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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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

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

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Speaker 1: bond markets, very much front and center here is yields

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Speaker 1: plunge to record lows, particularly in the longer term debt world.

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Speaker 1: You see both the US and Germany reaching those all

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Speaker 1: time lows. So there is one person for us to

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Speaker 1: speak with when it comes to bond yields. Priumistress, she

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Speaker 1: has ice in her veins. She's just you know, she's

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Speaker 1: just cool, common collected. Priamizra absolutely is cool, common collected.

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Speaker 1: So I want to get a cool, common collected view

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Speaker 1: of what's going on. Priamira TV Secure is head of

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Speaker 1: Global rate Strategy. Prey love having you on today on

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Speaker 1: this bond focused morning. How would you frame what we're

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Speaker 1: seeing today in bond markets? Chearn, Thanks for having me on.

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Speaker 1: A little hard to be cool and connected when all

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Speaker 1: of my EE curve signals are suggesting a recession is

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Speaker 1: very likely a greater than fifty percent chance in the

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Speaker 1: next fwelve months. But you know, really it's been a

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Speaker 1: perfect storm for the treasury market. You've had global growth

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Speaker 1: being weak and that's brought global bond deals lower, so

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Speaker 1: there is this duration gap grab. But I think we

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Speaker 1: have to look at you know, the underlying data, and

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Speaker 1: manufacturing in the US looks very weak. We've been off

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Speaker 1: the camp that if manufacturing is this week, US business

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Speaker 1: investment is weak, it is going to filter through into

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Speaker 1: the non manufactor or the services sector. And so we've

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Speaker 1: been actually pretty nervous about growth. So you had this

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Speaker 1: I think filtering through as the U S data is

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Speaker 1: looking a little not great um and you know, services

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Speaker 1: looking okay, but it is a lagging indicator. And then

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Speaker 1: I have to add the Fed. I think the Fed

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Speaker 1: continuing to call this a mid cycle adjustment, that's a

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Speaker 1: problem for the market. I mean, when were the last

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Speaker 1: time the Fed East race, which they did two weeks ago,

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Speaker 1: and the yield curve continue to flatten. So the bond

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Speaker 1: market is telling you that the Feds behind the curve

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Speaker 1: and really needs to do more than a mid cycle adjustment.

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Speaker 1: So this is the word of the day, and that

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Speaker 1: is recession. Everyone is looking at what's going on in

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Speaker 1: bond markets. They're saying recession. When when are we going

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Speaker 1: to see recession? Right? That's it's really in all the question.

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Speaker 1: So you know, we've got many models for recessions. If

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Speaker 1: you look at any econometric model looking at US data,

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Speaker 1: it actually does not signal a recession any time in

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Speaker 1: the new future. The problem is it is backward looking

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Speaker 1: data and we are in unprecedented times. I mean, for

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Speaker 1: the global economy to be this week and for the

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Speaker 1: trade headwinds to be this week, I'm putting lower weight

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Speaker 1: in the econometric models. Then I look at the yield curve.

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Speaker 1: The yelk curve tends to it's a wide range. But

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Speaker 1: when the two stents curve in birds or after the

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Speaker 1: three Montenian birds, which has been go to since March,

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Speaker 1: it could be anywhere from six months to eighteen months.

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Speaker 1: So it's a wide range. We're thinking somewhere in the

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Speaker 1: nine to twelve months. Were how closer way to an

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Speaker 1: emergency meeting? I mean there's any number of ways looking

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Speaker 1: this pre I know you're not going to talk about

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Speaker 1: another bank. Deutsche Bank is broken down from a six

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Speaker 1: fourteen to a six point one zero euro equity share

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Speaker 1: a five ninety nine on uh Deutsche Bank pre I

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Speaker 1: would guess, is really not good. Commerce bank record low, etcetera, etcetera.

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Speaker 1: What's it taken your study of history in the bond

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Speaker 1: market to make a central bank move intra meeting. Normally

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Speaker 1: you need significant tightening and financial conditions, so we've seen

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Speaker 1: this for example, UM, after a t c M was impacted.

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Speaker 1: I would also say, you need a US shock, so

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Speaker 1: Lehman goes down and they do come in right away.

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Speaker 1: I mean, if you look at broader financial conditions, and

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Speaker 1: again I'm on the road, but I don't think we're

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Speaker 1: down more than four percent on the S and P

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Speaker 1: from the high. So financial conditions have not tightened enough.

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Speaker 1: And so I think the FED is going to say, look,

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Speaker 1: we'll do what we can, and as the leader UM

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Speaker 1: you know, comes in, we will respond. But any emergency

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Speaker 1: move I think needs the SMP down from here. Okay,

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Speaker 1: well there's a statistic, folks from I'm just suggesting, Lisa,

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Speaker 1: the immediacy that you and I see on our Bloomberg

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Speaker 1: screen is extraordinary for any given August. And then there's

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Speaker 1: a question pre Amster saying that the US manner session

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Speaker 1: the next nine to twelve months, based on your analysis

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Speaker 1: of it, Can the FED stop that? If the FED

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Speaker 1: came out and said we're holding an emergency meeting and

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Speaker 1: we're cutting rates by seventy five basis points, that's a

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Speaker 1: great question. It's one of the reasons we've been looking

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Speaker 1: for cuts next year as well. I mean, we have

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Speaker 1: seventy five basis points pencils in for this year in

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Speaker 1: terms of FED cuts, and then another seventy five. And

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Speaker 1: this is where I've been getting pushed back. And my

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Speaker 1: point has been, look, what can frederate cuts do? I mean,

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Speaker 1: can can they boost up housing? At this point? Is

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Speaker 1: the problem with global growth and UM business investment being

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Speaker 1: weak due to trade uncertainty. I don't think some race

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Speaker 1: cuts actually work, which is why the FED, I think,

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Speaker 1: will be forced to cut a lot more. Right now,

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Speaker 1: the thirty year yields at two point oh one seven

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Speaker 1: three percent, the lowest on record. How long that wait?

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Speaker 1: We're now on a watch I mean with the gamma

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Speaker 1: that we've got to to Lisa, I mean continue, but

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Speaker 1: we're on at the third year, Bun. It is a watch.

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Speaker 1: Morning here in the surveillance studio is how long can

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Speaker 1: we go here. It's very hard to put a number

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Speaker 1: on it. I would say right now, the longing is

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Speaker 1: the only place that hedges you against risk asses. So

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Speaker 1: given by risk asses are right now, we're not that

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Speaker 1: low from We're not even you know, ten percent down

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Speaker 1: from the high, I think that the long end has

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Speaker 1: a lot more room to decline. Now if stocks are

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Speaker 1: significantly lower, then you expect an emergency move you know,

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Speaker 1: that can provide some sort of a floor on on

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Speaker 1: thirty a years. The other thing I would point to

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Speaker 1: is look at global rate. You look at by German

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Speaker 1: thirty year is so I think a lot of what

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Speaker 1: people thought that it can't go much lower. All those

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Speaker 1: um you know, theories have been thrown out the window

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Speaker 1: with the boon mom. So I think it's got a

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Speaker 1: lot more room because it is the only safe haven.

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Speaker 1: I think people have who have been hiding out in

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Speaker 1: bills because they're giving you a higher yield. We'll need

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Speaker 1: to move out. The COLT learned your speed data check

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Speaker 1: right now futures to tier eight negative futures negative three

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Speaker 1: eight four the fixed two point eight zero points twenty

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Speaker 1: point three to the yield from the thirty year to

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Speaker 1: zero two ten year one fifty seven in a huge

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Speaker 1: thirteen basis points within version the two stones one. What's

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Speaker 1: the playbook here? Is it just a by duration to

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Speaker 1: buy thirty year bonds across the board as much as

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Speaker 1: you possibly can and yield flattners. Yes, I think the

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Speaker 1: yelk of steepening trade is behind us. We really need

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Speaker 1: the FRET to come out and say that they're willing

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Speaker 1: to go all the way to zero and that this

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Speaker 1: could be the start of a lengthy easing cycle for

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Speaker 1: that front end to move. So it is about the

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Speaker 1: long This is really improtaned, don't mean to interrupt it.

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Speaker 1: This is really, really, really really important the FEDS to

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Speaker 1: go to zero. Do they need to wait for single

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Speaker 1: digit one percent or subone percent g d P or

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Speaker 1: can they affect that policy given a better trailing g

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Speaker 1: d P? Right, and now the FED has been creative.

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Speaker 1: I have to say earlier this year, the FED came

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Speaker 1: out and said, you know, when we're close to the

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Speaker 1: video abound, we should be preemptive. And that's when they

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Speaker 1: that's one of the reasons why they east two weeks ago.

