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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along

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Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best an economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. Claudia som

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Speaker 1: She has been front and center with this mystery of

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Speaker 1: a non recession. Her work on a recession at Michigan

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Speaker 1: was just extraordinary years ago. She is with Sound Consulting

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Speaker 1: on this fed day. Claudia Claudiasm. I want you to

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Speaker 1: talk about what you got from Claudia Golden.

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Speaker 2: The idea here that it wasn't gonna be nice.

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Speaker 1: We're gonna play hardball, We're gonna do first order at

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Speaker 1: research like you did at Michigan. Tell me what Claudia

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Speaker 1: Golden meant to you.

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Speaker 3: Kadia Goldin's an absolute leader in the field of economics.

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Speaker 3: She's a scholar. She's a hero to a lot of

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Speaker 3: women and frankly men in the profession and it comes

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Speaker 3: into the real world. She's one economist that really said, hey,

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Speaker 3: we got to think about women in the workforce, and

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Speaker 3: we saw this year women's employment rate for primge women

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Speaker 3: hidden all time high. Right, So it's not just about

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Speaker 3: the theory and the scholarship. It's about let's make this

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Speaker 3: happen in the real world.

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Speaker 1: This goes to the American mystery of a non recession.

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Speaker 1: You've provided a leadership on this this year. Do we

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Speaker 1: misjudge women in the economy? Do we misjudge technology in

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Speaker 1: the economy? Which means we have to have a humility

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Speaker 1: about the Psalm rule in twenty twenty four.

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Speaker 3: So we absolutely, like I love that this is FED Day,

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Speaker 3: but we have overplayed what the FED means to this economy.

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Speaker 3: We need workers back, not fewer customers. The FED can

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Speaker 3: only do the latter. We have seen workers come back.

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Speaker 3: We have women, we have black men, have people with disabilities.

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Speaker 3: And to your point, productivity, I mean, this is the

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Speaker 3: holy grail of prosperity. We've had some pretty good productivity

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Speaker 3: numbers recently, and frankly, there are technologies in place like

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Speaker 3: work from Home did a lot to help women who

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Speaker 3: were on the sidelines, were those with disabilities. I mean,

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Speaker 3: we really have some great stuff going. We just got

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Speaker 3: to keep pushing.

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Speaker 4: Kludy, you were saying that the FED is not the

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Speaker 4: end all be all, So then why are you so

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Speaker 4: excited for today?

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Speaker 5: What are you hoping to hear from the press conference?

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Speaker 2: Oh?

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Speaker 3: I love the FED, so I FED Day is always

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Speaker 3: a fun day for me. So I feel like the

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Speaker 3: soft landings in the bag for next year. Two percent inflation,

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Speaker 3: unemployment day is below around four percent and that. But

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Speaker 3: my biggest risk factor outside of politics in the economic

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Speaker 3: space is the FED. And frankly, what I worry about

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Speaker 3: is them confusing markets and like, I really not fully

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Speaker 3: emotionally prepared for the Summary of Economic Projections this afternoon

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Speaker 3: because I don't think it's going to markets clarity. They're

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Speaker 3: all over the map on their cuts, like there's no

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Speaker 3: way we're getting first border cuts from the FED. And

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Speaker 3: I worried that they're going to create enough uncertainty that

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Speaker 3: something breaks. We've been lucky so far, nothing's broken, and

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Speaker 3: I could come back and put the soft landing in

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Speaker 3: some danger.

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Speaker 5: What would break?

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Speaker 4: I mean, what we've seen is market's becoming more accommodative,

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Speaker 4: A stabilization in a benchmark bond yields. Where is this

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Speaker 4: potential for breaking coming from on the heels of FED communication?

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Speaker 3: Right, So if I could predict a financial breakage, I

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Speaker 3: could make a lot of money. Right, Like, these don't

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Speaker 3: come in an expected way. I think Silicon Valley Bank

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Speaker 3: was kind of there was a scary moment, right, the

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Speaker 3: FED set up an environment with interest rate risk, and

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Speaker 3: then you had a bank that had made incredibly bad decisions.

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Speaker 3: So that kind of came out of nowhere in a

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Speaker 3: big picture sense. And yet market we got it under control.

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Speaker 3: The FED stepped in, regulators stepped in, So you know,

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Speaker 3: I have a lot of faith. Again, this is a

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Speaker 3: risk that I see, and it's a pretty low risk.

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Speaker 3: But we've had a pretty good run of the FED

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Speaker 3: like not things breaking in financial markets, and frankly, I'm

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Speaker 3: a little surprised. I'm thankful, and I think we're on

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Speaker 3: the right path. But they the FED needs to stop

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Speaker 3: injecting uncertainty. They've got to get the message straight.

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Speaker 4: Although it's unclear to create certainty of time that's deeply uncertain.

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Speaker 4: This is sort of the conundrum for FED officials and

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Speaker 4: for economists and even for people in the market. You

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Speaker 4: are saying that next year. The soft landing seems to

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Speaker 4: be in the bag. But the biggest risk factor is

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Speaker 4: the FED. What is the bigger policy error that you

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Speaker 4: see them committing. Would it be cutting too soon or

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Speaker 4: cutting too late?

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Speaker 3: I honestly don't think the FED matters much next year.

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Speaker 3: This disinflation has not been about the FED. Jape is

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Speaker 3: not landing this plane right, This is not about the FED.

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Speaker 2: Now.

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Speaker 3: One thing I would really like to see today is

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Speaker 3: that j Palell articulate that they're going to go slowly

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Speaker 3: and really get people off this first order call, like

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Speaker 3: they're just not going to have enough data buy mar

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Speaker 3: and they're going to be a little sea conservative and

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Speaker 3: cutting because they don't want to have to raise again.

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Speaker 3: They don't want to make it look like politics. Right,

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Speaker 3: it's a collection year. So I just but there's been

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Speaker 3: a lot of communication issues that you've got so many

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Speaker 3: FOMC officials out. Frankly, I think they should limit their airtime. Sorry,

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Speaker 3: but you know, I think there's where there's been some confusion.

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Speaker 3: But when I listen to them, I'm like, they're going

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Speaker 3: to wait. So, yeah, you get to listen to a lot,

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Speaker 3: but I think they're going to get it together. They

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Speaker 3: know what they're doing.

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Speaker 1: Claudia out on LinkedIn today, you allude back to the

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Speaker 1: Voker fantasy, the idea of Powell being like Voker, and

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Speaker 1: you even take it back to the emotion that no

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Speaker 1: one wants to be Arthur Burns. He had the Smike

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Speaker 1: pipe smoking and what was a cloud of smoke telling

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Speaker 1: us in the meeting, tell us what we want to

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Speaker 1: avoid that Arthur Burns did decades ago.

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Speaker 3: There were two things that Arthur Burns did that are

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Speaker 3: at least seen as a mistake among monetary policy officials.

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Speaker 3: One was, whenever unemployment started to drift up, he cut

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Speaker 3: and then inflation came back even stronger. And there were

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Speaker 3: a few episodes of this, and that meant when Bulker

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Speaker 3: came in, there's real mass to cause of severe recession.

