Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz jay Leie. We bring
Speaker 1: you insight from the best and economics, finance, investment and
Speaker 1: international relations. Find Bloomberg Surveillance and Apple Podcast SoundCloud, Bloomberg
Speaker 1: dot Com, and of course, on the Bloomberg Terminal. Jonathan
Speaker 1: golber joining US now chief equity strategist at Credit Sweets.
Speaker 1: I remember the morning at some point in the summer time,
Speaker 1: I've taken the morning golf and the note dropped from
Speaker 1: Jonathan Gollobert. Credit Swiss had a year end out look
Speaker 1: for next year of five thousand and Jonathan. Many people
Speaker 1: just strugged and said, Jonathan gol Up, here we go again.
Speaker 1: He's too bullish. He's too bullish, And here we are
Speaker 1: at all time highs. John, why do you think we
Speaker 1: can get to five K from where we are just north? Well,
Speaker 1: I think there's a couple of stories here. The first
Speaker 1: one is that earnings benefit from these shortages. And I
Speaker 1: know that that sounds really bizarre, but they're getting tons
Speaker 1: of pricing power and um, and that's gonna mean that
Speaker 1: the earnings are gonna are gonna be driving this. If
Speaker 1: you look at the last twelve months, the price of
Speaker 1: the stock market is up less than the than the
Speaker 1: earnings have improved, and stock multiples are actually down over
Speaker 1: the last year. So that's the number one reason. The
Speaker 1: second thing which people missed is that, and you guys
Speaker 1: are talking about it a second ago. Rising interest rates
Speaker 1: is a sign of confidence in the economy, not a
Speaker 1: problem for stocks, and that's been the story over the
Speaker 1: last month's interest rates in Brisen, Jonathan, you've absolutely now
Speaker 1: that your earnings sustained call has been great. You've got
Speaker 1: some great statistics there on how earnings have come in
Speaker 1: far better than what the gloom was. By the cell side,
Speaker 1: you're as strong as your analysts. Let's take Matthew Cabral
Speaker 1: is just one example. What does Matthew Cabral on Apple
Speaker 1: or on tech and your other forty seven analysts, what
Speaker 1: are they whispering? Do you right now? Oh? You know,
Speaker 1: I hate to talk about individuals, get them broad you know,
Speaker 1: individual stucks. But you know we're we're seeing um in
Speaker 1: many ways. What the companies are telling us is that
Speaker 1: they're saying that things are pessimistic about their ability to
Speaker 1: meet demand. And they they're they're pessimistic on you know,
Speaker 1: margin cost pressures, and then the numbers come in and
Speaker 1: and the buzz that we're hearing from companies is more
Speaker 1: negative than the results that they're delivering, and we're seeing
Speaker 1: we're seeing that across the border. One of the things
Speaker 1: I'm saying to the analystis, I know management is telling
Speaker 1: you that there's gonna be this cost ways, don't believe them.
Speaker 1: It's gonna come in better. There's there's more pricing power
Speaker 1: than they're willing to tell you in their pre announcements. Jonathan,
Speaker 1: I'm looking at the e ago function on the Bloomberg
Speaker 1: which tells you basically how earning season is stacking up
Speaker 1: so far. And you're right, the earning surprises and average
Speaker 1: of on the top line, though the average sales surprise
Speaker 1: is only about two percent. So is that just because
Speaker 1: the bar was higher on the revenue side, or is
Speaker 1: that because of some of these supply and demand issues
Speaker 1: and you actually are seeing companies not being able to
Speaker 1: pull in quite as much revenue because they don't have
Speaker 1: adequate supply. Well, well, first of all, it's two stories here.
Speaker 1: The first one is is that you always have um
Speaker 1: really small revenue beats and really big margin meats. I
Speaker 1: mean that's um atalyas UM have much more clarity on
Speaker 1: the revenue line. So that's not that that's not a typical.