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Speaker 1: Now they need to come out and say, you know,

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Speaker 1: we've been pitching this and selling this as insurance stuffs

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Speaker 1: in mid cycle adjustments, we should be willing to go

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Speaker 1: more a lot of focus on Jackson Hole. I don't

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Speaker 1: think this is the place where they give that signals.

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Speaker 1: But you know, if SMB is down ten percent fifteen

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Speaker 1: percent between now and Jackson Hole in a week, I

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Speaker 1: wonder if we get that message from the FED, are

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Speaker 1: they willing to do That's? Where are you, Lisa? Are

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Speaker 1: you going to Jackson Hole? Are you sending me you

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Speaker 1: should go? I mean it's really cool. Pria, thank you,

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Speaker 1: this has been wonderful. Pria miser TV securities. Lisa, why

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Speaker 1: don't you bring in miss Calvacina, whom I think was

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Speaker 1: medicated to get through this this morning with futures negative. Calvasina,

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Speaker 1: I'm so glad you're able to join us, because really

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Speaker 1: the key question this morning is our US equities to

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Speaker 1: sanguine about the backdrop here. Laurie Calvacina is head of

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Speaker 1: US equity strategy at RBC Capital Market. So, Laurie, are

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Speaker 1: you expecting equities to turn a little bit lower here? Hi? Lisa,

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Speaker 1: Hi Tom, thanks for having me on UM. At least

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Speaker 1: I think the answer to your question is yes, Um,

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Speaker 1: we we really do feel like we're we're kind of

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Speaker 1: where we deserve to be at your end, but in

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Speaker 1: the inter and we think there's more pain to come

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Speaker 1: in the market. And I think, you know, even if

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Speaker 1: you just look back at how markets have traded off

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Speaker 1: big recovery lows, you know, twenty uh you know, sort

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Speaker 1: of background the nine eleven lows, we do tend to

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Speaker 1: have these periods of consolidation, so just at a minimum,

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Speaker 1: we've been due for one of those. Um. But but

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Speaker 1: I do think that yesterday's trading action was really puzzling.

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Speaker 1: I don't think the announcement from the Trump administration on

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Speaker 1: Delane sum and I stress some of these parists to December.

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Speaker 1: I think it was maybe not quite much ado about nothing,

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Speaker 1: but much to do about a little Well, Laurie that

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Speaker 1: the rais is a really important question. Who's trading? Who's

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Speaker 1: trading on these headlines? It's not our clients. I mean

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Speaker 1: we we we heard actually that people in particular on

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Speaker 1: the retail stocks are a little bit better to sell

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Speaker 1: into the end of yesterday. UM. I do know that

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Speaker 1: I talked to a lot of clients who are really

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Speaker 1: just kind of pulling things in, going neutral on their

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Speaker 1: sector beds still trying to look for individual names that

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Speaker 1: they like. But I do think there is just a

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Speaker 1: tremendous amount of straation on how to deal with these tweets. Laura,

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Speaker 1: let me cut to the chase and Brahma's demands that

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Speaker 1: I do Fibonacci's today from the President's announcement yesterday. Let's

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Speaker 1: call it the capitulation of the partial caven whatever we

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Speaker 1: went on futures. This is SPX up a lot, and

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Speaker 1: we've now brought in well over eighty percent of that.

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Speaker 1: We've retraced eighty percent of that good news green on

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Speaker 1: the screen yesterday. Laurie, what is the significance if we

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Speaker 1: break through the low seeing yesterday at five am. I

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Speaker 1: think it, I think it is. I think it is

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Speaker 1: very significant. I think the reason why we sort of

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Speaker 1: had a nice pop and then didn't really do much

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Speaker 1: yesterday is that there's there's not really that much to

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Speaker 1: do on this news. I think what we've done is

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Speaker 1: shore up earnings expectations a little bit for the second

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Speaker 1: half of the year. Um. But really the core issue

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Speaker 1: with this trade war is how it is affecting business confidence,

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Speaker 1: how that is affecting CAFEX how that is affecting hiring. Ultimately,

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Speaker 1: if hiring is effect that that will affect the consumer

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Speaker 1: regardless of what they're doing with these terraffs and and

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Speaker 1: business constance. Nothing was done yesterday. Okay, we'll give us

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Speaker 1: an update. I mean, I know you're not in speaking

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Speaker 1: terms of Tom Percelly, but what is your run rate

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Speaker 1: g DP that you're working with as an equity strategist.

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Speaker 1: So what we did is we actually for our twenty

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Speaker 1: earnings growth expectation, we decided to be very conservative and

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Speaker 1: we plugged in one point eight per cent in real terms.

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Speaker 1: And that's basically if you if you pull it up

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Speaker 1: on the Bloomberg terminal, that's basically where the cell side

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Speaker 1: consensus is for next year's GDP. So we're factoring in

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Speaker 1: a sluggish earnings are sluggish growth environment. It's a sluggish

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Speaker 1: revenue backdrops for earnings. Now, the significance of that is

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Speaker 1: number one, it brings in our earnings growth assumption to

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Speaker 1: about five percent. That's about half of what the cell

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Speaker 1: side bottom up consensus is anticipating. Street numbers are running

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Speaker 1: at ten percent on earnings growth. We think they need

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Speaker 1: to be cut in half. If that GDP number is right.

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Speaker 1: The other thing you have to con sitter is that

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Speaker 1: sluggish GDP and something like one slightly below two percent.

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Speaker 1: It is historically a very consistent trouble spot for equity markets.

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Speaker 1: About two thirds of the time markets have been flat

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Speaker 1: or down if you've had GDP in that one to

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Speaker 1: two type range. Laurie, thank you so much, so really good,

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Speaker 1: I mean really good update. This is the interview of

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Speaker 1: the day for all of you of Global Wall Street

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Speaker 1: on China. And I don't mean Hong Kong, but I

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Speaker 1: mean the border. I'm as guilty as anyone. I've been

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Speaker 1: honored to speak to Dr Roach of Yale University about this.

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Speaker 1: If I say I went to China, I land at

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Speaker 1: the airport, I always get in some big fancy Mercedes

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Speaker 1: that can't afford. They take me to the Mandarin Hotel.

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Speaker 1: I wanted the office to see von Man. Then I

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Speaker 1: go back to the hotel. Then I get back in

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Speaker 1: the Mercedes and go back to the hotel and go

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Speaker 1: back to the airport and say I've been to China.

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Speaker 1: George Friedman has been to China. He's the geopolitical futures

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Speaker 1: and we're honored to have him on today, George, you

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Speaker 1: are riveted on the dynamics of President G and the

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Speaker 1: modern experiment that is the Communist Party. Where does he

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Speaker 1: want to lead them? Well, the first thing he wants

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Speaker 1: to do is hold country together. Two thousand eight was

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Speaker 1: a rattling experience. China is an export addict, and as

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Speaker 1: customers stopped buying, or at least not buying as much

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Speaker 1: as they did. The country is divided between the part

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Speaker 1: you visit, the coastal region, which going through there you

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Speaker 1: can think you're anywhere Western country, and the interior, which

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Speaker 1: is enormously poor. That's where maud Say Tongue went to

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Speaker 1: raise his army to come back to the coast and

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Speaker 1: clear them out. So the real question here is can

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Speaker 1: g hold a country together? He's a dictator and they

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Speaker 1: didn't elect a dictator to put a dictator in charge? Again,

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Speaker 1: will its power because we're feeling comfortable. They did it

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Speaker 1: because they were worried. They're worried, and within it is

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Speaker 1: the Hong Kong Henry Olsen in the Washington Post talking

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Speaker 1: of the protesters wanting to develop a third Chinese at

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Speaker 1: Hong Kong, Chinese off the Han and Mandarin experience. How

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Speaker 1: does President She see that? How does he see the

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Speaker 1: culture of China that folds into the military power in

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Speaker 1: the sense of dictatorship. The People's Liberation Army has always

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Speaker 1: been a domestic group. A flaught in Korea didn't do well,

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Speaker 1: but the People's Liberation Army is a domestic security organization.

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Speaker 1: It is to guarantee that the Communist Party will stay

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Speaker 1: in power. He doesn't want to use it, obviously, he

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Speaker 1: wants everybody to be happy. What frightens him by Hong

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Speaker 1: Kong is not only the vigor, but two other things. First,

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Speaker 1: failure of Chinese intelligence, domestic intelligence to detect that this

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Speaker 1: was going to happen as a result of his actions

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Speaker 1: on criminal law, and the fear that is going to

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Speaker 1: spread into China. We tend to look at China as

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Speaker 1: enormous success. Well, like all countries, they go up and down,

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Speaker 1: and they come in trouble. And when they get into trouble,

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Speaker 1: the more important thing than the economic is the political.

