Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane.
Speaker 1: Daily we bring you insight from the best in economics, finance,
Speaker 1: investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Brian
Speaker 1: Lovett with us working today Opery her Fund, an international investment.
Speaker 1: We've got a lot to be thank you, thankful for,
Speaker 1: but for those in the market mostly what we're thankful
Speaker 1: for its courage. It is the most unloved bull market still,
Speaker 1: isn't it is? And it has been for a long time.
Speaker 1: I would say we're going on years now that investors
Speaker 1: have been asking me is it going to be over?
Speaker 1: And in actuality, if you look at the macro environment
Speaker 1: right now with growth above trend in over sixty sign
Speaker 1: of the countries around the world, that is a better
Speaker 1: macro backdrop that we've had in some time. Max Roser,
Speaker 1: who who does brilliant work out on Twitter and charts,
Speaker 1: I'll retweet out his work folks. He's in England just
Speaker 1: I think he's at Oxford. He does just great work.
Speaker 1: He said. The poorest Portugal's poverty oft was worse than
Speaker 1: any country today. I mean it is a more prosperous world,
Speaker 1: a more prosperous emerging markets. How does Oppenheimer Funds invest
Speaker 1: differently now in emerging markets than you did ten and
Speaker 1: twenty years ago. Well, we've always been looking for exceptional
Speaker 1: companies in the emerging markets, true growth companies in the
Speaker 1: emerging markets. So I think it's more that maybe some
Speaker 1: of the investors in the emerging markets have come to
Speaker 1: us rather than us change our process significantly. You know,
Speaker 1: people usually thought of emerging markets as state owned companies
Speaker 1: and big energy names, and that's basically what the indices
Speaker 1: are comprised of. We've always looked for growth in the
Speaker 1: emerging markets and UM as you've seen, you know, particularly
Speaker 1: with companies in China this year and other parts of
Speaker 1: the emerging markets, very very strong returns as investors look
Speaker 1: for true growth in a slow growth world. Brian, good
Speaker 1: morning to you, or good afternoon from London. In fact,
Speaker 1: when you're looking at an emerging markets, are you looking
Speaker 1: at a particular asset class or you invest in cross
Speaker 1: asset So at Oppenheimer Funds we have investments across the
Speaker 1: emerging markets. We run the largest UM equity emerging market
Speaker 1: fund UH and we also manage money in the emerging
Speaker 1: market debt space as well. But what we're focusing on
Speaker 1: as investors is a very nice macro backdrop in the
Speaker 1: emerging markets, the likes of which we haven't had in
Speaker 1: a handful of years. You have um, you know, China slowing,
Speaker 1: but to a what we believe is a higher quality
Speaker 1: level of growth. You have Latin America recovering, You have
Speaker 1: the oil producers recovering, and what most and as important,
Speaker 1: you have inflation which has come down in the emerging markets,
Speaker 1: which has allowed policy makers to be more accommodative. So
Speaker 1: on the fixed income side, attractive real yields and currencies
Speaker 1: that were beaten up on the equity side, very nice
Speaker 1: growth stories, both on the macro side but at the
Speaker 1: individual company level as well. As we look ahead to
Speaker 1: the FED minutes coming out later, how much of a
Speaker 1: risk to emerging markets does the tightening cycle from the
Speaker 1: Fed pose? Is it as much of a risk as
Speaker 1: it used to be. It is not as much as
Speaker 1: a risk as it used to be. If you remember
Speaker 1: the taper tantrum in real yields in the emerging markets
Speaker 1: were close to you know, one or below one. If
Speaker 1: you look at when the FED raised raids for the
Speaker 1: first time, in real yields in the emerging markets were
Speaker 1: very low as well. So what that meant was inflation
Speaker 1: was was generally high in the emerging markets and it
Speaker 1: wasn't attractive for investors to be there to the extent
Speaker 1: that it is now. So you had capital flight at
Speaker 1: this point in the cycle withinflation significantly down in the
Speaker 1: emerging markets. You have real yields on the order of
Speaker 1: three percent or so an aggregate across the emerging markets.