Speaker 1: But the story the earning season is that everyone thought
Speaker 1: that we were gonna get cost ways and what we're
Speaker 1: actually getting is uh is demand disappointment. And you you
Speaker 1: you know, you know. I don't want to comment on
Speaker 1: an individual company, but um I was out with a
Speaker 1: bunch of chief investment officers across different firms a few
Speaker 1: nights ago, and people were saying that they thought that
Speaker 1: ad spending was gonna be a problem. Why if you
Speaker 1: can't meet demand, why would you advertise just cut your
Speaker 1: head spending, And especially in area like autos, which is
Speaker 1: so important for the ad market, why would you advertise
Speaker 1: a car that you can't deliver? So this is a
Speaker 1: big issue. When we're seeing it lots of places. I'll
Speaker 1: tell you where we're not seeing it. We're not seeing
Speaker 1: in banks. UM banks are showing up with you know,
Speaker 1: really levitating separate from everything else. And let me just
Speaker 1: make one more in one comment there, if you split
Speaker 1: the market in half, which is, how are the bank's
Speaker 1: doing and how is everything else doing? It doesn't look
Speaker 1: as good as we're talking about. The market is beating
Speaker 1: by about seven percent the bank it exclu the banks um,
Speaker 1: and it's about you know, eleven or twelve percent with
Speaker 1: so there is a bit of a bifurcation on winners
Speaker 1: and losers, Joel, before you go. Sometimes its strategist job
Speaker 1: is to walk with therapy to how people stay invested
Speaker 1: in sleep well at night, do some therapy right now,
Speaker 1: what's the one reason people should stay invested in this
Speaker 1: market through all the next year and beyond? Um? You know, I,
Speaker 1: you know, I actually John I and my my therapy
Speaker 1: is a little bit different. Um, I'm seeing a Listen,
Speaker 1: I'm a bullish you know, I'm bullish about the market
Speaker 1: and optimistic in general. But I'm seeing almost complacency. What
Speaker 1: people just saying is just ignore the ignore any bad news.
Speaker 1: Just by the depths. The feed is backing this. Everything
Speaker 1: is gonna be okay, and there are things to be
Speaker 1: concerned about, to worry about. And in many ways I'm
Speaker 1: saying to the bullish guys, um, listen, I I agree
Speaker 1: with you, but there are you know, we didn't roll
Speaker 1: off of a ton of stimulus here. We don't have
Speaker 1: clarity on what tax policy is. You know, oil prices
Speaker 1: can be disruptive. Just check to make sure that your
Speaker 1: bullishit and this is warranted. I think it is, but
Speaker 1: just you know, go and double check. The bullishness is
Speaker 1: just very strong. I'll give you a cool when I
Speaker 1: struggle to sleep later, John. Thank you, Jonathan Gullup that
Speaker 1: sas on the secondy market. The market was in line
Speaker 1: with this idea that QUEI was separate from higher interest rates.
Speaker 1: You can't say that anymore, Tom, in the same way.
Speaker 1: That's changed in the last couple of months. Let's drive
Speaker 1: this conversation forward, and we do it with someone really interesting.
Speaker 1: She is a claim for hyper hyper detailed notes and
Speaker 1: high frequency economics, taking all the wonderful granularity of her
Speaker 1: Stone and McCarthy hears or throughout Rubila for Rookie could
Speaker 1: be with us today, working always with Carl Wineber RUBYLA,
Speaker 1: what is in the details right now? If I look
Speaker 1: at your high frequency economics domestic note, which is the
Speaker 1: item that has your greatest attention? Well, good morning, thank
Speaker 1: you for having me. Uh you know, what we're looking
Speaker 1: at is how the consumer responding to high inflation pressures
Speaker 1: and what the underline trend and inflation is. And I
Speaker 1: think this whole debate around great heights and how the
Speaker 1: central Bank is going to respond is centered around these
Speaker 1: inflation high inflation readings that are lasting longer than expected
Speaker 1: and also rising inflation expectations. So I do think that
Speaker 1: what is being priced in right now is a little aggressive,
Speaker 1: and I do think that this sets up the path
Speaker 1: that UH as we see inflation moderate over the course
Speaker 1: of twenty two, that these expectations are going to reset
Speaker 1: and that's going to have implications for the yield, especially
Speaker 1: the short end. You're as good as your data can
Speaker 1: you get good made and data. Now, with the dislocations,
Speaker 1: say in the automobile business, or the dislocations at the
Speaker 1: ports on the West coast, how good is the goodness
Speaker 1: of the data you and Carl Weinberg have. It is
Speaker 1: definitely challenging right now to figure out what the underlying
Speaker 1: trends are in consumer spending or let's say, business investment,
Speaker 1: given the dislocations we're seeing on the supply side of
Speaker 1: the economy. But what we do expect is that these
Speaker 1: disruptions are going to eventually pan out and what we
Speaker 1: see beyond that is a slower pace where the impetus
Speaker 1: from for demand, which is you know, is being built
Speaker 1: into expectations of inflation resting wronger longer that is not there.
Speaker 1: You're not going to see the sugar high or fiscal
Speaker 1: posture and enhanced unemployment benefits. So as supply dynamics readjust,
Speaker 1: we do think that the demand side of this equation
Speaker 1: is also going to be tempered, and that's why we
Speaker 1: think we're going to move into a lower inflation and
Speaker 1: lower growth sort of environment. Repeat, Can you put some
Speaker 1: numbers on that for next year? Just going through the
Speaker 1: e c f C function on the Bloomberg for where
Speaker 1: the major is right now, the survey that we conduct
Speaker 1: for economists going forward twenty two real GDP at about
Speaker 1: four percent, c p I three point three percent for
Speaker 1: twenty two. For next year four and three, what are
Speaker 1: you looking for if you look at our forecasts and
Speaker 1: we are sub three percent on a que for Q
Speaker 1: four basis, you know, closer to three and a half
Speaker 1: percent on a calendar average basis, and on CPI inflation,
Speaker 1: we are still seeing higher readings and that is a
Speaker 1: function of you know, how we expect the goods and
Speaker 1: service sector. How that adjustment is going to happen, especially
Speaker 1: as you see normalization of the service sector o E
Speaker 1: ER that is a large component. So I do think
Speaker 1: that we're going to see a lift from that and
Speaker 1: the goods side. There's so much uncertainty from the supply
Speaker 1: chain side that you know, it's it's really difficult to
Speaker 1: time how or when that is going to happen. But
Speaker 1: we do expect to see elevated readings. But by the
Speaker 1: second half of the year, growth is going to be
Speaker 1: in our assessment closer to two and a half percent,
Speaker 1: and inflation readings are also going to ease quite substantially,
Speaker 1: closer to two So reveal on on those supply chain problems.
Speaker 1: That's not something that monetary policymakers are easily equipped to address.
Speaker 1: But obviously the inflation caused by it is causing central
Speaker 1: banks to get pretty uncomfortable or seeing that at the
Speaker 1: b o e S. John said, you have Russia hiking
Speaker 1: as well. On the phase of inflation at a five
Speaker 1: year high, do we run the risk of when those
Speaker 1: bottlenecks eased, we end up with policy that is too tight, Well,
Speaker 1: that is exactly you know what we have been talking about,
Speaker 1: is that this is the supply dynamic that you know,
Speaker 1: any action from the FED is really not equipped to address.
Speaker 1: So if you are looking at the expectation that demand
Speaker 1: is going to be so strong that it unlicits a
Speaker 1: FED response, we don't really subscribe to that new So
Speaker 1: I guess there is there is a chance that you know,
Speaker 1: you do see a response from the FED that you know,
Speaker 1: tamps down the economy, uh, you know, in a in
Speaker 1: a more substantial way than is needed. But I do
Speaker 1: think that all this is centered around what the FED
Speaker 1: is communicating right now, and what they're communicating is that
Speaker 1: if inflation does turn out to be you know, substantially stickier,
Speaker 1: that they are ready to respond. But I think it's
Speaker 1: a matter of managing expectations rather than them saying that,
Speaker 1: you know, we are not we are just going to
Speaker 1: sit back and and you know, let this happen. The
Speaker 1: inflation and expectations are arising, and what they need to
Speaker 1: do is manage those expectations. And this is the communication process.
Speaker 1: What they're saying is that they're not going to uh,
Speaker 1: they're not going to let this occur at a rate
Speaker 1: you know that we're seeing right now, Well, it's a
Speaker 1: good point on inflation expectations, and that brings me to
Speaker 1: a question on the consumer, because obviously we're in the
Speaker 1: thick of earning season, we're talking a lot about supply
Speaker 1: chain issues and companies raising costs because of their higher
Speaker 1: input costs are colleaguet Bloomberg Opinion Andrea Fell said put
Speaker 1: out a column on the terminal talking about the likes
Speaker 1: of Unilever, and yes, price hikes are working for them
Speaker 1: for now, but if they hike further, there may be
Speaker 1: a point in time where consumers are not going to
Speaker 1: be tolerant of them. What is your take on that? Yeah,
Speaker 1: that's that's exactly right. I mean, I do think that
Speaker 1: the expectation that these price increases are going to continue forever.
Speaker 1: I do think that, um, that is I'm not sure
Speaker 1: that that's really realistic. At some point, either the consumer
Speaker 1: steps back or you know, you have to adjust your
Speaker 1: expectations about uh, you know, wage increases or the response
Speaker 1: from just in terms of how the consumer response to uh,
Speaker 1: you know, persistently high uh or or accelerating inflation. So
Speaker 1: I do think that there will be pushed back at
Speaker 1: some point. I do think that these companies that are
Speaker 1: able to pass through the consumer is bast household balance
Speaker 1: sheet is very healthy right now, so the consumer is
Speaker 1: able to bear a little bit of this price pressure.
Speaker 1: But I do think that there's a limit to this,
Speaker 1: and in terms of you know, how successful companies will
Speaker 1: be in passing on price increases. Rebeta, thank you as always,
Speaker 1: Rebeata FERUKEI that of high frequency economics. John. What we
Speaker 1: can suggest is some girls would like to talk to us,
Speaker 1: and that would be Lizzie and Saunders. Hardcore Stones fan
Speaker 1: joins us writing it up. I'll never be your beast
Speaker 1: of burden. My back is broad, but it's a hurt.
Speaker 1: And Lizzie Saunders, you are writing on the equity markets
Speaker 1: about the beasts of burden that are out there. Which
Speaker 1: one has your attention? Well, I think there are some
Speaker 1: signs that some pressures might be easing, even though durable
Speaker 1: goods prices are still up. There's some signs of durable
Speaker 1: goods consumption is rolling over a little bit, but a
Speaker 1: little bit of rolling over in suppire delivery times. But
Speaker 1: to John's point just before I came on, it really
Speaker 1: depends on on what good or service you're talking about.
Speaker 1: Us to the timeframe associated when we get some balance
Speaker 1: back between demand and supply. But the one benefit to
Speaker 1: high prices is that it's actually easing some of the
Speaker 1: demand pressures, and the hope is that that force predates
Speaker 1: that that's need to step in more aggressively. You will
Speaker 1: be overwhelmed at Charles Schwab in the coming days with
Speaker 1: what do we do at a record standard or high
Speaker 1: What do you advise? I think I think rotational leadership ships,
Speaker 1: even some rotational corrections which have characterized much of this year,
Speaker 1: are likely to persist. But there's enough offsets when you
Speaker 1: go through these pockets of weakness that the net is
Speaker 1: it keeps the index level declines to a fairly benign degree.
Speaker 1: As we saw more recently when we had the five
Speaker 1: point drop in the SMP. You still have SMP that
Speaker 1: has had at least a tem per cent raw down
Speaker 1: this year, and the average draw down is eight and
Speaker 1: I think that type of environment is likely to persist.
Speaker 1: That's a pretty benign way to ease whether it's sent
Speaker 1: him an excess with technical excess and valuation excesses. And
Speaker 1: I think if you do more sort of volatility based
Speaker 1: rebalancing as opposed to trying to do short term market
Speaker 1: timing that helps investors stay in gear in this kind
Speaker 1: of market. Well, speaking of volatility, Lisianne, the VIX is
Speaker 1: sub fifteen we're looking at this morning. Can volatility stay
Speaker 1: this subdued into your end? Yes, I think a measure
Speaker 1: like the VIX can stay fairly subdued. But that doesn't
Speaker 1: mean you're not going to continue to see some of
Speaker 1: these underlying leadership shifts and some of the swaps that
Speaker 1: are happening even on a day to day basis, where uh,
Speaker 1: you know, you'll see energy at the top of the
Speaker 1: leader board for a day or two and check at
Speaker 1: the bottom and then you see a complete reversal of that.
Speaker 1: And I think those ships are keying off these days
Speaker 1: to a great degree, the bond market, and what what
Speaker 1: tenure yields are doing. For a while there they were
Speaker 1: those leadership ships were keying off the delta variant um.
Speaker 1: That seems to be less of a force now and
Speaker 1: let's hope that stays in the rearview mirror. Well, the
Speaker 1: bond market is John was just talking about, is pricing
Speaker 1: in a much higher rate of inflation over the next
Speaker 1: five years, with three percent on the five year break even.
Speaker 1: I was reading your note from a couple of days ago,
Speaker 1: and you said that there's a shift from pro cyclical
Speaker 1: to countercyclical inflation. Countercyclical meaning high prices drag on economic activities.
Speaker 1: So we're talking more inflation growth getting hit. Can you
Speaker 1: differentiate between that and stag inflation? Well, stagflation if you
Speaker 1: use the precise steffinition tied to what was going on
Speaker 1: in the seventies. It wasn't just weak economic growth and
Speaker 1: higher inflation. It was high and rising unemployment and to
Speaker 1: some degree, weak productivity. And we clearly don't have those
Speaker 1: ladder two factors. So whether we come up with some
Speaker 1: catching new phrase for just a slow and growth environment,
Speaker 1: I think this is more of a shift from pro
Speaker 1: cyclical inflation, which is what we had at the beginning
Speaker 1: of the reopening. Higher demand pushed up prices. Now we've
Speaker 1: got high prices pushing down demand and economic growth. I
Speaker 1: think that's a better way to think about the current
Speaker 1: environment than likening it to the seventies. Liszen Saunders, what
Speaker 1: is the new definition of the debate of pricing power?
Speaker 1: We've seen eras of discussion of pricing powers among our
Speaker 1: American corporations what's new this time. Well, I don't think
Speaker 1: we have yet kicked in the psychological component that feeds
Speaker 1: into the wage price spiral that we saw in the
Speaker 1: nine seventies. And that's a bit more esoteric. It's not
Speaker 1: as easy to measure, there's no numerics associated with it.
Speaker 1: But it's when that psychology kicks in. When workers the
Speaker 1: psyche changes, they feel they have the power to demand
Speaker 1: not just one time higher compensation ship but on a
Speaker 1: persistent basis. The power that companies feel they have when
Speaker 1: the psyche changes, to persistently pass on higher costs. I
Speaker 1: don't think we're there yet, but it's also why I
Speaker 1: think the margins story and the outlooks associated with that
Speaker 1: as we go through third quota reporting season, or maybe
Speaker 1: even more important than what the numbers are being reported
Speaker 1: for the quarter. Now, we're gonna go inside baseball here,
Speaker 1: and we can do this with a wonderful Lisa and
Speaker 1: Saunders lisenne I plotted today the value line arithmetic index
Speaker 1: minus the value line geometric index, which is one indication
Speaker 1: of the consolidation the concentration of a given broader American
Speaker 1: stock market. The slope is absolutely original. Give us an
Speaker 1: update on the dominance of profitable cash flow big tech.
Speaker 1: So I think profitability rising earnings revisions, as i've factor,
Speaker 1: is going to be increasingly important, especially if we if
Speaker 1: if this environment of weakening growth courtesy of higher inflation
Speaker 1: is less transitory than what was thought to be the case.
Speaker 1: I think focusing on those factors that sort of separate
Speaker 1: you from the masses, and the beauty of of some
Speaker 1: of those factors, especially rising earnings revisions forward looking higher
Speaker 1: profitability is it's almost a hybrid growth and value factor
Speaker 1: because of course, if you've got those rising earnings revisions,
Speaker 1: you've got a rising denominator, which means following multiples. And
Speaker 1: in addition to the volatility based rebalancing that we already
Speaker 1: talked about, I think a factor based approach makes more
Speaker 1: sense in this environment than trying to make sector calls.
