Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one twenty countries. You can download
Speaker 1: Bloomberg Business weekend iTunes, SoundCloud, or Bloomberg dot Com. You
Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern Time on Bloomberg Radio or watch us on YouTube
Speaker 1: search Bloomberg Global News. You are listening to Bloomberg Business
Speaker 1: Week here on Bloomberg Radio, on YouTube and of course
Speaker 1: around the world. Here what we are going to get
Speaker 1: into is in the cruise industry, because we are here
Speaker 1: with one of the CEOs of the world's lord. We
Speaker 1: are here with the CEO, i should say, of the
Speaker 1: world's largest cruise operator, the company by the way, launching
Speaker 1: its first cruise from a US port. They did that
Speaker 1: on July three out of Galveston, followed by their first
Speaker 1: cruise from Port Miami that was on July four. He
Speaker 1: was there and then Carnival Breeze setting sale today out
Speaker 1: of Galveston. That's happening at four thirty pm Eastern, So
Speaker 1: let's get to it with Arnold Donald, Presidency of Carnival. Arnold,
Speaker 1: it is great to have you back with us. I
Speaker 1: feel like you and I have been talking about a restart,
Speaker 1: things getting back closer to normal for a long time.
Speaker 1: How does it feel You've been waiting a long time
Speaker 1: for this, especially to see those ships out of US ports.
Speaker 1: You know, Carol, good afternoon, first of all, but it
Speaker 1: is a phenomenally exciting, fulfilling feeling, not just because we
Speaker 1: get to welcome guests back on board our ships, but
Speaker 1: also because there's so many people who are dependent on
Speaker 1: cruise for their livelihood, you know, port workers, uh, uber drivers,
Speaker 1: taxi drivers, the destinations around the world all have um
Speaker 1: so many people depending on the industry and people providing
Speaker 1: provisions to the ships and servicing the ships. So it's
Speaker 1: a very exciting time to have guest operations once again
Speaker 1: out of the US. How's it going so far with
Speaker 1: these ships that you have, And I know you've had
Speaker 1: ships going on over in Europe, so you know you've
Speaker 1: you have some experience in how things go post pandemic.
Speaker 1: How about with the U S ship specifically, because I
Speaker 1: believe off the Galveston ship passengers have already come off.
Speaker 1: How did it go? Is there any COVID cases where
Speaker 1: there are any concerns? You know, it's gone exceedingly well.
Speaker 1: The ships in Europe, as you pointed out, for our
Speaker 1: Costa and out brands, have been saving h sailing under
Speaker 1: different protocols because largely there are people are on vaccinated,
Speaker 1: so physical distancing, um, universal testing, additional medical screening, et cetera.
Speaker 1: So far here in the US, we've been sailing under
Speaker 1: the Conditional Sale Order issued by the Center for Disease Control,
Speaker 1: which focuses on having most of the guests vaccinated and
Speaker 1: that allows for more open cruise, and they've gone very
Speaker 1: very very well. We just got the net promoter scores
Speaker 1: back from the guests and it's the highest scores we've
Speaker 1: had and and quite some time. Unlike a lot of
Speaker 1: the other folks sailing, we had a lot of people
Speaker 1: on our ship. We had over twenty six d guests
Speaker 1: on one ship over another. We've already into our second
Speaker 1: week of cruising those ships with even more guests on
Speaker 1: board and the experience has just been fantastic, and it's
Speaker 1: it's a very rewarding feeling to finally be get back
Speaker 1: out s c um exceeding guests expectations and and just
Speaker 1: developing lifelong memories for people. Arnold, give us an idea
Speaker 1: about demand right now, because twenty nineteen was a record
Speaker 1: year in terms of bookings. Where are you right now, kay, tim,
Speaker 1: Where we are right now is what we've told you
Speaker 1: back in June. Between quarters were publicly traded companies, so
Speaker 1: we can only say so much. But at that time
Speaker 1: we indicated that our bookings second half of twenty two
Speaker 1: were well in excess of nineteens kind of record bookings,
Speaker 1: same point in time. Uh. And right now, it's hard
Speaker 1: to talk a lot of about occompascy and whatnot because
Speaker 1: of all the rules and regulations and restrictions and what
Speaker 1: have you, and some things we self impose on ourselves,
Speaker 1: for example in Europe, where we've absolutely reduced the number
Speaker 1: because of the additional protocols in place for those unvaccinated cruises.
Speaker 1: But to make a long story short, demand is robust.
Speaker 1: We have plenty of demand. UM. We're bringing the ships
Speaker 1: just in UM a few at a time, we have
Speaker 1: eighty five ships in total. Today's sailing in the US,
Speaker 1: we've had three we're about to launch uh new sailing
Speaker 1: as you mentioned, and a Breeze which will be our
Speaker 1: fourth one, and then we'll have three ships in Seattle
Speaker 1: later this month, and then July one Marti Gras Carnival,
Speaker 1: uh so our newer ship and uh just an unbelievably
Speaker 1: fabulous ship with the first roller coaster a s first
Speaker 1: roller coaster at sea. Can you give us an idea
Speaker 1: of pricing power that you have right now? Considering demand
Speaker 1: is so strong and look this, I'm asking this question
Speaker 1: the context of the inflation data that we got earlier
Speaker 1: this week. People are getting back out there. Companies are
Speaker 1: raising prices because demand is so high. What is your
Speaker 1: pricing power right now? Yeah, well, pricing is strong, there's
Speaker 1: no question about it. Um. You know, there's far more
Speaker 1: demand than there are cabins available, especially here in the
Speaker 1: US with the sailors we have. So pricing is strong
Speaker 1: and we expected to continue to be strong, not only
Speaker 1: because we're the best vacation experience there is, but we're
Speaker 1: the best vacation value there is, even with strong or
Speaker 1: pricing compared to equid on land based vacation, and so
Speaker 1: we're expecting a robust environment and demand, which leads so
Speaker 1: robust environment for pricing, especially with the staggered introduction of
Speaker 1: ships coming back in, which is going to happen you
Speaker 1: know over time, is destinations begin to open again? Are
Speaker 1: pricing similar to what we had pre pandemic? Aren't? Are
Speaker 1: we seeing it similar to that? Or is there a
Speaker 1: little bit more flexibility? Um? Right now, I would say
Speaker 1: if again, if you look at bookings. So I can
Speaker 1: only say what what I've said during the business subding.
