --> 01:17:07,914
But I like I guess, like

2806
01:17:07,914 --> 01:17:08,707
if you say

2807
01:17:08,707 --> 01:17:09,791
put $1 billion

2808
01:17:09,791 --> 01:17:12,794
in front of me for ten years, I mean, now

2809
01:17:13,211 --> 01:17:14,004
I wouldn't do it.

2810
01:17:14,004 --> 01:17:15,380
No. Do I.

2811
01:17:15,380 --> 01:17:17,049
Just ten years.

2812
01:17:17,132 --> 01:17:20,052
That is, that's a $100 million a year.

2813
01:17:20,135 --> 01:17:21,094
That's my freaking life.

2814
01:17:21,136 --> 01:17:22,387
Know all the things I can do

2815
01:17:22,387 --> 01:17:23,388
in ten years.

2816
01:17:23,472 --> 01:17:24,765
Be no help with anything.

2817
01:17:24,765 --> 01:17:25,807
Here's what you're missing, AJ.

2818
01:17:25,891 --> 01:17:26,683
Here's what you're missing.

2819
01:17:26,683 --> 01:17:28,477
Do you know how many years of your life

2820
01:17:28,477 --> 01:17:29,269
you can add

2821
01:17:29,353 --> 01:17:30,520
when you have that much money?

2822
01:17:30,520 --> 01:17:31,313
With the technology

2823
01:17:31,313 --> 01:17:31,938
that's going to exist

2824
01:17:31,938 --> 01:17:33,065
and that you're going to be able to look,

2825
01:17:33,148 --> 01:17:33,899
that's a real

2826
01:17:33,899 --> 01:17:35,067
that's the best argument I've heard.

2827
01:17:35,067 --> 01:17:35,651
Marisha.

2828
01:17:35,692 --> 01:17:37,694
Never giving up ten years of my kids.

2829
01:17:37,694 --> 01:17:38,528
That's a good point too.

2830
01:17:38,528 --> 01:17:40,405
But you get that you're ahead.

2831
01:17:40,489 --> 01:17:41,782
AJ if you don't have that money

2832
01:17:41,782 --> 01:17:42,949
you're going to die at 100.

2833
01:17:42,949 --> 01:17:43,450
With the money

2834
01:17:43,450 --> 01:17:44,326
you're going to die at one time.

2835
01:17:44,326 --> 01:17:45,827
Not miss in their childhood.

2836
01:17:45,827 --> 01:17:47,496
Where could you strategically do it

2837
01:17:47,496 --> 01:17:48,372
right when your kids are

2838
01:17:48,372 --> 01:17:49,539
those like pre-teens,

2839
01:17:49,539 --> 01:17:50,582
when they're going to like, hate

2840
01:17:50,582 --> 01:17:51,208
you anyway?

2841
01:17:51,249 --> 01:17:52,668
Like AJ, you're not missing that.

2842
01:17:52,668 --> 01:17:53,835
You're just ten years older now.

2843
01:17:53,835 --> 01:17:55,712
You're you just make you wake up tomorrow

2844
01:17:55,712 --> 01:17:57,005
and you're ten years older.

2845
01:17:57,089 --> 01:17:58,757
Everybody, everything else is the same.

2846
01:17:58,840 --> 01:18:01,426
Oh, but I go back to the Cody

2847
01:18:01,426 --> 01:18:03,303
Sanchez thing where she says, like,

2848
01:18:03,387 --> 01:18:05,722
take any billionaire in the world

2849
01:18:05,806 --> 01:18:08,308
that is 16, 60 years old,

2850
01:18:08,308 --> 01:18:09,726
like they would switch lives

2851
01:18:09,726 --> 01:18:11,853
with, oh, no, it's a Warren Buffett.

2852
01:18:11,853 --> 01:18:13,063
Like, I wouldn't switch places

2853
01:18:13,063 --> 01:18:14,564
with Warren Buffett for sure,

2854
01:18:14,564 --> 01:18:15,857
but he you might switch places

2855
01:18:15,857 --> 01:18:18,193
with the 60 year old. Dude, bring it on.

2856
01:18:18,276 --> 01:18:19,069
I'm in.

2857
01:18:19,152 --> 01:18:20,529
Yeah, I don't know.