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Speaker 3: J Powell has said on record that Bulker is his hero, right.

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Speaker 3: And the second thing that Burns did that actually lines

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Speaker 3: up with next year is Nixon really pushed on Burns

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Speaker 3: to cut those rates. There is no way they want

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Speaker 3: to do that this time.

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Speaker 1: Let me channel from John Farrell this morning. Is Chair

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Speaker 1: Yellen and Vice Chair Biden, are they pushing Powell to

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Speaker 1: cut rates?

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Speaker 3: No, this White House I mean, this is not the

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Speaker 3: Nixon White House, right.

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Speaker 6: They know better than that.

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Speaker 3: I mean the former vice chair of the FED running

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Speaker 3: any See, you've got the Chair of the FED running

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Speaker 3: the treasury. There's a visual way, right, they know better.

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Speaker 1: Claudia, congratulations on your impact this year. May a non

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Speaker 1: recession trail you into two twenty four Doctor Somers and

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Speaker 1: the SIME consulting in a absolute metric of original research

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Speaker 1: to some rule front and center for so.

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Speaker 2: Many in academic and market and economic.

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Speaker 7: One of Wall Street's biggest balls.

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Speaker 8: He's calling for the SMP to rise nearly thirteen percent

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Speaker 8: next year to fifty two hundred. John Stolfis of Oppenheimer,

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Speaker 8: writing this, we look for twenty twenty four to be

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Speaker 8: a year of transition as markets navigate what we expect

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Speaker 8: will be the Fed's pivot from a restrictive monetary policy

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Speaker 8: setting to an easier stance. John Stelfer, some please to say, John,

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Speaker 8: just right now, John, I actually think you call is

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Speaker 8: original in the sense that I don't think it's too

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Speaker 8: dependent on rate cuts next year in quite the same

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Speaker 8: way as it is elsewhere. John, Can you just go

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Speaker 8: through your framework the path to fifty two hundred on

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Speaker 8: the SMP.

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Speaker 6: Great to be on surveillance as always.

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Speaker 2: John.

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Speaker 9: You know the thing about this is how when we

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Speaker 9: look at it, we think the traders right now are

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Speaker 9: pushing this dream of four rate cuts next year. We

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Speaker 9: think the economy is showing significant resilience in the face

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Speaker 9: of what is at eleven hikes and three pauses thus far,

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Speaker 9: or skips as the Fed prefers to call it. The

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Speaker 9: FED has shown remarkable sensitivity as it practices its mandate

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Speaker 9: to keep untoward levels of inflation in check. And so

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Speaker 9: all in all, we think it's this looks good as

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Speaker 9: it cuts likely to happen in the second half of

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Speaker 9: the year and probably maintained mostly if it's going to happen,

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Speaker 9: probably in the fourth quarter, and then only once or twice.

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Speaker 2: John, there is a shift going on.

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Speaker 1: I saw it from our Gina Martin Adams of Bloomberg Intelligence.

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Speaker 2: It's obviously Stolefus.

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Speaker 1: One on one, and also the great Urie and timor

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Speaker 1: chart guy at Fidelity. There is a shift to earnings analysis.

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Speaker 1: We're moving away from Fed naval gazing to OMG, look

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Speaker 1: at revenues, OMG, look at earnings.

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Speaker 2: We've seen this before. How does the market react we.

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Speaker 9: Think that the market is actually well positioned to react

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Speaker 9: positively to it. It's not only about traders, you know,

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Speaker 9: it's intermediate, longer term investors and traders that create the environment.

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Speaker 9: I mean, the markets are like music. It's math and emotion.

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Speaker 9: It's fear, greed, and need. So some people invest for need,

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Speaker 9: others invest for the short term the fear and greed aspect,

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Speaker 9: and we think it creates I don't want to call

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Speaker 9: it a cocktail because that sounds a little bit too volatile,

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Speaker 9: but it creates an opportunity where if we focus on

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Speaker 9: earnings in an environment where it's the end of free money,

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Speaker 9: where bond issuers have to pay for the privilege of

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Speaker 9: borrowing money and bond buyers get something in return. This

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Speaker 9: just looks like a more normalized environment, and we like it.

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Speaker 5: Does it make you nervous that everyone seems to be

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Speaker 5: agreeing with you these day?

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Speaker 6: I'm sure it does. That's the one thing.

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Speaker 9: You know.

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Speaker 6: We saw an awful lot of the bears last year.

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Speaker 9: We're telling us about the pending recession and the massive

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Speaker 9: unemployment that was coming and all this stuff that was negative.

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Speaker 6: They took the negative pitch book sold.

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Speaker 9: Last year and it's what we believe really caused the

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Speaker 9: market to decline as it did last year on things

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Speaker 9: that were never realized, and so the bears have pivoted.

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Speaker 9: But when they pivot, you get that feeling if you're

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Speaker 9: on a boat. All of a sudden, everybody's on your

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Speaker 9: side of the boat. You start looking for a little ballast.

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Speaker 9: And that might well be in terms of taking advantage

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Speaker 9: of some of the diversification that fixed income offers, as

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Speaker 9: well as other areas of the market that have the

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Speaker 9: equity market that have yet to participate in this rally.

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Speaker 4: So does that mean John, that you're broadening out to

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Speaker 4: small caps some of the less loved areas away from

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Speaker 4: just focusing on big tech.

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Speaker 10: Yeah.

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Speaker 9: You know, at LISA, we've been we've been working with

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Speaker 9: better quality small caps on an alpha basis and in

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Speaker 9: terms of on a beta basis, or using passive indexes,

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Speaker 9: using the S and P six hundred ETFs versus the

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Speaker 9: Russell two thousand for that purpose for quite a while.

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Speaker 9: It's heard as in terms of overall performance, but it's

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Speaker 9: given a stability. We can't help but notice on days

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Speaker 9: when there's volatility in the market that's caused by nervous

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Speaker 9: money pulling out of the large caps. Usually these days

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Speaker 9: they're going into the S and P four hundred mid caps,

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Speaker 9: or the S and P six hundred, or when all

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Speaker 9: when the tide comes in at all ships are floating,

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Speaker 9: they roar into the Russell two thousand.

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Speaker 1: John, what's a comfortable price to earnings ratio? Right now

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Speaker 1: we're twenty one SPX. Obviously there's been multiple expansion, But

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Speaker 1: what's a historically comfortable pe for our viewers and listeners?

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Speaker 9: I think tomboyend it comes to historically. You got to

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Speaker 9: think the generations. I can't help but think Leon Cooperman's

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Speaker 9: ratio is probably about twelve. It is the most twelve times.

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Speaker 9: For most boomers it's around sixteen. And as you get younger,

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Speaker 9: the generations keep pushing that multiple up. Some of that

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Speaker 9: is probably because they wreck some of them. It's just

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Speaker 9: a more aggressive positioning, okay. But it also has to

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Speaker 9: do with the need that I think people are beginning

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Speaker 9: to realize that social security will not be in the

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Speaker 9: same instead that it was for many decades for generations

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Speaker 9: to come and people need to invest. And it's just

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Speaker 9: like real estate in New York, you know, back in

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Speaker 9: seventy eight, you could buy a co op really cheap,

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Speaker 9: even today with all the problems the city has.

