The I Love CVille Show With Jerry Miller! - Matthias John Joined Alex Urpí & Xavier Urpí On “Today y Mañana” On The I Love CVille Network!

Episode Date: August 29, 2024

Matthias John of Matthias John Realty joined Alex Urpí & Xavier Urpí On “Today y Mañana!” “Today y Mañana” airs every Thursday at 10:15 am on The I Love CVille Network! “Today y Mañana” is presented by Emergent Financial Services, LLC, Craddock Insurance Services Inc and Matthias John Realty, with Forward Adelante.

Good morning, everyone and welcome to Today and Manana. I'm Alex. This is Xavier. We're very excited to have you joining us on a beautiful morning here in Shardsville, Virginia. It is crisp. It is sunny. Like the apples like honey crisp. Yeah, it's a honey crisp day. Everyone's about the exiled Cuban poet comes out. Wow. That's poetry. Okay. Poet it, you know, crisp like the apples. But it's a beautiful day and it is now, I can safely say we are in Tefe-Ton-Lche season. Yeah. Do not get a nice Tefe-Ther anymore. I permit it. It goes down smooth. smoothly right when it's warm and it's a little cool outside warm creamy the phone the thing don't ice it at this point and now you can throw that one teaspoon of leche condensata

condensate you would actually do it would you oh yes but i mean if you if you put sugar in your coffee yeah ignore the sugar put that no but i mean in tube would you actually put a spoon of lege on oh yes absolutely yeah that's what makes it like creamy and delicious i've never actually had it that way oh you have to i mean it's uh i should you you yourself probably don't even have it. Well, I don't have it anymore. That's true. But when I did, that's the way I had it. If you're going to have one, you've got to have it the right

way. So there you have it. From Xavier himself, grab your cafe tonne letche, put a spoon of lecetre tonnezzada in it, which is condensed milk. If you're wondering, what the heck is he talking about? That's right.

Condensation. It's sweet and condensed milk. Put a little spoon to eat to Nesville, get to your cozy place and sit down and enjoy some beautiful today and an anianna. Because we have a great show lined up for everyone this morning. We're going to be joined shortly in the show by Matthias Yon for our wonderful monthly meet-up with

Matthias. And then further on to the show, we're going to have a little finance topic with the behavior and myself. Of course, always love being here on the I Love Steve on the set. Judah behind the camera pointed at me to tell me that the show's about to start, even though my eyeball had wandered over. Yeah, no, I was a little surprised

because I saw him go through the one and he put it down. And I'm saying, I mean, Alex is not even looking here. You know, I saw three, flashed my eye to the, since I saw two comments, and then flashed back, and I didn't see the one, and I realized we're at zero already. So I said, uh-oh, does you want me to start today? That's a problem here.

Judah is keeping me on the ball, even when I am not on the ball. And, of course, love our wonderful partners, Emergent Financial Services. Matiasio, Seon, Realty, of course, Charlotte for Opera, always helping us out for another lot of things. So we love all our great partners. Absolutely. here at today and manana.

And all our fans, and don't forget, don't forget to share and like, and then if you get to subscribe, that'd even be better. Exactly, exactly. Already done a couple of lights today. We've got Lucrezia Morales from... Ah, from sombreros. Absolutely. Right here on the downtown mall.

Buenos dees. Buenos dees. I love that I get to say the downtown mall, and they're actually on the downtown mall. You do not have to go around, that's right, through the New York Place or to the other side. They are in the old grid coffee. formerly Cafe Cubano space. That's right. It was good, people been here for like five years, it's probably great coffee, but like it was

Café Cubano, so now it has returned to its Latino roots. That's right, exactly. And it is sombreros. You have great coffee, great coffee. I'm sure it's drink coffee. I'm sure it's drink coffee. I mean, I still go for lunch, because it's so good, but I'm sure it has great coffee too. So I love that, and of course, Sabrina Cooper liked in the show this morning.

So definitely appreciate everyone who has liked the show. should have liked to share. Nid Lyserpe is watching us, which is always nice. You know, he puts so much work in to dead our fantastic desk, it's always nice that he gets to appreciate by the way. He worked very hard behind the scenes. He does indeed.

Not so hard in front of the scene, but certainly hard behind the scenes. Well, he likes the show. He likes the show. I know, I know. We appreciate that he tombs in as well. But I don't know about you, but I always love jumping in. Of course. Yeah. And he's always got great topics, great ideas, great thoughts. And just an all-around great job.

So we're excited to welcome to the show this morning. Matthias, Yon. Matthias, thanks for coming on in the end. Good morning. Well, good to be here again. We call it the monthly check-in with Matthias. I think it's been probably six or seven weeks, so it was about time to. It's a new month, and we just missed probably Octoberfest.

I mean, we're still in October, but October Fest really is. It was usually, yeah. The official, well, the real one is early October. That's right, yeah. Ends in early October. But in America, there's still some around town. So in America it lasts a little longer because I think they... Probably until Halloween.

Yeah, probably. Well, and actually, in Richmond, there's an October 1st celebration that I think that's coming weekend. This Saturday thing. Not this weekend, but the weekend after. Oh, the following weekend. And that apparently is a really big October Fest celebration. So if everything works out, I want to drive there. You know, we have this.

is a German Stamptish here in Charlottesville. So it's a group of Germans, and we meet on a monthly basis, usually just in a restaurant to speak some German, but this time we are planning to drive to Richmond together because of that. That would be great. That would be great. Huge October 1st over there.

