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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz jay Leie. We bring

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Speaker 1: you insight from the best and economics, finance, investment and

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Speaker 1: international relations. Find Bloomberg Surveillance and Apple Podcast SoundCloud, Bloomberg

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Speaker 1: dot Com, and of course, on the Bloomberg Terminal. Jonathan

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Speaker 1: golber joining US now chief equity strategist at Credit Sweets.

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Speaker 1: I remember the morning at some point in the summer time,

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Speaker 1: I've taken the morning golf and the note dropped from

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Speaker 1: Jonathan Gollobert. Credit Swiss had a year end out look

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Speaker 1: for next year of five thousand and Jonathan. Many people

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Speaker 1: just strugged and said, Jonathan gol Up, here we go again.

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Speaker 1: He's too bullish. He's too bullish, And here we are

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Speaker 1: at all time highs. John, why do you think we

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Speaker 1: can get to five K from where we are just north? Well,

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Speaker 1: I think there's a couple of stories here. The first

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Speaker 1: one is that earnings benefit from these shortages. And I

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Speaker 1: know that that sounds really bizarre, but they're getting tons

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Speaker 1: of pricing power and um, and that's gonna mean that

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Speaker 1: the earnings are gonna are gonna be driving this. If

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Speaker 1: you look at the last twelve months, the price of

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Speaker 1: the stock market is up less than the than the

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Speaker 1: earnings have improved, and stock multiples are actually down over

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Speaker 1: the last year. So that's the number one reason. The

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Speaker 1: second thing which people missed is that, and you guys

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Speaker 1: are talking about it a second ago. Rising interest rates

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Speaker 1: is a sign of confidence in the economy, not a

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Speaker 1: problem for stocks, and that's been the story over the

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Speaker 1: last month's interest rates in Brisen, Jonathan, you've absolutely now

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Speaker 1: that your earnings sustained call has been great. You've got

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Speaker 1: some great statistics there on how earnings have come in

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Speaker 1: far better than what the gloom was. By the cell side,

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Speaker 1: you're as strong as your analysts. Let's take Matthew Cabral

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Speaker 1: is just one example. What does Matthew Cabral on Apple

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Speaker 1: or on tech and your other forty seven analysts, what

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Speaker 1: are they whispering? Do you right now? Oh? You know,

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Speaker 1: I hate to talk about individuals, get them broad you know,

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Speaker 1: individual stucks. But you know we're we're seeing um in

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Speaker 1: many ways. What the companies are telling us is that

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Speaker 1: they're saying that things are pessimistic about their ability to

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Speaker 1: meet demand. And they they're they're pessimistic on you know,

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Speaker 1: margin cost pressures, and then the numbers come in and

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Speaker 1: and the buzz that we're hearing from companies is more

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Speaker 1: negative than the results that they're delivering, and we're seeing

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Speaker 1: we're seeing that across the border. One of the things

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Speaker 1: I'm saying to the analystis, I know management is telling

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Speaker 1: you that there's gonna be this cost ways, don't believe them.

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Speaker 1: It's gonna come in better. There's there's more pricing power

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Speaker 1: than they're willing to tell you in their pre announcements. Jonathan,

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Speaker 1: I'm looking at the e ago function on the Bloomberg

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Speaker 1: which tells you basically how earning season is stacking up

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Speaker 1: so far. And you're right, the earning surprises and average

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Speaker 1: of on the top line, though the average sales surprise

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Speaker 1: is only about two percent. So is that just because

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Speaker 1: the bar was higher on the revenue side, or is

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Speaker 1: that because of some of these supply and demand issues

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Speaker 1: and you actually are seeing companies not being able to

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Speaker 1: pull in quite as much revenue because they don't have

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Speaker 1: adequate supply. Well, well, first of all, it's two stories here.

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Speaker 1: The first one is is that you always have um

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Speaker 1: really small revenue beats and really big margin meats. I

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Speaker 1: mean that's um atalyas UM have much more clarity on

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Speaker 1: the revenue line. So that's not that that's not a typical.