Speaker 1: But the fact is pricing is stronger, is stronger than
Speaker 1: what it was. So you know what's interesting too is
Speaker 1: I have to wonder Arnold, you know, you came in
Speaker 1: after some crises at the ship, really righted the company.
Speaker 1: I do wonder how difficult though it is um to
Speaker 1: kind of assess your outlook for this industry, especially you know,
Speaker 1: we talk every day about the delta variant and the
Speaker 1: increases that we're seeing once again. Right, and you have
Speaker 1: different rules and regulations. We just had a headline Canada
Speaker 1: to lift the ban on large cruise ships as of
Speaker 1: November first. That just crossed a few minutes ago across
Speaker 1: the Bloomberg. How difficult is it to assess the outlook
Speaker 1: and get get ahold of the business, especially when once
Speaker 1: again we have something like the delta variant. Well, I
Speaker 1: think so several comments. First, everyone should give backs is
Speaker 1: the best way to protect themselves and those that they love.
Speaker 1: So everyone should try to get a vaccination less they
Speaker 1: have a medical reason, are deep religious belief uh to
Speaker 1: not other than that they should get vaccinated. Heaven said
Speaker 1: that there will be other variants. There's a delta varian,
Speaker 1: will be other variants. And what we have to do
Speaker 1: is learn as a society overall how to live with
Speaker 1: this virus and the various variants that can come. And
Speaker 1: the best way to do that is to take the
Speaker 1: advanced medical uh knowledge that exists and take advantage of it.
Speaker 1: So vaccinations now, later, there's also advanced treatments. If if
Speaker 1: someone does happen to contract the virus and having challenges
Speaker 1: with it and so and then the other measures we
Speaker 1: need to take. If there's a variant that shows up
Speaker 1: which hasn't happened yet that is threatening to those who
Speaker 1: are vaccinated, UH, then we'll have to return the protocols
Speaker 1: of mask wearing and physical distancing and things we've learned
Speaker 1: until the medicine catch us up, you know, with that
Speaker 1: particular variant. So keep in mind we've dealt with viruses
Speaker 1: for decades um. The cruise innistrant has had to deal
Speaker 1: with ebola and zekea and SARS and mers and and
Speaker 1: the world has had to uh and now on the
Speaker 1: world is getting a grip on this particular virus and
Speaker 1: plot us to all the scientists and technologists and all
Speaker 1: the people, the first responders, everyone that has gotten us
Speaker 1: to have gotten us to this point, which is a
Speaker 1: phenomenal thing, from something that we didn't even understand fifteen
Speaker 1: months ago, to multiple vaccines, advanced treatments, you know, known
Speaker 1: protocols to mitigate spread, and if we act responsibly, we
Speaker 1: can manage this. We are talking with Arnold Donald, of course,
Speaker 1: the CEO of Carnival Corporation. We do want to welcome
Speaker 1: all of our viewers on Bloomberg TV. We are live
Speaker 1: on Bloomberg TV, Bloomberg Radio and on YouTube. Here Arnald,
Speaker 1: let me push a little bit on the delta variant.
Speaker 1: I mean, how does the delta variant at all impact
Speaker 1: your restart, especially here in the United States. As we said,
Speaker 1: Carnival Breeze going out UH shortly later this afternoon. Um
Speaker 1: does it. Are you seeing any impact on bookings or
Speaker 1: any cancelations as a result of that? I know we
Speaker 1: have not. We have not seen a major impact. Again,
Speaker 1: I think the scientists around the world are pretty much
Speaker 1: aligned around the fact that being vaccinated UH prevents two things.
Speaker 1: One is possibility of contracting a virus. But then if
Speaker 1: you do contract it, um probability that you have any
Speaker 1: serious effects from it. It also appears, and there's a
Speaker 1: little more debate around this, but the scientists seemed to
Speaker 1: agree that it also mitigates the spread of the virus.
Speaker 1: That if you have it, you have less of a
Speaker 1: viral load and so your propensity to transmit is a
Speaker 1: little bit less. So we have not seen a big
Speaker 1: impact from it. Obviously, it will impact access to destinations,
Speaker 1: you know, places where people aren't vaccinated yet are are
Speaker 1: just not enough of the population is so it can
Speaker 1: slow down progress that way, and then we're gonna pay
Speaker 1: close attention. But as we always do, will follow you know,
Speaker 1: the authorities around the world. We have to be in
Speaker 1: compliance everywhere, and we'll follow the good Council from the
Speaker 1: leading medical um UH, scientists and and and personnel that
Speaker 1: we work with constantly. Hey, Arnold, you've seen a lot
Speaker 1: of economic cycles, and I think we're trying to assess
Speaker 1: in our conversations with everybody here at Bloomberg and on
Speaker 1: air Uh, what is the economic outlook? You'll hear from
Speaker 1: one airline ceo says things are gangbusters, Things are going
Speaker 1: you know, really really strong. We hear from the FED chief.
Speaker 1: We're here from FED members uh that you know, the
Speaker 1: FED Chief reminding us once again that listen, you know,
Speaker 1: it's gonna take time to get back to where we
Speaker 1: were pre pandemic, which is why he is still supportive
Speaker 1: of some of the measures that the FED has taken
Speaker 1: during the crisis. How do you see it? Um? Is
Speaker 1: the economy going gangbusters? Getting closer? Is it going to
Speaker 1: be for a little bit and then calm down? How
Speaker 1: would you describe it? You know, I'm not an economist, uh,
Speaker 1: pronoxticator extraordinary or anything, but my experience right now is
Speaker 1: the economy is strong, and that there's a lot of
Speaker 1: pent up demand. People are anxious to travel and to
Speaker 1: enjoy things again. They've been um, you know, for quite
Speaker 1: sometime on lockdown or near lockdown, and so there's a
Speaker 1: lot of excitement and interests. People are having a hard
Speaker 1: time hiring people for a period of time because of
Speaker 1: similar packages and another thing, are you having problems hiring people? Well,
Speaker 1: we recruit from a hundred and forty five countries around
Speaker 1: the world, and so for us, that's really not the
Speaker 1: issue on the short side jobs. As we ramp up,
Speaker 1: I'm sure we'll face some challenges in in some areas. Hey, Arnold,
Speaker 1: given that you recruit from a d forty five countries
Speaker 1: all over the world, how do you ensure that your
Speaker 1: staff actually have access to vaccines given that the vaccine
Speaker 1: rollout across the world has been really uneven. That's a
Speaker 1: great question to him, and we are very grateful to
Speaker 1: so many people around the world who have helped us
Speaker 1: gain access to vaccines for our crew, because the reality is,
Speaker 1: we can as a commercial in any directly access to vaccines.