2858
01:18:20,529 --> 01:18:21,947
Mauricio, you have an answer.

2859
01:18:22,030 --> 01:18:22,572
Come in.

2860
01:18:22,572 --> 01:18:24,366
It's a lock with the mortal lock.

2861
01:18:24,366 --> 01:18:24,950
It's a mortal.

2862
01:18:24,991 --> 01:18:26,284
$1 billion.

2863
01:18:26,284 --> 01:18:27,160
You do it? Yep.

2864
01:18:27,160 --> 01:18:28,662
Mauricio, do you have ten years?

2865
01:18:30,038 --> 01:18:31,206
That's more.

2866
01:18:31,206 --> 01:18:32,040
Yeah, there's.

2867
01:18:32,124 --> 01:18:33,583
There's the funny thing. He.

2868
01:18:33,583 --> 01:18:35,127
He's guaranteed another ten years

2869
01:18:35,127 --> 01:18:35,836
if he takes the bet.

2870
01:18:35,836 --> 01:18:36,378
There you go.

2871
01:18:36,461 --> 01:18:37,921
Well, I might wake up and they'd be dead.

2872
01:18:37,963 --> 01:18:39,548
Like, I'll wake up in ten years

2873
01:18:39,548 --> 01:18:41,466
and I'll be like, God,

2874
01:18:41,550 --> 01:18:42,342
yeah, if you were awake.

2875
01:18:42,342 --> 01:18:43,844
So if you were, if you were going to die

2876
01:18:43,844 --> 01:18:44,594
in the next ten years,

2877
01:18:44,594 --> 01:18:45,637
would you skip that event?

2878
01:18:45,637 --> 01:18:47,723
And just like, no, you get a second life,

2879
01:18:47,806 --> 01:18:49,766
you're asking the hard questions.

2880
01:18:49,850 --> 01:18:50,350
These are

2881
01:18:50,434 --> 01:18:51,351
these are like

2882
01:18:51,435 --> 01:18:52,853
every scenario, thought

2883
01:18:52,853 --> 01:18:54,104
through hypotheticals.

2884
01:18:54,104 --> 01:18:56,440
Mauricio, you're to get your critical

2885
01:18:56,440 --> 01:18:57,774
of their sports medicine.

2886
01:18:57,774 --> 01:19:00,152
My hair become whiter in ten years.

2887
01:19:00,152 --> 01:19:01,820
Or is it the same level of whiteness?

2888
01:19:01,903 --> 01:19:04,906
Well, I have hair in ten years.

2889
01:19:05,615 --> 01:19:06,658
Wake up and I'm bald.

2890
01:19:06,658 --> 01:19:06,950
I'm like,

2891
01:19:07,033 --> 01:19:08,535
yeah, I'm assuming you're doing it.

2892
01:19:08,618 --> 01:19:09,536
Are you doing it?

2893
01:19:09,536 --> 01:19:11,288
No, I'm I'm too old.

2894
01:19:11,371 --> 01:19:12,038
I'm too old.

2895
01:19:12,038 --> 01:19:12,456
I would have

2896
01:19:12,497 --> 01:19:13,999
I might have done it ten years ago.

2897
01:19:14,082 --> 01:19:14,499
How about this?

2898
01:19:14,499 --> 01:19:15,542
$1 billion.

2899
01:19:15,625 --> 01:19:16,460
Easy for you to say

2900
01:19:16,460 --> 01:19:18,795
looking back, but $1 billion.

2901
01:19:18,795 --> 01:19:20,589
But it rains every day,

2902
01:19:20,589 --> 01:19:22,257
no matter where you are.

2903
01:19:22,340 --> 01:19:23,091
See, that's where it

2904
01:19:23,091 --> 01:19:24,176
that that one I might.

2905
01:19:24,217 --> 01:19:25,385
That's basically staying.

2906
01:19:25,385 --> 01:19:26,052
The rest of your life

2907
01:19:26,052 --> 01:19:28,263
is going to be miserable. So screw that.

2908
01:19:28,346 --> 01:19:28,680
Yeah.

2909
01:19:28,680 --> 01:19:30,724
That one I'm like I'm very sensitive to

2910
01:19:30,724 --> 01:19:32,100
to crappy what? Forget about rain.