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Speaker 1: But the story the earning season is that everyone thought

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Speaker 1: that we were gonna get cost ways and what we're

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Speaker 1: actually getting is uh is demand disappointment. And you you

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Speaker 1: you know, you know. I don't want to comment on

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Speaker 1: an individual company, but um I was out with a

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Speaker 1: bunch of chief investment officers across different firms a few

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Speaker 1: nights ago, and people were saying that they thought that

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Speaker 1: ad spending was gonna be a problem. Why if you

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Speaker 1: can't meet demand, why would you advertise just cut your

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Speaker 1: head spending, And especially in area like autos, which is

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Speaker 1: so important for the ad market, why would you advertise

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Speaker 1: a car that you can't deliver? So this is a

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Speaker 1: big issue. When we're seeing it lots of places. I'll

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Speaker 1: tell you where we're not seeing it. We're not seeing

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Speaker 1: in banks. UM banks are showing up with you know,

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Speaker 1: really levitating separate from everything else. And let me just

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Speaker 1: make one more in one comment there, if you split

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Speaker 1: the market in half, which is, how are the bank's

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Speaker 1: doing and how is everything else doing? It doesn't look

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Speaker 1: as good as we're talking about. The market is beating

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Speaker 1: by about seven percent the bank it exclu the banks um,

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Speaker 1: and it's about you know, eleven or twelve percent with

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Speaker 1: so there is a bit of a bifurcation on winners

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Speaker 1: and losers, Joel, before you go. Sometimes its strategist job

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Speaker 1: is to walk with therapy to how people stay invested

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Speaker 1: in sleep well at night, do some therapy right now,

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Speaker 1: what's the one reason people should stay invested in this

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Speaker 1: market through all the next year and beyond? Um? You know, I,

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Speaker 1: you know, I actually John I and my my therapy

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Speaker 1: is a little bit different. Um, I'm seeing a Listen,

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Speaker 1: I'm a bullish you know, I'm bullish about the market

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Speaker 1: and optimistic in general. But I'm seeing almost complacency. What

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Speaker 1: people just saying is just ignore the ignore any bad news.

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Speaker 1: Just by the depths. The feed is backing this. Everything

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Speaker 1: is gonna be okay, and there are things to be

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Speaker 1: concerned about, to worry about. And in many ways I'm

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Speaker 1: saying to the bullish guys, um, listen, I I agree

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Speaker 1: with you, but there are you know, we didn't roll

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Speaker 1: off of a ton of stimulus here. We don't have

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Speaker 1: clarity on what tax policy is. You know, oil prices

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Speaker 1: can be disruptive. Just check to make sure that your

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Speaker 1: bullishit and this is warranted. I think it is, but

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Speaker 1: just you know, go and double check. The bullishness is

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Speaker 1: just very strong. I'll give you a cool when I

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Speaker 1: struggle to sleep later, John. Thank you, Jonathan Gullup that

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Speaker 1: sas on the secondy market. The market was in line

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Speaker 1: with this idea that QUEI was separate from higher interest rates.

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Speaker 1: You can't say that anymore, Tom, in the same way.

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Speaker 1: That's changed in the last couple of months. Let's drive

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Speaker 1: this conversation forward, and we do it with someone really interesting.

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Speaker 1: She is a claim for hyper hyper detailed notes and

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Speaker 1: high frequency economics, taking all the wonderful granularity of her

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Speaker 1: Stone and McCarthy hears or throughout Rubila for Rookie could

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Speaker 1: be with us today, working always with Carl Wineber RUBYLA,

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Speaker 1: what is in the details right now? If I look

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Speaker 1: at your high frequency economics domestic note, which is the

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Speaker 1: item that has your greatest attention? Well, good morning, thank

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Speaker 1: you for having me. Uh you know, what we're looking

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Speaker 1: at is how the consumer responding to high inflation pressures

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Speaker 1: and what the underline trend and inflation is. And I

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Speaker 1: think this whole debate around great heights and how the

