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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market crows, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast The Fed. We've got

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Speaker 1: minutes coming out today, Matt, two pm. Wall Street time

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Speaker 1: rates are going up. Balance Sheet's gonna be watched. Just

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Speaker 1: any minutes though, Okay, minutes that Jerome Powell said we're

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Speaker 1: going to be important. You know, he recommended that we

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Speaker 1: read these minutes. Really. Yeah, well, you don't have to

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Speaker 1: do that for me, all right. That's get a little

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Speaker 1: bit of a roundtable going here, Matt, because there's a

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Speaker 1: lot to break down and when we think about this

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Speaker 1: FEDER Reserve and what they're going to be doing for

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Speaker 1: the remainder this year into next. Former New York Fed

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Speaker 1: President Bill Dudley joins us, as well as Blomberg Blues

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Speaker 1: Editor in chief Matt Winkler joining us here in our

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Speaker 1: Bloomberg and actor studio emeritus absolutely founder of a bloom

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Speaker 1: creator exactly, Um, Bill, thanks so much for joining us

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Speaker 1: via zoom here. You know, a lot of investors are saying,

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Speaker 1: you know, I think the Fed is still behind the

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Speaker 1: curve here, even if we're talking multiple rate hikes fifty

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Speaker 1: basis points here, fifty basis points there. What's your view?

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Speaker 1: Of course, they're far far behind the Yelk curve, for

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Speaker 1: far behind the curve in terms of tightening montary policy.

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Speaker 1: Look at where short term indistrates are relative to inflation.

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Speaker 1: Look at where short term ingistrates are relative to how

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Speaker 1: tight the labor market is. The Fed basically says we

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Speaker 1: want to be a neutral uh, and they're not even

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Speaker 1: close to that. So they're going going to go very

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Speaker 1: fast this year towards neutral over the next you know,

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Speaker 1: nine months. What is neutral, Bill, Well, neutral obviously does

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Speaker 1: depend a bit on where inflation settles out. If the

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Speaker 1: Fed was at their two percent inflation objective, then neutral

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Speaker 1: be a brown two and a half percent in terms

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Speaker 1: of not all short term interest rates. But if inflation

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Speaker 1: is higher, neutral fire as well. So it's also going

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Speaker 1: to be important where we see inflation settle out. Matt,

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Speaker 1: what do you think about? Um? It does seem that

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Speaker 1: everyone's turned very hawkish and inflation, sorry, employment UM went

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Speaker 1: from being questionable as to whether it's full now UM

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Speaker 1: daily yesterday said it's tight, a very tight labor market.

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Speaker 1: So I think the best way to look at this

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Speaker 1: from the Fed's perspective is if you take a look

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Speaker 1: at their preferred monthly measure of inflation, which is the

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Speaker 1: US Personal consumption expenditure core Price Index, which if you

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Speaker 1: juxtaposed it with a thirty trillion dollar bond markets expectation

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Speaker 1: of inflation, and uh, what that shows is tenure break

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Speaker 1: even rate or yield gap between the benchmark treasury and

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Speaker 1: what we call treasury inflation protection securities are tips. The

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Speaker 1: FED inflation measure shows us every day through yesterday, while

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Speaker 1: the bond market anticipates all the days to come. And

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Speaker 1: what we see is that between the second half of

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Speaker 1: last year and today is an increase in inflation to

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Speaker 1: five point four percent, the highest since bond investors, on

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Speaker 1: the other hand, see inflation at about three percent. So

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Speaker 1: this is a record divergence. And I think you know,

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Speaker 1: since Bill and I started talking about such things more

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Speaker 1: than three decades ago, um, you look at something else

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Speaker 1: that's relevant, which is the FED Zones Survey the February

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Speaker 1: survey of consumer expectations, and it shows consumers anticipate inflation

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Speaker 1: subsiding to three point eight percent in three years. Um.

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Speaker 1: So you know, before you go any further, I would

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Speaker 1: ask Bill he has said. You have said, Bill consistently

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Speaker 1: that the FED is behind the curve. So what's wrong

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Speaker 1: with these pictures? The market is basically assuming that the

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Speaker 1: FED is ultimately going to do their job. They may

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Speaker 1: have gotten a late start, but they now are moving

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Speaker 1: pretty rapidly in attaining direction of the market's view I

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Speaker 1: think is that the federalis are will in fact get

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Speaker 1: this done. Um. I think that's probably right. I think

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Speaker 1: the big risk though, to the downside, is that whenever

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Speaker 1: the FED has had to tighten sufficiently to push the

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Speaker 1: unemployer rate up, the US economy has always fallen into recession.

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Speaker 1: I'm not looking for a recession anytime soon, because montre

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Speaker 1: policy first has to get to be tight. But I

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Speaker 1: do think that the chances of the FED pulling off

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Speaker 1: the soft laying this time are very very low at

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Speaker 1: this point. Wait, so you don't see a recession in

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Speaker 1: the next, say, twelve to eighteen months. It's retainly not

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Speaker 1: in the next twelve months. The US economy has a

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Speaker 1: lot of momentum behind it as we're as we're going

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Speaker 1: into the opening up stage. So you've seen seeing the

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Speaker 1: strength and payil employment over the last few months. We

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Speaker 1: also have an imbalanced in a lot of areas between

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Speaker 1: demand and supply where demand ex seeds supply. So even

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Speaker 1: if the FED knocks back demand a little bit, supply

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Speaker 1: is going to continue to recover as supply chains are normalized.

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Speaker 1: And so I think it's quite a bit of momentum

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Speaker 1: over the next twelve months or so. It's I think

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Speaker 1: there's a recession coming. I don't think it's in the

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Speaker 1: near room. And that's, by the way, consistent. You know,

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Speaker 1: if you look at the Bloomberg's own survey of fifty

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Speaker 1: seven economists, and it shows no consensus for that outcome

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Speaker 1: a recession at least before the fourth quarter of And

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Speaker 1: you can see that. We have a table that shows

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Speaker 1: the average GDP forecast for each quarter in the next

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Speaker 1: eight quarters ranges from two point three percent to four

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Speaker 1: and a half percent, and even the lowest forecast and

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Speaker 1: the eight quarters that we're talking about ranges from half

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Speaker 1: a percent to three point two percent. So in other words,

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Speaker 1: the worst of these scenarios, which we've compiled, doesn't anticipate

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Speaker 1: a recession. And you've written about the strength of corporate

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Speaker 1: America as well. I think a couple of columns ago

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Speaker 1: you had had been quoting the Business round Table, UM

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Speaker 1: and also the most recent earnings releases saying that you know,

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Speaker 1: companies are looking to hire more than they ever have before.

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Speaker 1: That's absolutely right. Um. You know, if you went to

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Speaker 1: the Business round Table, which is the two if you like,

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Speaker 1: most prominent companies c e O s, and they said

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Speaker 1: they anticipated this year hiring more people than they have

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Speaker 1: in the past two decades, which is saying a lot.

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Speaker 1: And then if you look at something like debt ratios

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Speaker 1: of American companies, even with all the record corporate borrowing

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Speaker 1: that we've seen because interest rates have been so low,

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Speaker 1: the debt ratios show that companies are actually very healthy.

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Speaker 1: So it's not like we're coming out of, if you will,

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Speaker 1: the financial crisis, which Bill is all too familiar with,

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Speaker 1: because and consumers back and consumer balance sheets are healthy

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Speaker 1: as well. So I mean, Bill, it's safe to say

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Speaker 1: there will be a recession someday. But what pushes us

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Speaker 1: in to a recession. Um. You know, even if the

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Speaker 1: FED raises aggressively, we're going from uh um as close

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Speaker 1: to zero as as damn it. I think the English

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Speaker 1: would say um and uh. You know if the neutral

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Speaker 1: rate is where where? Where you think when you think

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Speaker 1: the neutral rate is um right now? Well, again it

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Speaker 1: depends on where you think recession is. But would you

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Speaker 1: hazard a guess? And you know, I think I think

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Speaker 1: neutral today is probably you know, three and a half

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Speaker 1: ish because inflation is above the fence two objective. I

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Speaker 1: think the problem for the FET is this, whenever the ft,

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Speaker 1: the FET needs to make the labor market looser. If

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Speaker 1: it's going to actually get control of inflation, to make

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Speaker 1: the labor market looser, it has to tighten sufficiently to

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Speaker 1: push the unemployer rate up. Whenever the FET has pushed

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Speaker 1: the unemployer rate up, it's been very difficult to control

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Speaker 1: how much. Every time that has happened, the US economy

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Speaker 1: has ultimately ended in recession. So don't get me wrong.

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Speaker 1: The FEEN is going to try for a soft land.

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Speaker 1: That's what they're going to try for, and of course

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Speaker 1: they have to do that if they're going to try

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Speaker 1: to control inflation. The problem is almost always, they overdo

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Speaker 1: it and the commy dips into recession. So if you

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Speaker 1: don't mind, Bill, let's let's go back in time. You

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Speaker 1: probably we have as much experience with inflation and deflation

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Speaker 1: in our time as any economists, And during your leadership

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Speaker 1: at the New York Fed, you persistently defended quantitative using

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Speaker 1: when so many critics derided KEWI as irresponsibly inflationary and

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Speaker 1: a debasement of the dollar. The critics were wrong. When

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Speaker 1: Janet Yellen became FED chair in two thousand fourteen, unemployment

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Speaker 1: and the labor participation rate we're still in emic, she said,

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Speaker 1: and you agreed with her at that time that the

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Speaker 1: economy needed to run a little hot to get to

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Speaker 1: an optimal job market. So just last Friday, we learned

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Speaker 1: US gained four hundred and thirty one thousand jobs. In March,

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Speaker 1: unemployment felt at three point six percent average big as

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Speaker 1: we average hour le earnings registered to five point six

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Speaker 1: percent increase from the same period last year, and the

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Speaker 1: labor participation rate rose significantly. So I guess, Bill, why

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Speaker 1: is Brad DeLong wrong when he said recently it's time

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Speaker 1: for another victory lap led by the Fed. Well, they

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Speaker 1: deserve a victory lap in terms of getting generating as

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Speaker 1: strong I cannot recovery and getting us back to full

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Speaker 1: employment quickly. The problem now, though, is that they're behind

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Speaker 1: in terms of where they need to be related to

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Speaker 1: what the labor market is. If the FIG wants to

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Speaker 1: sustain the economic expansion, it's gonna keep inflation under control.

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Speaker 1: And to keep inflation under control, they have to tighten

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Speaker 1: Monterrey policy. So I think the problem for the FED

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Speaker 1: here was that they adopted a monterrey policy framework that

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Speaker 1: the operationalized by saying we're not gonna even begin to

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Speaker 1: lift off until we've actually reached to percent inflation, where

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Speaker 1: confident inflation is gonna be both two percent in the

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Speaker 1: future and we're confident that we're at full employment. So

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Speaker 1: we find ourselves in this unusual circumstance at the time

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Speaker 1: where Monterrey policy needs to be neutral or tight, the

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Speaker 1: fit still is on a very very accommodative monetary setting.

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Speaker 1: Big today between where the fit should be and where

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Speaker 1: it is. How much of this match is about monetary

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Speaker 1: policy because there was such a huge fiscal impetus. When

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Speaker 1: Bill says the FED did a great job getting us

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Speaker 1: back to full employment. It seems to me the five

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Speaker 1: six trillion dollars that the US government spent was also helpful.

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Speaker 1: And I noticed yesterday in the Esther George interview that

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Speaker 1: Michael McKee did she said, um, you know, the fiscal

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Speaker 1: impetus is gonna wane here. Well, that's definitely true. I mean,

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Speaker 1: and there's been considerable discussion about to what extent did

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Speaker 1: the Relief Act last year have on inflation? And there

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Speaker 1: are plenty of economists who say not that much, um,

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Speaker 1: And you know, Frankly uh to credit Bill, he has

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Speaker 1: been very consistent, going back at least a couple of

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Speaker 1: years and saying the Fed really needs to get on

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Speaker 1: the escalator um, and that we are going to see

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Speaker 1: you know, higher interest rates. It's just a question of when.

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Speaker 1: But they have to get there. So I'm not so

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Speaker 1: sure it's so much a fiscal issue here with respect

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Speaker 1: to inflation. It's more the latter coming out of you know,

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Speaker 1: this expansion and uh, you know, interest rates and you

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Speaker 1: have to come up. So that's kind of where I

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Speaker 1: wanted to go, Bill. I mean, the inflation that I experience,

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Speaker 1: I'm sure many Americans experience. It's at the gas pump.