2911
01:19:32,100 --> 01:19:32,684
If you just told me

2912
01:19:32,684 --> 01:19:33,518
it was going to be, like,

2913
01:19:33,518 --> 01:19:35,353
really dark and depressing and,

2914
01:19:35,395 --> 01:19:37,564
you know, a cloud might like in

2915
01:19:37,606 --> 01:19:39,065
that just means either

2916
01:19:39,149 --> 01:19:40,358
my wife would divorce me

2917
01:19:40,358 --> 01:19:42,027
because she cannot handle

2918
01:19:42,068 --> 01:19:43,487
she gets seasonal depression.

2919
01:19:43,487 --> 01:19:44,905
Anyway, that's literally

2920
01:19:44,905 --> 01:19:46,364
the reason I moved to Florida.

2921
01:19:46,448 --> 01:19:47,324
You're Sarasota

2922
01:19:47,324 --> 01:19:48,825
never gets hit with hurricanes, right?

2923
01:19:48,909 --> 01:19:49,659
That's when you were

2924
01:19:49,659 --> 01:19:50,452
you were convinced that

2925
01:19:50,535 --> 01:19:51,745
that's not seasonal depression.

2926
01:19:51,745 --> 01:19:52,621
That's just like.

2927
01:19:52,704 --> 01:19:53,705
That's just like,

2928
01:19:53,789 --> 01:19:54,998
every other every other week

2929
01:19:54,998 --> 01:19:56,458
for a couple of months a year.

2930
01:19:56,541 --> 01:19:57,042
I'm never going

2931
01:19:57,042 --> 01:19:57,918
to let you live that down.

2932
01:19:57,918 --> 01:19:59,127
J what was it, 20,

2933
01:19:59,127 --> 01:20:00,462
18, 19 where you're like,

2934
01:20:00,462 --> 01:20:02,839
oh, you got to move to Sarasota.

2935
01:20:02,923 --> 01:20:04,841
Never gets hit with hurricanes, ever.

2936
01:20:04,841 --> 01:20:06,009
I've done the math.

2937
01:20:06,051 --> 01:20:06,301
There's

2938
01:20:06,301 --> 01:20:07,093
this special thing

2939
01:20:07,093 --> 01:20:08,470
that goes on in Sarasota

2940
01:20:08,470 --> 01:20:10,013
that it never gets it.

2941
01:20:10,096 --> 01:20:13,099
Then that like twice in two years.

2942
01:20:13,934 --> 01:20:14,601
Fun fact

2943
01:20:14,601 --> 01:20:15,936
the first hurricane of the season

2944
01:20:15,936 --> 01:20:18,146
is forming off of Africa right now, sir.

2945
01:20:18,188 --> 01:20:20,023
And so you're coming for

2946
01:20:20,023 --> 01:20:21,775
you could be coming for me in a week.

2947
01:20:21,775 --> 01:20:23,318
Okay. All those hurricanes.

2948
01:20:23,318 --> 01:20:23,652
All right.

2949
01:20:23,652 --> 01:20:25,028
Plug AJ, what do you got?

2950
01:20:25,028 --> 01:20:27,155
YouTube channel Alex works hard on it.

2951
01:20:27,155 --> 01:20:28,573
It's doing a really good job.

2952
01:20:28,657 --> 01:20:30,033
And they're, training

2953
01:20:30,033 --> 01:20:31,910
made better and better by the day, so.

2954
01:20:31,993 --> 01:20:34,079
Hey, Joe, go check it out.

2955
01:20:34,162 --> 01:20:35,747
I think our podcast is out there too.

2956
01:20:35,747 --> 01:20:37,207
If you want to look at the latest podcast

2957
01:20:37,207 --> 01:20:38,458
between AJ Osborne

2958
01:20:38,458 --> 01:20:39,584
and Mauricio rolled the

2959
01:20:39,626 --> 01:20:41,837
go to the YouTube channel. It's right.

2960
01:20:41,920 --> 01:20:42,838
Check it out.

2961
01:20:42,921 --> 01:20:44,256
Mauricio, you got to do anything else

2962
01:20:44,256 --> 01:20:45,423
to plug in that.