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Speaker 1: How will people respond? And this is what the Chinese

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Speaker 1: are extremely worried about from Hong Kong, that will spread.

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Speaker 1: How do you respond, folks, if you're just joining us?

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Speaker 1: George Friedman of Geopolitical futures here. I just can't say

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Speaker 1: enough about his work on the linkage of defense to society.

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Speaker 1: They have a type fifteen tank, a z t Q tank.

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Speaker 1: I don't know if that's lined up as a light

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Speaker 1: tank on the border, et cetera. But how do you

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Speaker 1: respond to what I'm going to editorialize is the fearmongering

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Speaker 1: of green trucks in military at the border fifty miles

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Speaker 1: from the central district. Well, they're desperately trying to intimidate demonstrators.

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Speaker 1: They wanted to go home. They wanted to go away,

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Speaker 1: and they don't want this crisis. Uh, they can come

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Speaker 1: in and crush the demonstrators whenever they want. They don't

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Speaker 1: need the fancy material that you can just do it.

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Speaker 1: But the fear is one what will do to its

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Speaker 1: international image? It has tried to portray itself as a

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Speaker 1: symbol of modernization to be emulated. They do this and

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Speaker 1: it loses that capability. And secondly, as bettinam and square,

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Speaker 1: how the rest of China responds the real problem that

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Speaker 1: he has. He was wanted to solve these problems. He

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Speaker 1: can't solve any of them. He has to solve the

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Speaker 1: economic problem. He didn't manage Trump. He hasn't made any

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Speaker 1: progress in the South China. See the one Belt, one

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Speaker 1: Road initiative has kind of fallen apart. How fragile George

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Speaker 1: is he in the time we've got left Elizabeth economy

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Speaker 1: and see if far is very big on this. We

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Speaker 1: look at the media in the Western world as a

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Speaker 1: communist party is monolithic. It's not I get that, But

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Speaker 1: how fragile is his tenure is the supreme leader of

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Speaker 1: this communist party? Well, if he winds up losing Hong

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Speaker 1: Kong on top of very bad news out of the

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Speaker 1: Chinese economy, which is probably worse than the news that

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Speaker 1: they releases, uh, they're going to be some very serious

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Speaker 1: questions about whether or not this is the direction they

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Speaker 1: want to take. And if he cracks down too hard,

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Speaker 1: they're going to ask that question. And his most important

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Speaker 1: job is handling his biggest customer, the United States, and

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Speaker 1: he failed. So I would have to think that inside

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Speaker 1: the Central Committee, very quietly, there is discussion of what's

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Speaker 1: going to happen, and I think he's nervous, and I

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Speaker 1: think that'll wind up resulting in him going into Hong Kong. George,

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Speaker 1: thank you so much for being with us, particularly early

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Speaker 1: early in your Austin, Texas morning, uh, three or four

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Speaker 1: hours ago. We really hope to speak to you through

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Speaker 1: the week and into this uh into the August as well.

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Speaker 1: George Freeman, of course, founder and chairman Geopolitical Futures and

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Speaker 1: just a riveting piece. Again, we protect the copyright of

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Speaker 1: all of our guests. We have the Freeman literature. You

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Speaker 1: can get it from Geopolitical Futures and a bit here

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Speaker 1: we're actually gonna talk about Kathay Pacific and what all

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Speaker 1: of this means to global travel, the protests in Hong Kong,

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Speaker 1: and what we observed. We have the number one guy

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Speaker 1: in the world on how we're all addicted to those

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Speaker 1: charge cards. Right now we get frequent Frickson came miles

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Speaker 1: with Ira Jersey of Bloomberg Intelligence. Ira, what's the correlation

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Speaker 1: right now of your on market with the equity market? Yeah,

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Speaker 1: so the correlations negative right now. So you know, equities

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Speaker 1: go down and fix income prices go up. Um. You know,

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Speaker 1: this is a lot different from June. So in June

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Speaker 1: it was basically the the lower yields and and the

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Speaker 1: yields going lower because the FED was going to be

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Speaker 1: more commendative and you know, data was wasn't great, but

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Speaker 1: it also wasn't terrible. That helped equity markets go up.