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Speaker 1: central Bank is going to respond is centered around these

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Speaker 1: inflation high inflation readings that are lasting longer than expected

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Speaker 1: and also rising inflation expectations. So I do think that

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Speaker 1: what is being priced in right now is a little aggressive,

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Speaker 1: and I do think that this sets up the path

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Speaker 1: that UH as we see inflation moderate over the course

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Speaker 1: of twenty two, that these expectations are going to reset

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Speaker 1: and that's going to have implications for the yield, especially

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Speaker 1: the short end. You're as good as your data can

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Speaker 1: you get good made and data. Now, with the dislocations,

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Speaker 1: say in the automobile business, or the dislocations at the

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Speaker 1: ports on the West coast, how good is the goodness

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Speaker 1: of the data you and Carl Weinberg have. It is

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Speaker 1: definitely challenging right now to figure out what the underlying

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Speaker 1: trends are in consumer spending or let's say, business investment,

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Speaker 1: given the dislocations we're seeing on the supply side of

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Speaker 1: the economy. But what we do expect is that these

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Speaker 1: disruptions are going to eventually pan out and what we

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Speaker 1: see beyond that is a slower pace where the impetus

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Speaker 1: from for demand, which is you know, is being built

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Speaker 1: into expectations of inflation resting wronger longer that is not there.

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Speaker 1: You're not going to see the sugar high or fiscal

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Speaker 1: posture and enhanced unemployment benefits. So as supply dynamics readjust,

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Speaker 1: we do think that the demand side of this equation

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Speaker 1: is also going to be tempered, and that's why we

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Speaker 1: think we're going to move into a lower inflation and

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Speaker 1: lower growth sort of environment. Repeat, Can you put some

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Speaker 1: numbers on that for next year? Just going through the

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Speaker 1: e c f C function on the Bloomberg for where

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Speaker 1: the major is right now, the survey that we conduct

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Speaker 1: for economists going forward twenty two real GDP at about

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Speaker 1: four percent, c p I three point three percent for

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Speaker 1: twenty two. For next year four and three, what are

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Speaker 1: you looking for if you look at our forecasts and

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Speaker 1: we are sub three percent on a que for Q

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Speaker 1: four basis, you know, closer to three and a half

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Speaker 1: percent on a calendar average basis, and on CPI inflation,

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Speaker 1: we are still seeing higher readings and that is a

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Speaker 1: function of you know, how we expect the goods and

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Speaker 1: service sector. How that adjustment is going to happen, especially

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Speaker 1: as you see normalization of the service sector o E

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Speaker 1: ER that is a large component. So I do think

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Speaker 1: that we're going to see a lift from that and

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Speaker 1: the goods side. There's so much uncertainty from the supply

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Speaker 1: chain side that you know, it's it's really difficult to

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Speaker 1: time how or when that is going to happen. But

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Speaker 1: we do expect to see elevated readings. But by the

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Speaker 1: second half of the year, growth is going to be

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Speaker 1: in our assessment closer to two and a half percent,

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Speaker 1: and inflation readings are also going to ease quite substantially,

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Speaker 1: closer to two So reveal on on those supply chain problems.

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Speaker 1: That's not something that monetary policymakers are easily equipped to address.

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Speaker 1: But obviously the inflation caused by it is causing central

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Speaker 1: banks to get pretty uncomfortable or seeing that at the

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Speaker 1: b o e S. John said, you have Russia hiking

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Speaker 1: as well. On the phase of inflation at a five

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Speaker 1: year high, do we run the risk of when those

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Speaker 1: bottlenecks eased, we end up with policy that is too tight, Well,

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Speaker 1: that is exactly you know what we have been talking about,

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Speaker 1: is that this is the supply dynamic that you know,

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Speaker 1: any action from the FED is really not equipped to address.