Speaker 1: So as the FED raises rates UM, which we believe
Speaker 1: will ultimately be of continue to be gradually and slowly um,
Speaker 1: there is less like you are significantly less likely to
Speaker 1: see capital flight from the emerging markets. But I'm glad
Speaker 1: that they brings us up because, to be honest, I've
Speaker 1: been remiss in not doing a real yield analysis. Let's
Speaker 1: back up to investment one oh one. Why should our
Speaker 1: listeners look at inflation adjusted yields versus the nominal yield,
Speaker 1: which is where the corporate officer lives every moment. Well,
Speaker 1: I mean, you want your standard of living to improve,
Speaker 1: so if you can, if you can generate income above
Speaker 1: the rate of inflation, your standard of living is improving.
Speaker 1: Some of the difficulties that investors have right now in
Speaker 1: the United States. If you look at a ten year
Speaker 1: treasury rate of I think around two thirty five to
Speaker 1: forty with inflation of around two, that's akin to running
Speaker 1: on a treadmill. You're not really getting anywhere, and you're
Speaker 1: taking on interest rate. So that looks the real yield
Speaker 1: in the Philippines or Poland, or you don't name your
Speaker 1: other favorites. So if you looked in aggregate across the
Speaker 1: emerging markets, you're at about three percent real years. So
Speaker 1: I'm gonna pick up two hundred basis points plus two
Speaker 1: full percentage points a real yield. Do you hedge that
Speaker 1: against the currency risk? We can hedge that against the
Speaker 1: currency risk. We will use currencies as a lever to
Speaker 1: pull to drive returns. What you have right now is
Speaker 1: a generally weaker dollar and currencies across the emerging markets
Speaker 1: that are generally under value to the U. S Dollar
Speaker 1: on a purchasing power parody basis. So we believe that
Speaker 1: currency is additive to fixed income emerging market returns at
Speaker 1: this point in the cycle. On the equity side, we
Speaker 1: believe that hedging currencies adds cost and complexity of the portfolios,
Speaker 1: and over longer term time periods is generally a gosh.
Speaker 1: So unfixed income we have the ability um to hedge currencies,
Speaker 1: and we do so at certain points um. On the
Speaker 1: on the equity side, we typically do not hedge the currency. Brian,
Speaker 1: I want to pivot the conversation slightly to the to
Speaker 1: Europe and the US, so we keep talking about the
Speaker 1: relentless flattening of the U S yield curve. Right, Let's
Speaker 1: take the twos tense for example. The German twos tense
Speaker 1: curve has been flattening as well, but the spread between
Speaker 1: the two is the most positive since two thousand and six.
Speaker 1: Does that mean adding duration in Germany suddenly looks relatively
Speaker 1: cheap even if absolute yields are well below those in
Speaker 1: the US. Yeah, it does, but it's not. It's still
Speaker 1: not a particularly attractive investment many of the developed market
Speaker 1: UH fixed income instruments. I would say, you know, with
Speaker 1: regards to the flattening in the United States, I think
Speaker 1: what it says to me is that the Federal Reserve
Speaker 1: is ultimately going to have to back off its um
Speaker 1: off its tightening stance. There simply not enough spread between
Speaker 1: two and ten. Uh. The Fed really wants to raise
Speaker 1: interest rates three or four times in the coming year.