Speaker 1: So it's the localities like Miami and Galveston and here
Speaker 1: in the US and other places around the world that
Speaker 1: have made the vaccines available, and they do be so
Speaker 1: because they know the economic impact of cruise and so
Speaker 1: we can get our crew vaccinated that way and have
Speaker 1: been around the world. So using the United States to
Speaker 1: vaccinate cruise from around the world. Yes, we're getting vaccines
Speaker 1: around the world. We're also vaccinating it in the UK
Speaker 1: and other ports around the world. And my understanding is
Speaker 1: arnold that you know, or to get a ship out
Speaker 1: of a US port, you have I think at least
Speaker 1: passengers crew vaccinated. Is that is that correct? Is at
Speaker 1: the minimum that's on the conditional sale order that the
Speaker 1: Center for Disease Control currently has in place, So you
Speaker 1: can sail that way, um without a lot of restrictions.
Speaker 1: You know, the guests don't have the physically distance, they
Speaker 1: don't have to wear a mask. We we recommend they
Speaker 1: wear a mask anyway, but but they don't have to.
Speaker 1: And so if you want to sail onto those conditions
Speaker 1: which are the ideal conditions? And I know you guys,
Speaker 1: and I know we're talking with your team and with
Speaker 1: you that you guys have been back and forth with
Speaker 1: the CDC and really you know, trying to get up
Speaker 1: to date and keep up to date um with the
Speaker 1: conditional sale orders and the changing conditions. You know, what
Speaker 1: is the CDC telling you that this are you at
Speaker 1: all concerned that they're going to kind of pump the
Speaker 1: brakes when it comes to the restart here in the
Speaker 1: United States. We have a few remaining challenges UM to
Speaker 1: to get through. For example, if you wanted to sail
Speaker 1: with less than of the guests vaccinated. UH, some of
Speaker 1: the protocols that are currently mandated make it almost impossible
Speaker 1: to sail in a manner that works for the guests,
Speaker 1: and so we continue to work with them to modify
Speaker 1: those for those situations where that would ultimately make sense. UM.
Speaker 1: But we're optimistic that the CDC, along with UM, the
Speaker 1: Biden administration, and the various cabinet members and their staff
Speaker 1: that have responsibility for servicing the public health and and
Speaker 1: making sure the economy is strong UH, that that collectively, UM,
Speaker 1: they'll weigh in and make the right decisions, and and
Speaker 1: we've made some meaningful progress. Our objective would be that
Speaker 1: we would be treated the same as other sectors in
Speaker 1: travel and leisure. What's the message that you have for
Speaker 1: somebody watching or listening right now who still may be
Speaker 1: uneasy about getting back on a ship in this environment.
Speaker 1: I'm sorry to faded out. Could you repeat, just was
Speaker 1: wondering the message that you would have for somebody who's
Speaker 1: listening right now, we're watching right now, if they're potentially
Speaker 1: uneasy about getting back on a ship in this environment.
Speaker 1: I'm thinking about our own Charlie Pellett, who has gone
Speaker 1: on a lot of carnival cruises, loves to go cruising
Speaker 1: and can't wait to get back out there. What's the
Speaker 1: message that you would, you know, give to somebody who's
Speaker 1: looking at the industry, maybe a little hesitant and wanting
Speaker 1: to get on a ship. What would be the message
Speaker 1: you would say to them? Oh, the message is simple,
Speaker 1: come aboard, you know, get vaccinated please. But if you're vaccinated,
Speaker 1: come aboard and um and enjoy yourself. You're gonna have
Speaker 1: a safe cruise and you're gonna have a great time. Hey,
Speaker 1: you know those recurring cruisers, I know, like a Charlie
Speaker 1: Pellett who works here at Bloomberg, they give you, guys
Speaker 1: a great um window into future cruises. Talk to us
Speaker 1: a little bit about that, because I know there's millions
Speaker 1: of them out there right that take a cruise come back.
Speaker 1: I remember being on your ship and sitting in there,
Speaker 1: you know, in an elevator and people saying it was
Speaker 1: my fifth cruise, my six cruise. But it gives you, right,
Speaker 1: some visibility in terms of where you're going. What are
Speaker 1: you seeing on that front? Oh, in terms of the
Speaker 1: future you mean for the industry, yeah, or and for
Speaker 1: you specifically, Yeah. Yeah. The future for us and for
Speaker 1: the industry is super bright. Keep in mind, prior to COVID,
Speaker 1: about a half a billion people a year took holidays
Speaker 1: or vacations around the world. We were sailing as an industry,
Speaker 1: thirty million people a year. We sailed a little with
Speaker 1: thirteen you know, across our nine world leading cruise line brands,
Speaker 1: and um, when you think about it that way, you
Speaker 1: realize what the opportunity is, where the best vacation value
Speaker 1: there is, with the best vacation experience there is, And
Speaker 1: so we have nothing but upside. We were on a
Speaker 1: great role as an industry prior to COVID. We were growing.
Speaker 1: Things were great, great returns for the shareholders, great experiences
Speaker 1: for the guests. And we'll be back to that. You know,
Speaker 1: we'll we'll have to stagger the ships in but by
Speaker 1: spring next year or later, assuming the trajectory for the
Speaker 1: pandemic continues the way it's going, we'll we'll be back
Speaker 1: to where we were, um, exciting people and then tie
Speaker 1: you seem more and more people to the great experience
Speaker 1: that accruises. So I have to say our audience, financial audience,
Speaker 1: and folks on the terminal sending me message and they're
Speaker 1: like okay, So ask Arnold. You know we're hearing it.