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Speaker 1: So if you are looking at the expectation that demand

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Speaker 1: is going to be so strong that it unlicits a

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Speaker 1: FED response, we don't really subscribe to that new So

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Speaker 1: I guess there is there is a chance that you know,

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Speaker 1: you do see a response from the FED that you know,

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Speaker 1: tamps down the economy, uh, you know, in a in

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Speaker 1: a more substantial way than is needed. But I do

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Speaker 1: think that all this is centered around what the FED

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Speaker 1: is communicating right now, and what they're communicating is that

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Speaker 1: if inflation does turn out to be you know, substantially stickier,

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Speaker 1: that they are ready to respond. But I think it's

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Speaker 1: a matter of managing expectations rather than them saying that,

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Speaker 1: you know, we are not we are just going to

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Speaker 1: sit back and and you know, let this happen. The

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Speaker 1: inflation and expectations are arising, and what they need to

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Speaker 1: do is manage those expectations. And this is the communication process.

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Speaker 1: What they're saying is that they're not going to uh,

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Speaker 1: they're not going to let this occur at a rate

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Speaker 1: you know that we're seeing right now, Well, it's a

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Speaker 1: good point on inflation expectations, and that brings me to

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Speaker 1: a question on the consumer, because obviously we're in the

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Speaker 1: thick of earning season, we're talking a lot about supply

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Speaker 1: chain issues and companies raising costs because of their higher

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Speaker 1: input costs are colleaguet Bloomberg Opinion Andrea Fell said put

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Speaker 1: out a column on the terminal talking about the likes

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Speaker 1: of Unilever, and yes, price hikes are working for them

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Speaker 1: for now, but if they hike further, there may be

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Speaker 1: a point in time where consumers are not going to

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Speaker 1: be tolerant of them. What is your take on that? Yeah,

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Speaker 1: that's that's exactly right. I mean, I do think that

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Speaker 1: the expectation that these price increases are going to continue forever.

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Speaker 1: I do think that, um, that is I'm not sure

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Speaker 1: that that's really realistic. At some point, either the consumer

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Speaker 1: steps back or you know, you have to adjust your

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Speaker 1: expectations about uh, you know, wage increases or the response

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Speaker 1: from just in terms of how the consumer response to uh,

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Speaker 1: you know, persistently high uh or or accelerating inflation. So

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Speaker 1: I do think that there will be pushed back at

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Speaker 1: some point. I do think that these companies that are

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Speaker 1: able to pass through the consumer is bast household balance

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Speaker 1: sheet is very healthy right now, so the consumer is

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Speaker 1: able to bear a little bit of this price pressure.

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Speaker 1: But I do think that there's a limit to this,

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Speaker 1: and in terms of you know, how successful companies will

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Speaker 1: be in passing on price increases. Rebeta, thank you as always,

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Speaker 1: Rebeata FERUKEI that of high frequency economics. John. What we

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Speaker 1: can suggest is some girls would like to talk to us,

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Speaker 1: and that would be Lizzie and Saunders. Hardcore Stones fan

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Speaker 1: joins us writing it up. I'll never be your beast

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Speaker 1: of burden. My back is broad, but it's a hurt.

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Speaker 1: And Lizzie Saunders, you are writing on the equity markets

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Speaker 1: about the beasts of burden that are out there. Which

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Speaker 1: one has your attention? Well, I think there are some

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Speaker 1: signs that some pressures might be easing, even though durable

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Speaker 1: goods prices are still up. There's some signs of durable

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Speaker 1: goods consumption is rolling over a little bit, but a

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Speaker 1: little bit of rolling over in suppire delivery times. But

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Speaker 1: to John's point just before I came on, it really

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Speaker 1: depends on on what good or service you're talking about.

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Speaker 1: Us to the timeframe associated when we get some balance

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Speaker 1: back between demand and supply. But the one benefit to

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Speaker 1: high prices is that it's actually easing some of the

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Speaker 1: demand pressures, and the hope is that that force predates

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Speaker 1: that that's need to step in more aggressively. You will

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Speaker 1: be overwhelmed at Charles Schwab in the coming days with

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Speaker 1: what do we do at a record standard or high

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Speaker 1: What do you advise? I think I think rotational leadership ships,

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Speaker 1: even some rotational corrections which have characterized much of this year,

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Speaker 1: are likely to persist. But there's enough offsets when you

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Speaker 1: go through these pockets of weakness that the net is

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Speaker 1: it keeps the index level declines to a fairly benign degree.