Speaker 1: You're gonna see a flat yield curb if that were
Speaker 1: to happen. Investors your to your point, might be happy
Speaker 1: to have some duration in their portfolio. If you look
Speaker 1: at US investors right now, their short duration. They've been
Speaker 1: told to be short duration for eight years. You know,
Speaker 1: having some duration your portfolio, maybe adding some credit can
Speaker 1: increase the yield and maybe bring down some vall. It
Speaker 1: will be interesting to see the two thousand and eighteen
Speaker 1: research packets and also how they're amended about April next
Speaker 1: your brand, Levitt, thank you so much with Happenheimer Funds,
Speaker 1: and thank you to your team. We enjoyed immensely of
Speaker 1: visiting your studios. Why don't you bring in our steamed
Speaker 1: petroleum guests. Yeah, absolutely fantastic to have Philip Veliger here
Speaker 1: um with with us in the London studio. I understand
Speaker 1: that you're here in London sort of on a Thanksgiving break,
Speaker 1: but you've really kindly agreed to drop into surveillance because
Speaker 1: he likes you so much. Tom, you hear that Happy
Speaker 1: Thanksgiving Tom, Well, happy Thanksgiving to you, Mr Roger. You know,
Speaker 1: I think nearer to have Phil Verliger here is to
Speaker 1: go back to the hindsight of there were very few
Speaker 1: people doubting a hundred dollar oil, and Phil Verliger is
Speaker 1: consistently doubted some of the excesses of of opec in
Speaker 1: a in a contrived market for years. Phil, do you
Speaker 1: maintain a lower price for oil? Call this year? Uh? Yes, sir,
Speaker 1: It's oil prices are going to stay about where they
Speaker 1: are right now, maybe fifty, maybe sixty. Think unless Uh,
Speaker 1: the events in Saudi Arabia, which are the really important event,
Speaker 1: the the arrest of all the wealthy people essentially attempt
Speaker 1: trying to extract you know, four hundred or six hundred
Speaker 1: billion dollars from these people. Uh. If you look at
Speaker 1: what's going on in Saudi Arabia, you have a country
Speaker 1: that is strongly opposed to Iran, Syria and uh in Lebanon,
Speaker 1: the Hespalaon Lebanon, and although those are backed by the Russians,
Speaker 1: at the same time, Saudi Arabia has been cooperating with
Speaker 1: Russia to hold up oil prices. The question is if
Speaker 1: the assorities are able to accumulate a substantial amount of cash.
Speaker 1: This essentially double the liquidity of the central bank from
Speaker 1: four eight hundred billion dollars maybe a trillion. I think
Speaker 1: the strategy will then change and they will probably UH
Speaker 1: increase production because they've been watching the Russian steel market share.
Speaker 1: At at that point they will be able to go
Speaker 1: back to the low price scenario for a for a year,
Speaker 1: to push oil on the market and re establish a
Speaker 1: base to grow from in the future. Year. That's really
Speaker 1: interesting because there's been a lot of expectations ahead of
Speaker 1: the Opeque meeting, ahead of this month, at the end
Speaker 1: of this month, and in some ways, you know, you
Speaker 1: could say that the market has now positioned itself for disappointment.
Speaker 1: Almost I think the market has disappointed, and I don't
Speaker 1: think the Saudis will do anything right now, because what
Speaker 1: they're doing is essentially trying to extract all this money
Speaker 1: that they claim has been taken by graft, and that's
Speaker 1: going to take some time because much of the money
Speaker 1: is overseas and they can't release these people from there
Speaker 1: from this UH prison they have them at at the
Speaker 1: st Regis until they've actually gotten the money back to
Speaker 1: Saudi Arabia because once the people are out, they can
Speaker 1: go to government like the United States or the English
Speaker 1: government and say the money was taken from us and
Speaker 1: to arrest and the Saudia Council be frozen. So they
Speaker 1: need to work it. But if you look, I think
Speaker 1: the key individual in this whole thing is is not
Speaker 1: the crown Prince but at al Jabbar, who's the foreign
Speaker 1: minister and who has been if you go back to
Speaker 1: he was a spokesman when when they invaded Kuwait, and
Speaker 1: he his father was the ambassador to Germany, and he's
Speaker 1: just a he's really the leading person. You know. The
Speaker 1: best best example is to read a book by Machiavelli
Speaker 1: which really describes what he's doing. Uh, and that changes.
Speaker 1: That's going to change what happens to prices. But Tom,
Speaker 1: I don't think. I think the question is could they
Speaker 1: go much lower? And the answer is probably they can't. Well,
Speaker 1: then that is the eu listicity. You talk about the
Speaker 1: desire to drill and the idea that cash will chase drilling.
