WEBVTT - Bloomberg Surveillance TV: May 20, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.159 Terminal and the Bloomberg Business app. We begin with our 0:00:37.200 --> 0:00:39.680 top story and kicking off the week with all eyes 0:00:39.720 --> 0:00:42.600 on Nvidio the City. Stuart Kais are writing this markets 0:00:42.640 --> 0:00:45.800 will be captivated by Nvidia earnings, but after that event 0:00:46.120 --> 0:00:49.520 there are about two weeks without clear catalysts. Last quarter, 0:00:49.640 --> 0:00:51.960 Russell two thousand and s and P five hundred equal 0:00:51.960 --> 0:00:55.600 weight both outperformed the SMP by about two hundred basis 0:00:55.600 --> 0:00:59.600 points between Nvidia earnings and the March CPI report. We 0:00:59.720 --> 0:01:03.319 like positioning for a similar patent. Steve judges for more 0:01:03.360 --> 0:01:03.680 good on it. 0:01:03.760 --> 0:01:05.000 Ste Good Morning to. 0:01:05.000 --> 0:01:07.080 Find good is two weeks of no dates or a 0:01:07.080 --> 0:01:07.440 good thing. 0:01:08.319 --> 0:01:09.920 I Honestly, it's going to be a really big test. 0:01:09.959 --> 0:01:12.040 Because last week when you had kind of no data, 0:01:12.080 --> 0:01:14.000 the market was able to or two weeks ago when 0:01:14.040 --> 0:01:15.319 you had no date to the market just sort of 0:01:15.319 --> 0:01:17.080 trended hire you had a nice clean week. I think 0:01:17.120 --> 0:01:19.320 this time you have a two week window. It's right 0:01:19.360 --> 0:01:20.080 around month end. 0:01:20.440 --> 0:01:20.640 You know. 0:01:20.680 --> 0:01:22.360 The question I think is with the market at all 0:01:22.400 --> 0:01:24.280 time high, did people kind of trim some risk and 0:01:24.280 --> 0:01:27.240 do you get a little chop or is it everything's 0:01:27.280 --> 0:01:29.040 fine and dandy. I see, if you had dandy, it 0:01:29.040 --> 0:01:32.280 makes it much more enjoyable. If it's fine and dandy, I. 0:01:32.240 --> 0:01:33.800 Think you can kind kind of drift higher. 0:01:33.840 --> 0:01:37.520 So our view is strong earning season the same way 0:01:37.560 --> 0:01:39.520 you had a strong earning season last time. That tends 0:01:39.520 --> 0:01:42.120 to favor large cap because they're generating the bulk of 0:01:42.160 --> 0:01:44.000 the earnings. Once you get out of that kind of 0:01:44.000 --> 0:01:45.759 earnings event, we do think you can get a little 0:01:45.800 --> 0:01:48.520 little episode of broadening into that big June twelfth day. 0:01:48.680 --> 0:01:51.160 With the emphasis on a little episode and not maybe 0:01:51.160 --> 0:01:52.560 a durable boarder think why is that? 0:01:53.280 --> 0:01:55.600 Ye think I think there's still, as as you all 0:01:55.600 --> 0:01:57.680 have highlighted, there's still some anxiety, you know, kind of 0:01:57.680 --> 0:01:58.200 in the system. 0:01:58.200 --> 0:02:00.320 I think a lot of it to be revolved around 0:02:00.320 --> 0:02:00.960 the labor market. 0:02:01.000 --> 0:02:03.240 I think that's the area that is by by far 0:02:03.320 --> 0:02:05.480 the biggest risk to equity markets. And if you look 0:02:05.480 --> 0:02:08.800 at the case fed labor tracker or other metrics, there 0:02:08.840 --> 0:02:11.720 are some some sort of cracks or a little weeds 0:02:11.800 --> 0:02:13.040 kind of in the garden that you need to deal 0:02:13.080 --> 0:02:15.480 with them. It's going to kind of keep people a 0:02:15.480 --> 0:02:16.280 little bit conservative. 0:02:16.400 --> 0:02:18.040 And you point into the idea that momentum has not 0:02:18.160 --> 0:02:20.480 recovered alongside the broader market. I was talking about that, 0:02:20.520 --> 0:02:22.040 we were talking about that earlier. I thought that was 0:02:22.080 --> 0:02:25.320 a really interesting point that this isn't necessarily the game 0:02:25.400 --> 0:02:27.760 stop frenzy, that it's going to fuel the everything up 0:02:28.000 --> 0:02:30.560 kind of moment, and yet you're still constructive. What do 0:02:30.600 --> 0:02:32.760 you take from that the idea that momentum is not 0:02:32.880 --> 0:02:33.600 really driving this. 0:02:34.120 --> 0:02:35.440 It might be a little bit of kind of by 0:02:35.480 --> 0:02:37.600 the rumor sell of effect type issue. You know, you 0:02:37.720 --> 0:02:41.079 have very strong earnings from TMT companies. I think that's 0:02:41.120 --> 0:02:43.359 really what stabilized the market that week of kind of 0:02:43.360 --> 0:02:45.640 April twenty six or so, right, And I think now 0:02:45.680 --> 0:02:47.680 that you've gotten through that period, you know, people are 0:02:47.680 --> 0:02:49.520 probably taking a little bit of profits and maybe taking 0:02:49.560 --> 0:02:50.799 a little bit of risk off the table. And we 0:02:50.840 --> 0:02:52.400 were back at all time hues. Again we were below 0:02:52.480 --> 0:02:55.880 five thousand pre TMPT earnings. Who are fifty three hundred dows. 0:02:55.880 --> 0:02:57.440 So I do think you're just seeing some people kind 0:02:57.440 --> 0:03:00.320 of adjusting positioning and maybe it's seven million the lake 0:03:00.400 --> 0:03:01.320 type situation here. 0:03:01.480 --> 0:03:02.919 Is that what you're recommending? Do you feel fine? 0:03:03.400 --> 0:03:04.120 I feel pretty good. 0:03:04.120 --> 0:03:05.760 Actually, okay, that's different than fine. 0:03:05.760 --> 0:03:07.079 I just want to say that one thing that you 0:03:07.160 --> 0:03:10.000 pointed to was initial job was claims, and I thought 0:03:10.040 --> 0:03:11.760 that was interesting because I remember when people used to 0:03:11.800 --> 0:03:13.560 care about those and then they started to flat line 0:03:13.560 --> 0:03:15.639 and then everybody ignored them. Is that going to be 0:03:15.680 --> 0:03:16.720 first here data this week? 0:03:17.280 --> 0:03:19.000 Yeah? I mean claims are important. 0:03:19.000 --> 0:03:20.639 If you think back to last summer, last June, we 0:03:20.720 --> 0:03:22.880 printed one oh five in non FORIGM payrolls and you 0:03:22.919 --> 0:03:25.120 got claims, you know, kind of above two fifty. If 0:03:25.160 --> 0:03:27.000 we got a repeat it that obviously the mark is 0:03:27.000 --> 0:03:28.520 not going to light that combination to data. 0:03:28.600 --> 0:03:29.920 So claims matter. 0:03:30.000 --> 0:03:31.639 It's just tough when you're at such a you know, 0:03:31.800 --> 0:03:34.200 such a low level, you would need a significant step 0:03:34.280 --> 0:03:36.440 up in claims. I think to get people's you know, 0:03:36.520 --> 0:03:39.000 people's attention kind of ticking up ten k here or 0:03:39.000 --> 0:03:40.360 there is not going to do it. You know, you're 0:03:40.400 --> 0:03:42.280 going to need a I think a significant step higher 0:03:42.360 --> 0:03:43.400 claims to be disruptive. 0:03:43.520 --> 0:03:45.320 Stuart, how do you read the inflation data? Because we 0:03:45.400 --> 0:03:47.160 saw the bumps earlier in the year, it was just 0:03:47.280 --> 0:03:49.120 that this is bumps, not a trend. Then we get 0:03:49.240 --> 0:03:53.000 one print that's basically in line, and everyone's all excited, saying, Okay, 0:03:53.040 --> 0:03:55.400 we're back to the disinflationary trend off of one report. 0:03:55.560 --> 0:03:56.080 Is that fair? 0:03:57.000 --> 0:03:59.800 I mean, it's a good question. The reason people are 0:04:00.240 --> 0:04:02.280 taking it so well because I think they interpret the 0:04:02.320 --> 0:04:04.240 FED is taking it very well. Right This is a 0:04:04.280 --> 0:04:06.080 FED that has sort of a cutting bias to it, 0:04:06.400 --> 0:04:08.080 and I think the market is saying, if you're printing 0:04:08.120 --> 0:04:10.800 thirty basis points of of course CPI, that gives the 0:04:10.880 --> 0:04:14.040 FED kind of leeway to cut later this year. If 0:04:14.040 --> 0:04:16.760 you keep printing thirty basis points a core, you're almost 0:04:16.839 --> 0:04:18.440 back to four percent by the end of the year. 0:04:18.760 --> 0:04:20.760 So you know, thirty basis points is probably not going 0:04:20.839 --> 0:04:23.120 to do it medium term, but right now I think 0:04:23.160 --> 0:04:25.160 it gives people confidence that the FED is kind of 0:04:25.160 --> 0:04:27.279 willing to cut in that environment. You know, we've said 0:04:27.279 --> 0:04:29.240 at the beginning of the year, you're sort of uber 0:04:29.320 --> 0:04:31.440 bowl case for markets, is you soft land or you 0:04:31.480 --> 0:04:33.480 don't go under the recession, and the FED does a 0:04:33.520 --> 0:04:36.120 couple insurance cuts behind that because that gives you a 0:04:36.160 --> 0:04:38.599 strong EPs outlook and potentially you get a little bit 0:04:38.640 --> 0:04:39.080 of juice on. 0:04:39.080 --> 0:04:40.000 The valuation side. 0:04:40.279 --> 0:04:41.760 So that was kind of what can get you up 0:04:41.760 --> 0:04:44.600 to those fifty five hundred type levels. That's what the 0:04:44.680 --> 0:04:46.800 market wants, ultimately, it's what we all want. So you know, 0:04:46.880 --> 0:04:48.640 when you get data that allows you to confirm that 0:04:48.680 --> 0:04:50.200 a little bit, I think the market tries to run 0:04:50.279 --> 0:04:50.400 with it. 0:04:50.680 --> 0:04:52.240 You've said for a while that when the labor market 0:04:52.279 --> 0:04:54.760 starts to waken, you're going to get nervous. Your team 0:04:54.839 --> 0:04:57.880 is predicting that on the economic side of the research division. 0:04:58.320 --> 0:04:59.880 What does that mean for your call? Does it just 0:05:00.000 --> 0:05:02.159 to come increased in these short term and much more tactical. 0:05:02.279 --> 0:05:03.800 Is it much more difficult to have a longer term 0:05:03.880 --> 0:05:05.560 view of where the secretary market is going. 0:05:05.520 --> 0:05:06.520 To be one hundred percent? 0:05:06.720 --> 0:05:09.200 I mean we'd recommended hedging a little bit, you know, 0:05:09.240 --> 0:05:11.000 the last month, just to kind of manage that risk. 0:05:11.080 --> 0:05:12.720 The risk reward of the market is not what it 0:05:12.839 --> 0:05:13.520 was two months ago. 0:05:13.600 --> 0:05:14.040 In our view. 0:05:14.080 --> 0:05:17.400 You've had your US economic surprises has gotten quite negative. 0:05:17.400 --> 0:05:19.920 You've got some hiccups going on in the labor market. 0:05:20.000 --> 0:05:21.800 Earnings are strong, but it's starting to get priced in. 0:05:21.920 --> 0:05:24.599 So yeah, we're we're keeping it much much more tactical. 0:05:24.680 --> 0:05:26.600 When you get volatility down to these levels, I think 0:05:26.600 --> 0:05:28.240 it makes a whole lot of sense either to hedge 0:05:28.600 --> 0:05:30.520 or to use options for your upside. When you're paying 0:05:30.680 --> 0:05:33.160 sub ten implied volatility for upside on the S and P. 0:05:33.560 --> 0:05:36.120 That feels like a very responsible way to have your 0:05:36.240 --> 0:05:38.839 kind of long exposure around. So yeah, we're much more tactical, 0:05:38.920 --> 0:05:41.120 much more careful, And I think the market is showing 0:05:41.120 --> 0:05:43.760 you that it's going to be a responsive to bad news. 0:05:44.240 --> 0:05:46.120 Unfortunately or fortunately we just haven't had. 0:05:46.080 --> 0:05:46.599 That bad news. 0:05:46.760 --> 0:05:49.360 How high is the bar for Wednesday? Frinvidia got another 0:05:49.440 --> 0:05:50.880 call right now in front of me, this time from 0:05:50.920 --> 0:05:53.960 Stefhul on Nvidia price target race to ten eighty five 0:05:54.240 --> 0:05:57.880 from nine to ten. The quote beaten rays widely anticipated. 0:05:58.080 --> 0:06:00.680 Same thing came from Berkley's early this morning. Oh sign 0:06:00.760 --> 0:06:03.720 still points to another revision higher. How high is that 0:06:03.800 --> 0:06:04.919 bar Wednesday afternoon. 0:06:05.160 --> 0:06:06.160 It's a pretty high bar, man. 0:06:06.240 --> 0:06:09.360 The market's got used to them basically beating by two billion, 0:06:09.800 --> 0:06:11.320 you know, every quarter for a number of quarters in 0:06:11.360 --> 0:06:11.520 a row. 0:06:11.600 --> 0:06:12.920 Two billion used to be a big number. 0:06:13.200 --> 0:06:15.840 So I think I think it's the bar is pretty high, 0:06:16.000 --> 0:06:18.599 you know for a video here, perhaps a little less 0:06:18.640 --> 0:06:20.400 high than it was a couple of weeks ago, when 0:06:20.640 --> 0:06:22.359 you know, the market was sub five thousand and there 0:06:22.440 --> 0:06:23.840 was a little bit of stress in the system. But 0:06:24.240 --> 0:06:26.479 the issue with a video is it's been a huge 0:06:26.520 --> 0:06:28.560 part of revenue on Ernie's growth. It's also a huge 0:06:28.600 --> 0:06:30.400 part of market cap, which is why if you take 0:06:30.440 --> 0:06:33.160 the Nvidia implied move and you know, kind of multiply 0:06:33.200 --> 0:06:34.680 it by its market cap, it could move the S 0:06:34.760 --> 0:06:37.360 and P forty to fifty basis points that day by itself. 0:06:37.480 --> 0:06:39.480 So you know, the bar is definitely high. 0:06:39.600 --> 0:06:41.960 The way we track sort of sentiment, it's not quite 0:06:41.960 --> 0:06:45.160 as aggressively high as it was last quarter. Last quarter 0:06:45.200 --> 0:06:48.000 you had inverted skew, which means your calls cost more 0:06:48.040 --> 0:06:50.719 than your puts. That's highly unusual at the single stock level. 0:06:51.000 --> 0:06:52.360 Some of that has started to come out of the 0:06:52.400 --> 0:06:53.520 system so bullish. 0:06:54.040 --> 0:06:55.599 Definitely, bar is high. 0:06:55.440 --> 0:06:57.559 But it does feel maybe I think people are starting 0:06:57.600 --> 0:07:00.680 to just accept the fact that you can't continually beat 0:07:00.720 --> 0:07:02.840 by two million every quarter, right, So I think people 0:07:02.880 --> 0:07:04.400 have kind of prepared themselves for a little bit. 0:07:04.440 --> 0:07:04.920 It'll be fine. 0:07:04.920 --> 0:07:06.760 I think you think it's going to be fine. You 0:07:06.800 --> 0:07:07.240 feel fine. 0:07:07.240 --> 0:07:07.960 I think it will be fine. 0:07:08.000 --> 0:07:09.920 Yeah, fine and dandy, which is actually better than that. 0:07:10.080 --> 0:07:12.520 I will just say one thing that I find interesting 0:07:12.640 --> 0:07:14.240 is that we used to have companies that were bell 0:07:14.280 --> 0:07:16.920 Weather companies. Whether it was the banks, which no longer 0:07:17.080 --> 0:07:19.560 serves that, whether it was Walmart, which maybe no longer 0:07:19.600 --> 0:07:21.360 serves is that either it's sort of a Walmart story, 0:07:21.440 --> 0:07:25.240 not necessarily a macro story. Is in Vidia serving more 0:07:25.360 --> 0:07:27.960 as a macro story in terms of AI adoption. Will 0:07:27.960 --> 0:07:30.280 we get a sort of broader read through to the 0:07:30.720 --> 0:07:33.600 market and sort of the sentiment behind it from Nvidia 0:07:33.840 --> 0:07:35.400 than just an Nvidia story. 0:07:35.880 --> 0:07:36.640 I think definitely. So. 0:07:36.760 --> 0:07:39.400 I think if video has become a macro store, you 0:07:39.480 --> 0:07:41.320 see how aggressively it's even probably sitto the S and 0:07:41.320 --> 0:07:44.040 P five hundred viece events or like our market based events. 0:07:44.360 --> 0:07:44.480 You know. 0:07:44.480 --> 0:07:45.880 I think we've talked in the past there's a view 0:07:45.920 --> 0:07:49.680 that AI increases productivity and can potentially lift GDP growth 0:07:49.720 --> 0:07:51.680 on a go forward basis. It has massive impacts on 0:07:51.720 --> 0:07:54.720 the labor market. So you know, AI at large is 0:07:54.760 --> 0:07:57.200 a macro story, and VIDIA is right now the cleanest, 0:07:57.240 --> 0:07:58.840 most direct way to trade that. So it's made that, 0:07:58.960 --> 0:08:01.880 you know, a macro story, Ei William. Those with the 0:08:01.960 --> 0:08:04.160 GLP ones I think would fall into that category as well. 0:08:04.200 --> 0:08:06.480 Those are probably the two sort of single stocks or 0:08:06.560 --> 0:08:08.360 themes that would become macro over the years. 0:08:09.040 --> 0:08:10.600 Take your point of the week, right date, a point 0:08:10.600 --> 0:08:10.880 of the week. 0:08:11.200 --> 0:08:14.440 Goldman Sachs last week said eleven hundred dollars per share 0:08:14.560 --> 0:08:17.320 that they uplifted for Navidia. This is the data point 0:08:17.360 --> 0:08:19.000 I think whether or not the markets will be fine 0:08:19.080 --> 0:08:20.160 or maybe less than. 0:08:20.080 --> 0:08:22.240 Fine Wednesday after the close, You've got a word on 0:08:22.280 --> 0:08:25.600 Man City, a couple of words sad. Are they the 0:08:25.680 --> 0:08:26.760 Mets not fine? 0:08:27.400 --> 0:08:28.320 No, they're not the best. 0:08:28.800 --> 0:08:31.920 Unfortunately they're not the Mets high root for the Mets 0:08:31.960 --> 0:08:35.400 of the EPL, which is the unfortunate that the unfortunate situation. 0:08:36.320 --> 0:08:38.680 Stuve, it's going to see you. It's fine, It's going 0:08:38.760 --> 0:08:41.160 to be all right. Stuart Kaiser city. Thank you, sir. 0:08:50.559 --> 0:08:52.679 Let's turn to travel shares of Rhyan Air love this 0:08:52.840 --> 0:08:55.440 morning with the adlines saying some affairs may be flat 0:08:55.840 --> 0:09:00.320 despite low capacity. Ryanair planning to offer discounts to stimulate demand, 0:09:00.440 --> 0:09:02.520 and the the friend of our side, but he yes, 0:09:02.559 --> 0:09:04.400 Michael Leary joins us some more. Michael, good morning to 0:09:04.440 --> 0:09:05.320 you and welcome to New York. 0:09:05.440 --> 0:09:06.920 More and John, great pleasure to be here again. 0:09:07.040 --> 0:09:08.560 Grace to cant shat with you said, So, let's talk 0:09:08.559 --> 0:09:11.120 about pricingw You're right, cfive said it was cantering Shiwit's 0:09:11.160 --> 0:09:14.120 if helped me understand deck capacities down, prices are flat, 0:09:14.240 --> 0:09:14.760 what's going on? 0:09:15.960 --> 0:09:17.360 Difficult to understand it ourselves. 0:09:17.400 --> 0:09:20.320 Like, we've come off two summers and twenty percent plus 0:09:20.400 --> 0:09:22.880 pricing increases. So we thought pricing this year would be softer. 0:09:23.200 --> 0:09:25.040 We thought up five to ten. At the moment, it 0:09:25.080 --> 0:09:27.360 looks like it's flat to five percent through the summer peak. 0:09:27.520 --> 0:09:29.560 I think there's just a bit of consumer resistance out there. 0:09:29.840 --> 0:09:32.600 Capacity is constrained in Europe. We thought that would lead 0:09:32.640 --> 0:09:35.400 to stronger pricing each of us early. That means that 0:09:35.520 --> 0:09:38.240 April May June is a little bit softer. We still 0:09:38.240 --> 0:09:41.280 see pricing up through the peak July August September. We're 0:09:41.320 --> 0:09:44.240 constrained because of boy delivery delays, but I think pricing 0:09:44.360 --> 0:09:46.240 is going to be softer than we had originally expected 0:09:46.280 --> 0:09:49.679 this summer. Good for consumers, not necessarily quite so good 0:09:49.679 --> 0:09:52.080 for shareholders. But then we've launched a seven hundred million 0:09:52.160 --> 0:09:54.560 share by back today, so that will keep shareholders quiet 0:09:54.800 --> 0:09:56.679 while we look after consumers all summer long. 0:09:56.760 --> 0:09:58.320 It's just to be clear there strength of summer then 0:09:58.440 --> 0:10:00.640 soft right now, but you do expect five to increase, 0:10:00.679 --> 0:10:02.600 fest to increase as the summer progresses. 0:10:02.720 --> 0:10:05.120 Yeah, there's no doubt. Indeed, the April May June quarter 0:10:05.240 --> 0:10:07.000 pricing is down on the prior year. Now we had 0:10:07.000 --> 0:10:08.920 a full easter in April. This year we only half 0:10:08.960 --> 0:10:11.280 at easter. Their pricing still looks but it's up, but 0:10:11.360 --> 0:10:13.839 it's up small. It's very weak and zero to five 0:10:13.880 --> 0:10:16.880 percent through July August September. We've only sold about forty 0:10:16.920 --> 0:10:18.800 percent of the seats in that quarter, so it could 0:10:18.840 --> 0:10:21.439 still be up slightly higher, it could be lower. We're 0:10:21.520 --> 0:10:24.360 reasonably relaxed. We have costs well under control. We've hedged 0:10:24.400 --> 0:10:26.679 our fuel form for the next year. We've saved four 0:10:26.760 --> 0:10:28.559 hundred and fifty million dollars on fuel for the next 0:10:28.600 --> 0:10:32.200 twelve months, so we can use that to stimulate pricing. 0:10:32.520 --> 0:10:34.760 And when we've done some price stimulation in reason weeks, 0:10:34.800 --> 0:10:37.440 we've seen very strong responses from consumers. So I think 0:10:37.520 --> 0:10:40.320 consumers are they're a little bit nervous spending this week, 0:10:40.559 --> 0:10:44.040 but when you give them a price incentive, volumes the 0:10:44.200 --> 0:10:45.080 volumes are very strong. 0:10:45.280 --> 0:10:47.320 Does this take some of the pressure off the twenty 0:10:47.440 --> 0:10:50.000 three deliveries of Boeing jets that you're waiting for that 0:10:50.080 --> 0:10:53.400 could be delayed because ultimately capacity is less of an issue. 0:10:53.679 --> 0:10:56.439 Yeah, I mean I don't think so least. 0:10:56.480 --> 0:10:58.480 I mean I would prefer to take the aircraft. We 0:10:58.559 --> 0:11:02.040 could fill those aircraft through the peak through July, August September. 0:11:02.120 --> 0:11:04.480 We think travel will be strong, pricing will be strong. 0:11:04.840 --> 0:11:07.000 We regret the fact that we'll be twenty aircraft short. 0:11:07.280 --> 0:11:09.040 We've crewed up so we have all the pilots and 0:11:09.080 --> 0:11:11.000 the cabin crew. Our label will be a little bit 0:11:11.040 --> 0:11:14.080 higher in that second quarter, but volumes lower. We've had 0:11:14.080 --> 0:11:16.640 to pair back our full year traffic forecast this year 0:11:16.679 --> 0:11:18.880 from two hundred and five million to about two hundred 0:11:18.920 --> 0:11:22.400 million passengers. So it doesn't really help because everything we're 0:11:22.440 --> 0:11:24.760 geared up for the growth and we're just going to 0:11:24.760 --> 0:11:26.840 be let Boeing go leave us twenty aircraft short. 0:11:26.960 --> 0:11:29.600 You've always been known for being incredibly cost conscious, trying 0:11:29.640 --> 0:11:32.000 to bring a lower cost to the consumer. Are you 0:11:32.080 --> 0:11:34.560 trying to get a deal on some of these Boeing jets? 0:11:34.600 --> 0:11:37.680 You're looking to maybe buy some from others, or you know, say, 0:11:37.880 --> 0:11:40.120 if you want to shift to Airbus, that's fine, I'll 0:11:40.160 --> 0:11:42.160 take your Max seven thirty seven jets. 0:11:42.200 --> 0:11:44.000 Well, we've already said when United came out with those 0:11:44.080 --> 0:11:46.000 stupid comments there in the year, you know, we're not 0:11:46.080 --> 0:11:50.200 going to take those Max tens. Max Aircraft will take 0:11:50.240 --> 0:11:51.880 them if you don't want them, will take them? Of course, 0:11:52.280 --> 0:11:55.280 Yeah no, they kind of they mumbled and then decide 0:11:55.280 --> 0:11:57.840 they were going to take him anywhere. Aircraft and deliveries 0:11:57.880 --> 0:12:00.600 are incredibly tight. Airbus and Boeing are running way behind 0:12:00.640 --> 0:12:04.120 in their deliveries. There's a real capacity constrained story in Europe. 0:12:04.120 --> 0:12:07.880 For the next couple of summers, manufacturers are delayed. Airbus 0:12:08.000 --> 0:12:10.240 fleet is twenty percent of the airbus fleet is grounded 0:12:10.240 --> 0:12:12.839 because the pattern with me engine issue and Europe is 0:12:12.880 --> 0:12:16.079 an airbus market, so capacity is constrained. Why it's a 0:12:16.160 --> 0:12:19.000 little bit surprising pricing is soft this summer. We thought 0:12:19.080 --> 0:12:20.920 pricing would be a little bit stronger because of those 0:12:20.960 --> 0:12:24.880 capacity constraints. But hey, if the consumers are a little 0:12:24.880 --> 0:12:26.800 bit more price conscious, if they're a little bit more 0:12:26.800 --> 0:12:28.520 price sensitive, we'll stimulate. 0:12:28.760 --> 0:12:31.080 It's good for our business because we're the lowest price provider. 0:12:31.200 --> 0:12:33.040 Michael, what are you hearing from Boeing at the moments 0:12:33.080 --> 0:12:34.640 in the past you said you thought the deliveries could 0:12:34.679 --> 0:12:35.240 slip further. 0:12:35.640 --> 0:12:37.200 How much further are we talking well? 0:12:37.240 --> 0:12:40.920 And we re good question? I think two things. One, 0:12:41.040 --> 0:12:42.240 we're twenty aircraft behind. 0:12:42.280 --> 0:12:44.199 We're supposed to get fifty nine aircraft for this summer 0:12:44.240 --> 0:12:46.400 running and get thirty nine at best. But we do 0:12:46.600 --> 0:12:49.440 see signs of improvement in recent weeks. I think Stephanie 0:12:49.480 --> 0:12:51.040 Pope and the new team in see After doing a 0:12:51.080 --> 0:12:53.880 good job. They're taking fuselages that are not being taken 0:12:53.920 --> 0:12:55.040 from which to unless. 0:12:54.800 --> 0:12:58.760 They're completely defect free. But we're not yet seeing a 0:12:58.800 --> 0:12:59.959 speed up in the turnaround time. 0:13:00.080 --> 0:13:02.520 In Seattle, they're still taking twelve to fourteen weeks to 0:13:02.600 --> 0:13:04.959 produce an aircraft whereas it should really be eight to ten. 0:13:05.400 --> 0:13:07.800 Now. Two weeks ago they sent us an update. We 0:13:07.880 --> 0:13:11.280 were expecting two deliveries in June, three in July. We're 0:13:11.280 --> 0:13:13.240 getting two in June. It looks like seven in July. 0:13:13.440 --> 0:13:16.920 So we're beginning to see the situation improve, but it's 0:13:17.080 --> 0:13:20.120 very small baby steps. We're still going to take aircraft 0:13:20.200 --> 0:13:22.719 through August, September and October, even though we can't fly 0:13:22.800 --> 0:13:25.360 them during those months. We think we get all fifty 0:13:25.480 --> 0:13:28.280 nine aircraft in this calendar year, and then the big 0:13:28.360 --> 0:13:29.880 issue with US at going is will we get the 0:13:29.920 --> 0:13:33.000 twenty nine aircraft deliveries we are contracted to deliver us 0:13:33.000 --> 0:13:35.959 between January and April twenty twenty five. So I think 0:13:35.960 --> 0:13:40.320 they're making small, small steps, little progress, but we don't 0:13:40.320 --> 0:13:41.600 want to see any further bad news. 0:13:41.679 --> 0:13:44.000 If that's your big question going into next year, then 0:13:44.120 --> 0:13:45.839 how do you weigh the impact on What does that 0:13:45.880 --> 0:13:47.360 mean for your business for twenty twenty five? 0:13:47.960 --> 0:13:49.840 I figur at the moment it means that for twenty 0:13:49.920 --> 0:13:52.480 twenty four, for FY twenty March twenty five, we're going 0:13:52.559 --> 0:13:54.400 to be doing two hundred million passes instead of two 0:13:54.480 --> 0:13:57.079 hundred and five million for March twenty six or summer 0:13:57.120 --> 0:13:59.080 twenty five, we think we can step that up. 0:13:59.320 --> 0:14:00.520 I think we'll get most. 0:14:00.320 --> 0:14:02.040 Of those aircraft are Boeing, and then we'd like to 0:14:02.080 --> 0:14:04.679 see ourselves grow to probably about two hundred and fifteen 0:14:04.679 --> 0:14:08.080 million passengers through summer twenty five into March twenty six. 0:14:08.400 --> 0:14:09.880 We think there'll be a strong rebound. 0:14:10.240 --> 0:14:13.160 We still think pricing would be reasonably robust across Europe 0:14:13.320 --> 0:14:16.000 because capacity is going to be constrained. Airbus and Boeing 0:14:16.080 --> 0:14:19.360 can't deliver any additional aircraft. The engine manuf issue is 0:14:19.400 --> 0:14:21.880 a huge problem for the airbus fleet. You know, they've 0:14:21.920 --> 0:14:24.000 been talking about three hundred and fifty days to repair 0:14:24.080 --> 0:14:26.320 these engines. We think it's going to be for five 0:14:26.440 --> 0:14:28.960 hundred days, so a lot of Airbus aircraft are going 0:14:29.000 --> 0:14:30.560 to be grounded for the next two or three years. 0:14:30.720 --> 0:14:32.640 How much do you see just going back to this 0:14:32.720 --> 0:14:35.240 idea of pricing power and that we're surprised that there's 0:14:35.320 --> 0:14:38.280 not greater degree of pricing power given some of the 0:14:38.360 --> 0:14:40.680 constraints with deliveries. How much is it sort of the 0:14:40.800 --> 0:14:42.920 end of the boom that we saw in the travel 0:14:43.080 --> 0:14:45.200 and that people are constrained by the fact that you know, 0:14:45.720 --> 0:14:49.320 hotel prices have tripled. You can see that any restaurant 0:14:49.400 --> 0:14:51.080 you go to is that which works, but it's ready 0:14:51.080 --> 0:14:53.520 to be travel. I mean it's incredibly expensive. So how 0:14:53.600 --> 0:14:55.720 much have we sort of reached the tipping point or 0:14:55.760 --> 0:14:58.280 we're going back to something that's pre pandemic and not 0:14:58.400 --> 0:15:00.000 this you can work anywhere and travel all the time 0:15:00.080 --> 0:15:01.040 time kind of mentality. 0:15:01.080 --> 0:15:02.560 I mean, I don't think we've reached. 0:15:02.920 --> 0:15:05.000 I think Europe is a fundamentally different market to the 0:15:05.160 --> 0:15:07.760 US North America. You've seen a lot of travel price 0:15:07.800 --> 0:15:09.840 inflation in the last couple of years. You know, the 0:15:09.880 --> 0:15:12.480 average Fair Southwest charge last two week last year was 0:15:12.480 --> 0:15:14.600 one hundred and seventy dollars. The average Fair and Ryan 0:15:14.640 --> 0:15:17.840 air across Europe is forty eight euros. So there's still 0:15:17.840 --> 0:15:19.840 a bit to go in Europe. But there's no doubt 0:15:19.880 --> 0:15:22.200 in my mind that the European consumer is cutting spend 0:15:22.600 --> 0:15:23.840 is careful. 0:15:24.160 --> 0:15:26.920 They're cautious. They want price stimulation. 0:15:27.520 --> 0:15:30.200 We go out with seat sales, we sell out straight away, 0:15:30.600 --> 0:15:33.400 but you know, we have higher interest rates in government's 0:15:33.400 --> 0:15:35.440