But you're right. The actual Octoberfest ends in the first week of October. It starts in September. Last weekend, I actually, I was in Lederhausen, and I was out in Blue Mountain with Nick your brother Alex I was so sad to miss that

that's her Michael went too that's right that's right and Michael was there too he had a great time he said that's right so no leader who wasn't today but was little baby in

dindle again or did you draw out of the dundle? No so for last year's October Fest I purchased a little dindle for her and he was a little bit too large And so the question was,

well, she fed in this year. And yes, she did. So we got two years out of that purchase. That's wonderful. I can imagine. She was a cute girl and a dandel. She's a beautiful girl. So, yeah, you were a lucky man.

I am, yeah. And on a personal note, tomorrow is the due date. Oh, wow. For number two. I hope you have your phone on. Tomorrow. And, of course, that's not reliable.

we think it's going to be sometime next week. Oh, okay. Well, if the phone rings, and Matthias runs up, I'm walking at my phone. I might have to run out of here, and then you know why. We'll know why.

It's not because of something you said. That's it. I can't take your day for anymore out of here. How about Alex? I feel offended. I'm running out. Also, man, what an exciting time of year.

You know, but it's exciting time. So many things happening. So many things happening. So many things happening. happening and I'm bringing a topic to the show today that's been on so many people's mind

this week because of while it was in the newspaper you know city council has an idea, has a plan and it looks like they're moving forward to it. So the topic and I understand it's not a light

conversational topic you know but it's been on our mind we've been discussing it for a while. The unhoused problem and especially the downtown business impact is what I've been curious about and you know this

podcast here today Manjana has of course this emphasis on downtown businesses or just small businesses in general in the area and so of course we're looking at this today from that particular angle there's also the

you know the the human angle. I think we can all agree that we have sympathy and empathy for those that are unhoused, the homeless. And that's a conversation worth having too. It's so complex, you know, it's a nuanced conversation. What leads them to be unhoused in the first place, you know? And I don't think anyone here today has the solution on how to combat that. and so it's really the unhoused on the downtown mall or in the city center that's been just a discussion for years now

and I feel like in recent years it has really peaked right because we had so many headlines and incidences on the downtown mall and especially the businesses on the downtown mall have been struggling with that and um yeah i think once things kind of came back like during COVID okay there was new were so few people in the downtown mall it was very difficult probably to distinguish okay are people not

coming because they're just not going anywhere right or are they not coming for other reasons but now I think in the last few years it's been okay this is clearly something that is discouraging families from coming and making life more difficult for the small businesses that are there so we probably do need

to do something about it yeah I mean when you walk the downtown mall right now you can you can feel the tension right shop owners are doing the best to to welcome patrons customers but the reality of people sleeping in doorways or shouting in public spaces make that really hard yeah hence the tension and it's it's not just an image problem and to that topic of an image problem of course as a real estate professional, I talked to clients that are moving to the area about the appeal of the downtown mall. And of course it kind of is an image problem if you have those negative headlines about,

you know, the incidences, the situations that arise. And I would imagine kind of an image problem in the sense that, you know, they'll hear from their realtor, it's a beautiful downtown. More, you can walk in. And then maybe they don't visit that afternoon. And they say, oh, my realtor kind of left this part out or, oh, this is not as nice as I thought it would be. And you never want that because that's also, that's also, unfortunately, a discouraging first impression that Charlottesville can make. Because for a lot of people that will come and think about moving here, that kind of, that may well be your first impression.

Because you'll probably go straight to the downtown mall and see what it looks like. Sure. You know, reports of families with young children. feeling unsafe on the mall, of course, is, yeah, it leads to an image problem, sure. But not only the image problem, it's also a climate problem for business, right? And so the city is moving or is planning to purchase a facility that is still within the city limit, but it's a little further outside. It's in the, you know, where Best Buy is.

holiday drive and so that's the big headline this week that I thought we can touch on and look at from different angles it's certainly on my mind it's relevant to my business it's in you too you talk to local business owners

every day that's again that's the focus of your show you probably have something to say about that as well I find it really interesting and I'm you know I'm an optimistic person so I don't want to outright say, oh, that's just another Band-Aid. No, it's finally

city council offering something concrete, right? We had several plans over the winter months for several years now to provide shelter and a warm space, but this might actually be a

mid-and-long-term solution, right? And so the question remains, what will be the outcome of that? So in particular, so they are planning to spend $6.2 million on this property that is close to the little hotel section of the bypass, right, holiday drive. And it's my understanding that it's a 27,000 square feet building. right and so the city plans to turn this into a low barrier 24-7 shelter and they have been looking for for quite a while now we all are involved with the friends of civil initiative with that organization and so we have all heard Sanders as well as Wade discussing this and they shared several

times that, you know, they had a few ideas. I think one was in Belmont to create a low barrier shelter there, and then a property in Fiveville was considered for a while, and there was a lot of pushback, and it always sounded like it's not ideal in several regards, right? And so now they're proposing something that seems to make more sense overall. It might have downsides as well. For instance, and I wanted to ask your opinion on this access, right? Will

the unhouse be able to get there? This is further out. Again, it's off the bypass intersection with 29. But for the first time, so it seems to me at least there's something concrete. So there's a sense of excitement

about this right now. And at least once they're there, 29 is building that pedestrian bridge. Almost finished, too. It's almost done. So, in other words, there's no... That's a ways away also. No, in the sense that it won't matter what side of 29 you were on anymore.

You will be able to either get to one of the grocery stores or, like, you will not actually have to ever cross 29 in a dangerous fashion, which people used to, some of them were you, people try to, like, run across 29. Yeah. You don't have to actually run across... True. 29 anymore. Yeah, yeah. I mean, I think it's a, as always, I mean, you'd run in New York.

Yeah, we look at this from a humanitarian point of view, and I totally agree. I mean, something has to be done, right, because we need to help these people. But always the challenge is, I mean, the challenge you just mentioned there is probably the biggest one. In other words, how do we get them there?

And two, do they want to be there in the first place? And I only say that because the two experiences I have one is in New York where you know they built a beautiful facility for the you know unhoused in New York and this is back in the 90s right and you know I mean

it was 10% occupied right so finally what they had to do literally every night is go collecting the unhouse and bring them to this particular facility right in order to again at that point was the idea to clean up the city right to make it you know New York what New York you should

to be. And so they have to do that continuously every single night, pick them up and bring them there, right? And another experience of mine was in Denver where I used to have a couple of clients. I used to go there once and twice a year. And I used to pass this place with like tons and tons of people who were in front of this particular building. And I asked my clients, I said, you know, what are you doing there? And they said, you know, literally about five blocks away, you know, that was the park. Five blocks away there's the housing, right? He says, but they never go there. I mean, it's just one of those things where they try to push them and they just say, no, we're just going to hang out in the park and stay here, right? Now, even in the winter,

some people just stay there. And we're talking about Denver. I mean, so, so the issue is sometimes, and you mentioned this. I mean, the house, the homeless and the house is a complex issue. It's not just people that are there because they just want to be there. Sometimes there are mental issues that you need to deal with, right? So how do you deal with that in such a way that you get them to where you want them to be? And then, two, somewhat stay there. I mean, it's a great idea, but, I mean,

I know exactly the best buy is. And so if they start dispersing there, where are they going? You know, that's just a lot of commercial place. I mean, in other words, are they going to feel even comfortable to staying there? I mean, I'm sure they've discussed this and the council and this may be a solution

but I'm not, yeah. The one nice thing I would say, one of the big barriers always to, for cities across the country, when you try to deal with the on-house situation is you run into a lot of courts, appellate courts. And I think the Supreme Court, I'd actually struck this down,

but you would often run into a lot of appellate courts that would say, no, you can't, you cannot take anyone off the street, unless you have or you can't make it illegal to you know put a tent or do something unless you have enough rooms that every single person that is unhoused in your area can go there so in other words if you got 800 people but you only have 200 low very rooms right even if you know that all 800 people will never go to then you still can't pass a law that says you can't live in the park because a judge

in a rule, you can't pass that law because if every one of those 800 people try to abide by your law, you actually don't have enough spaces. So at least now, if they can get enough rooms, to create a foundation.

Okay, granted, can you, the next step is to get people there, but at very least now if you pass an ordinance saying, you know, you can't just put up your tent or sleep in the alleyway under a, you know, we now make it that you can't do that, right? A judge to no longer strike it down saying, well, you don't have enough rooms

because they'll say, well, actually, we do now. We just built. But now they might have. It opens up your avenues to maybe do some of those other things without worrying about a legal problem that an appellate court is going to say, now you can't do that. Yeah. Of course, right now we're talking in theory about this. It's one thing to provide this facility and shelter. And then the other one is to run it continuously, right? We are talking about professional staff. We're talking about community outreach programs. There's a lot involved.

Plus, and I'm not, I don't know the specifics, but the $6.2 million is just for the purchase. How much do you need to outfit the building, to modify it to the needs for what is intended there? Of course, they will need to touch a lot of money, right? But it might be the first step. But, yeah, you're very right in questioning or wondering how practical is it, how feasible will it be, and time will tell.

But I'm excited about there is a constructive discussion right now. And we also should acknowledge it's not the only option for those in need. We also have the Salvation Army facility here on Ridge Street, which is in walking distance from where we are right now. The difference is just the city is trying to create a low barrier facility or shelter, meaning no work, no sobriety requirements, and the Salvation Army does have requirements, so it's not a low barrier. But there are different options available,

and also in different locations. So I think we are getting in the right discussion, plus the Salvation Army is also talking about expanding the facility that they have, and they're going through fundraising efforts right now. So there's a lot happening on that front, right? But again, going back to the downtown mall and the perception that people

that visitors have in terms of cleanliness and safety. So that psychological impact can be huge. Do you think it impacts are there like second order or do you see second order impacts of it

beyond the just like the businesses on the mall being able to be successful as opposed to like does it spill over into people's decisions as to do I even want to live near the mall or do I want to live in the outskirts

or do you think people who really want to live in the center of the city will do so regardless? Well, I think the appeal of living downtown always exists for people and I know for a fact that we don't have much vacancy in condos, apartments, residence is here close to the downtown mall

quite the opposite but well it's several aspects here we care about downtown business owners to be successful they make a living of that

and we want them to continue doing that we don't want to see empty storefronts on the downtown mall that would indicate that the problem continues to exist. And then there has the aspect of, and we touched on that already,

visitors, right? Those that actually spend money on the downtown mall. We have a beautiful downtown mall and the mall has been through struggles in the past. Even before I lived here, the discussion was

about crime and safety and cleanliness on the downtown mall. And then it got revived and, and, and, and, Frankly, that was a downtown mall that I saw when I moved to 11 years ago and then more problems occurred again. So it's an up and down, of course. But again, the perception of the downtown mall being safe and clean and vibrant, that is something that we want to achieve, right? And there's a path there.