Speaker 1: I get the idea of cash chasing a hundred dollars
Speaker 1: of barrel? Does cash want to chase fifty seven dollar? There? Yes,
Speaker 1: there was a very good presentation that the Energy Information
Speaker 1: Agency had last week. It's on on. There was a
Speaker 1: webcast and RICE did, which is a consulting firm that
Speaker 1: goes down to the very nitty gritty, laid out a
Speaker 1: case where it's sixty the barrel. By the end of
Speaker 1: twenty we have four million barrels a day of production
Speaker 1: from UH from the Permian, and if it's thirty five dollars,
Speaker 1: we're down at two million barrels a day. And they
Speaker 1: did it almost on a well by well basis. And
Speaker 1: if you blow this up to the United States, the
Speaker 1: swing is probably three or four million barrels a day,
Speaker 1: so they really need it down They can make money
Speaker 1: according to Rice dead and according to everybody else, at
Speaker 1: at five dollars a barrel. And if you look at
Speaker 1: the futures market, open interest and contracts expiring more than
Speaker 1: twelve months is up by almost six from this time
Speaker 1: last year, so a lot of that oil has been
Speaker 1: hedged through banks or swap dealers and so on. So
Speaker 1: the next year is already in the can and the
Speaker 1: production is going to happen. So in terms of the price,
Speaker 1: then what sort of range are we in and for
Speaker 1: what time period. Well, I think the range we're going
Speaker 1: to be in is upper limit, uh, and it's that's
Speaker 1: probably that's Brent, or it's w t I Houston. The
Speaker 1: other thing that's happening is the world oil center of
Speaker 1: the world oil market has swung to Houston, and there's
Speaker 1: a w t I price in Houston, and the industry
Speaker 1: is trading there. Cushing has become less relevant, although it's
Speaker 1: still the hedging market. But you know, sixty dollars at
Speaker 1: the top side, uh, fifty dollars on the low side. Again,
Speaker 1: assuming Saudi Arabia doesn't do something. And this also assumes
Speaker 1: that the economy keeps growing uh, and it holds together,
Speaker 1: which of course is the first first part of the story. Phil,
Speaker 1: We've got two minutes left with you, not even that,
Speaker 1: And I do want to switch to your historic work
Speaker 1: on neft of decades ago. What are the ramifications that
Speaker 1: you see if the president does away with NAFTA. Um Tom,
Speaker 1: I've been I keep looking at that, and I've looked.
Speaker 1: The more I look at it, the more frightened I get.
Speaker 1: Is that well, because everything moves back and forth across
Speaker 1: the border without duty, and once you take NAFTA off
Speaker 1: it's the same thing you see over here with Brexit.
Speaker 1: I don't know what happens, what happens to manufacturing part production,
Speaker 1: and I know people have done different numbers. My guess
Speaker 1: is GDP is to two percentage points lower twelve months
Speaker 1: after we pulled out of NAFTA. I think it's that
Speaker 1: much because you know, the agricultural sector is going to
Speaker 1: suffer dramatically. I think they everybody says, well, autos will
Speaker 1: do better. No, autos won't because some of the parts
Speaker 1: are made in Mexico and they can't get them back.
Speaker 1: I mean, you can't turn the economy out of the
Speaker 1: doct I mean, you're your Nash. It's hard to get
Speaker 1: parts for your NASH, and it's uh uh you know
Speaker 1: they're gonna have trouble getting parts and they're trying moving manufacturings.
Speaker 1: So it's gonna raise costs. And I think it's the thing.
Speaker 1: My plate plead is, don't do it. Yeah. What I've
Speaker 1: heard from a couple of people's right where you go
Speaker 1: Dirtri Furliger, which is the idea of you're gonna need
Speaker 1: a part for that training and ain't gonna be there.
Speaker 1: So really good, Thank you so much. Honored with your
Speaker 1: visit in London. Really look forward to seeing you in London,
Speaker 1: New York, Calgary or or Aspen. Phil Roger of his
Speaker 1: own pker and of course just wonderful and always controversial.
Speaker 1: On oil. We've of course keeping keeping an eye on
Speaker 1: Chancellor Philip Hammond's budget. The key thing is that growth
Speaker 1: forecast for the UK have been cuts. We've seen a
Speaker 1: little bit of a dip in sterling, also some curve
Speaker 1: flattening in guilt on that cut to the growth outlook.
Speaker 1: But we're also keeping a very close eye on the
Speaker 1: Brexit development and with us to discuss that is Sony Kappa,
Speaker 1: Managing director at Redefined. Sony, great to have you on
Speaker 1: the program and good morning or afternoon to you rather
Speaker 1: in London. So when it comes to the Brexit negotiations,
Speaker 1: we're looking ahead to this December EU summit and it
Speaker 1: seems like finally the UK has given a little at
Speaker 1: the ground on the brexit bill. Prime Minister Theresa May
Speaker 1: ready to put more money on the table to settle
Speaker 1: that divorce bill. How do you see the negotiations going
Speaker 1: in December, Well, I think they are going to be
Speaker 1: very fraud and very difficult and the UK remains in
Speaker 1: a very tricky situation. So even as we have relatedly
Speaker 1: accepted that there is a much higher price to be
Speaker 1: paid for Breakfit, mostly relating to existing obligations of the UK,
Speaker 1: the issue of the Irish border threatens to actually scupper
Speaker 1: the whole negotiations with December. And the background that is
Speaker 1: that the having a border free crossing between Northern Ireland
Speaker 1: and an Ireland in UH is an important part of
Speaker 1: the peace process and that is non negotiable. And of
Speaker 1: course if the UK leaves the EU and Ireland bills
Speaker 1: remain in the EU, there will be a bother and
Speaker 1: the Irish Prime Minister has rightly intervened to say that
Speaker 1: he will veto any further negotiation with the UK unless
Speaker 1: and until the UK is able to give an assurance
Speaker 1: that there will be no hard boded. That of course
Speaker 1: is incompatible with the UK actually leaving the Customs Union,
Speaker 1: which Brexitters want the UK to do and Theresa May
Speaker 1: had said the UK will do so. Money is one
Speaker 1: part of the discussion where the UK has finally agreed
Speaker 1: to double its contribution from twenty billion euros they had
Speaker 1: said to about forty billion as the starting offer, but
Speaker 1: the Irish problem remains completely intractable for now. Right, so
Speaker 1: how what are the chances then? What where would you
Speaker 1: put it in percentage terms of their actually being a
Speaker 1: shift to trade talks in December, uh without some unexpected
Speaker 1: solution or money from Heaven dropping down to come up
Speaker 1: with a reasonable solution to the Irish problem. I would
Speaker 1: say less than twenty right, And already we're hearing that
Speaker 1: that certain banks are making contingency plans to start shifting
Speaker 1: business out of London in the first quarter of next year.
Speaker 1: That's going to accelerate perhaps then. I think what has
Speaker 1: happened is up until about a month back, businesses and
Speaker 1: banks we're waiting and watching to see how things went.
Speaker 1: But this has been a particularly bad month and a
Speaker 1: particularly bad week for the UK, with the decision to
Speaker 1: relocate the European Banking Authority out of London to Paris,
Speaker 1: the European Medicine Agency out of London Amsterdam, making Brexit
Speaker 1: very real and businesses can no longer sit on their
Speaker 1: hands and wait to do their contingency planning. They are
Speaker 1: starting to move and a lot of the exodus will
Speaker 1: actually start even before exit day, if and when it
Speaker 1: does actually happen. Redefine Managing Director Sony Kapaul, thank you
Speaker 1: so much for talking us through some of the briggs
Speaker 1: at risks. What better person to speak to is people
Speaker 1: around the US get ready for the holiday. Julian Mark Heel,
Speaker 1: the points guy, senior analyst with us here on Bloomberg Surveillance.
Speaker 1: Good morning or good afternoon here in the London to you, Julian,
Speaker 1: how are you doing? Good morning and afternoon to you.
Speaker 1: So you're the expert here on travel, people are going
Speaker 1: to be moving around mean unimaginably for me sitting here
Speaker 1: in London where we're just probably going to go to
Speaker 1: the pub around the corner and have some dinner. What
Speaker 1: are your top tips for traveling at this time of year? Yeah,
Speaker 1: when when you're traveling in the holiday season, really anytime,
Speaker 1: but especially during the holiday season. I like to say
Speaker 1: knowledge is power. Come armed with information. For instance, Uh,
Speaker 1: take a look at the map of the airport that
Speaker 1: you're going to be in. You're hopefully leaving a little
Speaker 1: extra time to get there and to you may end
Speaker 1: up in the airport for a little longer than you
Speaker 1: usually do. So make sure you know what food areas
Speaker 1: are in the airport where you might need to take
Speaker 1: your children to have a quick good drink or a
Speaker 1: quick bite while you're waiting for the flight. Also know
Speaker 1: what no, no, no when the children are older. When
Speaker 1: the children are older, they're downstairs in some bar and
Speaker 1: I'm up in the gold loins drinking bottled water. That's
Speaker 1: how it works. Please, that is certainly the ideal, yes,
Speaker 1: but but at the very least, then know which lounges
Speaker 1: in your terminal and which club you can go to,
Speaker 1: and what what will be required for admittance. Also, in
Speaker 1: case your flight ends up being delayed or canceled, know
Speaker 1: what other flights are available with your airline. And that
Speaker 1: doesn't necessarily mean that they have to be bookable, but
Speaker 1: what's actually flying. A lot of people rely on the
Speaker 1: airline agent to tell them what's the next best option.