Speaker 1: He's very optimistic. It's positive to see another U S
Speaker 1: ship or another ship out of a U S port.
Speaker 1: You did though guide for positive even up by the
Speaker 1: summer of two, provided the full fleet is up and
Speaker 1: running right and we're back to those more normal occupancy levels. Um,
Speaker 1: do those and I know earnings are coming up, so
Speaker 1: you tell me what you can tell me. Do those assumptions.
Speaker 1: Though Arnold still hold, I would say that clearly where
Speaker 1: we're at now it's maximizing cast generation. We have fourteen
Speaker 1: trans actions UM during the during the pause, and now
Speaker 1: a fifteenth as we refinanced one of those, and to
Speaker 1: raise twenty three point six billion dollars, a lot of
Speaker 1: it in debt, either senior or secondary. But the bottom
Speaker 1: line is, UM, we want to accelerate repaying that debt.
Speaker 1: We want to return to the credit ratings that we had,
Speaker 1: the strong credit ratings that we had pre COVID, and
Speaker 1: in doing so will create great value for the shareholders.
Speaker 1: And the way for us to do that is to
Speaker 1: be sailing again generating cash. We have a more efficient fleet.
Speaker 1: We eliminated nineteen of our least efficient vessels. We have
Speaker 1: new vessels coming in that are far more efficient, a
Speaker 1: strong environment with robust demand, and uh, it's just gonna
Speaker 1: it looks very positive going forward, so positive enough that
Speaker 1: if you can get back to triple B territory on
Speaker 1: your debt anytime soon, I think anytime soon. It's gonna
Speaker 1: take us a few years to get back to the
Speaker 1: very high credit ready that that we had before. Um,
Speaker 1: but but we're gonna we should be able to do that,
Speaker 1: assuming you know that the trajectory stays with the pandemic
Speaker 1: and and things continue the role. I'm interested to hear
Speaker 1: about how you get that next generation of cruisers to
Speaker 1: be Never I've never been on a cruise. For example,
Speaker 1: I would be somebody who you would want to reach, right,
Speaker 1: I have a young family. How do you get us
Speaker 1: to become that next generation of cruisers? Well, first of all,
Speaker 1: you know, we sell a lot of millennials now, so
Speaker 1: the cruises by definition multigeneration, and so so many people
Speaker 1: have all ages have cruise. We sell more children, for example,
Speaker 1: on our Carnival brand than any other line in the orld,
Speaker 1: and so we we have multigenerational experience already. The second
Speaker 1: thing is that especially for millennials, Uh, they love experiences.
Speaker 1: Everybody does, but but they are even more predispision predisposition
Speaker 1: for that than others. And so that's what cruises and
Speaker 1: all of our data shows that crews really resonates with
Speaker 1: that generation. So for you, tim, we just gotta have
Speaker 1: you experienced it once and you'll be hooked. Like the
Speaker 1: young man who told me on this ship the other
Speaker 1: day that he had two thousand days of cruising with
Speaker 1: the Corner brand. Talk about recurring, I've been pushing him
Speaker 1: out to the water. I'm just gonna tell you, Arnold. Hey,
Speaker 1: last question, um, the events of the past year, how
Speaker 1: is it reshaped your long term approach to the company
Speaker 1: in the industry? I'm sorry, could you repeat, I'm getting
Speaker 1: a little feedback. My our apologies are, how have the
Speaker 1: events of the past year kind of reshaped your long
Speaker 1: term approach to the company and specifically the cruise industry
Speaker 1: and just kind I think our long term approaches the same.
Speaker 1: First of all, our highest responsibility and therefore our top
Speaker 1: priority always always it's compliance, environ mental protection and the health,
Speaker 1: safety and well being of our guests, of the people
Speaker 1: in the communities we touch and serve, and then of
Speaker 1: our shipboard and short side personnel. So that is our
Speaker 1: foundation that gives us the freedom to operate, and that
Speaker 1: is at our core what we have to do exceedingly
Speaker 1: well to put us in position to see guests expectations
Speaker 1: and generate great returns for shareholders. Arnold, thank you so much.
Speaker 1: Arnold Donald, chief executive officer at Carnival Corporation, joining us
Speaker 1: from their headquarters in Miami. This is Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. It's about China's favorite fiery liquor. It is
Speaker 1: getting a millennial makeover. And I gotta just tell you
Speaker 1: the backstories that we've been having around our table here
Speaker 1: in the studio. Yeah, we should have been broadcasting during
Speaker 1: the break. I'm kind of glad that it for examples.
Speaker 1: So joining us now is Joel Weber, Editor at Bloomberg
Speaker 1: Business Week. He's in the Bloomberg Interactive Broker studio as
Speaker 1: is mlis Assistant Managing editor at Bloomberg A Business Week Joel,
Speaker 1: what you have had this liquor? Buys you? Buys you? Yeah,
Speaker 1: how is it? What does it taste like? Um? Well,
Speaker 1: I can rewind the clock a little bit. And I
Speaker 1: was in Beijing for the New Economy Forum a couple
Speaker 1: of years ago in the Before Times and the we
Speaker 1: have a great colleague there, John lou who. Um. You know.
Speaker 1: One interesting thing about going to China is that you know,
Speaker 1: it's actually kind of difficult to interact and do comrace
Speaker 1: because you know, I'm I'm a gringo. My cash doesn't
Speaker 1: work there. I don't have the apps that they use,
Speaker 1: so you're sort of locked out. The great joy of
Speaker 1: that is that your colleagues basically have to take you
Speaker 1: everywhere and feed you. Um. So we had this great
Speaker 1: dinner um and John was like, you got a little
Speaker 1: bit more wind than you and I was like, yeah,
Speaker 1: I got a little bit. And he was like, I'm
Speaker 1: gonna get something for you and he and he gave
Speaker 1: us some buys you and I really don't remember what
Speaker 1: happened from then on. Out. We're just talking a little bit.