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Speaker 1: It's at the supermarket, it's maybe the local deli um.

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Speaker 1: But a lot of that is just supplying demand in

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Speaker 1: an economy. We I've got a global reopening economy. I've

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Speaker 1: got these crazy supply chain issues that are vexing all

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Speaker 1: types of industries. In that scenario, what can the FED

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Speaker 1: really do in terms of inflation, Well, the supply chains

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Speaker 1: did that. That has to be has to be patient.

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Speaker 1: But the problem we have with inflation now it's not

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Speaker 1: just about supply chain disruptions, because we've seen the inflation

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Speaker 1: pressure broadened out. So if you look at, for example,

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Speaker 1: the Cleveland fled or the Dallas that that have measures

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Speaker 1: of median CPI trim mean uh, they basically show that

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Speaker 1: the pressures are now much broader than they were earlier.

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Speaker 1: So it's not just the question of use car prices

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Speaker 1: going up because there's chip shortages that are inhibiting new

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Speaker 1: car production. Is much broader then think you know, the

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Speaker 1: wage trend I think is also relevant here. You know,

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Speaker 1: if you act yourself, what wage inflation rate is consistent

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Speaker 1: with two percent inflation? You wouldn't pick five and a

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Speaker 1: half to six percent. You pick something in the probably

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Speaker 1: the three or four percent Rang, So the wage trend

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Speaker 1: already is higher than what's consistent with two percent inflation.

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Speaker 1: I do wish the FED could somehow get General Motors

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Speaker 1: to produce more Sierra fift hundred, you know, a T

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Speaker 1: four x is if the FED could just supply them

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Speaker 1: with the microchips, you know, maybe the price increase has

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Speaker 1: been insane. By the way, I've come back just a

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Speaker 1: few months ago, I've been looking at trucks, and trucks

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Speaker 1: that were fifty five thousand dollars in January became sixty

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Speaker 1: dollars in February. Now there's sixty five dollars. This is

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Speaker 1: new m s r P. It's unbelievable. But there's not

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Speaker 1: much the FED can really do about that. Matt Well,

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Speaker 1: what the Fed we'll pay attention to us they should

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Speaker 1: is expectations. And the one variable here that is somewhat

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Speaker 1: encouraging is that we are not seeing yet built into

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Speaker 1: this market the expectation like we did in the seventies,

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Speaker 1: that everything is going to go up um and our

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Speaker 1: behavior is measured by that. We're not there yet. So

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Speaker 1: will we get there? Do you think? Hopefully not? Billy Bill,

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Speaker 1: We're gonna get to that spot I mean, I mean,

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Speaker 1: I think, I think Matth exactly right. That is the

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Speaker 1: positive in the in the outlook is that inflation expectations

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Speaker 1: are still pretty well anchored. And you could argue that's

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Speaker 1: actually a little bit of a surprise. I mean, if

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Speaker 1: you sort of looked at what's actually happening to in

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Speaker 1: terms of inflation and how slow the FIT has been

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Speaker 1: to react, it's quite striking that market participants in households

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Speaker 1: and businesses still are comfortable that the FETE is ultimately

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Speaker 1: going to do their job. This is precisely what you've

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Speaker 1: been writing, Matt. Well, yeah, it could be a semantic discussion,

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Speaker 1: but I've been saying that it's kind of hard for

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Speaker 1: me to accept the fact that when the FETE is

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Speaker 1: data dependent, which means that the data changes, the FED changes,

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Speaker 1: that it's behind the curve, and Bill and the majority

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Speaker 1: of economists say no, no, no, no no, no, they're behind

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Speaker 1: the behind the curve. All right, that's fantastic, Bill Dudley,

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Speaker 1: thank you so much for joining us. Former New York

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Speaker 1: Fed President Bill Dudley and Bloomberg News Editor in chief

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Speaker 1: emeritus founder of Bloomberg News Matt wink with joining us

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Speaker 1: here in our Bloomberg Interactive Broker Studio. Fascinating discussion on

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Speaker 1: what we're gonna see from this photo reserve going forward again.

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Speaker 1: Fo MC meetings Meeting minutes will be released today two

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Speaker 1: pm Wall Street time. Time to get the update that

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Speaker 1: I think we all need on Ukraine. It is a

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Speaker 1: fluid situation, certainly in some of the images coming out

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Speaker 1: of parts of Ukraine are very very disturbing. Let's bringing

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Speaker 1: Amor Hordern, Washington correspondent for Bloomberg Television and Marie thanks

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Speaker 1: so much for joining us here. It feels what's the

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Speaker 1: I guess I'll just step back and say what's really

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Speaker 1: the latest thinking from Washington, d C About how this

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Speaker 1: situation in the Ukraine can go, will go, and maybe

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Speaker 1: how we should be continuing to engage well. Jake Sullivan

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Speaker 1: recently had a briefing, was saying that they see some

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Speaker 1: practical changes and in Russia and that there's going to

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Speaker 1: be a focus more on eastern and southern Ukraine specifically,

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Speaker 1: especially making sure they can maintain that stronghold in Luhansk

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Speaker 1: and don Yesk. But what is very clear, and you

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Speaker 1: just need to turn your television or open up Twitter

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Speaker 1: to see, is that the assault on the Russian cities

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Speaker 1: and the attacks on civilians. It's not just Bucha, it's

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Speaker 1: Mario pol It's a number of cities that continues every day,

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Speaker 1: and so it continues in a nasty, nasty way. And

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Speaker 1: I know the atrocities are we are alleging that Russians

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Speaker 1: committed atrocities. They're saying that the photographic and video evidence

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Speaker 1: has been faked somehow. Um. But our Western government's prepared

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Speaker 1: to really take the final step. We can say we're

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Speaker 1: not going to buy any coal from Russia anymore. That's

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Speaker 1: easy because we don't want coal and we have enough

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Speaker 1: coal ourselves. Um. But saying for Germany to say we

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Speaker 1: refused to pay hundreds of billions for natural gas, that's

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Speaker 1: that's a big step to take. It would be a

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Speaker 1: big step to take. And also are they prepared to

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Speaker 1: take that step in the sense that not just morally prepared,

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Speaker 1: which I think they wished they were at uh or

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Speaker 1: they are at excuse me, but in terms of the infrastructure,

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Speaker 1: I think they wished they were there. Because Shulton said

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Speaker 1: today the German Chancellor, that what is going on and

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Speaker 1: the image of that a Busha, these are war crimes.