2963
01:20:45,507 --> 01:20:46,633
No, I'm going to plug,

2964
01:20:46,716 --> 01:20:48,343
if you're, a syndicator

2965
01:20:48,343 --> 01:20:49,511
and you want to make sure

2966
01:20:49,511 --> 01:20:51,471
you're doing things right,

2967
01:20:51,555 --> 01:20:53,849
and you want to do some consulting

2968
01:20:53,849 --> 01:20:54,140
with me,

2969
01:20:54,182 --> 01:20:56,601
go to coaching with mauricio.com,

2970
01:20:56,601 --> 01:20:57,561
and we'll see if it's a fit.

2971
01:20:57,561 --> 01:20:59,229
But I can make sure that you raise

2972
01:20:59,229 --> 01:21:00,522
capital Compliantly and

2973
01:21:00,564 --> 01:21:01,773
not end up in jail.

2974
01:21:02,858 --> 01:21:04,609
Nice.

2975
01:21:04,693 --> 01:21:05,569
Jay, you want to do

2976
01:21:05,569 --> 01:21:06,486
your plug or you want me

2977
01:21:06,486 --> 01:21:07,487
to, plug

2978
01:21:07,487 --> 01:21:08,613
or I'll do mine,

2979
01:21:08,613 --> 01:21:10,657
but we're going to do it again.

2980
01:21:10,740 --> 01:21:12,200
When AJ gets back,

2981
01:21:12,200 --> 01:21:13,368
he's gone for the next two weeks.

2982
01:21:13,368 --> 01:21:14,160
But when he gets back,

2983
01:21:14,160 --> 01:21:16,913
we're going to do a special episode.

2984
01:21:16,997 --> 01:21:19,207
But I'm plugging my wife.

2985
01:21:19,291 --> 01:21:21,501
So my wife is launching her new business

2986
01:21:21,501 --> 01:21:23,086
tomorrow, which I guess is yesterday

2987
01:21:23,086 --> 01:21:24,838
when this releases,

2988
01:21:24,921 --> 01:21:27,299
and it's an upscale gifting company

2989
01:21:27,299 --> 01:21:30,260
currently focused on cookies and,

2990
01:21:30,343 --> 01:21:32,012
called Smooch Cookie.

2991
01:21:32,095 --> 01:21:33,221
It's called smooch, but,

2992
01:21:33,305 --> 01:21:37,225
smooch cookie.com, and it's ridiculous.

2993
01:21:37,309 --> 01:21:39,352
That peanut butter cookie.

2994
01:21:39,436 --> 01:21:41,396
Oh my gosh.

2995
01:21:41,479 --> 01:21:43,148
Like oh my gosh

2996
01:21:43,148 --> 01:21:44,107
you're going to love this.

2997
01:21:44,107 --> 01:21:44,524
This is

2998
01:21:44,524 --> 01:21:46,276
this is the box inside the

2999
01:21:46,276 --> 01:21:48,528
this is the third box

3000
01:21:48,612 --> 01:21:51,531
you get you get your box on your step.

3001
01:21:51,615 --> 01:21:52,866
And that's a good looking box.

3002
01:21:52,866 --> 01:21:53,825
And then you open that up

3003
01:21:53,825 --> 01:21:54,659
and there's another box.

3004
01:21:54,659 --> 01:21:55,994
And then this is the third box.

3005
01:21:55,994 --> 01:21:57,412
And it has a magnet on it.

3006
01:21:57,412 --> 01:21:59,998
The thing seals with magnets.

3007
01:22:00,040 --> 01:22:00,874
It will hold paper.

3008
01:22:00,874 --> 01:22:01,917
It's perfectly sized

3009
01:22:01,917 --> 01:22:02,792
eight and a half by 11.

3010
01:22:02,792 --> 01:22:04,127
So you can put it on your bookshelf

3011
01:22:04,127 --> 01:22:04,669
and you can.

3012
01:22:04,669 --> 01:22:05,754
And there's a little like

3013
01:22:05,837 --> 01:22:08,423
there's a little like note in here too.

3014
01:22:08,506 --> 01:22:09,215
And then like it's

3015
01:22:09,215 --> 01:22:11,509
like special wrapping paper

3016
01:22:11,593 --> 01:22:11,885
and like,

3017
01:22:11,885 --> 01:22:13,178
look at all this thing like this.