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Speaker 1: But now what's happened over the last five weeks or

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Speaker 1: so as you've seen that turn the other way where um,

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Speaker 1: you know, bad news is bad and you wind up

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Speaker 1: having a flight to quality into rates from other ethic

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Speaker 1: class is you know, a math guy and this is

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Speaker 1: out of reason Fabosis talking to one of our young

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Speaker 1: troops here yesterday, and I didn't notice that the classic

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Speaker 1: fabosies a thousand, forty eight pages. I quoted that in

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Speaker 1: the discussion I was having in the Fabosi the dynamics

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Speaker 1: of yield are different than the dynamics of price. This

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Speaker 1: is a great mystery to people right now. I would

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Speaker 1: suggest it's price up. What's the buying frenzy that you

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Speaker 1: observe at Bloomberg Intelligence. Yeah, it's it's all about sentiment.

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Speaker 1: So the sentiment because of of the seeming higher risks

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Speaker 1: out there, and that's causing this flight the quality into

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Speaker 1: UH into treasuries and other government bonds. And interestingly, you know,

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Speaker 1: and this is not something new, but the fact is

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Speaker 1: is that the US government yields are still higher than

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Speaker 1: the yields and most other developed government bond markets. So um,

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Speaker 1: you know, even even the UK which also has positive yields,

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Speaker 1: right that one of the few European countries that does

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Speaker 1: UM thirty year yields. There are are one percent thirty

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Speaker 1: year yields here are two percent, So we still have

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Speaker 1: UM significantly higher yields. And if the dollar is going

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Speaker 1: to keep on appreciating because our economy is doing better

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Speaker 1: than everyone else, then this is the place to be.

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Speaker 1: You want to be here, maybe on an unhedged basis.

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Speaker 1: Deutsche Bank, this is important headline. This is aside from

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Speaker 1: IRA Jersey. But I gotta go to this iro. It's

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Speaker 1: so important for global Wall Street audience. I'm getting the

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Speaker 1: headline up right now. Deutsche chairman Art Lightner searching for

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Speaker 1: his successor is the headline. I'm looking at a six

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Speaker 1: point one for euros per share. And if I can

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Speaker 1: get over to the A d R uh No, it'd

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Speaker 1: be help if I knew the symbol. David Wilson, where

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Speaker 1: are you with? I need you? Deutsche Bank. Oh, I'm

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Speaker 1: killing folks, I'm just killing this today. D E U

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Speaker 1: T S c H E Bank. There's four thousand people

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Speaker 1: just in New York. IRA. I don't know where the

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Speaker 1: a d R is on Deutsche Bank itself, that's all

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00:21:31,440 --> 00:21:33,800
Speaker 1: you need to know. Negative three D six on the

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Speaker 1: doll IRA. What's credit doing? Link full faith and credit

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Speaker 1: with the credit risk of the investment grade market in

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Speaker 1: the high yield market, how do they link in this crisis? Yeah, So,

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Speaker 1: so you've seen spreads wide and somewhat, but there's still

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Speaker 1: you know, a lot of people are not particularly worried

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Speaker 1: about UM, you know, corporate credit UM the default at

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Speaker 1: the moment because balance sheets, particularly for large US corporations

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Speaker 1: that make up the investment grade market have UM you know,

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00:22:02,240 --> 00:22:06,720
Speaker 1: still are still look okay. So it's not a fundamental story,

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Speaker 1: it's more it is more and more sentiment. So you

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Speaker 1: have seen spreads wide and significantly since late July, but

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Speaker 1: they've actually stabilized here over the last week. Now. I

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Speaker 1: suspect that if you keep on getting the draw down

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Speaker 1: in inequity prices, that spread probably widen a little further.

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Speaker 1: But it is one of the places that we have

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Speaker 1: been hearing anecdotally that there's still demand just because you

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00:22:28,000 --> 00:22:30,600
Speaker 1: do pick up that in metal yield our Jersey too,

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Speaker 1: short to visit, stay with us and publishing today for

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Speaker 1: Bloomberg Intelligence as well. We now turn to not a

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Speaker 1: lighter topic but off the markets, but nevertheless critical to

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Speaker 1: our global audience. And that's how we move ourselves. Our

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Speaker 1: businesses are families around on jets. He is Brian Kelly

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Speaker 1: who single candidly has changed how the world travels. Brian,

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Speaker 1: good morning. Could you fly to Hong Kong today? Do

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Speaker 1: you have confidence to book a ticket ten days out,

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Speaker 1: three weeks out and say Keith to Hong Kong? Yet

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Speaker 1: you can absolutely fly today. The airport's back and pretty

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Speaker 1: much fully operational. They've got security outside of the terminal

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Speaker 1: so that only ticketed passengers can get in. That being said,

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Speaker 1: if you are booked, you can cancel for free or

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Speaker 1: change up until tomorrow. But you know what, I choose

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Speaker 1: to go to Hong Kong right now as a tourist.