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Speaker 6: Gosh, if you look at the prices on co ops, at.

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Speaker 9: Least the ask is just you pale looking at it

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Speaker 9: when you give it a historic comparison. We think equities

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Speaker 9: move higher here, so probably twenty one to twenty two.

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Speaker 6: And I'm not a gunslinger.

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Speaker 9: It's just that the demand for equities when private equity

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Speaker 9: has taken so many stocks out of the market that

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Speaker 9: it creates demand that is chasing supply.

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Speaker 7: John Iyes have a good bank co op phase another day.

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Speaker 7: Love that.

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Speaker 8: John steff Is Offenheimer Asset Management. John, have a wonderful Christmas.

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Speaker 8: It's going to catch up with the set.

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Speaker 1: Michael Schumacher, Global ahead of macro Strategy at Wells Fargo,

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Speaker 1: joins us right now. Michael, I love your calculus illusion.

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Speaker 1: We're on a down escalator or a down elevator. What

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Speaker 1: does twenty twenty four look like? Am I on the

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Speaker 1: escalator or AM on the lower yield elevator?

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Speaker 11: Think you're on the escalator. So it's going to be

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Speaker 11: a slow move down in yields time. From art perspective,

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Speaker 11: I thought it was really interesting to hear about the

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Speaker 11: move since the last FED, meaning it's been phenomenal in

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Speaker 11: terms of equities, bonds, what have you. But we do

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Speaker 11: think the market's a bit overdone. It's probably overdone as

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Speaker 11: yields went up. We think it's overdone as yields have

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Speaker 11: gone down. We like the direction, we think it makes sense,

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Speaker 11: but the ghost slow path here is our preferred route

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Speaker 11: right now.

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Speaker 1: How do you follow Jay Brison's economics into your study?

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Speaker 1: Is it a study of global weakness as the IMF

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Speaker 1: structures out to twenty twenty eight or can there be

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Speaker 1: the surprise resiliency we saw at Q three US.

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Speaker 11: You can always get a resiliency. There's a potential for

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Speaker 11: your surprise. China is probably a decent example. Expectations are solo.

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Speaker 11: Wouldn't take much for China to surprise to the upside.

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Speaker 11: But I agree with Jay and his team. You think

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Speaker 11: about the global backdrop economically, frankly, it's not that great,

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Speaker 11: whether it's especially Europe. Canada looks like it's either in

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Speaker 11: recession or very likely to go into one pretty soon.

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Speaker 11: US probably lagging behind a bit so weakening but not

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Speaker 11: as fast.

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Speaker 10: But it's not a pretty picture.

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Speaker 11: And yet that's really what you want from a power standpoint,

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Speaker 11: you to take the wind out of the sales of inflation.

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Speaker 4: You said that the move is overdone, and I'm curious

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Speaker 4: which move in particular. Is it the fact that we're

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Speaker 4: going to get so many rate cuts next year, is

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Speaker 4: it the fact that we're going to have a strong

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Speaker 4: economy that persists despite where we are in this economic cycle,

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Speaker 4: or is it that this inflation can continue at the

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Speaker 4: pace that we've seen.

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Speaker 11: Now, what I was talking about, Lisa was the yield

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Speaker 11: move up and then down. We think the volatility and

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Speaker 11: bonds has been extraordinary, too much, so thinking about other

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Speaker 11: things that are probably a bit overcooked as well. Think

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Speaker 11: about market expectations for easing by pick your favorite central bank,

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Speaker 11: the FED, ecb Bank of Canada, whatever it might be.

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Speaker 11: They seem pretty aggressive to us right now for next year.

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Speaker 11: That's not to say the central banks won't get there,

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Speaker 11: but the market's ahead of the policy makers. So, for instance,

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Speaker 11: the FED price to ease forty five basis points something

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Speaker 11: like that by June of next year. It might actually

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Speaker 11: do it, but the market, we think, is running too

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Speaker 11: far ahead of j. Powle on team right now. So

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Speaker 11: I think that also is a bit ahead of the

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Speaker 11: game and overdone.

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Speaker 4: So do you think that essentially the equity bet that

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Speaker 4: the economy will remain strong is the correct one, but

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Speaker 4: the idea that disinflation will come down enough to edify

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Speaker 4: rate cut bets is not going to really follow through?

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Speaker 4: Is that your call.

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Speaker 11: It seems to me, is really an equity layman that

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Speaker 11: what's going on now in risk markets is risk markets

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Speaker 11: are reacting to what they think central bankers will do.

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Speaker 11: So as it becomes less likely central bankers will hike

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Speaker 11: or let's assume that's off the table, extra pan, more

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Speaker 11: likely they're going to cut pretty soon. Risk markets like that.

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Speaker 11: I think it's been about that simple. Chris Harvey can

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Speaker 11: give you a chapter and verse, but to me, that

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Speaker 11: seems to be the picture right now.

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Speaker 1: Mike sure Maker, part of this is just folding in

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Speaker 1: what the dollar would do. John mentioned Euro earlier, Wells

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Speaker 1: Fargus did some great work on Euro, and all of

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Speaker 1: this comes back to just the assumption weaker dollar. I

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Speaker 1: don't want to make theater out of it, but just

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Speaker 1: an ebbing dollar, if you will, is that your call.

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Speaker 11: Dollar probably weekends somewhat, Tom, But I think there's a

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Speaker 11: consensus for you out there and we disagree with it

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Speaker 11: that the dollar files out of bed. And the basic

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Speaker 11: thesis behind that argument is, Hey, the Fed's hiked a lot,

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Speaker 11: the Fed's got the highest policy rate, therefore the Federal

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Speaker 11: cut the most dollar weekends. Well, okay, but it's really

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Speaker 11: all driven by the idea of the Fed goes first.

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Speaker 11: Why should the Fed go first? Why shouldn't the ECB

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Speaker 11: lead the way, or maybe the Bank of Canada. So

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Speaker 11: we think that view the dollar really I wouldn't say collapses,

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Speaker 11: but takes a big help.

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Speaker 10: We think it's off base.

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Speaker 11: A bit of weakness, yes, but massive weakness, no, we

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Speaker 11: don't think that's on tap.

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Speaker 8: Let's play that game. Just priced in a lot of

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Speaker 8: rate cuts over the Bank of England. Growth not great, Mike,

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Speaker 8: who do you think goes first?

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Speaker 11: So let's say the candidate's John are, FED, Bank of Canada, ECB, BOE.

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Speaker 11: I'll put the ECB in first place, Bank of Canada second,

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Speaker 11: boees kind of a strange one to handicap.

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Speaker 10: Fed's probably or BOE fourth?

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Speaker 7: Is that growth call or a disinflation coll.

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Speaker 10: Now it's the inflation comfort level call. I guess I

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Speaker 10: would call it.

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Speaker 11: So, how how certain are you as a policymaker, whether

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Speaker 11: it's Andrew Bailey, J Powell, whomever, that inflation is not

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Speaker 11: just down, but it's actually out.

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Speaker 10: That to me is what's going to dictate the path.