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Speaker 1: As we saw more recently when we had the five

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Speaker 1: point drop in the SMP. You still have SMP that

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Speaker 1: has had at least a tem per cent raw down

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Speaker 1: this year, and the average draw down is eight and

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Speaker 1: I think that type of environment is likely to persist.

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Speaker 1: That's a pretty benign way to ease whether it's sent

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Speaker 1: him an excess with technical excess and valuation excesses. And

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Speaker 1: I think if you do more sort of volatility based

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Speaker 1: rebalancing as opposed to trying to do short term market

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Speaker 1: timing that helps investors stay in gear in this kind

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Speaker 1: of market. Well, speaking of volatility, Lisianne, the VIX is

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Speaker 1: sub fifteen we're looking at this morning. Can volatility stay

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Speaker 1: this subdued into your end? Yes, I think a measure

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Speaker 1: like the VIX can stay fairly subdued. But that doesn't

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Speaker 1: mean you're not going to continue to see some of

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Speaker 1: these underlying leadership shifts and some of the swaps that

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Speaker 1: are happening even on a day to day basis, where uh,

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Speaker 1: you know, you'll see energy at the top of the

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Speaker 1: leader board for a day or two and check at

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Speaker 1: the bottom and then you see a complete reversal of that.

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Speaker 1: And I think those ships are keying off these days

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Speaker 1: to a great degree, the bond market, and what what

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Speaker 1: tenure yields are doing. For a while there they were

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Speaker 1: those leadership ships were keying off the delta variant um.

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Speaker 1: That seems to be less of a force now and

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Speaker 1: let's hope that stays in the rearview mirror. Well, the

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Speaker 1: bond market is John was just talking about, is pricing

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Speaker 1: in a much higher rate of inflation over the next

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Speaker 1: five years, with three percent on the five year break even.

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Speaker 1: I was reading your note from a couple of days ago,

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Speaker 1: and you said that there's a shift from pro cyclical

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Speaker 1: to countercyclical inflation. Countercyclical meaning high prices drag on economic activities.

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Speaker 1: So we're talking more inflation growth getting hit. Can you

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Speaker 1: differentiate between that and stag inflation? Well, stagflation if you

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Speaker 1: use the precise steffinition tied to what was going on

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Speaker 1: in the seventies. It wasn't just weak economic growth and

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Speaker 1: higher inflation. It was high and rising unemployment and to

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Speaker 1: some degree, weak productivity. And we clearly don't have those

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Speaker 1: ladder two factors. So whether we come up with some

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Speaker 1: catching new phrase for just a slow and growth environment,

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Speaker 1: I think this is more of a shift from pro

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Speaker 1: cyclical inflation, which is what we had at the beginning

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Speaker 1: of the reopening. Higher demand pushed up prices. Now we've

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Speaker 1: got high prices pushing down demand and economic growth. I

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Speaker 1: think that's a better way to think about the current

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Speaker 1: environment than likening it to the seventies. Liszen Saunders, what

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Speaker 1: is the new definition of the debate of pricing power?

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Speaker 1: We've seen eras of discussion of pricing powers among our

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Speaker 1: American corporations what's new this time. Well, I don't think

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Speaker 1: we have yet kicked in the psychological component that feeds

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Speaker 1: into the wage price spiral that we saw in the

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Speaker 1: nine seventies. And that's a bit more esoteric. It's not

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Speaker 1: as easy to measure, there's no numerics associated with it.