Speaker 1: But it helps, actually if you already know what flight
Speaker 1: you would like to be rebooked on and specifically ask
Speaker 1: for that. They may not always do it, but if
Speaker 1: you go in, it never hurts to ask, and it
Speaker 1: helps to go in knowing what you want. You know,
Speaker 1: and look at this and we're sort of going into
Speaker 1: the you know, the holiday season, and then I guess
Speaker 1: we're in this slow season. Let's back up. Our flights
Speaker 1: cheaper than they were a year ago. You know, flights
Speaker 1: are not necessarily cheaper or more expensive. But if of
Speaker 1: course all of those fees that the airlines keep tacking on,
Speaker 1: and people are not huge fans of them, but the
Speaker 1: airlines are the enormous fans of them because they're generating
Speaker 1: billions of dollars of extra Okay, well, Heathrow. Let's go
Speaker 1: to Heathrow right now. Every time Nera flies to New York,
Speaker 1: she insists that the surveillance golf stream avoid Heathrow. Come on.
Speaker 1: The fees of Heathrow are insane. The fees that Heathrow
Speaker 1: are a special level of insane because of their departure tax.
Speaker 1: Especially if you're coming out of Heathrow in a premium
Speaker 1: class like business or first even on a point or
Speaker 1: mileage tickets, you're gonna end up paying hundreds of dollars
Speaker 1: for For Bloomberg, Washington is dullest like the airport that
Speaker 1: needs the most investment right now. You know, actually I
Speaker 1: would argue that LaGuardia in New York needs the most investment.
Speaker 1: It's a small airport that hasn't really had the investment
Speaker 1: in years dollars is certainly up there. It could certainly
Speaker 1: use a lot of work and a lot of resources
Speaker 1: put into it, But in my heart, LaGuardia is the
Speaker 1: one that and they are working on LaGuardia, so we'll
Speaker 1: see how it goes. Julian, You've done some work on
Speaker 1: the best and worst airlines in the United States and
Speaker 1: sort of laid out the argument as to whether it's
Speaker 1: really a case of best and worst or whether it's
Speaker 1: just customers perception when it comes to Thanksgiving. I'm guessing
Speaker 1: all the excitement, potentially all the stress if you've got
Speaker 1: lots of kids running around, might have some impact on
Speaker 1: your perception. Two airlines. Two airlines, actually do they pull
Speaker 1: it out of the bag during the holiday or does
Speaker 1: it all actually fall apart? You know, it's it's really
Speaker 1: tough to run an airline. To give them credit, they're
Speaker 1: moving hundreds of thousands of people every day in the
Speaker 1: most and the safest possible transport that's ever been invented
Speaker 1: by humankind, and to do all that and keep people
Speaker 1: happy is a tall order. That's not to say they shouldn't,
Speaker 1: and some airlines, like in our study. Alaska airlines do
Speaker 1: it better than others, like say Spirit and Frontier Um,
Speaker 1: but it's certainly a tall order, and during the holidays
Speaker 1: it's even harder because of the number of people trappling.
Speaker 1: Julian Markue whether is the points guy Brian Kelly was
Speaker 1: going to be with us, but he's in Bali on
Speaker 1: some hundred flight from Dubai. You wanted to know if
Speaker 1: you were going to join him? Tom, Yeah, well yeah,
Speaker 1: I wish that they make kids take all the miles
Speaker 1: Bloomberg surveillance this morning. But you by the accountants, the
Speaker 1: advisors at Eisener Amper. The two thousand seventeen tax season
Speaker 1: it is upon us. Are you ready for the challenges
Speaker 1: they are? Visit eisener Emper dot com slash tax reformed Julian.