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Speaker 8: Hey, Mikey, one of the best. Thank you sir, and

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Speaker 8: enjoy the holiday. It's happy Christmas. Always great to catch

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Speaker 8: up my Schumacher there of Wells Falco.

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Speaker 1: Our stress is to get the right person to talk to.

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Speaker 1: Christopher mcgrety is with KBW. They are the institutional investor.

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Speaker 2: Mid Camp bank.

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Speaker 1: Do you look at JP Morgan at all or do

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Speaker 1: you just ignore Fortresstein?

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Speaker 12: Now you have to look at it. You have to

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Speaker 12: look at it. There's another whatever for the industry.

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Speaker 1: So what it's like the midcalf So I want to

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Speaker 1: go to Tacoma, Washington, one of the banks you follow.

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Speaker 2: I don't even know where Dacoma is on.

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Speaker 1: The map, Tacoma nine eighty four or three. Columbia Banking system,

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Speaker 1: Where are they going to be in a year?

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Speaker 2: Where are the mid caps like Columbia Banking going to

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Speaker 2: be five years?

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Speaker 1: Right?

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Speaker 12: I think consolidation is part of the question. Tom. The

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Speaker 12: Colombia is a bank that's doubled in size over the

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Speaker 12: past two years, and so we think scale is really

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Speaker 12: important in this In this industry, we've done a lot

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Speaker 12: of work and there's a really strong correlation between the

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Speaker 12: size of your bank and the degree of profitability. And importantly,

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Speaker 12: the market rewards scale. They also punish scale, and regulation

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Speaker 12: is one of the things that we have to deal

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Speaker 12: with the out of the COVID.

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Speaker 8: Have you been surprised by how little consolidation we've seen

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Speaker 8: between the stress of spring and now?

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Speaker 10: No.

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Speaker 12: I think it's an evolution, right. The spring was forced consolidation,

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Speaker 12: it was failures. We saw three or four notable failures.

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Speaker 12: But as the industry picks up the pieces from from

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Speaker 12: March and that is that is happening, we will see consolidation.

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Speaker 12: The industry still has four thousand banks, uh, that's the

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Speaker 12: only developed country in the world that has this level

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Speaker 12: of fragmentation. And I think one of the one of

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Speaker 12: the consequences of failures and stress is that we need

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Speaker 12: to pick up the pieces and and move forward.

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Speaker 5: What's the right number of banks.

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Speaker 12: A fewer, But I think what's important about the number

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Speaker 12: of banks is we need more competition for the top

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Speaker 12: three or four. Right, the biggest banks are the most

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Speaker 12: regulated in the world, but there's really a general hesitation

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Speaker 12: by the regulators to let the bigger banks get bigger.

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Speaker 12: So the regionals the one hundred billions of two hundred billions,

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Speaker 12: they need to be bigger to compete more effectively with

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Speaker 12: the JP Morgans of the world, the Wells Fargo's of

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Speaker 12: the world. We think once the rules are written on regulation,

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Speaker 12: and there's a lot of pushback on regulation, that is

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Speaker 12: an opportunity over the next several years.

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Speaker 5: Where is the growth going to come from.

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Speaker 4: Is it going to come from deposits, Is it going

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Speaker 4: to become from consumer lending. Is it going to come

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Speaker 4: from some of the areas where they suddenly have some

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Speaker 4: real competition.

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Speaker 5: From private credit and private equity firms.

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Speaker 12: I think your term there isn't going to be a

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Speaker 12: lot of growth. Just to be very candid, I think

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Speaker 12: the banks are deleveraging. If you go back to the

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Speaker 12: financial crisis, they had credit first and deleveraging second. This cycle,

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Speaker 12: we are deleveraging. We are shrinking balance sheets, we are

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Speaker 12: raising capital and liquid and I think, you know, going forward,

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Speaker 12: that's going to be a challenge for the next one

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Speaker 12: to two years.

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Speaker 1: David Conrad, your shop covers the larger regionals like PNC

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Speaker 1: Financial and all they do for the Pittsburgh Pirates great.

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Speaker 1: When do they finally merge to compete with the major banks?

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Speaker 1: I mean it's ridiculous. We used to have five, six,

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Speaker 1: seven major banks. Now we've got four with an asterisk

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Speaker 1: that's called City Group. Okay, but we got to get

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Speaker 1: more major banks. When do the pncs get to play?

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Speaker 12: I think we need to know what the rules are

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Speaker 12: going to be. Basel three is a big, a big development.

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Speaker 12: That's that's being debated right now. I think a near

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Speaker 12: term with the credit uncertainty in the economy, I think

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Speaker 12: pencils are down for M and A, but I think

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Speaker 12: over time there will be there will be more consolidation.

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Speaker 8: Think about what you just said, we got to get

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Speaker 8: more major banks. Does anyone in Washington agree with something?

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Speaker 6: No?

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Speaker 12: No, not right now?

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Speaker 2: No no.

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Speaker 7: So why would that be the direction to travel any

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Speaker 7: time soon?

439
00:21:52,200 --> 00:21:54,119
Speaker 2: Because every other nation's done this, you mentioned it.

440
00:21:54,400 --> 00:21:58,480
Speaker 7: I'm with you. You totally goes this is Wendy Schiller. Okay,

441
00:21:58,520 --> 00:21:58,880
Speaker 7: So we have.

442
00:21:58,840 --> 00:22:00,600
Speaker 8: To figure out why we say in care in this

443
00:22:00,800 --> 00:22:03,600
Speaker 8: so lonely developed nation with four thousand banks.

444
00:22:03,760 --> 00:22:06,160
Speaker 7: We're here because someone wants us to be here, right.

445
00:22:06,040 --> 00:22:07,119
Speaker 12: But regulation changes.

446
00:22:07,200 --> 00:22:07,360
Speaker 2: Right.

447
00:22:07,680 --> 00:22:10,040
Speaker 12: So for two thousand and eight global financial crisis, the

448
00:22:10,080 --> 00:22:13,159
Speaker 12: fifty billion systemic level was put a line in the

449
00:22:13,200 --> 00:22:16,000
Speaker 12: sand that was walked back in twenty sixteen after the

450
00:22:16,000 --> 00:22:19,200
Speaker 12: Trump administration. So without getting political, there is there is

451
00:22:19,240 --> 00:22:22,040
Speaker 12: an element of political consideration that you have to think about.

452
00:22:22,480 --> 00:22:24,840
Speaker 1: I mean, I just remember John being in London as

453
00:22:24,880 --> 00:22:27,439
Speaker 1: a paperback writer. Was just released by the Beatles. I'm

454
00:22:27,480 --> 00:22:30,440
Speaker 1: walking around there's no banks. I mean I remember.

455
00:22:30,000 --> 00:22:33,000
Speaker 2: Looking around compared to America. There's a bank in America

456
00:22:33,000 --> 00:22:34,640
Speaker 2: on every corner. And that's not true.

457
00:22:34,880 --> 00:22:36,960
Speaker 8: You bring it up a different conversation. The footprint on

458
00:22:37,000 --> 00:22:38,879
Speaker 8: the high street, on main Street in the UK has

459
00:22:38,960 --> 00:22:42,160
Speaker 8: changed massively. We've seen a lot of closures. I don't

460
00:22:42,200 --> 00:22:44,600
Speaker 8: see that in quite the same way here in the States.