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Speaker 1: But it's when that psychology kicks in. When workers the

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Speaker 1: psyche changes, they feel they have the power to demand

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Speaker 1: not just one time higher compensation ship but on a

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Speaker 1: persistent basis. The power that companies feel they have when

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Speaker 1: the psyche changes, to persistently pass on higher costs. I

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Speaker 1: don't think we're there yet, but it's also why I

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Speaker 1: think the margins story and the outlooks associated with that

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Speaker 1: as we go through third quota reporting season, or maybe

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Speaker 1: even more important than what the numbers are being reported

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Speaker 1: for the quarter. Now, we're gonna go inside baseball here,

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Speaker 1: and we can do this with a wonderful Lisa and

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Speaker 1: Saunders lisenne I plotted today the value line arithmetic index

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Speaker 1: minus the value line geometric index, which is one indication

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Speaker 1: of the consolidation the concentration of a given broader American

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Speaker 1: stock market. The slope is absolutely original. Give us an

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Speaker 1: update on the dominance of profitable cash flow big tech.

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Speaker 1: So I think profitability rising earnings revisions, as i've factor,

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Speaker 1: is going to be increasingly important, especially if we if

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Speaker 1: if this environment of weakening growth courtesy of higher inflation

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Speaker 1: is less transitory than what was thought to be the case.

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Speaker 1: I think focusing on those factors that sort of separate

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Speaker 1: you from the masses, and the beauty of of some

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Speaker 1: of those factors, especially rising earnings revisions forward looking higher

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Speaker 1: profitability is it's almost a hybrid growth and value factor

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Speaker 1: because of course, if you've got those rising earnings revisions,

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Speaker 1: you've got a rising denominator, which means following multiples. And

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Speaker 1: in addition to the volatility based rebalancing that we already

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Speaker 1: talked about, I think a factor based approach makes more

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Speaker 1: sense in this environment than trying to make sector calls.

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Speaker 1: And I think taking advantage of weaker growth and what

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Speaker 1: that means for companies that do have that sustainable growth

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Speaker 1: trajectory looking forward is probably the best way to approach

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Speaker 1: the market, especially if you're a stock. By always great

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Speaker 1: to catch. Thanks you so much, swap right now, Kaylee Lines,

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Speaker 1: and I would like to manage the message on your

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Speaker 1: next air travel over to Helene Becker to say she's

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Speaker 1: senior research at Analystic Cowen with Kivan Rumor barely defines

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Speaker 1: the ownership of Cowen with Airlines Securities Analysis Excellence going

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Speaker 1: back decades and decades, Helene Becker, I know you're gonna

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Speaker 1: tell me you've never seen it like this before. What

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Speaker 1: will our industry look like in twelve months. I think

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Speaker 1: it's gonna be a lot better than it is now.

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Speaker 1: We're still in that transition phase UM, which we expected

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Speaker 1: would last. I actually thought it would last three to

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Speaker 1: five years. And UM for for domestic recovery. Of course,

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Speaker 1: I wasn't counting on the government giving people a lot

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Speaker 1: of money UM, and I think the stimulus obviously helped travel. UM.

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Speaker 1: Usually if you have time, you don't have money, and

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Speaker 1: if you have money, you don't have time. So it's

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Speaker 1: been over the past I would say six or nine months,

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Speaker 1: we've seen a huge recovery in domestic air travel and

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Speaker 1: we expect that to continue. UM. Business travel should come

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Speaker 1: back in two not all the way we're thinking of

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Speaker 1: the way, which you know we've talked about. And in

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Speaker 1: the international next summer should be a pretty good international UM.

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Speaker 1: People will want to, we'll take those trips. Tell me

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Speaker 1: about the price discrimination, the idea of selling the cheapest

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Speaker 1: seat and then forty seven slices up and up to

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Speaker 1: a full price first class ticket. I look at the

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Speaker 1: ratio of business class to economy and it's outrageous executed

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Speaker 1: obviously because of COVID and all that. Are we going

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Speaker 1: back to the normal price discrimination perceit of pre pandemic

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Speaker 1: or is there a new new to all this now,

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Speaker 1: I see? I don't you know. I don't know how

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Speaker 1: to answer the question, other than to say that I think, um,

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Speaker 1: people don't like to be squished in the back of

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Speaker 1: the planes, and what the airlines are seeing is more

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Speaker 1: more leisure travelers actually buying up too, if not first

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Speaker 1: class to premium economy or whatever they call this first

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Speaker 1: maybe five or seven rows um to get just a

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Speaker 1: little more leg room. And you know you've heard about

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Speaker 1: all the unruly passengers on board. I think part of

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Speaker 1: it is just the squishiness, the wearing of the masks,

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Speaker 1: the whole uncomfort level. I don't think that's going to change. Um.