3018
01:22:13,261 --> 01:22:13,762
This is

3019
01:22:13,845 --> 01:22:15,221
I have never received

3020
01:22:15,221 --> 01:22:17,182
a gift for Christmas

3021
01:22:17,182 --> 01:22:18,558
or my birthday in my life.

3022
01:22:18,558 --> 01:22:20,352
With as good a wrapping as this.

3023
01:22:20,435 --> 01:22:21,937
It's so good.

3024
01:22:21,937 --> 01:22:23,563
My wife is a design person

3025
01:22:23,563 --> 01:22:24,648
and a gift person.

3026
01:22:24,648 --> 01:22:26,316
And so,

3027
01:22:26,399 --> 01:22:27,067
people are going to think

3028
01:22:27,067 --> 01:22:28,026
it's a cookie company.

3029
01:22:28,026 --> 01:22:29,069
It's a gifting company.

3030
01:22:29,069 --> 01:22:30,403
It just happens to be cookies.

3031
01:22:30,403 --> 01:22:32,948
And the cookies, I think are pretty good.

3032
01:22:32,948 --> 01:22:33,949
She spent a year

3033
01:22:33,949 --> 01:22:35,075
working on these recipes.

3034
01:22:35,075 --> 01:22:35,951
Every cookie is like

3035
01:22:35,951 --> 01:22:38,328
at least a half pound. That's crazy.

3036
01:22:38,411 --> 01:22:40,246
Well, here's here, should I open it?

3037
01:22:40,330 --> 01:22:41,039
Sure.

3038
01:22:41,122 --> 01:22:42,290
Which ones? That the red velvet.

3039
01:22:42,332 --> 01:22:43,541
I thought we were all going to eat

3040
01:22:43,541 --> 01:22:44,668
one on the air.

3041
01:22:44,668 --> 01:22:45,669
I thought that was going to be like,

3042
01:22:45,669 --> 01:22:47,420
our thing is like, look,

3043
01:22:47,504 --> 01:22:49,255
it's like the size of my face.

3044
01:22:49,339 --> 01:22:50,507
Look at this.

3045
01:22:50,590 --> 01:22:52,550
My favorite is the cappuccino.

3046
01:22:52,634 --> 01:22:53,510
The red velvet's

3047
01:22:53,510 --> 01:22:54,886
pretty good to red velvet.

3048
01:22:54,970 --> 01:22:56,304
Oh, yeah. The red, the cappuccino.

3049
01:22:56,304 --> 01:22:57,555
You could have my cappuccino one.

3050
01:22:57,555 --> 01:22:58,598
I'm not a coffee person.

3051
01:22:58,640 --> 01:23:01,059
Oh, I see the red velvet one was good.

3052
01:23:01,142 --> 01:23:02,602
Red velvet one is good.

3053
01:23:02,686 --> 01:23:03,853
Keep my kids love the double

3054
01:23:03,853 --> 01:23:04,688
brownie blast.

3055
01:23:04,771 --> 01:23:06,439
You see, it's like I just love I do.

3056
01:23:06,439 --> 01:23:07,732
They just kill them?

3057
01:23:08,733 --> 01:23:09,734
Oh, okay.

3058
01:23:09,818 --> 01:23:12,070
I will be sending you guys another one.

3059
01:23:12,070 --> 01:23:12,696
Don't open it.

3060
01:23:12,696 --> 01:23:14,864
We will open it and enjoy it on the,

3061
01:23:14,948 --> 01:23:15,740
the episode when,

3062
01:23:15,740 --> 01:23:16,992
when AJ I'm going to give you

3063
01:23:16,992 --> 01:23:19,244
a, I'm going to give you a new address.

3064
01:23:19,327 --> 01:23:20,537
Perfect. Yeah.

3065
01:23:20,620 --> 01:23:21,663
I gonna have to literally

3066
01:23:21,663 --> 01:23:22,664
tell my family though,

3067
01:23:22,664 --> 01:23:23,289
that it's coming in.

3068
01:23:23,289 --> 01:23:23,915
They can't open it

3069
01:23:23,915 --> 01:23:25,125
because the moment they see it,

3070
01:23:25,125 --> 01:23:26,001
they're going to be like,

3071
01:23:26,084 --> 01:23:27,460
rip it open and just be like,

3072
01:23:27,460 --> 01:23:29,087
where's the cookies?