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Speaker 1: So you do see Germany wanting to wratch it up

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Speaker 1: that pressure and really hurt Russia. For what is going

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Speaker 1: on the issue is they're just way to rely on.

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Speaker 1: What we can potentially see is individual European states coming

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Speaker 1: out and unilaterally going further. I know Lithuania is tiny,

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Speaker 1: but they did this themselves. Potentially, maybe you'll see other

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Speaker 1: Baltic trees do this themselves, because it's going to take

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Speaker 1: a while to get all twenty seven European countries to

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Speaker 1: agree on this, right well, and most of them are

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Speaker 1: so small that it doesn't matter. Right. Germany is the

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Speaker 1: biggest economy in Europe m eighty million people and they

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Speaker 1: gets I think sixty of their energy needs from Russian gas.

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Speaker 1: So the idea is they're willing to hurt Russia, but

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Speaker 1: they're not willing to hurt themselves yet. Um. You know.

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Speaker 1: The the interesting thing is the Ukrainians would ask, why

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Speaker 1: you know you're watching these atrocities, why haven't you done

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Speaker 1: more like at least give us a no fly zone,

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Speaker 1: right And NATO's response is, well, we don't want to

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Speaker 1: directly engage Russia because there goes World War three. Um,

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Speaker 1: you have been really excellent in your coverage of Mikhail Kardarkowski.

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Speaker 1: For those who don't know, he was once Russia's richest man.

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Speaker 1: He was a billionaire who ran Yukos oil and he

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Speaker 1: was politically opposed to Putin. Um that didn't go well.

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Speaker 1: He was accused of tax evasion to the tune of

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Speaker 1: something like billion and then spent ten years in a

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Speaker 1: gulag Um. Now he's out, and he's very vocal about um.

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Speaker 1: Obviously his criticism of Vladimir Putin. But he said something

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Speaker 1: really interesting yesterday, which is that the West is already

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Speaker 1: engaged with Russia, at least from Putin's perspective. Kodakovski says,

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Speaker 1: we're already. He thinks the West is already in a

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Speaker 1: war against him. Yes, Michel Kolkowski is very interesting to

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Speaker 1: talk to you, because you really can understand the thinking

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Speaker 1: of the Russian elite and also the thinking of President

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Speaker 1: Putin the Kremlin. And he says, from Putin's eyes, the

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Speaker 1: United States Western allies already at war with Russia. And

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Speaker 1: he says the same mistake that the West does not

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Speaker 1: realized and they do not understand that. That is Putin's perspective.

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Speaker 1: And a lot of the time when you hear from

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Speaker 1: Western leaders is you know, we will defend NATO every

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Speaker 1: single inch. But this is almost a nuance that doesn't

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Speaker 1: even filter into Putin's mind. He already thinks he's there

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Speaker 1: and he's fighting a war with America. And if you

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Speaker 1: look at any Russian state TV, that is also the

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Speaker 1: sense that you get that this is a US backed war,

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Speaker 1: Western backed war against Russia and Ukraine. So, Henry, what's

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Speaker 1: the feeling in Washington these days about next steps for

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Speaker 1: the US and maybe the US as it relates to NATO.

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Speaker 1: Is there any consensus as to what we should do?

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Speaker 1: I guess next, more, better, bigger. Well, just in the

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Speaker 1: past hour we got a brief on the latest sanctions,

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Speaker 1: so still more economic sanctions and those included a full

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Speaker 1: blocking sanctions on Spur Bank, which is Russia's biggest bank,

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Speaker 1: as well as ALFA Bank. But again they include energy

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Speaker 1: carve out. So it really comes full circle to the

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Speaker 1: start of this conversation with winners Germany and Europe going

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Speaker 1: to get on board with or be able to block

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Speaker 1: Russian oil and gas. He also we also have sanctions

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Speaker 1: on Putin's two adult children, Catherina and Maria. Interesting enough,

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Speaker 1: Putto has gone through great lengths his entire life to

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Speaker 1: really cloud them in secrecy. Uh so, quite symbolic, but

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Speaker 1: also very personal, and also a ban on investments in Russia.

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Speaker 1: But just to take it back to Miyaw Karakowski, because

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Speaker 1: I spent more than an hour with him yesterday and

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Speaker 1: he's in Washington meeting with officials as well. He says

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Speaker 1: that Putin is not afraid of sanctions. Sanctions alone cannot

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Speaker 1: to ter Putin. And the idea of going after the oligarch,

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Speaker 1: you know, makes sense, but the presumption that they can

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Speaker 1: have a change on Putin is just not there. And

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Speaker 1: maybe the West thinks that could happen, but he says

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Speaker 1: that is just not how Russia works. It is a

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Speaker 1: complete dictatorship. Some have said that, you know, these sanctions

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Speaker 1: aren't so much to deter Putin has to make the

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Speaker 1: West feel better about ourselves, right, Yeah, interesting to say.

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Speaker 1: It's a very difficult situation. And Re Hordern, thank you

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Speaker 1: so much for joining us. We love getting your perspective

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Speaker 1: from Washington, d C. And Re Hoarder, and Washington correspondent

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Speaker 1: for Bloomberg Television, has a story out on the Bloomberg

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Speaker 1: terminal with her interview of that ex oligarch from Russia

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Speaker 1: who Henry's set is in Washington making the rounds there.

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Speaker 1: So I appreciate getting her perspective. There. There's m and

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Speaker 1: A activity, there's a consalination going on in the airline

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Speaker 1: business today. Got Jet Blue taking a look um at

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Speaker 1: the business as well, looking to make a bid for Spirit.

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Speaker 1: George Ferguson the fourth, by the way, senior Aerospace, Defense

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Speaker 1: and Airlines Annos with Bloomberg Intelligence joins us. So from

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Speaker 1: your military intelligence to Bloomberg Intelligence exactly. So yeah, George

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Speaker 1: was in the army and military intelligence. That tells you

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Speaker 1: all we need to know about our military. As I

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Speaker 1: always say, George, thanks so much for joining us here.

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Speaker 1: What's jet Blues? What's strategy here? Why does it want

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Speaker 1: to own uh Spirit Airlines? Yes to thank for having

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Speaker 1: me yet, um so I really think you know Jet

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Speaker 1: Blue has spent you know a number of years, um,

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Speaker 1: a lot of years from on the periphery of the business.

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Speaker 1: Right there's uh, you know the main carriers you have.

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Speaker 1: You know you have American, United, Delta, the big full

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Speaker 1: service carriers got you got the Southwest and Jet Blue

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Speaker 1: and Alaska have had this smaller role in the marketplace.

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Speaker 1: I think Jet Blue is looking at Spirit and Frontier

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Speaker 1: getting together, thinking about how rough that's going to be

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Speaker 1: on competition, thinking about where their position in the industry is,

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Speaker 1: maybe even the ability to grow, because their order book

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Speaker 1: just is in as as large as Spirits and Frontiers

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Speaker 1: um a couple of years into the future, and they're

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Speaker 1: thinking this is their opportunity to try to get in

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Speaker 1: the mix, because otherwise they're gonna be fighting against a

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Speaker 1: really intense competitor of a combined Spirit and in Frontier. George,

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Speaker 1: how much competition is really allowed in the US market.

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Speaker 1: When I um lived here, I didn't think about it much.

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Speaker 1: I moved to Germany, back to Germany in two thousand

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Speaker 1: and sixteen, spent six years there, and I've just come

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Speaker 1: back and I realized, Um, I thought, why did I

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Speaker 1: travel so much in Europe? Every weekend? I was in Rome,

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Speaker 1: I was in Paris, I was in Madrid, I was

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Speaker 1: all over the place. And the reason is plane tickets

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Speaker 1: who were like sometimes twenty euros, you know, but they

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Speaker 1: weren't more than a hundred euros in any direction usually,

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Speaker 1: And here in the US that's just not the case.

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Speaker 1: Not by a long shot is that how has that

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Speaker 1: competition been stifled here? Yeah, so the US has been

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Speaker 1: a more consolidated market than the rest of the world,

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Speaker 1: especially sort of Europe. Actouldn't say the best world then

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Speaker 1: Europe um. And you know, I think you're both has

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Speaker 1: a different phenomena where there's more vacation, and so if

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Speaker 1: you got five or six weeks of vacation to take

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Speaker 1: more trips, like Matt doesn't, you know you yeah, like

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Speaker 1: Matt does. And you know, Matt, you you wanted to

429
00:23:43,160 --> 00:23:45,880
Speaker 1: spend fifty euros of the flight and spend the rest

430
00:23:45,960 --> 00:23:48,359
Speaker 1: of the money in Barcelona rather than spending on the

431
00:23:48,440 --> 00:23:51,400
Speaker 1: flight where Americans kind of get two to three weeks,

432
00:23:51,440 --> 00:23:55,320
Speaker 1: they might do one flight a year, um, you know,

433
00:23:55,440 --> 00:23:57,000
Speaker 1: And and they're kind of, I think, willing to pay

434
00:23:57,000 --> 00:24:00,280
Speaker 1: a little more. Although Spirit in Frontier are the ones

435
00:24:00,359 --> 00:24:03,960
Speaker 1: testing that model right there, testing the idea that Americans

436
00:24:04,040 --> 00:24:07,000
Speaker 1: might people might desire to pay a lot less and

437
00:24:07,280 --> 00:24:10,680
Speaker 1: get less in their flight but there's less. Do you

438
00:24:10,760 --> 00:24:14,960
Speaker 1: do you think that consumer behavior could be different post pandemic?

439
00:24:15,160 --> 00:24:18,040
Speaker 1: You know, we've seen things like the Great Resignation, which

440
00:24:18,080 --> 00:24:20,560
Speaker 1: we're still trying to figure out. Is it possible that

441
00:24:20,640 --> 00:24:23,560
Speaker 1: consumers are like, you know what, I'm I'm working from

442
00:24:23,640 --> 00:24:26,800
Speaker 1: home now or some kind of hybrid model. I'm I'm

443
00:24:26,880 --> 00:24:30,720
Speaker 1: demanding thirty days off a year, and I'm gonna travel.

444
00:24:30,840 --> 00:24:33,040
Speaker 1: I'm gonna go see the Grand Canyon. I'm gonna go

445
00:24:33,119 --> 00:24:36,719
Speaker 1: to Joshua Tree on shrooms or whatever. And I mean,

446
00:24:36,760 --> 00:24:41,480
Speaker 1: they're gonna be taking more flights, I think, so, I

447
00:24:41,600 --> 00:24:43,960
Speaker 1: hope so. I think the other big part of this

448
00:24:44,480 --> 00:24:47,240
Speaker 1: is um. I mean, because look, first, we do have

449
00:24:47,320 --> 00:24:49,840
Speaker 1: to change some of the US employer behavior to give

450
00:24:49,840 --> 00:24:51,639
Speaker 1: you a little more time off or I guess we

451
00:24:51,760 --> 00:24:53,880
Speaker 1: all call it working from homes are flying somewhere, which

452
00:24:53,920 --> 00:24:55,960
Speaker 1: I guess. You know, if WiFi is good enough in

453
00:24:55,960 --> 00:24:57,879
Speaker 1: the airplane, maybe you get away with that. But the

454
00:24:58,080 --> 00:25:00,639
Speaker 1: other big thing that we're looking at is just that

455
00:25:01,160 --> 00:25:04,159
Speaker 1: the consumer pocketbook is going to be pressured here right

456
00:25:04,720 --> 00:25:08,399
Speaker 1: The price of fuel is um, you know, fuel and

457
00:25:08,440 --> 00:25:11,680
Speaker 1: heating oil and uh, it's gonna ripple through your economy

458
00:25:11,840 --> 00:25:15,400
Speaker 1: is just astronomical right now. And that's going to pressure

459
00:25:15,600 --> 00:25:17,359
Speaker 1: their pocketbook. And so the consumer is going to go

460
00:25:17,400 --> 00:25:20,159
Speaker 1: out and say I want to go on vacation, but

461
00:25:20,280 --> 00:25:22,800
Speaker 1: I'm I can't spend a lot of money getting there. Oh,

462
00:25:22,880 --> 00:25:26,040
Speaker 1: look at Spirit in Frontier, whatever the combined company might

463
00:25:26,080 --> 00:25:28,639
Speaker 1: be called. If it gets done. Oh, they've got a

464
00:25:28,680 --> 00:25:32,479
Speaker 1: flight for forty dollars, I'll do that, right. I can

465
00:25:32,560 --> 00:25:33,960
Speaker 1: suck up the fact that I'm not going to get

466
00:25:34,000 --> 00:25:36,280
Speaker 1: any recline on my seat on the on the weight

467
00:25:36,320 --> 00:25:39,320
Speaker 1: of vegas or something like that. So that's the challenge.

468
00:25:39,359 --> 00:25:41,560
Speaker 1: The consumer is going to be pressured here, and that's

469
00:25:41,600 --> 00:25:44,280
Speaker 1: why that's a really interesting thing about this merger or sorry,

470
00:25:44,359 --> 00:25:47,480
Speaker 1: this this purchase of jet Blue. Jet Blue wants to

471
00:25:47,560 --> 00:25:51,159
Speaker 1: take Spirit and turn it into jet Blue. Now, look,

472
00:25:51,160 --> 00:25:53,680
Speaker 1: I think jet Blue's got a great product, but I

473
00:25:53,800 --> 00:25:57,520
Speaker 1: think that the consumer is again pressured. Consumer is going

474
00:25:57,560 --> 00:26:00,960
Speaker 1: to say, just give me the cheapest ticket price, not

475
00:26:01,240 --> 00:26:04,359
Speaker 1: giving me give me you know, aircs love to talk

476
00:26:04,400 --> 00:26:07,560
Speaker 1: about sort of the quality of the product, the product experience.

477
00:26:07,880 --> 00:26:10,040
Speaker 1: People just want to get there. Then they want to

478
00:26:10,080 --> 00:26:12,840
Speaker 1: have fun. And I think that's that's the interesting part

479
00:26:12,880 --> 00:26:14,960
Speaker 1: of this is that jet Blue wants to turn Spirit

480
00:26:15,040 --> 00:26:17,159
Speaker 1: into jet Blue, which I think will be very challenging.

481
00:26:17,320 --> 00:26:20,000
Speaker 1: George thirty seconds. Does this deal get past the regulators.

482
00:26:20,920 --> 00:26:22,680
Speaker 1: I do think it will get past regulars. I don't

483
00:26:22,680 --> 00:26:24,320
Speaker 1: think any of these airlines are so important to the

484
00:26:24,400 --> 00:26:27,080
Speaker 1: US economy. You have so much market share anywhere that

485
00:26:27,200 --> 00:26:30,320
Speaker 1: it can't get done. All right, George, good stuff. Appreciate that.

486
00:26:30,680 --> 00:26:34,920
Speaker 1: George Ferguson, Senior Aerospace, Defense and Airline annalys from Bloomberg Intelligence.

487
00:26:34,960 --> 00:26:42,480
Speaker 1: He's been coming in stocks for decades. Back to work,

488
00:26:42,560 --> 00:26:46,119
Speaker 1: getting back to the office. New York businesses, they're figuring

489
00:26:46,160 --> 00:26:49,400
Speaker 1: out how to go. You're bringing people back how many days? Well,

490
00:26:49,680 --> 00:26:51,440
Speaker 1: when they deal with that, They've also got some new

491
00:26:51,520 --> 00:26:53,680
Speaker 1: legislation that they have to think about in terms of

492
00:26:53,720 --> 00:26:57,440
Speaker 1: whistleblower protections. Some new legislation coming there as well as

493
00:26:58,280 --> 00:27:02,440
Speaker 1: disclosing salaries for external and internal job posting. So some

494
00:27:02,560 --> 00:27:05,119
Speaker 1: new regulations coming. Question is how will some of these

495
00:27:05,160 --> 00:27:08,520
Speaker 1: businesses deal with that. We welcome, Rania said Home, managing

496
00:27:08,560 --> 00:27:10,760
Speaker 1: partner of the set Home Law Group. So Rania talked

497
00:27:10,760 --> 00:27:12,639
Speaker 1: to us about some of the this new legislation that

498
00:27:12,880 --> 00:27:17,159
Speaker 1: employers and employees in New York need to deal with.

499
00:27:19,080 --> 00:27:22,520
Speaker 1: Thanks for having me on the show. Thanks so much. Well,

500
00:27:22,560 --> 00:27:26,879
Speaker 1: the whistle Blower Act is actually retroactive to January, and

501
00:27:26,960 --> 00:27:29,399
Speaker 1: it may come as a surprise for many. We were

502
00:27:29,440 --> 00:27:31,960
Speaker 1: all scrambling, you know, to start this new year hopefully

503
00:27:32,200 --> 00:27:35,119
Speaker 1: COVID free. And we might have missed this one, but

504
00:27:35,400 --> 00:27:39,280
Speaker 1: the whistleblower protections in New York have it expanded, and

505
00:27:39,440 --> 00:27:43,879
Speaker 1: now it protects employees who complain about any actual or

506
00:27:43,960 --> 00:27:49,840
Speaker 1: suspected violation of any law. Prior to January two, they

507
00:27:49,840 --> 00:27:53,160
Speaker 1: would only have whistle lower protection if their complaints related

508
00:27:53,240 --> 00:27:57,119
Speaker 1: to a specific danger or public health and safety. So

509
00:27:57,480 --> 00:28:01,080
Speaker 1: there's truly no exception at this point. The only uh,

510
00:28:01,240 --> 00:28:03,639
Speaker 1: you know, argument that an employer can make if they

511
00:28:03,720 --> 00:28:07,840
Speaker 1: fire someone who complained is that, uh, there was no

512
00:28:07,960 --> 00:28:11,879
Speaker 1: reasonable belief about what the employee was complaining about. We

513
00:28:12,000 --> 00:28:14,720
Speaker 1: have to wait and see what that means. It's so interesting.

514
00:28:14,920 --> 00:28:17,320
Speaker 1: First of all, I have a few friends named Brownia,

515
00:28:17,680 --> 00:28:22,920
Speaker 1: So you do. Yes, okay, so that's great, Thank you

516
00:28:23,040 --> 00:28:28,200
Speaker 1: so much. Second second of all, um, so we've really seen,

517
00:28:28,480 --> 00:28:31,000
Speaker 1: or you know, Bloomberg News been writing about a shift

518
00:28:31,119 --> 00:28:33,760
Speaker 1: towards labor the likes of which we haven't seen in decades.

519
00:28:33,800 --> 00:28:36,080
Speaker 1: And I know when you were at Syracuse you were

520
00:28:36,119 --> 00:28:39,640
Speaker 1: the editor of the Labor Lawyer, um and a digest there,

521
00:28:39,720 --> 00:28:44,160
Speaker 1: so you um do labor law. Do you agree that

522
00:28:44,240 --> 00:28:47,520
Speaker 1: we've seen a big shift towards the rights of workers.

523
00:28:48,640 --> 00:28:51,960
Speaker 1: I do see this shift, and I see more coming.

524
00:28:52,080 --> 00:28:55,480
Speaker 1: I don't have a crystal ball, but I have intuition,

525
00:28:55,760 --> 00:28:57,840
Speaker 1: and I think there's going to be more and more

526
00:28:57,920 --> 00:29:01,280
Speaker 1: of a shift. And I think you negotiations are going

527
00:29:01,400 --> 00:29:04,960
Speaker 1: to be more aggressive, um, you know, toward the labor side.

528
00:29:05,560 --> 00:29:08,479
Speaker 1: I think employers need to gear up. We hear more

529
00:29:08,480 --> 00:29:13,240
Speaker 1: and more stories Uh, Amazon, the the union, UM want

530
00:29:13,280 --> 00:29:17,800
Speaker 1: to vote their Starbucks. UM. And these aren't you know, nationwide.

531
00:29:18,160 --> 00:29:23,000
Speaker 1: These are in specific areas. But we also have seen

532
00:29:23,480 --> 00:29:28,480
Speaker 1: UM average hourly wages continue to rise. Um. And Paul

533
00:29:28,560 --> 00:29:31,280
Speaker 1: was just talking about disclosure rules. So what's the story.

534
00:29:31,360 --> 00:29:34,240
Speaker 1: Now They companies have to disclose what they're paying to

535
00:29:34,400 --> 00:29:37,880
Speaker 1: employees who come into the office as opposed to employees

536
00:29:37,880 --> 00:29:43,240
Speaker 1: who work from home. No. Effective May fourteen, New York

537
00:29:43,320 --> 00:29:46,640
Speaker 1: City employers, not New York State, just New York City.

538
00:29:46,680 --> 00:29:50,400
Speaker 1: Now the law changed slightly, actually two days ago. Now

539
00:29:50,480 --> 00:29:54,400
Speaker 1: it applies to those employers who employ at least fifteen employees.

540
00:29:55,760 --> 00:29:59,480
Speaker 1: Whenever you post an advertisement, whether it's internal or external,

541
00:29:59,560 --> 00:30:02,560
Speaker 1: for any of available job, you have to provide the

542
00:30:02,640 --> 00:30:05,880
Speaker 1: salary range for that job, and failure to do so

543
00:30:06,560 --> 00:30:10,080
Speaker 1: is going to be deemed an unlawful discriminatory practice and

544
00:30:10,560 --> 00:30:14,160
Speaker 1: comes with a fine of up two I see so

545
00:30:14,280 --> 00:30:17,400
Speaker 1: internal external meaning like inside of work, outside of work.

546
00:30:17,440 --> 00:30:21,160
Speaker 1: I mean, if my manager sends around a group email

547
00:30:21,360 --> 00:30:24,440
Speaker 1: and says we're looking for a new director of East

548
00:30:24,480 --> 00:30:29,040
Speaker 1: Coast Operations, Um, she has to then include the salary

549
00:30:29,200 --> 00:30:33,040
Speaker 1: range if they've done so for an external posting. Uh,

550
00:30:33,240 --> 00:30:35,320
Speaker 1: you have to do it for both listings. But yes,

551
00:30:35,520 --> 00:30:37,640
Speaker 1: your your analogy is correct. By the way, in terms

552
00:30:37,680 --> 00:30:39,320
Speaker 1: of working from home, Paul and I were talking about

553
00:30:39,320 --> 00:30:42,120
Speaker 1: this earlier. Um, if you work in New York, you

554
00:30:42,200 --> 00:30:44,840
Speaker 1: gotta pay New York City taxes. And a lot of

555
00:30:44,920 --> 00:30:48,600
Speaker 1: people who used to work in New York City offices

556
00:30:48,800 --> 00:30:53,400
Speaker 1: now telecommute in from Connecticut or New Jersey or Florida

557
00:30:53,560 --> 00:30:57,280
Speaker 1: or Texas. Do those people have to pay New York

558
00:30:57,400 --> 00:31:01,720
Speaker 1: City income taxes since they're not physically coming to this place,

559
00:31:01,920 --> 00:31:05,600
Speaker 1: even if um, you know, they remote into computers at

560
00:31:06,360 --> 00:31:11,160
Speaker 1: on Manhattan Island. The employees income tax is going to

561
00:31:11,240 --> 00:31:14,640
Speaker 1: be based upon their residents. I don't know if these

562
00:31:14,720 --> 00:31:19,080
Speaker 1: employees have changed their residents officially or not, but uh,

563
00:31:19,440 --> 00:31:23,200
Speaker 1: that's on them. But the employer may have to register

564
00:31:23,360 --> 00:31:25,480
Speaker 1: to do business in a state that there are otherwise

565
00:31:26,320 --> 00:31:29,719
Speaker 1: not registered to do business and because of this telecommuter

566
00:31:30,120 --> 00:31:33,680
Speaker 1: that they have. Interesting. So, Ronnie, when you talk to

567
00:31:33,760 --> 00:31:38,000
Speaker 1: your clients, is it is hybrid the way it's going

568
00:31:38,080 --> 00:31:42,080
Speaker 1: to be going forward? You know, I still hear they're

569
00:31:42,080 --> 00:31:45,600
Speaker 1: prepping for that, some Goldman Sachs executives trying to hold steady. No,

570
00:31:45,680 --> 00:31:47,280
Speaker 1: you've got to be in the office every single day,

571
00:31:47,360 --> 00:31:50,080
Speaker 1: blah blah blah. Bank you American workers to come back

572
00:31:50,120 --> 00:31:51,360
Speaker 1: in June. But what do you what do you see

573
00:31:51,520 --> 00:31:55,080
Speaker 1: from your clients. I think a lot of my clients

574
00:31:55,160 --> 00:31:58,680
Speaker 1: and just um, you know other business owners who I

575
00:31:58,720 --> 00:32:03,000
Speaker 1: know who are friends, they're worried that if they proclaim

576
00:32:03,160 --> 00:32:05,920
Speaker 1: that it's a five day in office work week that

577
00:32:06,040 --> 00:32:09,080
Speaker 1: they'll lose employees. And so several of them are easing

578
00:32:09,200 --> 00:32:14,320
Speaker 1: into returning to work and having a hybrid workplace. One

579
00:32:14,520 --> 00:32:16,960
Speaker 1: is because again they're afraid that they'll lose their employees.