Speaker 1: All of this is hinged on charged cards. Who's winning
Speaker 1: the banks or the airlines? Ah, The banks are winning
Speaker 1: as far as getting new customers, and the credit card usage,
Speaker 1: especially in the US, is at record levels. There's a
Speaker 1: lot of fees being made off of those cards, from
Speaker 1: annual fees charged to the consumer to swipe fees charged
Speaker 1: at the merchant level. The airlines are also doing well.
Speaker 1: Because of course they sell those more points and miles
Speaker 1: to the banks. But the banks have really Yeah, the
Speaker 1: banks have really started to develop their own systems like
Speaker 1: Chase Ultimate Rewards and American Express Membership rewards. So they're
Speaker 1: trying to bring it in house as much as they can.
Speaker 1: Judy and I just want to ask you a quick
Speaker 1: question on Ryanair. I mean, here in Europe, the short
Speaker 1: haul market, the low cost market really giving the legacy
Speaker 1: airlines a run for their money. Is it that situation
Speaker 1: in the US or not so much. We have a
Speaker 1: similar situation with Frontier and Spirit on the low cost end,
Speaker 1: It's not quite as intense as Ryanair does it. Ryanair
Speaker 1: is running a Black Friday sale right now with prices
Speaker 1: as low as four nine. It's left four dollars and
Speaker 1: cents or four euro and cents, So we we haven't
Speaker 1: reached that level yet. Ryan Air has a special, uh
Speaker 1: special kind of touch with that, but it's it's certainly
Speaker 1: something that the US air lines see them doing and
Speaker 1: either have to compete or match. The thing is Ryanair
Speaker 1: under a lot of challenges at the moment with the
Speaker 1: pilots unions. Yes, the pilots are as many of your
Speaker 1: listeners may know the there was a bit of a
Speaker 1: snap who it Ryanair last month when they had to
Speaker 1: cancel thousands of flights because by their own admissions, they
Speaker 1: the airline messed up their pilots holiday schedule and they
Speaker 1: ended up canceling fifty or more flights a day for
Speaker 1: a period of six weeks. Uh and Ryanair didn't do
Speaker 1: themselves any favors with their customers because, at least at first,
Speaker 1: they weren't telling their customers more than five days in
Speaker 1: advance which flights were going to be canceled. After some
Speaker 1: strong customer reaction, they reversed that policy and put out
Speaker 1: a list. But it's come now to a head with
Speaker 1: the pilots union. Ryan Harris traditionally negotiated directly with the
Speaker 1: members of their airline hubs, in other words, a set
Speaker 1: of about eighty or so groups they would negotiate their
Speaker 1: contracts with, and that was a bit of a divide
Speaker 1: and conqueror strategy because you can play one off the other.
Speaker 1: Now Ryanair's pilots want to form a single trade union
Speaker 1: and negotiate with just one committee. Yeah, Julians, just one
Speaker 1: more question our our perception as pilots make big, big
Speaker 1: six figure numbers, and you know they work like six
Speaker 1: hours a week. That's the reality in two, is it.
Speaker 1: It's not, especially when you get down to the regional carriers,
Speaker 1: where a starting pilot there might only make twenty or
Speaker 1: thirty thousand dollars a year. Could that be there? How
Speaker 1: can that be? I mean the kid for starters, A
Speaker 1: kid looks like my grandchild. He so the pilot? Are
Speaker 1: you telling me the pilots making five a year? In
Speaker 1: some cases now, because there's been such a pilot short recently,
Speaker 1: they are starting to get sign up bonuses so that
Speaker 1: they'll come and work for the originals. But yes, when
Speaker 1: you're starting out, you need your hours and you don't
Speaker 1: have a lot of time in the cockpit. You you
Speaker 1: spend a lot of time in the air for not
Speaker 1: a ton of money. I know more than one pilot
Speaker 1: who supplements her income by waitressing. There you go, don't
Speaker 1: be a stranger. Tell Brian when he gets back that
Speaker 1: he used to go away again on one of his
Speaker 1: two dollar trips to an article. We'd rather talk you
Speaker 1: j Julian killed there. Julian kill with the points guy,
Speaker 1: Thanks for listening to the Bloomberg surveillance podcast. Subscribe and
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Speaker 1: Radio