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Speaker 1: We we didn't talk about oil prices yet this morning,

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Speaker 1: but the oil prices up sixty percent right, every year, right,

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Speaker 1: So at some point capacity has to come down or

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Speaker 1: airlines have to raise ticket prices. And I think ticket

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Speaker 1: prices are going off well that I'm so glad you

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Speaker 1: brought that up, Lane, because we heard the likes of

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Speaker 1: Delta warning about that, for example, saying oil prices are

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Speaker 1: going to weigh and we might not actually be pro

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Speaker 1: fitable in the last quarter of the year. Why is

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Speaker 1: it that airlines can't exercise enough pricing power to offset

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Speaker 1: that cost. Yeah, So the issue for airlines is they

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Speaker 1: sell six of their tickets within ninety days of travel,

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Speaker 1: so generally you enter the first of the month having

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Speaker 1: sold at almost two thirds of your seats. So the

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Speaker 1: price that you've set it was using a fuel price

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Speaker 1: that was established two or three months ago, So you're

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Speaker 1: you're looking at the forward curve and you're trying to

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Speaker 1: figure out what the price is going to look like

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Speaker 1: when the person takes the trip. We don't do fuel

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Speaker 1: charges for domestic trips in the United States, only international,

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Speaker 1: so there's that mismatch. You have to work through that

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Speaker 1: group of tickets and then within the month you can

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Speaker 1: address it. So it takes a couple of months. We

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Speaker 1: figure the regressions. We've done show anywhere from two to

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Speaker 1: four months. I know Delta set up to six months

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Speaker 1: to get price. United said the other day we will

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Speaker 1: raise ticket prices and they just have to because I

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Speaker 1: heard your segment with Lausanne and um excuse me. One

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Speaker 1: of the things that she was talking about was wage inflation. Well,

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Speaker 1: the Alanes are experiencing too, especially for entry level jobs

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Speaker 1: and the markets where they're competing with people like Amazon

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Speaker 1: or Facebook or Yahoo, are Microsoft. You're seeing huge wage

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Speaker 1: inflation even at the corporate level, not just in entry

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Speaker 1: level jobs. You're seeing that in retention. So you know,

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Speaker 1: we're we're looking at margin pressure over the next six

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Speaker 1: or nine months, and you know the only thing they

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Speaker 1: can do is raise ticket prices, which will which will

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Speaker 1: tamp down demand. Helene, it's like you're reading my mind

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Speaker 1: because I was going to go to labor next. Not

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Speaker 1: so much because of the wage inflation part of the conversation,

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Speaker 1: but just getting people to fly your planes, to be

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Speaker 1: flight attendants within the planes. Given a lot of the

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Speaker 1: trouble that Southwest, for example, has had with its vaccine mandate,

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Speaker 1: how do you handicap that kind of issue When are

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Speaker 1: thinking fundamentally about these airlines. Yeah, so I'm not gonna

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Speaker 1: get into the whole vaccine thing. I mean, United had

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Speaker 1: a lot of success working with their employees and getting

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Speaker 1: the vaccine mandate. Everybody's done. It's you know, it's just

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00:24:14,760 --> 00:24:17,400
Speaker 1: got to be done from a safety perspective, right, That's

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00:24:17,440 --> 00:24:19,960
Speaker 1: like the number one thing airlines talked about all the time.

