NYC renters vs. the mother of all upfront fees

Plus: Your 60/40 portfolio, how to sell your company and more [Bloomberg]( This is Bloomberg Opinion Today, a fee-free roundup of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - Fees [plague]( New York renters. - The 60/40 portfolio [means]( different things to different people. - How not to look [desperate]( when selling your company. The Fee Economy The modern world is full of [hidden fees]( and commissions. Restaurant patrons pay hidden “delivery fees” and “services fees.” Airline passengers pay “luggage fees” and “seat selection fees.” And perhaps most egregiously, New York City renters pay thousands of dollars in upfront fees to real estate brokers to lease places that renters found themselves on Zillow. What a system! The real estate profession was turned upside down recently when a Missouri court found the National Association of Realtors and some specific brokerages guilty of conspiring to maintain artificially high commissions, but Erin Lowry [says]( the New York brokerage fees —  which went unaddressed by the Missouri ruling —  are the real abomination in the world of real estate. “Renters in New York have been gouged by bloated fees for years, a burden that only compounds the city’s dire shortage of affordable housing,” she says. The financial capital of the world has tried to ban brokers’ fees for renters before, but industry interests ultimately prevailed. At present, renters end up coughing up 10%-15% of their annual lease amounts to brokers that they often don’t even hire (the landlords do). According to Erin’s math, that ends up translating into around $7,560 on a median-priced one-bedroom Manhattan apartment (and that doesn’t even include the security deposit and first month’s rent, which brings the total to $15,960 upfront). Ouch! Some New York City Council members have a plan to put the onus on the party that hired the broker to pay the fees, and the real estate industry is (predictably) against it. Some observers also claim that landlords might indirectly pass the fees on to renters anyway through higher rents. Maybe so. But as Erin says, it could be an important step toward cutting down on would-be tenants’ upfront costs. One additional note on personal finance for today. For the few lucky ones who have anything left over after paying their New York City rent, a key question is: How do I invest my money so I can afford ever-so-slightly better apartments in the future? As Allison Schrager [says](, savers should think hard before reflexively dumping savings into the storied 60/40 stock-bond portfolio. For starters, many people don’t realize how many different 60/40 portfolios there are. Is your 60% equity allocation all US stocks, or is it global? Is your 40% bond allocation all cash-like short-term government securities (intended to cut risk)? Or is is it mainly longer-term bonds (which have diversification benefits, sure, but still carry plenty of risk of their own)? Whatever the case, the 60/40 portfolio is neither perfect nor uniform across investment managers, and it’s important to define your specific objectives and make investments that match them. Even still, Allison says there’s value in simplicity and a 60/40 strategy “is still probably a better bet than many other strategies, provided you aren’t paying high fees.” Here we go with the fees again! Negotiating Tactics Selling a company is like selling anything else; one of the best strategies is to convince eager buyers that you don’t really want to sell in the first place. Say your buddy is dying to acquire original Beanie Babies and you happen to have some that you wanted to get rid of anyway. “They’re not really for sale,” you say, but they keep pressing the matter and are forced to outbid themselves. This is a great strategy to make a lot of money selling Beanie Babies. Similarly, Chris Hughes [believes]( US biotech company BioMarin Pharmaceutical Inc. needs to get ready for takeover approaches, especially after billionaire Paul Singer’s Elliott Management Corp. [reportedly acquired](bbg://news/stories/S3RI60DWRGG1) a stake (encouraging M&A is part of Elliott’s modus operandi as an activist investor). Despite having a portfolio of niche drugs and more in the pipeline, the company has done a lousy job of controlling costs to turn extraordinary top-line growth into profit, and the market has punished it accordingly. Sure, the board should consider selling for a good offer, but that doesn’t mean it should put up a “for sale” sign. Desperation is not a good look. “A proactive sale process would risk signaling a lack of faith in the solo strategy and leave BioMarin reliant on a tense auction to get a good price,” Chris writes. “The best way to get a good deal is to demonstrate you don’t need one.” Telltale Charts Federal Reserve Chair Jerome Powell is probably the most powerful individual in global finance. In months past, he has moved the price of trillions of dollars in assets with a single utterance. But lately, it feels like something else has taken control of the narrative — namely, the gaping US deficit and concerns about a glut of bonds that the market won’t easily digest. Consider the developments on Thursday, a day billed as a major event for central bank-watchers. Powell was slated to take the stage in an International Monetary Fund panel with other luminaries in economics and policymaking, but it was a disappointing 30-year bond auction earlier in the day that defined the negative tone for the trading day. “Not for the first time recently, what Powell said seemed secondary to news of the actual demand for bonds at auction,” John Authers [says](. Meanwhile, there are some discouraging signs for nuclear bulls in the US — at least if NuScale Power Corp., the company nominally leading the nuclear renaissance, is any guide. As Liam Denning [says](, nuclear enthusiasts have been laser-focused on the promise of “shrinking” — that is, moving toward small modular reactors made relatively inexpensively in factories — but what’s shrinking even faster is NuScale’s market capitalization. A number of companies have been hurrying to develop the reactors, known as SMRs, but NuScale is the only one to have its design approved by the Nuclear Regulatory Commission, so a lot of people in the industry have had their eye on the company. Unfortunately, it’s not giving folks a lot of reason to stay optimistic (as the chart above shows). NuScale, which had been working on a plan for a significant Idaho facility, failed to win enough customers for its power. Changing plans and cost estimates probably didn’t help. “This particular attempt to break the mold for nuclear power foundered on the most familiar of obstacles: time and money,” Liam says. Further Reading Postponing election in Ukraine is the[right thing to do](, but Zelenskiy should ensure the delay isn’t infinite. — Bloomberg’s editorial board A study finds [concerning disparitiesÂ](in rates and deaths from colorectal cancer among Black people. — Lisa Jarvis Joe Manchin may have been hard to deal with, but Democrats will [miss him]( when he’s gone. — Jonathan Bernstein Portugal’s economy has had a [nice run](, but it faces challenging times ahead. — Lionel Laurent New factory investments are typically based more on [economic practicalities]( than government and politics. — Brooke Sutherland The NCAA hurts [students’ interests]( with transfer rules. — Adam Minter ICYMI An opioid-like drink is [getting people hooked](. Bob Vila is selling his Florida mansion for [$52.9 million](. Michigan coach Jim Harbaugh is suspended over [alleged sign-stealing](. The [FBI took Eric Adams']( phones. Kickers There's a [pink pond]( in Hawaii. There’s a weird new Guinness World Record involving [human dominoes](. Wisconsin lawmakers [declare brandy old fashioned]( as state cocktail. Don't [bring home snakes]( you find while hiking.  Notes: Please send brandy cocktails and feedback to Jonathan Levin at jlevin20@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](.  Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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