3073
01:23:29,170 --> 01:23:30,880
Jake, can I make a request, though?

3074
01:23:30,964 --> 01:23:33,967
Can you not have it arrive

3075
01:23:34,342 --> 01:23:36,261
like you had it arrived Friday?

3076
01:23:36,344 --> 01:23:38,179
And then you expected

3077
01:23:38,263 --> 01:23:39,889
for cookies to last?

3078
01:23:39,973 --> 01:23:41,891
No, not until Tuesday.

3079
01:23:41,975 --> 01:23:44,769
This has to arrive Monday or Tuesday.

3080
01:23:44,769 --> 01:23:45,854
Like there's no that.

3081
01:23:45,854 --> 01:23:48,314
You realize how much willpower it took me

3082
01:23:48,398 --> 01:23:50,567
for those cookies to sit there,

3083
01:23:50,650 --> 01:23:51,151
and I was like,

3084
01:23:51,151 --> 01:23:52,736
I can't open this thing I like.

3085
01:23:52,736 --> 01:23:54,320
I when I say, I can't open this.

3086
01:23:54,320 --> 01:23:55,530
I ate two of them. But,

3087
01:23:56,698 --> 01:23:57,991
I can't

3088
01:23:58,074 --> 01:23:59,534
I can't eat all of them

3089
01:23:59,617 --> 01:24:00,577
because then you're going to be like,

3090
01:24:00,577 --> 01:24:01,786
oh, that's everyone, have a cookie.

3091
01:24:01,786 --> 01:24:02,037
Me like,

3092
01:24:02,037 --> 01:24:02,912
I don't have any cookies

3093
01:24:02,912 --> 01:24:04,831
because you sent them to me on Friday

3094
01:24:04,914 --> 01:24:06,416
and you're expecting me to not to eat it

3095
01:24:06,458 --> 01:24:07,625
one cookie a day.

3096
01:24:07,709 --> 01:24:09,252
That's not my fault. That's JJ's fault.

3097
01:24:09,252 --> 01:24:11,212
So I don't feel bad at all,

3098
01:24:11,296 --> 01:24:13,381
because how could he expect that from me?

3099
01:24:13,381 --> 01:24:14,883
They were gone.

3100
01:24:14,966 --> 01:24:15,967
Well, thank you.

3101
01:24:15,967 --> 01:24:19,888
And, if anybody is interested in, sending

3102
01:24:19,971 --> 01:24:20,889
a gift

3103
01:24:20,972 --> 01:24:24,893
to anybody they love, smooch cookie.com.

3104
01:24:25,268 --> 01:24:27,312
And, for

3105
01:24:27,395 --> 01:24:28,313
the next couple weeks,

3106
01:24:28,396 --> 01:24:30,774
we post our addresses to just chat.

3107
01:24:30,857 --> 01:24:32,317
And you can actually,

3108
01:24:32,317 --> 01:24:34,444
if you want to send us gifts,

3109
01:24:34,527 --> 01:24:35,612
send us gifts, use

3110
01:24:35,612 --> 01:24:38,615
coupon code forward, forward a smooch.

3111
01:24:38,698 --> 01:24:40,075
Use coupon code forward,

3112
01:24:40,158 --> 01:24:41,326
and you'll get, free

3113
01:24:41,326 --> 01:24:42,911
shipping for the rest of the month.

3114
01:24:42,994 --> 01:24:43,328
Hey, Jay,

3115
01:24:43,328 --> 01:24:44,079
when was the last time

3116
01:24:44,079 --> 01:24:45,622
you plugged your wife?

3117
01:24:45,705 --> 01:24:46,748
I just did,

3118
01:24:46,831 --> 01:24:47,916
I think there was the first time

3119
01:24:47,916 --> 01:24:49,125
since the start of the podcast

3120
01:24:49,125 --> 01:24:50,168
that he plugged his wife.

3121
01:24:50,251 --> 01:24:50,835
That's right.

3122
01:24:50,919 --> 01:24:52,045
That's how she likes it.

3123
01:24:52,128 --> 01:24:52,837
It's been like a year

3124
01:24:52,837 --> 01:24:54,089
and a half like that.

3125
01:24:54,172 --> 01:24:55,590
That's that's that's about right.