Speaker 1: It is it is memorable. It is uh spicy, hot, fiery,
Speaker 1: uh and it is stuck with me and I never
Speaker 1: want to have it again. And that was what caught
Speaker 1: my attention on this story, is laughing because buys you
Speaker 1: is uh. It is a national liquor, right, and it
Speaker 1: is interesting around the world. I mean, I guess in
Speaker 1: America we have Budweiser, but other people have like real things,
Speaker 1: like you know, Hungary you have Unicom, in Greece you
Speaker 1: have Uzu. Like in in China you have buys. I mean,
Speaker 1: it's one of those things that you know, it's always
Speaker 1: been used for celebrations and make a lot of Americans.
Speaker 1: The first exposure they had to it was when, um,
Speaker 1: you know, when Nixon and Jow and Lye toasted each
Speaker 1: other with Buyju when they opened up China to the West,
Speaker 1: and um, you sort of think, well, what is that. Well,
Speaker 1: it's the most popular liquor in China. It is a
Speaker 1: huge business. It's much bigger than beer. It's a hundred
Speaker 1: and forty seven billion dollar a year business. It is massive.
Speaker 1: It is something that everyone likes there and has used
Speaker 1: for celebrations for centuries. The problem is that it's very strong.
Speaker 1: It's a hundred and ten proof, and for a lot
Speaker 1: of younger drinkers, they think it's way too strong. Younger
Speaker 1: drinkers in China are becoming much more like consumers elsewhere.
Speaker 1: They like things like um, you know, they're experimenting with wine,
Speaker 1: to experimenting with cocktails, and the notion of sitting down
Speaker 1: and basically drinking firewater, you know, which is popular with
Speaker 1: businessmen who are older, is something that is not working
Speaker 1: out for them. Millennial, what do you think? No? Thanks?
Speaker 1: I mean I'm the one who's like talking about non
Speaker 1: alcoholic beer. I'm like scared. Even my stomach is is
Speaker 1: fiery thinking about this. So so how are they what
Speaker 1: are they trying to do to actually attract millennials. So
Speaker 1: there's when company in particular that our story focuses on,
Speaker 1: which I'm gonna attempt to say it, Jim, I think
Speaker 1: you can say it better than me. Jing Jaobai, right,
Speaker 1: it's too miss chun king jing jaobai, which is um uh.
Speaker 1: It's they're basically trying tind to make buys you something
Speaker 1: that younger drinkers would like, and what that means is
Speaker 1: sort of using marketing that aims at the young uh
Speaker 1: putting um you know, going online looking for ways to
Speaker 1: you know, you can suggest you know, saying that they'll
Speaker 1: print on the bottles. They also sell it on team all,
Speaker 1: which is the massive you know, sort of e commerce
Speaker 1: site there. They push it to um you know, in
Speaker 1: things like anime. They've done ways to appeal to a
Speaker 1: younger person who typically wouldn't want this. They've also um,
Speaker 1: you know, trying to find ways to use it as
Speaker 1: as in flavors. I mean, you don't normally think of
Speaker 1: this kind of thing mixing as a cocktail, but for
Speaker 1: younger drinkers and particularly female drinkers, they want something that
Speaker 1: has a little bit more of a fruity taste and
Speaker 1: something that doesn't really knock you out. Is it working.
Speaker 1: It is working. I mean this is actually growing very fast,
Speaker 1: and because of that, it's attracted other people who wanted
Speaker 1: to get into the sort of lighter, um you know,
Speaker 1: sort of lighter liquor business. There are um you know,
Speaker 1: it's not just buy jus that have flavors. They're also
Speaker 1: plumb wines are becoming a big growth business over there.
Speaker 1: That's not a big business outside of certain markets in Asia,
Speaker 1: but it's really working over there. This is the future
Speaker 1: and um, you know, liquor, especially in a market that large,
Speaker 1: even having just a sliver of this business, you know,
Speaker 1: means that you're going to you know, basically have a
Speaker 1: really really big business. And part of the strategy here,
Speaker 1: as uh the CEO told us, was they want to
Speaker 1: be a little bit like the unique clow of you.
Speaker 1: So you know, you walk into a unique clue shop
Speaker 1: again in the before times, and and it's it's like
Speaker 1: walking into a Skittles bag. Right, It's just like colors everywhere,
Speaker 1: tons of things for everyone, and yet it's all affordable.
Speaker 1: It's all very utilitarian. Right. So if you, you know,
Speaker 1: Jim curious, like what's what's the rest of this? What
Speaker 1: are they fighting against? Right? Like, what what are the
Speaker 1: what are they up again? Well, they're up against the
Speaker 1: you know. First of all, the younger consumers are much
Speaker 1: more experimental and they are looking for other types of tipples.
Speaker 1: I mean, one thing is that, uh, you know, wine
Speaker 1: is something that's not really a long term thing in
Speaker 1: Chinese culture, but they really are growing and that's pushing
Speaker 1: a lot of the sort of Western winemakers just say
Speaker 1: they want to come in like lvm age to come
Speaker 1: in and do developed wines just for China. That's a
Speaker 1: new group that wants to you know, sort of get there.
Speaker 1: They also are up against um, you know, sort from
Speaker 1: a marketing standpoint. You drink by Jo because often it's
Speaker 1: because of a business connection, this business meeting, you know,
Speaker 1: like Joe's dinner. Um, But how do you do that
Speaker 1: because if well, I mean the business meeting is over.
Speaker 1: They tend to split bottles and that's a different, different
Speaker 1: approach here. There'll be a large, extremely expensive bottle. Bottles
Speaker 1: can be. Bottles can be you know, a bottle might
Speaker 1: be for a sort of flying berry, might be three
Speaker 1: eighty dollars for a lot of money, but as well,
Speaker 1: but no, a fancy buys you could go take you
Speaker 1: up to almost four thousand dollars, no comment. I can't.
Speaker 1: I literally could not interact with I was locked out.
Speaker 1: But has taken a different approach, which is to come
Speaker 1: with a much less expensive version that and also small
Speaker 1: bottles that you can use with just you and a friend.
Speaker 1: I have a vague reminiscent of it being a small bottle.
Speaker 1: It was not a big bottle, So I you know.
Speaker 1: The other thing Jimmy here is like, is there is
Speaker 1: there an ability for a product like this to really
Speaker 1: ever find its way out of China at this day
Speaker 1: and age, or is this just really you're just appealing to,
Speaker 1: you know, the billions of Chinese. Well, most likely this
Speaker 1: is something that won't make it here because here in
Speaker 1: the US most things are going lighter, not heavier. What
Speaker 1: I think is just sort of interesting that this is
Speaker 1: like even something like this that you can just leave.
Speaker 1: You would think that there's no future in this right
Speaker 1: and it can cause like upboards of a thousand dollars,
Speaker 1: and yet you wrap a little bit of a story
Speaker 1: around it, you put some marketing dollars behind it, reimagine
Speaker 1: it and like maybe you got a shot. We're already
Speaker 1: getting some sent here for you. Joel, Well, we know
Speaker 1: how that ends. Next time we go to the bar,
Speaker 1: we'll check it out. Joe Weber and Jim Ellis Bloomberg
Speaker 1: Business Week. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Bloomberg Quick Takes. Tim Stinovik on Bloomberg Radio. Sorry
Speaker 1: about flurry, a virus and vaccine headlines. Health officials in
Speaker 1: southwestern Missouri or Missouri asked the state to set up
Speaker 1: an emergency hospital to handle a surgeon delta variant cases, Tim,
Speaker 1: that threatened to really overwhelm health services there. Yeah, and
Speaker 1: we're also keeping eye of course on the delta variant
Speaker 1: and listening to what executives have to say during their
Speaker 1: earnings calls about how they're monitoring it not just for
Speaker 1: their business, but as they also at the same try
Speaker 1: and try to get employees back to the office. Africa,
Speaker 1: by the way, has seen a million new cases over
Speaker 1: the past month. Hospitals are at a breaking point with
Speaker 1: the continent in the grip of its most severe wave
Speaker 1: of infections. Uh, there so lots to get to. Let's
Speaker 1: bring in Talbert Nishua. He is senior Research Associate at
Speaker 1: Johns Hopkins University Bloomberg School of Public Health. Former Deputy
Speaker 1: Minister of Health for the Republic of Liberia. He joins
Speaker 1: us on the phone from Delaware at the Bloomberg School
Speaker 1: of Public Health, supported by Michael R. Bloomberg, founder of
Speaker 1: Bloomberg LP and Bloomberg Philanthropies. Talbert, nice to have you
Speaker 1: here with Tim and myself. Every day, you know, Tim
Speaker 1: and I have to go through and look through the
Speaker 1: headlines to try and really put out there to our
Speaker 1: audience what really matters, what they need to know about.
Speaker 1: What do you think first and format most, we have
Speaker 1: to kind of understand about where we are when it
Speaker 1: comes to the health pandemic. God damn, thank you for
Speaker 1: having me. Thank you for having me. It's a polity
Speaker 1: to beat on. We in a situation where rick communication
Speaker 1: and community engagement UH cannot be over emphasized. The fact
Speaker 1: of the matter is people are the vaccine uptake, the
Speaker 1: sub octoman and we see a strong correlation between unvascilated
Speaker 1: and COVID ninety cases, hotspot hospitalization, the VA disease, and unfottendulatives.
Speaker 1: And these are presentable once you take your shots, so
Speaker 1: people need to make use of the vaccines. In fact,
Speaker 1: gave you speccific examples of COVID nineteen hospots right now.
Speaker 1: You see stre the missouries of Carolina, Oklahoma, Utah, Nevada, Partkingtons,
Speaker 1: the States. The vascination rate is stay below for how
Speaker 1: do you how do you get it above? How if
Speaker 1: people are going to get a vaccine now, who have
Speaker 1: access to vaccines for free, who have access to vaccine
Speaker 1: things that are really convenient. Are they ever going to
Speaker 1: get a vaccine? Is it time to just move on
Speaker 1: and and and and send these vaccines out of the
Speaker 1: United States to two countries that need them more. It
Speaker 1: is important to solve the inequitate gap that we have
Speaker 1: in other countries like in the Global South, in Africa
Speaker 1: and other areas around the world, and what's happening in
Speaker 1: the Asia. But it's also good for the United States
Speaker 1: that have affects and availability to make use of the vaccines.
Speaker 1: That's the most important part politicizing public health, especially the
Speaker 1: current open like the evaccination program. Place people in Hampswere
Speaker 1: with the data there and we see that not the
Speaker 1: nine percent of the infection and just are in people
Speaker 1: on vaccinated. So people should not move on. We need
Speaker 1: to get to zero cases of this ward or create
Speaker 1: the hair is unity step the percent of the population
Speaker 1: get vaccinated and make sure that we do. This is
Speaker 1: a patriotic duty every second the vaccines. Hey, Tolbert, let
Speaker 1: me ask you something because we just had on the
Speaker 1: Carnival Corporation CEO Arnold Donald, and you know they are
Speaker 1: starting to set sail here in the US out of
Speaker 1: US ports specifically, but it is a slow progress and
Speaker 1: they've been waiting for a long time. And I asked
Speaker 1: Arnold about the Delta variants specifically the impact it has,
Speaker 1: and you know, he didn't talk about that. They've dealt
Speaker 1: with other viruses. They've talked with Zeke, you know, dealt
Speaker 1: with Zeka, They've dealt with you know stars. Is there
Speaker 1: something different though about COVID versus some of those other viruses,
Speaker 1: the auto viruses. You just talk about what at the
Speaker 1: level of the pandemic And what makes this difficult is
Speaker 1: that the entire word with this pandemic and these barrels
Speaker 1: and the fact that we still don't have treatment for this,
Speaker 1: and the vaccines are in low supplied, the stratege the
Speaker 1: supply team is limited for the rest of the world.
Speaker 1: It gave the virus the opportunity to mute it. And
Speaker 1: this is why we've seen the variants. That's for color
Speaker 1: right now, we've seen four kinds of variants and the
Speaker 1: parents sorry, and the data bearing is becoming more transmissible
Speaker 1: as it studies in the UK number area of sheroom
Speaker 1: sixty percent transmission and even more virulent as as as
Speaker 1: compared to the rest of the three of uh Laquer
Speaker 1: and government, parants parents that we've seen. This is this
Speaker 1: is the important fact. Were there with the bola. Bola
Speaker 1: was once I was the infidet manning gurn in West Africa.
Speaker 1: When were there with the bola, it was continue and
Speaker 1: localized in pre West African country. Vicar did not go
Speaker 1: up ask breas right now and so this is a
Speaker 1: different with over nine things. But the good news is
Speaker 1: we now have the vaccine, so people should go and
Speaker 1: take their vaccines. That's very very critical. October, you were
Speaker 1: Deputy Minister of Health for the Republic of Liberia. We
Speaker 1: Carol mentioned the statistics about Africa very concerning. It is
Speaker 1: not a monolith. Each country is different. But I do
Speaker 1: wonder what's a realistic way for us to think about
Speaker 1: the pandemic ending on the continent given the tough access
Speaker 1: to vaccines that many countries have. Does it just does it?
Speaker 1: Does it just continue to go unabated? It is right
Speaker 1: now as we see it, and no country is saved
Speaker 1: one another part of the world is not making the
Speaker 1: same progress that countries in the global now that it
Speaker 1: is not that in Europe I'm making right now. The
Speaker 1: trend in Africa is worsening and the reasons are simple.
Speaker 1: Number one, health giest systems are within those countries. We
Speaker 1: be spart in the number of cases our concern right
Speaker 1: now scientifically, and global health community public health communities does
Speaker 1: not get Africa to were India is in the part
Speaker 1: and other countries are right now, and we've seen the
Speaker 1: trend in Africa to be you know, worsing and alarming,
Speaker 1: with just less than two percent of the people having vaccines,
Speaker 1: and vaccines are not available there. Health system witness people
Speaker 1: are downplaying the virus. They're not being the number of
Speaker 1: deaths in other places. Tibert, thank you so much. We
Speaker 1: really always appreciate when you give us some time. Toilbert Niche,
Speaker 1: to our senior research associate the Johns Hopkins Bloomberg School
Speaker 1: of Public Health on the phone from Delaware, the journal now,
Speaker 1: but you let me drive, no, honey, please, l I
Speaker 1: want to drive. Question. This is the drive to the globe.
Speaker 1: M Thanks. We'll drying us to dawn on Bloomberg Radio.
Speaker 1: So Tim and I've been watching the trade today. We've
Speaker 1: been bouncing around, certainly on the equity front. We're off
Speaker 1: our lows, off our highs the day as well, talking
Speaker 1: about the importance it feels like when it comes to
Speaker 1: the bond market, specifically watching that tenure note that you'll
Speaker 1: below one point three. So let's see what it all means.
Speaker 1: Let's get to with Annahan, she's vice president Equity strategis
Speaker 1: at Wells Fargo Securities with us on the phone in
Speaker 1: New York City and a good to have you here
Speaker 1: with Tim and myself. You do watch the equity markets,
Speaker 1: but you know you watch the financial markets. Do you
Speaker 1: feel like the equity markets or the bond market tells
Speaker 1: the true story of what's going on and what we
Speaker 1: can expect in terms of the economic and market environment
Speaker 1: for those publicly held companies. Hi, Carol, I mean I
Speaker 1: think you've got to look at it together, right, because
Speaker 1: both parts equity and the fixed income markets are giving
Speaker 1: you a little bit of a mixed signal when you
Speaker 1: look get on their own, but when you blend them together,
Speaker 1: the pictures starts coming together. So we can start with
Speaker 1: the fixed income markets. You see that yield are dropping
Speaker 1: the tenure below one thirty. It's got people jittery, worried
Speaker 1: about future economic growth here. But you see the pull
Speaker 1: back there is mostly coming out of real yield. It's
Speaker 1: not coming out of the inflation expectation portion, so it
Speaker 1: looks like, okay, it's not necessarily future growth that's really
Speaker 1: taking it. And then you look over towards the equity side.
Speaker 1: What's leading today, you staples, but also financials, right, So
Speaker 1: it's mixed back where you have part of the market
Speaker 1: concerned that you know, accommodation is not enough, it's it's
Speaker 1: got to stay on because uh, you know, inflation is
Speaker 1: too transitory. But you have the other part of market thinking, hey,
Speaker 1: growth will continue. So it's a mixed bag today. So
Speaker 1: so let me go back to the message that the
Speaker 1: bond market is sending, at least as far as as
Speaker 1: you're interpreting it, What is it exactly saying to you?
Speaker 1: With yields dropping like this? When we yield dropped by this,
Speaker 1: generally we think about, you know, the belly of the
Speaker 1: curve or the longer end of the curve as this
Speaker 1: reflection of the growth of the economy or expected inflation. Right,
Speaker 1: But in that aspect, you have to realize the nomenal
Speaker 1: yield moving has two components to it. You have the
Speaker 1: actual real yields portion, and then you have the part
Speaker 1: where then you can back out how much of it
Speaker 1: means actually the inflation expectation of future growth part, and
Speaker 1: a lot of the move, especially since the end of March,
Speaker 1: has come from that real yields portion. I think that
Speaker 1: part by the end of the year is going to
Speaker 1: have an inflection point and trend back upwards. Right now,
Speaker 1: real yields are in negative territory. I think that the
Speaker 1: ten years probably around negative ninety basis points, if not
Speaker 1: more in real yield. I think they'll trim up to
Speaker 1: probably negative fifty by the end of this still negatively
Speaker 1: yield eventually, ye, still negative. It makes it tougher the
Speaker 1: financial sector as well when you see yields low like that,
Speaker 1: which is why you say it is fascinating to look
Speaker 1: at the major industry groups in the S and P
Speaker 1: five or eleven, utilities and consumer staples, as you say,
Speaker 1: which would be kind of a more safer play, right,
Speaker 1: careful play, uh, and then financials in real estate, you know,
Speaker 1: which would speak to recovery, right it's it's it is
Speaker 1: a mixed bag, yep. And something special too that I
Speaker 1: want to highlight here is that youth staples and reads,
Speaker 1: they're very traditionally what we like to classify as low
Speaker 1: volatility sectors. Like you said, Carol's defensive, but not just
Speaker 1: defensive because you know, economically you think about their sensitivity,
Speaker 1: but also because as yields retreat in a growth contracting environment,
Speaker 1: these kind of groups tend to hold up better. They
Speaker 1: tend to outperform the market. And low ball is a
Speaker 1: tactical positioning that we recently recommended for those who you know,
Speaker 1: need to lighten up on on that sting from the
Speaker 1: from yields retreating. Hey, you know, we just spoke earlier
Speaker 1: in this show to Arnold Donald, the President and CEO
Speaker 1: of Carnival Cruise Corporation. He told us that demand is robust,
Speaker 1: pricing is strong, and in fact that bookings in two
Speaker 1: pricing is also stronger than all the way back in
Speaker 1: twenty nine. I'm wondering about mid cycle recovery place because
Speaker 1: I know you've got your eyes on leisure and travel
Speaker 1: people looking for experiences over things. What do you got
Speaker 1: your eye on somewhere? Like you said, the cruise industry
Speaker 1: is a great example, but anything tied to that where
Speaker 1: people can travel again, hotels, leisure when you're going out somewhere,
Speaker 1: and really, when you say experiences, it's you know, kind
Speaker 1: of a cheesy phrase, but it's true. Think about those
Speaker 1: parts where lodging, um air fairs, car rental, these kind
Speaker 1: of things are people what people want to do because
Speaker 1: we haven't been able to. So that's that mid cycle
Speaker 1: exposure we like. And we still think it's too early
Speaker 1: to shift. It's not into the late cycle place. I
Speaker 1: think that the economic recovery were it is today, we're
Speaker 1: still going to see some robust growth for a couple
Speaker 1: of quarters, especially on the earnings front. Might we stay
Speaker 1: in this mid cycle world for a while. It's very
Speaker 1: possible because if you think about one thing that's kind
Speaker 1: of dampened earnings growth a little bit at least for
Speaker 1: seeing evidence of that in this earning season is the
Speaker 1: supply constraints and that labor shortage you've heard of time
Speaker 1: time and again. But what's also kind of not offsetting
Speaker 1: it necessarily but also helping to extend the economic cycle
Speaker 1: is that corporates themselves they're doing more supply management. And
Speaker 1: that supply management because they know that they have low inventories.
Speaker 1: They're not rushing necessarily to restock these inventories, but they're
Speaker 1: managing their supply chain so that they can extend their
Speaker 1: corporate growth out. I think that's helping as well, and
Speaker 1: they going to keep us still in that mid cycle
Speaker 1: for a little longer. What are you seeing with earnings
Speaker 1: right now? I'm just thinking about mid cycle right Wait
Speaker 1: a minute, Well, it's it's interesting because here we are
Speaker 1: of the banks. The big banks have all reported, right,
Speaker 1: so just the beginning of earnings. It is just the
Speaker 1: beginning of earning season. But this is like what marks
Speaker 1: the beginning of earning season. It gives us so much
Speaker 1: inside anna into what these companies are thinking about the economy.
Speaker 1: And we have gotten a handful of companies as well,
Speaker 1: including airlines and PEPSI outside of the big banks. But
Speaker 1: how would you characterize the results that we've we've heard
Speaker 1: thus far because investor expectations are really high here I'm
Speaker 1: talking to the tune of over sixty earnings growth. Yep.
Speaker 1: You know you hit something very key here is that
Speaker 1: invest expectations because right now you're seeing that a lot
Speaker 1: of the corporate over the last two quarters were beating
Speaker 1: EPs estimates, but those EPs estimates were cell side. Now
Speaker 1: the way that this earning season has started, same thing.
Speaker 1: You're getting a good amount of EPs beats out there,
Speaker 1: but the reaction to these beats hasn't been so hot.
Speaker 1: You're not seeing this great one day reward after announcement.
Speaker 1: It's because investor expectations are elevated. But something to keep
Speaker 1: in mind is that what also people look at here
Speaker 1: is what our corporates saying in those transcripts, and what
Speaker 1: we've highlighted is there's a lot of focus on margin
Speaker 1: pressure and input costs for those corporates who are saying
Speaker 1: that they're able to pass along those elevated input costs
Speaker 1: and able to maintain those margins because right now demand
Speaker 1: remains so robust and they can manage those supply chains.
Speaker 1: You know, that's that's a pretty good sign. But we
Speaker 1: also have corporates that are talking about, hey, these margin
Speaker 1: pressures are are coming at us. We might eat into
Speaker 1: US and the next couple of quarters. And I think
Speaker 1: for those companies in particular, investors might be getting a
Speaker 1: little more uncertain on But it is tricky that I mean,
Speaker 1: I think Tim and I we in talking with various
Speaker 1: CEOs and leaders UH and industry watchers. It's not the
Speaker 1: same when it comes to wage constraints or labor constraints.
Speaker 1: We found that with Arno old Donald, they they tap
Speaker 1: into a global workforce and he seems to be pretty
Speaker 1: comfortable countries and it's fine hiring, it's massive, and he
Speaker 1: didn't seem to have any problems. So I just do wonder,
Speaker 1: how do you how do you figure out is there
Speaker 1: a narrative here, really a true now when it comes
Speaker 1: to higher wages and the impact it might have. You know, Carol,
Speaker 1: that's our job every day as a macro strategist. You
Speaker 1: gotta go from the top down, but pay attention to
Speaker 1: those little details and put together what is the big theme.
Speaker 1: And so far, I think it helps start when you
Speaker 1: kind of focus a little more by industry, when you
Speaker 1: look at kind of more the the industrial sectors. So far,
Speaker 1: they're saying, hey, we can maintain margin, we can pass
Speaker 1: along price. But some other parts of the market you're
Speaker 1: seeing that these labor constraints are really eating into those
Speaker 1: margins and they're not so sure how that's going to
Speaker 1: keep up. But that's the name of the game from
Speaker 1: maid cycle economic recovery. It's not this easy dumpster diving
Speaker 1: that we saw early fighting that's right, where you just
Speaker 1: can kind of go anywhere. No, it's right. It makes
Speaker 1: so much sense. Anna, Thanks so much, really great conversation,
Speaker 1: Annah and vice president equity strategist Wells Fargo Securities joining
Speaker 1: us on the phone in New York City. Thanks for
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com, and you can also listen to
Speaker 1: our radio show at two p m. Eastern on Bloomberg
Speaker 1: Radio or watch us on YouTube. Search to Bloomberg Global
Speaker 1: News