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Speaker 1: Probably not, but you know no, no tourists have harmed

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Speaker 1: in any of the protests. But pretty unstable time. If

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Speaker 1: you ask me, what are the dynamics right now? And

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Speaker 1: what you helped invent, which is how we're all addicted

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Speaker 1: to these charge cards with miles, the Apple card getting

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00:23:33,880 --> 00:23:38,320
Speaker 1: resoundingly negative and tepid reviews because it's really not linked

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Speaker 1: to the incentives that you helped invent. I mean, does

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Speaker 1: Tim Cook need an Apple card that says you get

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Speaker 1: a hundred thousand miles if you sign up for the thing. Well,

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Speaker 1: they're certainly dipping their toes into a very competitive market. Um,

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Speaker 1: you know they're there. I think they're gonna learn a

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Speaker 1: lot about credit card marketing. Uh that simply buzz Isn't

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00:23:57,560 --> 00:24:01,040
Speaker 1: you know? Smart consumers want value back their spend. The

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00:24:01,080 --> 00:24:04,240
Speaker 1: Apple card has some interesting features around technology and design,

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00:24:04,400 --> 00:24:06,720
Speaker 1: but I don't you know, I'm not rushing out to

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00:24:06,720 --> 00:24:09,600
Speaker 1: get one because you know, you basically lose money by

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00:24:09,680 --> 00:24:11,880
Speaker 1: using it, by not using more lucrative cards. But it's

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00:24:11,880 --> 00:24:14,639
Speaker 1: an interesting concept about, you know, no credit being pulled

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00:24:14,720 --> 00:24:17,040
Speaker 1: until you're approved and things like that. Brian Kelly's on

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00:24:17,080 --> 00:24:19,880
Speaker 1: all these romantic trips, folks. My trip is I used

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00:24:19,920 --> 00:24:22,359
Speaker 1: my Frequent Flyer miles to take the shuttle down to

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00:24:22,359 --> 00:24:26,520
Speaker 1: Philadelphia and you know, cashman that way. What's the dynamic

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00:24:26,560 --> 00:24:29,480
Speaker 1: of the industry right now? Clearly every seat's taken on

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00:24:29,560 --> 00:24:32,520
Speaker 1: every plane, right, every seat is taken a lot. You know,

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00:24:32,600 --> 00:24:34,639
Speaker 1: you can still find those savor level awards, but you've

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00:24:34,640 --> 00:24:36,800
Speaker 1: got to be a little bit more flexible. But you know,

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00:24:37,200 --> 00:24:39,480
Speaker 1: you know, I'm flying to Venice for the film Festival

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00:24:39,480 --> 00:24:43,000
Speaker 1: over Labor Day. Flights were eight grand on United. Even

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00:24:43,040 --> 00:24:44,760
Speaker 1: at the peak level, I used a hundred fifty five

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00:24:44,760 --> 00:24:47,320
Speaker 1: thousand miles one way for business class and ten bucks.

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00:24:47,359 --> 00:24:49,480
Speaker 1: So even when you have to use more miles that

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00:24:49,680 --> 00:24:52,320
Speaker 1: those hundred fifty five tho miles got many cents per

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00:24:52,359 --> 00:24:55,399
Speaker 1: mile and value. So um. While you know there is

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00:24:55,400 --> 00:24:57,639
Speaker 1: a creep up and inflation in the amount of points needed,

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00:24:57,720 --> 00:25:00,639
Speaker 1: there's still tremendous value to be had. And and folks,

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00:25:00,680 --> 00:25:02,560
Speaker 1: I've seen that where the tickets have gone up. Okay,

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00:25:02,600 --> 00:25:04,560
Speaker 1: this is the number one thing I get from family

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00:25:04,600 --> 00:25:08,800
Speaker 1: members and from listeners as well. The place is packed.