3126
01:24:55,632 --> 01:24:57,425
He didn't even plug her on her birthday.

3127
01:24:57,425 --> 01:24:58,510
Like that's how bad it is.

3128
01:24:59,761 --> 01:25:01,179
Her birthday is Christmas Day.

3129
01:25:01,179 --> 01:25:02,514
So, we don't

3130
01:25:02,514 --> 01:25:04,933
we don't do an episode that day, so.

3131
01:25:05,016 --> 01:25:05,558
Oh, okay.

3132
01:25:05,558 --> 01:25:07,268
Or otherwise, you would have plugged her.

3133
01:25:07,352 --> 01:25:09,145
Absolutely. Right. Yeah.

3134
01:25:09,229 --> 01:25:10,855
Well, I don't mind. Plug in your wife.

3135
01:25:10,939 --> 01:25:12,190
I'll plug her right now

3136
01:25:12,190 --> 01:25:13,733
and I'll plug her next time we do this.

3137
01:25:13,733 --> 01:25:15,276
And,

3138
01:25:15,360 --> 01:25:17,237
as long as we're getting cookies.

3139
01:25:17,320 --> 01:25:18,613
Yeah. Hey, hey.

3140
01:25:18,613 --> 01:25:19,280
I'm okay.

3141
01:25:19,364 --> 01:25:20,240
I'm an easy sell.

3142
01:25:20,240 --> 01:25:23,243
I'll plug for anyone for cookies.

3143
01:25:24,661 --> 01:25:25,328
Yeah.

3144
01:25:25,411 --> 01:25:26,287
All right, well,

3145
01:25:26,287 --> 01:25:27,580
so I guess we have to say.

3146
01:25:27,664 --> 01:25:30,667
Or of water to AJ, then.

3147
01:25:31,167 --> 01:25:31,793
That's right.

3148
01:25:31,876 --> 01:25:32,377
Are they French

3149
01:25:32,377 --> 01:25:33,670
on that side of the country?

3150
01:25:33,753 --> 01:25:34,337
No they're not.

3151
01:25:34,337 --> 01:25:35,296
There's no French over there.

3152
01:25:35,380 --> 01:25:37,006
They actually most of them

3153
01:25:37,006 --> 01:25:38,049
hate the French over there.

3154
01:25:38,091 --> 01:25:38,466
Hey, Jim,

3155
01:25:38,466 --> 01:25:39,300
make sure you take some bear

3156
01:25:39,300 --> 01:25:40,760
spray with you.

3157
01:25:40,844 --> 01:25:42,011
We will take

3158
01:25:42,011 --> 01:25:42,804
take your boots

3159
01:25:42,804 --> 01:25:46,391
so you can say a boot about these boots.

3160
01:25:46,599 --> 01:25:47,058
Yeah.

3161
01:25:47,142 --> 01:25:48,768
It's all it's all a boot to boot.

3162
01:25:48,852 --> 01:25:50,353
New doing the boot photocopy.

3163
01:25:50,395 --> 01:25:50,895
Make sure you take

3164
01:25:50,895 --> 01:25:52,397
a photocopy of your passport

3165
01:25:52,397 --> 01:25:53,815
and have it somewhere safe

3166
01:25:53,898 --> 01:25:54,482
when they,

3167
01:25:54,524 --> 01:25:55,900
you know, jump you and steal

3168
01:25:55,900 --> 01:25:56,776
all your passports.

3169
01:25:56,860 --> 01:25:57,318
All right,

3170
01:25:57,402 --> 01:25:58,027
so we're going to have

3171
01:25:58,027 --> 01:25:58,987
someone fill in next week

3172
01:25:58,987 --> 01:25:59,779
because that the plan

3173
01:25:59,863 --> 01:26:01,322
ratio has somebody in mind.

3174
01:26:01,322 --> 01:26:03,449
Good surprise. Does he. Why do.

3175
01:26:03,533 --> 01:26:05,118
So you have to wait till next week.

3176
01:26:05,201 --> 01:26:05,410
All right.

3177
01:26:05,410 --> 01:26:07,871
Well I guess for everyone except AJ

3178
01:26:07,871 --> 01:26:09,622
and then special guest.

3179
01:26:09,706 --> 01:26:11,416
We will see you next Thursday.