461
00:22:44,640 --> 00:22:48,360
Speaker 12: Why is that the bank the branch you are, you're

462
00:22:48,359 --> 00:22:52,080
Speaker 12: seeing smaller and fewer. But certainly there's a lot of regulation.

463
00:22:52,160 --> 00:22:54,320
Speaker 12: You have to also pay attention to fair lending, you know,

464
00:22:54,359 --> 00:22:57,199
Speaker 12: making sure a bank has exposure in certain pockets of

465
00:22:57,240 --> 00:22:58,680
Speaker 12: the economy in different markets.

466
00:22:59,320 --> 00:23:02,879
Speaker 4: What's the advantage to having strong regional banks. I mean,

467
00:23:03,119 --> 00:23:05,120
Speaker 4: with all due respect, I mean there's this question of

468
00:23:05,160 --> 00:23:07,639
Speaker 4: whether banks have been saved again and again, particularly on

469
00:23:07,640 --> 00:23:10,360
Speaker 4: the smaller end, who didn't hedge appropriately when it came

470
00:23:10,440 --> 00:23:13,119
Speaker 4: to some of their interest rate exposure, who invested in

471
00:23:13,200 --> 00:23:15,879
Speaker 4: a lot of commercial real estate that was faulty, and

472
00:23:15,880 --> 00:23:18,119
Speaker 4: a lot of those activities in terms of consumer loans

473
00:23:18,160 --> 00:23:21,679
Speaker 4: are moving to other investment firms. What's the argument for

474
00:23:21,760 --> 00:23:24,280
Speaker 4: beefing up this industry in a more material way?

475
00:23:25,200 --> 00:23:27,480
Speaker 12: The smaller banks that are the lifeblood of the economy.

476
00:23:27,560 --> 00:23:31,800
Speaker 12: JP Morgan, Great Company, City, grow Wells Fargo, big powerful institutions,

477
00:23:31,880 --> 00:23:33,919
Speaker 12: but at the local level, you do need the local

478
00:23:34,080 --> 00:23:36,800
Speaker 12: small bank to give that customer service. Now you're right,

479
00:23:36,840 --> 00:23:39,359
Speaker 12: a lot a lot of mistakes were made with interstratement,

480
00:23:39,440 --> 00:23:42,480
Speaker 12: interst rate risk, and interstrate management, and those shareholders and

481
00:23:42,640 --> 00:23:45,800
Speaker 12: those companies certainly paid paid the ultimate price. But I

482
00:23:45,800 --> 00:23:48,160
Speaker 12: think for a healthy and thriving economy, you do need

483
00:23:48,200 --> 00:23:51,760
Speaker 12: more scale it and size across the gamut.

484
00:23:51,800 --> 00:23:54,160
Speaker 1: If you took the three of us, we haven't been

485
00:23:54,160 --> 00:23:56,000
Speaker 1: in a branch since I think, you know, the Red

486
00:23:56,040 --> 00:23:56,639
Speaker 1: Sox were.

487
00:23:56,480 --> 00:23:57,160
Speaker 2: In first place.

488
00:23:58,000 --> 00:23:59,480
Speaker 5: Going to say the same, we do.

489
00:23:59,440 --> 00:24:02,520
Speaker 1: Everything Zell this zell that all the rest of it

490
00:24:03,080 --> 00:24:06,760
Speaker 1: in our banking, How does Colombia Savings Bank to Coma

491
00:24:06,800 --> 00:24:10,639
Speaker 1: Washington compete with the digital investment of the major banks.

492
00:24:10,640 --> 00:24:12,280
Speaker 2: I just don't understand that, right.

493
00:24:12,440 --> 00:24:15,840
Speaker 12: The smaller banks are certainly one A. The bigger banks

494
00:24:15,880 --> 00:24:17,520
Speaker 12: are going to move first. The small banks are going

495
00:24:17,560 --> 00:24:20,639
Speaker 12: to adapt second. But certainly they have they have built

496
00:24:20,640 --> 00:24:24,040
Speaker 12: out capabilities these smaller banks to compete effectively. Maybe not

497
00:24:24,400 --> 00:24:27,720
Speaker 12: to the sophistication of an international international.

498
00:24:27,200 --> 00:24:29,520
Speaker 2: Example of that, what's a capability they have?

499
00:24:29,560 --> 00:24:32,840
Speaker 1: And Tacoma, Washington where they don't want Brian moynan to

500
00:24:32,880 --> 00:24:34,320
Speaker 1: come in from Bank of America.

501
00:24:34,400 --> 00:24:36,920
Speaker 12: So I would say, turn around in online speed for

502
00:24:37,320 --> 00:24:40,040
Speaker 12: deposit captures. Right, we can go in deposit money without

503
00:24:40,040 --> 00:24:41,720
Speaker 12: going into a branch. I haven't been to a branch

504
00:24:41,720 --> 00:24:43,560
Speaker 12: either in years, and.

505
00:24:43,560 --> 00:24:45,879
Speaker 2: Certainly show goes in every day. Be careful what you

506
00:24:45,920 --> 00:24:47,520
Speaker 2: say personally, KBW.

507
00:24:47,720 --> 00:24:50,280
Speaker 12: We do, we do, But I mean the capabilities for

508
00:24:50,800 --> 00:24:53,720
Speaker 12: you and I as a consumer. Certainly the smaller banks

509
00:24:53,720 --> 00:24:55,879
Speaker 12: can accommodate that. Maybe not, they're not going to have

510
00:24:55,960 --> 00:24:57,200
Speaker 12: the budget initially, but.

511
00:24:57,160 --> 00:24:57,720
Speaker 2: They will follow.

512
00:24:57,880 --> 00:25:00,000
Speaker 8: This isn't really hot runny off the lives for the regional.

513
00:25:00,400 --> 00:25:02,800
Speaker 8: We're still down about twenty five percent from the highs

514
00:25:02,880 --> 00:25:05,280
Speaker 8: of the year. Any reason to believe we reclaim those

515
00:25:05,320 --> 00:25:06,080
Speaker 8: highs next year?

516
00:25:06,520 --> 00:25:08,920
Speaker 12: Right, We're still market weight to the US banks we moved.

517
00:25:09,080 --> 00:25:11,840
Speaker 12: This is the one year anniversary of moving to market weight,

518
00:25:12,320 --> 00:25:14,240
Speaker 12: and what we've seen over the past twelve months is

519
00:25:14,240 --> 00:25:16,240
Speaker 12: a thirty point divergence between the S and P and

520
00:25:16,240 --> 00:25:18,360
Speaker 12: the banks. And so the first part of the year,

521
00:25:18,440 --> 00:25:22,080
Speaker 12: the spring was really about net interst margin, netatures, income,

522
00:25:22,160 --> 00:25:25,080
Speaker 12: deposit flows, and systemic risk. That leg of the relay

523
00:25:25,160 --> 00:25:28,800
Speaker 12: race has largely played out and that's stabilized. What we're

524
00:25:28,840 --> 00:25:30,919
Speaker 12: feeling now is what is credit going to look like

525
00:25:31,080 --> 00:25:33,399
Speaker 12: as interest rates have risen. How much of a credit

526
00:25:33,440 --> 00:25:35,840
Speaker 12: normalization process are we going to go through and how

527
00:25:35,920 --> 00:25:38,639
Speaker 12: much will this weigh on earnings estimates going forward? The

528
00:25:38,720 --> 00:25:42,000
Speaker 12: key for us is the direction of earnings dictate the direction.