Speaker 1: And I think taking advantage of weaker growth and what
Speaker 1: that means for companies that do have that sustainable growth
Speaker 1: trajectory looking forward is probably the best way to approach
Speaker 1: the market, especially if you're a stock. By always great
Speaker 1: to catch. Thanks you so much, swap right now, Kaylee Lines,
Speaker 1: and I would like to manage the message on your
Speaker 1: next air travel over to Helene Becker to say she's
Speaker 1: senior research at Analystic Cowen with Kivan Rumor barely defines
Speaker 1: the ownership of Cowen with Airlines Securities Analysis Excellence going
Speaker 1: back decades and decades, Helene Becker, I know you're gonna
Speaker 1: tell me you've never seen it like this before. What
Speaker 1: will our industry look like in twelve months. I think
Speaker 1: it's gonna be a lot better than it is now.
Speaker 1: We're still in that transition phase UM, which we expected
Speaker 1: would last. I actually thought it would last three to
Speaker 1: five years. And UM for for domestic recovery. Of course,
Speaker 1: I wasn't counting on the government giving people a lot
Speaker 1: of money UM, and I think the stimulus obviously helped travel. UM.
Speaker 1: Usually if you have time, you don't have money, and
Speaker 1: if you have money, you don't have time. So it's
Speaker 1: been over the past I would say six or nine months,
Speaker 1: we've seen a huge recovery in domestic air travel and
Speaker 1: we expect that to continue. UM. Business travel should come
Speaker 1: back in two not all the way we're thinking of
Speaker 1: the way, which you know we've talked about. And in
Speaker 1: the international next summer should be a pretty good international UM.
Speaker 1: People will want to, we'll take those trips. Tell me
Speaker 1: about the price discrimination, the idea of selling the cheapest
Speaker 1: seat and then forty seven slices up and up to
Speaker 1: a full price first class ticket. I look at the
Speaker 1: ratio of business class to economy and it's outrageous executed
Speaker 1: obviously because of COVID and all that. Are we going
Speaker 1: back to the normal price discrimination perceit of pre pandemic
Speaker 1: or is there a new new to all this now,
Speaker 1: I see? I don't you know. I don't know how
Speaker 1: to answer the question, other than to say that I think, um,
Speaker 1: people don't like to be squished in the back of
Speaker 1: the planes, and what the airlines are seeing is more
Speaker 1: more leisure travelers actually buying up too, if not first
Speaker 1: class to premium economy or whatever they call this first
Speaker 1: maybe five or seven rows um to get just a
Speaker 1: little more leg room. And you know you've heard about
Speaker 1: all the unruly passengers on board. I think part of
Speaker 1: it is just the squishiness, the wearing of the masks,
Speaker 1: the whole uncomfort level. I don't think that's going to change. Um.
Speaker 1: We we didn't talk about oil prices yet this morning,
Speaker 1: but the oil prices up sixty percent right, every year, right,
Speaker 1: So at some point capacity has to come down or
Speaker 1: airlines have to raise ticket prices. And I think ticket
Speaker 1: prices are going off well that I'm so glad you
Speaker 1: brought that up, Lane, because we heard the likes of
Speaker 1: Delta warning about that, for example, saying oil prices are
Speaker 1: going to weigh and we might not actually be pro
Speaker 1: fitable in the last quarter of the year. Why is
Speaker 1: it that airlines can't exercise enough pricing power to offset
Speaker 1: that cost. Yeah, So the issue for airlines is they
Speaker 1: sell six of their tickets within ninety days of travel,
Speaker 1: so generally you enter the first of the month having
Speaker 1: sold at almost two thirds of your seats. So the
Speaker 1: price that you've set it was using a fuel price
Speaker 1: that was established two or three months ago, So you're
Speaker 1: you're looking at the forward curve and you're trying to
Speaker 1: figure out what the price is going to look like
Speaker 1: when the person takes the trip. We don't do fuel
Speaker 1: charges for domestic trips in the United States, only international,
Speaker 1: so there's that mismatch. You have to work through that
Speaker 1: group of tickets and then within the month you can
Speaker 1: address it. So it takes a couple of months. We
Speaker 1: figure the regressions. We've done show anywhere from two to
Speaker 1: four months. I know Delta set up to six months
Speaker 1: to get price. United said the other day we will
Speaker 1: raise ticket prices and they just have to because I
Speaker 1: heard your segment with Lausanne and um excuse me. One
Speaker 1: of the things that she was talking about was wage inflation. Well,
Speaker 1: the Alanes are experiencing too, especially for entry level jobs
Speaker 1: and the markets where they're competing with people like Amazon
Speaker 1: or Facebook or Yahoo, are Microsoft. You're seeing huge wage
Speaker 1: inflation even at the corporate level, not just in entry
Speaker 1: level jobs. You're seeing that in retention. So you know,
Speaker 1: we're we're looking at margin pressure over the next six
Speaker 1: or nine months, and you know the only thing they
Speaker 1: can do is raise ticket prices, which will which will
Speaker 1: tamp down demand. Helene, it's like you're reading my mind
Speaker 1: because I was going to go to labor next. Not
Speaker 1: so much because of the wage inflation part of the conversation,
Speaker 1: but just getting people to fly your planes, to be
Speaker 1: flight attendants within the planes. Given a lot of the
Speaker 1: trouble that Southwest, for example, has had with its vaccine mandate,
Speaker 1: how do you handicap that kind of issue When are
Speaker 1: thinking fundamentally about these airlines. Yeah, so I'm not gonna
Speaker 1: get into the whole vaccine thing. I mean, United had
Speaker 1: a lot of success working with their employees and getting
Speaker 1: the vaccine mandate. Everybody's done. It's you know, it's just
Speaker 1: got to be done from a safety perspective, right, That's
Speaker 1: like the number one thing airlines talked about all the time.
Speaker 1: We want to be safe. So that's the first thing. Um,
Speaker 1: flight attendants. I kind of think that it's not a
Speaker 1: hard job to fill. Delta had thirty five thousand applications
Speaker 1: for spots and United had twenty thousand for two thousand,
Speaker 1: So that's not the problem, even when maybe more so pilots. Yeah,
Speaker 1: pilots are a problem for sure. Mechanics. Nobody ever talks
Speaker 1: about the fact that we're not turning out enough mechanics
Speaker 1: to keep the planes in the air. Um, you know,
Speaker 1: that's an issue for for airlines over the next few years. Pilots.
Speaker 1: United so they hired a thousand, They were going to
Speaker 1: hire ten thousand pilots this decade. American and Delta are
Speaker 1: not far behind. Mind. I mean, we we've estimated that
Speaker 1: in order to replace the pilots retiring and to handle
Speaker 1: the growth they've talked about in Say and Beyond. We're
Speaker 1: we need pilots, so that's going to be an amazing
Speaker 1: career UM and their academies that you can go that
Speaker 1: will help you financially and that will wash you out
Speaker 1: if you don't have the skill set early, so you
Speaker 1: don't wind up going through the process of knowing lots
Speaker 1: of money. UM. Really the issue for labor is going
Speaker 1: to be in the areas of entry level like airport staffing,
Speaker 1: the contractors the airlines use at the catering, wheelchair runners, UM,
Speaker 1: baggage handling. That's really where you're having a hard time
Speaker 1: finding people to come back. Hello, and we got to
Speaker 1: leave it the more questions will do it again legendary
Speaker 1: on the airline business. You know, Kayley, all of our
Speaker 1: audiences really care about this stuff. We've all got our anecdotes.
Speaker 1: I just want to say, in all the travel I've
Speaker 1: done through this horrific pandemic, I've seen service, Kaylee, like
Speaker 1: I've never seen. If there's been failures, yeah, but all
Speaker 1: in all, it's been stunning. This is the Bloomberg Surveillance Podcast.
Speaker 1: Thanks for listening. Join us live weekdays from seven to
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Speaker 1: dot com, and of course, on the terminal. I'm Tom Keene,
Speaker 1: and this is Bloomberg