580
00:32:17,000 --> 00:32:20,240
Speaker 1: And two there's still some uncertainty with the pandemic and

581
00:32:20,520 --> 00:32:24,760
Speaker 1: they don't need any liability. But I think ultimately we

582
00:32:24,880 --> 00:32:28,400
Speaker 1: are going to go back to, you know, in office

583
00:32:28,800 --> 00:32:32,560
Speaker 1: work because it's easier to collaborate and when everybody is

584
00:32:32,600 --> 00:32:35,880
Speaker 1: working from home, it's different than if we're in a

585
00:32:35,960 --> 00:32:38,480
Speaker 1: meeting and two people are on the phone or on

586
00:32:38,600 --> 00:32:41,680
Speaker 1: zoom whatever people are using, and everyone else is in

587
00:32:41,760 --> 00:32:45,400
Speaker 1: the conference room. Um, I can understand that. Although I

588
00:32:47,040 --> 00:32:49,600
Speaker 1: I can understand, I can imagine a future in which

589
00:32:49,720 --> 00:32:53,360
Speaker 1: we all um work in the metaverse. I know, using

590
00:32:53,400 --> 00:32:55,720
Speaker 1: that term makes it sound weird, I know, but you

591
00:32:55,800 --> 00:32:57,680
Speaker 1: know what, try and think of it as a like

592
00:32:57,760 --> 00:32:59,720
Speaker 1: a zoom call where we that we all go to

593
00:33:00,000 --> 00:33:02,160
Speaker 1: and then we can all walk from our zoom desk

594
00:33:02,280 --> 00:33:06,160
Speaker 1: to the zoom cafeteria or to the zoom you know

595
00:33:06,240 --> 00:33:09,600
Speaker 1: coat room. I mean, it doesn't seem that strange to me.

596
00:33:10,000 --> 00:33:13,360
Speaker 1: I wonder how the legal issues change when you go

597
00:33:13,640 --> 00:33:17,400
Speaker 1: from uh an in office work situation to one where

598
00:33:17,480 --> 00:33:23,560
Speaker 1: we all work in the cloud. Well, there are several

599
00:33:23,960 --> 00:33:26,480
Speaker 1: you know, things that will arise. For example, you know,

600
00:33:26,600 --> 00:33:31,480
Speaker 1: workers compensation insurance. It's mandatory and uh it's based upon

601
00:33:31,640 --> 00:33:35,880
Speaker 1: where the employee is working, doesn't even matter whether where

602
00:33:35,920 --> 00:33:38,840
Speaker 1: their residence is. So I could have decided to go

603
00:33:38,960 --> 00:33:41,960
Speaker 1: to Hawaii and work from there during the pandemic, my

604
00:33:42,160 --> 00:33:46,520
Speaker 1: company would have to purchase workers compensation for me in Hawaii,

605
00:33:46,920 --> 00:33:50,120
Speaker 1: and then there are all of these issues surrounding well,

606
00:33:50,640 --> 00:33:54,520
Speaker 1: you know, what happened to you, what injury happened, and

607
00:33:54,920 --> 00:33:57,640
Speaker 1: was it work related? And was it during work hours?

608
00:33:57,760 --> 00:34:00,680
Speaker 1: And as we've heard several people say, working from home

609
00:34:00,800 --> 00:34:03,880
Speaker 1: is convenient on one hand, but inconvenience on the other hand,

610
00:34:03,960 --> 00:34:06,720
Speaker 1: because there's a blurry of what is what am I

611
00:34:06,800 --> 00:34:09,480
Speaker 1: doing for work? On what am I doing for myself?

612
00:34:10,000 --> 00:34:13,800
Speaker 1: There's also you know, unemployment insurance, you'd have to purchase

613
00:34:13,880 --> 00:34:16,600
Speaker 1: it wherever it is a person is working again. And

614
00:34:16,719 --> 00:34:20,919
Speaker 1: then uh employee reimbursements. This you know, varies from state

615
00:34:21,000 --> 00:34:25,400
Speaker 1: to state how aggressive the reimbursement policies are. For example,

616
00:34:25,520 --> 00:34:28,360
Speaker 1: in some states you have to pay a portion of

617
00:34:28,480 --> 00:34:32,080
Speaker 1: your employees electricity bill and internet bill because that's your

618
00:34:32,160 --> 00:34:35,200
Speaker 1: new office. So there are a lot of things to consider,

619
00:34:35,360 --> 00:34:38,439
Speaker 1: and that's why I think as these things percoate, we're

620
00:34:38,480 --> 00:34:41,080
Speaker 1: not everybody's gonna have to figure it out. Everybody's got

621
00:34:41,080 --> 00:34:43,000
Speaker 1: to figure it out, all right. Ronnie, thank you so

622
00:34:43,120 --> 00:34:45,439
Speaker 1: much for joining us, Ronnie set Home, Managing Partner, set

623
00:34:45,480 --> 00:34:51,320
Speaker 1: Home a Law Group. Thanks for listening to the Bloomberg

624
00:34:51,400 --> 00:34:54,800
Speaker 1: Markets podcast. You can subscribe and listen to interviews of

625
00:34:54,840 --> 00:34:59,640
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.

626
00:35:00,000 --> 00:35:03,600
Speaker 1: I'm on Twitter at Matt Miller seventy three. And I'm

627
00:35:03,640 --> 00:35:06,680
Speaker 1: fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast,

628
00:35:06,760 --> 00:35:09,239
Speaker 1: you can always catch us worldwide at Bloomberg Radio