529
00:25:41,760 --> 00:25:44,000
Speaker 7: Of the stocks, not just the direction of the tenure yield.

530
00:25:44,600 --> 00:25:46,240
Speaker 12: The last few months has definitely been a trade on

531
00:25:46,240 --> 00:25:46,600
Speaker 12: the tenure.

532
00:25:46,600 --> 00:25:49,000
Speaker 8: It's been amazing, Lisa, all of it pretty much off

533
00:25:49,040 --> 00:25:50,320
Speaker 8: the back of this move in a bond.

534
00:25:50,119 --> 00:25:53,320
Speaker 4: Market, and completely counterintuitive because usually higher rates were good

535
00:25:53,320 --> 00:25:55,680
Speaker 4: for banks and now lower rates going down and pretty

536
00:25:55,720 --> 00:26:00,320
Speaker 4: racily are better for banks. This is default risk concern

537
00:26:00,400 --> 00:26:04,240
Speaker 4: about withdrawals of consumer deposits.

538
00:26:04,280 --> 00:26:06,320
Speaker 5: This is concerned about breaking the system.

539
00:26:06,600 --> 00:26:09,200
Speaker 4: If that's taken off the table, people can get perhaps

540
00:26:09,240 --> 00:26:10,800
Speaker 4: a bit more optimistic.

541
00:26:10,520 --> 00:26:13,240
Speaker 8: In twenty seconds. Any reason for that to change anytime soon?

542
00:26:13,280 --> 00:26:15,720
Speaker 8: The correlction between bones and rachel os.

543
00:26:16,040 --> 00:26:18,040
Speaker 12: I think the question of why rates are coming down?

544
00:26:18,119 --> 00:26:20,280
Speaker 12: Our rates coming down because inflation is moderating, or is

545
00:26:20,280 --> 00:26:22,160
Speaker 12: it because growth is slow? Your prior guests talked about

546
00:26:22,160 --> 00:26:24,879
Speaker 12: that if we get a softish landing, which KBW is

547
00:26:24,920 --> 00:26:28,240
Speaker 12: in the camp of softish, I think the banks can work.

548
00:26:28,320 --> 00:26:30,760
Speaker 12: But I think if it's because we see something break

549
00:26:30,760 --> 00:26:32,560
Speaker 12: in the system, and if the I think the future's

550
00:26:32,560 --> 00:26:34,920
Speaker 12: market one hundred basis points a little ahead of itself. Yeah,

551
00:26:34,920 --> 00:26:36,400
Speaker 12: but if credit credit's a.

552
00:26:36,320 --> 00:26:38,520
Speaker 7: Big wildcer, maybe the thing's breaking out of this.

553
00:26:38,600 --> 00:26:38,800
Speaker 2: Yeah.

554
00:26:38,840 --> 00:26:58,280
Speaker 7: Chris is going to say, yeah.

555
00:26:49,160 --> 00:26:51,119
Speaker 1: We're going to digress here for a little minute, because

556
00:26:52,000 --> 00:26:55,400
Speaker 1: some of my heritage goes way back to Thanksgiving.

557
00:26:55,440 --> 00:26:57,120
Speaker 2: The world stopped.

558
00:26:56,840 --> 00:26:59,879
Speaker 1: Yep, and a m with the core can that stand

559
00:27:00,280 --> 00:27:03,480
Speaker 1: freezing would play a small team from Austin and lose.

560
00:27:03,800 --> 00:27:07,000
Speaker 1: That was always the case in the world is moved

561
00:27:07,040 --> 00:27:09,560
Speaker 1: on to the fight in Texas Aggies now one of

562
00:27:09,600 --> 00:27:13,679
Speaker 1: the great universities of America, and before we talked the

563
00:27:13,760 --> 00:27:19,080
Speaker 1: airline business here on Southwest Airlines and their CEO, Bob Jordan.

564
00:27:19,119 --> 00:27:21,760
Speaker 1: We're going to talk to him about how College station

565
00:27:21,880 --> 00:27:23,679
Speaker 1: has changed from.

566
00:27:23,600 --> 00:27:26,959
Speaker 2: When my father went there seventy years ago. Tell us

567
00:27:27,000 --> 00:27:28,680
Speaker 2: about the new college station.

568
00:27:29,440 --> 00:27:32,480
Speaker 13: It's changed considerably. And I'll have you know we did

569
00:27:32,480 --> 00:27:38,520
Speaker 13: not lose every Thanksgiving that was uncalled for. But no,

570
00:27:38,600 --> 00:27:40,480
Speaker 13: it's really changed A and n When I was there

571
00:27:40,560 --> 00:27:43,560
Speaker 13: was probably thirty thousand students. We are now the largest

572
00:27:43,760 --> 00:27:47,959
Speaker 13: university in the country twenty five thousand students in engineering

573
00:27:48,080 --> 00:27:48,760
Speaker 13: as an example.

574
00:27:48,840 --> 00:27:50,920
Speaker 2: No chiography, I mean they reinvented it.

575
00:27:51,000 --> 00:27:53,959
Speaker 13: We don't have twenty five thousand, but we do have

576
00:27:54,000 --> 00:27:57,359
Speaker 13: twenty five thousand engineering, but no fabulous place. And we

577
00:27:57,440 --> 00:28:00,879
Speaker 13: just named a new president, General Mark Welsh, yesterday and

578
00:28:00,920 --> 00:28:02,320
Speaker 13: he will do a fabulous job.

579
00:28:02,600 --> 00:28:05,520
Speaker 1: Honitive with us, just meant today fight in Texas Aggie

580
00:28:05,640 --> 00:28:08,040
Speaker 1: as well, usually doing equities with us, but with Bob

581
00:28:08,119 --> 00:28:13,080
Speaker 1: Jordan of Southwest Airlines, the airline business, I don't get

582
00:28:13,520 --> 00:28:15,720
Speaker 1: I was looking at what I was paying for a

583
00:28:15,840 --> 00:28:18,280
Speaker 1: year ago, eighteen months ago.

584
00:28:18,400 --> 00:28:23,280
Speaker 2: How do you manage the new capacity and the fair declines.

585
00:28:23,320 --> 00:28:29,840
Speaker 13: We're all celebrating, you know, the Southwest is born out

586
00:28:29,840 --> 00:28:32,720
Speaker 13: of low cost that produced low fairs. We Southwest Airlines

587
00:28:32,800 --> 00:28:35,560
Speaker 13: created the low fair industry and really gave Americans the

588
00:28:35,560 --> 00:28:38,280
Speaker 13: freedom to fly. And fares are up, but if you

589
00:28:38,320 --> 00:28:41,520
Speaker 13: go back to pre pandemic, fairs are only up about

590
00:28:41,560 --> 00:28:44,960
Speaker 13: eight percent from twenty nineteen. So while they're up, they

591
00:28:45,000 --> 00:28:49,520
Speaker 13: have absolutely not risen with inflation. And our goal as

592
00:28:49,560 --> 00:28:52,960
Speaker 13: always is to keep costs low and keep fares low.