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00:24:20,520 --> 00:24:23,240
Speaker 1: We want to be safe. So that's the first thing. Um,

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Speaker 1: flight attendants. I kind of think that it's not a

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00:24:27,280 --> 00:24:30,720
Speaker 1: hard job to fill. Delta had thirty five thousand applications

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00:24:30,720 --> 00:24:35,159
Speaker 1: for spots and United had twenty thousand for two thousand,

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00:24:35,280 --> 00:24:39,560
Speaker 1: So that's not the problem, even when maybe more so pilots. Yeah,

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00:24:39,720 --> 00:24:42,800
Speaker 1: pilots are a problem for sure. Mechanics. Nobody ever talks

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00:24:42,840 --> 00:24:45,679
Speaker 1: about the fact that we're not turning out enough mechanics

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00:24:45,720 --> 00:24:48,840
Speaker 1: to keep the planes in the air. Um, you know,

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00:24:48,960 --> 00:24:52,920
Speaker 1: that's an issue for for airlines over the next few years. Pilots.

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00:24:53,040 --> 00:24:55,399
Speaker 1: United so they hired a thousand, They were going to

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00:24:55,560 --> 00:24:59,199
Speaker 1: hire ten thousand pilots this decade. American and Delta are

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00:24:59,280 --> 00:25:02,320
Speaker 1: not far behind. Mind. I mean, we we've estimated that

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00:25:02,400 --> 00:25:06,800
Speaker 1: in order to replace the pilots retiring and to handle

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00:25:06,840 --> 00:25:10,600
Speaker 1: the growth they've talked about in Say and Beyond. We're

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00:25:10,760 --> 00:25:14,520
Speaker 1: we need pilots, so that's going to be an amazing

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00:25:14,640 --> 00:25:18,520
Speaker 1: career UM and their academies that you can go that

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00:25:18,560 --> 00:25:20,960
Speaker 1: will help you financially and that will wash you out

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00:25:21,400 --> 00:25:23,720
Speaker 1: if you don't have the skill set early, so you

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00:25:23,760 --> 00:25:26,360
Speaker 1: don't wind up going through the process of knowing lots

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00:25:26,359 --> 00:25:30,600
Speaker 1: of money. UM. Really the issue for labor is going

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00:25:30,680 --> 00:25:36,240
Speaker 1: to be in the areas of entry level like airport staffing,

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00:25:36,720 --> 00:25:41,760
Speaker 1: the contractors the airlines use at the catering, wheelchair runners, UM,

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00:25:41,960 --> 00:25:44,680
Speaker 1: baggage handling. That's really where you're having a hard time

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00:25:44,720 --> 00:25:46,920
Speaker 1: finding people to come back. Hello, and we got to

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00:25:46,960 --> 00:25:51,320
Speaker 1: leave it the more questions will do it again legendary

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00:25:51,440 --> 00:25:54,160
Speaker 1: on the airline business. You know, Kayley, all of our

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00:25:54,200 --> 00:25:58,480
Speaker 1: audiences really care about this stuff. We've all got our anecdotes.

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Speaker 1: I just want to say, in all the travel I've

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00:26:00,760 --> 00:26:04,359
Speaker 1: done through this horrific pandemic, I've seen service, Kaylee, like

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Speaker 1: I've never seen. If there's been failures, yeah, but all

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Speaker 1: in all, it's been stunning. This is the Bloomberg Surveillance Podcast.

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00:26:11,880 --> 00:26:15,280
Speaker 1: Thanks for listening. Join us live weekdays from seven to

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00:26:15,359 --> 00:26:19,400
Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television

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00:26:19,760 --> 00:26:23,800
Speaker 1: each day from six to nine am for insight from

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00:26:23,800 --> 00:26:28,359
Speaker 1: the best in economics, finance, investment, and international relations. And

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00:26:28,440 --> 00:26:33,600
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg

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00:26:33,640 --> 00:26:37,359
Speaker 1: dot com, and of course, on the terminal. I'm Tom Keene,

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00:26:37,359 --> 00:26:39,440
Speaker 1: and this is Bloomberg