So again, it's downtown mall business owners surviving and giving them an incentive to continue the operation there and then all of us with our families, whether you come from Green County or you live in Belmont or wherever it is to actually frequent the downtown mall, spend money there, spent time in the evenings, going to restaurants, going to the boutiques, going to the concert,

venues that we have, everything that contributes to the vibrant downtown atmosphere that we are trying to achieve again. And I think to hopefully build more of that, I just, I think to, and granted, the culture in Europe is a little different, but I think to the fact that you want, you would also love your downtown to be a place where people kind of mingle and walk when they're not in a restaurant or in a shop. and the downtown mall very much so now is very much you go you eat you leave you leave you don't really say

now that I've eaten let me linger let me walk let me go walk back and forth and see if I meet people see if I talk with people I haven't seen in a while you especially in the evenings and if it's dark your comfort level in doing that is diminished and ironically it's one of those sad little spirals because the less people go, the less comfortable people feel,

the less people go in one of those. And you want to kind of go in the opposite direction where people say, okay, I am comfortable going. Oh, now there's more people. Now I'm even more comfortable just walking around the downtown one. And so you kind of spiral in the Udama effect

in the positive direction where you end up like a lot of those European watch, which the downtown all resembles, right, where you, so many people at five, six, a clock in Europe, you're not, they're not inside all the restaurants. A lot of them are just literally walking back and forth. And the important thing is also, you know, the downtown mall has the ability where people can be outside eating and drinking, right? And the challenge there, of course, is when you have a situation where there's unhoused and they're kind of walking

up to you, whatever, that makes it uncomfortable, right? So that's the issue, right? And because, I mean, you're right, in Europe, I mean, that's what people do. I mean, you know, when they go out, they go out to eat outside, they eat outdoors, especially obviously during the summer months, right? And they just walk around. They literally walk around. I mean, some places are a little bigger than the downtown mall. But that's the sense of exactly walking, talking, chatting, going to a store.

And then being able, the other thing is the ability to be able to say, which I don't think the downtown mall has it yet, but the ability to say, I went to dinner, I walked around. And then I want a cup of coffee. And then I want a cup of coffee. Can I sit down somewhere and have a cup of coffee and continue to chat or talk? Right now, that kind of doesn't exist yet. Does it exist yet? The sense that the city is there.

Yeah. And you'd love to get that sense in Charlott's feel like, okay, the city is there. And everyone's there, not just they're all in their little restaurants, and then they'll leave. You know, and I think you can build that. You just have to take these kind of steps, one at a time, to try to get there. And I'm very thankful that we have a great. of people, many people actually that work really hard, relentlessly, on exactly that, to create the safe and pleasant atmosphere downtown.

You know, we know that Greer from friends of Severs, she puts in so much work. Do you remember the city council meeting where she represented the minority and was yelled at and shut down by the opposing people. You know, she was there. She's trying really hard, and there's a group of people behind it. And, of course, so many business owners here on the downtown mall that, and they're not one-sided in their approach. They come with a lot of empathy to the table.

They approach the unhoused or the small fraction of those. They create the issues, they talk to them. They have tried it for many, many years. So they're very invested. It's not a one-sided. It's actually the majority of people approach this in a very constructive way. And so now the city is on board, and I'm really curious to see how this unfolds. I think the due diligence period for this acquisition of that property is until end of October.

so it's not a done deal and then we have inspections and probably also and they've got to build it out they have to build it out how long will that take how much money will they take right but you know the way I read it is

they must have been working on this particular idea for a long time otherwise they wouldn't have announced it you know everyone's looking at them they are on the spot they they got a lot of attention

for everything they say on this topic. They wouldn't have announced this particular idea if it wasn't feasible in their opinion. So it makes sense. It is worse for you to announce it and then in a month say we couldn't actually

go through with it, then to never have announced it in the first place. Right. So you don't typically take that risk. But of course, there's still many question marks. Transit, access, staff, additional money to put into that build out. At least we've moved

from, oh, there's just nothing you can do about it to, okay, let's try to do something about it. I think for many years I think the frustration that a lot of people in the downtown mall had was, the answer was kind of always, well, there's just the law is the law, there's just nothing you can do

about it. And as a small business owner, well, that really does not comfort me. Like, oh, there's just nothing you can do about it. At least now it's saying, okay, there's still work to be done, but there is something you can do about it. Right. And we're going to at least begin to attempt to do something about it.

Right. And it goes back to that atmosphere of tension and pressure that we felt. I mean, if you had been to the last business meetings of the downtown business owners with the city manager Sanders, but also with weight and coaches, the police chief, there was a lot of tension and pressure and it was building up so we kind of piqued that so the timing is good for the city to announce something

concrete that at least on paper appears to make sense and to anyone listening you know there's there's something in the works right now and that is a good sign is it the perfect solution right now no it's not as you said yourself

of Xavier, there are many questions, many things we need to figure out. But I, for one, I'm, well, my wife always says I'm a hopeless optimist, but I'm looking at this with optimism because that's what it deserves, frankly. Yeah, right? That's good, though. That's good. And so in that spirit, let's be positive about this and spread the word. Yeah.

No, I mean, I think it's the housing issue, the unhoused issue, as you mentioned for the beginning is a complex issue and I think the one thing I always in a way kind of criticize this country for

is that we have a tax system that really doesn't benefit counties and cities we put too much money into the federal government and how it gets how it trickles back down to you

is very questionable and so I always say we should have a higher tax basis you know, let the government do what they need to do in certain areas, and I'm not going to mention those right now. But I think from a perspective of I'd rather pay more taxes to my city, my county, because then I can dictate more where those taxes, where that money should be used. And many of these folks need tender loving care in the sense of they need continuously help,

they need medical help, they need assistance, and that is what they need more than anything else, right? So it's something where in some cases, they may be able to be cured. In some cases, they cannot, but we need to help them. But when you sit here as a little city like Charlottesville, and you're going to spend $6 million here, but then do you have the funds available to really help these people? Or are you just going to hope and pray that they just go there and live there, right? And that's the big question mark, right? So, I mean, unlike you, I'm an optimist, the problem is I've seen this movie many,

many times and you know unfortunately never ends well but I'm hoping that this is not the case you know because for multiple reasons I mean granted I agree 100% of downtown mall is a place where you know families people should come all the time the business owners I mean I know quite a few of them and you know they're challenged they really are challenged on it every single morning to make that place you know respectable respect so it's it's difficult for a lot of people And for a long time, the city was so focused on this small group of unhoused people and to provide solutions and approach them with dignity that they had forgotten about the business owners.

Right? And so we don't want business owners to become unhoused in the process. And I'm exaggerating right now, but to make my point, I need to look at everyone involved. And how do you say that they have to leave them all? and then you have an empty mall. You're both right. It's a circle.

It's a domino effect, right? It goes one way and it can go the other way, right? So the idea is to get it flowing, get a rolling the other way where everybody begins to feel much more comfortable about going to the downtown mall. And, you know, we all pray that the unhoused are helped and that they have a better life, right? And that's the goal. Yeah. Well, folks, thanks for letting me bring this up. I'm passionate about this. The commenters are loving it. Bobby Lempitrino says, great discussion. Thanks, Matisseur, and for bringing it to us.

Hey, Bobby. Thanks. So Bobby loves it. Ricardo Cruz Duran is saying, it's so nice to see you all. Good to see you, Ricardo. You know, I think the audience is appreciated. Yeah. It affects us all. It does. And it's nice to, because there's so many places you can know and read about this. topic from different perspectives, but it's nice that we can bring our audience the same topic in a much more measured perspective that I think all three of us have, right, that from a different angle, much more of a small business and a human angle rather than worrying about, okay, who's on this side, who's on that side, who's on that side, kind of thing. Yeah, the most important things always, you just mentioned the human angle, right? I mean, you have to help people.

That's what we're here for. That's humanity, right? And certainly from my Christian background, that's what we try to do. So that's the first and foremost, right, is how do we help people, you know? And we just have to make sure, like we all said, that this particular project, right, works, right? Because if it doesn't work, then we're in the same boat, and we haven't helped those people. So thank you for bringing this to us. Good discussion.

Always a great discussion. I love having you on. It's amazing. The time flies. It really does, yeah. We have Matia's on, so I really appreciate it, and I'm looking forward to the next one. See you guys in November. See you a little bit.

I know you've done a bit of a drive, but to see you in safe travels. Thanks. It was that song, see you in September. I want to see you in September. I don't know. Well, now we'll say see you in November. See you in November. Thanks for coming on.

Thank you, Matthews. Thanks for having me. I always love having Matias on. Always, yes. That was a great discussion. Yeah, I have no idea. he was going to talk about that, so it's fantastic. So, yeah, always appreciate.

Well, we love surprising. We love surprising. No, yeah, that's good. You know, Nittles especially loves doing that, being like, Xavier, guess what today's topic is? Sometimes he'll even do it, David, guess who today's guest is? Well, I don't ask myself, so that's just him, yeah. We appreciate that.

So, yeah, thanks for the comments, Bobby Ricardo, though. John Gordon, thanks for watching the show this morning. Always appreciate everyone who tunes in and sends us your questions to comments. Yes, always please. Yeah, yeah. You know, and now we'll go super controversial and talk about the Federal Reserve. There I don't hold back. We won't talk about the Federal Reserve, but you don't have to not hold back.

So I know, I mean, it's been a while since we've had a last finance topic, a couple of things in the news. I know something that's been on your mind. I don't know if you wanted to start Federal Reserve, government shutdown. Well, I mean, they're both almost in the same kind of genre, right? Because, I mean, the way you and I look at things is how are decisions made by the Federal Reserve, the administration, you know, anybody else? How does that impact the markets, right? Because that's what we're here all about. And others, what is the impact on the markets, right?

But you and I also know that it's not so much what are the impacts on the markets because we can't, you know, we, you know, we, meaning emerging financial service in particular, we're not day traders, right? So I'm not interested in, you know, how's the market going to open? Do I take advantage of this opening? Well, more like where could this leave the market? Exactly. Because ultimately that's where our client portfolios will end up. Exactly. Because, again, right, you can control as an investment advisor, right,

you can control, to an extent, the magnitude of how your client's portfolios will react to the market. But you are never going to make a client portfolio that does not move in the direction of the market. What will determine up or down is going to be the market, because I'm going to say, I don't think your investment advisor should have you in an inverse portfolio that if the market goes up, you go down, and if the market goes down, you go up. Let's throw that out, right? So you're always, we care about where the markets are going long term because that's the direction of our client portfolios are going to know when, and we need to decide how much magnitude we want to be exposed to that. Yeah, it's basically how do you, you know, we always talk about it. How do you manage risk, right? And so the question is, you know, are we managing risk in such a way that the portfolios are protected in such a way that we feel comfortable?

And again, you know, to a sort of respect, all the portfolios are customized, right? They're customized to the particular client's goals and needs. So, but you have to sit back and say, okay, we had this particular risk level because we expect that this was going to happen. And over the long term, we expect this particular return, right? If the market is shifting in a particular way, you may say, well, we need to adjust that. portfolio a little bit in order to make sure that we are capturing some of the changes that may occur because of this, right?

And everyone can have a customized portfolio, but there's always going to be certain things that are going to be applicable to everybody. Absolutely, exactly. The difference between floating rate bonds and fixed rate bonds in an interest rate environment, you're not going to leave one, you have to say, well, this client, you know, that really doesn't apply to them, you know, their portfolios

very rare, one and one in a hundred cases, maybe. They have something that it doesn't apply. But there are going to be things that just apply Absolutely. No, exactly, exactly. And you're right. And obviously, you know, from the perspective of the Fed, you know, lowering or increasing rates, has as big as impact in the fixed income market, right? So in other words, what is the direction of interest rates based on what the Fed is doing? And I thought it was interesting because when the Fed lowered the rates, I think it was on September 17th, when they lowered the rates by a quarter of a point, right? The short in the market, because think about this,

The way the bar market works is the expectation is where interest rates are going, right? Short-term interest rates never, literally never move except for when the Fed changes rates because literally short-term rates are based on what the Fed Fund's rate is, right? However, in the interest rate longer than the two-year Treasury note, those rates can move up and down regardless of what the rate is doing, right? Well, and some people would argue those are even more driven by inflation expectations than by interest because it's a double effect. The long end of the curve

is saying, where do I think inflation is going to be because that's where I think interest rates will have an effect two, five, ten years down the road whereas the short end is like well, I already know what today's inflation is, all I care about is what is the Federal Reserve going to do? Exactly, and

where is the rate of the Fed and what is the Federal Reserve rate today, right? But you're absolutely right. In other words, basically if you're investing in a 10 year, Treasury security, and you're earned let's say, and I'm throwing this number out so that people, you're earning 5%, right? The expectation you have is that that 5% will outperform inflation. However, if you think inflation is going to rise above 5%, you're saying,

I don't want to buy 5% a 5% 10 year because if inflation is going to be 6, 7% in 2 or 3 years, I'm going to be losing money, right? So therefore, in that situation, it's like nobody's buying a 10-year, so what happens? The 10-year rate moves up to that 7% where you say, okay, at 7%, I'll buy it. because I think it's going to cover the inflation expectation, right? So that's what you're alluding to, right? But on the short end, but I thought it was interesting, again, so they lowered the rates on September 17th, the quarter point.

The short end market dropped a quarter point literally across the board, some, you know, 25, 30 basis points. The rest of the curve, literally, in some cases, from September 17 to today, interest rates are up, right? So basically the rally in the long end of the yield curve had already happened before even the Fed took its step, Because they were expecting it, right? And two, they're looking, as you said,

they're looking at the inflation numbers and saying, okay, inflation, although it's not where the Fed originally wants it to be, which is a 2% has come down, right? And two, the fear at the beginning of year was that these tariffs are going to cause inflationary pressures, right? And so, one, it hasn't appeared. And two, once Powell said that he was surprised, that the tariffs haven't cost inflation, and therefore, you know, he's willing to cut the quarter percent rate, right?

Then the market had rallied already ahead of that. And so now, like I said, the long end of the curve literally went up about 10 basis points from the time that they lowered. So short-term rates came down 25 basis points, long-term rates went about 10, up-10 basis points. But the nice thing is, like, we are now beginning to see what we call a normalized curve, which means that short-term rates have lower rates than longer-term rates. Which is normal, right? You should, in a normal world, right, if I'm going to lend you money for three months, I would expect less interest than if I'm going to lend you money for 10 years.

Right. Right. That's basic common sense. So for the curve to be inverted where it's cheaper that you pay me less to lend you money for 10 years and you do for me to lend you money for six months, this doesn't make. Absolutely. doesn't make sense. It's a sign of a problem, but now the normalization usually is a more positive sign. Exactly. Exactly. And think about banks. I mean, for banks, it's very important

for that curve to be normal because, you know, in particular, the 10-year is the, is kind of the surrogate for the 30-year mortgage, right? So if the 10-year is lower, then where they can then borrow money, that doesn't work, right? So a normalized curve, and it's not, you know, it's somewhat normalized, it's a little bit flat on the short end. But at least it's, going in the right direction, right? So from a perspective of fixed income, yeah, there are strategies to be employed because of the fact that the Fed lowered rates, because of the fact that we need the expectations that they might do it again at least, right? Is that what your, I was going to ask you, what was your reading into the, what they said as to whether

this was a one time or if it's possible they'll do it again? So I think, I think most people expect them to do it one more time, another quarter point. And I think, Given the softness in their labor market, I think they go into lower rates another time here this year. So I think that's going to happen. Yeah. So, and again, so from an investment point of view, from an investment manager point of view, those are the type of, you know, that's the type of information that given what you see. And again, nobody has a crystal ball. I don't have a crystal ball.

However, given what we expect the market to do, or what the Fed to do, we're going to do. we're going to shift our particular strategy and fixed income this way, right, because we think this is going to be beneficial for the portfolio longer term, right? But, you know, and you're talking about the government shutdown, and, you know, before they give them shutdown, I mean, there was one article after another where people are saying, watch out 401Ks, you're going to get crushed, the market's going to, you know, just tumble, the market's up.

Not only that, I was at an investment conference the other week, and the guy who was a portfolio manager was talking to the top of it said this was like the morning of the shutdown right he said so in other words this isn't just an anomaly

to show you that this is not an anomaly like oh this is just the one random time that the market's up for a shutdown all there have been three shutdowns this century yeah right so since 2000 right there have been three shutdowns the market went up during all three shutdowns because again the market is forward looking. It's not, the market doesn't,

excuse me, the market doesn't wake up on Tuesday morning of the shutdown and say, oh my goodness, there's a shutdown. This is it. The market baked in the week beforehand, okay, yeah, there's probably going to be a shutdown. So now the market's looking forward and saying, okay, do I see anything in the next three months that's going to be a disaster? No. It doesn't mean it won't

happen, but I'm not seeing it yet. And too, let's, you know, the other thing that's very important, right? There's the public market and the private market, right? If all of a sudden the private market, let's say, and again, throwing these names out, now I don't want people to get, you know, nervous. But let's say Costco says, you know, we're struggling, we're shutting down, you know, basically 50% of our operations, right?

Well, that 50% operation means there's a lot of people going to be unemployed. They're not going to get paid, right? That's an impact on the economy, right? Basically, the government shutting down the market says, yeah, we're going to pay you today, you know what, when you come back to work, there's furlough. In other words, we're going to pay you every single penny you would have earned. So the markets are looking at that there's no impact on basically the economy because, yes, maybe even if it's shut down for a month or two months, which it's never happened, 35, I think.

35 days is the most. So if it's shut down one month, it's not going to impact the economy. So these people are still going to eat bread. They're still going to buy food, have gas. So maybe they don't buy the TV this month, right? But then they're going to make a big check the next month. It's like, oh, wow, yeah, I forgot about that. Now I got a big check.

So in reality, the market looks at that, there's no impact, right? In other words, there's nothing really that a government shutdown is going to cause a situation where there's going to be chaos in the street. No, because people's like, I still got my job, and the only thing is I don't have to go to work, right? So it's not really anything dramatic that it's impacting the markets. I think the market, the market that knows what historically has happened. And Nick, you can't always, the issue. you can't manage a portfolio market

by assuming the worst possible tail risk. You can't sit there and say, oh my goodness, there's a 1% chance that this lasts nine months and the whole thing falls apart, right? Right. You can't manage portfolios that way. Because if you did, then you would leave your clients

in three-month treasury bills 12 months out of the year, but there's always a 1% chance of some disaster state which you have not even foreseen. Exactly. Nobody has. You can't manage an entire portfolio for tail list. You have to manage it based on foreseeable ordinary risk, right? You can test for tail risk every once in a while and say, okay, if there's tail risk, okay, do I, is this a minus 100% return?

Okay, maybe I should do something about that, right? But you can't manage every day for that risk because you will be costing people in this very environment, because if you had sold everything and not it to cash the day before the show, shutdown, you're not, you don't, you don't look very good on your return right now. Yeah, the market's up 2% since then. Yeah, it's like, you know, it's only two, but it's only a few days. Yeah, 2% a few days annualized is a huge number. Exactly.

So you sit there and go, oops, I lost 2% of my money. So that's something just to keep in mind, I think. And, you know, I think that applies to, there applies to a lot of things, right? It applies to the shutdown, applies to the Federal Reserve, right? And it applies even to things which are maybe newer to us, you know, the extent to which we maybe looking at tariffs in the future. I mean, even Powell said, you know, as I looked into this, I realized that, which I mean, I would argue that

economics 101 should have taught him this, but, you know, maybe sometimes smarter you are, the more it takes you to get around to it. Get back to the basics. Get back to basics. That a tariff is a one-time increase in price. So the concern with inflation is not, in other words, what worries you more with inflation, right,

is not that I come to you today and say, all right, everything you buy is going to be 5%, more expensive tomorrow. And that's it. The problem with inflation is it's 5% more expensive than last year. Now it's 9% more expensive than the 5% it was. Now it's 3%. So in other words, when we had the 9% inflation year over year, right, back in 2020, and then the next month it was 7. Well, that means it was 7 above whatever. That's in other words. On top of the 9th. Inflation is a compounding thing. Meaning by the time you're done with three years of inflation, it's 40% more expensive than it was

and it's not stopping because you rarely ever have inflation that turns negative. Right. And Powell said what I realized was that when you put a tariff on something, it's not like it's 10% more expensive tomorrow, then it's 10% more expensive than that the next day, then it's 10% how a tariff works. It's boom,

10% more expensive. And even then only until you actually if your dollar is to bring manufacturing back there, only until you've successfully brought the manufacturer back at which point it settles back between zero and whatever the tariff was right because the point of the tariff is you know that the cost to produce it here is less than that hence you will come back here rather than pay the tariff right so Powell said basically he realized okay this is not a persistent

driver of inflation even if it were to manifest in the next 12 months so that's one of those things people have to keep in mind is that okay these things which can sound scary at first the market then looks at it and says, okay, yeah, it looks scary on Liberation Day, but it doesn't look so scary now. A, because half to three quarters of those tariffs will never be implemented because the EU made a deal.

A lot of these countries have made a deal. So, yeah, the 90% tariff on Vietnam is not happening, but Vietnam said, well, I don't want a 90% tariff. I'll buy some of your stuff if you take it away. Right. Right. And Europe made an extremely favorable deal with the United States on this, right?

So the market realized, okay, a lot of this is never going to happen. And even if it does happen, to Powell's point, it's not like it's a continuous never-ending process. Yeah, and not only that, let's face it, I mean, you know, companies sit back and say, you know, all right, do I really want to impose this huge of an increase in my product? And the answer is a lot of times no. In other words, I can eat part of that because I still want my product to be consumed as much as possible. In other words, I want that supply to increase, right, in the sense of demand. increase, so the supply can increase, as opposed to all of a sudden the demand drops to almost zero because it's so expensive, I'm out of business, right? So I'll absorb some of that cost for now, pass a little of the cost to the consumer, and then over time, try to figure out, do I, am I happy, you know, where I am, or do I next year also increase it a little bit more, right?

But, I mean, so that's the situation, right, where, and as you mentioned, I mean, the whole goal originally is to bring back some more manufacturing here. And, you know, listen, between robotics and AI, you know, there's a lot of things that are being done cheaper now than, you know, 10 years ago or, you know, five years ago. So that probability of bringing that back is great. There's a term of economics, but like, elasted goods, right? In other words, price increases can't be 100% passed on if I can go buy something else. Right. That's somewhat like the thing you are selling. It only, you're only a passing price if you have, if you were the only dollar.

in the world making this one thing, then yeah, you can raise the price and if I need it, I have to buy it. But if there's any kind of substitute for it, then you can't pass on the entirety of the price because I will just move

to the substitute. And for a lot of the goods we're talking about, there are substitutes for them, right? Whether it's somebody else's lumber, whether there's a company in the U.S. that makes this. Maybe there's a company in Europe that the trade deal that sells it that is now cheaper than the company in China that has a 140%

tariff on it exactly right so there's always things you can do to move around so they cannot pass on the entirety of the tariff and that's that's kind of always how this works and you can know it works because whenever there's talked about raising corporate tax rates right no one ever says well oh no my goodness they're gonna pass on all of the torporate they're kind of an understanding, right? Well, okay, if you increase corporate taxes by 5%, not everything goes up 5%, but the assumption is the company can't just say, the assumption is the corporation won't say, I still want my same exact profit. So I'll just charge everybody. Well, there's kind of an unstated assumption that they won't do that. Otherwise, no one would

propose a corporate tax height. Exactly. Right. So the implication is that if you impose a corporate tax height, the profit of the corporation goes down. Right. Well, the profit only goes down if they don't pass on all of the tax side because you know that they can't. So it's a similar vein with tariffs, right? You know that they cannot pass on 100% of the tariff. Exactly, yeah. So just a couple of things, I think. Yeah, so that's where, you know, that's where we are.

I mean, it's been a very interesting year. I mean, there's, I mean, it's interesting because there's just so much literally going on. And, you know, between, and, you know, we've talked about this electricity, AI, And, again, obviously, the Fed, I mean, there's just so much, I should say, the economic, how the economy is run today is different, how it was run 10, 15, 20 years ago, and how it's going to be run in the future, I think is changing. So that's the only thing that one, you know, and it's where we spend a lot of time, obviously, doing a lot of research and saying, you know, where are we going and what's going to be that which is in most demand in the future. So those are some of the things that really as an investment manager also need to sit down and think about it. And these are the kind of environments where you can't just passively sit there and say, I just put all my money in the start market in one fund and not pay attention to it.

That may not be the best. I mean, we saw that a few years ago with the bond market. In 2022, you could not be passive and say, oh, just my bond allocation, put it all in one bond fund fund. that's the entire bond market and leave it there you would have been crushed exactly right and you

and there were just a few things you did have done that would have made you not get crushed right and I think we're in an environment where you cannot just say leave all my money in one fund

and don't think about it because there are going to be some changes that certain portions of the market are going to do better than others and you can't just say yeah leave all my money in the growth fund because growth did the best

over the last couple years and don't look at it. That may not fly going forward. It certainly hasn't flown in the second half of this year. True, yeah, exactly, yeah. And the other thing is always you know, if you have funds that are not in retirement accounts, you know, tax loss harvesting is something that

is actively, you know, opportunities that are there, right? And, but that's an active portfolio. You have to look at that and manage it, but, you know, again, you buy one fund, that fund goes up in price. The minute you're selling, you're paying taxes. And there's opportunities where you don't have to do that, right?

So just some things to think about. Absolutely. Always. Well, this has been a blast. Very, it's always, always love doing some. I missed a little bit of finance topic. Always love talking a little shop. I just, to give people an insight as to what happens around the emergence table.

On Monday morning? On Monday mornings. Sometimes more, sometimes more than just Monday mornings. so definitely always appreciate being able to look into that and yeah it was a great show, enjoyed spending some time with Matthias Yeah, no, it's a good topic, Matthias brought up

I mean, you know, that is something that is so important here in this city Yeah, absolutely. I definitely appreciate everyone who tuned in today. All our great viewers again, that's for the comments, the questions or in this case, the compliment The compliment to Matias' topic of the day. definitely appreciate everyone who tuned in.

Of course, you appreciate our great partners, you know, merger financial services, of course, and Matthias Yon Realty, Ford, Adelante. Appreciate the I Love Seville Network, too, behind the camera, making us all look good. Always appreciate being out with you. Same here. Always a plan, and most of all, we appreciate.

We're really thankful for all our viewers. Thank so much for tuning in this morning. We look forward to seeing you next week, or... Two weeks. No, we're a little... What's next week? That's right. Oh, we're off, so it's next week. We were slightly delayed this week,

So we will actually be on next week. Okay. I'll forward to seeing you all then. But until that time, as we'd like to close it out on the show, Asta mania. Thank you.