593
00:28:53,560 --> 00:28:55,360
Speaker 14: So Bob, talk to us about kind of we know

594
00:28:55,400 --> 00:28:57,520
Speaker 14: the holiday We're hearing from a lot of from you,

595
00:28:57,520 --> 00:29:00,480
Speaker 14: your earnings you reported, and from some of your peers.

596
00:29:00,880 --> 00:29:05,200
Speaker 14: Holiday travels strong. How about post holiday travel? Now investors

597
00:29:05,200 --> 00:29:07,280
Speaker 14: are trying to ask about post holiday travel. What are

598
00:29:07,280 --> 00:29:09,160
Speaker 14: you see in terms of demand AF fairs, that type

599
00:29:09,160 --> 00:29:09,400
Speaker 14: of thing.

600
00:29:09,560 --> 00:29:12,720
Speaker 13: Yeah, the holiday bookings are really strong, especially close in

601
00:29:12,760 --> 00:29:14,880
Speaker 13: November December. In fact, we've got an eight k out

602
00:29:14,880 --> 00:29:19,240
Speaker 13: this morning that is revising our guidance and revenue to

603
00:29:19,280 --> 00:29:21,640
Speaker 13: the better end of the range. I'm very proud of that.

604
00:29:22,400 --> 00:29:26,080
Speaker 13: The travel demand is different. It's really driven by the

605
00:29:26,120 --> 00:29:31,440
Speaker 13: fact that for the most part, business is strong. Leisure

606
00:29:31,560 --> 00:29:34,480
Speaker 13: is strong, but business travel is not restored to twenty

607
00:29:34,600 --> 00:29:38,200
Speaker 13: nineteen pre pandemic, and so we're all adapting our schedules

608
00:29:38,240 --> 00:29:40,360
Speaker 13: to deal with that. In the first quarter, for example,

609
00:29:40,400 --> 00:29:43,440
Speaker 13: we took out some capacity and it's really about drawing

610
00:29:43,480 --> 00:29:46,320
Speaker 13: down Tuesdays and Wednesdays because those are the days you're

611
00:29:46,400 --> 00:29:50,280
Speaker 13: just missing business travel that was there. But I have

612
00:29:50,360 --> 00:29:54,120
Speaker 13: confidence that business will recover. We're seeing sequential improvements from

613
00:29:54,280 --> 00:29:57,440
Speaker 13: order to quarter to quarter, but no bookings are strong,

614
00:29:57,600 --> 00:29:59,320
Speaker 13: both on the leisure and the business side.

615
00:30:00,000 --> 00:30:02,800
Speaker 2: The Texas boom just met and jump in here.

616
00:30:03,040 --> 00:30:06,040
Speaker 15: Well, there's so much debate about whether or not we're

617
00:30:06,040 --> 00:30:08,560
Speaker 15: headed for an impending recession, but you look at the

618
00:30:08,560 --> 00:30:11,640
Speaker 15: consumer spending data is still very resilient. From your point

619
00:30:11,640 --> 00:30:14,080
Speaker 15: of view as the CEO of one of the major airlines,

620
00:30:14,320 --> 00:30:17,120
Speaker 15: where do you see things headed and are we headed

621
00:30:17,120 --> 00:30:18,160
Speaker 15: toward a recession or not?

622
00:30:18,640 --> 00:30:21,560
Speaker 13: It is so hard to predict, and there's been a

623
00:30:21,600 --> 00:30:23,960
Speaker 13: call for a soft landing, a o landing, a hard

624
00:30:24,000 --> 00:30:28,360
Speaker 13: landing for nearly a year now, and as we look forward,

625
00:30:29,840 --> 00:30:32,880
Speaker 13: bookings are strong and again on the on the business

626
00:30:32,920 --> 00:30:36,680
Speaker 13: and the leisure side, again, travel is different, so we've

627
00:30:36,800 --> 00:30:41,200
Speaker 13: actually modified our twenty twenty four capacity. We've taken a

628
00:30:41,200 --> 00:30:43,920
Speaker 13: little capacity out, will grow sixty eight percent next year,

629
00:30:44,480 --> 00:30:49,120
Speaker 13: and it's really to reflect the network to the new

630
00:30:49,160 --> 00:30:52,160
Speaker 13: demand trends. This morning we also announced that our longer

631
00:30:52,240 --> 00:30:55,080
Speaker 13: term growth plans twenty twenty five and forward, we moderated

632
00:30:55,120 --> 00:30:58,320
Speaker 13: those from signed mid single digit growth each year to

633
00:30:58,400 --> 00:31:02,320
Speaker 13: low to mid single digit. That's really a reflection of that.

634
00:31:02,560 --> 00:31:05,120
Speaker 13: And second, it gives us a chance with a little

635
00:31:05,120 --> 00:31:09,160
Speaker 13: bit lower capacity to manage our capex and really make

636
00:31:09,240 --> 00:31:13,520
Speaker 13: a push to hit shareholder returns. Our goals are to

637
00:31:14,600 --> 00:31:17,160
Speaker 13: have returns that exceed our weight at average cost of capital,

638
00:31:17,200 --> 00:31:19,840
Speaker 13: and we will not stop until we get there well above.

639
00:31:19,880 --> 00:31:24,000
Speaker 14: In fact, Bob, talk to us about your fleet. Boeing

640
00:31:24,000 --> 00:31:27,400
Speaker 14: seven three seven backbone of your fleet. How's Boeing doing

641
00:31:27,440 --> 00:31:30,520
Speaker 14: and delivering what they are contracted to deliver to you guys.

642
00:31:30,680 --> 00:31:33,320
Speaker 13: You know, Boeing's a fantastic partner, always have been. We've

643
00:31:33,360 --> 00:31:36,360
Speaker 13: been with Boeing since the very beginning in nineteen seventy one,

644
00:31:37,000 --> 00:31:39,800
Speaker 13: and they dealt with supply chain issues like we all have.

645
00:31:40,560 --> 00:31:43,240
Speaker 13: They are in my mind, in really good shape. We

646
00:31:43,320 --> 00:31:46,720
Speaker 13: have a new Boeing order that we put in place recently.

647
00:31:47,400 --> 00:31:50,880
Speaker 13: It flows out aircraft are evenly, allows for very even

648
00:31:50,920 --> 00:31:55,280
Speaker 13: capacity growth about ninety aircraft a year, very cost effective

649
00:31:55,320 --> 00:31:59,240
Speaker 13: aircraft purchases. But no Boeing has been a very good

650
00:31:59,320 --> 00:32:03,160
Speaker 13: partner and it has really gotten their delivery house and shape.

651
00:32:03,200 --> 00:32:06,960
Speaker 13: In my mind. Now we need the Max seven, which

652
00:32:07,000 --> 00:32:10,040
Speaker 13: is not certified yet Boeing. I think their latest guidance

653
00:32:10,080 --> 00:32:12,840
Speaker 13: is January of next year. It's a little smaller than

654
00:32:12,840 --> 00:32:15,280
Speaker 13: the Max eight, and we have some routes that are

655
00:32:15,440 --> 00:32:17,480
Speaker 13: you know, we've got the larger aircraft on really could

656
00:32:17,560 --> 00:32:18,960
Speaker 13: use the Max seven. But I've got a lot of

657
00:32:18,960 --> 00:32:20,800
Speaker 13: confidence that Bowey's going to get that done and get

658
00:32:20,800 --> 00:32:21,320
Speaker 13: that done soon.

659
00:32:21,360 --> 00:32:23,760
Speaker 1: We get two more questions, and I think one of

660
00:32:23,800 --> 00:32:27,800
Speaker 1: them is your best practice to say no to all

661
00:32:27,840 --> 00:32:30,840
Speaker 1: the people around you are going we've got a flight

662
00:32:30,920 --> 00:32:35,320
Speaker 1: to London or you know the romance of Delta United

663
00:32:35,840 --> 00:32:38,360
Speaker 1: all the bigger airlines as well. And you have to

664
00:32:38,400 --> 00:32:42,080
Speaker 1: have a discipline among people that desire for Southwest to

665
00:32:42,080 --> 00:32:45,560
Speaker 1: do something different. How do you respond to those endless requests?

666
00:32:45,640 --> 00:32:50,840
Speaker 13: Southwest history is to manage ourselves and manage ourselves well,

667
00:32:50,880 --> 00:32:54,680
Speaker 13: we've got a very strong balance sheet. We have a

668
00:32:54,760 --> 00:33:00,080
Speaker 13: net cash cash cash above debt. Her Boys said he

669
00:33:00,080 --> 00:33:03,880
Speaker 13: he planned for ten of the next two recessions. But

670
00:33:04,320 --> 00:33:07,960
Speaker 13: we manage ourselves well. We have a lot of domestic opportunities.

671
00:33:07,960 --> 00:33:09,520
Speaker 13: We have the best domestic.

672
00:33:09,720 --> 00:33:11,520
Speaker 1: Give me a city, Give me a city you're not

673
00:33:11,560 --> 00:33:12,840
Speaker 1: covering now where you say we.

674
00:33:12,840 --> 00:33:13,480
Speaker 2: Got to go there.

675
00:33:13,960 --> 00:33:15,640
Speaker 13: I'm not going to give you a city. I'm just

676
00:33:15,680 --> 00:33:18,760
Speaker 13: telling you some news because I'll hear from them tomorrow.

677
00:33:19,080 --> 00:33:21,080
Speaker 13: But we always have I'll tell you we always have

678
00:33:21,080 --> 00:33:23,640
Speaker 13: a lifts, a list of fifty or so in front

679
00:33:23,680 --> 00:33:26,200
Speaker 13: of us. During the pandemic, I'm sure you know this,

680
00:33:26,240 --> 00:33:29,560
Speaker 13: we added eighteen new cities. We grew the network during

681
00:33:29,600 --> 00:33:32,080
Speaker 13: the pandemic. We did not shrink the network, and those

682
00:33:32,080 --> 00:33:36,680
Speaker 13: cities are performing. We also grew our Hawaii franchise, and

683
00:33:36,840 --> 00:33:41,240
Speaker 13: we will have continued steady growth that includes new city openings.

684
00:33:41,360 --> 00:33:43,600
Speaker 13: But our focus for twenty twenty four really is to

685
00:33:43,640 --> 00:33:46,800
Speaker 13: optimize the network for the new travel patterns because it

686
00:33:46,840 --> 00:33:51,240
Speaker 13: helps us get to returns faster, returns that exceed and

687
00:33:51,280 --> 00:33:53,040
Speaker 13: well exceed our way at average cost to cap.

688
00:33:53,160 --> 00:33:56,800
Speaker 1: My focus is someday I will get to college Station

689
00:33:56,960 --> 00:33:59,800
Speaker 1: Texas to go to the Hullabaloo Diner.

690
00:34:00,360 --> 00:34:01,720
Speaker 2: I mean, that's what you gotta.

691
00:34:02,200 --> 00:34:04,480
Speaker 1: I mean, it's like it's like it's a New York

692
00:34:04,560 --> 00:34:09,280
Speaker 1: diner folks that a million years ago, before Southwest existed,

693
00:34:09,440 --> 00:34:13,200
Speaker 1: was transported by you know, I don't know, Storks or whatever.

694
00:34:13,680 --> 00:34:15,600
Speaker 2: Have you been there a college even I have?

695
00:34:15,760 --> 00:34:18,200
Speaker 13: But I've got to tell you know where you really

696
00:34:18,200 --> 00:34:24,040
Speaker 13: need to go is the Dixie Chicken. I agree, I mean, yeah, Jess,

697
00:34:25,760 --> 00:34:27,359
Speaker 13: nice cold beer, best burger ever.

698
00:34:27,480 --> 00:34:30,840
Speaker 15: It's the best burger you can have, Fries, chicken wings,

699
00:34:30,880 --> 00:34:33,480
Speaker 15: all that good stuff, but the beer, of course, Shiner Bock.

700
00:34:34,640 --> 00:34:39,560
Speaker 1: Fondest hope in Michael Barr's not here now, Arch Detroit

701
00:34:39,640 --> 00:34:43,279
Speaker 1: Lions fan. But my fondest hope is is that you

702
00:34:43,440 --> 00:34:47,040
Speaker 1: get Texas A and M University of Texas football back

703
00:34:47,120 --> 00:34:48,080
Speaker 1: Thanksgiving morning.

704
00:34:49,800 --> 00:34:53,480
Speaker 13: We played next November thirtieth. It's a Saturday because it's

705
00:34:53,560 --> 00:34:55,759
Speaker 13: not it's not back to Thanksgiving, but we'll work to

706
00:34:55,800 --> 00:34:56,279
Speaker 13: get it there.

707
00:34:56,719 --> 00:34:58,239
Speaker 10: Am I going to the.

708
00:34:58,280 --> 00:35:00,680
Speaker 2: Fort making Pleasant?

709
00:35:01,000 --> 00:35:04,960
Speaker 1: Just metten in charge of our daykiller Bob Jordan's Southwest Airline.

710
00:35:05,040 --> 00:35:06,839
Speaker 2: He is from College Station.

711
00:35:07,120 --> 00:35:10,960
Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple Spotify, and

712
00:35:11,080 --> 00:35:15,280
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713
00:35:15,560 --> 00:35:19,000
Speaker 1: starting at seven am Eastern on Bloomberg dot Com, the

714
00:35:19,200 --> 00:35:23,719
Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You

715
00:35:23,760 --> 00:35:27,799
Speaker 1: can watch us live on Bloomberg Television and always I'm

716
00:35:27,800 --> 00:35:28,880
Speaker 1: the Bloomberg Terminal.

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00:35:29,280 --> 00:35:33,480
Speaker 2: Thanks for listening. I'm Tom Keen, and this is Bloomberg