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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene,

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

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

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

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Speaker 1: York City. I'm very pleased to say we're here at

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Speaker 1: the RBC Capital Markets Financial Institutions Conference. And joining me

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Speaker 1: here in New York candis conference, I'm pleased to say,

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Speaker 1: is the RBC CEO himself, Dave McKay. Dave, great to

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Speaker 1: catch hell you do this morning. Good morning, nice early

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Speaker 1: start to the day. So let's talk about your expansion

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Speaker 1: into the United States and why you're ultimately here. So

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Speaker 1: many people have tried to do this and pretty much

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Speaker 1: every day my co anchor Tom Keen and I will

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Speaker 1: talk about European banks that have failed in their effort

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Speaker 1: to expand in the United States. Why are you different? Well,

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Speaker 1: I think it goes back to you, this is not

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Speaker 1: an overnight success. We've been working at this for ten years.

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Speaker 1: Goes back to the early part of the last recession

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Speaker 1: where we had balance sheet. Put that balance sheet to

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Speaker 1: work with clients where other banks were retreating. And therefore,

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Speaker 1: when you're with a client and with a strategy over

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Speaker 1: the better part of a decade, you know, clients reward

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Speaker 1: you for that loyalty and being there continue to upgrade

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Speaker 1: and expand our coverage environment while we're putting our balance

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Speaker 1: sheet to work and we're really pursuing and originate and

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Speaker 1: lending strategy where we'll put a balance sheet and cross

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Speaker 1: sell r D c M E c M capability. So

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Speaker 1: it's really and it's not an overnight success. Douts your

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Speaker 1: bank Curtiss RBS. There's such a long list of European

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Speaker 1: players that are now retrenching into their core competency competencies

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Speaker 1: that care geographies. How do you identify the right strategies

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Speaker 1: that you don't make the same mistakes that others have.

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Speaker 1: We're typically conserve bit of institution by nature, and we're

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Speaker 1: thinking long term. Long term sustainable growth is a big

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Speaker 1: part of our core strategy across all our businesses, not

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Speaker 1: just capital markets. So when we're looking at, you know,

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Speaker 1: building a relationship with a client, we look at the

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Speaker 1: long term sustainability that relationship. We look at the potential

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Speaker 1: to drive long term returns, look at the credit risk

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Speaker 1: and put it all into balance, and we're looking to

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Speaker 1: build long term, sustainable relationships. And that for us really

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Speaker 1: was starting with a kind of a mid market capital

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Speaker 1: market strategy across multiple sectors to diversifier book and therefore

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Speaker 1: we've graduated that with you know, more bankers and upgrading bankers.

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Speaker 1: We're very proud we just recently was sole advisor to

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Speaker 1: b B and T on the sun Trust, a merger

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Speaker 1: of equals, and that really talks to the power of

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Speaker 1: our franchise consistency and ability to deliver value the clients

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Speaker 1: and be that sol advisor in a historic transaction. That

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Speaker 1: way is really what we've been aiming for for the

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Speaker 1: last ten years. Is we've continued to upgrade and build

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Speaker 1: relationships and build trust with CEOs across America. So let's

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Speaker 1: talk about that solid advantaging. Well, that you did take

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Speaker 1: a lot of people were surprised by that. Have to admit,

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Speaker 1: many people come on the program and talk to me

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Speaker 1: about it, and they were surprised by the fact that

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Speaker 1: you did get that. Is this a moment in time

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Speaker 1: or a broader consolidation story that you think you can

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Speaker 1: be a key player in. I think certainly you have to.

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Speaker 1: You have to hand both BB and T, Kelly King

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Speaker 1: and and so trust a lot of credit for having

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Speaker 1: the vision to build a larger competitive institution that will

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Speaker 1: compete with the top four and bring the scale towards technology.

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Speaker 1: And I think it's caused a lot of CEOs. I've

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Speaker 1: talked to you even in the last twenty four hours

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Speaker 1: and since the announcement of Transaction, to reevaluate the art

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Speaker 1: of the possible, the implications of scale and potentially the

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Speaker 1: openness to do something more transformational. Doesn't mean we'll see

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Speaker 1: something else, but I think everyone's paused to digest and

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Speaker 1: real kudos to those two leaders who put the Transaction together. That's,

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Speaker 1: you know, looking at the implications. I think it's foundation.

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Speaker 1: So being an advisor in the consolidation story here in

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Speaker 1: the United States and the financial sector is one thing.

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Speaker 1: Being an active participant in it's a different story. Are

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Speaker 1: you looking at anything right now? You've made acquisitions in

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Speaker 1: the possible on that big one a couple of years ago.

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Speaker 1: Are you looking at anything right now? We continually evaluate

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Speaker 1: the ability to grow organically and inorganically, and we we

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Speaker 1: we have a team dedicated to thinking through various opportunities

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Speaker 1: to grow geographically. That would be our first presence within

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Speaker 1: the United States. Can we expand into a new market,

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Speaker 1: but it has to be a cultural fit with the

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Speaker 1: potential acquisition or merger partner. The economics have to be

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Speaker 1: there for the shareholder. We made kind of a transaction

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Speaker 1: that was longer term, a platform transaction with City National.

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Speaker 1: We've earned our way back into our hurdle rates very quickly,

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Speaker 1: but w we've benefited from economic tailwinds, benefitted from a

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Speaker 1: rising rate environment. We've benefited from tax cuts. We accelerated

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Speaker 1: our return on shareholder investment. You look at those transactions

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Speaker 1: going forward. Without those tail winds, the economics are more difficult. Therefore,

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Speaker 1: we're incredibly disciplined with the capital. We always look at alternative,

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Speaker 1: organic or returning it to shareholders. And when you look

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Speaker 1: at the platform we have, we don't need it for

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Speaker 1: a platform basis. It's more for geographic expansion and and acceleration. Therefore,

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Speaker 1: the economics have to work, and the economics still are

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Speaker 1: quite tough for the share All you have to you

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Speaker 1: have to forecast some end of cycle, so you're you're

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Speaker 1: you're you're acquiring it towards the end of a cycle.

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Speaker 1: So what's gonna be the credit performance? Your cash flows

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Speaker 1: could be delayed by an economic cycle turn, All those

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Speaker 1: come into consideration. We are trying to drive shareholder value

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Speaker 1: in the market. Really really punishes players who over extend themselves.

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Speaker 1: When you see us, somebody see guys will tell me

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Speaker 1: the price isn't right. They'll say the spread between the

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Speaker 1: buyer and the sounder is still too wide to come in.

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Speaker 1: There's a decent chance it won't come in until the

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Speaker 1: next down to the question you've got to answer Resultimately,

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Speaker 1: are you're willing to extend your balance sheet in a

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Speaker 1: recession to make that acquisition? Are you? If the if

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Speaker 1: the deal is right, Absolutely, there's I don't see a

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Speaker 1: lot of difference between you have to delay your cash flows,

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Speaker 1: but the uncertainty of doing it now before there's some

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Speaker 1: type of economic credit cycle turn versus while you're in it.

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Speaker 1: Maybe you have more information when you're in it. But

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Speaker 1: I mean there's the sellers not as willing to sell.

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Speaker 1: Certainly there's a few willing sellers right now, so all

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Speaker 1: the ingredients may not come together either. You're you're taking

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Speaker 1: our risk between every constituent coming together. So it's an

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Speaker 1: uncertain game. At the end of the day, we have

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Speaker 1: a growth platform organically that we're really excited about. We

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Speaker 1: continue to grow, add private bankers, add commercial bankers on

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Speaker 1: the wealth management side. Similarly on the capital market side,

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Speaker 1: we're pulling our balance sheet to work. We're adding bankers.

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Speaker 1: We just hired another star banker, Michelle Neil's joining the platform,

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Speaker 1: as you reported on. So we're very excited about the

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Speaker 1: opportunity to grow. If there's a tactical acquisition, well we'll

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Speaker 1: look at it. But right now we're focused organically. Right

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Speaker 1: to catch up with you. Good luck for the rest

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Speaker 1: of the day. Day McConney. Obviously see right here at

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Speaker 1: the obviously capital markets Financial Institutions conference with this Howard Ward,

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Speaker 1: wonderful long term investor at gibelly a claim to say

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Speaker 1: the least. We're thrilled that he gives us opinion on

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Speaker 1: use of cash and maybe on Apple. I was kidding

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Speaker 1: him earlier calling him a Howard Apple off of Tim Apple,

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Speaker 1: but we will. Well, let's stop with Apple now because

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Speaker 1: Bowing is so centered. You own Bowing. Let's say, what

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Speaker 1: do you do given the new slow Well, tom Um,

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Speaker 1: I think most investors at owned Boeing will be best

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Speaker 1: served by sitting tight until we have the resolution of

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Speaker 1: the cause of this most recent crash. I believe that Boweing,

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Speaker 1: even in the event that this is another one of

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Speaker 1: their problems associated with the software on that plane, they

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Speaker 1: will be able to fix that and the orders for

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Speaker 1: that plane will remain largely, if not entirely intact. So

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Speaker 1: it has been an outstanding dock in recent years. Even

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Speaker 1: year to date, it's been one of the leading stocks

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Speaker 1: in the TAO. Uh So it's certainly there is certainly

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Speaker 1: room there for profit taking for those it might be

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Speaker 1: somewhat nervous about this situation, but I think most people

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Speaker 1: should sit tight. Sectors are different. How do you study

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Speaker 1: a Boeing which goes project to project downs a itty

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Speaker 1: biddy defense contractor no, but nevertheless they still live project

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Speaker 1: to project as a general statement, versus Microsoft, which has

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Speaker 1: huge persistent cash flow, or for that matter, Apple and Well,

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Speaker 1: you have to study them differently, don't you. Well, you

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Speaker 1: really do. And Boeing falls under the industrial category, and

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Speaker 1: it is one of the premier industrial names because there

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Speaker 1: is a oligopoly and the commercial airspace business which most

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Speaker 1: of their businesses commercial aviation as opposed to defense, and

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Speaker 1: they have historically made the finest planes in the world

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Speaker 1: bar none. Air Bus makes a fine plane, but Boeing

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Speaker 1: has traditionally, you know, been the finest manufacturer rough planes

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Speaker 1: in the world and the largest producer. So uh, you know,

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Speaker 1: that gives them a special place. And these are very

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Speaker 1: long tail projects, these new planes which they embark upon.

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Speaker 1: And you know, once a plane is in full production,

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Speaker 1: the free cash flow starts to fall to the bottom.

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Speaker 1: And so bowing right now is has become, i should say,

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Speaker 1: a tremendous free cash flow story, allowing them to buy

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Speaker 1: back greater amounts of stock and to increase their dividend

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Speaker 1: and very healthy rate for what looks like to be

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Speaker 1: years to come back four years free cash flow seven billion,

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Speaker 1: eight billion, twelve billion, fourteen billion, why not do fourteen

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Speaker 1: billion another time and modeled up to seventeen billions. So

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Speaker 1: just over the span of Howard Award ownership, you can

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Speaker 1: go from eight billion out to seven to billion on

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Speaker 1: free cash flow. With that said, you have to know

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Speaker 1: when to buy. How do you determine is it dividend yield?

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Speaker 1: Is it some form of ratio multiple? You know? And

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Speaker 1: now so so you know, Boeing isn't industrial, it's a

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Speaker 1: little bit of a unique industrial but like most industrials, uh,

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Speaker 1: you want to buy them when actually the best time

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Speaker 1: to buy them, I should say, is when the economy

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Speaker 1: isn't doing well and when industrials are not doing well,

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Speaker 1: and when the stocks have been underperforming for a period

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Speaker 1: of time and and that's not the current environment. And

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Speaker 1: you know in two thousand and eight, two thousand and nine,

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Speaker 1: for example, would have been an outstanding time to acquire

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Speaker 1: Boeing shares. And uh so that's what you really have

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Speaker 1: to do. And you have to be patient if you're

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Speaker 1: going to wait for those kinds of opportunities. And otherwise

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Speaker 1: you can still do fine, but the returns won't be

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Speaker 1: as great. You survived December, the New York Rangers were terrible.

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Speaker 1: Then you survived January, February the New York Rangers were terrible.

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Speaker 1: Now you're in March in the New York Rangers are

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Speaker 1: still terrible. How the last three months been, O wise? One, Yeah,

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Speaker 1: they've been. They've been brutal for actually for New York

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Speaker 1: sports in general, it hasn't been a sports You guys,

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Speaker 1: what do you do well we're lots, we're hockey we uh,

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Speaker 1: we just focus on watching that ticket tape go by

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Speaker 1: every day. And what do you see there right now?

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Speaker 1: I mean, yeah, Tom, So, you know, since the beginning

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Speaker 1: of the year, we've seen negative earnings estimate revisions on

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Speaker 1: the SMP. They've SMP estimates for this year have come

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Speaker 1: down about seven percent from around hundred and seventy eight

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Speaker 1: dollars a year about a hundred and sixty eight dollars

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Speaker 1: a year. Uh. And given the trends that we see

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Speaker 1: in terms of UH, increasing weakness in the global economy,

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Speaker 1: including here at home. For example, the Conference Boards Index

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Speaker 1: of Leading Economic Indicators here in the US has fallen

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Speaker 1: for four consecutive months. And there's you know, weakness and

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Speaker 1: autos and housing and retail sales, and I think the

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Speaker 1: weekly unemployment claims are bubbling high. So uh, you know,

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Speaker 1: we think there's more negative earnings estimate revisions to come

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Speaker 1: and that has not been fully priced in. So we're

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Speaker 1: a little bit cautious on the market in their term.

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Speaker 1: And I'd also say I think the market has sort

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Speaker 1: of baked in some sort of a deal with China

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Speaker 1: on trade and whatever that deal is, and I'm sure

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Speaker 1: there will be one. I'm sure Trump will announce it

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Speaker 1: as being the greatest trade deal in history. It won't be,

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Speaker 1: but uh, he'll he'll try to make that headline. Point um.

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Speaker 1: But the market is sort of baked in probably something

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Speaker 1: similar to what we're going to get. China is going

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Speaker 1: to agree to buy more soybeans and cars, and there'll

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Speaker 1: be a few compromises here and there, but it's not

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Speaker 1: going to be uh, you know, the deal that Trump's

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Speaker 1: gonna want you to think it is. Howard Apple, thank

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Speaker 1: you so much for being with us today. I'm doing

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Speaker 1: Howard Ward of Gabelli. We're thrilled that he could attend

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Speaker 1: today with major news. Let's get right to it because

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Speaker 1: there's so many distractions with Boeing and Brexit and all that.

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Speaker 1: I just want to spend some time in the American economy.

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Speaker 1: You can do that with Lindsay Piegs stifle uh joining

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Speaker 1: us now uh dr vizzack pegs Um. I'm fascinated by

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Speaker 1: the Atlanta g d P now forecast, which is not

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Speaker 1: at recession levels but has come down well under one

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Speaker 1: percent towards zero percent Q one growth. How do you

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Speaker 1: use the forecasting model of the Federal Reserve Bank of Atlanta. Well,

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Speaker 1: I think it's it's uh, it's good to use that

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Speaker 1: as a gauge of almost a sentiment. This is how

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Speaker 1: the market is feeling, This is how the set is

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Speaker 1: viewing the economy. Now, the Atlanta GDP model does tend

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Speaker 1: to be incredibly volatile, so you do have to take

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Speaker 1: it with a grade of salt. There are wild swings

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Speaker 1: after each data point being released, so it doesn't necessarily

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Speaker 1: give us a specific target or even a target range.

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Speaker 1: But I think it does give us a general sense

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Speaker 1: of the directoral momentum as well as the general feel

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Speaker 1: of the market. Is now mentioned, it's pretty dismal. Okay,

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Speaker 1: it's pretty dismal. What is the vector that you see?

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Speaker 1: It's Steple. Right now, our audience is riveted by the

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Speaker 1: interviews we have of optimism versus some would say the

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Speaker 1: reality they're feeling out there. What's the Steple vector? Well,

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Speaker 1: I think the most important thing is opposed to just

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Speaker 1: focusing on the first quarter, is looking at the long

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Speaker 1: term directional trend. For the look at we see the

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Speaker 1: economy losing significant momentum relative to what we saw in

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Speaker 1: We're looking for the economy to fall well below two percent,

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Speaker 1: closer to a range of one and a half to

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Speaker 1: one point eight percent for the year of so again

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Speaker 1: quarter to quarter volatility aside, we're looking for a point

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Speaker 1: five to one point eight percent growth rate for the year, lindsay.

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Speaker 1: Outside of this debate, there is also a big debate

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Speaker 1: taking place that the headline inflation rate won't be boosted

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Speaker 1: by what's happening with wages. Waste growth was really impressive

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Speaker 1: last week, and there is just this comfort I think

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Speaker 1: that that won't bleed into headline price pressure. Do you

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Speaker 1: share that belief? Well? If, first off, I don't know

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Speaker 1: if I if I agree with your characterization that wage

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Speaker 1: growth was really impressive. It certainly was improvement from the

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Speaker 1: more lackluster paces wage growth that we've seen over the

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Speaker 1: past couple of years, But in my opinion, it's almost

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Speaker 1: too little, too late. I do think the more recent

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Speaker 1: backup and wages that we've seen is going to prove

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Speaker 1: very short lived, as we do fear the risk of

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Speaker 1: recession now lurking around the corner. Also, when we look

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Speaker 1: into some of the wage specifics, the wage games seemed

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Speaker 1: to be relatively segmented into particular areas of the economy

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Speaker 1: areas where skills, specific skills are in high demand but

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Speaker 1: very low supply, meaning it engineering, accounting, craft, labor. The

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Speaker 1: FETES specifically noticed and noted these pockets of wage pressures,

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Speaker 1: and that's pretty much what we're seeing in the data

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Speaker 1: as opposed to a broad based increase across all sectors.

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Speaker 1: So certainly there are sub workers out in the labor

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Speaker 1: markets that are feeling that wage pressure, but not everyone

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Speaker 1: is feeling that some are being left behind. Wellndy, Certainly,

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Speaker 1: the assessment is all relative, of course, and relative to

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Speaker 1: the last ten years. I think it's impressive relative to

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Speaker 1: what we have got, and understand that relatively speaking, the

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Speaker 1: data we've had before hasn't been great going forward from here,

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Speaker 1: I think there's a big, big question about being late cycle.

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Speaker 1: I've heard that so many times over the last couple

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Speaker 1: of years that were late cycle. Five years ago we

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Speaker 1: were light cycle. Why are we late cycle now? Well,

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Speaker 1: I think we're late cycle now because when we look

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Speaker 1: out and we look at the trajectory of the recovery,

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Speaker 1: there's very little evidence that it will be sustained much beyond.

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Speaker 1: So in fact, we are looking for a recessionist it

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Speaker 1: in potentially as early as the first quarter of so

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Speaker 1: we see this bleeding momentum among a number of key

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Speaker 1: sectors of the economy. The consumer are beginning to lose

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Speaker 1: a little bit of momentum when we look at their

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Speaker 1: spending patterns, business investment starting to wane, the FED specifically

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Speaker 1: note in the moderating case of corporate dollars flooding into

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Speaker 1: investment areas. Housing starting to lose ground as well. We've

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Speaker 1: seen now ten consecutive months of negative sales activity. So

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Speaker 1: I think at this point it's very clear that the

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Speaker 1: domestical independent of international weakness is beginning to lose momentum,

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Speaker 1: and it's very clear that this advansion is coming to

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Speaker 1: an end in our opinion, and Dr Pierre's I think

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Speaker 1: you so much greatly appreciated UH this morning. It was

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Speaker 1: a well needed update and of course very different than

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Speaker 1: some of the Yeah, but it's detail what I like

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Speaker 1: about her call, whether I agree that or not, as

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Speaker 1: she's granular. Try not sure what you airport you're out of.

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Speaker 1: You come out of Gatwick or Standstead or whatever, and

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Speaker 1: when you need to get on a jet to go

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Speaker 1: up to Liverpool to root for the Liverpool Ians, whatever,

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Speaker 1: they're called. Well, I'm not that's sure. It's not that

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Speaker 1: you do it out of the smaller aircraft of the

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Speaker 1: United Kingdom. He is expert on European transportation and all

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Speaker 1: things bowing and airbus. Christopher Jasper was have you ever

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Speaker 1: done that? Do you take the train to Liverpool to

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Speaker 1: see the Mighty play, Christopher? Or do you take an airplane?

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Speaker 1: How do you get there? Trying? But to be honest,

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Speaker 1: I have tightened the plane on the all occasion. Certainly

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Speaker 1: these planes, these seven thirty seven's in this smaller airbus

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Speaker 1: there the workhorse of all those short distances of Europe.

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Speaker 1: Do you assume and I know you're speaking as a

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Speaker 1: journalist and that as you know, pundon expert, but we

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Speaker 1: see Southeast Asia and now all mine of the Middle

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Speaker 1: East combine, do you assume European announcements on the seven

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Speaker 1: thirty seven Max. It's an interesting question and I think

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Speaker 1: it's probably a crucial one for Boeing as well. I mean,

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Speaker 1: we might think expect the US carriers to to sort

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Speaker 1: of stay in line following the FAA's advice at the

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Speaker 1: moment as we understand it, Yassa, which is the European

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Speaker 1: Safety Regulator, uh, you know, would would would endorse the

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Speaker 1: FAA's recommendations. If ASSA was to break ranks, then that

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Speaker 1: would be a huge deal and obviously the Europeans would follow.

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Speaker 1: But it's it's possible that some European carriers could see

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Speaker 1: it differently. At the moment that appears not to be

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Speaker 1: the case. The focus is generally in Asia and a

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Speaker 1: handful of of African carriers and also something in Latin America.

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Speaker 1: Why is that? Do we have a Y year? I mean,

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Speaker 1: John Ferro was speculating on it. We're not, you know,

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Speaker 1: I really don't want to do that. But do we

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Speaker 1: have a why of this geographic band? It's an interesting one,

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Speaker 1: I mean I think I think you can see. I mean,

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Speaker 1: initially we had Europe, Ethiopia itself, and Indonesia, which of

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Speaker 1: course is where the Lion air plane crash last year,

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Speaker 1: followed by China, which views itself as a sort of

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Speaker 1: an emerging regulatory power as well as an aerospace power,

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Speaker 1: and all the rest. But in Asia, when we had

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Speaker 1: today or overnight Singapore and Australia following suit, which are

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Speaker 1: two administrations within the aviation world that are highly respected,

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Speaker 1: then that's almost as potentially devastating for Boeing as if

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Speaker 1: some of the Europeans had decided to break ranks. Is

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Speaker 1: there certain as this goes to Christopher us for it's

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Speaker 1: just really expertise on uh, these different planes. Is the

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Speaker 1: Baby Bowing the seven thirty seven of the Max whatever,

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Speaker 1: is it substantially different from the baby air Bus the

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Speaker 1: direct competition? Are they really remarkably the same? Which is it? Well,

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Speaker 1: they're very similar in in some ways, but each augmentation

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Speaker 1: of the aircraft has has taken them in slightly different directions.

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Speaker 1: But Airbus endorsed fly by wire technology, for example, earlier

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Speaker 1: than Bowing. What does that mean, um, well, basically controlling

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Speaker 1: the aircraft's flight surfaces the you know, the tail and

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Speaker 1: flaps and so on, by electronic wiring rather than hydraulically.

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Speaker 1: And they had real problems with that in in the

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Speaker 1: early days, and certainly in the early days of the

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Speaker 1: three twenty there was a crash there which was problematic

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Speaker 1: for Airbus. Boeing stuck with the with hydraulic system for

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Speaker 1: longer and ad planes have still got those systems. But

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Speaker 1: Bowing is is moved in that direction itself now And

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Speaker 1: I mean ironically that the thing that maybe at fault

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Speaker 1: with the seven three seven Marx is a system that

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Speaker 1: Bowing installed on this plane which wasn't present on the

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Speaker 1: previous version UH to ENHNT safety, to actually provide an

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Speaker 1: override that would step in when it needed to and

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Speaker 1: the pilot needed Hell yeah, I mean, I'm glad you

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Speaker 1: bring this up. And we covered it's yesterday and thanks

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Speaker 1: to the blog the air Current John Astro on Seattle

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Speaker 1: for a detailed article and this mc AS system to

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Speaker 1: review Christopher to review this. The engines are moved forward

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Speaker 1: off the wing to increase fuel consumption, but in doing

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Speaker 1: that it tips the nose of the plane upwards naturally,

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Speaker 1: and you have to have systems to bring them knows

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Speaker 1: backed down. Do I have that right? Well that that

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Speaker 1: that may be one case where that system would would

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Speaker 1: kick in, but ultimately it's intended to to step in

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Speaker 1: at any point where the aircraft faces a potential store situation.

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Speaker 1: We're not talking about the engine stalling, We're talking about

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Speaker 1: the wing. I either plane loses lift and threats to

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Speaker 1: go out of control, and the MCAST system will will

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Speaker 1: step in and dip the nose to rectify that and

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Speaker 1: and increase the airflow which will keep the flying. What

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Speaker 1: did we know from Lion and the Indonesian Airline of

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Speaker 1: a number of months ago. Is there still a mystery

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Speaker 1: as well. It's a mystery, but we've had a preliminary report,

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Speaker 1: and we've also had comment from Boeing UH and both

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Speaker 1: agreed really that there was a problem with that system,

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Speaker 1: which can be traced to a faulty sensor. There was

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Speaker 1: a faulty sensor reading that suggested that in terms of

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Speaker 1: speed and airflow that the plane was about to stall.

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Speaker 1: So the MCAST system stepped in dip the nose to

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Speaker 1: encourage the airflow, but unfortunately the sensor was faulty and

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Speaker 1: that action in itself taken automatically jeopardized the plane. The

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Speaker 1: pilots attempted to override that on a dozen occasions, but

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Speaker 1: were unable to do so. Now Boeing says, well, it

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Speaker 1: was in the manual. They should have really known how

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Speaker 1: to do that. Plus the sensor itself was possibly incorrectly installed,

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Speaker 1: So they say they then issued further advice on you

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Speaker 1: know what to do in such a situation, and that's

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Speaker 1: why they argue that the plane is safe if you

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Speaker 1: follow the flying manual to the letter. If you're just

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Speaker 1: join this Christopher Jasper with us with Bloomberg News in London,

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Speaker 1: just just definitive on not only airlines, but the engineering

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Speaker 1: of all these different systems. Let me ask you and

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Speaker 1: beyond like a question. I'm sitting in our New York

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Speaker 1: studios with Paul Sweene and John Tucker, and we all

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Speaker 1: have a perception of the gradient of doctors that we see,

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Speaker 1: the gradient variance of dennis that we see in lawyers.

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Speaker 1: Are all pilots the same from Christopher Jasper's view or

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Speaker 1: is there a variance in commercial pilot quality? But we

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Speaker 1: used to say that there's a variance, you know, a

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Speaker 1: few decades ago, I think to be fair that that,

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Speaker 1: you know, it was clearer um certainly in terms of

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Speaker 1: some of the safety data. But there's a much more

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Speaker 1: global industry now. For example, you know there are pilots

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Speaker 1: small over the world, flying all over the Middle East,

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Speaker 1: all over Asia, and if you look at Ethiopian Airlines

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Speaker 1: in particular, you know they've been a get ahead airline

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Speaker 1: for decades now. They're one of the first planes to

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Speaker 1: introduce the seven six seven many years ago, and of

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Speaker 1: course they were a very early customer for the seven

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Speaker 1: eight Dreamliner. UH seven eight seven Dreamliner. They've ordered the

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Speaker 1: ables A three fifty and and they've got the Max

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Speaker 1: so they've got a very new fleet. It's a big fleet.

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Speaker 1: They're the biggest carry in Africa. They're the only consistently

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Speaker 1: profitable carrier in Africa. They're fighting their way against the

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Speaker 1: big three golf carriers. So you know, if the Open

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Speaker 1: is not an airline that you'd expect to see an

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Speaker 1: event like this, if it was pilot related, this has

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Speaker 1: been hugely valuable. I hope to get this out on

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Speaker 1: our podcast today on Apple podcast Spotify as well. Christopher

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Speaker 1: Jasper from our London studios. He is with Bloomberg. Thanks

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Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen

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Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform

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Speaker 1: you prefer. I'm on Twitter at Tom Keane before the podcast.

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Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio.