Ep.125: Is The UK Housing Market About To Crash?

Hello and welcome back to the Trading Floor episode of the Market Maker podcast, where I'm joined by our co-founder Piers Curran, and we've got 3 topics for discussion this week. Going to talk about the housing market. If you're based in the UK, you've probably been littered with headlines such as UK housing prices fall at their fastest rate since 2009. Lots of, uh, concern here on the street in the UK, but this is more than just the UK. This is a, a global, uh, topic. So we're gonna discuss a little bit about the divergence in prices actually between the UK and the US. And also, could Denmark have the solution for Britain's broken housing market? Definitely interested to see why they have a potential, uh, solution for us here, uh, in the UK. So Piers, I know you're gonna shed some light on that and then UBS, they posted their biggest ever quarterly profit, so we'll dive into those numbers. They're one of the last European banks to report this season. And then thirdly, is the US labor market starting to show some cracks after the US job openings this week dropped to the lowest level in nearly 2 and a half years in the month of July? So to kick things off, why don't we talk a little bit then, Piers, about the housing market. Where do you want to go first, the UK or the US?

Uh, well, let's go, let's go domestic. Let's go UK, shall we? Um, there's nothing like, uh, the, the media love a kind of doom and gloom, um, housing market headline. So yeah, as you said, they've definitely served that up this month. We've obviously each month you get house price index data being released, and when these numbers Drop, which give you the kind of latest monthly update, then the financial press tend to be all over that and they love a headline. So yeah, the headline 5.3%, that's the annualised drop in house prices in the month of August. So house prices on average across the whole of the UK, what's the price on average August 2023 compared to August 2022? And it's down 5.3%. In July, I mean, look, house prices have been declining, well, actually, pretty much all year. It's just, if you like, the pace is increasing because in July, the annualised house price drop— actually, I did have that data. Now I've lost it. Oh, hang on, I've got a different stat first. You can maybe give us the, uh, the figure from last month. My different stat was, and the reason why it's kind of sensationalized, is that, um, the— yeah, this is the sharpest fall, um, annualized fall since July 2009. So the speed of decline is picking up basically. Here, I've got it now. July, the decline was 3.8%. Year on year. Now it's 5.3% year on year. What's it going to be next month? Probably even a greater drop, right? As we come off the top, you really need to see, um, I guess a house price chart to get it into context. So whilst we are declining, we're declining off those 2022 highs, all-time highs. So we've been pegged back to now prices that we last saw at the start of 2022. Right, but look, the trend is in place. Prices are dropping, and it's not a surprise.

Um, yeah, I think that's one of the main things that I heard a comment from Nationwide, who's this data you're referring to, their chief economist, chap called Robert Gardner, and he said that the softening is not surprising given the extent of the rise in borrowing costs. And he said he thinks a relatively soft landing for the property market. He's pinched a bit of language here from the, uh, the other economists on the economy front. He said a soft landing, uh, it looks, looks likely for the property market, still achievable because of the unemployment rate, which is expected to remain low, and the high proportion of borrowers on fixed rates.

Yeah, hello. It depends on obviously interest rates Surging is the key catalyst behind this, and obviously inflation and the cost of living. You've then got less money to spend on your mortgage payments each month, and we'll kind of get into the meat of it. But ultimately, this is an important economic barometer historically, and and present day and in the future. And it's just very simply like in an economy where it's largely geared around consumption, it's all about the ability for the consumer to spend. And so what's their, you know, disposable income each month is obviously a key part of that consumption story. And if their disposable income, if more and more and more of it is actually being taken away because their interest payments on their mortgage is going up, well, then of course that means less disposable income. That means that damages that consumption story. And ultimately, that's, that's where— how the economy grows, by people consuming more, right? So there is— this is a key economic barometer. I do hesitate to talk about house prices too much, only because if you own a house, well, It's one of the most important things in your life. Of course, if you don't own a house, well then, yeah, because if there's people listening to this going, well, I don't own a house, so who cares? Well, it is important from a macro point of view, but ironically, they'll be feeling the pain in a different way. If you own a house, you're feeling the pain, the value of your assets declining and your monthly interest payments might go up. We'll talk about that in a sec. If you don't own a house, you're feeling the pain because actually a byproduct of a weak housing market is actually a strong rental market because people aren't buying houses because they can't afford it or the mortgage rates are too high so they can't afford those payments. So they're not buying, so they're renting, of course. So rental demand spiked, which means, of course, price— rent prices have gone up. So rent prices are record highs. Um, yeah, so it's quite an interesting kind of dynamic that we have here in the housing market at the moment.

Yeah, I think, um, if you are an owner, one of the things is, yeah, do look at what a chart though. You mentioned, and rightly so, the stat that the fall, the data we've had out today, it's the fastest pace since July of 2009. This obviously is like the heat of the financial crisis, but if you look at the house price appreciation from the next month all the way through, basically for a 12-month period, house prices went up just by eye looking at this chart, about 25 to 30% in 12 months.

Yeah.

Immediately after it hit that, that pace of the bottom of the financial crisis, because obviously the, the response that we saw by authorities in various forms at the time really juiced the market. And actually, even over the COVID period, that 2-year period between kind of 2020 to 2022, on an average we're clocking in around 8-9%. Yeah, appreciation. Um, it's been a great trade.

It's just come off the top a little bit.

Yeah.

Well, actually, but, and this is what the press focus on. It does annoy me a little bit. That's that sensationalist headline. Oh my God, prices are collapsing. But actually, that's not the story. The way more important story, which, okay, they are covering as well, is mortgage rates and your monthly outgoings as a homeowner and how is that going to change. And this then, let's talk a bit about mortgages and, right, what's available. So, and it depends on the country as to the typical trends and patterns of how people go about borrowing to buy a house. Now, in the UK Typically, we have short-term mortgages. Well, so when you buy a house, if you've never done it before, then you need to borrow money, clearly. And you're looking at normally like a 30-year time frame over which you're going to pay off this loan. So historically, you start your career, you start earning a salary, and then, right now that I'm a salary earner, a bank will view me as safe enough to lend me money as long as I can prove that I'm in a stable job, full-time employment. And normally they ask for like 3 months' worth of payslips to prove that you're in that job and that your monthly income is what you say it is. And then, right, they tend to lend against that and they'll say, right, you can borrow 4 times your annual salary. That's the kind of rough ballpark maths, right? Fine. You borrow the money, but over what time frame? And typically the banks give these deals where, right, you can have a 2-year fixed rate mortgage or a 5-year fixed rate mortgage. And typically what happens is, let's just take a 2-year example, you'll get a sweetener where you'll get a 2-year fixed rate which is discounted because the bank wants to get you in and get you on the books. And then after those 2 years elapse, your mortgage rate will then revert to a floating rate, which is linked to the central bank's interest rate. Okay, so it'll be the central bank's rate plus 1%. Okay, let's just say. But of course, what people do in the UK, they do their 2-year fix. Great, they get this cheap deal. And then in 2 years' time, they don't just let that loan roll onto that base rate plus 1 variable thing. They then just rearrange and go and get a new mortgage deal with a different bank, and then they enter into another new fixed 2-year deal. Right. And typically, if interest rates are low, this is a great way of going about it. You have flexibility, you can shop around, you can change your mortgage up every couple of years. Okay, but what's happened Now is this has turned into an absolute nightmare because you've been— you fixed your mortgage. Let's say you fixed it in 2021 for 2 years at a rate of, I don't know, let's just say roughly 1.5% interest rate that you could have got on a 2-year mortgage in 2021, maybe even lower, right? But let's just say 1.5%. Okay, great. You fix that in, perfect, super cheap. My monthly interest payments aren't that massive. Perfect. Now you're facing a nightmare because 2 years on, either the mortgage you have is going to roll onto this base rate plus 1, or you got to rearrange and fix with someone else. But of course, the fixed rates are now north of 5%. So you, you're going to move from an interest rate of 1.5% to an interest rate of 5%. Now, what does that mean in terms of actual pounds in your pocket or pounds going out of your bank account? It obviously depends on the size of your mortgage and how much you're borrowing, but the averages are, roughly speaking, you're going to get about— I think it's 2 million homeowners are going to see their annual mortgage payments increase by more than £3,000. In the next 12 months. So go back to my original point, disposable income, and how much can I get out there and spend? Well, if I'm now minus £3,000, that's not a small amount of money. And so it's expected that, A, that's going to have a very negative drag on consumption and therefore the UK economy broadly. But then also, B, it's going to mean bad news for the housing market from a demand point of view, because people aren't going to be buying houses. They're not going to be upsizing and getting a bigger mortgage. They're not all— if they're not on the market, they're not going to buy because rates are too expensive. So demand has collapsed. So of course prices are coming down.

Yeah. I mean, on that point, one article that jumps to mind was something I saw. That was talking about investment bank MDs. So an MD level, this is where your compensation is typically very high.

Yeah.

And this was specifically talking about the investment bank division. So bankers, right? As we've discussed many times, the deal flow has dramatically slowed over the past 18 months or so. So bonus sizes have been slammed. And one of the problems here is a lot of these MDs have very nice houses in very expensive places in London. And so, you know, they, they themselves, I mean, even though they get paid astronomical sums of money, they don't have 5 million in the bank to put down for a Georgian townhouse in the West End.

Yeah.

So they've got very big mortgages essentially. Yeah. And I was reading this one person who was kind of used as a case study. I think his mortgage rate, it went up to something like he was paying 25,000 a month. It jumped up to having reset on like a 2-year. And so basically there's MDs who are basically having to fire sale everything because they just can't afford to keep that, their lifestyle, even though they're at the upper echelon of their so-called profession.

Or they're they're forced to sell the house, right?

Yeah.

And so, and this adds to the declining price trend and momentum because they're forced to sell. There's not much demand. So like in any market, how do you price it? Well, it's obviously supply and demand, isn't it? And when there's not much demand, you got to just go lower on price. And so what's happening is you're getting, you know, asking prices. That's one thing. That's what the seller would like to sell for. But these days it's a buyer's market, meaning they, they've got the power and they'll come in with a bid well below the asking price. And the sellers either, if they can stay in the house and just ride it out over the next X years, or they might be forced to sell, in which case they have to take that lowball bid. And of course that then marks that mark to market lower, and that's the price decline momentum, you know, building.

So before we talk about the US and how they're different, one thing is, is where are UK interest rates heading now? And I say that because there was an interesting comment from the chief economist, of all people, from the Bank of England yesterday. And firstly, very interesting comment that was yesterday was that, um, Hugh Pill is the guy's name, and he said he pushed back— well, essentially he pushed back against market expectations, and he was indicating that he would vote to keep rates at 5.25% for a longer period. However, he's come out today, looks like he's had his hand slapped by his powers that be, and to clarify, he's now saying the Bank of England needs to be particularly wary about letting inflation Persistence dynamic set in. So he's kind of like reverting back a little bit to perhaps we do need to hike.

Yeah.

And then he said, we have not yet seen a downturn in core inflation, which would reassure us. So yeah, a bit of, bit of flip-flopping commentary there from the chief economist, but where are we at the moment in that rate debate?

Really, I think it's really difficult to call for the UK. Um, so 5.25%, that's where we're at at the moment. What is it, 14 meetings in a row of hikes, and, uh, or maybe it's 15, I lose count now. And, and it's about like when we talk about the US, we're pretty confident they're at the top, no more hikes. I'm fine, they might hang around at the top for a bit, let's see. And who knows, maybe you might get some cuts, I don't know, back half of next year kind of thing. I think there's more visibility in the US. I think in the UK, the inflation situation isn't tamed yet like it seems to have been in the US. And so what we're seeing is like stats like wage growth is remaining at, I think, record highs, or if not record, it's certainly super high levels, right? And this feeds into, um, sustained inflation. And the labour market is still pretty tight. And so employers are still having to pay higher wages to get workers in. And so, yeah, we're a bit worried that the inflation thing is hanging around for longer here in the UK. So what do the Bank of England do about that? Do they either think 5.25% is now high enough and that's going to deliver pain that over the months ahead, let's say the 6 months ahead, that pain will then naturally see consumption start to get eroded and find that inflation story starts to turn? Or are they more worried and they think 5.25% as a peak rate isn't going to do the job, we need to go higher? And, you know, and I think that your Hugh Pill's soft landing. Oh no, sorry, that was the Robert Gardner. Sorry, Robert Gardner, that his soft landing in the housing market, I think, will be very dependent on what happens with interest rates. And do the Bank of England go more, then you've got a much more— you've got a hard landing risk increasing there. If they go more, well, of course, all this mortgage pain just increases, and then naturally the speed of that house price decline picks up and it starts to turn into a much more rapid collapse rather than what is at the moment a steady decline.

Yeah, one interesting item linked to this this week was that price rises in British shops had slowed to their lowest rate since October. So when we're trying to like piece together where inflation is heading, however, I thought the interesting part of that was, okay, fine, prices are slowing. Um, this is a good sign if you're tying it to inflation. However, there are 3 major supply risks that were also highlighted, which could disrupt the pattern specifically of food inflation, uh, which we already know is tracking way higher than, than the rest of the inflation metrics. So here they were talking about grain exports from Ukraine are in jeopardy again. And this is tied to the fact that Russia pulled out of something called the Black Sea Grain Initiative. So this was an agreement about the passage of grain coming out of Ukraine, which is almost one-third of global grain exports. Then there was this idea about poor harvests across Europe and beyond. And I know it's hard to believe there's been a summer if you're based in the UK, but in Europe it's almost the other way around, I think.

Yeah.

And then 3, India and their decision. They've placed export restrictions on rice.

Yeah.

I think their rice prices are up like 30% or something.

Well, did you see that the Philippines in response, um, have introduced— the government's introduced a rice price cap. So like here we've had like any, you know, gas price, energy price caps. Well, in the Philippines it's a rice price cap. Yeah. So for sure, those supply risks are still there, right, in the system.

So, so yes, I guess you say it's hard, hard for the visibility for the UK. But, but so how about going back to the housing market, the US then?

Yeah.

So you talked about this idea of the kind of short-term nature of how we access mortgages here in the UK. Is the US the same or different?

So it's different. Um, well, when I tell you that the house price situation in the US— well, prices are still going up, and actually they're record highs. But hang on, their interest rates have sharply gone up and are super high, and mortgage rates, if you're trying to get a new mortgage now, are even higher than in the UK. You're looking at north of 7%. So it's like, hang on a minute, why does that then not have the same negative impacts that we're seeing in the UK? How are prices still going up? So this is all about the difference in the mortgage, the structuring of these loans for homes. Now, in the US, it's completely different. Almost all— I think it's like almost all homeowners when you buy a house, you enter into a 30-year fixed rate loan agreement that's done and set up front. Okay, there's none of this 2-year fix, 5-year fix, you know, roll onto a new deal, rearrange— none of that. You buy a house, you get a loan, one loan for the lifetime of the house, or, well, sorry, for 30 years at a fixed rate. Okay, now if Now, that rate right now, if you're buying a house now, 7.2%. Okay? And that's the highest since 2001. If I'll use my same example, if in the US you bought a house in 2021, okay, you would have secured, or you did secure, a 30-year fixed rate of 2.7%. That's locked in. That's an amazing rate. Now it's 7.2%, right? So if you own a house and you bought it pre this interest rate spike, you are happy days. You got a super low, relatively super low interest rate on a mortgage for the lifetime of the loan, 30 years. The problem in the US is if you sell your house, well, then you lose that mortgage deal. You can't. So here in the UK, you can what's called port your mortgage. So if you sell a house and buy a different one, you can basically take your existing mortgage with you and it just rotates onto this different property. Can't do that in the US. Sell your house, you lose your deal. So of course, no one's selling their house because they don't want to switch from a 2.7% interest rate to a 7.2% interest rate. So existing home sales have collapsed. The supply has collapsed. Now demand has also weakened for the same macro forces, right? Interest rates are really high. People can't afford to buy. Demand has dropped. It's just in the US because of this difference in the mortgage system, the supply of available existing homes has collapsed even further. So you go back to just the simple supply and demand dynamics, and because supply has collapsed by even more than demand, then actually prices are still rising. So, and actually a kind of bit of a kind of second dimension impact on that is then home builders in the UK, they are you know, literally going out of business, worst conditions for decades. In the US, home builders are having a heyday because it's— where's the supply? If you do want to buy a house and get on the market, there are no existing homes for sale because people don't want to sell. So you got to buy new homes. So actually new home sales has gone through the roof, and I think it's like, it's making up like 30% Um, uh, one-third of active listings right now in the US, one-third of all listings are new homes. Normally the average over the last couple of decades, like pre-COVID and interest rate hikes, the average is about 13% of listings are new homes. Now that's risen to— it's more than doubled, almost tripled. Um, so yeah, you've got this really quite unique set of circumstances in the US housing market that's led to a collapse of existing home sales, prices therefore still rising, and yet affordability for new buyers being at the worst conditions for years and years.

Okay, so we've had both ends of the spectrum. Yeah, we mentioned at the top of the episode Denmark. So what's the situation with Denmark?

Well, the good old Danes. Half of that— so again, the 30-year fixed rate deal is very popular in Denmark, similar to the US. You buy a house, you enter into this deal, it's 30 years and it's fixed. Okay, more than half of homeowners in Denmark are on a 30-year fixed rate deal. Okay, but where they've got a better system than the US is if you sell your house— of course, remember, that's the problem in the US. No one's selling because you lose that low rate. In Denmark, two options that the US don't have. If you sell your house, you can either buy out your mortgage, but if interest rates have gone up, the value of your mortgage essentially gets mark-to-market down. So you, you benefit from essentially having a discounted amount that you can buy your mortgage off at. Okay, that's one way. That's a bit more complex, that. There's a more simpler option which is easier to get your head around. When you sell your house in Denmark, if you've got a 30-year fixed deal, the buyer can take over that deal. So essentially the loan belongs to the property more than the owner of the property. And so this frees up the market and enables people to sell and buy. If you've got an existing home, right, I'm going to sell it. I'm not going to— my buyer is going to get the low rate deal I got, I secured back in 2021. So they're happy. And I can then go and buy another house and I'll get the low rate deal that the previous owner of that house used to have. So it just frees up the market and it means that supply hasn't collapsed.

So yeah, I do, I wonder how the affordability angle works there. So if I was a first-time buyer, let's come as a 25-year-old compared to a 55-year-old.

Yeah.

My earnings and my existing capital, could it, can I take it over?

I, yeah, so I, I don't know. I mean, that's all a top level, that all sounds hunky-dory and makes sense. But yeah, for sure, when you get into the weeds of it, um, different credit ratings— if you're a new buyer coming in, it's got a lower credit rating, well then yeah, how does the bank feel about that? So I don't quite know how that works, to be honest.

Just a final question, tying it back to the actual people who offer these mortgages. So what's the pro and con as a financial institution, a lender, offering the UK model or the US model?

Well, the US model again is a bit unique in that it's essentially government-backed because you've got Fannie Mae and Freddie Mac. So essentially your, your mortgage deals with the government. Then Fannie Mae and Freddie Mac package these mortgages and sell them to banks and investors, right? Um, in the UK, that's not how it works. It's the banks. You're borrowing directly from, you know, the publicly owned banks. And so, you know, for, I guess, for those banks, it's Here in the UK, it's a more nimble market. So, but then, you know, you've got this headache of getting a lot of churn because every 2 years customers are rolling off. And then so you've always got to be trying to win these customers back. And so there's that huge sort of sales and marketing effort around. It's a fierce marketplace. So that's a real headache. But then, you know, you're not stuck, you know, as a bank. Imagine if most of your customers are on a 2.7%, 30-year fixed rate loan arrangement. For a bank, that's a nightmare. Given rates are now where they are, right?

So it's funny, I remember sitting on the desk in 2008 And used to have Bloomberg with lots of different screens and one of them, a lot of them were like price monitors. So you'd have different asset classes or products and we'd had this like ladder of different equity and sectors. So you could just identify visually what's out and underperforming. Yeah. And I remember seeing Fannie and Freddie.

Yeah.

And they would, down like 25, 30%. So this was even before the banks started to get hit. So it was like the very first domino was like, or the signal was when those started to get absolutely drilled.

Yeah.

And then it, there was actually a bit of time there. I mean, I say time, I'm talking days before then it kind of like became like, wow, this is a serious problem at the time.

Yeah, I mean, this— and that, that's just those— that extreme moment, right, where you, you get a sharp collapse in house prices, because that then means, of course, you get the value of the asset declines below the, the level of the loan that's secured on that asset. Okay, so you're now underwater. And at the same time, the economy is collapsing, so people are losing their jobs and they can't afford to pay their mortgage payments anymore. So there's foreclosures and there's defaults, but the banks are wearing the pain because ultimately, if they then sell the asset, well, they don't reclaim the same amount of money as their loan liability, and so they end up losing money. And then the housing market, it's like a vicious cycle, right? Because then if there's a lot of forced selling, well then of course the prices collapse even further. And that was that kind of, well, I'll call it once in a lifetime moment, maybe.

Careful, careful. You're going to live to 100, Piers. So, all right, well look, we wanted to talk about the housing market the most. I feel like we've done that now. So let's just briefly touch on the other two subjects. So firstly, UBS, uh, again, the media kind of juicing the headline, the biggest ever quarterly profit, and they were referring to the $29 billion gain, but that being a result of the accounting difference between the $3.8 billion price UBS paid for Credit Suisse and the value of the acquired lender's balance sheet. Essentially, but the other things I thought were quite interesting was just how big and dominant now UBS is and is going to become because the combination now puts their global franchise, as they refer to it. So all parts of the business, essentially close to $5 trillion in client assets. And, you know, looking at their share price, I saw a chart of UBS against European and US peers in the investment bank space, and everyone's kind of like quite erratic, but generally not going anywhere, up marginally. But UBS has gone through the roof, and actually they were already up 30%, um, for the year.

Yeah.

And then they were— they opened up about 7% yesterday. I don't think they finished quite as high, but we're talking about a 30 gain on the year. Uh, their market value now is gone over BNP Paribas. They now rank as the second, um, biggest in Europe after HSBC, right? Um, they've trumped that of US lender Citigroup as well, right?

Well, I mean, on the face of it, you think, hang on a minute, They've done— they've had an— got an absolute steal here because they've basically bought Credit Suisse. And here's the— it's entirely an accounting thing, right? There's $29 billion. If you took out the Credit Suisse deal, their profit for the quarter is actually $1.1 billion. But it's reported at $29 billion. As you said, it's the biggest bank profit ever. Do you know what, do you know what the previous record was? So JP Morgan set the previous record in 2021. Um, they had a profit of $14.3 billion, which is a straight up genuine profit. This, this is $29 billion, but it's an accounting trick. Um, and you think, you think, hang on a minute, because they bought— remember, they bought Credit Suisse for $3.4 billion. And now, hang on, they've made $29 billion out of that. You're like, wow, that's like the best trade, the best deal in the history of mankind. But I guess it's easy to think that now, but you go back to that banking crisis, um, you know, back in, in the spring, and it's not that there was zero risk here. I mean, they did step in and take a big risk. Yes, they were in a position where they could force an amazing deal, but it wasn't risk-free. All right, fine, it's all settled down and it's all turned around, uh, and happy days. What people haven't— maybe don't quite appreciate— this $29 billion profit was actually lower than expected. Analysts had actually forecasted a $33 billion, um, profit And so that's just because actually the outflow from, of deposits from Credit Suisse during the crisis was actually a bit higher than they thought. The outflow was $10.6 billion. But basically, yeah, UBS bought the asset book of Credit Suisse at an incredibly discounted level because there was uncertainty as to how much deposit outflow there would end up being. Anyway, it's all worked out incredibly well, obviously. Now, what I thought was quite controversial, because, you know, obviously they're right, they're now going ahead with the merger. It's going to take years and fine, there's lots of cost efficiencies that UBS think they can find within that Credit Suisse entity. Inevitably, there'll be a lot of job losses, of course. But one thing that they announced in this earnings that they, they announced that they, they're going to merge the domestic businesses and essentially phase out the whole Credit Suisse brand entirely. That's a 167-year-old brand. And the only reason I mention this is because this is getting political. Because actually there was a poll done back when the kind of rescue took place and 75% of Swiss nationals do not agree with UBS phasing out the Credit Suisse brand. And there's an election coming up. And this is all getting quite political now around, right? You know, all these political candidates are getting asked, you know, what do you, what's your position on the, you know, UBS-Credit Suisse deal?

And so it's kind of entered into that political arena a little bit, but Well, all I know is Roger Federer was Credit Suisse, not UBS, if I'm not wrong. So, you know, when it comes to Swiss identity, yeah, the global level.

Can I just finish on the share price? You mentioned it. So it has— it's actually just broken, uh, 30— sorry, 23 Swiss francs. Okay. Got a key and it just jumps this week, as you said. What's key about that? It's actually broken above the 2015 high. So that's actually the highest now since 2008. Okay. For the UBS share price I'm talking about now, but it's at 23 Swiss francs, right? And you mentioned, oh, it's more valuable than Citigroup now, or, well, in terms of assets under management, let's say. But its share price, UBS's share price 2007, pre-financial crisis. So remember, it's at 23 Swiss francs now. It's had a great year, 30% up, multi-year high, 23 Swiss francs. It was 71 Swiss francs in 2007. So whilst it's had an amazing year, What's— I'm going back even further. UBS's share price was at 23 Swiss francs in 1993. So you could argue in 20, in 30 years, it's gone nowhere.

I hope there's no, uh, UBS stockholders who've been holding since '93 listening. Just for their own sanity. Hang in there. Um, all right, well, look, let's go on to the final one, which was just quickly to talk about the US from a very top level. Uh, we are recording this on the 1st of September, so Nonfarm Payrolls is yet to come. But even before that, there's been some interesting data in something called JOLTS. So perhaps you could give us a bit of color about what that is and what's been happening.

Yeah, so there's a thing called the JOLTS job open rate. So it's economic data released every month, and it's one of the many, many measures on the labour market. And this one's looking at job openings. So as the name suggests, in total across the entire economy, how many jobs are being advertised for? Right now for positions that are genuinely available, where companies want these workers to start as soon as possible. And this is like a salaried role. Okay. Um, and the thing here is it's a measure of how tight the labor market is. And point being, if the higher the job open rate, well, that's a measure to say that there's a lack of supply of workers because companies can't fill these positions. And so we had this peak, uh, back in December 2022 where it got above 11 million, okay, 11 million job openings. And start, you know, companies just couldn't find staff. The problem is this is inflationary because what happens if you can't find someone to fill your job opening, well, you, you gotta offer more money, right? And then this means wages go up, which then of course incomes go up, and then consumption goes up, and it all feeds into that inflation story, right? Um, so over 11 million in December 2022. It's now been declining ever since then, and it's one of those key measures that the Fed look at as to, right, what are the labor market conditions? And they feed this into their decision-making around their inflation forecasting. And therefore, are they going to continue to raise interest rates or not? And the key reading this week came out, and it's for the month of July, so it's a little old. But the point is that it dropped below 9 million now, so it's actually at 8.83 million job openings. Um, that was a lot lower than expected. Um, the forecasted figure I think was, um, 9.4 million actually. So it came in a lot lower than expected. It was expected to go back up. Not only did it not go up, it declined, and it went below the key psychological 9 million level. So it's further evidence— in summation, it's further evidence that the The, the tight conditions in the labor market in the US are easing, and this feeds into the whole narrative. The Fed are done, there's no more rate hikes. And if you go and have a look at the stock market this week, they've had a great week. You know, S&P and the NASDAQ have been nicely and strongly up on the week as people get more confident again that the Fed aren't going to hike any further.

I love that. I love the— it's like Main Street suffers, yet Wall Street up. Yep, just the perverse nature of how markets work. And yeah, just to kind of supplement what you said, economists, they are expecting the increase in non-farm to come out momentarily to have moderated further in August, having already posted in July the second smallest gain since December 2020. So kind of all marrying up, if you like, in that way. The other thing is JOLTS, so J-O-L-T-S. So the J-O is Job Openings, yeah, the LTS is Labor Turnover Survey. And on that side of things, the Labor Department said that it also showed the number of people quitting their jobs dropped to levels last seen in early 2021. Basically Americans becoming less confident about the labor market. So yeah, all— everything all coming to that same, same point you said. Cool. Well, look, let's wrap it up there and finish things off. Thank you very much as ever, Piers. Thank you everyone for listening. Have a fantastic weekend, and we will see you same time next week.

Yeah, have an awesome weekend. Bye-bye.