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00:25:09,600 --> 00:25:12,880
Speaker 1: I can't get a business class seat. Why don't they

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00:25:12,920 --> 00:25:17,440
Speaker 1: move those little flimsy walls between business class and economy

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00:25:17,480 --> 00:25:20,280
Speaker 1: and premium economy. Why don't they just move them back

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00:25:20,400 --> 00:25:23,679
Speaker 1: and put in more business class seats? Why not? They

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00:25:24,480 --> 00:25:26,840
Speaker 1: actually are so there're a lot of airlines are getting

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00:25:26,880 --> 00:25:29,080
Speaker 1: rid of first class and putting in more business class,

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00:25:29,359 --> 00:25:32,200
Speaker 1: especially on the retrofitted United planes that are now flying

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00:25:32,200 --> 00:25:35,200
Speaker 1: to London, the player's seats are actually adding in more,

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00:25:35,440 --> 00:25:38,720
Speaker 1: more business class seats and better ones at that. So yeah,

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Speaker 1: I mean we see, you know, premium economies expanding business classes,

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00:25:42,480 --> 00:25:47,560
Speaker 1: growing first classes, decreasing or going extinct altogether on some airlines,

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00:25:47,680 --> 00:25:49,840
Speaker 1: do they make money on business class? I mean is that?

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00:25:49,840 --> 00:25:52,399
Speaker 1: What business class is? The bread and butter? You know,

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00:25:52,440 --> 00:25:57,480
Speaker 1: those premium passengers pay an outsize proportion of revenue, and

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00:25:57,480 --> 00:26:00,639
Speaker 1: and premium economy economy is kind of a you know,

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00:26:00,680 --> 00:26:04,080
Speaker 1: can can be profitable, but bears are still really really low.

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Speaker 1: Um globally, you know, four ducks paying to Europe. So

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Speaker 1: we gotta we gotta end with a natural trip. Okay,

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Speaker 1: are are you a chart? Girl? Just got married in Athens?

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00:26:12,480 --> 00:26:14,840
Speaker 1: Talk about a Greek wedding and I was going to

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00:26:14,920 --> 00:26:17,280
Speaker 1: go there, but it was four hundred thousand miles to

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00:26:17,359 --> 00:26:19,840
Speaker 1: get the thing done. Am I better going to Greece

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00:26:20,080 --> 00:26:22,639
Speaker 1: on my miles? Or am I better going to Denver

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00:26:22,800 --> 00:26:25,600
Speaker 1: on my miles? Which is a better value? Here here's

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00:26:25,600 --> 00:26:28,280
Speaker 1: my tips. I actually would fly Norwegian. They now fly

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00:26:28,440 --> 00:26:31,480
Speaker 1: from New York to Athens NonStop, and it's like fourteen

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00:26:31,560 --> 00:26:33,960
Speaker 1: hundred bucks in their premium. But their Premium Economy is

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00:26:34,119 --> 00:26:36,160
Speaker 1: a big recliner seat. It's not a life flap bed.

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00:26:36,240 --> 00:26:38,160
Speaker 1: But I fly. I'm six ft seven and I fly

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00:26:38,359 --> 00:26:41,480
Speaker 1: to Europe. I would save my miles and fly Norwegian

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00:26:41,480 --> 00:26:45,639
Speaker 1: and use my miles on a uh different trip. You're sick.

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00:26:45,880 --> 00:26:47,879
Speaker 1: How do I get to London? What's the Brian Kelly

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00:26:47,880 --> 00:26:50,359
Speaker 1: way to get back and forth to London? You know?

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00:26:50,520 --> 00:26:53,040
Speaker 1: I use UM so I actually buy Alaska Airlines miles

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00:26:53,040 --> 00:26:55,359
Speaker 1: seventy thousand. You can buy for fourteen hundred bucks and

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00:26:55,359 --> 00:26:57,879
Speaker 1: that's what we'll let you redeem. For British Airways first class.

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Speaker 1: You get the concord room, which is uh, you know,

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Speaker 1: the nice way to do it. This is just sick.

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Speaker 1: Brian Kelly, I hate you. Uh the points guy reinventing

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00:27:08,119 --> 00:27:10,399
Speaker 1: and changing the travel industry. It's good to check in

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Speaker 1: on him. Thanks for listening to the Bloomberg Surveillance podcast.

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Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

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00:27:23,280 --> 00:27:27,600
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom

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00:27:27,680 --> 00:27:31,520
Speaker 1: Keene before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio